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HomeMy WebLinkAbout12-2383t2 APR ,7 OIIB1rRLAND COUNT 1E*!sYL VA,,N1A METTE, EVANS & WOODSIDE Heather Z. Kelly, Esquire Attorney I.D. No. 86291 3401 North Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 (717) 232-5000 (717) 236-1816 (fax) hzkelly@mette.com Attorneys for Plaintiff METRO BANK, f/k/a Commerce IN THE COURT OF COMMON PLEAS OF Bank/Harrisburg, N.A., CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. DOCKET NO. ?o?a-a'3 ?turl HUTCH HOMES,INC, JAMES W. HUTCHISON, JR. and CYNTHIA G. HUTCHISON, Defendants NOTICE YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and Notice are served, by entering a written appearance personally or by attorney and filing in writing with the Court your defenses or objections to the claims set forth against you. You are warned that if you fail to do so the case may proceed without you and a judgment may be entered against you by the Court without further notice for any money claimed in the Complaint or for any other claim or relief requested by the Plaintiff. You may lose money or property or other rights 6?) important to you. v-10'3.-75-P4 QHy C k- o. /o ya3; V e? a? 3911 METTE, EVANS & WOODSIDE Heather Z. Kelly, Esquire Attorney I.D. No. 86291 3401 North Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 (717) 232-5000 (717) 236-1816 (fax) hzkelly@mette.com Attorneys for Plaintiff METRO BANK, f/k/a Commerce Bank/Harrisburg, N.A., Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA V. HUTCH HOMES,INC, JAMES W. HUTCHISON, JR. and CYNTHIA G. HUTCHISON, Defendants DOCKET NO. COMPLAINT NOW COMES, Metro Bank, f/k/a Commerce Bank/Harrisburg, N.A. ("Plaintiff'), by its attorneys files the following Complaint: Parties 1. Plaintiff is a Pennsylvania state chartered bank with an address at 3801 Paxton Street, Harrisburg, PA 17111. 2. Defendant Hutch Homes, Inc. ("Hutch Homes") is a Pennsylvania corporation with a principal place of business at 414 South York Street, Mechanicsburg, PA 17055. 3. Defendant James W. Hutchison, Jr. ("James Hutchison") is an adult individual with a resident address of 414 South York Street, Mechanicsburg, PA 17055. 4. Defendant Cynthia G. Hutchison (collectively with James Hutchison, the "Hutchisons") is an adult individual with a resident address of 414 South York Street, Mechanicsburg, PA 17055. Jurisdiction & Venue 5. Jurisdiction and venue are proper in the Cumberland County Court of Common Pleas because the events and occurrences giving rise to the claims set forth herein occurred in Cumberland County. Factual Background A. The 2001 Loan 6. On August 1, 2001, Plaintiff and Hutch Homes entered into a Business Loan Agreement ("2001 Loan Agreement"). A true and correct copy of the Business Loan Agreement is attached hereto as Exhibit "A". 7. Pursuant to the 2001 Loan Agreement, Plaintiff made a Twenty Five Thousand Dollars and 00/100 ($25,000.00) loan to Hutch Homes (the "2001 Loan"). 8. In addition to the terms set forth in the 2001 Loan Agreement, Hutch Homes' indebtedness and obligations with respect to the 2001 Loan are evidenced by and set forth in a Promissory Note in the original principal amount of Twenty Five Thousand Dollars and 00/100 ($25,000.00) that Hutch Homes executed in favor of Plaintiff on August 1, 2001. 9. Pursuant to a Modification Agreement dated November 26, 2002, the principal amount of the 2001 Loan was increased to Seventy Five Thousand Dollars and 00/100 ($75,000.00). True and correct copies of the August 1, 2001 Promissory Note and November 26, 2002 Modification Agreement are attached hereto as Exhibit "B," and referred to collectively as the "2001 Note". 10. Pursuant to the terms of the 2001 Note, Hutch Homes is obligated to make regular monthly interest payments. (Ex. B, p. 1, Payment). 11. Hutch Homes is also obligated to pay the full amount of the unpaid principal and interest due on the 2001 Note upon demand of Plaintiff. (Ex. B, p.1, Payment; Promise to Pay). 12. Interest accrues on the unpaid balance under the 2001 Note at a variable rate of 1.0% point over "Index," as defined in the 2001 Note. (2001 Note, Ex. B, p. 1, Variable Interest Rate). 13. The 2001 Note further provides: "If a regularly scheduled interest payment is 15 days or more late, Borrower [Hutch Homes] will be charged 5.0% of the regularly scheduled payment." (2001 Note, Ex. B, p. 1, Late Charge). 14. Upon default under the 2001 Note, "Lender [Plaintiff] may.... declare the entire unpaid principal balance under the Note and all accrued unpaid interest immediately due." (2001 Note, Ex. B, p.2, Lender's Rights). 15. The failure of Hutch Homes to make any payment under the 2001 Note is a default under the 2001 Note. (2001 Note, Ex. B, p.l, Payment Default). 16. Upon default under the 2001 Note, "the total sum due under this Note will bear interest from the date of acceleration or maturity at the variable interest rate on the Note." (2001 Note, Ex. B, p.1, Interest After Default). 17. Hutch Homes further agreed in the 2001 Note "Lender [Plaintiff] may hire or pay someone else to collect this Note if Borrower [Hutch Homes] does not pay. Borrower [Hutch Homes] will pay Lender [Plaintiff) that amount. This includes.... reasonable attorney's fees and Lender's [Plaintiff's] legal expenses." (2001 Note, Ex. B, p. 2, Attorney's Fee; Expenses). 18. Pursuant to a Commercial Guaranties dated August 1, 2001, Cynthia Hutchison, unconditionally and irrevocably guarantied Hutch Homes' obligations under the 2001 Loan and 2001 Note (the "Cynthia Hutchison Guaranty"). A true and correct copy of the Cynthia. Hutchison Guaranty is attached hereto as Exhibit "C".' 19. The Cynthia Hutchison Guaranty further provides that "Guarantor agrees to pay upon demand all of Lender's costs and expenses, including Lender's attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this Guaranty..." (Cynthia Hutchison Guaranty, Ex. Cl p.2, Attorney's Fees; Expenses). 20. To secure its obligations under the 2001 Loan and 2001 Note, Hutch Homes executed and delivered to Plaintiff an Open-End Mortgage which was recorded in the Recorder of Deeds for Cumberland County, Pennsylvania on August 1, 2001 in Book 1730, Page 0847 which includes real estate known as 414 South York Street, Mechanicsburg, PA. See Open-End Mortgage attached hereto as Exhibit "D". 21. Hutch Homes and Cynthia Hutchison have failed to make payment under the 2001 Note and Cynthia Hutchison Guaranty. (April 6, 2012 Correspondence, attached hereto as Exhibit "E"). B. The 2007 Loan 1 James Hutchison also personally guaranteed the 2001 Loan, but received a discharge in bankruptcy on November 18, 2004. 22. On October 29, 2007, Plaintiff and Hutch Homes entered into a Construction Loan Agreement ("2007 Loan Agreement"). A true and correct copy of the Construction Loan Agreement is attached hereto as Exhibit "F". 23. Pursuant to the 2007 Loan Agreement, Plaintiff made a Two Hundred Thirty Seven Three Hundred Forty Five Dollar and 00/100 ($237,345.00) term loan to Hutch Homes (the "2007 Loan"). 24. In addition to the terms set forth in the 2007 Loan Agreement, Hutch Homes' indebtedness and obligations with respect to the term loan are evidenced by and set forth in a Promissory Note in the original principal amount of Two Hundred Thirty Seven Three Hundred Forty Five Dollars 00/100 ($237,345.00) that Hutch Homes executed in favor of Plaintiff on October 29, 2007 with numerous Change in Terms Agreements extending the maturity date of the Term Note until January 29, 2012. True and correct copies of the Promissory Note and Change In Terms Agreements are attached hereto as Exhibit "G," and referred to collectively as the "2007 Note". 25. Pursuant to the terms of the 2007 Note, Hutch Homes is obligated to make regular monthly interest payments until the maturity date of the 2007 Note. (2007 Note, Ex. G, p.1, Payment). 26. Interest accrues on the unpaid balance under the 2007 Note at a variable rate of 1.0% point over "Index" as defined in the Note. (2007 Note, Ex. G, p. 1). 27. The 2007 Note further provides: "If a payment is 10 days or more late, Borrower [Hutch Homes] will be charged 5.0% of the regularly scheduled payment." (2007 Note, Ex. G, p. 1, Late Charge). 28. Upon default under the 2007 Note, "Lender [Plaintiff] may.... declare the entire unpaid principal balance under the Note and all accrued unpaid interest immediately due." (2007 Note, Ex. G, p.2, Lender's Rights). 29. The failure of Hutch Homes to make final payment upon maturity is a default under the 2007 Note. (2007 Note, Ex. G, p.1, Payment Default). 30. Upon default under the 2007 Note, "including failure to pay upon final maturity, the interest rate on this [2007] Note shall be increased by adding a 4.0% point margin." (2007 Note, Ex. G, p.1, Interest After Default). 31. Hutch Homes further agreed in the 2007 Note "Lender [Plaintiff] may hire or pay someone else to collect this Note if Borrower [Hutch Homes] does not pay. Borrower [Hutch Homes] will pay Lender [Plaintiff] that amount. This includes.... reasonable attorney's fees and Lender's [Plaintiff's] legal expenses." (2007 Note, Ex. G, p. 2, Attorney's Fees; Expenses). 32. Pursuant to a Guaranty dated October 29, 2007, James Hutchison unconditionally and irrevocably guarantied Hutch Homes' obligations under the 2007 Loan and 2007 Note (the "James Guaranty"). A true and correct copy of the James Hutchison Guaranty is attached hereto as Exhibit "H". 33. The James Guaranty further provides that "Guarantor agrees to pay upon demand all of Lender's costs and expenses, including Lender's attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this Guaranty..." (James Guaranty, Ex. H, p.2, Attorney's Fees; Expenses). 34. To secure its obligations under the 2007 Loan Agreement and 2007 Note, Hutch Homes executed and delivered to Plaintiff an Open-End Construction Mortgage and Security Agreement which was recorded in the Recorder of Deeds for York County, Pennsylvania on November 1, 2007 in Book 1930, Page 7492 which includes real estate known as Lot #16, Terrace Place, New Cumberland, York County, PA. (Open-End Construction Mortgage and Security Agreement attached hereto as Exhibit "I") 35. As additional security, on October 29, 2007, James Hutchison and Cynthia Hutchison executed a Commercial Pledge and Security Agreement in which the Hutchisons granted to Plaintiff a security interest in a brokerage account. (Commercial Pledge and Security Agreement attached hereto as Exhibit "J"). 36. On January 29, 2012, upon maturity of the 2007 Note, Hutch Homes and James Hutchison failed to make payment when due. 37. Hutch Homes and James Hutchison failed to make payment on demand. (April 6, 2012 Correspondence, attached hereto as Exhibit "K"). COUNTI Plaintiff v. Hutch Homes, Inc. Breach of Contract - 2001 Loan 38. All of the preceding averments are incorporated herein by reference as if fully set forth. 39. As consideration for Plaintiff making the 2001 Loan, Hutch Homes promised to make consecutive monthly payments of interest to the Plaintiff as required by the Hutch Homes 2001 Loan Agreement and the 2001 Note. 40. Hutch Homes has breached its contractual obligations to Plaintiff by failing to make payments as required by the 2001 Loan Agreement and the 2001 Note. 41. Hutch Homes has breached its contractual obligations to Plaintiff by failing to pay the entire amount of outstanding indebtedness due under the 2001 Note upon demand by Plaintiff. 42. Hutch Homes' outstanding indebtedness under the 2001 Note as of April 6, 2012 is $77,914.55, which is calculated as follows: Principal: $75,312.03 Interest as of 2/7/12: $1,204.99 Late Fees as of 2/7/12: $1,397.53 TOTAL: $77,914.55 43. As set forth above, the 2001 Note provides that Hutch Homes will also pay attorneys fees incurred in enforcing Plaintiff's rights under the 2001 Note. WHEREFORE, Plaintiff respectfully requests that this Honorable Court enter judgment in its favor and against Defendant Hutch Homes, Inc. in the amount of $77,914.55, together with attorneys' fees and costs as provided for in the 2001 Note, as well as continuing interest and all other relief that the Court deems appropriate. COUNT II Plaintiff v. Cynthia G. Hutchison 'Breach of Contract - Hutchisons Guaranty of 2001 Loan 44. All of the preceding averments are incorporated herein by reference as if fully set forth. 45. Pursuant to the terms of the Cynthia Hutchison Guaranty of the 2001 Note obligations, and as consideration for Plaintiff making the 2001 Loan to Hutch Homes, Cynthia Hutchison unconditionally and irrevocably guarantied Hutch Homes' repayment obligations. 46. Cynthia Hutchison has breached her contractual obligations to Plaintiff by failing to pay the entire amount of outstanding indebtedness under the 2001 Note upon demand by Plaintiff 47. Hutch Homes' outstanding indebtedness under the 2001 Note as of April 6, 2012 is $77,914.55, which is calculated as follows: Principal: $75,312.03 Interest as of 2/7/12: $1,204.99 Late Fees as of 2/7/12: $1,397.53 TOTAL: $77,914.55 48. As set forth above, the Cynthia Hutchison Guaranty provides that Cynthia Hutchison will also pay attorneys fees incurred in enforcing the Cynthia Hutchison Guaranty. WHEREFORE, Plaintiff respectfully requests that this Honorable Court enter judgment in its favor and against Defendant Cynthia G. Hutchison in the amount of $77,914.55, together with attorney's fees and costs as provided for in the Cynthia Hutchison Guaranty, as well as interest and all other relief that the Court deems appropriate. COUNT Ili Plaintiff v. Hutch Homes, Inc. Breach of Contract - 2007 Loan 49. All of the preceding averments are incorporated herein by reference as if fully set forth. 50. Hutch Homes has breached its contractual obligations to Plaintiff by failing to make payment in full upon maturity as required by the 2007 Loan Agreement and the 2007 Note. 51. Hutch Homes' outstanding indebtedness under the 2007 Note as of April 6, 2012 was $288,631.60, which is calculated as follows: Principal: $228,545.72 Interest as of 2/7/12: $3,397.11 Late Fees as of 2/7/12: $55,688.77 Other Fees as of 2/7/12: $1,000.00 TOTAL: $288,631.60 52. As set forth above, the 2007 Note provides that Hutch Homes will also pay attorneys fees incurred in enforcing Plaintiff s rights under the 2007 Note. WHEREFORE, Plaintiff respectfully requests that this Honorable Court enter judgment in its favor and against Defendant Hutch Homes, Inc. in the amount of $288,631.60, together with attorneys' fees and costs as provided for in the 2007 Note, as well as continuing interest and all other relief that the Court deems appropriate. COUNT IV Plaintiff v. James W. Hutchison, Jr. Breach of Contract - James W. Hutchison, Jr. Guaranty of 2007 Loan 53. All of the preceding averments are incorporated herein by reference as if fully set forth. 54. Pursuant to the terms of the James Hutchison Guaranty of the 2007 Note obligations, and as consideration for Plaintiff making the 2007 Loan to Hutch Homes, James Hutchison unconditionally and irrevocably guarantied Hutch Homes' repayment obligations. 55. Defendant James Hutchison has beached his contractual obligations to Plaintiff by failing to make honor his guaranty of payment in full upon maturity as required by the 2007 Loan Agreement, the 2007 Note, and the James Hutchison Guaranty. 56. Hutch Homes' outstanding indebtedness under the 2007 Note as of April 6, 2012 was $288,631.60, which is calculated as follows: Principal: $228,545.72 Interest as of 2/7/12: $3,397.11 Late Fees as of 2/7/12: $55,688.77 Other Fees as of 2/7/12: $1,000.00 TOTAL: $288,631.60 57. As set forth above, the James Hutchison Guaranty also provides that James Hutchison will also pay attorneys fees incurred in enforcing Plaintiff's rights under the James Hutchison Guaranty. WHEREFORE, Plaintiff respectfully requests that this Honorable Court enter judgment in its favor and against Defendant James W. Hutchison, Jr. in the amount of $288,631.60, together with attorneys' fees and costs as provided for in the 2007 Note, as well as continuing interest and all other relief that the Court deems appropriate. Respectfully submitted, METTE, EVANS & WOODSIDE By: Heather Z. Kelly, squire Attorney I.D. No. 86291 3401 North Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 Attorneys for Plaintiff Date: April 16, 2012 ????? b USINESS LOAN AGREEME maim* Lem tit i react Ac-euind 7, _ cam' f1t References in the shaded area are for Lenders use arty and do not unit the applicability of th is docurnent to any particular loan or harm. Any item above containing -has been omitted due tD text length limitations. Borrower: Hutch Homes, Inc. CnN: 25-1892622) Lender: COMMERCE BANKIHARRISBURG NJL 414 South York York Street COMMERCIAL MORTGAGE DEPARTMENT Mechanicsburg, PA 17065 100 SENATE AVENUE CAMP HILL, PA 17011 (717)975.8630 THIS BUSINESS LOAN AGREEMENT dated August 1, 2001, is made and executed between Hutch Homes, Inc. ('Borrows") and COMMERCE BANKIHARRISBURG NJL ("Lander') on the following terms and conditions. Borrows has received prior commercial loans from Lands or has applied to Lander for a commercial loan or loans or other financial accornmodatwns, Including those which may be described on any eodhfblt or schedule attached to this Agreement ("Loan'). Borrower understands and agrees that (A) In granting, renewing, or a:tending any Loan, Lender is relying upon Borrower's ropresentatlons, warranties, and agreements as set forth In this Agreement, and (B) all such Loans shall be and remain subject to the terms and conditions of this Agreement. TERN. This Agreement shall be effective as of August 1, 2001, and shall continue it full force and effect until such time as all of Borrower's Loans In favor of Lender have been paid in full, including principal, Interest, costs, expenses, attorneys' fees, and other fees and charges, or until such time as the parties may agree In writing to terminate this Agreement CONDITIONS PRECEDENT TO EACH ADVANCE Lender's obligation to make the initial Advance and each subsequent Advance under this Agreement shall be subject to the fulfillment to Lender's satisfaction of all of the conditions set forth in this Agreement and in the Related Documents. Loan Documents. Borrower shall provide fo Lender the following documents for the Loan: (1) the Nate; (2) Security Agreements granting to Lander security Interests In the Collateral; (3) financing statements and all other documents perfecting Lender's Security Interests; (4) evidence of insurance as required below; (5) guaranties; (B) together with all such Related Documents as Lender may require for the Loan; all In form and substance satisfactory tD Lender and Lender's counsel. Borrower's Authortzatfon. Borrower shall have provided in form and substance satisfactory to Lender property certified resolutions, duly authorizing the execution and delivery of this Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such other resolutions, authorizations, documents and Instruments as Lander or its counsel, may require. Payment of Fees and Expenses. Borrower shall have paid to Lander all fees, charges, and other expenses which are then due and payable as specified in this Agreement or any Related Document Representations and Wamntles. The representations and warranties set forth in this Agreement, in the Related Documents, and in any document or certificate delivered to Lender under this Agreement are true and correct No Event of Default There shall not exist at the time of any Advance a condition which would conflate an Event of Default under this Agreement or under any Related Document REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lander, as of the date of this Agreement, as of the data of each disbursement of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all tines any Indebtadness exists: Organization. Borrower Is a corporation for profit which is, and at all times shall be, duly organized, validly existing, and In good standing under and by virtue of the laws of the Commonwealth of Pennsylvania. Borrower is duly authorized to transact business in all other states in which Borrower is doing business, having obtained all necessary, filings, governmental licenses and approvals for each state In which Borrower is doing business. Specifically, Borrower is, and at all tines shad be, duly qualified as a foreign corporation in all states in which the failure to so qualffy would have a material adverse effect on its business or financial condition. Borrower has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. Borrower maintains an office at 414 South York York Street, Mechanicsburg, PA 17055. Unless Borrower has designated otherwise In writing, the principal office Is the office at which Borrower keeps its books and records Including Its records concerning the Collateral. Borrower will notify Lender prior in any change in the location of Borrowers state of organization or any change in Borrower's name. Borrower shall do all things necessary to preserve and tD keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any govemmental or quasi-goverrmental authority or court applicable to Borrower and Borrower's business activitles. Assumed Business Names. Borrower has filed or recorded all documents or flings required by law relating to ad assumed business navies used by Borrower. Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower does business: None. Authorfaadon. Borrower's execution, delivery, and perfonmance of this Agreement and all the Related Documents have been duty authorized by all necessary action by Borrower and do not conflict with, result In a violation at, or constitute a default under (1) any provision of Borrowers articles of incorporation or organization, or bylaws, or any agreement or other instrument biding upon Borrower or (2) any law, governments! regulation, court decree, or order applicable to Borrower or to Borrower's properties. Financai Information. Each of Borrower's financial statements supplied to Lender truly and completely disclosed Borrower's financial condition as of the date of the statement, and there has been no material adverse change in Borrower's financial condition subsequent to the data of the most recent financial statement supplied to Lender. Borrower has no material contingent obligations except as disclosed In such financial statements. Legal Effect This Agreement aanelihxteS, and any Instrument or agreement Borrower Is required to give under this Agreement when delivered will constitute legat, valid, and biding obligations of Borrower enforceable against Borrower in accordance with their respective terms. Properties. Except as contemplated by this Agreement or as previously disclosed in Borrower's financial statements or in writing to Lander and as accepted by Lander, and except for properly tax liens for taxes not presently due and payable, Borrower owns and has good title fx) all of Borrower's properties free and dear of all Security Interests, and has not executed any security documents or financing statements relating to such properties. All of Borrower's properties are titled in Borrowers legal name, and Borrower has not used, or filed a financing statement under, any other name for at least the last fNre (5) years. Hazardous Substances. Except as disclosed to and acknowledged by Lander In writing, Borrower represents and warrants that (1) During the period of Borrowers ownership of Borrower's Collateral, there has been no use, generation. manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from any of the Collateral. (2) Borrower has no knowledge of, or reason to believe that there has been (a) any breach or violation of any Environmental Laws; (b) any use, generation, manufacture, storage, BUSINESS LOAN AGREEMENT (Continued) Page 2 treatrnent, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Collateral by any prior owners or occupants of any of the Collateral; or (c) any actual or threatened litigation or dawns of any kind by any person relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the Collateral shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or from any of the Collateral; and any such activity shall be conducted in compliance with all applicable federal, state, and local laws, regulation, and ordinances, including without limitation all Environmental Laws. Borrower aufrizes Lender and its agents to enter upon the Collateral to make such inspections and tests as Lender may deem appropriate to determine compliance of the Collateral with this section of the Agreement. Any inspections or tests made by Lender shell be at Borrowers expense and for Lender's purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Borrower or to any other person. The representations and warranties contained herein are based on Borrower's due diligence In investigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the evert Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify and hold harmless lender against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release of a hazardous waste or substance on the Collateral. The provisions of this section of the Agreement, including the obligation to indemnify, shall survive the payment of fine Indebtedness and the termination, expiration or satisfaction of this Agreement and shall not be affected by Lender's acquisition of any Interest in any of the Collateral, whether by foreclosure or otherwise. Litigation and Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower's financial condition or properties, other than litigation, ciakns, or other events, If any, that have been disclosed to and acknowledged by Lender in writing. Taxes. To the beat of Borrower's knowledge, all of Borrower's tax retums and reports that are or were required to be fled, have been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower In good faith in the ordinary course of business and for which adequate reserves have been provided. Lien Priority. Unless otherwise previously disclosed to Lender in writing, Borrower has not entered Into or granted any Security Agreements, or permitted the filing or attachment of any Security Interests an or affecting any of the Collateral directly or Indirectly securing repayment of Borrower's Loan and Note, that would be prior or that may in any way be superior to Lender's Security Interests arid rights in and to such Collateral. Binding Effect This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers thereof, as well as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective temps. AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lander that, so long as this Agreement remains in effect, Borrower will: Notices of Claims and Litigation. Promptly Inform Lender in writing of (1) all material adverse changes in Borrower's financial condition, and (2) all existing and all threatened litigation, claims, Investigations, administrative proceedings or similar actions affecting Borrower or any Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor. Financial Records. Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examine and audit Borrower's books and records at all reasonable rimes. Financial Statements. Furnish Lender with such financial statements and other related Information at such frequencies and in such detail as Lender may reasonably request. Additional Information. Furnish such additional information and statements, as Lender may request from time to time. Insurance. Maintain fire and other risk Insurance, public liability Insurance, and such other Insurance as Lender may require with respect to Borrowers properties and operations, In forth, amounts, coverages and with Insurance companies acceptable to Lender. Borrower, upon request of Lender, will deliver to Lander from time to time the policies or certificates of Insurance in forth satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least ten (10) days prior written notice to Lender. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be Impaired In any way by any act, omission or default of Borrower or any other person. In connection with all policies covering assets in which Lender holds or Is offered a security interest for the Loans, Borrower will provide Lender with such lenders loss payable or other andomements as Lender may require. Insurance Reports. Fumish to Lender, upon request of Lender, reports on each exist W Insurance policy showing such Irfomiation as Lender may reasonably request, Including without limitation the following: (1) the name of the Insurer, (2) the risks Insured; (3) the amount of the policy; (4) the properties Insured; (5) the then current property values on the basis of which Insurance has been obtained, and the manner of deWrmining those values; and (6) the expiration date of the policy. in addition, upon request of Lender (however rot more often than annually), Borrower will have an Ihdeperhdert appraiser satisfactory to Lender determine, as applicable, the actual cash value or replacement cost of any Collateral. The cost of such appraisal shall be paid by Borrower. Guararitt" Prior to disbursement of any Loan proceeds, furnish executed guaranties of the Loans In favor of tender, executed by the guarantors named below, on Lenders fours, and In the amounts and under the conditions set forth in those guaranties. Names of Guarantors Amounts James W. Hutchison, Jr. Unlimited Cynthia G. Hutchison Unlimited Other Agreements. Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any other party and notify Lender Immediately in writing of any default in connection with any other such agreements. Loan Proceeds. Use all Loan proceeds solely for Borrowers business operations, unless specifically consented to the contrary by Lender In writing. Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations, Including without limitation all assessments, taxes, governmental charges, levies and dens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on which penalties would attach, and all lawful claims that, lt unpaid, might become a lien or charge upon any of Borrowers properties, Income, or profits. Performance. Perform and comply in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, In the Related Documents, and In all other Instruments and agreements between Borrower and Lender. Borrower shall notify Lender Immediately In writing of any default in connection with any agreemenL Operations. Maintain executive and mr cement personnel with substantially the same qual'rfir '-rs and experience as the present executive and management personnel; provide writ 3tice to Lender of any change In executive and matt ieht personnel; conduct its business affairs in a reasonable and prudent manner. BUSINESS LOAN AGREEMEN' (Continued) Page 3 Envlircnmsntai Studlea. Promptly conduct and complete, at Borrower's expense, all such investigations, studies, samplings and testings as may be requested by Lender or any govemmental authority relative to any substance, or any waste or by-product of any substance defined as toxic or a hazardous substance under applicable federal, state, or local law, rule, regulation, order or directive, at or affecting any property or any facility owned, used or used by Borrower. Compliance with Governmental Requirements. Comply with all laws, ordinances, and regulations, now or hereafter In effect, of all governmental authorities applicable to the conduct of Borrower's properties, businesses and operations, and to the use or occupancy of the collateral, including without limitation, the Americans With Disabilities AcL Borrower may contest in good faith arty such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender in writing prior to doing so and so long as, in gender's sole opinion Lender's interests in the Collateral are riot jeopardized. Lender may require Borrower to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender's interest Inspection. Pemdt employees or agents of Larder at any reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower's other properties and to examine or audit Borrowers books, accounts, and records and to make copies and memoranda of Borrowers books, accounts, and records. If Borrower now or at any tine hereafter maintains arty records (including without limitation computer generated records and computer software programs for the generation of such records) in the possession of a third party, Borrower, upon request of Lender, shall notify such parry to permit Lender free access to such records at all reasonable tines and to provide Lender with copies of any records it may request, all at Borrower's expense. Compliance Certificates. Unless waived in writing by lender, provide Lender at least annually, with a certificate executed by Borrower's chief financial officer, or other officer or person acceptable to Lender, certifying that the representations and warranties set forth in this Agreement are true and correct as of the date of the certificate and further certifying that, as of the date of the certificate, no Event of Default exists under this Agreement Environmental Compliance and Reports. Borrower shall comply In all respects with any and all Environmental laws; not cause or permit to exist, as a result of an Intentional or unintentional action or omission an Borrowers part or on the part of any third party, on property owned and/or occupied by Borrower, any environmental activity where damage may result to the environment, unless such environmental activity is pursuant to and in compliance with the conditions of a pemrdt Issued by the appropriate federal, state or local governmental authorities; shall furnish to Lender promptly and In any event within thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication from any governmental agency or Instrumentality concerning arty Intentional or unintentional action or omission an Borrowers part In connection with any environmental activity whether or not there Is damage to the environment and/or other natural resources. Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgaiges, deeds of trust, security agreements, assignments, financing statements, Instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loans and to perfect all Security Interests. LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lenders Interest in the Collateral or If Borrower fads to comply with any provision of this Agreement or any Related Documents, Including but not limited to Borrowers failure to discharge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or any Related Documents, Lender an Borrowers behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security Interests, encumbrances and other claims, at any time levied or placed on any Collateral and paying all costs for Insuring, maintaining and preserving any Collateral. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the data Incurred or paid by lender to the date of repayment by Borrower. Ali such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any Installment payments to become due during either (1) the term of any applicable Insurance policy, or (2) the remaining term of the Note; or (C) be treated as a balkxxn payment which will be due and payable at the Note's maturity. NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior written consent of Lender: Indebtedness and Liens. (1) Except for trade debt Incurred in the normal course of business and Indebtedness to Lender contemplated by this Agreement, create, Incur or assume Indebtedness for borrowed money, Including capital leases, (2) sell, transfer, mortgage, assign, pledge, lease, grant a security interest in, or encumber any of Borrowers assets (except as allowed as Permitted liens), or (3) sell with recourse any of Borrowers accounts, except to Lender. Continuity of Operations. (1) Engage In any business activities substantially different than those In which Borrower is presently engaged, (2) cease operations, liquidate, merge, transfer, acquire or consolidate with any other entity, change Its name, dissolve or transfer or sell Collateral out of the ordinary course of business, or (3) pay any dividends on Borrower's stock (other than dividends payable in its stock), provided, however that notwithstanding the foregoing, but only so long as no Event of Default has occurred and is continuing or would result from the payment of dividends, If Borrower Is a 'Subchapter S Corporation' (as defined in the Internal Revenue Code of 1988, as amended), Borrower cash dividends an its stock to its shareholders from time to time In amounts necessary to enable the shareholders to pay irx:ome taxies and make estimated Income tax payments to satisfy their liabilities under federal and state dew which arise solely from their status as Shareholders of a Subchapter S Corporation because of their ownership of shares of Borrowers stock, or purchase or retire any of Borrowers outstanding shares or alter or amend Borrowers capital structure. Loans, Aoquiaftlons and Guaranties. (1) Loan, Invest in or advance money or assets, (2) purchase, create or acquire any interest in any other enterprise or entity, or (3) incur any obligation as surety or guarantor other then in the ordinary course of business. CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement or under any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds ff. (A) Borrower or any Guarantor Is In default under the terns of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender, (B) Borrower or any Guarantor dies, becomes Incompetent or becomes insolvent, ties a petition in bankruptcy or similar proceedings, or Is acyudged a bankrupt; (C) there occurs a materiel adverse change In Borrowers financial condition, In the financial condition of any Guarantor, or In the value of any Collateral securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such Guarantors guaranty of the Loan or any other loan with Lender, or (E) Lender In good faith deems itself Insecure, even though no Event of Default shall have occurred. RIGHT OF SETOFF. To the extant permitted by applicable law, tender reserves a right of setoff in all Borrowers accounts with Lender (whether checking, savings, or some other account). This Includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes tender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts. DEFAULT. Each of the following shall constitute an Event of Default under this Agreement: Payment Default Borrower falls to make any payment when due under the Loan. Other Defaults. Borrower fags to comply with or to perform any other term, obligation, covenant or condition contained In this Agreement or in BUSINESS LOAN AGREEMENT (Continued) Page 4 any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower. Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, In favor of any other creditor or person that may materially affect any of Borrower's or any Grantor's property or Borrower's or any Grantor's ability to repay the Loans or perform their respective obligations under this Agreement or any of the Related Documents. False Staternents. Any warranty, representation or statement made or furnished to lender by Borrower or on Borrower's behalf under this Agreement or ft Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereattar. Insolvency. The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, arty type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower. Defective Collateralration. This Agreement or arty at the Related Documents ceases to be It full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason. Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by Judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any govemmental agency against any collateral securing the Loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply If there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which Is the basis of the creditor or forfeiture proceeding and I Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sale discretion, as being an adequate reserve or bond for the dispute. Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness. In the event of a death, Lender, at its option, may, but shall not be required to, permit the Guarantor's estate to assume unconditionally the obligations arising under the guaranty in a manner satisfactory to Lender, and, in doing so, cure any Event of Default Change In Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower. Adverse Change. A material adverse change occurs In Borrower's financial condition, or Lender believes the prospect of payment or performance of the Loan is impaired. Insecurity. Lender in good faith believes itself Insecure. Right to Cure. If any default other than a default on Indebtedness, Is curable and l Borrower or Grantor, as the case may be, has not been given a notice of a similar default within the preceding twelve (12) months, it may be cured (and no Event of Default will have occurred) ti Borrower or Grantor, as the case may be, after receiving written notice from Lender demanding cure of such default (1) cure the default within fifteen (15) days; or (2) If the cure requires more than fifteen (15) days, immediately Wtiate steps which Lander deems In Lender's sole discretion to be sufficient to cure the default and thereafter continue and complete all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical. EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise provided In this Agreement or the Related Documents, all commitments and obligations of Lender under this Agreement or the Related Documents or arty other agreement immediately will terminate (including any obligation to make further Loan Advances or disbursements), and, at Lender's option, all Indebtedness immediately will become due and payable, all without notice of any kind to Borrower, except that In the case of an Event of Default of the type described In the 'Insolvency' subsection above, such acceleration shall be automatic and not optional. In addition, Lender shall have all the rights and remedies provided In the Related Documents or available at law, In equity, or otherwise. Except as may be prohibited by applNcable law, all of Lender's rights and remedies shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Borrower or of any Grantor shall not affect Lender's right to declare a default and to exercise tie rights and remedies. