EXHIBIT 10.2
[BANK OF AMERICA LOGO]
BUSINESS LOAN AGREEMENT (ASSET BASED)
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BORROWER: COLLEGIATE PACIFIC, INC. LENDER: BANK OF AMERICA, N.A.
13950 SENLAC DRIVE, SUITE 100 CLSC-COMMERCIAL BANKING
FARMERS XXXXXX, XX 00000 TX1-609-06-01
X.X. XXX 000000
XXXXXX, XX 00000-0000
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THIS BUSINESS LOAN AGREEMENT (ASSET BASED) DATED DECEMBER 26, 2001, IS MADE AND
EXECUTED BETWEEN COLLEGIATE PACIFIC, INC. ("BORROWER") AND BANK OF AMERICA, N.A.
("LENDER") ON THE FOLLOWING TERMS AND CONDITIONS. BORROWER HAS RECEIVED PRIOR
COMMERCIAL LOANS FROM LENDER OR HAS APPLIED TO LENDER FOR A COMMERCIAL LOAN OR
LOANS OR OTHER FINANCIAL ACCOMMODATIONS, INCLUDING THOSE WHICH MAY BE DESCRIBED
ON ANY EXHIBIT OR SCHEDULE ATTACHED TO THIS AGREEMENT ("LOAN"). BORROWER
UNDERSTANDS AND AGREES THAT: (A) IN GRANTING, RENEWING, OR EXTENDING ANY LOAN,
LENDER IS RELYING UPON BORROWER'S REPRESENTATIONS, WARRANTIES, AND AGREEMENTS AS
SET FORTH IN THIS AGREEMENT, AND (B) ALL SUCH LOANS SHALL BE AND REMAIN SUBJECT
TO THE TERMS AND CONDITIONS OF THIS AGREEMENT.
TERM. This Agreement shall be effective as of December 26, 2001, and shall
continue in full force and effect until such time as all of Borrower's Loans in
favor of Lender have been paid in full, including principal, interest, costs,
expenses, attorneys' fees, and other fees and charges, or until such time as the
parties may agree in writing to terminate this Agreement.
LINE OF CREDIT. Lender agrees to make Advances to Borrower from time to time
from the date of this Agreement to the Expiration Date, provided the aggregate
amount of such Advances outstanding at any time does not exceed the Borrowing
Base. Within the foregoing limits, Borrower may borrow, partially or wholly
prepay, and reborrow under this Agreement as follows:
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make any
Advance to or for the account of Borrower under this Agreement is
subject to the following conditions precedent, with all documents,
instruments, opinions, reports, and other items required under this
Agreement to be in form and substance satisfactory to Lender:
(1) Lender shall have received evidence that this Agreement
and all Related Documents have been duly authorized, executed,
and delivered by Borrower to Lender.
(2) Lender shall have received such opinions of counsel,
supplemental opinions, and documents as Lender may request.
(3) The security interests in the Collateral shall have been
duly authorized, created, and perfected with first lien
priority and shall be in full force and effect.
(4) All guaranties required by Lender for the credit
facility(ies) shall have been executed by each Guarantor,
delivered to Lender, and be in full force and effect.
(5) Lender, at its option and for its sole benefit, shall have
conducted an audit of Borrower's Accounts, Inventory, books,
records, and operations, and Lender shall be satisfied as to
their condition.
(6) Borrower shall have paid to Lender all fees, costs, and
expenses specified in this Agreement and the Related Documents
as are then due and payable.
(7) There shall not exist at the time of any Advance a
condition which would constitute an Event of Default under
this Agreement, and Borrower shall have delivered to Lender
the compliance certificate called for in the paragraph below
titled "Compliance Certificate."
MAKING LOAN ADVANCES. Advances under this credit facility, as well as
directions for payment from Borrower's accounts, may be requested
orally or in writing by authorized persons. Lender may, but need not,
require that all oral requests be confirmed in writing. Each Advance
shall be conclusively deemed to have been made at the request of and
for the benefit of Borrower (1) when credited to any deposit account of
Borrower maintained with Lender or (2) when advanced in accordance with
the instructions of an authorized person. Lender, at its option, may
set a cutoff time, after which all requests for Advances will be
treated as having been requested on the next succeeding Business Day.
MANDATORY LOAN REPAYMENTS. If at any time the aggregate principal
amount of the outstanding Advances shall exceed the applicable
Borrowing Base, Borrower, immediately upon written or oral notice from
Lender, shall pay to Lender an amount equal to the difference between
the outstanding principal balance of the Advances and the Borrowing
Base. On the Expiration Date, Borrower shall pay to Lender in full the
aggregate unpaid principal amount of all Advances then outstanding and
all accrued unpaid interest, together with all other applicable fees,
costs and charges, if any, not yet paid.
LOAN ACCOUNT. Lender shall maintain on its books a record of account in
which Lender shall make entries for each Advance and such other debits
and credits as shall be appropriate in connection with the credit
facility. Lender shall provide Borrower with periodic statements of
Borrower's account, which statements shall be considered to be correct
and conclusively binding on Borrower unless Borrower notifies Lender to
the contrary within thirty (30) days after Borrower's receipt of any
such statement which Borrower deems to be incorrect.
COLLATERAL. To secure payment of the Primary Credit Facility and performance of
all other Loan, obligations and duties owed by Borrower to Lender, Borrower (and
others, if required) shall grant to Lender Security Interests in such property
and assets as Lender may require. Lender's Security Interests in the Collateral
shall be continuing liens and shall include the proceeds and products of the
Collateral, including without limitation the proceeds of any insurance. With
respect to the Collateral, Borrower agrees and represents and warrants to
Lender:
PERFECTION OF SECURITY INTERESTS. Borrower agrees to execute financing
statements and all documents perfecting Lender's Security Interest and
to take whatever other actions are requested by Lender to perfect and
continue Lender's Security Interests in the Collateral. Upon request of
Lender, Borrower will deliver to Lender any and all of the documents
evidencing or constituting the Collateral, and Borrower will note
Lender's interest upon any and all chattel paper and instruments if not
delivered to Lender for possession by Lender. Contemporaneous with the
execution of this Agreement, Borrower will execute one or more UCC
financing statements and any similar statements as may be required by
applicable law, and Lender will file such financing statements and all
such similar statements in the appropriate location or locations.
Borrower hereby appoints Lender as its irrevocable attorney-in-fact
for the purpose of executing any documents necessary to perfect or to
continue any Security Interest. Lender may at any time, and without
further authorization from Borrower, file a carbon, photograph,
facsimile, or other reproduction of any financing statement for use as
a financing statement. Borrower will reimburse Lender for all expenses
for the perfection, termination, and the continuation of the perfection
of Lender's security interest in the Collateral. Borrower promptly will
notify Lender before any change in Borrower's name including any change
to the assumed business names of Borrower. Borrower also promptly will
notify Lender before any change in Borrower's Social Security Number or
Employer Identification Number. Borrower further agrees to notify
Lender in writing prior to any change in address or location of
Borrower's principal governance office or should Borrower merge or
consolidate with any other entity.
BUSINESS LOAN AGREEMENT (ASSET BASED)
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COLLATERAL RECORDS. Borrower does now, and at all times hereafter
shall, keep correct and accurate records of the Collateral, all of
which records shall be available to Lender or Lender's representative
upon demand for inspection and copying at any reasonable time. With
respect to the Accounts, Borrower agrees to keep and maintain such
records as Lender may require, including without limitation information
concerning Eligible Accounts and Account balances and agings. Records
related to Accounts (Receivables) are or will be located at 00000
Xxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000. With respect to the
Inventory, Borrower agrees to keep and maintain such records as Lender
may require, including without limitation information concerning
Eligible Inventory and records itemizing and describing the kind, type,
quality, and quantity of Inventory, Borrower's Inventory costs and
selling prices, and the daily withdrawals and additions to Inventory.
Records related to Inventory are or will be located at 00000 Xxxxxx
Xxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000. The above is an accurate and
complete list of all locations at which Borrower keeps or maintains
business records concerning Borrower's collateral.
COLLATERAL SCHEDULES. Concurrently with the execution and delivery of
this Agreement, Borrower shall execute and deliver to Lender schedules
of Accounts and Inventory and schedules of Eligible Accounts and
Eligible Inventory in form and substance satisfactory to the Lender.
Thereafter supplemental schedules shall be delivered according to the
following schedule: With respect to Eligible Accounts, schedules shall
be delivered within 30 days of quarter end, along with accounts
receivable agings and accounts payable agings. With respect to Eligible
Inventory, schedules shall be delivered within 30 days of quarter end,
along with inventory listing.
REPRESENTATIONS AND WARRANTIES CONCERNING ACCOUNTS. With respect to the
Accounts, Borrower represents and warrants to Lender: (1) Each Account
represented by Borrower to be an Eligible Account for purposes of this
Agreement conforms to the requirements of the definition of an Eligible
Account; (2) All Account information listed on schedules delivered to
Lender will be true and correct, subject to immaterial variance; and
(3) Lender, its assigns, or agents shall have the right at any time and
at Borrower's expense to inspect, examine, and audit Borrower's records
and to confirm with Account Debtors the accuracy of such Accounts.
REPRESENTATIONS AND WARRANTIES CONCERNING INVENTORY. With respect to
the Inventory, Borrower represents and warrants to Lender: (1) All
Inventory represented by Borrower to be Eligible Inventory for purposes
of this Agreement conforms to the requirements of the definition of
Eligible Inventory; (2) All Inventory values listed on schedules
delivered to Lender will be true and correct, subject to immaterial
variance; (3) The value of the Inventory will be determined on a
consistent accounting basis; (4) Except as agreed to the contrary by
Lender in writing, all Eligible Inventory is now and at all times
hereafter will be in Borrower's physical possession and shall not be
held by others on consignment, sale on approval, or sale or return; (5)
Except as reflected in the Inventory schedules delivered to Lender, all
Eligible Inventory is now and at all times hereafter will be of good
and merchantable quality, free from defects; (6) Eligible Inventory is
not now and will not at any time hereafter be stored with a bailee,
warehouseman, or similar party without Lender's prior written consent,
and, in such event, Borrower will concurrently at the time of bailment
cause any such bailee, warehouseman, or similar party to issue and
deliver to Lender, in form acceptable to Lender, warehouse receipts in
Lender name evidencing the storage of Inventory; and (7) Lender, its
assigns, or agents shall have the right at any time and at Borrower's
expense to inspect and examine the Inventory and to check and test the
same as to quality, quantity, value, and condition.
ADDITIONAL CREDIT FACILITIES. In addition to the Primary Credit Facility, the
following credit accommodations are either in place or will be made available to
Borrower:
LETTER OF CREDIT FACILITY. Subject to the terms of this Agreement,
Lender will issue standby letters of credit and commercial letters of
credit (each a "Letter of Credit") on behalf of Borrower. At no time,
however, shall the total face amount of all Letters of Credit
outstanding, less any partial draws paid under the Letters of Credit
exceed the sum of $250,000.00.
(1) Upon Lender's request, Borrower promptly shall pay to
Lender issuance fees and such other fees, commissions, costs,
and any out-of-pocket expenses charged or incurred by Lender
with respect to any Letter of Credit.
(2) The commitment by Lender to issue Letters of Credit shall,
unless earlier terminated in accordance with the terms of this
Agreement, automatically terminate on the Expiration Date and
no Letter of Credit shall expire on a date which is more than
zero ( ) days after the Expiration Date.
(3) Each Letter of Credit shall be in form and substance
satisfactory to Lender and in favor of beneficiaries
satisfactory to Lender, provided that Lender may refuse to
issue a Letter of Credit due to the nature of the transaction
or its terms or in connection with any transaction where
Lender, due to the beneficiary or the nationality or residence
of the beneficiary, would be prohibited by any applicable law,
regulation, or order from issuing such Letter of Credit. Under
no circumstances, however, will a Letter of Credit exceed zero
( ) days from the issue date.
(4) Prior to the issuance of each Letter of Credit, and in all
events prior to any daily cutoff time Lender may have
established for purposes thereof, Borrower shall deliver to
Lender a duly executed form of Lender's standard form of
application for issuance of letter of credit with proper
insertions.
LENDER'S RIGHTS UPON DEFAULT. Upon the occurrence of any Event of Default,
Lender may, at its sole and absolute discretion and in addition to any other
remedies available to it under this Agreement or otherwise, require Borrower to
pay immediately to Lender, for application against drawings under any
outstanding Letters of Credit, the outstanding principal amount of any such
Letters of Credit which have not expired. Any portion of the amount so paid to
Lender which is not applied to satisfy draws under any such Letters of Credit or
any other obligations of Borrower to the Lender shall be repaid to Borrower
without interest.
LENDER'S COSTS AND EXPENSES. Borrower shall, upon Lender's request, promptly pay
to and reimburse Lender for all costs incurred and payments made by Lender by
reason of any future assessment, reserve, deposit, or similar requirement or any
surcharge, tax, or fee imposed upon Lender or as a result of Lender's compliance
with any directive or requirement of any regulatory authority pertaining or
relating to any Letter of Credit.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender's satisfaction of all of the conditions set forth in this
Agreement and in the Related Documents.
LOAN DOCUMENTS. Borrower shall provide to Lender the following
documents for the Loan: (1) the Note; (2) Security Agreements granting
to Lender security interests in the Collateral; (3) financing
statements and all other documents perfecting Lender's Security
Interests; (4) evidence of insurance as required below; (5) guaranties;
(6) subordinations; (7) together with all such Related Documents as
Lender may require for the Loan; all in form and substance satisfactory
to Lender and Lender's counsel.
BORROWER'S AUTHORIZATION. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and
the Related Documents. In addition, Borrower shall have provided such
other resolutions, authorizations, documents and instruments as Lender
or its counsel, may require.
FEES AND EXPENSES UNDER THIS AGREEMENT. Borrower shall have paid to
Lender all fees, costs, and expenses specified in this Agreement and
the Related Documents as are then due and payable.
REPRESENTATIONS AND WARRANTIES. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document
or certificate delivered to Lender under this Agreement are true and
correct.
NO EVENT OF DEFAULT. There shall not exist at the time of any Advance a
condition which would constitute an Event of Default under this
Agreement or under any Related Document.
BUSINESS LOAN AGREEMENT (ASSET BASED)
(CONTINUED) PAGE 3
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REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:
ORGANIZATION. Borrower is a corporation for profit which is, and at all
times shall be, duly organized, validly existing, and in good standing
under and by virtue of the laws of the State of Delaware. Borrower is
duly authorized to transact business in the State of Texas and all
other states in which Borrower is doing business, having obtained all
necessary filings, governmental licenses and approvals for each state
in which Borrower is doing business. Specifically, Borrower is, and at
all times shall be, duly qualified as a foreign corporation in all
states in which the failure to so qualify would have a material adverse
effect on its business or financial condition. Borrower has the full
power and authority to own its properties and to transact the business
in which it is presently engaged or presently proposes to engage.
Borrower maintains an office at 00000 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx
Xxxxxx, XX 00000. Unless Borrower has designated otherwise in writing,
the principal office is the office at which Borrower keeps its books
and records including its records concerning the Collateral. Borrower
will notify Lender prior to any change in the location of Borrower's
state of organization or any change in Borrower's name. Borrower shall
do all things necessary to preserve and to keep in full force and
effect its existence, rights and privileges, and shall comply with all
regulations, rules, ordinances, statutes, orders and decrees of any
governmental or quasi-governmental authority or court applicable to
Borrower and Borrower's business activities.
ASSUMED BUSINESS NAMES. Borrower has filed or recorded all documents or
filings required by law relating to all assumed business names used by
Borrower. Excluding the name of Borrower, the following is a complete
list of all assumed business names under which Borrower does business:
Borrower Assumed Business Name Filing Location Date
-------- --------------------- --------------- ----
COLLEGIATE PACIFIC, INC. PRODUCT MERCHANDISING
AUTHORIZATION. Borrower's execution, delivery, and performance of this
Agreement and all the Related Documents have been duly authorized by
all necessary action by Borrower and do not conflict with, result in a
violation of, or constitute a default under (1) any provision of
Borrower's articles of incorporation or organization, or bylaws, or any
agreement or other instrument binding upon Borrower or (2) any law,
governmental regulation, court decree, or order applicable to Borrower
or to Borrower's properties.
FINANCIAL INFORMATION. Each of Borrower's financial statements supplied
to Lender truly and completely disclosed Borrower's financial condition
as of the date of the statement, and there has been no material adverse
change in Borrower's financial condition subsequent to the date of the
most recent financial statement supplied to Lender. Borrower has no
material contingent obligations except as disclosed in such financial
statements.
LEGAL EFFECT. This Agreement constitutes, and any Instrument or
agreement Borrower is required to give under this Agreement when
delivered will constitute legal, valid, and binding obligations of
Borrower enforceable against Borrower in accordance with their
respective terms.
PROPERTIES. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender
and as accepted by Lender, and except for property tax liens for taxes
not presently due and payable, Borrower owns and has good title to all
of Borrower's properties free and clear of all Security Interests, and
has not executed any security documents or financing statements
relating to such properties. All of Borrower's properties are titled in
Borrower's legal name, and Borrower has not used or filed a financing
statement under any other name for at least the last five (5) years.
HAZARDOUS SUBSTANCES. Except as disclosed to and acknowledged by Lender
in writing, Borrower represents and warrants that: (1) During the
period of Borrower's ownership of Borrower's Collateral, there has been
no use, generation, manufacture, storage, treatment, disposal, release
or threatened release of any Hazardous Substance by any person on,
under, about or from any of the Collateral. (2) Borrower has no
knowledge of, or reason to believe that there has been (a) any breach
or violation of any Environmental Laws; (b) any use, generation,
manufacture, storage, treatment, disposal, release or threatened
release of any Hazardous Substance on, under, about or from the
Collateral by any prior owners or occupants of any of the Collateral;
or (c) any actual or threatened litigation or claims of any kind by any
person relating to such matters. (3) Neither Borrower nor any tenant,
contractor, agent or other authorized user of any of the Collateral
shall use, generate, manufacture, store, treat, dispose of or release
any Hazardous Substance on, under, about or from any of the Collateral;
and any such activity shall be conducted in compliance with all
applicable federal, state, and local laws, regulations, and ordinances,
including without limitation all Environmental Laws. Borrower
authorizes Lender and its agents to enter upon the Collateral to make
such inspections and tests as Lender may deem appropriate to determine
compliance of the Collateral with this section of the Agreement. Any
inspections or tests made by Lender shall be at Borrower's expense and
for Lender's purposes only and shall not be construed to create any
responsibility or liability on the part of Lender to Borrower or to any
other person. The representations and warranties contained herein are
based on Borrower's due diligence in investigating the Collateral for
hazardous waste and Hazardous Substances. Borrower hereby (1) releases
and waives any future claims against Lender for indemnity or
contribution in the event Borrower becomes liable for cleanup or other
costs under any such laws, and (2) agrees to indemnify and hold
harmless Lender against any and all claims, losses, liabilities,
damages, penalties, and expenses which Lender may directly or
indirectly sustain or suffer resulting from a breach of this section of
the Agreement or as a consequence of any use, generation, manufacture,
storage, disposal, release or threatened release of a hazardous waste
or substance on the Collateral. The provisions of this section of the
Agreement, including the obligation to indemnify, shall survive the
payment of the Indebtedness and the termination, expiration or
satisfaction of this Agreement and shall not be affected by Lender's
acquisition of any interest in any of the Collateral, whether by
foreclosure or otherwise.
LITIGATION AND CLAIMS. No litigation, claim, investigation,
administrative proceeding or similar action (including those for unpaid
taxes) against Borrower is pending or threatened, and no other event
has occurred which may materially adversely affect Borrower's financial
condition or properties, other than litigation, claims, or other
events, if any, that have been disclosed to and acknowledged by Lender
in writing.
TAXES. To the best of Borrower's knowledge, all of Borrower's tax
returns and reports that are or were required to be filed, have been
filed, and all taxes, assessments and other governmental charges have
been paid in full, except those presently being or to be contested by
Borrower in good faith in the ordinary course of business and for which
adequate reserves have been provided.
LIEN PRIORITY. Unless otherwise previously disclosed to Lender in
writing, Borrower has not entered into or granted any
Security
Agreements, or permitted the filing or attachment of any Security
Interests on or affecting any of the Collateral directly or indirectly
securing repayment of Borrower's Loan and Note, that would be prior or
that may in any way be superior to Lender's Security Interests and
rights in and to such Collateral.
BINDING EFFECT. This Agreement, the Note, all
Security Agreements (if
any), and all Related Documents are binding upon the signers thereof,
as well as upon their successors, representatives and assigns, and are
legally enforceable in accordance with their respective terms.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long
as this Agreement remains in effect, Borrower will:
NOTICES OF CLAIMS AND LITIGATION. Promptly inform Lender in writing of
(1) all material adverse changes in Borrower's financial condition, and
(2) all existing and all threatened litigation, claims, investigations,
administrative proceedings or similar actions affecting Borrower or any
Guarantor which could materially affect the financial condition of
Borrower or the financial condition of any Guarantor.
FINANCIAL RECORDS. Maintain its books and records in accordance with
GAAP, applied on a consistent basis, and permit Lender to examine and
BUSINESS LOAN AGREEMENT (ASSET BASED)
(CONTINUED) PAGE 4
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audit Borrower's books and records at all reasonable times.
FINANCIAL STATEMENTS. Furnish Lender with the following:
ANNUAL STATEMENTS. As soon as available, but in no event later
than ninety (90) days after the end of each fiscal year,
Borrower's balance sheet and income statement for the year
ended, audited by a certified public accountant satisfactory
to Lender.
INTERIM STATEMENTS. As soon as available, but in no event
later than 45 days after the end of each fiscal quarter,
Borrower's balance sheet and profit and loss statement for the
period ended, prepared by Borrower.
ADDITIONAL REQUIREMENTS. Basis of Financial Statements. The
financial statements required by this Agreement shall be
prepared on a consolidated basis.
Compliance Certificates-Revised Schedule. In lieu of the
provisions of the Affirmative Covenant paragraph below
entitled "Compliance Certificates," the following provision is
substituted to replace it in its entirety.
Borrower covenants and agrees with Lender that, so long as
this Agreement remains in effect, Borrower will deliver to
Lender (a) within 90 days following the end of each fiscal
year, and (b) within 45 days following the end of each
quarter, a certificate signed by the Borrower, or if the
Borrower is a business entity, an authorized financial officer
of Borrower setting forth (i) the information and computations
(in sufficient detail) to establish that Borrower is in
compliance with all financial covenants at the end of the
period covered by the financial statements then being
delivered to Lender, and (ii) whether there existed as of the
date of such financial statements and whether there exists as
of the date of the certificate, any Event of Default under
this Agreement and, if any such default exists, specifying the
nature thereof and the action Borrower is taking and proposes
to take with respect thereto.
All financial reports required to be provided under this Agreement
shall be prepared in accordance with GAAP, applied on a consistent
basis, and certified by Borrower as being true and correct.
ADDITIONAL INFORMATION. Furnish such additional information and
statements, as Lender may request from time to time.
FINANCIAL COVENANTS AND RATIOS. Comply with the following covenants and
ratios:
OTHER REQUIREMENTS. Debt to Worth Ratio. Maintain on a
consolidated basis a ratio of Total Liabilities (excluding the
non-current portion of Subordinated Liabilities) to Tangible
Net Worth not exceeding 1.0:1.0. "Total Liabilities" means the
sum of current liabilities plus long term liabilities.
"Tangible Net Worth" means the value of Borrower's total
assets (including leaseholds and leasehold improvements and
reserves against assets but excluding goodwill, patents,
trademarks, trade names, organization expense, unamortized
debt discount and expense, capitalized or deferred research
and development costs, deferred marketing expenses, and other
like intangibles, and monies due from affiliates, officers,
directors, employees, shareholders, members or managers of
Borrower) less total liabilities, including but not limited to
accrued and deferred income taxes, but excluding the
non-current portion of Subordinated Liabilities. "Subordinated
Liabilities" means liabilities subordinated to Borrower's
obligations to Lender in a manner acceptable to Lender in its
sole discretion.
Profitability. Maintain on a consolidated basis, a positive
net income before taxes and extraordinary items for each
annual accounting period.
Except as provided above, all computations made to determine
compliance with the requirements contained in this paragraph
shall be made in accordance with generally accepted
accounting principles, applied on a consistent basis, and
certified by Borrower as being true and correct.
INSURANCE. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect
to Borrower's properties and operations, in form, amounts, and
coverages reasonably acceptable to Lender and by insurance companies
authorized to transact business in
Texas. BORROWER MAY FURNISH THE
INSURANCE REQUIRED BY THIS AGREEMENT WHETHER THROUGH EXISTING POLICIES
OWNED OR CONTROLLED BY BORROWER OR THROUGH EQUIVALENT COVERAGE FROM ANY
INSURANCE COMPANY AUTHORIZED TO TRANSACT BUSINESS IN
TEXAS. Borrower,
upon request of Lender, will deliver to Lender from time to time the
policies or certificates of insurance in form satisfactory to Lender,
including stipulations that coverages will not be cancelled or
diminished without at least thirty (30) days prior written notice to
Lender. Each insurance policy also shall include an endorsement
providing that coverage in favor of Lender will not be impaired in any
way by any act, omission or default of Borrower or any other person. In
connection with all policies covering assets in which Lender holds or
is offered a security interest for the Loans, Borrower will provide
Lender with such lender's loss payable or other endorsements as Lender
may require.
INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports
on each existing insurance policy showing such information as Lender
may reasonably request, including without limitation the following: (1)
the name of the insurer; (2) the risks insured; (3) the amount of the
policy; (4) the properties insured; (5) the then current property
values on the basis of which insurance has been obtained, and the
manner of determining those values; and (6) the expiration date of the
policy. In addition, upon request of Lender (however not more often
than annually), Borrower will have an independent appraiser
satisfactory to Lender determine, as applicable, the actual cash value
or replacement cost of any Collateral. The cost of such appraisal shall
be paid by Borrower.
GUARANTIES. Prior to disbursement of any Loan proceeds, furnish
executed guaranties of the Loans in favor of Lender, executed by the
guarantors named below, on Lender's forms, and in the amounts and under
the conditions set forth in those guaranties.
NAMES OF GUARANTORS AMOUNTS
------------------- -------
XXXXXXX X. XXXXXXXXXX $1,000,000.00
KESMIL MANUFACTURING, INC. UNLIMITED
SUBORDINATION. Prior to disbursement of any Loan proceeds, deliver to
Lender a subordination agreement on Lender's forms, executed by
Borrower's creditor named below, subordinating all of Borrower's
indebtedness to such creditor, or such lesser amount as may be agreed
to by Lender in writing, and any security interests in collateral
securing that indebtedness to the Loans and security interests of
Lender.
NAME OF CREDITOR TOTAL AMOUNT OF DEBT
---------------- --------------------
XXXXXXX X. XXXXXXXXXX $385,000.00
OTHER AGREEMENTS. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.
LOAN PROCEEDS. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.
TAXES, CHARGES AND LIENS. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all
assessments, taxes, governmental charges, levies and liens, of every
kind and nature, imposed upon Borrower or its properties, income, or
profits, prior to the date on which penalties would attach, and all
lawful claims that, if unpaid, might become a lien or charge upon any
of Borrower's properties, income, or profits.
BUSINESS LOAN AGREEMENT (ASSET BASED)
(CONTINUED) PAGE 5
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PERFORMANCE. Perform and comply, in a timely manner, with all terms,
conditions, and provisions set forth in this Agreement, in the Related
Documents, and in all other instruments and agreements between Borrower
and Lender. Borrower shall notify Lender immediately in writing of any
default in connection with any agreement.
OPERATIONS. Maintain executive and management personnel with
substantially the same qualifications and experience as the present
executive and management personnel; provide written notice to Lender of
any change in executive and management personnel; conduct its business
affairs in a reasonable and prudent manner.
ENVIRONMENTAL STUDIES. Promptly conduct and complete, at Borrower's
expense, all such investigations, studies, samplings and testings as
may be requested by Lender or any governmental authority relative to
any substance, or any waste or by-product of any substance defined as
toxic or a hazardous substance under applicable federal, state, or
local law, rule, regulation, order or directive, at or affecting any
property or any facility owned, leased or used by Borrower.
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Comply with all laws,
ordinances, and regulations, now or hereafter in effect, of all
governmental authorities applicable to the conduct of Borrower's
properties, businesses and operations, and to the use or occupancy of
the Collateral, including without limitation, the Americans With
Disabilities Act. Borrower may contest in good faith any such law,
ordinance, or regulation and withhold compliance during any proceeding,
including appropriate appeals, so long as Borrower has notified Lender
in writing prior to doing so and so long as, in Lender's sole opinion,
Lender's interests in the Collateral are not jeopardized. Lender may
require Borrower to post adequate security or a surety bond, reasonably
satisfactory to Lender, to protect Lender's interest.
INSPECTION. Permit employees or agents of Lender at any reasonable time
to inspect any and all Collateral for the Loan or Loans and Borrower's
other properties and to examine or audit Borrower's books, accounts,
and records and to make copies and memoranda of Borrower's books,
accounts, and records. If Borrower now or at any time hereafter
maintains any records (including without limitation computer generated
records and computer software programs for the generation of such
records) in the possession of a third party, Borrower, upon request of
Lender, shall notify such party to permit Lender free access to such
records at all reasonable times and to provide Lender with copies of
any records it may request, all at Borrower's expense.
COMPLIANCE CERTIFICATES. Unless waived in writing by Lender, provide
Lender at least annually, with a certificate executed by Borrower's
chief financial officer, or other officer or person acceptable to
Lender, certifying that the representations and warranties set forth in
this Agreement are true and correct as of the date of the certificate
and further certifying that, as of the date of the certificate, no
Event of Default exists under this Agreement.
ENVIRONMENTAL COMPLIANCE AND REPORTS. Borrower shall comply in all
respects with any and all Environmental Laws; not cause or permit to
exist, as a result of an intentional or unintentional action or
omission on Borrower's part or on the part of any third party, on
property owned and/or occupied by Borrower, any environmental activity
where damage may result to the environment, unless such environmental
activity is pursuant to and in compliance with the conditions of a
permit issued by the appropriate federal, state or local governmental
authorities; shall furnish to Lender promptly and in any event within
thirty (30) days after receipt thereof a copy of any notice, summons,
lien, citation, directive, letter or other communication from any
governmental agency or instrumentality concerning any intentional or
unintentional action or omission on Borrower's part in connection with
any environmental activity whether or not there is damage to the
environment and/or other natural resources.
ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such
promissory notes, mortgages, deeds of trust,
security agreements,
assignments, financing statements, instruments, documents and other
agreements as Lender or its attorneys may reasonably request to
evidence and secure the Loans and to perfect all Security Interests.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Borrower fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Borrower's failure to discharge or pay when due any amounts
Borrower is required to discharge or pay under this Agreement or any Related
Documents, Lender on Borrower's behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on any Collateral and paying all
costs for insuring, maintaining and preserving any Collateral. All such
expenditures paid by Lender for such purposes will then bear interest at the
Note rate from the date paid by Lender to the date of repayment by Borrower. To
the extent permitted by applicable law, all such expenses will become a part of
the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be
added to the balance of the Note and be apportioned among and be payable with
any installment payments to become due during either (1) the term of any
applicable insurance policy; or (2) the remaining term of the Note; or (C) be
treated as a balloon payment which will be due and payable at the Note's
maturity.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
CAPITAL EXPENDITURES. Make or contract to make capital expenditures,
including leasehold improvements, in any fiscal year in excess of
$150,000.00 or incur liability for rentals of property (including both
real and personal property) in an amount which, together with capital
expenditures, shall in any fiscal year exceed such sum.
INDEBTEDNESS AND LIENS. (1) Except for trade debt incurred in the
normal course of business and indebtedness to Lender contemplated by
this Agreement, create, incur or assume additional indebtedness for
borrowed money, including capital leases, in excess of the aggregate
amount of $100,000.00, (2) sell, transfer, mortgage, assign, pledge,
lease, grant a security interest in, or encumber any of Borrower's
assets (except as allowed as Permitted Liens), or (3) sell with
recourse any of Borrower's accounts, except to Lender.
ADDITIONAL FINANCIAL RESTRICTIONS. The paragraph entitled "Continuity
of Operations" under NEGATIVE COVENANTS, is replaced in its entirety by
the following: " (1) Engage in any business activities substantially
different than those in which Borrower is presently engaged; or (2)
cease operations, liquidate, merge, transfer, acquire or consolidate
with any other entity, change its name, dissolve or transfer or sell
Collateral out of the ordinary course of business or (3) pay any
dividends on Borrower's stock (other than dividends payable in its
stock); provided, however that notwithstanding the foregoing, but only
so long as no Event of Default has occurred and is continuing or would
result from the payment of dividends, Borrower may pay dividends from
earnings available for distributions and earned during the immediately
preceding fiscal year, and in any event, not in excess of 50% of
Borrower's net income in any one fiscal year.
CONTINUITY OF OPERATIONS. (1) Engage in any business activities
substantially different than those in which Borrower is presently
engaged, (2) cease operations, liquidate, merge, transfer, acquire or
consolidate with any other entity, change its name, dissolve or
transfer or sell Collateral out of the ordinary course of business, or
(3) pay any dividends on Borrower's stock (other than dividends payable
in its stock), provided, however that notwithstanding the foregoing,
but only so long as no Event of Default has occurred and is continuing
or would result from the payment of dividends, if Borrower is a
"Subchapter S Corporation" (as defined in the Internal Revenue Code of
1986, as amended), Borrower may pay cash dividends on its stock to its
shareholders from time to time in amounts necessary to enable the
shareholders to pay income taxes and make estimated income tax payments
to satisfy their liabilities under federal and state law which arise
solely from their status as Shareholders of a Subchapter S Corporation
because of their ownership of shares of Borrower's stock, or purchase
or retire any of Borrower's outstanding shares or alter or amend
Borrower's capital structure.
BUSINESS LOAN AGREEMENT (ASSET BASED)
(CONTINUED) PAGE 6
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LOANS, ACQUISITIONS AND GUARANTIES. (1) Loan, invest in or advance
money or assets, (2) purchase, create or acquire any interest in any
other enterprise or entity, or (3) incur any obligation as surety or
guarantor other than in the ordinary course of business.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(A) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes
incompetent or becomes insolvent, files a petition in bankruptcy or similar
proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse
change in Borrower's financial condition, in the financial condition of any
Guarantor, or in the value of any Collateral securing any Loan; or (D) any
Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such
Guarantor's guaranty of the Loan or any other loan with Lender; or (E) Lender in
good xxxxx xxxxx itself insecure, even though no Event of Default shall have
occurred.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any XXX or Xxxxx accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts.
DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:
PAYMENT DEFAULT. Borrower fails to make any payment when due under the
Loan.
OTHER DEFAULTS. Borrower fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or
in any of the Related Documents or to comply with or to perform any
term, obligation, covenant or condition contained in any other
agreement between Lender and Borrower.
DEFAULT IN FAVOR OF THIRD PARTIES. Borrower or any Grantor defaults
under any loan, extension of credit,
security agreement, purchase or
sales agreement, or any other agreement, in favor of any other creditor
or person that may materially affect any of Borrower's or any Grantor's
property or Borrower's or any Grantor's ability to repay the Loans or
perform their respective obligations under this Agreement or any of the
Related Documents.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf under this
Agreement or the Related Documents is false or misleading in any
material respect, either now or at the time made or furnished or
becomes false or misleading at any time thereafter.
INSOLVENCY. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a
receiver for any part of Borrower's property, any assignment for the
benefit of creditors, any type of creditor workout, or the commencement
of any proceeding under any bankruptcy or insolvency laws by or
against Borrower.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of
any collateral document to create a valid and perfected security
interest or lien) at any time and for any reason.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the Loan. This
includes a garnishment of any of Borrower's accounts, including deposit
accounts, with Lender. However, this Event of Default shall not apply
if there is a good faith dispute by Borrower as to the validity or
reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and if Borrower gives Lender written notice of
the creditor or forfeiture proceeding and deposits with Lender monies
or a surety bond for the creditor or forfeiture proceeding, in an
amount determined by Lender, in its sole discretion, as being an
adequate reserve or bond for the dispute.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or any Guarantor
dies or becomes incompetent, or revokes or disputes the validity of, or
liability under, any Guaranty of the Indebtedness.
CHANGE IN OWNERSHIP. Any change in ownership of twenty-five percent
(25%) or more of the common stock of Borrower.
ADVERSE CHANGE. A material adverse change occurs in Borrower's
financial condition, or Lender believes the prospect of payment or
performance of the Loan is impaired.
INSECURITY. Lender in good faith believes itself insecure.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate (including any obligation to make
further Loan Advances or disbursements), and, at Lender's option, all
Indebtedness immediately will become due and payable, all without notice of any
kind to Borrower, except that in the case of an Event of Default of the type
described in the "Insolvency" subsection above, such acceleration shall be
automatic and not optional. In addition, Lender shall have all the rights and
remedies provided in the Related Documents or available at law, in equity, or
otherwise. Except as may be prohibited by applicable law, all of Lender's rights
and remedies shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not exclude pursuit
of any other remedy, and an election to make expenditures or to take action to
perform an obligation of Borrower or of any Grantor shall not affect Lender's
right to declare a default and to exercise its rights and remedies.
ARBITRATION. (a) This paragraph concerns the resolution of any controversies or
claims between the parties, whether arising in contract, tort or by statute,
including but not limited to controversies or claims that arise out of or relate
to: (i) this agreement (including any renewals, extensions or modifications); or
(ii) any document related to this agreement; (collectively a "Claim").
(b) At the request of any party to this agreement, any Claim shall be resolved
by binding arbitration in accordance with the Federal Arbitration Act (Title 9,
U.S. Code) (the "Act"). The Act will apply even though this agreement provides
that it is governed by the law of a specified state.
(c) Arbitration proceedings will be determined in accordance with the Act, the
applicable rules and procedures for the arbitration of disputes of JAMS or any
successor thereof ("JAMS"), and the terms of this paragraph. In the event of any
inconsistency, the terms of this paragraph shall control.
(d) The arbitration shall be administered by JAMS and conducted, unless
otherwise required by law, in any U.S. state where real or tangible personal
property collateral for this credit is located or if there is no such
collateral, in the state specified in the governing law section of this
agreement. All Claims shall be determined by one arbitrator; however, if Claims
exceed $5,000,000, upon the request of any party, the Claims shall be decided by
three arbitrators. All arbitration hearings shall commence within 90 days of the
demand for arbitration and close within 90 days of commencement and the award of
the arbitrator(s) shall be issued within 30 days of the close of the hearing.
However, the arbitrator(s), upon a showing of good cause, may extend
the commencement of the hearing for up to an additional 60 days. The
arbitrator(s) shall provide a concise written statement of reasons for the
award. The arbitration award may be submitted to any court having jurisdiction
to be confirmed and enforced.
(e) The arbitrator(s) will have the authority to decide whether any Claim is
barred by the statute of limitations and, if so, to dismiss the arbitration on
that basis. For purposes of the application of the statute of limitations, the
service on JAMS under applicable JAMS rules of a notice of Claim is the
BUSINESS LOAN AGREEMENT (ASSET BASED)
(CONTINUED) PAGE 7
================================================================================
equivalent of the filing of a lawsuit. Any dispute concerning this arbitration
provision or whether a Claim is arbitratable shall be determined by the
arbitrator(s). The arbitrator(s) shall have the power to award legal fees
pursuant to the terms of this agreement.
(f) This paragraph does not limit the right of any party to: (i) exercise
self-help remedies, such as but not limited to, setoff; (ii) initiate judicial
or nonjudicial foreclosure against any real or personal property collateral;
(iii) exercise any judicial or power of sale rights, or (iv) act in a court of
law to obtain an interim remedy, such as but not limited to, injunctive relief,
writ of possession or appointment of a receiver, or additional or supplementary
remedies.
(g) The filing of a court action is not intended to constitute a waiver of the
right of any party, including the suing party, thereafter to require submittal
of the Claim to arbitration.
ADDITIONAL DEFAULTS. Each of the following shall constitute an event of default
("Event of Default") under this Agreement:
EVENT OF DEFAULT UNDER RELATED DOCUMENTS. A default or event of default occurs
under the terms of any Related Document executed by Borrower or any guarantor,
pledgor, accommodation party or other obligor.
REVOCATION OR TERMINATION OF TRUST. If any Borrower, grantor, guarantor,
pledgor, accommodation party or other obligor on the indebtedness secured
hereunder or any of the related documents is a trust or the trustee(s) of a
trust, such trust is revoked or otherwise terminated or all or a substantial
part of such trust's assets are distributed or otherwise disposed of, or in the
case of a revocable trust, the grantor of such trust dies.
DEFAULT BY AFFILIATES. Any affiliate of Borrower defaults under any loan,
extension of credit,
security agreement, purchase or sales agreement, or any
other agreement, in favor of Lender or any other creditor. "Affiliate" shall
mean any person or entity that controls, is controlled by, or under common
control with the Borrower. "Control" shall mean the ability to vote twenty five
percent (25%) or more of the voting stock or interest of such entity.
COUNTERPART SIGNATURES. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
ADDRESS FOR NOTICES. Notwithstanding anything to the contrary herein, all
notices and communications to the Lender shall be directed to the following
address:
Bank of America, N.A.
Dallas CLSC, Attn: Notice Desk
000 Xxxx, 0xx Xxxxx
Xxxxxx, XX 00000.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment
to this Agreement shall be effective unless given in writing and signed
by the party or parties sought to be charged or bound by the alteration
or amendment.
ATTORNEYS' FEES; EXPENSES. Borrower agrees to pay upon demand all of
Lender's costs and expenses, including Lender's reasonable attorneys
fees and Lender's legal expenses, incurred in connection with the
enforcement of this Agreement. Lender may hire or pay someone else to
help enforce this Agreement and Borrower shall pay the costs and
expenses of such enforcement. Costs and expenses include Lender's
reasonable attorneys' fees and legal expenses whether or not there is a
lawsuit, including Lender's reasonable attorneys' fees and legal
expenses for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Borrower also shall pay all court
costs and such additional fees as may be directed by the court.
CAPTION HEADINGS. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or define
the provisions of this Agreement.
CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation
interests in the Loan to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Lender may have about Borrower or about any
other matter relating to the Loan, and Borrower hereby waives any
rights to privacy Borrower may have with respect to such matters.
Borrower additionally waives any and all notices of sale of
participation interests, as well as all notices of any repurchase of
such participation interests. Borrower also agrees that the purchasers
of any such participation interests will be considered as the absolute
owners of such interests in the Loan and will have all the rights
granted under the participation agreement or agreements governing the
sale of such participation interests. Borrower further waives all
rights of offset or counterclaim that it may have now or later against
Lender or against any purchaser of such a participation interest and
unconditionally agrees that either Lender or such purchaser may enforce
Borrower's obligation under the Loan irrespective of the failure or
insolvency of any holder of any interest in the Loan. Borrower further
agrees that the purchaser of any such participation interests may
enforce its interests irrespective of any personal claims or defenses
that Borrower may have against Lender.
GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED AND
ENFORCED IN ACCORDANCE WITH FEDERAL LAW AND THE LAWS OF THE STATE OF
TEXAS. THIS AGREEMENT HAS BEEN ACCEPTED BY LENDER IN THE STATE OF
TEXAS.
CHOICE OF VENUE. If there is a lawsuit, and if the transaction
evidenced by this Agreement occurred in any County, Borrower agrees
upon Lender's request to submit to the jurisdiction of the courts of
any County, State of
Texas.
NO WAIVER BY LENDER. Lender shall not be deemed to have waived any
rights under this Agreement unless such waiver is given in writing and
signed by Lender. No delay or omission on the part of Lender in
exercising any right shall operate as a waiver of such right or any
other right. A waiver by Lender of a provision of this Agreement shall
not prejudice or constitute a waiver of Lender's right otherwise to
demand strict compliance with that provision or any other provision of
this Agreement. No prior waiver by Lender, nor any course of dealing
between Lender and Borrower, or between Lender and any Grantor, shall
constitute a waiver of any of Lender's rights or of any of Borrower's
or any Grantor's obligations as to any future transactions. Whenever
the consent of Lender is required under this Agreement, the granting of
such consent by Lender in any instance shall not constitute continuing
consent to subsequent instances where such consent is required and in
all cases such consent may be granted or withheld in the sole
discretion of Lender.
NOTICES. Any notice required to be given under this Agreement shall be
given in writing, and shall be effective when actually delivered, when
actually received by telefacsimile (unless otherwise required by law),
when deposited with a nationally recognized overnight courier, or, if
mailed, when deposited in the United States mail, as first class,
certified or registered mail postage prepaid, directed to the addresses
shown near the beginning of this Agreement. Any party may change its
address for notices under this Agreement by giving formal written
notice to the other parties, specifying that the purpose of the notice
is to change the party's address. For notice purposes, Borrower agrees
to keep Lender informed at all times of Borrower's current address.
Unless otherwise provided or required by law, if there is more than one
Borrower, any notice given by Lender to any Borrower is deemed to be
notice given to all Borrowers.
PAYMENT OF INTEREST AND FEES. Notwithstanding any other provision of
this Agreement or any provision of any Related Document, Borrower does
BUSINESS LOAN AGREEMENT (ASSET BASED)
(CONTINUED) PAGE 8
================================================================================
not agree or intend to pay, and Lender does not agree or intend to
charge, collect, take, reserve or receive (collectively referred to
herein as "charge or collect"), any amount in the nature of interest or
in the nature of a fee for the Loan which would in any way or event
(including demand, prepayment, or acceleration) cause Lender to
contract for, charge or collect more for the Loan than the maximum
Lender would be permitted to charge or collect by any applicable
federal or
Texas state law. Any such excess interest or unauthorized
fee will, instead of anything stated to the contrary, be applied first
to reduce the unpaid principal balance of the Loan, and when the
principal has been paid in full, be refunded to Borrower.
SEVERABILITY. If a court of competent jurisdiction finds any provision
of this Agreement to be illegal, invalid, or unenforceable as to any
circumstance, that finding shall not make the offending provision
illegal, invalid, or unenforceable as to any other circumstance. If
feasible, the offending provision shall be considered modified so that
it becomes legal, valid and enforceable. If the offending provision
cannot be so modified, it shall be considered deleted from this
Agreement. Unless otherwise required by law, the illegality,
invalidity, or unenforceability of any provision of this Agreement
shall not affect the legality, validity or enforceability of any other
provision of this Agreement.
SUBSIDIARIES AND AFFILIATES OF BORROWER. To the extent the context of
any provisions of this Agreement makes it appropriate, including
without limitation any representation, warranty or covenant, the word
"Borrower" as used in this Agreement shall include all of Borrower's
subsidiaries and affiliates. Notwithstanding the foregoing however,
under no circumstances shall this Agreement be construed to require
Lender to make any Loan or other financial accommodation to any of
Borrower's subsidiaries or affiliates.
SUCCESSORS AND ASSIGNS. All covenants and agreements contained by or on
behalf of Borrower shall bind Borrower's successors and assigns and
shall inure to the benefit of Lender and its successors and assigns.
Borrower shall not, however, have the right to assign Borrower's rights
under this Agreement or any interest therein, without the prior written
consent of Lender.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands and
agrees that in extending Loan Advances, Lender is relying on all
representations, warranties, and covenants made by Borrower in this
Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement or the Related Documents.
Borrower further agrees that regardless of any investigation made by
Lender, all such representations, warranties and covenants will survive
the extension of Loan Advances and delivery to Lender of the Related
Documents, shall be continuing in nature, shall be deemed made and
redated by Borrower at the time each Loan Advance is made, and shall
remain in full force and effect until such time as Borrower's
Indebtedness shall be paid in full, or until this Agreement shall be
terminated in the manner provided above, whichever is the last to
occur.
TIME IS OF THE ESSENCE. Time is of the essence in the performance of
this Agreement.
WAIVE JURY. ALL PARTIES TO THIS AGREEMENT HEREBY WAIVE THE RIGHT TO ANY
JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY ANY
PARTY AGAINST ANY OTHER PARTY.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. Accounting
words and terms not otherwise defined in this Agreement shall have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date of this Agreement:
ACCOUNT. The word "Account" means a trade account, account receivable,
other receivable, or other right to payment for goods sold or services
rendered owing to Borrower (or to a third party grantor acceptable to
Lender).
ADVANCE. The word "Advance" means a disbursement of Loan funds made, or
to be made, to Borrower or on Borrower's behalf under the terms and
conditions of this Agreement.
AGREEMENT. The word "Agreement" means this Business Loan Agreement
(Asset Based), as this Business Loan Agreement (Asset Based) may be
amended or modified from time to time, together with all exhibits and
schedules attached to this Business Loan Agreement (Asset Based) from
time to time.
BORROWER. The word "Borrower" means Collegiate Pacific, Inc., and all
other persons and entities signing the Note in whatever capacity.
BORROWING BASE. The words "Borrowing Base" mean as determined by Lender
from time to time, the lesser of (1) $2,500,000.00 or (2) the sum of
(a) 80.000% of the aggregate amount of Eligible Accounts, plus (b)
40.000% of the aggregate amount of Eligible Inventory (limited to 100%
of Accounts Receivable in the borrowing base) less (c) any Letters of
Credit issued under Letter of Credit Facility.
After calculating the portion of the Borrowing Base comprised of
Eligible Accounts and Eligible Inventory, Lender shall deduct from such
portion of the Borrowing Base such reserves as Lender may establish
from time to time in its reasonable credit judgment, including, without
limitation, reserves for rent at leased locations subject to statutory
or contractual landlord's liens, inventory shrinkage, dilution, customs
charges, warehousemen's or bailees' charges, liabilities to growers of
agricultural products which are entitled to lien rights under the
federal Perishable Agricultural Commodities Act or any applicable state
law, and the amount of estimated maximum exposure, as determined by
Lender from time to time, under any interest rate contracts which
Borrower enters into with Lender (including interest rate swaps, caps,
floors, options thereof, combinations thereof, or similar contracts).
BUSINESS DAY. The words "Business Day" mean a day on which commercial
banks are open in the State of
Texas.
COLLATERAL. The word "Collateral" means all property and assets granted
as collateral security for a Loan, whether real or personal property,
whether granted directly or indirectly, whether granted now or in the
future, and whether granted in the form of a security interest,
mortgage, collateral mortgage, deed of trust, assignment, pledge, crop
pledge, chattel mortgage, collateral chattel mortgage, chattel trust,
factor's lien, equipment trust, conditional sale, trust receipt, lien,
charge, lien or title retention contract, lease or consignment intended
as a security device, or any other security or lien interest
whatsoever, whether created by law, contract, or otherwise. The word
Collateral also includes without limitation all collateral described in
the Collateral section of this Agreement.
ELIGIBLE ACCOUNTS. The words "Eligible Accounts" mean at any time, all
of Borrower's Accounts which contain selling terms and conditions
acceptable to Lender. The net amount of any Eligible Account against
which Borrower may borrow shall exclude all returns, discounts,
credits, and offsets of any nature. Unless otherwise agreed to by
Lender in writing, Eligible Accounts do not include:
(1) Accounts with respect to which the Account Debtor is
employee or agent of Borrower.
(2) Accounts with respect to which the Account Debtor is a
subsidiary of, or affiliated with Borrower or its
shareholders, officers, or directors.
(3) Accounts with respect to which goods are placed on
consignment, guaranteed sale, or other terms by reason of
which the payment by the Account Debtor may be conditional.
(4) Accounts with respect to which the Account Debtor is not a
resident of the United States, except to the extent such
Accounts are supported by insurance, bonds or other assurances
satisfactory to Lender.
BUSINESS LOAN AGREEMENT (ASSET BASED)
(CONTINUED) PAGE 9
================================================================================
(5) Accounts with respect to which Borrower is or may become
liable to the Account Debtor for goods sold or services
rendered by the Account Debtor to Borrower.
(6) Accounts which are subject to dispute, counterclaim, or
setoff.
(7) Accounts with respect to which the goods have not been
shipped or delivered, or the services have not been rendered,
to the Account Debtor.
(8) Accounts with respect to which Lender, in its sole
discretion, deems the creditworthiness or financial condition
of the Account Debtor to be unsatisfactory.
(9) Accounts of any Account Debtor who has filed or has had
filed against it a petition in bankruptcy or an application
for relief under any provision of any state or federal
bankruptcy, insolvency, or debtor-in-relief acts; or who has
had appointed a trustee, custodian, or receiver for the assets
of such Account Debtor; or who has made an assignment for the
benefit of creditors or has become insolvent or fails
generally to pay its debts (including its payrolls) as such
debts become due.
(10) Accounts which have not been paid in full within 90 DAYS
from the invoice date. The entire balance of any Account of
any single Account Debtor will be ineligible whenever the
portion of the Account which has not been paid within 90 DAYS
from the invoice date is in excess of 25.000% of the total
amount outstanding on the Account.
(11) Accounts which have not been paid in full within 90 days
from the invoice date or 60 days past due.
ELIGIBLE INVENTORY. The words "Eligible Inventory" mean at any time,
all of Borrower's Inventory as defined below except:
(1) Inventory which is not owned by Borrower free and clear of
all security interests, liens, encumbrances, and claims of
third parties.
(2) Inventory which Lender, in its sole discretion, deems to
be obsolete, unsalable, damaged, defective, or unfit for
further processing.
(3) Inventory that is in transit.
ENVIRONMENTAL LAWS. The words "Environmental Laws" mean any and
all state, federal and local statutes, regulations and ordinances
relating to the protection of human health or the environment,
including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section
9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization
Act of 1986, Pub. L. No. 99-499 ("XXXX"), the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or
other applicable state or federal laws, rules, or regulations adopted
pursuant thereto.
EVENT OF DEFAULT. The words "Event of Default" mean any of the events
of default set forth in this Agreement in the default section of this
Agreement.
EXPIRATION DATE. The words "Expiration Date" mean the date of
termination of Lender's commitment to lend under this Agreement.
GAAP. The word "GAAP" means generally accepted accounting principles.
GRANTOR. The word "Grantor" means each and all of the persons or
entities granting a Security Interest in any Collateral for the Loan,
including without limitation all Borrowers granting such a Security
Interest.
GUARANTOR. The word "Guarantor" means any guarantor, surety, or
accommodation party of any or all of the Loan.
GUARANTY. The word "Guaranty" means the guaranty from Guarantor to
Lender, including without limitation a guaranty of all or part of the
Note.
HAZARDOUS SUBSTANCES. The words "Hazardous Substances" mean materials
that, because of their quantity, concentration or physical, chemical or
infectious characteristics, may cause or pose a present or potential
hazard to human health or the environment when improperly used,
treated, stored, disposed of, generated, manufactured, transported or
otherwise handled. The words "Hazardous Substances" are used in their
very broadest sense and include without limitation any and all
hazardous or toxic substances, materials or waste as defined by or
listed under the Environmental Laws. The term "Hazardous Substances"
also includes, without limitation, petroleum and petroleum by-products
or any fraction thereof and asbestos.
INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced
by the Note or Related Documents, including all principal and interest
together with all other indebtedness and costs and expenses for which
Borrower or Grantor or any other borrower, guarantor, pledgor, obligor
or accommodation party is responsible under this Agreement or under any
of the Related Documents, including any swap, option or forward
obligations.
INVENTORY. The word "Inventory" means all of Borrower's raw materials,
work in process, finished goods, merchandise, parts and supplies, of
every kind and description, and goods held for sale or lease or
furnished under contracts of service in which Borrower now has or
hereafter acquires any right, whether held by Borrower or others, and
all documents of title, warehouse receipts, bills of lading, and all
other documents of every type covering all or any part of the
foregoing. Inventory includes inventory temporarily out of Borrower's
custody or possession and all returns on Accounts.
LENDER. The word "Lender" means Bank of America, N.A., its successors
and assigns.
LETTER OF CREDIT. The words "Letter of Credit" mean a letter of credit
issued by Lender on behalf of Borrower as described in the Letter of
Credit Facility section of this Agreement.
LOAN. The word "Loan" means any and all loans and financial
accommodations from Lender to Borrower whether now or hereafter
existing, and however evidenced, including without limitation those
loans and financial accommodations described herein or described on any
exhibit or schedule attached to this Agreement from time to time.
NOTE. The word "Note" means (i) the Note executed by Borrower in the
principal amount of $2,500,000.00 dated December 26, 2001, (ii) any
other promissory note, credit agreement or letter of credit agreement
now or hereafter executed by Borrower in favor of Lender with respect
to the indebtedness, including without limitation those promissory
notes, credit agreements and letter of credit agreements described on
any schedule or exhibit attached to this Agreement from time to time,
and (iii) any renewals of, extensions of, modifications of,
refinancings of, consolidations of, and substitutions for any of the
foregoing.
PERMITTED LIENS. The words "Permitted Liens" mean (1) liens and
security interests securing Indebtedness owed by Borrower to Lender;
(2) liens for taxes, assessments, or similar charges either not yet due
or being contested in good faith; (3) liens of materialmen, mechanics,
warehousemen, or carriers, or other like liens arising in the ordinary
course of business and securing obligations which are not yet
delinquent; (4) purchase money liens or purchase money security
interests upon or in any property acquired or held by Borrower in the
ordinary course of business to secure indebtedness outstanding on the
date of this Agreement or permitted to be incurred under the paragraph
of this Agreement titled "Indebtedness and Liens"; (5) liens and
security interests which, as of the date of this Agreement, have been
disclosed to and approved by the Lender in writing; and (6) those liens
and security interests which in the aggregate constitute an immaterial
and insignificant monetary amount with respect to the net value of
Borrower's assets.
BUSINESS LOAN AGREEMENT (ASSET BASED)
(CONTINUED) PAGE 10
================================================================================
PRIMARY CREDIT FACILITY. The words "Primary Credit Facility" mean the
credit facility described in the Line of Credit section of this
Agreement.
RELATED DOCUMENTS. The words "Related Documents" mean all promissory
notes, credit agreements, loan agreements, environmental agreements,
guaranties,
security agreements, mortgages, deeds of trust, security
deeds, collateral mortgages, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection
with the Loan.
SECURITY AGREEMENT. The words "
Security Agreement" mean and include
without limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract,
or otherwise, evidencing, governing, representing, or creating a
Security Interest.
SECURITY INTEREST. The words "Security Interest" mean, without
limitation, any and all types of collateral security, present and
future, whether in the form of a lien, charge, encumbrance, mortgage,
deed of trust, security deed, assignment, pledge, crop pledge, chattel
mortgage, collateral chattel mortgage, chattel trust, factor's lien,
equipment trust, conditional sale, trust receipt, lien or title
retention contract, lease or consignment intended as a security device,
or any other security or lien interest whatsoever whether created by
law, contract, or otherwise.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT (ASSET BASED) AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN
AGREEMENT (ASSET BASED) IS DATED DECEMBER 26, 2001.
BORROWER:
COLLEGIATE PACIFIC, INC.
By: /s/ XXXXXXX X. XXXXXXXXXX
-------------------------------------------------
Xxxxxxx X. Xxxxxxxxxx, Chief Executive Officer of
Collegiate Pacific, Inc.
LENDER:
BANK OF AMERICA, N.A.
By: /s/ XXXXXX XXXXXXX
-------------------------------------------------
Authorized Signer
EXHIBIT TO LOAN AGREEMENT
================================================================================
BORROWER: COLLEGIATE PACIFIC, INC. LENDER: BANK OF AMERICA, N.A.
13950 SENLAC DRIVE, SUITE 100 CLSC-COMMERCIAL BANKING
FARMERS XXXXXX, XX 00000 TX1-609-06-01
X.X. XXX 000000
XXXXXX, XX 00000-0000
GUARANTOR: XXXXXXX X. XXXXXXXXXX
KESMIL MANUFACTURING, INC.
00000 XXXXXX XXXXX, XXXXX 000
XXXXXXX XXXXXX, XX 00000
================================================================================
THIS EXHIBIT TO LOAN AGREEMENT IS ATTACHED TO AND BY THIS REFERENCE IS MADE A
PART OF THE BUSINESS LOAN AGREEMENT (ASSET BASED), DATED DECEMBER 26, 2001, AND
EXECUTED IN CONNECTION WITH A LOAN OR OTHER FINANCIAL ACCOMMODATIONS BETWEEN
BANK OF AMERICA, N.A. AND COLLEGIATE PACIFIC, INC.
CHANGE OF OWNERSHIP. NOT TO CAUSE, PERMIT, OR SUFFER ANY CHANGE IN
BORROWER'S CAPITAL OWNERSHIP SUCH THAT XXXXXXX X. XXXXXXXXXX CEASES TO OWN AND
CONTROL, DIRECTLY AND INDIRECTLY, AT LEAST FIFTY ONE PERCENT (51%) OF BORROWER'S
CAPITAL OWNERSHIP. ANY CONFLICTING PARAGRAPH ENTITLED "CHANGE OF OWNERSHIP" IN
THE DEFAULT SECTION OF THIS AGREEMENT IS HEREBY DELETED.
THIS EXHIBIT TO LOAN AGREEMENT IS EXECUTED ON DECEMBER 26, 2001.
BORROWER:
COLLEGIATE PACIFIC, INC.
