INDEX NO. 650921/2014
FILED: NEW YORK COUNTY CLERK 03/24/2014
NYSCEF DOC. NO. 2
RECEIVED NYSCEF: 03/24/2014
Exhibit A
SUPREME COURT: STATE OF NEW YORK
COUNTY OF NEW YORK
COUNSEL FINANCIAL II. l.LC,
AFFIDAVIT OF
Plaintiff
v.
CONFESSION OF JUDGMENT
BALESTRIERE PLLC,
Index No.:
JOHN BALESTRIERE and
VTrTORIA FARIELLO,
Defendants
STATE OF NEW YORK
COUNTY OF NEW YORK
)
)ss.:
JOHN BALESTRIERE, being duly sworn, deposes and says the following:
I am the managing member of Balestriere PLLC. a New York professional limited liability
company, with offices located at 225 Broadway, Suite 2900, New York, New York 10007.
2.
On behalf of Balestriere PLLC (the "Law Finn"). 1 hereby confess judgment against the Law Firm
pursuant [o Section 3218 oftheNew York Civil Practice Law and Rules ("CI'LR") in favor of Counsel Financial II.
LLC ("Plaintiff") in the sum of SI,700,000.01), plus interest on that sum from and alter Aprill^,,1 2012, al the
interest rate set forth in ihat certain Fourth Amended and Restaleii Term Promissory Note (the "Note"") dated as of
ApriirQ, 2012, in the maximum principal amount of SI,700,000.00, executed and delivered to Plaintiff by the Law
Firm, which Note was guaranteed pursuant to a Guaranty of Payment and Performance dated as of April £J2O12,
executed and delivered by John Balestriere and Vittoria Fariello (collectively. '■Guarantors") to Plaintiff (the
■■Guaranty"). The sum of SI, 700,000.00 consists of the outstanding principal amount of the Note plus amounts
available to be drawn thereunder as of April /y 20! 2.
3.
I hereby authorize Plaintiff, its assigns or successors, on or after the date on which this affidavit is
executed, to enter judgment against the Law Firm in New York County, New York in the amount of SI,700,000.00
plus interest at the aforesaid rale from April [C$012 through the date such judgment is entered. The Law Firm
resides in the Stale of New York and Co umy of New York.
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4.
In the event a judgment 'n entered against the Law Firm pursuant to this affidavit, the Law Firm shall be
entitled lo an offset against the total amount herein confessed equal to the sum of all good payments Plaintiff receives
from the Law Firm or the Guarantors or on behalf of any ofthem after the dale on which this affidavit is executed as of
the date same are respectively received through iiie dale judgment is entered.
5.
This confession ofjudgrnent ia for a debt which is justly due and owing by the Law Firm to
Plaintiff pursuant lo the Note.
6.
This confession ofjudgmentj»-fiSriHgde for ihe purpose of securing Plaintiff against a contingent
liability; nor is it made in connection with an\insta!lmeniW
STATE OF NEW YORK
)
COUNTY OF NEW YORK
)ss.:
On ihe
l \yitnT?» the tiroiubilioii'tifp'LR Section 3201.
/Way of April, 2012. before le personally came John Ualeslriere, to me known who, being by
me duly sworn, did depose and say that he is the managing member of Baleslriere PLLC, with ils principal offices
localed al 225 Broadway. Suite 2900. New York. New York 10007. and that he is the individual described in and
who executed the foregoing Affidavit of Confession of Judgment on behall'ofBalesiriere PLLC, and he duly
acknowledged to me that he executed the same as the managing member of Balestriere PLLC and that Ihe
statements contained therein are true and correct.
—
MARC JUSTIN NATAlf
. NOTARY PUBLIC STATE OF NEW YORK
NEW YORK COUNTY
Nolary Public
UC. #01N«2«836
C0MM. EXP.
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/
SUPREME COURT: STATE OF NEW YORK
COUNTY 01-' WESTCHESTER
COUNSEL FINANCIAL II, LLC.
Plaintiff
AFFIDAVIT OF
v.
CONFESSION OF JUDGMENT
BALESTRIERE PLLC,
Index No.:
JOHN BALESTRIERE and
V1TT0R1A PARIELLO,
Defendants
STATE OF NEW YORK
COUNTY OF NEW YORK
)
)ss.:
J01 IN BALESTRIERE, being duly sworn, deposes and says Ihe following;
1.
I am Li resident of New York County, New York, residing at I 18 A Fulton Street. /M23,New York,
New York I003S.
2.
I hereby confess judgment pursuant to Section 32 IS of the New York Civil Practice Law and Rules
fCPLR") in favor of Counsel Financial II. LLC ("Plaintiff) in the sum of 51,7(10,000.00, plus interest on that sum
from and after April {0. 2012, at the interest rale set forth in that certain Fourth Amended and Restated Term
Promissory Note (the "Note") dated as of April |C 2012, in the maximum principal amount of SI .700.000.00,
executed and delivered to Plaintiff by Balestriere PLLC (the "Law Finn"), pursuant to Ihe Guaranty of Payment
and Performance dated as of April _, 2012. executed and delivered by John [ialestriere and Vittoria Fanello
(collectively, "Guarantore") to Plaintiff (the "Guaranty"). The sum of$1,700,000.00 consists of the principal
amount of the Note outstanding or available to be drawn as of April [L/2012.
3.
1 hereby authorize Plaintiff, ils assigns or successors, on or alter the dale on whkh this affidavit is
executed, 10 enterjudgment in New York County, New York against me in the amount of S1,7()(U)H(].OO plus
interest at the aforesaid rale from ApripLJ 2012 through the dale such judgment is entered.
