Exhibit 10.2

 

REVOLVING PROMISSORY NOTE

(FLOATING RATE)

(this “Note”)

 

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NAME(S) AND ADDRESS(ES) OF BORROWER(S) (“Borrower”)

              

MANNATECH INCORPORATED

600 SOUTH ROYAL LANE SUITE 200

COPPELL, TEXAS 75019

              

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U.S. $2,000,000.00

       

MARCH 15, 2003 (the “Date”)

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ACCOUNT NUMBER/NOTE NUMBER

  

TRANSACTION CODE

  

PREPARED BY

  

OFFICER

4008/0080260836

  

N

  

CVR

  

156199

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FOR VALUE RECEIVED, Borrower (jointly and severally if more than one), promises
to pay to the order of JPMorgan Chase Bank (“Bank”) on or before MARCH 15, 2004,
at its office at 712 Main Street, Houston, Harris County, Texas 77002, or at
such other location as Bank may designate, in immediately available funds, TWO
MILLION AND NO/100 UNITED STATES DOLLARS (U.S. $2,000,000.00) (the “Maximum
Amount of Note”) or the aggregate unpaid amount of all advances hereunder,
whichever is less. Borrower will also pay interest on the unpaid principal
balance outstanding from time to time at a rate per annum equal to the lesser of
(i) the sum of the Prime Rate (as hereinafter defined) from time to time in
effect MINUS ONE percent (1.00%), (the “Stated Rate”) or (ii) the maximum
nonusurious rate of interest from time to time permitted by applicable law, (the
“Highest Lawful Rate”). If the Stated Rate at any time exceeds the Highest
Lawful Rate, the actual rate of interest to accrue on the unpaid principal
amount of this Note will be limited to the Highest Lawful Rate, but any
subsequent reductions in the Stated Rate due to reductions in the Prime Rate
will not reduce the interest rate payable upon the unpaid principal amount of
this Note below the Highest Lawful Rate until the total amount of interest
accrued on this Note equals the amount of interest which would have accrued if
the Stated Rate had at all times been in effect.

 

“Prime Rate” means the rate determined from time to time by Bank as its prime
rate. The Prime Rate will change automatically from time to time without notice
to Borrower or any other person. THE PRIME RATE IS A REFERENCE RATE AND MAY NOT
BE BANK’S LOWEST RATE.

 

To the extent that Texas law determines the Highest Lawful Rate, the Highest
Lawful Rate is the weekly rate ceiling as defined in the Texas Finance Code
Chapter 303. Bank may from time to time, as to current and future balances,
elect and implement any other ceiling under such Code and/or revise the index,
formula or provisions of law used to compute the rate on this open-end account
by notice to Borrower, if and to the extent permitted by, and in the manner
provided in such Code.

 

Each advance must be at least N/A UNITED STATES DOLLARS (U.S.N/A) unless the
amount available for borrowing under this Note is less.

 

Accrued and unpaid interest is due and payable MONTHLY, beginning on APRIL 15,
2003, and continuing on the 15TH day of each MONTH thereafter and at maturity
when all unpaid principal and accrued and unpaid interest is finally due and
payable.

 

Interest will be computed on the basis of the actual number of days elapsed and
a year comprised of:    x  365 (or 366 as the case may be) days    ¨  360 days,
unless such calculation would result in a usurious interest rate, in which case
such interest will be calculated on the basis of a 365 or 366 day year, as the
case may be.

 

All past-due principal and interest on this Note will, at Bank’s option, bear
interest at the Highest Lawful Rate, or if applicable law does not provide for a
maximum nonusurious rate of interest, at a rate per annum equal to 18%.

 

In addition to all principal and accrued interest on this Note, Borrower agrees
to pay: (a) all reasonable costs and expenses incurred by Bank and all owners
and holders of this Note in collecting this Note through probate,
reorganization, bankruptcy or any other proceeding; and (b) reasonable
attorneys’ fees if and when this Note is placed in the hands of attorneys for
collection.

 

Borrower and Bank intend to conform strictly to applicable usury laws.
Therefore, the total amount of interest (as defined under applicable law)
contracted for, charged or collected under this Note will never exceed the
Highest Lawful Rate. If Bank contracts for, charges or receives any excess
interest, it will be deemed a mistake. Bank will automatically reform the
contract or charge to conform to applicable law, and if excess interest has been
received, Bank will either refund the excess to Borrower or credit the excess on
the unpaid principal amount of this Note. All amounts constituting interest will
be spread throughout the full term of this Note in determining whether interest
exceeds lawful amounts.

 

The unpaid principal balance of this Note at any time will be the total amounts
advanced by Bank, less the amount of all payments or prepayments of principal.
Absent manifest error, the records of Bank will be conclusive as to amounts
owed. Subject to the terms and conditions of this Note and the Loan Documents,
Borrower may use all or any part of the credit provided for herein at any time
before the maturity of this Note and may borrow, repay and reborrow. There is no
limitation on the number of advances made so long as the total unpaid principal
amount at any time outstanding does not exceed the Maximum Amount of Note.

 

Borrower may at any time pay the full amount or any part of this Note without
the payment of any premium or fee. Any partial prepayment will be in the amount
of N/A (US$ N/A), or an integral multiple thereof. All payments may, at Bank’s
sole option, be applied to accrued interest, to principal, or to both.

 

“Loan Document” means this Note and any document or instrument evidencing,
securing, guaranteeing or given in connection with this Note. “Obligations”
means all principal, interest and other amounts which are or become owing under
this Note or any other Loan Document. “Obligor” means Borrower and any
guarantor, surety, co-signer, general partner or other person who may now or
hereafter be obligated to pay all or any part of the Obligations. Where
appropriate the neuter gender includes the feminine and the masculine and the
singular number includes the plural number.

 

Each of the following events or conditions is an “Event of Default:” (1) any
Obligor fails to pay any of the Obligations when due; (2) any warranty,
representation or statement now or hereafter contained in or made in connection
with any Loan Document was false or misleading in any respect when made; (3) any
Obligor violates any covenant, condition or agreement contained in any Loan
Document; (4) any Obligor fails or refuses to submit financial information
requested by Bank or to permit Bank to inspect its books and records on request;
(5) any event of default occurs under any other Loan Document; (6) any
individual Obligor dies, or any Obligor that is an entity dissolves; (7) a
receiver, conservator or similar official is appointed for any Obligor or any
Obligor’s assets; (8) any petition is filed by or against any Obligor under any
bankruptcy, insolvency or similar law; (9) any Obligor makes an assignment for
the benefit of creditors; (10) a final judgment is entered against any Obligor
and remains unsatisfied for 30 days after entry, or any property of any Obligor
is attached, garnished or otherwise made subject to legal process; (11) any
material adverse change occurs in the business, assets, affairs or financial
condition of any Obligor, or (12) Borrower is in default of any other obligation
to or any other agreement with Bank.