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement Amendments. This Agmement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given In writing and signed by the party or parties sought to be charged or bound by the alteration or amendment Attorneys' Fees; Expenses. Borrower agrees to pay upon demand all of Lender's costs and expenses, including Lender's attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this Agreement Lander may hire or pay someone else to help enforce this Agreement. and Borrower shall pay the costs and expenses of such enforcement. Costs and expenses include Lenders attorneys' fees and legal expenses whether or not there Is a lawsuit, including attomeys' fees and legal expenses for bankruptcy proceedings (including efforts to modily or vacate any automatic stay or Iyunction), appeals, and any anticipated post-Judgment collecticrr services. Borrower also shall pay all court costs and such additional fees as may be directed by the court Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement. Consent to Loan Participation. Borrower agrees and consents to Lerxlers sale or transfer, whether now or later, of one or more participation interests in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lander may have about Borrower or about any otter matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect to such matters. Borrower additionally waives any and all notices of sale of participation Interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as the absolute owners of such Interests In the Loan and will have all the rights granted under the participation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim that it may have now or later against Lender or against any purchaser of such a participation Interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower's obligation under the Loan Irrespective of the failure or Insolvency of any holder of any Interest in the Loan. Borrower further agrees that the purchaser of any such participation interests may enforce its Interests Irrespective of any personal claims or defenses that Borrower may have against Lender. Governing Law. This Agreement will be governed by, construed and enforced In accordance with federal law and the laws of the Commonwealth of Pennsylvania. ThLr, " -iam. ant has been accepted by Lender in the Core •nwealth of Pennsylvania. No Waiver by Lander. Lender shall inc. deemed to have waived any rights under this Agm it unless such waiver is given In writing and BUSINESS LOAN AGREEMEN (Continued) Page 5 signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by lender of a provision of this Agreement shaft not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Agreement No prior waiver by Lender, nor any course of dealing between Lender and Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender's rights or of any of Borrower's or any Grantors obligations as to any future transactions. Whenever the consent of Lender Is required under this Agreement, the granting of such consent by Lender in any Instance shall not constitute continuing consent to subsequent instances where such consent Is required and in all cases such consent may be granted or withheld In the sole discretion of Lender. Notice:. Unless otherwise provided by applicable law, any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited In the United States mail, as first class, certified or registered mad postage prepaid, directed to the addresses shown near the beginning of this Agreement Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Borrower agrees to keep Lender informed at all times of Borrowers current address. Unless otherwise provided by applicable law, If there is more than one Borrower, any roue given by Lender to any Borrower is deemed to be notice given to all Borrowers. Severabillty. If a court of competent jurisdiction finds any provision of this Agreement to be Illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, Invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement Unless otherwise required by law, the Illegality, invalidity, or unenforceabdity of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement Subsidlarles and Affiliates of Borrower. To the extent the context of any provisions of this Agreement makes it appropriate, including without limitation any representation, warranty or covenant, the word 'Borrower' as used in this Agreement shall include all of Borrowers subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to require lender to make any Loan or other 1inencial aocorrnodation to any of Borrowers subsidiaries or affiliates. Successors and Assigns. AN covenants and agreements contained by or on behalf of Borrower shad bind Borrowers successors and assigns and shall Inure to the beneftt of Lender and its successors and assigns. Borrower shall not, however, have the right to assign Borrowers rights under this Agreement or any interest therein, without the prior written consent of Lender. Survival of Representations and Warranties. Borrower understands and agrees that in extending Loan Advances, Lender Is retying on all representations, warranties, and covenants made by Borrower In this Agreement or In any certificate or other Instrument delivered by Borrower to Lmier under. this Agreement or the Related Documents. Borrower further agrees that regardless of any investigation made by Lender, all such r9preserdatkxns, warranties and covenants will survive the extension of Loan Advances and delivery to Lender of the Related Docurment% shad be continuing in nature, shad be deemed made and redated by Borrower at the time each Loan Advance is made, and shall remain in full force and effect until such tine as Borrowers Indebtedness shall be paid In full, or until this Agreement shall be tem>inated in the manner provided above, whichever is the last to occur. Time Is of the Essence. Time is of the essence in the performance of this Agreement DEFlNMONS. The following caphalaed words and terns shall have the following meanings when used in this Agreement Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts In lawful money of the United States of America. Words and two used in the singular shall Include the plural, and the plural shad include the singular, as the context may require. Words and tams not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. Accounting words and terns not otherwise defined in this Agreement shall have the meanings assigned to them In accordance with generally accepted accounting principles as In effect on the date of this Agreement Advance. The word 'Advance' means a disbursement of Loan funds made, or to be made, to Borrower or on Borrowers behalf on a line of credit or multiple advance basis under the terms and conditions of this Agreement. Agreement The word 'Agreement" means this Business Loan Agreement, as this Business Loan Agreement may be amended or modified from time to tine, together with all exhibits and schedules attached to this Business Loan Agreement from time to time. Borrower. The word 'Borrower' means Hutch Homes, Inc., and all other persons and entities signing the Note in whatever capacity. Collateral. The word 'Collateral' means all property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly or Indirectly, whether granted now or in the future, and whether granted In the form of a security interest, mortgage, collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, crust recelpt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien Interest whatsoever, whether created by law, contract, or otherwise. Environmental Laws. The words 'Environmental Laws' mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environ meM Including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1goo, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA7, the Superfund Amendments and Reauthorization Act of 1986, Pub. L No. 99-499 ('SARAJ, the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, at seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, at seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto. Event of Detwit. The words 'Event of Default' mean any of the events of default set forth In this Agreement In the default section of this GAAP. The word 'GAAP' means generally accepted accounting principles. Grantor. The wont "Grantor' means each and all of the persons or entitles granting a Security Interest in any Collateral for the Loan, including without Ilmitatlon all Borrowers granting such a Security Interest Guarantor. The word 'Guarantor' means any guarantor, surety, or accommodation party of any or all of the Loan. Guaranty. The word 'Guaranty' means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note. Hazardous Substances. The words 'Hazardous Substances" mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words 'Hazardous Substances' are used In their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. The term 'Hazardous Substances' also includes, without limitation, petroleurn and petroleum by-products or any fraction thereof and asbestos. Indebtedness. The word "Indebtedness' means the indebtedness evidenced by the Note or Related Documents, including all principal and BUSINESS LOAN AGREEMENT (Continued) Page 6 Interest together with all other indebtedness and costs and expenses for which Borrower Is responsible under this Agreement or under any of the Related Documents. Lender. The word 'Lender' means COMMERCE BANKIKARRISBURG N.A., its successors and assigns. Loan. The word 'Loan" means any and all loans and financial ac commodadons from Lender to Borrower whether now or hereafter existing, and however evidenced, including without limitation those loans and financial accormwdalions described herein or described on any exhibit or schedule attached to this Agreemen from time to time. Note. The word "Nate" means the Note executed by Borrower in the principal amount of $25,000.00 dated August 1, 2001, together with all renewals of, extensions of, modifications of, re&-anciigs of, consolidations of, and substitutions for the note or credit agreement Permitted Liens. The words 'Permitted Liens" mean (1) liens and security interests securing Indebtedness owed by Borrower to Lender, (2) liens for taxes, assessments, or skrAw charges either not yet due or being contested In good faith; (3) liens of materialmen, mechanics, warehousemen, or carriers, or other like tiers arising in the ordinary course of business and securing obligations which are not yet delinquent; (4) purchase maul (tens or purchase money security Interests upon or in any property acquired or held by Borrower In the ordinary course of business to secure Indebtedness outstanding on the date of this Agreement or permitted tD be incurred under the paragraph of this Agreement titled "Indebtedness and Liens"; (5) Ilens and security interests which, as of the date of this Agreement, have been disclosed to and approved by the Lender in writing; and (6) those liens and security interests which in the aggregate constitute an Immaterial and Insignificant monetary amount with respect to the net value of Borrower's assets. Related Documents. The words 'Related Documents' mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements. mortgages, deeds of bust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Loan. Security Agresmernt The words 'Security Agreement' mean and include without lirrltation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security Intarest Security Interest The words "Securlty Interest' mean, without Iirrift ion, any and all types of collateral security, present and future, whether in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust,'factoes lien, equipment trust, conditional sale, trust receipt, lien or title retention oontract, lease or consignment intended as a security device, or any other security or lien interest whatsoever whether created by law, corntact, or otherwise. BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED AUGUST 1. 2001. THIS AGREEMENT IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW. BORROWER: f f OIIIES, INC. may, W. Hut fain, "Jr., Pry' mss, Inc. LENDER: COMMERCE BANKIRARRISBURG NA. By: sfyp 1A90 "M IaYIL %.. •.I7.11M OW. tb f d FV rW a,f oa ImL IM. EM. M Iq,r ft.- . M 79-ma MIS 0 A PROMISSORY NOTE .oaa . t ;;flf t! "2M- fIft-l' s# ItoReferences in the shaded area are for Lender's use only and do not limit the Wx:WfiHy of this document to any particular loan or item. Any item above containing has been omitted due to text length limitations. Borrower Hutch Homes, Inc. (TIN: 25-1026M Lender: COMMERCE BANKIHARRiSBURG NA 414 South York York Street COMMERCIAL MORTGAGE DEPARTMENT 100 SENATE Mechanicsburg, PA 17055 CA AVENUE CAMP HILL, PA 17011 (717) 975-b6.40 Principal Amount: $259000.00 Initial Rate: 8.750% Date of Note: August 1, 2001 PROMISE TO PAY. Hutch Homes, Inc. ("Borrower') promises to pay to COMMERCE BANK/HARRISBURG N.A. ("Lender'), or order, in lawful from the maybe oof the utstanding, toStates of gether w?erlan omaudpa unpaid outst nding principal ba nce of each dadva& OOM 00 Dollars nce. Interest shelf be ccalcu ated much as data of each advance until repayment of each advance. PAYMENT. Borrower will pay this loan immediately upon Lender's demand. Payment in full Is due Immediately upon Lender's demand. Borrower will pay regular monthly be payments the all accrued month due as of each day of Interest that UNon othherewise agreed agroq September 1, by applicable el law! subsequent interest payrrrenb payments wig be gViled first to accrued unpaid Interest, then to principal, and any remaining amount to any unpaid collection costs and late charges. The annual Interest rate for this Note is computed on a 3661380 basis; that 1% by applying the ratio of the annual Interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. Borrower will pay Lender at Lenders address shown above or at such other place as Lender may designate in writing. VARIABLE INTEREST RATE. The Interest rate on this Note is subject to change from time to time based on changes in an index which is Lender's Prime Rate (the `Index'). This is the rate Lender charges, or would charge, on 90-day unsecured loans to the most creditworthy corporate customers. This rate may or may not be the lowest rate available from Lender at any given time. Lender will tell Borrower the current Index rate upon Borrowers request The Interest mite change wW not occur more often linen each day. Borrawrer understands that Lender may make bans based on other rates as well. The IndsX currently is 7.76074 per annum. Ths Interest rate to be applied to tho unpaid prfnapal balance of this Note will be at a rate of 1,000 Percertlsge point over the Index, tbsuiting In an Initial rate o! 8.750°h per annum. NOTICE: Under ne circumstances wtH the interest rate on this Note be more than the maximurrn rate allowed by appUcatule law. PREPAYMENT. Borrower agrees that all ban fees and other prepaid finance charges are earned fully as of the date of the loan and will not be subject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law. Except for the foregoing, Borrower may lay without penalty all or a pardon of the amount owed earlier than It is due. Early payments will not, unless agreed to by Lender In writing, relieve Borrower of Borrowers obligation to continue to make payments of accrued unpaid interest Rather, early payments will reduce the principal balance due. Borrower agrees not to send Lender payments marked "paid in full', "without recourse`, or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written communications miceming disputed amounts, Including any check or other payment instrument that indicates that the payment constitutes 'payment in full' of the amount owed or that Is tendered with other conditions or limitations or as full safthictim of a disputed amount must be mailed or delivered to: COMMERCE BANK/HARRISBURG N.A., COMMERCIAL MORTGAGE DEPARTMENT, 100 SENATE AVENUE, CAMP HILL, PA 17011. LATE CHARGE. If a regularly scheduled Interest payment is 15 days or more late. Borrower will be charged 5.000% of the regularly scheduled payment. lt Lender demands payment of this loan, and Borrower does not pay the ban in full within 15 days after Lender's demand, Borrower also will be charged 5.000% of the sum of the unpaid principal plus accrued unpaid interest. INTEREST AFTER DEFAULT. Upon default, Including failure to pay upon final maturity, the total scan due under this Note will bear interest from the date of acceleration or maturity at the variable Interest rate on this Note. The interest rate will not exceed the maximum rate permitted by applicable law. DEFAULT. Each of the following shall constitute an event of default ('Event of Default") under this Note: payment Default. Borrower falls to make any payment when due under this Note. Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained In this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower. credit Default in Favor of Third Parties. Borroweoor any Grardar creditor defaults under that my' extensile affect any security agreement property hose or sales agreement, or any other agreement, in favor f any other or person ability to repay this Note or perform Borrowers obligations under this Note or any of the related documents. False Statements. Any warranty, representation or statsment made or furnished to Lender by Borrower or on Borrowers behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter. Insolvency. The dissolution or tarmirmtran of Borrowers existence as a going business, the Insolvency of Borrower, the appointment of a receiver for any part of Borrowers property. any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower. Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This trxdudes a gamishment of any of Borrowers accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and If Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute. Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the Indebtedness evidenced by this Note. In the event of a death, Lender, at its opibn, may, but shell not be required to, permit the Guarantors estate to assume unconditionally the obligations arising under the guaranty in a manner satisfactory to bender, and, in doing so, cure any Event of Default Change In Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower. PROMISSORY NOTE Page 2 (Continued) Adverse Change. A material adverse change occurs In Borrower's financial condition, or Lender believes the prospect of payment or performance of this Note Is Impalred. Insecurity. Lender In good faith believes belt insecure. Cure Provisions. If any default, other than a default in payment Is curable and d Borrower has not been given a notice of a breach of the same provision of this Note within the preceding twelve (12) months, it may be cured (and no event of default will have occurred) if Borrower, after receiving written notice from Lender demanding cure of such default (1) cures the default within fifteen (15) days; or (2) 1 the cure requires more than fifteen (15) days, immediately initiates steps which Lender deems in Lender's sole discretion to be suffdent tD cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical. applicable law, declare the entire unpaid prirx:fpal balance on duad sthen uch notices orrowar will pay by that amount. this Note LENDER'S RIGHTS. and all accrue Upon unpaid interest after ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note If Borrower does not pay. Borrower will pay Lender that amount This Includes, subject to any limits under applicable law, Lender's attorneys' fees and Lender's legal expenses, whether or not there Is a lawsultincluding attorneys' fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any sutornatic stay or injunction), and appeals. If not prohibited by applicable law, Borrower also will pay any court costs, In addition to all adw sums provided by law. GOVERNING LAW. This Note will be governed by, construed and enforced in accordance with federal law and the laws of the Commonwealth of Pennsylvania. This Note has been accepted by Lender In the Commonwealth of Pennsylvania RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff In all Borrower's accounts with Lender (whether checking, savings, or some other account). This Includes all accounts Borrower holds johntiy with someone else and all accounts Borrower may open In the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by taw. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts. COLLATERAL Borrower acknowledges this Note is secured by 2nd mortgage lien on 414 South York Streak Mechanicsburg, Cumberland County, Pennsylvania. Personal guarantees of James W. and Cynthia G. Hutchison. LINE OF CREDIT. This Note evidences a revolving line of credit Advances under this Note, as well as directions for payment from Borrower's accounts, may be requested orally or In writing by Borrower or by an authorized person. Lender may, but need not, require that all oral requests be confirmed in writing. Borrower agrees to be liable for all sums either: (A) advanced in accordance with the Instructions of an authorized person or (B) credited to any of Borrower's accounts with Lender. The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lender's internal records, including daily computer print-outs. SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and Its successors and assigns. NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES. Please notify us if we report any inaccurate information about your account(s) to a consumer reporting agency. Your written notice describing the specific inaccuracy(fes) should be sent to us at the following address: COMMERCE BANKIHARRISBURG NA 100 SENATE AVENUE CAMP HILL, PA 17011 GENERAL PROVISIONS. This Nate is payable on demand. The Inclusion of specific default provisions or rights of Lender shall not preclude Lender's right to declare payment of this Note on Its demand. Lender may delay or forgo enforcing any of its rights or remedies under this Nate without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment? s this payment, and notice of dishonor. Upon any change in the term of this Note, and unless othertAse expressly stated in writing, no party Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. AN such parties agree that Lender may renew or extend (repeatedly and for any length of tims) this loan or release any party or guarantor or collateral; or Impair, fall to realize upon or perfect Lender's security Interest In the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notes to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several. if any portion of this Note Is for any reason determined to be unenforceable, it will not affect the enforceability of any other provisions of this Note. CONFESSION OF JUDGMENT. BORROWER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR THE PROTHONOTARY OR CLERK OF ANY COURT N THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE, TO APPEAR AT ANY TIME FOR BORROWER AFTER A DEFAULT UNDER THIS NOTE AND WITH OR WITHOUT COMPLAINT FILED, CONFESS OR ENTER JUDGMENT AGAINST BORROWER FOR THE ENTIRE PRINCIPAL BALANCE OF THIS NOTE AND ALL ACCRUED INTEREST, LATE CHARGES AND ANY AND ALL AMOUNTS EXPENDED OR ADVANCED BY LENDER RELATING TO ANY COLLATERAL SECURING THIS NOTE, TOGETHER WITH COSTS OF SUIT, AND AN ATTORNEY'S COMMISSION OF TEN PERCENT (10%) OF THE UNPAID PRINCIPAL BALANCE AND ACCRUED INTEREST FOR COLLECTION, BUT IN ANY EVENT NOT LESS THAN FIVE HUNDRED DOLLARS (5500) ON WHICH JUDGMENT OR JUDGMENTS ONE OR MORE EXECUTIONS MAY ISSUE IMMEDIATELY; AND FOR SO DOING, THIS NOTE OR A COPY OF THIS NOTE VERIFIED BY AFFIDAVIT SHALL BE SUFFICIENT WARRANT. THE AUTHORITY GRANTED IN THIS NOTE TO CONFESS JUDGMENT AGAINST BORROWER SHALL NOT BE EXHAUSTED BY ANY EXERCISE OF THAT AUTHORITY, BUT SHALL CONTINUE FROM TIME TO TIME AND AT ALL TIMES UNTIL PAYMENT IN FULL OF ALL AMOUNTS DUE UNDER THIS NOTE BORROWER HEREBY WANES ANY RIGHT BORROWER MAY HAVE TO NOTICE OR TO A HEARING IN CONNECTION WITH ANY SUCH OF JUDGMENT SPEC EITHER THAT THIS CONFEIONPROVISION ON TO ORROW AS ATTENTION OR BO ROWER HAS BEEN REPRESENTED BYIFIC NDEPE DE ENNTELEGAL COUNSELSiON OF UDGM PROMISSORY NOTE (Continued) Page 3 PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE. BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE. THIS NOTE IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS NOTE IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW. BORROWER: HUTCH HOMES, INC. (Sea JwTies W. H Isom) rea t of Hutch Hoes, Inc. UBER MW Lwd w Yo. U7.91M CW. Ho F-M "M. Iwo. OP. M. M ilyb M1w?l. • M !NWWPFff1PWAGPNJUD=.FC 7A,'V mia ??q 5 ?p RECORD & RETURN TO: CREDIT LD'DERS S'?Rt.'!CF A sFNCY P ©. BOX 508 CHERV ?LL, NI.s s10n8 MODIFICATION AGREEMENT 1 RTT`'!: Pt ',R. RFC. C`^. PEC:O=~r)W.' THIS MODIFICATION AGREEMENT, dated as of 41?n_ day of November, 2002, between Hutch Homes, Inc. (hereinafter called "Borroweel, James W. Hutchison, Jr., and Cynthia G. Hutchison ("the Guarantors"), and Commerce Bank/Harrisburb, N. A. (the `Bank"). RECITALS A. By Note dated August 1, 2001, (the "Note"), and Loan Agreement dated August 1, 2001 (the "Loan Agreement'), the Bank agreed to make a $25,000 loan (the "Loan") to the Borrower. The Loan was evidenced by a Note in the amount of $25,000 dated August 1, 2001. The Note was secured by a mortgage on properties owned by Borrowers and kno,%m as 414 S. York Street, Mechanicsburg, PA 17055. The Loan is further secured by the personal guarantees of James W. Hutchison, Jr., and Cynthia G. Hutchison C. Ile Borrower and Guarantors have requested, and the Bank has agreed to modify the Loans provided herein. The parties hereto now wish to modify the Loan Documents to evidence such modification. MODIFICATION AGREEMENT FOR and in consideration of the sum of $10.00 cash in hand paid and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agrees as follows: Modification of Note $75,000. (a) The Note is hereby modified by increasing the amount of borrowing from $25,000 to (b) The parties acknowledge, that as of the date of this Agreement, the principal amount outstanding on the Note is currently zero (0). (c) Except as specifically modified hereby, the terms and provisions of the Note are hereby ratified and confirmed and remain in full force and effect. (d) After this Agreement has been fully executed and delivered, the Bank shall place the following legend on the Promissory Note. "THIS NOTE HAS BEEN MODIFIED BY MODIFICATION AGREEMENT DATED AS OF NOVEMBER a V'2002, AN ORIGINAL COUNTERPART OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE HOLDER OF THIS NOTE". 2. Modification of Mortgage (a) The Mortgage dated August 1, 2001 recorded in the Office of the Recorder of Deeds, in and for Cumberland County, Pennsylvania, in the name of James W. Hutchison, Jr. and Cynthia G. Hutchison, for real estate located at 414 South York Street, Mechanicsburg, Pennsylvania, 17055, on August 9, 2001 in Book 1730, Pg 0847, is hereby modified by increasing the principal sum of the borrowing from $25,000.00 to $75,000.00. (b) Except as specifically modified hereby, the terms and provisions of the Mortgage are hereby ratified and confirmed and will remain in full force and effect. ;17._01 BOOK 692 PAGE 1048 3. Security Agreement. (a) The Security Agreement, executed August 1, 2001, is hereby modified to increase the borrowing from $25,000.00 to $75,000.00. (b) Except as specifically modified hereby, the terms and provisions of the Security Agreement are hereby ratified and confirmed and remain in full force and effect. 4. No Release or Satisifaction of Exisitng Loans. The Borrower and the Bank specifically agree and intend that the obligations evidenced by the Note, Mortgage, Security Agreement and the Loan Documents are neither released nor satisfied by this Modification Agreement. 5. Further Assurances. The Borrower hereby covenants and agrees to execute and deliver, or cause to be executed and delivered, and to do or make, or cause to be done or made, upon the reasonable request of the Bank, any and all instruments, papers, deeds, acts or things, supplemental, confirmatory or otherwise, as may be reasonably required by the Bank for the purpose of effecting the modification described herein. 6. Completeness and Modification. This Agreement constitutes the entire agreement between the parties hereto as to the transaction contemplated hereby and supersedes all prior discussions, understandings or agreements between the parties hereto. 7. Successors and Assigns.. This Agreement shall bind and inure to the benefit of the parties hereto and their and their respective successors and assigns. 8. Governing Law. This Agreement and all other instruments referred to herein shall be governed by, and shall be construed according to, the laws of the Commonwealth of Pennsylvania. 9. Guarantors' Consent. The Guarantors, by their signatures set forth below, hereby consent to the increase in the amount of borrowing from $25,000.00 to $75,000.00, and hereby acknowledge that they have reviewed the Disclosure for Confession of Judgement, and the original Guaranty Agreements, will be applicable to the increased borrowing amount. Bom 692 PAGE 1049 10. Borrower's Acknowledgment, The Borrower hereby acknowledges that the Borrower has reviewed the Disclosure of Confession of Judgment executed upon execution of the original Note in this matter, and hereby specifically agrees that the terms and condition in the Disclosures of the Confession of Judgement are applicable to the Note as modified by this Agreement. A st: Bo o'er: Hutch Homes, Secretary James W. utc ' Jr., President tors: s W. Hutchison, a G. Hutchison COMMONWEALTH OF PENNSYLVANIA SS: COUNTY OF CUMBERLAND On this, the 2 Kati day of November, 2002, before me a Notary Public, the undersigned officer, personally appeared James W. Hutchison, Jr., President, representative of Hutch Homes, Inc., who acknowledges he/she is authorized to execute the foregoing instrument, and being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of Hutch Homes, Inc. WITNESS by hand and notarial seal My Commission Expires: Notarial SW Fmmoya tthew D. Harahbarger, Notary Pubic .mrspd en ' Wp., Cumteftld Qwnty Commiaslon Expires Sept. 27, 2004 x ..t t std" K ?+ ?, vm 692 PAGE 1050 COMMONWEALTH OF PENNSYLVANIA COUNTY OF CUMBERLAND SS: On this, the aday of November, 2002, before me a Notary Public, the undersigned officer, personally appeared James W. Hutchison, Jr., and Cynthia G. Hutchison, known to me (or satisfactory proven) to be the persons whose names are subscribed to the within instrument, and acknowledged that they executed the same for the purposes therein contained. WITNESS by hand and notarial seal My Commission Expires: y 4 ? hh i - ? -1 Ys? 4a?± ,? S ? ? x ' unkaBiop ?cphas J N r? r'n C-7 r,. mot` ...-. r.t ?. S•'i r,- •s; C E [ L11 L 25 is [f.., ?r fled In Ca, R BOOK 692 Pw.1051 Iv , L COMMERCIAL GUARANTY } :a esi? 601 earn Ate[ 0101w I References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan or item. Any hem above containing """ has been omitted due to text length limitations. Borrower. Hutch Homes, Inc. (TIN; 25-1892622) 414 South York York Street Mechanicsburg, PA 17055 Lander: COMMERCE BANKMARRISBURG N.A. COMMERCIAL MORTGAGE DEPARTMENT 100 SENATE AVENUE CAMP HILL, PA 17011 (717) 975-5MO Guarantor: Cynthia G. Hutchison 414 South York York Street Mechanicsburg, PA 17055 AMOUNT OF GUARANTY. The amount of this Guaranty Is Unlimited CONTINUING UNLIMITED GUARANTY. For good and valuable consideration, Cynthia G. Hutchison ("Guarantor") absolutely and unconditionally guarantees and promises to pay to COMMERCE BANKAiARRISBURG NA ("Lender') or its order, on demand, in legal tender of the United States of America, the Indebtedness (as that term Is defined below) of Hutch Homes, inc. ("Borrower") to Lender on the terms and conditions set forth In this Guaranty. Under this Guaranty, the liability of Guarantor is unlimited and the obligations of Guarantor are continuing. INDEBTEDNESS GUARANTEED. The Indebtedness guaranteed by this Guaranty Includes any and all of Borrower's Indebtedness to Lender and is used In the most comprehensive sense and means and includes any and all of Borrower's liabilities, obligations and debts to Lender, now existing or hereinafter incurred or created, Including, without limitation, all bans, advances, interest, costs, debts, overdraft Indebtedness, credit card Indebtedness, lease obligations, other obligations, and liabilities of Borrower, or any of them, and any present or future judgments against Borrower, or arty of them; and whether any such Indebtedness. is voluntarily or Involuntarily incurred, due or not due, absolute or contingent, liquidated or unliquidated, determined or undetem>;ned; whether Borrower may be liable Individually or jointly with others, or primarily or secondarily, or as guarantor or surety; whether recovery on the Indebtedness may be or may become barred or unenforceable against Borrower for any reason whatsoever, and whether the Indebtedness arises from transactions which may be voidable on account of infancy, insanity, ultra vlres, or otherwise. DURATION OF GUARANTY. This Guaranty will take effect when received by Lender without the necessity of any acceptance by Lender, or any notice to Guarantor or to Borrower, and will continue In full force until all Indebtedness Incurred or contracted before receipt by Lender of any notice of revocation shall have been fully and finally paid and satisfied and all of Guarantor's other obligations under this Guaranty shall have been performed in full. If Guarantor elects to revoke this Guaranty, Guarantor may only do so in writing. Guarantor's written notice of revocation must be malled to Lender, by certified mail, at Lender's address listed above or such other place as Lender may designate In writing. Written revocation of this Guaranty will apply only to advances or new Indebtedness created after actual receipt by Lender of Guarantors written revocation. For this purpose and without limitation, the tens "new Indebtedness' does not include Indebtedness which at the time of notice of revocation Is contingent, uniiquidated, undetermined or not due and which later becomes absolute, liquidated, determined or due. This Guaranty will continue to bind Guarantor for all Indebtedness Incurred by Borrower or committed by Lender prior to receipt of Guarantor's written notice of revocation, including any extensions, renewals, substitutions or modifications of the Indebtedness. All renewals, extensions, substitutions, and modifications of the Indebtedness granted after Guarantors revocation, are contemplated under this Guaranty and, specifically will riot be considered to be new Indebtedness. This Guaranty shall bind Guarantor's estate as to Indebtedness created both before and after Guarantors death or incapacity, regardless of Lenders actual notice of Guarantors death. Subject to the foregoing, Guarantors executor or administrator or other legal representative may terrninate this Guaranty in the same manner in which Guarantor might have terminated it and with the same effect. Release of any other guarantor or termination of any other guaranty of the Indebtedness shall not affect the liability of Guarantor under this Guaranty. A revocation Lender receives from any one or more Guarantors shall not affect the liability of any remaining Guarantors under this Guaranty. It Is anticipated that fluctuations may occur In the aggregate amount of Indebtedness covered by this Guaranty, and Guarantor specifically acknowledges and agrees that reductions in the amount of indebtedness, even to zero dollars (;0.00), prior to Guarantor's written revocation of this Guaranty shall not constitute a termination of this Guaranty. This Guaranty is binding upon Guarantor and Guarantor's heirs, successors and assigns so long as any of the guaranteed Indebtedness remains unpaid and even though the Indebtedness guaranteed may from time to time be zero dollars ($0.00). GUARANTOR'S AUTHORIZATION TO LENDEFL Guarantor authorizes Lender, aidw before or after any revocation hereof, without notice or demand and without lessening Guarantor's liability under this Guaranty, from time to time; (A) prior to revocation as set forth above, to make one or more additional secured or unsecured loans to Borrower, to lease equipment or other goods to Borrower, or otherwise to extend additional credit to Borrower, (B) to alter, compronds% renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of the Indebtedness or any part of the Indebtedness, Including increases and decreases of the rate of Interest on the Indebtedness; extensions may be repeated and may be fof longer than the original loan term; (C) to take and hold security for the payment of this Guaranty or the Indebtedness, and exchange, enforce, waive, subordinate, fad or decide not to perfect, and release any such security, with or without the substitution of new collateral; (D) to release, substitute, agree not to sue, or deal with any one or more of Borrowers sureties, endorsers, or other guarantors on any terms or in any roamer Larder may choose; (E) to determine how, when and what application of payments and credits shad be made on the Indebtedness (F) to apply such security and direct the order or manner of sale thereof, Including without limitation, any nonjudlcial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion may determine, (G) to sell, transfer, assign or grunt participations In all or any part of the Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lander that (A) no repr3ser atlons or agreements of any kind have been made to Guarantor which would limit or qualify in any way the terms of this Guaranty; (B) this Guaranty Is executed at Borrowers request and not at the request of Lender, (C) Guarantor has full power, right and authority to enter Into this Guaranty; (D) the provisions of this Guaranty do not conflict with or result in a default under any agreement or other instrument binding upon Guarantor and do not result in a violation d any law, regulation, court decree or order applicable to Guarantor, (E) Guarantor has not and will not, without the prior written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer, or otherwise dispose of all or substantially all of Guarantors assets, or any Interest therein; (17 upon Lenders request, Guarantor will provide to Lender financial and credit information in form acceptable to Lender, and all such financial Womvrtion which currently has been, and all future financial Information which will be provided to Lender is and will be true and correct in all materiel respects and fairly present Guarantors financial condition as of the dates the financial Information is provided; (G) no material adverse change has occurred in Guarantor's financial condition since the date of the most recent financial statements provided to Lender and no evert has occurred which may materially adversely affect Guarantors financial condition; (H) no [litigation, claim, investigation, administrative proceeding or similar action (Including those for unpaid taxes) against Guarantor is pending or threatened; (n Lender has made no representation to Guarantor as to the creditworthiness of Borrower, and (J) Guarantor has established adequate means of obtaining from Borrower on a continuing basis Information regarding Borrowers financial condition. Guarantor agrees to keep adequately Informed from such means of any facts, events, or circumstances which might in any way affect Guarantor's risks under this Guaranty, and Guarani r further agrees that Larder shall have no obligation to disclose to COMMERCIAL GUARANTY (Continued) Page 2 juarsntor any Information or documents acquired by Lender in the course of Its relationship with Borrower. GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives any right to require Lender (A) to continue lending money or to extend other credit to Borrower, (B) to make any presentment, protest, demand, or notice of any kid, Including notice of any nonpayment indebtedness or of arty nonpayment related to any collateral, or notice of any action or nonaction on the part of Borrower, Lender, any surety, endorser, or other guarantor In connection with the Indebtedness or in connection with the creation of new or additbrml loans or obligations; (C) to resort for payment or to proceed directly or at once against any person, Including Borrower or any other guarantor; (D) to proceed directly against or exhaust any collateral held by Lender from Borrower, any other guarantor, or any other person; (E) to give notice of the temps, time, and place of any public private sale of personal property security Feld'by Lender from Borrower or to comply with any other applicable provisions of the Uniform Commercial Cade; (F) to pursue any other remedy within Lender's power, or (G) to commit any act or omission of any kind, or at any time, with respect to any matter whatsoever. Guarantor also waives any and all rights or defenses arising by reason of (A) any "one action' or 'anti-deficiency" law or any other law which may prevent Lender from bringing any action, including a daln for deficiency, against Guarantor, before or after Lender's commencement or completion of any foreclosure action, either Judicially or by exercise of a power of sale; (B) any election of remedies by Lender which destroys or otherwise adversely effects Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower for reimbursement, Including without limitation, any loss of rights Guarantor may suffer by reason of any law limiting, qualifying, or discharging the indebtedness; (C) arty disabfltty or other defense of Borrower, of any other guarantor, or of any other person, or by reason of the cessation of Borrower's Ilab]ity from any cause whatsoever, other than payment in full In legal tender, of the Indebtedness; (D) arty right to claim discharge of the Indebtedness on the basis of unjustified Impairment of any collateral for the indebtedness; (E) any statute of limitations, ff at any time any action or suit brought by Larder against Guarantor is commenced, there is outstanding Indebtedness of Borrower to Lender which is not barred by any applicable statute of limitations; or (F) any defenses given to guarantors at law or in equity other than actual payment and performance of the Indebtedness. If payment is made by Borrower, whether voluntarily or otherwise, or by any third party, on the indebtedness and thereafter Lender is forced to remit the amount of that payment to Borrower's trustee in bankruptcy or to any sirrrlar person under arty federal or state bankruptcy law or law for the relief of debtors, the Indebtedness shall be considered unpaid for the purpose of the enforcement of this Guaranty. Guarantor further waives and agrees not to assert or claim at any time any deductions to the amount guaranteed under this Guaranty for any claim of setoff, counterclaim, counter demand, recoupment or similar right, whether such claim, demand or right may be asserted by the Borrower, the Guarantor, or both. GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees that each of the waivers set forth above is made with Guarantor's full knowiedge of its sigr0oance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public policy or law. If any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective only to the extern permitted by law or public policy. SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the Indebtedness of Borrower to Lender, whether now existing or hereafter created, shall be superior to any claim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes insolvent Guarantor hereby expressly subordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any claim that Lender may now or hereafter have against Borrower. In the event of insolvency and consequent liquidation of the assets of Borrower, through bankruptcy, by an assignment for the benefit of creditors, by voluntary liquidation, or otherwise, the assets of Borrower applicable to the payment of the claims of both Lender and Guarantor shall be paid to Lender and shall be first applied by Lender to the Indebtedness of Borrower to Lender- Guarantor does hereby assign to Lender all claims which it may have or acquire against Borrower or against any assignee or trustee in bankruptcy of Borrower, provided however, that such assignment shall be effective only for the purpose of assuring to Lender full payment in legal tender of the Indebtedness. If Lender so requests, any notes or credit agreements now or hereafter evidencing any debts or obligations of Borrower to Guarantor shall be marked with a legend that the same are subject to this Guaranty and shall be delivered to Lander. Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor, from time to time, to execute and file financing statements and continuation statemerris and to execute such other documents and to take such other actions as Lender deems necessary or appropriate to perfect, preserve and enforce its rights under this Guaranty. CONFESSION OF JUDGMENT. Guarantor hereby irrevocably authorizes and empowers any attomay-at4aw to appear in any court of record and to confess judgment against Guarantor for the unpaid amount of this Guaranty as evidenced by an affidavit signed by an officer of Lender setting forth the amount then due, attorneys' fees plus costs of suit, and to release all errors, and waive all rights of appeal. If a copy of this Guaranty, verified by an affidavit shall have been fled in the proceeding, lt will not be necessary to file the original as a warrant of attorney. Guarantor waives the right to any stay of execution and the benefit of all exemption laws now or hereafter in effect No single exercise of the foregoing warrant and power to confess judgment will be deemed to exhaust the power, whether or not any such exercise shall be held by any court to be Invalid, voidable, or void; but the power will continue undiminished and may be exercised from time to time as Lender may elect Lint] all amounts owing on this Guaranty have been paid In full. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Guaranty: Amendments. This Guaranty, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Guaranty. No alteration of or amendment to this Guaranty shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of Lender's costs and expenses, including Lender's attorneys' fees and Lender's legal expenses, Incurred in connection with the enforcement of this Guaranty. Lender may hire or pay someone also to help enforce this Guaranty, and Guarantor shall pay the costs and expenses of such enforcement Costs and expenses include Lender's attomeys' fees and legal es for modify expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses action services. proceedings eeealso ding f forts court costs shall pay vacate any automatic stay or injunction), appeals, and any anticipated post judgm and such additional fees as may be directed by the court Caption Headings. Caption headings in this Guaranty are for convenience purposes only and are not to be used to Interpret or define the provisions of this Guaranty. Governing Law. This Guaranty will be governed by, construed and enforced in accordance with federal law and the laws of the Commonwealth of Pennsylvania. This Guaranty has been accepted by Lender in the Commonwealth of Pennsylvania. Integration. Guarantor further agrees that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had the opportunity to be advised by Guarantor's attorney with respect to this Guaranty; the Guaranty fully reflects Guarantor's intentions and Perot evidence is not required to Interpret the terms of this Guaranty. Guarantor hereby indemnifies and holds Lender harmless from all losses, claims, damages, and costs (mcluding Larder's attorneys' fees) suffered or incurred by Larder as a result of any breach by Guarantor of the warranties, representations and agreements of this paragraph. intrarpretatlon. in all cases where th more than one Borrower or Guarantor, then all wr.. used In this Guaranty in the singular shall be deemed to have been used in the plum o ore the context and construction so require; and wh ere is more than one Borrower named in this COMMERCIAL GUARANTY (Continued) Page 3 Guaranty or when this Guaranty is executed by more than one Guarantor, the words 'Borrower' and 'Guarantor' respectively shall mean all and any one or more of them. The words 'Guarantor,' 'Borrower,' and "Lender' include the heirs, successors, assigns, and transferees of each of them. If a court finds that any provision of this Guaranty is not valid or should not be enforced, that fact by itself will not mean that the rest of this Guaranty will not be valid or enforced. Therefore, a court will enforce the rest of the provisions of this Guaranty even if a provision of this Guaranty may be found to be invalid or unenforceable. If any one or more of Borrower or Guarantor are corporations, partnerships, limited robilfty companies, or similar entities, it Is not necessary for Lender to Inquire Into the powers of Borrower or Guarantor or of the officers, directors, partners, managers, or other agents acting or purporting to act on their behalf, and any Loan indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed under this Guaranty. Notices. Unless otherwise provided by applicable law, any notice required to be given under this Guaranty shall be given In writing, and, except for revocation notices by Guarantor, shall be effective when actually delivered, when actually received by telefac:simile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, 't mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Guaranty. An revocation notices by Guarantor shall be in writing and shall be effective upon delivery to Lender as provided in the section of this Guaranty entitled 'DURATION OF GUARANTY.' Any party may change its address for notices under this Guaranty by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes. Guarantor agrees to keep Lender informed at all times of Guarantors current address. Unless otherwise provided by applicable law, If there is more than one Guarantor, any notice given by lender to any Guarantor is deemed to be notice given to all Guarantors. No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Guaranty unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender In exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Guaranty shall riot prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Guaranty. No prior waiver by Lender, nor any course of dealing between Lender and Guarantor, shall constitute a waiver of any of lenders rights or of any of Guarantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Guaranty, the granting of such consent by Lender In any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender. Successors and Assigns. The terms of this Guaranty shall be binding upon Guarantor, and upon Guarantors heirs, personal representatives, successors, and assigns, and shall be enforceable by Lender and ft successors and assigns. DEFINITIONS. The following capitalized words and terms shall have the following meanings when used In this Guaranty. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts In lawful money of the United States of America. Words and terms used In the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and temps not otherwise defined In this Guaranty shall have the meanings attributed to such terms in the Uniform Commercial Code. Borrower, The word "Borrower' means Hutch Homes, Inc., and all other persons and entities signing the Note in whatever capacity. Guarantor. The word "Guarantor' means each and every person or entity signing this Guaranty, including without limitation Cynthia G. Hutchison. Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note. Indebtedness. The word 'Indebtedness" means Borrower's indebtedness to Lender as more particularly described in this Guaranty. Lender. The word "Lander' means COMMERCE BANKIHARRISBURG N.A., its successors and assigns. Related Documents. The words 'Related Documents' mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other Instruments, agreements and documents, whether now or hereafter existing. executed in connection with the Indebtedness. CONFESSION OF JUDGMENT. GUARANTOR HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR THE PROTHONOTARY OR CLERK OF ANY COURT IN THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE, TO APPEAR AT ANY TIME FOR GUARANTOR AFTER THE AMOUNTS HEREUNDER BECOME DUE AND WITH OR WITHOUT COMPLAINT FILED, CONFESS OR ENTER JUDGMENT AGAINST GUARANTOR FOR THE ENTIRE PRINCIPAL BALANCE OF THIS GUARANTY AND ALL ACCRUED INTEREST, LATE CHARGES AND ANY AND ALL AMOUNTS EXPENDED OR ADVANCED BY LENDER RELATING TO ANY COLLATERAL SECURING THE INDEBTEDNESS, TOGETHER WITH COSTS OF SUrr, AND AN ATTORNEY'S COMMISSION OF TEN PERCENT (10%) OF THE UNPAID PRINCIPAL BALANCE AND ACCRUED INTEREST FOR COLLECTION, BUT IN ANY EVENT NOT LESS THAN FIVE HUNDRED DOLLARS ($500) ON WHICH JUDGMENT OR JUDGMENTS ONE OR MORE EXECUTIONS MAY ISSUE IMMEDIATELY; AND FOR SO DOING, THIS GUARANTY OR A COPY OF THIS GUARANTY VERIFIED BY AFFIDAVIT SHALL BE SUFFICIENT WARRANT. THE AUTHORITY GRANTED IN THIS GUARANTY TO CONFESS JUDGMENT AGAINST GUARANTOR SHALL NOT BE EXHAUSTED BY ANY EXERCISE OF THAT AUTHORITY, BUT SHALL CONTINUE FROM TiME TO TIME AND AT ALLTiMES UNTIL PAYMENT IN FULL OF ALL AMOUNTS DUE UNDER THIS GUARANTY. GUARANTOR HEREBY WANES ANY RIGHT GUARANTOR MAY HAVE TO NOTICE OR TO A HEARING IN CONNECTION WITH ANY SUCH CONFESSION OF JUDGMENT AND STATES THAT EITHER A REPRESENTATIVE OF LENDER SPECIFICALLY CALLED THIS CONFESSION OF JUDGMENT PROVISION TO GUARANTOR'S ATTENTION OR GUARANTOR HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL GUARANTY AND GUARANTOR AGREES TO ITS TERMS. THIS COMMERCIAL GUARANTY IS DATED AUGUST 1, 2001. THIS GUARANTY IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS GUARANTY IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW. GUARANTOR: X" ' r. t '. Sean Cy a G. Hutchison, I ually COMMERCIAL GUARANTY (Continued) Page 4 INDIVIDUAL AGKNUVVL.CVUmr-1'41 COMMONWEALTH OF PENNSYLVANIA ) A )SS COUNTY OF On this, the day of (AQ ( S+ 20 0 { before me ((4 the undersigned Notary ic, personalty appeared C"Ia G. Hutchison, Vown to me (or satisfactorily proven) io be the person whose name Is subscribed to the within instru nest, and acknowledged that he or she executed the same for the purposes therein contained. In witness whereof, I hereunto set my hand and official seal CC. Notary Public in acid for the of : zM Q MW HID t..i{ V- L17MA1 OW. h.