HomeMy WebLinkAbout12-3801HARTMAN UNDERHILL & BRUBAKER LLP
By: Brett D. Jackson, Esquire
Attorney I.D. No. 87517
221 East Chestnut Street
Lancaster, PA 17602
(717) 299-7254/(717) 299-3160 (Fax)
SUSQUEHANNA BANK, f/k/a
GRAYSTONE BANK,
PENNSYLVANIA
Plaintiff
vs.
LIGHTSTYLES, LTD.
Defendant
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Attorneys fdir l??i4 tF!`
Susquehanna Bank
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY,
: CIVIL ACTION -LAW
No. J
: CONFESSION OF JUDGMENT
CONFESSION OF JUDGMENT
Pursuant to the authority contained in the confession of judgment provision in the
Note, a true and correct copy of which is attached to the Complaint as Exhibit A, I appear
for Defendant, Lightstyles, Ltd., and confess judgment in favor of Plaintiff, Susquehanna
Bank, and against Defendant as follows:
(a) Unpaid balance of principal debt
(b) Accrued interest at variable contract
rate through 6/13/12(Current per diem
is $1,240.28)
(c) Reasonable attorneys' fees, as
authorized
TOTAL
$8,930,024.72
$200,925.46
$15,737.53
$9,146,687.71
*Interest on the judgment at the variable default rate prevailing under the terms of
the Note, and all attorneys' fees, costs and charges collectable under the terms of the Loan
Documents which accrue hereafter, are to be collectable under and included within the
judgment.
(00660598.1)
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HARTMAN UNDERHILL & BRUBAKER LLP
Attorneys for Plaintiff
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Dated: l3 /1? By:
tel. Jackson, squire
Judgment is entered as above directed:
Prothonotary
(00660598.1)
HARTMAN UNDERHILL & BRUBAKER LLP
By: Brett D. Jackson, Esquire t_
Attorney I.D. No. 87517
221 East Chestnut Street ?- f
Lancaster, PA 17602 Attorneys for Plaiiirift:l-
(717) 299-7254/(717) 299-3160 (Fax) Susquehanna Bank
SUSQUEHANNA BANK, f/k/a
GRAYSTONE BANK,
Plaintiff
vs.
LIGHTSTYLES, LTD.
Defendant
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION -LAW
No. ? ;, -` -? ( civ it t
CONFESSION OF JUDGMENT
COMPLAINT IN CONFESSION OF JUDGMENT
Plaintiff files this Complaint pursuant to Pa.R.C.P. Rule 2951(a) for judgment by
confession and avers as follows:
1. Plaintiff, Susquehanna Bank, is a financial institution organized and existing
under the laws of the Commonwealth of Pennsylvania, with its principal offices located at
1570 Manheim Pike, Lancaster, Lancaster County, Pennsylvania 17604.
2. Graystone Bank was a financial institution which, in 2012, merged with and
into Susquehanna Bank.
3. Defendant, Lightstyles, Ltd. is a Pennsylvania corporation with a principal
place of business at 1261 Claremont Road, Carlisle, Cumberland County, Pennsylvania
17013.
4. Defendant executed and delivered to Plaintiff a certain Promissory Note
dated as of December 6, 2006 in the original maximum principal amount of Eleven Million
{00658313.1}
Dollars ($11,000,000) (as amended from time to time, the "Note") to evidence a line of
credit for Defendant's working capital needs ("Loan"). True and correct copies of the Note
and of a Change in Terms Agreement dated as of December 31, 2008 are attached hereto,
incorporated by reference and together marked Exhibit A.
5. In conjunction with its execution and delivery of the Note, Defendant
executed and delivered to Plaintiff a Disclosure for Confession of Judgment dated
December 6, 2006 ("Disclosure"). A true and correct copy of the Disclosure executed by
Defendant is attached hereto, incorporated by reference and marked Exhibit B.
6. In conjunction with its execution and delivery of the Note, Defendant also
executed and delivered to Plaintiff a certain Business Loan Agreement dated as of
December 6, 2006 ("Loan Agreement"). A true and correct copy of the Loan Agreement is
attached hereto, incorporated by reference and marked Exhibit C.
7. Pursuant to the terms of the Loan Agreement, Defendant requested and
Plaintiff extended advances on the Loan, all of which advances were requested by
Defendant to finance its working capital needs for its business operations, and all of which
were evidenced under the Note.
8. Plaintiff is the owner and holder the Note; the Note has not been assigned.
9. No prior judgment has been entered on the Note in any jurisdiction.
10. The Note authorizes the confession of judgment against Defendant upon the
occurrence of an event of default.
11. The terms of the Note requires Defendant:
{00658313.1} 2
(a) To make monthly payments to Plaintiff of interest due with respect to
the outstanding principal amount advanced under the Loan;
(b) To repay in full, once per year and for a period of thirty (30)
consecutive days, the entire outstanding balance of the Loan; and
(c) To pay, immediately upon demand by Plaintiff, the entire outstanding
balance of the Loan, together with all accrued but unpaid interest and any and all other
amounts due under the Note.
12. Defendant's failure to make the payments required under the terms of the
Note constitutes a default under the terms of the Note.
13. Pursuant to the terms of the Note, if Defendant fails to make any regularly
scheduled interest payment within twenty (20) days of the date upon which such payment is
due or fails to pay the Loan in full within twenty (20) days of demand by Lender, a late fee
is imposed in an amount equal to the rg eater of ten percent (10%) of the delinquent
payment or outstanding amount of the Loan, as applicable, or $250.00.
14. The Note authorizes Plaintiff to collect from Defendant all costs of collection
and enforcement upon the occurrence of an Event of Default, including an attorney's
commission equal to ten percent (10%) of the outstanding principal balance and accrued
interest for collection.
15. Upon a default under the terms of the Note, the Note authorizes the
imposition of a default interest rate equal to two percent (2%) above the variable interest
rate set forth in the Note.
{00658313.1} 3
16, Judgment may now be entered on the Note because Defendant is in default of
its Note obligations owed to Plaintiff. Specifically, Defendant is in default under the terms
of the Note as follows:
(a) Defendant has failed to make the regularly scheduled interest
payments as and when required under the Note for the month of January through the
present; and
(b) Defendant has failed to pay Plaintiff the full outstanding balance of
the Loan (including any accrued but unpaid interest thereon imposed pursuant to the Note)
upon Plaintiff's demand in accordance with the terms of the Note. A true and correct copy
of Plaintiff's written Demand for Payment, dated May 24, 2012, and addressed to
Defendant, is attached hereto, incorporated by reference and marked Exhibit D.
17. The amount now due from Defendant to Plaintiff pursuant to the terms of the
Note, as a result of Defendant's defaults described in paragraph 16 above, is as follows:
(a) Unpaid balance of principal debt
(b) Accrued interest at variable contract
rate through 6/13/12(Current per diem
is $1,240.28)
(c) Reasonable attorneys' fees, as
authorized
TOTAL
$8,930,024.72
$200,925.46
$15,737.53
$9,146,687.71
*Interest on the judgment at the variable default rate prevailing under the terms of
the Note, and all attorneys' fees, costs and charges collectable under the terms of the Loan
Documents which accrue hereafter, are to be collectable under and included within the
judgment.
{00658313.1} 4
18. The amount due and owing as set forth in Paragraph 17 above reflects all
credits applied and payments received by Plaintiff on Defendant's account as of the date of
this Complaint.