 

If any Event of Default occurs, then Bank may do any or all of the following:
(i) cease making advances hereunder; (ii) declare the Obligations to be
immediately due and payable, without notice of acceleration or of intention to
accelerate, presentment and demand or protest or notice of any kind, all of
which are hereby expressly waived; (iii) set off, in any order, against the
Obligations any debt owing by Bank to any Obligor, including, but not limited
to, any deposit account, which right is hereby granted by each Obligor to Bank;
and (iv) exercise any and all other rights under any Loan Document, at law, in
equity or otherwise.

 

No waiver of any default is waiver of any other default. Bank’s delay in
exercising any right or power under any Loan Document is not a waiver of such
right or power.

 

Each Obligor severally waives notice, demand, presentment for payment, notice of
nonpayment, notice of intent to accelerate, notice of acceleration, protest,
notice of protest, and the filing of suit and diligence in collecting this Note
and all other demands and notices, and consents and agrees that its liabilities
and obligations will not be released or discharged by any or all of the
following, whether with or without notice to it or any other Obligor, and
whether before or after the stated maturity hereof: (i) extensions of the time
of payment; (ii) renewals; (iii) acceptances of partial payments; (iv) releases
or substitutions of any collateral or any Obligor; or (v) failure, if any, to
perfect or maintain perfection of any security interest or lien in any
collateral. Each Obligor agrees that acceptance of any partial payment will not
constitute a waiver and that waiver of any default will not constitute waiver of
any prior or

 

1

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subsequent default. Nothing in this Note is intended to waive or vary the duties
of Bank or the rights of any Obligor in violation of Section 9.602 of the Texas
Business and Commerce Code.

 

Borrower represents and agrees that: all advances evidenced by this Note are and
will be for business, commercial, investment, agricultural or other similar
purpose and not primarily for personal, family, or household use.

 

Borrower represents and warrants that the following statement is true unless the
box preceding that statement is checked and initialed by Borrower and
Bank:    ¨                         No advances will be used for the purpose of
purchasing or carrying any margin stock as that term is defined in Regulation U
of the Board of Governors of the Federal Reserve System (the “Board”).

 

Notwithstanding anything contained herein or in any other Loan Document, if this
is a consumer credit obligation (as defined or described in 12 C.F.R. 227,
Regulation AA, promulgated by the Board), the security for this credit
obligation will not extend to any non-possessory security interest in household
goods (as defined in Regulation AA) other than a purchase money security
interest, and no waiver of any notice contained herein or therein will extend to
any waiver of notice prohibited by Regulation AA.

 

Texas Finance Code Chapter 346 shall not apply to this Note or to any advance
evidenced by this Note.

 

This Note is governed by Texas law. If any provision of this Note is illegal or
unenforceable, that illegality or unenforceability will not affect the remaining
provisions of this Note. BORROWER(S) AND BANK AGREE THAT THIS NOTE WILL BE
PERFORMED IN THE COUNTY IN WHICH BANK’S PRINCIPAL OFFICE IN TEXAS IS LOCATED,
AND THAT SUCH COUNTY IS PROPER VENUE FOR ANY ACTION OR PROCEEDING BROUGHT BY
BORROWER(S) OR BANK, WHETHER IN CONTRACT, TORT, OR OTHERWISE. ANY ACTION OR
PROCEEDING AGAINST BORROWER(S) MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT IN
SUCH COUNTY TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, BORROWER(S) HEREBY IRREVOCABLY (A) SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURTS, AND (B) WAIVES ANY OBJECTION IT MAY
NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT OR THAT ANY SUCH COURT IS AN INCONVENIENT FORUM. BORROWER(S)
AGREES THAT SERVICE OF PROCESS UPON IT MAY BE MADE BY CERTIFIED OR REGISTERED
MAIL, RETURN RECEIPT REQUESTED, AT ITS ADDRESS SPECIFIED BELOW. BANK MAY SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW AND MAY BRING ANY ACTION OR
PROCEEDING AGAINST BORROWER(S) OR WITH RESPECT TO ANY OF ITS PROPERTY IN COURTS
IN OTHER PROPER JURISDICTIONS OR VENUES.

 

For purposes of this Note, any assignee or subsequent holder of this Note will
be considered “Bank,” and each successor to Borrower will be considered
“Borrower.”

 

Each Borrower and cosigner represents that if it is not a natural person, it is
duly organized and validly existing and in good standing under the laws of the
state of its incorporation or organization; has full power to own its properties
and to carry on its business as now conducted; is duly qualified to do business
and is in good standing in each jurisdiction in which the nature of the business
conducted by it makes such qualification desirable; and has not commenced any
dissolution proceedings. Each Borrower and cosigner that is subject to the Texas
Revised Partnership Act (“TRPA”) agrees that Bank is not required to comply with
Section 3.05(d) of the TRPA and agrees that Bank may proceed directly against
one or more partners or their property without first seeking satisfaction from
partnership property. Each Borrower and cosigner represents that if it conducts
business under an assumed business or professional name it has properly filed
Assumed Name Certificate(s) in the office(s) required by Chapter 36 of the Texas
Business and Commerce Code. Each of the persons signing below as Borrower or
cosigner represents that he/she has full requisite power and authority to
execute and deliver this Note to Bank on behalf of the party for whom he/she
signs and to bind such party to the terms and conditions of this Note and that
this Note is enforceable against such party.

 

JURY TRIAL WAIVER. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW, BORROWER AND
BANK HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL
BY JURY THAT BORROWER OR BANK MAY HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN
EQUITY, IN CONNECTION WITH THIS NOTE OR THE OBLIGATIONS. BORROWER REPRESENTS AND
WARRANTS THAT NO REPRESENTATIVE OR AGENT OF BANK HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT BANK WILL NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THIS
RIGHT TO JURY TRIAL WAIVER. BORROWER ACKNOWLEDGES THAT BANK HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS WAIVER.

 

NO COURSE OF DEALING BETWEEN BORROWER AND BANK, NO COURSE OF PERFORMANCE, NO
TRADE PRACTICES, AND NO EXTRINSIC EVIDENCE OF ANY NATURE MAY BE USED TO
CONTRADICT OR MODIFY ANY TERM OF THIS NOTE OR ANY OTHER LOAN DOCUMENT.

 

THIS NOTE AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

 

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

IN WITNESS WHEREOF, Borrower has executed this Note effective as of MARCH 15,
2003.

