HomeMy WebLinkAbout06-4639
SHETRON WELDING &
FABRICATION, INC.,
THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY,
Plaintiff
v.
CIVIL ACTION LAW
No. 0(,.41.3"l' ~ I~
TERRY SHETRON,
Defendant
ORI~\NAL
NOTICE
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 attomey and filing in
writing with the Court your defenses or objections to the claims set forth against you. You are
wamed 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 HA VB A LAWYER OR YOU CANNOT AFFORD ONE, GO TO OR TELEPHONE THE
OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL HELP.
LAWYER REFERRAL SERVICE
Cumberland County Bar Association
2 Liberty Avenue
Carlisle, P A 17013
(717) 249-3199
617092.2
A VI80
USTED HA SIDE DEMANDADO/A EN CORTE. Si usted desea defenderse de las demandas
que se presentan mas adelante en las siguientes paginas, debe tomar accion dentro de los
proximos veinte (20) dias despues de la notificacion de esta Demanda y Aviso radicando
personalmente 0 por medio de un abogado una comparecencia escrita y radicando en la Corte por
escrito sus defensas de, y objecciones a, las demandas presentadas aqui en contra suya. Se Ie
advierte de que si usted falla de tomar accion como se describe anterionnente, el caso puede
proceder sin usted y un fallo por cualquier suma de dinero reclamada en la demanda 0 cualquier
otra reclamacion 0 remedio solicitado por el demandante puede ser dictado en contra suya por la
Corte sin mas aviso adicional. Usted puede perder dinero 0 propiedad u otros derechos
importantes para usted.
USTED DEBE LLEV AR ESTE DOCUMENTO A SU ABOGADO INMEDIATAMENTE. 81
USTED NO TlENE UN ABOGADO 0 NO PUEDE PAGARLE A UNO, LLAME 0 VA Y A A
LA SIGUlENTE OFICINA PARA A VERIGUAR DONDE PUEDE ENCONTRAR
AS1STENCIA LEGAL.
LAWYER REFERRAL SERVICE
Cumberland County Bar Association
2 Liberty Avenue
Carlisle, P A 17013
(717) 249-3199
605521.1
Dean F. Piermattei, Esquire
Attorney I.D. No. 53847
Stephanie E. DiVittore, Esquire
Attorney I.D. No. 85906
RHOADS & SINON LLP
One South Market Square, 12th Floor
P.O. Box 1146
Harrisburg, P A 17108-1146
(717) 233-5731
Attorneys for Sbetron Welding & Fabrication, Inc.
SHETRON WELDING &
FABRICATION, INC.,
THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY,
Plaintiff
v.
CNIL ACTION LAW
No. 0 C. -1/ (, 3'} C-ti.,.(Tj ,r...
TERRY SHETRON,
Defendant
COMPLAINT
NOW COMES Plaintiff Shetron Welding & Fabrication, Inc. ("Shetron Welding"), by
and through its attomeys, Rhoads & Sinon LLP, and files this Complaint, stating as follows:
1. Plaintiff Shetron Welding is a Pennsylvania Corporation with its principal address
at 85 Kutz Road, Carlisle, Cumberland County, Pennsylvania 17013 (the "Shetron premises").
2. At all relevant times, Defendant Terry Shetron ("Shetron" or "Defendant") was an
adult individual residing at 1505 Walnut Bottom Road, Newville, Cumberland County,
Pennsylvania 17241.
COUNT I
BREACH OF CONTRACT
3. Shetron Welding incorporates herein by reference Paragraphs 1 and 2 above.
4. Prior to January 12, 2004, Defendant was the sole shareholder and owner of
Shetron Welding & Fabrication, Inc.
5. On or about January 12, 2004, Kurt Naugle and Ray Cullen (collectively "the
Buyers") entered in to a Stock Purchase Agreement ("SPA") with Defendant pursuant to which
Defendant agreed to sell to the Buyers all of the issued and outstanding shares of Shetron
Welding capital stock.
6. Pursuant to Paragraph 7.8 of the SPA, the Buyers agreed that they would enter
into a lease with the Defendant whereby the Buyers would lease from him the property on which
the Shetron Welding facility was located.
7. On January 12, 2004, Shetron Welding entered into a commercial property lease
agreement ("the Lease") with the Defendant whereby Shetron Welding agreed to lease the
Shetron premises from Defendant for a term of 10 years beginning February 1,2005 and ending
February, 2015 for an initial monthly rental payment in the amount of $8,250.00. (A copy of the
Lease is attached hereto as Exhibit "A" and incorporated herein by reference).
8. Pursuant to the Lease, Shetron Welding has a right to make alternations,
improvements or additions to the Shetron premises, but must first obtain the Defendant's prior
written consent. (Lease, ~5(c)).
9. As part of the Shetron Welding operations, there exists a Paint Hunt on the
Shetron premises wherein the products produced by Shetron Welding are spray painted and
otherwise coated prior to delivery on job sites.
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10. Because of the expanding operations of Shetron Welding, the current Paint Hut is
of insufficient size to allow Shetron Welding to continue to meet its existing obligations and
expand its operations in the future.
11. As a result of the insufficiency of the existing Paint Hut, Shetron Welding sought
to construct a new Paint Hut utilizing a commercially acceptable builder. The new Paint Hut
would be constructed in accordance with all codes and regulations for said structure and would
be larger in size so as to accommodate the needs ofShetron Welding.
12. To that end, Shetron Welding's owners, through their counsel, requested consent
for construction of the expanded Paint Hut. Counsel for Shetron Welding communicated to
Defendant's counsel, detailing the nature of the new Paint Hut, and requested Defendant's to
construct the new structure. (A copy of the correspondence is attached hereto as Exhibit "B" and
incorporated herein by reference.)
13. In addition to the written request for consent, counsel for Shetron Welding has
had several conversations both with Attomey Douglas Yohe and his partner, Glenn Davis,
counsel representing Defendant, and his partner, Glenn Davis, in another dispute involving the
parties, relating to whether the Defendant would be willing to grant consent for construction of
the required Paint Hut. The only response with respect to these requests, however, came from
Mr. Y ohe, who indicated that his client would not even consider the matter until other legal
disputes between the parties were resolved.
14. To date, the Defendant has refused to provide consent or even consider the
request for construction of a new Paint Hut.
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15. The proposed new Paint Hut is superior in construction and nature to the existing
Paint Hut and would only add value to the Shetron premises currently being leased by Shetron
Welding.
16. There is no negative consequence that would flow from construction of the
proposed, new Paint Hut.
17. The proposed, new Paint Hut is required for the continued operations of Shetron
Welding, as the existing Paint Hut is insufficient in size as to meet Shetron Welding's
operational needs.
18. To date, Shetron Welding has made all of its monthly rental payments and has
been in full compliance with all conditions required of it under the Lease.
19. Under Pennsylvania law, every contract imposes upon each party a duty of good
faith and fair dealing in its performance and its enforcement. Al!Iecvcle. Inc. v. Citv of
Pittsburg, 783 A.2d 863,867 (pa. Commw. Ct. 2001) (citing Restatement (Second) of Contracts
~ 205 (1981)). The good faith obligation may be implied to allow enforcement of the contract
terms in a manner that is consistent with the parties' reasonable expectation. rd.
20. A landlord who contractually retains the discretion to withhold its consent to a
term of the contract must exercise that discretion in a manner consistent with good faith and fair
dealing. Sterling Nat'l Mortgage Co.. Inc. v. Mortgage Comer. Inc., 97 F.3d 39, 43 (3d Cir.
1996).
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21. Defendant had an implied duty to act in good faith and fair dealing in withholding
its consent to Shetron Welding's request to make alternations, improvements or additions to the
Shetron premises.
22. The fundamental rule in construing a contract is to ascertain and give effect to the
intention of the parties. Agrecvcle. Inc. v. Citv of Pittsburg, 783 A.2d 863, 868 (pa. Commw.
Ct. 2001).
23. In the absence of an express provision, the law will imply an agreement by the
parties to a contract to do and perform those things that according to reason and justice they
should do in order to carry out the purpose of the contract and to refrain from doing anything that
would destroy or injure the other party's right to receive the fruits of the contract. Id. (citing
Daniel B. Van CamDen Com. v. Building & Constr. Trades Council of Phila. & Vicinity. 195
A.2d 134, 136-37 (pa. Super. Ct. 1963)).
24. Based on Defendant's failure to consider the construction, failure to provide
consent and his unreasonable withholding of consent, the Defendant is in breach of his
obligations under the Lease and in breach of the Lease.
25. Defendant's failure to provide consent and his unreasonable withholding of
consent, the parties' intentions in entering into the lease agreement have been frustrated in that
Shetron Welding is not able to adequately continue with the operation of its business.
26. As a direct result of Defendant's breach of the Lease and his obligations
thereunder, Shetron Welding is incurring injury to its business by failing to be able to timely and
adequately provide products to its customers as required under its various contracts.
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Furthermore, Shetron Welding is being limited in its ability to conduct business by being forced
to operate from the existing, inadequately sized Paint Hut.
27. As a direct result of Defendant's breach of the Lease, the Buyers have incurred
monetary damages associated with the inability construct the proposed, new Paint Hut.
WHEREFORE, Plaintiff Shetron Welding & Fabrication, Inc. respectfully requests that
this Court enter judgment in its favor and against Defendant Terry Shetron in the amount in
excess of $35,000.00, together with interest and costs as allowed by law.
COUNT II
SPECIFIC PERFORMANCE
28. Shetron Welding incorporates herein by reference Paragraphs 1 through 27 above.
29. As set forth above, Defendant breached his obligations under the terms of the
Lease and Pennsylvania law, causing injury to Plaintiff.
30. The remedy of specific performance is generally only available where there is no
method by which damages can be accurately computed or ascertained, XPress Truck Lines. Inc.
v. Pa. Liauor Control Bd., 469 A.2d 1000 (pa. 1983), or if damages are not reasonably
ascertainable or are inadequate, Sullivan v. Bucks County. 499 A.2d 678 (pa. Commw. Ct.
1985).
31. Shetron Weldings' damages cannot accurately be computed, ascertained, or
computed because Defendant's failure to provide consent and his unreasonable withholding of
consent renders Shetron Weldon unable to adequately operate its business.
32. As a result of the Defendant's default under the Lease, Shetron Welding seeks
specific performance and is requesting that this Court order the Defendant to provide the consent
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necessary for Shetron Welding to construct the proposed, new Paint Hut necessary to
accommodate its operations and allow it to fulfill its contractual obligations to its customers.
33. As a result of the Defendant's default under the Lease, in addition to the monetary
damages incurred by Shetron Welding as set forth above, Shetron Welding has also incurred
damages which can be remedied only through specific performance.
WHEREFORE, PlaintiffShetron Welding and Fabrication, Inc. respectfully requests that
this Court enter judgment in its favor and against Defendant Terry Shetron and issue an Order
requiring Defendant to consent to the proposed, new Paint Hut to be constructed on the Shetron
Welding premises.
COUNT III
DECLARATORY JUDGMENT
34. Shetron Welding incorporates herein by reference Paragraphs I through 33 above.
35. An action for declaratory judgment is available to obtain declaration of existing
legal rights, duties, or status of parties if the declaration will aid in the determination of a
genuine, justiciable controversy. Wamer v. Continental/CAN Ins. Co., 688 A.2d 177 (1996).
36. An action for declaratory judgment is available to determine the validity and
enforceability of contractual provisions. The fact that one of the issues in the case may concern
the propriety of awarding money damages in no way affects the viability of the declaratory
judgment action. In re Pew Memorial Trust No.2, 5 Pa. D. & C.3d 698 (C.P. 1977).
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37. A declaratory judgment may be obtained as to the interpretation of a lease and as
to the rights of the parties under it. Countv Amusement Co. v. Johnstown Schiffs. Inc., 37 Pa.
D. & C.2d 290 (C.P. 1965).
38. Declaring the parties rights and obligations under the terms of the agreement will
help in terminating the controversy.
WHEREFORE, Plaintiff Shetron Welding and Fabrication, Inc. respectfully requests that
this Court enter judgment in its favor and against Defendant Terry Shetron and issue an Order
declaring that under the terms of the parties' agreement, Defendant is not entitled to
unreasonable withhold consent to the proposed, new Paint Hut to be constructed on the Shetron
Welding premises.
Respectfully submitted,
Attomeys for Plaintiff
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VERIFICATION
Ray Cullen deposes and says, subject to the penalties of 18 Pa C.S. ~904
relating to unswom falsification to authorities, that he is the Owner and President of
Shetron Welding & Fabrication, Inc., that he makes this verification by its authority and
that the facts set forth in the Complaint are true and correct to the best of his knowledge,
information and belief.
1 /?<t /c~
Date '
~~)
f;JJ~Jlt +
STOCK PURCHASE AGREEMENT
This is a STOCK PURCHASE AGREEMENT, dated this 12th day of January, 2004, (the
"Agreement") by and among Shetron Welding & Fabrication, Inc., Ray Cullen, and Kirk Naugle
("BUYERS"), and Terry Shetron ("SHAREHOLDER"), for the transfer of the stock owned by
SHAREHOLDER.
WITNESSETH:
WHEREAS, SHAREHOLDER is the owner of all of the issued and outstanding shares of
the capital stock of CORPORATION, which consists of one hundred (100) shares of common
stock (collectively, the "Stock"); and
WHEREAS, BUYERS desire to acquire and SHAREHOLDER desires to sell to
BUYERS all of the Stock upon the tenns and conditions set forth in this Agreement (the
"Purchase"); .
NOW, TIiEREFORE, in consideration of the promises and of the respective
representations and warranties set forth in this 'Agreement, and of the covenants and agreements
contained herein, and intending to be legally bound, BUYERS and SHAREHOLDER hereby
agree as follows:
1. SALE OF STOCK.
Subject to the tenns and conditions set forth in this Agreement:
1.1 SHAREHOLDER hereby agrees, at the Closing as defmed in paragraph 2 of this
Agreement, to sell and transfer the Stock to BUYERS and BUYERS agree, at such Closing, to
acquire such Stock.
1.2 SHAREHOLDER shall make such sale, transfer, assignment, and delivery of the
Stock by delivering the BUYERS all certificates evidencing the Stock, free and clear of all liens,
encumbrances, or claims of others whatsoever, duly endorsed in blank or accompanied by
appropriate instruments of transfer satisfactory to BUYERS.
1.3 BUYERS will deliver the consideration for the stock to the SHAREHOLDER in
the following manner:
1.3.1 At Closing, BUYERS will deliver to SHAREHOLDER Five
Hundred Thousand Dollars ($500,000.00). This amount is not subject to
reduction.
1.3.2 At Closing, BUYERS will execute and deliver to
SHAREHOLDER a "promissory note" payable to the SHAREHOLDER in the
principal amount of One Million, Four Hundred and Forty Five Thousand Dollars
495280.2
-,
,
($1,445,000.00) (collectively, the "Purchase Price"). The promissory note shall
be executed by BUYERS. Under the promissory note, BUYERS will make
monthly interests payments on the principal amount ($1,445,000.00) for a period
often (10) years with interest to be calculated at the PRIME interest rate, as of the
first business day of January of every year, plus 1.5%. Under the promissory
note, on January 2, 2014, BUYERS will make a balloon payment to
SHAREHOLDER in the amount of One Million, Four Hundred and Forty Five
Thousand Dollars ($1,445,000.00). Provided, however, that the purchase price
shall be subject to reduction in accordance with the provisions of paragraph 1.3.3
and paragraph 9.3 of this Agreement.
1.3.3 The Purchase Price shall be adjusted by reducing the principal
balance of the promissory note on a dollar for dollar basis:
(a) At Closing, if the Net Worth of the
CORPORA nON on the Closing date is less than the "Target Net
Worth". For purposes of this Agreement, the "Target Net Worth"
shall equal the Net Worth set forth on the December 31, 2002
Financial Statements attached hereto as Schedule 3.7; ll!ld
(b) Post Closing, for any accounts receivables
outstanding on the Closing date that are not collected within 150
days after the Closing date ("Uncollected Receivables''); provided,
, .
however, that: (A) the Uncollected Receivables are assigned to the
SHAREHOLDER as of 150 days after the Closing date; (B) the
CORPORATION will forward to the SHAREHOLDER any
payments received on such Uncollected Receivables after the
assignment set forth above and (C) the SHAREHOLDER shall
have a right to take appropriate action to collect such Uncollected
Receivables.
(c) At Closing, should the Net Worth be determined to
be more than the Target Net Worth, SHAREHOLDER retains all
amounts above and beyond the Target Net Worth.
2. CLOSING.
2.1 The Closing shall take place at the offices of Abom & Kutulakis, L.L.P., attomeys
for SHAREHOLDER, on or before February 28, 2004. Closing may also take place at such
other time, as the parties shall mutually agree.
2.2 At Closing BUYERS will deliver to SHAREHOLDERS Five Hundred Thousand
Dollars ($500,000.00) and a promissory note for the Purchase Price.
2.3 At Closing SHAREHOLDER will execute and deliver a certificate transferring all
one hundred (100) shares of common stock in CORPORA nON to BUYERS.
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2.4 At Closing, BUYERS will enter into a security agreement with SHAREHOLDER
where all existing and after acquired assets, equipment and inventory of CORPORA nON will
be placed as collateral to secure BUYERS' obligations under the promissory note. .
SHAREHOLDER will hold first priority position over all existing and after-acquired equipment
and inventory of CORPORATION. SHAREHOLDER will hold second priority position on all
accounts receivable to the lender holding first priority position on all accounts receivable as
security for a line of credit granted to CORPORATION by lender.
2.5 At Closing, BUYERS will enter into a pledge and escrow agreement with
SHAREHOLDER where the one hundred (100) shares of common stock will be placed in
escrow to secure the BUYERS' payment obligations stated in the promissory note.
2.6 At Closing, SHAREHOLDER shall tender a notice of resignation for all officers
and directors of the CORPORATION.
2.7 BUYERS and SHAREHOLDER agree that the promissory note, security
agreement, pledge and escrow agreement, financing statement, lease of commercial property,
and non-compete/confidentiality agreement are integral and inseparable elements of the
Agreement, even if executed on different dates.
3. REPRESENTATIONS AND WARRANTIES OF CORPORATION AND
SHAREHOLDER.
Corporation and Shareholder hereby jointly and severally make the following
representations and warranties. each of which is true and correct on the date hereof and will be
true and correct on the Closing Date and each of which shall survive the Closing Date and the
transactions contemplated hereby to the extent set forth in paragraph 9 hereof.
3.1 Coroorate Existence and Oualification. CORPORATION is a corporation duly
organized, validly existing, and in good standing under the laws of the Commonwealth of
Pennsylvania and is duly qualified to conduct its business in each jurisdiction listed on Schedule
3.1. CORPORATION has the corporate power and authority to own and use its properties and to'
transact the business in which it is engaged, and to enter into this Agreement and to consummate
the transaction contemplated hereby.
3.2 Caoitalization. The entire authorized capital stock of CORPORA nON consists
of one hundred (100) shares of Common Stock. There are presently issued one hundred (100)
shares of Common Stock, all of which are duly authorized, validly issued, fully paid, and non-
assessable and without restriction on the right of transfer thereof. SHAREHOLDER does not
have any right or obligation to purchase or redeem any shares of Common Stock or any other
security of CORPORATION of any kind.
3.3 Title to Stock. SHAREHOLDER is the sole record and beneficial owner all of
the issued shares of Common Stock and SHAREHOLDER has full right and title without any
lien or encumbrance whatsoever to such shares and full and unrestricted right, power, and
authority to exchange, assign, transfer, and deliver such shares, free and clear of claims, charges,
equities, restrictions, pledges, liens, or encumbrances of any kind. SHAREHOLDER acquired
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such shares legally and without knowledge or notice of any infirmity with respect to such shares.
There are no restrictions as to the transferability of such shares.
3.4 Subsidiaries. CORPORATION does not own, of record or beneficially, any
capital stock or other securities of any other corporation; does not own, directly or indirectly, any
interest in a business, in a business trust, joint stock company, or other business organization or
association; and is not a party to any partnership, joint venture, or other business venture.
CORPORATION, to the extent that it may have previously owned any stock in a corporation,
has legally divested itself of such ownership, has paid all obligations and liabilities relative to
such ownership, has filed all tax returns and paid all taxes required by such prior ownership and
divestment thereof, and certifies that it has no liability or obligations, contingent or otherwise,
relating to such ownership or sale or divestment thereof.
3.5 Al!I'eement Leszal and Authorized. The execution and delivery of this Agreement
does not, and the consummation by SHAREHOLDER of the transactions contemplated herein
and the fulfillment by SHAREHOLDER of the terms, conditions, and provisions hereof, will not:
3.5.1 conflict with, violate, or result in a breach of any law,
administrative regulation, or court decree applicable to CORPORATION or the
SHAREHOLDER;
3.5.2 result in the creation or imposition of any lien, charge, or
encumbrance of any nature upon any of the properties or assets of
CORPORATION or upon CORPORATION Stock except as provided in the
security and pledge and escrow agreements.
3.6 Valid and Bindin!! Obliszation. CORPORATION has the right, power. legal
capacity, and authority to enter into and perform its obligations under this Agreement. The
execution, delivery, and performance of this Agreement have been du1y authorized by all
necessary corporate action on the part of the CORPORATION. This Agreement constitutes a
valid, binding, and enforceable obligation of CORPORATION, BUYERS, and
SHAREHOLDER. .
