**Exhibit 10.14**

 

GUARANTY AGREEMENT

 

 

This Guarantyis made by the undersigned (referred to as “Guarantors”, whether one or more)for the benefit of INTERNATIONAL BANK OF COMMERCE, 130 E. Travis, San Antonio,Bexar County, Texas 78205 (“Lender”), This Guaranty relates to the indebtednessand other obligations described below of LANCER PARTNERSHIP, LTD., a Texaslimited partnership (“Borrower”), whether one or more.

 

1. Guarantee. Guarantors, for**good andvaluable consideration, the receipt of which is hereby acknowledged, do herebyjointly and severally, unconditionally guarantee and promise to pay to Lender,its successors and assigns, in currency which is legal tender in the UnitedStates of America,

 

(a) the full, punctual and prompt payment of the GuaranteedIndebtedness (defined below), together with interest thereon from the date suchindebtedness is due until paid at the rate of interest specified in thepromissory note(s) and/or other instruments or documents that evidence suchindebtedness, and

 

(b) the performance and discharge of the obligations of Borrowerspecified and under any and all promissory notes, letters of credit, and allother documents and instruments (the “Security Instruments”) executed byBorrower and/or other parties in connection with the Guaranteed Indebtedness.This Guaranty is an absolute and continuing unconditional guaranty of paymentand not of collectability.

 

2. Guaranteed Indebtedness. The term “Guaranteed Indebtedness”shall mean all liabilities and obligations of Borrower (or any of them if morethan one) to Lender, whether immediate or remote, whether now existing orhereafter created or arising, due or to become due, direct or indirect,absolute or contingent, and whether joint, several, joint and several, as tooutstanding principal, accrued and unpaid interest, late charges, attorney’sfees, collection costs and all other sums owing by Borrower (or any of them ifmore than one) to Lender, including but not limited to:

 

(a) anycommercial loan or indebtedness; (b) any credit card or other consumer type ofloan; (c) any indebtedness relating to checking or savings accounts(overdrafts, interest, fees, etc.); (d) any expenses incurred in the protectionor maintenance of the collateral securing any of such liabilities, loans, andobligations; (e) any expenses incurred in the collection of any obligation ofthe Borrower to Lender whether arising out of this Guaranty or otherwise; (f)any letters of credit and/or indebtedness arising out of, or advanced to pay,letters of credit transactions; (g) any indebtedness, however evidenced,whether by promissory note, bookkeeping entry, electronic transfer, checks,drafts or other items, or by any other manner or form; (h) any otherindebtedness of Borrower to any member Bank or branch Bank of InternationalBancShares Corporation, jointly and/or severally, and in any capacity, whetheras borrower, guarantor, or otherwise, now or hereafter owing, created and/orarising, and regardless of how evidenced or arising; (i) any and all extensions,modifications, substitutions and/or renewals of any of such indebtedness;and/or (j) any of the foregoing that arises after the filing of a petition inbankruptcy by or against Debtor under the Federal Bankruptcy Code, even if theobligations do not accrue because of the automatic stay under Bankruptcy Code362 or otherwise.

 

By executionof this Guaranty, Guarantor expressly covenants that Guarantor understands thatthis Guaranty will guarantee the obligation of all present and futureindebtedness of Borrower (and anyone of them if more than one) regardless ofthe fact that said other indebtedness may be of a different c1ass and may havebeen incurred for a different purpose and may be totally unrelated to thepurpose of the loan made or advanced at the time of the execution by Guarantorsof this Guaranty Agreement.

 

3. Guaranty Terms. This Guaranty is subject to the followingterms:

 

(a) Guarantors agree that Lender may renew, rearrange or extend fromtime to time, the time, manner, place or terms of payment of the GuaranteedIndebtedness or any renewals or extensions thereof without notice thereof toGuarantors and Guarantors hereby consent to such action, and/or Lender maysupplement, change, amend, substitute, modify or alter the Guaranteed Indebtednessand/or any present and future Security Instruments without in any way changing,releasing or discharging Guarantors from liability and/or obligation hereunder;

 

(b) Guarantors agree that notice of acceptance of this GuarantyAgreement by Lender is not expected or desired and Guarantors waive notice ofacceptance by Lender of this Guaranty Agreement and also waive demand foroverdue payments, notice of intention to accelerate and notice of actualacceleration, presentment, demand for payment, protest and notice of protest,nonpayment, default or dishonor of the Guaranteed Indebtedness or any renewal,modification, or extension thereof; waive the obligation required by Section 34.02of the Texas Business and Commerce Code (the “Code”) for Lender to sue on theGuaranteed Indebtedness; the discharge provisions of §34.02(b) of the Code andthe provisions of §34.03 of the Code which require a levy of execution to bemade against the principal’s property first so that pursuant to this waiver,levy can be made against the Guarantors’ property prior to or with Borrower’sproperty;

 

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(c) Lender has the right but not the obligation, at any time and fromtime to time, without prejudice to any claim against Guarantors hereunder, andwithout notice to Guarantors to: (i) exchange, release or surrender all or anypart of the properties, real or personal, (the “Collateral”) which securepayment of the Guaranteed Indebtedness, (ii) sell all or part of the Collateralin accordance with the terms and provisions of any security instrument andbecome the purchaser thereof at any public sale of the same, (iii) settle orcompromise with the Borrower, or any other person primarily or secondarilyliable with the Borrower, the Guaranteed Indebtedness, in whole or in part, andall renewals and extensions thereof, but without waiving Lender’s rights to anyand all deficiencies on said Guaranteed Indebtedness, if any, and (iv) performor attempt to perform, partially or fully, any or all of the obligationsguaranteed hereunder;