 

BORROWER(S):

 

MANNATECH INCORPORATION

 

By:

 

 

/s/    STEPHEN D. FENSTERMACHER

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Name:

 

S. Fenstermacher

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Title:

 

CFO

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(Bank’s signature is provided as its acknowledgement of the above as the final
written agreement between the parties and as its agreement with each Borrower
subject to TRPA that Bank is not required to comply with Section 3.05(d) of TRPA
and its agreement with the Jury Trial Waiver.)

 

BANK: JPMorgan Chase Bank

By:

 

/s/    LAURA F. SIMMONS        

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Title:

 

Vice President

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Typed Name:

 

Laura F. Simmons

           

 

 

2

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SECURITY AGREEMENT—PLEDGE

(this “Agreement”)

 

MANNATECH INCORPORATED

600 SOUTH ROYAL LANE SUITE 200

COPPELL, TEXAS 75019

 

(whether one or more, “Debtor”), jointly and severally if more than one, each of
whose address pursuant to Section 3.(d) is set forth below under Debtor’s name
if different than the address above, and JPMORGAN CHASE BANK, whose principal
office in Texas is located at 712 Main Street, P. O. Box 2558, Houston, Harris
County, Texas 77252-2558 (together with its successors and assigns, “Secured
Party”), agree as follows:

 

SECTION 1. DEFINITIONS. (a) “Acts” means the Securities Act of 1933 and the
Securities Exchange Act of 1934, each as amended from time to time and any
regulations promulgated pursuant thereto or any successor statute. (b)
“Collateral” means all Pledged Securities, all Securities Accounts and all
Proceeds. Notwithstanding the description of “Collateral”, the Security Interest
shall exclude any common trust funds of Secured Party in which Secured Party is
prohibited by applicable law from taking a security interest. (c) “Control
Agreement” means any control agreement among Debtor, Secured Party and a
Securities Intermediary relating to Collateral. Debtor consents to Secured Party
entering into any master control agreement with any of its affiliates acting as
Securities Intermediary. (d) “Loan Value” means the value assigned by Secured
Party from time to time, in its sole discretion, to each item of Collateral. (e)
“Highest Lawful Rate” means the maximum nonusurious rate of interest permitted
to be charged by applicable Federal or state law governing this Agreement
(whichever permits the higher lawful rate) from time to time in effect. To the
extent that Texas law determines the Highest Lawful Rate, the Highest Lawful
Rate is the “weekly” rate ceiling as defined in the Texas Finance Code Chapter
303. (f) “Lien” means any mortgage, pledge, charge, encumbrance, security
interest, collateral assignment or other lien or restriction of any kind,
whether based on common law, constitutional provision, statute or contract. (g)
“Obligations” means all debts, obligations and liabilities of every kind and
character of Debtor, whether joint or several, contingent or otherwise, now or
hereafter existing in favor of Secured Party, including without limitation, all
liabilities arising under or from any note, open account, overdraft, letter of
credit application, endorsement, surety agreement, guaranty, interest rate swap
or other derivative product, acceptance, foreign exchange contract or depository
service contract, whether payable to Secured Party or to a third party and
subsequently acquired by Secured Party. Debtor and Secured Party specifically
contemplate that Obligations include indebtedness hereafter incurred by any
Debtor to Secured Party. (h) “Past Due Rate” means the Highest Lawful Rate or if
applicable law does not provide for a maximum nonusurious rate, then 18%. (i)
“Pledged Securities” means all securities, financial assets and other property
described on Schedule I and all other securities, financial assets and other
property that Debtor now or later delivers or causes to be delivered to Secured
Party or to any other person on Secured Party’s behalf intending such
securities, financial assets and other property to be pledged to Secured Party,
and any additional securities, financial assets and other property, or financial
assets delivered or transferred to Secured Party in replacement of or
substitution for any Pledged Securities, without the need for any additional
documentation. Pledged Securities include (1) the intangible interest
represented by any security, (2) the physical certificates, if any, and (3) all
securities entitlements. If any Securities Account is listed on Schedule 1,
Pledged Securities includes all securities and financial assets in which Debtor
has securities entitlements through the Securities Account. Debtor and Secured
Party expressly agree that all property held in the Securities Account are
financial assets under the UCC. (j) “Proceeds” means all products and proceeds,
in cash or otherwise, of all Collateral, including, but not limited to, all
interest, dividends (in cash or otherwise), rights to receive dividends,
subscription rights, voting rights, cash, instruments and other property now or
hereafter received, receivable or otherwise distributed in connection with the
sale, lease, license, exchange or other disposition of any Collateral and all
other rights, payments or distributions. Proceeds of Pledged Securities include
free credit balances and securities entitlements in any securities account in
which Pledged Securities are held, to the extent the free credit balances or
securities entitlements would otherwise be Proceeds. The inclusion of Proceeds
does not authorize Debtor to sell, dispose of or otherwise use Collateral in any
manner not specifically authorized herein. (k) “Proper Form” means in form and
substance satisfactory to Secured Party. (l) “Securities Account” means all
securities accounts of Debtor held by a Securities Intermediary and listed on
Schedule 1 or hereafter subject to the terms of this Agreement, including all
securities entitlements, free credit balances and other financial assets held in
or through the Securities Account. (m) “Securities Laws” means the Acts and any
other federal, state, local or foreign laws or regulations relating to the
Collateral. (n) “Securities Intermediary” means any securities intermediary
together with each of their successors and assigns or any affiliate of Secured
Party acting in such capacity holding Collateral listed on Schedule 1 or
hereafter subject to the terms of this Agreement. (o) “Security Interest” means
the Liens created by this Agreement. (p) “UCC” means the Texas Uniform
Commercial Code as amended from time to time if this Agreement is governed by
Texas law or the New York Uniform Commercial Code as amended from time to time
if this Agreement is governed by New York law. All terms defined in the UCC and
used in this Agreement shall have the same definitions herein as specified
therein unless otherwise defined in this Agreement.

 

SECTION 2. CREATION OF SECURITY INTEREST. To secure the payment and performance
of the Obligations, Debtor grants to Secured Party a security interest in,
pledges and assigns to Secured Party all Collateral owned by Debtor or in which
Debtor has rights or the power to transfer rights, and all Collateral in which
Debtor later acquires ownership, other rights or the power to transfer rights.

