HomeMy WebLinkAbout14-6132 Supreme Co F t ennsylvania
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Complaint Writ of Summons 0 Petition
S Transfer from Another Jurisdiction ❑ Declaration of Taking
E
C Lead Plaintiff s Name: Lead Defendant's Name:
T FIRST NATIONAL BANK OF PENNSYLVANIA ERIC J. DESROSIERS
Are money damages requested? ES Yes No Dollar Amount Requested: ®within arbitration limits
0 (check one) xi outside arbitration limits
N Is this a Class Action Suit? 0 Yes No Is this an MDJAppeal? E3 Yes 0 No
A Name of Plaintiff/Appellant's Attorney: John B. Joyce, Esquire PA I.D.#68242
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Updated 11112011
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IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA
FIRST NATIONAL BANK OF ) CIVIL DIVISION
PENNSYLVANIA, successor by merger to
The Legacy Bank, ) NO:
Plaintiff, )
vs. ) TYPE OF PLEADING:
ERIC J. DESROSIERS, ) Complaint in Breach of Contract
Defendant. )
FILED ON BEHALF OF PLAINTIFF:
First National Bank of Pennsylvania,
I HEREBY CERTIFY THAT THE ADDRESS OF THE ) successor by merger to The Legacy Bank
PLAINTIFF IS: )
One FNB Boulevard )
Hermitage,PA 16148 )
COUNSEL OF RECORD FOR THIS
AND THE DEFENDANT IS: ) PARTY:
808 Michigan Avenue )
Lemoyne,PA 17043 ) John B. Joyce, Esquire
Pa. I.D. #68242
AT OR LAINTI ) GRENEN & BIRSIC, P.C.
One Gateway Center, 9t" Floor
Pittsburgh, PA 15222
(412) 281-7650
�31
V
IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA
FIRST NATIONAL BANK OF CIVIL DIVISION
PENNSYLVANIA, successor by merger to
The Legacy Bank, NO.:
Plaintiff,
vs.
ERIC J. DESROSIERS,
Defendant.
NOTICE TO DEFEND
You have been sued in court. If you wish to defend against the claim set forth in the following
pages, you must take action within twenty (20) days after this complaint and notice are served, by
entering a written appearance personally or by attorney and filing in writing with the court your
defenses or objections to the claims set forth against you. You are warned that if you fail to do so the
case may proceed without you and a judgment may be entered against you by the court without further
notice for any money claimed in the complaint or for any other claim or relief requested by the
plaintiff. You may lose money or property or other rights important to you.
YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT
HAVE A LAWYER,GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW. THIS OFFICE
CAN PROVIDE YOU WITH INFORMATION ABOUT HIRING A LAWYER.
IF YOU CANNOT AFFORD TO HIRE A LAWYER, THIS OFFICE MAY BE ABLE TO
PROVIDE YOU WITH INFORMATION ABOUT AGENCIES THAT MAY OFFER LEGAL
SERVICES TO ELIGIBLE PERSONS AT A REDUCED FEE OR NO FEE.
Lawyer Referral Service
Cumberland County Bar Association
32 South Bedford Street
Carlisle, PA 17013
(800) 990-9108
717-249-3166
IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA
FIRST NATIONAL BANK OF CIVIL DIVISION
PENNSYLVANIA, successor by merger to
The Legacy Bank, NO.:
Plaintiff,
VS.
ERIC J. DESROSIERS,
Defendant.
COMPLAINT IN BREACH OF CONTRACT
AND NOW, comes Plaintiff, First National Bank of Pennsylvania, successor by merger to
The Legacy Bank,including Legacy Bank,a Division of First National Bank of Pennsylvania,by its
attorneys, Grenen & Birsic, P.C., and files this Complaint in Breach of Contract as follows:
1. First National Bank of Pennsylvania, successor by merger to The Legacy Bank,
including Legacy Bank, a Division of First National Bank of Pennsylvania, is a commercial bank
doing business in the Commonwealth of Pennsylvania with an office located at One FNB Boulevard,
Hermitage, PA 16148.
2. The Defendant,Eric J. Desrosiers("Defendant'), is an individual with a last known
address of 808 Michigan Avenue, Lemoyne, PA 17043.
Count L $320,000 Note
3. Plaintiff hereby incorporates all prior paragraphs by reference as if fully set forth
herein.
4. On or about February 28, 2007, Capitol Real Estate Development, L.P. (hereinafter
"Capitol Real Estate" or"Borrower") executed a Promissory Note in favor of The Legacy Bank, a
4
L
Division of First National Bank of Pennsylvania,which has since merged into First National Bank of
Pennsylvania(hereinafter"Plaintiff'), in the original principal amount of$320,000.00 ("$320,000
Note"). A copy of said$320,000 Note,which copy is a true and correct reproduction of the original
$320,000 Note, is marked as Exhibit "A" attached hereto and made a part hereof.
5. In connection with the$320,000 Note,Borrower executed and delivered to Plaintiff a
Business Loan Agreement dated February 28,2007(as amended,modified,supplemented,extended,
substituted and restated from time to time, hereinafter "$320,000 Loan Agreement"). A true and
correct copy of the original$320,000 Loan Agreement,which copy is a true and correct reproduction
of the original$320,000 Loan Agreement and any amendments thereto is attached hereto and marked
as Exhibit "B".
6. On or about February 28,2007,Defendant,Eric J.Desrosiers,executed and delivered
in favor of Plaintiff a certain Commercial Guaranty(1320,000 Guaranty"),in which he absolutely
and unconditionally guaranteed to pay all amounts owing Plaintiff under the$320,000 Note. A copy
of the $320,000 Guaranty, which copy is a true and correct reproduction of the original $320,000
Guaranty, is marked as Exhibit "C" attached hereto and made a part hereof.
7. An Event of Default exists under the terms of the Note as a result of Borrower's
failure to make payments under the $320,000 Note when due and as a result of defaults under the
$246,000 Note referenced herein in Count II.
8. By correspondence dated June 27,2014,Plaintiff advised Borrower and Defendant of
the default and demanded and declared the outstanding loan indebtedness be paid within ten (10)
days or by July 7, 2014. Borrower and Defendant have failed to repay the indebtedness. Copies of
the demand letters,which copies are true and correct reproductions of the original letters,are marked
as Exhibit "D", attached hereto and made a part hereof.
2
M1
v
9. The itemization of the amount due and owing from Borrower to Plaintiff under the
terms of the $320,000 Note, and accordingly by Defendant to Plaintiff under the terms of the
$320,000 Guaranty, is as follows:
Principal $ 278,493.78
Interest through 8/12/14 $ 60,341.56
Late Charges through 6/27/14 $ 5,497.49
TOTAL $ 344,332.83
WHEREFORE,Plaintiff demands judgment against the Defendant,Eric J.Desrosiers,in the
sum of$344,332.83,with interest on the principal sum($278,493.78)at the applicable interest rate
from June 27,2014,plus costs of suit and other collection costs,and reasonable and actual attorneys'
fees as authorized by the $320,000 Note and $320,000 Guaranty.
Count II: $246,000 Note
10. Plaintiff hereby incorporates all prior paragraphs by reference as if fully set forth
herein.
11. On or about February 28, 2007, Borrower executed a Promissory Note in favor of
Plaintiff, in the original principal amount of $246,000.00 ("$246,000 Note"). A copy of said
$246,000 Note, which copy is a true and correct reproduction of the original $246,000 Note, is
marked as Exhibit "E" attached hereto and made a part hereof.
12. In connection with the$246,000 Note,Borrower executed and delivered to Plaintiff a
Business Loan Agreement dated February 28,2007(as amended,modified,supplemented,extended,
substituted and restated from time to time, hereinafter $246,000 Loan Agreement"). A true and
correct copy of the original$246,000 Loan Agreement,which copy is a true and correct reproduction
of the original$246,000 Loan Agreement and any amendments thereto is attached hereto and marked
as Exhibit "F".
3
13. On or about February 28,2007,Defendant,Eric J.Desrosiers,executed and delivered
in favor of Plaintiff a certain Commercial Guaranty("$246,000 Guaranty"), in which he absolutely
and unconditionally guaranteed to pay all amounts owing Plaintiff under the$246,000 Note. A copy
of the $246,000 Guaranty, which copy is a true and correct reproduction of the original $246,000
Guaranty, is marked as Exhibit "G" attached hereto and made a part hereof.
14. An Event of Default exists under the terms of the $320,000 Note as a result of
Borrower's failure to make payments when due under$320,000 Note and due to Borrower's default
under the $320,000 Note referenced herein in Count I.
15. By correspondence dated June 27,2014,Plaintiff advised Borrower and Defendant of
the default and demanded and declared the outstanding loan indebtedness be paid within ten (10)
days or by July 7,2014. Borrower and Defendant have failed to repay the indebtedness. Copies of
the demand letters,which copies are true and correct reproductions of the original letters,are marked
as Exhibit "D", attached hereto and made a part hereof.
16. The itemization of the amount due and owing from Borrower to Plaintiff under the
terms of the $246,000 Note, and accordingly by Defendant to Plaintiff under the terms of the
$246,000 Guaranty, is as follows:
Principal $ 216,632.87
Interest through 8/12/14 $ 45,117.14
Late Charges through 6/27/14 $ 4,355.83
TOTAL $ 266,105.84
4
WHEREFORE,Plaintiff demands judgment against the Defendant,Eric J.Desrosiers,in the
sum of$266,105.84,with interest on the principal sum($216,632.87)at the applicable interest rate
from August 12, 2014, plus costs of suit and other collection costs, and reasonable and actual
attorneys' fees as authorized by the $246,000 Note and $246,000 Guaranty.
Respectfully submitted,
GRENEN & BIRSIC, P.C.
BY:
J Joyce, Es e
a. #68242
torneys for a' iff
One Gateway enter, 9th Floor
Pittsburgh, PA 15222
(412) 281-7650
THIS IS AN ATTEMPT TO COLLECT A DEBT, AND ANY
INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE
5
EXHIBIT "A"
o Complaint in Breach of Contract
"0955"
PROMISSORY NOTE
. ...................................................
... ::.: . ..ss. .......... _............ :. . .::.. .:. :.•::::::::<•:::!t:•::t::::.>.:::::::•::....:.sa;::'x•:::.:ss:ss:Asx:�:;•x:�:.sr,:;rtr»:•:»:•:•s'•ii:x:>;;:::::r::::n:: $k:::::::i i:ii:'tsf
:_�:::. .. ... . .... . ..............:R...�:.:. '::':::::..:....::....: .. .':`:>::Rif:•x+.�:... .{�. r�. :::�.+>::::...,•:::;.:��.:::ta»::.•is•i;t• ':��'.�::::::::::.:::::.».�::>.-:::::::..::.:�.::•:s:.�•:::.::::c::.:::..........
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan or item.
Any item above containing""•""has been omitted due to text length limitations.
Borrower: Capitol Real Estate Development LP Lender: Legacy Bank a Division of First National Bank of
110 Third Street,Suite 200 Pennsylvania
New Cumberland, PA 17070 Commercial Lending
One FNB BLVD
Hermitage,PA 16148
Principal Amount: $320,000.00 Date of Note: February 28, 2007
PROMISE TO PAY, Capitol Real Estate Development LP ("Borrower") promises to pay to Legacy Bank a Division of First National Bank of
Pennsylvania ("Lender"), or order,in lawful money of the United States of America,the principal amount of Three Hundred Twenty Thousand&
00/100 Dollars($320,000.00),together with Interest on the unpaid principal balance from February 28, 2007,until paid in full.
PAYMENT. Subject to any payment changes resulting from changes in the Index, Borrower will pay this loan in accordance with the following
payment schedule: 60 monthly consecutive principal and interest payments In the initial amount of $2,385.54 each, beginning April 1, 2007,
with interest calculated on the unpaid principal balances at an initial discounted interest rate of 6.400% per annum; and 180 monthly
consecutive principal and Interest payments In the Initial amount of $2,841.96 each, beginning April 1, 2012, with interest calculated on the
unpaid principal balances at an Interest rate based on the "Prime Rate" as published from time to time in The Wall Street Journal, or any
successor publication (currently 8.250%),plus a margin of 1.000%,resulting in an Initial interest rate of 9.260%. Borrower's final payment will
be duo on March 1, 2027 and will be for all principal and accrued interest not yet paid,together with any other unpaid amounts under this Note.
Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid Interest;then to principal; then to
any unpaid collection costs; and then to any late charges. The annual interest rate for this Note is computed on a 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. For the first 60 payments,the interest rate on this loan will be 6.400%. Thereafter,the interest rate on this Note
is subject to change from time to time based on changes in an independent index which is the "Prime Rate" as published from time to time in
The Wall Street Journal,or any.successor publication(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 Index currently is 8.260%per annum. The interest rate or rates to
be applied to the unpaid principal balance during this Note will be the rate or rates set forth herein in the "Payment" section. Notwithstanding
any other provision of this Note, after the first payment stream, the Interest rate for each subsequent payment stream will be effective as of the
last payment date of the just-ending payment stream. NOTICE: Under no circumstances will the Interest rate on this Note be more than the
maximum rate allowed by applicable law. Whenever increases occur in the interest rate, Lender, at its option, may do one or more of the
following; (A) increase Borrower's payments to ensure Borrower's loan will pay off by Its original final maturity date, (B) increase Borrower's
payments to cover accruing interest, (C) increase the number of Borrower's payments, and (D) continue Borrower's payments at the same
amount and increase Borrower's final payment.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged 8.000%of the regularly scheduled payment.
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased by
adding a 4.000 percentage point margin ("Default Rate Margin"). The Default Rate Margin shall also apply to each succeeding interest rate
change that would have applied had there been no default. After maturity,or after this Note would have matured had there been no default,the
Default Rate Margin will continue to apply to the final interest rate described in this Note. 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.
DEFAULT. Each of the following shall constitute an event of default("Event of Default")under this Note:
Payment Default. Borrower fails to make any payment when due under this Note.
Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or In
any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement
between Lender and Borrower.
Default In Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or
sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrowor's property or
Borrower's ability to repay this Note or perform Borrower's obligations under this Note or any of the related documents.
False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this
Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false
or misleading at any time thereafter.
Death or Insolvency. The dissolution or termination of Borrower's existence as a going business or the death of any partner,the insolvency
of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of
creditor workout,or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help,
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
PROMISSORY NOTE
(Continued) Page 2
a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, In its sole discretion, as being an adequate
reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the indebtedness or any
Guarantor dies or becomes Incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness
evidenced by this Note. In the event of a death, Lender, at its 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.
Events Affecting General Partner of Borrower. Any of the preceding events occurs with respect to any general partner of Borrower or any
general partner dies or becomes incompetent.
Change In Ownership. The resignation or expulsion of any general partner with an ownership interest of twenty-five percent(25%) or more
in Borrower.
Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or
performance of this Note is impaired.
Insecurity. Lender in good faith believes itself insecure.
Cure Provisions. If any default, other than a default In payment Is curable and if Borrower has not been given a notice of a breach of the
same provision of this Note within the preceding twelve (12) months, It may be cured If Borrower, after receiving written notice from
Lender demanding cure of such default: (1) cures the default within fifteen (15) days;or (2) if the cure requires more than fifteen (15)
days, Immediately initiates steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter
continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may, after giving such notices as required by applicable law, declare the entire unpaid principal
balance under this Note and all accrued unpaid interest 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 bfforts 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 Mercer 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.
FINANCIAL INFORMATION.The undersigned hereby agrees to prepare or cause to be prepared and to furnish financial statements and additional
information, lists of assets and liabilities, aging lists of accounts receivable and payable,inventory schedules,budgets, forecasts,tax returns and
other reports and documents with respect to the undersigned's financial condition and business operations and that of any guarantor or surety In
form and substance as the holder hereof may request from time to time.
PREPAYMENT FEE.Borrower shall have the right to prepay this Note in whole at any time or in part from time to time. In the event of any such
prepayment, whether by declaration, acceleration or otherwise,a prepayment charge equal to three percent(3%) for the first year,two percent
(20/6) for the second year, one percent(1%)for the third year, one percent(1%) for the fourth year, and one percent(1%) for the fifth year of
the prepaid principal balance, only in the event of refinance with another financial institution, shall be immediately due and payable to the
Lender.
INTEREST RATE AFTER DEFAULT. Upon the occurrence of an event of default as set forth herein the undersigned agrees that the interest rate
shall be amended and increased to four percent (4%) per annum greater than the rate set forth above and shall continue to accrue at said
default rate until the holder agrees and the underlying event of default has been cured by the undersigned or any defaulting party.
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives,
successors and assigns,and shall Inure to the benefit of Lender and its successors and assigns.
NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES. Please notify us if we report any inaccurate
information about your account(s)to a consumer reporting agency. Your written notice describing the specific inaccuracy(ies) should be sent to
us at the following address:Legacy Bank a Division of First National Bank of Pennsylvania, Commercial Lending, One FNB BLVD,Hermitage, PA
16148.
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, partner, or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral;
and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under
this Note are joint and several. If any portion of this Note is for any reason determined to be unenforceable, it will not affect the enforceability
of any other provisions of this Note.
CONFESSION OF JUDGMENT. BORROWER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR THE
PROTHONOTARY OR CLERK OF ANY COURT IN THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE, TO APPEAR AT ANY TIME
FOR BORROWER AFTER A DEFAULT UNDER THIS NOTE AND WITH OR WITHOUT COMPLAINT FILED, CONFESS OR ENTER JUDGMENT
PROMISSORY NOTE
(Continued) Page 3
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 ($500) ON WHICH JUDGMENT OR JUDGMENTS ONE OR
MORE EXECUTIONS MAY ISSUE IMMEDIATELY;AND FOR SO DOING,THIS NOTE OR A COPY OF THIS NOTE VERIFIED BY AFFIDAVIT SHALL
BE SUFFICIENT WARRANT. THE AUTHORITY GRANTED IN THIS NOTE TO CONFESS JUDGMENT AGAINST BORROWER SHALL NOT BE
EXHAUSTED BY ANY EXERCISE OF THAT AUTHORITY,BUT SHALL CONTINUE FROM TIME TO TIME AND AT ALL TIMES UNTIL PAYMENT IN
FULL OF ALL AMOUNTS DUE UNDER THIS NOTE. BORROWER HEREBY WAIVES ANY RIGHT BORROWER MAY HAVE TO NOTICE OR TO A
HEARING IN CONNECTION WITH ANY SUCH CONFESSION OF JUDGMENT AND STATES THAT EITHER A REPRESENTATIVE OF LENDER
SPECIFICALLY CALLED THIS CONFESSION OF JUDGMENT PROVISION TO BORROWER'S ATTENTION OR BORROWER HAS BEEN
REPRESENTED BY INDEPENDENT LEGAL COUNSEL.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE
INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE.
BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE,
THIS NOTE IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS NOTE IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A
SEALED INSTRUMENT ACCORDING TO LAW.
BORROWER:
CAPITOL REAL ESTATE DEVELOPMENT LP
CAPITOL FITNESS,INC-,;-G�aenerai•Partner of Capitol R.eal`t$late Development LP
6Y: ,f �"` r`-` (Seal)
Eric J. Desrosiers, President of Capitol Fitness,Inc.
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EXHIBIT "B"
To Complaint in Breach of Contract
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"0070"
BUSINESS LOAN AGREEMENT
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.....::.....
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan or item.
Any item above containing """"" has been omitted due to text length limitations.
Borrower: Capitol Real Estate Development LP Lender: Legacy Bank a Division of First National Bank of
110 Third Street,Suite 200 Pennsylvania
Now Cumberland,PA 17070 Commercial Lending
One FNB BLVD
Hermitage, PA 16148
THIS BUSINESS LOAN AGREEMENT dated February 28,2007,Is made and executed between Capitol Real Estate Development LP("Borrower")
and Legacy Bank a Division of First National Bank of Pennsylvania ("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 February 28, 2007,and shall continue in full force and effect until such time as all of Borrower's
Loans in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys' fees, and other fees and charges, or
until such time as the parties may agree in writing to terminate this Agreement.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial Advance and each subsequent Advance under this
Agreement shall be subject to the fulfillment to Lender's satisfaction of all of the conditions set forth in this Agreement and in the Related
Documents.
Loan Documents. Borrower shall provide 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.
Payment of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and other expenses which are then due and payable
as specified in this Agreement or any Related Document.
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 limited partnership 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 limited partnership 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 110 Third Street, Suite 200, New Cumberland, PA 17070. 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 principal office address 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 or agreements of partnership, or (b) any agreement or other instrument binding upon Borrower or (7.)
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 respective
terms.
BUSINESS LOAN AGREEMENT 0
(Continued) Page 2
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(6) 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 (e) 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
warranties contained herein are based on Borrower's due diligence In investigating the Collateral for hazardous waste and Hazardous
Substances. Borrower hereby (1) releases and waives any future claims against Lender for Indemnity or contribution in the event
Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify, defend, and hold harmless Lender
against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer
resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal,
release or threatened release of a hazardous waste or substance on the Collateral. The provisions of this section of the Agreement,
Including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and the termination, expiration or
satisfaction of this Agreement and shall not be affected by Lender's acquisition of any interest in any of the Collateral, whether by
foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes)
against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower's financial
condition or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in
writing.
Taxes. To the best of Borrower's knowledge, all of Borrower's tax returns and reports that are or were required to be filed, have been
filed, and all taxes, assessments and other governmental charges have been paid in full,except those presently being or to be contested by
Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided.
Lien Priority. Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or granted any Security
Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly
securing repayment of Borrower's Loan and Note,that would be prior or that may in any way be superior to Lender's Security Interests and
rights in and to such Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers
thereof, as well as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective
terms.
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, prepared by Borrower.
Tax Returns. As soon as available, but in no event later than thirty(30) days after the applicable filing date for the tax reporting period
ended, Federal and other governmental tax returns,prepared by Borrower.
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.
Financial Covenants and Ratios. Comply with the following covenants and ratios:
Minimum Income and Cash flow Requirements. Borrower shall comply with the following cash flow ratio requirements:
Debt Service Coverage of a Minimum Ratio. Maintain a ratio of Debt Service Coverage of a Minimum in excess of 1.200 to 1.00
. This coverage ratio will be evaluated as of year-end.
Except as provided above, all computations made to determine compliance with the requirements contained in this paragraph shall be
made in accordance with generally accepted accounting principles, applied on a consistent basis, and certified by Borrower as being
true and correct.
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 ten(10)days prior written notice to Lender. Each insurance
policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or
default of Borrower or any other person. In connection with all policies covering assets in which Lender holds or is offered a security
interest for the Loans, Boriower will provide Lender with such lender's loss payable or other endorsements as Lender may require.
r BUSINESS LOAN AGREEMENT
(Continued) Page 3
Insurance Reports, Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as
Lender may reasonably request, including without limitation the following: (1) the name of the insurer; (2) the risks Insured; (3) the
amount of the policy; (4) the properties Insured; (5) the then current property values on the basis of which insurance has been obtained,
and the manner of determining those values; and (6) the expiration date of the policy. In addition, upon request of Lender (however not
more often than annually), Borrower will have an independent appraiser satisfactory to Lender determine, as applicable, the actual cash
value or replacement cost of any Collateral. The cost of such appraisal shall be paid by Borrower.
Guaranties. Prior to disbursement of any Loan proceeds, furnish executed guaranties of the Loans in favor of Lender, executed by the
guarantor named below,on Lender's forms, and in the amount and under the conditions set forth in those guaranties.
Name of Guarantor Amount
Eric J. Desrosiers 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 Borrower's business operations, unless specifically consented to the contrary by Lender in
writing.
Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments,
taxes, governmental charges, levies and 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.
Compliance Certificates. Unless waived in writing by Lender, provide Lender at least annually, with a certificate executed by Borrower's
chief financial officer, or other officer or person acceptable to Lender, certifying that the representations and warranties set forth in this
Agreement are true and correct as of the date of the certificate and further certifying that, as of the date of the certificate, no Event of
Default exists under this Agreement.
Environmental Compliance and Reports. Borrower shall comply In all respects with any and all Environmental Laws; not cause or permit to
exist, as a result of an intentional or unintentional action or omission 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
BUSINESS LOAN AGREEMENT
(C0ntinued) Page 4
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
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) make any distribution with respect to any capital account, whether by reduction of
capital or otherwise.