3.7 Financial Statements. The fmancial statements of CORPORATION, appearing as
Schedu1e 3.7, are true, complete, correct, and presents fairly the financial position of
CORPORATION as of December 3 I, 2002 and 2003, and the resu1ts of operations of
CORPORATION for the respective periods indicated, and does not omit to state or reflect any
material fact concerning CORPORATION required to be stated or reflected therein or necessary
to make the statements therein not misleading.
3.8 Events Subsequent to Financial Statement. Since the date of the financial
statement appearing as Schedule 3.7, there has been no, and there has been no threatened or
anticipated:
(a) change in the financial condition, assets, liabilities, prospects, or
business of CORPORATION;
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,
(b) damage, destruction, or loss (whether or not covered by insurance)
materially adversely affecting the business, prospects, or any property of
CORPORATION or any material deterioration in the operating condition of
CORPORATION'S assets;
(c) declaration, setting aside, or payment of a dividend, return of
capital, or other distribution in respect of any of CORPORATION'S capital stock,
or any direct or indirect redemption, purchase, or other acquisition of any capital
stock or securities convertible into or exchangeable for such capita! stock;
(d) strike, lockout, labor trouble, or any event or condition of any
character materially adversely affecting the business, properties or prospects of
CORPORATION;
(e) mortgage or pledge of or creation of any other lien, claim, or
encumbrance with respect to any of CORPORATION'S assets, whether tangible
or intangible; ,
(f) cancellation or waiver of any right material to the operation of
CORPORA TION'S business or any cancellation or waiver of any debts or claims
of substantial value or any cancellation ,or waiver of any debts or claims against
any affiliate of CORPORATION;
(g) sale, transfer, or other disposition of any assets of
CORPORATION, except sales of assets in the ordinary course of business;
(h) payment, discharge, or satisfaction of any liability or obligation
(whether accrued, absolute, contingent, or otherwise) by CORPORATION, other
than the payment, discharge, or satisfaction, in the ordinary course of business, of
liabilities or obligations shown or reflected on the financial statement attached
hereto or incurred in the ordinary course of business since the date thereof;
,
(i) adverse change or any threat of any adverse change in
CORPORATION'S relations with, or any loss or threat ofloss of, any of
. CORPORATION'S important suppliers, clients, or customers;
(j) write-offs as uncollectible of any notes or accounts receivable of
CORPORATION or write-downs of the value of any assets or inventory by
CORPORATION other than in immaterial amounts or in the ordinary course of
business consistent with past practice and at a rate no greater than the rate during
the twelve (12) months preceding the date of this Agreement. This does not
include the write-off of the accounts receivable due to the Chapter II Bankruptcy
filed by Kamand Construction;
(1<) change by CORPORATION in the method of accounting or
keeping its books of record or accounting practices, or any write-up of the book
value of any of CORPORATION'S assets;
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(I) creation, incurrence, aSsumption, or guarantee by
CORPORATION of any obligations or liabilities (whether absolute, accrued,
contingent, or otherwise and whether due or to become due), except in the
ordinary course of business or any creation, incurrence, assumption, or guarantee
by CORPORATION of any indebtedness for money borrowed;
(m) disposition of or failure to keep in effect any rights in, to, or for the
use of any material patent, trademark, service mark, trade name, or copyright used
by CORPORATION, or any disclosure to any person not an employee or other
disposition of any trade secret, process, or know-how belonging to or used by
CORPORATION; or
(n) any transaction, agreement, or event outside the ordinary course of
CORPORATION'S business or inconsistent with past practice.
3.9 Undisclosed Liabilities. CORPORATION does not have any liabilities or
obligations whatsoever, whether due or to become due, accrued, absolute, contingent, or
otherwise, including liabilities for or in respect of taxes (including, without limitation, any
interest or penalties relating thereto), and SHAREHOLDER knows of no basis for any claim
against CORPORATION for any liability, except .
(a) to the extent set forth and used in determining the Net Worth of
CORPORATION in the financial statement,
(b) to the extent specifically set forth in Schedule 3.12. delivered
pursuant hereto, or
(c) liabilities or obligations incurred in the normal and ordinary course
of CORPORATION since compilation of the financial statement. Neither
CORPORATION nor SHAREHOLDER knows or has any reasonable ground to
know of any basis for the assertion against CORPORATION of any liability of
any nature not included on the financial statement attached hereto or incurred in
the ordinary course of business since the date thereof.
3.10 Environmental ReDresentation. Neither CORPORA nON nor the
SHAREHOLDER have received any notice of any potential violation or liability under any type
of environmental law, rule or regulation, including with respect to the use, discharge, or disposal
of any hazardous or toxic substance or material and, to the knowledge of the SHAREHOLDER,
there is no basis upon which any such violation or liability could be asserted. BUYERS AND
SHAREHOLDER agree to have a Phase I Environmental study completed at BUYERS'
expense.
3.1 I All Creditors to be Paid. CORPORA nON will supply to BUYERS a list of all
CORPORA nON'S creditors as of the date hereof and the amounts owed thereto.
CORPORA nON and SHAREHOLDER warrant that all liabilities or obligations of
CORPORATION whatsoever, either accrued prior to Closing, contingent or otherwise, except
for those set forth on the schedule attached hereto as Schedule 3.1 I (and in amounts no greater
than as set forth on such schedule), will be paid and satisfied in fuIl on or before Closing.
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3.12 Taxes.
3.12.1 CORPORATION has filed, or caused to be filed, with the
appropriate foreign, federal, state, local, and other agencies, all tax returns and tax
reports required by law to be filed by it and such returns and reports are true,
complete, and correct.
3.12.2 No audit or any federal, state, or local income tax returns or other
tax returns by CORPORATION is in progress, or threatened. Neither
CORPORATION nor SHAREHOLDER has any information concerning or
reasonable grounds to anticipate any such audit within the foreseeable future.
3.12.3 There exists no past due unpaid federal, state, or local income or
other tax or any tax deficiency by a governmental agency or authority having
jurisdiction assessed against CORPORATION.
3.12.4 All income, profits, franchise, sales and use, occupation, property,
excise, ad valorem, and other taxes due have been fully paid, or adequate reserves
have been set up for the same and reflected on the financial statement, except
reserves for such as may have accrued or been incurred in the ordinary course of
business since the compilation of the financial statement.
3.12.5 There exist no grounds for the assertion or assessment of any
additional taxes against CORPORATION or its assets.
3.12.6 Copies of all federal income tax returns, tax examination r:eports
and statements of deficiencies assessed against, or agreed to by, CORPORATION
with respect to the last five (5) years will be made available to BUYERS. Sueh
tax returns, and all records pertinent to their preparation, shall remain the property
of CORPORATION after closing and shall be delivered into possession of
BUYERS at or before that time. No waiver of any statute oflimitations has been
given and is in effect against CORPORATION.
3.12.7 BUYERS agree to pay all loan taxes that are a direct result of this
Agreement accompanying Promissory Note.
3.13 Real and Personal Prooertv-Dwned. CORPORATION has good and
merchantable title to all real and personal property reflected on Schedule 3.14. CORPORATION
has good and merchantable title to all the vehicles listed in Schedule 3.14, free and clear of all
mortgages, options, liens, charges, security interest, leases, covenants, conditions, agreements,
claims, restrictions, and other encumbrances of every kind and there exists no restriction on the
use or transfer of such property.
3.14 Necessary Prooertv: Title to Assets. The tangible property owned or leased by
CORPORATION, and the intangible personal property constitute all of such property now used
in, and necessary for the conduct of, the business of CORPORATION in the manner and to the
extent presently conducted or planned by it. There exists no restriction or reservation affecting
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CORPORATION'S title to or the utility of its assets that would prevent it from using such assets,
or any part thereof after the Purchase is consummated, to the same full extent that they might
continue to do so if the transaction contemplated hereby did not take place. All of the following
assets are owned by CORPORATION, are proprietary property of CORPORATION, and shall
remain with the CORPORATION (which has good and clear title to same) at and after closing:
all customer lists and marketing information, all patents. the rights to and absolute use of all
trade secrets, formulas, plans, technical specifications, and all other data pertaining to the
production of CORPORA nON'S retail products, and all rights to and absolute use of all
catalogues, advertising, and promotional materials, including artwork and exhibits.
3.15 Use and Condition ofProoertv. All currently used property and assets of
CORPORATION are in good operating condition and repair as required for their use in the
business of CORPORATION as presently conducted or planned. All improvements located on,
and the use presently being made of all real property, leased by CORPORATION, comply with
all applicable zoning ordinances and all other applicable laws. CORPORATION and
SHAREHOLDER are not aware of any proposed, pending, or threatened change in any such
code, ordinance, or standard that would adversely affect the business of CORPORATION or the
use of its property and assets. CORPORATION has not received any written or oral notice or
order by any governmental or other public authority, any insurance company that has issued a
policy with respect to any of such properties or any board of fire underwriters or other body
exercising similar functions that (a) relates to violations or alleged violations of building, safety,
fire, or other ordinances or regulations, (b) claims any defect or deficiency with respect to any of
such properties, or (c) requests the performance of any repairs, alterations, or other work to or in
any of such properties or in the streets bounding the same. CORPORATION and
SHAREHOLDER are not aware of any proposed, pending, or threatened condemnation
proceeding or similar action affecting the property or assets of CORPORATION and there are no
proposed, pending, or threatened changes with respect to any streets or public amenities
appurtenant thereto or in.the vicinity thereof that would adversely affect the business of
CORPORATION or the use of its property and assets.
3.16 Contract and Commitments. CORPORATION does not have outstanding:
,
3.16.1 Any contract providing for an expenditure by CORPORATION for
the purchase of any real property, machinery, equipment, or other items that are in
the nature of capital investment; or any contract providing for an expenditure by
CORPORATION for the purchase of supplies or other items that are in the nature
of inventory that are not in the ordinary course of business and consistent ordinary
course of business and consistent with past business practices of
CORPORATION.
3.16.2 Any contract, bid, or offer to sell products or to provide services to
third parties that (l) is, at a price that would result in a net loss on the sale of such
products or providing such services, or (2) that is pursuant to terms or conditions
CORPORATION cannot reasonably expect to satisfy or fulfill in their entirety.
3.16.3 Any revocable or irrevocable power of attorney to any person,
firm, or corporation for any purpose whatsoever.
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"
3.16.4, Any loan agreement, indenture, promissory note, conditional sales
agreement, or other similar type of agreement other than those reflected in the
financial statement or otherwise disclosed in writing to BUYERS.
3.16.5 Any other material contract or commitment that is not cancelable
on thirty (30) days notice or less and that is not specifically set forth on any other
Schedule hereto, or otherwise in this Agreement. All leases, contracts, and other
commitments to which CORPORATION is a party or by which it is bound are in
full force and effect; all parties to such leases, contracts, and other commitments
have complied with the provisions thereof; no such party is in default under any
of the terms thereof; and no event has occurred that with the passage of time or
the giving of notice or both would constitute a default by any party under any
provision thereof. .
3.17 Reasonableness- Validitv of Contracts. No purchase commitment for materials,
supplies, component parts or other items of inventory to which CORPORATION is a party is in
excess of normal, ordinary, usual, and current requirements of its business or at a price in excess
of the current reasonable market price, Each of the contracts and agreements to which
CORPORATION is a party is a valid and binding obligation of the parties thereto in accordance
with its terms and conditions. No party to any such contract or agreement is in default with
respect to any term or condition thereof. nor has any event occurred that, through the passage of
time or the giving of notice, or both, would constitute a default thereunder or would cause the
acceleration of any obligation of any party thereto or the creation of a lien or encumberance upon
any asset of CORPORATION.
3.18 No Breach of Contract. CORPORATION is not in default under, or in violation
of, any provision of its Articles ofIncorporation, Bylaws, any promissory note, indenture, or any
evidence of indebtedness or security therefore, lease, contract, purchase, or other commitment or
any other agreement to which CORPORATION is a party or by which CORPORATION is
bound, which may result in an adverse effect on the business or condition, financial or otherwise,
of CORPORATION.
3.19 Trademarks and Similar Rights. To the knowledge of the SHAREHOLDER,
CORPORATION owns or is licensed or otherwise has the full right to use all trademarks, service
marks and trade names and all copyrights, technology and software which are used in or
necessary for the conduct of its business as heretofore conducted. True, complete and correct
copies of all registrations, agreements and licenses related to the foregoing will be delivered to
BUYERS prior to the Closing.
3.20 Litintion. Other than the suit filed against former estimator, Anthony Tumulo, to
prevent the disclosure ofCORPORATION'S trade secrets, there is no suit, claim, action, or
proceeding now pending or threatened before any court, administrative or regulatory body, or
any governmental agency, nor are SHAREHOLDER or CORPORATION aware of any grounds
therefore, to which CORPORATION is a party or that may result in any judgment, order, decree,
liability, or other determination that will, or could have any material adverse effect upon the
business or conditions, financial or otherwise, of CORPORATION. No such judgment, order, or
decree has been entered against CORPORATION nor any such liability incurred that has, or
could have, such effect. There is no claim action or proceeding now pending or threatened before
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.
any court, administrative, or regulatory body, or any governmental agency, nor are
SHAREHOLDER or CORPORATION aware of any grounds therefore, that will, or could,
prevent or hamper the consummation of the transactions contemplated by this Agreement.
3.21 Comoliance with Laws. CORPORATION holds all licenses and permits
necessary and required for the conduct of its businesses. Such licenses and permits are valid and
in full force and effect, and will not be terminated or otherwise adversely affected by the
consummation of the transactions contemplated hereby.
3.22 Comoensation and Perauisites of Al!:ents and Emolovees. CORPORATION has
properly and accurately reflected on its books and records all compensation paid to and
perqUisites provided to or on behalf of its agents and employees. Such compensation and
perquisites have been properly and accurately disclosed in the financial statements, proxy
statements, and other public or private reports, records, or filings of CORPORATION, to the
extent required by law. Neither the Internal Revenue Service nor any other federal, state, local,
or other governmental agency or entity has initiated or threatened any investigation of any
deduction claimed by CORPORATION with respect to any of such compensation or perquisites,
the disclosure of such compensation or perquisites in any public or private reports, records, or
filings of CORPORATION, or otherwise relating to such compensation or perquisites.
3.23 Emolovment Matters.
3.23.1 Except as set forth on Schedule 3.23 attached hereto,
CORPORA TION does not maintain or contribute to any pension, profit sharing,
thrift or retirement plan; medical, hospitalization, life, disability insurance plan; or
any other employee benefit plan or policy (including any policies on officers). To
the knowledge of the SHAREHOLDER, each such plan or policy is in
compliance with all applicable laws. Other than claims for the benefit by
employees, beneficiaries or dependents under the disclosed plans or policies
arising in the nonnal course of operation of such plans. no claim is pending or
threatened with respect to any plan. All returns required to be filed with any
governmental agency with respect to any plan, including returnS required by the
Department of Labor, have been timely filed.
3.23.2 Except as set forth in Schedule 3.23, CORPORATION is not a
party to any collective bargaining. employment, consulting, or other similar
agreement of any type whatsoever with any person or entity, and is not committed
or obligated to enter into any of the foregoing.
3.24 Securities Relristration. The CORPORATION Stock is not registered nor
required to be registered under section 12(a) of the Securities Exchange Act of 1934, as
amended.
3.25 Governmental Consent No governmental permits, consents, filings, registrations,
or qualifications are necessary to effect the transaction contemplated hereby.
.3.26 Full Disclosure. CORPORATION and SHAREHOLDER shall provide full and
unrestricted access to all financial records of CORPORATION to BUYERS. No representation
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or warranty by CORPORATION, or the SHAREHOLDER in this Agreement, or in any
certificate, exhibit, schedule, or other document furnished or to be furnished by
CORPORATION, or the SHAREHOLDER pursuant hereto, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact necessary to make the
statements contained therein not misleading. .
3.27 Absence of Certain Conditions. Since the date of the Financial Statement in
Schedule 3.7 (other than as disclosed in the Adjusted Balance Sheet set forth on Schedule 3.12),
CORPORATION did not:
3.27.1 Mortgage, pledge, or subject to lien, lease, security interest, or
other charge or encumbrance any of the properties or assets of CORPORATION.
3.27.2 Transfer, sell, or dispose of any of the assets or properties of
CORPORATION, except in the ordinary and usual course of business.
3.27.3 incUr, create, assume, and guarantee any indebtedness,liabilities,
or obligations other than (a) in the usual and ordinary course of business and with
a maturity date of less than one year, or (b) that are incurred pursuant to contracts
disclosed in the Schedule delivered pursuant hereto.
3.27.4 Enter into any contract or commitment or engage in any
transaction that is not in the usual and ordinary course of business or that is
inconsistent with past practices.
3.27.5 Make any material capital expenditure or enter into any lease of
capital equipment or real estate, other than a lease offabrication machinery
named "Ocean Avenger". .
3.27.6 Enter into any contract, other than in the ordinary course of
business, that is to be performed in more than thirty (30) days, other than those
described in writing to BUYERS.
3.27.7 Forgive or cancel any debts or claims or waive any rights except in
the ordinary course of business.
3.27.8 Increase the rate of compensation to the officers, agents, or salaried
employees of CORPORATION.
3.27.9 Increase the rate of compensation to non-salaried employees of
CORPORATION, provided, however, that ordinary merit increases not unusual in
character or amount may be made in the ordinary course of business.
3.27.10 Make any payments of severance or termination pay, except as to
Anthony Tumulo.
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3.27.11 Enter into or amend any stock option, deferred compensation,
bonus, profit- sharing, incentive compensation payment, pension, retirement,
medical, hospitalization, life insurance, other insurance, or other plan.
3.27.12 Enter into any employment contracts or collective bargaining
agreement.
3.27.13 Issue any additional shares of stock or other securities.
3.27.14 Make any distribution to the SHAREHOLDER by way of
dividends, purchase of shares, or otherwise.
3.27.15 Make or institute any unusual or novel method of transacting
business or change any accounting procedures or practices of its financial
structure.
3.27.16 Make any amendments to or changes in its articles of
incorporation or bylaws.
3'.27.17 Perform any act, or attempt to do any act, or permit any act or
omission to act, that will cause a breach of any material contract, commitment, or
obligation to which CORPORATION is a party.
3.2& Audits. There are currently no audits underway or planned by any third party.
3.29 Ril!ht to Ne20tiate Contracts ofEmDlovment. SHAREHOLDER and
CORPORATION agree that BUYERS sball have the right to negotiate contracts of employment
with the current management and supervisory personnel of CORPORATION.
4. REPRESENTATIONS AND WARRANTIES OF BUYERS. BUYERS
represents and ~atrants as follows:
4.1 No Broker. Neither BUYERS nor any of BUYERS'S employees has paid or
agreed to pay any brokerage fee or commission or any finder's fee to any broker, agent, or [mder
on account of this Agreement or any matters contemplated by BUYERS.
4.2 Financial Statements. BUYERS warrants and represents that the financial
statements that BUYERS has supplied to SHAREHOLDER are true and accurate as of the date
of their preparation and may be relied on as such by SHAREHOLDER.
5. COVENANTS OF CORPORATION AND SHAREHOLDER.
CORPORATION and SHAREHOLDER jointly and severally agree that from and after
the date of this Agreement and until the Closing Date they will conduct CORPORATION'S
business subject to the following provisions and limitations:
5.1 Operation of Business. Without the prior written consent of BUYERS,
CORPORATION will not:
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5.1.1 Mortgage. pledge, or subject to lien, lease, security interest, or
other charge or encumbrance any of the properties or assets of CORPORATION.
5.1.2 Transfer, sell, or dispose of any of the assets or properties of
CORPORATION, except in the ordinary and usual course of business.
5. I.3 Incur, create, assume, or guarantee any indebtedness, liabilities, or
obligations other than (a) in the usual and ordinary course of business and with a
maturity date of less than one year, or (b) that are incurred pursuant to contracts
disclosed in the Schedule delivered pursuant hereto.
5.104 Enter into any contract or commitment or engage in any
transaction that is not in the usual and ordinary course of business or that is
inconsistent with past practices.
5.1.5 Make any material capital expenditure or enter into any lease of
capital equipment or real estate. Except as previously agreed by the parties to
lease the "Ocean Avenger".
5.1.6 Forgive or cancel any debts or claims, or waive any rights except
in the ordinary course of business.
5.1. 7 Increase the rate of compensation to the officers, agents, or salaried
employees of CORPORATION.
5.1.8 Increase the rate of compensatio!l to non-salaried employees of
CORPORATION, provided, however, that ordinary merit increases not unusual in
character or amount may be made in the ordinary course of business.
5.1.9 Make any payments of severance or tennination pay.
, .
5.1.1 0 Enter into or amend any stock option, deferred compensation,
bonus, profit- sharing, incentive compensation payment, pension, retirement,
medica!, hospitalization, life insurance, other insurance, or other plan.
5.1.11 Enter into any employment contracts or collective bargaining
agreement.
5.1.12 Issue any additional shares of stock or other securities.
5.U3 Make any distribution to the SHAREHOLDER by way of
dividends, purchase of shares, or otherwise.
5.1.14 Make or instiMe any unusual or novel method of transacting
business or change any accounting procedures or practice of its financial
structure.
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'.,
,
5.1.15 Make any amendments to or changes in its articles of incorporation
or bylaws.
5.1.16 Perform any act, or attempt to do any act, or permit any act or
omission to act, that will cause a breach of any material contract commitment or
obligation to which CORPORATION is a party.