*.W ft-" ftW- Da off. SDI. M IWb R-MA ' M KWAWPWSt4l91 "LftMP-% TAF PWW F- U' ;OR RE "IN T0: ENS i g -VICE AGENCY 4- 3C a9 z n' ;IL' 'J 08003 r ?. RECORO M10 WHEN DECO , 0:. t E? FORD E A RETURNM. 1` ? ? .P 'I ?lit't9?DEltSSERViCEA?IGy BOX SOS CHERRY Hill., NJ am ffIft PUB. REC. DIX RECOM)ING 21 3 6 4.77 PAD- ; LE9 -? DEEDS RUG 1120 OPEN - END MORTGAGE THIS MORTGAGE SECURES FUTURE ADVANCES THIS MORTGAGE dated August 1, 2001, is made and executed between James W. Hutchison, Jr.; and Cynthia G. Hutchison, whose address is 414 South York York Street, Mechanicsburg, PA 17055 (referred to below as "Grantor") and COMMERCE BANK/HARRISBURG N.A., whose address is 100 SENATE AVENUE, CAMP HILL, PA 17011 (referred to below as "Lender"). GRANT OF MORTGAGE For valuable consideration, Grantor grants, bargains, sells, conveys, assigns, transfers, releases, confirms and mortgages to Lender all of Grantors right, title, and interest in and to the following described real property, together with all existing or subsequently erected or affixed buildings, Improvements and fixtures; all streets, lanes, alleys, passages, and ways; all easements, rights of way, ail liberties, privileges, tenements, hereditaments, and appurtenances thereunto belonging or anywise made appurtenant hereafter, and the reversions and remainders with respect thereto; all water, water rights, watercourses and ditch rights (inclLx ire stock In utilities with ditch or Irrigation runts); and all other rights, royalties, and profits relating to the real p arty includ' without limitation all minerals, oil, gas geothermal and similar matters, (the "Real Property") located in Cumberland County,w&mmonwealth of Pennsylvania: See Exhibit "A", which is attached to this Mortgage and made a part of this Mortgage as if fully set forth herein. The Real Property or Its address Is commonly known as 414 South York Street, Mechanicsburg, PA 17055. REVOLVING LINE OF CREDIT. Specifically, in addition to the amounts specified in the Indebtedness definition, and without limitation, this Mortgage secures a revolving line of credlt, which obligates Lender to make advances to Borrower unless Borrower fails to comply with all the terms of the Note. Grantor presently assigns to Lender all of Grantor's right, title, and Interest in and to all present and future leases of the Property and all Rents from the Property. In addition, Grantor grants to Lender a Uniform Commercial Code security interest in the Personal Property and Rents. THIS MORTGAGE, INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY INTEREST IN THE RENTS AND PERSONAL PROPERTY, IS GIVEN TO SECURE (A) PAYMENT OF THE INDEBTEDNESS AND (B) PERFORMANCE OF ANY AND ALL OBUGA71ONS UNDER THE NOTE, THE RELATED DOCUMENTS, AND THIS MORTGAGE THIS MORTGAGE IS GIVEN AND ACCEPTED ON THE FOLLOWING TERMS: GRANTOR'S WAIVERS. Grantor waives all rights or defenses arising by reason of any "one action" or 'anti-deficiency' law, or any other law which may prevent Lender from bringing any action against Grantor, including a claim for deficiency to the extent Lender is otherwise entitled to a claim for deficiency, before or after Lender's commencement or completion of any foreclosure action, either judicially or by exercise of a power of sale. GRANTOR'S REPRESENTATIONS AND WARRANTIES. Grantor warrants that (a) this Mortgage Is executed at borrowers request and rah at the request of bonder; (b) Grantor has the full power, right, and authority to enter into this Mortgage and to hypothecate the Property; (c) the provisions of this Mortgage do not conflict with, or result In a default under any agreement or other instrument binding upon Grantor and do rat result in a violation of arty law, regulation, court doom or order applicable to Grantor; (d) Grantor has established adequate means of obtaining from Borrower on a continuing basis irtormation about Borrowers financial condition; and (e) Lender has made no representation to Grantor about Borrower ('ualuding without limitation the creditworthiness of Borrower). PAYMENT AND PERFORMANCE Except as otherwise provided in this Mortgage, Borrower shall pay to Lender all Indebtedness secured by this Mortgage as it becomes due, and Borrower and Grantor shall strictly perform all Borrowers and Grantor's obligations under this Mortgage. POSSESSION AND MAINTENANCE OF THE PROPERTY. Borrower and Grantor agree that Borrowers and Grantors possession and use of the Property shatl be governed by the following provisions: Possession and Use. Until Default, Grantor may (1) remain in possession and control of the Property; (2) use, operate or manage the Property; and (3) collect the Rents from the Property. Duty to Maintain. Grantor shall maintain the Property in tenantable condition and promptly perform all repairs, replacements, and maintenance necessary to preserve its value. Compliance With Environmental taws. Grantor represents and warrants to Lender that (1) During the period of Grantors ownership of the Property, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from the Property; (2) Grantor has no knowledge of, or reason to believe that there has been, except as previously disclosed to and acknowledged by Lender In writing, (a) any breach or violation of any Environmental Laws, (b) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Property by any prior owners or occupants of the Property, or (c) any actual or threatened litigation or claims of any kind by any person relating to such matters; and (3) Except as previously disclosed to and acknowledged by Lender in writing, (a) neither Grantor nor any tenant, contractor, agent or other authorized user of the Property shall use, generate, manufacture, store, treat, dispose of or release any Hazardous B 1 7?W-C,0 47 MORTGAGE (Continued) Page 2 Substance on, under, about or from the Property: and (b) any such activity shall be conducted in compliance with all applicable federal, state, and kcal laws, regulations and ordinances, including without limitation all Ernrironmantal Laws. Grantor authorizes Lender and Its agents to enter upon the Property to make such inspections and tests, at Grantor's expense, as Lender may deem appropriate to determine compliance of the Property with this section of the Mortgage. Any inspections or tests made by Lender shall be for LerKWs purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Grantor or to any other person. The representations and warranties contained herein are based on Grantor's due diligence In Investigating the Property for Hazardous Substances. Grantor hereby (1) releases and waives any future claims against Lander for indemnity or contribution in the event Grantor becomes liable for cleanup or other costs under any such laws; and (2) agrees to indemnify and hold harmless; Lender against any and all claims, kisses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Mortgage or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release occurring prior to Grantor's ownership or Interest in the Property, whether or not the same was or should have been known to Grantor. The provisions of this section of the Mortgage, including the obligation to indemnify, shell survive the payment of the Indebtedness and the satisfaction and recorweyance of the lien of this Mortgage and shall not be affected by Lender's acquisition of any interest in the Property, whether by foreclosure or otherwise. Nuisance, Waste. Grantor shall not cause, conduct or permit any nuisance nor commit, permit, or suffer any stripping of or waste on or to the Property or any portion of the Property. Without limiting the generality of the foregoing, Grantor will not remove, or grant to any other party the right to remove, any timber, minerals (ncluding oil and gas), coal, clay, scoria, soil, gravel or rock products without Lender's prior written consent. Removal of Improvements. Grantor shad not demolish or remove any Improvements from the Real Property without Lender's prior written consent. As a condition to the removal of any Improvements, Lender may require Grantor to make arrangements satisfactory to Lender to replace such Improvements with Improvements of at least equal value. Lender's Right to Enter. Lender and Lenders agents and representatives may enter upon the Real Property at all reasonable times to attend to Lenders interests end to Inspect the Real Property for purposes of Graroes compliance with the terms and conditions of this Mortgage. Compliance with Govemmental Requirements. Grantor shall promptly comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmental authorities applicable to the use or occupancy of the Property, Including without limitation, the Amerk;ars With Disabilities Act Grantor may contest in good faith any such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so kxtg as Grantor has notified Lender in writing prior to doing so and so long as, in Lenders sole opinion, Lenders Interests In the Property are rot jeopardized. Lender may require Grantor to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Leaders Intarest Duty to Protect. Grantor agrees neither to abandon nor leave unattended the Property. Grantor shall do all other acts, In addition to those acts set forth above in this section, which from the character and use of the Property are reasonably necessary to protect and preserve the Property. TAXES AND LIENS. The following provisions relating to the taxes and liens on the Property are part of this Mortgage: Payment Grantor shall pay when due (and in all events prior to delinquency) all taxes, payroll taxes, special taxes, assessments, water charges and sewer service charges levied against or on account of the Property, and shall pay when due all claims for work done on or for services rendered or material furnished to the Property. Grantor shall maintain the Property free of any hens having priority over or equal to the interest of Lender under this Mortgage, except for those Ilene specifically agreed to in writing by Lender, and except for the lien of taxes and assessments riot din as further speciflW in the Right to Contest paragraph. Right to Contuest. Grantor may withhold payment of any tax, assessment, or claim in connection with a good faith dispute over the obligation to pay, so long as Lender's interest in the Property is not jeopardized. If a lien arises or is filed as a result of nonpayment, Grantor shall within fifteen (15) days after the lien arises or, ff a lien Is flied, within fifteen (15) days after Grantor has notice of the filing, secure the discharge of the lien, or if requested by Lender, deposit with Lender cash or a sufficfen t corporate surety bond or other security satisfactory to Larder in an amount sufficient to discharge the lien plus any costs and attorneys' fees, or other charges that could accrue as a result of a foreclosure or sale under the lien. In any contest, Grantor shalt defend ffseff and Lender and shall satiety any adverse judgment before enforcement against the Property. Grantor shall name Lender as an additional obligee under any surety bond furnished in the contest proceedings. Evidence of Payment. Grantor shall upon demand furnish to Lender satisfactory evidence of payment of the taxes or assessments and shall authorize the appropriate governmental official to deliver to Lender at any time a written statement of the taxes and assessments against the Property. Notice of Construction. Grantor shall notify Lender at least fifteen (15) days before any work Is commenced, any services are furnished, or any materials are supplied to the Property, If any mechanic's lien, materialmhen's lien, or other lien could be asserted on account of the work, services, or materials. Grantor will upon request of Lender furnish to Lender advance assurances satisfactory to Lender that Grantor can and will pay the cost of such Improvements. PROPERTY DAMAGE INSURANCE. The following provisions relafing to insuring the Property are a part of this Mortgage: Maintenance of Insurance. Grantor shall procure and maintain policies of fire Insurance with standard extended coverage endorsements on a replacement basis for the full insurable value covering all Improvemnents on the Real Property In an amount sufficient to avoid application of any coinsurance clause, and with a standard mortgagee clause in favor of Lender. Grantor stall also procure and maintain comprehensive general liability insurance in such coverage amounts as Lender may request with Lender being named as additional insureds in such liability insurance policies. Additionally, Grantor shell maintain such other Insurance, including but not limited to hazard, business Interruption and boiler insurance as Lender may require. Policies shall ?lr>sid??nci?` t;anrhpathle? and in such form as may be reasonably acceptable to Lander. Grantor shall deliver to Lender certificates of r e?,fnu9p*j9sV0VjVntaInIng a stipulation that coverage will not be cancelled or diminished without a minimum of ten (10) days' prior written v Lsndgrartd rot containing any disclaimer of the insurers liability for failure to give such notice. Each Insurance policy also stall Sh.erage in favor of Lender will not be impaired in arty way by any act, o mission or default of Grantor or arty be located in an area designated by the Director of the Federal Emrergency tAariagememrt Agency as a specia?BreA; agr?s to obtain and maintain Federal Flood Insurance, if available, within 45 days after notice is given by Lender that the Property is located in a special flood hazard area, for the full unpaid principal balance of the ban and any prior liens an the property securing the loan, up to the maxknum policy limits set under the National Flood Insurance Program, or as otherwise required by Lender, and to maintain such insurance for the tern of the loan. App'.Ica.Mon of Proceeds. Grantor shgfienomptly Hotly Lender of any loss or damage to the Property. Lender may make proof of loss If Grantor fads to do so within fifteen (15) days of the casualty. Whether or not Lender's security is impaired, Lender may, at Lenders election, receive and retain the proceeds of any insurence and apply the proceeds to the reduction of the Indebtedness, payment of any lien affecting the Property, or the restoration and repair of the Prop r If Lender elects to apply the proceeds to restoration and repair, Grantor shall repair or replace the B VI a vU41,1 `13 MORTGAGE (Continued) Page 3 damaged or destroyed Improvements in a manner satisfactory to Lender. Lender shall, upon satisfactory prof of such expenditure, pay or rein'.burse Grantor from the proceeds for the reasonable cost of repair or restoration If Grantor is riot in default under this Mortgage. Any proceeds which hhve not been disbursed within 180 days after their receipt and which Lender has not committed to the repair or restoration of the Property shall be used first to pay any amount owing to Lender under this Mortgage, then tD pay accrued interest, and the remainder, If any, shall be applied to the principal balance of the Indebtedness. If Lender holds any proceeds after payment in full of the Indebtedness, such proceeds shall be paid to Grantor as Grantor's Interests may appear. Unexpired Insurance at Sato Any unexpired insurance shall Inure to the benefit of, and pass to, the purchaser of the Property covered by this Mortgage at any trustee's sale or other sale hold under the provisions of this Mortgage, or at any foreclosure sale of such Property. LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's Interest in the Property or B Grantor falls to comply with any provision of this Mortgage or any Related Documents, Including but not limited to Grantor's failure to discharge or pay when due any amounts Grantor is required to discharge or pay under this Mortgage or any Related Documents, Lender on Grantor's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security Interests, encumbrances and other claims, at any time levied or placed on the Property and paying all costs for insuring, maintaining and preserving the Property. All such expenditures Incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Grantor. All such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable Insurance policy; or (2) the remaining term of the. Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity. The Mortgage also will secure payment of these amounts. S,,ch rig'. t shall be in addition to all other rights and remedies to which Lander may be entitled upon Default. Grantor's obligation to Lender for all such expenses shall survive the entry of any mortgage foreclosure judgment WARRANTY; DEFENSE OF TITLE. The following provisions relating to ownership of the Property are a part of this Mortgage: Tale. Grantor warrants that (a) Grantor holds good and marketable title of record to the Property in fee simple, free and dear of all lions and encumbrances other than those set forth in the Real Property description or in any title insurance policy, title report, or final title opinion issued in favor of, and accepted by, Lender in connection with this Mortgage, and (b) Grantor has the full right, power, and authority to execute and deliver this Mortgage to Lender. Defense of Titis. Subject to the exception In the paragraph above, Grantor warrants and will forever defend the title to the Property against the lawful claims of all persons. In the event any action or proceeding Is commenced that questions Grantor's title or the interest of Lender under this Mortgage, Grantor shall defend the action at Grantor's expense. Grantor may be the nominal party in such proceeding, but Lender shall be entitled to participate in the proceeding and to be represented In the proceeding by counsel of Lender's own choice, and Grantor will deliver, or cause to be delivered, to Leader such Instruments as Lender may request from time to time to permit such participation. Compliance With Laws. Grantor warrants that the Property and Grantor's use of the Property complies with all existing applicable laws, ordinances, and regulations of governmental authorities. Survival of Representations and Warranties. All representations, warranties, and agreements made by Grantor in this Mortgage shall survive the execution and delivery of this Mortgage, shall be continuing in nature, and shall remain In full force and effect until such time as Borrower's Indebtedness shall be paid in full. CONDEMNATION. The following provisions relating to condemnation proceedings are a part of this Mortgage: Proceedings. If any proceeding in condemnation is filed. Grantor shall promptly notify Lender In writing, and Grantor shall promptly, take such steps as may be necessary to defend the action and obtain the award. Grantor may be the nominal party In such proceeding, but Larder shall be entitled to participate in the proceeding and to be represented in the proceeding by counsel of Its own choice, and Grantor wig deliver or cause to be delivered to Lander such instruments and documentation as may be requested by Lender from time to time to permit such participation. Application of Net Proceeds. If all or any part of the Property is condemned by eminent domain proceedings or by any proceeding or purchase in lieu of condemnation, Lander may at its election require that all or any portion of the net proceeds of the award be applied to the kdebtedness or the repair or restoration of the Property. The net proceeds of the award shall mean the award after payment of all actual costs, expenses, and attorneys' fees incurred by Lender in connection with the condemnation. IMPOSITION OF TAXES, FEES AND CHARGES DY GOVERNMENTAL AUTHORITIES. The following provisions relating to governmental taxes, fens and charges are a part of this Mortgage: Current Twwk Fes and Charges. Upon request by Lender, Grantor shall execute such documents in addition to this Mortgage and take whatever other action is requested by Lender to perfect and continue Lender's Ilan on the Real Property. Grantor shall relrrthurse Lender for all taxes, as described below, together with all expenses incurred in recording, perfecting or continuing this Mortgage, including without limitation all taxes, fees, documentary stamps, and other charges for recording or registering this Mortgage. Taxes. The following shall constitute taxes to which this section applies: (1) a specific tax upon this type of Mortgage or upon all or any part of the Indebtedness segued by this Mortgage; (2) a specific tax on Borrower which Borrower is authorized or required to deduct from payments on the Indebtedness secured by this type of Mortgage, (3) a tax on this type of Mortgage chargeable against the Lender or the holder of the Note; and (4) a specific tax on all or arty portion of the Indebtedness or on payments of principal and Interest made by Borrower. Subsequent Taxes. If any tax to which this section applies is enacted subsequent to the date of this Mortgage, this event shall have the sans effect as Default, and Lender may exercise any or all of its available remedies for Default as provided below unless Grantor either (1) pays the tax before it becomes delinquent, or (2) contests the tax as provided above in the Taxes and Liens section and deposits with Lender cash or a sufficient corporate surety bond or other security satisfactory to Lender. SECURITY AGREEMENT; FINANCING STATEMENTS. The following provisions relating to this Mortgage as a security agreement are a part of this Mortgage: Security Agreement. This instrument shall constitute a Security Agreement to the extent any of the Property constitutes fixtures, and Lender shall have all of the rights of a secured party under the UnIform Commercial Code as amended from time to time. Security interest. Upon request by Lender, Grantor shall execute financing statements and take whatever other action is requested by Lender to perfect and continue Lender's security interest in the Rents and Personal Property. In addition to recording this Mortgage In the real property records, Lender may, at any One and without further authorization from Grantor, file executed counterparts, copies or reproductions of this Mortgage as a financing statement Grantor shall reimburse Lender for all expenses Incurred in perfecting or continuing this security interest. 173 0 PG 0 8 4 9 MORTGAGE (Continued) Page 4 Upon default, Grantor shall not remove, sever or detach the Personal Property from the Property. Upon default, Grantor shalt assemble any Personal Property not affixed to the Property In a manner and at a place reasonably convenient to Grantor and Lender and make It available to Lender within three (3) days after receipt of written demand from Lender to the extent permitted by applicable law. Addresses. The mailing addresses of Grantor (debtor) and Lender (secured party) from which Information concerning the security Interest granted by this Mortgage may be obtained (each as required by the Uniform Commercial Code) are as stated on the first page of this Mortgage. FURTHER ASSURANCES; ADDITIONAL AUTHORIZATIONS. The following provisions relating to further assurances and additional authorizations are a part of this Mortgage: Further Assurances. At any tine, and from time to time, upon request of Lender, Grantor will make, execute and deliver, or will cause to be made, executed or delivered, to Lender or to Lender's designee, and when requested by Lender, cause to be tiled, recorded, refiled, or rerecorded, as the case may be, at such t1mos and in such offices and places as Lender may deem appropriate, any and all such mortgages, deeds of trust, security deeds, security agreements, financing statements, continuation statements, instruments of further assurance, certificates, and other documents as may, in the sole opinion of Lender, be necessary or desirable in order to effectuate, complete, perfect, continue, or preserve (1) Borrower's and Grantor's obligations under the Note, this Mortgage, and the Related Documents, and (2) the [lens and security Interests created by this Mortgage on the Property, whether now owned or hereafter acquired by Grantor. Unless prohibited by law or Lender agrees to the contrary in writing, Grantor shall reimburse Lender for all costs and expenses Incurred in connection with the matters referred to in this paragraph. Additional Authorizations. If Grantor fails to do any of the things referred to in the preceding paragraph, Lender may do so for and in the name of Grantor and at Grantor's expense. For such purposes, Grantor hereby irrevocably authorizes Lender to make, execute, deliver, So, record and do all other things as may be necessary or desirable, in Lender's sole opinion, to accomplish the matters referred to In the preceding paragraph. It is understood that nothing set forth herein shall require Lender to take any such actions. FULL PERFORMANCE. If Borrower pays all the indebtedness when due, and otherwise performs all the obigations imposed upon Grantor under this Mortgage, Lender shall execute and deliver to Grantor a suitable satisfaction of this Mortgage and suitable statements of termination of any financing statement on file evidencing Lender's security interest in the Rents and the Personal Property. Grantor will pay, if permitted by applicable law, any reasonable termination fee as determined by Lender from time to time. DEFAULT. Default wig occur if payment in full is not made immediately when due. RIGHTS AND REMEDIES ON DEFAULT. Upon Default and at any time thereafter, Lender, at Lender's option, may exercise any one or more of the following rights and remedies, In addition to any other rights or remedies provided by law: Accelerate Indebtedness. Lender shall have the right at it option, after giving such notices as required by applicable law, to declare the entire Indebtedness immediately due and payable. UCC Remedies. With respect to all or any part of the Personal Property, Lender shall have all the rights and remedies of a secured party under the Uniform Commercial Code. Collect Rents. Lender shall have the right, without notice to Borrower or Grantor, to take possession of the Property and, with or without taking possession of the Property, to collect the Rents, Including amounts past due and unpaid, and apply the net proceeds, over and above Lender's costs, against the indebtedness. In furtherance of this right, Lender may require any tenant or other user of the Property to make payments of rent or use fees directly to Lender. ff the Rents are collected by Lander, then Grantor irrevocably authorizes Lender to endorse instruments received In payment thereof In the name of Grantor and to negotiate the same and collect the proceeds. Payments by tenants or other users to Lender in response to Lender's demand shall satisfy the obligations for which the payments are made, whether or not any proper grounds for the demand existed. Lender may exercise its rights under this subparagraph either in person, by agent, or through a receiver. Appoint Receiver. Lender shall have the right to have a receiver appointed to take possession of all or any part of the Property, with the power to protect and preserve the Property, to operate the Property preceding foreclosure or sale, and to collect the Rents from the Property and apply the proceeds, over and above the cost of the receivership, against the Indebtedness. The receiver may serve without bond If permitted by law. Lender's right to the appointrnent of a receiver shall exist whether or not the apparent value of the Property exceeds the Indebtedness by a substantial amount Employment by Lender shag not disqualify a person from serving as a receiver. Judicial ForedosunL Lender may obtain a judicial decree foreclosing Grantor's interest In all or any part of the Property. Possession of ttre property. For the purpose of procuring possession of the Property, Grantor hereby authorizes and empowers any attorney of any court of record in the Commonwealth of Pennsylvania or elsewhere, as attorney for Lender and all persons claiming under or through Lender, to sign an agreement for entering in any competent court an amicable action in ejectment for possession of the Property and to appear for and confess judgment against Grantor, and against all persons claknng under or through Grantor, for the recovery by Lender of possession of the Property, without any stay of execution, for which this Mortgage, or a copy of this Mortgage verified by affidavit, shall be a sufficient warrant; and thereupon a writ of possession may be issued forthwith, without any prior writ or proceeding whatsoever. Nonju dicial Sale. If permitted by applicable law, Lender may foreclose Grantor's interest in all or in any part of the Personal Property or the Real Property by non-judicial sate. Deficiency JudgmenL Lender may obtain a judgment for any deficiency remaining in the Indebtedness dun to Lender after application of all amounts received from the exercise of the rights provided in this section. Tenancy at Sufferance. If Grantor remains in possession of the Property after the Property is sold as provided above or Lender otherwise becomes entitled to possession of the Property upon default of Grantor, Grantor shall become a tenant at sufferance of Lender or the purchaser of the Property and shall, at Lender's option, either (1) pay a reasonable rental for the use of the Property, or (2) vacate the Property immediately upon the demand of Lender. Other Rermedies. Lender shall have all other rights and remedies provided in this Mortgage or the Note or available at law or In equity. Sale of the Property. To the extent perrnited by applicable law, Borrower and Grantor hereby waives any and all right to have the Property marshalled. In exercising its rights and remedies, Lender shall be free to sell all or any part of the Property together or separately, in one sale or by separate sales. Lander shall be entitled to bid at any public sale on all or any portion of the Property. Notice 4 38, Lender shall give Grantor reasonable notice of the time and place of any public sale.of the Personal Property or of the time after which any private sale or other Intended disposition of the Personal Property is to be made. Unless otherwise required by applicable law, reasonable notice shall mean notice given at least ten (10) days before the time of the sale or disposition. MORTGAGE (Continued) Page s Election, of Remedies. Election by Lender to pursue any remedy shell not exclude pursuit of any other remedy, and an election to make expxxilures'or to take action to perform an obligation of Grantor under this Mortgage, after Grantor's failure to perform, shall not affect Lender's ft"'to declare a default and exercise its remedies. Nothing under this Mortgage or otherwise shall be construed so as to limit or restrict the rights and remedies available to Lender following Default, or In any way to limit or restrict the rights and ability of Lender to proceed directly against Grantor and/or Borrower and/or against any other co-maker, guarantor, surety or endorser and/or to proceed against any other collateral directly or indirectly securing the Indebtedness. Attomeys' Fens; Expenses. If Lender institutes any suit or action to enforce any of the terms of this Mortgage, Lender shall be entitled to recover such sum as the court may adjudge reasonable as attorneys' fees at trial and upon any appeal. Whether or rat any court action is Involved, and to the extent not prohibited by law, all reasonable expenses Lender incurs that in Lenders opinion are necessary at any time for the protection of ft interest or the enforcement of its rights shall become a part of the Indebtedness payable on demand and shall bear interest at the Note rate from the date of the expenditure until repaid. Expenses covered by this paragraph include, without limitation, however subject to any limits under applicable law, L.erhders attorneys' fees and Lenders legal expenses, whether or rat there is a lawsuit, Including attomeys' fees and expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post judgment collection services, the cost of searching records, obtaining title reports (Including foreclosure reports), surveyors' reports, and appraisal fees and title Insurance, to the extent permitted by applicable law. Grantor also will pay any court costs, in addition to all other sums provided by law. NOTICES. Unless otherwise provided by applicable law, any notice required to be given under this Mortgage shall be given In writing, and shall be effective when actually delivered, when actually received by teletacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier., or, If mailed, when deposited in the United States. mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown new the beginning of this Mortgage. All copies of notices of foreclosure from the holder of any lien which has priority over this Mortgage and notices pursuant to 42 Pa. C.S.A. Section 8143, at seq., shall be sent to Li0xiers address, as shown near the beginning of this Mortgage. Any party may change its address for notices under this Mortgage by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Grantor agrees to keep Lender informed at all times of Grantors current address. Unless otherwise provided by applicable law, if there is more than one Grantor, any notice given by Lender to any Grantor Is deemed to be notice given to all Grantors. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Mortgage: Amendments. This Mortgage, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Mortgage. No alteration of or amendment to this Mortgage shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment Annual Reports. If the Property Is used for purposes other than Granto es residence, Grantor shall furnish to Lender, upon request, a certified statement of net operating income received from the Property during Grantors previous fiscal year in such form and detail as Lender shall require. 'Net operating Income' shall mean all cash receipts from the Property less all cash expenditures made in connection with the operation of the Property. Caption Headings. Caption headings in this Mortgage are for convenience purposes only and are not to be used to interpret or define the proviso of this Mortgage. Governing Law. This Mortgage will be governed by, construed and enforced in accordance with federal law and the taws of the Commonwealth of Pennsylvania. This Mortgage has been accepted by Lender in the Commonwealth of Pennsylvania. Joint and Several Liability. All obligations of Borrower and Grantor under this Mortgage shall be joint and several, and all references to Grantor shall mean each and every Grantor, and all references to Borrower shall mean each and every Borrower. This means that each Borrower and Grantor signing below is responsible for all obligations In this Mortgage. No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Mortgage unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any outer right A waiver by Lender of a provision of this Mortgage shell not prejudice or constitute a waiver of Lenders right otherwise to demand strict compliance with that provision or any other provision of this Mortgage. No prior waiver by Lender, nor any course of dealing between Lender and Grantor, shall constitute a waiver of any of Lerders rights or of any of Grantors obligations as to any future transactions. Whenever the consent of Lender is required under this Mortgage, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent vinatances where such consent is required and in all cases such consent may be granted or withheld in the. sole discretion of Lender. - SeveraMilty. If a court of competent jurisdiction finds any provision of this Mortgage to be illegal, invalid, or unenforceable as to any person or cirournstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other person or circumstance. It feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from We Mortgage. Unless otherwise required by law, the Illegality, invalidity, or unenforceabflity, of any provision of this Mortgage shall not affect the legality, validity or enforceability of any other provision of this Mortgage. Merger. There shall be no merger of the Interest or estate created by this Mortgage with any other interest or estate In the Property at any time held by or for the benefit of Lender In any capacity, without the written consent of Lender. Successor Interests. The terms of this Mortgage shall be binding upon Grantor, and upon Grantors heirs, personal representatives, successors, and assigns, and shall be enforceable by Lender and Its successors and assigns. Time Is of the Essence. Time is of the essence in the performance of this Mortgage. DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Mortgage. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and temps used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and tents not otherwise defined In this Mortgage shell have the meanings attributed to such temps in the Uniform Commercial Code: Borrower. The word "Borrower' means Hutch Homes, Inc., and all other persons and entities signing the Note in whatever opacity. Default The word 'Default" means the Default set forth in this Mortgage In the section titled 'Default. Environmental Laws. The words "Environmental Laws' mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, at seq. ("CERCLA"), the Superf nd Amendments and Reauthorization Act of 1988, Pub. L No. 99-499 ("SARA'), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, at seq., the Resource Conservation and Recovery 8IK173U1 MORTGAGE (Continued) Page 6 Act, 42 U.S.C. Section 6901, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto. Grantor. The word "Granto' means James W. Hutchison, Jr.; and Cynthia G. Hutchison. Hazardous Substances. The words 'Hazardous Substances" mean materials that, because of their quantity, cor>centration or physical, chemical or Infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when Improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words 'Hazardous Substances' are used in their very broadest sense and include without Urnhation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. The term "Hazardous Substances" also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos. Improvements. The word 'Improvements' means all existing and future Improvements, buildings, structures, mobile homes affixed on the Real Property, facilities, additions, replacements and other construction on the Real Property. Indebtedness. The word 'Indebtedness' means all principal, interest, and other amounts, costs and expenses payable under the Note or Related Documents, together with all renewals of, extensions of, modifications of, consolkfations of and substitutions for the Note or Related Documents and any amounts expended or advanced by Lender to discharge Grantor's obligations or expenses Incurred by Lender to enforce Grantors obligations under this Mortgage, together with interest on such amounts as provided in this Mortgage. The liens and security interests created pursuant to this Mortgage covering the Indebtedness which may be created in the future shall mate back to the date of this Mortgage. Lender. The word 'Lender' means COMMERCE BANK/HARRISBURG N.A., its successors and assigns. Mortgage. The word "Mortgage" means this Mortgage between Grantor and Lender. Note. The word "Note' means the promissory We dated August 1, mot, In the original principal amount of $25,000.00 from Borrower to Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the promissory note or agreement Personal Property. The words 'Personal Property" mean all equipment, fixtures, and other articles of personal property now or hereafter owned by Grantor, and now or hereafter attached or affixed to the Real Property; together with all accessions, parts, and additions to, all replacements of, and all substitutions for, any of such property, and together with all proceeds (including without limitation all Insurance proceeds and refunds of premiums) from any sale or other disposition of the Property. Property. The word "Property" means collectively the Real Property and the Personal Property. Real Property. The words "Real Property' mean the real property, Interests and rights, as further described In this Mortgage. Related Documents. The words "Related Documents" mean all promissory rotes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, oollateral mortgages, and all other instniments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness. Rams. The word "Rents" means all present and future rents, revenues, income, issues, royalties, profits, and other benefits derived from the Property. EACH GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS MORTGAGE, AND EACH GRANTOR AGREES TO ITS TERMS. THIS MORTGAGE'IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS MORTGAGE IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW. X lhdhldually Cynt G. Hutchison, Individually CERTIFICATE OF RESIDENCE I hereby certify, that the precise address of the mortgagee, COMMERCE BANKIHARRISBURG NA, herein Is as follows: COMMERCIAL MORTGAGE DEPARTMENT, 100 SENATE AVENUE, CAMP HILL, PA 17011 A4omey orAgent forMoflaftm 61, v i i .) 5 2 MORTGAGE (Continued) Page 7 INDIVIDUAL ACKNOWLEDGMENT COMMONWEALTH OF PENNSYLVANIA ) couNnr of )SS ) On this, the l? day of At 4 u 20 o ? before me tk& L - kfa"IC ` the undersigned Notary Public, pers nay appeared James W. Hutchison, Jr. and Cynthia G. Hutchison, known to me (or satisfactorily proven) to be the person whose names are subscribed to the within instrument, and acknowledged that they executed the same for the purposes therein contained. In witness whereof, I hereunto set my hand and official seal. +: Public in and for the State of » . . s' . G'.;ia; w'!it! Co. Est F ... s o f!y 01,14; :' S +>1 Ega,.e.?? Jute 9, 2003 Lis- mn t..?aw, v.. e.nai.oe cepe, w?.ne w..w a.w+M.. tie. uw, 2eei. ui wow we..v.e. a AE?M T* Cp= MMV=AG8W P.a9"so rH LL, NJ CeCf(r.! ATfltrMttEC D=RECMWG ri?•' /4 ?? ALLTIIAT CERTAIN piece or parcel of ground situate in the Borough of Mechanicsburg, County of Cumberland and State of Pennsylvania, bounded and described in accordance with a survey and plan thereof dated March 5, 1965, prepared by Erneat J. Wallcor, Registered Surveyor, to wit:- BEGINNING at a point on the Western line of South York Street, said point being one hundred sixty-one and six-tentlis (161.6) feet in a Southerly direction from the Southern line of Coovor Street; thence extending along said South York Streot, South 11 degrees 30 minutes East, eighty-four (84) feet to a point; thence South 79 degrees 30 minutes West, one hundred twenty (120) feet to a point on the Eastern line of a twenty (20) fool- alley; thence along said alley, Ilorth 11 degrees 30 minutes West, eighty-four (8ll) feet to a point; thence North 79 degrees 30 minutes East, one hundred twenty (120) feet to a point on the Western line of South York Street, aforesaid, at the point and place of BEGIUNING. HAVING thereon erected a two and one-half story brick dwelling house, known' and nwabered as 1?11? South York Street, Mechanicsburg, Poru-)syl- vania. I Certify In Carat be recorded Cothity PA . N. der of Deeds ?\ `? 