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; or (E) Lender in good faith deems itself insecure, even though no
Event of Default shall have occurred.
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.
Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or
sales agreement, or any other agreement, In favor of any other creditor or person that may materially affect any of Borrower's or any
Grantor's property or Borrower's or any Grantor's ability to repay the Loans or perform their respective obligations under this Agreement or
any of the Related Documents.
False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this
Agreement or the Related Documents is false or misleading in any material respect,either now or at the time made or furnished or becomes
false or misleading at any time thereafter.
Death or Insolvency. The dissolution or termination of Borrower's existence as a going business or the death of any partner,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.
Events Affecting General Partner of Borrower. Any of the preceding events occurs with respect to any general partner of Borrower or any
general partner dies or becomes incompetent.
Change In Ownership. The resignation or expulsion of any general partner with an ownership interest of twenty-five percent(25%)or more
in Borrower.
Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or
performance of the Loan is impaired.
Insecurity. Lender in good faith believes itself insecure.
f
BUSINESS LOAN AGREEMENT
(Continued) Page 5
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(1 6)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 faw, 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.
ADDITIONAL MONTHLY FINANCIAL INFORMATION. The Borrower will provide Bank with monthly aging of Accounts Receivable, Accounts
Payable, monthly Balance Sheet, Profit and Loss Statements and Borrowing Base Certificates in form and substance acceptable to Bank.
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.
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 Mercer 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.
BUSINESS LOAN AGREEMENT
(Continued) Page 6
Successors and Assigns. All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related
Documents shall bind Bo��ower'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 making the Loan, 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 making of the Loan and delivery to Lender of the Related
Documents, shall be continuing in nature, and shall remain In full force and effect until such time as Borrower's indebtedness shall be paid
in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur.
Time is of the Essence. Time Is of the essence in the performance of this Agreement.
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:
Advance. The word "Advance" means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower's behalf on a line
of credit or multiple advance basis under the terms and conditions of this Agreement,
Agreement. The word "Agreement" means this Business Loan Agreement, as this Business Loan Agreement may be amended or modified
from time to time,together with all exhibits and schedules attached to this Business Loan Agreement from time to time.
Borrower. The word "Borrower" means Capitol Real Estate Development LP and includes all co-signers and co-makers signing the Note and
all their successors and assigns.
Collateral. The word "Collateral" means all property and assets granted as collateral security for a Loan,whether real or personal property,
whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security Interest,
mortgage, collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust,
factor's lien, equipment trust,conditional sale,trust receipt, lien,charge, lien or title retention contract, lease or consignment intended as a
security device,or any other security or lien interest whatsoever,whether created by law,contract,or otherwise.
Environmental Laws. The words "Environmental Laws" mean any and all state, federal and local statutes, regulations and ordinances
relating to the protection+•of human health or the environment, Including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, at seq, ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"),the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, at seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et 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.
GAAP. The word "GAAP"means generally accepted accounting principles.
Grantor. The word "Grantor" means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan,
including without limitation all Borrowers granting such a Security Interest.
Guarantor. The word "Guarantor" means any guarantor, surety,or accommodation party of any or all of the Loan.
Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender, Including without limitation a guaranty of all or part of the
Note.
Hazardous Substances. The words "Hazardous Substances" mean materials that, because of their quantity, concentration or physical,
chemical or Infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when
Improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words "Hazardous
Substances' are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or
waste as defined by or listed under the Environmental Laws. The term "Hazardous Substances" also includes, without limitation, petroleum
and petroleum by-products or any fraction thereof and asbestos.
Indebtedness. The word "Indebtedness" means and includes any and all of Grantor's liabilities, obligations, debts, and indebtedness to
Lender, now existing or hereinafter incurred or created, including, without limitation, all loans, advances, future advances, interest, costs,
debts, overdraft indebtedness, credit card indebtedness, lease obligations, other obligations, and liabilities of Grantor, or any of them, and
any present or future judgments against Grantor,or any of them;and whether any such indebtedness Is voluntarily or Involuntarily incurred,
due or not due, absolute or contingent, liquidated or unliquidated,determined or undetermined;whether Grantor may be liable individually or
jointly with others, or primarily or secondarily, or as guarantor or surety; whether recovery on the indebtedness may be or may become
barred or unenforceable against Grantor for any reason whatsoever; and whether the indebtedness arises from transactions which may be
voidable on account of infancy, insanity, ultra vires or otherwise.,
Lender. The word "Lender" means Legacy Bank a Division of First National Bank of Pennsylvania, 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 Capitol Real Estate Development LP in the principal amount of $32.0,000,00 dated
February 28, 2007, 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
BUSINESS LOAN AGREEMENT
(Continued) Page 7
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.
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 AND BORROWER AGREES TO
ITS TERMS: THIS BUSINESS LOAN AGREEMENT IS DATED FEBRUARY 26, 2007.
THIS AGREEMENT IS GIVEN;UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT IS AND SHALL CONSTITUTE AND HAVE THE
EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW,
BORROWER:
CAPITOL REAL ESTATE DEVELOPMENT LP
CAPITOL FITNESSd INC:- General Partner of)Capitol Reaf'Edtate Development LP
By:
�<�— �°. : (Seal)
Eric J. Degrosiers;"President of Capitol Fitness,Inc.
LENDER:
LEGACY BANK A D VISION OF FIRST NATIONAL BANK OF PENNSYLVANIA
By: � (Seal)
A prized Signer
WER PRO Lending,Vr.6.04.09.902 C-11 Nvhnd Finn S,Wdnn,,In*.1997,2907, All Ryhis R,dvnd. •PA I:kcn%wwMCFI%PL%C4"C TR-95071 PR-44
EXHIBIT «C"
To Complaint in Breach of Contract
°
"Vu2V°
COMMERCIAL GUARANTY
TR,I
Ax
an,!.,! ...,- *
to'Lam only
An
t1m ab It-inin to not limit the applicability of this document to any
has been Omitted clue to t particular loan or RAM
13o,tro,vver: Capitol Real Estate Development LP --------- ext length limitations.
110 Third Street, Suite 200 Lender Legacy Bank a Division Of First National Bank of
New Cumberland,PA 77070 Pennsylvania
Commercial Lending
One FNB BLVD
Guarantor Eric J. 130srosiers; Hermitage,pA 16148
808 Michigan Avenue
Lemovne,PA 17043
CONTINUING GUARANTEE OF P-A YMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely and unconditionally
guarantees full and punctual pay i
Borrower's obligations under the ment and satisfaction of the Indebtedness of Borrower to Lender, and the performance and discharge of all
Lender can enforce this Guaranty Note and the Related Documents. This is a guaranty of Payment and Performance and not of collection so
pay the Indebtedness or against a against Guarantor even when Lender has not exhausted Lender's remedies against anyone else obligate�to
ny collateral securing the Indebtedness, this Guaranty or any other
will make any payments to Lender or its order, on
--"" demand` in leg" tender- of the onb�« - America, '
same-day funds, without se
ded
""- -' ~ counterclaim, will -- perform
Borrower's ~ - unuo, mo m^� a»u Related o^«u�orvnv Guarantor's liability is unlimited and o"^mnmr�om��mn»w� ��osaTcomeao The word .Indebtedne 3" �
�
as used in this
one or more --` -`~~~" ��womm�v mvmvn -` '-~~ =ll"' =«Pnno�m �
'
" anding from arising from any and nature or orrower
by law, attorneys, .
debts, overdraft now �
ndebtedness"Includes, without
credit card indebtedness, lease
agreements or foreign
tection agreements, other obligations, and liabilities of Borrower,
and
any present Or mmm --' --'~n~"w"nmonmn, n��obligations, liabilities- '- ~~ ��wunono under loans,- --~~rest rate ~ /
or substitute these debts, liabilities and obligations whether-, voluntarily or Involuntarily incurred; due or to Lecome due by their terms or
acceleration; absolute or contingent;liquidated or unliquidated;determined or undetermined direct or indirect; primary or secondary in nature or
arising from a guaranty or surety; secured or unsecured; joint or several or joint and several; evidenced by a negotiable or non-negotiable
instrument or writing; originated by Lender or another or others; barred or unenforceable�gainst Borrower for any reason whatsoever; for any
transactions that may be voidable for any reason (such as
extinguis ad and then afterwards increased or
It Lender reinstated.- --dgments against Borrower, future advances, loans or transactions that renew, extend modify, refinance consolidate
--'--' and o�nvmnmv mu�v /
` -- ~~= "�m /
a«u�nmr'o liability will ouu-^` shall '�� �u»mo b*��guaranties from uv«mnm� Lender's rights under all guaranshall be cumulative. This ties
'
Guarantor's ��--'- = "�««"oon» un*v or invalidate ~~
nomT�u�msuch other unterminated guaranties.
THISIS A =" �mumm�m ' other guaranties.
PUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF BORROWER TO LENDER, NOW EXISTING OR
HEREAFTER ARISING OR ACQUIRED ON AN OPEN AND CONTINUING BASIS. ACCORDINGLY ANY PAYMENTS MADE ON THE
INDEBTEDNESS WILL NOT DISCHAR�i OR DIMINISH GUARANTOR'S OBLIGATIONS AND
REMAINING AND SUCCEEDING INDEBTEDNESS
---^``^ '""� /ow� mrowa -'-' WHEN ALL OR *«nr OF THE OUTSTANDICONTINUING GUARANTY' UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL AND
NG '"= GUARANTY FOR �mv �
���morm��m� This � INDEBTEDNESS MAY BE A ZERO /
notice to Guarantor or to Borrower, and will continue In full force until all
any notice of revocation
- ---~—^ -and-all Of Guarantor's other obligations under this-- -Guaranty will take effect when received by Lender without the receipt by Lender of
Lender,- ~ any Indebtedness incurred o, ore shall hav^ ~~=fully and finally Paid uw revocation must be mailed - Lender, ~' ^==�mmax '�
For withoutand limitation, vmz�m "new Written -' --- ~` °= --'~ ~^ u" '
of Guarantor's written revocation.
revocation is contingent, unliquidated, undetermined without does not include the Indebtedness which
determined or due. For this
purpose and
limitation,-' '=� Indebtedness" which-- later `"^" em uuov �
revocation; Incurred under a commitment that became binding before ons,
and modifications of
the
as to the Indebtedness created both before and after
ess of Lender's actual notice of Guarantor's death. Subject to
legal representative may
mustrator or other
ReleaseGuarantor mig9t have terminated it and with the same effec!.
»'
'
guarantor Or termination of
---~^` " '"""�anun �onue any othe-~ u"=a.� mma Indebtedness shall not affect the liability of Guarantor under this
|n�ou�u"",�� -- Guaranty /nm m« Is binding - amount- ~ ~� "�o���n�� even to zo»u u��=' -- -~~'~'^~ ""p �vumnm, .
COMMERCIAL. GUARANTY
(Continued) Page 2
4 this Guaranty or the Indebtedness, and exchange,enforce, waive,subordinate,fail or decide not to perfect, and release any such security, with
or without the substitution of new collateral; (D) to release,substitute, agree not to sue, or deal with any one or more of Borrower's sureties,
endorsers, or other guarantors on any terms or in any manner Lender may choose; (E) to determine how, when and what application of
payments and credits shall be made on the Indebtedness; (F) to apply such security and direct the order or manner of sale thereof, including
without limitation, any nonjudicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion
may determine; (G) to sell, transfer, assign or grant participations in all or any part of the Indebtedness; and (H) to assign or transfer this
Guaranty in whole or in part.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lender that (A) no representations or
agreements of any kind have been made to Guarantor which would limit or qualify in any way the terms of this Guaranty; (B) this Guaranty is
executed at Borrower's request and not at the request of Lender; (C) Guarantor has full power, right and authority to enter into this Guaranty;
(D) the provisions of this Guaranty do not conflict with or result in a default under any agreement or other instrument binding upon Guarantor
and do not result in a violation of any law, regulation,court decree or order applicable to Guarantor; (E) Guarantor has not and will not, without
the prior written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer, or otherwise dispose of all or substantially all of
Guarantor's assets,or any Interest therein; (F) upon Lender's request,Guarantor will provide to Lender financial and credit information In form
acceptable to Lender, and all such financial information which currently has been, and all future financial information which will be provided to
Lender is and will be true and correct in all material respects and fairly present Guarantor's financial condition as of the dates the financial
information is provided; (G) no material adverse change has occurred in Guarantor's financial condition since the date of the most recent
financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantor's financial condition; (H)
no litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending or
threatened; (1) Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and (J) Guarantor has established
adequate means of obtaining from Borrower on a continuing basis information regarding Borrower's financial condition. Guarantor agrees to
keep adequately informed from such means of any facts, events, or circumstances which might in any way affect Guarantor's risks under this
Guaranty,and Guarantor further agrees that Lender shall have no obligation to disclose to Guarantor any information or documents acquired by
Lender in the course of its relationship with Borrower.