5.2 Preservation of Business. CORPORATION shall carry on its business diligently
and substantially in the same manner as heretofore conducted and shall keep its business
organizations intact, including its present employees (except for such as may be discharged for
cause and with prior notification to BUYERS) and its present relationships with suppliers and
customers and others having business relations with it. CORPORA nON will at all times
maintain in inventory supplies to allow it to continue and operate its business, after the Closing
Date, free from any reasonable shortage of such items.
5.3 Insurance and Maintenance of Prooertv. CORPORATION will cause all property
owned or leased by it to be insured against all ordinary and insurable risks and will operate,
maintain, and repair all its property in a careful, prudent, and efficient manner.
5.4 Full Access. BUYERS shall have full access at all reasonable times to all
premises, properties, books, records, contracts, tax records, and documents of CORPORATION
and CORPORATION will furnish to BUYERS any information in respect of the business and
affairs of CORPORATION as BUYERS may from time to time reasonably request. Such
examination and investigation by BUYERS shall not affect the warranties and representations of
CORPORATION and the SHAREHOLDER contained in this Agreement.
5.5 Books. Records. and Financial Statements. CORPORATION shall maintain its
books and fmancial records in accordance with generally accepted accounting principles
consistently applied, and on a basis consistent with the past practices of OORPORA TION. Said
books and financial records shall fairly and accurately reflect the operations of
CORPORATION.
5.6 Particioation in Like or Comoetinl!: Business. As long as' BUYERS are not
in default of the payment provisions set forth in paragraph 1.3.2, SHAREHOLDER,
individually or in conjunction with others, shall not either directly or indirectly compete
with BUYERS' business as indicated in the non-compete agreement entered into by
COROPORATION and SHAREHOLDER.
6. COVENANTS OF CORPORATION, SHAREHOLDER, AND BUYERS.
6.1 Confidentiality. Each party to this Agreement covenants and agrees with the
other parties to hold in confidence all documents and information concerning the other parties
furnished to it in connection with the transaction contemplated by this Agreement and not
otherwise available to it, and agrees to use such information only in connection with such
transaction. Each party further agrees not to release or disclose such information to any other
person, except its outside accountants, attomeys, and consultants. If the transaction contemplated
by this Agreement shall not be consummated, such confidence shall be maintained and such
information shall not be used in competition with any other party (except to the extent that such
.,
- 14 -
'.,
information was previously known to such party, in the public domain, or later acquired by such
party from other legitimate sources) and all such documents shaH immediately thereafter be
returned to the party furnishing same.
6.2 Transition Period Advice. SHAREHOLDER shall make himself available at no
cost to BUYERS, for a period after Closing not to exceed ninety (90) days, in order to provide
advice, infonnation, and consultation services for the operation of the business that is the subject
of this Agreement. Following the first ninety (90) days after Closing, SHAREHOLDER and
BUYERS agree that all consultation services provided by the SHAREHOLDER will be billed at
Twenty Five Dollars ($25.00) per hour to BUYERS, at a minimum of One Hundred Dollars
($100.00) per consultation. for a period not to exceed 5 (five) years.
6.3 Good Faith Efforts. Each party to this Agreement shall use his, her, or its,
respectively, best good faith efforts to carry out the intents and purposes of this Agreement and
to cure or correct any unintentional deviations from this Agreement and to accomplish any of the
undertakings in this Agreement.
6.4 Lease of Ocean AveOl!er. SHAREHOLDER agrees to make six (6) monthly
payments due on the lease of the Ocean Avenger. Under the lease, the first, last, October 2003,
November 2003, and December 2003 payments have been paid by SHAREHOLDER. The final
of the six (6) monthly payments under this tenn will be made in January 2004. BUYERS agree
that CORPORATION will make all remaining monthly lease payments for the Ocean Avenger
after SHAREHOLDER has fulfilled his obligation to pay six (6) lease payments.
6.5 Coroorate Vehicles to be Titled to SHAREHOLDER. CORPORATION agrees to
transfer title to a GMC pick-up truck and Dodge Durango to SHAREHOLDER.
SHAREHOLDER agrees to pay all costs and taxes associated with the transfer of title.
6.6 Health Insurance. BUYERS agree to provide comprehensive health care
coverage to SHAREHOLDER and SHAREHOLDER'S family at BUYERS' expense for five (5)
years following the date of this Agreement. SHAREHOLDER'S family includes his wife and
two daughters.
7.
CLOSE.
CONDITIONS PRECEDENT TO mE OBLIGATIONS OF BUYERS TO
The obligations of BUYERS to consummate the transactions contemplated by this
Agreement are subject to satisfaction of each of the following conditions on or before the
Closing Date, subject to the right of BUYERS to waive anyone or more of such conditions:
7. I Reoresentations and Warranties of SHAREHOLDER and CORPORATION. The
representations and warranties of the SHAREHOLDER and CORPORATION contained in this
Agreement and in any certificate, exhibit, schedule, or other document delivered to BUYERS
pursuant to the provisions of this Agreement or in connection with the transaction contemplated
hereby shall be true and correct on and as of the Closing Date as though such representations and
warranties were made on the Closing Date.
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,
,
7.2 Environmental Audit. BUYERS shaIl have received satisfactory results, in their
discretion, from their environmental audit.
7.3 Performance of this Agreement. The SHAREHOLDER and CORPORATION
shall have performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by them prior to or at the Closing.
7.4 Material Adverse Change. There shall have been no material adverse change,
actual or threatened. in the properties, business, or condition, financial or otherwise, of
CORPORATION, whether or not covered by insurance, as a result of fire, flood, explosion,
earthquake, disaster, accident, or other calamity, labor dispute, any action of the United States or
other governmental authority, riots, civil disturbance, uprisings, activity of the Armed Forces, or
act of God or the public enemy.
7.5 No Lawsuits. No suit, action, or other proceeding or investigation shall be
threatened or pending before or by any court or governmental agency concerning this Agreement
or the consummation of the transactions contemplated hereby, or in connection with any material '
claim against CORPORATION not disclosed on the schedules hereto. No governmental agency
shall have threatened or directed any request for infonnation concerning this Agreement, the
transaction contemplated hereby, or the consequences or implications of such transaction to the
SHAREHOLDER, CORPORATION, or BUYERS, or any officer, director, employee, or agent
of any of them.
7.6 No Restriction. There shall not exist any conditions. restrictions, or reservations
affecting the title to or utility of the assets or property of CORPORATION that would prevent
them from occupying and using said assets and property, or any part thereof, to the same fuIl
extent that they might continue to do so if the Purchase contemplated hereby did not take place.
7.7 Audit and Investigation. BUYERS shall have the absolute right to have audits
performed by its accountant(s) of all financial records, tax returns, bank statements, audit reports,
and all other materials relating to the conduct and operation of CORPORATION. BUYERS
shall be reasonably satisfied with the results of any audit and investigation of CORPORATION
undertaken by them between the date of this Agreement and the Closing Date.
7.8 Lease. BUYERS and SHAREHOLDER shall have agreed to the terms of a lease
of the real property.
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
SHAREHOLDER TO CLOSE.
The obligations of the SHAREHOLDER to consummate the transactions contemplated
by this Agreement are subject to satisfaction of each of the foIlowing conditions on or before the
Closing Date, subject to the right of the SHAREHOLDER to waive anyone or more such
conditions:
8.1 Reoresentations and Warranties of BUYERS. The representations and warranties
of BUYERS contained in this Agreement and in any certificate, exhibit, schedule, or other
document delivered to the SHAREHOLDER pursuant to the provisions of this Agreement or in
- 16-
.
connection with the transactions contemplated hereby shall be true and correct on and as of the
Closing Date as though such representations and warranties were made on the Closing Date.
8.2 Perfonnance of this Agreement. BUYERS shall have perfonned and complied
with all agreements and conditions required by this Agreement to be performed or complied with
by it prior to or at the Closing.
8.3 No Lawsuits. No suit, action, or other proceeding or investigation shall be
threatened or pending before or by any court or governmental agency conceming this Agreement
or the conswnmation of the transactions contemplated hereby, or in connection with any material
claim against BUYERS not disclosed on the schedules hereto. No governmental agency shall
have threatened or directed any request for infonnation concerning this Agreement, the
transaction contemplated hereby, or the consequences or implications of such transaction to the
SHAREHOLDER, or BUYERS, or any officer, director, employee, or agent of any of them.
8.4 Aooroval of Counsel. The validity of the transactions herein contemplated and
the form and substance of all opinions, instruments, Closing documents, and other documents or
certificates to be delivered by BUYERS hereunder and of such other documents or opinions as
shall reasonably be determined by SHAREHOLDER'S counsel as necessary to carry out the
intent and purposes of this Agreement shall have been delivered prior to Closing and shall be
satisfactory to counsel for SHAREHOLDER.
9. INDEMNIFICATION; SURVIVAL OF REPRESENT A nONS AND
WARRANTIES.
9.1 Survival of Warranties and Reoresentations. All representations, warranties, and
agreements of BUYERS, CORPORATION, and SHAREHOLDER made under or pursuant to
this Agreement shall survive the Closing Date without limitation as to time.
9.2 Indemnification. The SHAREHOLDER hereby covenants and agrees to
indemnify and hold harmless BUYERS from and against any and all loss, liability image, or
,
expense (including, but not limited to, reasonable attorney's fees incident thereto) arising out of,
or resulting from. any misrepresentation or the breach of any warranty, representation, or
covenant made by CORPORATION or SHAREHOLDER in this Agreement, the schedules
hereto, and any and all written statements, certificates, instruments, and documents delivered to
BUYERS pursuant to this Agreement on or before the Closing Date. The SHAREHOLDER
hereby covenants and agrees to indemnify BUYERS against any and all liabilities of
CORPORA nON of any nature, whether accrued, absolute, contingent, or otherwise, to the
extent not reflected in the Financial Statement attached hereto as Schedule 3.7, including all tax
liabilities, for any period prior to the date of Closing or arising out of transactions entered into,
and any stated facts existing, prior to such date. The SHAREHOLDER hereby covenants and
agrees to indemnify and hold harmless BUYERS from and against any and all loss, liability,
damage, or expense (including but not limited to, reasonable attomey's fees incident thereto)
arising out of, or resulting from, the content or operations of the business of CORPORATION
and all of its business equipment up to the date of closing on the purchase and sale of stock
provided for in this agreement The BUYERS hereby covenants and agrees to indemnify and
hold harmless SHAREHOLDER from and against any and all loss, liability, damage, or expense
(including but not limited to, reasonable attorney's fees incident thereto) arising out of. or
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c
.
resulting from the cQntent or operations of the business of CORPORATION and all of its
business equipment on and after the date of closing on the purchase and sale of stock provided
for in this agreement.
9.3 Remedies.
9.3.1 Reduction in Payment. In the event that at any time on or prior to the dates of
payments pursuant to the Promissory Note, BUYERS shall determine that: (a) Any tax, penalty
or interest has been or may be assessed against CORPORATION or BUYERS as transferee of
the SHAREHOLDER'S stock arising out of or relating to misappropriate conduct of
CORPORATION'S business or SHAREHOLDER'S activities prior to Closing; BUYERS may
reduce the amount payable pursuant to the Promissory Note in an amount equal to the amount
reasonably necessary to cure such material default, or to settle any such taxes, penalties, and
interest or to payor otherwise discharge any such obligations or liabilities. Said reduction to be
carried out in accordance with the terms and provisions set forth in paragraph 9.3.2.
9.3.2 Procedure for Reduction. In the event BUYERS detennines to reduce the
payment(s) due upon the Promissory Note pursuant to paragraph 9.3.1 above, BUYERS shall
promptly give notice of such intended reduction to SHAREHOLDER. w~ereupon BUYERS
shall be free to reduce the monthly payment(s) next falling due on said promissory note and said
reduction(s) shall be applied to and credited against interest payments as the case may be.
Nothing contained herein is intended or shall be construed so as to limit the remedies that either
party may have against the other in the event of a breach by either party of any representation,
warranty, or agreement made under or pursuant to this Agreement, it being intended that any
remedies shall be cumulative and nonexclusive. If SHAREHOLDER does not (at
SHAREHOLDER'S sole expense) promptly and expeditiously move to contest through
appropriate leg!ll channels, BUYERS may apply amounts withheld per the terms of this
paragraph 9.3 to reduction of such outstanding taxes, penalty, and interest.
9.3.3 In the event that any claim is made against BUYERS for any matter for which
SHAREHOLDER has agreed to indemnify BUYERS per the terms of paragraph 9.2 of this
,
Agreement, the SHAREHOLDER shall have the right to defend such claim. BUYERS agree to
provide SHAREHOLDER. at SHAREHOLDER'S expense, with all material and infonnation in
BUYERS' possession reasonably necessary to the defense of any such claim by
SHAREHOLDER BUYERS shall give SHAREHOLDER notice of any such claim with
reasonable promptness. In the event of litigation, such notice shall be in writing and sent to
SHAREHOLDER within ten (J 0) days of receipt of the Complaint by BUYERS.
SHAREHOLDER shall notify BUYERS in writing with reasonable promptness (and in the event
ofIitigation, within five (5) days ofreceipt of the aforesaid notice of litigation) as to whether
SHAREHOLDER intends to contest such claim or liability. In the interim, BUYERS shall take
any action it deems appropriate with respect to such claim to protect against default. If
SHAREHOLDER does not move to contest or defend any claims as required herein, then upon
such failure to do so, BUYERS shall have the same right of set-off and reduction in promissory
note payments as provided hereinbefore in paragraphs 9.3.1 and 9.3.2 for tax liabilities.
10. TERMlNATION.
- 18-
10.1 Termination bv SHAREHOLD~R. The SHAREHOLDER may terminate this
Agreement by giving written notice to BUYERS at any time prior to the Closing if a condition to
the performance of the SHAREHOLDER hereunder shall not be fulfilled on or before the date
specified for the fulfillment thereof or if a material default under or a material breach of this
Agreement shall be made by BUYERS.
10.2 Termination by BUYERS. BUYERS may terminate this Agreement by giving
written notice to the SHAREHOLDER at any time prior to the Closing if a condition to the
performance of BUYERS hereunder shall not be fulfilled on or before the date specified for the
fulfillment thereof or if a material default under or a material breach of this Agreement of a
material misstatement, error, or omission in any representation or warranty set forth herein or in
any certificate, exhibit, schedule, or other document furnished by the SHAREHOLDER pursuant
hereto shall occur or be made by the SHAREHOLDER.
10.3 Termination bv Mutual Consent. The parties, by mutual consent, may at any time
prior to closing agree in writing to terminate this agreement.
10.4 In the Event of Tennination. In the event of the termination and abandonment of
the closing of this transaction pursuant to the provisions of this paragraph 10, this Agreement
shall become void and have no effect, without any liability on the part of any party or the
directors, officers, or stockholders of BUYERS, the SHAREHOLDER, or CORPORATION
except for the provisions contained in the last sentence of paragraph 6.1 and in paragraph 11.3
hereof; provided, however, that if any party hereto willfully fails to perform its obligations
herein, any other party may seek any available legal or equitable remedies in addition to those
provided herein.
11. MISCELLANeOUS.
11.1 Notices. All notices, requests, demands, and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered personally or mailed
first- class postage prepaid:
11.1.1 to CORPORATION;
ABOM & KUTULAKIS, L.L.P.
36 South Hanover Street
Carlisle, P A 17013
11.1.2 to SHAREHOLDER;
ABOM & KUTULAKIS, L.L.P.
36 South Hanover Street
Carlisle, P A 17013
11.1.3 to BUYERS;
Ray Cullen
601 West King Street
Kirk Naugle
1100 Remington Drive
- 19-
,
Shippensburg, PA 17257
Shippensburg, P A 17257
or to such other address or to such other person as the parties shall have last designated by notice
to the other parties.
11.2 Successors and Assigns; Entire Agreement; Modification. This Agreement shall
be binding upon and inure to the benefit of the respective parties hereto and their respective
assigns, successors, heirs, executors, and administrators. This Agreement contains the entire
agreement between the parties hereto with respect to the transactions contemplated herein and
shall not be modified or amended except by an instrument in writing signed by or on behalf of
the parties hereto. However, at any time prior to the Closing Date, either the SHAREHOLDER,
or BUYERS may:
11.2.1 extend the time for the perfonnance of any obligations or other
acts of the other of them;
11.2.2 waive any inaccuracies by the other in the'representations and
warranties contained herein or in any document delivered pursuant hereto; and
11 :2.3 waive compliance with any of the agreements or conditions
contained herein to be perfonned by the other.
11.3 Governinl! Law: Unenforceabilitv. This Agreement shall be govemed by and
construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania
without giving effect to its conflicts oflaws provisions.
11.4 Counteroarts. This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
11.5 The Agreement consists of the foregoing document, promissory note, confession
of judgment, secUrity 'agreement, and financing statement.
11.6 Headinl!s. The paragraph headings in this Agreement are for convenience of
reference only and shall not be deemed to alter or affect any provisions hereof.
- 20-
,
,
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date first hereinabove written.
../----;J
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Shetron Welding &: Fabrication, Inc., Buyer
Ray Cullen, Director and Officer
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Shetron Welding & Fabricatioi1;l:nC., Buyer
Kirk Naugle, Director and Officer
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Ray nflen, Buyer
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Kirk Naugle. Buyer '" ----- .
C1I., ) -JJ&:.l~~-
Cd..J2J,,'e.t-j~
Terry J. Shetron, Shareholder
On this 1'<.. t..L day of _ \A.Ju An-it . 2004, before me, the
undersigned officer, personally appeared Terry hetron, Ray Cullen, and Kirk Naugle, known to
me (or satisfactory proven) to be the person whose name is subscribed to the within Agreement
and acknowledged that she executed the same for the purpose therein contained.
J.t.SClN NOTARW. SEAl.
'CIrIIII~~
MyCllll~"II.,EIphI_2III,_
IN WITNESS WHEREOF, I hereunto set my hanchpd official seal.
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NOrUbliC
- 21 -
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.
Schedule 3. I-Corporate Existence and Qualification
Corporation is qualified to conduct its business in each of
the following jurisdictions:
,
The Commonwealth of Pennsylvania
,.
.
Schedule 3. 7-Financial Statements of
12/31/02 and 12/31/03
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.
Schedule 3.l2-Corporation's Creditors
Schedule 3. 23-Employment Matters
PROMISSORY NOTE
PARTIES
THIS NOTE, dated this 12th day ofJanuary, 2004, by and between Terry J.
Shetron, ("Creditor"), an individual with his principal address at 1505 Walnut Bottom
Road, Newville, Cumberland County, Pennsylvania 17241, and Shetron Welding &
Fabrication, Inc., ("Borrower") a corporation organized under the laws of the
Commonwealth of Pennsylvania with its principal place of business at 85 Kutz Road,
Carlisle, Cumberland County, Pennsylvania, 17013.
STATEMENT AND RECOGNITION OF DEBT
Borrower is in debt One Million, Four Hundred and Forty Five Thousand Dollars
($1,445,000.00) to Creditor, in consideration for the purchase of Creditor's one hundred
(100) shares of Common Stock in Shetron Welding & Fabrication, Inc. Borrower
promises to pay off this debt directly to Creditor in accordance with the following
payment terms.
PAYMENT Terms
Principal Amount Financed ........................................................................................$1,445,000.00
Repayment Term..............................................................................................,120 monthsl10 years
Annual Interest Rate .................................................................................................PRlME + 1.5%
Monthly Payment.............................................................................................. Interest on Principal
. th
Monthly Payment Due Date...............................................On or before the 15 day of each month
Due date of fIrst payment..................................................................................... February 15, 2004
Balloon Payment.........................................................................................................$1,445,000.00
Date of Balloon Payment ..................................................................................... February 15, 2014
PREPAYMENT
Borrower may pay without penalty, at any time, the entire balance of the principal
amount owed. If borrower makes a partial payment towards the principal prior to the
date scheduled for the balloon payment a prepayment penalty shall be imposed against
Borrower. The prepayment penalty will be calculated at PRIME + 1.5% of the total
prepayment amount. Early payments will not, unless agreed to by Creditor in writing.
relieve Borrower of Borrower's obligation to continue to make monthly payments each
and every month.
DEFAULT
Borrower will be considered to be in default for failure to make one or more
payments within ten (10) days from the date each payment is due. This ten (10) day
period shall constitute a grace period.
If a preceding month's payment is not made by Borrower on or before the due
date for the next month's payment, Creditor is entitled to take any and all action
reasonably necessary to recover all amounts due under this Note and accompanying
Security Agreement without prior notice to Borrower.
Borrower will be considered to be in default if one or more monthly payments are
returned due to insufficient funds.
Borrower will be considered to be in default for failure 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 ~ any other agreement between Creditor and Borrower.
Borrower will be considered to be in default for failure to make payments due
under the Commercial Property Lease Agreement
The making or leVying of any attaclunent or execution on collateral.
The filing of a petition in bankruptcy or insolvency, or for the appointment of a
receiver in liquidation or a trustee, by or against Borrower or for any of Borrower's
property.
Borrower's making any assignment for the benefit of creditors.
The filing of a petition or other proceeding by or against Borrower for
reorganization, compromise, adjustment or other relief under the laws of the United
States or of any state, relating to the relief of Borrower.
Borrower understands that the collateral, as outlined in the Security Agreement,
will be repossessed should Borrower be in default oftms Note.
Borrower understands and agrees that the failure of Creditor at any time to
enforce its rights under this Note and accompanying Security Agreement shall not be
construed as having created a custom in any way or manner contrary to the specific terms
and provisions of this Note and accompanying Security Agreement.