 

SECTION 3. DEBTOR’S REPRESENTATIONS. Debtor represents and warrants to Secured
Party the following: (a) Debtor is the sole and lawful owner of the Collateral,
free and clear of all Liens and adverse claims, and has the right and power to
assign and transfer the Collateral to Secured Party and to assign, pledge and
grant to Secured Party the Security Interest. No financing statement or similar
record covering the Collateral, other than in favor of Secured Party, is on file
in any public office. The Security Interest does not violate the rights of any
person. There are no restrictions on transfer, assignment or pledge of the
Collateral except as created by this Agreement. Debtor has obtained any consents
necessary to execute, deliver and perform Debtor’s obligations under this
Agreement and for Secured Party to enforce the Security Interest. (b) This
Agreement constitutes the legal, valid and binding obligation of Debtor,
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency and other similar laws affecting creditors’ rights
generally. ( c) The Collateral and Debtor’s use thereof comply with all
applicable laws, rules and regulations. Debtor has complied and will comply with
the Securities Laws in connection with Debtor’s ownership of Collateral. (d) The
address set forth in this Agreement is: (i) Debtor’s principal residence, if
Debtor is an individual; (ii) Debtor’s chief executive office, if Debtor is not
an individual and has more than one place of business; or (iii) Debtor’s place
of business if Debtor is not an individual and has only one place of business.
(e) If Debtor is a registered organization, it is organized under the laws of
the state or foreign jurisdiction set forth under Debtor’s certification below.
(f) If Debtor is an individual, Debtor’s correct name is set forth above in this
Agreement. If Debtor is a registered organization, Debtor’s name as set forth
above in this Agreement is its correct name as indicated on, the public record
of Debtor’s jurisdiction of organization which shows Debtor to have been
organized. If Debtor is neither a registered organization nor an individual, the
name of Debtor set forth in this Agreement satisfies the requirements of the UCC
for providing the name of Debtor in any financing statement related hereto,
including by example only, if a Debtor is a trust, the name of Debtor is the
name specified for the trust in Debtor’s organic document and if Debtor is an
organization other than a registered organization, a trust or a decedent’s
estate and Debtor has a name, the name of Debtor is the organizational name of
Debtor. If Debtor uses any trade or assumed names, Debtor has properly filed of
record in the appropriate filing office all those trade names and has delivered
to Bank a list of all of Debtor’s assumed or trade names. (g) Each Securities
Account is a valid and legally binding obligation of the Securities
Intermediary, the securities entitlements credited to the Securities Accounts
are valid and genuine and Debtor has provided Secured Party with a complete and
accurate statement of the financial assets and the money credited to the
Securities Account as of the date of this Agreement. (h) All Pledged Securities
are genuine, free from any restriction on transfer unless the restriction is
accurately noted on any physical certificate (it being understood that neither
the terms of this representation nor Secured Party’s taking delivery of any
legended certificate evidences Secured Party’s agreement that Collateral subject
to any restriction is acceptable as security for any Obligations and, if any
restriction exists, Debtor has completed and signed Schedule 2, Transfer
Restrictions Schedule). (i) All Pledged Securities are duly and validly
authorized and issued, fully paid and nonassessable as of the date of this
Agreement and if any of the Collateral is evidenced by a physical certificate
with an earlier issue date, as of that date. No Pledged Securities were issued
in violation of the preemptive rights of any person or of any agreement by which
Debtor or the issuer is bound. To the best of Debtor’s knowledge, unless
previously disclosed to Secured Party in writing, no issuer of Pledged
Securities (other than securities of a class which are publicly traded) has
granted any outstanding rights entitling any person to receive newly

 

3

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issued capital stock of the issuer. (j) No Collateral is held by a bailee except
as specified in an attached schedule. (k) Upon the taking of all actions
necessary to perfect the Security Interest, this Agreement will create a valid
and perfected first priority Lien in the Collateral securing the Obligations.

 

SECTION 4. DEBTOR’S AGREEMENTS. (a) Debtor will warrant and defend its title in
and to the Collateral and the Security Interest against any adverse claimant.
(b) If any Collateral is subject to any transfer or sale restriction, neither
Debtor nor any person with whom Debtor shall be deemed one “person” for purposes
of Rule 144 of the Securities and Exchange Commission (“Rule 144”) and any
successor provision, will pledge, sell, donate or otherwise transfer any other
securities of the same type, and in the event any transfer occurs (whether or
not with Secured Party’s express consent in its discretion), Debtor will furnish
Secured Party with a copy of any Form 144 filed in respect of the transfer. (c)
Notwithstanding the Security Interest in Proceeds, Secured Party has not
authorized Debtor to, and Debtor agrees not to sell, transfer, assign or
otherwise dispose of any interest in the Collateral, except as authorized in
this Agreement or in writing by Secured Party. Debtor will keep the Collateral
(including Proceeds) free from unpaid charges, including taxes and assessments,
and from all Liens other than those in favor of Secured Party. Debtor
understands that any sale, transfer, pledge, assignment or other disposition or
encumbrance of the Collateral contrary to this Agreement would violate the
rights of Secured Party under this Agreement. (d) If requested by Secured Party,
Debtor will promptly execute and deliver to Secured Party any documents required
(or which Secured Party reasonably believes to be required) under Regulation U
of the Board of Governors of the Federal Reserve System (“Regulation U”). None
of the Obligations will be a “purpose credit” under Regulation U unless Debtor
discloses that fact in writing to Secured Party on a Regulation U Purpose
Statement before the Obligation is created. (e) Secured Party may require at any
time that Debtor (i) deposit all Proceeds in a special bank or securities
account over which Secured Party alone has power of withdrawal and control, (ii)
notify other persons holding Collateral of Secured Party’s Security Interest and
that payment is to be made directly to Secured Party or to any financial
institution or Securities Intermediary designated by Secured Party. After the
making of such a request or the giving of any such notification, Debtor shall
hold any Proceeds of Collateral received by Debtor as trustee for Secured Party
without commingling them with other funds of Debtor and shall turn them over to
Secured Party in the identical form received, together with any necessary
endorsements, assignments or agreements providing Secured Party with control,
all in Proper Form. Secured Party shall apply the Proceeds and Collateral
received by Secured Party to the Obligations, such proceeds to be credited after
final payment in cash or other immediately available funds of the items giving
rise to them, or to be held as Collateral for the Obligations. (f) Debtor will
furnish Secured Party all records and other information Secured Party may
reasonably request. (g) Debtor will notify Secured Party promptly of any event
or condition that could have a significant effect on the aggregate value of the
Collateral or on the Security Interest. (h) Debtor will not change Debtor’s
principal residence, chief executive office or any of its other business
locations without providing Secured Party 60 days’ prior written notice. Debtor
will not change its legal identity, name, organizational structure or the
jurisdiction in which it is organized without the prior written consent of
Secured Party and shall notify Secured Party 60 days’ prior to a request for
consent of its intention or desire to so change. (i) Debtor will keep accurate
books and other records regarding the Collateral and will allow Secured Party to
inspect the Collateral and make test verifications of the Collateral and make
copies (including electronic copies) of Debtor’s books and records during
regular business hours. (j) Debtor has the risk of loss of the Collateral. (k)
Debtor will not deposit any Proceeds into a deposit account which is not
maintained with Secured Party. (l) If any Collateral is located or maintained
with any bailee or person other than Debtor, Debtor will immediately notify
Secured Party and obtain the acknowledgement of the bailee or other person that
the Collateral is held for the benefit of Secured Party and Debtor will, and
will cause such bailee or other person to enter into a control agreement in
Proper Form with Secured Party. (m) Debtor will take any action requested by
Secured Party to establish and maintain control by Secured Party of any
Collateral consisting of deposit accounts, letter of credit rights and
investment property. (n) If any Collateral comes into Debtor’s possession, then:
(i) Debtor will keep the Collateral separate from other property of Debtor; (ii)
Debtor will keep accurate records of all Collateral Debtor receives; and (iii)
Debtor will promptly deliver the Collateral to Secured Party in whatever form
received. (o) Debtor will not enter into any agreement purporting to prohibit or
restrict the transfer of any Collateral unless the agreement is expressly
subordinate to the rights of Secured Party, any purchaser at foreclosure sale,
and any person claiming the Collateral through either of them. (p) Any
indication on the books or internal records of a Securities Intermediary
(including any Securities Intermediary which is an affiliate of Secured Party)
that Pledged Securities or a Securities Account has been pledged to Secured
Party will conclusively establish Secured Party’s perfected Security Interest in
and control over the Collateral. (q) Debtor will not attempt to modify or
terminate any Control Agreement or the agreement between Debtor and any
Securities Intermediary governing any Securities Account without Secured Party’s
written consent. Debtor will cause each Securities Intermediary to send to
Secured Party a complete and accurate copy of every statement, confirmation,
notice or other communication concerning the Securities Account that the
Securities Intermediary sends to Debtor. Any confirmation or statement of
account that Secured Party may (but need not) issue will conclusively establish
delivery of Pledged Securities to Secured Party. (r) Debtor will comply with the
Securities Laws with respect to Debtor’s ownership of Collateral. Debtor will
not commit any act which might render any Collateral not readily saleable under
the Securities Laws. Debtor will notify Secured Party immediately of any
development or occurrence which to Debtor’s knowledge would render any
Collateral not readily saleable under the Securities Laws.