4.
In UM evem a judgment is entered against me pursuant to Uiis affidavit.! shall be entitled to an olfset
against the lotal amount herein confessed equal to the sum ofall good payments Plaintiffrecelves from the Law Firm or
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the Guarantors or on behalf of any of ihem after llie dale on which iliis affidavit is executed as of the dale same are
respectively received through the date judgment is entered.
5.
This confession ofjudgment is for a debt which is justly due and owing by your Affiant (as
guarantor) io Plaintiff pursuant to the Guaranty.
6.
This confession of judgment istlui made for ihe purpose of securing Plaintiff against a contingent
liability; nor is it made in connection with an irtstallti en! contract wilhin thCpPtitubilion of Cl'l.K Section 3201.
STATE OF NEW YORK
COUNTY OF NEW YORK
)
)ss.:
On [he fDday of April, 2012, before nje personally cannjJohn Ualeslfiere, to me known who. being by
me duly sworn, did depose and say that he resides at I ISA Fullon Street #123. New York, New York 10038,that
he is the individual described in and who executed the foregoing Affidavit of Confession of Judgment, and duly
acknowledged to me lliar he executed the same and that the statements contained therein are true and correct.
Notary Public
MARC JUSTIN NATALE
NOTARY PUBLIC STATE OF NEW YORK
NEW YORK COUNTY
UC. #01NAG244836
COMM. EXP
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SUPREME COURT: STATE OF NEW YORK
COUNTY OF WESTC! [ESTER
COUNSEL FINANCIAL II, LLC,
Plaintiff
AFFIDAVIT OF
v.
CONFESSION OF JUDCMEN'
BALESTRIEREPLLC,
Index No.:
JOHN BALESTR1ERE and
VITTQRIA FARffiLLO,
Defendants
STATE OF NEW YORK
COUNTY OF NEW YORK
)
)ss.:
VITTORIA FAR1ELLO. being duly sworn, deposes and says ihe following:
1.
1 am a resident of New York County, New York, residing a( 118 A Fulton Street, "123, New York,
New York 10038.
2.
I hereby confess judgment pursuant to Section 3218 of the New York Civil Practice Law and Rules
("CPLR") in favor of Counsel Financial 11. LLC ("Plaintiff") in the sum of SI, 700,00(1.00. plus interest on thai sum
from and after April /c), 2012. at the interest rale set forth in thai certain Fourth Amended and Restated Term
Promissory Note (the "Note") dated us of April ©2012. in the maximum principal amount of SI.700.000.00.
executed and delivered to Plaintiff by Buleslriere I'LLC (the "Law Firm"), pursuant to the Guaranty of Payment
and Performance dated as of April JQ 2012, oxeculed and delivered by John Balestriere and Vittoria Fariello
(collectively, "Guarantors") to Plaintiff (the ■■Guaranty"). The sum of SI, 700,000.00 consists of the principal
amount of the Note outstanding or available to be drawn as of April.
3.
, 2012.
[ hereby authorize Plaintiff, iis assigns or successors, on or after the date on which this affidavit is
executed, to enter judgment in New York County, New York against me in the amount of 51,700,000.00 plus
interest at the aforesaid rate from .April _[W^0l2 through the date such judgment is entered.
4.
In the event a judgment is entered against me pursuant to this affidavit, I shall be entitled to an offset
against the total amount herein confessed equal to the sum ofall good payments RlaSnti A' receives from the Law Firm or
t
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the Guarantors or on behalf Of any of them after the date on which this affidavit is executed as of the d:ite same are
respectively received through the dale judgment is entered.
5.
This confession ofjudgment is for a debt which is justly due and owing by your Affiant (as
guarantor) to Plaintiff pursuant to the Guaranty.
6.
This confession of judgment is not made for the purpose of securing Plaintiff against a contingent
liability: nor is it made in connection with an installment contract within the prohibition of CPLR Section 3201.
VITfORIAFAllliLLO
STATE OF NEW YORK
COUNTY OF NEW YORK
)
)ss.:
On the fyday of April, 2012, before me personally came John Balestriere. to me known who, being by
me duly sworn, did depose and say that she resides at 1 ISA Fulton Street #123, New York, New York 10038, that
she is the individual described in and who executed the foregoing Affidavit of Confession of Judgment, and duly
acknowledged to me that she executed the same and that the statements contained therein are true and correct.
Nul;trv-Public
UAflC JUSTIN NATALE
NOTARY PUBLIC STATE OF NEW YORK
NEW YORK COUNTY
UC.#01NA6244ffl6
COMM.HP
/
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Exhibit B
FOURTH AMENDED AND RESTATED
REVOLVING PROMISSORY NOTE
Counsel Financial II, LLC
Delivered in Buffalo, New York
SA1,7.??/?°L
o
April \U, 2012
1.
DEFINITIONS. For purposes of this Note:
a
Borrower. The "Borrower" means Balestriere PLLC, aprofessional limited liability company organized
under New York law, having its principal office located at 225 Broadway, Suite 2900, New York, NY
10007.
b
Collateral. "Collateral" means all ofBorrower's and any Guarantor's assets whether real or personal,
tangible or intangible, contingent or accrued, now or hereafter existing or now owned or hereafter acquired
and whether or not subject to the Uniform Commercial Code, including all Goods, Money, Instruments
(including Promissory Notes), Accounts, Deposit Accounts, Inventory, Fixtures, Equipment, Contracts,
Documents, Chattel Paper, Investment Property, Lettcr-of-Crcdit Rights, real property, and General
Intangibles (including payment intangibles) and all interest, dividends and other distributions thereon paid
and payable in cash or in property; and all replacements and substitutions for, and all accessions and
additions to, and all products and proceeds of, all ofthe foregoing. All capitalized terms used in this
definition and not otherwise defined in this Note shall have the meanings set forth in the Uniform
Commercial Code.
c.