Borrower understands and agrees that the Security Agreement is part of and
incorporated into this Promissory Note.
2
Each of the undersigned has read the foregoing Promissory Note carefully and
agrees to abide by each and every term as set forth.
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Slietro 'Welding' & Fabrication, Inc,
Ray Cullen, Director and Officer
a
Shetron Welding & Fabncation,
Kirk Naugle, Director and Officer
:t-~~~~~
Terry J. Shetron, Secured Party
On this J 'Z.R day of , 2004, before me, the
undersigned officers, personally appeared Ra Cullen, Kirk Naugle and Terry Shetron,
known to me (or satisfactory proven) to be the person whose name is subscribed to the
within Agreement and acknowledged that she executed the same for the purpose therein
contained.
IN WITNESS WHEREOF. I \'"1' hmd md offici" =I.
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~'''w'~I..'.''''''=t'~ Notai"vPuolic
CllllllBanl."~ IIl1l1d T'
airel " .EIipIIII... l
3
COMMERCIAL PROPERTY LEASE AGREEMENT
THIS AGREEMENT, dated this 12th day of January, 2004, by and between Shetron
Welding and Fabrication, Inc. (hereinafter called Lessee), and Terry J. Shetron (hereinafter
called Lessor). Lessor does hereby demise and let unto Lessee all that certain real property at 85
Kutz Road, Carlisle, Cumberland County, Pennsylvania, to be used and occupied as the place of
business for Lessee and for no other purpose. for the term often (10) years, beginning the 1st day
of February ,2004, and ending the final day of February 2015, for the rental payment set for the
first five (5) years at Eight Thousand Two Hundred and Fifty Dollars ($8,250.00), payable in
monthly insta1lments, due on or before the 1 st day of each month, with the first installment to be
paid on or before the 1st day of February, 2004. After the first five (5) year term, the rental
payment shall be adjusted according to the Consumer Price Index (CPI) with a maximum
increase of 12% for the remaining five (5) year term. In no event shall the rental payment be
adjusted to an amount less than $8,250.00 per month.
2. Additional Rent.
(a) Damages for Default. Lessee agrees to pay as rent in addition to the minimum rental
for any and all sums which may become due by reason of the failure of Lessee to comply with all
of the covenants of this lease and any and all damages, costs and expenses which the Lessor may
suffer or incur by reason of any default of the Lessee or failure on his part to comply with the
covenants of this lease, and each of them, and also any and all damages to the demised premises"
caused by any act or neglect of the Lessee.
(b) Taxes. Lessee further agrees to pay as rent in addition to the minimum rental all taxes
assessed or imposed upon the demised premises and/or the building of which the demised
premises is a part during the term of this lease, in excess of and over and above those assessed or
imposed at the time of making this lease. The amount due hereunder on account of such taxes
shall be apportioned for that part of the first and last calendar years covered by the term. The
same shall be paid by Lessee to Lessor on or before the first day of July of each and every year.
3. Place of Payment. All rents shall be payable without prior notice or demand at the
office of Lessor at 1505 Walnut Bottom Road, Newville, Pennsylvania 17241, or at such other
place as Lessor may from time to time designate by notice in writing.
4. Affirmative Covenants of Lessee. Lessee covenants and agrees that he will perform the
following without demand:
(a) Payment of Rent. Pay the rent and all other charges on the days and times and at the
place that they are made payable, without fail, and if Lessor shall at any time or times accept the
rent or rent charges after they shall have become due and payable, such acceptance shall not
excuse delay upon subsequent occasions, or constitute or be construed as a waiver of any of
Lessor's rights. Lessee agrees that any charge or payment agreed to be treated or collected as rent
and/or any other charges or taxes, expenses, or costs to be paid by the Lessee may be proceeded
for and recovered by the Lessor by distraint or other process in the same manner as rent due and
in arrears.
(b) Fire Insurance. Lessee further agrees to maintain and pay all fire insurance premiums
upon the demised premises and/or the building of which the demised premises is a part during
the entire tenn of this Agreement. .
(c) Liability Insurance. Lessee agrees to maintain and pay all liability insurance
premiums for the demised premises during the entire tenn of this Agreement.
(d) Miscellaneous Insurance. Lessee agrees to maintain and pay all insurance premiums
necessary as a result of the type of business activity and trade being conducted in or on the
demised property during the entire tenn of this Agreement.
(e) Cleaning, Repairing, etc. Keep the demised premises clean and free from all ashes,
dirt and other refuse matter; replace all glass windows, doors, etc., broken; keep all waste and
drain pipes open; repair all damage to plumbing and to the premises in general; keep the same in
good order and repair as they now are, reasonable wear and tear and damage by accidental fire or
other casualty not occurring through negligence of Lessee or those employed by or acting for
Lessee alone excepted. Lessee agrees to be responsible for all repairs not classified and defmed
as "major repairs" in paragraph 8(f). The Lessee agrees to surrender the demised premises in the
same condition in which Lessee has agreed to keep the same during the continuance of this lease.
.(f).Requirements of Public Authorities. Comply with any requirements of any of the
constituted public authorities, and with the terms of any state or federal statute or local ordinance
or regulation applicable to Lessee or his use of the demised premises, and indemnify Lessor from
penalties, fines, costs or damages resulting from failure so to do.
(g) Fire. ~se every reasonable precaution against fire.
(h) Rules and Regulations. Comply with rules and regulations of Lessor promulgated as
provided in this Agreement.
(i) Surrender of Possession. Peaceably deliver up and surrender possession of the
demised premises to the Lessor at the expiration or sooner tennination of this lease, promptly
delivering to Lessor at its office all keys for the demised premises.
0) Notice of Fire, etc. Give to Lessor prompt written notice of any accident, fire, or
damage occurring on or to the demised premises. .
(k) Condition of Pavement. Lessee shall be responsible for the condition of the pavement,
curb, cellar doors, awnings and other erections on the pavement during the tenn of this lease;
shall keep the pavement free from snow and ice, and shall be, and hereby agrees that Lessee is
solely liable for any accidents, due or alleged to l?e due to their defective condition, or to any
accumulations of snow and ice.
(I) Environmental Responsibility. Lessee shall exercise reasonable environmental
2
responsibility and agrees to be held liable for all liability and costs involved for environmental
hazards created through the failure of the Corporation or a Corporation employee to exercise
reasonable environmental responsibility. As part of the Purchase Agreement a Phase I
Environmental Study is to be completed to ensure that Lessor is not responsible for any
environmental hazards or contamination to the demised premises prior to the date of the
Purchase Agreement.
5. Negative Covenants of Lessee. Lessee covenants and agrees that he will do none of the
following things without the consent in writing of Lessor:
(a) Use of Premises. Occupy the demised premises in any other manner or for any other
purpose than as above set forth.
(b) Assignment and Subletting. Assign, mortgage or pledge this lease or underlet or
sublease the demised premises, or any part of it, or permit any other person, firm or corporation
to occupy the demised premises, or any part of it; nor shall any assignee or sublessee assign,
mortgage or pledge this lease or such sublease, without an additional written consent by the
Lessor, and without consent no assignment, mortgage or pledge shall be valid. If the Lessee
becomes embarrassed or insolvent, or makes an assignment for the benefit of creditors, or if a
petition in bankruptcy is filed by or against the Lessee or a bill in equity or other proceeding for
the appointment of a receiver for the Lessee is filed, or if the real or personal property of the
Lessee shall be sold or levied upon by any sheriff, marshal or constable, the same shaH be a
violation of this covenant.
(c) Alterations, Improvements. Make any alterations, improvements, or additions to the
demised premises without Lessor's prior written consent. All alterations, improvements,
additions or fixtures, whether installed before or after the execution of this lease, shall remain
upon the premises at the expiration or sooner detennination'ofthis lease and become the
property of Lessor, unless Lessor shall, prior to the determination of this lease, have given
written notice to Lessee to remove such alterations, improvements and additions and restore the
premises to the same good order and condition in which they now~. Should Lessee fail to do
so, Lessor may do so, collecting, at Lessor's option, the cost and expense from Lessee as
additional rent.
(d) Fire Insurance. Do or allow to be done, any act, matter or thing objectionable to the
fire insurance companies so that the fire insurance or any other insurance now in force or here-
after to be placed on the demised premises, or any part of it, or on the building of which the
demised premises may be a part, shall become void or suspended, or whereby the same shall be
rated as a more hazardous risk than at the date of execution of this lease. In case of a breach of
this covenant (in addition to all other remedies given to Lessor in case of the breach of any of the
conditions or covenants of this lease) Lessee agrees to pay to Lessor as additional rent any and
all increase or increases of premiums on insurance carried by Lessor on the demised premises, or
any part of it, or on the building of which the demised premises may be a part, caused in any way
by the occupancy of Lessee.
(e) Removal of Goods. Remove, attempt to remove or manifest an intention to remove
3
, Lessee's goods or property from or out of the demised premises otherwise than in the ordinary
and usual course of business, without having first paid and satisfied Lessor for all rent which
may become due during the entire teon of this lease.
(f) Vacate Premises. Vacate or desert the premises during the teon of this lease, or permit
the same to be empty and unoccupied.
6. Inspection of Premises. Lessor shall at all reasonable times, by itself or its duly
authorized agents, have the right to go upon and inspect the demised premises and every part of
it, and/or at its option to make repairs, alterations and additions to the demised premises. No
alterations or additions shall be made by Lessor without first consulting Lessee.
7. Responsibility of Lessee. Lessee agrees to be responsible for and to relieve and hereby
relieves the Lessor from all liability by reason of any injury or damage to any person or property
in the demised premises, whether belonging to the Lessee or any other person, caused by any
fire, breakage or leakage in any part or portion of the demised premises, or any part or portion of
the building of which the demised premises is a part, or from water, rain or snow that may leak
into, issue or flow from any part of the said premises, or of the building of which the demised
premises is a part, from the drains, pipes, or plwnbing work of the same, or from any place or
quarter, whether such breakage, leakage, injury or damage be caused by or result from the
negligence of Lessor or its servants or agents or any person or person. Lessee also agrees to be
responsible for and to relieve and hereby relieves Lessor from all liability by reason of any
. -.damage or injury to any person or thing which may arise from or be due to the use. misuse or '
abuse of all or any of the elevators, hatches, openings, stairways, hallways of any kind which
may exist or hereafter be erected or constructed on the premises, or from any kind of injury
which may be caused on the premises or of which the demised premises is a part, whether such
damage, injury, use, misuse or abuse be caused by or result from the negligence of Lessor, its
servants or agents or any other person or pers.oDS.
8. Responsibility of Lessor.
(a) Damage for Interruption of Use. Lessor shall not be liable for any damage.
compensation or claim by reason of inconvenience or annoyance arising from the necessity of
repairing any portion of the building, the interruption in the use of the premises, or the
termination of this lease by reason of the destruction of the premises.
(b) Representation of Condition of Premises. The Lessor has let the demised premises in
their present condition and without any representations on the part of the Lessor, its officers, em-
ployees, servants and/or agents. It is understood and agreed that Lessor is under no duty to make
repairs or alterations at the time ofletting or at any time thereafter.
(c) Zoning. It is understood and agreed that the zoning classification for said property is
Industrial. Lessor does not warrant or undertake that the classification will remain Industrial.
Should the zoning classification be changed due to circwnstances outside the control of the
Lessor and Lessee, Lessee agrees that this lease shall not teoninate without Lessor's consent, and
the Lessee shall use the premises only in a manner permitted under such zoning ordinance or
4
,.
,
. regulation. Lessee agrees to incur all expense involved in contesting any and all proposed
zoning changes.
(d) Water. Lessor agrees to pay all amounts necessary to provide and maintain well water
service for the demised premises. If Lessee has a need for an increased water supply due to trade
activity being conducted by Lessee, Lessee agrees to pay all amounts necessary to create an
increased water supply.
(e) Sewer. Lessor further agrees to pay all amounts necessary to provide and maintain a
non-public septic system for the disposal of all sewage created by the demised premises. This
excludes payment for repairs to the septic system due to improper use or negligence by Lessee
and its agents.
(f) Major Repairs. Major repairs are defined as repairs that are in excess of Five
Thousand Dollars ($5,000.00). Lessor agrees to be responsible for making and paying for all
major repairs that are not due to the negligence or fault of Corporation or an employee or officer
of Corporation.
9; Miscellaneous Agreements and Conditions.
(a) Effect of Repairs on Rental. No contract entered into or that may be subsequently
entered into by Lessor with Lessee, relative to any alterations, additions, improvements or
repairs, nor the failure of Lessor to make such alterations, additions, improvements or repairs as
required by any such contract, nor the making by Lessor or its agents or contractors of such alter-
ations, additions, improvements or repairs shall in any way affect the payment of the rent or
other charges at the time specified in this lease.
(b) Waiver of Custom. It is hereby covenanted and aweed that notwithstanding any law,
usage or custom. Lessor shall have the right at all times to enforce the covenants and provisions
of this lease in strict accordance with its tenns, notwithstanding any conduct or custom on the
part of the Lessor in refraining from so doing at any time or times; and, further, that the failure of
Lessor at any' time or times to enforce its rights under these covenants and provisions strictly in
accordance with the same shall not be construed as having created a custom in any way or
manner contrary to the specific tenus. provisions and covenants of this lease or as having in any
way or manner modified the same.
(c) Conduct of Lessee. This lease is granted upon the express condition that Lessee and/or
the occupants of the premises herein leased, shall not conduct themselves in a manner which the
Lessor in its sole opinion may deem improper or objectionable, and that if at any time during the
tenn of this lease or any extension or continuation, Lessee or any occupier of the premises shall
have conducted himself, herself or themselves in a manner which Lessor in its sole opinion
deems improper or objectionable, Lessee shall be taken to have broken the covenants and
conditions of this lease. and Lessor will be entitled to all the rights and remedies granted and
reserved in this Agreement, for the Lessee's failure to observe any of the covenants and
conditions of this lease.
5
"
,
(d) Failure of Lessee to Repair. In the event of the failure of Lessee promptly to perform
the covenants of Section 4(b), Lessor may go upon the demised premises and perform such
covenants, the costs, at the sole option of Lessor, to be charged to Lessee as additional and
delinquent rent.
10. Remedies of Lessor. If the Lessee:
(a) Does not pay in full when due any and all installments of rent and/or any other charge
or payment reserved, included, or agreed to be treated or collected, as rent and/or any other
charge, expense, or cost agreed to be paid by the Lessee; or
(b) Violates or fails to perform or otherwise breaks any covenant or agreement herein
contained; or .
(c) Violates or fails to perform or otherwise breaks any covenant or agreement contained
in the Stock Purchase Agreement and Promissory Note; or
(d) Vacates the demised premises or removes or attempts to remove or manifests an
intention to remove any goods or property therefrom other than in the ordinary and usual course
of business without having first paid and satisfied the Lessor in full for all rent and other charges
then due or that may thereafter become due until the expiration of the then current term, above
mentioned; or
(e) Becomes insolvent, or makes an assignment for the benefit of creditors, or if a petition
in bankruptcy is filed by or against the Lessee or a bill in equity or other proceeding for the
appointment of a receiver for the Lessee is filed, or if proceedings for reorganization or for
composition with creditors under any state or federal law are instituted by or against Lessee, or if
the real or personal property of the Lessee shaH be sold or levied upon by any sheriff, marshal or
constable, then and in any or either of these events, there shall be deemed to be a breach of this
lease, and due to that breach and without entry or other action by Lessor;
,
(i) The rent for the entire unexpired balance of the term of this lease, as well as all
other charges, payments, costS and expenses agreed to be paid by the Lessee, or at the op-
tion of Lessor any part of it, and also costs and officer's commissions including
watchman's wages and further including the five percent chargeable by Act of Assembly
to the Lessor, shall, in addition to any and all installments of rent already due and
payment herein reserved, included or agreed to be treated or collected as rent, and/or any
other charge, expense or cost agreed to be paid by the Lessee which may be due and
payable and in arrears, be taken to be due and payable in arrears as ifby the terms and
provisions of this lease, the whole balance of unpaid rent and other charges, payments,
taxes, costs and expenses were on that date payable in advance; and if this lease or any
part is assigned, or if the premises or any part is sublet, Lessee hereby irrevocably
constitutes and appoints Lessor Lessee's agent to collect the rents due by such assignee or
sublessee and apply the same to the rent due without in any way affecting Lessee's
obligation to pay any unpaid balance of rent due hereunder or in the event of any of the
foregoing at any time at the option of Lessor;
6
,
.
(ii) This lease and the term hereby created shall,tenninate and become absolutely
void without any right on the part of the Lessee to save the forfeiture by payment of any
sum due or by other performance of any condition, term or covenant broken; whereupon,
Lessor shall be entitled to recover damages for such breach in an amount equal to the
amount of rent reserved for the balance of the term of this lease.
I I. Further Remedies of Lessor. In the event of any default as above set forth in Section
10, the Lessor, or anyone acting on Lessor's behalf, at Lessor's option:
(a) may without notice or demand enter the demised premises, breaking open locked
doors if necessary to effect entrance, without liability to action for prosecution or damages for
such entry or for its manner, for the purpose of distraining or levying and for any other purposes,
and take possession of and sell all goods and chattels at auction, on three days' notice served in
person on the Lessee, or left on the premises, and pay the Lessor out of the proceeds, and even if
the rent is not due and unpaid, should the Lessee at any time remove or attempt to remove goods
and chattels from the premises without leaving enough thereon to meet the next periodical
payment, Lessee authorizes the Lessor to follow for a period of ninety days after such removal,
take possession of and sell at auction, upon like notice, sufficient of such goods to meet the
proportion of rent accrued at the time of such removal; and the Lessee hereby releases and
discharges the Lessor, and his agents from all claims, actions, suits, damages and penalties, for or
by reason or on account of any entry, distraint, levy. appraisement or sale; and/or
(b) may enter the premises, and without demand proceed by distress and sale of the goods
there found to levy the rent and/or other charges payable as rent, and all costs and officers'
commissions, included watchmen's wages and sums chargeable to Lessor, and further including
a sum equal to five percent (5%) of the amount of the levy as commissions to the constable or
other person making the levy, shall be paid by the Lessee, and in such case all costs, officers'
commission and other charges shall immediately attach and become part of the claim of Lessor
for rent, and any tender of rent without the costs, commission and charges made after the issue of
a warrant of distress shall not be sufficient to satisfy the claim of , the Lessor. Lessee hereby
expressly waives in favor of Lessor the benefit of all laws now made or which may hereafter be
made regarding any limitation on the goods upon which, or the time within which, distress is to
be made after removal of goods. and further relieves the Lessor of the obligations of proving or
identifying such goods, it being the purpose and intent of this provision that all goods of Lessee,
whether upon the demised premises or not, shall be liable to distress for rent.
(c) The Lessee further waives the right to issue a Writ of Replevin under the
Pennsylvania Rules of Civil Procedure No. 1071 et seq. and Laws of the Commonwealth of
Pennsylvania under any other law previously enacted or now in force or which may be hereafter
enacted, for the recovery of any articles, household goods, furniture, etc., seized under a distress
for rent or levy upon an execution for rent, damages or otherwise; all waivers mentioned above
are hereby extended to apply to any such action; and/or
(d) May lease the premises or any part or parts of it to such person or persons as may in
Lessor's discretion seem best and the Lessee shall be liable for any loss of rent for the balance of
7
, the then current term.
12. Ejectment. When this lease shall be terminated by condition broken. either during the
original term ofthis lease or any renewal or extension, and also when and as soon as the term
hereby created or any extension shall have expired, it shall be lawful for any attorney as attomey
for Lessee to file an agreement for entering in any competent court an amicable action and
judgment in ejectment against Lessee and all persons claiming under Lessee for the recovery by
Lessor of possession of the demised premises, for which this lease shall be his sufficient warrant,
whereupon, if Lessor so desires, a writ of possession may issue, without any prior proceedings
whatsoever, and provided that if for any reason after such action shall have been commenced the
same shall be determined and the possession of the premises hereby demised remain in or be
restored to Lessee. Lessor shall have the right upon any subsequent default or defaults, or upon
the termination of this lease, to bring one or more amicable action or actions to recover
possession of the said premises.
13. Affidavit of Default. In any amicable action of ejectment and/or for rent in arrears,
Lessor shall first cause to be filed in such action an affidavit made by it or someone acting for it
setting forth the facts necessary to authorize the entry of judgment, of which facts such affidavit
shall be conclusive evidence, and if a true copy of this lease (and of the truth of the copy such,
affidavit shall be sufficient evidence) be filed in such action, it shall not be necessary to file the
original as a warrant of attomey, any role of Court, custom or practice to the contrary.
14. Waivers by Lessee of Errors, Right of Appeal, Stay Exemption. Inquisition. Lessee
expressly agrees that any judgment, order or decree entered against it by or in any court of
magistrate by virtue of the powers of attorney contained in this lease, or otherwise, shall be final,
and that it will not take an appeal, certain, writ of error, exception or objection to the same, or
file a motion or rule to strike off or open or to stay execution of the same, and releases to Lessor
and to any and all attomeys who may appear for Lessee all errors in the proceedings, and all .
liability. Lessee expressly waives the benefits of all laws, now or hereafter in force, exempting
any goods on the demised premises, or elsewhere from distraint, levy or sale in any legal
proceedings taken by the Lessor to enforce any rights under the lease. Lessee further waives the
right to petition for the stay of any execution on any real estate that may be levied upon to collect
any amount which may become due under the terms and conditions of this lease, and does '
voluntarily authorize the prothonotary or clerk of court to issue a writ or writs of execution for
the sale of the same. If proceedings shall be commenced by Lessor to recover possession under
the Acts of Assembly, either at the end of the term or sooner termination of this lease, or for
nonpayment of rent or any other reason, Lessee specifically waives the right to the three months'
notice, and/or the fifteen or thirty days' notice required by the Pennsylvania Landlord and Tenant
Act of 1951, as amended, and agrees that five days' notice shall be sufficient in either or any
such case.
