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The following item listed as part of the Trustee’s Second Amended Designation of

Record on Appeal is available for viewing at the US Bankruptcy Court-MD of AL:

1) All of Plaintiff’s Trial Exhibits

2) Deposition transcript and exhibits of M.D. Horton, Jr.

3) Deposition transcript and exhibits of Richard Dobbins

4) Deposition transcript and exhibits of Frank Henderson

5) Deposition transcript and exhibits of John E. Hall III

6)Deposition transcript and exhibits of David Bowen

7) Deposition transcript and exhibits of David Giddens

Case 2:06-cv-00746-WHA Document 3-2 Filed 08/18/2006 Page 1 of 1
IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE MIDDLE DISTRICT OF ALABAMA 

IN RE: ) 

 ) 

TERRY MANUFACTURING ) CASE NO. 03-32063-WRS 

COMPANY, INC., ) 

 ) CHAPTER 7 

 Debtor ) 

 ) 

________________________________________________________________________ 

IN RE: ) 

 ) 

TERRY UNIFORM ) CASE NO. 03-32213-WRS 

COMPANY, LLC, ) 

 ) 

 Debtor ) 

________________________________________________________________________ 

J. LESTER ALEXANDER, III, ) 

TRUSTEE OF TERRY ) 

MANUFACTURING COMPANY, ) ADVERSARY PROCEEDING 

NO.: 

 ) 05-03042 

INC, AND TERRY UNIFORM ) 

COMPANY, LLC ) 

 ) 

VERSUS ) 

 ) 

N.D. HORTON AND JAMES M. ) 

REYNOLDS, III ) 

MOTION TO ALTER OR AMEND

 COME NOW the Defendants, N.D. Horton, Jr. (“Horton”), and James M. 

Reynolds (“Reynolds”), III, and hereby move to alter or amend the scheduling order. For 

their motion, the defendants say as follows: 

 1. By order dated September 21, 2005 this Court provided that 

discovery had to be completed by December 31, 2005. 

Case 2:06-cv-00746-WHA Document 3-3 Filed 08/18/2006 Page 1 of 3
2. However, at the scheduling conference, the Court indicated that 

discovery cutoff would be January 31, 2006. 

 3. Moving the discovery deadline to January 31, 2006, would not 

impact the other deadlines within the order. 

 4. The defendants had requested six months for discovery. 

 WHEREFORE, premises considered, the defendants respectfully request 

this Court to extend the discovery deadline until January 31, 2006. The defendants pray 

for such further and other relief as this Court may deem appropriate. 

\s\ C. Ellis Brazeal III

C. Ellis Brazeal III 

Attorney for American Real Estate 

Investment Company, Ltd, L.P. 

OF COUNSEL:

WALSTON, WELLS & BIRCHALL, LLP 

1819 5th Avenue North, Suite 1100 

Birmingham, Alabama 35203 

Telephone: (205) 244-5237 

Telecopier: (205) 244-5437 

CERTIFICATE OF SERVICE

I hereby certify that a copy of the above and foregoing Motion to Alter or 

Amend has been served by placing same in the United States mail, properly addressed 

and postage prepaid, as follows: 

Brent B. Barriere 

David L. Patron 

365 Canal Street 

Suite 2000 

New Orleans, Louisiana 70130 

This the \3rd\ day of October, 2005. 

 \s\ C. Ellis Brazeal III

 OF COUNSEL 

 

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Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 37 of 136
RECEIPT OFSTOCK SHARE CERTIFICATE

PERKY CAP COMPANY, INC

The undersigned does acknowledge receipt ofCertificate Number ~ I representing

91) IX) shares ofthe common stock ofPerkyCap Company, Jnc.

This ft~day ofNovember, 2000.

~

CotinaTerry 0

AmR.Est 00300

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 38 of 136
~Jr~ ~

PURCHASE MONEY

PROMISSORY NOTE

$200,000.00 Greensboro, Georgia November 10, 2000

FOR VALUE RECEWED, the undersignedpromise to pay to the orderofN,ft

HORTON, JR. Ar~~DJAMES M. REYNOLDS, ifi, equally (“Holder”) the principal sum of

Two Hundred Thousand and No/100 Dollars ($200,000.00) with interestfrom date at the rate of

Nine and One-Halfpercent (9.5%) per annum, interest only payablemonthly, beginning

December 10,2000, and monthlythereafter through November 10, 2001, then payable in 18

equal monthly installments ofprincipal, plus accrued interest in the amount of$11,965.42

beginning December 10,2001, and monthlythereafterwith a final installment ofprincipal and all

accrued but unpaidinterest due on May 10, 2003, (the “Maturity Date”).