Credit. The "Credit" means arevolving credit facility made available by the Lender to the Borrower in the
maximum principal amount equal to the Limiting Principal Amount.
d.
Event ofDefault. An "Event ofDefault" occurs or exists if:
(0
the Borrower defaults in the payment when due, whether by acceleration or otherwise, ofany ofthe
Outstanding Principal Amount or any interest or other amount payable pursuant to this Note; or
Oi)
the Borrower or any Guarantor defaults hi the observance or performance when due, whether by acceleration
or otherwise, of any obligation (including, but not limited to, any obligation to pay any money except as
described in clause (i) ofthis Section 1(d), whether for any principal, interest, fee, tax, charge, cost or
expense or otherwise), whether now existing or hereafter arising or accruing, (a) under this Note or any
agreement or arrangement now or hereafter entered into between the Borrower or any Guarantor and the
Holder, (b) owed by Borrower to any third party, where the maturity of any such obligation is accelerated or
there occurs or exists any event or condition that, whether immediately or after notice, lapse of tune or both
notice and lapse oftime and whether or not waived, would constitute adefault with respect to or permit the
acceleration of the maturity ofany such obligation, or (c) owed by Borrower to any governmental entity; or
(iii)
the Borrower or any Guarantor fails to provide the Holder with (A) copies ofthe Borrower's and Guarantor's
annual federal tax returns to be delivered on the sooner of(i) three days after filing or (n) the 15" day ofthe
tentli month ofeach fiscal year for the immediately preceding fiscal year; (B) an updated case and status list
with respect to the clients and cases ofthe Borrower at least once each calendar quarter, (C) copies ot
monthly bank statements ofthe Borrower from each ofits bank accoun^ej^jing and trust) Jtojjfluy
settlement repoit and current and monthly reconciliation ofIOLTA account no later than the 10 day ofeach
month (D) current updated financial statements ofBorrower, compiled by an independent third party
accountant, not later than the 15th day ofeach calendar quarter in the form completed by Borrower and
delivered to Holder on or before execution of this Note, (E) acurrent updated personal financial statement for
each Guarantor to be delivered on or before April 15th and October 15th ofeach year in the :orm completed
by the Guarantor and delivered to Holder on or before execution of this Note, (F) evidence of current
malpractice insurance for the Borrower and life insurance coverage of John Balestriere on the anniversary
date ofcoverage; (G) notice ofany material change in the business, clients or prospects ofthe Boirower, (H)
copies of any notice ofcancellation, revocation or non-renewal ofany malpractice insurance or any life
insurance policy assigned to Holder as part ofthe Collateral within five (5) business days after receipt thereof
by the Borrower or the Guarantor, (I) copies of any default notice or notice of the existence of facts or
circumstances that with the passage oftime will constitute adefault under any obligation ofBorrower that are
received by Bonower, or (J) any documentation or information reasonably requested by the Holder that
relates to the business or assets ofthe Borrower or any Guarantor; or
(iv)
the Bonower or any Guarantor is dissolved, ceases to exist, participates or agrees to participate in any
mereer consolidation or other absorption (unless the Borrower or such Guarantor is the surviving entity with
respect thereto), assigns or otherwise transfers or disposes ofamajority ofhis, her or its assets, ma«s or
permits what might be afraudulent transfer or fraudulent conveyance of any ofhis, her or its assets becomes
insolvent (however such insolvency is evidenced), generally fails to pay his, her or its debts as they become
due fails to pay, withhold cr collect any tax as required by applicable law, suspends or ceases its business or
has served, filed or recorded against him, her or it or any ofhis, her or its assets any judgment, order or award
ofany court, other governmental authority or arbitrator or any lien; or
(v)
any Guarantor dies, becomes incompetent or purports to terminate his, her or its obligations pursuant to any
guaranty or other agreement evidencing obligations of such Guarantor to the Holder; or John Balestriere fads
to maintain in effect life insurance on his life in aminimum amount equal to g^J1****"^.