15. Right of Assignee of Lessor, The right to enter judgment against Lessee and to enforce
all of the other provisions of this lease may, at the option of any assignee of this lease, be
exercised by any assignee of the Lessor's right, title and interest in this lease in his, her or their
own name, notwithstanding the fact that any or all assignments of the right, title and interest may
not be executed and/or witnessed'in accordance with the Act of Assembly of May 28, 1715, 1
Sm. L. 94, and all supplements and amendments that have been or may hereafter be passed and
8
Lessee hereby expressly waives the requirements of said Act of Assembly and any and all laws
regulating manner and/or form in which such assignments shall be executed and witnessed.
16. Remedies Cumulative. All of the remedies herein given to Lessor and all rights and
remedies given to it by law and equity shallf:le cumulative and concurrent. No termination of
this lease or the taking or recovering of the premises shall deprive Lessor of any of its remedies
or actions against the Lessee for rent due at the time or which, under its terms, would in the
future become due as if there had been no termination, or for sums due at the time or which,
under its terms, would in the future become due as if there had been no termination, nor shall the
bringing of any action for rent or breach of covenant, or the resort to any other remedy herein for
the recovery of rent be construed as a waiver of the right to obtain possession of the premises.
17. Termination of Lease. It is hereby mutually agreed that either party may terminate
this lease at the end of its ten (10) year term by giving to the other party written notice at least
ninety (90) days prior thereto, but in default of such notice, this lease shall continue upon the
same terms and conditions in force immediately prior to the expiration of its term as for a further
term of one (I) year and so on, unless or until terminated by either party hereto, giving the other
ninety (90) days written notice for removal previous to expiration of the then current term;
PROVIDED, however, that should this lease be continued for a further period under the terms
herein above-mentioned, the rental amount is subject to an increase and the lease conditions are
subject to modification for each term beyond the original ten (10) year term, provided that Lessor
shall have given one hundred twenty (120) days written notice prior to the expiration of any term
ofitsintention to change the rental amount and conditions of this lease. Nothing in this
Agreement shall be construed as giving the Lessee the option to terminate this lease prior to the
expiration of its ten (10) year term.
18. Notice, All notices required to be given by Lessor to Lessee shall be sufficiently
given by leaving the same upon the demised premises, but notices given by Lessee to Lessor
must be given by registered mail, and as against Lessor the only admissible evidence that notice
has been given by Lessee shall be a registry retum'receipt signed by Lessor or its agent.
,
19. Lease Contains All Agreements. It is expressly understood and agreed by and between
the parties that this lease and the riders attached to it and forming a part of it set forth all the
promises, agreements, conditions and understandings between Lessor or its Agent and Lessee
relative to the demised premises, and that there are no promises, agreements, conditions or
umierstandings, either oral or written, between them other than are set forth. It is further
understood and agreed that, except as otherwise provided, no subsequent alteration, amendment,
, change or addition to this lease shall be binding upon Lessor or Lessee unless reduced to writing
and signed by them.
20. Heirs and Assignees. All rights and liabilities given to, or imposed upon, the
respective parties shall extend to and bind the several and respective heirs, executors,
administrators, successors and assigns of the parties; and if there shall be more than one Lessee,
they shall all be bound jointly and severally by the terms, covenants and agreements of this
Agre.ement, and the word "Lessee" shall be deemed and taken to mean each and every person or
party mentioned as a Lessee, be the same one or more; and if there shall be more than one
9
.
,
Lessee, any notice required or pennitted by the terms of this lease may be given by or to anyone
of them, and shall have the same force and effect as if given by or to all. No rights, however.
shall inure to the benefit of any assignee of Lessee unless the assignment to such assignee has
been approved by Lessor in writing.
21. Headings No Part of Lease. Any headings preceeding the text of the paragraphs and
subparagraphs of this Agreement are inserted solely for convenience or reference and shall not
affect its meaning, construction, or effect.
IN WITNESS WHEREOF, the parties have executed the foregoing Agreement presents
the day and year first above written, and intend to be legally bound.
'~~
. - ....-;:>r .........-"/, ~.
,,' ,,/./..', i
~/-', ' "'~ ".7"
Ray' CUllen, Owner and Officer
For Shetron Welding & Fabrication, Inc., Lessee
/2'~~
Kirk Naugle, Owner d Officer
For Shetron Welding & Fabrication, Inc., Lessee
== - ~w1;;Pj~&=:-.
Terry Shetron, Lessor
On this I '2-rL day of j;WtL.A~ ,2004, before me, the
undersigned officer, personally appeared Terry Shetron, Ray Cullen, and Kirk Naugle, known to
me (or satisfactory proven) to be the ~rson whose name is subscribed to the within Agreement
and acknowledged that she executed the saine for the purpose therein contained.
,.--. NOMf!LSEIL
-1CIIfIIAIaS, En.
CdiII_~.d
urCal.... '.. ElipnI.u. 21,
IN WITNESS WHEREOF, I hereunto set ~d and official seal.
~ /
~p J ) kr.!J~u
NoW Public
\
10
NON-COMPETITION AGREEMENT
1. Introduction. This Agreement is dated this 12th day of January, 2004, by and between
Terry J. Shetron, ("consultant" or "former shareholder") and Shetron Welding & Fabrication,
Inc., ("the Corporation").
2. Identification of Parties. Whenever in this agreement the tenns "you" or "your" are
used, reference is being made to you, the consultant. Whenever the term "Corporation" is used,
reference is being made to Shetron Welding & Fabrication, Inc., and all ofits successors and
assigns.
3. Consideration for Agreement. In consideration of your employment as a consultant,
your agreed-upon compensation, and the purchase of your one hundred (100) shares of common
stock in the Corporation; the sufficiency of which you hereby acknowledge, you agree to all of
the terms and conditions contained in this Agreement.
4. Restriction Against Competition
,
(a) Corporation's Trade Area. Corporation conducts its business in the trade area of
commercial steel and miscellaneous metal erection, fabrication of stairs and handrails, and
welding necessary for said erection and fabrication.
(b) You agree that for a period of five (5) years from the date of this Agreement, and
within a seventy-five (75) mile radius from 85 Kutz Road, Carlisle, Pennsylvania, you will not,
individually or in conjunction with any o,ther person, or as an consultant, agent, representative,
partner or holder of any interest in any other person, firm, corporation or other association:
(i) Solicit, entice, induce any person, firm or corporation, who or which at
any time during your employment with the Corporation was a customer
of the Corporation, to become a client or customer of any other person,
firm or corporation conducting business in the Corporation's trade area;
(ii) Authorize or direct any person, firm or corporation to solicit, entice or
induce any person, firm or corporation, who or which at any time
during your employment with the Corporation was a customer of the
Corporation, to become a customer of any other person, firm or
corporation conducting business in the Corporation' s trade area;
(iii) Solicit, entice or induce any person who presently is employed by the
Corporation, to become employed by any other person, firm or
corporation, and you shall not approach any such employee for such
purpose or authorize or direct the taking of such actions by any other
person;
(iv) Solicit, participate in, directly or indirectly, or accept business similar
"
to the Corporation's trade area from any person, firm or corporation,
who or which was a customer or prospect of the Corporation during
your employment with the Corporation and with whom you had
business contact while employed by the Corporation. "Contact" for
these purposes shall include your telephonic, written and/or face to face
business communication with representatives of the customer or
prospect. Nothing in the foregoing shall prohibit you, after termination
of employment with the Corporation from engaging in any business
that is not in competition with the Corporation.
5. Corporation's Acknowledgments. Corporation acknowledges that consultant is an
expert in the trade area ofmetaJ welding and fabrication and may work in said trade area within
the above-mentioned seventy-five (75) mile radius, so long as consultant first consults with and
gains the written approval of Corporation.
6. Remedies
(a) You acknowledge that the restrictions contained in this Agreement are reasonable and
necessary in view of the nature of the Corporation's businesses and in order to protect the
legitimate business interests of the Corporation. You further acknowledge that your violation of
the restrictions, or any of them, would result in irreparable injury to Corporation. Therefore, you
agree that, in the event of a breach or threatened breach by you of the provisions of paragraphs 4
or 5, the' CorPOration shall be entitled to obtain from any court of competent jurisdiction,
preliminary and permanent injunctive relief restraining you from any violation of the foregoing.
(b) Nothing herein shall be construed as prohibiting the Corporation from pursuing any
other remedies available to the Corporation for such breach or threatened breach.
(c) The parties acknowledge their intention that the 'Corporation shall have the broadest
possible protection of the value of Corporation's business in the trade area set forth above,
consistent with public policy. Should a court determine that the durational restrictions on post.
employment competition'are broader than public policy will permit, it will not violate the intent
of the parties if such court modifies the restriction(s) to the maximum temporal duration
permitted under public policy.
7. Survival. The provisions of paragraphs 4 and 6 shall survive the termination of your
employment, regardless of the reason for termination.
8. Miscellaneous
(a) This Agreement cancels and supersedes any and all prior agreements and
understandings between or among any and all of the parties hereto with respect to your
employment with the Corporation. This Agreement may not be modified in any respect except in
a writing signed by the parties hereto.
(b) All of the terms and provisions of this Agreement shall be binding upon and inure to
2
'.
the benefit6f and be enforceable by the respective heirs, executors, administrators, legal
representatives, successors and assigns of the parties hereto, except that your duties and
responsibilities hereunder are of a personal nature and shall not be assignable or delegatable, in
whole or in part, by you.
9. Agreement Becomes Void. This Agreement immediately becomes void should the
Corporation or Buyers, under the Stock Purchase Agreement, default on the terms of the Stock
Purchase Agreement, Promissory Note, Security Agreement, or any other agreement related to
the purchase of Corporation.
10. Controlling Law. The validity, interpretation, construction, performance and enforce-
ment of this agreement shall be govemed by the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties have signed this agreement on the date set forth above,
at Pennsylvania.
WITNESS:
Shetron Welding & Fabrication, Inc.
Ray Cullen, Owner and Officer
Shetron Welding & Fabrication, Inc.
Kirk Naugle, Owner and Officer
Terry J. Shetron
On this day of , 2004, before me, the
undersigned officer, personally appeared Terry Shetron, Ray Cullen, and Kirk Naugle, known to
me (or satisfactory proven) to be the person whose name is subscribed to the within Agreement
and acknowledged that she executed the same for the purpose therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public
3
the benefit of and be enforceable by the respective heirs, executors, administrators, legal
representatives, successors1imd assigns of the parties hereto, except that your duties and
responsibilities hereunder are of a personal nature and shall not be assignable or delegatable, in
whole or in part, by you.
9. Agreement Becomes Void This Agreement immediately becomes void should the
Corporation or Buyers, under the Stock Purchase Agreement, default on the terms of the Stock
Purchase Agreement, Promissory Note, Security Agreement, or any other agreement related to
the purchase of Corporation.
10. Controlling Law. The validity, interpretation, construction, performance and enforce-
ment of this agreement shall be govemed by the laws of the Commonwealth of Pennsylvania
IN WITNESS WHEREOF, the parties have signed this agreement on the date set forth above,
at Pennsylvania.
WITNESS:
./-?,~/
--~,
SIle'tronWelding & Fabrication, Inc.
Ra:V Cullen, Director and Officer
,~a~~,
Shetron Welding & FabricatiOn, Inc. '
Kirk Naugle, Director and Officer
~ /f ~/J~
ClJ2htr.tfj!..=z5~
Terry J. Shetron
On this -1L -ft., day of J,4,";UJHZ.~ ' , 2004, before me, the
undersigned officer, personally appeared Terry hetron, Ray Cullen. and Kirk Naugle, known to
me (or satisfactory proven) to be the person whose name is subscribed to the within Agreement
and acknowledged that she executed the same for the purpose therein contained.
IN WITNESS WHEREOF, I hereunto se d and official seal.
\.
'~
NOTARW. SEAL
,NON1GITWICI8,&.".
CIrIIII_~ 'I~ld
_en .. ...... 211,
No
3
SECURITYAGREEMENT
THIS AGREEMENT, made the 12th day of January, 2004, by and between Terry
J. Shetron, ("Secured Party"), an individual with his principal address at 1505 Walnut
Bottom Road, Newville, Cumberland County, Pennsylvania 17241 and Shetron Welding
& Fabrication, Inc., ("Borrower"). Shetron Welding and Fabrication, Inc., is a
corporation organized under the laws of the Commonwealth of Pennsylvania with its
principal place of business at 85 Kutz Road, Carlisle, Cumberland County, Pennsylvania,
17013.
WITNESSETH:
Borrower has executed and delivered to Secured Party a Promissory Note
("Note"), bearing even date herewith, and intend to fully perform as obligated under the
Note.
Secured Party desires to secure the Borrower's payment of all amounts due under
the Note and the Borrower's performance of all its obligations under the Note by taking a
security interest in certain Borrower's property.
NOW THEREFORE, intending to be legally bound by this Agreement, Borrower
and Secured Party mutually covenant and agree as follows:
1. Security Interest. Borrower hereby grants and conveys to Secured Party,a
continuing security interest in and lien upon all Collateral (as ,hereinafter defined", now
owned or hereafter acquired in connection with the conduct of the Borrower's business;
situate in the locations set forth in the opening paragraph of this Agreement, all in
accordance with the provisions of the Uniform Commercial Code l!S enacted I the
Commonwealth of Pennsylvania (the "UCC"). Such security interest is granted as
security for the payment of all amounts due by the Borrower to Secured Party under the
Note and Borrower's perfonnance of all ofits obligations under the Note. This
Agreement also covers and secures all other obligations of the Borrower to the Secured
Party, direct or indirect, absolute or contingent, due or to become due, whether now
existing or hereafter arising.
2. CollateraL For purposes of this Agreement, "Collateral" is defmed to include
all "equipment" and "inventory" (as such terms are defined in the UCC) of the Borrower
now owned or possessed or hereafter acquired, whether new or used, together with any .
additions, accessories and accessions now or hereafter attached thereto, substitutions
therefore and proceeds thereof, and including, without limitation, all proceeds of any
insUrance covering the equipment and inventory, and all tangible personal property
owned or possessed by Borrower and represented by a "Document of Title" (which is
defined herein to mean a certificate of origin, bill of sale, bill of lading, dock warrant,
dock receipt, order for the delivery of goods or a certificate of title, and also any other
document which in the regular course of business or fmancing is treated adequately
evidencing that the person in possession of it is entitled to receive, hold or dispose of the
document imd the goods it cover, including but not limited to motor vehicles, parts and
accessories). Without in any way limiting the generality of the foregoing definition of
Collateral as including and granting to Secured party a security interest in the proceeds of
equipment and inventory, it is understood that Collateral does include those accounts
receivable of Borrower relating to or arising out of payment obligations of third parties
for services performed by Borrower.
a) In addition to the general security interest granted above, Borrower
grants a first priority security interest to Secured Party in the following:
(i) All equipment and inventory listed in Schedule 2a(i) to this agreement.
b) Commerce Bank holds first priority interest on accounts receivable for a
line of credit in the name Borrower in the amount of $250,000. Borrower
grants a second priority interest to Secured Party on all accounts
receivable. Borrower grants Secured Party first priority interest on all
accounts receivable after satisfaction of Commerce Bank's first priority
interest.
3. Borrower's Warranties, Representations and Agreements. The Borrower
represents and warrants to Secured Party and agrees that:
a) Except for the security interest herein granted, there is no existing security
interest in the collateral for which Borrower have granted a specific security
interest to the Secured Party;
b) The Collateral is and will be used for business purposes;
c) The offices where Borrower keeps the Books and Records relating to the
Collateral is the address stated after the name of Borrower above, and
Borrower shall not remove the Books and Records or keep them at any other
place without giving Secured Party thirty days prior written notice thereof;
d) Borrower will permit Secured Party and its agents to have access to all of
Borrower's Books and Records and any other records pertaining to
Borrower's business which Secured Party may request, and will cause all
persons including attomeys and accountants, to make all such Books and
Records available to Secured Party and if deemed necessary by Secured Party,
Borrower agree to allow Secured Party to make copies of necessary Books
and Records;
e) The Collateral is and will be kept at the locations set forth as the Borrower's
address above except when temporarily in use at specific job sites in the
ordinary course of Borrower's business;
2
,"
f) Borrower must immediately notify'Secured Party in writing of any event
causing deterioration, loss or depreciation in value of any ,of the Collateral and
the amount of such loss or depreciation; ,
g) Borrower will not sell, exchange, lease, rent or otherwise dispose of any of the
Collateral or of any Borrower's rights therein, other than in the ordinary
course of Borrower's business, without the prior written consent of Secured
Party;
h) Borrower will care for and preserve the Collateral in good condition and
repair at all times and will pay the cost of repairs to and maintenance and
preservation of the Collateral and will not permit anything to be done that may
impair the value of any of the Collateral or the security intended to be
afforded by this Agreement;
'i) Until the occurrence of an Event of Default, as listed in the Note and defmed
below, Borrower may use the Collateral in any lawful manner not inconsistent
with the agreements herein or with the terms and conditions of any policy of
insurance thereon;
j) No Event of Default has occurred and no event has occurred which, with the
passage of time or the giving of notice or both, could be an Event of Default
in the Note and hereunder;
k) Borrower will notify the Secured Party in writing prior to beginning to engage
in any corporate or fictitious name other than its present coIporate name;
I) Borrower will not use the Collateral in violation of any federal, state or local
statute or ordinance;
, m) Borrower will comply with each covenant set forth in the Note and the Loan
Agreement;
n) Borrower will not hereafter grant a security interest in the Collateral to any
person, form or corporation;
0) Borrower will keep itself and the Collateral insured against all hazards I such
amounts and by such insurers as are satisfactory to Secured Party, with
insurance policies which provide for at least ten (10) days prior written notice
to Secured Party of any cancellation or reduction in coverage.
p) In the event ofloss of the Collateral, Borrower agrees to apply any insurance
proceeds to pay down or satisfy the debt as outlined in the Note.
3
,.
.
4. Use ofCollatera/; Casualty. Until the occurrence ofan Event of Default,
Borrower may sell and;use the Collateral in the course of its business and accept the
return of and repossess goods constituting the Collateral;
5. Event of Default Any of the following shall constitute a default hereunder:
a) Borrower's failure to promptly make any payment under the Note.
b) Borrower's failure to promptly perform any of the provisions contained in this
Agreement and Note.
c) Borrower's default or breach of the Purchase Agreement or Commercial
Lease Agreement.
d) The making or levying of any attachment or execution on collateral.
e) The filing of a petition in bankruptcy or insolvency, or for the appointment of
a receiver in liquidation or a trustee, by or against Borrower or for any of
Borrower's property. '
f) Borrower's making any assignment for the benefit of creditors.
. g) The filing of a petition or other proceeding by or against Borrower for
reorganization, compromise, adjustment or other relief under the laws of the
United States or of any state. relating to the relief of Borrower.
h) Secured party's deeming Borrower to be insecure for failure to make payment.
6. SecureiParty's Rights and Remedies. Upon or after the occurrence of any
Event of Default, Secured Party may do any or all of the following, all of which rights
and remedies shall be cumulative and any and all of which may be exercised from time to
time and as often as Secured Party, shall deem necessary or desirable:
a) Exercise any and all rights, privileges and remedies available to Secured Party
under this Agreement, the Notes and the Loan Agreement, and of a secured
party under the UCC, or any other applicable law, including without limitation
the right to require the Borrower to assemble the Collateral and make it
available to Secure Party at a designated place reasonably convenient for
disposition;
b) Cure any default in any reasonable manner and add the cost of any such cure
to the amount due under the Note and accrue interest thereon at the rate then
being charged by Secured Party under the Note;
c) Retain all of Borrower's Books and Records;
4
d) Upon five days prior written notice to Borrower, which notice Borrower
acknowledges is sufficient, proper and commercially reasonable, Secured
Party may sel1, lease or otherwise dispose of the Col1ateral, at any time and
from time to time, in whole or in part, at public or private sale, without
advertisement or notice of sale, all of which are hereby waived, and apply the
proceeds of any such sale:
(i) first, to the expenses of Secured Party in preparing the
Col1ateral for sale, selling and the like, including without
limitation reasonable attomeys' fees and expenses
incurred by Secured Party (including fees and expenses
of any litigation incident to any of the foregoing):
(ii) second, to the payment in full of all sums owing to
Secured Party under the Note and the satisfaction of all of
the Borrower's obligations under the Note; and
(iii) Any excess shall be paid to Borrower.
e) The waiver of any Event of DefauIt, or Secured Party's failure to exercise any
right or remedy hereunder, shall not be deemed a waiver of any subsequent
Event of Default or of the right to exercise that or any other right or remedy
aVailable to Secured Party.
7. Borrower's Other Property. Secured Party is hereby given a lien upon, and a
security interest in all property of Borrower now or at anytime hereafter in the possession
of Secured Party in any capacity whatsoever, including but not limited to any balance or
share of any deposit, trust or agency account, as security for the payment Note, and
Secured Party shall have the same rights to such property as it has with respect to the
Collateral.