 

(d) No failure, omission or delay on the part of Lender in exercisingany rights hereunder or in taking any action to collect or enforce payment ofany obligations to which this Guaranty applies or in enforcing observance orperformance of any agreement, covenant, term or condition to be performed orobserved under the Security Instruments, either against the Borrower or anyother person primarily or secondarily liable with the Borrower, shall operateas a waiver of any such right or in any manner prejudice the rights of Lenderagainst Guarantors;

 

(e) Guarantors waive any right to require Lender to first (i) proceedagainst the Borrower or endorsers, (ii) proceed against, sell or exhaust anycollateral held by Lender for the payment of the Guaranteed Indebtedness, or(iii) pursue any other remedy that Lender has or to which it may be entitled;

 

(f) Suit may be brought against the Guarantors and/or against any otherperson or entity obligated on the Guaranteed Indebtedness, whether by separateGuaranty Agreement, or otherwise, jointly and severally, and against anyone ormore of them, less than all, without impairing the rights of the Lender, itssuccessors or assigns, against the other Guarantors, and the Lender may compromisewith anyone of the Guarantors for such sum or sums as it may see fit andrelease such of the Guarantors from all further liability to the Lender forsuch indebtedness without impairing the right of the Lender to demand andcollect the balance of such Guaranteed Indebtedness from others of theGuarantors not so released, but it is agreed among the Guarantors themselves,however, that such compromise and release shall not impair the rights of theGuarantors among themselves arid will not impair any of the Lender’s rightsagainst the Borrower to recover the Guaranteed Indebtedness to include theLender’s right, at its option, to proceed against the Borrower for a deficiencyjudgment;

 

(g) The liability of Guarantors shall remain and continue in full forceand effect notwithstanding (i) the non-liability of the Borrower for any reasonwhatsoever for the payment of the Guaranteed Indebtedness or any part thereof,save and except actual payment of the Guaranteed Indebtedness, (ii) thevoluntary or involuntary liquidation, dissolution, sale of all or substantiallyall of the property described in the Security Instruments for the benefit ofcreditors, reorganization, arrangement, composition or readjustment of, or anysimilar proceeding affecting Borrower or any of Borrower’s assets, (iii) thetotal pr partial release of the Borrower from the observance of any of theagreements, covenants, terms or conditions contained in the SecurityInstruments by agreement of Lender and/or by operation of law, or (iv) any defensesor rights of set-off or counterclaims which Borrower may have or assert;

 

(h) Until the Guaranteed Indebtedness has been paid in full to Lender,Guarantors hereby (i) waive and release any right of subrogation Guarantorshave or to which Guarantors may be entitled (in and to the benefit of anysecurity which Lender may at any time hold in connection with the GuaranteedIndebtedness); and (ii) expressly subordinate their rights to payment of anyindebtedness owing from Borrower to Guarantors whether now existing or arisingat any time in the future to the prior right of Lender to receive or requirepayment in full of the Guaranteed Indebtedness including interest accruing onthe Guaranteed Indebtedness, after any petition is filed under the United StatesBankruptcy Code, which post-petition interest Guarantors agree shall remain aclaim that is prior and superior to any claim of Guarantors notwithstanding anycontrary practice, custom or ruling or proceedings under the United StatesBankruptcy Code, and Guarantors agree not to accept any payment or satisfactionof any kind of any indebtedness of the Borrower to Guarantors. If Guarantorsshould receive any such payment, satisfaction or security for any indebtednessof the Borrower to Guarantors, Guarantors agree forthwith to deliver the sameto the Lender in the form received, endorsed or assigned as may be appropriatefor application on account of, or as security for, the Guaranteed Indebtednessor performance by Guarantors hereunder and until so delivered, and/or agree tohold the same for the Lender;

 

(i) Guarantors agree that this guaranty contract and all obligationshereunder are payable and performable in Bexar County, Texas, that paymenthereunder is due in said county at the address of Lender. GUARANTORS AGREEFURTHER THAT THIS GUARANTY AGREEMENT AND ALL RIGHTS, OBLIGATIONS ANDLIABILITIES ARISING HEREUNDER SHALL BE CONSTRUED ACCORDING TO THE LAWS OF THESTATE OF TEXAS;

 

(j) Guarantors agree that the Lender may, without demand or notice ofany kind, at any time when any amount shall be due and payable hereunder byGuarantors, appropriate and apply toward the payment of such amount, and insuch order of application as the Lender in its sole discretion may from time totime elect, any property, balances, credits, deposits, accounts or monies ofGuarantors now or hereafter, for any purpose, in the possession or control ofthe Lender or any member Bank or branch Bank of International BancSharesCorporation;

 