19. Judgment by confession under this Complaint is not being entered against a
natural person in connection with a consumer credit transaction.
WHEREFORE Plaintiff, as authorized by the warrant of attorney set forth in the
Note attached hereto and incorporated by reference, demands judgment against the
Defendant, and in Plaintiffs favor, in the total amount of $9,146,687.71, calculated as set
forth in paragraph 17 hereof, plus subsequently accruing interest at the variable default rate
provided under the Note (current per diem is $1,240.28), attorneys' fees, charges and all
other amounts collectable under the terms of the Note and other Loan Documents and costs
of this action.
Dated: (A /1,31a
HARTMAN UNDERHILL & BRUBAKER LLP
Attorneys for Plaintiff
By:
. ett D. ackson, ire
{00658313.1}
VERIFICATION
I hereby verify that I am a Loan Workout Officer of Susquehanna Bank; that as such
I am authorized to make this verification; and that the information set forth in the foregoing
Complaint is true and correct to the best of my knowledge, information and belief. I
understand that any false statements contained herein are subject to the penalties of 18
Pa.C.S. § 4904, relating to unsworn falsification to authorities.
Dated:
SUSQUEHANNA BANK
By:
Robert D. Sayre,
Loan Workout Officer
{00658313.1} 6
PROMISSORY NOTE
Borrower: Lightstyles, Ltd. Lender: GRAYSTONE BANK
1261 Claremont Road Capital Region
Carlisle, PA 17013 112 Market Street
Harrisburg, PA 17101
Principal Amount: $11,000,000.00 Date of Note: December 6, 2006
PROMISE TO PAY. Lightstyles, Ltd. ("Borrower") promises to pay to GRAYSTONE BANK ("Lender"), or order, in lawful money of the United
States of America, on demand, the principal amount of Eleven Million & 00/100 Dollars ($11,000,000.00) 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 full immediately upon Lender's demand. Borrower will pay regular monthly payments of all accrued
unpaid interest due as of each payment date, beginning January 1, 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 late charges; and then to any unpaid collection costs. The annual interest rate for this Note is computed on a
365/360 basis; that is, by applying the ratio of the annual interest rate over a year of 360 days, multiplied by the outstanding principal balance,
multiplied by the actual number of days the principal balance is outstanding. Borrower will pay Lender at Lender's address shown above or at
such other place as Lender may designate in writing.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an independent index
whichts the 30-Day London Interbank Offered Rate as published in the Wall Street Journal column in 'money rates' (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 often than each day. Borrower understands that Lender may make loans based on other rates as well. The
interest rate to be applied to the unpaid principal balance during this Note will be at a rate of 2.950 percentage points over the Index. NOTICE:
Under no circumstances will the interest rate on this Note be more than the maximum rate allowed by applicable law.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges are earned fully as of the date of the loan and will not be
subject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law. Except for the
foregoing, Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed
to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments 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: GRAYSTONE BANK, 112 Market Street
Harrisburg, PA 17101.
LATE CHARGE. If a regularly scheduled interest payment is 20 days or more late, Borrower will be charged 10.000% of the regularly scheduled
payment or $250.00, whichever is greater. If Lender demands payment of this loan, and Borrower does not pay the loan in full within 20 days
after Lender's demand, Borrower also will be charged either 10.000% of the sum of the unpaid principal plus accrued unpaid interest or
$250.00, whichever is greater.
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased by
adding a 2.000 percentage point margin 1"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 effect at the time judgment is entered. However, in no event will the interest rate exceed the maximum
interest rate limitations under applicable law.
LENDER'S RIGHTS. Upon Lender's demand, 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 immediately due, and then Borrower will pay that amount.
ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay
Lender that amount. This includes, subject to any limits under applicable law, Lender's attorneys' fees and Lender's legal expenses, whether or
not there is a lawsuit, including attorneys' fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay
or injunction), and appeals If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by
law.
JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender
or Borrower against the other.
GOVERNING LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of
the Commonwealth of Pennsylvania without regard to its conflicts of law provisions. This Note has been accepted by Lender in the
Commonwealth of Pennsylvania.
CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of Dauphin County,
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.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under this Note may be requested either orally or in writing by
Borrower or by an authorized person. All oral requests shall be confirmed in writing on the day of the request, on forms acceptable to Lender.
All communications, instructions, or directions by telephone or otherwise to Lender are to be directed to Lender's office shown above. 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.
SECURITY. All collateral (as herein defined) is security for this Note and any renewals, extensions and modifications thereof, and the payment,
performance and discharge of all other present or future indebtedness, obligations and undertakings (whether individual, joint, several, direct,
contingent or otherwise) of the Borrower to or for the benefit of Lender, whether arising directly to Lender under this Note or under any other
PROMISSORY NOTE
Loan No: 4000002205 (Continued)
Page 2
agreement, promissory note or undertakings now existing or hereinafter entered into by the Borrower to the Lender. The term "Collateral"
includes all tangible and intangible property (i) described in any mortgage, pledge, assignment or other security document separately executed in
favor of Lender, and lit) in which a security interest has been-granted to Lender pursuant to this Note.
ANNUAL REVIEW/ANNUAL PAYOUT. The Loan is subject to a 30-day payout during each fiscal year at which time the balance must be paid in
full for a period of thirty (30) consecutive days. The Lender will review the Loan annually for renewals and extensions; such renewals and
extensions to be granted predicated on the performance of the company and/or individuals and adherence to the Loan Agreement.
CROSS COLLATERALIZE/CROSS DEFAULT. This loan will be cross-collateralized/cross-defaulted with all other loans from Borrower, or any of
Borrower's related entities, to Lender. If at any time there is a default under this loan, all loans will be considered in default and all outstanding
amounts under the loans will be immediately due and payable in full. A default in one loan shall constitute a default in all others,
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives,
successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.
GENERAL PROVISIONS. 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
Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker Or
endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this
loan or release any party 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 lobn 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:
LIGHTSTY
By:
R , 4,nt
LENDER:
GRAYSTONE BANK
X
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DISCLOS?-AE FOR CONFESSION OF JUL jMENT
Declarant: Lightstyles, Ltd. Lender: GRAYSTONE BANK
1261 Claremont Road Capital Region
Carlisle, PA 17013 112 Market Street
Harrisburg, PA 17101
DISCLOSURE FOR CONFESSION OF JUDGMENT
fti
THE UNDERSIGNED IS EXECUTING ON BEHALF OF DECLARANT, THIS ? DAY OF ?WeMh P/ 20 A
PROMISSORY NOTE FOR $11,000,000.00 OBLIGATING DECLARANT TO REPAY THAT AMOUNT.
A. THE UNDERSIGNED UNDERSTANDS THAT THE NOTE CONTAINS A CONFESSION OF JUDGMENT PROVISION THAT WOULD PERMIT
LENDER TO ENTER JUDGMENT AGAINST DECLARANT IN COURT, AFTER A DEFAULT ON THE NOTE, WITHOUT ADVANCE NOTICE TO
DECLARANT AND WITHOUT OFFERING DECLARANT AN OPPORTUNITY TO DEFEND AGAINST THE ENTRY OF JUDGMENT. IN EXECUTING
THE NOTE, BEING FULLY AWARE OF DECLARANT'S RIGHTS TO ADVANCE NOTICE AND TO A HEARING TO CONTEST THE VALIDITY OF
ANY JUDGMENT OR OTHER CLAIMS THAT LENDER MAY ASSERT AGAINST DECLARANT UNDER THE NOTE, 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 CONFESSION OF JUDGMENT PROVISION.