assigned to the Holder and that is subject to an effective collateral assignment to the Holder ofthis Note at all
umes while this Note is outstanding; or John Balestriere or Vittoria Fariello sells gifts, transfers or otherwise
disposes of assets or incurs indebtedness that reduces the personal net worth (including his or her indirect
interest in Borrower's assets and his or her interest in joint assets) ofsuch Guarantor to less than 55,100,000,
or
(vi)
the Borrower or any Guarantor has any receiver, trustee, custodian or similar Person for him, heroritOfany
ofhis her or its assets appointed (whether with or without his, her or its consent), makes any assignment for
the benefit of creditors, admits in writing his, her or its inability to pay debts generally as they become due or
commences or has commenced against him, her or itany bankruptcy or insolvency J"»rfta£"**"od
or informal proceeding for the dissolution, liquidation or winding up ofthe affairs ofor the settlement of
claims againsthim, her or it; or
(vii) any representation or warranty heretofore made to the Lender or hereafter made to the Holder, or any
C financial statement heretofore provided to the Lender or hereafter provided to tne Holder, by or on behalfof
the Borrower or any Guarantor, proves, as ofthe date thereof, to have been incorrect or misleading; in any
material respect, or before the execution and delivery to the Lender by the Borrower ofthis Note there
occurred and was not disclosed to the Lender any materia! adverse change in any mformanor.disclosed inany
such representation or warranty heretofore so made or in any such financial statement heretofore so provided;
or
(viii) Holder's estimate ofthe future aggregate legal fees collectible by Born^^i the Collateral^ time is
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less than EIGHT TIMES the Outstanding Principal Amount plus interest on this Note whether such estimate
is based on (A) the actual client files ofBorrower from time to time, (B) the inclusion of an adjustment for the
amount ofany indebtedness or obligation ofBorrower having priority over the collection rights ofHolder, or
(C) any law, judicial decision, administrative order, or professional ethics opinion limiting the rights of law
firms to sue clients for the collection of legal fees or expenses; or
(ix)
there occurs any change in the management of, or the beneficial ownership of any stock ofor other ownership
interest in, the Borrower that is, in the opinion of the Holder, adverse to its interest and is not corrected to its
full satisfaction within 30 days after it gives to the Borrower anotice that itconsiders such change adverse to
its interest; or
(x)
there occurs any change in the value ofthe Collateral or Borrower's or any Guarantor's ownership interest in
the Collateral, that is, in the opinion of the Holder, adverse to its interest and is not corrected to its full
satisfaction within 10 days after itgives to the Borrower anotice that itconsiders such change adverse to its
interest; or
(xi)
except for Permitted Indebtedness, Borrower or any Guarantor incurs after the date of this Note or repays
after the date ofthis Note any indebtedness or liability, including any indebtedness or liability to any member
or shareholder ofthe Bonower or any Guarantor or any affiliate of any Guarantor (for clarity, any future
indebtedness ofBorrower or any Guarantor not included in Permitted Indebtedness requires the prior written
consent ofHolder which consent may require that the proceeds ofsuch financing be used to repay this Note in
whole or in part); or
(xu)
there occurs or exists any event or condition ofdefault, without the prior written cons cnt ofthe Holder, with
respect to any (A) indebtedness or liability of Bonower or any Guarantor or (B) security agreement or other
writing evidencing or relating toany Collateral; or
(xiii) Borrower or any Guarantor creates, assumes or suffers to exist any mortgage, security interest, judgment or
lien (including tax liens) on any of its assets now or hereafter acquired other than purchase money hens
relating to the acquisition offixed assets or consumer debt; or
(xiv) any Guarantor owns or hereafter acquires, without prior written consent ofthe Holder, an ownership interest
cither direct or indirect, in any entity engaged in the practice oflaw other than Borrower; or
(xv) Marc Natale is no longer employed by Bonower and Borrower has failed immediately to replace him with a
controller or chieffinancial officer acceptable to Holder in its sole discretion; or
(xvi) Borrower or any Guarantor fails upon the request ofthe Holder to sign aconfession ofjudgment or a
replacement for apreviously signed confession ofjudgment with respect to this Note; or
(xvi) any license to practice law held by Borrower or any Guarantor is suspended or revoked.
e.
Guarantor. "Guarantor" means, other than the Borrower, any Person (i) who or that is now or hereafter
liable whether directly or indirectly or absolutely or contingently, for the payment of any ofthe Outstanding
Principal Amount or any interest or other amount payable pursuant to this Note or (n) any asset of whom or
which now or hereafter directly or indirectly secures the payment ofany ofthe Outstanding Principal
Amountor any such interest or other amount.
f
Holder. The "Holder" means the Lender or any transferee ofthis Note^
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g
Lender. The "Lender" means Counsel Financial II, LLC, aDelaware limited liability company having its
chief executive office at 6400 Main Street, Suite 120, WiHiamsvillc, NY 14221, its successors and assigns,
h.
LIBOlt Rate. "LIBOR Rate" means the one-month London Interbank Offered Rate, as fixed by the British
Bankers Association for United States dollar deposits in the London interbank market atapproximately 11:00
a.m. London, England time (or as soon thereafter as practicable) each day, as determined by the Lender from
any broker, quoting service or commonly available source utilized by the Lender.
i.
Limiting Principal Amount. "Limiting Principal Amount" means $1,700,000, US currency.
j.
Loan. "Loan" means any loan by the Holder pursuant to the Credit.
Ic
Loan Request. "Loan Request" means any oral (including, but not limited to, telephonic), written or other
(including, but not limited to, facsimile or email) request for aLoan.
I.
Maturity Date. The "Maturity Date" has the meaning set forth in Section 4ofthis Note.
m.
Outstanding Principal Amount. The "Outstanding Principal Amount" means the outstanding principal
amount of this Note from time to time.
n.
Permitted Indebtedness. "Permitted Indebtedness" means indebtedness ofaPerson (A) to the Lender; (B)
constituting unsecured normal trade debt incurred upon customary terms in the ordinary course ofsuch
Person's business; (C) arising from the endorsement in the ordinary course ofsuch Person's business ofany
check or other negotiable instrument for deposit or collection; (D) secured by aPermitted Lien as defined in
the Security Agreement; or (E) consumer debt existing on the date ofthis Note.
o.
Person "Person" means (i) any individual, corporation, partnership, limited liability company, joint venture,
trust or unincorporated association, (ii) any court or other governmental authority or (in) any other entity,
body, organization or group.
Security Agreement. "Security Agreement" means the Security Agreement described in Section 18 ofthis
Note.
Uniform Commercial Code. "Uniform Commercial Code" means the Uniform Commercial Code as in
effect from time to time in the Stateof New York.