(k) In addition to all liens upon, and rights of set-off against, themonies, securities; or other property of Guarantors given Lender by law,Guarantors hereby grant to Lender a security interest in and a right of set-offagainst all monies, securities, and other property (except to the extent prohibitedby applicable Federal and State laws) of Guarantors now or hereafter in thepossession of or on deposit with Lender or any member Bank or branch Bank ofInternational Bancshares Corporation, whether held in a general or specialaccount or deposit, or for safekeeping or otherwise. Every such securityinterest and right of set-off may be exercised without demand upon or notice toGuarantors. No security interest or right of set-off shall be deemed to havebeen waived by any act or conduct on the part of the Lender, or any failure toexercise such right of set-off or to enforce such security interest; or by anydelay in so doing. Every right of set-off and security interest shall continuein full force and effect until such right of set-off or security interest isspecifically waived or released by an instrument in writing executed by Lender.The foregoing is in addition to and not in lieu of any rights of set-offallowed by law;

 

(l) Guarantors, whether one or more of them, may give to the Lenderwritten notice that those of Guarantors signing and giving such notice will notbe liable hereunder for any Guaranteed Indebtedness created, incurred orarising after the giving of such notice,

 

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**BUT THEOBLIGATIONS UNDER THIS GUARANTY OF THOSE GUARANTORS WHO SHALL NOT HAVE SIGNEDAND GIVEN SUCH NOTICE SHALL REMAIN AND CONTINUE WITHOUT DIMINUTION WHATSOEVER,AS IF SUCH GUARANTORS HAD BEEN THE ONLY GUARANTORS SIGNING THIS INSTRUMENT, OROTHER GUARANTY AGREEMENT. HOWEVER, NO SUCH NOTICE SHALL LIMIT OR IMPAIR THEOBLIGATIONS HEREUNDER OF ANY GUARANTORS BY WHOM SUCH NOTICE IS SIGNED AND GIVENWITH RESPECT TO ANY OF THE GUARANTEED INDEBTEDNESS WHICH WAS EXISTING PRIOR TOAND ON THE DATE OF RECEIPT OF SUCH NOTICE BY THE LENDER. THE GUARANTORS SIGNINGAND GIVING SAID NOTICE SHALL CONTINUE TO BE LIABLE FOR PAYMENT OF THATGUARANTEED INDEBTEDNESS WHICH WAS EXISTING PRIOR TO AND ON THE DATE OF RECEIPTBY LENDER OF SAID NOTICE INCLUDING ALL INTEREST TO ACCRUE AND REMAIN UNPAID THEREAFTERON THE GUARANTEED INDEBTEDNESS UNTIL THE GUARANTEED INDEBTEDNESS IS PAID INFULL. THE GUARANTEED INDEBTEDNESS MAY BE RENEWED, CONSOLIDATED, AND/ORMODIFIED, FROM TIME TO TIME, AFTER RECEIPT BY LENDER OF SUCH NOTICE, WITHOUTIMPAIRING OR LIMITING THE OBLIGATION OF GUARANTORS TO REPAY THE GUARANTEEDINDEBTEDNESS (WITH INTEREST AS IT ACCRUES AND REMAINS UNPAID). NOTWITHSTANDINGTHE FOREGOING, NO SUCH NOTICE SHALL LIMIT OR IMPAIR THE OBLIGATIONS OF ANYGUARANTORS FOR ANY LOSS TO LENDER RESULTING FROM ITEMS IN TRANSIT OR FROMCURRENCY DEVALUATIONS ARISING AFTER RECEIPT OF SUCH NOTICE. THE NOTICE ABOVEPROVIDED FOR SHALL NOT BE CONSIDERED AS GIVEN OR EFFECTIVE UNTIL ACTUALLYRECEIVED AND ACKNOWLEDGED IN WRITING BY AN OFFICER OF SAID LENDER.**In the event of the death of any Guarantors hereunder, the obligation of thedeceased Guarantor shall continue in full force and effect against his/herstate as to all Guaranteed Indebtedness which shall have been created orincurred by the Borrower prior to the time when the Lender shall have receivednotice in writing of such death and this Guaranty shall from the date of suchdeath, as to all Guaranteed Indebtedness created, incurred or arising aftersuch death remain and continue in full force as a guaranty by the survivingGuarantors. All Guaranteed Indebtedness, of whatever kind or character, createdpursuant to the provisions of any binding loan agreement between Lender andBorrower entered into prior to receipt by Lender of any notice referred toherein, including notice of death of any Guarantor, shall be deemed to beGuaranteed Indebtedness created, incurred or arising prior to receipt of anysuch notice to Lender even though advances constituting all or a portion ofsuch indebtedness be made subsequent to receipt of such notice by Lender;

 

(m) In the event the Borrower is a trust, corporation, joint stockassociation, limited liability company, limited liability partnership orpartnership, or is hereafter incorporated, and if the Guaranteed Indebtednessat any time hereafter exceeds the amount permitted by law, or said Borrower isnot liable because the act of creating the obligation is ultra vires, or theofficers or persons creating same acted in excess of their authority, thennotwithstanding such events, the individuals executing this Guaranty shall beliable personally hereunder, notwithstanding that said trust, corporation,joint stock association, limited liability company, limited liabilitypartnership or partnership is not liable under this Guaranty (or for thepayment of any portion of the Guaranteed Indebtedness), to the same extent assuch individuals would have been if the Guaranteed Indebtedness of saidBorrower had been enforceable against it;

 