BY: /S/ XXXXXXX X. XXXXXXXXXX
-------------------------------------------------
XXXXXXX X. XXXXXXXXXX, CHIEF EXECUTIVE OFFICER OF
COLLEGIATE PACIFIC, INC.
LENDER:
BANK OF AMERICA, N.A.
BY: /S/ XXXXXX XXXXXXX
-------------------------------------------------
AUTHORIZED SIGNER
BORROWING BASE CERTIFICATE
Status as of , .
------------------ ---------
In accordance with the terms of that Loan Agreement dated December 26, 2001 by
and between Collegiate Pacific, Inc. and Bank of America, N.A., we hereby
represent and warrant as follows:
1. TOTAL ACCOUNTS RECEIVABLE $
-------------
2. LESS INELIGIBLE ACCOUNTS RECEIVABLE
(AS SET FORTH IN THE LOAN AGREEMENT) $
-------------
3. ELIGIBLE ACCOUNTS RECEIVABLE (LINE 1 MINUS LINE 2) $
-------------
4. MULTIPLY LINE 3 TIMES 80% (.8) $
-------------
5. TOTAL INVENTORY $
-------------
6. LESS INELIGIBLE INVENTORY
(AS DEFINED IN THE LOAN AGREEMENT) $
-------------
7. ELIGIBLE INVENTORY (LINE 5 MINUS LINE 6) $
-------------
8. MULTIPLY LINE 7 TIMES 40% (.40) $
-------------
9. INVENTORY AVAILABLE FOR BORROWING BASE
(USE LESSER OF AMOUNT IN LINE 8 OR LINE 4) $
-------------
10. TOTAL BORROWING BASE (ADD LINES 4 AND 9) $
-------------
11. LESS LETTERS OF CREDIT (UP TO $250,000 ALLOWED) $
-------------
12. NET AVAILABLE (LINE 10 MINUS LINE 11) $
-------------
13. MAXIMUM LOAN AMOUNT $ 2,500,000.00
14. ADJUSTED NET AVAILABLE (LESSER OF LINE 12 OR 13) $
-------------
15. OUTSTANDING BALANCE AS OF REPORT DATE $
-------------
16. AVAILABLE FOR FURTHER ADVANCES
(LINE 14 MINUS LINE 15). PAYDOWN IF NEGATIVE. $
-------------
Borrower:
By:
---------------------------
Name:
Title:
FORM OF COMPLIANCE CERTIFICATE
This Compliance Certificate (the "Certificate") is delivered pursuant
to the Loan Agreement dated as of December 26, 2001 (together with all
amendments and modifications, if any, from time to time made thereto, the "Loan
Agreement"), between Collegiate Pacific, Inc. (the "Borrower") and Bank of
America, N.A. ("Lender"). Unless otherwise defined, terms used herein (including
the exhibits hereto) have the meanings provided in the Loan Agreement.
The undersigned, being the duly elected, qualified and acting
______________ of the Borrower, on behalf of the Borrower and solely in his or
her capacity as an officer of the Borrower, hereby certifies and warrants that:
He or she is the ________________ of the Borrower and that, as such,
he or she is authorized to execute this Certificate on behalf of the Borrower.
As of ______________, ___________:
Borrower was not in default of any of the
provisions of the Loan Agreement during the period to which this Certificate
relates;
Debt to Worth Ratio. Borrower's consolidated Debt
to Worth Ratio was ______ to 1.0 as computed on Debt to Worth Ratio Exhibit
attached hereto;
Profitability. Borrower's net income before taxes
and extraordinary items on a consolidated basis equaled $________ for each
annual accounting period covered by this Compliance Certificate.
Capital Expenditures. Borrower's fixed asset costs
(including the amount of capital leases) during the fiscal year ended ________
equaled $________________.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Certificate, this ___ day of___________________, 20___.
By:
----------------------------------
Title:
-------------------------------
1
DEBT TO WORTH RATIO EXHIBIT
PERIOD ENDING
----------
DEBT TO WORTH RATIO (ON A CONSOLIDATED BASIS)
1. Total Liabilities:
current liabilities $
-------------
+ long term liabilities (including, but not limited to,
accrued and deferred income taxes) $
-------------
MINUS the non-current portion of liabilities subordinated to
the Borrower's obligations to Lender ($ )
-------------
(A) = Total Liabilities $
-------------
2. Tangible Net Worth:
value of Borrower's total assets (including leaseholds,
leasehold improvements and reserves against assets, but
EXCLUDING all intangible assets as defined below*) $
-------------
LESS
Total Liabilities (see calculation 1(A) above) ($ )
-------------
3. (A) Tangible Net Worth $
-------------
DEBT TO WORTH RATIO = 1(A) divided by 3(A) to 1.0
-------------
Required Total Liabilities to Tangible Net Worth Ratio to 1.0
-------------
*the sum of goodwill, patents, trademarks, trade names, organization expense,
unamortized debt discount and expense, capitalized or deferred research and
development costs, deferred marketing expenses, and other like intangibles, and
monies due from affiliates, officers, directors, employees, shareholders,
members or managers of Borrower.
2
[BANK OF AMERICA LOGO]
PROMISSORY NOTE
================================================================================
BORROWER: COLLEGIATE PACIFIC, INC. LENDER: BANK OF AMERICA, N.A.
13950 SENLAC DRIVE, SUITE 100 CLSC-COMMERCIAL BANKING
FARMERS XXXXXX, XX 00000 TX1-609-06-01
X.X. XXX 000000
XXXXXX, XX 00000-0000
================================================================================
PRINCIPAL AMOUNT: $2,500,000.00 DATE OF NOTE: DECEMBER 26, 2001
PROMISE TO PAY. COLLEGIATE PACIFIC, INC. ("BORROWER") PROMISES TO PAY TO BANK OF
AMERICA, N.A. ("LENDER"), OR ORDER, IN LAWFUL MONEY OF THE UNITED STATES OF
AMERICA, THE PRINCIPAL AMOUNT OF TWO MILLION FIVE HUNDRED THOUSAND & 00/100
DOLLARS ($2,500,000.00) OR SO MUCH AS MAY BE OUTSTANDING, TOGETHER WITH INTEREST
ON THE UNPAID OUTSTANDING PRINCIPAL BALANCE OF EACH ADVANCE. INTEREST SHALL BE
CALCULATED FROM THE DATE OF EACH ADVANCE UNTIL REPAYMENT OF EACH ADVANCE OR
MATURITY, WHICHEVER OCCURS FIRST.
CHOICE OF USURY CEILING AND INTEREST RATE. The interest rate on this Note has
been implemented under the "Weekly Ceiling" as referred to in Sections 303.002
and 303.003 of the
Texas Finance Code. The terms, including the rate, or index,
formula, or provision of law used to compute the rate on the Note, will be
subject to revision as to current and future balances, from time to time by
notice from Lender in compliance with Section 303.103 of the
Texas Finance Code.
PAYMENT. BORROWER WILL PAY THIS LOAN IN ONE PAYMENT OF ALL OUTSTANDING PRINCIPAL
PLUS ALL ACCRUED UNPAID INTEREST ON DECEMBER 26, 2003. IN ADDITION, BORROWER
WILL PAY REGULAR MONTHLY PAYMENTS OF ALL ACCRUED UNPAID INTEREST DUE AS OF EACH
PAYMENT DATE, BEGINNING FEBRUARY 1, 2002, WITH ALL SUBSEQUENT INTEREST PAYMENTS
TO BE DUE ON THE SAME DAY OF EACH MONTH AFTER THAT. UNLESS OTHERWISE AGREED OR
REQUIRED BY APPLICABLE LAW, PAYMENTS WILL BE APPLIED FIRST TO ANY UNPAID
COLLECTION COSTS AND ANY LATE CHARGES, THEN TO ANY ACCRUED UNPAID INTEREST, AND
ANY REMAINING AMOUNT TO PRINCIPAL. THE ANNUAL INTEREST RATE FOR THIS NOTE IS
COMPUTED ON A 365/360 BASIS; THAT IS, BY APPLYING THE RATIO OF THE ANNUAL
INTEREST RATE OVER A YEAR OF 360 DAYS, MULTIPLIED BY THE OUTSTANDING PRINCIPAL
BALANCE, MULTIPLIED BY THE ACTUAL NUMBER OF DAYS THE PRINCIPAL BALANCE IS
OUTSTANDING, UNLESS SUCH CALCULATION WOULD RESULT IN A USURIOUS RATE, IN WHICH
CASE INTEREST SHALL BE CALCULATED ON A PER DIEM BASIS OF A YEAR OF 365 OR 366
DAYS, AS THE CASE MAY BE. BORROWER WILL PAY LENDER AT LENDER'S ADDRESS SHOWN
ABOVE OR AT SUCH OTHER PLACE AS LENDER MAY DESIGNATE IN WRITING. NOTWITHSTANDING
ANY OTHER PROVISION OF THIS NOTE, LENDER WILL NOT CHARGE INTEREST ON ANY
UNDISBURSED LOAN PROCEEDS. NO SCHEDULED PAYMENT, WHETHER OF PRINCIPAL OR
INTEREST OR BOTH, WILL BE DUE UNLESS SUFFICIENT LOAN FUNDS HAVE BEEN DISBURSED
BY THE SCHEDULED PAYMENT DATE TO JUSTIFY THE PAYMENT.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an index which is the rate of interest publicly
announced from time to time by the Lender as its Prime Rate. The Prime Rate is
set by the Lender based on various factors, including the Lender's costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans. The Lender may price loans to its
customers at, above, or below the Prime Rate. Any change in the Prime Rate shall
take effect at the opening of business on the day specified in the public
announcement of a change in the Lender's Prime Rate (the "Index"). The Index is
not necessarily the lowest rate charged by Lender on its loans and is set by
Lender in its sole discretion. If the Index becomes unavailable during the term
of this loan, Lender may designate a substitute index after notifying Borrower.
Lender will tell Borrower the current Index rate upon Borrower's request. The
interest rate change will not occur more often than each date of such change in
the index. Borrower understands that Lender may make loans based on other rates
as well. The interest rate to be applied prior to maturity to the unpaid
principal balance of this Note will be at a rate of 0.500 percentage points over
the Index. NOTICE: Under no circumstances will the interest rate on this Note be
more than the maximum rate allowed by applicable law. For purposes of this Note,
the "maximum rate allowed by applicable law" means the greater of (A) the
maximum rate of interest permitted under federal or other law applicable to the
indebtedness evidenced by this Note, or (B) the "Weekly Ceiling" as referred to
in Sections 303.002 and 303.003 of the Texas Finance Code.
PREPAYMENT PENALTY. Borrower agrees that all loan fees and other prepaid finance
charges are earned fully as of the date of the loan and will not be subject to
refund upon early payment (whether voluntary or as a result of default), except
as otherwise required by law. UPON PREPAYMENT OF THIS NOTE, LENDER IS ENTITLED
TO THE FOLLOWING PREPAYMENT PENALTY: PREPAYMENTS MAY BE MADE IN WHOLE OR IN PART
AT ANY TIME ON ANY LOAN FOR WHICH THE RATE IS BASED ON THE PRIME RATE OR ANY
OTHER FLUCTUATING RATE OR INDEX WHICH MAY CHANGE DAILY. ALL PREPAYMENTS OF
PRINCIPAL SHALL BE APPLIED IN THE INVERSE ORDER OF MATURITY, OR IN SUCH OTHER
ORDER AS LENDER SHALL DETERMINE IN ITS SOLE DISCRETION. NO PREPAYMENT OF ANY
OTHER LOAN SHALL BE PERMITTED WITHOUT THE PRIOR WRITTEN CONSENT OF LENDER.
NOTWITHSTANDING SUCH PROHIBITION, IF THERE IS A PREPAYMENT OF ANY SUCH LOAN,
WHETHER BY CONSENT OF LENDER, OR BECAUSE OF ACCELERATION OR OTHERWISE, BORROWER
SHALL, WITHIN 15 DAYS OF ANY REQUEST BY LENDER, PAY TO LENDER ANY LOSS OR
EXPENSE, INCLUDING ANY LOSS OF ANTICIPATED PROFITS, WHICH LENDER MAY INCUR OR
SUSTAIN AS A RESULT OF SUCH PREPAYMENT. FOR THE PURPOSES OF CALCULATING THE
AMOUNTS OWED ONLY, IT SHALL BE ASSUMED THAT LENDER ACTUALLY FUNDED OR COMMITTED
TO FUND THE LOAN THROUGH THE PURCHASE OF AN UNDERLYING DEPOSIT IN AN AMOUNT AND
FOR A TERM COMPARABLE TO THE LOAN, AND SUCH DETERMINATION BY LENDER SHALL BE
CONCLUSIVE, ABSENT A MANIFEST ERROR IN COMPUTATION. EXCEPT FOR THE FOREGOING,
BORROWER MAY PAY ALL OR A PORTION OF THE AMOUNT OWED EARLIER THAN IT IS DUE. Any
partial payment shall be in an amount equal to one or more full installments.
Prepayment in full shall consist of payment of the remaining unpaid principal
balance together with all accrued and unpaid interest and all other amounts,
costs and expenses for which Borrower is responsible under this Note or any
other agreement with Lender pertaining to this loan, and in no event will
Borrower ever be required to pay any unearned interest. Early payments will not,
unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation
to continue to make payments of accrued unpaid interest. Rather, early payments
will reduce the principal balance due. Borrower agrees not to send Lender
payments marked "paid in full", "without recourse", or similar language. If
Borrower sends such a payment, Lender may accept it without losing any of
Lender's rights under this Note, and Borrower will remain obligated to pay any
further amount owed to Lender. All written communications concerning disputed
amounts, including any check or other payment instrument that indicates that the
payment constitutes "payment in full" of the amount owed or that is tendered
with other conditions or limitations or as full satisfaction of a disputed
amount must be mailed or delivered to: Bank of America, N.A., TX1-609-06-01,
X.X. Xxx 000000 Xxxxxx, XX 00000-0000.
LATE CHARGE. If a payment is 15 days or more late, Borrower will be charged
4.000% OF THE UNPAID PORTION OF THE REGULARLY SCHEDULED PAYMENT.
POST MATURITY RATE. The Post Maturity Rate on this Note is the lesser of the
maximum rate allowed by applicable law or 6.000 percentage points over the
Index. Borrower will pay interest on all sums due after final maturity, whether
by acceleration or otherwise, at that rate.
DEFAULT. Each of the following shall constitute an event of default ("Event of
Default") under this Note:
PAYMENT DEFAULT. Borrower fails to make any payment when due under this
Note.
OTHER DEFAULTS. Borrower fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Note or in
any of the related documents or to comply with or to perform any term,
obligation, covenant or condition contained in any other agreement
between Lender and Borrower.
PROMISSORY NOTE
(CONTINUED) PAGE 2
DEFAULT IN FAVOR OF THIRD PARTIES. Borrower or any Grantor defaults
under any loan, extension of credit,
security agreement, purchase or
sales agreement, or any other agreement, in favor of any other creditor
or person that may materially affect any of Borrower's property or
Borrower's ability to repay this Note or perform Borrower's obligations
under this Note or any of the related documents.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf under this Note
or the related documents is false or misleading in any material
respect, either now or at the time made or furnished or becomes false
or misleading at any time thereafter.
INSOLVENCY. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a
receiver for any part of Borrower's property, any assignment for the
benefit of creditors, any type of creditor workout, or the commencement
of any proceeding under any bankruptcy or insolvency laws by or against
Borrower.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the loan. This
includes a garnishment of any of Borrower's accounts, including deposit
accounts, with Lender. However, this Event of Default shall not apply
if there is a good faith dispute by Borrower as to the validity or
reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and if Borrower gives Lender written notice of
the creditor or forfeiture proceeding and deposits with Lender monies
or a surety bond for the creditor or forfeiture proceeding, in an
amount determined by Lender, in its sole discretion, as being an
adequate reserve or bond for the dispute.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
respect to any Guarantor of any of the indebtedness or any Guarantor
dies or becomes incompetent, or revokes or disputes the validity of, or
liability under, any guaranty of the indebtedness evidenced by this
Note.
CHANGE IN OWNERSHIP. Any change in ownership of twenty-five percent
(25%) or more of the common stock of Borrower.
ADVERSE CHANGE. A material adverse change occurs in Borrower's
financial condition, or Lender believes the prospect of payment or
performance of this Note is impaired.
INSECURITY. Lender in good faith believes itself insecure.
LENDER'S RIGHTS. Upon default, Lender may declare the entire indebtedness,
including the unpaid principal balance on this Note, all accrued unpaid
interest, and all other amounts, costs and expenses for which Borrower is
responsible under this Note or any other agreement with Lender pertaining to
this loan, immediately due, without notice, and then Borrower will pay that
amount.
ATTORNEYS' FEES; EXPENSES. Lender may hire an attorney to help collect this Note
if Borrower does not pay, and Borrower will pay Lender's reasonable attorneys'
fees. Borrower also will pay Lender all other amounts Lender actually incurs as
court costs, lawful fees for filing, recording, releasing to any public office
any instrument securing this Note; the reasonable cost actually expended for
repossessing, storing, preparing for sale, and selling any security; and fees
for noting a lien on or transferring a certificate of title to any motor vehicle
offered as security for this Note, or premiums or identifiable charges received
in connection with the sale of authorized insurance.
JURY WAIVER. LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY
ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER LENDER OR BORROWER AGAINST
THE OTHER.
GOVERNING LAW. THIS NOTE WILL BE GOVERNED BY, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH FEDERAL LAW AND THE LAWS OF THE STATE OF TEXAS. THIS NOTE HAS
BEEN ACCEPTED BY LENDER IN THE STATE OF TEXAS.
CHOICE OF VENUE. If there is a lawsuit, and if the transaction evidenced by this
Note occurred in any County, Borrower agrees upon Lender's request to submit to
the jurisdiction of the courts of any County, State of Texas.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any XXX or Xxxxx accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note, as well as directions for payment from Borrower's accounts, may be
requested orally or in writing by Borrower or by an authorized person. Lender
may, but need not, require that all oral requests be confirmed in writing.
Borrower agrees to be liable for all sums either: (A) advanced in accordance
with the instructions of an authorized person or (B) credited to any of
Borrower's accounts with Lender. The unpaid principal balance owing on this Note
at any time may be evidenced by endorsements on this Note or by Lender's
internal records, including daily computer print-outs. Lender will have no
obligation to advance funds under this Note if: (A) Borrower or any guarantor
is in default under the terms of this Note or any agreement that Borrower or any
guarantor has with Lender, including any agreement made in connection with the
signing of this Note; (B) Borrower or any guarantor ceases doing business or is
insolvent; (C) any guarantor seeks, claims or otherwise attempts to limit,
modify or revoke such guarantor's guarantee of this Note or any other loan with
Lender; (D) Borrower has applied funds provided pursuant to this Note for
purposes other than those authorized by Lender; or (E) Lender in good faith
believes itself insecure. THIS REVOLVING LINE OF CREDIT SHALL NOT BE SUBJECT TO
CH. 346 OF THE TEXAS FINANCE CODE.
ARBITRATION. (a) This paragraph concerns the resolution of any controversies or
claims between the parties, whether arising in contract, tort or by statute,
including but not limited to controversies or claims that arise out of or relate
to: (i) this agreement (including any renewals, extensions or modifications); or
(ii) any document related to this agreement; (collectively a "Claim").
(b) At the request of any party to this agreement, any Claim shall be resolved
by binding arbitration in accordance with the Federal Arbitration Act (Title 9,
U. S. Code) (the "Act"). The Act will apply even though this agreement provides
that it is governed by the law of a specified state.
(c) Arbitration proceedings will be determined in accordance with the Act, the
applicable rules and procedures for the arbitration of disputes of JAMS or any
successor thereof ("JAMS"), and the terms of this paragraph. In the event of any
inconsistency, the terms of this paragraph shall control.
(d) The arbitration shall be administered by JAMS and conducted, unless
otherwise required by law, in any U. S. state where real or tangible personal
property collateral for this credit is located or if there is no such
collateral, in the state specified in the governing law section of this
agreement. All Claims shall be determined by one arbitrator; however, if Claims
exceed $5,000,000, upon the request of any party, the Claims shall be decided by
three arbitrators. All arbitration hearings shall commence within 90 days of the
demand for arbitration and close within 90 days of commencement and the award of
the arbitrator(s) shall be issued within 30 days of the close of the hearing.
However, the arbitrator(s), upon a showing of good cause, may extend the
commencement of the hearing for up to an additional 60 days. The arbitrator(s)
shall provide a concise written statement of reasons for the award. The
arbitration award may be submitted to any court having jurisdiction to be
confirmed and enforced.
(e) The arbitrator(s) will have the authority to decide whether any Claim is
barred by the statute of limitations and, if so, to dismiss the arbitration on
that basis. For purposes of the application of the statute of limitations, the
service on JAMS under applicable JAMS rules of a notice of Claim is the
equivalent of the filing of a lawsuit. Any dispute concerning this arbitration
provision or whether a Claim is arbitratable shall be determined by the
arbitrator(s). The arbitrator(s) shall have the power to award legal fees
pursuant to the terms of this agreement.
PROMISSORY NOTE
(CONTINUED) PAGE 3
(f) This paragraph does not limit the right of any party to: (i) exercise
self-help remedies, such as but not limited to, setoff; (ii) initiate judicial
or nonjudicial foreclosure against any real or personal property collateral;
(iii) exercise any judicial or power of sale rights, or (iv) act in a court of
law to obtain an interim remedy, such as but not limited to, injunctive relief,
writ of possession or appointment of a receiver, or additional or supplementary
remedies.
(g) The filing of a court action is not intended to constitute a waiver of the
right of any party, including the suing party, thereafter to require submittal
of the Claim to arbitration.
ADDITIONAL DEFAULTS. Each of the following shall constitute an event of default
("Event of Default") under this Note:
EVENT OF DEFAULT UNDER RELATED DOCUMENTS. A default or event of default occurs
under the terms of any promissory note, guaranty, pledge agreement, security
agreement or other agreement or instrument executed by Borrower or any
guarantor, pledgor, accommodation party or other obligor in connection with or
relating to this Note.
JUDGMENT. The entry of a judgment against any Borrower or guarantor, pledgor,
accommodation party or other obligor which Lender deems to be of a material
nature, in Lender's sole discretion.
REVOCATION OR TERMINATION OF TRUST. If any Borrower, grantor, guarantor,
pledgor, accommodation party or other obligor on the indebtedness evidenced
hereby or any of the related documents is a trust or the trustee(s) of a trust,
such trust is revoked or otherwise terminated or all or a substantial part of
such trust's assets are distributed or otherwise disposed of, or in the case of
a revocable trust, the grantor of such trust dies.
DEFAULT BY AFFILIATES. Any affiliate of Borrower defaults under any loan,
extension of credit, security agreement, purchase or sales agreement, or any
other agreement in favor of Lender or any other creditor. "Affiliate" shall mean
any person or entity that controls, is controlled by, or under common control
with the Borrower. "Control" shall mean the ability to vote twenty five percent
(25%) or more of the voting stock or interest of such entity.
ADVERSE CHANGE OF OBLIGOR. A material adverse change occurs in the financial
condition of any guarantor, pledgor, accommodation party or other obligor, as
determined by Lender in its sole discretion.
SALE OF NOTE. ASSIGNMENT. Lender may sell or offer to sell this Note, together
with any and all documents guaranteeing, securing or executed in connection with
this Note, to one or more assignees without notice to or consent of Borrower.
Lender is hereby authorized to share any information it has pertaining to the
loan evidenced by this Note, including without limitation credit information on
the undersigned, any of its principals, or any guarantors of this Note, to any
such assignee or prospective assignee.
COUNTERPART SIGNATURES. This Note may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
UNUSED COMMITMENT FEE. Borrower agrees to pay a fee on any difference between
the maximum principal amount available under this Note and the amount of credit
it actually uses, determined by the weighted average credit outstanding during
the specified period. The fee will be calculated at .50% per year. This fee is
due on April 1, 2002, and on the same day of each following quarter until the
expiration of the availability of advances under this Note.
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and
upon Borrower's heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.
GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will
not affect the rest of the Note. Borrower does not agree or intend to pay, and
Lender does not agree or intend to contract for, charge, collect, take, reserve
or receive (collectively referred to herein as "charge or collect"), any amount
in the nature of interest or in the nature of a fee for this loan, which would
in any way or event (including demand, prepayment, or acceleration) cause Lender
to charge or collect more for this loan than the maximum Lender would be
permitted to charge or collect by federal law or the law of the State of Texas
(as applicable). Any such excess interest or unauthorized fee shall, instead of
anything stated to the contrary, be applied first to reduce the principal
balance of this loan, and when the principal has been paid in full, be refunded
to Borrower. The right to accelerate maturity of sums due under this Note does
not include the right to accelerate any interest which has not otherwise accrued
on the date of such acceleration, and Lender does not intend to charge or
collect any unearned interest in the event of acceleration. All sums paid or
agreed to be paid to Lender for the use, forbearance or detention of sums due
hereunder shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of the loan evidenced by
this Note until payment in full so that the rate or amount of interest on
account of the loan evidenced hereby does not exceed the applicable usury
ceiling. Lender may delay or forgo enforcing any of its rights or remedies under
this Note without losing them. Borrower and any other person who signs,
guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, notice of dishonor, notice of intent to
accelerate the maturity of this Note, and notice of acceleration of the maturity
of this Note. Upon any change in the terms of this Note, and unless otherwise
expressly stated in writing, no party who signs this Note, whether as maker,
guarantor, accommodation maker or endorser, shall be released from liability.
All such parties agree that Lender may renew or extend (repeatedly and for any
length of time) this loan or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral without the consent of or notice to anyone. All such parties also
agree that Lender may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made. The obligations
under this Note are joint and several.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE.
BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.
BORROWER:
COLLEGIATE PACIFIC, INC.
BY: /s/ XXXXXXX X. XXXXXXXXXX
-------------------------------------------------
XXXXXXX X. XXXXXXXXXX, CHIEF EXECUTIVE OFFICER OF
COLLEGIATE PACIFIC, INC.
EXHIBIT TO NOTE
================================================================================
BORROWER: COLLEGIATE PACIFIC, INC. LENDER: BANK OF AMERICA, N.A.
13950 SENLAC DRIVE, SUITE 100 CLSC-COMMERCIAL BANKING
FARMERS XXXXXX, XX 00000 TX1-609-06-01
X.X. XXX 000000
XXXXXX, XX 00000-0000
================================================================================
THIS EXHIBIT TO NOTE IS ATTACHED TO AND BY THIS REFERENCE IS MADE A PART OF THE
PROMISSORY NOTE, DATED DECEMBER 26, 2001, AND EXECUTED IN CONNECTION WITH A LOAN
OR OTHER FINANCIAL ACCOMMODATIONS BETWEEN BANK OF AMERICA, N.A. AND COLLEGIATE
PACIFIC, INC.
OPTIONAL INTEREST RATES
OPTIONAL RATES. IN ADDITION TO THE INTEREST RATE SPECIFIED IN THE NOTE,
ON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH BELOW, BORROWER WILL BE
ABLE TO SELECT, FROM ONE OF THE FOLLOWING OPTIONAL RATES, AN INTEREST RATE WHICH
WILL BE APPLICABLE TO A PARTICULAR DOLLAR INCREMENT OF AMOUNTS OUTSTANDING, OR
TO BE DISBURSED, UNDER THE NOTE, DURING INTEREST PERIODS AGREED TO BY LENDER AND
BORROWER. ANY PRINCIPAL AMOUNT BEARING INTEREST AT AN OPTIONAL RATE IS REFERRED
TO AS A "PORTION":
THE LIBOR RATE PLUS 3.00 PERCENTAGE POINTS.
RATE TERMS. EACH OPTIONAL INTEREST RATE IS A RATE PER YEAR. INTEREST
WILL BE PAID ON THE LAST DAY OF EACH INTEREST PERIOD, AND, IF THE INTEREST
PERIOD IS LONGER THAN ONE MONTH, ON THE 1ST DAY OF EACH MONTH DURING THE
INTEREST PERIOD. NO PORTION WILL BE CONVERTED TO A DIFFERENT INTEREST RATE
DURING THE APPLICABLE INTEREST PERIOD. IF ANY PRINCIPAL AMOUNT BEARING INTEREST
AT AN OPTIONAL INTEREST RATE IS REPAID DURING AN INTEREST PERIOD (OTHER THAN A
SCHEDULED PRINCIPAL PAYMENT), SUCH REPAYMENT WILL BE CONSIDERED A PREPAYMENT
SUBJECT TO ANY PREPAYMENT FEE AS DESCRIBED IN THE NOTE. UPON THE OCCURRENCE OF
AN EVENT OF DEFAULT UNDER THE NOTE OR ANY OTHER LOAN DOCUMENT, LENDER MAY
TERMINATE THE AVAILABILITY OF OPTIONAL INTEREST RATES FOR INTEREST PERIODS
COMMENCING AFTER THE DEFAULT OCCURS. NO INTEREST PERIOD MAY EXTEND BEYOND THE
MATURITY DATE OF THE NOTE. AT THE END OF ANY INTEREST PERIOD, THE INTEREST RATE
WILL REVERT TO THE RATE BASED ON THE PRIME RATE, UNLESS BORROWER HAS DESIGNATED
ANOTHER OPTIONAL INTEREST RATE FOR THE PORTION.
LIBOR RATE. THE ELECTION OF LIBOR RATES SHALL BE SUBJECT TO THE
FOLLOWING TERMS AND REQUIREMENTS:
(a) THE INTEREST PERIOD DURING WHICH THE LIBOR RATE WILL BE IN EFFECT
WILL BE ONE, TWO, THREE, FOUR, SIX. THE FIRST DAY OF THE INTEREST PERIOD MUST BE
A DAY OTHER THAN A SATURDAY, OR A SUNDAY ON WHICH LENDER IS OPEN FOR BUSINESS IN
NEW YORK AND LONDON AND DEALING IN OFFSHORE DOLLARS (A "LIBOR BANKING DAY"). THE
LAST DAY OF THE INTEREST PERIOD AND THE ACTUAL NUMBER OF DAYS DURING THE
INTEREST PERIOD WILL BE DETERMINED BY LENDER USING THE PRACTICES OF THE LONDON
INTER-BANK MARKET.
(b) EACH LIBOR RATE PORTION WILL BE FOR AN AMOUNT NOT LESS THAN ONE
HUNDRED THOUSAND DOLLARS ($100,000).
(c) THE "LIBOR RATE" MEANS THE INTEREST RATE DETERMINED BY THE
FOLLOWING FORMULA, ROUNDED UPWARD TO THE NEAREST 1/100 OF ONE PERCENT. (ALL
AMOUNTS IN THE CALCULATION WILL BE DETERMINED BY LENDER AS OF THE FIRST DAY OF
THE INTEREST PERIOD.)