2,
PROMISE TO PAY. For value received, the Borrower promises to pay to the order ofthe Holder in lawful
money ofthe United States and immediately available funds at any ofthe offices ofthe Holder:
The Outstanding Principal Amount and interest as described in Section 3of this Note by paying the amounts
described in Section 4 of this Note;
Ifany amount ofOutstanding Principal Amount or any payment ofinterest, including Mandatory
Prepayments, payable pursuant to this Note is not paid by the date it becomes due, on demand by the Holder,
amonthly late charge for each month or part thereofthat such overdue payment remains unpaid ofthe greater
of(i)5% ofthe overdue payment or(ii) S50;
Ifany document or information required to be provided to Holder under^ecti^ l(d)(iii) ofthis J4otc is not
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delivered when due or within 10 business days following request from the Holder, alate charge of$250 per
month until such documentation has been provided toHolder; and
d.
On demand by the Holder, each cost and expense (including, but not limited to, the reasonable fees and
disbursements ofcounsel, whether retained for advice, litigation or any other purpose) incurred by the Holder
in endeavoring to (i) collect any ofthe Outstanding Principal Amount or any interest or other amount payable
pursuant to this Note, (ii) preserve or exercise any right or remedy of the Holder pursuant to this Note or (iii)
preserve or exercise any right or remedy ofthe Holder relating to any Collateral including the payment of
unpaid insurance premiums, taxes, assessments or other obligations or incurrence of legal fees or court costs.
3
INTEREST. The Borrower shall pay interest, calculated on the basis ofa360 day year for the actual
number of days ofeach year (365 or 366, as applicable), on the Outstanding Principal Amount from and including
the date ofthis Note to but not including the date the Outstanding Principal Amount is paid mfull. On each day
prior to the occurrence or existence of any Event of Default, the rate per year shall be Eighteen Percent (18%);
provided, however, that if at any time the LIBOR Rate exceeds 2.5%, such interest rate shall, from time to time,
increase by an amount equal to the difference between the LIBOR Rale and 2.5%. On the day of and on each day
after the occurrence or existence ofany Event ofDefault, the rate per year shall be the lesser of(i) 24.9% or (n) the
maximum rate permitted by applicable law ("Default Interest"). Default Interest shall be payable during any period
ofdefault and up to and including the date of the next payment made after such period ofdefault. Default Interest,
and not any rate set by statute, shall be computed in any entry ofjudgment pertaining to this Note, and further, shall
be paid subsequent to the entry ofsuch judgment, and until actual satisfaction ofsaid judgment. The judgment
shall include both the action and the obligation itself. In such event, the Default Interest rate shall continue up
through and including all foreclosure proceedings and proceedings for payment ofmonies including but not limited
to surplus money proceedings and shall be computed in the entry ofany judgment, and further, subsequent to the
entry of any judgment, and until actual satisfaction ofthis Note and said judgment
Notwithstanding the foregoing, (A) in no event shall such interest be payable at arate in excess ofthe maximum
-ate permitted by applicable law and (B) solely to the extent necessary to result in such mterest not being payable at
arate in excess ofsuch maximum rate, any amount that would be treated as part of such interest under afinal
judicial interpretation of applicable law shall be deemed to have been amistake and automatically canceled, and, if
received by the Holder, shall be refunded to the Borrower or applied to the Outstanding Principal Amount, as
determined by the Holder, it being the intention ofthe Lender and the Borrower that such interest not be payable at
a rate in excess of such maximum rate
4
PAYMENTS. In addition to the Mandatory Prepayment provisions of Section 9of this Note, the Borrower
shall (a) pay the Outstanding Principal Amount in twenty-four (24) equal installment payments con^encing onMay
1 2014 and continuing monthly thereafter with the final payment due and payable on April 1, 2016 (the Maturity
Date") and (b) pay monthly interest as described In Section 3of tills Note that has accrued on the Outstanding
Principal Amount through the last day ofany calendar month, beginning with the calendar month containing the date
ofthis Note, all such payments ofprincipal or interest by the 10th day ofthe succeeding calendar month.
In addition, the Borrower shall at all times prior to the Maturity Date (a) maintain an interest reserve (the "Reserve")
with the Holder equal to 30 days' interest based on the Outstanding Principal Amount on the later ofthe dale or the
most recent Loan under this Note or the last day ofthe most recently ended calendar month during the term ot this
Note and (b) maintain an authorization for electronic funds tranfer by the Holder at abank and account designated by
Borrower and reasonably acceptable to the Holder for payments under this Note. The Holder may, but shall not be
obligated to, deduct from the proceeds of any Loan an amount sufficient to fund the Reserve, may commingle the
Reserve with its other funds, shall have no obligation to pay any interest on the Reserve anc shall be entitled to set oft
against the Reserve, or authorize an electronic funds transfer for, any amount that is not paid to the Holtowhen due
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under this Note.
5.
LOAN REQUESTS.
(a) At any time prior to May 1,2013, the Borrower may make aLoan Request, which Request shall be
irrevocable that specifies (i) the amount requested as the principal amount of the Loan, (ii) the law firm purposes for
the Loan and (iii) the business day of the Holder on which such Loan is requested to be made. All Loan Requests
shall be for the sole purpose ofrefinancing Borrower's existing credit facilities with the Lender or making interest
payments under this Note, except that the Lender will permit adraw ofup to 355,000 on the date ofthis Note to cover
rent payments, provided that the Borrower provides supporting documentation satisfactory to the Lender in its sole
discretion with the draw request form. Borrower shall maintain credit availability at all times under this Note in an
amount equal to not less than 60 days interest based on the Outstanding Principal Amount on the later ofthe date of
the most recent Loan under this Note or the last day ofthe most recently ended calendar month during the term ofthis
Note No Loan Reoucsts may be made to fund the activities or operations ofBorrower (other than as specifically set
:
forth above), any Guarantor or any third party entity. Notwithstanding the foregoing, no Loan shall be made with
respect to any principal amount prepaid under Section 9of this Note until at least one (1) business day after the date
ofsuch prepayment. Notwithstanding anything contained in this Note to the contrary, commencing May 1,
2013, Borrower shall not be permitted to make any further Loan Requests under this Note.