(n) In the event any legal action or arbitration proceeding iscommenced in connection with the enforcement of or any declaration of rightsunder this Guaranty and/or any instrument or written agreement required ordelivered under or pursuant to the terms of this Guaranty or the GuaranteedIndebtedness, and/or any controversy or claim, whether sounding in contract,tort or statute, legal or equitable, involving in any way the Guaranteedindebtedness, or any other proposed or actual loan or extension of creditinvolving Borrower, the prevailing party shall be entitled to recoverreasonable and necessary attorney’s fees, paralegal costs (including allocatedcosts for in-house legal services), expert witness fees and costs, expenses andcosts and other necessary disbursements made in connection with any such actionor proceeding, in the amount determined by the fact-finder or arbitrator;

 

(o) If any of the following events occur or are continuing (and suchevents continue beyond any applicable grace period provided in the SecurityInstruments for the curing of such events):

 

(i)            Thedefault and failure of Borrower to Pay or perform the Guaranteed Indebtedness,when due, in accordance with the terms, of the Security Instruments, whichdefault continues beyond any grace period provided in the Security Instrumentsfor the curing of such default; or

(ii)           IfGuarantors, or any of them, default in the performance or observance of anyagreement, covenant, term or condition contained herein; or

(iii)          IfGuarantors, or any of them, make a general assignment for the benefit of creditors;or

(iv)          IfGuarantors, or any of them, petition or apply to any tribunal for theappointment of a trustee or receiver of the business, estate or assets of anysubstantial part of the business, estate or assets of Guarantors under anybankruptcy, reorganization, arrangement, insolvency, readjustment of debt,dissolution or liquidation law of any jurisdiction, whether now or here afterin effect; or

(v)           Ifany such petition or application is filed or any such proceedings are commencedagainst Guarantors and Guarantors, or any of them, by any act indicate approvalthereof, consent thereto, or acquiescence therein, or an order is enteredappointing any such trustee or receiver, or adjudicating Guarantors bankrupt orinsolvent, or approving the petition in any such proceedings; or

(vi)          Ifany other material change shall occur which causes Lender to deem itself to beinsecure in the payment or performance by Borrower of the GuaranteedIndebtedness;

 

THEN, in any of such events, an event of default under the Guarantyshall have occurred and Lender may, at its option, without notice of any kind,declare the Guaranteed Indebtedness to be due and payable immediately, togetherwith the interest accrued thereon under the terms of the Security Instrumentsand demand payment thereof by Borrower, Guarantors, or both of them and pursuecollection and enforcement in accordance with applicable law.

 

4. Compliance with Usury Laws. It is expressly, understood andagreed that under no contingency or event whatsoever shall any amount be paidby Guarantors hereunder, which is or may be determined to be interest, everexceed the maximum amount of interest which may be charged to Guarantors underthe laws of the State of Texas and the laws of the United States of America,when and to the extent they preempt the laws of said state. In no event shallthe Guarantors, upon demand by the holder hereof for payment of the GuaranteedIndebtedness, upon acceleration of the maturity of any promissory noteguaranteed by this Guaranty Agreement or otherwise, be obligated to payinterest on excess of the amount permitted by law. If for any reason orcircumstance fulfillment of any provisions 

 

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hereof, at any time performance of such provisions shall be due, andshall involve receipt by Lender of interest in any amount which would exceedthe highest lawful rate to Guarantors, such amount which would be excessiveinterest shall be applied to the reduction of the principal of the GuaranteedIndebtedness and not to payment of interest.

 

5. Severability of Terms. In the event any of the provisionscontained in this Guaranty shall for any reason be held to be invalid, illegalor unenforceable in any respect, such provision shall not affect the validityof any other terms or provisions hereof.

 
| 6. |   | **ARBITRATION.** |
|----|--------|------------------|

 

 

**GUARANTORSAND LENDER FURTHER AGREE AS FOLLOWS:**

 

**(a)****           ANYAND ALL CONTROVERSIES BETWEEN THE PARTIES, EXCEPT SUCH CLAIMS AND CONTROVERSIESWHICH ARE CONSUMER RELATED AND INVOLVE AN AGGREGATE AMOUNT IN CONTROVERSY OFLESS THAN TEN THOUSAND DOLLARS ($10,000.00), SHALL BE RESOLVED BY ARBITRATIONIN ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATIONASSOCIATION IN EFFECT AT THE TIME OF FILING, UNLESS THE COMMERCIAL ARBITRATIONRULES CONFLICT WITH TIDS PROVISION, AND IN SUCH EVENT THE TERMS OF THISPROVISION SHALL CONTROL TO THE EXTENT OF THE CONFLICT. NOTWITHSTANDING ANYTHINGCONTAINED HEREIN TO THE CONTRARY, SAVE AND EXPECT SUBPARAGRAPHS (k), (m), (o),(p), AND (8) HEREIN, THOSE CONSUMER RELATED CLAIMS AND CONTROVERSIES INVOLVINGAN AGGREGATE AMOUNT OF LESS THAN TEN THOUSAND DOLLARS ($10,000.00) SHALL BECONDUCTED IN ACCORDANCE WITH THE AMERICAN ARBITRATION ASSOCIATION RULES FOR THERESOLUTION OF CONSUMER-RELATED DISPUTES OF LESS THAN TEN THOUSAND DOLLARS. ANYARBITRATION HEREUNDER SHALL BE BEFORE AT LEAST THREE NEUTRAL ARBITRATORSASSOCIATED WITH THE AMERICAN ARBITRATION ASSOCIATION AND SELECTED IN ACCORDANCEWITH THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION.FAILURE OF ANY ARBITRATOR TO DISCLOSE ALL FACTS WHICH MIGHT TO AN OBJECTIVEOBSERVER CREATE A REASONABLE IMPRESSION OF THE ARBITRATOR’S PARTIALITY, AND/ORMATERIAL ERRORS OF LAW SHALL BE GROUNDS [IN ADDITION TO ALL OTHERS] FOR VACATUROF AN AWARD RENDERED PURSUANT TO THIS AGREEMENT. .**