LIBOR RATE = LONDON INTER-BANK OFFERED RATE
(1.00 - RESERVE PERCENTAGE)
WHERE,
(i) "LONDON INTER-BANK OFFERED RATE" MEANS THE AVERAGE PER ANNUM
INTEREST RATE AT WHICH U.S. DOLLAR DEPOSITS WOULD BE OFFERED FOR THE APPLICABLE
INTEREST PERIOD BY MAJOR BANKS IN THE LONDON INTER-BANK MARKET, AS SHOWN ON THE
TELERATE PAGE 3750 (OR ANY SUCCESSOR PAGE) AT APPROXIMATELY 11:00 A.M. LONDON
TIME TWO (2) LONDON BANKING DAYS BEFORE THE COMMENCEMENT OF THE INTEREST PERIOD.
IF SUCH RATE DOES NOT APPEAR ON THE TELERATE PAGE 3750 (OR ANY SUCCESSOR PAGE),
THE RATE FOR THAT INTEREST PERIOD WILL BE DETERMINED BY SUCH ALTERNATE METHOD
AS REASONABLY SELECTED BY LENDER. A "LONDON BANKING DAY" IS A DAY ON WHICH
LENDER'S LONDON BANKING CENTER IS OPEN FOR BUSINESS AND DEALING IN OFFSHORE
DOLLARS.
(ii) "RESERVE PERCENTAGE" MEANS THE TOTAL OF THE MAXIMUM RESERVE
PERCENTAGES FOR DETERMINING THE RESERVES TO BE MAINTAINED BY MEMBER BANKS OF THE
FEDERAL RESERVE SYSTEM FOR EUROCURRENCY LIABILITIES, AS DEFINED IN FEDERAL
RESERVE BOARD REGULATION D, ROUNDED UPWARD TO THE NEAREST 1/100 OF ONE PERCENT.
THE PERCENTAGE WILL BE EXPRESSED AS A DECIMAL, AND WILL INCLUDE, BUT NOT BE
LIMITED TO, MARGINAL, EMERGENCY, SUPPLEMENTAL, SPECIAL, AND OTHER RESERVE
PERCENTAGES.
(d) BORROWER SHALL IRREVOCABLY REQUEST A LIBOR RATE PORTION NO LATER
THAN 12:00 NOON CENTRAL TIME ON THE LIBOR BANKING DAY PRECEDING THE DAY ON WHICH
THE LONDON INTER-BANK OFFERED RATE WILL BE SET, AS SPECIFIED ABOVE. FOR EXAMPLE,
IF THERE ARE NO INTERVENING HOLIDAYS OR WEEKEND DAYS IN ANY OF THE RELEVANT
LOCATIONS, THE REQUEST MUST BE MADE AT LEAST THREE DAYS BEFORE THE LIBOR RATE
TAKES EFFECT.
(e) LENDER WILL HAVE NO OBLIGATION TO ACCEPT AN ELECTION FOR A LIBOR
RATE PORTION IF ANY OF THE FOLLOWING DESCRIBED EVENTS HAS OCCURRED AND IS
CONTINUING:
(i) DOLLAR DEPOSITS IN THE PRINCIPAL AMOUNT, AND FOR PERIODS EQUAL TO
THE INTEREST PERIOD, OF A LIBOR RATE PORTION ARE NOT AVAILABLE IN THE LONDON
INTER-BANK MARKET; OR
(ii) THE LIBOR RATE DOES NOT ACCURATELY REFLECT THE COST OF A LIBOR
RATE PORTION.
NOTICES; AUTHORITY TO ACT. LENDER MAY ACCEPT REQUESTS BY BORROWER FOR
OPTIONAL INTEREST RATES MADE BY TELEPHONE. BORROWER ACKNOWLEDGES AND AGREES THAT
THE AGREEMENT OF LENDER HEREIN TO RECEIVE CERTAIN NOTICES BY TELEPHONE IS SOLELY
FOR THE CONVENIENCE OF BORROWER. LENDER SHALL BE ENTITLED TO RELY ON THE
AUTHORITY OF THE PERSON PURPORTING TO BE A PERSON AUTHORIZED BY BORROWER TO GIVE
SUCH NOTICE, AND LENDER SHALL HAVE NO LIABILITY TO BORROWER ON ACCOUNT OF ANY
ACTION TAKEN BY LENDER IN RELIANCE UPON SUCH TELEPHONIC NOTICE. THE OBLIGATION
OF BORROWER TO REPAY ALL SUMS OWING UNDER THE NOTE SHALL NOT BE AFFECTED IN ANY
WAY OR TO ANY EXTENT BY ANY FAILURE BY LENDER TO RECEIVE WRITTEN CONFIRMATION OF
ANY TELEPHONIC NOTICE OR THE RECEIPT BY LENDER OF A CONFIRMATION WHICH IS AT
VARIANCE WITH THE TERMS UNDERSTOOD BY LENDER TO BE CONTAINED IN THE TELEPHONIC
NOTICE.
THIS EXHIBIT TO THE NOTE IS EXECUTED AS OF THE DATE STATED ON THE NOTE.
EXHIBIT TO NOTE
(CONTINUED) PAGE 2
THIS EXHIBIT TO NOTE IS EXECUTED ON DECEMBER 26, 2001.
BORROWER:
COLLEGIATE PACIFIC, INC.
BY: /s/ XXXXXXX X. XXXXXXXXXX
-------------------------------------------------
XXXXXXX X. XXXXXXXXXX, CHIEF EXECUTIVE OFFICER OF
COLLEGIATE PACIFIC, INC.
[BANK OF AMERICA LOGO]
COMMERCIAL SECURITY AGREEMENT
================================================================================
GRANTOR: COLLEGIATE PACIFIC, INC. LENDER: BANK OF AMERICA, N.A.
13950 SENLAC DRIVE, SUITE 100 CLSC-COMMERCIAL BANKING
FARMERS XXXXXX, XX 00000 TX1-609-06-01
X.X. XXX 000000
XXXXXX, XX 00000-0000
================================================================================
THIS COMMERCIAL SECURITY AGREEMENT DATED DECEMBER 26, 2001, IS MADE AND EXECUTED
BETWEEN COLLEGIATE PACIFIC, INC. ("GRANTOR") AND BANK OF AMERICA, N.A.
("LENDER").
GRANT OF SECURITY INTEREST. FOR VALUABLE CONSIDERATION, GRANTOR GRANTS TO LENDER
A SECURITY INTEREST IN THE COLLATERAL TO SECURE THE INDEBTEDNESS AND AGREES THAT
LENDER SHALL HAVE THE RIGHTS STATED IN THIS AGREEMENT WITH RESPECT TO THE
COLLATERAL, IN ADDITION TO ALL OTHER RIGHTS WHICH LENDER MAY HAVE BY LAW.
COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means
the following described property, whether now owned or hereafter acquired,
whether now existing or hereafter arising, and wherever located, in which
Grantor is giving to Lender a security interest for the payment of the
Indebtedness and performance of all other obligations under the Note and this
Agreement:
ALL INVENTORY, CHATTEL PAPER, ACCOUNTS, EQUIPMENT AND GENERAL INTANGIBLES
In addition, the word "Collateral" also includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located:
(A) All accessions, attachments, accessories, tools, parts, supplies,
replacements and additions to any of the collateral described herein,
whether added now or later.
(B) All products and produce of any of the property described in this
Collateral section.
(C) All accounts, general intangibles, instruments, rents, monies,
payments, and all other rights, arising out of a sale, lease, or other
disposition of any of the property described in this Collateral section.
(D) All proceeds (including insurance proceeds) from the sale,
destruction, loss, or other disposition of any of the property described
in this Collateral section, and sums due from a third party who has
damaged or destroyed the Collateral or from that party's insurer, whether
due to judgment, settlement or other process.
(E) All records and data relating to any of the property described in
this Collateral section, whether in the form of a writing, photograph,
microfilm, microfiche, or electronic media, together with all of
Grantor's right, title, and interest in and to all computer software
required to utilize, create, maintain, and process any such records or
data on electronic media.
Despite any other provision of this Agreement, Lender is not granted, and will
not have, a nonpurchase money security interest in household goods, to the
extent such a security interest would be prohibited by applicable law. In
addition, if because of the type of any Property, Lender is required to give a
notice of the right to cancel under Truth in Lending for the Indebtedness, then
Lender will not have a security interest in such Collateral unless and until
such a notice is given.
CROSS-COLLATERALIZATION. In addition to the Note, this Agreement secures the
following described additional indebtedness: all obligations, debts and
liabilities, including any swap, option or forward obligations, plus interest
thereon, of Borrower to Lender, or any one or more of them, as well as all
claims by Lender against Borrower or any other party to this Agreement or any
one or more of them, whether now existing or hereafter arising, whether related
or unrelated to the purpose of the Note, whether voluntary or otherwise, whether
due or not due, direct or indirect, absolute or contingent, liquidated or
unliquidated and whether Borrower or any other party to this Agreement may be
liable individually or jointly with others, whether obligated as guarantor,
surety, accommodation party or otherwise, and whether recovery upon such amounts
may be or hereafter may become barred by any statute of limitations, and whether
the obligation to repay such amounts may be or hereafter may become otherwise
unenforceable. Unless the Borrower and any other party to this Agreement shall
have otherwise agreed in writing or received written notice thereof, this
Agreement shall not secure any obligation owing to Lender which constitutes
"consumer credit" subject to the disclosure requirements of the Federal Truth in
Lending Act and any regulations promulgated thereunder.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Grantor's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Grantor holds
jointly with someone else and all accounts Grantor may open in the future.
However, this does not include any XXX or Xxxxx accounts, or any trust accounts
for which setoff would be prohibited by law. Grantor authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts.
GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With
respect to the Collateral, Grantor represents and promises to Lender that:
PERFECTION OF SECURITY INTEREST. Grantor agrees to execute financing
statements and to take whatever other actions are requested by Lender to
perfect and continue Lender's security interest in the Collateral. Upon
request of Lender, Grantor will deliver to Lender any and all of the
documents evidencing or constituting the Collateral, and Grantor will note
Lender's interest upon any and all chattel paper if not delivered to
Lender for possession by Lender. THIS IS A CONTINUING SECURITY AGREEMENT
AND WILL CONTINUE IN EFFECT EVEN THOUGH ALL OR ANY PART OF THE
INDEBTEDNESS IS PAID IN FULL AND EVEN THOUGH FOR A PERIOD OF TIME GRANTOR
MAY NOT BE INDEBTED TO LENDER.
NOTICES TO LENDER. Grantor will promptly notify Lender in writing at
Lender's address shown above (or such other addresses as Lender may
designate from time to time) prior to any (1) change in Grantor's name;
(2) change in Grantor's assumed business name(s); (3) change in the
management of the Corporation Grantor; (4) change in the authorized
signer(s); (5) change in Grantor's principal office address; (6) change in
Grantor's state of organization; (7) conversion of Grantor to a new or
different type of business entity; or (8) change in any other aspect of
Grantor that directly or indirectly relates to any agreements between
Grantor and Lender. No change in Grantor's name or state of organization
will take effect until after Lender has received notice.
NO VIOLATION: The execution and delivery of this Agreement will not
violate any law or agreement governing Grantor or to which Grantor is a
party, and its certificate or articles of incorporation and bylaws do not
prohibit any term or condition of this Agreement.
ENFORCEABILITY OF COLLATERAL. To the extent the Collateral consists of
accounts, chattel paper, or general intangibles, as defined by the Uniform
Commercial Code, the Collateral is enforceable in accordance with its
terms, is genuine, and fully complies with all applicable laws and
regulations concerning form, content and manner of preparation and
execution, and all persons appearing to be obligated on the Collateral
have authority
COMMERCIAL SECURITY AGREEMENT
(CONTINUED) PAGE 2
================================================================================
and capacity to contract and are in fact obligated as they appear to be on
the Collateral. At the time any Account becomes subject to a security
interest in favor of Lender, the Account shall be a good and valid account
representing an undisputed, bona fide indebtedness incurred by the account
debtor, for merchandise held subject to delivery instructions or
previously shipped or delivered pursuant to a contract of sale, or for
services previously performed by Grantor with or for the account debtor.
So long as this Agreement remains in effect, Grantor shall not, without
Lender's prior written consent, compromise, settle, adjust, or extend
payment under or with regard to any such Accounts. There shall be no
setoffs or counterclaims against any of the Collateral, and no agreement
shall have been made under which any deductions or discounts may be
claimed concerning the Collateral except those disclosed to Lender in
writing.
LOCATION OF THE COLLATERAL. Except in the ordinary course of Grantor's
business, Grantor agrees to keep the Collateral (or to the extent the
Collateral consists of intangible property such as accounts or general
intangibles, the records concerning the Collateral) at Grantor's address
shown above or at such other locations as are acceptable to Lender. Upon
Lender's request, Grantor will deliver to Lender in form satisfactory to
Lender a schedule of real properties and Collateral locations relating to
Grantor's operations, including without limitation the following: (1) all
real property Grantor owns or is purchasing; (2) all real property Grantor
is renting or leasing; (3) all storage facilities Grantor owns, rents,
leases, or uses; and (4) all other properties where Collateral is or may
be located.
REMOVAL OF THE COLLATERAL. Except in the ordinary course of Grantor's
business, including the sales of inventory, Grantor shall not remove the
Collateral from its existing location without Lender's prior written
consent. To the extent that the Collateral consists of vehicles, or other
titled property, Grantor shall not take or permit any action, which would
require application for certificates of title for the vehicles outside the
State of Texas, without Lender's prior written consent. Grantor shall,
whenever requested, advise Lender of the exact location of the Collateral.
TRANSACTIONS INVOLVING COLLATERAL. Except for inventory sold or accounts
collected in the ordinary course of Grantor's business, or as otherwise
provided for in this Agreement, Grantor shall not sell, offer to sell, or
otherwise transfer or dispose of the Collateral. While Grantor is not in
default under this Agreement, Grantor may sell inventory, but only in the
ordinary course of its business and only to buyers who qualify as a buyer
in the ordinary course of business. A sale in the ordinary course of
Grantor's business does not include a transfer in partial or total
satisfaction of a debt or any bulk sale. Grantor shall not pledge,
mortgage, encumber or otherwise permit the Collateral to be subject to any
lien, security interest, encumbrance, or charge, other than the security
interest provided for in this Agreement, without the prior written consent
of Lender. This includes security interests even if junior in right to the
security interests granted under this Agreement. Unless waived by Lender,
all proceeds from any disposition of the Collateral (for whatever reason)
shall be held in trust for Lender and shall not be commingled with any
other funds; provided however, this requirement shall not constitute
consent by Lender to any sale or other disposition. Upon receipt, Grantor
shall immediately deliver any such proceeds to Lender.
TITLE. Grantor represents and warrants to Lender that Grantor holds good
and marketable title to the Collateral, free and clear of all liens and
encumbrances except for the lien of this Agreement. No financing statement
covering any of the Collateral is on file in any public office other than
those which reflect the security interest created by this Agreement or to
which Lender has specifically consented. Grantor shall defend Lender's
rights in the Collateral against the claims and demands of all other
persons.
REPAIRS AND MAINTENANCE. Grantor agrees to keep and maintain, and to cause
others to keep and maintain, the Collateral in good order, repair and
condition at all times while this Agreement remains in effect. Grantor
further agrees to pay when due all claims for work done on, or services
rendered or material furnished in connection with the Collateral so that
no lien or encumbrance may ever attach to or be filed against the
Collateral.
INSPECTION OF COLLATERAL. Lender and Lender's designated representatives
and agents shall have the right at all reasonable times to examine and
inspect the Collateral wherever located.
TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all taxes,
assessments and liens upon the Collateral, its use or operation, upon this
Agreement, upon any promissory note or notes evidencing the Indebtedness,
or upon any of the other Related Documents. Grantor may withhold any such
payment or may elect to contest any lien if Grantor is in good faith
conducting an appropriate proceeding to contest the obligation to pay and
so long as Lender's interest in the Collateral is not jeopardized in
Lender's sole opinion. In any contest Grantor shall defend itself and
Lender and shall satisfy any final adverse judgment before enforcement
against the Collateral. Grantor shall name Lender as an additional obligee
under any surety bond furnished in the contest proceedings. Grantor
further agrees to furnish Lender with evidence that such taxes,
assessments, and governmental and other charges have been paid in full and
in a timely manner. Grantor may withhold any such payment or may elect to
contest any lien if Grantor is in good faith conducting an appropriate
proceeding to contest the obligation to pay and so long as Lender's
interest in the Collateral is not jeopardized.
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor shall comply promptly
with all laws, ordinances, rules and regulations of all governmental
authorities, now or hereafter in effect, applicable to the ownership,
production, disposition, or use of the Collateral. Grantor may contest in
good faith any such law, ordinance or regulation and withhold compliance
during any proceeding, including appropriate appeals, so long as Lender's
interest in the Collateral, in Lender's opinion, is not jeopardized.
HAZARDOUS SUBSTANCES. Grantor represents and warrants that the Collateral
never has been, and never will be so long as this Agreement remains a lien
on the Collateral, used in violation of any Environmental Laws or for the
generation, manufacture, storage, transportation, treatment, disposal,
release or threatened release of any Hazardous Substance. The
representations and warranties contained herein are based on Grantor's due
diligence in investigating the Collateral for Hazardous Substances.
Grantor hereby (1) releases and waives any future claims against Lender
for indemnity or contribution in the event Grantor becomes liable for
cleanup or other costs under any Environmental Laws, and (2) agrees to
indemnify and hold harmless Lender against any and all claims and losses
resulting from a breach of this provision of this Agreement. This
obligation to indemnify shall survive the payment of the Indebtedness and
the satisfaction of this Agreement.
MAINTENANCE OF CASUALTY INSURANCE. Grantor shall procure and maintain all
risks insurance, including without limitation fire, theft and liability
coverage together with such other insurance as Lender may require with
respect to the Collateral, in form, amounts, coverages and basis
reasonably acceptable to Lender. Grantor, upon request of Lender, will
deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulations that
coverages will not be cancelled or diminished without at least thirty (30)
days' prior written notice to Lender and not including any disclaimer of
the Insurer's liability for failure to give such a notice. Each insurance
policy also shall include an endorsement providing that coverage in favor
of Lender will not be impaired in any way by any act, omission or default
of Grantor or any other person. In connection with all policies covering
assets in which Lender holds or is offered a security interest, Grantor
will provide Lender with such loss payable or other endorsements as Lender
may require. If Grantor at any time fails to obtain or maintain any
insurance as required under this Agreement, Lender may, (but shall not be
obligated to) obtain such insurance as Lender deems appropriate, including
if Lender so chooses "single interest insurance," which will cover only
Lender's interest in the Collateral.
APPLICATION OF INSURANCE PROCEEDS. Grantor shall promptly notify Lender of
any loss or damage to the Collateral. Lender may make proof of loss if
Grantor fails to do so within fifteen (15) days of the casualty. All
proceeds of any insurance on the Collateral, including accrued proceeds
thereon, shall be held by Lender as part of the Collateral. If Lender
consents to repair or replacement of the damaged or destroyed Collateral,
Lender shall, upon satisfactory proof of expenditure, pay or reimburse
Grantor from the proceeds for the reasonable cost of repair or
restoration. If Lender does not consent to repair or replacement of the
Collateral, Lender shall retain a sufficient amount of the proceeds to pay
all of the Indebtedness, and shall pay the balance to Grantor. Any
proceeds which have not been disbursed within six (6) months after their
receipt and
COMMERCIAL SECURITY AGREEMENT
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which Grantor has not committed to the repair or restoration of the
Collateral shall be used to prepay the Indebtedness.
INSURANCE RESERVES. Lender may require Grantor to maintain with Lender
reserves for payment of insurance premiums, which reserves shall be
created by monthly payments from Grantor of a sum estimated by Lender to
be sufficient to produce, at least fifteen (15) days before the premium
due date, amounts at least equal to the insurance premiums to be paid. If
fifteen (15) days before payment is due, the reserve funds are
insufficient, Grantor shall upon demand pay any deficiency to Lender. The
reserve funds shall be held by Lender as a general deposit and shall
constitute a non-interest-bearing account which Lender may satisfy by
payment of the insurance premiums required to be paid by Grantor as they
become due. Lender does not hold the reserve funds in trust for Grantor,
and Lender is not the agent of Grantor for payment of the insurance
premiums required to be paid by Grantor. The responsibility for the
payment of premiums shall remain Grantor's sole responsibility.
INSURANCE REPORTS. Grantor, upon request of Lender, shall furnish to
Lender reports on each existing policy of insurance showing such
information as Lender may reasonably request including the following: (1)
the name of the insurer; (2) the risks insured; (3) the amount of the
policy; (4) the property insured; (5) the then current value on the basis
of which insurance has been obtained and the manner of determining that
value; and (6) the expiration date of the policy. In addition, Grantor
shall upon request by Lender (however not more often than annually) have
an independent appraiser satisfactory to Lender determine, as applicable,
the cash value or replacement cost of the Collateral.
GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to accounts, Grantor may have
possession of the tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor's right to possession
and beneficial use shall not apply to any Collateral where possession of the
Collateral by Lender is required by law to perfect Lender's security interest in
such Collateral. Until otherwise notified by Lender, Grantor may collect any of
the Collateral consisting of accounts. At any time and even though no Event of
Default exists, Lender may exercise its rights to collect the accounts and to
notify account debtors to make payments directly to Lender for application to
the Indebtedness. If Lender at any time has possession of any Collateral,
whether before or after an Event of Default, Lender shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral if
Lender takes such action for that purpose as Grantor shall request or as Lender,
in Lender's sole discretion, shall deem appropriate under the circumstances, but
failure to honor any request by Grantor shall not of itself be deemed to be a
failure to exercise reasonable care. Lender shall not be required to take any
steps necessary to preserve any rights in the Collateral against prior parties,
nor to protect, preserve or maintain any security interest given to secure the
Indebtedness.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Grantor fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Grantor's failure to discharge or pay when due any amounts
Grantor is required to discharge or pay under this Agreement or any Related
Documents, Lender on Grantor's behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on the Collateral and paying all
costs for insuring, maintaining and preserving the Collateral. All such
expenditures paid by Lender for such purposes will then bear interest at the
Note rate from the date paid by Lender to the date of repayment by Grantor. To
the extent permitted by applicable law, all such expenses will become a part of
the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be
added to the balance of the Note and be apportioned among and be payable with
any installment payments to become due during either (1) the term of any
applicable insurance policy; or (2) the remaining term of the Note; or (C) be
treated as a balloon payment which will be due and payable at the Note's
maturity. The Agreement also will secure payment of these amounts. Such right
shall be in addition to all other rights and remedies to which Lender may be
entitled upon Default.
DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:
PAYMENT DEFAULT. Grantor fails to make any payment when due under the
Indebtedness.
OTHER DEFAULTS. Grantor fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Agreement or in any of
the Related Documents or to comply with or to perform any term,
obligation, covenant or condition contained in any other agreement between
Lender and Grantor.
DEFAULT IN FAVOR OF THIRD PARTIES. Should Grantor or any Grantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or
person that may materially affect any of Grantor's property or Grantor's
or any Grantor's ability to repay the Indebtedness or perform their
respective obligations under this Agreement or any of the Related
Documents.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by Grantor or on Grantor's behalf under this Agreement
or the Related Documents is false or misleading in any material respect,
either now or at the time made or furnished or becomes false or misleading
at any time thereafter.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of any
collateral document to create a valid and perfected security interest or
lien) at any time and for any reason.
INSOLVENCY. The dissolution or termination of Grantor's existence as a
going business, the insolvency of Grantor, the appointment of a receiver
for any part of Grantor's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Grantor.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Grantor or by any
governmental agency against any collateral securing the Indebtedness. This
includes a garnishment of any of Grantor's accounts, including deposit
accounts, with Lender. However, this Event of Default shall not apply if
there is a good faith dispute by Grantor as to the validity or
reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and if Grantor gives Lender written notice of the
creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount
determined by Lender, in its sole discretion, as being an adequate reserve
or bond for the dispute.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
respect to Guarantor of any of the Indebtedness or Guarantor dies or
becomes incompetent or revokes or disputes the validity of, or liability
under, any Guaranty of the Indebtedness.
ADVERSE CHANGE. A material adverse change occurs in Grantor's financial
condition, or Lender believes the prospect of payment or performance of
the Indebtedness is impaired.
INSECURITY. Lender in good faith believes itself insecure.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the Texas Uniform Commercial Code. In addition and without
limitation, Lender may exercise any one or more of the following rights and
remedies:
ACCELERATE INDEBTEDNESS. Lender may declare the entire Indebtedness
immediately due and payable, without notice of any kind to Grantor.
ASSEMBLE COLLATERAL. Lender may require Grantor to deliver to Lender all
or any portion of the Collateral and any and all certificates of title and
other documents relating to the Collateral. Lender may require Grantor to
assemble the Collateral and make it available to Lender at a place to be
designated by Lender. Lender also shall have full power to enter, provided
Lender does so without a breach of the peace or a trespass, upon the
COMMERCIAL SECURITY AGREEMENT
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property of Grantor to take possession of and remove the Collateral. If
the Collateral contains other goods not covered by this Agreement at the
time of repossession, Grantor agrees Lender may take such other goods,
provided that Lender makes reasonable efforts to return them to Grantor
after repossession.
SELL THE COLLATERAL. Lender shall have full power to sell, lease,
transfer, or otherwise deal with the Collateral or proceeds thereof in
Lender's own name or that of Grantor. Lender may sell the Collateral at
public auction or private sale. Unless the Collateral threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Lender will give Grantor, and other persons as required by law, reasonable
notice of the time and place of any public sale, or the time after which
any private sale or any other disposition of the Collateral is to be made.
However, no notice need be provided to any person who, after Event of
Default occurs, enters into and authenticates an agreement waiving that
person's right to notification of sale. The requirements of reasonable
notice shall be met if such notice is given at least ten (10) days before
the time of the sale or disposition. All expenses relating to the
disposition of the Collateral, including without limitation the expenses
of retaking, holding, insuring, preparing for sale and selling the
Collateral, shall become a part of the indebtedness secured by this
Agreement and shall be payable on demand, with interest at the Note rate
from date of expenditure until repaid.
APPOINT RECEIVER. Lender shall have the right to have a receiver appointed
to take possession of all or any part of the Collateral, with the power to
protect and preserve the Collateral, to operate the Collateral preceding
foreclosure or sale, and to collect the Rents from the Collateral and
apply the proceeds, over and above the cost of the receivership, against
the Indebtedness. The receiver may serve without bond if permitted by law.
Lender's right to the appointment of a receiver shall exist whether or not
the apparent value of the Collateral exceeds the Indebtedness by a
substantial amount. Employment by Lender shall not disqualify a person
from serving as a receiver.
COLLECT REVENUES, APPLY ACCOUNTS. Lender, either itself or through a
receiver, may collect the payments, rents, income, and revenues from the
Collateral. Lender may at any time in Lender's discretion transfer any
Collateral into Lender's own name or that of Lender's nominee and receive
the payments, rents, income, and revenues therefrom and hold the same as
security for the Indebtedness or apply it to payment of the Indebtedness
in such order of preference as Lender may determine. Insofar as the
Collateral consists of accounts, general intangibles, insurance policies,
instruments, chattel paper, choses in action, or similar property, Lender
may demand, collect, receipt for, settle, compromise, adjust, xxx for,
foreclose, or realize on the Collateral as Lender may determine, whether
or not Indebtedness or Collateral is then due. For these purposes, Lender
may, on behalf of and in the name of Grantor, receive, open and dispose of
mail addressed to Grantor; change any address to which mail and payments
are to be sent; and endorse notes, checks, drafts, money orders, documents
of title, instruments and items pertaining to payment, shipment, or
storage of any Collateral. To facilitate collection, Lender may notify
account debtors and obligors on any Collateral to make payments directly
to Lender.
OBTAIN DEFICIENCY. If Lender chooses to sell any or all of the Collateral,
Lender may obtain a judgment against Grantor for any deficiency remaining
on the Indebtedness due to Lender after application of all amounts
received from the exercise of the rights provided in this Agreement.
Grantor shall be liable for a deficiency even if the transaction described
in this subsection is a sale of accounts or chattel paper.
OTHER RIGHTS AND REMEDIES. Lender shall have all the rights and remedies
of a secured creditor under the provisions of the Uniform Commercial Code,
as may be amended from time to time. In addition, Lender shall have and
may exercise any or all other rights and remedies it may have available at
law, in equity, or otherwise.
ELECTION OF REMEDIES. Except as may be prohibited by applicable law, all
of Lender's rights and remedies, whether evidenced by this Agreement, the
Related Documents, or by any other writing, shall be cumulative and may be
exercised singularly or concurrently. Election by Lender to pursue any
remedy shall not exclude pursuit of any other remedy, and an election to
make expenditures or to take action to perform an obligation of Grantor
under this Agreement, after Grantor's failure to perform, shall not affect
Lender's right to declare a default and exercise its remedies.
ARBITRATION. (a) This paragraph concerns the resolution of any controversies or
claims between the parties, whether arising in contract, tort or by statute,
including but not limited to controversies or claims that arise out of or relate
to: (i) this agreement (including any renewals, extensions or modifications); or
(ii) any document related to this agreement; (collectively a "Claim").
(b) At the request of any party to this agreement, any Claim shall be resolved
by binding arbitration in accordance with the Federal Arbitration Act (Title 9,
U. S. Code) (the "Act"). The Act will apply even though this agreement provides
that it is governed by the law of a specified state.
(c) Arbitration proceedings will be determined in accordance with the Act, the
applicable rules and procedures for the arbitration of disputes of JAMS or any
successor thereof ("JAMS"), and the terms of this paragraph. In the event of any
inconsistency, the terms of this paragraph shall control.
(d) The arbitration shall be administered by JAMS and conducted, unless
otherwise required by law, in any U.S. state where real or tangible personal
property collateral for this credit is located or if there is no such
collateral, in the state specified in the governing law section of this
agreement. All Claims shall be determined by one arbitrator; however, if Claims
exceed $5,000,000, upon the request of any party, the Claims shall be decided by
three arbitrators. All arbitration hearings shall commence within 90 days of the
demand for arbitration and close within 90 days of commencement and the award of
the arbitrator(s) shall be issued within 30 days of the close of the hearing.
However, the arbitrator(s), upon a showing of good cause, may extend the
commencement of the hearing for up to an additional 60 days. The arbitrator(s)
shall provide a concise written statement of reasons for the award. The
arbitration award may be submitted to any court having jurisdiction to be
confirmed and enforced.