B. THE UNDERSIGNED FURTHER UNDERSTANDS THAT IN ADDITION TO GIVING LENDER THE RIGHT TO ENTER JUDGMENT AGAINST
DECLARANT WITHOUT ADVANCE NOTICE OR A HEARING, THE CONFESSION OF JUDGMENT PROVISION IN THE NOTE ALSO CONTAINS
LANGUAGE THAT WOULD PERMIT LENDER, AFTER ENTRY OF JUDGMENT, AGAIN WITHOUT EITHER ADVANCE NOTICE OR A HEARING, TO
EXECUTE ON THE JUDGMENT BY FORECLOSING UPON, ATTACHING, LEVYING ON, TAKING POSSESSION OF OR OTHERWISE SEIZING
DECLARANT'S PROPERTY, IN FULL OR PARTIAL PAYMENT OF THE JUDGMENT. IN EXECUTING THE NOTE, BEING FULLY AWARE OF
DECLARANT'S RIGHTS TO ADVANCE NOTICE AND A HEARING AFTER JUDGMENT IS ENTERED AND BEFORE EXECUTION ON THE
JUDGMENT, 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 ADVANCE NOTICE.
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 IN CONNECTION WITH THE
NOTE.
2. A REPRESENTATIVE OF LENDER SPECIFICALLY CALLED THE CONFESSION OF JUDGMENT PROVISION IN THE NOTE TO
DECLARANT'S ATTENTION.
THIS DISCLOSURE IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS DISCLOSURE IS AND SHALL CONSTITUTE AND HAVE THE
EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.
nF(_I GRANT
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HANGE IN TERMS AGREEN JT
Borrower: Lightstyles, Ltd. Lender: GRAYSTONE BANK
1261 Claremont Road Capital Region
Carlisle, PA 17013 112 Market Street
Harrisburg, PA 17101
Principal Amount: $11,000,000.00 Date of Agreement: December 31, 2008
DESCRIPTION OF EXISTING INDEBTEDNESS. On December 6, 2006, Borrower executed and delivered to Lender a Promissory Note in the
original Principal Amount of Eleven Million and 00/100 Dollars ($11,000,000.00) ("Note") with interest accruing at a variable rate of 30-Day
LIBOR plus 2.95% with no floor limitation.
DESCRIPTION OF CHANGE IN TERMS. Lender and Borrower have agreed to a change in the Variable Interest Rate to 90-day LIBOR plus 2.95%
with a floor of 5.00%, all the terms of which are defined below.
PROMISE TO PAY. Lightstyles, Ltd. ("Borrower") promises to pay to GRAYSTONE BANK ("Lender"), or order, in lawful money of the United
States of America, on demand, the principal amount of Eleven Million & 00/100 Dollars ($11,000,000.00) 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 ban in full immediately upon Lender's demand. Borrower will pay regular monthly payments of all accrued
unpaid interest due as of each payment date, beginning January 1, 2009, 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 td principal; then to any late charges; and then to any unpaid collection costs. 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 loan is subject to change from time to time based on changes in an independent index
which is the 30-Day London Interbank Offered Rate as published in the Wall Street Journal column in 'money rates' (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 often than each day. Borrower understands that Lender may make loans based on other rates as well. The
interest rate to be applied to the unpaid principal balance of this loan will be calculated as described in the "INTEREST CALCULATION METHOD"
paragraph using a rate of 2.950 percentage points over the Index. NOTICE: Under no circumstances will the interest rate on this loan be less
than 5.000% per annum or more than the maximum rate allowed by applicable law.
INTEREST CALCULATION METHOD. Interest on this ban is computed on a 365/300 basis; that is, by applying the ratio of the 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.
AN interest payable under this loan is computed using this method.
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 Agreement, 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: GRAYSTONE BANK, 112 Market
Street Harrisburg, PA 17101.
LATE CHARGE. If a regularly scheduled interest payment is 20 days or more late, Borrower will be charged 10.000% of the regularly scheduled
payment or $250.00, whichever is greater. If Lender demands payment of this loan, and Borrower does not pay the loan in full within 20 days
after Lender's demand, Borrower also will be charged either 10.000% of the sum of the unpaid principal plus accrued unpaid interest or
$250.00, whichever is greater.
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final maturity, the interest rate on this loan shall be increased by adding
a 2.000 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 Agreement, interest will continue to accrue after
the date of judgment at the rate in effect at the time judgment is entered. However, in no event will the interest rate exceed the maximum
interest rate limitations under applicable law.
LENDER'S RIGHTS. Upon Lender's demand, Lender may, after giving such notices as required by applicable law, declare the entire unpaid
principal balance under this Agreement and all accrued unpaid interest immediately due, and then Borrower will pay that amount.
ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect this Agreement 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.
JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender
or Borrower against the other.
GOVERNING LAW. This 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.
CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of Dauphin County,
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.
CHANGE IN TERMS AGREEMENT
Loan No: 4000002205 (Continued)
Page 2
writing by Borrower or by an authorized person. All oral requests shall be confirmed in writing on the day of the request, on forms acceptable to
Lender. All communications, instructions, or directions by tglephone or otherwise to Lender are-to be directed to Lender's office shown above.
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 Agreement at any time may be evidenced by endorsements
on this Agreement or by Lender's internal records, including daily computer print-outs.
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 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 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.
SUCCESSOR INTERESTS. The terms of this Agreement shall be binding upon Borrower, and upon Borrower's heirs, personal representatives,
successors, and assigns, and shall be enforceable by Lender and its successors and assigns.
MISCELLANEOUS PROVISIONS. If any part of this Agreement cannot be enforced, this fact will not affect the rest of the Agreement. Lender
may delay or forgo enforcing any of its rights or remedies under this Agreement without losing them. Borrower and any other person who
signs' guarantees or endorses this Agreement, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor.
Upon any change in the terms of this Agreement, and unless otherwise expressly stated in writing, no party who signs this Agreement, whether
as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend
(repeatedly and for any length of time) this loan or release any party 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 Agreement are joint and several.
PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGREEMENT, INCLUDING THE
VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE AGREEMENT.
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.
aneQnwCe
LENDER
GRAYSTONE NK
X
Steven D. Butz, Vice President
I LASER IRO LttnEi,p, V.. 5.42.00.004 C.I. IMrlmd Nn-1.1 So41bm, Inc. 1997, 2009. AN RgAU R.-d. - ?A S:%W1WR41CR1LRL\D20C.RC TR-909 RR-1
DISCLOS.-AE FOR CONFESSION OF JUL. jMENT
Borrower: Lightstyles, Ltd. Lender: GRAYSTONE BANK
1261 Claremont Road Capital Region
Carlisle, PA 17013 112 Market Street
Harrisburg, PA 17101
Declarant: Robert L. Slagle
8 Foxfield Court
Mechanicsburg, PA 17050
DISCLOSURE FOR CONFESSION OF JUDGMENT
I AM EXECUTING, THIS DAY OF De(011 ti er 200fo, A GUARANTY OF A PROMISSORY NOTE FOR
$11,000,000.00 OBLIGATING ME TO REPAY THAT AMOUNT.