8. Miscef/aneous. The rights and privileges of Secured Party under this
Agreement will inure to the benefit of its endorsers, successors and assigns forever. AIl
representations, warranties and agreements of Borrower contained in this Agreement will
survive this Agreement. This agreement will be govemed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania. If any provision of this
Agreement will for any reason be held to be invalid or unenforceable, such invalidity or
unenforceability will not affect any other provision hereof, but this Agreement will be
construed as if such invalid or unenforceable provision had never been contained herein.
A name change by Borrower shall in no way affect the validity of this Agreement.
5
"
IN WITNESS WHEREOF, Borrower and Secured Party have caused this Security
Agreement to be duly executed and sealed as of the day and year first above written.
,.~~
"
i / .
~.1.rr-~ I,
Shetron Welding & Fabrication, Inc.
Ray Cullen, Director and Officer
~
Shetron Welding & Faorication,
Kirk Naugle, Direct~r and Officer
$lY4;/:;).J!d;.~
Terry J. Shetron, Secured Party
rJ~ \ .
On this _1 t- day of _ \r..tJLL~ ' 2004, before me, the
undersigned officers, personally appeared Ray ullen, Kirk Naugle and Terry J. Shetron,
known to me (or satisfactory proven) to be the person whose name is subscribed to the
within Agreement and acknowledged that she executed the same for the purpose therein
contained.
IN WITNESS WHEREOF, I hereunt~y hand and official seal.
" '
" \ ~
MOTNVUEH. "- .'}, ~.
=~~ NO~liC
....CI.. . '.. - ~-..
-, ... .......-....
6
"
,
Schedule 2a(i)
7
m
SHETRON WELDING & FABRICATION, INC.
.
"Your First Choice In Welding"
Fabricatfon &. Repair; Shop &. Portable
85 Kutz Road . Carllsle, PA 17013
(717) 776-4344 · FAX (717) 776-4220
INVENTORY
VEHICLES
Terry Shetron
Owner
VEHICLE ESTIMATE VALUE
6/2003
2002 CHEVY WHITE $26,000.00
VTN IGBHK24U12E242277
1994 JEEP GRAND CHEROKEE $7,650.00
VIN 1J4GZ58SXRC355920
2000 DODGE DURANGO $18,000.00
VIN lB4HS28Z9YF125144
2000 DODGE TRUCK (RED) $18,500.00
VJN 3B6MC3663YM216136 .
2001 DODGE DUALLY $30,000.00
TRUCK(MAROON)
VIN 1B7MF33721J541055
1995 DODGE DUALLY TRUCK $14,000.00
(BLKIMAROON)
VIN 3B7MF33C3SM132743
1995 DODGE TRUCK (WHITE) $12,000,00
VIN 1B7KF26C8SS228579
2000 GMC TRUCK $18,000.00
VIN 1 GTGK24UXYE207317
1992 CHEVY TOOLBOX TRUCK $6,000.00
VIN 1GCFC24HONE217085
1998 CHEVY TRUCK(WHlTE) $14,000.00
VIN 1GBGK24R1WEI08043
2000 STERLING CR.A.NE TRUCK $66,000.00
VIN 2FZHRJAAXYAF35395
TOTAL $230,150,00
m
SHETRON WELDING & FABRICATION, INC.
"Your First Choice In Welding"
Fabrication & Repair; Shop & Portable
85KutzRoad . Carlisle.PA 17013
(717) 776-4344 . FAX (717) 776-4220
Terry Shetron
Owner
INVENTORY
TRAILERS
TRAILER ESTIMATE VALUE 6/2003
200130' BT TRAILER $6,000,00
VIN 4KPFT37221P002833
2002 30' TRAILER $6,000.00
VIN 4KPFT37282P002971
200018' EAGLE TRAILER $2,000.00 ,
VIN 4KPFT24231P002826
199814' PEQUEA TRAILER $2,000.00
. VIN 4JADS22XWGOOOO51
200240' EAGLE TRAILER $8,000.00
VIN 4KPFT47272POO2978
2002 20" EAGLE TRAlLER $2,200.00
VIN 4ZZFT23222POO8809
1999 20' PEQUEA TRAILER $3,500.00
V1N 4JADS202IXG100303 ,
199818' CROSS COUNTRY $3,500.00
VlN 431FS1624WIOOO939
TOTAL $33,200.00
m
SHETRON WElDING & F ABRlCATlON, iNc.
"Your First Choice In Welding"
Fabrication & Repair; Shop & Portable
85 Kutz Road . Carllsle. PA 17013
(717) 776-4344 . FAX (717) 776-4220
"
,
Terry Shetron
Own....
INVENTORY
PORTABLE TRUCK SUPPLIES
TOOL QTY EST. ESTIMATE
VALUE VALUE 6/2003
EACH
HEAVY DUTY 100' 2 $35,00 $70.00
EXTENSION CORD
50' EXTENSION CORD 2 S10.00 $20.00
HAND CHAIN HOIST 1 $300.00
BOSCH HAMMER DRILL 1 $125.00
KIT
. ' . , MIL W AKEE HAMMER I $125.00
DRILL KIT
DEWALT IMPACT 1 $155.00
3" CORE BITS 2 $25.00 $50.00
HIL TI CORE DRILL 1 $1.400.00
PORTA BAN 1 $150.00
MIL WAKEE SA WSALL I $110.00
MATABO GRINDERS 2 $100,00 $200.00
(SMALL)
PORTA POWER 10 TON 1 $200,00
DEWALT OR BOSCH KIT 1 $450.00
(HAMMER DRILL. SA WSALL,
SKILLSA W, LIGHTI
LARGE BESSIE CLAMP 2 $110.00 $220,00
..#11 CLAMPS 5 $10.00 $50.00
VICE GRIPS 3 $7.00 $21.00
WELDING PLIERS 2 $10.00 $20.00
TORCH 1 $150.00
"
,
MILLER 110 MIG 1 $500.00
WELDER
,
TOTAL PER TRUCK , $4,316.00
$4316.00 X 6 PORTABLE $25,896.00
WELDING TRUCKS
E
SHElRON WELDING & FABRICATION, iNC.
.
"Your First Choice In Welding"
Fabrication & Repair; Shop & Portable
85 Kutz Road · Carlisle. PA 17013
(717) 7764344 · FAX (717) 7764220
Terry Shetron
Own..r
INVENTORY
FIELD EQUIPMENT
ITEM QUANTITY EST, ESTIMATE VALUE
VALUE 6/2003
EACH
DAEWOO FORKLIFT 1 $16.000.00
NASSON FORKLIFT 1 $8,000.00
2000 NEW HOLLAND I $14,000.00
SKIDLOADER ,
KOMATSU FORKLIFT 1 $10,500.00
JLG 40H BOOMLIFT 1 $12,000.00
GRADALL PETIBONE 1 $22,500.00
JLG MANLIFTz033 1 $4,000.00
11G MANLIFT IIOH 1 $12,000.00
TOTAL , $99.000.00
,
In
SHETRON WELDING & FABRICATION, ;iNC.
"Your First Choice In Welding"
Fabricatlon & Repair; Shop & Portable
85 KutzRoad . CarUsIe,PA 17013
(717) 776-4344 . FAX (717) 776-4220
Terry Shetron
Our"er
INVENTORY
ROTATING STOCK
STOCK ITEM ESTIMATE VALUE
6/2003
WELDING WIRE $1,200.00
WELDING RODS $400.00
PAINT $460.00
PRJlv.fER $,4,200.00
I-BEAMS $6,200,00
PLATE STEEL $8,800.00
ALUMINUM PIPE $7,400.00
STEEL PIPE $11.400.00
BAR SrOCK $12,200.00
ANGLE IRON $4,100.00
CHANNEL IRON $3,100.00
SQUARE & RECTANGULAR TUBING $2,450.00
PIPE BOLLARDS $6,100.00
ANCHOR CONCRETE $680.00
MISe, HARDWARE, FASTENERS, $4,100.00
BOLTS, ETC.
TOTAL $72,790,00
m
SHETRON WELDING & FABRICATION, iNC.
"Your First Choice Tn Wefding"
Fabrlcation & Repajr; ShoP & Portable
85KutzRoad . CarJisle,PA 17013
(717) 776-4344 . FAX (717) 776-4220
"
.
Terry Shetron
O"m<<l'
INVENTORY
SHOP TOOLS/EQUIPMENT/SUPPLIES
ITEM QUANTITY EST ESTIMATE
VALUE VALUE
EACH 6/2003
60" GAS CYLINDERS 42 $290 $12,180.00
48" GAS CYLINDERS 11 $240 $2.640.00
40" GAS CYLINDERS '. 16 $195 $3.120.00
40" FAT GAS 2 $225 $450.00
CYLINDERS
FIRE EXT. 10# 22 $40 $880.00
FIRE EXT 2!)# ~---12 -.-.. ..--$-'5' $600,00
FIRE EXT. 2.5# 28 $20 $560.00
STEEL WORK TABLES 22 $20,320.00
STEEL MOVlNG 14 $400 $5,600.00
WAGONS
LONG STEEL MOVING 3 $650 $2,050.00
WAGONS
Fuel tanks 2 $1,200.00
Paint racks 9 $125 $1,125.00
Mag drills 5 $1000 $5.000.00
Spray guns md pots $4,000.00
Air compressor 2 $5.000.00
Portable smoke eaters 2 $4,200.00
Skatfolding $3.000.00
Smail grinders 17 $100 $1,700.00
Large grinders 8 $150 $1,200.00
Clamps 11 SP 48 $10 $480.00
12" Bessie clamps 19 $50 $950,00
, Steel cutting saw 5 $400 $2,000.00
VerticaJ band saw 1 $4,500.00
Janey super notcher 1 $3.400.00
Jancy cold saw 2 $3,000 $6,000.00
Grissly bandsaw 1 $2,500,00
J mcy bender 1 , $9,000.00
Janey superbender ER60A I 1 $7,000.00
Drill press 16 sp. 1 $350.00
Edwards ironworke;r 100 2 $8,000 $16,000.00
ton
70's pacific brake 1 I $26,000.00
70' s pacific shear 1 $23,000.00
2 ton overhead crane $10,000.00
Overhead crane $12.000.00
Overhead crane ' $12.000.00
~er polisher 1 $6780.00
Alum. Pipe polisher 1 $7,000.00
Air filtration ~ts fOTshclP" , " , $3770.00
High lift ladder $850.00
Air filtration kit $2500.00
Pipe notchet . $6,000.00
Genie lift 2 $500 $1,000.00
Diesel welders 2 $3,000 $6,000.00
Bobcat welders 3 $1200 $3,600.00
,
Legend welder 1 $1,200.00
Trailblazer welders 3 $3000 $9.000.00
Ranger 9 welder 1 $1,200.00
HobartlMiller Mis welders 4 $600 $2.400,00
Miller 250x welders 10 $1,400 $14,000.00
Lincoln stick welders 4 $500 $2,000.00
Miller rig welders 2 $4.500 $9,000,00
Lincoln Tig welder 1 $1,000.00
LN 25 suitcase welders 2 $1.000.00 $2,000.00
-- I
Total $289,305.00
II
SHElRON WELDIN~ & F ABRlCATION, INC.
"Your First Choice In Welding"
Fabrication 8r. Repair; Shop &. Portable
85 Kutz Road . CarUsle, fA 17013
(717) 776-4344 . FAX (717) 7764220
Tenv ShetroD
Own6l"
INVENTORY
OFFICE EQUIPMENT/SUPPLIES
ITEM QUANTITY ESTIMATE
VALUE
6/2003
HP270 COPIER 1 $100.00
CANON F AXPHONE B740 1 $350.00
HP990 PRINTER 1 $75.00
LEXMARK X73 PRINTER- 1 $150.00
HP DESIGN JET 430 1 $500.00
XEROX 3040 DRAWING COPIER 1 $5,000.00
00' DELL &.00 PENT II $500.00
00' DELL 3800 NOTEBOOK $600.00
OO'DELL 650 PENT n $500.00
96'DELL 400 PENT IISYST $200.00
00' 500 Mh PENT II $300.00
02'CUSTOM COMPUTER $500.00
02' INFINITY COMPU'rER $500.00
02' INFINITY COMPutER $500.00
TELEPLUSPHONESYSTEM $4,500.00
NEXTEL CELL PHONES 17 $1,000.00
WALKIE TALKIES 6 $300.00
4-DR FILE CABINET 4 $200.00
2.DR FILE CABINET 5 $125.00
DESKS $150.00
- - BLUEPRlNT W ALLRACK- -5 $1,500.00
BLUEPRINT FLOOR RACK 5 $1,000.00
LG: REFRIGERATOR 1 $50.00
, -
,
SM. REFRIGERATOR 1 $75.00
MICROW A VB 3 $150.00
WATER COOLER 1 $100.00
COMPUTER SOFTWARE $16,400.00
(AUTOCAD,STEEL DETAILING,
MASTER BUILDERS, ETC.)
MISC. OFFICE FURNITURE $725.00
MISC. OFFICE SUPPLIES $500.00
TOTAL $36,550.00
e
t;, jll '..) -.; It S
.
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COMMERCIAL PROPERTY LEASE AGREEMENT
THIS AGREEMENT, dated this 12th day of January, 2004, by and between Shetron
Welding and Fabrication, Inc. (hereinafter called Lessee), and Terry J. Shetron (hereinafter
called Lessor). Lessor does hereby demise and let unto Lessee all that certain real property at 85
Kutz Road, Carlisle, Cumberland County, Pennsylvania, to be used and occupied as the place of
business for Lessee and for no other purpose, for the term of ten (10) years, beginning the 1 Sl day
of February ,2004, and ending the final day of February 2015, for the rental payment set for the
fIrst fIve (5) years at Eight Thousand Two Hundred and Fifty Dollars ($8,250.00), payable in
monthly installments, due on or before the 1 st day of each month, with the first installment to be
paid on or before the 1st day of February, 2004. After the first fIve (5) year term, the rental
payment shall be adjusted according to the Consumer Price Index (CPI) with a maximum
increase of 12% for the remaining five (5) year term. In no event shall the rental payment be
adjusted to an amount less than $8,250.00 per month.
2. Additional Rent.
(a) Damages for Default. Lessee agrees to pay as rent in addition to the minimum rental
for any and all sums which may become due by reason of the failure of Lessee to comply with all
of the covenants of this lease and any and all damages, costs and expenses which the Lessor may
suffer or incur by reason of any default of the Lessee or failure on his part to comply with the
covenants of this lease, and each of them. and also any and all damages to the demised premises - ~
caused by any act or neglect of the Lessee.
(b) Taxes. Lessee further agrees to pay as rent in addition to the minimum rental all taxes
assessed or imposed upon the demised premises and/or the building of which the demised
premises is a part during the term of this lease, in excess of and over and above those assessed or
imposed at the time of making this lease. The amount due hereunder on account of such taxes
shall be apportioned for that part of the first and last calendar years covered by the term. The
same shall be paid by Lessee to Lessor on or before the first day of July of each and every year.
3. Place of Payment. All rents shall be payable without prior notice or demand at the
office of Lessor at 1505 Walnut Bottom Road, Newville, Pennsylvania 17241, or at such other
place as Lessor may from time to time designate by notice in writing.
4. Affirmative Covenants of Lessee. Lessee covenants and agrees that be will perform the
following without demand:
(a) Payment of Rent. Pay the rent and all other charges on the days and times and at the
place that they are made payable, without fail, and if Lessor shall at any time or times accept the
rent or rent charges after they shall have become due and payable, such acceptance shall not
excuse delay upon subsequent occasions, or constitute or be construed as a waiver of any of
Lessor's rights. Lessee agrees that any charge or payment agreed to be treated or collected as rent
and/or any other charges or taxes, expenses, or costs to be paid by the Lessee may be proceeded
for and recovered by ihe Lessor by distraint or other process in the same manner as rent due and
-
,.
in arrears.
(b) Fire Insurance. Lessee further agrees to maintain and pay all fIre insurance premiums
upon the demised premises and/or the building of which the demised premises is a part during
the entire term of this Agreement.
(c) Liability Insurance. Lessee agrees to maintain and pay all liability insurance
premiums for the demised premises during the entire term of this Agreement.
(d) Miscellaneous Insurance. Lessee agrees to maintain and pay all insurance premiums
necessary as a result of the type of business activity and trade being conducted in or on the
demised property during the entire term of this Agreement.
(e) Cleaning, Repairing, etc. Keep the demised premises clean and free from all ashes,
dirt and other refuse matter; replace all glass windows, doors, etc., broken; keep all waste and
drain pipes open; repair all damage to plumbing and to the premises in general; keep the same in
good order and repair as they now are, reasonable wear and tear and damage by accidental fIre or
other casualty not occurring through negligence of Lessee or those employed by or acting for
Lessee alone excepted. Lessee agrees to be responsible for all repairs not classified and defined
as "major repairs" in paragraph 8(f). The Lessee agrees to surrender the demised premises in the
same condition in which Lessee has agreed to keep the same during the continuance of this lease.
. (f)Requirements of Public Authorities. Comply with any requirements of any of the
constituted public authorities, and with the terms of any state or federal statute or local ordinance
or regulation applicable to Lessee or his use of the demised premises, and indemnify Lessor from
penalties, fines, costs or damages resulting from failure so to do.
(g) Fire. ~se every reasonable precaution against fire.
(h) Rules and Regulations. Comply with rules and regulations of Lessor promulgated as
provided in this Agreement.
(i) Surrender of Possession. Peaceably deliver up and surrender possession of the
demised premises to the Lessor at the expiration or sooner termination of this lease, promptly
delivering to Lessor at its office all keys for the demised premises.
G) Notice of Fire, etc. Give to Lessor prompt written notice of any accident, fIre, or
damage occurring on or to the demised premises.
(k) Condition of Pavement. Lessee shall be responsible for the condition of the pavement,
curb, cellar doors, awnings and other erections on the pavement during the term of this lease;
shall keep the pavement free from snow and ice, and shall be, and hereby agrees that Lessee is
solely liable for any accidents, due or alleged to l?e due to their defective condition, or to any
accumulations of snow and ice.
(1) Environmental Responsibility. Lessee shall exercise reasonable environmental
2
-
responsibility and agrees to be held liable for all liability and costs involved for environmental
hazards created through the failure of the Corporation or a Corporation employee to exercise
reasonable environmental responsibility. As part of the Purchase Agreement a Phase I
Environmental Study is to be completed to ensure that Lessor is not responsible for any
environmental hazards or contamination to the demised premises prior to the date of the
Purchase Agreement.
5. Negative Covenants of Lessee. Lessee covenants and agrees that he will do none of the
following things without the consent in writing of Lessor:
(a) Use of Premises. Occupy the demised premises in any other manner or for any other
purpose than as above set forth.
(b) Assignment and Subletting. Assign, mortgage or pledge this lease or underlet or
sublease the demised premises, or any part of it, or permit any other person, firm or corporation
to occupy the demised premises, or any part of it; nor shall any assignee or sublessee assign,
mortgage or pledge this lease or such sublease, without an additional written consent by the
Lessor, and without consent no assignment, mortgage or pledge shall be valid. If the Lessee
becomes embarrassed or insolvent, or makes an assignment for the benefit of creditors, or if a
petition in bankruptcy is filed by or against the Lessee or a bill in equity or other proceeding for
the appointment of a receiver for the Lessee is filed, or if the real or personal property of the
Lessee shall be sold or levied upon by any sheriff, marshal or constable, the same shall be a
. __ _ violation of this covenant. .
(c) Alterations, Improvements. Make any alterations, improvements, or additions to the
demised premises without Lessor's prior written consent. All alterations, improvements,
additions or fixtures, whether installed before or after the execution of this lease, shall remain
upon the premises at the expiT8;tion or sooner determination 'of this lease and become the
property of Lessor, unless Lessor shall, prior to the determination of this lease, have given
written notice to Lessee to remove such alterations, improvements and additions and restore the
premises to the same good order and condition in which they now ~. Should Lessee fail to do
so, Lessor may do so, collecting, at Lessor's option, the cost and expense from Lessee as
additional rent.
(d) Fire Insurance. Do or allow to be done, any act, matter or thing objectionable to the
fire insurance companies so that the fire insurance or any other insurance now in force or here-
after to be placed on the demised premises, or any part of it, or on the building of which the
demised premises may be a part, shall become void or suspended, or whereby the same shall be
rated as a more hazardous risk than at the date of execution of this lease. In case of a breach of
this .covenant (in addition to all other remedies given to Lessor in case of the breach of any of the
conditions or covenants of this lease) Lessee agrees to pay to Lessor as additional rent any and
all increase or increases of premiums on insurance carried by Lessor on the demised premises, or
any part of it, or on the building of which the demised premises may be a part, caused in any way
by the occupancy of Lessee.
(e) Removal afGoods. Remove, attempt to remove or manifest an intention to remove
3
-
. Lessee's goods or property from or out of the demised premises otherwise than in the ordinary
and usual course of business, without having first paid and satisfied Lessor for all rent which
may become due during the entire term of this lease.
(f) Vacate Premises. Vacate or desert the premises during the term of this lease, or permit
the same to be empty and unoccupied.
6. Inspection of Premises. Lessor shall at all reasonable times, by itself or its duly
authorized agents, have the right to go upon and inspect the demised premises and every part of
it, and/or at its option to make repairs, alterations and additions to the demised premises. No
alterations or additions shall be made by Lessor without first consulting Lessee.