Principal and interest arepayable at2561 Lake OconeeParkway, Greensboro, Georgia

30642 oratsuch other place as the Holder hereofmay designate in writing.

Should payment not be paid when due, or should the Maker, orMakers, hereoffail to

comply with any ofthe terms or requirements ofa Pledge Agreement ofeven date herewith,the

entire unpaid principal sum evidenced by this note,with all accrued interest, shall at the option of

the Holder, and without noticeto the undersigned, become due and may be collected forthwith,

time being ofthe essence ofthis contract It is further agreed that failure ofthe Holder to

exercise this right ofaccelerating the maturity ofthe debt, or indulgence granted form time to

time, shall inno event be considered as a waiver ofsuch right ofacceleration or estop the Holder

from exercising suchright.

In case this note is collected by law, asthrough an attorney at law, all costs ofcollection,

including fifteenpercent (15%) ofthe principal and interest as attorney’s fees, shall be paidby the

Maker hereof.

And each ofus, whether Maker, endorser, guarantor, or surety, hereby severally waives

and renounces, for himselfand family, any and all exemptionrights either ofus, or the family of

eitherofus, may have under or by virtueofthe Constitution or laws ofGeorgia, or any other

State, or the United States, as against this debt or any renewal thereof; and each further waives

demand, protest and notice ofdemand, protest and non-payment.

In case ofdefault in the paymentofthe notewhen due, and in case the Holder ofthis note

should elect on account ofsuch default, to declare the unpaid balance ofthe principal sum due w

and payable, said principal sum, or so much thereof as may remain unpaid at the time ofsuch

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 39 of 136
default, shall bear interest at the rate o~’fifteenpercent (15%) per annum from the date ofsuch

default.

PurchaseMoney Security Interest: To securepayment ofthis note and any other

indebtedness ofthe Makerto Holder, whethernow or existing or arisinghereinafter, the Maker

hereby delivers, pledges, assigns, conveys and transfers to the Holderthe following described

property (hereinafterreferred to as collateral):

The undersigned’s right, title and interest in and to:

1. All ofthe undersigned’s common stock in Perky Cap Company, Inc., including

but not limited to CertificateNumber ~‘ ~ (~~/~fl shares).

This contract is to be construed in all respects and enforced according to the laws ofthe

State ofGeorgia..

Prepayment Privilege: Makermay prepay in whole or in part at any time without penalty.

Ifall or any part ofthe property described in the aforementioned Security Agreement or

any interest in it is sold or transferred without Holder’spriorwritten consent, Holder may at its

option require immediate paymentofall sums owing hereunder.

Signed,sealed and delivered bythe undersigned the date first above written.

do Post Office Box 648

924 South Street

Roanoke, Alabama 36274

(205) 863-8835 (facsimile)

Cotina Terry

___________(Seal)

AmR.Est 00293

E.\D~~WP\SOO1\194\,ot.-cøti~terry.~pd

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 40 of 136
Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 41 of 136
BILL OF SALE OF COMrvI0N STOCK

For and in consideration ofthe sum ofTwo Hundred Thousand Dollars ($200,000.00)

evidencedby PromissoryNote from Grantee to Grantors and applicable security documents, the

undersignedN. D. Horton, Jr. and James M Reynolds, ifi, Grantors do hereby transfer unto

Cotina Terry, Grantee, Nine Thousand Shares(10%) ofthe outstanding Common Stock ofPerky

Cap Company, Inc. and by thesepresents do bargain, sell, convey and set over unto Grantee the

aforesaid Stock.

The undersignedwarrant that said Stock is unencumbered and they shall take such action

as is necessary to transfer the same on the books ofthe Company.

In Witness Whereof, the undersigned have hereunto set theirhands and affixed theirseals

this the 10th day ofNovember, 2000.

7~.

AmR.Est 00297

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 42 of 136
Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 43 of 136
PLEDGE AGREEMENT/IRREVOCABLE LIMITED POWER

OF ATTORNEY AND ASSIGNMENT

FORVALUE R.ECEWED and to secure a loan from N. D. Horton, Jr. and James M. Reynolds,

III, equally to the undersigned dated November 10, 2000 in the original amount of$200,000.00

(Note), theundersigned does(do) hereby sell, assign and transferto N. D. Horton,Jr. and JamesM.

Reynolds, ifi, Ten percent ownership of Perky Cap Company, Inc., (Company) represented by

CertificateNo. *t rLk° ~ (11), inclusive, standing in thename ofthe undersigned onthebooks

ofsaid Company.