 

**(b)****           THEAWARD OF THE ARBITRATORS, OR A MAJORITY OF THEM, SHALL BE FINAL, AND JUDGMENTUPON THE AWARD RENDERED MAY BE ENTERED IN ANY COURT, STATE OR FEDERAL, HAVINGJURISDICTION. THE ARBITRATION AWARD SHALL BE IN WRITING AND SPECIFY THE FACTUALAND LEGAL BASES FOR THE AWARD. UPON THE REQUEST OF ANY PARTY, THE AWARD SHALLINCLUDE FINDINGS OF FACT AND CONCLUSIONS OF LAW.**

 

**(c)****           ARBITRABLEDISPUTES INCLUDE ANY AND ALL CONTROVERSIES OR CLAIMS BETWEEN THE PARTIES OFWHATEVER TYPE OR MANNER, INCLUDING WITHOUT LIMITATION; ANY CLAIM ARISING OUT OFOR RELATING TO THIS AGREEMENT, ALL PAST, PRESENT AND/OR FUTURE CREDITFACILITIES AND/OR AGREEMENTS INVOLVING THE PARTIES, ANY TRANSACTIONS BETWEEN ORINVOLVING THE PARTIES, AND/OR ANY ASPECT OF ANY PAST OR PRESENT RELATIONSHIP OFTHE PARTIES, WHETHER BANKING OR OTHERWISE, SPECIFICALLY INCLUDING ANY ALLEGEDTORT COMMITTED BY ANY PARTY.**

 

**(d)****           THEPARTIES SHALL ALLOW AND PARTICIPATE IN DISCOVERY IN ACCORDANCE WITH THE FEDERALRULES OF CIVIL PROCEDURE FOR A PERIOD OF ONE HUNDRED TWENTY (120) DAYS AFTERTHE FILING OF THE ORIGINAL RESPONSIVE PLEADING. DISCOVERY MAY CONTINUETHEREAFTER AS AGREED BY THE PARTIES OR AS ALLOWED BY THE ARBITRATORS.UNRESOLVED DISCOVERY DISPUTES SHALL BE BROUGHT TO THE ATTENTION OF THEARBITRATORS BY WRITTEN MOTION FOR PROPER DISPOSITION, INCLUDING RULING ON ANYASSERTED OBJECTIONS, PRIVILEGES, AND PROTECTIVE ORDER REQUESTS AND AWARDINGREASONABLE ATTORNEY’S FEES TO THE PREVAILING PARTY.**

 

**(e)****           INTHE EVENT THE AGGREGATE OF ALL AFFIRMATIVE CLAIMS ASSERTED EXCEED $500,000.00,EXCLUSIVE OF INTEREST AND ATTORNEY’S FEES, OR UPON THE WRITTEN REQUEST OF ANYPARTY, (1) PRIOR TO THE DISSEMINATION OF A LIST OF POTENTIAL ARBITRATORS, THEAMERICAN ARBITRATION ASSOCIATION SHALL CONDUCT AN IN PERSON ADMINISTRATIVECONFERENCE WITH THE PARTIES AND THEIR ATTORNEYS FOR THE FOLLOWING PURPOSES ANDFOR SUCH ADDITIONAL PURPOSES AS THE PARTIES OR THE AMERICAN ARBITRATIONASSOCIATION MAY DEEM APPROPRIATE, (A) TO OBTAIN ADDITIONAL INFORMATION ABOUTTHE NATURE AND MAGNITUDE OF THE DISPUTE AND THE ANTICIPATED LENGTH OF HEARINGSAND SCHEDULING; (B) TO DISCUSS THE VIEW OF THE PARTIES ABOUT ANY TECHNICALAND/OR OTHER SPECIAL QUALIFICATIONS OF THE ARBITRATORS; AND (C) TO CONSIDER,WHETHER MEDIATIQN OR OTHER METHODS OF DISPUTE RESOLUTION MIGHT BE APPROPRIATE,AND (2) AS PROMPTLY AS PRACTICABLE AFTER THE SELECTION OF THE ARBITRATORS, APRELIMINARY HEARING SHALL BE HELD AMONG THE PARTIES, THEIR ATTORNEYS AND THEARBITRATORS WITH THE AGREEMENT OF THE ARBITRATORS AND THE PARTIES, THEPRELIMINARY HEARING MAY BE CONDUCTED BY TELEPHONE CONFERENCE CALL RATHER THANIN PERSON. AT THE PRELIMINARY HEARING THE MATTERS THAT MAY BE CONSIDERED SHALLINCLUDE, WITHOUT LIMITATION, A PREHEARING SCHEDULING ORDER ADDRESSING (A) EACHPARTY’S DUTY TO SUBMIT A DETAILED STATEMENT OF CLAIMS, DAMAGES AND/OR DEFENSES,A STATEMENT OF THE ISSUES ASSERTED BY EACH PARTY AND ANY LEGAL AUTHORITIES THEPARTIES MAY WISH TO BRING TO THE ATTENTION OF THE ARBITRATORS; (B) RESPONSESAND/OR REPLIES TO THE PLEADINGS FILED IN COMPLIANCE WITH SUBPART 2(A); (C)STIPULATIONS REGARDING ANY UNCONTESTED FACTS; (D) EXCHANGE AND PREMARKING OFALL DOCUMENTS WHICH EACH PARTY**