(e) The arbitrator(s) will have the authority to decide whether any Claim is
barred by the statute of limitations and, if so, to dismiss the arbitration on
that basis. For purposes of the application of the statute of limitations, the
service on JAMS under applicable JAMS rules of a notice of Claim is the
equivalent of the filing of a lawsuit Any dispute concerning this arbitration
provision or whether a Claim is arbitratable shall be determined by the
arbitrator(s). The arbitrator(s) shall have the power to award legal fees
pursuant to the terms of this agreement.
(f) This paragraph does not limit the right of any party to: (1) exercise
self-help remedies, such as but not limited to, setoff; (ii) initiate judicial
or nonjudicial foreclosure against any real or personal property collateral;
(iii) exercise any judicial or power of sale rights, or (iv) act in a court of
law to obtain an interim remedy, such as but not limited to, injunctive relief,
writ of possession or appointment of a receiver, or additional or supplementary
remedies.
(g) The filing of a court action is not intended to constitute a waiver of the
right of any party, including the suing party, thereafter to require submittal
of the Claim to arbitration.
ADDITIONAL DEFAULTS. Each of the following shall constitute an event of default
("Event of Default") under this Agreement:
EVENT OF DEFAULTS UNDER RELATED DOCUMENTS. A default or event of default occurs
under the terms of any Related Document executed by Borrower or any guarantor,
pledgor, accommodation party or other obligor.
REVOCATION OR TERMINATION OF TRUST. If any Borrower, grantor, guarantor,
pledgor, accommodation party or other obligor on the indebtedness secured
hereunder or any of the related documents is a trust or the trustee(s) of a
trust, such trust is revoked or otherwise terminated or all or a substantial
part of such trust's assets are distributed or otherwise disposed of, or in the
case of a revocable trust, the grantor of such trust dies.
COMMERCIAL SECURITY AGREEMENT
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DEFAULT BY AFFILIATES. Any affiliate of Borrower defaults under any loan,
extension of credit, security agreement, purchase or sales agreement, or any
other agreement, in favor of Lender or any other creditor. "Affiliate" shall
mean any person or entity that controls, is controlled by, or under common
control with the Borrower. "Control" shall mean the ability to vote twenty five
percent (25%) or more of the voting stock or interest of such entity.
COUNTERPART SIGNATURES. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
ADDRESS FOR NOTICES. Notwithstanding anything to the contrary herein, all
notices and communications to the Lender shall be directed to the following
address:
Bank of America, N.A.
Dallas CLSC, Attn: Notice Desk
000 Xxxx, 0xx Xxxxx
Xxxxxx, XX 00000.
GRANTORS PLACE(S) OF BUSINESS AND LOCATION(S) COLLATERAL. All of Grantor's
place(s) of business and/or location(s) where collateral are or will be kept are
as follows: 13950 Senlac Drive, Suites 000 & 000, Xxxxxxx Xxxxxx, Xxxxx 00000;
Xxxxx & Xxxxx, 0000 Xxxxxxx Xxxxxx Xxxxx, #000, Xxxxxxx, Xxxxxxxxx 00000; 0000
Xxxxx Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxx 00000; and Network Distribution of
Dallas, 0000 Xxxxxx Xxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment.
ATTORNEYS' FEES; EXPENSES. Grantor agrees to pay upon demand all of
Lender's costs and expenses, including Lender's reasonable attorneys' fees
and Lender's legal expenses, incurred in connection with the enforcement
of this Agreement. Lender may hire or pay someone else to help enforce
this Agreement, and Grantor shall pay the costs and expenses of such
enforcement. Costs and expenses include Lender's reasonable attorneys'
fees and legal expenses whether or not there is a lawsuit, including
Lender's reasonable attorneys' fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection
services. Grantor also shall pay all court costs and such additional fees
as may be directed by the court.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED AND ENFORCED
IN ACCORDANCE WITH FEDERAL LAW AND THE LAWS OF THE STATE OF TEXAS. THIS
AGREEMENT HAS BEEN ACCEPTED BY LENDER IN THE STATE OF TEXAS.
CHOICE OF VENUE. If there is a lawsuit, and if the transaction evidenced
by this Agreement occurred in any County, Grantor agrees upon Lender's
request to submit to the jurisdiction of the courts of any County, State
of Texas.
NO WAIVER BY LENDER. Lender shall not be deemed to have waived any rights
under this Agreement unless such waiver is given in writing and signed by
Lender. No delay or omission on the part of Lender in exercising any right
shall operate as a waiver of such right or any other right. A waiver by
Lender of a provision of this Agreement shall not prejudice or constitute
a waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by
Lender, nor any course of dealing between Lender and Grantor, shall
constitute a waiver of any of Lender's rights or of any of Grantor's
obligations as to any future transactions. Whenever the consent of Lender
is required under this Agreement, the granting of such consent by Lender
in any instance shall not constitute continuing consent to subsequent
instances where such consent is required and in all cases such consent may
be granted or withheld in the sole discretion of Lender.
NOTICES. Any notice required to be given under this Agreement shall be
given in writing, and shall be effective when actually delivered, when
actually received by telefacsimile (unless otherwise required by law),
when deposited with a nationally recognized overnight courier, or, if
mailed, when deposited in the United States mail, as first class,
certified or registered mail postage prepaid, directed to the addresses
shown near the beginning of this Agreement. Any party may change its
address for notices under this Agreement by giving formal written notice
to the other parties, specifying that the purpose of the notice is to
change the party's address. For notice purposes, Grantor agrees to keep
Lender informed at all times of Grantor's current address. Unless
otherwise provided or required by law, if there is more than one Grantor,
any notice given by Lender to any Grantor is deemed to be notice given to
all Grantors.
POWER OF ATTORNEY. Grantor hereby appoints Lender as Grantor's irrevocable
attorney-in-fact for the purpose of executing any documents necessary to
perfect, amend, or to continue the security interest granted in this
Agreement or to demand termination of filings of other secured parties.
Lender may at any time, and without further authorization from Grantor,
file a carbon, photographic or other reproduction of any financing
statement or of this Agreement for use as a financing statement. Grantor
will reimburse Lender for all expenses for the perfection and the
continuation of the perfection of Lender's security interest in the
Collateral.
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Agreement to be illegal, invalid, or unenforceable as to any
circumstance, that finding shall not make the offending provision,
illegal, invalid, or unenforceable as to any other circumstance. If
feasible, the offending provision shall be considered modified so that it
becomes legal, valid and enforceable. If the offending provision cannot be
so modified, it shall be considered deleted from this Agreement. Unless
otherwise required by law, the illegality, invalidity, or unenforceability
of any provision of this Agreement shall not affect the legality, validity
or enforceability of any other provision of this Agreement.
SUCCESSORS AND ASSIGNS. Subject to any limitations stated in this
Agreement on transfer of Grantor's interest, this Agreement shall be
binding upon and inure to the benefit of the parties, their successors and
assigns. If ownership of the Collateral becomes vested in a person other
than Grantor, Lender, without notice to Grantor, may deal with Grantor's
successors with reference to this Agreement and the Indebtedness by way of
forbearance or extension without releasing Grantor from the obligations of
this Agreement or liability under the Indebtedness.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties, and agreements made by Grantor in this Agreement shall survive
the execution and delivery of this Agreement, shall be continuing in
nature, and shall remain in full force and effect until such time as
Grantor's Indebtedness shall be paid in full.
TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
Agreement.
WAIVE JURY. ALL PARTIES TO THIS AGREEMENT HEREBY WAIVE THE RIGHT TO ANY
JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY ANY PARTY
AGAINST ANY OTHER PARTY.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this
COMMERCIAL SECURITY AGREEMENT
(CONTINUED) PAGE 6
================================================================================
Agreement shall have the meanings attributed to such terms in the Uniform
Commercial Code:
ACCOUNT. The word "Account" means a trade account, account receivable,
other receivable, or other right to payment for goods sold or services
rendered owing to Grantor (or to a third party grantor acceptable to
Lender).
AGREEMENT. The word "Agreement" means this Commercial Security Agreement,
as this Commercial Security Agreement may be amended or modified from time
to time, together with all exhibits and schedules attached to this
Commercial Security Agreement from time to time.
BORROWER. The word "Borrower" means Collegiate Pacific, Inc., and all
other persons and entities signing the Note in whatever capacity.
COLLATERAL. The word "Collateral" means all of Grantor's right, title and
interest in and to all the Collateral as described in the Collateral
Description section of this Agreement.
DEFAULT. The word "Default" means the Default set forth in this Agreement
in the section titled "Default".
ENVIRONMENTAL LAWS. The words "Environmental Laws" mean any and all state,
federal and local statutes, regulations and ordinances relating to the
protection of human health or the environment, including without
limitation the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.
("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, Pub.
L. No. 99-499 ("XXXX"), the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act,
42 U.S.C. Section 6901, et seq., or other applicable state or federal
laws, rules, or regulations adopted pursuant thereto.
EVENT OF DEFAULT. The words "Event of Default" mean any of the events of
default set forth in this Agreement in the default section of this
Agreement.
GRANTOR. The word "Grantor" means Collegiate Pacific, Inc.
GUARANTOR. The word "Guarantor" means any guarantor, surety, or
accommodation party of any or all of the Indebtedness.
GUARANTY. The word "Guaranty" means the guaranty from Guarantor to Lender,
including without limitation a guaranty of all or part of the Note.
HAZARDOUS SUBSTANCES. The words "Hazardous Substances" mean materials
that, because of their quantity, concentration or physical, chemical or
infectious characteristics, may cause or pose a present or potential
hazard to human health or the environment when improperly used, treated,
stored, disposed of, generated, manufactured, transported or otherwise
handled. The words "Hazardous Substances" are used in their very broadest
sense and include without limitation any and all hazardous or toxic
substances, materials or waste as defined by or listed under the
Environmental Laws. The term "Hazardous Substances" also includes, without
limitation, petroleum and petroleum by-products or any fraction thereof
and asbestos.
INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by
the Note or Related Documents, including all principal and interest
together with all other indebtedness and costs and expenses for which
Borrower or Grantor or any other borrower, guarantor, pledgor, obligor or
accommodation party is responsible under this Agreement or under any of
the Related Documents, including any swap, option or forward obligations.
LENDER. The word "Lender" means Bank of America, N.A., its successors and
assigns.
NOTE. The word "Note" means (i) the Note executed by Borrower in the
principal amount of $2,500,000.00 dated December 26, 2001, (ii) any other
promissory note, credit agreement or letter of credit agreement now or
hereafter executed by Borrower in favor of Lender with respect to the
Indebtedness, including without limitation those promissory notes, credit
agreements and letter of credit agreements described on any schedule or
exhibit attached to this Agreement from time to time, and (iii) any
renewals of, extensions of, modifications of, refinancings of,
consolidations of, and substitutions for any of the foregoing.
RELATED DOCUMENTS. The words "Related Documents" mean all promissory
notes, credit agreements, loan agreements, environmental agreements,
guaranties, security agreements, mortgages, deeds of trust, security
deeds, collateral mortgages, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection with
the Indebtedness.
GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED DECEMBER 26, 2001.
GRANTOR:
COLLEGIATE PACIFIC, INC.
BY: /s/ XXXXXXX X. XXXXXXXXXX
-------------------------------------------------
XXXXXXX X. XXXXXXXXXX, CHIEF EXECUTIVE OFFICER OF
COLLEGIATE PACIFIC, INC.
[BANK OF AMERICA LOGO]
COMMERCIAL SECURITY AGREEMENT
================================================================================
BORROWER: COLLEGIATE PACIFIC, INC. LENDER: BANK OF AMERICA, N.A.
13950 SENLAC DRIVE, SUITE 100 CLSC-COMMERCIAL BANKING
FARMERS XXXXXX, XX 00000 TX1-609-06-01
X.X. XXX 000000
XXXXXXX: KESMIL MANUFACTURING, INC. XXXXXX, XX 00000-0000
00000 XXXXXX XXXXX, XXXXX 000
XXXXXXX XXXXXX, XX 00000
================================================================================
THIS COMMERCIAL SECURITY AGREEMENT DATED DECEMBER 26, 2001, IS MADE AND EXECUTED
AMONG KESMIL MANUFACTURING, INC. ("GRANTOR"); COLLEGIATE PACIFIC, INC.
("BORROWER"); AND BANK OF AMERICA, N.A. ("LENDER").
GRANT OF SECURITY INTEREST. FOR VALUABLE CONSIDERATION, GRANTOR GRANTS TO LENDER
A SECURITY INTEREST IN THE COLLATERAL TO SECURE THE INDEBTEDNESS AND AGREES THAT
LENDER SHALL HAVE THE RIGHTS STATED IN THIS AGREEMENT WITH RESPECT TO THE
COLLATERAL, IN ADDITION TO ALL OTHER RIGHTS WHICH LENDER MAY HAVE BY LAW.
COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means
the following described property, whether now owned or hereafter acquired,
whether now existing or hereafter arising, and wherever located, in which
Grantor is giving to Lender a security interest for the payment of the
Indebtedness and performance of all other obligations under the Note and this
Agreement:
ALL INVENTORY, CHATTEL PAPER, ACCOUNTS, EQUIPMENT AND GENERAL INTANGIBLES
In addition, the word "Collateral" also includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located:
(A) All accessions, attachments, accessories, tools, parts, supplies,
replacements and additions to any of the collateral described herein,
whether added now or later.
(B) All products and produce of any of the property described in this
Collateral section.
(C) All accounts, general intangibles, instruments, rents, monies,
payments, and all other rights, arising out of a sale, lease, or other
disposition of any of the property described in this Collateral section.
(D) All proceeds (including insurance proceeds) from the sale,
destruction, loss, or other disposition of any of the property described
in this Collateral section, and sums due from a third party who has
damaged or destroyed the Collateral or from that party's insurer, whether
due to judgment, settlement or other process.
(E) All records and data relating to any of the property described in
this Collateral section, whether in the form of a writing, photograph,
microfilm, microfiche, or electronic media, together with all of
Grantor's right, title, and interest in and to all computer software
required to utilize, create, maintain, and process any such records or
data on electronic media.
Despite any other provision of this Agreement, Lender is not granted, and will
not have, a nonpurchase money security interest in household goods, to the
extent such a security interest would be prohibited by applicable law. In
addition, if because of the type of any Property, Lender is required to give a
notice of the right to cancel under Truth in Lending for the Indebtedness, then
Lender will not have a security interest in such Collateral unless and until
such a notice is given.
CROSS-COLLATERALIZATION. In addition to the Note, this Agreement secures the
following described additional indebtedness: all obligations, debts and
liabilities, including any swap, option or forward obligations, plus interest
thereon, of Borrower to Lender, or any one or more of them, as well as all
claims by Lender against Borrower or any other party to this Agreement or any
one or more of them, whether now existing or hereafter arising, whether related
or unrelated to the purpose of the Note, whether voluntary or otherwise, whether
due or not due, direct or indirect absolute or contingent, liquidated or
unliquidated and whether Borrower or any other party to this Agreement may be
liable individually or jointly with others, whether obligated as guarantor,
surety, accommodation party or otherwise, and whether recovery upon such amounts
may be or hereafter may become barred by any statute of limitations, and whether
the obligation to repay such amounts may be or hereafter may become otherwise
unenforceable. Unless the Borrower and any other party to this Agreement shall
have otherwise agreed in writing or received written notice thereof, this
Agreement shall not secure any obligation owing to Lender which constitutes
"consumer credit" subject to the disclosure requirements of the Federal Truth in
Lending Act and any regulations promulgated thereunder.
BORROWER'S WAIVERS AND RESPONSIBILITIES. Except as otherwise required under this
Agreement or by applicable law, (A) Borrower agrees that Lender need not tell
Borrower about any action or inaction Lender takes in connection with this
Agreement; (B) Borrower assumes the responsibility for being and keeping
informed about the Collateral; and (C) Borrower waives any defenses that may
arise because of any action or inaction of Lender, including without limitation
any failure of Lender to realize upon the Collateral or any delay by Lender in
realizing upon the Collateral; and Borrower agrees to remain liable under the
Note no matter what action Lender takes or fails to take under this Agreement.
GRANTOR'S REPRESENTATIONS AND WARRANTIES. Grantor warrants that: (A) this
Agreement is executed at Borrower's request and not at the request of Lender;
(B) Grantor has the full right, power and authority to enter into this Agreement
and to pledge the Collateral to Lender; (C) Grantor has established adequate
means of obtaining from Borrower on a continuing basis information about
Borrower's financial condition; and (D) Lender has made no representation to
Grantor about Borrower or Borrower's creditworthiness.
GRANTOR'S WAIVERS. Grantor waives all requirements of presentment, protest,
demand, and notice of dishonor or non-payment to Borrower or Grantor, or any
other party to the Indebtedness or the Collateral. Lender may do any of the
following with respect to any obligation of any Borrower, without first
obtaining the consent of Grantor: (A) grant any extension of time for any
payment, (B) grant any renewal, (C) permit any modification of payment terms or
other terms, or (D) exchange or release any Collateral or other security. No
such act or failure to act shall affect Lender's rights against Grantor or the
Collateral.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Grantor's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Grantor holds
jointly with someone else and all accounts Grantor may open in the future.
However, this does not include any XXX or Xxxxx accounts, or any trust accounts
for which setoff would be prohibited by law. Grantor authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts.
GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With
respect to the Collateral, Grantor represents
COMMERCIAL SECURITY AGREEMENT
(CONTINUED) PAGE 2
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and promises to Lender that:
PERFECTION OF SECURITY INTEREST. Grantor agrees to execute financing
statements and to take whatever other actions are requested by Lender to
perfect and continue Lender's security interest in the Collateral. Upon
request of Lender, Grantor will deliver to Lender any and all of the
documents evidencing or constituting the Collateral, and Grantor will
note Lender's interest upon any and all chattel paper if not delivered to
Lender for possession by Lender. THIS IS A CONTINUING SECURITY AGREEMENT
AND WILL CONTINUE IN EFFECT EVEN THOUGH ALL OR ANY PART OF THE
INDEBTEDNESS IS PAID IN FULL AND EVEN THOUGH FOR A PERIOD OF TIME
BORROWER MAY NOT BE INDEBTED TO LENDER.
NOTICES TO LENDER. Grantor will promptly notify Lender in writing at
Lender's address shown above (or such other addresses as Lender may
designate from time to time) prior to any (1) change in Grantor's name;
(2) change in Grantor's assumed business name(s); (3) change in the
management of the Corporation Grantor; (4) change in the authorized
signer(s); (5) change in Grantor's principal office address; (6) change
in Grantor's state of organization; (7) conversion of Grantor to a new or
different type of business entity; or (8) change in any other aspect of
Grantor that directly or indirectly relates to any agreements between
Grantor and Lender. No change in Grantor's name or state of organization
will take effect until after Lender has received notice.
NO VIOLATION. The execution and delivery of this Agreement will not
violate any law or agreement governing Grantor or to which Grantor is a
party, and its certificate or articles of incorporation and bylaws do not
prohibit any term or condition of this Agreement.
ENFORCEABILITY OF COLLATERAL. To the extent the Collateral consists of
accounts, chattel paper, or general intangibles, as defined by the
Uniform Commercial Code, the Collateral is enforceable in accordance with
its terms, is genuine, and fully complies with all applicable laws and
regulations concerning form, content and manner of preparation and
execution, and all persons appearing to be obligated on the Collateral
have authority and capacity to contract and are in fact obligated as they
appear to be on the Collateral. At the time any Account becomes subject
to a security interest in favor of Lender, the Account shall be a good
and valid account representing an undisputed, bona fide indebtedness
incurred by the account debtor, for merchandise held subject to delivery
instructions or previously shipped or delivered pursuant to a contract of
sale, or for services previously performed by Grantor with or for the
account debtor. So long as this Agreement remains in effect, Grantor
shall not, without Lender's prior written consent, compromise, settle,
adjust, or extend payment under or with regard to any such Accounts.
There shall be no setoffs or counterclaims against any of the Collateral,
and no agreement shall have been made under which any deductions or
discounts may be claimed concerning the Collateral except those disclosed
to Lender in writing.
LOCATION OF THE COLLATERAL. Except in the ordinary course of Grantor's
business, Grantor agrees to keep the Collateral (or to the extent the
Collateral consists of intangible property such as accounts or general
intangibles, the records concerning the Collateral) at Grantor's address
shown above or at such other locations as are acceptable to Lender. Upon
Lender's request, Grantor will deliver to Lender in form satisfactory to
Lender a schedule of real properties and Collateral locations relating to
Grantor's operations, including without limitation the following: (1) all
real property Grantor owns or is purchasing; (2) all real property
Grantor is renting or leasing; (3) all storage facilities Grantor owns,
rents, leases, or uses; and (4) all other properties where Collateral is
or may be located.
REMOVAL OF THE COLLATERAL. Except in the ordinary course of Grantor's
business, including the sales of inventory, Grantor shall not remove the
Collateral from its existing location without Lender's prior written
consent. To the extent that the Collateral consists of vehicles, or other
titled property, Grantor shall not take or permit any action which would
require application for certificates of title for the vehicles outside
the State of Texas, without Lender's prior written consent. Grantor
shall, whenever requested, advise Lender of the exact location of the
Collateral.
TRANSACTIONS INVOLVING COLLATERAL. Except for inventory sold or accounts
collected in the ordinary course of Grantor's business, or as otherwise
provided for in this Agreement, Grantor shall not sell, offer to sell, or
otherwise transfer or dispose of the Collateral. While Grantor is not in
default under this Agreement, Grantor may sell inventory, but only in the
ordinary course of its business and only to buyers who quality as a buyer
in the ordinary course of business. A sale in the ordinary course of
Grantor's business does not include a transfer in partial or total
satisfaction of a debt or any bulk sale. Grantor shall not pledge,
mortgage, encumber or otherwise permit the Collateral to be subject to
any lien, security interest, encumbrance, or charge, other than the
security interest provided for in this Agreement, without the prior
written consent of Lender. This includes security interests even if
junior in right to the security interests granted under this Agreement.
Unless waived by Lender, all proceeds from any disposition of the
Collateral (for whatever reason) shall be held in trust for Lender and
shall not be commingled with any other funds; provided however, this
requirement shall not constitute consent by Lender to any sale or other
disposition. Upon receipt, Grantor shall immediately deliver any such
proceeds to Lender.
TITLE. Grantor represents and warrants to Lender that Grantor holds good
and marketable title to the Collateral, free and clear of all liens and
encumbrances except for the lien of this Agreement. No financing
statement covering any of the Collateral is on file in any public office
other than those which reflect the security interest created by this
Agreement or to which Lender has specifically consented. Grantor shall
defend Lender's rights in the Collateral against the claims and demands
of all other persons.
REPAIRS AND MAINTENANCE. Grantor agrees to keep and maintain, and to
cause others to keep and maintain, the Collateral in good order, repair
and condition at all times while this Agreement remains in effect.
Grantor further agrees to pay when due all claims for work done on, or
services rendered or material furnished in connection with the Collateral
so that no lien or encumbrance may ever attach to or be filed against
the Collateral.
INSPECTION OF COLLATERAL. Lender and Lender's designated representatives
and agents shall have the right at all reasonable times to examine and
inspect the Collateral wherever located.
TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all taxes,
assessments and liens upon the Collateral, its use or operation, upon
this Agreement, upon any promissory note or notes evidencing the
Indebtedness, or upon any of the other Related Documents. Grantor may
withhold any such payment or may elect to contest any lien if Grantor is
in good faith conducting an appropriate proceeding to contest the
obligation to pay and so long as Lender's interest in the Collateral is
not jeopardized in Lender's sole opinion. In any contest Grantor shall
defend itself and Lender and shall satisfy any final adverse judgment
before enforcement against the Collateral. Grantor shall name Lender as
an additional obligee under any surety bond furnished in the contest
proceedings. Grantor further agrees to furnish Lender with evidence that
such taxes, assessments, and governmental and other charges have been
paid in full and in a timely manner. Grantor may withhold any such
payment or may elect to contest any lien if Grantor is in good faith
conducting an appropriate proceeding to contest the obligation to pay and
so long as Lender's interest in the Collateral is not jeopardized.
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor shall comply promptly
with all laws, ordinances, rules and regulations of all governmental
authorities, now or hereafter in effect, applicable to the ownership,
production, disposition, or use of the Collateral. Grantor may contest in
good faith any such law, ordinance or regulation and withhold compliance
during any proceeding, including appropriate appeals, so long as Lender's
interest in the Collateral, in Lender's opinion, is not jeopardized.
HAZARDOUS SUBSTANCES. Grantor represents and warrants that the Collateral
never has been, and never will be so long as this Agreement remains a
lien on the Collateral, used in violation of any Environmental Laws or
for the generation, manufacture, storage, transportation, treatment,
disposal, release or threatened release of any Hazardous Substance. The
representations and warranties contained herein are based on Grantor's
due diligence in investigating the Collateral for Hazardous Substances.
Grantor hereby (1) releases and waives any future claims against Lender
for indemnity or contribution in the event Grantor becomes liable for
cleanup or other costs under any Environmental Laws, and (2) agrees to
COMMERCIAL SECURITY AGREEMENT
(CONTINUED) PAGE 3
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indemnify and hold harmless Lender against any and all claims and losses
resulting from a breach of this provision of this Agreement. This
obligation to indemnify shall survive the payment of the Indebtedness and
the satisfaction of this Agreement.
MAINTENANCE OF CASUALTY INSURANCE. Grantor shall procure and maintain all
risks insurance, including without limitation fire, theft and liability
coverage together with such other insurance as Lender may require with
respect to the Collateral, in form, amounts, coverages and basis
reasonably acceptable to Lender. Grantor, upon request of Lender, will
deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulations that
coverages will not be cancelled or diminished without at least thirty
(30) days' prior written notice to Lender and not including any
disclaimer of the insurer's liability for failure to give such a notice.
Each insurance policy also shall include an endorsement providing that
coverage in favor of Lender will not be impaired in any way by any act,
omission or default of Grantor or any other person. In connection with
all policies covering assets in which Lender holds or is offered a
security interest, Grantor will provide Lender with such loss payable or
other endorsements as Lender may require. If Grantor at any time fails to
obtain or maintain any insurance as required under this Agreement, Lender
may (but shall not be obligated to) obtain such insurance as Lender deems
appropriate, including if Lender so chooses "single interest insurance,"
which will cover only Lender's interest in the Collateral.
APPLICATION OF INSURANCE PROCEEDS. Grantor shall promptly notify Lender
of any loss or damage to the Collateral. Lender may make proof of loss if
Grantor fails to do so within fifteen (15) days of the casualty. All
proceeds of any insurance on the Collateral, including accrued proceeds
thereon, shall be held by Lender as part of the Collateral. If Lender
consents to repair or replacement of the damaged or destroyed Collateral,
Lender shall, upon satisfactory proof of expenditure, pay or reimburse
Grantor from the proceeds for the reasonable cost of repair or
restoration. If Lender does not consent to repair or replacement of the
Collateral, Lender shall retain a sufficient amount of the proceeds to
pay all of the Indebtedness, and shall pay the balance to Grantor. Any
proceeds which have not been disbursed within six (6) months after their
receipt and which Grantor has not committed to the repair or restoration
of the Collateral shall be used to prepay the Indebtedness.
INSURANCE RESERVES. Lender may require Grantor to maintain with Lender
reserves for payment of insurance premiums, which reserves shall be
created by monthly payments from Grantor of a sum estimated by Lender to
be sufficient to produce, at least fifteen (15) days before the premium
due date, amounts at least equal to the insurance premiums to be paid. If
fifteen (15) days before payment is due, the reserve funds are
insufficient, Grantor shall upon demand pay any deficiency to Lender. The
reserve funds shall be held by Lender as a general deposit and shall
constitute a non-interest-bearing account which Lender may satisfy by
payment of the insurance premiums required to be paid by Grantor as they
become due. Lender does not hold the reserve funds in trust for Grantor,
and Lender is not the agent of Grantor for payment of the insurance
premiums required to be paid by Grantor. The responsibility for the
payment of premiums shall remain Grantor's sole responsibility.
INSURANCE REPORTS. Grantor, upon request of Lender, shall furnish to
Lender reports on each existing policy of insurance showing such
information as Lender may reasonably request including the following: (1)
the name of the insurer; (2) the risks insured; (3) the amount of the
policy; (4) the property insured; (5) the then current value on the basis
of which insurance has been obtained and the manner of determining that
value; and (6) the expiration date of the policy. In addition, Grantor
shall upon request by Lender (however not more often than annually) have
an independent appraiser satisfactory to Lender determine, as applicable,
the cash value or replacement cost of the Collateral.
GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to accounts, Grantor may have
possession of the tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor's right to possession
and beneficial use shall not apply to any Collateral where possession of the
Collateral by Lender is required by law to perfect Lender's security interest in
such Collateral. Until otherwise notified by Lender, Grantor may collect any of
the Collateral consisting of accounts. At any time and even though no Event of
Default exists, Lender may exercise its rights to collect the accounts and to
notify account debtors to make payments directly to Lender for application to
the Indebtedness. If Lender at any time has possession of any Collateral,
whether before or after an Event of Default, Lender shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral if
Lender takes such action for that purpose as Grantor shall request or as Lender,
in Lender's sole discretion, shall deem appropriate under the circumstances, but
failure to honor any request by Grantor shall not of itself be deemed to be a
failure to exercise reasonable care. Lender shall not be required to take any
steps necessary to preserve any rights in the Collateral against prior parties,
nor to protect, preserve or maintain any security interest given to secure the
Indebtedness.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Grantor fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Grantor's failure to discharge or pay when due any amounts
Grantor is required to discharge or pay under this Agreement or any Related
Documents, Lender on Grantor's behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on the Collateral and paying all
costs for insuring, maintaining and preserving the Collateral. All such
expenditures paid by Lender for such purposes will then bear interest at the
Note rate from the date paid by Lender to the date of repayment by Grantor. To
the extent permitted by applicable law, all such expenses will become a part of
the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be
added to the balance of the Note and be apportioned among and be payable with
any installment payments to become due during either (1) the term of any
applicable insurance policy; or (2) the remaining term of the Note; or (C) be
treated as a balloon payment which will be due and payable at the Note's
maturity. The Agreement also will secure payment of these amounts. Such right
shall be in addition to all other rights and remedies to which Lender may be
entitled upon Default.
DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:
PAYMENT DEFAULT. Borrower fails to make any payment when due under the
Indebtedness.
OTHER DEFAULTS. Borrower or Grantor fails to comply with or to perform
any other term, obligation, covenant or condition contained in this
Agreement or in any of the Related Documents or to comply with or to
perform any term, obligation, covenant or condition contained in any
other agreement between Lender and Borrower or Grantor.
DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase or
sales agreement, or any other agreement, in favor of any other creditor
or person that may materially affect any of Borrower's property or
Borrower's or any Grantor's ability to repay the Indebtedness or perform
their respective obligations under this Agreement or any of the Related
Documents.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by Borrower or Grantor or on Borrower's or Grantor's
behalf under this Agreement or the Related Documents is false or
misleading in any material respect, either now or at the time made or
furnished or becomes false or misleading at any time thereafter.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of any
collateral document to create a valid and perfected security interest or
lien) at any time and for any reason.
INSOLVENCY. The dissolution or termination of Borrower's or Grantor's
existence as a going business, the insolvency of Borrower or Grantor, the
appointment of a receiver for any part of Borrower's or Grantor's
property, any assignment for the benefit of creditors, any type of
creditor workout, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Borrower or Grantor.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
COMMERCIAL SECURITY AGREEMENT
(CONTINUED) PAGE 4
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repossession or any other method, by any creditor of Borrower or Grantor
or by any governmental agency against any collateral securing the
Indebtedness. This includes a garnishment of any of Borrower's or
Grantor's accounts, including deposit accounts, with Lender. However,
this Event of Default shall not apply if there is a good faith dispute by
Borrower or Grantor as to the validity or reasonableness of the claim
which is the basis of the creditor or forfeiture proceeding and if
Borrower or Grantor gives Lender written notice of the creditor or
forfeiture proceeding and deposits with Lender monies or a surety bond
for the creditor or forfeiture proceeding, in an amount determined by
Lender, in its sole discretion, as being an adequate reserve or bond for
the dispute.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
respect to Guarantor of any of the Indebtedness or Guarantor dies or
becomes incompetent or revokes or disputes the validity of, or liability
under, any Guaranty of the Indebtedness.
ADVERSE CHANGE. A material adverse change occurs in Borrower's or
Grantor's financial condition, or Lender believes the prospect of payment
or performance of the Indebtedness is impaired.
INSECURITY. Lender in good faith believes itself insecure.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the Texas Uniform Commercial Code. In addition and without
limitation, Lender may exercise any one or more of the following rights and
remedies:
ACCELERATE INDEBTEDNESS. Lender may declare the entire Indebtedness
immediately due and payable, without notice of any kind to Borrower or
Grantor.
ASSEMBLE COLLATERAL. Lender may require Grantor to deliver to Lender all
or any portion of the Collateral and any and all certificates of title
and other documents relating to the Collateral. Lender may require
Grantor to assemble the Collateral and make it available to Lender at a
place to be designated by Lender. Lender also shall have full power to
enter, provided Lender does so without a breach of the peace or a
trespass, upon the property of Grantor to take possession of and remove
the Collateral. If the Collateral contains other goods not covered by
this Agreement at the time of repossession, Grantor agrees Lender may
take such other goods, provided that Lender makes reasonable efforts to
return them to Grantor after repossession.
SELL THE COLLATERAL. Lender shall have full power to sell, lease,
transfer, or otherwise deal with the Collateral or proceeds thereof in
Lender's own name or that of Grantor. Lender may sell the Collateral at
public auction or private sale. Unless the Collateral threatens to
decline speedily in value or is of a type customarily sold on a
recognized market, Lender will give Grantor, and other persons as
required by law, reasonable notice of the time and place of any public
sale, or the time after which any private sale or any other disposition
of the Collateral is to be made. However, no notice need be provided to
any person who, after Event of Default occurs, enters into and
authenticates an agreement waiving that person's right to notification of
sale. The requirements of reasonable notice shall be met if such notice
is given at least ten (10) days before the time of the sale or
disposition. All expenses relating to the disposition of the Collateral,
including without limitation the expenses of retaking, holding, insuring,
preparing for sale and selling the Collateral, shall become a part of the
Indebtedness secured by this Agreement and shall be payable on demand,
with interest at the Note rate from date of expenditure until repaid.
APPOINT RECEIVER. Lender shall have the right to have a receiver
appointed to take possession of all or any part of the Collateral, with
the power to protect and preserve the Collateral, to operate the
Collateral preceding foreclosure or sale, and to collect the Rents from
the Collateral and apply the proceeds, over and above the cost of the
receivership, against the Indebtedness. The receiver may serve without
bond if permitted by law. Lender's right to the appointment of a receiver
shall exist whether or not the apparent value of the Collateral exceeds
the Indebtedness by a substantial amount. Employment by Lender shall not
disqualify a person from serving as a receiver.
COLLECT REVENUES, APPLY ACCOUNTS. Lender, either itself or through a
receiver, may collect the payments, rents, income, and revenues from the
Collateral. Lender may at any time in Lender's discretion transfer any
Collateral into Lender's own name or that of Lender's nominee and receive
the payments, rents, income, and revenues therefrom and hold the same as
security for the Indebtedness or apply it to payment of the Indebtedness
in such order of preference as Lender may determine. Insofar as the
Collateral consists of accounts, general intangibles, insurance policies,
instruments, chattel paper, choses in action, or similar property, Lender
may demand, collect, receipt for, settle, compromise, adjust, xxx for,
foreclose, or realize on the Collateral as Lender may determine, whether
or not Indebtedness or Collateral is then due. For these purposes, Lender
may, on behalf of and in the name of Grantor, receive, open and dispose
of mail addressed to Grantor; change any address to which mail and
payments are to be sent; and endorse notes, checks, drafts, money orders,
documents of title, instruments and items pertaining to payment,
shipment, or storage of any Collateral. To facilitate collection, Lender
may notify account debtors and obligors on any Collateral to make
payments directly to Lender.
OBTAIN DEFICIENCY. If Lender chooses to sell any or all of the
Collateral, Lender may obtain a judgment against Borrower for any
deficiency remaining on the Indebtedness due to Lender after application
of all amounts received from the exercise of the rights provided in this
Agreement. Borrower shall be liable for a deficiency even if the
transaction described in this subsection is a sale of accounts or chattel
paper.
OTHER RIGHTS AND REMEDIES. Lender shall have all the rights and remedies
of a secured creditor under the provisions of the Uniform Commercial
Code, as may be amended from time to time. In addition, Lender shall have
and may exercise any or all other rights and remedies it may have
available at law, in equity, or otherwise.
ELECTION OF REMEDIES. Except as may be prohibited by applicable law, all
of Lender's rights and remedies, whether evidenced by this Agreement, the
Related Documents, or by any other writing, shall be cumulative and may
be exercised singularly or concurrently. Election by Lender to pursue any
remedy shall not exclude pursuit of any other remedy, and an election to
make expenditures or to take action to perform an obligation of Grantor
under this Agreement, after Grantor's failure to perform, shall not
affect Lender's right to declare a default and exercise its remedies.
ARBITRATION. (a) This paragraph concerns the resolution of any controversies or
claims between the parties, whether arising in contract, tort or by statute,
including but not limited to controversies or claims that arise out of or relate
to: (i) this agreement (including any renewals, extensions or modifications); or
(ii) any document related to this agreement; (collectively a "Claim").
(b) At the request of any party to this agreement, any Claim shall be resolved
by binding arbitration in accordance with the Federal Arbitration Act (Title 9,
U. S. Code) (the "Act"). The Act will apply even though this agreement provides
that it is governed by the law of a specified state.
(c) Arbitration proceedings will be determined in accordance with the Act, the
applicable rules and procedures for the arbitration of disputes of JAMS or any
successor thereof ("JAMS"), and the terms of this paragraph. In the event of any
inconsistency, the terms of this paragraph shall control.
(d) The arbitration shall be administered by JAMS and conducted, unless
otherwise required by law, in any U. S. state where real or tangible personal
property collateral for this credit is located or if there is no such
collateral, in the state specified in the governing law section of this
agreement. All Claims shall be determined by one arbitrator; however, if Claims
exceed $5,000,000, upon the request of any party, the Claims shall be decided by
three arbitrators. All arbitration hearings shall commence within 90 days of the
demand for arbitration and close within 90 days of commencement and the award of
the arbitrator(s) shall be issued within 30 days of the close of the hearing.
However, the arbitrator(s), upon a showing of good cause, may extend the
commencement of the hearing for up to an additional 60 days. The arbitrator(s)
shall provide a concise written statement of reasons for the
COMMERCIAL SECURITY AGREEMENT
(CONTINUED) PAGE 5
================================================================================
award. The arbitration award may be submitted to any court having jurisdiction
to be confirmed and enforced.
(e) The arbitrator(s) will have the authority to decide whether any Claim is
barred by the statute of limitations and, if so, to dismiss the arbitration on
that basis. For purposes of the application of the statute of limitations, the
service on JAMS under applicable JAMS rules of a notice of Claim is the
equivalent of the filing of a lawsuit. Any dispute concerning this arbitration
provision or whether a Claim is arbitratable shall be determined by the
arbitrator(s). The arbitrator(s) shall have the power to award legal fees
pursuant to the terms of this agreement.
(f) This paragraph does not limit the right of any party to: (i) exercise
self-help remedies, such as but not limited to, setoff; (ii) initiate judicial
or nonjudicial foreclosure against any real or personal property collateral;
(iii) exercise any judicial or power of sale rights, or (iv) act in a court of
law to obtain an interim remedy, such as but not limited to, injunctive relief,
writ of possession or appointment of a receiver, or additional or supplementary
remedies.
(g) The filing of a court action is not intended to constitute a waiver of the
right of any party, including the suing party, thereafter to require submittal
of the Claim to arbitration.
ADDITIONAL DEFAULTS. Each of the following shall constitute an event of default
("Event of Default") under this Agreement:
EVENT OF DEFAULT UNDER RELATED DOCUMENTS. A default or event of default occurs
under the terms of any Related Document executed by Borrower or any guarantor,
pledgor, accommodation party or other obligor.
REVOCATION OR TERMINATION OF TRUST. If any Borrower, grantor, guarantor,
pledgor, accommodation party or other obligor on the indebtedness secured
hereunder or any of the related documents is a trust or the trustee(s) of a
trust, such trust is revoked or otherwise terminated or all or a substantial
part of such trust's assets are distributed or otherwise disposed of, or in the
case of a revocable trust, the grantor of such trust dies.
DEFAULT BY AFFILIATES. Any affiliate of Borrower defaults under any loan,
extension of credit, security agreement, purchase or sales agreement, or any
other agreement, in favor of Lender or any other creditor. "Affiliate" shall
mean any person or entity that controls, is controlled by, or under common
control with the Borrower. "Control" shall mean the ability to vote twenty five
percent (25%) or more of the voting stock or interest of such entity.
COUNTERPART SIGNATURES. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
ADDRESS FOR NOTICES. Notwithstanding anything to the contrary herein, all
notices and communications to the Lender shall be directed to the following
address:
Bank of America, N.A.
Dallas CLSC, Attn: Notice Desk
000 Xxxx, 0xx Xxxxx
Xxxxxx, XX 00000.
GRANTORS PLACE(S) OF BUSINESS AND LOCATION(S) COLLATERAL. All of Grantor's
place(s) of business and/or location(s) where collateral are or will be kept are
as follows: 13950 Senlac Drive, Suites 000 & 000, Xxxxxxx Xxxxxx, Xxxxx 00000;
Xxxxx & Xxxxx, 0000 Xxxxxxx Xxxxxx Xxxxx, #000, Xxxxxxx, Xxxxxxxxx 00000; 0000
Xxxxx Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxx 00000; and Network Distribution of
Dallas, 0000 Xxxxxx Xxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment.
ATTORNEYS' FEES; EXPENSES. Grantor agrees to pay upon demand all of
Lender's costs and expenses, including Lender's reasonable attorneys'
fees and Lender's legal expenses, incurred in connection with the
enforcement of this Agreement. Lender may hire or pay someone else to
help enforce this Agreement, and Grantor shall pay the costs and expenses
of such enforcement. Costs and expenses include Lender's reasonable
attorneys' fees and legal expenses whether or not there is a lawsuit,
including Lender's reasonable attorneys' fees and legal expenses for
bankruptcy proceedings (including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated post-judgment
collection services. Grantor also shall pay all court costs and such
additional fees as may be directed by the court.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the
provisions of this Agreement.
GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED AND ENFORCED
IN ACCORDANCE WITH FEDERAL LAW AND THE LAWS OF THE STATE OF TEXAS. THIS
AGREEMENT HAS BEEN ACCEPTED BY LENDER IN THE STATE OF TEXAS.
CHOICE OF VENUE. If there is a lawsuit, and if the transaction evidenced
by this Agreement occurred in any County, Grantor agrees upon Lender's
request to submit to the jurisdiction of the courts of any County, State
of Texas.
JOINT AND SEVERAL LIABILITY. All obligations of Borrower and Grantor
under this Agreement shall be joint and several, and all references to
Grantor shall mean each and every Grantor, and all references to Borrower
shall mean each and every Borrower. This means that each Borrower and
Grantor signing below is responsible for all obligations in this
Agreement. Where any one or more of the parties is a corporation,
partnership, limited liability company or similar entity, it is not
necessary for Lender to inquire into the powers of any of the officers,
directors, partners, members, or other agents acting or purporting to act
on the entity's behalf, and any obligations made or created in reliance
upon the professed exercise of such powers shall be guaranteed under this
Agreement.
NO WAIVER BY LENDER. Lender shall not be deemed to have waived any rights
under this Agreement unless such waiver is given in writing and signed by
Lender. No delay or omission on the part of Lender in exercising any
right shall operate as a waiver of such right or any other right. A
waiver by Lender of a provision of this Agreement shall not prejudice or
constitute a waiver of Lender's right otherwise to demand strict
compliance with that provision or any other provision of this Agreement.
No prior waiver by Lender, nor any course of dealing between Lender and
Grantor, shall constitute a waiver of any of Lender's rights or of any of
Grantor's obligations as to any future transactions. Whenever the consent
of Lender is required under this Agreement, the granting of such consent
by Lender in any instance shall not constitute continuing consent to
subsequent instances where such consent is required and in all cases such
consent may be granted or withheld in the sole discretion of Lender.
NOTICES. Any notice required to be given under this Agreement shall be
given in writing, and shall be effective when actually delivered, when
actually received by telefacsimile (unless otherwise required by law),
when deposited with a nationally recognized overnight courier, or, if
mailed, when deposited in the United States mail, as first class,
certified or registered mail postage prepaid, directed to the addresses
shown near the beginning of this Agreement. Any party may change its
address for notices under this Agreement by giving formal written notice
to the other parties, specifying that the purpose of the notice is to
change the party's address. For notice purposes, Grantor agrees to keep
Lender informed
COMMERCIAL SECURITY AGREEMENT
(CONTINUED) PAGE 6
================================================================================
at all times of Grantor's current address. Unless otherwise provided or
required by law, if there is more than one Grantor, any notice given by
Lender to any Grantor is deemed to be notice given to all Grantors.
POWER OF ATTORNEY. Grantor hereby appoints Lender as Grantor's
irrevocable attorney-in-fact for the purpose of executing any documents
necessary to perfect, amend, or to continue the security interest granted
in this Agreement or to demand termination of filings of other secured
parties. Lender may at any time, and without further authorization from
Grantor, file a carbon, photographic or other reproduction of any
financing statement or of this Agreement for use as a financing
statement. Grantor will reimburse Lender for all expenses for the
perfection and the continuation of the perfection of Lender's security
interest in the Collateral.
PAYMENT OF INTEREST AND FEES. Notwithstanding any other provision of this
Agreement or any provision of any Related Document, Grantor does not
agree or intend to pay, and Lender does not agree or intend to charge,
collect, take, reserve or receive (collectively referred to herein as
"charge or collect"), any amount in the nature of interest or in the
nature of a fee for the Indebtedness which would in any way or event
(including demand, prepayment, or acceleration) cause Lender to contract
for, charge or collect more for the Indebtedness than the maximum Lender
would be permitted to charge or collect by any applicable federal or
Texas state law. Any such excess interest or unauthorized fee will,
instead of anything stated to the contrary, be applied first to reduce
the unpaid principal balance of the Indebtedness, and when the principal
has been paid in full, be refunded to Grantor.
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Agreement to be illegal, invalid, or unenforceable as to any
circumstance, that finding shall not make the offending provision
illegal, invalid, or unenforceable as to any other circumstance. If
feasible, the offending provision shall be considered modified so that it
becomes legal, valid and enforceable. If the offending provision cannot
be so modified, it shall be considered deleted from this Agreement.
Unless otherwise required by law, the illegality, invalidity, or
unenforceability of any provision of this Agreement shall not affect
the legality, validity or enforceability of any other provision of this
Agreement.
SUCCESSORS AND ASSIGNS. Subject to any limitations stated in this
Agreement on transfer of Grantor's interest, this Agreement shall be
binding upon and inure to the benefit of the parties, their successors
and assigns. If ownership of the Collateral becomes vested in a person
other than Grantor, Lender, without notice to Grantor, may deal with
Grantor's successors with reference to this Agreement and the
Indebtedness by way of forbearance or extension without releasing Grantor
from the obligations of this Agreement or liability under the
Indebtedness.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties, and agreements made by Grantor in this Agreement shall
survive the execution and delivery of this Agreement, shall be continuing
in nature, and shall remain in full force and effect until such time as
Borrower's Indebtedness shall be paid in full.
TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
Agreement.
WAIVE JURY. ALL PARTIES TO THIS AGREEMENT HEREBY WAIVE THE RIGHT TO ANY
JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY ANY
PARTY AGAINST ANY OTHER PARTY.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code:
ACCOUNT. The word "Account" means a trade account, account receivable,
other receivable, or other right to payment for goods sold or services
rendered owing to Grantor (or to a third party grantor acceptable to
Lender).
AGREEMENT. The word "Agreement" means this Commercial Security Agreement,
as this Commercial Security Agreement may be amended or modified from
time to time, together with all exhibits and schedules attached to this
Commercial Security Agreement from time to time.
BORROWER. The word "Borrower" means Collegiate Pacific, Inc., and all
other persons and entities signing the Note in whatever capacity.
COLLATERAL. The word "Collateral" means all of Grantor's right, title and
interest in and to all the Collateral as described in the Collateral
Description section of this Agreement.
DEFAULT. The word "Default" means the Default set forth in this Agreement
in the section titled "Default".
ENVIRONMENTAL LAWS. The words "Environmental Laws" mean any and all
state, federal and local statutes, regulations and ordinances relating to
the protection of human health or the environment, including without
limitation the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.
("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986,
Pub. L. No. 99-499 ("XXXX"), the Hazardous Materials Transportation Act,
49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901, et seq., or other applicable state or
federal laws, rules, or regulations adopted pursuant thereto.
EVENT OF DEFAULT. The words "Event of Default" mean any of the events of
default set forth in this Agreement in the default section of this
Agreement.
GRANTOR. The word "Grantor" means Kesmil Manufacturing, Inc.
GUARANTOR. The word "Guarantor" means any guarantor, surety, or
accommodation party of any or all of the Indebtedness.
GUARANTY. The word "Guaranty" means the guaranty from Guarantor to
Lender, including without limitation a guaranty of all or part of the
Note.
HAZARDOUS SUBSTANCES. The words "Hazardous Substances" mean materials
that, because of their quantity, concentration or physical, chemical or
infectious characteristics, may cause or pose a present or potential
hazard to human health or the environment when improperly used, treated,
stored, disposed of, generated, manufactured, transported or otherwise
handled. The words "Hazardous Substances" are used in their very broadest
sense and include without limitation any and all hazardous or toxic
substances, materials or waste as defined by or listed under the
Environmental Laws. The term "Hazardous Substances" also includes,
without limitation, petroleum and petroleum by-products or any fraction
thereof and asbestos.
INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by
the Note or Related Documents, including all principal and interest
together with all other indebtedness and costs and expenses for which
Borrower or Grantor or any other borrower, guarantor, pledgor, obligor or
accommodation party is responsible under this Agreement or under any of
the Related Documents, including any swap, option or forward obligations.
LENDER. The word "Lender" means Bank of America, N.A., its successors and
assigns.
NOTE. The word "Note" means (i) the Note executed by Borrower in the
principal amount of $2,500,000.00 dated December 26, 2001, (ii) any other
promissory note, credit agreement or letter of credit agreement now or
hereafter executed by Borrower in favor of Lender with respect to the
Indebtedness, including without limitation those promissory notes, credit
agreements and letter of credit agreements described on any schedule or
exhibit attached to this Agreement from time to time, and (iii) any
renewals of, extensions of, modifications of, refinancings of,
consolidations of, and substitutions for any of the foregoing.
COMMERCIAL SECURITY AGREEMENT
(CONTINUED) PAGE 7
================================================================================
RELATED DOCUMENTS. The words "Related Documents" mean all promissory
notes, credit agreements, loan agreements, environmental agreements,
guaranties, security agreements, mortgages, deeds of trust, security
deeds, collateral mortgages, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection with
the Indebtedness.
BORROWER AND GRANTOR HAVE READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS
COMMERCIAL SECURITY AGREEMENT AND AGREE TO ITS TERMS. THIS AGREEMENT IS DATED
DECEMBER 26, 2001.
GRANTOR:
KESMIL MANUFACTURING, INC.
BY: /s/ XXXXXXX X. XXXXXXXXXX
-------------------------------------------------
XXXXXXX X. XXXXXXXXXX, PRESIDENT OF KESMIL
MANUFACTURING, INC.
BORROWER:
COLLEGIATE PACIFIC, INC.
BY: /s/ XXXXXXX X. XXXXXXXXXX
-------------------------------------------------
XXXXXXX X. XXXXXXXXXX, CHIEF EXECUTIVE OFFICER OF
COLLEGIATE PACIFIC, INC.
[BANK OF AMERICA LOGO]
SUBORDINATION AGREEMENT
================================================================================
BORROWER: COLLEGIATE PACIFIC, INC. LENDER: BANK OF AMERICA, N.A.
13950 SENLAC DRIVE, SUITE 100 CLSC-COMMERCIAL BANKING
FARMERS XXXXXX, XX 00000 TX1-609-06-01
P.O. BOX 830632
CREDITOR: XXXXXXX X. XXXXXXXXXX XXXXXX, XX 00000-0000
00000 XXXXXX XXXXX, XXXXX 000
XXXXXXX XXXXXX, XX 00000
================================================================================
THIS SUBORDINATION AGREEMENT DATED DECEMBER 26, 2001, IS MADE AND EXECUTED AMONG
COLLEGIATE PACIFIC, INC. 00000 XXXXXX XXXXX, XXXXX 000; FARMERS BRANCH, TX 75234
("BORROWER"); XXXXXXX X. XXXXXXXXXX, 00000 XXXXXX XXXXX, XXXXX 000, XXXXXXX
XXXXXX, XX 00000 ("CREDITOR"); AND BANK OF AMERICA, N.A.; CLSC-COMMERCIAL
BANKING; TX1-609-06-01; X.X. XXX 000000; XXXXXX, XX 00000-0000 ("LENDER").
CURRENT INDEBTEDNESS OWING TO CREDITOR. As of the date of this Agreement,
Borrower is indebted to Creditor in the AGGREGATE AMOUNT OF $385,000.00. This
amount is the total indebtedness of every kind from Borrower to Creditor.
REQUESTED FINANCIAL ACCOMMODATIONS. Borrower and Creditor each want Lender to
provide financial accommodations to Borrower in the form of (A) new credit or
loan advances, (B) an extension of time to pay or other compromises regarding
all or part of Borrower's present indebtedness to Lender, or (C) other benefits
to Borrower. Borrower and Creditor each represent and acknowledge to Lender that
Creditor will benefit as a result of these financial accommodations from Lender
to Borrower, and Creditor acknowledges receipt of valuable consideration for
entering into this Agreement. BASED ON THE REPRESENTATIONS AND ACKNOWLEDGMENTS
CONTAINED IN THIS AGREEMENT, BORROWER AND CREDITOR AGREE WITH LENDER AS FOLLOWS:
SUBORDINATED INDEBTEDNESS. The words "Subordinated Indebtedness" as used in this
Agreement mean the following specific indebtedness from BORROWER TO CREDITOR,
including all renewals, extensions, modifications and substitutions for the
indebtedness, including principal, interest, and all costs and Lender's
reasonable attorneys' fees, relating to the indebtedness: $385,000.00.
SUPERIOR INDEBTEDNESS. The words "Superior Indebtedness" as used in this
Agreement mean and include all present and future indebtedness, obligations,
liabilities, claims, rights, and demands of any kind which may be now or
hereafter owing from BORROWER TO LENDER. The term "Superior Indebtedness" is
used in its broadest sense and includes without limitation all principal, all
interest, all costs, Lender's reasonable attorneys' fees, all sums paid for the
purpose of protecting Lender's rights in security (such as paying for insurance
on collateral if the owner fails to do so), all contingent obligations of
Borrower (such as a guaranty), all obligations arising by reason of Borrower's
accounts with Lender (such as an overdraft on a checking account), and all other
obligations of Borrower to Lender, secured or unsecured, of any nature
whatsoever.
SUBORDINATION. All Subordinated Indebtedness of Borrower to Creditor is and
shall be subordinated in all respects to all Superior Indebtedness of Borrower
to Lender, If Creditor holds one or more Security Interests, whether now
existing or hereafter acquired, in any of Borrower's real property or personal
property, Creditor also subordinates all Creditor's Security Interests to all
Security Interests held by Lender, whether now existing or hereafter acquired.
PAYMENTS TO CREDITOR. Except as provided below, Borrower will not make and
Creditor will not accept, at any time while any Superior Indebtedness is owing
to Lender, (A) any payment upon any Subordinated Indebtedness, (B) any advance,
transfer, or assignment of assets to Creditor in any form whatsoever that would
reduce at any time or in any way the amount of Subordinated Indebtedness, or (C)
any transfer of any assets as security for the Subordinated Indebtedness.
Notwithstanding the foregoing, Borrower may make regularly scheduled payments of
$38,187.00 EACH QUARTER to Creditor in accordance with the terms of the
Subordinated Indebtedness so long as Borrower is not in default under any
agreement between Lender and Borrower. Creditor may not accelerate any amounts
owed to Creditor without Lender's prior written consent.
In the event of any distribution, division, or application, whether partial or
complete, voluntary or involuntary, by operation of law or otherwise, of all or
any part of Borrower's assets, or the proceeds of Borrower's assets, in whatever
form, to creditors of Borrower or upon any indebtedness of Borrower, whether by
reason of the liquidation, dissolution or other winding-up of Borrower, or by
reason of any execution sale, receivership, insolvency, or bankruptcy
proceeding, assignment for the benefit of creditors, proceedings for
reorganization, or readjustment of Borrower or Borrower's properties, then and
in such event, (A) the Superior Indebtedness shall be paid in full before any
payment is made upon the Subordinated Indebtedness, and (B) all payments and
distributions, of any kind or character and whether in cash, property, or
securities, which shall be payable or deliverable upon or in respect of the
Subordinated Indebtedness shall be paid or delivered directly to Lender for
application in payment of the amounts then due on the Superior Indebtedness
until the Superior Indebtedness shall have been paid in full.
In order that Lender may establish its right to prove claims and recover for its
own account dividends based on the Subordinated Indebtedness, Creditor does
hereby assign all its right, title, and interest in such claims to Lender.
Creditor further agrees to supply such information and evidence, provide access
to and copies of such of Creditor's records as may pertain to the Subordinated
Indebtedness, and execute such instruments as may be required by Lender to
enable Lender to enforce all such claims and collect all dividends, payments, or
other disbursements which may be made on account of the Subordinated
Indebtedness. For such purposes, Creditor hereby irrevocably authorizes Lender
in its discretion to make and present for or on behalf of Creditor such proofs
of claims on account of the Subordinated Indebtedness as Lender may deem
expedient and proper and to vote such claims in any such proceeding and to
receive and collect any and all dividends, payments, or other disbursements made
thereon in whatever form the same may be paid or issued and to apply the same on
account of the Superior Indebtedness.
Should any payment, distribution, security, or proceeds thereof be received by
Creditor at any time on the Subordinated Indebtedness contrary to the terms of
this Agreement, Creditor immediately will deliver the same to Lender in
precisely the form received (except for the endorsement or assignment of
Creditor if necessary), for application on or to secure the Superior
Indebtedness, whether it is due or not due, and until so delivered the same
shall be held in trust by Creditor as property of Lender. In the event Creditor
fails to make any such endorsement or assignment, Lender, or any of its officers
on behalf of Lender, is hereby irrevocably authorized by Creditor to make the
same.
CREDITOR'S NOTES. Creditor agrees to deliver to Lender, at Lender's request, all
notes of Borrower to Creditor, or other evidence of the Subordinated
Indebtedness, now held or hereafter acquired by Creditor, while this Agreement
remains in effect. At Lender's request, Borrower also will execute and deliver
to Creditor a promissory note evidencing any book account or claim now or
hereafter owed by Borrower to Creditor, which note also shall be delivered by
Creditor to Lender. Creditor agrees not to sell, assign, pledge or otherwise
transfer any of such notes except subject to all the terms and conditions of
this Agreement.
CREDITOR'S REPRESENTATIONS AND WARRANTIES. Creditor represents and warrants to
Lender that: (A) no representations or agreements of any kind have been made to
Creditor which would limit or qualify in any way the terms of this Agreement;
(B) this Agreement is executed at Borrower's
SUBORDINATION AGREEMENT
(CONTINUED) PAGE 2
================================================================================
request and not at the request of Lender; (C) Lender has made no representation
to Creditor as to the creditworthiness of Borrower; and (D) Creditor has
established adequate means of obtaining from Borrower on a continuing basis
information regarding Borrower's financial condition. Creditor agrees to keep
adequately informed from such means of any facts, events, or circumstances which
might in any way affect Creditor's risks under this Agreement, and Creditor
further agrees that Lender shall have no obligation to disclose to Creditor
information or material acquired by Lender in the course of its relationship
with Borrower.
CREDITOR'S WAIVERS. Creditor waives any right to require Lender: (A) to make,
extend, renew, or modify any loan to Borrower or to grant any other financial
accommodations to Borrower whatsoever; (B) to make any presentment, protest,
demand, or notice of any kind, including notice of any nonpayment of the
Superior Indebtedness or of any nonpayment related to any Security Interests, or
notice of any action or nonaction on the part of Borrower, Lender, any surety,
endorser, or other guarantor in connection with the Superior Indebtedness, or in
connection with the creation of new or additional Superior Indebtedness; (C) to
resort for payment or to proceed directly or at once against any person,
including Borrower; (D) to proceed directly against or exhaust any Security
Interests held by Lender from Borrower, any other guarantor, or any other
person; (E) to give notice of the terms, time, and place of any public or
private sale of personal property security held by Lender from Borrower or to
comply with any other applicable provisions of the Uniform Commercial Code; (F)
to pursue any other remedy within Lender's power; or (G) to commit any act or
omission of any kind, at any time, with respect to any matter whatsoever.