GUARANTOR'S FINANCIAL STATEMENTS. Guarantor agrees to furnish Lender with the following;
Annual Statements. As soon as available, but in no event later than one-hundred-twenty (120) days after the end of each fiscal year,
Guarantor's balance sheet and income statement for the year ended,prepared by Guarantor.
Tax Returns. As soon as available, but in no event later than thirty (30) days after the applicable filing date for the tax reporting period
ended, Federal and other governmental tax returns, prepared by Guarantor.
All financial reports required to be provided under this Guaranty shall be prepared in accordance with GAAP, applied on a consistent basis, and
certified by Guarantor as being true and correct. ,
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives any right to require Lender (A) to continue lending
money or to extend other credit to Borrower; (B) to make any presentment; protest, demand, or notice of any kind, including notice of any
nonpayment of the Indebtedness or of any nonpayment related to any collateral, or notice of any action or nonaction on the part of Borrower,
Lender, any surety, endorser, or other guarantor in connection with the Indebtedness or in connection with the creation of new or additional
loans or obligations; (C) to resort for payment or to proceed directly or at once against any person, including Borrower or any other guarantor;
(D) to proceed directly against or exhaust any collateral held by Lender from Borrower, any other guarantor, or any other person; (E) to give
notice of the terms,time, and place of any public or private sale of personal property security held by Lender from Borrower or to comply with
any other applicable provisions of the Uniform Commercial Code; (F) to pursue any other remedy within Lender's power;or (G) to commit any
act or omission of any kind,or at any time,with respect to any matter whatsoever.
Guarantor also waives any and all rights or defenses based on suretyship or impairment of collateral including, but not limited to, any rights or
defenses arising by reason of (A) any "one action" or "anti-deficiency" law or any other law which may prevent Lender from bringing any
action, including a claim for deficiency, against Guarantor, before or after Lender's commencement or completion of any foreclosure action,
either judicially or by exercise of a power of sale; (B) any election of remedies by Lender which destroys or otherwise adversely affects
Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower for reimbursement, including without limitation, any loss of
rights Guarantor may suffer by reason of any law limiting, qualifying, or discharging the Indebtedness; (C) any disability or other defense of
Borrower,of any other guarantor,or of any other person,or by reason of the cessation of Borrower's liability from any cause whatsoever,other
than payment in full in legal tender, of the Indebtedness; (0) any right to claim discharge of the Indebtedness on the basis of unjustified
impairment of any collateral for the Indebtedness; (E) any statute of limitations, if at any time any action or suit brought by Lender against
Guarantor is commenced, there is outstanding Indebtedness which is not barred by any applicable statute of limitations; or (F) any defenses
given to guarantors at law orin equity other than actual payment and performance of the Indebtedness. If payment is made by Borrower,
whether voluntarily or otherwise, or by any third party,on the Indebtedness and thereafter Lender is forced to remit the amount of that payment
to Borrower's trustee in bankruptcy or to any similar person under any federal or state bankruptcy law or law for the relief of debtors, the
indebtedness shall be considered unpaid for the purpose of the enforcement of this Guaranty.
Guarantor further waives and agrees not to assert or claim at any time any deductions to the amount guaranteed under this Guaranty for any
claim of setoff, counterclaim, counter demand, recoupment or similar right, whether such claim, demand or right may be asserted by the
Borrower,the Guarantor,or both.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees that each of the waivers set forth above is
made with Guarantor's full knowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and
not contrary to public policy or law. If any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be
effective only to the extent permitted by law or public policy.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the Indebtedness, whether now existing or hereafter
created, shall be superior to any claim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes
insolvent. Guarantor hereby expressly subordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any
claim that Lender may now or hereafter have against Borrower. In the event of insolvency and consequent liquidation of the assets of Borrower,
through bankruptcy, by an assignment for the benefit of creditors, by voluntary liquidation, or otherwise, the assets of Borrower applicable to
the payment of the claims of both Lender and Guarantor shall be paid to Lender and shall be first applied by Lender to the Indebtedness.
Guarantor does hereby assign to Lender all claims which it may have or acquire against Borrower or against any assignee or trustee in
bankruptcy of Borrower; provided however, that such assignment shall be effective only for the purpose of assuring to Lender full payment in
legal tender of the Indebtedness. If Lender so requests, any notes or credit agreements now or hereafter evidencing any debts or obligations of
Borrower to Guarantor shall be marked with a legend that the same are subject to this Guaranty and shall be delivered to Lender. Guarantor
agrees, and Lender is hereby authorized, In the name of Guarantor, from time to time to file financing statements and continuation statements
and to execute documents and to take such other actions as Lender deems necessary or appropriate to perfect, preserve and enforce its rights
COMMERCIAL GUARANTY
(Continued) Page 3
under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Guaranty:
Amendments. This Guaranty, together with any Related Documents, constitutes the entire understanding and agreement of the parties as
to the matters set forth in this Guaranty. No alteration of or amendment to this Guaranty shall be effective unless given in writing and
signed by the party or parties sought to be charged or bound by the alteration or amendment.
Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of Lender's costs and expenses, including Lender's attorneys' fees
and Lender's legal expenses, incurred in connection with the enforcement of this Guaranty. Lender may hire or pay someone else to help
enforce this Guaranty, and Guarantor 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. Guarantor also shall pay all court costs and such additional fees as may be directed by the court.
Caption Headings. Caption headings in this Guaranty are for convenience purposes only and are not to be used to interpret or define the
provisions of this Guaranty.
Governing Law. This Guaranty 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.
Choice of Venue. If there is a lawsuit, Guarantor agrees upon Lender's request to submit to the jurisdiction of the courts of Mercer County,
Commonwealth of Pennsylvania.
Integration. Guarantor further agrees that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had the
opportunity to be advised by Guarantor's attorney with respect to this Guaranty;the Guaranty fully reflects Guarantor's intentions and parol
evidence is not required to interpret the terms of this Guaranty. Guarantor hereby Indemnifies and holds Lender harmless from all losses,
claims, damages, and costs (including Lender's attorneys' fees)suffered or incurred by Lender as a result of any breach by Guarantor of the
warranties,representations and agreements of this paragraph.
Interpretation. In all cases where there is more than one Borrower or Guarantor, then all words used In this Guaranty in the singular shall
be deemed to have been used in the plural where the context and construction so require; and where there is more than one Borrower
named in this Guaranty or when this Guaranty is executed by more than one Guarantor, the words "Borrower" and "Guarantor"
respectively shall mean all and any one or more of them. The words "Guarantor," "Borrower," and "Lender" include the heirs, successors,
assigns, and transferees of each of them. If a court finds that any provision of this Guaranty is not valid or should not be enforced, that
fact by itself will not mean that the rest of this Guaranty will not be valid or enforced. Therefore, a court will enforce the rest of the
provisions of this Guaranty even if a provision of this Guaranty may be found to be invalid or unenforceable. If any one or more of
Borrower or Guarantor are corporations, partnerships, limited liability companies, or similar entities, it is not necessary for Lender to inquire
into the powers of Borrower or Guarantor or of the officers, directors, partners, managers, or other agents acting or purporting to act on
their behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed under this
Guaranty.
Notices. Unless otherwise provided by applicable law, any notice required to be given under this Guaranty shall be given In writing, and,
except for revocation notices by Guarantor, shall be effective when actually delivered, when actually received by 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 Guaranty.
All revocation notices by Guarantor shall be in writing and shall be effective upon delivery to Lender as provided in the section of this
Guaranty entitled "DURATION OF GUARANTY." Any party may change its address for notices under this Guaranty by giving formal written
notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Guarantor
agrees to keep Lender informed at all times of Guarantor's current address. Unless otherwise provided by applicable law, if there is more
than one Guarantor,any notice given by Lender to any Guarantor is deemed to be notice given to all Guarantors.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Guaranty unless such waiver is given In writing and
signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other
right. A waiver by Lender of a provision of this Guaranty shall not prejudice or constitute a waiver of Lender's right otherwise to demand
strict compliance with that provision or any other provision of this Guaranty. No prior waiver by Lender, nor any course of dealing between
Lender and Guarantor, shall constitute a waiver of any of Lender's rights or of any of Guarantor's obligations as to any future transactions.
Whenever the consent of Lender is required under this Guaranty,the granting of such consent by Lender In any instance shall not constitute
continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in
the sole discretion of Lender.
Successors and Assigns. The terms of this Guaranty shall be binding upon Guarantor, and upon Guarantor's heirs, personal
representatives, successors, and assigns, and shall be enforceable by Lender and its successors and assigns.
DISC COJ GTY. An exhibit,titled"DISCLOSURE OF CONFESSION OF JUDGEMENT," is attached to this Guaranty and by this reference is made
a part of this Guaranty just as if all the provisions, terms and conditions of the Exhibit had been fully set forth in this Guaranty.
DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Guaranty. Unless specifically
stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms
used In the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise
defined in this Guaranty shall have the meanings attributed to such terms in the Uniform Commercial Code:
Borrower. The word "Borrower" means Capitol Real Estate Development LP and includes all co-signers and co-makers signing the Note and
all their successors and assigns.
GAAP. The word "GAAP" means generally accepted accounting principles.
Guarantor. The word "Guarantor" means everyone signing this Guaranty, including without limitation Eric J. Desrosiers, and in each case,
any signer's successors and assigns.
Guaranty. The word "Guaranty" means this guaranty from Guarantor to Lender.
Indebtedness. The word "Indebtedness" means Borrower's indebtedness to Lender as more particularly described in this Guaranty.
Lender. The word "Lender" means Legacy Bank a Division of First National Bank of Pennsylvania, its successors and assigns.
Note. The word "Note" means and includes without limitation all of Borrower's promissory notes and/or credit agreements evidencing
Borrower's loan obligations In favor of Lender, together with all renewals of, extensions of, modifications of, refinancings of,consolidations
COMMERCIAL GUARANTY
(Continued) Page 4
of and substitutions for promissory notes or credit agreements.
Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental
agreements, guaranties, 'security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other Instruments,
agreements and documents, whether now or hereafter existing,executed in connection with the Indebtedness.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITS
TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND
DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE MANNER SET FORTH
IN THE SECTION TITLED "DURATION OF GUARANTY". NO FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY
EFFECTIVE. THIS GUARANTY IS DATED FEBRUARY 28, 2007.
THIS GUARANTY IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS GUARANTY IS AND SHALL CONSTITUTE AND HAVE THE EFFECT
OF A SEALED INSTRUMENT ACCORDING TO LAW.
GUARANTOR:
Xs , !' (Seal)
Eric J. Desrosiers'
;r
LASER PRO L dhO,V-6.31.00.001 CC-Henlm6Efn"olN 0o10d—,Ino.1007,2007, NI 8101.1,R..rv.d. •PR L•1CPRLVIN9010P11LPL1E20.PC TR-0071 PH-44
�
DISCLlq URE OF CONFESSION OF JU GEMENT
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References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan or item.
Any item above containing "•" ' has been omitted due to text length limitations.
Borrower: Capitol Real Estate Development LP Lender: Legacy Bank a Division of First National Bank of
110 Third Street, Suite 200 Pennsylvania
New Cumberland, PA 17070 Commercial Lending
One FNB BLVD
Hermitage, PA 16148
Guarantor: Eric J. Desrosiers.
808 Michigan Avenue
Lemovne,PA 17043
This DISCLOSURE OF CONFESSION OF JUDGEMENT is attached to and by this reference Is made a part of the Commercial Guaranty, dated
February 28, 2007, and executed in connection with a loan or other financial accommodations between LEGACY BANK A DIVISION OF FIRST
NATIONAL BANK OF PENNSYLVANIA and Capitol Real Estate Development LP.