7. Responsibility of Lessee. Lessee agrees to be responsible for and to relieve and hereby
relieves the Lessor from all liability by reason of any injury or damage to any person or property
in the demised premises, whether belonging to the Lessee or any other person, caused by any
fire, breakage or leakage in any part or portion of the demised premises, or any part or portion of
the building of which the demised premises is a part, or from water, rain or snow that may leak
into, issue or flow from any part of the said premises, or of the building of which the demised
premises is a part, from the drains, pipes, or plumbing work of the same, or from any place or
quarter, whether such breakage, leakage, injury or damage be caused by or result from the
negligence of Lessor or its servants or agents or any person or person. Lessee also agrees to be
responsible for and to relieve and hereby relieves Lessor from all liability by reason of any
-damage or injury to any person or thing which may arise from or be due to the use, misuse or..
abuse of all or any of the elevators, hatches, openings, stairways, hallways of any kind which
may exist or hereafter be erected or constructed on the premises, or from any kind of injury
which may be caused on the premises or of which the demised premises is a part, whether such
damage, injury, use, misuse or abuse be caused by or result from the negligence of Lessor, its
servants or agents or any other person or pers,ons.
8. Responsibility of Lessor.
(a) Damagefor Interruption of Use. Lessor shall not be liable for any damage,
compensation or claim by reason of inconvenience or annoyance arising from the necessity of
repairing any portion of the building, the interruption in the use of the premises, or the
termination of this lease by reason of the destruction of the premises.
(b) Representation of Condition of Premises. The Lessor has Jet the demised premises in
their present condition and without any representations on the part of the Lessor, its officers, em-
ployees, servants and/or agents. It is understood and agreed that Lessor is under no duty to make.
repairs or alterations at the time of letting or at any time thereafter.
( c) Zoning. It is understood and agreed that the zoning classification for said property is
Industrial. Lessor does not warrant or undertake that the classification will remain Industrial.
Should the zoning classification be changed due to circumstances outside the control of the
Lessor and Lessee, Lessee agrees that this lease shall not terminate without Lessor's consent, and
the Lessee shall use the premises only in a manner permitted under such zoning ordinance or
4
,.
. .
. regulation. Lessee agrees to incur all expense involved in contesting any and all proposed
zoning changes.
(d) Water. Lessor agrees to pay all amounts necessary to provide and maintain well water
service for the demised premises. If Lessee h~ a need for an increased water supply due to trade
activity being conducted by Lessee, Lessee agrees to pay all amounts necessary to create an
increased water supply.
(e) Sewer. Lessor further agrees to pay all amounts necessary to provide and maintain a
non-public septic system for the disposal of all sewage created by the demised premises. This
excludes payment for repairs to the septic system due to improper use or negligence by Lessee
and its agents.
(f) Major Repairs. Major repairs are defined as repairs that are in excess of Five
Thousand Dollars ($5,000.00). Lessor agrees to be responsible for making and paying for all
major repairs that are not due to the negligence or fault of Corporation or an employee or officer
of Corporation.
~. Miscellaneous Agreements and Conditions.
(a) Effect of Repairs on Rental. No contract entered into or that may be subsequently
entered into by Lessor with Lessee, relative to any alterations, additions, improvements or
repairs, nor the failure of Lessor to make such alterations, additions, improvements or repairs as
required by any such contract, nor the making by Lessor or its agents or contractors of such alter-
ations, additions, improvements or repairs shall in any way affect the payment of the rent or
other charges at the time specified in this lease.
(b) Waiver of Custom. It is hereby covenanted and a~d that notwithstanding any law,
usage or custom, Lessor shall have the right at all times to enforce.the covenants and provisions
of this lease in strict accordance with its terms, notwithstanding any conduct or custom on the
part of the Lessor in refraining from so doing at any time or times; and, further, that the failure of
Lessor at any'time or times to enforce its rights under these covenants and provisions strictly in
accordance with the same shall not be construed as having created a custom in any way or
manner contrary to the specific terms, provisions and covenants of this lease or as having in any
way or manner modified the same.
(c) Conduct of Lessee. This lease is granted upon the express condition that Lessee and/or
the occupants of the premises herein leased, shall not conduct themselves in a manner which the
Lessor in its sole opinion may deem improper or objectionable, and that if at any time during the
term of this lease or any extension or continuation, Lessee or any occupier of the premises shall
have conducted himself, herself or themselves in a manner which Lessor in its sole opinion
deems improper or objectionable, Lessee shall be taken to have broken the covenants and
conditions of this lease, and Lessor will be entitled to all the rights and remedies granted and
reserved in this Agreement, for the Lessee's failure to observe any of the covenants and
conditions of this lease.
5
-,
,
. (d) Failure of Lessee to Repair, In the event of the failure of Lessee promptly to perform
the covenants of Section 4(b), Lessor may go upon the demised premises and perform such
covenants, the costs, at the sole option of Lessor, to be charged to Lessee as additional and
delinquent rent.
10. Remedies of Lessor, If the Lessee:
(a) Does not pay in full when due any and all installments of rent and/or any other charge
or payment reserved, included. or agreed to be treated or collected, as rent and/or any other
charge, expense, or cost agreed to be paid by the Lessee; or
(b) Violates or fails to perform or otherwise breaks any covenant or agreement herein
contained; or '
(c) Violates or fails to perform or otherwise breaks any covenant or agreement contained
in the Stock Purchase Agreement and Promissory Note; or
(d) Vacates the demised premises or removes or attempts to remove or manifests an
intention to remove any goods or property therefrom other than in the ordinary and usual course
of business without having first paid and satisfied the Lessor in full for all rent and other charges
then due or that may thereafter become due until the expiration of the then current term, above
mentioned; or
(e) Becomes insolvent, or makes an assignment for the benefit of creditors, or if a petition
in bankruptcy is filed by or against the Lessee or a bill in equity or other proceeding for the
appointment of a receiver for the Lessee is filed, or if proceedings for reorganization or for
composition with creditors under any state or federal law are instituted by or against Lessee, or if
the real or personal property of the Lessee shall be sold or levied upon by any sheriff, marshal or
constable, then and in any or either of these events, there shall be deemed to be a breach of this
lease, and due to that breach and without entry or other action by Lessor;
, .
(i) The rent for the entire unexpired balance of the term of this lease, as well as all
other charges, payments, costS and expenses agreed to be paid by the Lessee, or at the op-
tion of Lessor any part of it, and also costs and officer's commissions including
watchman's wages and further including the five percent chargeable by Act of Assembly
to the Lessor, shall, in addition to any and all installments of rent already due and
payment herein reserved, included or agreed to be treated or collected as rent, and/or any
other charge, expense or cost agreed to be paid by the Lessee which may be due and
payable and in arrears, be taken to be due and payable in arrears as if by the terms and
provisions of this lease, the whole balance of unpaid rent and other charges, payments,
taxes, costs and expenses were on that date payable in advance; and if this lease or any
part is assigned. or if the premises or any part is sublet, Lessee hereby irrevocably
constitutes and appoints Lessor Lessee's agent to collect the rents due by such assignee or
sublessee and apply the same to the rent due without in any way affecting Lessee's
obligation to pay any unpaid balance of rent due hereunder or in the event of any of the
foregoing at any time at the option of Lessor;
6
..
(ii) This lease and the term hereby created shall,terminate and become absolutely
void without any right on the part of the Lessee to save the forfeiture by payment of any
sum due or by other performance of any condition, term or covenant broken; whereupon,
Lessor shall be entitled to recover damages for such breach in an amount equal to the
amount of rent reserved for the balance of the term of this lease.
11. Further Remedies of Lessor. In the event of any default as above set forth in Section
10, the Lessor, or anyone acting on Lessor's behalf, at Lessor's option:
(a) may without notice or demand enter the demised premises, breaking open locked
doors if necessary to effect entrance, without liability to action for prosecution or damages for
such entry or for its manner, for the purpose of distraining or levying and for any other purposes,
and take possession of and sell all goods and chattels at auction, on three days' notiCe served in
person on the Lessee, or left on the premises, and pay the Lessor out of the proceeds, and even if
the rent is not due and unpaid, should the Lessee at any time remove or attempt to remove goods
and chattels from the premises without leaving enough thereon to meet the next periodical
payment, Lessee authorizes the Lessor to follow for a period of ninety days after such removal,
take possession of and sell at auction, upon like notice, sufficient of such goods to meet the
proportion of rent accrued at the time of such removal; and the Lessee hereby releases and
discharges the Lessor, and his agents from all claims, actions, suits, damages and penalties, for or
by reason or on account of any entry, distraint, levy, appraisement or sale; and/or
(b) may enter the premises, and without demand proceed by distress and sale of the goods
there found to levy the rent and/or other charges payable as rent, and all costs and officers'
commissions, included watchmen's wages and sums chargeable to Lessor, and further including
a sum equal to five percent (5%) of the amount of the levy as commissions to the constable or
other person making the levy, shall be paid by the Lessee, and in,such case all costs, officers'
commission and other charges shall immediately attach and become part of the claim of Lessor
for rent, and any tender of rent without the costs, commission and charges made after the issue of
a warrant of distress shall not be sufficient to satisfy the claim of,the Lessor. Lessee hereby
expressly waives in favor of Lessor the benefit of all laws now made or which may hereafter be
made regarding any limitation on the goods upon which, or the time within which, distress is to
be made after removal of goods, and further relieves the Lessor of the obligations of proving or
identifying such goods, it being the purpose and intent of this provision that all goods of Lessee,
whether upon the demised premises or not, shall be liable to distress for rent.
( c) The Lessee further waives the right to issue a Writ of Replevin under the
Pennsylvania Rules of Civil Procedure No. 1071 et seq. and Laws of the Commonwealth of
Pennsylvania under any other law previously enacted or now in force or which may be hereafter
enacted, for the recovery of any articles, household goods, furniture, etc., seized under a distress
for rent or levy upon an execution for rent, damages or otherwise; all waivers mentioned above
are hereby extended to apply to any such action; and/or
(d) May lease the premises or any part or parts of it to such person or persons as may in
Lessor's discretion seem best and the Lessee shall be liable for any loss of rent for the balance of
7
.,
,
the then current term.
12. Ejectment. When this lease shall be terminated by condition broken, either during the
original term of this lease or any renewal or extension, and also when and as soon as the term
hereby created or any extension shall have expired, it shall be lawful for any attorney as attorney
for Lessee to file an agreement for entering in any competent court an amicable action and
judgment in ejectment against Lessee and all persons claiming under Lessee for the recovery by
Lessor of possession of the demised premises, for which this lease shall be his sufficient warrant,
whereupon, if Lessor so desires, a writ of possession may issue, without any prior proceedings
whatsoever, and provided that iffor any reason after such action shall have been commenced the
same shall be determined and the possession of the premises hereby demised remain in or be
restored to Lessee. Lessor shall have the right upon any subsequent default or defaults, or upon
the termination of this lease, to bring one or more amicable action or actions to recover
possession of the said premises,
13. Affidavit of Default. In any amicable action of ejectment and/or for rent in arrears,
Lessor shall first cause to be filed in such action an affidavit made by it or someone acting for it
setting forth the facts necessary to authorize the entry of judgment, of which facts such affidavit
shall be conclusive evidence, and if a true copy of this lease (and of the truth of the copy such.
affidavit shall be sufficient evidence) be filed in such action, it shall not be necessary to file the
original as a warrant of attorney, any rule of Court, custom or practice to the contrary.
14. Waivers by Lessee of Errors, Right of Appeal, Stay Exemption, Inquisition. Lessee
expressly agrees that any judgment, order or decree entered against it by or in any court of
magistrate by virtue of the powers of attorney contained in this lease, or otherwise, shall be final,
and that it will not take an appeal, certain, writ of error, exception or objection to the same, or
file a motion or rule to strike off or open or to stay execution of the same, and releases to Lessor
and to any and all attorneys who may appear for Lessee all errors in the proceedings, and all.
liability. Lessee expressly waives the benefits of all laws, now or hereafter in force, exempting
any goods on the demised premises, or elsewhere from distraint, levy or sale in any legal
proceedings taken by the Lessor to enforce any rights under the lease. Lessee further waives the
right to petition for the stay of any execution on any real estate that may be levied upon to collect
any amount which may become due under the terms and conditions of this lease, and does '
voluntarily authorize the prothonotary or clerk of court to issue a writ or writs of execution for
the sale of the same. If proceedings shall be commenced by Lessor to recover possession under
the Acts of Assembly, either at the end of the term or sooner termination of this lease, or for
nonpayment of rent or any other reason, Lessee specifically waives the right to the three months'
notice, and/or the fifteen or thirty days' notice required by the Pennsylvania Landlord and Tenant
Act of 1951, as amended. and agrees that five days' notice shall be sufficient in either or any
such case.
15. Right of Assignee of Lessor, The right to enter judgment against Lessee and to enforce
all of the other provisions of this lease may, at the option of any assignee of this lease, be
exercised by any assignee of the Lessor's right, title and interest in this lease in his, her or their
own name, notwithstanding the fact that any or all assignments of the right, title and interest may
not be executed and/or witnessed'in accordance with the Act of Assembly of May 28, 1715, 1
Sm. L. 94, and all supplements and amendments that have been or may hereafter be passed and
8
,
Lessee hereby expressly waives the requirements of said Act of Assembly and any and all laws
regulating manner and/or form in which such assignments shall be executed and witnessed.
16. Remedies Cumulative. All of the remedies herein given to Lessor and all rights and
remedies given to it by law and equity shall ~ cumulative and concurrent. No termination of
this lease or the taking or recovering of the premises shall deprive Lessor of any of its remedies
or actions against the Lessee for rent due at the time or which, under its terms, would in the
future become due as if there had been no termination, or for sums due at the time or which,
under its terms, would in the future become due as if there had been no termination, nor shall the
bringing of any action for rent or breach of covenant, or the resort to any other remedy herein for
the recovery of rent be construed as a waiver of the right to obtain possession of the premises.
17. Termination of Lease. It is hereby mutually agreed that either party may terminate
this lease at the end of its ten (10) year term by giving to the other party written notice at least
ninety (90) days prior thereto, but in default of such notice, this lease shall continue upon the
same terms and conditions in force immediately prior to the expiration of its term as for a further
term of one (I) year and so on, unless or until terminated by either party hereto, giving the other
ninety (90) days written notice for removal previous to expiration of the then current term;
PROVIDED, however, that should this lease be continued for a further period under the terms
herein above-mentioned, the rental amount is subject to an increase and the lease conditions are
subject to modification for each term beyond the original ten (10) year term, provided that Lessor
shall have. given one hundred twenty (120) days written notice prior to the expiration of any term
ofits intention to change the rental amount and conditions of this lease. Nothing in this _ .
Agreement shall be construed as giving the Lessee the option to terminate this lease prior to the
expiration ofits ten (10) year term.
18. Notice. All notices required to be given by Lessor to Lessee shall be sufficiently
given by leaving the same upon the demised premises, but notices given by Lessee to Lessor
must be given by registered mail, and as against Lessor the only admissible evidence that notice
has been given by Lessee shall be a registry return. receipt signed by Lessor or its agent.
,
19. Lease Contains All Agreements. It is expressly understood and agreed by and between
the parties that this lease and the riders attached to it and forming a part of it set forth all the
promises, agreements, conditions and understandings between Lessor or its Agent and Lessee
relative to the demised premises, and that there are no promises, agreements, conditions or
understandings, either oral or written, between them other than are set forth. It is further
understood and agreed that, except as otherwise provided, no subsequent alteration, amendment,
. change or addition to this lease shall be binding upon Lessor or Lessee unless reduced to writing
and signed by them.
20. Heirs and Assignees. All rights and liabilities given to, or imposed upon, the
respective parties shall extend to and bind the several and respective heirs, executors,
administrators, successors and assigns of the parties; and if there shall be more than one Lessee,
they shall all be bound jointly and severally by the terms, covenants and agreements of this
Agre.ement, and the word "Lessee" shall be deemed and taken to mean each and every person or
party mentioned as a Lessee, be the same one or more; and if there shall be more than one
9
,
.
Lessee, any notice required or permitted by theJerms of this lease may be given by or to anyone
of them, and shall have the same force and effect as if given by or to all. No rights, however,
shall inure to the benefit of any assignee of Lessee unless the assignment to such assignee has
been approved by Lessor in writing.
21. Headings No Part o/Lease. Any headings preceeding the text of the paragraphs and
subparagraphs of this Agreement are inserted solely for convenience or reference and shall not
affect its meaning, construction, or effect.
IN WITNESS WHEREOF, the parties have executed the foregoing Agreement presents
the day and year first above written, and intend to be legally bound.
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Ray C'ullen, Owner and Officer
For Shetron Welding & Fabrication. Inc., Lessee
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Kirk Naugle, Owner d Officer
For Shetron Welding & Fabrication, Inc., Lessee
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Terry Shetron, Lessor
On this I '2-of'i day of jJwL1A~ ,2004, before me, the
undersigned officer, personally appeared TelT)l Shetron, Ray Cullen, and Kirk Naugle, known to
me (or satisfactory proven) to be the p,erson whose name is subscribed to the within Agreement
and acknowledged that she executed the saine for the purpose therein contained.
.NON NOTARW. SEAL
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MyCall.... r.,~_2II,
IN WTINESS WHEREOF, I hereunto set m~d and official seal.
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NotiU'Y Public
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RHOADS 1\I!HH~
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Dean F. Piermattei
ph (717) 233-5731
fx(717} 23l-6637 ...
dpiermattei@rhoads-sinon.com
flLENQ, 9787.001
May 2, 2006
Re: Shetron Lease
Douglas C. Yohe, Esq.
Latsha Davis Y ohe & McKenna, P.C.
1700 Bent Creek Boulevard, Suite 140
Mechanicsburg, P A 17050
VIA FACSIMILE
& REGULAR MAIL
(717) 620-2444
Dear Mr. Yohe:
Please be advised that I represent Shetron Welding in a number of business matters,
including issues relating to the lease currently in place between Shetron Welding and
Fabrication, Inc. and Terry Shetron, dated January 12, 2004. I understand that you represent
Terry Shetron, however, if this is not the case please let me know. My client has a need to
increase the size of the Paint Hut used as part of their operations. Pursuant to Paragraph 5(c),
Shetron Welding is required to notify Terry Shetron of the improvement and obtain his written
consent thereto. The Paint Hut is to be relocated and expanded. It will involve placement of a
foundation and construction of a structure which will be 26 feet wide by 12 feet high by 48 feet
long. I understand the prior structure was 26 feet wide by 12 feet high by 30 feet long. The end
result will be an increase in the value of the property, and the new structure will allow the
owners to meet their current needs with respect to this issue. Please advise in writing within the
next week whether Terry will consent to the improvement.
Also, I understand from speaking with Ray Cullen that there may be a prospective buyer
for the Ocean Avenger. If this is in fact the case, you should contact me on this matter and we
can move forward perhaps with a sale, which would be beneficial to both our clients.
Very truly yours,
RHOADS & SINON LLP
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Enclosure
6062.30.]
Rhoads &: Sinon llP . Attorneys at Law . Twelfth Floor' One South Market Square' P.O. Box 1146
u_.."l"'T.. PA 17108-1146 . ph (717) 233-5731 . fx (717) 232.1459 . www.rboads-siDon.com
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RHOADS JIIIIIII'L
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Dean F. Piermattei
pn (717) 233-5731
ft (7l7) 231-6637
dpiermattei@rhoads-sinon.com
I'ILI!N'" 9787.001
6Ot22S.!
May 16, 2006
Re: Shetron Lease - Paint Hut
Douglas C. Yohe, Esq.
Latsha Davis Y ohe & McKenna, P.C.
1700 Bent Creek Boulevard, Suite 140
Mechanicsburg, P A 17050
VIA FACSIMll.E
& REGULAR MAll.,
(717) 620-2444
Dear Mr. Yohe:
I am once again attempting to contact you regarding consent for construction of the paint
hut, as detailed in my previous letter to you dated May 2, 2006. I tried to contact you by
telephone last week. I have heard nothing from you on this issue to date. If I hear nothing from
you in the next two business days, I will assume you do not represent Mr. Shetron and I will.
contact him directly on this issue. Time is of the essence on this matter, as my clients are busy
and in need of obtaining consent to move forward with this addition, which is required for their
continued operations.
I look forward to hearing from you.
Very truly yours,
RHOADS & SINON LLP
By: !J~r/lk~n1dtz;'
Dean F. Piennattei
Enclosure
Rhoads & Sinon LLP . Attorneys at Law. Twelfth Floor' One South Market Square' P.O. Box 1146
. n, '~1l"'-1146' ph (717) 233-5731 . fx (7]7) 232-1459' www.rhoads-sinon.com
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RHOADS ~iii
& SINON LLP
Dean F. Piermattei
ph (717) 233-5731
Ix (7]7) 231-6637
dpicnnattei@thoads-sinon.com
PlUlNO 9787.00]
July 12; 2006
Re: Shetron Weldin!!. et aL v. Terrv Shetron
No. 06-3096 (Civil)
BY HAND DELIVERY
Glenn R. Davis, Esq.
l~t.bll Davis Y ohe & McKenna, P.c.