1?? /) 7 l/ METRO BANK 3801 Paxton Street 888.937.0004 Harrisburg, PA 17111 mymetrobank.com April 6, 2012 VIA CERTIFIED AND FIRST CLASS MAIL Hutch Homes, Inc 414 S York St Mechanicsburg, pA 17055 Cynthia G Hutchison 2312 Mill Rd Mechanicsburg, pA 17055 Re: Hutch Homes, Inc $75,000 Promissory Note dated August 1, 2001, as amended ("Note I ") $237,345 Promissory Note dated October 29, 2007, as (collectively, the "Notes,) amended ("Note 2") Dear Mrs. Hutchison: The Borrower and/or Guarantors have defaulted on their respective obligations to the Bank due to, amongst other things, their failure to remit payments when due ("Defaults"). As a result of the Borrowers default, the Bank has elected to exercise its option to declare the entire unpaid ). principal balance of the following Notes and all accrued and unpaid interest to be immediately due and payable. The amounts due under the Notes are as follows: Note 1 Principal Balance $ 75,312.03 Accrued interest through 4/6/12 $ 1,204.99 Late Fees through 4/6/12 $ 1,397.53 Sub-Total Amount Due through 416/12 $ 77,914.55 Note 2 Principal Balance $ 228,545.72 Accrued Interest through 4/6/12 $ 3,397.11 Late Fees through 4/6/12 $ 55,688.77 Other Fees through 4/6/12 $ 1,000.00 Sub-Total Amount Due through 4/6/12 $ 288,631.60 Total Amount Due on the Notes through 4/6/12: $ 366,54 6.15 The balances due under the Notes may increase or decrease as a result of the receipt of payments and the proceeds of collateral securing the Notes, late charges, costs of collection and other fees, costs and expenses. Therefore, immediately prior to remitting payment, please contact the undersigned at 717-412-6218 to obtain final payoff amounts and remittance instructions. Nothing contained in this letter constitutes a waiver or release of any of the terms or provisions of the Notes or of any and all other notes, instruments or agreements between the Bank and the Borrower and/or Guarantors ("Loan Documents"). The Bank reserves all rights and remedies available to it under the Loan Documents and applicable law, all of which are expressly hereby reserved. No discussions between the Bank and the Borrower and/or Guarantors concerning this notification, other loan relationships between the Bank and the Borrower and/or Guarantors, or any other matter shall imply an agreement on the part of the Bank to waive any of its rights and remedies or to forbear from taking any action authorized by the Loan Documents or applicable law, whether or not such discussions may be continuing. Any communications with any representative of the Bank, whether oral or written, will be mere discussions only and will not in any way commit or be binding upon the Bank unless reduced to a writing signed by an authorized officer of the Bank. Such communications will not represent any course of dealing, and in no manner shall the Borrower or Guarantors rely in any way on any such discussions unless such communications are reduced to a writing signed by an authorized officer of the Bank. The acceptance of any partial payment of any of the obligations of the Borrower and/or Guarantors to the Bank shall -not be deemed a waiver or limitation of any of the Bank's rights reserved herein as to the full amount of any unpaid balance. Any delay or forbearance by the Bank in the enforcement or pursuit of any of its rights and remedies under the Loan Documents or applicable law shall not constitute a waiver thereof, nor shall it be a bar to the exercise of the Bank's rights or remedies at a later date. If you have any questions regarding the contents of this letter, please contact me. Thank you for your attention to this matter. Sincerely, METRO BANK v David M. Chaikowski Assistant Vice President RECYCLED CL"jSTRUCTION LOAN AGREEA?...NT to", twee wbftd$V Lom He eel ica Accataft Oftior f References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item. Anv item above conteinina ' •"'" has been omitted due to text length limitations. Borrower: Hutch Homes, Inc. Lender: COMMERCE BANKMARRISBURG N.A. 414 South York Street COMMERCIAL MORTGAGE DEPARTMENT Mechanicsburg, PA 17055 3801 PAXTON STREET HARRISBURG. PA 17111 (717) 975-5630 THIS CONSTRUCTION LOAN AGREEMENT dated October 29, 2007, Is made and executed between Hutch Homes, Inc. ('Borrower") and COMMERCE BANK/HARRISBURG N.A. ("Lender") on the following terms and conditions. Borrower has applied to Lender for one or more loans for purposes of constructing the Improvements on the Red Property described below. Lander Is willing to lend the ban amount to Borrower solely under the terms and conditions specified in this Agreement and In the Related Documents, to each of which Borrower agrees. Borrower understands and agrees that: (A) in granting, renewing, or extending any Loan, Lender Is relying upon Borrower's representations, warranties, and agreements as set forth in this Agreement, and (B) all such Loans shall be and remain subject to the terms and conditions of this Agreement. TERM. This Agreement shall be effective as of October 29, 2007, and shall continue in full force and effect until such time as all of Borrower's Loans in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys' fees, and other fees and charges, or until such time as the parties may agree in writing to terminate this Agreement. LOAN. The Loan shall be in an amount not to exceed the principal sum of U.S. $237,345.00 and shall bear interest on so much of the principal sum as shall be advanced pursuant to the terms of this Agreement and the Related Documents. The Loan shall bear interest on each Advance from the date of the Advance in accordance with the terms of the Note. Borrower shall use the Loan Funds solely for the payment of: (A) the costs of constructing the Improvements and equipping the Project in accordance with the Construction Contract; (B) other costs and expenses incurred or to be incurred in connection with the construction of the Improvements as Lender in its sole discretion shall approve; and (C) if permitted by Lender, interest due under the Note, including all expenses and all loan and commitment fees described in this Agreement. The Loan amount shall be subject at all times to all maximum limits and conditions set forth in this Agreement or in any of the Related Documents, including without limitation, any limits relating to loan to value ratios and acquisition and Project costs. PROJECT DESCRIPTION. The word "Project" as used in this Agreement means the construction and completion of all Improvements contemplated by this Agreement, including without limitation the erection of the building or structure on the Real Property identified to this Agreement by Borrower and Lender, installation of equipment and fixtures, landscaping, and all other work necessary to make the Project usable and complete for the intended purposes. The Project includes the following work: Construction of a 2,578 square foot spec home in the Cherry HM neighborbood of New Cumberland. The word "Property" as used in this Agreement means the Real Property together with all Improvements, all equipment, fixtures, and other articles of personal property now or subsequently attached or affixed to the Real Property, together with all accessions, parts, and additions to, all replacements of, and all substitutions for any of such property, and all proceeds (including insurance proceeds and refunds of premiums) from any sale or other disposition of such property. The real estate described below constitutes the Real Property as used In this Agreement. The real estate or its address Is commonly known as: Real Property located at Lot #16 Terrace Place, New Cumberland, PA 17070. FEES AND EXPENSES. Whether or not the Project shall be consummated, Borrower shall assume and pay upon demand all out-of-pocket expenses incurred by Lender in connection with the preparation of loan documents and the making of the Loan, including without limitation the following: (A) all closing costs, loan fees, and disbursements; IB) all expenses of Lender's legal counsel; and (C) all title examination fees, title insurance premiums, appraisal fees, survey costs, required fees, and filing and recording fees. NO CONSTRUCTION PRIOR TO RECORDING OF SECURITY DOCUMENT. Borrower will not permit any work or materials to be furnished in connection with the Project until (A) Borrower has signed the Related Documents; (B) Lender's mortgage or deed of trust and other Security Interests in the Property have been duly recorded and perfected; (C) Lender has been provided evidence, satisfactory to Lender, that Borrower has obtained all insurance required under this Agreement or any Related Documents and that Lender's liens on the Property and Improvements are valid perfected first liens, subject only to such exceptions, if any, acceptable to Lander. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists: Organization. Borrower is a corporation for profit which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the Commonwealth of Pennsylvania. Borrower is duly authorized to transact business in all other states in which Borrower is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which Borrower is doing business. Specifically, Borrower is, and at all times shall be, duly qualified as a foreign corporation in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition. Borrower has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. Borrower maintains its principal office at 414 South York Street, Mechanicsburg, PA 17055. Unless Borrower has designated otherwise in writing, this is the principal office at which Borrower keeps its books and records including its records concerning the Collateral. Borrower will notify Lender prior to any change in the location of Borrower's state of organization or any change in Borrower's name. Borrower shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to Borrower and Borrower's business activities. Assumed Business Names. Borrower has filed or recorded all documents or filings required by law relating to all assumed business names used by Borrower. Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower does business: None. Authorization. Borrower's execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by all necessary action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any provision of (a) Borrower's articles of incorporation or organization, or bylaws, or (b) any agreement or other instrument binding upon Borrower or (2) any law, governmental regulation, court decree, or order applicable to Borrower or to Borrower's properties. Financial Information. Each of Borrower's financial statements supplied to Lender truly and completely disclosed Borrower's financial CONSTRUCTION LOAN AGREEMENT Loan No: 3554350 (Continued) Page 2 condition as of the date of the statement, and there has been no material adverse change in Borrower's financial condition subsequent to the date of the most recent financial statement supplied to Lender. Borrower has no material contingent obligations except as disclosed in such financial statements. Legal Effect. This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement when delivered will constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms. Properties. Except as contemplated by this Agreement or as previously disclosed in Borrower's financial statements or in writing to Lender and as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title to all of Borrower's properties free and clear of all Security Interests, and has not executed any security documents or financing statements relating to such properties. All of Borrower's properties are titled in Borrower's legal name, and Borrower has not used or filed a financing statement under any other name for at least the last five (5) years. Hazardous Substances. Except as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that: (1) During the period of Borrower's ownership of the Collateral, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from any of the Collateral. (2) Borrower has no knowledge of, or reason to believe that there has been (a) any breach or violation of any Environmental Laws; (b) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Collateral by any prior owners or occupants of any of the Collateral; or (c) any actual or threatened litigation or claims of any kind by any person relating to such matters. 13) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the Collateral shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or from any of the Collateral; and any such activity shall be conducted in compliance with all applicable federal, state, and local laws, regulations, and ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender and its agents to enter upon the Collateral to make such inspections and tests as Lender may deem appropriate to determine compliance of the Collateral with this section of the Agreement. Any inspections or tests made by Lender shall be at Borrower's expense and for Lender's purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Borrower or to any other person. The representations and warranties contained herein are based on Borrower's due diligence in investigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release of a hazardous waste or substance on the Collateral. The provisions of this section of the Agreement, including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and the termination, expiration or satisfaction of this Agreement and shall not be affected by Lender's acquisition of any interest in any of the Collateral, whether by foreclosure or otherwise. Litigation and Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower's financial condition or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in writing. Taxes. To the best of Borrower's knowledge, all of Borrower's tax returns and reports that are or were required to be filed, have been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided. Lien Priority. Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or granted any Security Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly securing repayment of Borrower's Loan and Note, that would be prior or that may in any way be superior to Lender's Security Interests and rights in and to such Collateral. Binding Effect. This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers thereof, as well as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective terms. Title to Property. Borrower has, or on the date of first disbursement of Loan proceeds will have, good and marketable title to the Collateral free and clear of all defects, liens, and encumbrances, excepting only liens for taxes, assessments, or governmental charges or levies not yet delinquent or payable without penalty or interest, and such liens and encumbrances as may be approved in writing by the Lender. The Collateral is contiguous to publicly dedicated streets, roads, or highways providing access to the Collateral. Project Costs. The Project costs are true and accurate estimates of the costs necessary to complete the Improvements in a good and workmanlike manner according to the Plans and Specifications presented by Borrower to Lender, and Borrower shall take all steps necessary to prevent the actual cost of the Improvements from exceeding the Project costs. Unity Services. All utility services appropriate to the use of the Project after completion of construction are available at the boundaries of the Collateral. Assessment of Property. The Collateral is and will continue to be assessed and taxed as an independent parcel by all governmental authorities. Compliance with Governing Authorities. Borrower has examined and is familiar with all the easements, covenants, conditions, restrictions, reservations, building laws, regulations, zoning ordinances, and federal, state, and local requirements affecting the Project. The Project will at all times and in all respects conform to and comply with the requirements of such easements, covenants, conditions, restrictions, reservations, building laws, regulations, zoning ordinances, and federal, state, and local requirements. Survival of Representations and Warranties. Borrower understands and agrees that in extending Loan Advances, Lender is relying on all representations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees that regardless of any investigation made by Lender, all such representations, warranties and covenants will survive the extension of Loan Advances and delivery to Lender of the Related Documents, shall be continuing in nature, shall be deemed made and radiated by Borrower at the time each Loan Advance is made, and shall remain in full force and effect until such time as Borrower's Indebtedness shall be paid in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur. CONDITIONS PRECEDENT TO EACH ADV-" ''E. Lender's obligation to make the initial Advr and each subsequent Advance under this Agreement shall be subject to the futfillm o Lender's satisfaction of all of the conditions orth in this Agreement and in the Related -:0INSTRUCTION LOAN AGREEMM Loan No: 3554350 (Continued) Page 3 Documents. Special Conditions to Initial Advance. Lender to receive a copy of building plans, cost breakdown, specifications listing, building permit and Builder's Risk insurance. Approval of Contractors, Subcontractors, and Materfalmen. Lender shall have approved a list of all contractors, subcontractors in direct privity with a contractor, and all persons in direct privity with such a subcontractor employed in connection with the construction of the Improvements, showing the name, address, and telephone number of each contractor, a general description of the nature of the work to be done, the labor and materials to be supplied, the names of materialmen, if known, and the approximate dollar value of the labor, work, or materials with respect to each contractor or materialman. Lender shall have the right to communicate with any person to verify the facts disclosed by the list or by any application for any Advance, or for any other purpose. Plans, Specification, and Permlts. Lender shall have received and accepted a complete set of written Plans and Specifications setting forth all Improvements for the Project, and Borrower shall have furnished to Lender copies of all permits and requisite approvals of any governmental body necessary for the construction and use of the Project. Architect's and Construction Contracts. Borrower shall have furnished in form and substance satisfactory to Lender an executed copy of the Architect's Contract and an executed copy of the Construction Contract. Budget and Schedule of Estimated Advances. Lender shall have approved detailed budget and cash flow projections of total Project costs and a schedule of the estimated amount and time of disbursements of each Advance. Borrower's Authorization. Borrower shall have provided in form and substance satisfactory to Lender properly certified resolutions, duly authorizing the consummation of the Project and duly authorizing the execution and delivery of this Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such other resolutions, authorizations, documents and instruments as Lender or its counsel, in their sole discretion, may require. Bond. If requested by Lender, Borrower shall have furnished a performance and payment bond in an amount equal to 100% of the amount of the Construction Contract, as well as a materialmen's and mechanics' payment bond, with such riders and supplements as Lender may require, each in form and substance satisfactory to Lender, naming the General Contractor as principal and Lender as an additional obligee. Appraisal. If required by Lender, an appraisal shall be prepared for the Property, at Borrower's expense, which in form and substance shall be satisfactory to Lender, in Lender's sole discretion, including applicable regulatory requirements. Plans and Specifications. If requested by Lender, Borrower shall have assigned to Lender on Lender's forms the Plans and Specifications for the Project. Environmental Report. If requested by Lender, Borrower shall have furnished to Lender, at Borrower's expense, an environmental report and certificate on the Property in form and substance satisfactory to Lender, prepared by an engineer or other expert satisfactory to Lender stating that the Property complies with all applicable provisions and requirements of the 'Hazardous Substances" paragraph set forth in this Agreement. Soil Report. If requested by Lender, Borrower shall have furnished to Lender, at Borrower's expenses, a soil report for the Property in form and substance satisfactory to Lender, prepared by a registered engineer satisfactory to Lender stating that the Property is free from soil or other geological conditions that would preclude its use or development as contemplated without extra expense for precautionary, corrective or remedial measures. Survey. If requested by Lender, Borrower shall have furnished to Lender a survey of recent date, prepared and certified by a qualified surveyor and providing that the Improvements, if constructed in accordance with the Plans and Specifications, shall lie wholly within the boundaries of the Collateral without encroachment or violation of any zoning ordinances, building codes or regulations, or setback requirements, together with such other information as Lender in its sole discretion may require. Zoning. Borrower shall have furnished evidence satisfactory to Lender that the Collateral is duly and validly zoned for the construction, maintenance, and operation of the Project. Title Insurance. Borrower shall have provided to Lender an ALTA Lender's extended coverage policy of title insurance with such endorsements as Lender may require, issued by a title insurance company acceptable to Lender and in a form, amount, and content satisfactory to Lender, insuring or agreeing to insure that Lender's security agreement or other security document on the Property is or will be upon recordation a valid first lien on the Property free and clear of all defects, liens, encumbrances, and exceptions except those as specifically accepted by Lender in writing. If requested by Lender, Borrower shall provide to Lender, at Borrower's expense, a foundation endorsement to the title policy upon the completion of each foundation for the Improvements, showing no encroachments, and upon completion an endorsement which insures the lien-free completion of the Improvements. Insurance. Unless waived by Lender in writing, Borrower shall have delivered to Lender the following insurance policies or evidence thereof: (a) an all risks course of construction insurance policy (builder's risk), with extended coverage covering the Improvements issued in an amount and by a company acceptable to Lender, containing a loss payable or other endorsement satisfactory to Lender insuring Lender as mortgagee, together with such other endorsements as may be required by Lender, including stipulations that coverages will not be cancelled or diminished without at least ten (10) days prior written notice to Lender; (b) owners and General Contractor general liability insurance, public liability and workmen's compensation insurance; (c) flood insurance if required by Lender or applicable law; and (d) all other insurance required by this Agreement or by the Related Documents. Workers' Compensation Coverage. Provide to Lender proof of the General Contractor's compliance with all applicable workers' compensation laws and regulations with regard to all work performed on the Project. Payment of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and other expenses which are then due and payable as specified in this Agreement or any Related Document. Satisfactory Construction. All work usually done at the stage of construction for which disbursement is requested shall have been done in a good and workmanlike manner and all materials and fixtures usually furnished and installed at that stage of construction shall have been furnished and installed, all in compliance with the Plans and Specifications. Borrower shall also have furnished to Lander such proofs as Lender may require to establish the progress of the work, compliance with applicable laws, freedom of the Property from liens, and the basis for the requested disbursement. Certification. Borrower shall have furnished to Lender a certification by an engineer, architect, or other qualified inspector acceptable to Lender that the construction of the Improvements has complied and will continue to comply with all applicable statutes, ordinances;, codes, regulations, and similar requirements. Lien Waivers. Borrower shall have obtained and attached to each application for an Advance, including the Advance to cover final payment CONSTRUCTION LOAN AGREEMENT Loan No: 3554350 (Continued) Page 4 to the General Contractor, executed acknowledgments of payments of all sums due and releases of mechanic's and materialmen's liens, satisfactory to Lender, from any party having lien rights, which acknowledgments of payment and releases of liens shall cover all work, labor, equipment, materials done, supplied, performed, or furnished prior to such application for an Advance. No Event of Default. There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement or under any Related Document. DISBURSEMENT OF LOAN FUNDS. The following provisions relate to the disbursement of funds from the Loan Fund. Application for Advances. Each application shall be stated on a standard AIA payment request form or other form approved by Lender, executed by Borrower, and supported by such evidence as Lender shall reasonably require. Borrower shall apply only for disbursement with respect to work actually done by the General Contractor and for materials and equipment actually incorporated into the Project. Each application for an Advance shall be deemed a certification of Borrower that as of the date of such application, all representation and warranties contained in the Agreement are true and correct, and that Borrower is in compliance with all of the provisions of this Agreement. Payments. At the sole option of Lender, Advances may be paid in the joint names of Borrower and the General Contractor, subcontractor(s), or supplier(sl in payment of sums due under the Construction Contract. At its sole option, Lender may directly pay the General Contractor and any subcontractors or other parties the sums due under the Construction Contract. Borrower authorizes Lender to make such payments. This authorization shall be deemed coupled with an interest, shall be irrevocable, and shall survive an Event of Default under this Agreement. Projected Cost Overruns. If Lender at any time determines in its sole discretion that the amount in the Loan Fund is insufficient, or will be insufficient, to complete fully and to pay for the Project, then within ten (10) days after receipt of a written request from Lender, Borrower shall deposit in the Loan Fund an amount equal to the deficiency as determined by Lender. The judgment and determination of Lender under this section shall be final and conclusive. Any such amounts deposited by Borrower shall be disbursed prior to any Loan proceeds. Final Payment to General Contractor. Upon completion of the Project and fulfillment of the Construction Contract to the satisfaction of Lender and provided sufficient Loan Funds are available, Lender shall make an Advance to cover the final payment due to the General Contractor upon delivery to Lender of endorsements to the ALTA title Insurance policy following the posting of the completion notice, as provided under applicable law. Construction shall not be deemed complete for purposes of final disbursement unless and until Lender shall have received all of the following: (1) Evidence satisfactory to Lender that all work under the Construction Contract requiring inspection by any governmental authority with jurisdiction has been duly inspected and approved by such authority, that a certificate of occupancy has been issued, and that all parties performing work have been paid, or will be paid, for such work; (2) A certification by an engineer, architect, or other qualified inspector acceptable to Lender that the Improvements have been completed substantially in accordance with the Plans and Specifications and the Construction Contract, that direct connection has been made to all utilities set forth in the Plans and Specifications, and that the Project is ready for occupancy; and 13) Acceptance of the completed Improvements by Lender and Borrower. Construction Default. If Borrower fails in any respect to comply with the provisions of this Agreement or if construction ceases before completion regardless of the reason, Lender, at its option, may refuse to make further Advances, may accelerate the indebtedness under the terms of the Note, and without thereby impairing any of its rights, powers, or privileges, may enter into possession of the construction site and perform or cause to be performed any and all work and labor necessary to complete the improvements, substantially in accordance with the Plans and Specifications. Damage or Destruction. If any of the Collateral or Improvements is damaged or destroyed by casualty of any nature, within sixty (60) days thereafter Borrower shall restore the Collateral and Improvements to the condition in which they were before such damage or destruction with funds other than those in the Loan Fund. Lender shall not be obligated to make disbursements under this Agreement until such restoration has been accomplished. Adequate Security. When any event occurs that Lender determines may endanger completion of the Project or the fulfillment of any condition or covenant in this Agreement, Lender may require Borrower to furnish, within ten (10) days after delivery of a written request, adequate security to eliminate, reduce, or indemnify Lender against, such danger. In addition, upon such occurrence, Lender in its sole discretion may advance funds or agree to undertake to advance funds to any party to eliminate, reduce, or indemnify Lender against, such danger or to complete the Project. All sums paid by Lender pursuant to such agreements or undertakings shall be for Borrower's account and shall be without prejudice to Borrower's rights, if any, to receive such funds from the party to whom paid. All sums expanded by Lender in the exercise of its option to complete the Project or protect Lender's interests shall be payable to Lender on demand together with interest from the date of the Advance at the rate applicable to the Loan. In addition, any Advance of funds under this Agreement, Including without limitation direct disbursements to the General Contractor or other parties in payment of sums due under the Construction Contract, shall be deemed to have been expended by or on behalf of Borrower and to have been secured by Lender's Mortgage, if any, on the Collateral. CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement or under any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is in default under the terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender; (B) Borrower or any Guarantor Was, becomes incompetent or becomes insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse change in Borrower's financial condition, in the financial condition of any Guarantor, or in the value of any Collateral securing any Loan; or (DI any Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any other loan with Lender; or (E) Lender in good faith deems itself insecure, even though no Event of Default shall have occurred. LIMITATION OF RESPONSIBILITY. The making of any Advance by Lender shall not constitute or be interpreted as either (A) an approval or acceptance by Lender of the work done through the date of the Advance, or (B) a representation or indemnity by Lender to any party against any deficiency or defect in the work or against any breach of any contract. Inspections and approvals of the Plans and Specifications, the nprovements, the workmanship and materials used in the Improvements, and the exercise of any other right of inspection, approval, or inquiry granted to Lender in this Agreement are acknowledged to be solely for the protection of Lender's interests, and under no circumstances shall they be construed to impose any responsibility or liability of any nature whatsoever on Lender to any party. Neither Borrower nor any contractor, subcontractor, materialman, laborer, or any other person shall rely, or have any right to rely, upon Lender's determination of the appropriateness of any Advance. No disbur.Poment or approval by Lender shall constitute a representation by Lender as to the nature of the Project, its construction, or its intended us, - Borrower or for any other person, nor shall it or Mute an indemnity by Lender to Borrower or to any other person against any deficiency .facts in the Project or against any breach of any tact. -JNSTRUCTION LOAN AGREEMEi.. Loan No: 3554350 (Continued) Page 5 AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will: Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse changes in Borrower's financial condition, and (2) all existing and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower or any Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor. Financial Records. Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examine and audit Borrower's books and records at all reasonable times. Financial Statements. Furnish Lender with the following: Tax Returns. As soon as available, but in no event later than one-hundred-twenty (120) days after the applicable filing date for the tax reporting period ended, Federal and other governmental tax returns, prepared by a professional accountant satisfactory to Lender. All financial reports required to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Borrower as being true and correct. Additional Information. Furnish such additional information and statements, lists of assets and liabilities, agings of receivables and payables, inventory schedules, budgets, forecasts, tax returns, and other reports with respect to Borrower's financial condition and business operations as Lender may request from time to time. Other Agreements. Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any other parry and notify Lender immediately in writing of any default in connection with any other such agreements. Insurance. Maintain fire and other risk insurance, hail, federal crop insurance, public liability insurance, and such other insurance as Lender may require with respect to Borrower's properties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least ten (10) days prior written notice to Lender. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Borrower or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest for the Loans, Borrower will provide Lender with such lender's loss payable or other endorsements as Lender may require. Insurance Reports. Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as Lender may reasonably request, including without limitation the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the properties insured; (5) the then current property values on the basis of which insurance has been obtained, and the manner of determining those values; and (6) the expiration date of the policy. In addition, upon request of Lender (however not more often than annually), Borrower will have an independent appraiser satisfactory to Lender determine, as applicable, the actual cash value or replacement cost of any Collateral. The cost of such appraisal shall be paid by Borrower. Guaranties. Prior to disbursement of any Loan proceeds, furnish executed guaranties of the Loans in favor of Lender, executed by the guarantor named below, on Lender's forms, and in the amount and under the conditions set forth in those guaranties. Name of Guarantor Amount James W. Hutchison, Jr. Unlimited Loan Fees, Charges and Expenses. Whether or not the Project is completed, Borrower also shall pay upon demand all out-of-pocket expenses incurred by Lender in connection with the preparation of loan documents and the making of the Loan, including, without limitation, all closing costs, fees, and disbursements, all expenses of Lender's legal counsel, and all title examination fees, title insurance premiums, appraisal fees, survey costs, required fees, and filing and recording fees. Loan Proceeds. Use the Loan Funds solely for payment of bills and expenses directly related to the Project. Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower's properties, income, or profits. Performance. Perform and comply, in a timely manner, with all terms, conditions, and provisions set forth In this Agreement, in the Related Documents, and in all other Instruments and agreements between Borrower and Lender. Borrower shall notify Lender immediately in writing of any default in connection with any agreement. Inspection. Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower's other properties and to examine or audit Borrower's books, accounts, and records and to make copies and memoranda of Borrower's books, accounts, and records. If Borrower now or at any time hereafter maintains any records (including without limitation computer generated records and computer software programs for the generation of such records) in the possession of a third party, Borrower, upon request of Lender, shall notify such party to permit Lender free access to such records at all reasonable times and to provide Lender with copies of any records it may request, all at Borrower's expense. Compliance Certificates. Unless waived in writing by Lender, provide Lender at least annually, with a certificate executed by Borrower's chief financial officer, or other officer or person acceptable to Lender, certifying that the representations and warranties set forth in this Agreement are true and correct as of the date of the certificate and further certifying that, as of the date of the certificate, no Event of Default exists under this Agreement. Construction of the Project. Commence construction of the Project no later than October 25, 2007, and cause the Improvements to be constructed and equipped in a diligent and orderly manner and in strict accordance with the Plans and Specifications approved by Lender, the Construction Contract, and all applicable laws, ordinances, codes, regulations, and rights of adjoining or concurrent property owners. Borrower agrees to complete the Project for purposes of final payment to the General Contractor on or before April 25, 2009, regardless of the reason for any delay. Defects. Upon demand of Lender, promptly correct any defect in the Improvements or any departure from the Plans and Specifications not approved by Lender in writing before further work shall be done upon the portion of the Improvements affected. Project Claims and Litigation. Promptly inform Lender of (1) all material adverse changes in the financial condition of the General Contractor; (2) any litigation and claims, actual or threatened, affecting the Project or the General Contractor, which could materially affect the successful completion of the Project or the ability of the General Contractor to complete the Project as agreed; and (3) any condition or event which constitutes a breach or default under any of the Related Documents or any contract related to the Project. CONSTRUCTION LOAN AGREEMENT Loan No: 3554350 (Continued) Page 6 Payment of Claims and Removal of Liens. (1) Cause all claims for labor done and materials and services furnished in connection with the Improvements to be fully paid and discharged in a timely manner and (2) take all reasonable steps necessary to remove all claims of liens against the Collateral, the Improvements or any part of the Collateral or Improvements, or any rights or interests appurtenant to the Collateral or Improvements. Upon Lender's request, Borrower shall make such demands or claims upon or against laborers, materialmen, subcontractors, or other persons who have furnished or claim to have furnished labor, services, or materials in connection with the Improvements, which demands or claims shall under the laws of the Commonwealth of Pennsylvania require diligent assertions of lien claims upon penalty of loss or waiver thereof. Borrower shall, within ten (10) days after the filing of any claim of lien that is disputed or contested by Borrower, provide Lender with a surety bond issued by a surety acceptable to Lender sufficient to release the claim of lien or deposit with Lender an amount satisfactory to Lender for the possibility that the contest will be unsuccessful. If Borrower fails to remove any lien on the Collateral or Improvements or provide a bond or deposit pursuant to this provision, Lender may pay such lien, or may contest the validity of the lien, and Borrower shall pay all costs and expenses of such contest, including Lender's reasonable attorneys' fees. Taxes and Claims. Pay and discharge when due all of Borrower's indebtedness, obligations, and claims that, if unpaid, might become a lien or charge upon the Collateral or Improvements; provided, however, that Borrower shall not be required to pay and discharge any such indebtedness, obligation, or claim so long as (1) its legality shall be contested in good faith by appropriate proceedings, (2) the indebtedness, obligation, or claim does not become a lien or charge upon the Collateral or Improvements, and (3) Borrower shall have established on its books adequate reserves with respect to the amount contested in accordance with GAAP. If the indebtedness, obligation, or claim does become a lien or charge upon the Collateral or Improvements, Borrower shall remove the lien or charge as provided in the preceding paragraph. Environmental Studies. Promptly conduct and complete, at Borrower's expense, all such investigations, studies, samplings and testings as may be requested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance defined as toxic or a hazardous substance under applicable federal, state, or local law, rule, regulation, order or directive, at or affecting any property or any facility owned, leased or used by Borrower. Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, assignments, financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loans and to perfect all Security Interests in the Collateral and Improvements. RECOVERY OF ADDITIONAL COSTS. If the imposition of or any change in any law, rule, regulation or guideline, or the interpretation or application of any thereof by any court or administrative or governmental authority (including any request or policy not having the force of law) shall impose, modify or make applicable any taxes (except federal, state or local income or franchise taxes imposed on Lender), reserve requirements, capital adequacy requirements or other obligations which would (A) increase the cost to Lender for extending or maintaining the credit facilities to which this Agreement relates, (B) reduce the amounts payable to Lender under this Agreement or the Related Documents, or (C) reduce the rate of return on Lender's capital as a consequence of Lender's obligations with respect to the credit facilities to which this Agreement relates, then Borrower agrees to pay Lender such additional amounts as will compensate Lender therefor, within five 15) days after ender's written demand for such payment, which demand shall be accompanied by an explanation of such imposition or charge and a alculation in reasonable detail of the additional amounts payable by Borrower, which explanation and calculations shall be conclusive in the absence of manifest error. LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Borrower fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower's failure to discharge or pay when due any amoums Borrower Is required to discharge or pay under this Agreement or any Related Documents, Lender on Borrower's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on any Collateral and paying all costs for insuring, maintaining and preserving any Collateral. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Borrower. All such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity. NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior written consent of Lender: Indebtedness and Lions. (1) Except for trade debt incurred in the normal course of business and indebtedness to Lender contemplated by this Agreement, create, incur or assume indebtedness for borrowed money, including capital leases, 12) sell, transfer, mortgage, assign, pledge, lease, grant a security interest in, or encumber any of Borrower's assets (except as allowed as Permitted Liens), or (3) sell with recourse any of Borrower's accounts, except to Lender. Continuity of Operations. (1) Engage in any business activities substantially different than those in which Borrower is presently engaged, (2) cease operations, liquidate, merge, transfer, acquire or consolidate with any other entity, change its name, dissolve or transfer or sell Collateral out of the ordinary course of business, or (3) pay any dividends on Borrower's stock (other than dividends payable in its stock), provided, however that notwithstanding the foregoing, but only so long as no Event of Default has occurred and is continuing or would result from the payment of dividends, if Borrower is a "Subchapter S Corporation" (as defined in the Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends on its stock to its shareholders from time to time in amounts necessary to enable the shareholders to pay income taxes and make estimated income tax paymema to satisfy their liabilities under federal and state law which arise solely from their status as Shareholders of a Subchapter S Corporation because of their ownership of shares of Borrower's stock, or purchase or retire any of Borrower's outstanding shares or alter or amend Borrower's capital structure. Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or assets to any other person, enterprise or entity, (2) purchase, create or acquire any interest in any other enterprise or entity, or (3) incur any obligation as surety or guarantor other than in the ordinary course of business. Modification of Contract. Make or permit to be made any modification of the Construction Contract. Liens. Create or allow to be created any lien or charge upon the Collateral or the Improvements. Agreements. Borrower will not enter into any agreement containing any provisions which would be violated or breached by the performance of Borrower's obligations under this Agreement or in connection herewith. GENERAL PROJECT PROVISIONS. The following provisions relate to the construction and completion of the Project: Change Orders. All requests for char in the Plans and Specifications, other than mir• hanges involving no extra cost, must be in writing, signed by Borrower and the : act, and delivered to Lender for its approval. E rarer will not permit the performance of any .,ONSTRUCTION LOAN AGREEME6. Loan No: 3554350 (Continued) Page 7 work pursuant to any change order or modification of the Construction Contract or any subcontract without the written approval of Lender. Borrower will obtain any required permits or authorizations from governmental authorities having jurisdiction before approving or requesting a new change order. Purchase of Materials; Conditional Sales Contracts. No materials, equipment, fixtures, or articles of personal property placed in or incorporated into the Project shall be purchased or installed under any Security Agreement or other agreement whereby the seller reserves or purports to reserve title or the right of removal or repossession, or the right to consider such items as personal property after their incorporation into the Project, unless otherwise authorized by Lender in writing. Lender's Right of Entry and Inspection. Lender and its agents shall have at all times the right of entry and free access to the Property and the right to inspect all work done, labor performed, and materials furnished with respect to the Project. Lender shall have unrestricted access to and the right to copy all records, accounting books, contracts, subcontracts, bills, statements, vouchers, and supporting documents of Borrower relating in any way to the Project. Lender's Right to Stop Work. If Lender in good faith determines that any work or materials do not conform to the approved Plans and Specifications or sound building practices, or otherwise depart from any of the requirements of this Agreement, Lender may require the work to be stopped and withhold disbursements until the matter is corrected. In such event, Borrower will promptly correct the work to Lender's satisfaction. No such action by Lender will affect Borrower's obligation to complete the Improvements on or before the Completion Date. Lender Is under no duty to supervise or inspect the construction or examine any books and records. Any inspection or examination by Lender is for the sole purpose of protecting Lender's security and preserving Lender's rights under this Agreement. No default of Borrower will be waived by any inspection by Lender. In no event will any inspection by Lender be a representation that there has been or will be compliance with the Plans and Specifications or that the construction is free from defective materials or workmanship. Indemnity. Borrower shall indemnify, defend, and hold Lender harmless from any and all claims asserted against Lender or the Property by any person, entity, or governmental body, or arising out of or in connection with the Property, Improvements, or Project. Lender shall be entitled to appear in any proceedings to defend itself against such claims, and all costs and expenses reasonable attorneys' fees incurred by Lender in connection with such defense shall be paid by Borrower to Lender. Lender shall, in its sole discretion, be entitled to settle or compromise any asserted claims against it, and such settlement shall be binding upon Borrower for purposes of this indemnification. All amounts paid by Lender under this paragraph shall be secured by Lender's security agreement or Mortgage, if any, on the Property, shall be deemed an additional principal Advance under the Loan, payable upon demand, and shall bear interest at the rate applicable to the Loan. Publicity. Lender may display a sign at the construction site informing the public that Lender is the construction lender for the Project. Lender may obtain other publicity in connection with the Project through press releases and participation in ground-breaking and opening ceremonies and similar events. Actions. Lender shall have the right to commence, appear in, or defend any action or proceeding purporting to affect the rights, duties, or liabilities of the parties to this Agreement, or the disbursement of funds from the Loan Fund. In connection with this right, Lender may incur and pay reasonable costs, expenses and reasonable attorneys' fees. Borrower covenants to pay to Lender on demand all such expenses, together with interest from the date Lender incurs the expense at the rate specified in the Note, and Lender is authorized to disburse funds from the Loan Fund for such purposes. RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts. DEFAULT. Each of the following shall constitute an Event of Default under this Agreement; Payment Default. Borrower fails to make any payment when due under the Loan. Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower. Environmental Default. Failure of any party to comply with or perform when due any term, obligation, covenant or condition contained in any environmental agreement executed in connection with any Loan. Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's or any Grantor's property or Borrower's or any Grantor's ability to repay the Loans or perform their respective obligations under this Agreement or any of the Related Documents. False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter. Insolvency. The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower. Defective Collateral'u:ation. This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason. Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the Loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute. Breach of Construction Contract. The Improvements are not constructed in accordance with the Plans and Specifications or in accordance with the terms of the Construction Contract. Cessation of Construction. Prior to the completion of construction of the Improvements and equipping of the Project, the construction of the Improvements or the equipping of the Project is abandoned or work thereon ceases for a period of more than ten (10) days for any CONSTRUCTION LOAN AGREEMENT Loan No: 3554350 (Continued) Page 8 reason, or the Improvements are not completed for purposes of final payment to the General Contractor prior to April 25, 2009, regardless of the reason for the delay. Transfer of Property. Sale, transfer, hypothecation, assignment, or conveyance of the Property or the Improvements or any portion thereof or interest therein by Borrower or any Borrower without Lender's prior written consent. Condemnation. All or any material portion of the Collateral is condemned, seized, or appropriated without compensation, and Borrower does not within thirty (30) days after such condemnation, seizure, or appropriation, initiate and diligently prosecute appropriate action to contest in good faith the validity of such condemnation, seizure, or appropriation. Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness. In the event of a death, Lender, at its option, may, but shall not be required to, permit the Guarantor's estate to assume unconditionally the obligations arising under the guaranty in a manner satisfactory to Lender, and, in doing so, cure any Event of Default. Change In Ownership. Any change in ownership of twenty-five percent (25961 or more of the common stock of Borrower. Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of the Loan is impaired. Insecurity. Lender in good faith believes itself insecure. Right to Cure. If any default, other than a default on Indebtedness, is curable and If Borrower or Grantor, as the case may be, has not been given a notice of a similar default within the preceding twelve (12) months, It may be cured if Borrower or Grantor, as the case may be, after receiving written notice from Lender demanding cure of such default: (1) cure the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days, immediately initiate steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continue and complete all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical. EFFECT OF AN EVENT OF DEFAULT; REMEDIES. Upon the occurrence of any Event of Default and at any time thereafter, Lender may, at its option, but without any obligation to do so, and in addition to any other right Lender without notice to Borrower may have, do any one or more of the following without notice to Borrower: (a) Cancel this Agreement; (b) Institute appropriate proceedings to enforce the performance of this Agreement; (c) Withhold further disbursement of Loan Funds; (d) Expend funds necessary to remedy the default; (e) Take possession of the Property and continue construction of the Project; (f) Accelerate maturity of the Note and/or Indebtedness and demand payment of all sums due under the Note and/or Indebtedness; (g) Bring an action on the Note and/or Indebtedness; (h) Foreclose Lender's security agreement or Mortgage, if any, on the Property in any manner available under law; and (I) Exercise any other right or remedy which it has under the Note or Related Documents, or which is otherwise available at law or in equity or by statute. COMPLETION OF IMPROVEMENTS BY LENDER, If Lender takes possession of the Collateral, it may take any and all actions necessary in its iudgment to complete construction of the Improvements, including but not limited to making changes In the Plans and Specifications, work, or iaterials and entering into, modifying or terminating any contractual arrangements, subject to Lender's right at any time to discontinue any work without liability. If Lender elects to complete the Improvements, it will not assume any liability to Borrower or to any other person for completing the Improvements or for the manner or quality of construction of the Improvements, and Borrower expressly waives any such liability. Borrower irrevocably authorizes Lender, with full power of substitution, at Lender's option, to complete the Improvements either in Borrower's name or in its own name. It is understood that nothing set forth herein shall require Lender to take any such action. In any event, all sums expended by Lender in completing the construction of the Improvements will be considered to have been disbursed to Borrower and will be secured by the Collateral for the Loan. Any such sums that cause the principal amount of the Loan to exceed the face amount of the Note will be considered to be an additional Loan to Borrower, bearing interest at the Note rate and being secured by the Collateral. For these purposes, Borrower assigns to Lender all of its right, title and interest in and to the Project Documents; however Lender will not have any obligation under the Project Documents unless Lender expressly hereafter agrees to assume such obligations in writing. Lender will have the right to exercise any rights of Borrower under the Project Documents upon the occurrence of an Event of Default. Except as may be prohibited by applicable law, all of Lender's rights and remedies, whether evidenced by this Agreement or by any other writing, shall be cumulative and may be exercised singularly or concurrently. ADDITIONAL DOCUMENTS. Borrower shall provide Lender with the following additional documents: Corporate Resolution. Borrower has provided or will provide Lender with a certified copy of resolutions properly adopted by Borrower's Board of Directors, and certified by Borrower's corporate secretary, assistant secretary, or other authorized officer, under which Borrower's Board of Directors authorized one or more designated officers or employees to execute this Agreement, the Note and any and all Security Agreements directly or indirectly securing repayment of the same, and to consummate the borrowings and other transactions as contemplated under this Agreement, and to consent to the remedies following any default by Borrower as provided in this Agreement and in any Security Agreements. Opinion of Counsel. When required by Lender, Borrower has provided or will provide Lender with an opinion of Borrower's counsel certifying to and that: (1) Borrower's Note, any Security Agreements and this Agreement constitute valid and binding obligations on Borrower's part that are enforceable in accordance with their respective terms; (2) Borrower is validly existing and in good standing; (3) Borrower has authority to enter into this Agreement and to consummate the transactions contemplated under this Agreement; and (4) such other matters as may have been requested by Lender or by Lender's counsel. COLLATERAL RESTRICTION. Trading In the FMA Advisors marketable securities account is prohibited without prior written approval of the Bank. MONTHLY SUBMISSION OF BROKERAGE STATEMENTS. Borrower understands and agrees that Brokerage Statements to be forwarded to Lender every month. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement: Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment. Attorneys' Fees; Expenses. Borrower agrees to pay upon demand all of Lender's costs and expenses, including Lender's reasonable attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, and Borrower shall pay the costs and expenses of such enforcement. Costs and expenses include Lender's reasonable attorneys' fees and legal expenses whether or not there is a law-uh, including reasonable attorneys' fees and legal expenses for bankruptcy procet s (including efforts to modify or vacate any a atic stay or injunction), appeals, and any anticipated post-judgment collection at .as. Borrower also shall pay all court costs and a additional fees as may be directed by the JNSTRUCTION LOAN AGREEME1 Loan No: 3554350 (Continued) Page 9 court. Authority to File Notices. Borrower authorizes Lender to file for the record any notice that Lender deems necessary to protect its interest under this Agreement. This authorization shall be deemed coupled with an interest and shall be irrevocable while any sum or performance remains due and owing under any of the Related Documents. Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement. GovemMg Law. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the Commonwealth of Pennsylvania without regard to its conflicts of law provisions. This Agreement has been accepted by Lender In the Commonwealth of Pennsylvania. Indemnlflcatlon of Lender. Borrower agrees to indemnify, to defend and to save and hold Lender harmless from any and all claims, suits, obligations, damages, losses, costs and expenses (including, without limitation, Lender's reasonable attorneys' fees, as well as Lender's architect's and engineering fees), demands, liabilities, penalties, fines and forfeitures of any nature whatsoever that may be asserted against or incurred by Lender, its officers, directors, employees, and agents arising out of, relating to, or in any manner occasioned by this Agreement and the exercise of the rights and remedies granted Lender under this. The foregoing indemnity provisions shall survive the cancellation of this Agreement as to all matters arising or accruing prior to such cancellation and the foregoing indemnity shall survive in the event that Lender elects to exercise any of the remedies as provided under this Agreement following default hereunder. Consent to Loan Participation. Borrower agrees and consents to Lender's sale or transfer, whether now or later, of one or more participation interests in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lender may have about Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect to such matters. Borrower additionally waives any and all notices of sale of participation interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as the absolute owners of such interests in the Loan and will have all the rights granted under the participation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim that it may have now or later against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower's obligation under the Loan irrespective of the failure or insolvency of any holder of any interest in the Loan. Borrower further agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defenses that Borrower may have against Lender. No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender's rights or of any of Borrower's or any Grantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender. Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement. Successors and Assigns. All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related Documents shall bind Borrower's successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have the right to assign Borrower's rights under this Agreement or any interest therein, without the prior written consent of Lender. Survival of Representations and Warranties. Borrower understands and agrees that in extending Loan Advances, Lender is relying on all representations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees that regardless of any investigation made by Lender, all such representations, warranties and covenants will survive the extension of Loan Advances and delivery to Lender of the Related Documents, shall be continuing in nature, shall be deemed made and radated by Borrower at the time each Loan Advance is made, and shall remain in full force and effect until such time as Borrower's Indebtedness shall be paid in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur. Tine Is of the Essence. Time is of the essence in the performance of this Agreement. DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. Accounting words and terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this Agreement: Advance. The word "Advance" means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower's behalf on a line of credit or multiple advance basis under the terms and conditions of this Agreement. Agreement. The word "Agreement" means this Construction Loan Agreement, as this Construction Loan Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Construction Loan Agreement from time to time. Architect's Contract. The words "Architect's Contract" mean the architect's contract between Borrower and the architect for the Project. Borrower. The word "Borrower" means Hutch Homes, Inc. and includes all co-signers and co-makers signing the Note and all their successors and assigns. Collateral. The word "Collateral" means all property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage, collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a CONSTRUCTION LOAN AGREEMENT Loan No: 3554350 (Continued) Page 10 security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise. Completion Date. The words "Completion Date" mean April 25, 2009. Construction Contract. The words "Construction Contract" mean the contract between Borrower and Hutch Homes, Inc., the general contractor for the Project, and any subcontracts with subcontractors, materialmen, laborers, or any other person or entity for performance of work on the Project or the delivery of materials to the Project. Contractor. The word "Contractor" means Hutch Homes, Inc., the general contractor for the Project. Environmental Laws. The words "Environmental Laws" mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, at seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, at seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto. Event of Defautt. The words "Event of Default" mean any of the events of default set forth in this Agreement in the default section of this Agreement. GAAP. The word "GAAP" means generally accepted accounting principles. Grantor. The word "Grantor" means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan, including without limitation all Borrowers granting such a Security Interest. Guarantor. The word "Guarantor" means any guarantor, surety, or accommodation party of any or all of the Loan and any guarantor under a completion guaranty agreement. Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note. Hazardous Substances. The words "Hazardous Substances" mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words "Hazardous Substances" are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. The term "Hazardous Substances" also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos. Improvements. The word "Improvements" means all existing and future buildings, structures, facilities, fixtures, additions, and similar construction on the Collateral. Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents. Lander. The word "Lender" means COMMERCE BANKMARRISBURG N.A., its successors and assigns. Loan. The word "Loan" means the loan or loans made to Borrower under this Agreement and the Related Documents as described . Loan Fund. The words "Loan Fund" mean the undisbursed proceeds of the Loan under this Agreement together with any equity funds or other deposits required from Borrower under this Agreement. Note. The word "Note" means the promissory note dated October 29, 2007, In the original principal amount of $237,345.00 from Borrower to Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the promissory note or agreement. Permitted Liens. The words "Permitted Liens" mean 11) liens and security interests securing Indebtedness owed by Borrower to Lender; (2) liens for taxes, assessments, or similar charges either not yet due or being contested in good faith; (3) liens of materialmen, mechanics, warehousemen, or carriers, or other like liens arising in the ordinary course of business and securing obligations which are not yet delinquent; (4) purchase money liens or purchase money security interests upon or in any property acquired or held by Borrower in the ordinary course of business to secure indebtedness outstanding on the date of this Agreement or permitted to be incurred under the paragraph of this Agreement titled "Indebtedness and Liens"; (5) liens and security interests which, as of the date of this Agreement, have been disclosed to and approved by the Lender in writing; and (6) those liens and security interests which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net value of Borrower's assets. Plans and Specifications. The words "Plans and Specifications" mean the plans and specifications for the Project which have been submitted to and initialed by Lender, together with such changes and additions as may be approved by Lender in writing. Project. The word "Project" means the construction project as described in the "Project Description" section of this Agreement. Project Documents. The words "Project Documents" mean the Plans and Specifications, all studies, data and drawings relating to the Project, whether prepared by or for Borrower, the Construction Contract, the Architect's Contract, and all other contracts and agreements relating to the Project or the construction of the Improvements. Property. The word "Property" means the property as described in the "Project Description" section of this Agreement. Real Property. The words "Real Property" mean the real property, interests and rights, as further described in the "Project Description" section of this Agreement. Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Loan. Security Agreement. The words "Security Agreement" mean and include without limitation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security Interest. Security Interest. The words "Security Interest" mean, without limitation, any and all types of collateral security, present and future, whether in the form of a lien, charge encumbrance, mortgage, deed of trust, security r ---d, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage lttel trust, factor's lien, equipment trust, cond' I sale, trust receipt, lien or title retention contract, lease or consignment intender is a security device, or any other security or lien. serest whatsoever whether created by law, ..ONSTRUCTION LOAN AGREEMEI.I' Loan No: 3554350 (Continued) Page 11 contract, or otherwise. BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS CONSTRUCTION LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS CONSTRUCTION LOAN AGREEMENT IS DATED OCTOBER 29, 2007. THIS AGREEMENT IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW. BORROWER: f HUTCH JIOMES? INC. -- By a _?t77* (Seal) Jsr?as W. H l on. JW" Pre ident o Hutch Homes, Inc. LENDER: COMMERCE BANKMARRISBURG N.A. By: (Seal) Authorized Signer LAmm NO Ur,"L Va. Lm.mom Cw. %mX M-w &a *'k M. 1077. 7041. 141 Rbhb Nbr,tl. - M MVM1?A WWVJICFftLMC{i./C 111.74010 PR70 V`?UJ? Q? PROMISSORY NOTE References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item. Any item above containing "* **" has been omitted due to text length limitations. Borrower: Hutch Homes, inc. Lender: COMMERCE BANK/HARRISBURG N.A. 414 South York Street COMMERCIAL MORTGAGE DEPARTMENT Mechanicsburg, PA 17055 3801 PAXTON STREET HARRISBURG, PA 17111 (717) 975-5630 Principal Amount: $237,345.00 Initial Rate: 8.750% Date of Note: October 29, 2007 PROMISE TO PAY. Hutch Homes, Inc. ("Borrower") promises to pay to COMMERCE BANK/HARRISBURG N.A. ("Lender"), or order, in lawful money of the United States of America, the principal amount of Two Hundred Thirty-seven Thousand Three Hundred Forty-five & 00/100 Dollars ($237,345.00) or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance. Interest shall be calculated from the date of each advance until repayment of each advance. PAYMENT. Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on April 29, 2009. In addition, Borrower will pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning November 29, 2007, with all subsequent Interest payments to be due on the same day of each month after that. Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any unpaid collection costs; and then to any late charges. The annual Interest rate for this Note is computed on a 3651360 basis; that Is, by applying the ratio of the annual Interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate in writing. VARIABLE INTEREST RATE, The interest rate on this Note is subject to change from time to time based on changes in an independent index which is the Prime Rate as published in the Money Rate Section of the Wall Street Journal (the "Index"), The Index is not necessarily the lowest rate charged by Lender on its loans. If the Index becomes unavailable during the term of this loan, Lender may designate a substitute index after notifying Borrower. Lender will tell Borrower the current Index rate upon Borrower's request. The interest rate change will not occur more ofte _-fte *han-each daily R Ira loans based on other rates as well. The Index current) is 7.750% per annum. The interest rate to be applied to the unpaid- principal balance during this Note will be at a rate of -.000 percentage point over the Index, resulting in an initial rate of 8.750% per annum. NOTICE: Under no circumstances will the interest rate on this Note be more than the maximum rate allowed by applicable law. PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges are earned fully as of the date of the loan and will not be subject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law. Except for the foregoing, Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments of accrued unpaid interest. Rather, early payments will reduce the principal balance due. Borrower agrees not to send Lender payments marked "paid in full", "without recourse", or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: COMMERCE BANKMARRISBURG N.A., COMMERCIAL MORTGAGE DEPARTMENT, 3801 PAXTON STREET, HARRISBURG, PA 17111. INTEREST RESERVES. Borrower authorizes Lender to place $9,000.00 of the Principal Amount as an interest reserve, which is an estimate of the interest due on the Note ("Interest Reserve"). All interest payments shall be paid from the Interest Reserve. Lender may automatically deduct accrued unpaid interest from the Interest Reserve. Interest will accrue, as described in this Note, on amounts deducted from the Interest Reserve. In the event the interest due under this Note exceeds the interest Reserve, Borrower will pay accrued unpaid interest when due according to the terms of this Note. Upon maturity, Lender will not advance or disburse the remaining interest Reserve, if any, to Borrower. The principal due upon maturity will not Include any remaining Interest Reserve. LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged 5.000% of the regularly scheduled payment. INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased by adding a 4.000 percentage point margin ("Default Rate Margin"). The Default Rate Margin shall also apply to each succeeding interest rate change that would have applied had there been no default. If judgment is entered in connection with this Note, interest will continue to accrue after the date of judgment at the rate in eff ect, at the time judgment is entered. However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law. DEFAULT. Each of the following shall constitute an event of default ("Event of Default") under this Note: Payment Default. Borrower fails to make any payment when due under this Note. Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower. Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's property or Borrower's ability to repay this Note or perform Borrower's obligations under this Note or any of the related documents. Environmental Default. Failure of any party to comply with or perform when due any term, obligation, covenant or condition contained in any environmental agreement executed in connection with any loan. False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter. Insolvency. The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower. Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, PROMISSORY NOTE Loan No: 3554350 (Continued) Page 2 repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute. Insufficient Market Value of Securities. Failure to satisfy Lender's requirement set forth in the Insufficient Market Value of Securities section of the Pledge Agreement. Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note. In the event of a death, Lender, at its option, may, but shall not be required to, permit the Guarantor's estate to assume unconditionally the obligations arising under the guaranty in a manner satisfactory to Lender, and, in doing so, cure any Event of Default. Change In Ownership. Any change in ownership of twenty-five percent (25°x) or more of the common stock of Borrower. Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of this Note is impaired. Insecurity. Lender in good faith believes itself insecure. Cure Provisions. If any default, other than a default in payment or failure to satisfy Lender's requirement in the Insufficient Market Value of Securities section is curable and if Borrower has not been given a notice of a breach of the same provision of this Note within the preceding twelve (12) months, it may be cured if Borrower, after receiving written notice from Lender demanding cure of such default: (1) cures the defauit within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days, immediately initiates steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical. LENDER'S RIGHTS. Upon default, Lender may, after giving such notices as required by applicable law, declare the entire unpaid principal ___--balance under-this-Note-and all-accrued unpaid interest immadiately due and then Borrower will pay that amount. ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay Lender that amount. This includes, subject to any limits under applicable law, Lender's reasonable attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit, including reasonable attorneys' fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law. GOVERNING LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the Commonwealth of Pennsylvania without regard to its conflicts of law provisions. This Note has been accepted by Lender in the Commonwealth of Pennsylvania. RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts. COLLATERAL. Borrower acknowledges this Note is secured by the following collateral described in the security instruments listed herein: (A) a Construction Mortgage dated October 29, 2007, to Lender on real property located in York County, Commonwealth of Pennsylvania. (B) securities or investment property described in a Commercial Pledge Agreement dated October 29, 2007. LINE OF CREDIT. This Note evidences a straight line of credit. Once the total amount of principal has been advanced, Borrower is not entitled to further loan advances. Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instructions of an authorized person or (B) credited to any of Borrower's accounts with Lender. The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lender's internal records, including daily computer print-outs. POST CLOSING COMPLIANCE. Borrower agrees to execute, re-execute, cause a Guarantor(s) or other third partyiies) involved in the loan transaction to execute and/or re-execute and to deliver to Lender or its legal counsel, as may be deemed appropriate, any document or instrument signed in connection with the Loan which was incorrectly drafted and/or signed, as well as any document or instrument which should have been signed at or prior to the closing of the Loan, but which was not so signed and delivered. Borrower agrees to comply with any written request by Lender within ten (10) days after receipt by Borrower of such request. Failure to Borrower to so comply shall, at the option of Lender, upon notice to Borrower, constitute an event of default under the Loan, COMMITMENT LETTER COMPLIANCE.. This loan is contingent upon Borrower's compliance with all of the terms and conditions in the commitment letter issued by Lender to Borrower on or about October 22, 2007. Upon breach of any term of condition therein Lender shall have the right to declare this loan in default and demand payment in full of the principal balance remaining unpaid, together with all interest, which shall have accrued thereon. COLLATERAL RESTRICTION. Trading in the FMA Advisors marketable securities account is prohibited without prior written approval of the Bank. MONTHLY SUBMISSION OF BROKERAGE STATEMENTS. Borrower understands and agrees that Brokerage Statements to be forwarded to Lender every month. SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns. NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES. Please notify us if we report any inaccurate information about your account(s) to a consumer reporting agency. Your written notice describing the specific inaccuracy(ies) should be sent to us at the following address: COMMERCE BANK/HARRISBURG N.A. LOAN SERVICING 3801 PAXTON STREET HARRISBURG, PA 17111. GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this .I-,- ....a ....I---.h' ?+a+- i...w,rif:nn nn Hart., whn cinnc thie Nnta whalhar ac maker nnarantnr annnmmndatinn maker nr PROMISSORY NOTE Loan No: 3554350 (Continued) Page 3 endorser, shall be released from liability, All such parties agree that Lender may renew or extend Irepeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several, If any portion of this Note is for any reason determined to be unenforceable, it will not affect the enforceability of any other provisions of this Note. CONFESSION OF JUDGMENT. BORROWER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR THE PROTHONOTARY OR CLERK OF ANY COURT IN THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE, TO APPEAR AT ANY TIME FOR BORROWER AFTER A DEFAULT UNDER THIS NOTE AND WITH OR WITHOUT COMPLAINT FILED, CONFESS OR ENTER JUDGMENT AGAINST BORROWER FOR THE ENTIRE PRINCIPAL BALANCE OF THIS NOTE AND ALL ACCRUED INTEREST, LATE CHARGES AND ANY AND ALL AMOUNTS EXPENDED OR ADVANCED BY LENDER RELATING TO ANY COLLATERAL SECURING THIS NOTE, TOGETHER WITH COSTS OF SUIT, AND AN ATTORNEY'S COMMISSION OF TEN PERCENT (10%) OF THE UNPAID PRINCIPAL BALANCE AND ACCRUED INTEREST FOR COLLECTION, BUT IN ANY EVENT NOT LESS THAN FIVE HUNDRED DOLLARS ($500) ON WHICH JUDGMENT OR JUDGMENTS ONE OR MORE EXECUTIONS MAY ISSUE IMMEDIATELY; AND FOR SO DOING, THIS NOTE OR A COPY OF THIS NOTE VERIFIED BY AFFIDAVIT SHALL BE SUFFICIENT WARRANT. THE AUTHORITY GRANTED IN THIS NOTE TO CONFESS JUDGMENT AGAINST BORROWER SHALL NOT BE EXHAUSTED BY ANY EXERCISE OF THAT AUTHORITY, BUT SHALL CONTINUE FROM TIME TO TIME AND AT ALL TIMES UNTIL PAYMENT IN FULL OF ALL AMOUNTS DUE UNDER THIS NOTE, BORROWER HEREBY WAIVES ANY RIGHT BORROWER MAY HAVE TO NOTICE OR TO A HEARING IN CONNECTION WITH ANY SUCH CONFESSION OF JUDGMENT AND STATES THAT EITHER A REPRESENTATIVE OF LENDER SPECIFICALLY CALLED THIS CONFESSION OF JUDGMENT PROVISION TO BORROWER'S ATTENTION OR BORROWER HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL. PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE. BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE. THIS NOTE IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS NOTE IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW. BORROWER: HUTCH H?MES?NC. / Inc. LW.A PM Lwdi g. Vw. d39.0(004 Cep. "w1wd F-W Sakda lea. 1887, 2007. A8 apl,b A*- d. - PA H;%VANAPP5W-MNICFlNAWMFC TP-3170 M;O "References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item. Any item above containing "•*•" has been omitted due to text length limitations. irrower: Hutch Homes, Inc. Lender: COMMERCE BANKMARRISBURG 414 South York Street COMMERCIAL MORTGAGE DEPARTMENT Mechanicsburg, PA 17055 3801 PAXTON STREET HARRISBURG, PA 17111 (888) 837.0004 Principal Amount: $204,480.15 Initial Rate: 4.250% Date of Agreement: April 14, 200! 3ESCRIPTION OF CHANGE IN TERMS. The maturity date for the above-referenced loan is hereby extended from April 29, 2009 to July 29 2009. :ONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of the original obligation or obligations, including a agreements evidenced or securing the obligation(a), remain unchanged and in full force and effect. Consent by Lender to this Agreement doe lot waive Lender's right to strict performance of the obligation(s) as changed, nor obligate Lender to make any future change in terms. Nothin n this Agreement will constitute a satisfaction of the obligation(s). it is the Intention of Lender to retain as liable parties all makers aro )ndorsers of the original obligation(s), including accommodation parties, unless a party is expressly released by Lender In writing. Any maker c )ndorser, including accommodation makers, will not be released by virtue of this Agreement. If any person who signed the original obligatio foes not sign this Agreement below, then all persons signing below acknowledge that this Agreement is given conditionally, based on th •spresentation to Lender that the non-signing party consents to the changes and provisions of this Agreement or otherwise will not be release )y it. This waiver applies not only to any initial extension, modification or release, but also to all such subsequent actions. PHIS AGREEMENT IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW. sRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGREEMENT. BORROWER 4GREES TO THE TERMS OF THE AGREEMENT. 30RROWER- iUTC HOMES, INC.. f 3y. (Seal) Imes W. Hutc , Jr., Pre dent of Hutch Homes, Inc. uaMAMO L?h& v.. MMOLM a r.. rYr4"O IbrWY swM.?a ?.. tN7,?700M. N WO N"w-. • M M:U R%LKW2MC(t 76MW70 PW20 C4ANGE IN TERMS AGREEMENT CHANGE IN TERMS AGREEMENT Principal Loan Date Maturity Loan No Call / Coll Account Officer Initials $204,480.15 10.29-2007 08-29-2009 3554350 500196 2115 References in the boxes above are for Landees use only and do not limit the applicability of this document to any particular loan or Item. An kem above containing has been omitted due to text length limitations. Borrower: Hutch Homes, Inc. Lender: COMMERCE BANK / HARRISBURG T/D/BIA METRO 414 South York Street BANK Mechanicsburg, PA 17055 COMMERCIAL MORTGAGE DEPARTMENT 3801 PAXTON STREET HARRISBURG, PA 17111 (888) 937-0004 Principal Amount: $204,480.15 Date of Agreement: July 21, 2009 DESCRIPTION OF CHANGE IN TERMS. The maturity date for the above-referenced loan is hereby extended from July 29, 2009 to August 29, 2009. CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of the original obligation or obligations, including all agreements evidenced or securing the obligation(s), remain unchanged and in full force and effect. Consent by Lender to this Agreement does not waive Lender's right to strict performance of the obligation(s) as changed, nor obligate Lender to make any future change in terms. Nothing In this Agreement will constitute a satisfaction of the obligation(s). It Is the intention of lender to retain as liable parties all makers and endorsers of the original obiigatlon(a), Including accommodation parties, unless a party Is expressly released by Lender in writing. Any maker or endorser, Including accommodation makers, will not be released by virtue of this Agreement. If any pennon who signed the original obligation does not sign this Agreement below, then all persons signing below acknowledge that this Agreement Is given conditionally, based on the representation to Lender that the non-signing party consents to the changes and provisions of this Agreement or otherwise will not be released by it This waiver applies not only to any initial extension, modification or release, but also to all such subsequent actions. THIS AGREEMENT IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT M AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW. PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGREEMENT. BORROWER AGREES TO THE TERMS OF THE AGREEMENT. BORROWER: HUTCH HPM INC. t y ,. Ina. LAM NO L?VW U&MON GoP-IYYM 1'Y-nY! taluUia 1M. MY ML M NO" R-" • M VAANGE IN TERMS AGREEMEN it Principal Loan Date Maturity Loan No Call / Cali Account Officer I Initials $237,3 5.00 10-29-2007 11-29-2009 3554350 600196 2115 References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular ban or item. Any Item above containing`-- has been omitted due to text length limitations. Borrower: Hutch Homes, Inc. Lander. METRO BANK 414 South York Street COMMERCIAL MORTGAGE DEPARTMENT Mechanicsburg, PA 17055 3801 PAXTON STREET HARRISBURG, PA 17111 (888)837.0004 Principal Amount: $237,345.00 Date of Agreement: August 27, 2009 DESCRIPTION OF EXISTING INDEBTEDNESS, Refer to Promissory Note dated October 29, 2007, DESCRIPTION OF COLLATERAL Refer to Security documents dated October 29, 2007. DESCRIPTION OF CHANGE IN TERMS. The maturity date for the above-referenced loan la hereby extended from August 29, 2008 to November 29, 2009. CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of the original obligation or obligations, including all agreements evidenced or seouring the obligation(s), remain unchanged and in full forte and effect. Consent by Lender to this Agreement dome not waive Lender's right to strict performance of the obligation(s) as changed, nor obligate Lender to make any future change in terms. Nothing in this Agreement will eonsdwte a satisfaction of the obligation(s). It is the intention of Lander to retain as Roble parties all makers and endorsers of the original obligation(s), Including accommodation parties, unless a party is expressly released by Lender in writing. Any maker or endorser. Including accommodation makers, will not be released by virtue of this Agreement. If any person who signed the original obligation does not sign this Agreement below, then all persons signing below acknowledge that this Agreement is given canditionaity. based on the representation to Lender that the non-signing party consents to the changes and provisions of this Agreement or otherwise will not be released by it. This waiver applies not only to any initial extension, modification or release, but also to all such subsequent actions, REFERENCE TO LENDER This Change in Terms Agreement Is being made by Metro Bank formery known as Commerce Bank / Harrisburg, N.A THIS AGREEMENT IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT IS AND SHALL CONSTITUTE AND RAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW. PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGREEMENT, BORROWER AGREES TO THE TERMS OF THE AGREEMENT, BORROWER: HUTC ME$, I ;° ..!'?.. _ Seal) !INK utchison, r es nt o Hutch mt:s, Inc. Wo 04 L."M V... l?u%a. rna..wwr flr r„ WVY.w) km m), 2-, . e*0 .- • P. ?'OrKrIQ?1a?G )M+4n M= Td 1,11:14Z:40 6002 6Z '6nd 9994 469 : 'ON dNOHd NOI ion6iSN00 HOif1H : WMU cNANGE IN TERMS AGREEMENT Principal Loan Dace 1 Maturity Loan No Call con Account Officer Inltlals $237,345.00 10-29-2007 07-29-20101 3554350 600196 2115 Retemnoes In the boxes above are for Lenders use only and do not limn the applicability of this document to any particular loan or Item. . An item above containing "°-"' has been omitted due to text length limitations. Borrower: Hutch Homes, Inc. Lender. METRO BANK 414 South York Street COMMERCIAL MORTGAGE DEPARTMENT Mechanicsburg, PA 17055 3801 PAXTON STREET HARRISBURG, PA 17111 (888) 837-0004 Principal Amount: $237,345.00 Date of Agreement: May 11, 2010 DESCRIPTION OF CHANGE IN TERMS. The maturity date for the above-referenced ban is hereby extended from May 29. 2010 to July 29, 2010. CONTINUING VAUD". Except as expressly changed by this Agreement, the terms of the original obligation or obligations. Including all agreements evidenced or securing the abllgation(s), remain unchanged and In full force and effect. Consent by Lender to this Agreement does not waive Lenders right to strict performance of the obligation(s) as changed, nor obligate Lender to make arty future change in terms. Nothmg In ;his Agreement will constitute a satisfaction of the obligation(s). It Is the intention of Lender to retain as liable parties all makers and endorsers or the original obligation(s), including accommodation parties, unless a party is exprway released by Lender In writing. Any maker or endorser, Including accommodation makers, will not be released by virtue of this Agreement. If any parson who signed the original obligation does not sign this Agreement below, then all persons signing below acknowledge that this Agreement Is given conditionally, based on the representation to Lender mat the non-signing party consents to the changes and provisions of this Agreement or otherwise will not be released by it. This waiver applies not only to any innlal extension, modification or release, but also to all such subsequent actions. REFERENCE TO LENDER. This Change in Terms Agreement Is being made by Metro Bank formerly known as Commerce Bank I Harrisburg, N.A. CONFESSION OF JUDGMENT. BORROWER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR THE PROTHONOTARY OR CLERK OF ANY COURT IN THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE. TO APPEAR AT ANY TINE FOR BORROWER AFTER A DEFAULT UNDER THIS NOTE AND WITH OR WITHOUT COMPLAINT FILED, CONFESS OR ENTER JUDGMENT AGAINST BORROWER FOR THE ENTIRE PRINCIPAL BALANCE OF THIS NOTE AND ALL ACCRUED INTEREST, LATE CHARGES AND ANY AND ALL AMOUNTS EXPENDED OR ADVANCED BY LENDER RELATING TO ANY COLLATERAL SECURING THIS NOTE. TOGETHER WITH COSTS OF SUIT, AND AN ATTORNEY'S COMMISSION OF TEN PERCENT (10%) OF THE UNPAID PRINCIPAL BALANCE AND ACCRUED INTEREST FOR COLLECTION, BUT IN ANY EVENT NOT LESS THAN FIVE HUNDRED DOLLARS ($500) ON WHICH JUDGMENT OR JUDGMENTS ONE OR MORE EXECUTIONS MAY ISSUE IMMEDIATELY; AND FOR SO DOING, THIS NOTE OR A COPY OF THIS NOTE VERIFIED BY AFFIDAVIT SHALL BE SUFFICIENT WARRANT. THE AUTHORITY GRANTED IN THIS NOTE TO CONFESS JUDGMENT AGAINST BORROWER SHALL NOT BE EXHAUSTED BY ANY EXERCISE OF THAT AUTHORITY, BUT SHALL CONTINUE FROM TIME TO TIME AND AT ALL TIMES UNTIL PAYMENT IN FULL OF ALL AMOUNTS DUE UNDER THIS NOTE. BORROWER HEREBY WAIVES ANY RIGHT BORROWER MAY HAVE TO NOTICE OR TO A HEARING IN CONNECTION WITH ANY SUCH CONFESSION OF JUDGMENT AND STATES THAT EITHER A REPRESENTATIVE OF LENDER SPECIFICALLY CALLED THIS CONFESSION OF JUDGMENT PROVISION TO BORROWER'S ATTENTION OR BORROWER HAS BEEN REPRESENTED ESY INDEPENDENT LEGAL COUNSEL. THIS AGREEMENT IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT 13 AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW. PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGREEMENT. BORROWER AGREES TO THE TERMS OF THE AGREEMENT. [BORROWER. HUTCH JWOMES, *nws, r`+= ^: ,:" ;::; (Seal) utcNson?.Jr., Presid of utch.. Ina. W"ML-Ai V-, s."Aft PW -w"1-107.„,h .i Mo.*..u.., .ru VVIQLroWIC T.,UW$ M.W Zd WdTO:20 OTOZ TO 'unt 9992 L69 : 'ON 3NOHd NOIIDMI I gNOa Ha nl-l : Woad DISCLOSURE FOR CONFESSION OF JUDGMENT THE UNDERSIGNED IS EXECUTING ON BEHALF OF DECLARANT, THIS I I u' DAY OF May, 2010, A CHANGE IN TERMS AGREEMENT TO THE PROMISSORY NOTE FOR $237,345.00 (LOAN NUMBER 3554350) 013LIGATING DECLARANT TO REPAY THAT AMOUNT. A. THE UNDERSIGNED UNDERSTANDS THAT THE NOTE AND THE CHANGE IN TERMS AGREEMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION THAT WOULD PERMIT I.ENDER TO ENTER JUDGMENT AGAINST DECLARANT IN COURT, AFTER A DEFAULT ON THE NOTE AS AMENDED, WITHOUT ADVANCE NOTICE TO DECLARANT AND WITHOUT OFFERING DECLARANT AN OPPORTUNITY TO DUIPEND AGAINST THE ENTRY OF JUDGMENT. IN EXECUTING THE CHANGE IN TERMS AGREEMENT, BEING FULLY AWARE OF DECLARANT'S RIGHTS TO ADVANCE NOTICE AND TO A HEARING TO CONTEST THE VALIDITY OF ANY JUDGMENT OR OTHER CLAIMS THAT LENDER MAY ASSERT AGAINST DECLARANT UNDER THE NOTE AS AMENDED, THE UNDERSIGNED, ON BEHALF OF THE DECLARANT, IS KNOWINGLY, INTELLIGENTLY, AND VOLUNTARILY WAIVING THESE RIGHTS, INCLUDING ANY RIGHT TO ADVANCE NOTICE OF THE ENTRY OF JUDGMENT, AND THE UNDERSIGNED EXPRESSLY AGREES AND CONSENTS TO LENDER'S ENTERING JUDGMENT AGAINST DECLARANT BY CONFESSION AS PROVIDED FOR IN THE SION OF JUDGMENT PROVISION. INITIALS: B. THE UNDERSIGNED FURTHER UNDERSTANDS THAT IN ADDITION TO GIVING LENDER THP RIGHT TO ENTER JUDGMENT AGAINST DECLARANT WITHOUT ADVANCE NOTICE OR A HEARING, THE CONFESSION OF JUDGMENT PROVISION IN THE NOTE AND THIS CHANGE IN TERMS AGREEMENT ALSO CONTAIN LANGUAGE THAT WOULD PERMIT LENDER, AFTER ENTRY OF JUDGMENT, AGAIN WITHOUT EITHER ADVANCE NOTICE OR A HEARING, TO EXECUTE ON THE JUDGMENT BY FORECLOSING UPON, ATTACHING, LEVYING ON, TAKING POSSESSION OF OR OTHERWISE SEMNG DECLARANT'S PROPERTY, IN FULL OR PARTIAL PAYMENT OF THE JUDGMENT. IN EXECUTING THE CHANGE IN TERMS AGREEMENT, BEING FULLY AWARE OF DECLARANT'S RIGHTS TO ADVANCE NOTICE AND A HEARING AFTER JUDGMENT IS ENTERED AND BEFORE EXECUTION ON THE JUDGMENT, THE UNDERSIGNED, ON BEHALF OF THE DECLARANT, IS KNOWINGLY, INTELLIGENTLY AND VOLUNTARILY WAIVING THESE RIGHTS, AND THE UNDERSIGNED EXPRESSLY AGREES AND CONSENTS TO LENDER'S IMMEDIATELY EXECUTING ON THE RJPGMENT IN ANY MANNER PERMITTED BY APPLICABLE STATE AND FEDERAL LAW, WITHOUT GIVING D ANY ADVANCE NOTICE. INITIA : C. AFTER HAVING READ AND DETERMINED WHICH OP THE FOLLOWING STATEMENTS ARE APPLICABLE, BY INITIALING EACH STATEMENT THAT APPLIES, THE UNDERSIGNED REPRESENTS THAT: INITIAL ONE BELOW: 1. DECLARANT WAS REPRESENTED BY DECLARANTS OWN INDEPENDENT LEGAL 2M-MENT IN CONNECTION WITH THE NOTE AND THIS CHANGE IN TERMS AGREEMENT. 