(b) Notwithstanding anything contained in this Note to the contrary, the decision whether to honor such
Loan Request and make such Loan shall be in the sole discretion of the Holder. The Holder may treat as made by the
Borrower and rely upon, and the Borrower shall be bound by, any Loan Request that die Holder in good faith believes
to be valid and to have been made in the name or on behalfofthe Borrower by any officer, manager, member partner
or other individual authorized to act on behalfofthe Borrower, and the Holder shall not incur any liability to the
Borrower or any other Person as adirect or indirect result ofhonoring such Loan Request and making such Loan.
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LIMITATION ON OUTSTANDING PRINCIPAL AMOUNT. The Borrower shall not at any time permit,
and the Holder shall net at any time be obligated to permit, the Outstanding Principal Amount to exceed the Limitmg
!
Principal Amount.
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SCHEDULE OF ADVANCES OR LOAN ACCOUNT. There shall be payable as principal pursuant to this
Note only so much of the Limiting Principal Amount as shall have been advanced by the Holder as aLoan or Loans
and is outstanding. The Holder shall set forth on aschedule or loan account (including but not limited to, any
amount of each Loan, (b) the date and amount ofeach payment applied to tho Outstanding Principal Amount and (c)
the Outstanding Principal Amount after each Loan and each such payment. Each such annotation shaU, mthe absence
of manlest error, be conclusive and binding upon the Borrower. No failure by the Holder to make and no error by he
Holder in making any annotation on such schedule or loan account shall affect the Borrower's obligation to repay the
principal amount ofeach Loan, the Borrower's obligation to pay interest on the outstanding principal amount ofeach
Loan or any other obligation ofthe Bonower to the Holder pursuant to this Note or otherwise.
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OPTIONAL PREPAYMENT. The Bonower shall have the option ofprepaying, without penalty or
oremium, the Outstanding Principal Amount to the Holder in full or part at any time and from time to time provided
mat (a) the Outstanding Principal Amount must exceed $50,000 at all times during the first one hundred twenty (20)
days after the date ofthis Note, and (b) upon prepaying the Outstanding Principal Amount in full, the Borrower shall
pav to the Holder all interest and other amounts payable pursuant to this Note and remaining unpaid. With respect to
prepayments made on or after May 1,2014, any partial prepayment shall not result in areduction mthe teim of mis
schedule or loan account maintained in computerized records) annotations evidencing a) the date and principal
Note, and the HoIder will recalculate the monthly principal amortization for the remaining term ofthe Note as ot the
first day ofthe month Immediately following the dale of prepayment.
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MANDATORY PREPAYMENT. In addition to payments set forth above, Bonower shall be required to pay the
Holder amounts (collectively, the "Mandatory Prepayments") equal to (i) commencing on the date hereofand continuing
until April 30, 2014, an amount each month equal to the greater of (A) $2,500 or (B) the sum of(I) 10% ofall revenues
received by Borrower in the prior month up to $100,000, plus (II) 50% of all revenues received by Borrower msuch
month in excess of$100,000, and (ii) on and after May 1, 2014 until the Outstanding Principal Amount and interest
thereon has been paid in full, ifgreater than the amount ofprincipal required to bo paid in aparticular month pursuant to
Section 4(a) of this Note, 30% of all Net Fees (as hereinafter defined) received by Borrower in the prior month. Any
Mandatory Prepayment made pursuant to clause (i) ofthe preceding sentence will be applied first to accrued but unpaid
interest and fees and then to Outstanding Principal Amount. Commencing May 1,2014, all Mandatory Prepayments shall
be applied to repay Outstanding Principal Amount and shall not offset Borrower's obligat.on to make monthly interest
payments. All Mandatory Prepayments must be paid to Holder within three (3) business days afterthe end ofeach month.
For purposes ofthis section, "Net Fees" means all legal fees and reimbursed expenses resulting from any client
representation or referral (whether contingent, hourly, fixed fee or other) after payment ofallamounts owing to third party
lawyers (other than employees or partners ofBorrower) for assistance orreferralwith respectto such chen representation.
Elementis remitted toHolder, any such funds payableto theBorrowershal be held inBoiTowers.rust account to
the benefit of the Holder. Borrower shall continue to escrow any and all such funds received until payment of the
mndatory amount is transmitted to Lender. Funds in Borrower's trust account in which the Holder has an mterest sha
Z£f2 to anyone exceptHolder. With respectto prepayments made on or afterMay 12014, anypartialprepaymen
sh II not result in areduction in the term ofthis Note, and Holder will recalculate the monthly principal amortization for
me remaining term of the Note as ofthe first day ofthe month immediately following the date ofprepayment.