A. 1 UNDERSTAND THAT THE GUARANTY CONTAINS A CONFESSION OF JUDGMENT PROVISION THAT WOULD PERMIT LENDER TO ENTER
JUDGMENT AGAINST ME IN COURT, AFTER A DEFAULT ON THE GUARANTY, WITHOUT ADVANCE NOTICE TO ME AND WITHOUT
OFFERING ME AN OPPORTUNITY TO DEFEND AGAINST THE ENTRY OF JUDGMENT. IN EXECUTING THE GUARANTY, BEING FULLY AWARE
OF MI. RIGHTS TO ADVANCE NOTICE AND TO A HEARING TO CONTEST THE VALIDITY OF ANY JUDGMENT OR OTHER CLAIMS THAT
LENDER MAY ASSERT AGAINST ME UNDER THE GUARANTY, I AM KNOWINGLY, INTELLIGENTLY, AND VOLUNTARILY WAIVING THESE
RIGHTS, INCLUDING ANY RIGHT TO ADVANCE NOTICE OF THE ENTRY OF JUDGMENT, AND I EXPRESSLY AGREE AND CONSENT TO
LENDER'S ENTERING JUDGMENT AGAINST ME BY CONFESSION AS PROVIDED FOR IN THE CONFESSION OF JUDGMENT PROVISION.
B. I FURTHER UNDERSTAND THAT IN ADDITION TO GIVING LENDER THE RIGHT TO ENTER JUDGMENT AGAINST ME WITHOUT ADVANCE
NOTICE OR A HEARING, THE CONFESSION OF JUDGMENT PROVISION IN THE GUARANTY ALSO CONTAINS LANGUAGE THAT WOULD
PERMIT LENDER, AFTER ENTRY OF JUDGMENT, AGAIN WITHOUT EITHER ADVANCE NOTICE OR A HEARING, TO EXECUTE ON THE
JUDGMENT BY FORECLOSING UPON, ATTACHING, LEVYING ON, TAKING POSSESSION OF OR OTHERWISE SEIZING MY PROPERTY, IN FULL
OR PARTIAL PAYMENT OF THE JUDGMENT. IN EXECUTING THE GUARANTY, BEING FULLY AWARE OF MY RIGHTS TO ADVANCE NOTICE
AND A HEARING AFTER JUDGMENT IS ENTERED AND BEFORE EXECUTION ON THE JUDGMENT, I AM KNOWINGLY, INTELLIGENTLY AND
VOLUNTARILY WAIVING THESE RIGHTS, AND I EXPRESSLY AGREE AND CONSENT TO LENDER'S IMMEDIATELY EXECUTING ON THE
JUDGMENT IN ANY MANNER PERMITTED BY APPLICABLE STATE AND FEDERAL LAW, WITHOUT GIVING ME ANY ADVANCE NOTICE.
C. AFTER HAVING READ AND DETERMINED WHICH OF THE FOLLOWING STATEMENTS ARE APPLICABLE, BY INITIALING EACH
STATEMENT THAT APPLIES, I REPRESENT THAT:
INITIALS
1. 1 WAS REPRESENTED BY MY OWN INDEPENDENT LEGAL COUNSEL IN CONNECTION WITH THE GUARANTY.
2. A REPRESENTATIVE OF LENDER SPECIFICALLY CALLED THE CONFESSION OF JUDGMENT PROVISION IN THE GUARANTY
TO MY ATTENTION.
D. I CERTIFY THAT MY ANNUAL INCOME EXCEEDS $10,000; THAT THE BLANKS IN THIS DISCLOSURE WERE FILLED IN WHEN I INITIALED
AND SIGNED IT; AND THAT I RECEIVED A COPY AT THE TIME OF SIGNING.
THIS DISCLO URE IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS DISCLOSURE IS AND SHALL CONSTITUTE AND HAVE THE
EFFECT OEALED INSTRUMENT ACCORDING TO LAW.
X
LASER PRO L-ding. V,,. 5.33.00.004 Cop,. Hwi-d F,,m, N Solution,, Inc. 1997, 2006. An Highl, A...v d. - PA S:1p...uiWCFHLP0O30.FC TR.ROR PR 1
DISCI-M- AE FOR CONFESSION OF JUG IMENT
Borrower: Lightstyles, Ltd. Lender: GRAYSTONE BANK
1261 Claremont Road Capital Region
Carlisle, PA 17013 112 Market Street
Harrisburg, PA 17101
Declarant: Susan D. Slagle
8 Foxfield Court
Mechanicsburg, PA 17050
DISCLOSURE FOR CONFESSION OF JUDGMENT
I AM EXECUTING, THIS `v -t, DAY OF Dlleni / eor 200/0 , A GUARANTY OF A PROMISSORY NOTE FOR
$11,000,000.00 OBLIGATING ME TO REPAY THAT AMOUNT.
A. I UNDERSTAND THAT THE GUARANTY CONTAINS A CONFESSION OF JUDGMENT PROVISION THAT WOULD PERMIT LENDER TO ENTER
JUDGMENT AGAINST ME IN COURT, AFTER A DEFAULT ON THE GUARANTY, WITHOUT ADVANCE NOTICE TO ME AND WITHOUT
OFFERING ME AN OPPORTUNITY TO DEFEND AGAINST THE ENTRY OF JUDGMENT. IN EXECUTING THE GUARANTY, BEING FULLY AWARE
OF MX RIGHTS TO ADVANCE NOTICE AND TO A HEARING TO CONTEST THE VALIDITY OF ANY JUDGMENT OR OTHER CLAIMS THAT
LENDER MAY ASSERT AGAINST ME UNDER THE GUARANTY, I AM KNOWINGLY, INTELLIGENTLY, AND VOLUNTARILY WAIVING THESE
RIGHTS, INCLUDING ANY RIGHT TO ADVANCE NOTICE OF THE ENTRY OF JUDGMENT, AND I EXPRESSLY AGREE AND CONSENT TO
LENDER'S ENTERING JUDGMENT AGAINST ME BY CONFESSION AS PROVIDED FOR IN THE CONFESSION OF JUDGMENT PROVISION.
B. 1 FURTHER UNDERSTAND THAT IN ADDITION TO GIVING LENDER THE RIGHT TO ENTER JUDGMENT AGAINST ME WITHOUT ADVANCE
NOTICE OR A HEARING, THE CONFESSION OF JUDGMENT PROVISION IN THE GUARANTY ALSO CONTAINS LANGUAGE THAT WOULD
PERMIT LENDER, AFTER ENTRY OF JUDGMENT, AGAIN WITHOUT EITHER ADVANCE NOTICE OR A HEARING, TO EXECUTE ON THE
JUDGMENT BY FORECLOSING UPON, ATTACHING, LEVYING ON, TAKING POSSESSION OF OR OTHERWISE SEIZING MY PROPERTY, IN FULL
OR PARTIAL PAYMENT OF THE JUDGMENT. IN EXECUTING THE GUARANTY, BEING FULLY AWARE OF MY RIGHTS TO ADVANCE NOTICE
AND A HEARING AFTER JUDGMENT IS ENTERED AND BEFORE EXECUTION ON THE JUDGMENT, I AM KNOWINGLY, INTELLIGENTLY AND
VOLUNTARILY WAIVING THESE RIGHTS, AND I EXPRESSLY AGREE AND CONSENT TO LENDER'S IMMEDIATELY EXECUTING ON THE
JUDGMENT IN ANY MANNER PERMITTED BY APPLICABLE STATE AND FEDERAL LAW, WITHOUT GIVING ME ANY ADVANCE NOTICE.