Upon default ofthe undersigned under the Note or Pledge Agreement or Loan Documents, the

undersigned does hereby irrevocably constitute and appoint N. D. Horton, Jr. and/or James M.

Reynolds,ifi, attorney, or such person asthey mayappoint in writing, to transferthe said Common

Stock on the books ofsaid Company, with fullpower ofsubstitution in the premises.

Dated: p~9 ~ 000 ____________________(SEAL)

Cotina Terry Ci

Executed and acknowledgedbefore me

this ‘1 f~’tdayofNovember, 2000:

~ Ju’y 20, 2003.

My CommissionExpires:

(AFFiX NOTARY SEAL)

AmR.Est 00298

N~b~8. 2~O

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 44 of 136
Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 45 of 136
PROXY

For value received and in order to secure a Purchase MoneyPromissory Note, the

undersigned, CotinaTerry (Owner) do hereby grantunto N. D. Horton,Jr. and JamesM.

Reynolds, 111, Proxy to vote at any and all shareholder meetings which may be had in the

company known as Perky Cap Company, Inc., proxy for nine thousand shares (10%) ofthe

outstanding Common Stock ofPerky Cap Company, Inc.

Providedhowever, that for so long asthe following obligations are current and not in

default this Proxy shall be suspended, but upon default in any ofthe following namedobligations

this Proxy shall be valid and active and shall not be revoked for so long as such default may

exist:

1. PurchaseMoney Note from CotinaTerry to N. D. Horton, Jr., James M.

Reynolds, ifi datedNovember 10, 2000 secured byNine Thousand Shares ofthe

Common Stock ofPerky Cap Company, Inc.

2. 5.5 Million Dollar Line ofCredit and affiliated documents evidenced by

Promissory Note from TerryManufacturing Company, Inc., RoyTerry and

Rudolph Terryto American Real Estate Investment Company, Ltd., L.P. dated

November 10, 2000.

3. Promissory Note from Roy Terry and Rudolph Terry to American Real Estate

Investment Company, Ltd., L.P. datedNovember 24, 1999 in the original

principal amount of One Million Dollars.

4. Stock Options granted under Agreements datedNovember 10, 2000 to American

Real Estate Investment Company, Ltd., L.P. and equity participation percentage in

TerryPromotional Products granted inAgreements datedNovember 10, 2000

between Terry Manufacturing Company, Inc. and AmericanReal Estate

Investment Company, Ltd., L.P.

In Witness Whereof the undersigned have hereunto set theirhands and affixed their seals

this 10th day ofNovember, 2000.

40 ~ (SEAL)

Cotina Terry

AmR.Est 00301

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 46 of 136
Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 47 of 136
PLEDGE AGREEMENT

This Agreement made this JO day ofNovember, 2000, by and between Cotina Terry,

hereinafter Pledgor, and N. D. Horton, Jr. and James M. Reynolds, III, 2561 Lake Oconee

Parkway, Greensboro, Georgia 30642, hereinafter Pledgee;

W I T N E S S E T H:

Whereas, Pledgee hasloaned to Pledgor the sum ofTwo Hundred Thousand and No/lOO

Dollars ($200,000.00)for the purchaseofCommon Stock ofPerkyCap Company as ofNovember

10, 2000 (Loan Documents); and

WIi ereas, in order toinduce the Pledgee to makesuch loan, Pledgorhas agreed topledge the

Common Stock hereinafter mentioned to thePledgee as security for the repayment ofsaid loan.

Now Therefore, it is agreed between theparties as follows:

1.

In consideration ofthe loan made by Pledgee to the Pledgor as hereiñbefore mentioned,the

Pledgor hereby delivers to the Pledgee 10% percent ownership in Perky Cap Company, Inc., a

Georgia Corporation Eepresented by Certificate No. jj. (±1,/)00shares), together with that certain

Pledge Agreement/Irrevocable Limited Power ofAttorney and Assignment, and do hereby assign

such Common Stock andCertificate to thePledgee and dohereby appoint Pledgee as their true and

lawful attorney for them and in their name, place and stead to cause said Common Stock to be

transferred on the books ofthe said Perky Cap Company to the name ofthe Pledgee.

2.

The Pledgee shall hold said Common Stock as security for the repayment ofthe aforesaid

loan and loan incentives as described in the Loan Documents, together with interest thereon, shall

not at any time dispose ofsuch Common Stock or encumber the same, except as herein otherwise

provided.

3.

Pledgor shall repaythe indebtedness and loan incentivesto thePledgeewith interest thereon

according to the terms contained in said Loan Documents.

AmR.ESt 00451

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 48 of 136
4.