1700 Bent Creek Boulevard, Suite 140
Mechanicsburg, P A 17050
Dear Glenn:
Enclosed please find a date-stamped copy of the Amended Complaint for which you have
agreed to accept service on behalf of your client, Terry Shetron. Accordingly, please forward
your responsive pleading to me on or before August 2, 2006. If my understanding is in any way
incorrect on this issue, please notify me immediately;
Additionally, please advise me on whether or not your client will consent to sale of the
red Jeep which we previously discussed, which has approximately 220,000 miles on it. The sale
is approximately for salvage value of $700.00.
Also, enclosed please find my correspondence to your partner which we have previously
discussed relating to the Paint Hut consent and the Ocean Avenger. I look forward to hearing
from you on the issues of the Jeep, the Ocean Avenger and the Paint Hut, to see if these matters
can be amicably resolved.
Very truly yours,
Enclosures
615306.1
Rhoads Est Sinon LLP . Attorneys at Law. Twelfth Floor. One South Market Square. P.O. Box 1146
Harrisburg. PA 17108-1146' ph (717) 233-5731 . Jx (717) 232.]459. www.rhoads-sinon.com
CERTIFICATE OF SERVICE
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I hereby certify that on this ~ day of Ifl1Jus+ , 2006, a true and correct copy of
the foregoing Complaint was served by means of United States mail, first class, postage prepaid,
upon the following:
Douglas Yohe, Esq.
Glenn R. Davis, Esq.
Latsha Davis Yohe & McKenna, P.C.
1700 Bent Creek Boulevard, Suite 140
Mechanicsburg, P A 17050
(717) 620-2424
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Dean F. Piermattei, Esquire
Stephanie E. DiVittore, Esquire
RHOADS & SINON LLP
One South Market Square, 12th FIr.
P.O. Box 1146
Harrisburg, P A 17101
(717) 233-5731
Attorneys for Plaintiff
SHETRON WELDING AND
FABRICATION, INC"
: IN THE COURT OF COMMON PLEAS
: CUMBERLAND COUNTY, PENNSYLVANIA
Plaintiff
v.
: Docket No. 2006-4639
TERRY SHETRON
Defendant
IMPORTANT NOTICE: TEN DAY NOTICE OF DEFAULT
To: Terry Shetron
. 1505 Walnut Bottom Road
Newville, P A 17241
YOU ARE IN DEF AUL T BECAUSE YOU HAVE FAILED TO ENTER A WRITTEN
APPEARANCE PERSONALLY OR BY ATTORNEY AND FILE IN WRITING WITH THE
COURT YOUR DEFENSES OR OBJECTIONS TO THE CLAIMS SET FORTH AGAINST
YOu. UNLESS YOU ACT WITHIN TEN (10) DAYS FROM THE DATE OF THIS NOTICE, A
JUDGMENT MAYBE ENTERED AGAINST YOU WITHOUT A HEARING, AND YOU MAY
LOSE YOUR PROPERTY OR OTHER IMPORTANT RIGHTS. YOU SHOULD TAKE THIS
NOTICE TO A LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT
AFFORD ONE, GO TO OR TELEPHONE THE FOLLOWING OFFICE TO FIND OUT
WHERE YOU CAN GET LEGAL HELP:
508392. I
CUMBERLAND COUNTY COURT ADMINISTRATOR
4th Floor, Cumberland County Courthouse
Carlisle, P A 17013
(717) 240-6200
Respectfully submitted,
RHOADS & SINON LLP
By: t?/t;rv\. (~
Dean F. Piermattei, Esquire
Stephanie E. DiVittore, Esquire
One South Market Square
P. O. Box 1146
Harrisburg, P A 17108-1146
(717) 233-5731
Attorneys for Plaintiff
CERTIFICATE OF SERVICE
I hereby certify that on this ~y of September, 2006, a true and correct copy of the
foregoing Ten Day Notice of Default was served as follows:
Via Certified Mail, Return Receipt Requested
Terry Shetron
1505 Walnut Bottom Road
Newville,PA 17241
Via Regular Mail
Glenn R. Davis, Esq.
Latsha Davis Y ohe & McKenna, P .C.
1700 Bent Creek Boulevard, Suite 140
Mechanicsburg, P A 17050
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SHERIFF'S RETURN - REGULAR
CASE NO: 2006-04639 P
COMMONWEALTH OF PENNSYLVANIA:
COUNTY OF CUMBERLAND
SHETRON ~ti]ELDING & FAABRICATION
VS
SHETRON TERRY
SHARON LANTZ
, Sheriff or Deputy Sheriff of
Cumberland County,Pennsylvania, who being duly sworn according to law,
says, the within COMPLAINT & NOTICE
was served upon
SHETRON TERRY
the
DEFENDANT
, at 1907:00 HOURS, on the 1st day of September, 2006
at 1505 vvALNUT BOTTOM ROAD
NEWVILLE, PA 17241
by handing to
TERRY SHETRON
a true and attested copy of COMPLAINT & NOTICE
together with
and at the same time directing His attention to the contents thereof.
Sheriff's Costs:
Docketing
Service
Postage
Surcharge
18.00
9.68
.39
10.00
.00
38.07./
q/~/O(
So Answers:
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R. Thomas Kline
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09/05/2006
RHOADS & SINON
Sworn and Subscibed to By:
before me this day
of A.D.
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IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
SHETRON WELDING &
F ABRICA nON, INC.,
Plaintiff
v.
No. 06-4639 CIVIL TERM
TERRY SHETRON,
Defendant
CIVIL ACTION - LAW
ENTRY OF APPEARANCE
Please enter the appearance of the undersigned and Latsha Davis Y ohe &
McKenna, P.c., on behalf of Defendant, Terry Shetron, in the above-captioned matter.
Respectfully submitted,
LATSHA DAVIS YOHE & McKENNA, P.c.
Dated: ~ ~ I :;U:Olo
By
~\2 RJh
Glenn R. Davis
Attorney LD. No. 31040
Andrea E. Dean
Attorney J.D. No. 86301
1700 Bent Creek Boulevard, Suite 140
Mechanicsburg, P A 17050
(717) 620-2424
Attorneys for Defendant Terry Shetron
11 0548
.
..
CERTIFICATE OF SERVICE
The undersigned hereby certifies that on this date a true and correct copy of the
foregoing Entry of Appearance was served by first-class United States mail, postage
prepaid, upon the following:
Dean F. Piermattei, Esq.
Stephanie E. DiVittore, Esq.
Rhoads & Sinon, LLP
One South Market Square, 12th Floor
P. O. Box 1146
Harrisburg, P A 17108-1146
Attorneys for Shetron Welding & Fabrication, Inc.
Dated: c4pJ Ol':l o2tlX'o
~ t. r;oh
Glenn R. Davis
11 0548
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IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
SHETRON WELDING &
F ABRICA TION, INC.,
Plaintiff
v.
No. 06-4639 CIVIL TERM
TERRY SHETRON,
Defendant
CIVIL ACTION - LAW
NOTICE TO PLEAD
You are hereby notified to file a written response to the enclosed New Matter
within twenty (20) days from service hereof or a judgment may be entered against you.
LATSHA DAVIS YOHE & McKENNA, P.c.
Dated: ~a81~
By
~~
Glenn R. Davis
Attorney I.D. No, 31040
1700 Bent Creek Boulevard, Suite 140
Mechanicsburg, PA 17050
(717) 620-2424
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
SHETRON WELDING &
FABRICATION, INC.,
Plaintiff
v.
No. 06-4639 CIVIL TERM
TERRY SHETRON,
Defendant
CIVIL ACTION - LAW
ANSWER TO COMPLAINT
WITH NEW MATTER
AND NOW, COMES, Defendant, Terry Shetron, by and through his attorneys,
Latsha Davis Yohe & McKenna, P.c., and states his Answer to Plaintiff's Complaint as
follows:
1. Admitted,
2. Admitted.
COUNT I
BREACH OF CONTRACT
3. Defendant incorporates his responses to Paragraphs 1 through 2 above as
if fully set forth herein.
4. Admitted.
5. Admitted in part and Denied in part. It is admitted that Defendant and
Buyers entered into a Stock Purchase Agreement dated January 12, 2004, which
Agreement is subject of an additional law suit filed with this Honorable Court by
Plaintiff at No. 06-3096 - Civil. The remaining averments attempt to characterize a
written document, which document speaks for itself.
6, Denied. The averments of the paragraph attempt to paraphrase
Section 7.8 of the Stock Purchase Agreement ("SPA"), which document speaks for itself.
See SPA attached as Exhibit" A" .
7. Admitted. By way of further answer, the Commercial Property Lease
Agreement ("Lease") states that the Lease ends on the final day of February 2015.
Additionally, the Lease states that the rental payment set for the first five years of the
Lease is $8,250.00 per month. See Lease attached as Exhibit" A" to Plaintiff's Complaint.
8. Denied. The averments of this paragraph attempt to paraphrase Section
5(c) of the Lease, which document speaks for itself. See Lease attached as Exhibit" A" to
Plaintiff's Complaint. By way of further answer, the Lease states that the Lessee,
Shetron Welding & Fabrication, Inc. (hereinafter "Shetron Welding" or "Plaintiff"),
agrees that he will not make alterations, improvements or additions without prior
written consent of Lessor.
9. Admitted. By way of further answer, Shetron Welding has not allowed
Defendant to inspect the property for the purpose of making any determination as to
the need for the alterations mentioned in and subject to this suit.
110547
2
"several conversations" with counsel for Defendant regarding a grant of consent for an
expanded Paint Hut. Undersigned counsel had one conversation with Dean Piermattei,
counsel for Plaintiff, seeking Shetron Welding's consent to the sale of a piece of steel
fabrication equipment known as an Ocean Avenger, Shetron Welding has failed to
remain current in its monthly payment obligations under the SPA on said Ocean
Avenger and Defendant having guaranteed said payments is therefore exposed to
substantial financial loss. Plaintiff has withheld consent to sell the equipment so as to
minimize and/ or eliminate further risk and loss of Defendant, but has rather used such
consent as leverage in this matter.
14. Admitted in part and Denied in part. It is admitted that Defendant has
not provided consent for construction of a new Paint Hut. It is denied that Defendant
has not considered the request for construction of a new Paint Hut.
15. Denied. Mter reasonable investigation, Defendant is without sufficient
information or belief to admit or deny any alleged superiority of a new Paint Hut and
any alleged value of the Paint Hut. By way of further answer, at no time has Plaintiff
provided any detailed information including shop drawings, prints, or otherwise, with
regard to its proposed construction.
16. Denied. Mter reasonable investigation, Defendant is without sufficient
information or belief to admit or deny consequences that would flow from construction
of the proposed Paint Hut.
110547
4
17. Denied. It is denied that a new Paint Hut is required for Shetron
Welding's operations and that the Paint Hut is insufficient in size to meet Shetron
Welding's needs.
18. Denied. It is specifically denied that Shetron Welding is in full compliance
with all terms and conditions of the Lease. Strict proof at time of trial is demanded.
19, Denied. The averments of this paragraph constitute a conclusion of law to
which no responsive pleading is required.
20. Denied. The averments of this paragraph constitute a conclusion of law to
which no responsive pleading is required.
21. Denied. The averments of this paragraph constitute a conclusion of law to
which no responsive pleading is required. To the extent that a responsive pleading is
required, it is denied that Defendant did not act in good faith and fair dealing in not
consenting to Shetron Welding's request to change the Paint Hut.
22. Denied. The averments of this paragraph constitute a conclusion of law to
which no responsive pleading is required.
23. Denied. The averments of this paragraph constitute a conclusion of law to
which no responsive pleading is required.
24. Denied. The averments of this paragraph constitute a conclusion of law to
which no responsive pleading is required, To the extent that a responsive pleading is
required, it is denied that Defendant is in breach of the Lease, that Defendant has not
considered the construction, and that Defendant withheld his consent unreasonably.
110547
5
25. Denied. The averments of this paragraph constitute a conclusion of law to
which no responsive pleading is required. To the extent that a responsive pleading is
required, it is denied that Defendant withheld his consent unreasonably, that the
parties' intentions in entering into the Lease have been frustrated, and that Shetron
Welding is not able to adequately continue with the operation of its business. By way
of further answer, such position is offered in bad faith and constitutes an actionable
offense under Pennsylvania law.
26. Denied. The averments of this paragraph constitute a conclusion of law to
which no responsive pleading is required, To the extent that a responsive pleading is
required, it is denied that Defendant is in breach of the Lease and that Shetron Welding
is incurring injury to its business as a result of Defendant's actions. Strict proof at time
of trial is demanded. It is further denied that the Paint Hut is inadequately sized and
that Shetron Welding is being limited in its ability to conduct business because of the
Paint Hut.
27. Denied. The averments of this paragraph constitute a conclusion of law to
which no responsive pleading is required. To the extent that a responsive pleading is
required, it is denied that Defendant is in breach of the Lease. It is further denied that
"Buyers" (Shetron Welding) have incurred monetary damages associated with not
constructing a new Paint Hut. Strict proof at time of trial is demanded.
WHEREFORE, Defendant, Terry Shetron, requests that this Honorable Court
deny Plaintiff's request for damages, and issue judgment on Defendant's behalf.
110547
6
COUNT II
SPECIFIC PERFORMANCE
28. Defendant incorporates his responses to Paragraphs 1 through 27 above as
if fully set forth herein.
29. Denied. The averments of this paragraph constitute a conclusion of law to
which no responsive pleading is required. To the extent that a responsive pleading is
required, it is denied that Defendant is in breach of the Lease. It is further denied that
Shetron Welding has incurred injury. Strict proof at time of trial is demanded.
30. Denied. The averments of this paragraph constitute a conclusion of law to
which no responsive pleading is required.
31, Denied. It is denied that Shetron Welding has suffered any damages. In
the alternative, if Shetron Welding has suffered damages, such damages would readily
be ascertainable and computable by Shetron Welding. Its failure to aver damages with
specificity or calculate such damages reflects on the credibility of such claim. Strict
proof of damages at time of trial is demanded. It is further denied that Defendant's
withholding of consent was unreasonable and that Shetron Welding is unable to
adequately operate its business.
32. Denied. The averments of this paragraph constitute a conclusion of law to
which no responsive pleading is required, To the extent that a responsive pleading is
required, it is denied that Defendant is in breach of the Lease, that a new Paint Hut is
necessary to Shetron Welding, and that consent should be ordered by this Court for
construction of a new Paint Hut.
110547
7
33. Denied. The averments of this paragraph constitute a conclusion of law to
which no responsive pleading is required. To the extent that a responsive pleading is
required, it is denied that Defendant is in breach of the Lease. It is further denied that
Shetron Welding has incurred any damages. Strict proof at time of trial is demanded.
WHEREFORE, Defendant, Terry Shetron, requests that this Honorable Court
deny Plaintiff's request for an order requiring Defendant's consent to a new Paint Hut,
and issue judgment on Defendant's behalf.
COUNT III
DECLARATORY JUDGMENT
34. Defendant incorporates his responses to Paragraphs 1 through 33 above as
if fully set forth herein.
35. Denied. The averments of this paragraph constitute a conclusion of law to
which no responsive pleading is required.
36. Denied. The averments of this paragraph constitute a conclusion of law to
which no responsive pleading is required.
37, Denied. The averments of this paragraph constitute a conclusion of law to
which no responsive pleading is required.
38. Denied. It is denied that an interpretation of the parties' rights and
obligations under the Lease will help aid in terminating any alleged controversy. It is
obvious by the nature of the multiple suits having been filed by Plaintiff that
controversies between the parties will continue.
110547
8
WHEREFORE, Defendant, Terry Shetron, requests that this Honorable Court
deny Plaintiff's request for declaratory judgment, and issue judgment on Defendant's
behalf.
NEW MATTER
39. Defendant incorporates his responses to Paragraphs 1 through 38 above as
if fully set forth herein.
40. Plaintiff has failed to state a claim against Defendant upon which relief
can be granted.
41. Plaintiff assumed a risk of injury and this action is therefore barred by the
doctrine of assumption of risk.
42. Any harm suffered by Plaintiff was as a consequence of conditions over
which Defendant has no control.
43. Plaintiff's claim is barred and/ or controlled pursuant to the terms and
provisions of the subject Lease.
44. Defendant affirmatively pleads all bars, limitations and rights under the
Lease.
45. Plaintiff's claims are barred to the extent that it has failed to mitigate
alleged damages.
46. Plaintiff's claims are barred in whole or in part by the doctrine of unclean
hands.
110547
9
WHEREFORE, Defendant, Terry Shetron, demands judgment be entered in his
favor in accordance with the foregoing.
Respectfully submitted,
LATSHA DAVIS YOHE & MCKENNA, P.e.
Dated:~
By
~12Jth50
Glenn R. Davis
Attorney I. D. No. 31040
Andrea E. Dean
Attorney I. D. No. 86301
1700 Bent Creek Boulevard, Suite 140
Mechanicsburg, P A 17050
(717) 620-2424
Attorneys for Defendant, Terry Shetron
110547
10
VERIFICATION
The undersigned states that the facts set forth in Defendant's Answer to
Complaint, are true to the best of his knowledge, information, and belief, and that this
Verification is being made subject to 18 Pa.C.S, ~ 4904 relating to unsworn falsification
to authorities,
Dated:
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Terry Shetron
CERTIFICATE OF SERVICE
The undersigned hereby certifies that on this date a true and correct copy of the
foregoing Answer to Complaint With New Matter was served by first-class United
States mail, postage prepaid, upon the following:
Dean F. Piermattei, Esq.
Stephanie E. DiVittore, Esq.
Rhoads & Sinon, LLP
One South Market Square, 12th Floor
P. O. Box 1146
Harrisburg, P A 17108-1146
Attorneys for Shetron Welding & Fabrication, Inc.
Dated: ~ dA , ()O:i.p
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Glenn R. Davis
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Dean F. Piennattei, Esquire
Jack F. Hurley, Jr., Esquire
Stephanie E. DiVittore, Esquire
RHOADS & SINON LLP
One South Market Square, 12th FIr.
P.O. Box 1146
Harrisburg, P A 17101
(717) 233-5731
Attorneys for Plaintiff
SHETRON WELDING &
FABRICATION, INe.,
THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY,
Plaintiff
v.
CIVIL ACTION LAW
No. 06-4639 Civil Term
TERRY SHETRON,
Defendant
REPLY TO NEW MATTER IN ANSWER TO COMPLAINT
NOW COMES Plaintiff Shetron Welding and Fabrication, Inc. ("Shetron Welding") by
and through its attorneys, Rhoads & Sinon LLP, and files the following Reply to New Matter in
Answer to Complaint stating as follows:
39. Plaintiff incorporates its allegations as set forth in Paragraphs 1 through 38 of the
Complaint.
40. The allegations of this Paragraph constitute legal conclusions to which no
response is required. To the extent a response is deemed appropriate, the same are denied.
41. The allegations of this Paragraph constitute legal conclusions to which no
response is required. To the extent a response is deemed appropriate, the same are denied.
624411.1
42. Denied. It is specifically denied that harm suffered by Shetron Welding was as a
consequence of conditions over which Defendant has no control.
43. The allegations of this Paragraph constitute legal conclusions to which no
response is required. To the extent a response is deemed appropriate, the same are denied.
44. The allegations of this Paragraph constitute legal conclusions to which no
response is required. To the extent a response is deemed appropriate, the same are denied.
45. The allegations of this Paragraph constitute legal conclusions to which no
response is required. To the extent a response is deemed appropriate, the same are denied.
46. The allegations of this Paragraph constitute legal conclusions to which no
response is required. To the extent a response is deemed appropriate, the same are denied.
WHEREFORE, Plaintiff Shetron Welding and Fabrication, Inc. respectfully requests that
this Court enter judgment in its favor and against Defendant Terry Shetron.
Respectfully Submitted,
RHOADS & SINON LLP
By:
.-
ean F. Piermattei, Esquire
Stephanie E. DiVittore, Esquire
One South Market Square
P.O. Box 1146
Harrisburg, PAl 71 08-1146
(717) 233-5731
Attorneys for Plaintiff
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.
CERTIFICATE OF SERVICE
I hereby certify that on this JJ{h day of October, 2006, a true and correct copy of the
foregoing Reply to New Matter in Answer to Complaint was served by means of United States
mail, first class, postage prepaid, upon the following:
Glen R. Davis, Esquire
Latsha Davis Y ohe & McKenna, P.e.
1700 Bent Creek Boulevard, suite 140
Mechanicsburg, P A 17050
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Dean F. Piermattei, Esquire
Stephanie E. DiVittore, Esquire
RHOADS & SINON LLP
One South Market Square, 1 tll FIr.
P.O. Box 1146
Harrisburg, P A 17101
(717) 233-5731
Attorneys for Plaintiff
SHETRON WELDING AND
F ABRICA nON, INC.,
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
Plaintiff
v.
: Docket No. 2006-4639
TERRY SHETRON
Defendant
PRAECIPE TO DISCONTINUE
TO THE PROTHONOTARY:
Kindly mark the above-captioned action as settled, discontinued and ended.
RHOADS & SINON LLP
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~anie E. DiVittore, Esquire
One South Market Square
P. O. Box 1146
Harrisburg, PAl 71 08-1146
(717) 233-5731
Attorneys for Plaintiff
603787.1
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CERTIFICATE OF SERVICE
I hereby certify that on December 20, 2006, a true and correct copy of the Praecipe to
Discontinue was served by means of United States mail, first class, postage prepaid, upon the
following:
Glenn R. Davis, Esq.
Latsha Davis Yohe & McKenna, P.c.
1700 Bent Creek Boulevard, Suite 140
Mechanicsburg, P A 17050
Via First Class Mail
& Facsimile (717) 620-2444
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