1 hereby acknowledge that I am executing the following document ("Document") related to a loan or other credit
accommodation to the above Borrower which contains a Confession of Judgment provision:
[ ) Promissory Note [X ) Guaranty Agreement
1. I understand that the Document contains a confession of judgment provision that would permit the Lender
to enter judgment against me. in court without advance notice to me and without offering me the opportunity to
defend against the entry of the judgment. In executing the Document, being fully aware of my rights to advance
notice and a hearing to contest the validity of any judgment or other claims that Lender may assert against me
under the Document, I hereby knowingly, intelligently and voluntarily waive these rights, including, without
limitation, anyright to advance notice of the entry of judgment. Further, I hereby expressly agree and consent to
Lender's entering judgment against me by confession as provided in the confession of judgment provision set forth
in the Document.
2. 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 Document also contains language that
would permit Lender, after entry ofudgment, without either advance notice or a hearing, to execute on the
judgment by attaching, levying, garnishing, foreclosing upon, taking possession, or otherwise seizing my property,
whether real, personal or mixed, in order to obtain full or partial payment of the judgment so entered In executing
the Document, I am fully aware of my rights to advance notice and a hearing after judgment is entered before
execution on the judgment and I herebyknowingly, intelligently and voluntarily waive these rights. Further, I
expressly agree and consent to Lender, in its sole and absolute discretion, to immediately or at any time to execute
on the judgment, in any manner permissible under applicable state and Federal laws, without any advance notice to
me.
MY EXECUTION OF THIS DISCLOSURE CERTIFIES THAT I WAS EITHER REPRESENTED BY MY OWN LEGAL
COUNSEL IN CONNECTION WITH THE TRANSACTION RELATED TO THE DOCUMENT, OR THAT I HAD THE
CONFESSION OF JUDGMENT PROVISION IN THE DOCUMENT DISCLOSED SEPARATELY TO ME BY A
REPRESENTATIVE OF LENDER. FURTHER, THIS DISCLOSURE, OR A COPY THEREOF, SIGNED BY ME SHALL BE
CONCLUSIVELY PRESUMED BY ANY COURT OF COMPETENT JURISDICTION TO INDICATE MY KNOWING,
INTELLIGENT AND VOLUNTARY WAIVER OF THESE RIGHTS.
Signed, acknowledged and delivered in the presence of:
Witnes Witness:
THIS DISCLOSURE OF CONFESSION OF JUDGEMENT IS EXECUTED ON FEBRUARY 28,2007.
GUARANTOR:
X ~�1„ � ' W,.fi' (Seal)
Eric J. Desrosiers a
LASER PRO l.ndinV,Vu.5.04.00.002 C.p,H.d.nd F6-616001 m,Ina.1997,2007. NI RIgha Ref—d. -PA h%CFR%VIP1951CF111PM20.FC TP-95371 PR-44
EXHIBIT "D"
To Complaint in Breach of Contract
41
GRENEN &BIRSIC, P.C.
ATTORNEYS AT LAW
ONE GATEWAY CENTER,NINTH FLOOR
PITTSBURGH,PENNSYLVANIA 15222
TEL(412)281-7650 FAx(412)281-7657
June 27, 2014
VIA CERTIFIED MAIL,RETURN
RECEIPT and FIRST CLASS, U.S. MAIL
Eric J. Desrosiers
808 Michigan Avenue
Lemoyne, PA 17043
RE: NOTICE OF DEFAULT AND DEMAND FOR PAYMENT — $246,000
Promissory Note Dated February 28, 2007, Secured by Certain Open-End
Mortgages Dated February 28, 2007 and a $320,000 Promissory Note Dated
February 28, 2007, between Capitol Real Estate Development LP and Legacy
Bank, a Division of First National Bank of Pennsylvania ("FNB");
Commercial Guarantys Dated February 28, 2007 Executed by Eric J.
Desrosiers ("Guarantor")
Dear Mr. Desrosiers:
Please be advised that this firm represents FNB in connection with the following loans:
A. $246,000 Business Loan #43924445 extended by FNB to Capitol Real Estate
Development LP ("Borrower"). The loan is evidenced by, among other things, that: (a) certain
Promissory Note dated February 28, 2007 in the original principal amount of$246,000, executed
and delivered by the Borrower in favor of FNB (as the same may have been amended, substituted,
restated, extended, supplemented or modified from time to time, the "$246K Note"); (b) that
certain Business Loan Agreement dated February 28, 2007 (as the same may have been amended,
substituted, restated, extended, supplemented or modified from time to time, the 1246K Loan
Agreement"); (c) those certain Open-End Mortgages dated February 28, 2007 on real estate with
addresses of 21 North Third Street, Lemoyne, PA 17043 and 238 &240 Walnut Street, Lemoyne,
PA 17043 (collectively the"Mortgaged Properties"); (d)those certain Assignments of Rents dated
February 28, 2007 concerning the Mortgaged Properties; (e) that certain Commercial Guaranty
dated February 28, 2007 executed by Eric J. Desrosiers; and (f) those certain loan and security
documents executed by the Borrower in connection with the $246K Note (as the same may have
been amended, substituted, restated, extended, supplemented or modified from time to time, the
"$246K Loan Security Documents"). Unless otherwise separately denoted, the instruments and
documents executed in connection with the $246K Note are collectively referred to herein as the
1246K Loan".
GRENEN &BIRSIC ).C.
Mr. Eric J. Desrosiers
June 27, 2014
Page 2
B. $320,000 Business Loan #43922015 extended by FNB to Borrower. The loan is
evidenced by, among other things, that: (a) certain Promissory Note dated February 28, 2007, in
the original principal amount of $320,000, executed and delivered by the Borrower in favor of
FNB (as the same may have been amended, substituted, restated, extended, supplemented or
modified from time to time, the "$320K Note"); (b) that certain Business Loan Agreement dated
February 28, 2007 (as the same may have been amended, substituted, restated, extended,
supplemented or modified from time to time,the 1320K Loan Agreement");(c)that certain Open-
End Mortgage dated February 28, 2007 on real estate with addresses of 21 North Third Street,
Lemoyne, PA 17043; (d) that certain Commercial Guaranty dated February.28, 2007 executed by
Eric J. Desrosiers; and (e)those certain loan and security documents executed by the Borrower in
connection with the $320K Note (as the same may have been amended, substituted, restated,
extended, supplemented or modified from time to time, the "$320K Loan Security Documents").
Unless otherwise separately denoted, the instruments and documents executed in connection with
the $320K Note are collectively referred to herein as the 1320K Loan".
Unless separately denoted, the $246K Loan and $320K Loan are hereinafter collectively
referred to as"Loans". The Commercial Guarantys executed by you in connection with the Loans
shall hereinafter be referred to as the "Guarantys".
This letter shall serve as formal notice to you that the Borrower is in default under
the Loans for failure to make payments due and owing under the Loans. As such, FNB has
elected to exercise its rights under the terms of the Loans by hereby accelerating and demanding
payment in full of all the outstanding indebtedness owing from the Borrower and Guarantor to
FNB. Pursuant to the Guarantys,FNB is hereby demanding from you payment in full of all
the outstanding indebtedness. The total amount of the debt immediately due and payable under
the Loans is as follows:
$246K Loan
Principal $ 216,632.87
Interest through 6/27/14 $ 42,833.46
Late Charges through 6/24/14 $ 4,35.5.83
TOTAL $ 263,822.16
$320K Loan
Principal $ 278,493.78
Interest through 6/27/14 $ 57,405.77
Late Charges through 6/27/14 $ 5,497.49
TOTAL $ 341,397.04
With continuing interest on the principal amounts at the rate as provided for in each of the
Loans plus any late fees, costs and expenses, including, without limitation, FNB's attorneys' fees.
1
GRENEN &BIRsiq;).C.
Mr. Eric J. Desrosiers
June 27, 2014
Page 3
Please direct payment in full to FNB within ten(10) days of the date of this letter to:
J. Martin Dell, Special Assets Officer
First National Bank
409 North Second Street, Suite 201
Harrisburg, PA 17101
(717) 540-3389
You may contact Mr. Dell for the accrued interest and fees as of the date you intend to pay
these obligations. Failure to remit the amounts owed will result in the FNB pursuing its rights and
remedies against the Borrower and/or Guarantor, including the commencement of legal action and
right of set off.
This letter will confirm that the FNB has made no agreement or commitment to forbear or
amend, supplement or modify the Loans or any of the loan security documents in any respect. No
action or inaction should be taken or omitted by Borrower or any Guarantor or other obligor based
upon any understanding that such a commitment exists or any expectation that any such
commitment will be made in the future. Any acceptance of a payment or any negotiation by FNB
with Borrower or any Guarantor or other obligor concerning this letter, the Loans or any of the
Loans' security documents is not, and shall not be construed to be, a modification, alteration,
release, limitation, waiver or cure of any breach, right, remedy, power or privilege of FNB under
the Loans except to the extent expressly provided in a written agreement signed by FNB.
Please note this letter and FNB's actions are not a waiver of, and are without prejudice to
all rights, remedies and causes of action that FNB has, or may have, against the Borrower and/or
any of its Guarantors under any applicable law,rule, regulation or principle of equity with respect
to the Loans and the loan security documents. All such rights and remedies and causes of action
of FNB are hereby expressly reserved in their entirety.
Please do not hesitate to contact me if you have any questions.
Very truly yours,
John B Jo ce
JBJ/asl
CC. Mr. J. Martin Dell
Capitol Real Estate Development, LP
ii
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" Lemoyne, PA 170 U.S. POSTAL SERVICE CERTIFICATE OF MAILING Affix fee here instamps
MAY BE USED FOR DOMESTIC AND INTERNATIONAL MAIL,DOES NOT
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NAOy
PS Form 3817,January 2001
SENDER: . SECTION COMPLETE THIS SECTION ON DELIVERY
i I ■ Complete..items 1,2,and 3.Also complete A• 555-517
item 4 if Restricted Delivery is desired. ❑Agent
■ Print your.name and address on the reverse ❑Addressee
0
so that we can return the card to you. B. eceivecl by( inted Name) C. Date of Delivery
■ Attach this card to the back of the mailpiece,
or on the front if space permits.
D. Is delivery address different from Item 17 ❑Yes
1. Article Addressed to: If YES,enter delivery address below: ❑No
Eric J. De�.osiers
0.
808 Miyan Avenue 3. Service Type
Lemoyne, PA 17043 XCertlfled Mail ❑Express Mail
❑Registered ❑Return Receipt for Merchandise
j ❑Insured Mail ❑C.O.D.
4. Restricted nalive-m2 XW—9-1 ❑Yes
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2.
102595-02-M-1540-
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EXHIBIT "E"
To Complaint in Breach of Contract
• f ��,
'0965"
PROMISSORY NOTE
..............M . itt ......._.... iN! .....................,,.... a1[..t.. ii:::..-...,:..:...:.:.::... . .................. ... er........... t
�t {� ..:.......... �}I��:�i�:..:::::::.....X.�n,�.{rrv.�.��:�>5:::�.�...�.......frt� �....:.j����:...'•: .' .. .: .......,.........�i.y.ry:::n:i���:•`:ijti:'::.;
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::.:....................................................
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan or item.
Any Item above containing has been omitted due to text length limitations.
Borrower: Capitol Real Estate Development LP Lender: Legacy Bank a Division of First National Bank of
110 Third Street,Suite 200 Pennsylvania
New Cumberland,PA 17070 Commercial Lending
One FNB BLVD
Hermitage, PA 16148
Principal Amount: $246,000.00 Date of Note: February 28, 2007
PROMISE TO PAY. Capitol Real Estate Development LP ("Borrower") promises to pay to Legacy Bank a Division of First National Bank of
Pennsylvania ("Lender"). or order,in lawful money of the United States of America,the principal amount of Two Hundred Forty-six Thousand &
00/100 Dollars($246,000.00),together with Interest on the unpaid principal balance from February 28,2007,until paid in full.