2. A REPRESENTATIVE OF LENDER SPECIFICALLY CALLED TIE CONFESSION OF PROVISION IN THE NOTE AND THIS CHANGE IN TERMS AGREEMENT TO DECLARANT'S ATTENTION. THIS DISCLOSURE IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS DISCLOSURE IS AND SHALL CONSTITUTE AND HA THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW. DE T: OMES, INC. B (SEAL) 7 W, CHISON, PRESIDENT OF HUTCH HOMES, INC. Td Wd00:20 0202 TO 'unlf 9992 269 : 'ON 9NOHd NOIion8.ISN00 H3inH : WOad CHANGE IN TERMS AGREEMENT Principal Losn Date Mtettlrity Loan No can colt Account er Initials 1 237,345.00 J0-29-2007 1218-2010 358d360 600196 BIG References ih this boxes above are for Lender's use ont and do not limit the applicability of this document to any particular loan or Item. "" has been omitted due to text length limit Wne. Any teem etaove containing Borrower: Hutch Homes, ine. Lender: METRO BANK 41 A South York Street COMMERCIAL MOIRTGiASE DEPARTMENT Nechaniesburg, PA 17055 3801 PATRON STREET HARIMBUIPA PA 17111 (3ee) 937-0004 Principal Amount: $237,349.00 Data of Agreement: November 9, 2010 DESCRIPTION OF CHANGE IN TERMS. The maturity data for the Amveaeferenced ban is hereby extended from September 29, 2010 to December 29, 2010. This Change in Terms Agreement Is deemed to have been effective as of September 29, 201o. CONTINUING VALIDITY. Except as pressly changed by this Agreement the terms of the original obligation or obiigailons, Including all agreements evidenced or securing the obligation(s), remain unchanged and in full force and effect. Consent by Lender to this Agreement does not waive Lenders right to select performance of the otigation(s) as drarrged, nor obligate Lander to make any future change in terns. Nothing in this Agreement will constitute a satisfaction of the obligation(s). It Is the Inremton of Lander to retain as liable parties all maters are endorsers of the original obligation(s), including accommodation partlea unless a party is expressly released by Lender In writing. Any maker or sndpreer, fntludiog "wmmvdirHvn meker4, will not be released by vktva of this Agreement, If ary person who signed the original obligation does not sign this Agreement below, then all persons signing below acknowledge that this Agreement is given conditionally, based on the representation to Lender that the non-slgning party consents to the changes and provbions of this Agreement or otherwise wvi not be naiea$ed by it. This waiver applies not only to any initial extension, modification or release, but also to all such subsequent actions. REFERENCE TO LENDER. This Change In Terms Agreement Is being made by Metro Bank formerly known as Commerce Bank I Harrlsburg, N.A. CONFESSION OF JUDGMENT. BORROWER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR THE PROTHONOTARY OR CLERK OF ANY COURT IN THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE, TO APPEAR AT ANY TIME FOR BORROWER AFTER A DEFAULT UNDER THIS NOTE AND WITH OR WITHOUT COMPLAINT FILED, CONFESS OR ENTER JUDGMENT AGAINST BORROWER FOR THE ENTIRE PRINCIPAL BALANCE OF THIS NOTE AND ALL ACCRUED INTEREST. LATE CHARGES AND ANY AND ALL AMOUNTS EXPENDED OR ADVANCED BY LENDER RELATING TO ANY COLLATERAL SECURING THI3 NOTE, TOGETHER WITH COSTS OF SUIT, AND AN ATTORNEY'S COMMISSION OF TEN PERCENT (10%) OF THE UNPAID PRINCIPAL BALANCE AND ACCRUED INTEREST FOR COLLECTION, BUT IN ANY EVENT NOT LESS THAN FIVE HUNDRED DOLLARS (S4p0) ON WHICH JUDGMENT OR JUDGMENTS ONE OR MORE EXECUTIONS MAY ISSUE IMMEDIATELY; AND FOR 90 DOING. THIS NOTE OR A COPY OF THIS NOTE VERIFIED BY AFFIDAVIT SHALL SE SUFFICIENT WARRANT. THE AUTHORITY GRANTED IN THIS NOTE TO CONFESS JUDGMENT AGAINST BORROWER SHALL NOT BE EXHAUSTED BY ANY EXERCISE OF THAT AUTHORITY, BUT SHALL CONTINUE FROM TIME TO TIME AND AT ALL TIMES UNTIL PAYMENT IN FULL OF ALL AMOUNTS DUE UNDER THIS NOTE. 1ORROWER HEREBY WANES ANY RIGHT BORROWER MAY HAVE TO NOTICE OR TO A HEARING IN CONNECTION WITH ANY SUCH CONFESSION OF JUDGMENT AND STATES THAT EITHER A REPRESENTATIVE OF LENDER SPECIFICALLY CALLED THIS CONFESSION OF JUDGMENT PROVISION TO BORROWER'S ATTENTION OR BORROWER HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL THIS AGREDIENT 15 GlIVE N UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT IS AND SHALL CONSTTTUTE AND NAVE THE EFFF6CT OF A SEALED INSTRUMENT ACCORDING TO LAW. PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGREEMENT. BORROWER AGREES TO THE TERMS OF THE AGREEMENT. .+ ? rra,.,,r,n vr, ass.,? c.w. ? wn,r.i fair... w, nw, aoa..u „y,., w..e. • rw ypmw,e»wo ?r r,w Zd Wd£0:L0 0ti0Z eT 'AON 999L L69 : 'ON 3NOHd NO11.911NLSNOO 1-191M : WO?lzl DISCLOSURE FOR CONFESSI!QN OF JUDGMENT THE UNDERSIGNED IS EXECUTING ON BEHALF OF DECLARANT, THIS 9TH DAY OF NOVEMBER, 2010, A CHANGE IN TERMS AGREEMENT TO THE PROMISSORY NOTE FOR $237,345.00 (LOAN NUMBER 3554350) OBLIGATING DECLARANT TO REPAY THAT AMOUNT. A. THE UNDERSIGNED UNDERSTANDS THAT THE NOTE AND THE CHANGE IN TERMS AGREEMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION THAT WOULD PERMIT LENDER TO ENTER JUDGMENT AGAINST DECLARANT IN COURT, AFTER A DEFAULT ON THE NOTE AS AMENDED, WITHOUT ADVANCE NOTICE TO DECLARANT AND WITHOUT OFFERING DECLARANT AN OPPORTUNITY TO DEFEND AGAINST THE ENTRY OF JUDGMENT. IN EXECUTING THE CHANGE IN TERMS AGREEMENT, BEING FULLY AWARE OF DECLARANT'S RIGHTS TO ADVANCE NOTICE AND TO A HEARING TO CONTEST THE VALIDITY OF ANY JUDGMENT OR OTHER CLAIMS THAT LENDER MAY ASSERT AGAINST DECLARANT UNDER THE NOTE AS AMENDED, THE UNDERSIGNED, ON BEHALF OF THE DECLARANT, IS KNOWINGLY, INTELLIGENTLY, AND VOLUNTARILY WAIVING THESE RIGHTS, INCLUDING ANY RIGHT TO ADVANCE NOTICE OF THE ENTRY OF JUDGMENT, AND THE UNDERSIGNED EXPRESSLY AGREES AND CONSENTS TO LENDER'S ENTERING JUDGME T AGAINST DECLARANT BY CONFESSION AS PROVIDED FOR IN THE CONFESSION OF JUDGMENT PROVISI INITIA $. THE UNDERSIGNED FURTHER UNDERSTANDS THAT IN ADDITION TO GIVING LENDER THE RIGHT TO ENTER JUDGMENT AGAINST DECLARANT WITHOUT ADVANCE NOTICE OR A HEARING, THE CONFESSION OF JUDGMENT PROVISION IN THE NOTE AND THIS CHANGE IN TERMS AGREEMENT ALSO CONTAIN LANGUAGE THAT WOULD PERMIT LENDER, AFTER ENTRY OF JUDGMENT, AGAIN WITHOUT EITHER ADVANCE NOTICE OR A HEARING, TO EXECUTE ON THE JUDGMENT BY FORECLOSING UPON, ATTACHING. LEVYING ON, TAKING POSSESSION OF OR OTHERWISE SEIZING DECLARANT'S PROPERTY, IN FULL OR PARTIAL PAYMENT OF THE JUDGMENT. IN EXECUTING THE CHANGE IN TERMS AGREEMENT, BEING FULLY AWARE OF DECLARANT'S RIGHTS TO ADVANCE NOTICE AND A HEARING AFTER JUDGMENT IS ENTERED AND BEFORE EXECUTION ON THE JUDGMENT, THE UNDERSIGNED, ON BEHALF OF THE DECLARANT, IS KNOWINGLY, INTELLIGENTLY AND VOLUNTARILY WAIVING THESE RIGHTS, AND THE UNDERSIGNED EXPRESSLY AGREES AND CONSENTS TO LENDER'S IMMEDIATELY EXECUTING ON THE JUDGMENT IN ANY MANNER PERMITTED BY APPLICABLE STATE AND FEDERAL LAW, WITHOUT GIVING DECLARANT ANY ADVAN 09TICE. INITIA W C. AFTER HAVING READ AND DETERMINED WHICH OF THE FOLLOWING STATEMENTS ARE APPLICABLE, BY INITIALING EACH STATEMENT THAT APPLIES, THE UNDERSIGNED REPRESENTS THAT: INITIALS: 1. DECLARANT WAS REPRESENTED BY DECLARANT'S OWN INDEPENDENT LEGAL COUNSEL I CONNECTION WITH THE NOTE AND THIS CHANGE IN TERMS AGREEMENT, 2, A REPRESENTATIVE OF LENDER SPECIFICALLY CALLED THE CONFESSION OF JUDGMENT OVISION IN THE NOTE AND THIS CHANGE IN TERMS AGREEMENT TO DECLARANT'S ATTENTION. THIS DISCLOSURE IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS DISCLOSURE IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW. ANT: HISCA HOMES, INC. ? iG r t ' I (SEAL) J mes W. Hu chanson, Jr., President of Hutch Homes, Inc. Td WdZO:Z0 OTOZ BT '^0N 9992 Z69 : 'ON 9NOHd Noiio maswo HOJ.f1H : W0?Izl CHANGE IN TERMS AGREEMENT prrstorpsrl loan t7ata Maturity than No Call 1 Colt Account Officer !Willa #237,345.00 10.29-2007 09-29-2011 3854330 800196 818 References in the box" abe" are for Landws use only and do not Nrnit the sppliaab-11 of tNa document to arty portiouMe ban or itarn- ng_ A stern above contakti has n amktad des to text I tit Bmitat+a+a. Borrower: Hutch Harries. Inc. Lonclart MGM RANK 414 6auth York Street 00MMIMCIAL MORTGA43S DBPARTM6NT Meohenicabunb PA 17055 3801 PAXTON STREET HARRISBURG. PA 17111 I8$B) 937.0004 Principal Amount; 8227,345.00 ? [late of Agreement: January 27, 2011 DESCRIPTION OF MSTING IyDERTEDNESB. Iiafar to the pramlaaoty Note dated Ootpber 29, 2007, as amended. D=RI)rMN OF COLLATUVAL. Refer to the Seawlty Doev"nta dated Ootabar 29, 2007. DESCRWT40M OF CHANGE III TEIIIMS. The maturity dote for the above-rofarentred loan is hereby extended from Dsoombor,20. 2010 to June 29, 2011. This Change In Terms Agreemont is deemed to hove boon effective as of December 29, 2010. - CONTINUING VALIDITY. Except me expressly charigad by this Agreement. the terms of the original obligation or obligations, including so agreements evidenced or securing the obligations), remain unthaegad and In full force and effect Consiord by Lander to "a Agreement does not waive Lender's right to strict performance of tfte obtlgationts) as changed, r*r obligate Lender to make any future ahanga In terms. Nothing In this Agreement will aanaftm a aeTlafactlon of the obligadontsl• It is ttie intention at Ladder to retain as Noble parties all maker: and endorsers of the onginal 0191gatior M, including woommodmian parties, unless a party Is expressly released by Lender in writing. Any maker or andwser. Including accommodation makers. will root be released by vine of this Agreement. It any person who signed the original obligation does not sign Due Agreement below, than N parsons signing below aaknowledge that that Ag OMMAL Is given cendidondly, based on the retlr"antsdon [d Lander that the non-signing party consents to the changes and provisions of this Agreement or otherwise will not be released by It, This welver applies not only to any Initial Extenaien, modification or release, but ciao to all such subsequent actions. REFERENCE TO LENDER. This Change in Terms Ageasment is being made by Metro Bank formerly known as COmMa(aa Bank 1 Harrisburg, N.A. CONFESSION OF JUDGMENT, BORROWER AGREES THAT THE CONFESSION OF JUOOMENT CLAUSE CONTAINED IN THE NOTE DATED OCTOBER 2S, 2007, REMAINS IN FULL FORCE AND EFFECT AND LOW910116 RIGHTS THEREUNDER CONTINUE WITH THE SIGNING OF THIS CHANGE IN TERMS AGRNMENT. THE 04SCLOSURE POR CONFESSION Of JUDGMENT DATED OCTOBER 29, 2007 REMAINS IN FULL FORCE AND EFFECT AND IS DEEMED TO BE REAFFIRMED WITH THE SIGNNG OF THIS CHAWE IN TERMS AGREEMENT. BOTH THE NOTE AND THE DISCLOSURE FOR CONFESSION OF JUDGMENT ARE ATTACHED HERETO AS EXHIBIT A. THIS AGREEMENT 16 GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT IS AND SHALL CONSTITUTE AND HAVE THE >FRCT OF A SEALED INSTRUMENT ACCORDING TO LAW. PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AQIML'llNT. BORROWER AGREES TO THE TERMS OF THE AGRfElEt1ENT. BORROWER: HUTCf Il OM ::.,.. ?,t .G?.` ,?, "'.? • Seals taA, r.. President Hdxnae, hie. Nrawtww.yr.xgr ov. wr.rwowr w•- wrens ..y.y.,p..M .. * WNtq W-V *M1*r rn4P Td WdLZ:bO TTOZ Tr "Uef 9992 269 : 'ON 3NOHd NOIi:)M.LSNOO HO1f1H : WON-A CHANGE IN TERMS AGREEMENT Principal Loan Date Maturity Loan No Cell / call Account Officer Initials $218,589.93 10-29-2007 101-29-2012 3554350__ _600196 990 References in the boxes above are for Lenders use only and do not limit the applicability of this document to any particular ban or item. Any item above containing "''*" has been omitted due to text length limitations. Borrower: Hutch Homes, Inc. Lender: Metro Bank 414 South York Street Commeretai Bustrwec Department Mechanicsburg, PA 17055 3801 Paxton Street Harrisburg, PA 17111 (888) 937.0004 Principal Amount: $218,589.93 Date of Agreement: December 15, 2011 DESCRIPTION OF EXISTING INDEBTEDNESS. Refer to the Promissory Note dated October 29, 2007, as amended. DESCRIPTION OF COLLATERAL Refer to the Security Documents dated October 29, 2007. DESCRIPTION OF CHANGE IN TERMS. The maturity date for the above-referenced loan Is hereby extended from September 29, 2011 to January 29, 2012. This Change In Terms Agreement is deemed to have been effective as of September 29, 2011. CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of the original obligation or obligations, Including all agreements evidenced or securing the obligation(s), remain unchanged and in full force and effect. Consent by Lender to this Agreement does not waive Lender's right to strict performance of the obligation(s) as changed, nor obligate Lender to make any future change in terms. Nothing in this Agreement will constitute a satisfaction of the obligation(s). • It is the Intention of L.ender.to retain as Ihable parties all makers and endorsers of the original obligation(s). Including accommodation parties, unless a party Is expressly released by Lender in writing. Any maker or endorser, including accommodation makers, will not be released by virtue of this Agreement if any person who signed the original obligation does not sign this Agreement below, then all persons signing below acknowledge that this Agreement is given conditionally, based on the representation to Lender that the non4gning party oonsents to the changes and provisions of this Agreement or otherwise will not be released by it. This waiver applies not only to arty initial extension, modification or release, but also to all such subsequent actions. REFERENCE TO LENDER. This Change in Terms Agreement is being made by Metro Bank formerly known as Commerce Bank / Harrisburg, N.A. CONFESSION OF JUDGEMENT. BORROWER AGREES THAT THE CONFESSION OF JUDGMENT CLAUSE CONTAINED IN THE NOTE DATED OCTOBER 29, 2007, REMAINS IN FULL FORCE AND EFFECT AND LENDER'S RIGHTS THEREUNDER CONTINUE WITH THE SIGNING OF THIS CHANGE IN TERMS AGREEMENT. THE DISCLOSURE FOR CONFESSION OF JUDGMENT DATED OCTOBER 29, 2007 MAINS IN FULL FORCE AND EFFECT AND IS DEEMED TO BE REAFFIRMED WITH THE SIGNING OF THIS CHANGE IN TERMS AGREEMENT. BOTH THE NOTE AND THE DISCLOSURE FOR CONFESSION OF JUDGMENT ARE ATTACHED HERETO AS EXHIBIT A. THIS AGREEMENT IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW. PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGREEMENT. BORROWER AGREES TO THE TERMS OF THE AGREEMENT. BORROWER: / r, HUTC? ME , imp.. ?. ames son, r., nee nt of Hutch \I Homes, Inc. Hill PIIC ?..Ai. v". P.N.70.001 CM. N-Y,/ FmnW aM,CIn.1M i"?, IC11. N N" Pfww0. -PA WOPUR'DMIC iR-UM PR,= CHANGE IN TERMS AGREEMENT Principal n Data Loa Maturity Loan No Call Icoil Account offiow InWais , $218 588.93 10.29.2007 09-29.2011 3584350 600996 990 References in the bwm above are for Lender's use only and do not limit the applicablily of feria doasnsnt to arty particular ban or item, Any Item abi we contairrim '" tree been omitted due io tenet ltmltatkrna. Borrower. Hutch Homes, Inc. Lander. Matra Bank Commefdal Suahrsa Deparibnard 414 South 7arls Street MesJeaniwiwrg, PA 17035 3601 Pairtsa Slrset Haerleburg, PA 17111 (606 937-0004 Principal Amouft 82'18,589.93 Dal:l? of Agreement: July 8, 2011 DESCpWnON OF E7cWMa INDEBTEDNESS. Refarto the Pronrbscry Note dated October 29.2007. as amended. DESCRIPTION OF OOLLATERAL Refer to the Security Doctainonts dated October 2S. 2007. OESCRIPTION OF CHANGE IN TERMS. The ma0.trrtty data for the abowa-raferanoed loan is hereby e4anded from June 29, 2011 to Sepftrrbw 29, 2011. This Change In Terms Agreement is deemed to have been effective as of June 2% 2011. CONTINUING VJWDIT'Y. Emept as axpressly changed by this Agra snenk the terrne of the original obligation or obligations, Induding all agraamerRS widened or sectaMg the ohllga8on(sy remain unchanged and In full forts and affect. Consent by Lender to this Agreement does not wales Landers right to strict parbirmance of Me obTigatlon(s) as changed, rmr obtipate Lander 1o make any future Change In tenure. Nothing in this Agreement will constitute a sattafaelbn of the oWlgation(s} It b the Intentlon of Lander to retain as limb e panles at maeera and andoraws of ttre original oDNgation(s), Including accommodation pertlea. unliess a party is expresely released by Lander in writing. Any rrtaior or endorser, 'nduding aceonunodisbon makers, wW root be released by virtue of this Agreement. If any person who signed the original obligation does not sign this Agreement below, then ail persons marina below aclvrowlodge that tit Agreerment Is given oondtfionaly, besed on the representation to Lender that the non-elgnircg party =meants so the chasrge% and pvovislons of this Agnswent or otherwise will rot be raiassed by It. This waiver applies not only to any tidal extenalort, modiSfeatton or relssse, but also to all such subsequent actlow. REFEIMCE TO LENDER This Change in Torn Agreement is being made by Metro Ow lit fermorly known as Commerce Bank / Harrisburg, N.A CONFESSION OF JUOGENIGNT. BORROWER AGREES THAT THE CONFESSION OF JUDGMENT CLAUSE CONTAtNEO IN THE NOTE DATED OCTOBER 29, 2007, REMAINS IN FULL FORCE AND EFFECT AND LENDERS RIGHTS THEREUNDER CONTINUE WITH THE SIGNING OF THIS CHANGE IN TERMS AGREEMENT THE DISCLOSURE FCR CONFESSION OF JUDGMENT DATED OCTOBER 29, 2007 REMAINS IN RXL FORCE AND EFFECT AND 13 DEEMED TO BE REAFFIRMED WITH THE SIGNING OF THIS CHANGE IN TERMS AGREEMENT. BOTH THE NOTE AND THE DISCLOSURE FOR CONFESSION OF JUDGMENT ARE AT T ACHED HERETO AS EXHIBIT A. THIS AGREMNT 38 GnM UNDER MAL. AND IT 13 INTENDED THAT THIS AGREEMENT IS AND SHALL GOIISTiTUNTE AND HAVE THE EFFECT OF A SEALED INt-TRUM£NT ACCORDING TO LAW. PRIOR TO SIGNING THIS AOMEIMT, BORROWER READ AND UNDERSTOOD ALL THE PROMMONS OF THIS AGREEMENT. BORROWER AGREES TO TH9 TERMS OF THE AGREEMENT. w 0.11aawr.vw.aasMM o?. w.r ¦r-wr r.,.w ss 1mann "WO&U. 4 •M *xV%ANulte eHtlrr r%4" V-d Z8Z80Z9-L 6L UOSiyO;nH wi ag0: 4 6 6l. 9Z 6ny ? ?.????? COMMERCIAL GUARANTY C04 I caa I Lem &Aft t to" A40 . ?.. References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item. Anv item above containing '"'"" has been omitted due to text length limitations. Borrower: Hutch Homes, Inc. Lender: COMMERCE BANKMARRISSURG N.A. 414 South York Street COMMERCIAL MORTGAGE DEPARTMENT Mechanicsburg, PA 17055 3801 PAXTON STREET HARRISBURG, PA 17111 (717) 975-5630 Guarantor: James W. Hutchison, Jr. 414 South York Street Mechanicsburg, PA 17065 CONTINUING GUARANTEE OF PAYMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely and unconditionally guarantees full and punctual payment and satisfaction of the Indebtedness of Borrower to Lander, and the performance and discharge of all Borrower's obligations under the Note and the Related Documents, This is a guaranty of payment and performance and not of collection, so Lender can enforce this Guaranty against Guarantor even when Lender has not exhausted Lander's remedies against anyone else obligated to pay the Indebtedness or against any collateral securing the Indebtedness, this Guaranty or any other guaranty of the indebtedness. Guarantor will make any payments to Lender or Its order, on demand, in legal tender of the United States of America, In same-day funds, without set-off or deduction or counterclaim, and will otherwise perform Borrower's obligations under the Note and Related Documents. Under Ns Guaranty, Guarantor's liability is unlimited and Guarantor's obligations are continuing. INDEBTEDNESS. The word "Indebtedness" as used in this Guaranty means all of the principal amount outstanding from time to time and at any one or more times, accrued unpaid interest thereon and all collection costs and legal expenses related thereto permitted by law, reasonable attorneys' fees, arising from any and all debts, liabilities and obligations of every nature or form, now existing or hereafter arising or acquired, that Borrower individually or collectively or Interchangeably with others, owes or will owe Lender. "Indebtedness" includes, without limitation, loans, advances, debts, overdraft indebtedness, credit card indebtedness, lease obligations, liabilities and obligations under any interest rate protection agreements or foreign currency exchange agreements or commodity price protection agreements, other obligations, and liabilities of Borrower, and any present or future judgments against Borrower, future advances, loans or transactions that renew, extend, modify, refinance, consolidate or substitute these debts, liabilities and obligations whether: voluntarily or involuntarily incurred; due or to become due by their terms or acceleration; absolute or contingent; liquidated or unliquidated; determined or undetermined; direct or indirect; primary or secondary in nature or arising from a guaranty or surety; secured or unsecured; joint or several or joint and several; evidenced by a negotiable or non-negotiable instrument or writing; originated by Lender or another or others; barred or unenforceable against Borrower for any reason -vhatsoever; for any transactions that may be voidable for any reason (such as Infancy, insanity, ultra vireo or otherwise); and originated then educed or extinguished and then afterwards increased or reinstated. If Lender presently holds one or more guaranties, or hereafter receives additional guaranties from Guarantor, Lender's rights under all guaranties shall be cumulative. This Guaranty shall not (unless specifically provided below to the contrary) affect or invalidate any such other guaranties. Guarantor's liability will be Guarantor's aggregate liability under the terms of this Guaranty and any such other unterminstad guaranties. CONTINUING GUARANTY. THIS IS A "CONTINUING GUARANTY" UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL AND PUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF BORROWER TO LENDER, NOW EXISTING OR HEREAFTER ARISING OR ACQUIRED, ON AN OPEN AND CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS MADE ON THE INDEBTEDNESS WILL NOT DISCHARGE OR DIMINISH GUARANTOR'S OBLIGATIONS AND LIABILITY UNDER THIS GUARANTY FOR ANY REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAY BE A ZERO BALANCE FROM TIME TO TIME, DURATION OF GUARANTY. This Guaranty will take effect when received by Lender without the necessity of any acceptance by Lender, or any notice to Guarantor or to Borrower, and will continue In full force until all the Indebtedness incurred or contracted before receipt by Lender of any notice of revocation shall have been fully and finally paid and satisfied and all of Guarantor's other obligations under this Guaranty shall have been performed in full. If Guarantor elects to revoke this Guaranty, Guarantor may only do so in writing. Guarantor's written notice of revocation must be mailed to Lender, by certified mail, at Lender's address listed above or such other place as Lender may designate in writing. Written revocation of this Guaranty will apply only to new Indebtedness created after actual receipt by Lender of Guarantor's written revocation. For this purpose and without limitation, the term "new Indebtedness" does not include the Indebtedness which at the time of notice of revocation is contingent, unliquidated, undetermined or not due and which later becomes absolute, liquidated, determined or due. For this purpose and without limitation, now Indebtedness" does not include all or part of the Indebtedness that Is: incurred by Borrower prior to revocation; incurred under a commitment that became binding before revocation; any renewals, extensions, substitutions, and modifications of the indebtedness. This Guaranty shall bind Guarantor's estate as to the Indebtedness created both before and after Guarantor's death or incapacity, regardless of Lender's actual notice of Guarantor's death. Subject to the foregoing, Guarantor's executor or administrator or other legal representative may terminate this Guaranty in the some manner In which Guarantor might have terminated it and with the same effect. Release of any other guarantor or termination of any other guaranty of the Indebtedness shall not affect the liability of Guarantor under this Guaranty. A revocation Lender receives from any one or more Guarantors shall not affect the liability of any remaining Guarantors under this Guaranty. It is anticipated that fluctuations may occur in the aggregate amount of the Indebtedness covered by this Guaranty, and Guarantor specifically acknowledges and agrees that reductions in the amount of the Indebtedness, even to zero dollars (90.00), shall not constitute a termination of this Guaranty. This Guaranty Is binding upon Guarantor and Guarantor's heirs, successors and assigns so long as any of the Indebtedness remains unpaid and even though the indebtedness may from time to time be zero dollars (90.00). GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before or after any revocation hereof, without notice or demand and without lessening Guarantor's Ilabilky under this Guaranty, from time to time: (A) prior to revocation as set forth above, to make one or more additional secured or unsecured loans to Borrower, to lease equipment or other goods to Borrower, or otherwise to extend additional credit to Borrower; (B) to altar, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of the Indebtedness or any part of the Indebtedness, including Increases and decreases of the rate of interest on the ndebtedness; extensions may be repeated and may be for longer than the original loan term; IC) to take and hold security for the payment of this Guaranty or the Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any such security, with or without the substitution of new collateral; (D) to release, substitute, agree not to sue, or deal with any one or more of Borrower's sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; (E) to determine how, when and what application of payments and credits shall be made on the Indebtedness; (F) to apply such security and direct the order or manner of sale thereof, including without limitation, any nonjudicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion may determine; IG) to sell, transfer, assign or grant participations in all or any part of the Indebtedness; and (H) to assign or transfer this COMMERCIAL GUARANTY Loan No: 3554350 (Continued) Page 2 Guaranty in whole or in part. GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lender that (A) no representations or agreements of any kind have been made to Guarantor which would limit or quality In any way the terms of this Guaranty; (B) this Guaranty is executed at Borrower's request and not at the request of Lender; (C) Guarantor has full power, right and authority to enter into this Guaranty; (D) the provisions of this Guaranty do not conflict with or result in a default under any agreement or other Instrument binding upon Guarantor and do not result in a violation of any law, regulation, court decree or order applicable to Guarantor; (E) Guarantor has not and will not, without the prior written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer, or otherwise dispose of all or substantially all of Guarantor's assets, or any interest therein; (F) upon Lender's request, Guarantor will provide to Lender financial and credit information in form acceptable to Lender, and all such financial information which currently has been, and all future financial information which will be provided to Lender is and will be true and correct in all material respects and fairly present Guarantor's financial condition as of the dates the financial information is provided; (G) no material adverse change has occurred in Guarantor's financial condition since the date of the most recent financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantor's financial condition; (H) no litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending or threatened; (1) Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and (J) Guarantor has established adequate means of obtaining from Borrower on a continuing basis information regarding Borrower's financial condition. Guarantor agrees to keep adequately informed from such means of any facts, events, or circumstances which might In any way affect Guarantor's risks under this Guaranty, and Guarantor further agrees that Lender shall have no obligation to disclose to Guarantor any information or documents acquired by Lender in the course of its relationship with Borrower. GUARANTOR'S FINANCIAL STATEMENTS. Guarantor agrees to furnish Lender with the following: Annual Statements. As soon as available, but in no event later than one-hundred-twenty (120) days after the end of each fiscal year, Guarantor's balance sheet and income statement for the year ended, prepared by Guarantor. Tax Returns. As soon as available, but in no event later than one-hundred-twenty 1120) days after the applicable filing date for the tax reporting period ended, Federal and other governmental tax returns, prepared by Guarantor. All financial reports required to be provided under this Guaranty shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Guarantor as being true and correct. GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives any right to require Lender (A) to continue lending money or to extend other credit to Borrower; (B) to make any presentment, protest, demand, or notice of any kind, including notice of any nonpayment of the Indebtedness or of any nonpayment related to any collateral, or notice of any action or nonaction on the part of Borrower, Lender, any surety, endorser, or other guarantor in connection with the Indebtedness or In connection with the creation of new or additional loans or obligations; (C) to resort for payment or to proceed directly or at once against any person, including Borrower or any other guarantor; (D) to proceed directly against or exhaust any collateral held by Lender from Borrower, any other guarantor, or any other person; (E) to give notice of the terms, time, and place of any public or private sale of personal property security held by Lender from Borrower or to comply with any other applicable provisions of the Uniform Commercial Code; (F) to pursue any other remedy within Lender's power; or (G) to commit any act or omission of any kind, or at any time, with respect to any matter whatsoever. Guarantor also waives any and all rights or defenses based on suretyship or impairment of collateral including, but not limited to, any rights or defenses arising by reason of (A) any "one action" or 'anti-deficiency' law or any other law which may prevent Lender from bringing any action, including a claim for deficiency, against Guarantor, before or after Lender's commencement or completion of any foreclosure action, either judicially or by exercise of a power of sale; (B) any election of remedies by Lender which destroys or otherwise adversely affects Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower for reimbursement, Including without limitation, any loss of rights Guarantor may suffer by reason of any law limiting, qualifying, or discharging the Indebtedness; IC) any disability or other defense of Borrower, of any other guarantor, or of any other person, or by reason of the cessation of Borrower's liability from any cause whatsoever, other than payment in full in legal tender, of the Indebtedness; ID) any right to claim discharge of the Indebtedness on the basis of unjustified impairment of any collateral for the Indebtedness; (E) any statute of limitations, if at any time any action or suit brought by Lender against Guarantor is commenced, there is outstanding Indebtedness which Is not barred by any applicable statute of limitations; or (F) any defenses given to guarantors at law or in equity other then actual payment and performance of the Indebtedness. If payment is made by Borrower, whether voluntarily or otherwise, or by any third party, on the Indebtedness and thereafter Lender is forced to remit the amount of that payment to Borrower's trustee In bankruptcy or to any similar person under any federal or state bankruptcy law or law for the relief of debtors, the indebtedness shall be considered unpaid for the purpose of the enforcement of this Guaranty. Guarantor further waives and agrees not to assert or claim at any time any deductions to the amount guaranteed under this Guaranty for any claim of setoff, counterclaim, counter demand, recoupment or similar right, whether such claim, demand or right may be asserted by the Borrower, the Guarantor, or both. GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees that each of the waivers set forth above is made with Guarantor's full knowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public policy or law. If any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective only to the extent permitted by law or public policy. SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the Indebtedness, whether now existing or hereafter created, shall be superior to any claim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby expressly subordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any claim that Lender may now or hereafter have against Borrower. In the event of insolvency and consequent liquidation of the assets of Borrower, through bankruptcy, by an assignment for the benefit of creditors, by voluntary liquidation, or otherwise, the assets of Borrower applicable to the payment of the claims of both Lender and Guarantor shall be paid to Lender and shall be first applied by Lender to the Indebtedness. Guarantor does hereby assign to Lender all claims which It may have or acquire against Borrower or against any assignee or trustee in bankruptcy of Borrower; provided however, that such assignment shall be effective only for the purpose of assuring to Lender full payment in legal tender of the Indebtedness. If Lender so requests, any notes or credit agreements now or hereafter evidencing any debts or obligations of Borrower to Guarantor shall be marked with a legend that the same are subject to this Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor, from time to time to file financing statements and continuation statements and to execute documents and to take such other actions as Lender deems necessary or appropriate to perfect, preserve and enforce its rights under this Guaranty. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Guaranty: Amendments. This Guaranty, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Guaranty. No alteration of or amendment to this Guaranty shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment. COMMERCIAL GUARANTY Loan No: 3554350 (Continued) Page 3 Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of Lender's costs and expenses, including Lender's reasonable attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this Guaranty. Lender may hire or pay someone also to help enforce this Guaranty, and Guarantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender's reasonable attorneys' fees and legal expenses Whether or not there is a lawsuit, including reasonable attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Guarantor also shall pay all court costs and such additional fees as may be directed by the court. Caption Headings. Caption headings in this Guaranty are for convenience purposes only and are not to be used to interpret or define the provisions of this Guaranty. Governing Law. This Guaranty wRl be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the Commonwealth of Pennsylvania without regard to Its confilcts of law provisions. Integration. Guarantor further agrees that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had the opportunity to be advised by Guarantor's attorney with respect to this Guaranty; the Guaranty fully reflects Guarantor's intentions and parol evidence is not required to interpret the terms of this Guaranty. Guarantor hereby indemnifies and holds Lender harmless from all losses, claims, damages, and costs (including Lender's attorneys' fees) suffered or incurred by Lender as a result of any breach by Guarantor of the warranties, representations and agreements of this paragraph. Interpretation. In all cases where there is more than one Borrower or Guarantor, then all words used in this Guaranty in the singular shall be deemed to have been used in the plural where the context and construction so require; and where there is more than one Borrower named in this Guaranty or when this Guaranty is executed by more than one Guarantor, the words 'Borrower' and "Guarantor" respectively shall mean all and any one or more of them. The words "Guarantor," "Borrower," and "Lender" include the heirs, successors, assigns, and transferees of each of them. If a court finds that any provision of this Guaranty is not valid or should not be enforced, that fact by itself will not mean that the rest of this Guaranty will not be valid or enforced. Therefore, a court will enforce the rest of the provisions of this Guaranty even if a provision of this Guaranty may be found to be invalid or unenforceable. If any one or more of Borrower or Guarantor arWcorporatign& pertnefxhips,..limited.liability companies, or similar entities, it is not necessary for Lender to inquire into the powers of Borrpwer nr 6uarantar or•' of-the officers,. directors, partners, managers, or other agents acting or purporting to act on their behalf, and any In{lebti:D6 esi:*hiigde'or'creaf'erl`i6-reliance upon the professed exercise of such powers shall be guaranteed under this Guaranty. Notices. Unless otherwise provided by;,appglicable law, any notice required to be given under this Guaranty shall be given in writing, and, except for revocation notices-4y Guarantor,. shall be effect'ree. when actually delivered, when actually received by telefecs(mile (unless otherwise required by law), when deposited -with a natiohiliy recognized overnight courier, or, if mailed, when deposited In the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Guaranty. All revocation notices by Guarantor shall be in writing and shall be effective upon delivery to Lender as provided in the section of this Guaranty entitled "DURATION OF GUARANTY." Any party may change its address for notices under this Guaranty by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Guarantor agrees to keep Lender Informed at all times of Guarantor's current address. Unless otherwise provided by applicable low, if there is more than one Guarantor, any notice given by Lander to any Guarantor is deemed to be notice given to all Guarantors. No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Guaranty unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Guaranty shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Guaranty. No prior waiver by Lender, nor any course of dealing between Lender and Guarantor, shall constitute a waiver of any of Lender's rights or of any of Guarantor's obligations as to any future transactions. Whenever the consent of Lender Is required under this Guaranty, the granting of such consent by Lander in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender. Successors and Assigns. The terms of this Guaranty shall be binding upon Guarantor, and upon Guarantor's heirs, personal representatives, successors, and assigns, and shall be enforceable by Lender and its successors and assigns. DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Guaranty. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Guaranty shall have the meanings attributed to such terms in the Uniform Commercial Code: Borrower. The word "Borrower" means Hutch Homes, Inc. and Includes all co-signers and co-makers signing the Note and all their successors and assigns. GAAP. The word 'GAAP' means generally accepted accounting principles. Guarantor. The word 'Guarantor' means everyone signing this Guaranty, including without limitation James W. Hutchison, Jr., and in each case, any signer's successors and assigns. Guaranty. The word "Guaranty' means this guaranty from Guarantor to Lender. Indebtedness. The word "Indebtedness' means Borrower's Indebtedness to Lender as more particularly described in this Guaranty. Lender. The word "Lander' means COMMERCE BANK/HARRISBURG N.A., its successors and assigns. Note. The word "Note" means and includes without limitation all of Borrower's promissory notes and/or credit agreements evidencing Borrower's loan obligations in favor of Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of and substitutions for promissory notes or credit agreements. Related Documents. The words 'Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed In connection with the Indebtedness. CONFESSION OF JUDGMENT. GUARANTOR HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR THE PROTHONOTARY OR CLERK OF ANY COURT IN THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE, TO APPEAR AT ANY TIME FOR GUARANTOR AFTER THE AMOUNTS HEREUNDER BECOME DUE AND WITH OR WITHOUT COMPLAINT FILED, CONFESS OR ENTER JUDGMENT AGAINST GUARANTOR FOR THE ENTIRE PRINCIPAL BALANCE OF THIS GUARANTY AND ALL ACCRUED INTEREST, LATE CHARGES AND ANY AND ALL AMOUNTS EXPENDED OR ADVANCED BY LENDER RELATING TO ANY COLLATERAL SECURING THE wnF:RTFnNFCS Tr)r;FTHFR WITH COSTS OF SUIT. AND AN ATTORNEY'S COMMISSION OF TEN PERCENT (10%) OF THE UNPAID COMMERCIAL GUARANTY Loan No: 3554350 (Continued) Page 4 PRINCIPAL BALANCE AND ACCRUED INTEREST FOR COLLECTION, BUT IN ANY EVENT NOT LESS THAN FIVE HUNDRED DOLLARS (5500) ON WHICH JUDGMENT OR JUDGMENTS ONE OR MORE EXECUTIONS MAY ISSUE IMMEDIATELY; AND FOR SO DOING, THIS GUARANTY OR A COPY OF THIS GUARANTY VERIFIED BY AFFIDAVIT SHALL BE SUFFICIENT WARRANT. THE AUTHORITY GRANTED IN THIS GUARANTY TO CONFESS JUDGMENT AGAINST GUARANTOR SHALL NOT BE EXHAUSTED BY ANY EXERCISE OF THAT AUTHORITY, BUT SHALL CONTINUE FROM TIME TO TIME AND AT ALL TIMES UNTIL PAYMENT IN FULL OF ALL AMOUNTS DUE UNDER THIS GUARANTY. GUARANTOR HEREBY WAIVES ANY RIGHT GUARANTOR MAY HAVE TO NOTICE OR TO A HEARING IN CONNECTION WITH ANY SUCH CONFESSION OF JUDGMENT AND STATES THAT EITHER A REPRESENTATIVE OF LENDER SPECIFICALLY CALLED THIS CONFESSION OF JUDGMENT PROVISION TO GUARANTOR'S ATTENTION OR GUARANTOR HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL. EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE MANNER SET FORTH IN THE SECTION TITLED 'DURATION OF GUARANTY". NO FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY IS DATED OCTOBER 29, 2007. THIS GUARANTY IS GIVEN UN ER SEAL AND IT IS INTENDED THAT THIS GUARANTY IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT CORDING TO LAW. GUA tN OR: INDIVIDUAL ACKNOWLEDGMENT COMMONWEALTH OF PENNSYLVANIA COUNTY OF )SS r0r this l day of , 20 4 before me It'll ?i // the undersigned No ary Public, personally appeared James W. Hutchison, Jr., known to me (or -12 satis actorily proven be the person whose name is subscribed to the within instrument, and acknowledged that he or she executed the same for the purposes th contained. In witness whereof, I hereunto set my hand and official seal. COMMONWEALTH OF PENNSYLVANIA v Nolarlai Seal - GwIdaM.W911F110ANQUOPubllm Notary Public In and for the State of Camp H1l ew% Cunl1WWid 0Mff4 * C mNeeimn E*= Der-27.2010 Manner. Penmylmmia Associallort Of N0161165 LAIN PW Ln1he. V". O.MM" Cm. Ndpr Pk-.M SA,§W b,. IM7. 3W. M R10b 11tH. • M 1011WNAPW" WX4KliLV.WM MUM MW ?s `b Parcel Identification Number: 270001400750000000 RECORDATION REQUESTED BY: COMMERCE RANKIHARRISBURG N.A. COMMERCIAL MORTGAGE DEPARTMENT 3801 PAXTON STREET HARRISBURG, PA 17111 WHEN RECORDED MAIL TO: COMMERCE BANKIHARRISBURG N.A. LOAN SERVICING 3801PAXTON STREET HARRISBURG, PA 17111-1418 n MU FY AlT tIFHCE 11111111 0753710 SEND TAX NOTICES TO: Hutch Homes, Inc. 414 South York Street {{ }Mtechafnyksburo, PA 17055 FOR RECORDER'S USE ONLY OPEN - END CONSTRUCTION MORTGAGE AND SECURITY AGREEMENT (This instrument is an open-end mortgage and secures future advances pursuant to 42 Pa. C. S. H 8143 and 8144, Act No. 126 of 1990) Amount Secured Hereby: $237,345.00 THIS MORTGAGE dated October 29, 2007, is made and executed between Hutch Homes, Inc., whose address is 414 South York Street, Mechanicsburg, PA 17055 (referred to below as "Grantor") and COMMERCE BANKIHARRISBURG N.4 whose address is 3801 PAXTON STREET, HARRISBURG, PA 17111 (referred to below as "Lender"). GRANT OF MORTGAGE. For valuable consideration, Grantor grants, bargains, sells, conveys, assigns, transfers, releases, confirms and mortgages to Lender all of Grantor's right, title, and interest in and to the following described real property, together with all existing or subsequently erected or affixed buildings, improvements and fixtures; all streets, lanes, alleys, passages, and ways; all easements, rights of way, all liberties, privileges, tenements, hereditaments, and appurtenances thereunto belonging or anywise made appurtenant hereafter, and the reversions and remainders with respect thereto; all water, water rights, watercourses and ditch rights (including stock in utilities with ditch or irrigation rights); and all other rights, royalties, and profits relating to the real property, includirgi without limitation all minerals, oil, gas, geothermal and similar matters, (the "Real Property") located in York County, Commonwealth of Pennsylvania: See Exhibit "A" which is attached to this Mortgage and made a part of this Mortgage as if fully set forth herein. The Real Property or its address is commonly known as "'14"Terrace Place, New Cumberland, PA 17070. The Real Property parcel 'identification number Is 270001400750000000. Grantor presently assigns to Lender all of Grantor's right, title, and interest in and to all present and future leases of the ! Property and all Rents from the Property. In addition, Grantor grants to Lender a Uniform Commercial Code security 1 interest in the Personal Property and Rents. THIS MORTGAGE, INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY INTEREST IN THE RENTS AND ' PERSONAL PROPERTY, IS GIVEN TO SECURE (A) PAYMENT OF THE INDEBTEDNESS AND (B) PERFORMANCE OF i ANY AND ALL OBLIGATIONS UNDER THE NOTE IN THE ORIGINAL PRINCIPAL AMOUNT OF $237,345.00, THE RELATED DOCUMENTS, AND THIS MORTGAGE. THIS MORTGAGE, INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY INTEREST IN THE RENTS AND PERSONAL PROPERTY, IS ALSO GIVEN TO SECURE ANY AND ALL OF ! Bask 192gCs Fuse 7492 i .??