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PURPOSE OF LO ANS. The Borrower shall not obtain or use the proceeds ofany Loan for any purpose
other than refinancing the Borrower's existing credit facilities with the Lender and funding; interest payments under
t t £ S April 30,2013, except that the Lender will permit adraw ofup to $55,000 on the «***-*»
to over ^1payments, provided that the Borrower provides supporting documentation satisfactory to the Lend . n
ts sole discretion with the draw request form. The Borrower acknowledges, warrants and represents to, and agree,
rtMMteflS•»
Loan ProCCCdS
bB "Sed bywarrants
thB BOrrOWel
' f°r °ther than
-il^dtSme
of
he Borrower. The Borrower
further 3ha11
acknowledges,
and represents
to, and"I agrees"with,
the Lende hat the
Le de. ha not committed or promised to advance any funds or loans to the Borrower except in accordan; wft the
tarn, and conditions and subject to the limitations set forth in this Note, the Security A^ent»d^ofter
documents executed and delivered by the Borrower and Guarantors in connection herewith, and that the ^erhas
made no representation to the Borrower regarding the adequacy ofthe Budget or ofany loans or**W«* made to the
Borrower pursuant to this Note for purposes ofconducting the Borrower's legal praot.ee or other business operations.
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AMOUNTS IMMEDIATELY DUE. Upon or at any time or from time to time after the occurrence or
existence ofany Event ofDefault other than, with respect to the Borrower, an Event ofDefaultdescribed in clause
M"c^ he definition of Even, ofDefault set forth in Section 1(d) ofthis Note, the Outstanding Principal Amount and
all interest and other amounts payable pursuant to this Note and remaining unpaid shall at the sole opt on of^the
older and without any notice, demand, presentment or protest of any kind (each ofwhich is knowingly, voluntarily,
iSttonSy and irrevocably waived by the Borrower), become immediately due. Upon the occurrence or existence
f whrespect to the Borrower, any Event ofDefault described in such clause (v ), the Outstanding Principa
Amount and all such interest and other amounts shall, without any notice, demand, presentment or Potest ofany kind
(each of which is knowingly, voluntarily, intentionally and irrevocably waived by the Borrower), automatically
become immediately due.
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BOOKS AND RECORDS, The Borrower shal! maintain accurate books and records regarding its
financial condition, including, but nol limited to, aged listings of accounts payable andaccoimts reccvable^all
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expenses and disbursements, business operations, and the status and condition ofthe Collateral. Holder shall have
the right at any time upon reasonable notice to inspect and audit such books, records, and accounts, and to make
copies thereof. Ifafter the scheduling ofan audit, Borrower (i) cancels the audit within five (5) business days prior
to the scheduled date or (ii) fails at the audit to provide Holder's representative with the necessary books and
records to permit Holder's representative to complete the audit, Borrower shall promptly reimburse Holder for the
costs associated with such cancelled orfailed audit, including all costs incurred by Holder with respect to its
representative such as compensation and travel expenses, in an amount equal to the greater of$500 or actual costs.
13.
CHANGES AND WAIVERS. No course ofconduct pursued, accepted oracquiesced in, and no oral, written
or other agreement or representation made, by or on behalfof the Holder in the future will change this Note or waive
any right or remedy ofthe Holder under or arising as aresult of this Note. Any change in this Note or waiver ofany
right or remedy ofthe Holder under or arising as aresult of this Note must be made in awriting signed by or on
behalf of the Holder.
14.
GOVERNING LAW. This Note shall be governed by and construed, Interpreted and enforced in accordance
with the internal laws ofdie State ofNew York, other than the conflict oflaw provisions ofsuch State, and, to the
extent applicable, the federal law of the United States, without regard to the law ofany other jurisdiction.
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CONSENT TOJURISDICTION. AS PART OFTHE CONSIDERATION FOR NEW VALUE
RECEIVED AND REGARDLESS OF ANT PRESENT OR FUTURE DOMICILE OR PRLNCIPAL PLACE
OF BUSINESS OF BORROWER OR HOLDER, BORROWER HEREBY CONSENTS AND AGREES THAT
ANY CLAMS OR DISPUTES BETWEEN BORROWER AND HOLDER PERTAINING TO THIS NOTE
OR TO ANY MATTER ARISLNG OUT OF OR RELATED TO THIS NOTE SHALL BE BROUGHT ONLY
IN THE SUPREME COURT OF THE STATE OF NEW YORK LOCATED IN THE COUNTY OF ERIE
WHICH SHALL BE DEEMED TO BE THE COURT OF SOLE AND EXCLUSIVE VENUE FOR THE
BRINGING OF Am' LEGA LACTION; PROVIDED, HOWEVER, HOLDER MAY AT ITS OPTION,
COMMENCE ANY ACTION, SUIT OR PROCEEDING IN ANT OTHER APPROPRIATE FORUM OR
JURISDICTION TO OBTAIN EQUITABLE RELIEF OR TO ENFORCE ANY JUDGMENT OR ORDER
OBTAINED BY HOLDER AGAINST BORROWER, TO ENFORCE ANY OTHER RIGHT OR REMEDY
UNDER THIS NOTE, OR TO OBTAIN ANY OTHER RELIEF DEEMED APPROPRIATE BY HOLDER.
BORROWER EXPRESSLY SUBMITS AND CONSENTS LN ADVANCE TO SUCH JURISDICTION IN
ANY ACTION OR SUIT COMMENCED IN THE SUPREME COURT OF THE STATE OF NEW YORK
I OCATED IN ERIE COUNTY, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH
BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE
OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EOUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH NEW YORK COURT. BORROWER
REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS CONSENT TO JURISDICTION
PROVISION WITH ITS LEGAL COUNSEL, AND HAS MADE THIS WAIVER KNOWINGLY AND
VOLUNTARILY.