PAYMENT. Subject to any payment changes resulting from changes in the Index, Borrower will pay this loan in accordance with the following
payment schedule: 60 monthly consecutive principal and interest payments in the initial amount of 52,037.72 each, beginning April 1, 2007,
with interest calculated on the unpaid principal balances at an Initial discounted interest rate of 7.750% per annum; and 180 monthly
consecutive principal and interest payments in the initial amount of $2,230.26 each, beginning April 1, 2012, with interest calculated on the
unpaid principal balances at an interest rate based on the "Prime Rate" as published from time to time In The Wall Street Journal, or any
successor publication(currently 8.250%), plus a margin of 1.000%,resulting in an initial interest rate of 9.250%. Borrower's final payment will
be due on March 1, 2027 and will be for all principal and accrued interest not yet paid,together with any other unpaid amounts under this Note.
Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to
any unpaid collection costs; and then to any late charges. The annual interest rate for this Note is computed on a 3651360 basis; that is, by
applying the ratio of the annual interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance is outstanding. Borrower will pay Lender at Lender's address shown above or at such other place as
Lender may designate in writing.
VARIABLE INTEREST RATE. For the first 60 payments,the interest rate on this loan will be 7.750%. Thereafter, the interest rate on this Note
is subject to change from time to time based on changes In an independent index which is the "Prime Rate" as published from time to time in
The Wall Street Journal,or any successor publication(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 Index currently Is 8.250% per annum. The interest rate or rates to
be applied to the unpaid principal balance during this Note will be the rate or rates set forth herein in the "Payment" section. Notwithstanding
any other provision of this Note, after the first payment stream, the interest rate for each subsequent payment stream will be effective as of the
last payment date of the just-ending payment stream. NOTICE: Under no circumstances will the interest rate on this Note be more than the
maximum rate allowed by applicable law. Whenever increases occur in the interest rate, Lender, at its option, may do one or more of the
following: (A) increase Borrower's payments to ensure Borrower's loan will pay off by its original final maturity date, (B) increase Borrower's
payments to cover accruing interest, (C) increase the number of Borrower's payments, and (D) continue Borrower's payments at the same
amount and increase Borrower's final payment.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged 8.000%of the regularly scheduled payment.
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased by
adding a 4.000 percentage point margin ("Default Rate Margin"). The Default Rate Margin shall also apply to each succeeding interest rate
change that would have applied had there been no default. After maturity,or after this Note would have matured had there been no default,the
Default Rate Margin will continue to apply to the final interest rate described in this Note. 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.
DEFAULT. Each of the following shall constitute an event of default 1"Event of Default") under this Note:
Payment Default. Borrower fails to make any payment when due under this Note.
Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in
any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement
between Lender and Borrower.
Default In Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or
sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's property or
Borrower's ability to repay this Note or perform Borrower's obligations under this Note or any of the related documents.
False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this '
Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false
or misleading at any time thereafter.
Death or Insolvency. The dissolution or termination of Borrower's existence as a going business or the death of any partner,the insolvency
of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of
creditor workout,or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help,
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
PROMISSORY NOTE
(Continued) page z
a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate
reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the indebtedness or any
Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness
evidenced by this Note. In the event of a death, Lender, at its 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.
Events Affecting General Partner of Borrower. Any of the preceding events occurs with respect to any general partner of Borrower or any
general partner dies or becomes incompetent.
Change In Ownership. The resignation or expulsion of any general partner with an ownership interest of twenty-five percent(25%) or more
In Borrower.
Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or
performance of this Note is impaired.
insecurity. Lender In good faith believes itself insecure.
Cure Provisions. If any default, other than a default in payment is curable and if Borrower has not been given a notice of a breach of the
same provision of this Note within the preceding twelve (12) months, it may be cured if Borrower, after receiving written notice from
Lender demanding cure of such default; (1) cures the default within fifteen J11 5) days; or (2) if the cure requires more than fifteen (15)
days, immediately initiates steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter
continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may, after giving such notices as required by applicable law, declare the entire unpaid principal
balance under this Note and all accrued unpaid interest 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 Mercer 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.
FINANCIAL INFORMATION.The undersigned hereby agrees to prepare or cause to be prepared and to furnish financial statements and additional
information,lists of assets and liabilities,aging lists of accounts receivable and payable,inventory schedules, budgets,forecasts,tax returns and
other reports and documents with respect to the undersigned's financial condition and business operations and that of any guarantor or surety in
form and substance as the holder hereof may request from time to time.
PREPAYMENT FEE. Borrower shall have the right to prepay this Note in whole at any time or in part from time to time. In the event of any such
prepayment, whether by declaration, acceleration or otherwise, a prepayment charge equal to three percent(3%) for the first year, two percent
(211/6) for the second year, one percent(1%) for tho third year,one percent (1%) for the fourth year, and one percent(1%) for the fifth year of
the prepaid principal balance, only in the event of refinance with another financial institution, shall be immediately due and payable to the
Lender. .
INTEREST RATE AFTER DEFAULT. Upon the occurrence of an event of default as set forth herein the undersigned agrees that the interest rate
shall be amended and increased to four percent (4%) per annum greater than the rate set forth above and shall continue to accrue at said
default rate until the holder agrees and the underlying event of default has been cured by the undersigned or any defaulting party.
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives,
successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.
NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES. Please notify us if we report any inaccurate
information about your account(s)to a consumer reporting agency. Your written notice describing the specific inaccuracy(les) should be sent to
us at the following address; Legacy Bank a Division of First National Bank of Pennsylvania,Commercial Lending, Ona FNB BLVD, Hermitage, PA
16148,
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, partner, or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral;
and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under
this Note are joint and several. If any portion of this Note is for any reason determined to be unenforceable, it will not affect the enforceability
of any other provisions of this Note.
CONFESSION OF JUDGMENT. BORROWER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR THE
PROTHONOTARY OR CLERK OF ANY COURT IN THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE, TO APPEAR AT ANY TIME
FOR BORROWER AFTER A DEFAULT UNDER THIS NOTE AND WITH OR WITHOUT COMPLAINT FILED, CONFESS OR ENTER JUDGMENT
PROMISSORY NOTE
(Continued) Page 3
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:
CAPITOL REAL ESTATE DEVELOPMENT LP
CAPITOL FITNESS,,INC7-,GeReral'partner,�f Caplto(~:Real. state Development LP
sM tmx
Eric J. DWsrosler%'President of Capitol Fitness, Inc.
LASER PRO Landing.V.,5,3/.90A07 CM.14.1.d ENanal,l S010—In&1997,2007, M W010611—ad. •PA 1AMWINILSIC711LPL%wo7C TA-95747 PR-44
EXHIBIT «F"
To Complaint in Breach of Contract
rt
*0070"
BUSINESS LOAN AGREEMENT
References in the shaded area are for Len •• ••• • "" •• "'"" """"'�"""�`-`' _
der s use only and do not limit the applicability of this document to any particular loan or item.
Any item above containing ""**"has been omitted due to text length limitations.
Borrower: Capitol Real Estate Development LP Lender: Legacy Bank a Division of First National Bank of
110 Third Street, Suite 200 Pennsylvania
New Cumberland, PA 17070
Commercial Lending
One FNB BLVD
Hermitage,PA 16148
THIS BUSINESS LOAN AGREEMENT dated February 28, 2007,is made and executed between Capitol Real Estate Development LP("Borrower")
and Legacy Bank a Division of First National Bank of Pennsylvania I"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 February 28, 2007, and shall continue in full force and effect until such time as all of Borrower's
Loans in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys' fees, and other fees and charges, or
until such time as the parties may agree in writing to terminate this Agreement.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial Advance and each subsequent Advance under this
Agreement shall be subject to the fulfillment to Lender's satisfaction of all of the conditions set forth in this Agreement and in the Related
Documents.
Loan Documents. Borrower shall provide 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 property certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and the Related Documents. In-addition, Borrower shall have provided
such other resolutions,authorizations, documents and instruments as Lender or its counsel, may require.
Payment of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and other expenses which are then due and payable
as specified in this Agreement or any Related Document.
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 limited partnership 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 limited partnership 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 110 Third Street, Suite 200, New Cumberland, PA 17070. 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 principal office address 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 fiusiness 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 or agreements of partnership,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 respective
terms.
BUSINESS LOAN AGREEMENT
(Continued) Page 2
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(S) 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
warranties contained herein are based on Borrower's due diligence in investigating the Collateral for hazardous waste and Hazardous
Substances. Borrower hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event
Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify, defend, and hold harmless Lender
against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer
resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal,
release or threatened release of a hazardous waste or substance on the Collateral. The provisions of this section of the Agreement,
including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and the termination, expiration or
satisfaction of this Agreement and shall not be affected by Lender's acquisition of any interest in any of the Collateral, whether by
foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes)
against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower's financial
condition or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in
writing.
Taxes. To the best of Borrower's knowledge, all of Borrower's tax returns and reports that are or were required to be filed, have been
filed, and all taxes, assessments and other governmental charges have been paid in full,except those presently being or to be contested by
Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided.
Lien Priority. Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or granted any .Security
Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly
securing repayment of Borrower's Loan and Note,that would be prior or that may in any way be superior to Lender's Security Interests and
rights in and to such Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers
thereof, as well as upon.their successors, representatives and assigns, and are legally enforceable in-accordance with their respective
terms.
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, prepared by Borrower.
Tax Returns. As soon as available,but in no event later than thirty(30) days after the applicable filing date for the tax reporting period
ended,Federal and other governmental tax returns,prepared by Borrower.
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.
Financial Covenants and Ratios. Comply with the following covenants and ratios:
Minimum Income and Cash flow Requirements. Borrower shall comply with the following cash flow ratio requirements:
Debt Service Coverage of a Minimum Ratio. Maintain a ratio of Debt Service Coverage of a Minimum in excess of 1.200 to 1.00
This coverage ratio will be evaluated as of year-end.
Except as provided above, all computations made to determine compliance with the requirements contained In this paragraph shall be
made in accordance with generally accepted accounting principles, applied on a consistent basis, and certified by Borrower as being
true and correct.
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 ten(10) days prior written notice to Lender. Each insurance
policy also shall include an endorsement providing that coverage in favor of Lender will not be Impaired in any way by any act, omission or
default of Borrower or any other person. In connection with all policies covering assets In which Lender holds or is offered a security
interest for the Loans, Borrower will provide Lender with such lender's loss payable or other endorsements as Lender may require,
BUSINESS LOAN AGREEMENT
(Continued) Page 3
Insurance Reports. Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as
Lender may reasonably request, including without limitation the following: (1) the name of the insurer; (2) the risks insured; (3) the
amount of the policy; (4) the properties insured; (5) the then current property values on the basis of which insurance has been obtained,
and the manner of determining those values; and (6) the expiration date of the policy. In addition, upon request of Lender (however not
more often than annually), Borrower will have an independent appraiser satisfactory to Lender determine, as applicable, the actual cash
value or replacement cost of any Collateral. The cost of such appraisal shall be paid by Borrower.
Guaranties. Prior to disbursement of any Loan proceeds, furnish executed guaranties of the Loans in favor of Lender, executed by the
guarantor named below,on Lender's forms, and In the amount and under the conditions set forth In those guaranties.
Name of Guarantor Amount
Eric J. Desrosiers 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 Borrower's business operations,unless specifically consented to the contrary by Lender in
writing.
Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments,
taxes, governmental charges, levies and 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 tender,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.
Compliance Certificates. Unless waived in writing by Lender, provide Lender at least annually, with a certificate executed by Borrower's
chief financial officer, or other officer or person acceptable to Lender, certifying that the representations and warranties set forth in this
Agreement are true and Correct as of the date of the certificate and further certifying that, as of the date of the certificate, no Event of
Default exists under this Agreement.
Environmental Compliance.and Reports. Borrower shall comply in all respects with any and all Environmental Laws; not cause or permit to
exist, as a result of an intentional or unintentional action or omission 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
BUSINESS LOAN AGREEMENT
(Continued) Page 4
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
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,
12) 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) make any distribution with respect to any capital account,whether by reduction of
capital or otherwise.
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;or (E) Lender in good faith deems itself insecure, even though no
Event of Default shall have occurred.
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.
Default In Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or
sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's or any
Grantor's property or Borrower's or any Grantor's ability to repay the Loans or perform their respective obligations under this Agreement or
any of the Related Documents.
False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this
Agreement or the Related+Documents is false or misleading in any material respect,either now or at the time made or furnished or becomes
false or misleading at any time thereafter.
Death or insolvency. The dissolution or termination of Borrower's existence as a going business or the death of any partner,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.
Events Affecting General Partner of Borrower. Any of the preceding events occurs with respect to any general partner of Borrower or any
general partner dies or becomes incompetent.