C. AFTER HAVING READ AND DETERMINED WHICH OF THE FOLLOWING STATEMENTS ARE APPLICABLE, BY INITIALING EACH
STATEMENT THAT APPLIES, I REPRESENT THAT:
INITIALS
1. 1 WAS REPRESENTED BY MY OWN INDEPENDENT LEGAL COUNSEL IN CONNECTION WITH THE GUARANTY.
2. A REPRESENTATIVE OF LENDER SPECIFICALLY CALLED THE CONFESSION OF JUDGMENT PROVISION IN THE GUARANTY
TO MY ATTENTION.
D. I CERTIFY THAT MY ANNUAL INCOME EXCEEDS $10,000; THAT THE BLANKS IN THIS DISCLOSURE WERE FILLED IN WHEN I INITIALED
AND SIGNED IT; AND THAT I RECEIVED A COPY AT THE TIME OF SIGNING.
THIS DISCLOSURE IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS DISCLOSURE IS AND SHALL CONSTITUTE AND HAVE THE
EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.
DECLARANT:.
X 2_ (Seal)
Susan D. Slagle ? "
LASER PRO --V, Var. 5.33.00.004 Cop,. Mll,t.d F..- Salutio. e. Inc. 1997, 2006. All R,ghl, R-1-d. - PA 5'1P10w1-CF1%PL1D30.FC -808 PR 1
BUSINES., LOAN AGREEMENT (ASSET _.ASED)
Borrower: Lightstyles, Ltd. Lender: GRAYSTONE BANK
1261 Claremont Road Capital Region
Carlisle, PA 17013 112 Market Street
Harrisburg, PA 17101
THIS BUSINESS LOAN AGREEMENT (ASSET BASED) dated December 6, 2006, is made and executed between Lightstyles, Ltd. ("Borrower")
and GRAYSTONE BANK ("Lender") on the following terms and conditions. Borrower has received prior commercial loans from Lender or has
applied to Lender for a commercial loan or loans or other financial accommodations, including those which may be described on any exhibit or
schedule attached to this Agreement ("Loan"). 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; (B) the granting, renewing, or
extending of any Loan by Lender at all times shall be subject to Lender's sole judgment and discretion; and (C) all such Loans shall be and
remain subject to the terms and conditions of this Agreement.
TERM. This Agreement shall be effective as of December 6, 2006, 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.
LINE OF CREDIT. Lender agrees to make Advances to Borrower from time to time from the date of this Agreement to the Expiration Date,
provided the aggregate amount of such Advances outstanding at any time does not exceed the Borrowing Base. Within the foregoing limits,
Borrower may borrow, partially or wholly prepay, and reborrow under this Agreement as follows:
Conditions Precedent to Each Advance. Lender's obligation to make any Advance to or for the account of Borrower under this Agreement
is subject to the following conditions precedent, with all documents, instruments, opinions, reports, and other items required under this
Agreement to be in form and substance satisfactory to Lender:
(1) Lender shall have received evidence that this Agreement and all Related Documents have been duly authorized, executed, and
delivered by Borrower to Lender.
(2) Lender shall have received such opinions of counsel, supplemental opinions, and documents as Lender may request.
(3) The security interests in the Collateral shall have been duly authorized, created, and perfected with first lien priority and shall be in
full force and effect.
(4) All guaranties required by Lender for the credit facility(ies) shall have been executed by each Guarantor, delivered to Lender, and
be in full force and effect.
(5) Lender, at its option and for its sole benefit, shall have conducted an audit of Borrower's Accounts, inventory, books, records, and
operations, and Lender shall be satisfied as to their condition.
(6) Borrower shall have paid to Lender all fees, costs, and expenses specified in this Agreement and the Related Documents as are
then due and payable.
(7) There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement, and
Borrower shall have delivered to Lender the compliance certificate called for in the paragraph below titled "Compliance Certificate."
Making Loan Advances. Advances under this credit facility, as well as directions for payment from Borrower's accounts, may be requested
orally or in, writing by authorized persons. Lender may, but need not, require that all oral requests be confirmed in writing. Each Advance
shall be conclusively deemed to have been made at the request of and for the benefit of Borrower (1) when credited to any deposit
account of Borrower maintained with Lender or (2) when advanced in accordance with the instructions of an authorized person. Lender, at
its option, may set a cutoff time, after which all requests for Advances will be treated as having been requested on the next succeeding
Business Day.
Mandatory Loan Repayments. If at any time the aggregate principal amount of the outstanding Advances shall exceed the applicable
Borrowing Base, Borrower, immediately upon written or oral notice from Lender, shall pay to Lender an amount equal to the difference
between the outstanding principal balance of the Advances and the Borrowing Base. On the Expiration Date, Borrower shall pay to Lender
in full the aggregate unpaid principal amount of all Advances then outstanding and all accrued unpaid interest, together with all other
applicable fees, costs and charges, if any, not yet paid.
Loan Account. Lender shall maintain on its books a record of account in which Lender shall make entries for each Advance and such other
debits and credits as shall be appropriate in connection with the credit facility. Lender shall provide Borrower with periodic statements of
Borrower's account, which statements shall be considered to be correct and conclusively binding on Borrower unless Borrower notifies
Lender to the contrary within thirty (30) days after Borrower's receipt of any such statement which Borrower deems to be incorrect.
COLLATERAL. To secure payment of the Primary Credit Facility and performance of all other Loans, obligations and duties owed by Borrower to
Lender, Borrower (and others, if required) shall grant to Lender Security Interests in such property and assets as Lender may require. Lender's
Security Interests in the Collateral shall be continuing liens and shall include the proceeds and products of the Collateral, including without
limitation the proceeds of any insurance. With respect to the Collateral, Borrower agrees and represents and warrants to Lender:
Perfection of Security Interests. Borrower agrees to execute all documents perfecting Lender's Security Interest and to take whatever
actions are requested by Lender to perfect and continue Lender's Security Interests in the Collateral. Upon request of Lender, Borrower will
deliver to Lender any and all of the documents evidencing or constituting the Collateral, and Borrower will note Lender's interest upon any
and all chattel paper and instruments if not delivered to Lender for possession by Lender. Contemporaneous with the execution of this
Agreement, Borrower will execute one or more UCC financing statements and any similar statements as may be required by applicable law,
and Lender will file such financing statements and all such similar statements in the appropriate location or locations. Borrower hereby
irrevocably authorizes Lender to execute any documents necessary to perfect or to continue any Security Interest. Lender may at any time,
and without further authorization from Borrower, file a carbon, photograph, facsimile, or other reproduction of any financing statement for
use as a financing statement. Borrower will reimburse Lender for all expenses for the perfection, termination, and the continuation of the
perfection of Lender's security interest in the Collateral. Borrower promptly will notify Lender before any change in Borrower's name
including any change to the assumed business names of Borrower. Borrower also promptly will notify Lender before any change in
Borrower's Social Security Number or Employer Identification Number. Borrower further agrees to notify Lender in writing prior to any
change in address or location of Borrower's principal governance office or should Borrower merge or consolidate with any other entity.
Collateral Records. Borrower does now, and at all times hereafter shall, keep correct and accurate records of the Collateral, all of which
records shall be available to Lender or Lender's representative upon demand for inspection and copying at any reasonable time. With
respect to the Accounts, Borrower agrees to keep and maintain such records as Lender may require, including without limitation
BUSINL-.,S LOAN AGREEMENT (ASSET Bh .,ED)
Loan No: 4000002205 (Continued)
- Page 2
information concerning Eligible Accounts and Account balances and agings. Records related to Accounts (Receivables) are or will be
located at 1261 Claremont Road, Carlisle, PA. With respect to the Inventory, Borrower -agrees to keep and maintainsuch records as
Lender may require, including without limitation information concerning Eligible Inventory arld records itemizing and describing the kind,
type, quality, and quantity of Inventory, Borrower's Inventory costs and selling prices, and the daily withdrawals and additions to Inventory.