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WAIVER OF TRIAL BY JURY. THE BORROWER KNOWINGLY, VOLUNTARILY,
INTENTIONALLY AND IRREVOCABLY WAIVES EACH RIGHT THE BORROWER MAY HAVE TO A
TRIAL BY JURY WITH RESPECT TO (a) THE CREDIT, ANY LOAN OR COLLATERAL, THIS NOTE
OR ANY OTHER WRITING HERETOFORE OR HERE AFTER EXECUTED LN CONNECTION WITH
THE CREDIT OR ANY LOAN OR COLLATERAL, (b) ANY TRANSACTION ARISING OUT OF OR
OTHERWISE RELATING TO THE CREDIT, ANY LOAN OR COLLATERAL, THIS NOTE OR ANY
SUCH OTHER WRITING OR (c) ANY NEGOTIATION, ADMINISTRATION, PERFORMANCE OR
ENFORCEMENT OFTHE CREDIT, ANY LOAN OR COLLATERAL, THIS NOTE OR ANY' SUCH
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OTHER WRITING.
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SERVICE OF PROCESS. PROCESS ON BORROWER IN ANY SUIT,ACTION OR
PROCEEDING ARISING OUT OF THIS NOTE WILLBE DEEMED TO HAVE BEEN GIVEN WHEN
GIVEN IN ANY ONE OF THE FOLLOWING WAYS: (I)PERSONALLY DELIVERED, (II) TWO
BUSINESS DAYS AFTERDEPOSITED WITH A NATIONALLY RECOGNIZED OVERNIGHT
COURIER, POSTAGE PREPAID, THAT ROUTINELY ISSUES RECEIPTS, OR (TH) 4BUSINESS DAYS
AFTER SENTBY CERTIFIED MAIL BY THE UNITED STATES POSTAL SERVICE, POSTAGE
PREPAED, RETURN RECEIPT REQUESTED, ADDRESSED TO THE BORROWER AT THE ADDRESS
SET FORTH IN SECTION l(n). Such service shall be deemed in every respect effective service ofprocess
upon Borrower and shall, to the fullest extent permitted by law, be taken and held to be valid personal
service upon the Borrower. Nothing in this Section shall affect the Holder's right to serve process in any
other manner permitted by law. Borrower may add additional addresses orchange its address for purposes
ofservice ofprocess by giving 10 days'prior written notice ofsuch change to the Holder in accordance with
the notice provisions of the Security Agreement.
18.
SECURITY AGREEMENT. This Note issecured by the terms ofa Security Agreement given by
Borrower to Lender simultaneously herewith.
19.
SOLVENCY. On the date hereof, and immediately prior to and after giving effect to the borrowing
represented by this Note and the use ofthe proceeds thereof, Borrower's assets will exceed its liabilities and
Borrower will be solvent, will be able topay its debts as they mature and will have capital sufficient to carry on
its business as then constituted.
20.
RENEWAL NOTE. This Note evidences but does not extinguish orsatisfy, and is not a novation of, a
preexisting indebtedness evidenced by that certain Revolving Promissory Note executed by Borrower to
Counsel Financial Services, LLC in the maximum principal amount of$600,000 dated January 16,2008, as
amended and restated by the First Amended and Restated Revolving Promissory Note executed by Borrower to
Counsel Financial Services, LLC in the maximum principal amount of$750,000 dated January 14,2009, all as
subsequently assigned by Counsel Financial Services, LLC to Lender on September 17,2009, the Second
Amended and Restated Revolving Promissory Note executed by Borrower to Lender in the maximum principal
amount ofS925.000 dated January %2010, and the Third Amended and Restated Revolving Promissory Note
executed by Borrower to Lender in the maximum principal amount of $1,275,000 dated July 13,2010 ("Prior
Notes"). The Borrower hereby acknowledges that the outstaiding principalbalance under the Prior Notes
immediately prior to the funding ofthis Note was / 3^> , f3 LzJiLg^
Dated: April ^, 2012
ACKNOWLEDGMENT/TOR NOT
STATE OF NEW YORK
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:SS.
COUNTY OF
On the Jfi day ofApril in the year 2012 before me, the undersigned, anotary public in and for said state,
personally appearedJohn Balestriere, personally known to me or proved to me on the basis ofsatisfactory evidence
to be the individual whose name is subscribed to the within instrument and acknowledged to me that he (she)
executed the same in his (her) capacity as Managing Member ofBalestriere PLLC, and that by his (her) signature
on the instrument, the individual, or other person upon behalf ofwhich the individual acted, executed the
instrument.
MARCJUSTIN HATALE
NOTARY PUBUC STATE OF NEW YORK
NEW YORK COUNTY
UC.#01NA9244836
C0MM.EXP.- ?/"/?0)> •
ALLONGE TO FOURTH AMENDED AND RESTATED REVOLVING PROMISSORY NOTE,
DATED APRIL JjQ, 2012, ISSUED BY BALESTRIERE PLLC
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TO COUNSEL FINANCIAL H, LLC
NOTICE- THIS NOTE IS SUBJECT TO ASECURITY INTEREST GRANTED BY COUNSEL
FINANCIAL HOLDINGS, LLC AND ITS WHOLLY-OWNED SUBSIDIARY COUNSEL FINANCIAL
II LLC TO BANK OF AMERICA PURSUANT TO ACREDIT AND SECURITY AGREEMENT
DATED SEPTEMBER 17, 2009, AMONG SUCH PARTIES, AS SUCH CREDIT AND SECURITY
AGREEMENT MAY BE AMENDED, SUPPLEMENTED, REPLACED, RESTATED OR
OTHERWISE MODIFIEDFROMTIME TO TIME
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