Change in Ownership. The resignation or expulsion of any general partner with an ownership interest of twenty-five percent(25%) or more
In Borrower.
Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or
performance of the Loan is impaired.
Insecurity. Lender in good faith believes itself insecure.
t BUSINESS L i
OAN AGREEMENT
(Continued) Page 5
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 casemay 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.
ADDITIONAL MONTHLY FINANCIAL INFORMATION. The Borrower will provide Bank with monthly aging of Accounts Receivable, Accounts
Payable, monthly Balance Sheet, Profit and Loss Statements and Borrowing Base Certificates in form and substance acceptable to Bank,
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 matt9rs 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.
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 Mercer 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.
i BUSINESS LOAN AGREEMENT '
(Continued) Page 6
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 making the Loan, 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 making of the Loan and delivery to Lender of the Related
Documents, shall be continuing in nature, and shall remain in full force and effect until such time as Borrower's Indebtedness shall be paid
in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur.
Time is of the Essence. Time is of the essence in the performance of this Agreement.
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:
Advance. The word "Advance" means a disbursement of Loan funds made, or to be made,to Borrower or on Borrower's behalf on a line
of credit or multiple advance basis under the terms and conditions of this Agreement.
Agreement. The word "Agreement" means this Business Loan Agreement, as this Business Loan Agreement may be amended or modified
from time to time,together with all exhibits and schedules attached to this Business Loan Agreement from time to time,
Borrower. The word "Borrower" means Capitol Real Estate Development LP and includes all co-signers and co-makers signing the Note and
all their successors and assigns.
Collateral. The word "Collateral" means all property and assets granted as collateral security for a Loan, whether real or personal property,
whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest,
mortgage, collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust,
factor's lien,equipment trust,conditional sale,trust receipt,lien, charge, lien or title retention contract, lease or consignment intended as a
security device,or any other security or lien interest whatsoever,whether created by law, contract, or otherwise.
Environmental Laws. The words "Environmental Laws" mean any and all state, federal and local statutes, regulations and ordinances
relating to the protection of human health or the environment, Including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"),the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, at seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et 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.
GAAP. The word"GAAP" means generally accepted accounting principles.
Grantor. The word "Grantor" means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan,
Including without limitation all Borrowers granting such a Security Interest.
Guarantor. The word "Guarantor" means any guarantor,surety,or accommodation party of any or all of the Loan.
Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the
Note.
Hazardous Substances. The words "Hazardous Substances" mean materials that, because of their quantity, concentration or physical,
chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when
improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words "Hazardous
Substances" are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or
waste as defined by or listed under the Environmental Laws. The term "Hazardous Substances" also includes,without limitation, petroleum
and petroleum by-products or any fraction thereof and asbestos.
Indebtedness. The word'"Indebtedness" means and includes any and all of Grantor's liabilities, obligations, debts, and indebtedness to
Lender, now existing or hereinafter incurred or created, including, without limitation, all loans, advances, future advances, interest, costs,
debts, overdraft indebtedness, credit card indebtedness, lease obligations, other obligations, and liabilities of Grantor, or any of them, and
any present or future judgments against Grantor,or any of them; and whether any such indebtedness is voluntarily or involuntarily incurred,
due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined; whether Grantor may be liable individually or
jointly with others, or primarily or secondarily, or as guarantor or surety; whether recovery on the indebtedness may be or may become
barred or unenforceable against Grantor for any reason whatsoever; and whether the indebtedness arises from transactions which may be
voidable on account of infancy, insanity, ultra vires or otherwise..
Lender. The word "Lender" means Legacy Bank a Division of First National Bank of Pennsylvania, 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 Capitol Real Estate Development LP in the principal amount of 8246,000.00 dated
February 28, 2007, 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
BUSINESS LOAN AGREEMENT
(Continued) page 7
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.
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 AND BORROWER AGREES TO
ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED FEBRUARY 28, 2007.
THIS AGREEMENT IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT IS AND SHALL CONSTITUTE AND HAVE THE
EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.
BORROWER:
CAPITOL REAL ESTATE DEVELOPMENT LP
CAPITOL FITNESSPINO:a, General"Ijartner of Capitol-Real Estate Development LP
By: /`4" Jj � (Seal)
Eric J eD srosiersf°Pre6Ident of Capit6l Fitness,Inc.
LENDER:
LEGACY BAN ISION OF FIRST NATIONAL BANK OF PENNSYLVANIA
By: �� (Seal)
Aut orized Signer
WER PRO Lmdk g.V".6.3/.00.00.7 Cap,.1401 nd fln,neW 9-Wtia-In P.1997.2007. A9 Rbhl,R66d.6d. -PA I:1Ci1%WIN951CFAtPL%C40,PC TR•95747 PRd{
S
EXHIBIT "G"
To Complaint in Breach of Contract
`0220"
COMMERCIAL GUARANTY
.::.:.....
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan or item.
Any item above containing •" has been omitted due to text length limitations.
Borrower: Capitol Real Estate Development LP Lander: Legacy Bank a Division of First National Bank of
110 Third Street,Suite 200 Pennsylvania
New Cumberland,PA 17070 Commercial Lending
One FNB BLVD
Hermitage,PA 16148
Guarantor: Eric J. Desrosiers
808 Michigan Avenue
Lemoyne, PA 17043
CONTINUING GUARANTEE OF PAYMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely and unconditionally
guarantees full and punctual payment and satisfaction of the Indebtedness of Borrower to Lender, and the performance and discharge of all
Borrower's obligations under the Note and the Related Documents. This is a guaranty of payment and performance and not of collection, so
Lender can enforce this Guaranty against Guarantor even when Lender has not exhausted Lender's remedies against anyone else obligated to
pay the Indebtedness or against any collateral securing the Indebtedness, this Guaranty or any other guaranty of the Indebtedness. Guarantor
will make any payments to Lender or its order, on demand,in legal tender of the United States of America,in same-day funds, without set-off or
deduction or counterclaim, and will otherwise perform Borrower's obligations under the Note and Related Documents. Under this Guaranty,
Guarantor's liability is unlimited and Guarantor's obligations are continuing.
INDEBTEDNESS. The word "Indebtedness" as used in this Guaranty means all of the principal amount outstanding from time to time and at any
one or more times, accrued unpaid interest thereon and all collection costs and legal expenses related thereto permitted by law, attorneys' fees,
arising from any and all debts, liabilities and obligations of every nature or form, now existing or hereafter arising or acquired, that Borrower
individually or collectively or interchangeably with others, owes or will owe Lender. "Indebtedness" includes,without limitation, loans, advances,
debts, overdraft indebtedness, credit card indebtedness, lease obligations, liabilities and obligations under any interest rate protection
agreements or foreign currency exchange agreements or commodity price protection agreements, other obligations, and liabilities of Borrower,
and any present or future judgments against Borrower, future advances, loans or transactions that renew,extend,modify, refinance, consolidate
or substitute these debts, liabilities and obligations whether; voluntarily or involuntarily incurred; due or to become due by their terms or
acceleration; absolute or contingent; liquidated or unliquidated;determined or undetermined;direct or indirect; primary or secondary in nature or
arising from a guaranty or surety; secured or unsecured; joint or several or joint and several; evidenced by a negotiable or non-negotiable
instrument or writing; originated by Lender or another or others; barred or unenforceable against Borrower for any reason whatsoever; for any
transactions that may be voidable for any reason (such as infancy, Insanity, ultra vires or otherwise); and originated then reduced or
extinguished and then afterwards increased or reinstated.
If Lender presently holds one or more guaranties, or hereafter receives additional guaranties from Guarantor, Lender's rights under all guaranties
shall be cumulative. This Guaranty shall not (unless specifically provided below to the contrary) affect or invalidate any such other guaranties.
Guarantor's liability will be Guarantor's aggregate liability under the terms of this Guaranty and any such other unterminated guaranties.
CONTINUING GUARANTY. THIS IS A "CONTINUING GUARANTY" UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL AND
PUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF BORROWER TO LENDER, NOW EXISTING OR
HEREAFTER ARISING OR ACQUIRED, ON AN OPEN AND CONTINUING BASIS, ACCORDINGLY, ANY PAYMENTS MADE ON THE
INDEBTEDNESS WILL NOT DISCHARGE OR DIMINISH GUARANTOR'S OBLIGATIONS AND LIABILITY UNDER THIS GUARANTY FOR ANY
REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAY BE A ZERO
BALANCE FROM TIME TO TIME.
DURATION OF GUARANTY. This Guaranty will take effect when received by Lender without the necessity of any acceptance by Lender, or any
notice to Guarantor or to Borrower, and will continue in full force until all the Indebtedness incurred or contracted before receipt by Lender of
any notice of revocation shall have been fully and finally paid and satisfied and all of Guarantor's other obligations under this Guaranty shall have
been performed in full. If Guarantor elects to revoke this Guaranty, Guarantor may only do so in writing. Guarantor's written notice of
revocation must be mailed to Lender, by certified mail, at Lender's address listed above or such other place as Lender may designate in writing.
Written revocation of this Guaranty will apply only to new Indebtedness created after actual receipt by Lender of Guarantor's written revocation.
For this purpose and without limitation, the term "new Indebtedness" does not include the Indebtedness which at the time of notice of
revocation is contingent, unliquidated, undetermined or not due and which later becomes absolute, liquidated, determined or due. For this
purpose and without limitation, "new Indebtedness" does not include all or part of the Indebtedness that is: Incurred by Borrower prior to
revocation; incurred under a commitment that became binding before revocation; any renewals, extensions, substitutions, and modifications of
the Indebtedness. This Guaranty shall bind Guarantor's estate as to the Indebtedness created both before and after Guarantor's death or
incapacity, regardless of Lender's actual notice of Guarantor's death. Subject to the foregoing, Guarantor's executor or administrator or other
legal representative may terminate this Guaranty in the same manner in which Guarantor might have terminated it and with the same effect.
Release of any other guarantor or termination of any other guaranty of the Indebtedness shall not affect the liability of Guarantor under this
Guaranty. A revocation Lender receives from any one or more Guarantors shall not affect the liability of any remaining Guarantors under this
Guaranty. It is anticipated that fluctuations may occur in the aggregate amount of the Indebtedness covered by this Guaranty, and Guarantor
specifically acknowledges and agrees that reductions In the amount of the Indebtedness, even to zero dollars ($0.00), shall not constitute a
termination of this Guaranty. This Guaranty is binding upon Guarantor and Guarantor's heirs, successors and assigns so long as any of the
Indebtedness remains unpaid and even though the Indebtedness may from time to time be zero dollars ($0.00).
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before or after any revocation hereof, without notice or
demand and without lessening Guarantor's liability under this Guaranty, from time to time: (A) prior to revocation as set forth above,to make
one or more additional secured or unsecured loans to Borrower, to lease equipment or other goods to Borrower, or otherwise to extend
additional credit to Borrower; (B) to alter, compromise,renew,extend,accelerate,or otherwise change one or more times the time for payment
or other terms of the Indebtedness or any part of the Indebtedness, Including increases and decreases of the rate of interest on the
Indebtedness; extensions may be repeated and may be for longer than the original loan term; (C) to take and hold security for the payment of
F
COMMERCIAL GUARANTY
(Continued) Page 2
this Guaranty or the Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any such security, with
or without the substitution of new collateral; (D) to release, substitute, agree not to sue, or deal with any one or more of Borrower's sureties,
endorsers, or other guarantors on any terms or in any manner Lender may choose; (E) to determine how, when and what application of
payments and credits shall be made on the Indebtedness; (F) to apply such security and direct the order or manner of sale thereof, including
without limitation, any nonjudicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion
may determine; (G) to sell, transfer, assign or grant participations in all or any part of the Indebtedness; and (H) to assign or transfer this
Guaranty in whole or in part.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lender that (A) no representations or
agreements of any kind have been made to Guarantor which would limit or qualify in any way the terms of this Guaranty; (B) this Guaranty is
executed at Borrower's request and not at the request of Lender; (C) Guarantor has full power, right and authority to enter into this Guaranty;
(D) the provisions of this Guaranty do not conflict with or result in a default under any agreement or other instrument binding upon Guarantor
and do not result in a violation of any law, regulation,court decree or order applicable to Guarantor; (E) Guarantor has not and will not,without
the prior written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer, or otherwise dispose of all or substantially all of
Guarantor's assets,or any interest therein; (F) upon Lender's request, Guarantor will provide to Lender financial and credit information in form
acceptable to Lender, and all such financial information which currently has been, and all future financial information which will be provided to
Lender is and will be true and correct in all material respects and fairly present Guarantor's financial condition as of the dates the financial
information is provided; (G) no material adverse change has occurred in Guarantor's financial condition since the date of the most recent
financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantor's financial condition; (H)
no litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending or
threatened; (1) Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and (J) Guarantor has established
adequate means of obtaining from Borrower on a continuing basis information regarding Borrower's financial condition. Guarantor agrees to
keep adequately informed from such means of any facts, events, or circumstances which might in any way affect Guarantor's risks under this
Guaranty, and Guarantor further agrees that Lender shall have no obligation to disclose to Guarantor any information or documents acquired by
Lender in the course of its relationship with Borrower.