Records related to Inventory are or will be located at 1261 Claremont Road, Carlisle PA. The above is an accurate and complete list of all
locations at which Borrower keeps or maintains business records concerning Borrower's collateral.
Collateral Schedules. Concurrently with the execution and delivery of this Agreement, Borrower shall execute and deliver to Lender
schedules of Accounts and Inventory and schedules of Eligible Accounts and Eligible Inventory in form and substance satisfactory to the
Lender. Thereafter supplemental schedules shall be delivered according to the following schedule: With respect to Eligible Accounts,
schedules shall be delivered no later than 20 days after the end of each month. With respect to Eligible Inventory, schedules shall be
delivered no later than 20 days after the end of each month.
Representations and Warranties Concerning Accounts. With respect to the Accounts, Borrower represents and warrants to Lender: (1)
Each Account represented by Borrower to be an Eligible Account for purposes of this Agreement conforms to the requirements of the
definition of an Eligible Account; (2) All Account information listed on schedules delivered to Lender will be true and correct, subject to
immaterial variance; and (3) Lender, its assigns, or agents shall have the right at any time and at Borrower's expense to inspect, examine,
and audit Borrower's records and to confirm with Account Debtors the accuracy of such Accounts.
Representations and Warranties Concerning Inventory. With respect to the Inventory, Borrower represents and warrants to Lender: (1) All
Inventory represented by Borrower to be Eligible Inventory for purposes of this Agreement conforms to the requirements of the definition of
E?igible Inventory; (2) All Inventory values listed on schedules delivered to Lender will be true and correct, subject to immaterial variance;
(3) The value of the Inventory will be determined on a consistent accounting basis; (4) Except as agreed to the contrary by Lender in
writing, all Eligible Inventory is now and at all times hereafter will be in Borrower's physical possession and shall not be held by others on
consignment, sale on approval, or sale or return; (5} Except as reflected in the Inventory schedules delivered to Lender, all Eligible
Inventory is now and at all times hereafter will be of good and merchantable quality, free from defects; (6) Eligible Inventory is not now
and will not at any time hereafter be stored with a bailee, warehouseman, or similar party without Lender's prior written consent, and, in
such event, Borrower will concurrently at the time of bailment cause any such bailee, warehouseman, or similar party to issue and deliver
to Lender, in form acceptable to Lender, warehouse receipts in Lender name evidencing the storage of Inventory; and (7) Lender, its
assigns, or agents shall have the right at any time and at Borrower's expense to inspect and examine the Inventory and to check and test
the same as to quality, quantity, value, and condition.
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 thg conditions set forth in this Agreement and in the Related
Documents.
Loan Documents. Borrower shall provide to Lender the following documents for the Loan: (1) the Note; (2) Security Agreements
granting to Lender 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; (6) together with all such Related Documents as Lender may
require for the Loan; all in form and substance satisfactory to Lender and Lender's counsel.
Borrower's Authorization. Borrower shall have provided in form and substance satisfactory to Lender properly 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 Lender or its counsel, may require.
Fees and Expenses Under This Agreement. Borrower shall have paid to Lender all fees, costs, and expenses specified in this Agreement
and the Related Documents as are then due and payable.
Representations and Warranties. 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 constitute an Event of Default under this
Agreement or under any Related Document.
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 an office at 1261 Claremont Road, Carlisle, PA 17013. 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 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
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 resnnntiv,-.
BUSINwS LOAN AGREEMENT (ASSET Bf..,ED)
Loan No: 4000002205 (Continued) Page 3
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. (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, 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
Arranties 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.
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:
Annual Statements. As soon as available, but in no event later than one-hundred-twenty (120) days after the end of each fiscal year,
Borrower's balance sheet and income statement for the year ended, reviewed by a certified public accountant satisfactory to Lender.
Interim Statements. As soon as available, but in no event later than thirty (30) days after the end of each month, Borrower's balance
sheet and profit and loss statement for the period ended, prepared by Borrower.
Additional Requirements. Borrower shall also provide Lender with monthly accounts receivable aging reports.
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, 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
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 fifteen (15) 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.
BUSIN...jS LOAN AGREEMENT (ASSET B,-, ED)
Loan No: 4000002205 (Continued) Page 4
Guaranties. Prior to disbursement of any Loan proceeds, furnish executed guaranties of the Loans in favor of Lender, executed by the
guarantors named below, on Lender's forms, and in the amounts and under the conditions set forth in those guaranties.
Names of Guarantors Amounts
Robert L. Slagle Unlimited
Susan D. Slagle 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 the following specific purposes: working capital line of credit.
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.
Operations. Maintain executive and management personnel with substantially the same qualifications and experience as the present
executive and management personnel; provide written notice to Lender of any change in executive and management personnel; conduct its
business affairs in a reasonable and prudent manner.
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.
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 Act. Borrower may contest in good faith any 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 Lender's sole opinion, Lender's interests in the Collateral are not jeopardized. Lender may
require Borrower to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender's interest.
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.
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 on Borrower's 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 permit 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 any intentional or
unintentional action or omission on Borrower's 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, 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.
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 (5) days after
Lender's written demand for such payment, which demand shall be accompanied by an explanation of such imposition or charge and a
calculation 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 amounts 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 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 Borrower's assets (except as allowed as Permitted Liens), or (3) sell with
BUSIN..-,S LOAN AGREEMENT (ASSET B#-..,ED)
Loan No: 4000002205 (Continued) Page 5
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 o`r consolidate with any other entity, ohange 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 payments 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.
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.
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 dies, 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 (D) 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.
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.
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 Collateralization. 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.
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.
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 0 5) 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. 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 any 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 applicable 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 its rights and remedies.
BUSIN?-,S LOAN AGREEMENT (ASSET B.,_ ,ED)
Loan No: 4000002205 (Continued) Page 5
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 payments 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.
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.
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 dies, 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 (D) 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.
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.
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 Collateralization. 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.
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.
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. 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 any 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 applicable 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 its rights and remedies.
BUSIN,-.,S LOAN AGREEMENT (ASSET B.,.-ED)
Loan NO: 4000002205 (Continued)
Page 6
ANNUAL REVIEW/ANNUAL PAYOUT. The Loan is subject to a 30-day payout during each fiscal year at which time the balance must be paid in
full for a period of thirty (30) consecutive days. The Lender will review the Loan annually for._renewals and extensions; such renewals and
extensions to be granted predicated on the performance of the, company and/or individuals and adherence to the Loan Agreement.
CROSS COLLATERALIZE/CROSS DEFAULT. This loan will be cross-collateralized/cross-defaulted with all other loans from Borrower, or any of
Borrower's related entities, to Lender. If at any time there is a default under this loan, all loans will be considered in default and all outstanding
amounts under the loans will be immediately due and payable in full. A default in one loan shall constitute a default in all others.
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 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
attorneys' fees and legal expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection
services. 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
piovisions of this Agreement.
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.
Governing 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.
Choice of Venue. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of Dauphin
County, Commonwealth of Pennsylvania.
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.