 

SECTION 5. VOTING RIGHTS AND DIVIDENDS. Unless an Event of Default occurs,
Debtor may exercise all voting and consensual powers and rights pertaining to
any Collateral for all purposes not inconsistent with the terms of this
Agreement and may receive and retain all dividends (other than stock or
liquidating dividends) on the Collateral. All dividends in stock or property
representing stock, and all subscription rights, warrants or other rights or
options, all liquidating dividends or distributions, and all securities or other
property received as a result of a merger or consolidation, will be Collateral
and must be delivered to Secured Party or as instructed by Secured Party.

 

SECTION 6. LOAN VALUE OF COLLATERAL. Debtor agrees that at all times the amount
of the Obligations may not exceed the aggregate Loan Value of the Collateral.
Debtor will, at Secured Party’s option, either supplement the Collateral or make
any payment under the Obligations to the extent necessary to ensure compliance
with this provision or Secured Party may liquidate Collateral without notice to
Debtor to the extent necessary to ensure compliance with this provision.

 

SECTION 7. FURTHER ASSURANCES. Secured Party may file this Agreement, or any
financing statements or amendments thereto or other record wherever Secured
Party believes necessary or appropriate to perfect the Security Interest,
including but not limited to, any official filing office, or in any other
recording or registration system. The financing statement or other record may
(a) indicate the Collateral as being of an equal or lesser scope or with greater
detail than set forth in this Agreement and (b) contain any other information
required by the UCC or other law regarding the notification of a Lien or other
right to direct disposition, for the sufficiency of the filing office’s or other
registrar’s acceptance of any financing statement or amendments thereto or other
record including, if Debtor is an organization, the type of organization and any
organization identification number issued to Debtor. Debtor also ratifies its
authorization for Secured Party’s filing of any financing statements covering
the Collateral in any jurisdiction prior to the date hereof. A photographic or
other reproduction of this Agreement or any financing statement relating to this
Agreement will be sufficient as a financing statement. Debtor will take such
action as Secured Party may at any time require to create, attach, perfect,
protect, assure the first priority of and to enforce the Security Interest.

 

SECTION 8. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Debtor authorizes and
irrevocably appoints Secured Party as Debtor’s attorney-in-fact to take any
action and execute or otherwise authenticate any record or other documentation
that Secured Party considers necessary or advisable to accomplish the purposes
of this Agreement, including but not limited to, the following actions: (1) to
endorse and collect all checks, drafts, other payment orders and instruments
representing or included in the Collateral or representing any payment, dividend
or distribution relating to any Collateral or to take any other action to
enforce, collect or compromise any of the Collateral; (2) to transfer any
Collateral into the name of Secured Party or its nominee or any broker-dealer
which may be an affiliate of Secured Party (including converting physical
certificates to book-entry holdings) and to execute any Control Agreement on
Debtor’s behalf and as attorney-in-fact for Debtor in order to perfect Secured
Party’s first priority and continuing Security Interest in the Collateral and in
order to provide Secured Party with control of the Collateral, and Debtor’s
signature on this Agreement or other authentication of this Agreement shall
constitute an irrevocable direction by Debtor to any bank, custodian,
broker-dealer, any other Securities Intermediary or commodity intermediary
holding any Collateral or any issuer of any letters of credit to comply with the
instructions or entitlement orders, as applicable of Secured Party, without the
further consent of Debtor or any other person; (3) to exchange any of the
Pledged Securities upon any merger, consolidation or other reorganization; (4)
to exercise any right, privilege or option pertaining to any Collateral, but
Secured Party has no obligation to do so; (5) to file any claims, take any
actions or institute any proceedings which Secured Party determines to be
necessary or appropriate to collect or preserve the Collateral or to enforce
Secured Party’s rights with respect to the Collateral; (6) to execute in the
name of or otherwise authenticate on behalf of Debtor any record reasonably
believed necessary or appropriate by Secured Party for compliance with laws,
rules or regulations applicable to any Collateral, or in connection with
exercising Secured Party’s rights under this Agreement; (7) to file any
financing statement relating to this Agreement electronically, and Secured
Party’s transmission of Debtor’s name as part of any filing relating to this
Agreement will constitute Debtor’s signature on and

 

4

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authentication of the financing statement; (8) to do and take any and all
actions with respect to the Collateral and to perform any of Debtor’s
obligations under this Agreement; and (9) to execute any documentation
reasonably believed necessary by Secured Party for compliance with Rule 144 or
any other restrictions, laws, rules or regulations applicable to any Collateral
hereunder that constitutes restricted securities under the Securities Laws. This
appointment is irrevocable and coupled with an interest and shall survive the
death or disability of Debtor.