LENDER'S RIGHTS. Lender may take or omit any and all actions with respect to the
Superior Indebtedness or any Security Interests for the Superior indebtedness
without affecting whatsoever any of Lender's rights under this Agreement. In
particular, without limitation, Lender may, without notice of any kind to
Creditor, (A) make one or more additional secured or unsecured loans to
Borrower; (B) repeatedly alter, compromise, renew, extend, accelerate, or
otherwise change the time for payment or other terms of the Superior
Indebtedness or any part thereof, including increases and decreases of the rate
of interest on the Superior Indebtedness; extensions may be repeated and may be
for longer than the original loan term; (C) take and hold Security Interests for
the payment of the Superior Indebtedness, and exchange, enforce, waive, and
release any such Security Interests, with or without the substitution of new
collateral; (D) release, substitute, agree not to xxx, or deal with any one or
more of Borrower's sureties, endorsers, or guarantors on any terms or manner
Lender chooses; (E) determine how, when and what application of payments and
credits, shall be made on the Superior Indebtedness; (F) apply such security and
direct the order or manner of sale thereof, as Lender in its discretion may
determine; and (G) assign this Agreement in whole or in part.
DEFAULT BY BORROWER. If Borrower becomes insolvent or bankrupt, this Agreement
shall remain in full force and effect. Any default by Borrower under the terms
of the Subordinated Indebtedness also shall constitute an event of default under
the terms of the Superior Indebtedness in favor of Lender.
DURATION AND TERMINATION. This Agreement will take effect when received by
Lender, without the necessity of any acceptance by Lender, in writing or
otherwise, and will remain in full force and effect until Creditor shall notify
Lender in writing at the address shown above to the contrary. Any such notice
shall not affect the Superior Indebtedness owed Lender by Borrower at the time
of such notice, nor shall such notice affect Superior Indebtedness thereafter
granted in compliance with a commitment made by Lender to Borrower prior to
receipt of such notice, nor shall such notice affect any renewals of or
substitutions for any of the foregoing. Such notice shall affect only
indebtedness of Borrower to Lender arising after receipt of such notice and not
arising from financial assistance granted by Lender to Borrower in compliance
with Lender's obligations under a commitment. Any notes lodged with Lender
pursuant to the section titled "Creditor's Notes" above need not be returned
until this Agreement has no further force or effect.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment.
ATTORNEYS' FEES; EXPENSES. Creditor agrees to pay upon demand all of
Lender's costs and expenses, including Lender's reasonable attorneys fees
and Lender's legal expenses, incurred in connection with the enforcement
of this Agreement. Lender may hire or pay someone else to help enforce
this Agreement, and Creditor shall pay the costs and expenses of such
enforcement. Costs and expenses include Lender's reasonable attorneys'
fees and legal expenses whether or not there is a lawsuit, including
Lender's reasonable attorneys' fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection
services. Creditor also shall pay all court costs and such additional
fees as may be directed by the court.
AUTHORITY. The person who signs this Agreement as or on behalf of
Creditor represents and warrants that he or she has authority to execute
this Agreement and to subordinate the Subordinated Indebtedness and the
Creditor's security interests in Borrower's property if any.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the
provisions of this Agreement.
GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED AND ENFORCED
IN ACCORDANCE WITH FEDERAL LAW AND THE LAWS OF THE STATE OF TEXAS. THIS
AGREEMENT HAS BEEN ACCEPTED BY LENDER IN THE STATE OF TEXAS.
CHOICE OF VENUE. If there is a lawsuit, and if the transaction evidenced
by this Agreement occurred in any County, Creditor agrees upon Lender's
request to submit to the jurisdiction of the courts of any County, State
of Texas.
INTERPRETATION. In all cases where there is more than one Creditor, then
all words used in this Agreement in the singular shall be deemed to have
been used in the plural where the context and construction so require;
and where there is more than one Creditor named in this Agreement or when
this Agreement is executed by more than one, the words "Creditor" shall
mean all and any one or more of them. Reference to the phrase "Creditor"
includes the heirs, successors, assigns, and transferees of each of them.
SUCCESSORS AND ASSIGNS. This Agreement shall be understood to be for the
benefit of Lender and for such other person or persons as may from time
to time become or be the holder or owner of any of the Indebtedness or
any interest therein, and this Agreement shall be transferable to the
same extent and with the same force and effect as any such Indebtedness
may be transferable.
NO WAIVER BY LENDER. Lender shall not be deemed to have waived any rights
under this Agreement unless such waiver is given in writing and signed by
Lender. No delay or omission on the part of Lender in exercising any
right shall operate as a waiver of such right or any other right. A
waiver by Lender of a provision of this Agreement shall not prejudice or
constitute a waiver of Lender's right otherwise to demand strict
compliance with that provision or any other provision of this Agreement.
No prior waiver by Lender, nor any course of dealing between Lender and
Creditor, shall constitute a waiver of any of Lender's rights or of any
of Creditor's obligations as to any future transactions. Whenever the
consent of Lender is required under this Agreement, the granting of such
consent by Lender in any instance shall not constitute continuing consent
to subsequent instances where such consent is required and in all cases
such consent may be granted or withheld in the sole discretion of Lender.
WAIVE JURY. ALL PARTIES TO THIS AGREEMENT HEREBY WAIVE THE RIGHT TO ANY
JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY ANY
PARTY AGAINST ANY OTHER PARTY.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated
SUBORDINATION AGREEMENT
(CONTINUED) PAGE 3
================================================================================
to the contrary, all references to dollar amounts shall mean amounts in lawful
money of the United States of America. Words and terms used in the singular
shall include the plural, and the plural shall include the singular, as the
context may require. Words and terms not otherwise defined in this Agreement
shall have the meanings attributed to such terms in the Uniform Commercial Code:
AGREEMENT. The word "Agreement" means this Subordination Agreement, as
this Subordination Agreement may be amended or modified from time to
time, together with all exhibits and schedules attached to this
Subordination Agreement from time to time.
BORROWER. The word "Borrower" means Collegiate Pacific, Inc., and all
other persons and entities signing the Note in whatever capacity.
CREDITOR. The word "Creditor" means Xxxxxxx X. Xxxxxxxxxx.
INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by
the Note or Related Documents, including all principal and interest
together with all other indebtedness and costs and expenses for which
Borrower or Grantor or any other borrower, guarantor, pledgor, obligor or
accommodation party is responsible under this Agreement or under any of
the Related Documents, including any swap, option or forward obligations.
LENDER. The word "Lender" means Bank of America, N.A., its successors and
assigns.
RELATED DOCUMENTS. The words "Related Documents" mean all promissory
notes, credit agreements, loan agreements, environmental agreements,
guaranties, security agreements, mortgages, deeds of trust, security
deeds, collateral mortgages, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection with
the Indebtedness.
SECURITY INTEREST. The words "Security Interest" mean, without
limitation, any and all types of collateral security, present and future,
whether in the form of a lien, charge, encumbrance, mortgage, deed of
trust, security deed, assignment, pledge, crop pledge, chattel mortgage,
collateral chattel mortgage, chattel trust, factor's lien, equipment
trust, conditional sale, trust receipt, lien or title retention contract,
lease or consignment intended as a security device, or any other security
or lien interest whatsoever whether created by law, contract, or
otherwise.
SUBORDINATED INDEBTEDNESS. The words "Subordinated Indebtedness" mean the
indebtedness described in the section of this Agreement titled
"Subordinated Indebtedness".
SUPERIOR INDEBTEDNESS. The words "Superior Indebtedness" mean the
indebtedness described in the section of this Agreement titled "Superior
Indebtedness".
BORROWER AND CREDITOR EACH ACKNOWLEDGE HAVING READ ALL THE PROVISIONS OF THIS
SUBORDINATION AGREEMENT, AND BORROWER AND CREDITOR EACH AGREE TO ITS TERMS. THIS
AGREEMENT IS DATED DECEMBER 26, 2001.
BORROWER:
COLLEGIATE PACIFIC, INC.
By: /S/ XXXXXXX X. XXXXXXXXXX
-------------------------------------------------
XXXXXXX X. XXXXXXXXXX, CHIEF EXECUTIVE OFFICER OF
COLLEGIATE PACIFIC, INC.
CREDITOR:
X /s/ XXXXXXX X. XXXXXXXXXX
---------------------------------------------------
XXXXXXX X. XXXXXXXXXX, INDIVIDUALLY
[BANK OF AMERICA LOGO]
COMMERCIAL GUARANTY
================================================================================
BORROWER: COLLEGIATE PACIFIC, INC. LENDER: BANK OF AMERICA, N.A.
13950 SENLAC DRIVE, SUITE 100 CLSC-COMMERCIAL BANKING
XXXXXXX XXXXXX, XX 00000 TX1-609-06-01
P. 0. XXX 000000
GUARANTOR: KESMIL MANUFACTURING, INC. XXXXXX XX 00000-0000
00000 XXXXXX XXXXX, XXXXX 000
XXXXXXX XXXXXX, XX 00000
================================================================================
AMOUNT OF GUARANTY. THE AMOUNT OF THIS GUARANTY IS UNLIMITED.
CONTINUING UNLIMITED GUARANTY. FOR GOOD AND VALUABLE CONSIDERATION, KESMIL
MANUFACTURING, INC. ("GUARANTOR") ABSOLUTELY AND UNCONDITIONALLY GUARANTEES AND
PROMISES TO PAY TO BANK OF AMERICA, N.A. ("LENDER") OR ITS ORDER, IN LEGAL
TENDER OF THE UNITED STATES OF AMERICA, THE INDEBTEDNESS (AS THAT TERM IS
DEFINED BELOW) OF COLLEGIATE PACIFIC, INC. ("BORROWER") TO LENDER ON THE TERMS
AND CONDITIONS SET FORTH IN THIS GUARANTY. UNDER THIS GUARANTY, THE LIABILITY OF
GUARANTOR IS UNLIMITED AND THE OBLIGATIONS OF GUARANTOR ARE CONTINUING.
INDEBTEDNESS GUARANTEED. The Indebtedness guaranteed by this Guaranty includes
any and all of Borrower's indebtedness to Lender and is used in the most
comprehensive sense and means and includes any and all of Borrower's
liabilities, obligations and debts to Lender, now existing or hereinafter
incurred or created, including, without limitation, all loans, advances,
interest, costs, attorneys' fees, debts, overdraft indebtedness, credit card
indebtedness, lease obligations, other obligations, and liabilities of Borrower,
or any of them, and any present or future judgments against Borrower, or any of
them; and whether any such Indebtedness is voluntarily or involuntarily
incurred, due or not due, absolute or contingent, liquidated or unliquidated,
determined or undetermined; whether Borrower may be liable individually or
jointly with others, or primarily or secondarily, or as guarantor or surety;
whether recovery on the Indebtedness may be or may become barred or
unenforceable against Borrower for any reason whatsoever; and whether the
Indebtedness arises from transactions which may be voidable on account of
infancy, insanity, ultra xxxxx, or otherwise.
DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all Indebtedness incurred or
contracted before receipt by Lender of any notice of revocation shall have been
fully and finally paid and satisfied and all of Guarantor's other obligations
under this Guaranty shall have been performed in full. If Guarantor elects to
revoke this Guaranty, Guarantor may only do so in writing. Guarantor's written
notice of revocation must be mailed to Lender, by certified mail, at Lender's
address listed above or such other place as Lender may designate in writing.
Written revocation of this Guaranty will apply only to advances or new
Indebtedness created after actual receipt by Lender of Guarantor's written
revocation and Lender's written acknowledgment of receipt. For this purpose and
without limitation, the term "new Indebtedness" does not include Indebtedness
which at the time of notice of revocation is contingent, unliquidated,
undetermined or not due and which later becomes absolute, liquidated, determined
or due. This Guaranty will continue to bind Guarantor for all Indebtedness
incurred by Borrower or committed by Lender prior to receipt of Guarantor's
written notice of revocation, including any extensions, renewals, substitutions
or modifications of the Indebtedness. All renewals, extensions, substitutions,
and modifications of the Indebtedness granted after Guarantor's revocation, are
contemplated under this Guaranty and, specifically will not be considered to be
new Indebtedness. This Guaranty shall bind Guarantor's estate as to Indebtedness
created both before and after Guarantor's death or incapacity, regardless of
Lender's actual notice of Guarantor's death. Subject to the foregoing,
Guarantor's executor or administrator or other legal representative may
terminate this Guaranty in the same manner in which Guarantor might have
terminated it and with the same effect. Release of any other guarantor or
termination of any other guaranty of the Indebtedness shall not affect the
liability of Guarantor under this Guaranty. A revocation Lender receives from
any one or more Guarantors shall not affect the liability of any remaining
Guarantors under this Guaranty. IT IS ANTICIPATED THAT FLUCTUATIONS MAY OCCUR IN
THE AGGREGATE AMOUNT OF INDEBTEDNESS COVERED BY THIS GUARANTY, AND GUARANTOR
SPECIFICALLY ACKNOWLEDGES AND AGREES THAT REDUCTIONS IN THE AMOUNT OF
INDEBTEDNESS, EVEN TO ZERO DOLLARS ($0.00), PRIOR TO GUARANTOR'S WRITTEN
REVOCATION OF THIS GUARANTY SHALL NOT CONSTITUTE A TERMINATION OF THIS GUARANTY.
THIS GUARANTY IS BINDING UPON GUARANTOR AND GUARANTOR'S HEIRS, SUCCESSORS AND
ASSIGNS SO LONG AS ANY OF THE GUARANTEED INDEBTEDNESS REMAINS UNPAID AND EVEN
THOUGH THE INDEBTEDNESS GUARANTEED MAY FROM TIME TO TIME BE ZERO DOLLARS
($0.00).
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before
or after any revocation hereof, WITHOUT NOTICE OR DEMAND AND WITHOUT LESSENING
OR OTHERWISE AFFECTING GUARANTOR'S LIABILITY UNDER THIS GUARANTY, FROM TIME TO
TIME: (A) prior to revocation as set forth above, to make one or more additional
secured or unsecured loans to Borrower, to lease equipment or other goods to
Borrower, or otherwise to extend additional credit to Borrower; (B) to alter,
compromise, renew, extend, accelerate, or otherwise change one or more times the
time for payment or other terms of the Indebtedness or any part of the
Indebtedness, including increases and decreases of the rate of interest on the
Indebtedness; extensions may be repeated and may be for longer than the original
loan term; (C) to take and hold security for the payment of this Guaranty or the
Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to
perfect, and release any such security, with or without the substitution of new
collateral; (D) to release, substitute, agree not to xxx, or deal with any one
or more of Borrower's sureties, endorsers, or other guarantors on any terms or
in any manner Lender may choose; (E) to determine how, when and what application
of payments and credits shall be made on the Indebtedness; (F) to apply such
security and direct the order or manner of sale thereof, including without
limitation, any nonjudicial sale permitted by the terms of the controlling
security agreement or deed of trust, as Lender in its discretion may determine;
(G) to sell, transfer, assign or grant participations in all or any part of the
Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lender that (A) no representations or agreements of any kind have been made to
Guarantor which would limit or qualify in any way the terms of this Guaranty;
(B) this Guaranty is executed at Borrower's request and not at the request of
Lender; (C) Guarantor has full power, right and authority to enter into this
Guaranty; (D) the provisions of this Guaranty do not conflict with or result in
a default under any agreement or other instrument binding upon Guarantor and do
not result in a violation of any law, regulation, court decree or order
applicable to Guarantor; (E) Guarantor has not and will not, without the prior
written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer,
or otherwise dispose of all or substantially all of Guarantor's assets, or any
interest therein; (F) upon Lender's request, Guarantor will provide to Lender
financial and credit information in form acceptable to Lender, and all such
financial information which currently has been, and all future financial
information which will be provided to Lender is and will be true and correct in
all material respects and fairly present Guarantor's financial condition as of
the dates the financial information is provided; (G) no material adverse change
has occurred in Guarantor's financial condition since the date of the most
recent financial statements provided to Lender and no event has occurred which
may materially adversely affect Guarantor's financial condition; (H) no
litigation, claim, investigation, administrative proceeding or similar action
(including those for unpaid taxes) against Guarantor is pending or threatened;
(I) Lender has made no representation to Guarantor as to the creditworthiness of
Borrower; and (J) Guarantor has established adequate means of obtaining from
Borrower on a continuing basis information regarding Borrower's financial
condition. Guarantor agrees to keep adequately informed from such means of any
facts, events, or circumstances which might in any way affect Guarantor's risks
under this Guaranty, and Guarantor further agrees that, absent a request for
information, Lender shall have no
COMMERCIAL GUARANTY
(CONTINUED) PAGE 2
================================================================================
obligation to disclose to Guarantor any information or documents acquired by
Lender in the course of its relationship with Borrower.
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (A) to continue lending money or to extend other
credit to Borrower; (B) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the indebtedness or in connection with the creation of new or
additional loans or obligations; (C) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (D) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (E) to give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (F) to pursue any other
remedy within Lender's power; or (G) to commit any act or omission of any kind,
or at any time, with respect to any matter whatsoever.
In addition to the waivers set forth herein, if now or hereafter Borrower is or
shall become insolvent and the Indebtedness shall not at all times until paid be
fully secured by collateral pledged by Borrower, Guarantor hereby forever waives
and gives up in favor of Lender and Borrower, and Lender's and Borrower's
respective successors, any claim or right to payment Guarantor may now have or
hereafter have or acquire against Borrower, by subrogation or otherwise, so that
at no time shall Guarantor be or become a "creditor" of Borrower within the
meaning of 11 U.S.C. section 547(b), or any successor provision of the Federal
bankruptcy laws.
Guarantor waives all rights of Guarantor under Chapter 34 of the Texas Business
and Commerce Code. Guarantor also waives any and all rights or defenses arising
by reason of (A) any "one action" or "anti--deficiency" law or any other law
which may prevent Lender from bringing any action, including a claim for
deficiency, against Guarantor, before or after Lender's commencement or
completion of any foreclosure action, either judicially or by exercise of a
power of sale; (B) any election of remedies by Lender which destroys or
otherwise adversely affects Guarantor's subrogation rights or Guarantor's rights
to proceed against Borrower for reimbursement, including without limitation, any
loss of rights Guarantor may suffer by reason of any law limiting, qualifying,
or discharging the Indebtedness; (C) any disability or other defense of
Borrower, of any other guarantor, or of any other person, or by reason of the
cessation of Borrower's liability from any cause whatsoever, other than payment
in full in legal tender, of the Indebtedness; (D) any right to claim discharge
of the Indebtedness on the basis of unjustified impairment of any collateral for
the Indebtedness; (E) any statute of limitations, if at any time any action or
suit brought by Lender against Guarantor is commenced, there is outstanding
Indebtedness of Borrower to Lender which is not barred by any applicable statute
of limitations; or (F) any defenses given to guarantors at law or in equity
other than actual payment and performance of the Indebtedness. If payment is
made by Borrower, whether voluntarily or otherwise, or by any third party, on
the indebtedness and thereafter Lender is forced to remit the amount of that
payment to Borrower's trustee in bankruptcy or to any similar person under any
federal or state bankruptcy law or law for the relief of debtors, the
Indebtedness shall be considered unpaid for the purpose of the enforcement of
this Guaranty.
Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of setoff,
counterclaim, counter demand, recoupment or similar right, whether such claim,
demand or right may be asserted by the Borrower, the Guarantor, or both.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and
agrees that each of the waivers set forth above is made with Guarantor's full
knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any such waiver is determined to be contrary to any applicable law or
public policy, such waiver shall be effective only to the extent permitted by
law or public policy.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Guarantor's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Guarantor holds
jointly with someone else and all accounts Guarantor may open in the future.
However, this does not include any XXX or Xxxxx accounts, or any trust accounts
for which setoff would be prohibited by law. Guarantor authorizes Lender, to the
extent permitted by applicable law, to hold these funds if there is a default,
and Lender may apply the funds in these accounts to pay what Guarantor owes
under the terms of this Guaranty.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be superior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets of
Borrower, through bankruptcy, by an assignment for the benefit of creditors, by
voluntary liquidation, or otherwise, the assets of Borrower applicable to the
payment of the claims of both Lender and Guarantor shall be paid to Lender and
shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the Indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
any debts or obligations of Borrower to Guarantor shall be marked with a legend
that the same are subject to this Guaranty and shall be delivered to Lender.
Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor,
from time to time to execute and file financing statements and continuation
statements and to execute such other documents and to take such other actions as
Lender deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
AMENDMENTS. This Guaranty, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Guaranty. No alteration of or amendment to
this Guaranty shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment.
ATTORNEYS' FEES; EXPENSES. Guarantor agrees to pay upon demand all of
Lender's costs and expenses, including Lender's reasonable attorneys'
fees and Lender's legal expenses, incurred in connection with the
enforcement of this Guaranty. Lender may hire or pay someone else to help
enforce this Guaranty, and Guarantor shall pay the costs and expenses of
such enforcement. Costs and expenses include Lender's reasonable
attorneys' fees and legal expenses whether or not there is a lawsuit,
including Lender's reasonable attorneys' fees and legal expenses for
bankruptcy proceedings (including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated post-judgment
collection services. Guarantor also shall pay all court costs and such
additional fees as may be directed by the court.
CAPTION HEADINGS. Caption headings in this Guaranty are for convenience
purposes only and are not to be used to interpret or define the
provisions of this Guaranty.
GOVERNING LAW. THIS GUARANTY WILL BE GOVERNED BY, CONSTRUED AND ENFORCED
IN ACCORDANCE WITH FEDERAL LAW AND THE LAWS OF THE STATE OF TEXAS. THIS
GUARANTY HAS BEEN ACCEPTED BY LENDER IN THE STATE OF TEXAS.
CHOICE OF VENUE. If there is a lawsuit, and if the transaction evidenced
by this Guaranty occurred in any County, Guarantor agrees upon Lender's
request to submit to the jurisdiction of the courts of any County, State
of Texas.
INTEGRATION. Guarantor further agrees that Guarantor has read and fully
understands the terms of this Guaranty. Guarantor has had the
COMMERCIAL GUARANTY
(CONTINUED) PAGE 3
================================================================================
opportunity to be advised by Guarantor's attorney with respect to this
Guaranty; the Guaranty fully reflects Guarantor's intentions and parol
evidence is not required to interpret the terms of this Guaranty.
Guarantor hereby indemnifies and holds Lender harmless from all losses,
claims, damages, and costs (including Lender's attorneys' fees) suffered
or incurred by Lender as a result of any breach by Guarantor of the
warranties, representations and agreements of this paragraph.
INTERPRETATION. In all cases where there is more than one Borrower or
Guarantor, then all words used in this Guaranty in the singular shall be
deemed to have been used in the plural where the context and construction
so require; and where there is more than one Borrower named in this
Guaranty or when this Guaranty is executed by more than one Guarantor,
the words "Borrower" and "Guarantor" respectively shall mean all and any
one or more of them. The words "Guarantor," "Borrower," and "Lender"
include the heirs, successors, assigns, and transferees of each of them.
If a court finds that any provision of this Guaranty is not valid or
should not be enforced, that fact by itself will not mean that the rest
of this Guaranty will not be valid or enforced. Therefore, a court will
enforce the rest of the provisions of this Guaranty even if a provision
of this Guaranty may be found to be invalid or unenforceable. If any one
or more of Borrower or Guarantor are corporations, partnerships, limited
liability companies, or similar entities, it is not necessary for Lender
to inquire into the powers of Borrower or Guarantor or of the officers,
directors, partners, managers, or other agents acting or purporting to
act on their behalf, and any Loan indebtedness made or created in
reliance upon the professed exercise of such powers shall be guaranteed
under this Guaranty.
NOTICES. Any notice required to be given under this Guaranty shall be
given in writing, and, except for revocation notices by Guarantor, shall
be effective when actually delivered, when actually received by
telefacsimile (unless otherwise required by law), when deposited with a
nationally recognized overnight courier, or, if mailed, when deposited in
the United States mail, as first class, certified or registered mail
postage prepaid, directed to the addresses shown near the beginning of
this Guaranty. All revocation notices by Guarantor shall be in writing
and shall be effective upon delivery to Lender as provided in the section
of this Guaranty entitled "DURATION OF GUARANTY." Any party may change
its address for notices under this Guaranty by giving formal written
notice to the other parties, specifying that the purpose of the notice is
to change the party's address. For notice purposes, Guarantor agrees to
keep Lender informed at all times of Guarantor's current address. Unless
otherwise provided or required by law, if there is more than one
Guarantor, any notice given by Lender to any Guarantor is deemed to be
notice given to all Guarantors.
NO WAIVER BY LENDER. Lender shall not be deemed to have waived any rights
under this Guaranty unless such waiver is given in writing and signed by
Lender. No delay or omission on the part of Lender in exercising any
right shall operate as a waiver of such right or any other right. A
waiver by Lender of a provision of this Guaranty shall not prejudice or
constitute a waiver of Lender's right otherwise to demand strict
compliance with that provision or any other provision of this Guaranty.
No prior waiver by Lender, nor any course of dealing between Lender and
Guarantor, shall constitute a waiver of any of Lender's rights or of any
of Guarantor's obligations as to any future transactions. Whenever the
consent of Lender is required under this Guaranty, the granting of such
consent by Lender in any instance shall not constitute continuing consent
to subsequent instances where such consent is required and in all cases
such consent may be granted or withheld in the sole discretion of Lender.
SUCCESSORS AND ASSIGNS. Subject to any limitations stated in this
Guaranty on transfer of Guarantor's interest, this Guaranty shall be
binding upon and inure to the benefit of the parties, their successors
and assigns.
WAIVE JURY. LENDER AND GUARANTOR HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL
IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER LENDER OR
BORROWER AGAINST THE OTHER.
ARBITRATION. (a) This paragraph concerns the resolution of any controversies or
claims between the parties, whether arising in contract, tort or by statute,
including but not limited to controversies or claims that arise out of or relate
to: (i) this agreement (including any renewals, extensions or modifications); or
(ii) any document related to this agreement; (collectively a "Claim").
(b) At the request of any party to this agreement, any Claim shall be resolved
by binding arbitration in accordance with the Federal Arbitration Act (Title 9,
U. S. Code) (the "Act"). The Act will apply even though this agreement provides
that it is governed by the law of a specified state.
(c) Arbitration proceedings will be determined in accordance with the Act, the
applicable rules and procedures for the arbitration of disputes of JAMS or any
successor thereof ("JAMS"), and the terms of this paragraph. In the event of any
inconsistency, the terms of this paragraph shall control.
(d) The arbitration shall be administered by JAMS and conducted, unless
otherwise required by law, in any U. S. state where real or tangible personal
property collateral for this credit is located or if there is no such
collateral, in the state specified in the governing law section of this
agreement. All Claims shall be determined by one arbitrator; however, if Claims
exceed $5,000,000, upon the request of any party, the Claims shall be decided by
three arbitrators. All arbitration hearings shall commence within 90 days of the
demand for arbitration and close within 90 days of commencement and the award of
the arbitrator(s) shall be issued within 30 days of the close of the hearing.
However, the arbitrator(s), upon a showing of good cause, may extend the
commencement of the hearing for up to an additional 60 days. The arbitrator(s)
shall provide a concise written statement of reasons for the award. The
arbitration award may be submitted to any court having jurisdiction to be
confirmed and enforced.
(e) The arbitrator(s) will have the authority to decide whether any Claim is
barred by the statute of limitations and, if so, to dismiss the arbitration on
that basis. For purposes of the application of the statute of limitations, the
service on JAMS under applicable JAMS rules of a notice of Claim is the
equivalent of the filing of a lawsuit. Any dispute concerning this arbitration
provision or whether a Claim is arbitratable shall be determined by the
arbitrator(s). The arbitrator(s) shall have the power to award legal fees
pursuant to the terms of this agreement.
(f) This paragraph does not limit the right of any party to: (i) exercise
self-help remedies, such as but not limited to, setoff; (ii) initiate judicial
or nonjudicial foreclosure against any real or personal property collateral;
(iii) exercise any judicial or power of sale rights, or (iv) act in a court of
law to obtain an interim remedy, such as but not limited to, injunctive relief,
writ of possession or appointment of a receiver, or additional or supplementary
remedies.
(g) The filing of a court action is not intended to constitute a waiver of the
right of any party, including the suing party, thereafter to require submittal
of the Claim to arbitration.
LENDER'S RIGHT TO OBTAIN CREDIT REPORTS. Each Guarantor signing below authorizes
and directs the Lender, as it deems necessary, to obtain one or more credit
reports about him/her as individuals in connection with this Guaranty or any
renewal, monitoring, or collection of the credit.
COUNTERPART SIGNATURES. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
ADDRESS FOR NOTICES. Notwithstanding anything to the contrary herein, all
notices and communications to the Lender shall be directed to the following
address:
Bank of America, N.A.
Dallas CLSC, Attn: Notice Desk
000 Xxxx, 0xx Xxxxx
Xxxxxx, XX 00000.
COMMERCIAL GUARANTY
(CONTINUED) PAGE 4
================================================================================
FINANCIAL INFORMATION FROM GUARANTOR. The Guarantor shall provide, or cause to
be provided to Lender the following financial information and statements in form
and content acceptable to Lender in its sole discretion as indicated below:
Within 365 days of the anniversary of Guarantor's last annual financial
statement, the Guarantor's annual financial statements. Such additional
financial information regarding Guarantor or any borrower, pledgor,
accommodation party or other obligor with respect to the loan as Lender shall
request. The financial statements required above shall include a properly
completed Bank of America personal financial statement form with all questions
fully answered and all schedules completed in their entirety, including all
requested income/expense information, contingent liabilities disclosure;
provided that, if Guarantor uses his/her own automated financial statement,
Guarantor may supplement the statement with supporting schedules, certifications
or other details so that all information requested on the Bank of America
financial statement form is provided in lieu of using such form.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Guaranty. Unless specifically stated to the contrary,
all references to dollar amounts shall mean amounts in lawful money of the
United States of America. Words and terms used in the singular shall include the
plural, and the plural shall include the singular, as the context may require.
Words and terms not otherwise defined in this Guaranty shall have the meanings
attributed to such terms in the Uniform Commercial Code:
BORROWER. The word "Borrower" means Collegiate Pacific, Inc., and all
other persons and entities signing the Note in whatever capacity.
GUARANTOR. The word "Guarantor" means each and every person or entity
signing this Guaranty, including without limitation Kesmil Manufacturing,
Inc.
GUARANTY. The word "Guaranty" means the guaranty from Guarantor to
Lender, including without limitation a guaranty of all or part of the
Note.
INDEBTEDNESS. The word "Indebtedness" means Borrower's indebtedness to
Lender as more particularly described in this Guaranty.