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, Borrower agrees to keep Lender informed at all times of Borrower's current address. Unless otherwise
provided by applicable law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice given to
all Borrowers.
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.
Subsidiaries 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 Borrower's
subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to require
Lender to make any Loan or other financial accommodation to any of Borrower's subsidiaries or affiliates.
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 redated 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.
BUSIN..,S LOAN AGREEMENT (ASSET B.. _ED)
Loan NO: 4000002205 (Continued) Page 6
ANNUAL REVIEW/ANNUAL PAYOUT. The Loan is subject to a 30-day payout during each fiscal year at which time the balance must be paid in
full for a period of thirty (30) consecutive days. The Lender will review the Loan annually for renewals and extensions; such renewals and
extensions to be granted predicated on the performance of the company and/or individuals and adherence to the Loan Agreement.
CROSS COLLATERALIZE/CROSS DEFAULT. This loan will be cross-collateralized/cross-defaulted with all other loans from Borrower, or any of
Borrower's related entities, to Lender. If at any time there is a default under this loan, all loans will be considered in default and all outstanding
amounts under the loans will be immediate!y due and payable in full. A default in one loan shall constitute a default in all others.
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 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
attorneys' fees and legal expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection
services. 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.
I
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.
Governing 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.
Choice of Venue. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of Dauphin
County, Commonwealth of Pennsylvania.
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.
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, Borrower agrees to keep Lender informed at all times of Borrower's current address. Unless otherwise
provided by applicable law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice given to
all Borrowers.
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.
Subsidiaries 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 Borrower's
subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to require
Lender to make any Loan or other financial accommodation to any of Borrower's subsidiaries or affiliates.
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 redated 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.
BUSING-,S LOAN AGREEMENT (ASSET Br-- ,ED)
Loan No: 4000002205 (Continued)
Page 7
Time is of the Essence. Time is of the essence in the performance of this Agreement.
Waive Jury. All parties to this Agreement hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by any
party against any other party.
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:
Account: The word "Account" means a trade account, account receivable, other receivable, or other right to payment for goods sold or
services rendered owing to Borrower (or to a third party grantor acceptable to Lender).
Account Debtor. The words "Account Debtor" mean the person or entity obligated upon an Account.
Advance. The word "Advance" means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower's behalf under the
terms and conditions of this Agreement.
Agreement. The word "Agreement" means this Business Loan Agreement (Asset Based), as this Business Loan Agreement (Asset Based)
may be amended or modified from time to time, together with all exhibits and schedules attached to this Business Loan Agreement (Asset
Based) from time to time.
Borrower. The word "Borrower" means Lightstyles, Ltd. and includes all co-signers and co-makers signing the Note and all their
successors and assigns.
Borrowing Base. The words "Borrowing Base" mean, as determined by Lender from time to time, the lesser of (1) $11,000,000.00 or
(2) the sum of (a) 80.000% of the aggregate amount of Eligible Accounts, plus (b) 50.000% of the aggregate amount of Eligible
Inventory.
Business Day. The words "Business Day" mean a day on which commercial banks are open in the Commonwealth of Pennsylvania.
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
security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise. The word Collateral also
includes without limitation all collateral described in the Collateral section of this Agreement.
Eligible Accounts. The words "Eligible Accounts" mean at any time, all of Borrower's Accounts which contain selling terms and conditions
acceptable to Lender. The net amount of any Eligible Account against which Borrower may borrow shall exclude all returns, discounts,
credits, and offsets of any nature. Unless otherwise agreed to by Lender in writing, Eligible Accounts do not include:
(1) Accounts with respect to which the Account Debtor is employee or agent of Borrower.
(2) Accounts with respect to which the Account Debtor is a subsidiary of, or affiliated with Borrower or its shareholders, officers, or
directors.
(3) Accounts with respect to which goods are placed on consignment, guaranteed sale, or other terms by reason of which the
payment by the Account Debtor may be conditional.
(4) Accounts with respect to which Borrower is or may become liable to the Account Debtor for goods sold or services rendered by
the Account Debtor to Borrower.
(5) Accounts which are subject to dispute, counterclaim, or setoff.
(6) Accounts with respect to which the goods have not been shipped or delivered, or the services have not been rendered, to the
Account Debtor.
(7) Accounts with respect to which Lender, in its sole discretion, deems the creditworthiness or financial condition of the Account
Debtor to be unsatisfactory.
(8) Accounts of any Account Debtor who has filed or has had filed against it a petition in bankruptcy or an application for relief under
any provision of any state or federal bankruptcy, insolvency, or debtor-in-relief acts; or who has had appointed a trustee, custodian, or
receiver for the assets of such Account Debtor; or who has made an assignment for the benefit of creditors or has become insolvent
or fails generally to pay its debts (including its payrolls) as such debts become due.
(9) Accounts which have not been paid in full within 90 days from the invoice date.
Eligible Inventory. The words "Eligible Inventory" mean, at any time, all of Borrower's Inventory as defined below, except:
11) Inventory which is not owned by Borrower free and clear of all security interests, liens, encumbrances, and claims of third parties.
(2) Inventory which Lender, in its sole discretion, deems to be obsolete, unsalable, damaged, defective, or unfit for further processing.
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, et 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 Agreement in the default section of this
Agreement.
Expiration Date. The words "Expiration Date" mean the date of termination of Lender's commitment to lend under 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
BUSINk--,S LOAN AGREEMENT (ASSET Bt. _ED)
Loan No: 4000002205 (Continued)
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
Page 8
Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender, including witfiout 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.
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.
Inventory. The word "Inventory" means all of Borrower's raw materials, work in process, finished goods, merchandise, parts and supplies,
of every kind and description, and goods held for sale or lease or furnished under contracts of service in which Borrower now has or
hereafter acquires any right, whether held by Borrower or others, and all documents of title, warehouse receipts, bills of lading, and all
other documents of every type covering all or any part of the foregoing. Inventory includes inventory temporarily out of Borrower's custody
ors possession and all returns on Accounts.
Lender. The word "Lender" means GRAYSTONE BANK, its successors and assigns.
Loan. The word "Loan" means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter
existing, and however evidenced, including without limitation those loans and financial accommodations described herein or described on
any exhibit or schedule attached to this Agreement from time to time.
Note. The word "Note" means the Note executed by Lightstyles, Ltd. in the principal amount of $11,000,000.00 dated December 6,
2006, together with all renewals of, extensions of, modifications of, refinancings 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 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.
Primary Credit Facility. The words "Primary Credit Facility" mean the credit facility described in the Line of Credit 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 deed, assignment, pledge, crop pledge, chattel
mortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, 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.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT (ASSET BASED) AND
BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT (ASSET BASED) IS DATED DECEMBER 6, 2006.
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.
Seal)
BUSINL,,S LOAN AGREEMENT (ASSET Bk -,ED)
Loan No: 4000002205 (Continued)
Page 9
LENDER
GRAYSTONE BANK
By: (Seal)
Steven D. B z, Vice Preside
LASFR PRO Lending, Va.. 5.33.00.009 Cop, H,ri,.a F.,-,,l S.1.1, s, Inc. 1997, 2006. All P19- Reserved. - PA S:lprea -i CFRLPUC40YC TR-806 PR I
C
HARTMAN UNDERHILL
& BRUBAKER LLP
brettj@hublaw.com
May 24, 2012
VIA CERTIFIED MAIL,
RETURN RECEIPT REQUESTED
Lightstyles, Ltd.