 

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**BELIEVES MAYBE OFFERED AT THE FINAL ARBITRATION HEARING; (E) THEIDENTIFICATION AND AVAILABILITY OF WITNESSES, INCLUDING EXPERTS, AND SUCHADDITIONAL MATTERS REGARDING WITNESSES INCLUDING THEIR BIOGRAPHIES AND A SHORTSUMMARY OF THEIR EXPECTED TESTIMONY, (F) WHETHER A STENOGRAPIC OR OTHEROFFICIAL RECORD OF THE PROCEEDINGS SHALL BE MAINTAINED; AND (G) THE POSSIBILITYOF UTILIZING MEDIATION OR OTHER ALTERNATIVE METHODS OF DISPUTE RESOLUTION.**

 

**(f)****            FORPURPOSES OF THIS PROVISION, “THE PARTIES” MEANS GUARANTOR(S) AND LENDER, ANDEACH AND ALL PERSONS AND ENTITIES SIGNING THIS AGREEMENT OR ANY OTHERAGREEMENTS BETWEEN OR AMONG ANY OF THE PARTIES AS PART OF THIS TRANSACTION. “THEPARTIES” SHALL ALSO INCLUDE INDIVIDUAL PARTNERS, AFFILIATES, OFFICERS,DIRECTORS, EMPLOYEES, AGENTS AND/OR REPRESENTATIVES OF ANY PARTY TO SUCHDOCUMENTS, AND SHALL INCLUDE ANY OTHER OWNER AND HOLDER OF THIS AGREEMENT.**

 

**(g)****           THEPARTIES SHALL HAVE THE RIGHT TO INVOKE SELF- HELP REMEDIES (SUCH AS SET-OFF,NOTIFICATION OF ACCOUNT DEBTORS, SEIZURE AND/OR FORECLOSURE OF COLLATERAL, ANDNON-JUDICIAL SALE OF PERSONAL PROPERTY AND REAL PROPERTY COLLATERAL) BEFORE,DURING OR AFTER ANY ARBITRATION AND/OR REQUEST ANCILLARY OR PROVISIONALJUDICIAL REMEDIES (SUCH AS GARNISHMENT, ATTACHMENT, SPECIFIC PERFORMANCE,RECEIVER, INJUNCTION OR RESTRAINING ORDER, AND SEQUESTRATION) BEFORE OR AFTERANY ARBITRATION. THE PARTIES NEED NOT AWAIT THE OUTCOME OF THE ARBITRATIONBEFORE USING SELF-HELP REMEDIES. USE OF SELF-HELP OR ANCILLARY AND/ORPROVISIONAL JUDICIAL REMEDIES SHALL NOT OPERATE AS A WAIVER OF EITHER PARTY’SRIGHT TO COMPEL ARBITRATION. ANY ANCILLARY OR PROVISIONAL REMEDY WHICH WOULD BEAVAILABLE FROM A COURT AT LAW SHALL BE AVAILABLE FROM THE ARBITRATORS.**

 

**(h)****           THEPARTIES AGREE THAT ANY ACTION REGARDING ANY CONTROVERSY BETWEEN THE PARTIESSHALL EITHER BE BROUGHT BY ARBITRATION, AS DESCRIBED HEREIN, OR BY JUDICIALPROCEEDINGS, BUT SHALL NOT BE PURSUED SIMULTANEOUSLY IN DIFFERENT ORALTERNATIVE FORMS. A TIMELY WRITTEN NOTICE OF INTENT TO ARBITRATE PURSUANT TOTHIS AGREEMENT STAYS AND/OR ABATES ANY AND ALL ACTION IN A TRIAL COURT, SAVEAND EXCEPT A HEARING ON A MOTION TO COMPEL ARBITRATION AND/OR THE ENTRY OF ANORDER COMPELLING ARBITRATION AND STAYING AND/OR ABATING THE LITIGATION PENDINGTHE FILING OF THE FINAL AWARD OF THE ARBITRATORS. ALL REASONABLE AND NECESSARYATTORNEY’S FEES AND ALL TRAVEL COSTS SHALL BE AWARDED TO THE PREVAILING PARTYON ANY MOTION TO COMPEL ARBITRATION AND MUST BE PAID TO SUCH PARTY WITHIN TEN(10) DAYS OF THE SIGNING OF THE ORDER COMPELLING ARBITRATION.**

 