 

SECTION 9. PROTECTION OF COLLATERAL. Except for the safe custody of any
Collateral in its possession and accounting for moneys actually received by it,
Secured Party has no duty as to any Collateral. Specifically, Secured Party has
no duty to do any of the following, and the failure to do the following things
will not be a failure to exercise ordinary care: (a) to preserve rights against
prior parties; (b) to determine the existence of any maturities, calls,
conversions, exchanges, offers, tenders or similar matters relating to the
Collateral or to inform Debtor of any such matters; (c) to exercise any right,
privilege or option relating to the Collateral unless (i) Debtor makes written
demand to Secured Party to do so, (ii) Debtor’s written demand is received by
Secured Party in sufficient time to permit Secured Party to do so in the
ordinary course of business, and (iii) if the exercise of such right reasonably
might be expected to reduce the value of the Collateral, Debtor provides
additional Collateral, acceptable to Secured Party in its sole discretion; (d)
to keep Debtor informed of changes or potential changes affecting the Collateral
(including such matters as tender offers, mergers, consolidations and
shareholder meetings); or (e) to sell any Collateral. If Debtor requests Secured
Party to sell the Collateral and provides additional Collateral acceptable to
Secured Party in its sole discretion, Secured Party may, but is not required to
do so. If Debtor requests that Secured Party deliver any Collateral to a broker
or other person, and Secured Party agrees to do so, Debtor will assume all risk
of loss of the Collateral. Secured Party has no duty to determine, and no
liability for any lack of, the authenticity or authority of any person
purporting to be a messenger, employee or other agent of the broker or other
person, or of any document or instructions delivered by any such person. Secured
Party’s sole responsibility is to deliver the Collateral to a person purporting
to be a messenger, employee or other agent of the broker or other person, and
doing so constitutes ordinary care.

 

SECTION 10. COSTS AND EXPENSES. To the maximum extent not prohibited by
applicable law, Debtor will pay, or reimburse Secured Party for, all costs and
expenses of every character incurred from time to time in connection with this
Agreement and the Obligations, including costs and expenses incurred (a) for
recording any record in connection with this Agreement, mortgage or recording
taxes (b) to satisfy any obligation of Debtor under this Agreement or to protect
or preserve the Collateral, (c) in connection with the evaluation, monitoring or
administration of the Obligations or the Collateral (whether or not an Event of
Default has occurred) including searches of any lien or organization records,
and (d) in connection with the exercise of Secured Party’s rights and remedies.
Costs and expenses include reasonable fees and expenses of outside counsel and
other outside professionals and charges imposed or allocated for the services of
attorneys and other professionals employed by Secured Party or its affiliates,
as well as bonds posted as surety for lost certificated securities and any costs
of reregistration of certificates. Any amount owing under this Section will be
due and payable on demand and will bear interest from the date of expenditure by
Secured Party until paid at the Past Due Rate. If any part of the Obligations is
governed by the Consumer Restrictions (as defined in Section 15), this Section
is limited to the extent required by the Consumer Restrictions with respect to
those Obligations.

 

SECTION 11. WAIVERS. Debtor waives all suretyship defenses that may lawfully be
waived, including but not limited to, notice of acceptance of this Agreement,
notice of the incurrence or acquisition of any Obligations, credit extended,
collateral received or delivered or other action taken in reliance on this
Agreement, notices and all other demands and notices of any description. With
respect to both Obligations and the Collateral, Debtor assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any Lien in any
Collateral, to the addition or release of any person primarily or secondarily
liable, to the acceptance of partial payment thereon and the settlement,
compromising or adjusting of any thereof, all in such manner and at such time or
times as Secured Party may deem advisable. To the extent not prohibited by
applicable law, Debtor further waives (i) diligence and promptness in preserving
liability of any person on the Obligations, and in collecting or bringing suit
to collect the Obligations; (ii) all rights, if any, of Debtor under Rule 31,
Texas Rules of Civil Procedure, or Chapter 34 of the Texas Business and Commerce
Code, or Section 17.001 of the Texas Civil Practice and Remedies Code; (iii) to
the extent Debtor is subject to the Texas Revised Partnership Act (“TRPA”),
compliance by Secured Party with Section 3.05(d) of TRPA; (iv) notice of
extensions, renewals, modifications, rearrangements and substitutions of the
Obligations; (v) failure to pay any of the Obligations as they mature, any other
default, adverse change in any obligor’s or any Debtor’s financial condition,
release or substitution of Collateral, subordination of Secured Party’s rights
in any Collateral, and every other notice of every kind. Nothing in this
Agreement is intended to waive or vary the duties of Secured Party or the rights
of Debtor or any obligor in violation of Section 9.602 of the UCC.

 

SECTION 12. DEFAULT. Each of the following events or conditions is an “Event of
Default:” (a) Debtor fails to pay when due (or within any contractually agreed
grace period) any of the Obligations; (b) any event occurs that results in the
automatic acceleration of any Obligations or gives Secured Party the immediate
right to declare any of the Obligations due and payable in full prior to final
maturity; (c) any warranty, representation or statement contained in this
Agreement or made in connection with this Agreement or any of the Obligations
was false or misleading in any respect when made; (d) Debtor violates any
covenant, condition or agreement contained in this Agreement or any other
documentation relating to any of the Obligations; (e) any Collateral is lost,
stolen, substantially damaged, destroyed, abandoned, levied upon, seized or
attached; (f) Debtor conceals or removes any part of the Collateral with intent
to hinder, delay or defraud Secured Party; (g) Secured Party receives at any
time a report indicating that the Security Interest is not prior to all other
Liens or other interests in the Collateral reflected in such report; or (h)
Debtor fails to comply with or become subject to any administrative or judicial
proceeding under any federal, state or local hazardous waste or environmental
law, asset forfeiture or similar law which may result in the forfeiture of
property, or other law where non-compliance may have a significant effect on the
Collateral or Debtor’s ability to pay the Obligations. After an Event of Default
occurs, Secured Party may, without notice to any person, declare the Obligations
to be immediately due and payable. Debtor WAIVES demand, presentment and all
notices, including without limitation notice of dishonor and default, notice of
intent to accelerate and notice of acceleration.