` MORTGAGE Loan No: 3554350 (Continued) Page 2 GRANTOR'S OBLIGATIONS UNDER THAT CERTAIN CONSTRUCTION LOAN AGREEMENT BETWEEN GRANTOR AND LENDER OF EVEN DATE HEREWITH. ANY EVENT OF DEFAULT UNDER THE CONSTRUCTION LOAN AGREEMENT, OR ANY OF THE RELATED DOCUMENTS REFERRED TO THEREIN, SHALL ALSO BE AN EVENT OF DEFAULT UNDER THIS MORTGAGE. THIS MORTGAGE IS GIVEN AND ACCEPTED ON THE FOLLOWING TERMS: PAYMENT AND PERFORMANCE. Except as otherwise provided in this Mortgage, Grantor shall pay to Lender all amounts secured by this Mortgage as they become due and shall strictly perform all of Grantor's obligations under this Mortgage. CONSTRUCTION MORTGAGE. This Mortgage is a "construction mortgage' for the purposes of Sections 9-334 and 2A-309 of the Uniform Commercial Code, as those sections have been adopted by the Commonwealth of Pennsylvania. POSSESSION AND MAINTENANCE OF THE PROPERTY. Grantor agrees that Grantor's possession and use of the Property shall be governed by the following provisions: Possession and Use. Until the occurrence of an Event of Default, Grantor may (1) remain in possession and control of the Property; (2) use, operate or manage the Property; and (3) collect the Rents from the Property. Duty to Maintain. Grantor shall maintain the Property in tenantable condition and promptly perform all repairs, replacements, and maintenance necessary to preserve its value. Compliance With Environmental Laws. Grantor represents and warrants to Lender that: (1) During the period of Grantor's ownership of the Property, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from the Property; (2) Grantor has no knowledge of, or reason to believe that there has been, except as previously disclosed to and acknowledged by Lender in writing, (a) any breach or violation of any Environmental Laws, (b) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Property by any prior owners or occupants of the Property, or (c) any actual or threatened litigation or claims of any kind by any person relating to such matters; and (3) Except as previously disclosed to and acknowledged by Lender in writing, (a) neither Grantor nor any tenant, contractor, agent or other authorized user of the Property shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or from the Property; and (b) any such activity shall be conducted in compliance with all applicable federal, state, and local laws, regulations and ordinances, including without limitation all Environmental Laws. Grantor authorizes Lender and its agents to enter upon the Property to make such inspections and tests, at Grantor's expense, as Lender may deem appropriate to determine compliance of the Property with this section of the Mortgage. Any inspections or tests made by Lender shall be for Lender's purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Grantor or to any other person. The representations and warranties contained herein are based on Grantor's due diligence in investigating the Property for Hazardous Substances. Grantor hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Grantor becomes liable for cleanup or other costs under any such laws; and 12) agrees to indemnify, defend, and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Mortgage or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release occurring prior to Grantor's ownership or interest in the Property, whether or not the same was or should have been known to Grantor. The provisions of this section of the Mortgage, including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and the satisfaction and reconveyance of the lien of this Mortgage and shall not be affected by Lender's acquisition of any interest in the Property, whether by foreclosure or otherwise. Nuisance, Waste. Grantor shall not cause, conduct or permit any nuisance nor commit, permit, or suffer any stripping of or waste on or to the Property or any portion of the Property. Without limiting the generality of the foregoing, Grantor will not remove, or grant to any other party the right to remove, any timber, minerals (including oil and gas), coal, clay, scoria, soil, gravel or rock products without Lender's prior written consent. Removal of Improvements. Grantor shall not demolish or remove any Improvements from the Real Property without Lender's prior written consent. As a condition to the removal of any Improvements, Lender may require Grantor to make arrangements satisfactory to Lender to replace such Improvements with Improvements of at least equal value. Lender's Right to Enter. Lender and Lender's agents and representatives may enter upon the Real Property at all reasonable times to attend to Lender's Interests and to inspect the Real Property for purposes of Grantor's compliance with the terms and conditions of this Mortgage. Compliance with Governmental Requirements. Grantor shall promptly comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmental authorities applicable to the use or occupancy of the Property, including without limitation, the Americans With Disabilities Act. Grantor may contest in good faith any such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long 83 Grantor has notified Lender in writing prior to doing so and 30 long as, in Lender's sole opinion, Lender's MORTGAGE Loan No: 3554350 (Continued) Page 3 interests in the Property are not jeopardized. Lender may require Grantor to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender's interest. Duty to Protect. Grantor agrees neither to abandon or leave unattended the Property. Grantor shall do all other acts, in addition to those acts set forth above in this section, which from the character and use of the Property are reasonably necessary to protect and preserve the Property. CONSTRUCTION LOAN. If some or all of the proceeds of the loan creating the Indebtedness are to be used to construct or complete construction of any Improvements on the Property, the Improvements shall be completed no later than the maturity date of the Note (or such earlier date as Lender may reasonably establish) and Grantor shall pay in full all costs and expenses in connection with the work. Lender will disburse loan proceeds under such terms and conditions as Lender may deem reasonably necessary to insure that the Interest created by this Mortgage shall have priority over all possible liens, including those of material suppliers and workmen. Lender may require, among other things, that disbursement requests be supported by receipted bills, expense affidavits, waivers of liens, construction progress reports, and such other documentation as Lender may reasonably request. DUE ON SALE - CONSENT BY LENDER. Lender may, at Lender's option, declare immediately due and payable all sums secured by this Mortgage upon the sale or transfer, without Lender's prior written consent, of all or any part of the Real Property, or any interest in the Real Property. A "sale or transfer' means the conveyance of Real Property or any right, title or interest in the Real Property; whether legal, beneficial or equitable; whether voluntary or involuntary; whether by outright sale, deed, installment sale contract, land contract, contract for deed, leasehold interest with a term greater than three (3) years, lease-option contract, or by sale, assignment, or transfer of any beneficial interest in or to any land trust holding title to the Real Property, or by any other method of conveyance of an interest in the Real Property. If any Grantor is a corporation, partnership or limited liability company, transfer also includes any change in ownership of more than twenty-five percent (25%) of the voting stock, partnership interests or limited liability company interests, as the case may be, of such Grantor. However, this option shall not be exercised by Lender if such exercise is prohibited by federal law or by Pennsylvania law. TAXES AND LIENS. The following provisions relating to the taxes and liens on the Property are part of this Mortgage: Payment. Grantor shall pay when due (and in all events prior to delinquency) all taxes, payroll taxes, special taxes, assessments, water charges and sewer service charges levied against or on account of the Property, and shall pay when due all claims for work done on or for services rendered or material furnished to the Property. Grantor shall maintain the Property free of any liens having priority over or equal to the interest of Lender under this Mortgage, except for those liens specifically agreed to in writing by Lender, and except for the lien of taxes and assessments not due as further specified in the Right to Contest paragraph. Right to Contest. Grantor may withhold payment of any tax, assessment, or claim in connection with a good faith dispute over the obligation to pay, so long as Lender's interest in the Property is not jeopardized. If a lien arises or is filed as a result of nonpayment, Grantor shall within fifteen (15) days after the lien arises or, if a lien is filed, within fifteen (15) days after Grantor has notice of the filing, secure the discharge of the lien, or if requested by Lender, deposit with Lender cash or a sufficient corporate surety bond or other security satisfactory to Lender in an amount sufficient to discharge the lien plus any costs and reasonable attorneys' fees, or other charges that could accrue as a result of a foreclosure or sale under the lien. In any contest, Grantor shall defend itself and Lender and shall satisfy any adverse judgment before enforcement against the Property. Grantor shall name Lender as an additional obligee under any surety bond furnished in the contest proceedings. Evidence of Payment. Grantor shall upon demand furnish to Lender satisfactory evidence of payment of the razes or assessments and shall authorize the appropriate governmental official to deliver to Lender at any time a written statement of the taxes and assessments against the Property. Notice of Constriction. Grantor shall notify Lender at least fifteen (15) days before any work is commenced, any services are furnished, or any materials are supplied to the Property, if any mechanic's lien, materialmen's lien, or other lien could be asserted on account of the work, services, or materials. Grantor will upon request of Lender furnish to Lender advance assurances satisfactory to Lender that Grantor can and will pay the cost of such improvements. PROPERTY DAMAGE INSURANCE. The following provisions relating to insuring the Property are a part of this Mortgage: Maintenance of Insurance. Grantor shall procure and maintain policies of fire insurance with standard extended coverage endorsements on a replacement basis for the full insurable value covering all Improvements on the Real Property in an amount sufficient to avoid application of any coinsurance clause, and with a standard mortgagee clause in favor of Lender. Grantor shall also procure and maintain comprehensive general liability insurance in such coverage amounts as Lender may request with Lender being named as additional insureds in such liability insurance policies. Additionally, Grantor shall maintain such other insurance, including but not limited to hazard, business interruption and boiler insurance as Lender may require. Policies shall be written by such insurance companies and in such form as may be reasonably acceptable to Lender. Grantor shall deliver to Lender certificates of coverage MORTGAGE Loan No: 3554350 (Continued) Page 4 from each insurer containing a stipulation that coverage will not be cancelled or diminished without a minimum of ten (10) days' prior written notice to Lender and not containing any disclaimer of the insurer's liability for failure to give such notice. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Grantor or any other person. Should the Real Property be located in an area designated by the Director of the Federal Emergency Management Agency as a special flood hazard area, Grantor agrees to obtain and maintain Federal Flood Insurance, If available, within 45 days after notice is given by Lender that the Property is located in a special flood hazard area, for the full unpaid principal balance of the loan and any prior liens on the property securing the ban, up to the maximum policy limits set under the National Flood Insurance Program, or as otherwise required by Lender, and to maintain such insurance for the term of the loan. Application of Proceeds. Grantor shall promptly notify Lender of any loss or damage to the Property. Lender may make proof of loss if Grantor fails to do so within fifteen (15) days of the casualty. Whether or not Lender's security is impaired, Lender may, at Lender's election, receive and retain the proceeds of any insurance and apply the proceeds to the reduction of the Indebtedness, payment of any lien affecting the Property, or the restoration and repair of the Property., If Lender elects to apply the proceeda•to restoration and repair, Grantor shall repair or replace the damaged or destroyed Improvements in a manner satisfactory to Lender. Lender shall, upon satisfactory proof of such expenditure, pay or reimburse Grantor from the proceeds for the reasonable cost of repair or restoration if Grantor is not in default under this Mortgage. Any proceeds which have not been disbursed within 180 days after their receipt and which Lender has not committed to the repair or restoration of the Property shall be used first to pay any amount owing to Lender under this Mortgage, then to pay accrued interest, and the remainder, if any, shall be applied to the principal balance of the Indebtedness. If Lender holds any proceeds after payment in full of the Indebtedness, such proceeds shall be paid to Grantor as Grantor's interests may appear. Grantor's Report an Insurance. Upon request of Lender, however not more than once a year,. Grantor shall furnish to Lender a report on each existing policy of insurance showing: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the property insured, the then current replacement value of such property, and the manner of determining that value; and (5) the expiration date of the policy. Grantor shall, upon request of Lender, have an independent appraiser satisfactory to Lender determine the cash value replacement cost of the Property. LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Property or if Grantor fails to comply with any provision of this Mortgage or any Related Documents, including but not limited to Grantor's failure to discharge or pay when due any amounts Grantor is required to discharge or pay under this Mortgage or any Related Documents, Lender on Grantor's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Property and paying all costs for insuring, maintaining and preserving the Property. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Grantor. All such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity. The Mortgage also will secure payment of these amounts. Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon Default. Grantor's obligation to Lender for all such expenses shall survive the entry of any mortgage foreclosure judgment. WARRANTY; DEFENSE OF TITLE. The following provisions relating to ownership of the Property are a part of this Mortgage: Title. Grantor warrants that: (a) Grantor holds good and marketable title of record to the Property in fee simple, free and clear of all liens and encumbrances other than those set forth in the Real Property description or in any title insurance policy, title report, or final title opinion Issued in favor of, and accepted by, Lender in connection with this Mortgage, and (b) Grantor has the full right, power, and authority to execute and deliver this Mortgage to Lander. Defense of Title. Subject to the exception in the paragraph above, Grantor warrants and will forever defend the title to the Property against the lawful claims of all persons. In the event any action or proceeding is commenced that questions Grantor's title or the interest of Lender under this Mortgage, Grantor shall defend the action at Grantor's expense. Grantor may be the nominal party in such proceeding, but Lender shall be entitled to participate in the proceeding and to be represented in the proceeding by counsel of Lender's own choice, and Grantor will deliver, or cause to be delivered, to Lender such instruments as Lender may request from time to time to permit such participation. Compliance With Laws. Grantor warrants that the Property and Grantor's use of the Property complies with all existing applicable laws, ordinances, and regulations of governmental authorities. MORTGAGE Loan No: 3554350 (Continued) Page 5 Survival of Representations and Warranties. All representations, warranties, and agreements made by Grantor in this Mortgage shall survive the execution and delivery of this Mortgage, shall be continuing in nature, and shall remain in full force and effect until such time as Grantor's Indebtedness shall be paid in full. CONDEMNATION. The following provisions relating to condemnation proceedings are a part of this Mortgage: Proceedings. If any proceeding in condemnation is filed, Grantor shall promptly notify Lender in writing, and Grantor shall promptly take such steps as may be necessary to defend the action and obtain the award. Grantor may be the nominal party in such proceeding, but Lender shall be entitled to participate in the proceeding and to be represented in the proceeding by counsel of its own choice, and Grantor will deliver or cause to be delivered to Lender such instruments and documentation as may be requested by Lender from time to time to permit such participation. Application of Net Proceeds. If all or any part of the Property is condemned by eminent domain proceedings or by any proceeding or purchase in lieu of condemnation, Lender may at its election require that all or any portion of the net proceeds of the award be applied to the Indebtedness or the repair or restoration of the Property. The net proceeds of the award shall mean the award after payment of all actual costs, expenses, and attorneys' fees Incurred by Lender in connection with the condemnation. IMPOSITION OF TAXES, FEES AND CHARGES BY GOVERNMENTAL AUTHORITIES. The following provisions relating to governmental taxes, fees and charges are a part of this Mortgage: Current Taxes, Fees and Charges. Upon request by Lender, Grantor shall execute such documents in addition to this Mortgage and take whatever other action is requested by Lander to perfect and continue Lender's lien on the Real Property. Grantor shall reimburse Lender for all taxes, as described below, together with all expenses incurred in recording, perfecting or continuing this Mortgage, including without limitation all taxes, fees, documentary stamps, and other charges for recording or registering this Mortgage. Taxes. The following shall constitute taxes to which this section applies: (1) a specific tax upon this type of Mortgage or upon all or any part of the Indebtedness secured by this Mortgage; (2) a specific tax on Grantor which Grantor is authorized or required to deduct from payments on the Indebtedness secured by this type of Mortgage; (3) a tax on this type of Mortgage chargeable against the Lender or the holder of the Note; and (4) a specific tax on all or any portion of the Indebtedness or on payments of principal and interest made by Grantor. Subsequent Taxes. If any tax to which this section applies is enacted subsequent to the date of this Mortgage, this event shall have the some effect as an Event of Default, and Lender may exercise any or all of its available remedies for an Event of Default as provided below unless Grantor either (1) pays the tax before it becomes delinquent, or (2) contests the tax as provided above in the Taxes and Liens section and deposits with Lender cash or a sufficient corporate surety bond or other security satisfactory to Lender. SECURITY AGREEMENT; FINANCING STATEMENTS. The following provisions relating to this Mortgage as a security agreement are a part of this Mortgage: Security Agreement. This instrument shall constitute a Security Agreement to the extent any of the Property constitutes fixtures, and Lender shall have all of the rights of a secured parry under the Uniform Commercial Code as amended from time to time. Security Interest. Upon request by Lender, Grantor shall take whatever action is requested by Lender to perfect and continue Lender's security interest in the Rents and Personal Property. In addition to recording this Mortgage in the real property records, Lender may, at any time and without further authorization from Grantor, file executed counterparts, copies or-reproductions of this Mortgage as a financing statement. Grantor shall reimburse Lender for all expenses incurred in perfecting or continuing this security interest. Upon default, Grantor shall not remove, sever or detach the Personal Property from the Property. Upon default, Grantor shall assemble any Personal Property not affixed to the Property in a manner and at a place reasonably convenient to Grantor and Lender and make it available to Lender within three (3) days after receipt of written demand from Lender to the extent permitted by applicable law. Addresses. The mailing addresses of Grantor (debtor) and Lender (secured party) from which information concerning the security interest granted by this Mortgage may be obtained (each as required by the Uniform Commercial Code) are as stated on the first page of this Mortgage. FURTHER ASSURANCES; ADDITIONAL AUTHORIZATIONS. The following provisions relating to further assurances and additional authorizations are a part of this Mortgage: Further Assurances. At any time, and from time to time, upon request of Lender, Grantor will make, execute and deliver, or will cause to be made, executed or delivered, to Lender or to Lender's designee, and when requested by Lender, cause to be filed, recorded, refiled, or rerecorded, as the case may be, at such times and in such offices and places as Lender may deem appropriate, any and all such mortgages, deeds of trust, security deeds, security agreements, financing statements, continuation statements, instruments of further assurance, certificates, and MORTGAGE Loan No: 3554350 (Continued) Page 6 other documents as may, in the sole opinion of Lander, be necessary or desirable in order to effectuate, complete, perfect, continue, or preserve 11) Grantor's obligations under the Note, this Mortgage, and the Related Documents, and (2) the liens and security interests created by this Mortgage as first and prior liens on the Property, whether now owned or hereafter acquired by Grantor. Unless prohibited by law or Lender agrees to the contrary in writing, Grantor shall reimburse Lender for all costs and expenses incurred in connection with the matters referred to in this paragraph. Additional Authorizations. If Grantor fails to do any of the things referred to in the preceding paragraph, Lender may do so for and in the name of Grantor and at Grantor's expense. For such purposes, Grantor hereby irrevocably authorizes Lender to make, execute, deliver, file, record and do all other things as may be necessary or desirable, in Lender's sole opinion, to accomplish the matters referred to in the preceding paragraph. It is understood that nothing set forth herein shall require Lender to take any such actions. FULL PERFORMANCE. If Grantor pays all the Indebtedness when due, and otherwise performs all the obligations imposed upon Grantor under this Mortgage, Lender shall execute and deliver to Grantor a suitable satisfaction of this Mortgage and suitable statements of termination of any financing statement on file evidencing Lender's security interest in the Rents and the Personal Property. Grantor will pay, if permitted by applicable law, any reasonable termination fee as determined by Lender from time to time. EVENTS OF DEFAULT. Each of the following, at Lender's option, shall constitute an Event of Default under this Mortgage: Payment Default. Grantor fails to make any payment when due under the Indebtedness. Default on Other Payments. Failure of Grantor within the time required by this Mortgage to make any payment for taxes or insurance, or any other payment necessary to prevent filing of or to effect discharge of any lien. Environmental Default. Failure of any parry to comply with or perform when due any term, obligation, covenant or condition contained in any environmental agreement executed in connection with the Property. Other Defaults. Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Mortgage or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Grantor. Defautt In Favor of Third Parties. Should Grantor defautt under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Grantor's property or Grantor's ability to repay the Indebtedness or Grantor's ability to perform Grantor's obligations under this Mortgage or any related document. False Statements. Any warranty, representation or statement made or furnished to Lender by Grantor or on Grantor's behalf under this Mortgage or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter. Defective Colinteraization. This Mortgage or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason. Insolvency. The dissolution or termination of Grantor's existence as a going business, the insolvency of Grantor, the appointment of a receiver for any part of Grantor's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Grantor. Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Grantor or by any governmental agency against any property securing the Indebtedness. This includes a garnishment of any of Grantor's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Grantor as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Grantor gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute. Breach of Other Agreement. Any breach by Grantor under the terms of any other agreement between Grantor and Lender that is not remedied within any grace period provided therein, including without limitation any agreement concerning any indebtedness or other obligation of Grantor to Lender, whether existing now or later. Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness. In the event of a death, Lender, at its option, may, but shall not be required to, permit the Guarantor's estate to assume unconditionally the obligations arising under the guaranty in a manner satisfactory to Lender, and, in doing so, cure any Event of Default. MORTGAGE Loan No: 3554350 (Continued) Page 7 Adverse Charge. A material adverse change occurs in Grantor's financial condition, or Lender believes the prospect of payment or performance of the Indebtedness is impaired. Insecurity. Lender in good faith believes itself insecure. Right to Cure. If any default, other than a default in payment is curable and if Grantor has not been given a notice of a breach of the same provision of this Mortgage within the preceding twelve (12) months, it may be cured if Grantor, after receiving written notice from Lender demanding cure of such default: (1) cures the default within fifteen (15) days; or (2) If the cure requires more than fifteen (15) days, immediately initiates steps which Lender deems In Lender's sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical. RIGHTS AND REMEDIES ON DEFAULT. Upon the occurrence of an Event of Default and at any time thereafter, Lender, at Lender's option, may exercise any one or more of the following rights and remedies, in addition to any other rights or remedies provided by law: Accelerate Indebtedness. Lender shall have the right at its option, after giving such notices as required by applicable law, to declare the entire Indebtedness immediately due and payable. UCC Remedies. With respect to all or any part of the Personal Property, Lender shall have all the rights and remedies of a secured party under the Uniform Commercial Code. Collect Rents. Lender shall have the right, without notice to Grantor, to take possession of the Property and, with or without taking possession of the Property, to collect the Rents, including amounts past due and unpaid, and apply the nut proceeds, over and above Lender's costs, against the Indebtedness. In furtherance of this right, Lender may require any tenant or other user of the Property to make payments of rent or use fees directly to Lender. If the Rents are collected by Lender, then Grantor Irrevocably authorizes Lender to endorse instruments received in payment thereof in the name of Grantor and to negotiate the same and collect the proceeds. Payments by tenants or other users to Lender In response to Lender's demand shall satisfy the obligations for which the payments are made, whether or not any proper grounds for the demand existed. Lender may exercise its rights under this subparagraph either in person, by agent, or through a receiver. Appoint Receiver. Lender shall have the right to have a receiver appointed to take possession of all or any part of the Property, with the power to protect and preserve the Property, to operate the Property preceding foreclosure or sale, and to collect the Rents from the Property and apply the proceeds, over and above the cost of the receivership, against the Indebtedness. The receiver may serve without bond if permitted by law. Lender's right to the appointment of a receiver shall exist whether or not the apparent value of the Property exceeds the Indebtedness by a substantial amount. Employment by Lender shall not disqualify a person from serving as a receiver. Judicial Foreclosure. Lender may obtain a judicial decree foreclosing Grantor's interest in all or any part of the Property. Possession of the Property. For the purpose of procuring possession of the Property, Grantor hereby authorizes and empowers any attorney of any court of record in the Commonwealth of Pennsylvania or elsewhere, as attorney for Lender and all persons claiming under or through Lender, to sign an agreement for entering in any competent court an amicable action in ejectment for possession of the Property and to appear for and confess judgment against Grantor, and against all persons claiming under or through Grantor, for the recovery by Lender of possession of the Property, without any stay of execution, for which this Mortgage, or a copy of this Mortgage verified by affidavit, shall be a sufficient warrant: and thereupon a writ of possession may be issued forthwith, without any prior writ or proceeding whatsoever. . Nonjudicial Sale. If permitted by applicable law, Lender may foreclose Grantor's interest in all or in any part of the Personal Property or the Real Property by non judicial sale. Deficiency Judgment. Lender may obtain a judgment for any deficiency remaining in the Indebtedness due to Lender after application of all amounts received from the exercise of the rights provided In this section. Tenancy at Sufferance. If Grantor remains in possession of the Property after the Property is sold as provided above or Lender otherwise becomes entitled to possession of the Property upon default of Grantor, Grantor shall become a tenant at sufferance of Lender or the purchaser of the Property and shall, at Lender's option, either (1) pay a reasonable rental for the use of the Property, or (2) vacate the Property immediately upon the demand of Lender. Other Remedies. Lender shall have all other rights and remedies provided in this Mortgage or the Note or available at law or in equity. Sale of the Property. To the extent permitted by applicable law, Grantor hereby waives any and all right to have the Property marshalled. In exercising its rights and remedies, Lender shall be free to sell all or any part of the Property together or separately, in one sale or by separate sales. Lender shall be entitled to bid at any public sale MORTGAGE Loan No: 3554350 (Continued) Page 8 on all or any portion of the Property. Notice of Sad. Lender shall give Grantor reasonable notice of the time and puce of any public sale of the Personal Property or of the time after which any private sale or other intended disposition of the Personal Property is to be made. Unless otherwise required by applicable law, reasonable notice shall mean notice given at least ten (10) days before the time of the sale or disposition. Any sale of the Personal Property may be made in conjunction with any sale of the Real Property. Election of Remedies. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Grantor under this Mortgage, after Grantor's failure to perform, shall not affect Lender's right to declare a default and exercise its remedies. Nothing under this Mortgage or otherwise shall be construed so as to limit or restrict the rights and remedies available to Lender following an Event of Default, or in any way to limit or restrict the rights and ability of Lender to proceed directly against Grantor and/or against any other co-maker, guarantor, surety or endorser and/or to proceed against any other collateral directly or indirectly securing the Indebtedness. Attorneys' Fees; Expenses. If Lender institutes any suit or action to enforce any of the terms of this Mortgage, Lender shall be entitled to recover such sum as the court may adjudge reasonable as attorneys' fees at trial and upon any appeal. Whether or not any court action is involved, and to the extent not prohibited by law, all reasonable expenses Lender incurs that in Lender's opinion are necessary at any time for the protection of its interest or the enforcement of its rights shall become a part of the Indebtedness payable on demand and shall bear interest at the Note rate from the date of the expenditure until repaid. Expenses covered by this paragraph include, without limitation, however subject to any limits under applicable law, Lender's reasonable attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit, including reasonable attorneys' fees and expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services, the cost of searching records, obtaining title reports (including foreclosure reports), surveyors' reports, and appraisal fees and title insurance, to the extent permitted by applicable law. Grantor also will pay any court costs, in addition to all other sums provided by law. NOTICES. Unless otherwise provided by applicable law, any notice required to be given under this Mortgage shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Mortgage. All copies of notices of foreclosure from the holder of any lien which has priority over this Mortgage and notices pursuant to 42 Pa. C.S.A. Section 8143, at. seq., shall be sent to Lender's address, as shown near the beginning of this Mortgage. Any party may change its address for notices under this Mortgage by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Grantor agrees to keep Lender informed at all times of Grantor's currant address. Unless otherwise provided by applicable law, if there is more than one Grantor, any notice given by Lender to any Grantor is deemed to be notice given to all Grantors. ADVANCE MONEY MORTGAGE. (A) This Mortgage secures future advances made pursuant to the Note or Related Documents. Without limiting the foregoing, this Mortgage secures all advances made by Lender or Banks of any kind or nature described in 42 Pa. C.S.A. S 8144. (B) If Grantor sends a written notice to Lender which purports to limit the indebtedness secured by this Mortgage and to release the obligation of Lender to make any additional advances to or for the benef(t of Grantor, such a notice shall be ineffective as to any future advances made: (1) to enable completion of the improvements on the Real Property for which the loan secured hereby was originally made; (2) to pay taxes, assessments, mairrtenance charges and insurance premiums; (3) for costs incurred for the protection of -the Property or the lien of this Mortgage; (4) on account of expenses incurred by Lender by reason of a default of Grantor hereunder or under the Related Documents or under the Note; and (5) on account of any other costa incurred by Lender to protect and preserve the Property or the lien of this Mortgage. It is the intention of the parties hereto that any such advance made by Lender after any such notice by Grantor shall be secured by the lien of this Mortgage on the Property. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Mortgage: Amendments. This Mortgage, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Mortgage. No alteration of or amendment to this Mortgage shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment. Annual Reports. if the Property is used for purposes other than Grantor's residence, Grantor shall furnish to Lender, upon request, a certified statement of net operating income received from the Property during Grantor's previous fiscal year in such form and detail as Lender shall require. "Net operating income" shall mean all cash receipts from the Property less all cash expenditures made in connection with the operation of the Property. Caption Headings. Caption headings in this Mortgage are for convenience purposes only and are not to be used to interpret or define the provisions of this Mortgage. MORTGAGE Loan No: 3554350 (Continued) Page 9 Governing Law. This Mortgage will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the Commonwealth of Pennsylvania without regard to Its conflicts of law provisions. This Mortgage has been accepted by Lender in the Commonwealth of Pennsylvania. No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Mortgage unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Mortgage shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Mortgage. No prior waiver by Lender, nor any course of dealing between Lender and Grantor, shall constitute a waiver of any of Lender's rights or of any of Grantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Mortgage, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender. Severabglty. If a court of competent jurisdiction finds any provision-of this Mortgage to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Mortgage. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Mortgage shall not affect the legality, validity or enforceability of any other provision of this Mortgage. Merger. There shall be no merger of the interest or estate created by this Mortgage with any other interest or estate in the Property at any time held by or for the benefit of Lender in any capacity, without the written consent of Lender. Successor Interests. The terms of this Mortgage shall be binding upon Grantor, and upon Grantor's heirs, personal representatives, successors, and assigns, and shall be enforceable by Lender and its successors and assigns. Time is of the Essence. Time is of the essence in the performance of this Mortgage. DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Mortgage. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Mortgage shall have the meanings attributed to such terms in the Uniform Commercial Code: Borrower. The word "Borrower" means Hutch Homes, Inc. and includes all co-signers and co-makers signing the Note and all their successors and assigns. Default. The word "Default" means the Default set forth in this Mortgage in the section titled "Default". Environmental Laws. The words "Environmental Laws" mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, at seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, at seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, at seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto. Event of Default. The words "Event of Default" mean any of the events of default set forth in this Mortgage in the events of default section of this Mortgage. Grantor. The word "Grantor" means Hutch Homes, Inc.. Guarantor. The word "Guarantor" means any guarantor, surety, or accommodation party of any or all of the Indebtedness. Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note. Hazardous Substances. The words "Hazardous Substances" mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words "Hazardous Substances" are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. The term "Hazardous Substances" also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos. Improvements. The word "Improvements" means all existing and future improvements, buildings, structures, MORTGAGE Loan No: 3554350 (Continued) Page 10 mobile homes affixed on the Real Property, facilities, additions, replacements and other construction on the Real Property. Indebtedness. The word 'Indebtedness' means all principal, interest, and other amounts, costs and expenses payable under the Note or Related Documents, together with all renewals of, extensions of, modifications of, consolidations of and substitutions for the Note or Related Documents and any amounts expended or advanced by Lender to discharge Grantor's obligations or expenses incurred by Lender to enforce Grantor's obligations under this Mortgage, together with interest on such amounts as provided in this Mortgage. The liens and security interests created pursuant to this Mortgage covering the Indebtedness which may be created in the future shall relate back to the date of this Mortgage. Lender. The word 'Lender" means COMMERCE BANK/HARRISBURG N.A., its successors and assigns. Mortgage. The word "Mortgage" means this Mortgage between Grantor and Lender. Note. The word 'Note" means the promissory note dated October 29, 2007, in the original principal amount of $237,345.00 from Grantor to Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the promissory note or agreement. NOTICE TO GRANTOR: THE NOTE CONTAINS A VARIABLE INTEREST RATE. Personal Property. The words "Personal Property" mean all equipment, fixtures, and other articles of personal property now or hereafter owned by Grantor, and now or hereafter attached or affixed to the Real Property; together with all accessions, parts, and additions to, all replacements of, and all substitutions for, any of such property; and together with all proceeds (including without limitation all insurance proceeds and refunds of premiums) from any sale or other disposition of the Property. Property. The word "Property" means collectively the Real Property and the Personal Property. Real Property. The words "Real Property" mean the real property, interests and rights, as further described in this Mortgage. Related Documents. The words 'Related Documents' mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness. Rants. The word "Rents" means all present and future rents, revenues, income, issues, royalties, profits, and other benefits derived from the Property. GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS MORTGAGE, AND GRANTOR AGREES TO ITS TERMS. THIS MORTGAGE IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS MORTGAGE IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALEp INSTRUMENT ACCORDING TO LAW. GRANTOR: J HUTCH !!tfeSk b? 5rperLF Leo-Qaq 1 f CERTIFICATE OF RESIDENCE I hereby certify, that the precise address of the mortgagee, COMMERCE BANKIHARRISBURG N.A., herein is as follows: COMMERCIAL MORTGAGE. DEPARTMENT, 3801 PAXTON STREET, HARRISBURG. PA 17111 Attorney or Agent for Mortgagee MORTGAGE Loan No: 3554350 (Continued) Page 11 CORPORATE ACKNOWLEDGMENT COMMONWEALTH OF PENNSYLVANIA j tf )SS COUNTY OF f --e-'..1 t O? is a ! day of 1 , 20 before me `= ?? I €I to :vim, the undersigned Notary Public, personally appeared James W. Hutchison, Jr., Pr M of Flutch Homes„Inc., who acknowledged himself or herself to be the President of Hutch Homes, inc., of a corporation, and that he of she as such President of Hutch Homes, inc., being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by himself or herself as President of Hutch Homes, Inc.. In witness whereof, 1 hereunto set my hand and official seal. " aIT1141 OF PENNSYLVANIq Nawwsew Notary Public in and for the State of %27 2010 nis Association of Notarias LAM"* LvWb& V- s.sL=W4 CW. H0WW M "sahls,M 1 m 1 M. "W. Al INeha Ilw.,r -PA M'AINAPrs1t11MRA4Ujft%0 M 7"44M M 20 FIRST AMERICAN TITLE INSURANCE CO. Commitment Number. HUT177-06(R) SCHEDULE C PROPERTY DESCRIPTION The land referred to in this Commitment is described as follows: ALL THAT CERTAIN tract or parcel of land situate in Fairview Township, York County, Pennsylvania, bounded and described as follows, to wit: BEGINNING at an iron pin on the northern right of way line of Pleasant View Terrace (T-740) at a common property comer of Lot 16 and 17 of the Final Subdivision Plan of Lots 16, 17 and 18, Cherry Hill Development; thence from said point of beginning, along said right of way line of Pleasant View Terrace (T-740) the following three (3) courses: 1) by a curve, curving to the right, having a radius of 125 feet and an arc length of 48.96 feet (with a chord bearing of North 19 degrees 31 minutes 31 seconds West and a chord distance of 48.65 feet) to a point; thence 2) North 08 degrees 18 minutes 00 seconds West, a distance of 64.05 feet to a point; thence 3) by a curve, curving to the left, having a radius of 170.70 feet an an arc length of 6.81 feet (with a chord bearing of North 09 degrees 26 minutes 35 seconds West and a chord distance of 6.81 feet) to a point at a common property comer of Lot 16 and lands now or late of Rosann Coviello; thence along said lands now or late of Rosann Coviello North 33 degrees 29 minutes 54 seconds East, a distance of 201.77 feet to a point at a common property comer of Lot 16, lands now or late of Rosann Coviello and lands now or late of the Pennsylvania Turnpike; thence along said lands now or late of the Pennsylvania Turnpike the following two courses 1) South 61 degrees 11 minutes 00 seconds East, a distance of 9.00 feet to a point; thence 2) South 61 degrees 35 minutes 00 seconds East, a distance of 95.96 feet to a point at a common property comer of Lot 16 and Lot 17; thence along said Lot 17, South 37 degrees 05 minutes 00 seconds West, a distance of 293.57 feet to an iron pin on the northern right of way line of Pleasant View Terrace T-740 said point being the place of BEGINNING. ALTA Commitment Schedule C (HUT177-06(R).PFDIHUT177-06(R)12) YORK COUNTY RECORDER OF DEEDS 28 EAST ALR%ET STREET YORK, PA 17401 Randi L. Reisinger - Recorder Gloria A. Fleming - Deputy Instrument Number - 2007081539 Book -1930 Starting Page - 7492 Recorded On 11/1/2007 At 9:37:18 AM * Total Pages -13 * Instrument Type - MORTGAGE Invoice Number - 732983 * Grantor - BUTCH HOMES INC * Grantee - COMMERCE BANK/HARRISBURG NATIONAL ASSOCIATION User - DEF *Received By: COUNTER * Customer - TRI COUNTY ABSTRACT * FEES STATE WRIT TAR JCS/ACCESS TO JUSTICE RECORDING FEES AFFORDABLE HOUSING PIN NUMBER FEES COUNTY ARCHIVES FEE ROD ARCHIVES FEE TOTAL PAID PARCEL IDENTIFICATION NUMBER $0.50 270001400750000000 $10.00 Total Parcels: 1 $29.00 $11.50 $2.00 $2.00 $3.00 $58.00 I Certify This Document To Be Recorded In York County Pa. .. ?N 4 ' * Racordw of Diw& cou?t< THIS IS A CERTIFICATION PAGE PLEASE DO NOT DETACH THIS PAGE IS NOW PART OF THIS LEGAL DOCUMENT * - Information denoted by an asterisk may change during the verification process and may not be reflected on this page. Book: 1930 Page: 7504 ? ?h???? COMMERC.,tL PLEDGE AND SECURITY A?.REEMENT A# W" I References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item. Any item above containing ' •' •• has been omitted due to text length limitations. Borrower: Hutch Homes, Inc. Lender: COMMERCE BANK/HARRISBURG N.A. 414 South York Street COMMERCIAL MORTGAGE DEPARTMENT Mechanicsburg, PA 17055 3801 PAXTON STREET HARRISBURG, PA 17111 (717) 975-6630 Grantor: James W. Hutchison, Jr. Cynthia G. Hutchison 414 South York Street Mechanicsburg, PA 17055 THIS COMMERCIAL PLEDGE AND SECURITY AGREEMENT dated October 29, 2007, is made and executed among James W. Hutchison, Jr.; and Cynthia G. Hutchison ("Grantor"); Hutch Homes, Inc. ("Borrower"); and COMMERCE BANK/HARRISBURG NA. ("Lander"). GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender a security Interest in the Collateral to secure the Indebtedness and agrees that Lender shall have the rights slatted in this Agreement with respect to the Collateral, In addition to all other rights which Lander may have by law. COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means Grantor's present and future rights, title and interest in and to, together with any and all present and future additions therato, substitutions therefore, and replacements thereof, together with any and all present and future certificates and/or instruments evidencing any Mutual Funds and further together with all Income and Proceeds as described herein: That certain brokerage account In the name of Grantor, which Grantor maintains with Fidelity Brokerage Services, LLC and National Financial Services, LLC (collectively, "Fidelty"), ON as more completely described in the Control Agreement in file, said Control Agreement having been signed by Grantor, Lender and Fidelity. CROSS-COLLATERALEZATION. In addition to the Note, this Agreement secures all obligations, debts and liabilities, plus interest thereon, of either Grantor or Borrower to Lender, or any one or more of them, as well as all claims by Lender against Borrower and Grantor or any one or more of them, whether now existing or hereafter ariaing, whether related or unrelated to the purpose of the Note, whether voluntary or otherwise, whether due or not due, direct or Indirect, determined or undetermined, absolute or contingent, liquidated or unliquidated, whether Burrower or Grantor may be liable individually or jointly with others, whether obligated as guarantor, surety, accommodation party or otherwise, ,nd whether recovery upon such amounts may be or hereafter may become barred by any statute of limitations, and whether the obligation to spay such amounts may be or hereafter may become otherwise unenforceable. BORROWER'S WAIVERS AND RESPONSIBILITIES. Except as otherwise required under this Agreement or by applicable law, (A) Borrower agrees that Lender need not tell Borrower about any action or inaction Lender takes in connection with this Agreement; (B) Borrower assumes the responsibility for being and keeping informed about the Collateral; and (C) Borrower waives any defenses that may arise because of any action or inaction of Lender, including without limitation any failure of Lender to realize upon the Collateral or any delay by Lender in realizing upon the Collateral; and Borrower agrees to remain liable under the Note no matter what action Lender takes or fails to take under this Agreement. GRANTOR'S REPRESENTATIONS AND WARRANTIES. Grantor warrants that: (A) this Agreement is executed at Borrower's request and not at the request of Lender; (B) Grantor has the full right, power and authority to enter Into this Agreement and to pledge the Collateral to Lender; (C) Grantor has established adequate means of obtaining from Borrower on a continuing basis information about Borrower's financial condition; and (D) Lender has made no representation to Grantor about Borrower or Borrower's creditworthiness. GRANTOR'S WAIVERS. Grantor waives all requirements of presentment, protest, demand, and notice of dishonor or non-payment to Borrower or Grantor, or any other party to the Indebtedness or the Collateral. Lender may do any of the following with respect to any obligation of any Borrower, without first obtaining the consent of Grantor: (A) grant any extension of time for any payment, (B) grant any