EXHIBIT 10.10
CHANGE IN TERMS AGREEMENT
Principal Loan Date Maturity Loan No. Call Collateral Account Officer
$150,000 05-05-2000 839914 021 C010845 GEJ
Borrower: Classic Trends International, Inc. Lender: Southwest Bank of Texas N.A.
(TIN: 00-0000000) Galleria
00000 Xxxxxxxxxx Xx., Xxxxx 000 P. O. Xxx 00000
Xxxxxxx, Xxxxx 00000 5 Post Oak Xxx/0000 Xxxx Xxx Xxxxxxx
Xxxxxxx, XX 00000-0000
================================================================================
PRINCIPAL AMOUNT: $150,000 DATE OF AGREEMENT: MAY 5, 1999
DESCRIPTION OF EXISTING INDEBTEDNESS. Original Promissory Note (the "Note")
dated March 5, 1996, in the principal sum of $50,000.00 executed by Borrower,
payable to Lender, as modified as applicable.
DESCRIPTION OF CHANGE IN TERMS. The Note is being modified in accordance with
the terms and provisions stated herein.
PROMISE TO PAY. CLASSIC TRENDS INTERNATIONAL, INC. ("BORROWER") PROMISES TO PAY
TO SOUTHWEST BANK OF TEXAS N.A. ("LENDER"), OR ORDER, IN LAWFUL MONEY OF THE
UNITED STATES OF AMERICA, THE PRINCIPAL AMOUNT OF ONE HUNDRED FIFTY THOUSAND &
00/100 DOLLARS ($150,000.00) 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 Agreement
has been implemented under the "Weekly Rate" as referred to in Section 303.210
of the Texas Finance Code and Articles 1D.002 and 1D.003 of the Texas Credit
Title. The terms, including rate, or index, formula, or provision of law used to
compute the rate on the Agreement, will be subject to revision as to current and
future balances, from time to time by notice from Lender in compliance with
Section 303.403 of the Texas Finance Code.
PAYMENT. BORROWER WILL PAY THIS LOAN ON DEMAND, OR IF NO DEMAND IS MADE, IN ONE
PAYMENT OF ALL OUTSTANDING PRINCIPAL PLUS ALL ACCRUED UNPAID INTEREST ON MAY 5,
2000. IN ADDITION, BORROWER WILL PAY REGULAR MONTHLY PAYMENTS OF ACCRUED UNPAID
INTEREST BEGINNING JUNE 5, 1999, AND ALL SUBSEQUENT INTEREST PAYMENTS ARE DUE ON
THE SAME DAY OF EACH MONTH AFTER THAT. The annual interest rate for this
Agreement 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. Unless
otherwise agreed or required by applicable law, payments will be applied first
to accrued unpaid interest, then to principal, and any remaining amount to any
unpaid collection costs and late charges. Notwithstanding any other provision of
this Agreement, Lender will not charge interest on any undisbursed loan
proceeds. No scheduled payment, whether 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 Agreement is subject to change
from time to time based on changes in an index which is the Southwest Bank of
Texas N.A. prime rate (the "Index"). Southwest Bank of Texas N.A. prime rate of
interest is the rate of interest established by the Bank from time to time as
its prime rate. The rate is set by the Bank as a general reference rate of
interest, taking into account such factors as the Bank may deem appropriate, it
being understood that many of the Bank's consumer and other loans are priced in
relation to such rate,
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that it is not necessarily the lowest or best rate actually charged any customer
and that the Bank may make various consumer or other loans at rates of interest
having no relationship to such rate. Lender will tell Borrower the current Index
rate upon Borrower's request. Borrower understands that Lender may make loans
based on other rates as well. The interest rate change will not occur more often
than each day. THE INDEX CURRENTLY IS 7.750% PER ANNUM. THE INTEREST RATE TO BE
APPLIED PRIOR TO MATURITY TO THE UNPAID PRINCIPAL BALANCE OF THIS AGREEMENT WILL
BE AT A RATE EQUAL TO THE INDEX, RESULTING IN AN INITIAL RATE OF 7.750% PER
ANNUM. NOTICE: Under no circumstances will the interest rate on this Agreement
be more than the maximum rate allowed by applicable law. For purposes of this
Agreement, 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 Agreement, or (b) the "Weekly Rate" as
referred to in Section 303.201 of the Texas Finance Code and Articles 1D.002 and
1D.003 of the Texas Credit Title.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due. Early payments will not, unless agreed to by Lender in
writing, relieve Borrower of Borrower's obligation to continue to make payments
of accrued unpaid interest. Rather, they will reduce the principal balance due.