**(i)****            ANYAGGRIEVED PARTY SHALL SERVE A WRITTEN NOTICE OF INTENT TO ARBITRATE TO ANY ANDALL OPPOSING PARTIES WITHIN 360 DAYS AFTER DISPUTE HAS ARISEN. A DISPUTE ISDEFINED TO HAVE ARISEN ONLY UPON RECEIPT OF SERVICE OF JUDICIAL PROCESS,INCLUDING SERVICE OF A COUNTERCLAIM, FAILURE TO SERVE A WRITTEN NOTICE OFINTENT TO ARBITRATE WITHIN THE TIME SPECIFIED ABOVE SHALL BE DEEMED A WAIVER OFTHE AGGRIEVED PARTY’S RIGHT TO COMPEL ARBITRATION OF SUCH CLAIM. THE ISSUE OFWAIVER PURSUANT TO THIS AGREEMENT IS AN ARBITRABLE DISPUTE.**

 

**(j)****            ACTIVEPARTICIPATION IN PENDING LITIGATION DURING THE 360 DAY NOTICE PERIOD, WHETHERAS PLAINTIFF OR DEFENDANT, IS NOT A WAIVER OF THE RIGHT TO COMPEL ARBITRATION.ALL DISCOVERY OBTAINED IN THE PENDING LITIGATION MAY BE USED IN ANY SUBSEQUENTARBITRATION PROCEEDING.**

 

**(k)****           THEPARTIES FURTHER AGREE THAT (i) NO ARBITRATION PROCEEDING HEREUNDER SHALL BECERTIFIED AS A CLASS ACTION OR PROCEED AS A CLASS ACTION, OR ON A BASISINVOLVING CLAIMS BROUGHT IN A PURPORTED REPRESENTATIVE CAPACITY ON BEHALF OF THEGENERAL PUBLIC OTHER CUSTOMERS OR POTENTIAL CUSTOMERS OR PERSONS SIMILARLYSITUATED AND (ii) NO ARBITRATION PROCEEDING HEREUNDER SHALL BE CONSOLIDATEDWITH, OR JOINED IN ANY WAY WITH, ANY OTHER ARBITRATION PROCEEDING.**

 

**(l)****            ANYARBITRATOR SELECTED SHALL BE KNOWLEDGEABLE IN THE SUBJECT MATTER OF THEDISPUTE. EACH OF THE PARTIES SHALL PAY AN EQUAL SHARE OF THE ARBITRATION COSTS,FEES, EXPENSES, AND OF THE ARBITRATORS’ FEES, COSTS AND EXPENSES.**

 

**(m)**          ALLSTATUTES OF LIMITATIONS WHICH WOULD OTHERWISE BE APPLICABLE SHALL APPLY TO ANYAND ALL CLAIMS ASSERTED IN ANY ARBITRATION PROCEEDING HEREUNDER AND THECOMMENCEMENT OF ANY ARBITRATION PROCEEDING TOLLS SUCH STATUTES OF LIMITATIONS.

 

**(n)**           INANY ARBITRATION PROCEEDING SUBJECT TO THIS PROVISION, THE ARBITRATORS, OR MAJORITYOF THEM, ARE SPECIFICALLY EMPOWERED TO DECIDE (BY DOCUMENTS ONLY, OR WITH AHEARING, AT THE ARBITRATORS’ SOLE DISCRETION) PREHEARING MOTIONS WHICH ARESUBSTANTIALLY SIMILAR TO PREHEARING MOTIONS TO DISMISS AND MOTIONS FOR SUMMARYADJUDICATION.

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**(o)****           THISARBITRATION PROVISION SHALL SURVIVE ANY TERMINATION, AMENDMENT, OR EXPIRATIONOF THE AGREEMENT IN WHICH THIS PROVISION IS CONTAINED, UNLESS ALL OF THEPARTIES OTHERWISE EXPRESSLY AGREE IN WRITING.**

 

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**(p)****           THEPARTIES ACKNOWLEDGE THAT THIS AGREEMENT EVIDENCES A TRANSACTION INVOLVINGINTERSTATE COMMERCE. THE FEDERAL ARBITRATION ACT SHALL GOVERN THEINTERPRETATION, ENFORCEMENT, AND PROCEEDINGS PURSUANT TO THE ARBITRATION CLAUSEOF THIS AGREEMENT.**

 

**(q)****           THEARBITRATORS, OR A MAJORITY OF THEM, SHALL AWARD ATTORNEY’S FEES AND COSTS TOTHE PREVAILING PARTY PURSUANT TO THE TERMS OF THIS AGREEMENT.**

 

**(r)****           NEITHERTHE PARTIES NOR THE ARBITRATORS MAY DISCLOSE THE EXISTENCE, CONTENT, OR RESULTSOF ANY ARBITRATION HEREUNDER WITHOUT PRIOR WRITTEN CONSENT OF ALL PARTIESAND/OR COURT ORDER.**

 

**(s)****           VENUEOF ANY ARBITRATION PROCEEDING HEREUNDER SHALL BE IN BEXAR COUNTY, TEXAS.**

 

7. Lender and Guarantors hereby expressly acknowledge and agree that inthe event of a default under this Guaranty Agreement or under any documentexecuted by Borrower or Guarantors in connection with, or to secure the paymentof, Guaranteed Indebtedness (a) Lender shall not be required to comply with Subsection 3.05(d)of the Texas Revised Partnership Act, and (b) Lender shall not be required toproceed against or exhaust the assets of any Borrower and/or any Guarantorbefore pursuing any remedy directly against one or more of the partners orBorrower and/or Guarantor or the property of such partners.