 

SECTION 13. SECURED PARTY’S RIGHTS AND REMEDIES. After an Event of Default
occurs, Secured Party will have all rights and remedies of a secured party after
default under the UCC and other applicable law, including without limitation,
the right to take possession of the Collateral, and for that purpose Secured
Party may, so far as Debtor can give authority therefor, enter upon any premises
on which any Collateral may be situated and lawfully remove any Collateral.
Secured Party may require Debtor to assemble the Collateral and make it
available at a reasonably convenient place Secured Party designates. Secured
Party may provide a copy of this Agreement to any Securities Intermediary or
other person having possession of, liable on or having any interest in any
Collateral. Secured Party may provide a copy of this Agreement to any person
having any interest in any Collateral. Secured Party is not required to take
possession of any Collateral prior to any sale, or to have any Collateral
present at any sale. In addition to public or private sale, Secured Party may
sell any Collateral on any exchange or through any broker, in one lot or several
parcels as Secured Party determines. Secured Party may sell part of the
Collateral without waiving its right to proceed against the remaining
Collateral. If any sale is not completed or is defective in the opinion of
Secured Party, Secured Party may make a subsequent sale of the same Collateral.
Any bill of sale or other record evidencing any foreclosure sale will be prima
facie evidence of the factual matters recorded therein. If a sale of Collateral
is conducted in conformity with customary practices of banks disposing of
similar property, the sale will be deemed commercially reasonable, but Secured
Party will have no obligation to advertise or to sell Collateral on credit.
However, if Secured Party sells any of the Collateral upon credit, Debtor will
be credited only with payments actually made by the purchaser, received by
Secured Party and applied to the indebtedness of the purchaser with respect to
the sale. In the event the purchaser fails to pay for the Collateral, Secured
Party may resell the Collateral and Debtor shall be credited with the proceeds
of the sale. In addition, Debtor waives any and all rights that Debtor may have
to a judicial hearing in advance of the enforcement of any of Secured Party’s
rights hereunder, including without limitation, its rights following an Event of
Default to take immediate possession of the Collateral and to exercise its
rights with respect thereto. By exercising its rights, Secured Party will not
become liable for, and Debtor will not be released from, any of Debtor’s duties
or obligations under the Collateral. All remedies in this Agreement are
cumulative of any and all other legal, equitable or contractual remedies
available to Secured Party and any such remedies may be exercised simultaneously
or in any order as determined by Secured Party. Debtor WAIVES any rights to a
marshaling of assets or sale in inverse order of alienation, and any rights to
notice except as required by the UCC. Secured Party may by notice to Debtor
immediately terminate all of Debtor’s voting rights and dividend rights under
Section 5. If the Collateral includes any Securities Account, Secured Party may
(i) deliver a notice of exclusive control or otherwise revoke trading and other
rights, if any, of Debtor under the Control Agreement; (ii) cause the Securities
Account to be re-registered in Secured Party’s name only or transfer the
Securities Account to another broker/dealer in Secured Party’s name only; and
(iii) remove any Collateral from the Securities Account and register such
collateral in Secured Party’s name or in the name of its broker/dealer, agent or
nominee or any of their nominees. Secured Party may exercise any voting,
conversion,

 

5

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registration, purchase or other rights of a holder of any of the Collateral
after an Event of Default occurs and any reasonable expense of such exercise
will be an expense of Debtor preserving the value of Collateral. Debtor agrees
that Secured Party’s ability to effect a sale of Collateral may be materially
restricted by applicable Securities Laws, or other laws, rules, regulations or
agreements applicable to the Collateral delivered by Debtor. Secured Party may
sell Collateral subject to any restriction that Secured Party reasonably
believes to be necessary or advisable under applicable Securities Laws or other
laws, rules, regulations or agreements, and the sale (whether public or private)
will not be rendered commercially unreasonable by compliance with any such
restrictions and/or laws, rules, regulations and other provisions reasonably
believed by Secured Party to be relevant to the sale, whether or not other
manner(s) of sale may have been available. Debtor specifically acknowledges and
agrees that a commercially reasonable sale of restricted securities typically
does not yield net sales proceeds equal to the sale proceeds expected from sale
of the same issue of securities if unrestricted. Secured Party will have no
obligation to delay a sale of any of the Collateral in order to permit Debtor to
register Collateral under any Securities Laws, even if Debtor would agree to do
so. Debtor represents and warrants that Debtor’s holding period (as defined and
provided for in Rule 144) for each item of Collateral represented by a physical
certificate is at least as long as evidenced by the issue date on the
certificate. Debtor will indemnify and hold harmless Secured Party and any
“controlling persons” of Secured Party (within the meaning of the Acts) from and
against any loss, cost or expense (including counsel fees and disbursements) in
connection with the Collateral, or any registration of the Collateral, arising
out of or based on any untrue or misleading statement or omission or alleged
untrue or misleading statement or omission of a material fact contained in any
registration statement or otherwise. Debtor specifically acknowledges that
Secured Party’s exercise of rights and remedies under this Section 13 and
otherwise may affect Debtor’s tax liability, and agrees that Secured Party shall
have no duty whatsoever to take into consideration any such tax liability.

 

SECTION 14. STANDARDS FOR EXERCISING REMEDIES. To the extent that applicable law
imposes duties on Secured Party to exercise remedies in a commercially
reasonable manner, Debtor acknowledges and agrees that it is not commercially
unreasonable for Secured Party, (a) to fail to incur expenses reasonably deemed
significant by Secured Party to prepare any Collateral for disposition, (b) to
fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or if not required by other law, to fail to obtain governmental or
third party consents for the collection or disposition of Collateral to be
collected or disposed of, (c) to fail to exercise collection remedies against
other persons obligated on Collateral or to remove Liens on or any adverse
claims against Collateral, (d) to exercise collection remedies against other
persons obligated on Collateral directly or through the use of collection
agencies and other collection specialists, (e) to advertise dispositions of
Collateral through publications or media of general circulation, whether or not
Collateral is of a specialized nature, (f) to contact other persons, whether or
not in the same business as Debtor, for expressions of interest in acquiring all
or any portion of the Collateral, (g) to hire one or more professional
auctioneers to assist in the disposition of Collateral, whether or not
Collateral is of a specialized nature, (h) to dispose of Collateral by utilizing
Internet sites that provide for the auction of assets of the types included in
Collateral or that have the reasonable capability of doing so, or that match
buyers and sellers of assets, (i) to dispose of assets in wholesale rather than
retail markets, (j) to disclaim disposition warranties, (k) to purchase
insurance or credit enhancements to insure Secured Party against risks of loss,
collection or disposition of Collateral or to provide Secured Party a guaranteed
return from the collection or disposition of Collateral, (l) to the extent
deemed appropriate by Secured Party, to obtain the services of brokers,
investment bankers, consultants and other professionals (including Secured Party
and its affiliates) to assist Secured Party in the collection or disposition of
any Collateral, (m) to comply with any applicable state or federal law
requirement in connection with the disposition or collection of any Collateral;
or (n) to not take into consideration Debtor’s tax liability in connection with
the sale of any Collateral. Debtor acknowledges that this Section is intended to
provide non-exhaustive indications of what actions or omissions by Secured Party
would not be commercially unreasonable in Secured Party’s exercise of remedies
against the Collateral and that other actions or omissions by Secured Party
shall not be deemed commercially unreasonable solely by not being included in
this Section. Without limitation upon the foregoing, nothing contained in this
Section shall be construed to grant any rights to Debtor or to impose any duties
upon Secured Party that would not have been granted or imposed by this Agreement
or by applicable law in the absence of this Section.