POST MATURITY RATE. The Post Maturity Rate on this Agreement is the lesser of
the maximum rate allowed by applicable law or 18.00% per annum. The bank may
charge interest on all sums due after final maturity, whether by acceleration or
otherwise, at that rate, with the exception of any amounts added to the
principal balance of this Agreement based on Lender's payment of insurance
premiums, which will continue to accrue interest at the pre-maturity rate.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this
Agreement or any agreement related to this Agreement, or in any other agreement
or loan Borrower has with Lender. (c) Borrower 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.
(d) Any representation or statement made or furnished to Lender by Borrower or
on Borrower's behalf is false or misleading in any material respect either now
or at the time made or furnished. (e) Borrower becomes insolvent, a receiver is
appointed for any part of Borrower's property, Borrower make an assignment for
the benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (f) Any creditor tries
to take any of Borrower's property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with Lender.
(g) Any guarantor dies or any of the other events described in this default
section occurs with respect to any guarantor of this Agreement. (h) A material
adverse change occurs in Borrower's financial condition, or Lender believes the
prospect of payment or performance of the indebtedness is impaired. (i) Lender
in good xxxxx xxxxx itself insecure.
If any default, other than a default in payment, is curable, it may be cured
(and no event of default will have occurred) if Borrower, after receiving
written notice from lender demanding cure of such default: (a) cures the
default within fifteen (15) days; or (b) if the cure requires more than fifteen
(15) days, immediately initiates steps which Lender deems in Lender's sole
discretion to be sufficient to cure the default and thereafter continues and
completes all reasonable and necessary steps sufficient to produce compliance as
soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire indebtedness,
including the unpaid principal balance on this Agreement, all accrued unpaid
interest, and all other amounts, costs and expenses for which Borrower is
responsible under this Agreement or any other agreement with Lender pertaining
to this loan, immediately due, without notice, and then Borrower will pay that
amount. Lender may hire an attorney to help collect this Agreement if Borrower
does not pay, and Borrower will pay Lender's reasonable attorneys' fees.
Borrower also will pay Lender all other amounts actually incurred by lender as
court costs, lawful fees for filing, recording, or releasing to any public
office any instrument securing this loan; 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 loan, or premiums or identifiable charges
received in connection with the sale of authorized
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insurance. THIS AGREEMENT HAS BEEN DELIVERED TO LENDER AND ACCEPTED BY LENDER IN
THE STATE OF TEXAS. IF THERE IS A LAWSUIT, AND IF THE TRANSACTION EVIDENCED BY
THIS AGREEMENT OCCURRED IN XXXXXX COUNTY, BORROWER AGREES UPON LENDER'S REQUEST
TO SUBMIT TO THE JURISDICTION OF THE COURTS OF XXXXXX COUNTY, THE STATE OF
TEXAS. SUBJECT TO THE PROVISIONS ON ARBITRATION, THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND
APPLICABLE FEDERAL LAWS.
RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in,
and hereby assigns, conveys, delivers, pledges, and transfers to Lender all
borrower's right, title and interest in and to, Borrower's accounts with Lender
(whether checking, savings, or some other account), including without limitation
all accounts held jointly with someone else and all accounts Borrower may open
in the future, excluding however all XXX and Xxxxx accounts, and all trust
accounts for which the grant of a security interest would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law, to charge
or setoff all sums owing on this Agreement against any and all such accounts.
LINE OF CREDIT. This Agreement evidences a revolving line of credit. Advances
under this Agreement may be requested orally by Borrower or by an authorized
person. Lender may, but need not, require that all oral requests be confirmed in
writing. All communications, instructions, or directions by telephone or
otherwise to Lender are to be directed to Lender's office shown above. The
following party or parties are authorized to request advances under the line of
credit until Lender receives from Borrower at Lender's address shown above
written notice of revocation of their authority: XXXXXX X. XXXXXXX, PRESIDENT.
Borrower agrees to be liable for all sums either; (a) advanced in accordance
with the instructions of an authorized person or (b) credited to any of
Borrower's accounts with Lender. The unpaid principal balance owing on this
Agreement at any time may be evidenced by endorsements on this Agreement or by
Lender's internal records, including daily computer print-outs. Lender will have
no obligation to advance funds under this Agreement if: (a) Borrower or any
guarantor is in default under the terms of this Agreement or any agreement that
Borrower or any guarantor has with Lender, including any agreement made in
connection with the signing of this Agreement; (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
Agreement or any other Agreement with Lender; (d) Borrower has applied funds
provided pursuant to this Agreement for purposes other than those authorized by
Lender; or (e)Lender in good xxxxx xxxxx itself insecure under this Agreement or
any other agreement between Lender and Borrower. THIS REVOLVING LINE OF CREDIT
SHALL NOT BE SUBJECT TO SEC. 346 OF THE TEXAS FINANCE CODE.