Attn: Robert L. Slagle, President
1261 Claremont Road
Carlisle, PA 17013
Robert L. Slagle and
Susan D. Slagle
8'Foxfield Court
Mechanicsburg, PA 17050
Re: Business Line of Credit to Lightstyles Ltd. from Susquehanna Bank,
f/k/a Graystone Tower Bank, with personal guarantees by Robert L.
Slagle and Susan D. Slagle
ACCELERATION OF LOAN OBLIGATIONS -
DEMAND FOR PAYMENT
Dear Mr. and Mrs. Slagle:
Our firm represents Susquehanna Bank, f/k/a Graystone Tower Bank (the
"Lender") in connection with the above-referenced loan.
Reference is made to the above-referenced business demand line of credit
("Loan") extended by Susquehanna Bank, f/k/a Graystone Tower Bank ("Lender"), to
Lightstles, Ltd., a Pennsylvania corporation ("Borrower"), in an original maximum
principal amount of $11,000,000.
This notice of demand is being provided to each of you in your individual capacity
as guarantors of the Loan, as well as to Mr. Slagle in his capacity as President and a
shareholder of the Borrower.
41 ,
Lightstyles, Ltd.
Robert L. Slagle
Susan D. Slagle
May 24, 2012
Page 2
The obligations of Borrower under the Loan are evidenced by, among other
documents, a certain Business Loan Agreement and Promissory Note, each dated
December 6, 2006 (together with any and all amendments or supplements thereto and
restatements thereof, the "Loan Agreement" and the "Note", respectively). The Loan
obligations are secured by several mortgages covering various parcels, lots and/or tracts
of real property (and the improvements thereon), as well as a perfected security interest in
and to all of Borrower's accounts receivable, contract rights, instruments, inventory,
machinery and equipment, together with all accessions, attachments, products, produce,
proceeds, records and data pertaining to any of the foregoing (collectively, the
"Collateral"). The Borrower's payment and other obligations arising under the Loan
Agreement, the Note, or otherwise with respect to the Loan are further secured by the
guaranties of each of you in your individual capacity (each a "Guaranty" and,
collectively, the "Guaranties" and each individually referred to as a "Guarantor" and,
collectively, the "Guarantors"). The Loan Agreement, the Note, the Guaranties and each
and every other instrument, document, agreement and/or other writing executed by any
obligor in connection with the Loan are hereinafter collectively referred to as the "Loan
Documents".
Pursuant to the terms of the Note, the Loan is due in full immediately upon
demand by Lender. As authorized under the terms of the Note, LENDER HEREBY
DEMAND'S IMMEDIATE PAYMENT OF ANY AND ALL AMOUNTS
REMAINING DUE UNDER THE NOTE, OR OTHERWISE WITH RESPECT TO
THE LOAN, including, without limitation, all outstanding principal, all accrued but
unpaid interest and any and all other costs, expenses and/or other amounts as authorized
under the terms of the Note or under any other Loan Document. In addition, interest at
the daily rate indicated below and all other fees and/or charges for which the Borrower
and Guarantors are responsible under the Loan Documents shall continue to accrue until
the Loan is paid in full.
The total amount of principal and accrued interest owed under the Loan as of the
date of this demand letter set forth above is as follows:
Principal
Accrued Interest (Interest
per day currently is
$1,240.28)
TOTAL
$ 8,930,024.72
$ 176,119.86
$ 9,106,144.58
Additional amounts owed to Lender include subsequently accruing interest, late
and other charges and all costs and expenses incurred by the Lender in connection with
! 1 '
Lightstyles, Ltd.
Robert L. Slagle
Susan D. Slagle
May 24, 2012
Page 3
collection of the Loan and enforcement of the provisions of the Loan Documents. A
precise payoff figure will be provided to you upon request.
As you know, pursuant to the terms of the Loan Documents, the Lender is entitled,
among other rights, to immediately take possession and control of all of the Collateral
including, without limitation, to collect the Borrower's accounts and to notify the
Borrower's account debtors to make payment directly to the Lender for application to the
Loan, to enter judgment by confession against the Borrower and against each of the
Guarantors, to institute execution proceedings with respect to the Collateral, to seek to
have all of its Collateral sold at a Sheriff's sale or other judicial sale and to hold the
Borrower and the Guarantors liable for any deficiency after liquidation of the Collateral
and for all collection costs and expenses incurred by the Lender including, without
limitation, the fees and expenses of the Lender's legal counsel.
Be advised that, until payment of the entire amount owed is received, the Lender
will not hesitate to exercise all of its legal rights with respect to the Loan and its collateral
for the Loan, as well as its rights against the Guarantors, by all available means, in
accordance with the Loan Documents or otherwise, all without further notice, except as
may be required by law.
Also be advised that receipt and acceptance of partial payment by the Lender shall
not constitute a waiver of the Lender's rights under any of the Loan Documents, except to
the extent required by the express terms thereof, nor shall such receipt and acceptance
require the Lender to forbear from exercising any right or remedy available to it.
Notwithstanding receipt and acceptance of partial payment, the Lender reserves the right
to proceed to further protect its interests and collect the entire amount owed under the
Loan without further demand.
Nothing contained in this letter or any other communication between the Borrower
or any Guarantor, or any representative of either, and the Lender, or any of its officers or
other representatives, shall constitute a waiver of any rights that the Lender may have
against the Borrower or against any Guarantor for the payment of all amounts due under
the Loan Documents. The Lender hereby reserves all of its rights and remedies under the
terms of the Loan Documents.
Please communicate with the undersigned for payment instructions and precise
payoff amounts as of the date of intended payment.
THIS CORRESPONDENCE IS AN ATTEMPT TO COLLECT A DEBT.
ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE.
-f
Lightstyles, Ltd.
Robert L. Slagle
Susan D. Slagle
May 24, 2012
Page 4
Please govern yourselves accordingly.
Sincerely,
Brett D. Jackson
B DJ/gmt: oo6ss962.aoc
cc: Robert D. Sayre, Loan Workout Officer
HARTMAN UNDERHILL & BRUBAKER LLP
By: Brett D. Jackson, Esquire
Attorney I.D. No. 87517
221 East Chestnut Street
Lancaster, PA 17602
(717) 299-7254/(717) 299-3160 (Fax)
! F p {?
Attorneys foriarit?f.
Susquehanna Bank
SUSQUEHANNA BANK, f/k/a IN THE COURT OF COMMON PLEAS OF
GRAYSTONE BANK, CUMBERLAND COUNTY, PENNSYLVANIA
Plaintiff CIVIL ACTION - LAW
vs.
No. 1oZ •????
LIGHTSTYLES, LTD.
Defendant CONFESSION OF JUDGMENT
CERTIFICATION OF ADDRESSES
I hereby certify, to the best of my knowledge, information and belief, that the Plaintiff
in this matter, Susquehanna Bank, a Pennsylvania banking institution, maintains a principal
place of business at 1570 Manheim Pike, Lancaster, Pennsylvania, 17604 and that the
Defendant has a mailing address as follows:
Lightstyles, Ltd.
1261 Claremont Road
Carlisle, PA 1.7013
I understand that any false statements contained herein are subject to the penalties of
18 Pa.C.S. §4904, relating to unsworn falsification to authorities.
HARTMAN UNDERHILL & BRUBAKER LLP
Attorneys for Plaintiff
Dated: l? 12 By:
D. Jackson, Esquire
(00660754.11 1