 

SECTION 15. ADDITIONAL AGREEMENTS. (a) For so long as any Obligations exist, or
Secured Party has any commitment to provide financing to any Debtor, or Secured
Party makes available a line of credit to any Debtor whether or not extensions
of credit under the line are at Secured Party’s sole discretion, or Secured
Party has any obligation to purchase from or guarantee to any affiliate any
extension of credit to any Debtor, or Secured Party provides any banking
services to any Debtor and until Secured Party executes and delivers to Debtor
an authenticated termination statement, this Agreement will remain in effect.
(b) No modification or waiver of the terms of this Agreement will be effective
unless in writing and signed by Secured Party. Secured Party may waive any
default without waiving any other prior or subsequent default. Secured Party’s
failure to exercise or delay in exercising any right under this Agreement will
not operate as a waiver of such right. No single or partial exercise of any
right under this Agreement will preclude any other or further exercise of that
right or any other right. (c) Any notice required or permitted under this
Agreement will be given in a record by United States mail, by hand delivery or
delivery service, by telegraphic, telex, telecopy or cable communication, or
electronic message via the Internet sent to the intended addressee at the
address shown in this Agreement, or to such different address as the addressee
designates by 10 days’ prior notice to be the address for this Agreement. Notice
by United States mail will be effective when mailed. All other notices will be
effective when received. Written confirmation or electronic notification of
receipt will be conclusive. (d) If any provision of this Agreement is
unenforceable or invalid, that provision will not affect the enforceability or
validity of any other provision. If the application of any provision of this
Agreement to any person or circumstance is illegal or unenforceable, that
application will not affect the legality or enforceability of the provision as
to any other person or circumstance. (e) If more than one person executes this
Agreement as Debtor, their obligations under this Agreement are joint and
several, and the term Collateral includes any property described in Section 1
that is owned by any Debtor individually or jointly with any other Debtor, and
the term “Obligations” includes both several and joint obligations of each
Debtor. (f) The section headings in this Agreement are for convenience only and
shall not be considered in construing this Agreement. (g) This Agreement may be
executed or authenticated in any number of counterparts and by different parties
in separate counterparts, each of which will constitute one and the same
agreement. (h) This Agreement benefits Secured Party and its successors and
assigns and is binding on Debtor and Debtor’s heirs, legal representatives,
successors and assigns and shall bind all who become bound as a debtor to this
Agreement. Secured Party may assign its rights and interests under this
Agreement. Debtor shall render performance under this Agreement to any
subsequent assignee. Debtor waives and will not assert against any assignee any
claims, defenses or set-off which Debtor could assert against Secured Party
except those which cannot legally be waived. (i) If any of the Obligations is
subject to Chapters 342 or 346 of the Texas Finance Code or Regulation AA of the
Board of Governors of the Federal Reserve System (collectively, the “Consumer
Restrictions”) or is a consumer transaction, (1) nothing in this Agreement
waives any rights which cannot be legally waived under the Consumer Restrictions
or the UCC, and (2) Collateral securing Obligations subject to the Consumer
Restrictions does not include any assignment of wages or any non-possessory,
non-purchase money security interest in household goods. (j) This Agreement is
governed by the laws of the State of x Texas, ¨ New York. (k) Secured Party is
executing this Agreement for the purpose of acknowledging and agreeing to the
following Jury Trial Waiver, the notice given under §26.02 of the Texas Business
and Commerce Code and to comply with the waiver requirement of TRPA, and Secured
Party’s failure to execute or authenticate this Agreement will not invalidate
this Agreement.

 

JURY TRIAL WAIVER. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW, DEBTOR AND
SECURED PARTY HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT
TO TRIAL BY JURY DEBTOR OR SECURED PARTY MAY HAVE IN ANY ACTION OR PROCEEDING,
IN LAW OR IN EQUITY, IN CONNECTION WITH THIS AGREEMENT OR THE OBLIGATIONS.
DEBTOR REPRESENTS AND WARRANTS THAT NO REPRESENTATIVE OR AGENT OF SECURED PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SECURED PARTY WILL NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THIS RIGHT TO JURY TRIAL WAIVER. DEBTOR
ACKNOWLEDGES THAT SECURED PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS WAIVER.

 

6

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This written loan agreement represents the final agreement of the parties and
may not be contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties. There are no unwritten oral agreements between the
parties.

 

Executed effective as of March 15, 2003.

 

Debtor certification for all non-individuals: Debtor certifies that it is
organized under the laws of the State of TEXAS if a U.S. Debtor, and if not a
U.S. Debtor, the laws of                         .

 

DEBTOR:

 

 

MANNATECH, INCORPORATED

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                          600 SOUTH ROYAL LANE SUITE 200

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                          COPPELL, TEXAS 75019

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Section 3. (d) Address (if different from the address set forth
above):                                         

 

   

STEPHEN D. FENSTERMACHER        

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CFO

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Debtor certification for all non-individuals: Debtor certifies that it is
organized under the laws of the State of ___________ if a US Debtor, and if not
a US Debtor, the laws of                          .

 

DEBTOR:                                                 

Section 3.(d) Address (if different from the address set forth
above):                                         

 

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SECURED PARTY: JPMORGAN CHASE BANK

712 Main Street

P. O. Box 2558

Houston, Texas 77252-2558

 

By:

 

/s/    LAURA F. SIMMONS        

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Name:

 

Laura F. Simmons

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Title:

 

Vice President

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