GUARANTOR'S FINANCIAL STATEMENTS. Guarantor agrees to furnish Lender with the following:
Annual Statements. As soon as available, but in no event later than one-hundred-twenty (120) days after the end of each fiscal year,
Guarantor's balance sheet and income statement for the year ended, prepared by Guarantor.
Tax Returns. As soon as available, but in no event later than thirty (30) days after the applicable filing date for the tax reporting period
ended, Federal and other governmental tax returns, prepared by Guarantor.
All financial reports required to be provided under this Guaranty shall be prepared in accordance with GAAP, applied on a consistent basis, and
certified by Guarantor as being true and correct.
GUARANTOR'S.WAIVERS. Except as prohibited by applicable law, Guarantor waives any right to require Lender (A) to continue lending
money or to extend other credit to Borrower; (B) to make any presentment, protest, demand, or notice of any kind, including notice of any
nonpayment of the Indebtedness or of any nonpayment related to any collateral, or notice of any action or nonaction on the part of Borrower,
Lender, any surety, endorser, or other guarantor in connection with the Indebtedness or in connection with the creation of new or additional
loans or obligations; (C) to resort for payment or to proceed directly or at once against any person, including Borrower or any other guarantor;
(D) to proceed directly against or exhaust any collateral held by Lender from Borrower, any other guarantor, or any other person; (E) to give
notice of the terms,time, and place of any public or private sale of personal property security held by Lender from Borrower or to comply with
any other applicable provisions of the Uniform Commercial Code; (F) to pursue any other remedy within Lender's power;or (G) to commit any
act or omission of any kind,or at any time,with respect to any matter whatsoever.
Guarantor also waives any and all rights or defenses based on suretyship or impairment of collateral including, but not limited to, any rights or
defenses arising by reason of (A) any "one action" or "anti-deficiency" law or any other law which may prevent Lender from bringing any
action, including a claim for deficiency, against Guarantor, before or after Lender's commencement or completion of any foreclosure action,
either judicially or by exercise:of a power of sale; (B) any election of remedies by Lender which destroys or otherwise adversely affects
Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower for reimbursement, including without limitation, any loss of
rights Guarantor may suffer by reason of any law limiting, qualifying, or discharging the Indebtedness; (C) any disability or other defense of
Borrower,of any other guarantor,or of any other person,or by reason of the cessation of Borrower's liability from any cause whatsoever, other
than payment in full in legal tender, of the Indebtedness; (D) any right to claim discharge of the Indebtedness on the basis of unjustified
impairment of any collateral for the Indebtedness; (E) any statute of limitations, if at any time any action or suit brought by Lender against
Guarantor is commenced, there is outstanding Indebtedness which Is not barred by any applicable statute of limitations; or (F) any defenses
given to guarantors at law or in equity other than actual payment and performance of the Indebtedness. If payment is made by Borrower,
whether voluntarily or otherwise, or by any third party, on the Indebtedness and thereafter Lender is forced to remit the amount of that payment
to Borrower's trustee in bankruptcy or to any similar person under any federal or state bankruptcy law or law for the relief of debtors, the
Indebtedness shall be considered unpaid for the purpose of the enforcement of this Guaranty.
Guarantor further waives and agrees not to assert or claim at any time any deductions to the amount guaranteed under this Guaranty for any
claim of setoff, counterclaim, counter demand, recoupment or similar right, whether such claim, demand or right may be asserted by the
Borrower,the Guarantor,or both.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees that each of the waivers set forth above is
made with Guarantor's full knowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and
not contrary to public policy or law. If any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be
effective only to the extent permitted by law or public policy.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the Indebtedness, whether now existing or hereafter
created, shall be superior to any claim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes
Insolvent. Guarantor hereby expressly subordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any
claim that Lender may now or hereafter have against Borrower. In the event of insolvency and consequent liquidation of the assets of Borrower,
through bankruptcy, by an assignment for the benefit of creditors, by voluntary liquidation, or otherwise, the assets of Borrower applicable to
the payment of the claims of both Lender and Guarantor shall be paid to Lender and shall be first applied by Lender to the Indebtedness.
Guarantor does hereby assign to Lender all claims which It may have or acquire against Borrower or against any assignee or trustee in
bankruptcy of Borrower; provided however, that such assignment shall be effective only for the purpose of assuring to Lender full payment in
legal tender of the Indebtedness. If Lender so requests, any notes or credit agreements now or hereafter evidencing any debts or obligations of
Borrower to Guarantor shall be°_marked with a legend that the same are subject to this Guaranty and shall be delivered to Lender. Guarantor
agrees, and Lender is hereby authorized, in the name of Guarantor, from time to time to file financing statements and continuation statements
and to execute documents and to take such other actions as Lender deems necessary or appropriate to perfect, preserve and enforce its rights
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COMMERCIAL GUARANTY
(Continued) Page 3
under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Guaranty:
Amendments. This Guaranty, together with any Related Documents, constitutes the entire understanding and agreement of the parties as
to the matters set forth in this Guaranty. No alteration of or amendment to this Guaranty shall be effective unless given in writing and
signed by the party or parties sought to be charged or bound by the alteration or amendment.
Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of Lender's costs and expenses, including Lender's attorneys' fees
and Lender's legal expenses, incurred in connection with the enforcement of this Guaranty. Lender may hire or pay someone also to help
enforce this Guaranty, and Guarantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender's
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. Guarantor also shall pay all court costs and such additional fees as may be directed by the court.
Caption Headings. Caption headings in this Guaranty are for convenience purposes only and are not to be used to interpret or define the
provisions of this Guaranty.
Governing Law. This Guaranty 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.
Choice of Venue. If there is a lawsuit, Guarantor agrees upon Lender's request to submit to the jurisdiction of the courts of Mercer County,
Commonwealth of Pennsylvania.
Integration. Guarantor further agrees that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had the
opportunity to be advised by Guarantor's attorney with respect to this Guaranty;the Guaranty fully reflects Guarantor's intentions and parol
evidence is not required to interpret the terms of this Guaranty. Guarantor hereby indemnifies and holds Lender harmless from all losses,
claims, damages, and costs (including Lender's attorneys'fees)suffered or incurred by Lender as a result of any breach by Guarantor of the
warranties, representations and agreements of this paragraph.
Interpretation. In all cases where there is more than one Borrower or Guarantor,then all words used in this Guaranty in the singular shall
be deemed to have been used in the plural where the context and construction so require; and where there is more than one Borrower
named in this Guaranty or when this Guaranty is executed by more than one Guarantor, the words "Borrower" and "Guarantor"
respectively shall mean all and any one or more of them. The words "Guarantor," "Borrower," and "Lender" include the heirs, successors,
assigns, and transferees of each of them. If a court finds that any provision of this Guaranty is not valid or should not be enforced, that
fact by itself will not mean that the rest of this Guaranty will not be valid or enforced. Therefore, a court will enforce the rest of the
provisions of this Guaranty even if a provision of this Guaranty may be found to be invalid or unenforceable. If any one or more of
Borrower or Guarantor are corporations, partnerships, limited liability companies,or similar entities, it is not necessary for Lender to inquire
into the powers of Borrower or Guarantor or of the officers, directors, partners, managers, or other agents acting or purporting to act on
their behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed under this
Guaranty.
Notices. Unless otherwise provided by applicable law, any notice required to be given under this Guaranty shall be given in writing, and,
except for revocation notices by Guarantor, shall be effective when actually delivered, when actually received by 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 Guaranty.
All revocation notices by Guarantor shall be in writing and shall be effective upon delivery to Lender as provided in the section of this
Guaranty entitled "DURATION OF GUARANTY." Any party may change its address for notices under this Guaranty by giving formal written
notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Guarantor
agrees to keep Lender informed at all times of Guarantor's current address. Unless otherwise provided by applicable law, if there is more
than one Guarantor,any notice given by Lender to any Guarantor is deemed to be notice given to all Guarantors.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Guaranty unless such waiver is given in writing and
signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other
right. A waiver by Lender of a provision of this Guaranty shall not prejudice or constitute a waiver of Lender's right otherwise to demand
strict compliance with that provision or any other provision of this Guaranty. No prior waiver by Lender, nor any course of dealing between
Lender and Guarantor, shall constitute a waiver of any of Lender's rights or of any of Guarantor's obligations as to any future transactions.
Whenever the consent of Lender is required under this Guaranty,the granting of such consent by Lender in any instance shall not constitute
continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld In
the sole discretion of Lender.
Successors and Assigns. The terms of this Guaranty shall be binding upon Guarantor, and upon Guarantor's heirs, personal
representatives, successors, and assigns, and shall be enforceable by Lender and its successors and assigns.
DISC COJ GTY. An exhibit,titled"DISCLOSURE OF CONFESSION OF JUDGEMENT," is attached to this Guaranty and by this reference is made
a part of this Guaranty just as if all the provisions, terms and conditions of the Exhibit had been fully set forth In this Guaranty.
DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Guaranty. Unless specifically
stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms
used in the singular shall include the plural,-and the plural shall include the singular, as the context may require. Words and terms not otherwise
defined in this Guaranty shall have the meanings attributed to such terms in the Uniform Commercial Code:
Borrower. The word "Borrower" means Capitol Real Estate Development LP and includes all co-signors and co-makers signing the Note and
all their successors and assigns.
GAAP. The word "GAAP" means generally accepted accounting principles.
Guarantor. The word "Guarantor" means everyone signing this Guaranty, including without limitation Eric J. Desrosiers, and in each case,
any signer's successors and assigns,
Guaranty. The word "Guaranty" means this guaranty from Guarantor to Lender.
Indebtedness. The word "Indebtedness"means Borrower's indebtedness to Lender as more particularly described in this Guaranty.
Lender. The word "Lender" means Legacy Bank a Division of First National Bank of Pennsylvania, its successors and assigns.
Note. The word "Note" means and Includes without limitation all of Borrower's promissory notes and/or credit agreements evidencing
Borrower's loan obligations in favor of Lender, together with all renewals of,extensions of, modifications of, refinancings of,consolidations
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COMMERCIAL GUARANTY
(Continued) Page 4
of and substitutions for promissory notes or credit agreements.
Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental
agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments,
agreements and documents, whether now or hereafter existing,executed in connection with the Indebtedness.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITS
TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND
DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE MANNER SET FORTH
IN THE SECTION TITLED "DURATION OF GUARANTY". NO FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY
EFFECTIVE. THIS GUARANTY IS DATED FEBRUARY 28,2007.
THIS GUARANTY IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS GUARANTY IS AND SHALL CONSTITUTE AND HAVE THE EFFECT
OF A SEALED INSTRUMENT ACCORDING TO LAW.
GUARANTOR: _.._-
X SFr' ` �� (Seal)
Eric J. Desrosier
LASER PRO LendFO,V-6.71.00.007 Cop.H.,Wd Fb—W OoNU—1—1997,3007. AN Rich%P—W. •PA t1C1RWIH991CHILMF2OFC IR-95747 PR-44
rf
VERIFICATION.
I J.IvI
artin.Dell,Special Assets Officer rand duly authorized representative of 1+rstNational
Bank of Pennsylvania deposes and says subject to the,penalties of 18 Pa. C.S.A. §4904 relat ng.to
unsworn falsiFcation to authorities that the facts set;forth in the foregoing Complaint are true and
correct to his information and belief:
J artin Dell
Special Assets Officer
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