renewal, (C) permit any modification of payment terms or other terms, or (D) exchange or release any Collateral or other security. No such act or failure to act shall affect Lender's rights against Grantor or the Collateral. RIGHT OF SETOFF. To the extent permitted by applicable law, Lander reserves a right of setoff in all Grantor's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Grantor holds jointly with someone also and all accounts Grantor may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Grantor authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts. REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. Grantor represents and warrants to Lender that: Ownership. Grantor is the lawful owner of the Collateral free and clear of all security interests, liens, encumbrances and claims of others except as disclosed to and accepted by Lender in writing prior to execution of this Agreement. Right to Pledge. Grantor has the full right, power and authority to enter into this Agreement and to pledge the Collateral. Authority; Binding Effect. Grantor has the full right, power and authority to enter into this Agreement and to grant a security Interest in the Collateral to Lender. This Agreement is binding upon Grantor as well as Grantor's successors and assigns, and is legally enforceable in accordance with its terms. The foregoing representations and warranties, and all other representations and warranties contained in this Agreement are and shall be continuing in nature and shall remain in full force and effect until such time as this Agreement is terminated or cancelled as provided herein. No Further Assignment. Grantor has not, and shall not, sell, assign, transfer, encumber or otherwise dispose of any of Grantor's rights in the Collateral except as provided in this Agreement. No Defaults. There are no defaults existing under the Collateral, and there are no offsets or counterclaims to the same. Grantor will strictly and promptly perform each of the terms, conditions, covenants and agreements, if any, contained in the Collateral which are to be performed by Grantor. COMMERCIAL PLEDGE AND SECURITY AGREEMENT Loan No: 3554350 (Continued) Page 2 No Violation. The execution and delivery of this Agreement will not violate any law or agreement governing Grantor or to which Grantor is a party. Financing Statements. Grantor authorizes Lander to file a UCC financing statement, or alternatively, a copy of this Agreement to perfect Lender's security interest. At Lender's request, Grantor additionally agrees to sign all other documents that are necessary to perfect, protect, and continue Lender's security interest in the Property. This includes making sure Lender is shown as the first and only security interest holder on the title covering the Property. Grantor will pay all filing fees, title transfer fees, and other fees and costs involved unless prohibited by law or unless Lender is required by law to pay such fees and costs. Grantor irrevocably appoints Lender to execute documents necessary to transfer title if there Is a default. Lender may file a copy of this Agreement as a financing statement. If Grantor changes Grantor's name or address, or the name or address of any person granting a security interest under this Agreement changes, Grantor will promptly notify the Lender of such change. LENDER'S RIGHTS AND OBLIGATIONS WITH RESPECT TO THE COLLATERAL. Lender may hold the Collateral until all Indebtedness has been paid and satisfied. Thereafter Lender may deliver the Collateral to Grantor or to any other owner of the Collateral. Lender shall have the following rights in addition to all other rights Lender may have by law: Maintenance and Protection of Collateral. Lender may, but shall not be obligated to, take such steps as it deems necessary or desirable to protect, maintain, insure, store, or care for the Collateral, Including paying of any liens or claims against the Collateral. This may include such things as hiring other people, such as attorneys, appraisers or other experts. Lender may charge Grantor for any cost incurred in so doing. When applicable low provides more then one method of perfection of Lender's security interest, Lender may choose the method(s) to be used. If the Collateral consists of stock, bonds or other investment property for which no certificate has been issued, Grantor agrees, at Lender's request, either to request issuance of an appropriate certificate or to give instructions on Lender's forms to the issuer, transfer agent, mutual fund company, or broker, as the case may be, to record on its books or records Lender's security interest in the Collateral. Grantor also agrees to execute any additional documents, including but not limited to, a control agreement, necessary to perfect Lender's security interest as Lander may desire. income and Proceeds from the Collateral. Lender may receive all Income and Proceeds and add it to the Collateral. Grantor agrees to deliver to Lender immediately upon receipt, in the exact form received and without commingling with other property, all Income and Proceeds from the Collateral which may be received by, paid, or delivered to Grantor or for Grantor's account, whether as an addition to, in discharge of, in substitution of, or in exchange for any of the Collateral. Application of Cash. At Lender's option, Lender may apply any cash, whether included in the Collateral or received as Income and Proceeds or through liquidation, sale, or retirement, of the Collateral, to the satisfaction of the Indebtedness or such portion thereof as Lander shall choose, whether or not matured. Transactions with Others. Lender may (1) extend time for payment or other performance, (2) grant a renewal or change in terms or conditions, or (3) compromise, compound or release any obligation, with any one or more Obligors, endorsers, or Guarantors of the Indebtedness as Lander deems advisable, without obtaining the prior written consent of Grantor, and no such act or failure to act shall affect Lander's rights against Grantor or the Collateral. All Collateral Secures Indebtedness. All Collateral shall be security for the Indebtedness, whether the Collateral is located at one or more offices or branches of Lender. This will be the case whether or not the office or branch where Grantor obtained Grantor's loan knows about the Collateral or relies upon the Collateral as security. Collection of Collateral. Lender at Lender's option may, but need not, collect the Income and Proceeds directly from the Obligors. Grantor authorizes and directs the Obligors, if Lender decides to collect the Income and Proceeds, to pay and deliver to Lender all Income and Proceeds from the Collateral and to accept Lender's receipt for the payments. Additional Authorizations. Grantor Irrevocably authorizes Lender, with full power of substitution, to do any of the following, either in Lender's own name or in the name of Grantor, or otherwise, which in the discretion of Lender may seem necessary or advisable: (a) to demand, collect, receive, receipt for, sue and recover all income and Proceeds and other sums of money and other property which may now or hereafter become due, owing or payable from the Obligors in accordance with the terms of the Collateral; (b) to execute, sign and endorse any and all instruments, receipts, checks, drafts and warrants issued in payment for the Collateral; (c) to settle or compromise any and all claims arising under the Collateral, and execute and deliver any release and acquittance therefor; (d) to file any claim or claims or to take any action or institute or take part in any proceedings; and (e) to execute and deliver to the Obligors, at the time and in the manner specified by the Collateral, any necessary instruments or documents. It is understood and agreed that any exercise of this authorization by Lender shall be on behalf of Lender and not on behalf of Grantor. Lender is not an agent or fiduciary of Grantor. However, in exercising the authorization granted hereby, Lender shall exercise reasonable caution and prudence and Lender shall keep full and accurate record of all actions, receipts and disbursements. Perfection of Security Interest. Upon Lender's request, Grantor will deliver to Lender any and all of the documents evidencing or constituting the Collateral. When applicable law provides more than one method of perfection of Lander's security Interest, Lender may choose the method(s) to be used. Upon Lender's request, Grantor will sign and deliver any writings necessary to perfect Lender's security interest. Grantor hereby irrevocably authorizes Lender to execute any documents necessary to perfect, amend, or to continue the security interest granted in this Agreement or to demand termination of filings of other secured parties. This Is a continuing Security Agreement and will continue in effect even though all or any part of the indebtedness is paid In full and even though for a period of time Borrower may not be Indebted to Lender. LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Grantor fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Grantor's failure to discharge or pay when due any amounts Grantor is required to discharge or pay under this Agreement or any Related Documents, Lander on Grantor's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Collateral and paying all costs for insuring, maintaining and preserving the Collateral. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Grantor. All such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity. The Agreement also will secure payment of these amounts. Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon Default. COMMEr.JAL PLEDGE AND SECURITY AGh_CMENT Loan No: 3554350 (Continued) Page 3 ,MITATiONS ON OBLIGATIONS OF LENDER. Lender shall use ordinary reasonable care in the physical preservation and custody of the Collateral in Lender's possession, but shalt have no other obligation to protect the Collateral or its value. In particular, but without limitation, Lender shall have no responsibility for (A) any depreciation in value of the Collateral or for the collection or protection of any Income and Proceeds from the Collateral, (Bl preservation of rights against parties to the Collateral or against third persons, lC) ascertaining any maturities, calls, conversions, exchanges, offers, tenders, or similar matters relating to any of the Collateral, or (D) Informing Grantor about any of the above, whether or not Lender has or is deemed to have knowledge of such matters. Except as provided above, Lender shall have no liability for depreciation or deterioration of the Collateral. DEFAULT. Each of the following shall constitute an Event of Default under this Agreement: Payment Default. Borrower fails to make any payment when due under the Indebtedness. Other Defaults. Borrower or Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower or Grantor. Default in Favor of Third Parties. Should Borrower or any Grantor default under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's property or Borrower's or any Grantor's ability to repay the Indebtedness or perform their respective obligations under this Agreement or any of the Related Documents. False Statements. Any warranty, representation or statement made or furnished to Lander by Borrower or Grantor or on Borrower's or Grantor's behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter. Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and affect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason. Death or Insolvency. The death of Borrower or Grantor or the dissolution or termination of Borrower's or Grantor's existence as a going business, the insolvency of Borrower or Grantor, the appointment of a receiver for any part of Borrower's or Grantor's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower or Grantor. Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or Grantor or by any governmental agency against any collateral securing the Indebtedness. This includes a garnishment of any of Borrower's or Grantor's accounts, including deposit accounts, with Lander, However, this Event of Default shall not apply If there is a good faith dispute by Borrower or Grantor as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower or Grantor gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, In an amount determined by Lender, in Its sole discretion, as being an adequate reserve or bond for the dispute. Insufficient Market Value of Securities. Mutual Fund: The market value of the Collateral falls below $33,000.00; and as a result of the deterioration of the market value of the Collateral, Grantor does not, by the close of business on the next business day after Grantor has received notice from Lender of the deterioration, either (1) reduce the amount of the Indebtedness in this loan as required by Lender or (2) pledge or grant an additional security interest to increase the value of the Collateral as required by Lender. Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or Guarantor dies or becomes incompetent or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness. Adverse Change. A material adverse change occurs in Borrower's or Grantor's financial condition, or Lender believes the prospect of payment or performance of the Indebtedness is Impaired. Insecurity. Lender in good faith believes itself insecure. Cure Provisions. If any default, other than a default In payment or failure to satisfy Lender's requirement in the Insufficient Market Value of Securities section is curable and if Grantor has not been given a notice of a breach of the some provision of this Agreement within the preceding twelve (12) months, it may be cured if Grantor, after receiving written notice from Lender demanding cure of such default: (1) cures the default within fifteen (15) days; or (2) If the cure requires more then fifteen (15) days, immediately Initiates steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical. RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this Agreement, at any time thereafter, Lender may exercise any one or more of the following rights and remedies: Accelerate Indebtedness. Declare all Indebtedness, including any prepayment penalty which Borrower would be required to pay, immediately due and payable, without notice of any kind to Borrower or Grantor. Collect the Collateral. Collect any of the Collateral and, at Lender's option and to the extent permitted by applicable law, retain possession of the Collateral while suing on the Indebtedness. Sell the Collateral. Sell the Collateral, at Lender's discretion, as a unit or in parcels, at one or more public or private sales. Unless the Collateral is perishable or threatens to decline speedily In value or Is of a type customarily sold on a recognized market, Lender shall give or mail to Grantor, and other persons as required by law, notice at least ten (10) days In advance of the time and place of any public sale, or of the time after which any private sale may be made. However, no notice need be provided to any person who, after an Event of Default occurs, enters into and authenticates an agreement waiving that person's right to notification of sale. Grantor agrees that any requirement of reasonable notice as to Grantor is satisfied if Lender mails notice by ordinary mail addressed to Grantor at the last address Grantor has given Lender in writing. If a public sale is held, there shell be sufficient compliance with all requirements of notice to the public by a single publication in any newspaper of general circulation in the county where the Collateral is located, setting forth the time and place of sale and a brief description of the property to be sold. Lender may be a purchaser at any public sale. Sell Securities. Sell any securities included in the Collateral in a manner consistent with applicable federal and state securities laws. If, because of restrictions under such laws, Lender is unable, or believes Lender is unable, to sell the securities In an open market transaction, Grantor agrees that Lender will have no obligation to delay sale until the securities can be registered. Then Lender may make a private sale to one or more persons or to a restricted group of persons, even though such sale may result in a price that is less favorable than might be COMMERCIAL. PLEDGE AND SECURITY AGREEMENT Loan No: 3554350 (Continued) Page 4 obtained in an open market transaction. Such a sale will be considered commercially reasonable. If any securities held as Collateral are "restricted securities" as defined in the Rules of the Securities and Exchange Commission (such as Regulation D or Rule 144) or the rules of state securities departments under state "Blue Sky" laws, or if Grantor or any other owner of the Collateral is an affiliate of the issuer of the securities, Grantor agrees that neither Grantor, nor any member of Grantor's family, nor any other person signing this Agreement will sell or dispose of any securities of such issuer without obtaining Lender's prior written consent, Rights and Remedies with Respect to Investment Property, Financial Assets and Related Collateral. In addition to other rights and remedies granted under this Agreement and under applicable law, Lender may exercise any or all of the following rights and remedies: (1) register with any issuer or broker or other securities intermediary any of the Collateral consisting of investment property or financial assets (collectively herein, "investment property') in Lender's sole name or in the name of Lender's broker, agent or nominee; (2) cause any issuer, broker or other securities intermediary to deliver to Lender any of the Collateral consisting of securities, or investment property capable of being delivered; (3) enter into a control agreement or power of attorney with any issuer or securities Intermediary with respect to any Collateral consisting of investment property, on such terms as Lender may doom appropriate, in its sole discretion, including without limitation, an agreement granting to Lender any of the rights provided hereunder without further notice to or consent by Grantor; (4) execute any such control agreement on Grantor's behalf and in Grantor's name, and hereby irrevocably authorizes Lender to execute such control agreement on Grantor's behalf; (5) exercise any and all rights of Lender under any such control agreement or power of attorney; (6) exercise any voting, conversion, registration, purchase, option, or other rights with respect to any Collateral; (7) collect, with or without legal action, and issue receipts concerning any notes, checks, drafts, remittances or distributions that are paid or payable with respect to any Collateral consisting of investment property. Any control agreement entered with respect to any investment property shall contain the following provisions, at Lender's discretion. Lender shall be authorized to instruct the Issuer, broker or other securities intermediary to take or to refrain from taking such actions with respect to the investment property as Lender may instruct, without further notice to or consent by Grantor. Such actions may include without limitation the issuance of entitlement orders, account Instructions, general trading or buy or sell orders, transfer and redemption orders, and stop loss orders. Lender shall be further entitled to instruct the issuer, broker or securities intermediary to sell or to liquidate any investment property, or to pay the cash surrender or account termination value with respect to any and all investment property, and to deliver all such payments and liquidation proceeds to Lender. Any such control agreement shall contain such authorizations as are necessary to place Lender in 'control" of such investment collateral, as contemplated under the provisions of the Uniform Commercial Code, and shall fully authorize Lender to issue "entitlement orders" concerning the transfer, redemption, liquidation or disposition of investment collateral, in conformance with the provisions of the Uniform Commercial Code. Foreclosure. Maintain a judicial suit for foreclosure and sale of the Collateral. Transfer Title. Effect transfer of title upon sale of all or part of the Collateral. For this purpose, Grantor irrevocably authorizes Lender to execute endorsements, assignments and instruments in the name of Grantor and each of them (if more than one) as shall be necessary or reasonable. Other Rights and Remedies. Have and exercise any or all of the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code, at law, in equity, or otherwise. Appgcation of Proceeds. Apply any cash which is part of the Collateral, or which is received from the collection or sale of the Collateral, to reimbursement of any expenses, Including any costs for registration of securities, commissions incurred in connection with a sale, reasonable attorneys' fees and court costs, whether or not there Is a lawsuit and including any fees on appeal, incurred by Lender in connection with the collection and sale of such Collateral and to the payment of the Indebtedness of Borrower to Lender, with any excess funds to be paid to Grantor as the interests of Grantor may appear. Borrower agrees, to the extant permitted by law, to pay any deficiency after application of the proceeds of the Collateral to the Indebtedness. Election of Remedies. Except as may be prohibited by applicable law, all of Lender's rights and remedies, whether evidenced by this Agreement, the Related Documents, or by any other writing, shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Grantor under this Agreement, after Grantor's failure to perform, shall not affect Lender's right to declare a default and exercise its remedies. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement: Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given In writing and signed by the party or parties sought to be charged or bound by the aiterstion or amendment. Attorneys' Fees; Expenses. Grantor agrees to pay upon demand all of Lender's costs and expenses, including Lender's reasonable attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, and Grantor shall pay the costs and expenses of such enforcement. Costs and expenses Include Lender's reasonable attorneys' fees and legal expenses whether or not there is a lawsuit, including reasonable attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Grantor also shall pay all court costs and such additional fees as may be directed by the court. Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement. Governing Law. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal low, the laws of the Commonwealth of Pennsylvania without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in the Commonwealth of Pennsylvania. Joint and Several Liability. All obligations of Borrower and Grantor under this Agreement shall be joint and several, and all references to Grantor shall mean each and every Grantor, and all references to Borrower shall mean each and every Borrower. This means that each Borrower and Grantor signing below is responsible for all obligations in this Agreement. No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right, A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of COMMEt.%;IAL PLEDGE AND SECURITY AGh?EMENT Loan No: 3554350 (Continued) Page 5 dealing between Lender and Grantor, shall constitute a waiver of any of Lender's rights or of any of Grantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender. Notices. Unless otherwise provided by applicable law, any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party may change Its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Grantor agrees to keep Lender informed at all times of Grantor's current address. Unless otherwise provided by applicable law, if there is more then one Grantor, any notice given by Lender to any Grantor is deemed to be notice given to all Grantors. Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any person or circumstance, that finding shall not make the offending provision Illegal, invalid, or unenforceable as to any other person or circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement. Successor Interests. The terms of this Agreement shall be binding upon Grantor, and upon Grantor's heirs, personal representatives, successors, and assigns, and shall be enforceable by Lender and its successors and assigns. Time Is of the Essence. Time is of the essence in the performance of this Agreement. DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts In lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code: Agreement. The word "Agreement" means this Commercial Pledge and Security Agreement, as this Commercial Pledge and Security Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Commercial Pledge and Security Agreement from time to time. Borrower. The word "Borrower" means Hutch Homes, Inc. and includes all co-signers and co-makers signing the Note and all their successors and assigns. Collateral. The word "Collateral" means all of Grantor's right, title and interest in and to all the Collateral as described in the Collateral Description section of this Agreement. Default. The word 'Default" means the Default set forth in this Agreement In the section titled "Default". Event of Default. The words "Event of Default" mean any of the events of default set forth In this Agreement in the default section of this Agreement. Grantor. The word "Grantor" means James W. Hutchison, Jr.; and Cynthia G. Hutchison. Guarantor. The word "Guarantor' means any guarantor, surety, or accommodation party of any or all of the Indebtedness. Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note. Income and Proceeds. The words "Income and Proceeds" mean all present and future Income, proceeds, earnings, increases, and substitutions from or for the Collateral of every kind and nature, including without limitation all payments, interest, profits, distributions, benefits, rights, options, warrants, dividends, stock dividends, stock splits, stock rights, regulatory dividends, subscriptions, monies, claims for money due and to become due, proceeds of any insurance on the Collateral, shares of stock of different per value or no per value issued in substitution or exchange for shares included in the Collateral, and all other property Grantor is entitled to receive on account of such Collateral, including accounts, documents, instruments, chattel paper, and general Intangibles. Indebtedness. The word 'Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents. The liens and security Interests created pursuant to this Agreement covering the Indebtedness which may be created in the future shell relate back to the date of this Agreement. Specifically, without limitation, Indebtedness includes all amounts that may be indirectly secured by the Cross-Collateralization provision of this Agreement. Lender. The word "Lender' means COMMERCE BANK/HARRISBURG N.A., its successors and assigns. Note. The word "Note" means the Note executed by Hutch Homes, Inc. in the principal amount of 8237,345.00 dated October 26, 2007, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit agreement. Obligor. The word "Obligor" means without limitation any and all persons obligated to pay money or to perform some other act under the Collateral. Property. The word "Property" means all of Grantor's right, title and interest in and to all the Property as described In the "Collateral Description" section of this Agreement. Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness. BORROWER AND GRANTOR HAVE READ AND UNDERSTOOD ALL THE PROVISIONS OF/THIS COMMERCIAL PLEDGE AND SECURITY .GREEMENT AND AGREE TO ITS TERMS. THIS AGREEMENT IS DATED OCTOBER? .p N THIS AGREEMENT IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS A ENT IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW. COMMERCIAL PLEDGE AND SECURITY AGREEMENT Loan No: 3554350 (Continued) Page 6 X.:{Seal) ynth . Hutchison, Individually 1AUR Mq wdr W. WAOAW arr. h- "d rb.e,w"W"M" 1"7. SOW. NWs NnrwL - FA N:1M7NAFl6VWWFUftW4QIO W62070 rww HUTCH OMES, INC. - : : . , '; ° :{Seel) Ja es fi on, Jr., Pr. of Hutch Ho s, Inc. RECYCLED METRO BANK 3801 Paxton Street 888.937.0004 Harrisburg, PA 17111 mymetrobank.com April 6, 2012 VIA CERTIFIED AND FIRST CLASS MAIL James W. Hutchison 414 S York St Mechanicsburg, PA 17055 Re: Hutch Homes, Inc $237,345 Promissory Note dated October 29, 2007, as amended ("Note") Dear Mr. Hutchison: The Borrower and/or Guarantors have defaulted on their respective obligations to the Bank due to, amongst other things, their failure to remit payments when due ("Defaults"). As a result of the Borrowers default, the Bank has elected to exercise its option to declare the entire unpaid principal balance of the following Notes and all accrued and unpaid interest to be immediately due and payable. The amounts due under the Note is follows: Note Principal Balance $ 228,545.72 Accrued Interest through 4/6/12 $ 3,397.11 Late Fees through 4/6/12 $ 55,688.77 Other Fees through 4/6/12 $ 1,000.00 Sub-Total Amount Due through 4/6/12 $ 288,631.60 Total Amount Due on the Note through 4/6/12: S 288,631.60 The balances due under the Note may increase or decrease as a result of the receipt of payments and the proceeds of collateral securing the Note, late charges, costs of collection and other fees, costs and expenses. Therefore, immediately prior to remitting payment, please contact the undersigned at 717-412-6218 to obtain final payoff amounts and remittance instructions. Nothing contained in this letter constitutes a waiver or release of any of the terms or provisions of the Note or of any and all other notes, instruments or agreements between the Bank and the Borrower and/or Guarantors ("Loan Documents"). The Bank reserves all rights and remedies available to it under the Loan Documents and applicable law, all of which are expressly hereby reserved. No discussions between the Bank and the Borrower and/or Guarantors concerning this notification, other loan relationships between the Bank and the Borrower and/or Guarantors, or any other matter shall imply an agreement on the part of the Bank to waive any of its rights and remedies or to forbear from taking any action authorized by the Loan Documents or applicable law, whether or not such discussions may be continuing. Any communications with any representative of the Bank, whether oral or written, will be mere discussions only and will not in any way commit or be binding upon the Bank unless reduced to a writing signed by an authorized officer of the Bank. Such communications will not represent any course of dealing, and in no manner shall the Borrower or Guarantors rely in any way on any such discussions unless such communications are reduced to a writing signed by an authorized officer of the Bank. The acceptance of any partial payment of any of the obligations of the Borrower and/or Guarantors to the Bank shall not be deemed a waiver or limitation of any of the Bank's rights reserved herein as to the full amount of any unpaid balance. Any delay or forbearance by the Bank in the enforcement or pursuit of any of its rights and remedies under the Loan Documents or applicable law shall not constitute a waiver thereof, nor shall it be a bar to the exercise of the Bank's rights or remedies at a later date. If you have any questions regarding the contents of this letter, please contact me. Thank you for your attention to this matter. Sincerely, METRO BANK David M. Chajkowski Assistant Vice President SHERIFF'S OFFICE OF CUMBERLAND COUNTY Ronny R Anderson Sheriff Jody S Smith Chief Deputy Richard W Stewart Solicitor ?4?t?itr pf t??tahLrrlfi?tl+ OFFICE OF THE SHERIFF PRO 2112 AUG -2 AM 8. 09 FENMSYLVANIA Metro Bank vs. Hutch Homes, Inc. (et aQ Case Numb 2012-2383 SHERIFF'S RETURN OF SERVICE 04/27/2012 01:15 PM - William Cline, Corporal, who being duly sworn according to law, states that on April 27, 20, 2 at 1315 hours, he served a true copy of the within Complaint and Notice, upon the within named defendant, to wit: Hutch Homes, Inc., by making known unto James Hutchinson, Owner of Hutch Homes, Inc. at 414 S. York Street, Mechanicsburg, Cumberland County, Pennsylvania 17055 its contents and at the same time handing to him personally the said true and correct copy of the same. E, DEPUTY 04/27/2012 01:16 PM - William Cline, Corporal, who being duly sworn according to law, states that on April 27, 20 2 at 1316 hours, he served a true copy of the within Complaint and Notice, upon the within named defendant, to wit: James W. Hutchinson, Jr., by making known unto himself personally, at 414 S. York Street, Mechanicsburg, Cumberland County, Pennsylvania 17055 its contents and at the same time handing to him personally the said true and correct copy of the same. z CLINE, DEPUTY 05/04/2012 06:50 PM - Ryan Burgett, Deputy Sheriff, who being duly sworn according to law, states that on May i 2012 at 1850 hours, he served a true copy of the within Complaint and Notice, upon the within named defendant, to wit: Cynthia G. Hutchinson, by making known unto herself personally, at 2312 Mill Road Mechanicsburg, Cumberland County, Pennsylvania 17055 its contents and at the same time handing her personally the said true and correct copy of the same. AN BURGETT, SHERIFF COST: $80.00 SO ANSWERS, May 09, 2012 R ANDERSON, SHERIFF (c) CointySutte Shenff, Teleosott, Inc. .t° rtc i ,.. F I P OTHONOTARY 2012 AUG -2 AM g: 46 CUMBERLANO COUNTY PENNSYLVANIA METTE, EVANS & WOODSIDE Heather Z. Kelly, Esquire Sup. Ct. I.D. No. 86291 3401 N. Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 (717) 232-5000 - Phone (717) 236-1816 - Facsimile hzkelly@mette.com Attorneys for Plaintiff METRO BANK, f/k/a Commerce Bank/Harrisburg, N.A., Plaintiff V. HUTCH HOMES, INC., JAMES W. HUTCHISON, JR. and CYNTHIA G. HUTCHISON, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVAI . DOCKET NO. 2012-2383-Civil PRAECIPE TO ENTER DEFAULT JUDGMENT TO THE PROTHONOTARY: Please enter judgment by default in the above-captioned matter, in favor of the Metro Bank, f/k/a/ Commerce Bank/Harrisburg, N.A., and against the Defendant Hutch Inc., for failure to plead to Plaintiff's Complaint in accordance with Rule 1037(b) of the Pennsylvania Rules of Civil Procedure and assess Plaintiff damages in the amount of $288,631.60 calculated as follows: Q Principal: $288,545.72 Interest as of 2/7/12 $3,397.11 Late Fees through 2/7/12 $55,688.77 Other Fees as of 2/7/12 $1,000.00 TOTAL: $288,631.60 Interest, costs and attorneys fees continue to accrue from February 7, 2012. I hereby certify that the Notice of Default attached hereto as Exhibit "A" was to Defendant Hutch Homes, Inc. in accordance with Rule 237.1 of the Pennsylvania Rules of Civil Procedure. There is no attorney of record. Respectfully submitted, METTE, EVANS & WOODSIDE By: lw'-4? j?' ? - Heather Z. Ke , Esquire Sup. Ct. ID No. 86291 3401 North Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 (717) 232-5000 Attorneys for Plaintiff Date: July 24, 2012 METTE, EVANS & WOODSME A PROFESSIONAL OORPORATION ATTORNRYS AT LAW HEATHER Z. KELLY, ESQ. Hutch Homes, Inc. 414 South York Street Mechanicsburg, PA 17055 Certificate of Re: Metro Bank f/k/a Commerce Bank/Harrisburg, N.A. v. Hutch Homes, Inc., James W. Hutchinson, Jr. and Cynthia G. Hutchison Cumberland County C. C. P.; No.: 2012-2383 Dear Sir/Madam: Enclosed you will find an Important Notice in the above-referenced matter. Please respond accordingly. Very truly yours, Heather Z. Kelly HZK/pml Womsm w 0 N o PCl5w lVKE° Certificate Of Mailing qqm ° r- This Certificate of Mating provides evidence that mail has been presented to USPS® for mailing I • O Q This form may be used for domestic and international mail ¦ CI r, W F`°m:Heather Z. Kelly, Esquire F Oj o Mette Evans & Woodside ?s to a N 3401 N. Front Street t??' Pq 7 o Harrisburg, PA 17110 ?y U_ O ? ?N p To: Hutch Homes, Inc. 414 South York Street s 3i?,n o o° Mechanicsburg, PA 17055 ?SQS + PS Form 3817, April 2007 PSN 7530-02-000-9065 a 8401 NORTH FRONT STREET P.O. BOX 5950 DIRECT HARRISBURG, PA 14110-0950 (717) 231 IRS NO. E-MAIL A 23-1985005 hzkeliy@m TELEPHONE FAX (717) 232-5000 (717) 236-1816 HTTPp//W W W A=TTF,.00X July 10, 2012 NIETTE, EVANS & WOODSIDE Heather Z. Kelly, Esquire Sup. Ct. I.D. No. 86291 3401 North Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 (717) 232-5000 - Phone (717) 236-1816 - Fax METRO BANK, f/k/a Commerce IN THE COURT OF COMMON PLEAS OF Bank/Harrisburg, N.A., CUMBERLAND COUNTY, PENNSYVANIA Plaintiff DOCKET NO. 2012-2383 V. HUTCH HOMES, INC., JEAN W. HUTCHINSON, JR. and CYNTHIA G. HUTCHISON, Defendants TO: Hutch Homes, Inc. 414 South York Street Mechanicsburg, PA 17055 DATE OF NOTICE: July 10, 2012 IMPORTANT NOTICE YOU ARE IN DEFAULT BECAUSE YOU HAVE FAILED TO ENTER A WRITTEI APPEARANCE PERSONALLY OR BY ATTORNEY AND FILE IN WRITING WITH THE COURT YOUR DEFENSES OR OBJECTIONS TO THE CLAIMS SET FORTH AGAINST YOU. UNLESS YOU ACT WITHIN TEN DAYS FROM THE DATE OF THIS NOTICE, A JUDGMENT MAY BE ENTERED AGAINST YOU WITHOUT A HEARING AND YOU MAY LOSE YOUR PROPERTY OR OTHER IMPORTANT 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 LAWYEI 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 S. Bedford Street Carlisle, PA 17013 1-800-990-9108 717-249-3166 Respectfully submitted, &a2?L- --? 2?Z& ,-- - Heather Z. Kelly, squire Sup. Ct. I.D. No. 86291 3401 North Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 (717) 232-5000 (717) 236-1816 (fax) Attorneys for Plaintiff Date: July 10, 2012 584953v1 iLED-OFFIGV f- HE 2012 AUG -2 AM 9: 47 CUMBERLAND COUNTY PENNSYLVANIA METTE, EVANS & WOODSIDE Heather Z. Kelly, Esquire Sup. Ct. I.D. No. 86291 3401 N. Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 (717) 232-5000 - Phone (717) 236-1816 - Facsimile hzkelly@mette.com Attorneys for Plaintiff METRO BANK, f/k/a Commerce Bank/Harrisburg, N.A., Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVAT V. HUTCH HOMES, INC., JAMES W. HUTCHISON, JR. and CYNTHIA G. HUTCHISON, Defendants DOCKET NO. 2012-2383-Civil CERTIFICATE OF RESIDENCE I hereby certify that the name and address of the proper person to receive this notice is: Hutch Homes, Inc. 414 S. York Street Mechanicsburg, PA 17055 Respectfully submitted, METTE, EVANS & WOODSIDE By: a-a? g zaf Heather Z. Kelly, E? squire Sup. Ct. ID No. 86291 3401 N. Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 (717) 232-5000 Attorneys for Plaintiff Date: July 24, 2012 T?,E ROT NONO TAI 1Q1? AUG -2 Atf 9: 4 C"BENLANO COUNT PENNSYLVANIA METTE, EVANS & WOODSIDE Heather Z. Kelly, Esquire Sup. Ct. I.D. No. 86291 3401 N. Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 (717) 232-5000 - Phone (717) 236-1816 - Facsimile hzkelly@mette.com Attorneys for Plaintiff METRO BANK, f/k/a Commerce Bank/Harrisburg, N.A., Plaintiff V. HUTCH HOMES, INC., JAMES W. HUTCHISON, JR. and CYNTHIA G. HUTCHISON, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVAT : DOCKET NO. 2012-2383-Civil AFFIDAVIT OF NON-MILITARY SERVICE I, Heather Z. Kelly, Esquire, being duly sworn according to law, depose and state that the best of my knowledge, information and belief, the Defendant Hutch Homes, Inc. is not in military or naval service of the United States or its allies, or otherwise within the provisions of the Servicemembers Civil Relief Act of 2003, 50 U.S.C. App. §501, et seq. Respectfully submitted, r METTE, EVANS & WOODSIDE By: Heather T Kelly, squire Sup. Ct. ID No. 86291 3401 N. Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 (717) 232-5000 Attorneys for Plaintiff Date: July 24, 2012 587103vl METRO BANK, f/k/a Commerce Bank/Harrisburg, N.A., Plaintiff V. HUTCH HOMES, INC., JAMES W. HUTCHISON, JR. and CYNTHIA G HUTCHISON, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVA] : DOCKET NO. 2012-2383-Civil ENTRY OF JUDGMENT You are hereby notified pursuant to Rule 236 of the Pennsylvania Rules of Civil Procedure that Judgment has been entered against you in the amount of $288,631.60 for Metro Bank, f/k/a Commerce Bank/Harrisburg, N.A. and against Defendant Hutch Homes, together with interest, attorneys fees, costs and expenses from the date of judgment until paid full. Date: g IZ 1? a ` I w Prothonotary METRO BANK, fWa Commerce Bank/Harrisburg, N.A., Plaintiff V. HUTCH HOMES, INC., JAMES W. HUTCHISON, JR. and CYNTHIA G. HUTCHISON, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVAT DOCKET NO. 2012-2383-Civil NOTICE OF ENTRY OF JUDGMENT TO: Hutch Homes, Inc. 414 S. York Street Mechanicsburg, PA 17055 You are hereby notified that on ? Jnf9' 2012, Judgment was entered against you the above-captioned case. Date: Prothonotary Tk PROTHONOTAR rt 2042 AUG -2 AN 9' 55 CUMBERLAND COUNTY PENNSYLVANIA METTE, EVANS & WOODSIDE Heather Z. Kelly, Esquire Sup. Ct. I.D. No. 86291 3401 N. Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 (717) 232-5000 - Phone (717) 236-1816 - Facsimile hzkelly@mette.com Attorneys for Plaintiff METRO BANK, f/k/a Commerce Bank/Harrisburg, N.A., Plaintiff V. HUTCH HOMES, INC., JAMES W. HUTCHISON, JR. and CYNTHIA G. HUTCHISON, Defendants PRAECIPE TO ENTER DEFAULT JUDGMENT TO THE PROTHONOTARY: Please enter judgment by default in the above-captioned matter, in favor of the Metro Bank, f/k/a/ Commerce Bank/Harrisburg, N.A., and against the Defendant Hutch Inc., for failure to plead to Plaintiff's Complaint in accordance with Rule 1037(b) of the IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVAI DOCKET NO. 2012-2383-Civil Pennsylvania Rules of Civil Procedure and assess Plaintiff damages in the amount of $77,91 calculated as follows: a,MA ate Ck.? It ;3y8 87 59 11AUUftl Principal: $75,312.03 Interest as of 2/7/12 $1,204.99 Late Fees through 2/7/12 $77,914.55 TOTAL: $77,914.55 Interest, costs and attorneys fees continue to accrue from February 7, 2012. I hereby certify that the Notice of Default attached hereto as Exhibit "A" was to Defendant Hutch Homes, Inc. in accordance with Rule 237.1 of the Pennsylvania Rules of Civil Procedure. There is no attorney of record. Respectfully submitted, METTE, EVANS & WOODSIDE By: Heather Z. Kell , squire Sup. Ct. ID No. 86291 3401 North Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 (717) 232-5000 Attorneys for Plaintiff Date: July 24, 2012 METTE2 EVANS & WOODSIDE A PROFESSIONAL ()ORPORATION ATTORNTaYS AT LAW HEATHER Z. KELLY, ESQ. Hutch Homes, Inc. 414 South York Street Mechanicsburg, PA 17055 Certificate of Maili Re: Metro Bank f/kla Commerce Bank/Harrisburg, N.A. v. Hutch Homes, Inc., James W. Hutchinson, Jr. and Cynthia G. Hutchison Cumberland County C. C. P.; No.: 2012-2383 Dear Sir/Madam: Enclosed you will find an Important Notice in the above-referenced matter. Please respond accordingly. Very truly yours, Heather Z. Kelly HZK/pml !l1WT?SISTES ip N CD PRSfJLLS6tYKE• Certificate Of Mailing " ?N r- This Certificate of McYing provides evidence that mail has been presented to USPS® for mailing • O This form may be used for domestic and international mail I err QW From: Heather Z. Kelly, Esquire I z O? o Mette Evans & Woodside °- 3401 N. Front Street P?_GP4 1 o Harrisburg, PA 17110 r-- LL O ? gN p T Hutch Homes, Inc. °C ?d ° o J 414 South York Street y s ?INn o o 2 Mechanicsburg, PA 17055 u5Q5 x. t Q' 3401 WORTS FRONT STREET P.O. BOX 5950 DMM E ARRISBURG, PA 17110-0950 (717) 2 MIS NO' E-MAIL 23-1985005 hzkellyC TELEPHONE PAX (717) 232-5000 (717) 238-1818 HT TP'?/M' W Mr.b0 :TTE.00M July 10, 2012 PS Form 3817, April 2007 PSN 7530-02-000-9065 METTE, EVANS & WOODSIDE Heather Z. Kelly, Esquire Sup. Ct. I.D. No. 86291 3401 North Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 (717) 232-5000 - Phone (717) 236-1816 - Fax METRO BANK, f/k/a Commerce Bank/Harrisburg, N.A., Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYVANIA : DOCKET NO. 2012-2383 V. HUTCH HOMES, INC., JEAN W. HUTCHINSON, JR. and CYNTHIA G. HUTCHISON, Defendants TO: Hutch Homes, Inc. 414 South York Street Mechanicsburg, PA 17055 DATE OF NOTICE: July 10, 2012 IMPORTANT NOTICE YOU ARE IN DEFAULT BECAUSE YOU HAVE FAILED TO ENTER A WRITTEI` APPEARANCE PERSONALLY OR BY ATTORNEY AND FILE IN WRITING WITH THE COURT YOUR DEFENSES OR OBJECTIONS TO THE CLAIMS SET FORTH AGAINST YOU. UNLESS YOU ACT WITHIN TEN DAYS FROM THE DATE OF THIS NOTICE, A JUDGMENT MAY BE ENTERED AGAINST YOU WITHOUT A HEARING AND YOU MAY LOSE YOUR PROPERTY OR OTHER IMPORTANT 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 LAWYEI 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 S. Bedford Street Carlisle, PA 17013 1-800-990-9108 717-249-3166 Respectfully submitted, &L42?Ll- --? 2?la Heather Z. Kelly, squire Sup. Ct. I.D. No. 86291 3401 North Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 (717) 232-5000 (717) 236-1816 (fax) Attorneys for Plaintiff Date: July 10, 2012 584953v1 METTE, EVANS & WOODSIDE Heather Z. Kelly, Esquire Sup. Ct. I.D. No. 86291 3401 N. Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 (717) 232-5000 - Phone (717) 236-1816 - Facsimile hzkelly@mette.com Attorneys for Plaintiff METRO BANK, f/k/a Commerce Bank/Harrisburg, N.A., Plaintiff V. HUTCH HOMES, INC., JAMES W. HUTCHISON, JR. and CYNTHIA G. HUTCHISON, Defendants HE PRO NONOTAR I 2012 AVG -2 AM 9: 59 CUMBERLAND COUNTY PENNSYLVANIA IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVAI : DOCKET NO. 2012-2383-Civil CERTIFICATE OF RESIDENCE I hereby certify that the name and address of the proper person to receive this notice is: Hutch Homes, Inc. 414 S. York Street Mechanicsburg, PA 17055 Respectfully submitted, METTE, EVANS & WOODSIDE By: 14LYK?L' ?? Heather Z. Kell , squire Sup. Ct. ID No. 86291 3401 N. Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 (717) 232-5000 Attorneys for Plaintiff Date: July 24, 2012 2012 AUG -2 Ate 9: 59 CUMBERLAND COUNTY PENNSYLVANIA METTE, EVANS & WOODSIDE Heather Z. Kelly, Esquire Sup. Ct. I.D. No. 86291 3401 N. Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 (717) 232-5000 - Phone (717) 236-1816 - Facsimile hzkelly@mette.com Attorneys for Plaintiff METRO BANK, f/k/a Commerce Bank/Harrisburg, N.A., Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVAT V. HUTCH HOMES, INC., JAMES W. HUTCHISON, JR. and CYNTHIA G. HUTCHISON, Defendants DOCKET NO. 2012-2383-Civil AFFIDAVIT OF NON-MILITARY SERVICE I, Heather Z. Kelly, Esquire, being duly sworn according to law, depose and state that the best of my knowledge, information and belief, the Defendant Hutch Homes, Inc. is not in military or naval service of the United States or its allies, or otherwise within the provisions the Servicemembers Civil Relief Act of 2003, 50 U.S.C. App. §501, et seq. Respectfully submitted, METTE, EVANS & WOODSIDE By: Heather Z. Kel , squire Sup. Ct. ID No. 86291 3401 N. Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 (717) 232-5000 Attorneys for Plaintiff Date: July 24, 2012 587088v1 METRO BANK, f/k/a Commerce Bank/Harrisburg, N.A., Plaintiff V. HUTCH HOMES, INC., JAMES W. HUTCHISON, JR. and CYNTHIA G. HUTCHISON, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVAl DOCKET NO. 2012-2383-Civil ENTRY OF JUDGMENT You are hereby notified pursuant to Rule 236 of the Pennsylvania Rules of Civil Procedure that Judgment has been entered against you in the amount of $77,914.55 for Metro Bank, f/k/a Commerce Bank/Harrisburg, N.A. and against Defendant Hutch Homes, Inc together with interest, attorneys fees, costs and expenses from the date of judgment until paid i full. Date: (/ ? / Prothonotary METRO BANK, f/k/a Commerce Bank/Harrisburg, N.A., Plaintiff V. HUTCH HOMES, INC., JAMES W. HUTCHISON, JR. and CYNTHIA G. HUTCHISON, Defendants : IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVAT DOCKET NO. 2012-2383-Civil NOTICE OF ENTRY OF JUDGMENT TO: Hutch Homes, Inc. 414 S. York Street Mechanicsburg, PA 17055 CL w? You are hereby notified that on J;ulyL a , 2012, Judgment was entered against you the above-captioned case. Date: $ 2 I ^d- Prothonotary