ARBITRATION. The undersigned agree(s) that all disputes, claims and
controversies between the undersigned or between the undersigned and any lender
or the holder of this instrument, whether individual, joint, or class in nature,
arising from this instrument, or any document executed in connection herewith or
otherwise, including without limitation contract and tort disputes, shall be
arbitrated pursuant to the Rules of the American Arbitration Association, upon
request of any party. No act to take or dispose of any collateral securing the
Note or covered by this instrument shall constitute a waiver of this arbitration
provision or be prohibited by this arbitration provision. This includes, without
limitation, obtaining injunctive relief or a temporary restraining order;
invoking a power of sale under any deed of trust or mortgage; obtaining a writ
of attachment or imposition of a receiver; or exercising any rights relating to
personal property, including taking or disposing of such property with or
without judicial process pursuant to Article 9 of the Uniform Commercial Code.
Any disputes, claims, or controversies concerning the lawfulness or
reasonableness of any act, or exercise of any right concerning any collateral
securing the Note or covered by this instrument, including any claim to rescind,
reform, or otherwise modify any agreement relating to the collateral securing
the Note or covered by this instrument, shall also be arbitrated, provided
however that no arbitrator shall have the right or the power to enjoin or
restrain any act of any party. Judgment upon any award rendered by any
arbitrator may be entered in any court having jurisdiction; provided, however,
that nothing contained herein shall be deemed to be a waiver by any party that
is a bank of the protections afforded to it under 12 USC Section 91, Texas
Banking Code art. 342-8.002, or any other protection provided banks under the
laws of Texas or the United States. The statute of limitations, estoppel,
waiver, laches, and similar doctrines which would otherwise be applicable in an
action brought by a party shall be applicable in any arbitration proceeding, and
the commencement of an arbitration proceeding shall be deemed the commencement
of an action for these purposes. The Federal Arbitration Act shall apply to the
construction, interpretation, and enforcement of this arbitration provision. If
the Federal Arbitration Act is inapplicable to any such claim or controversy for
any reason, such arbitration shall be conducted pursuant to the Texas General
Arbitration Act and in accordance with this arbitration provision and the
Commercial Arbitration Rules of the American Arbitration Association.
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CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of
the original obligation or obligations, including all agreements evidenced or
securing the obligation(s), remain unchanged and in full force and effect.
Consent by Lender to this Agreement does not waive Lender's right to strict
performance of the obligation(s) as changed, nor obligate Lender to make any
future change in terms. Nothing in this Agreement will constitute a satisfaction
of the obligation(s). It is the intention of Lender to retain as liable parties
all makers and endorsers of the original obligation(s), including accommodation
parties, unless a party is expressly released by Lender in writing. Any maker or
endorser, including accommodation makers, will not be released by virtue of this
Agreement. If any person who signed the original obligation does not sigh this
Agreement below, then all persons signing below acknowledge that this Agreement
is given conditionally, based on the representation to Lender that the non-
signing party consents to the changes and provisions of this Agreement or
otherwise will not be released by it. This waiver applies not only to any
initial extension, modification or release, but also to all such subsequent
actions.
FACSIMILE PROVISION. All Parties agree that any executed facsimile (faxed) copy
of this document shall be deemed to be of the same force and effect as the
original, manually executed document.
NOTICE OF FINAL AGREEMENT. THIS DOCUMENT AND ALL OTHER DOCUMENTS RELATING TO
THIS LOAN CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OR PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELATING TO THIS LOAN.
MISCELLANEOUS PROVISION. This Agreement is payable on demand. The inclusion of
specific default provisions or rights of Lender shall not preclude Lender's
right to declare payment of this Agreement on its demand. If any part of this
Agreement cannot be enforced, this fact will not affect the rest of the
Agreement. In particular, this section means (among other things) that 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 Agreement 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 doe 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 Agreement 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 Agreement without losing
them. Borrower and any other person who signs, guarantees or endorses this
Agreement, to the extent allowed by law, waive presentment, demand for payment,
protest, notice of dishonor, notice of intent to accelerate the maturity of this
Agreement, and notice of acceleration of the maturity of this Agreement. Upon
any change in the terms of this Agreement, and unless otherwise expressly stated
in writing, no party who signs this Agreement, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length of
time) this loan, or release any party or guarantor or collateral; or impair,
fail to realize upon or perfect Lender's security interest in the collateral
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.
PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS AGREEMENT, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER
AGREES TO THE TERMS OF THE AGREEMENT AND ACKNOWLEDGES RECEIPT OF A COMPLETED
COPY OF THE AGREEMENT.
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BORROWER:
Classic Trends International, Inc.
By: _______________________
Xxxxxx X. Xxxxxxx, President
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