At all times while Pledgee istheholder ofsaid Common Stock, thePledgorshall receive any

dividends distributed thereon. Provided such dividends shall be approved by Pledgee.

5.

While the Pledgee is the holder ofsaid Common Stock, the Pledgor shall have the right to

vote the same at meetings of Perky Cap Company so long as they are not in default in the

performanceof any ofthe terms ofthis Agreement, thepayment ofthe principal and interest ofthe

said loan orunder the terms ofthat certainLoan Agreement by and amongthe parties hereto (Loan

Documents).

6.

Upon the repayment ofthe entire amount ofthe loan and interest as herein provided and

satisfaction ofthe Stock Option - Put/Call and equity return guarantee, the Pledgee shall transfer to

the Pledgor the Stock Certificate pledged hereunder.

7.

In the event that the Pledgor shall fail to perform any ofthe terms ofthis Agreement or to

make payment ofthe principal and interest ofsaid loanas requiredpursuantto the terms ofsaid loan

as evidenced in the Note, fails to comply with the terms ofthe Loan Agreement or default on any

ofthe Loan Documents, Pledgee may, upon thirty (30) days notice in writing to the Pledgor by

RegisteredMail, sell anyorall oftheCommon Stock herein mentioned in suchmannerand forsuch

price asthe Pledgeemay determine,and out oftheproceeds ofsuchsale retain an amountsufficient

to pay the principal and interest then due on said loan together with expenses ofsale together with

any balance due on the Stock Option and guaranteed value ofequity participation, and pay any

balance ofsuch proceeds to thePledgor. At any bona fide public sale, thePledgee maypurchaie all

orpart ofsuch Common Stock at such price as he deemsproper. In the event that the proceeds of

any sale are notsufficient to pay the said loan and interest together with expenses ofsuch saleorany

obligations ofthepledgeorundertheLoanAgreement, then thePledgorshall pay to thePledgeeany

deficiency.

8.

All notices hereundershall be addressed to thePledgee and sent by Registered Mail, Return

ReceiptRequested at the following address orsuch other address as Pledgee shall give to Pledgor

in writing making specific reference to this Pledge Agreement, to-wit:

N. D. Horton,Jr. and

James M. Reynolds, III

2561 Lake Oconee Parkway

Greensboro, GA 30642. AmR.Est 00452

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 49 of 136
Cotina Terry

do P. 0. Box 648

924 South Street

Roanoke, AL 36274

9.

This Agreement shall be governed by the laws ofthe State ofGeorgia.

In Witness Whereof, the undersigned have hereunto set their hands and affixed theirseals

the day and year first above written.

Executed and acknowledged before me

this’f~_day ofNovember, 2000:

votary P~li~ Mv ‘~nrnn~ssIonE~n~re~ JU~~, 2003.

My Commission.Expires:

(AFFIX NOTARY SEAL)

(SEAL)

Cotina Terry

AmR.Est 00453

riedged before me

Notary

(AFFIX NOTARY

Ill

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 50 of 136
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UNCONDITIONAL GUARANTY OF PAYMENT AND PERFORMANCE

GREENE COUNTY, GEORGIA

FOR AND IN CONSIDERATION OF the sum ofTen and 00/100 ($10.00) Dollars and

other good and valuable considerations, paid or delivered to Terry Manufacturing Company,

Inc. (hereinafterreferred to as “Guarantor”) the receipt and sufficiency whereof are hereby

acknowledged by Guarantor, and for the purpose ofseekingto induce N. D. Horton,Jr. and

James M. Reynolds, ifi (hereinafter “Lender”) to extend credit or obligation to Cotina Terry

(hereinafter referred to as “Borrower”), which extension ofcredit or obligationwill be to the

direct interest and advantage ofGuarantor, Guarantor does hereby unconditionallyguarantee to

Lenderand its successors, successors-in-title and assigns (a) the full and promptpayment when

due, whether by acceleration orotherwise, with such interest as may accrue thereon, either before

or after maturitythereof~ofthat certain promissory note datedNovember 10,2000 madeby

Borrowerto the order ofLender in the principal face amount ofTwo Hundred Thousand and

O0\l00 Dollars ($200,000.00) (hereinafterreferred to asthe “Note”), togetherwith any renewals,

modifications, consolidations and extensions thereof, (b) the full and promptpayment and

performance ofany and all other obligations ofBorrowerto Lenderunder and other documents

orinstruments now orhereafter evidencing,securing, or otherwise relating to the indebtedness

evidencedby the Note (said other documents and instruments being hereinafterreferred to

collectively asthe “LoanDocuments”), and © all present and future obligations and liabilities of