 

8. Successors and Assigns. This Agreement shall be binding uponGuarantors, the heirs, successors, assigns and legal representatives of theGuarantors, and shall inure to the benefit of the Lender and the successors,assigns and legal representatives of Lender. This guaranty shall inure to thebenefit of the transferee, assignee, or holder of the principal debt; however,all Guaranteed Indebtedness owed to the Lender shall first be paid in fullbefore the assignee of any debt guaranteed shall receive any benefit of thiscontract. All references herein to “Lender” shall mean the above named Lenderand any subsequent owner or holder of the Guaranteed Indebtedness or anyinterest therein.

 

**NO ORAL AGREEMENTS**

 

**THISWRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAYNOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEOUENT ORALAGREEMENT OF THE PARTIES.**

 

**THERE ARENO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.**

 

IN WITNESSWHEREOF, Lender and Guarantor(s) have duly executed this Agreement to beeffective as of the date set forth above.

 
| “GUARANTOR”                | LANCER INTERNATIONAL SALES, INC., |                                 | “GUARANTOR”                |
|--------------------------------------|-----------------------------------|--------------------------------------|--------------------------------------|
|                                 | A Texas Corporation               |                                 |                                 |
|                                 |                              |                                 |
| By:                                  |  /s/  Scott Adams            |                                 |                                 |   |
|                                 |                              | Signature of Guarantor               |                                 |
|                                 |                              |                                 |
| Name:                                |   Scott  Adams               |                                 |                                 |   |
|                                 |                              | Signature of Guarantor’s Spouse |                                 |
| Title:                               |   Secretary                  |                                 |                                 |   |
|                                 |                              |                                 |
|                                 |                              | Type or Print Name of Guarantor      |                                 |
|                                 |                              |                                 |
|                                 |                              |                                 |
| “ADDRESS”                  |                              | “ADDRESS”                  |
|                                 |                              |                                 |                                 |   |
|                                 |                              |                                 |                                 |   |
|                                 |                              |                                 |                                 |   |
|                                 |                              |                                 |                                 |   |
|                                 |                              |                                 |                                 |   |
| “GUARANTOR”                |                              |                                 | “GUARANTOR”                |   |
|                                 |                              |                                 |                                 |   |
|                                 |                              |                                 |                                 |   |
| Signature of Guarantor               |                              |                                 | Signature of Guarantor               |   |
|                                 |                              |                                 |                                 |   |
|                                 |                              |                                 |                                 |   |
| Signature of Guarantor’s Spouse |                              |                                 | Signature of Guarantor’s Spouse |   |
|                                 |                              |                                 |                                 |   |
|                                 |                              |                                 |                                 |   |
| Type or Print Name of Guarantor      |                              |                                 | Type or Print Name of Guarantor.     |   |
|                                      |                                   |                                      |                                      |  |  |  |  |  |  |

 

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| “ADDRESS” |   |   | “ADDRESS” |   |
|---------------------|--------|--------|---------------------|--------|
|                |   |   |                |   |
|                |   |   |                |   |
|                |   |   |                |   |

 

 

**ACKNOWLEDGEMENT**

 

 
| THE STATE OF TEXAS | § |   |   |   |
|--------------------|--------|--------|--------|--------|
| COUNTY OF          | Bexar  |   | § |   |   |   |
|                    |        |        |        |        |  |  |

 

 

The foregoing instrument was acknowledgedbefore me on the              dayof December, 2004 by of Lancer International Sales, Inc., Texas corporation, onbehalf of said corporation

 
|                          |   |   |        |                       |
|-------------------------------|--------|--------|--------|-----------------------|
| THE STATE OF TEXAS            |   |   |        | **SCOTT**A: FARRIMOND |
|                          |
| Commission Expires 06-28-200B | § |
|                          |   |   |   |                  |
| COUNTY OF                     |   |   |   |                  | § |
|                               |        |        |        |                       |  |  |  |

 

**ACKNOWLEDGEMENT**

 

The foregoing instrument was acknowledged before me on the             day of                         ,                by                                                                                                                                                .

 
|   |   |   |                     |   |
|--------|--------|--------|--------------------------|--------|
|   |   |   | Notary Public in and for |   |
|   |   |   | The State of Texas       |   |
|   |   |   |                     |   |
|   |   |   |                     |   |
|   |   |   | Printed/Stamped Name     |   |
|   |   |   | My Commission Expires:   |   |

 

 
| THE STATE OF TEXAS | § |   |   |   |
|--------------------|--------|--------|--------|--------|
|               |   |   |   |   |
| COUNTY OF          |   |   | § |   |   |   |
|                    |        |        |        |        |  |  |

 

**ACKNOWLEDGEMENT**

 

The foregoing instrument was acknowledged before me on the             day of                        ,               by                                                                                                                                               .

 
|   |   |   |                     |   |
|--------|--------|--------|--------------------------|--------|
|   |   |   | Notary Public in and for |   |
|   |   |   | The State of Texas       |   |
|   |   |   |                     |   |
|   |   |   |                     |   |
|   |   |   | Printed/Stamped Name     |   |
|   |   |   | My Commission Expires:   |   |

 

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