LENDER. The word "Lender" means Bank of America, N.A., its successors and
assigns.
RELATED DOCUMENTS. The words "Related Documents" mean all promissory
notes, credit agreements, loan agreements, environmental agreements,
guaranties, security agreements, mortgages, deeds of trust, security
deeds, collateral mortgages, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection with
the indebtedness.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY". NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY
IS DATED DECEMBER 26, 2001.
GUARANTOR:
KESMIL MANUFACTURING, INC.
BY: /s/ XXXXXXX X. XXXXXXXXXX
------------------------------------------
XXXXXXX X. XXXXXXXXXX, PRESIDENT OF KESMIL
MANUFACTURING, INC.
CORPORATE ACKNOWLEDGEMENT
State of Texas )
)
County of Dallas )
This instrument was acknowledged before me on Jan. 11, 2002, by Xxxxxxx X.
Xxxxxxxxxx, President of Kesmil, a Texas corporation, on behalf of said
corporation.
Notary Public in and for the State of Texas
/s/ XXXXXX X. XXXX
-------------------------------
Notary Signature
XXXXXX X. XXXX
NOTARY PUBLIC Xxxxxx X. Xxxx
STATE OF TEXAS -------------------------------
EXPIRES (Print Name of Notary)
09-05-2005
Notary In Charge
-------------------------------
Title (and Rank)
9/5/2005
-------------------------------
My Commission Expires
[BANK OF AMERICA LOGO]
COMMERCIAL GUARANTY
================================================================================
BORROWER: COLLEGIATE PACIFIC, INC. LENDER: BANK OF AMERICA, N.A.
13950 SENLAC DRIVE, SUITE 100 CLSC-COMMERCIAL BANKING
FARMERS XXXXXX, XX 00000 TX1-609-06-01
P. O. BOX 830632
GUARANTOR: XXXXXXX X. XXXXXXXXXX XXXXXX, XX 00000-0000
00000 XXXXXX XXXXX, XXXXX 000
XXXXXXX XXXXXX, XX 00000
================================================================================
AMOUNT OF GUARANTY. THE PRINCIPAL AMOUNT OF THIS GUARANTY IS ONE MILLION &
00/100 DOLLARS ($1,000,000.00).
CONTINUING GUARANTY. FOR GOOD AND VALUABLE CONSIDERATION, XXXXXXX X. XXXXXXXXXX
("GUARANTOR") ABSOLUTELY AND UNCONDITIONALLY GUARANTEES AND PROMISES TO PAY TO
BANK OF AMERICA, N.A. ("LENDER") OR ITS ORDER, IN LEGAL TENDER OF THE UNITED
STATES OF AMERICA, THE INDEBTEDNESS (AS THAT TERM IS DEFINED BELOW) OF
COLLEGIATE PACIFIC, INC. ("BORROWER") TO LENDER ON THE TERMS AND CONDITIONS SET
FORTH IN THIS GUARANTY. THE OBLIGATIONS OF GUARANTOR UNDER THIS GUARANTY ARE
CONTINUING.
MAXIMUM LIABILITY. The maximum liability of Guarantor under this Guaranty shall
not exceed at any one time the sum of the principal amount of $1,000,000.00,
plus all interest thereon, plus all of Lender's costs, expenses, and Lender's
reasonable attorneys' fees incurred in connection with or relating to (A) the
collection of the Indebtedness, (B) the collection and sale of any collateral
for the Indebtedness or this Guaranty, or (C) the enforcement of this Guaranty.
Attorneys' fees include, without limitation, Lender's reasonable attorneys' fees
whether or not there is a lawsuit, and if there is a lawsuit, any fees and costs
for trial and appeals.
The above limitation on liability is not a restriction on the amount of the
Indebtedness of Borrower to Lender either in the aggregate or at any one time.
If Lender presently holds one or more guaranties, or hereafter receives
additional guaranties from Guarantor, Lender's rights under all guaranties shall
be cumulative. This Guaranty shall not (unless specifically provided below to
the contrary) affect or invalidate any such other guaranties. Guarantor's
liability will be Guarantor's aggregate liability under the terms of this
Guaranty and any such other unterminated guaranties.
INDEBTEDNESS GUARANTEED. The Indebtedness guaranteed by this Guaranty includes
any and all of Borrower's indebtedness to Lender and is used in the most
comprehensive sense and means and includes any and all of Borrower's
liabilities, obligations and debts to Lender, now existing or hereinafter
incurred or created, including, without limitation, all loans, advances,
interest, costs, attorneys' fees, debts, overdraft indebtedness, credit card
indebtedness, lease obligations, other obligations, and liabilities of Borrower,
or any of them, and any present or future judgments against Borrower, or any of
them; and whether any such Indebtedness is voluntarily or involuntarily
incurred, due or not due, absolute or contingent, liquidated or unliquidated,
determined or undetermined; whether Borrower may be liable individually or
jointly with others, or primarily or secondarily, or as guarantor or surety;
whether recovery on the Indebtedness may be or may become barred or
unenforceable against Borrower for any reason whatsoever; and whether the
Indebtedness arises from transactions which may be avoidable on account of
infancy, insanity, ultra xxxxx, or otherwise.
DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all Indebtedness incurred or
contracted before receipt by Lender of any notice of revocation shall have been
fully and finally paid and satisfied and all of Guarantor's other obligations
under this Guaranty shall have been performed in full. If Guarantor elects to
revoke this Guaranty, Guarantor may only do so in writing. Guarantor's written
notice of revocation must be mailed to Lender, by certified mail, at Lender's
address listed above or such other place as Lender may designate in writing.
Written revocation of this Guaranty will apply only to advances or new
Indebtedness created after actual receipt by Lender of Guarantor's written
revocation and Lender's written acknowledgment of receipt. For this purpose and
without limitation, the term "new Indebtedness" does not include Indebtedness
which at the time of notice of revocation is contingent, unliquidated,
undetermined or not due and which later becomes absolute, liquidated, determined
or due. This Guaranty will continue to bind Guarantor for all Indebtedness
incurred by Borrower or committed by Lender prior to receipt of Guarantor's
written notice of revocation, including any extensions, renewals, substitutions
or modifications of the Indebtedness. All renewals, extensions, substitutions,
and modifications of the Indebtedness granted after Guarantor's revocation, are
contemplated under this Guaranty and, specifically will not be considered to be
new Indebtedness. This Guaranty shall bind Guarantor's estate as to Indebtedness
created both before and after Guarantor's death or incapacity, regardless of
Lender's actual notice of Guarantor's death. Subject to the foregoing,
Guarantor's executor or administrator or other legal representative may
terminate this Guaranty in the same manner in which Guarantor might have
terminated it and with the same effect. Release of any other guarantor or
termination of any other guaranty of the Indebtedness shall not affect the
liability of Guarantor under this Guaranty. A revocation Lender receives from
any one or more Guarantors shall not affect the liability of any remaining
Guarantors under this Guaranty. IT IS ANTICIPATED THAT FLUCTUATIONS MAY OCCUR IN
THE AGGREGATE AMOUNT OF INDEBTEDNESS COVERED BY THIS GUARANTY, AND GUARANTOR
SPECIFICALLY ACKNOWLEDGES AND AGREES THAT REDUCTIONS IN THE AMOUNT OF
INDEBTEDNESS, EVEN TO ZERO DOLLARS ($0.00), PRIOR TO GUARANTOR'S WRITTEN
REVOCATION OF THIS GUARANTY SHALL NOT CONSTITUTE A TERMINATION OF THIS GUARANTY.
THIS GUARANTY IS BINDING UPON GUARANTOR AND GUARANTOR'S HEIRS, SUCCESSORS AND
ASSIGNS SO LONG AS ANY OF THE GUARANTEED INDEBTEDNESS REMAINS UNPAID AND EVEN
THOUGH THE INDEBTEDNESS GUARANTEED MAY FROM TIME TO TIME BE ZERO DOLLARS
($0.00).
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before
or after any revocation hereof, WITHOUT NOTICE OR DEMAND AND WITHOUT LESSENING
OR OTHERWISE AFFECTING GUARANTOR'S LIABILITY UNDER THIS GUARANTY, FROM TIME TO
TIME: (A) prior to revocation as set forth above, to make one or more additional
secured or unsecured loans to Borrower, to lease equipment or other goods to
Borrower, or otherwise to extend additional credit to Borrower; (B) to alter,
compromise, renew, extend, accelerate, or otherwise change one or more times the
time for payment or other terms of the Indebtedness or any part of the
Indebtedness, including increases and decreases of the rate of interest on the
Indebtedness; extensions may be repeated and may be for longer than the original
loan term; (C) to take and hold security for the payment of this Guaranty or the
Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to
perfect, and release any such security, with or without the substitution of new
collateral; (D) to release, substitute, agree not to xxx, or deal with any one
or more of Borrower's sureties, endorsers, or other guarantors on any terms or
in any manner Lender may choose; (E) to determine how, when and what application
of payments and credits shall be made on the Indebtedness; (F) to apply such
security and direct the order or manner of sale thereof, including without
limitation, any nonjudicial sale permitted by the terms of the controlling
security agreement or deed of trust, as Lender in its discretion may determine;
(G) to sell, transfer, assign or grant participations in all or any part of the
Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lender that (A) no representations or agreements of any kind have been made to
Guarantor which would limit or qualify in any way the terms of this Guaranty;
(B) this Guaranty is executed at Borrower's request and not at the request of
Lender; (C) Guarantor has full power, right and authority to enter into this
Guaranty; (D) the provisions of this Guaranty do not conflict with or result in
a default under any agreement or other instrument binding upon Guarantor and do
not result in a violation of any law, regulation, court decree or order
applicable to Guarantor; (E) Guarantor has not and will not, without the prior
written consent of
COMMERCIAL GUARANTY
(CONTINUED) PAGE 2
================================================================================
Lender, sell, lease, assign, encumber, hypothecate, transfer, or otherwise
dispose of all or substantially all of Guarantor's assets, or any interest
therein; (F) upon Lender's request, Guarantor will provide to Lender financial
and credit information in form acceptable to Lender, and all such financial
information which currently has been, and all future financial information which
will be provided to Lender is and will be true and correct in all material
respects and fairly present Guarantor's financial condition as of the dates the
financial information is provided; (G) no material adverse change has occurred
in Guarantor's financial condition since the date of the most recent financial
statements provided to Lender and no event has occurred which may materially
adversely affect Guarantor's financial condition; (H) no litigation, claim,
investigation, administrative proceeding or similar action (including those for
unpaid taxes) against Guarantor is pending or threatened; (I) Lender has made no
representation to Guarantor as to the creditworthiness of Borrower; and (J)
Guarantor has established adequate means of obtaining from Borrower on a
continuing basis information regarding Borrower's financial condition. Guarantor
agrees to keep adequately informed from such means of any facts, events, or
circumstances which might in any way affect Guarantor's risks under this
Guaranty, and Guarantor further agrees that, absent a request for information,
Lender shall have no obligation to disclose to Guarantor any information or
documents acquired by Lender in the course of its relationship with Borrower.
GUARANTOR'S FINANCIAL STATEMENTS. Guarantor agrees to furnish Lender with the
following:
ADDITIONAL REQUIREMENTS. The Guarantor shall provide, or cause to be
provided to Lender the following financial information and statements in
form and content acceptable to Lender in its sole discretion as indicated
below: Within 365 days of the anniversary of Guarantor's last annual
financial statement, the Guarantor's annual financial statements. Such
additional financial information regarding Guarantor or any borrower,
pledgor, accommodation party or other obligor with respect to the loan as
Lender shall request. The financial statements required above shall
include a properly completed Bank of America personal financial statement
form with all questions fully answered and all schedules completed in
their entirety, including all requested income/expense information,
contingent liabilities disclosure; provided that, if Guarantor uses
his/her own automated financial statement, Guarantor may supplement the
statement with supporting schedules, certifications or other details so
that all information requested on the Bank of America financial statement
form is provided in lieu of using such form.
Unencumbered Liquid Assets. Guarantor shall hold Unencumbered Liquid
Assets having an aggregate market value of not less than One Million and
No/100 Dollars ($1,000,000.00). For the purposes of this Guaranty,
"Unencumbered Liquid Assets" shall mean the following assets owned by
Guarantor (excluding assets of any retirement plan) which (i) are not the
subject of any lien, pledge, security interest or other arrangement with
any creditor to have his claim satisfied out of the asset (or proceeds
thereof) prior to the general creditors of Guarantor, and (ii) may be
converted to cash within five (5) days: (a) Cash or cash equivalents held
in the United States; (b) United States Treasury or governmental agency
obligations which constitute full faith and credit of the United States
of America; (c) Commercial paper rated P-1 or A1 by Xxxxx'x or S&P,
respectively; (d) Fixed income instruments rated investment grade by one
of the rating agencies described in (c) above; (e) Eligible Stocks; (f)
Mutual funds quoted in The Wall Street Journal which invest primarily in
the assets described in (a) - (e) above. For purposes of this Guaranty:
"Eligible Stocks" shall include any common or preferred stock which (i)
is not subject to statutory or contractual restrictions on sales, (ii) is
traded on a U.S. national stock exchange or included in the National
Market tier of NASDAQ and (iii) has, as of the close of trading on the
applicable exchange (excluding after hours trading), a per share price of
at least $15.
Compliance Certificates
Guarantor covenants and agrees with Lender that, so long as this Guaranty
remains in effect, Guarantor will deliver to Lender within 45 days
following the end of each quarter, a certificate signed by the Guarantor,
or if the Guarantor is a business entity, an authorized financial officer
of Guarantor setting forth (i) the information and computations (in
sufficient detail) to establish that Borrower is in compliance with all
financial covenants at the end of the period, and (ii) whether there
exists as of the date of the certificate, any Event of Default under this
Guaranty and, if any such default exists, specifying the nature thereof
and the action Guarantor is taking and proposes to take with respect
thereto.
All financial reports required to be provided under this Guaranty shall be
prepared in accordance with GAAP, applied on a consistent basis, and certified
by Guarantor as being true and correct.
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (A) to continue lending money or to extend other
credit to Borrower; (B) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations; (C) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (D) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (E) to give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (F) to pursue any other
remedy within Lender's power; or (G) to commit any act or omission of any kind,
or at any time, with respect to any matter whatsoever.
In addition to the waivers set forth herein, if now or hereafter Borrower is or
shall become insolvent and the Indebtedness shall not at all times until paid be
fully secured by collateral pledged by Borrower, Guarantor hereby forever waives
and gives up in favor of Lender and Borrower, and Lender's and Borrower's
respective successors, any claim or right to payment Guarantor may now have or
hereafter have or acquire against Borrower, by subrogation or otherwise, so that
at no time shall Guarantor be or become a "creditor" of Borrower within the
meaning of 11 U.S.C. section 547(b), or any successor provision of the Federal
bankruptcy laws.
Guarantor waives all rights of Guarantor under Chapter 34 of the Texas Business
and Commerce Code. Guarantor also waives any and all rights or defenses arising
by reason of (A) any "one action" or "anti-deficiency" law or any other law
which may prevent Lender from bringing any action, including a claim for
deficiency, against Guarantor, before or after Lender's commencement or
completion of any foreclosure action, either judicially or by exercise of a
power of sale; (B) any election of remedies by Lender which destroys or
otherwise adversely affects Guarantor's subrogation rights or Guarantor's rights
to proceed against Borrower for reimbursement, including without limitation, any
loss of rights Guarantor may suffer by reason of any law limiting, qualifying,
or discharging the Indebtedness; (C) any disability or other defense of
Borrower, of any other guarantor, or of any other person, or by reason of the
cessation of Borrower's liability from any cause whatsoever, other than payment
in full in legal tender, of the Indebtedness; (D) any right to claim discharge
of the Indebtedness on the basis of unjustified impairment of any collateral for
the Indebtedness; (E) any statute of limitations, if at any time any action or
suit brought by Lender against Guarantor is commenced, there is outstanding
Indebtedness of Borrower to Lender which is not barred by any applicable statute
of limitations; or (F) any defenses given to guarantors at law or in equity
other than actual payment and performance of the Indebtedness. If payment is
made by Borrower, whether voluntarily or otherwise, or by any third party, on
the Indebtedness and thereafter Lender is forced to remit the amount of that
payment to Borrower's trustee in bankruptcy or to any similar person under any
federal or state bankruptcy law or law for the relief of debtors, the
Indebtedness shall be considered unpaid for the purpose of the enforcement of
this Guaranty.
Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of setoff,
counterclaim, counter demand, recoupment or similar right, whether such claim,
demand or right may be asserted by the Borrower, the Guarantor, or both.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees
that each of the waivers set forth above is made with Guarantor's full knowledge
of its significance and consequences and that, under the circumstances, the
waivers are reasonable and not contrary to public policy or law. If any such
waiver is determined to be contrary to any applicable law or public policy, such
waiver shall be effective only to the
COMMERCIAL GUARANTY
(CONTINUED) PAGE 3
================================================================================
extent permitted by law or public policy.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Guarantor's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Guarantor holds
jointly with someone else and all accounts Guarantor may open in the future.
However, this does not include any XXX or Xxxxx accounts, or any trust accounts
for which setoff would be prohibited by law. Guarantor authorizes Lender, to the
extent permitted by applicable law, to hold these funds if there is a default,
and Lender may apply the funds in these accounts to pay what Guarantor owes
under the terms of this Guaranty.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be superior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets of
Borrower, through bankruptcy, by an assignment for the benefit of creditors, by
voluntary liquidation, or otherwise, the assets of Borrower applicable to the
payment of the claims of both Lender and Guarantor shall be paid to Lender and
shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the Indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
any debts or obligations of Borrower to Guarantor shall be marked with a legend
that the same are subject to this Guaranty and shall be delivered to Lender.
Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor,
from time to time to execute and file financing statements and continuation
statements and to execute such other documents and to take such other actions as
Lender deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
AMENDMENTS. This Guaranty, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Guaranty. No alteration of or amendment to
this Guaranty shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment.
ATTORNEYS' FEES; EXPENSES. Guarantor agrees to pay upon demand all of
Lender's costs and expenses, including Lender's reasonable attorneys'
fees and Lender's legal expenses, incurred in connection with the
enforcement of this Guaranty. Lender may hire or pay someone else to
help enforce this Guaranty, and Guarantor shall pay the costs and
expenses of such enforcement. Costs and expenses include Lender's
reasonable attorneys' fees and legal expenses whether or not there is a
lawsuit, including Lender's reasonable attorneys' fees and legal
expenses for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Guarantor also shall pay all court
costs and such additional fees as may be directed by the court.
CAPTION HEADINGS. Caption headings in this Guaranty are for convenience
purposes only and are not to be used to interpret or define the
provisions of this Guaranty.
GOVERNING LAW. THIS GUARANTY WILL BE GOVERNED BY, CONSTRUED AND ENFORCED
IN ACCORDANCE WITH FEDERAL LAW AND THE LAWS OF THE STATE OF TEXAS. THIS
GUARANTY HAS BEEN ACCEPTED BY LENDER IN THE STATE OF TEXAS.
CHOICE OF VENUE. If there is a lawsuit, and if the transaction evidenced
by this Guaranty occurred in any County, Guarantor agrees upon Lender's
request to submit to the jurisdiction of the courts of any County, State
of Texas.
INTEGRATION. Guarantor further agrees that Guarantor has read and fully
understands the terms of this Guaranty; Guarantor has had the opportunity
to be advised by Guarantor's attorney with respect to this Guaranty; the
Guaranty fully reflects Guarantor's intentions and parol evidence is not
required to interpret the terms of this Guaranty. Guarantor hereby
indemnifies and holds Lender harmless from all losses, claims, damages,
and costs (including Lender's attorneys' fees) suffered or incurred by
Lender as a result of any breach by Guarantor of the warranties,
representations and agreements of this paragraph.
INTERPRETATION. In all cases where there is more than one Borrower or
Guarantor, then all words used in this Guaranty in the singular shall be
deemed to have been used in the plural where the context and construction
so require; and where there is more than one Borrower named in this
Guaranty or when this Guaranty is executed by more than one Guarantor,
the words "Borrower" and "Guarantor" respectively shall mean all and any
one or more of them. The words "Guarantor," "Borrower," and "Lender"
include the heirs, successors, assigns, and transferees of each of them.
If a court finds that any provision of this Guaranty is not valid or
should not be enforced, that fact by itself will not mean that the rest
of this Guaranty will not be valid or enforced. Therefore, a court will
enforce the rest of the provisions of this Guaranty even if a provision
of this Guaranty may be found to be invalid or unenforceable. If any one
or more of Borrower or Guarantor are corporations, partnerships, limited
liability companies, or similar entities, it is not necessary for Lender
to inquire into the powers of Borrower or Guarantor or of the officers,
directors, partners, managers, or other agents acting or purporting to
act on their behalf, and any Loan indebtedness made or created in
reliance upon the professed exercise of such powers shall be guaranteed
under this Guaranty.
NOTICES. Any notice required to be given under this Guaranty shall be
given in writing, and, except for revocation notices by Guarantor, shall
be effective when actually delivered, when actually received by
telefacsimile (unless otherwise required by law), when deposited with a
nationally recognized overnight courier, or, if mailed, when deposited in
the United States mail, as first class, certified or registered mail
postage prepaid, directed to the addresses shown near the beginning of
this Guaranty. All revocation notices by Guarantor shall be in writing
and shall be effective upon delivery to Lender as provided in the section
of this Guaranty entitled "DURATION OF GUARANTY." Any party may change
its address for notices under this Guaranty by giving formal written
notice to the other parties, specifying that the purpose of the notice is
to change the party's address. For notice purposes, Guarantor agrees to
keep Lender informed at all times of Guarantor's current address. Unless
otherwise provided or required by law, if there is more than one
Guarantor, any notice given by Lender to any Guarantor is deemed to be
notice given to all Guarantors.
NO WAIVER BY LENDER. Lender shall not be deemed to have waived any rights
under this Guaranty unless such waiver is given in writing and signed by
Lender. No delay or omission on the part of Lender in exercising any
right shall operate as a waiver of such right or any other right. A
waiver by Lender of a provision of this Guaranty shall not prejudice or
constitute a waiver of Lender's right otherwise to demand strict
compliance with that provision or any other provision of this Guaranty.
No prior waiver by Lender, nor any course of dealing between Lender and
Guarantor, shall constitute a waiver of any of Lender's rights or of any
of Guarantor's obligations as to any future transactions. Whenever the
consent of Lender is required under this Guaranty, the granting of such
consent by Lender in any instance shall not constitute continuing consent
to subsequent instances where such consent is required and in all cases
such consent may be granted or withheld in the sole discretion of Lender.
SUCCESSORS AND ASSIGNS. Subject to any limitations stated in this
Guaranty on transfer of Guarantor's interest, this Guaranty shall be
binding upon and inure to the benefit of the parties, their successors
and assigns.
WAIVE JURY. LENDER AND GUARANTOR HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL
IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER LENDER OR
BORROWER AGAINST THE OTHER.
ARBITRATION. (a) This paragraph concerns the resolution of any controversies or
claims between the parties, whether arising in contract, tort or by
COMMERCIAL GUARANTY
(CONTINUED) PAGE 4
================================================================================
statute, including but not limited to controversies or claims that arise out of
or relate to: (i) this agreement (including any renewals, extensions or
modifications); or (ii) any document related to this agreement; (collectively a
"Claim").
(b) At the request of any party to this agreement, any Claim shall be resolved
by binding arbitration in accordance with the Federal Arbitration Act (Title 9,
U. S. Code) (the "Act"). The Act will apply even though this agreement provides
that it is governed by the law of a specified state.
(c) Arbitration proceedings will be determined in accordance with the Act, the
applicable rules and procedures for the arbitration of disputes of JAMS or any
successor thereof ("JAMS"), and the terms of this paragraph. In the event of any
inconsistency, the terms of this paragraph shall control.
(d) The arbitration shall be administered by JAMS and conducted, unless
otherwise required by law, in any U. S. state where real or tangible personal
property collateral for this credit is located or if there is no such
collateral, in the state specified in the governing law section of this
agreement. All Claims shall be determined by one arbitrator; however, if Claims
exceed $5,000,000, upon the request of any party, the Claims shall be decided by
three arbitrators. All arbitration hearings shall commence within 90 days of the
demand for arbitration and close within 90 days of commencement and the award of
the arbitrator(s) shall be issued within 30 days of the close of the hearing.
However, the arbitrator(s), upon a showing of good cause, may extend the
commencement of the hearing for up to an additional 60 days. The arbitrator(s)
shall provide a concise written statement of reasons for the award. The
arbitration award may be submitted to any court having jurisdiction to be
confirmed and enforced.
(e) The arbitrator(s) will have the authority to decide whether any Claim is
barred by the statute of limitations and, if so, to dismiss the arbitration on
that basis. For purposes of the application of the statute of limitations, the
service on JAMS under applicable JAMS rules of a notice of Claim is the
equivalent of the filing of a lawsuit. Any dispute concerning this arbitration
provision or whether a Claim is arbitratable shall be determined by the
arbitrator(s). The arbitrator(s) shall have the power to award legal fees
pursuant to the terms of this agreement.
(f) This paragraph does not limit the right of any party to: (i) exercise
self-help remedies, such as but not limited to, setoff; (ii) initiate judicial
or nonjudicial foreclosure against any real or personal property collateral;
(iii) exercise any judicial or power of sale rights, or (iv) act in a court of
law to obtain an interim remedy, such as but not limited to, injunctive relief,
writ of possession or appointment of a receiver, or additional or supplementary
remedies.
(g) The filing of a court action is not intended to constitute a waiver of the
right of any party, including the suing party, thereafter to require submittal
of the Claim to arbitration.
LENDER'S RIGHT TO OBTAIN CREDIT REPORTS. Each Guarantor signing below authorizes
and directs the Lender, as it deems necessary, to obtain one or more credit
reports about him/her as individuals in connection with this Guaranty or any
renewal, monitoring, or collection of the credit.
COUNTERPART SIGNATURES. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
ADDRESS FOR NOTICES. Notwithstanding anything to the contrary herein, all
notices and communications to the Lender shall be directed to the following
address:
Bank of America, N.A.
Dallas CLSC, Attn: Notice Desk
000 Xxxx, 0xx Xxxxx
Xxxxxx, XX 00000.
FINANCIAL INFORMATION FROM GUARANTOR. The Guarantor shall provide, or cause to
be provided to Lender the following financial information and statements in form
and content acceptable to Lender in its sole discretion as indicated below:
Within 365 days of the anniversary of Guarantor's last annual financial
statement, the Guarantor's annual financial statements. Such additional
financial information regarding Guarantor or any borrower, pledgor,
accommodation party or other obligor with respect to the loan as Lender shall
request. The financial statements required above shall include a properly
completed Bank of America personal financial statement form with all questions
fully answered and all schedules completed in their entirety, including all
requested income/expense information, contingent liabilities disclosure;
provided that, if Guarantor uses his/her own automated financial statement,
Guarantor may supplement the statement with supporting schedules, certifications
or other details so that all information requested on the Bank of America
financial statement form is provided in lieu of using such form.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Guaranty. Unless specifically stated to the contrary,
all references to dollar amounts shall mean amounts in lawful money of the
United States of America. Words and terms used in the singular shall include the
plural, and the plural shall include the singular, as the context may require.
Words and terms not otherwise defined in this Guaranty shall have the meanings
attributed to such terms in the Uniform Commercial Code:
BORROWER. The word "Borrower" means Collegiate Pacific, Inc., and all
other persons and entities signing the Note in whatever capacity.
GAAP. The word "GAAP" means generally accepted accounting principles.
GUARANTOR. The word "Guarantor" means each and every person or entity
signing this Guaranty, including without limitation Xxxxxxx X.
Xxxxxxxxxx.
GUARANTY. The word "Guaranty" means the guaranty from Guarantor to
Lender, including without limitation a guaranty of all or part of the
Note.
INDEBTEDNESS. The word "Indebtedness" means Borrower's indebtedness to
Lender as more particularly described in this Guaranty.
LENDER. The word "Lender" means Bank of America, N.A., its successors and
assigns.
RELATED DOCUMENTS. The words "Related Documents" mean all promissory
notes, credit agreements, loan agreements, environmental agreements,
guaranties, security agreements, mortgages, deeds of trust, security
deeds, collateral mortgages, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection
with the Indebtedness.
COMMERCIAL GUARANTY
(CONTINUED) PAGE 5
================================================================================
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY". NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY
IS DATED DECEMBER 26, 2001.
GUARANTOR:
X /s/ XXXXXXX X. XXXXXXXXXX
-----------------------------------
XXXXXXX X. XXXXXXXXXX, INDIVIDUALLY
INDIVIDUAL ACKNOWLEDGEMENT
State of Texas )
)
County of Dallas )
This instrument was acknowledged before me on Jan 11, 2002, by
Xxxxxxx X. Xxxxxxxxxx
-----------------------
(Guarantor)
Notary Public in and for the State of Texas
/s/ XXXXXX X. XXXX
----------------------
Notary Signature
XXXXXX X. XXXX
NOTARY PUBLIC Xxxxxx X. Xxxx
STATE OF TEXAS ----------------------
EXPIRES (Print Name of Notary)
09-05-2005
----------------------
Title and Rank
Notary In Charge
----------------------
[BANK OF AMERICA LOGO]
GUARANTOR COMPLIANCE CERTIFICATE
This Compliance Certificate (the "Certificate") is delivered pursuant
to the Guaranty dated as of December 26, 2001 (together with all amendments and
modifications, if any, from time to time made thereto, the "Guaranty"), between
Xxxxxxx X. Xxxxxxxxxx (the "Guarantor") and Bank of America, N.A. ("Lender").
Unless otherwise defined, terms used herein (including the attachments hereto)
have the meanings provided in the Guaranty.
Guarantor hereby certifies and warrants that:
1. He or she is the Guarantor and is authorized to execute this
Certificate.
2. As of ________________, 20_____:
(a) NO DEFAULT. Guarantor was not in default of any of the
provisions of the Guaranty during the period to which this Certificate relates;
(b) FINANCIAL COVENANT COMPLIANCE. Guarantor or Guarantor's
authorized agent submits this Certificate in connection With the following
financial covenants required by the terms of the Guaranty:
1. Unencumbered Liquid Assets. Guarantor's Unencumbered Liquid Assets equalled
$1,000,000.00 as computed below:
2. Guarantor's Unencumbered Liquid Assets have an aggregate market value of $
_________________________ as detailed on (please check applicable boxes below):
[ ] i. The brokerage statement(s) attached hereto.
[ ] ii. The Schedule of Liquid Assets attached hereto.
[ ] iii. Other. ___________________________________.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Compliance Certificate, this ____ day of _______________, 20___.
By:
----------------------------------
Title:
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