Borrowerto Lender under any instrument or document given to evidence, secure, support or

relate to any indebtedness ofBorrowerto Lenderwhethernow existing orhereafter arising,

contracted orincurred, and whether individually orjointly with others, and whether direct,

indirect, absolute or contingent as maker, endorser, guarantor, surety or otherwise, and all

extensions orrenewalsin whole or in part ofsuch liabilities. Guarantor does hereby agreethat if

theNote is not paid by Borrowerin accordance with itsterms, orif any and all sums which are

now ormay hereafterbecome due fromBorrowerto Lenderunderthe LoanDocuments arenot

paidby Borrowerin accordance with their terms, orif any other obligationofBorrowerto be

performed underthe LoanDocuments is not performed in accordance with their terms, Guarantor

will immediately make suchpayments orperform such obligations. Guarantor further agrees to

payLender all expenses (including reasonable attorneys’ fees) paid orincurredby Lenderin

endeavoring to collect the indebtedness, to enforce the obligations ofBorrower guaranteed

hereby, or any portion thereof, or to enforce this Guaranty.

The obligations incurred underthis guaranty include all obligations ofBorrower to

Lender now existing orhereaftercoming into existence and ofrenewals or extensions in whole or

in part ofany ofthe obligations before described, together with all damages, losses, costs,

interests, charges, expenses, and liabilities ofevery kind, nature, and description suffered or

incurred by Lender, arising in anymanner out oforin anywayconnected with, or growing out

of, said indebtedness orliabilities ofBorrowerto Lender.

Guarantor hereby consents and agrees that Lendermayat any time, and from time to time,

1 ~

AmR.ESt 00305

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 52 of 136
withoutnotice to orfurther consent from Guarantor, either with or without consideration,

surrender any property or othersecurity of any kind ornature whatsoeverheldby it orby any

person, firm, or corporation on its behalforforits account, securing any indebtedness orliability

herebyguaranteed; substitute for any collateral so held by it, other collateral oflike kind, or of

any kind; agree to modifythe terms ofthe Note orthe LoanDocuments; extend or renew the

Note for any period; grant releases, compromises and indulgences with respect to the Note, orthe

LoanDocuments and to any persons or entities now orhereafter liable thereunder or hereunder;

release any Guarantor or any otherguarantor orendorser oftheNote or any other ofthe Loan

Documents; or take or fail to take any action ofany type whatsoever. No suchactionwhich

Lendershall take or failto takein connection with the Loan Documents, or any ofthem, orany

securityfor the payment ofthe indebtedness ofBorrower to Lender or for the performanceofany

obligations or undertakings ofBorrower, nor any course ofdealing with Borrowerofany other

undertakings ofBorrower, nor any course ofdealing with Borrower or any other person, shall

release Guarantor’s obligations hereunder, affect this Guaranty in any wayor afford Guarantor

any recourse against Lender. The provisions ofthis Guaranty shall extend and be applicable to

all renewals, amendments, extensions, consolidations and modifications ofthe Loan Documents,

and any and all references hereinto the Loan Documents shall be deemed to include any such

renewals, extensions, amendments, consolidations or modifications thereof. This Guaranty

unconditionally guaranteesthe performance ofall obligations toLender made on behalfof

Borrowerby any officer, partner, or agent ofBorrower.

Guarantor hereby subordinates any and allindebtedness ofBorrowernow or hereafter

owedto anyGuarantor to all indebtedness ofBorrowerto Lender, and agrees withLender that

Guarantor shall not demand or accept any payment ofprincipal or interest from Borrower, shall

not claim any offset or other reduction ofGuarantor’s obligations hereunder because ofany such

indebtedness and shall not take any action to obtain any ofthe securitydescribed in and

encumbered by any document or instrument securing any ofthe obligations under the Loan

Documents; provided, however, that, ifLender so requests, such indebtedness shallbe collected,

enforced and received byGuarantor as trustee for Lender and be paid over to Lender on account

oftheindebtedness ofBorrowerto Lender,but without reducing or affecting in any manner the

liability ofGuarantor under the other provisions ofthis Guaranty.

Guarantor hereby waives and agrees not to assert or take advantage of(a) the defenseof

the statute oflimitations in any action hereunder or for the collection ofthe indebtedness or the

performance ofany obligation hereby guaranteed; (b) any defense that mayarise byreason ofthe

incapacity, lack ofauthority, death or disability ofGuarantor or any other person or entity, or the

failure ofLender to ifie or enforce a claim against the estate (either in administration, bankruptcy,

or any other proceeding) ofBorrower or any other personor entity © any defense based on the

failure ofLander to give notice ofthe existence, creation or incurring ofanynew or additional

indebtedness or obligation or ofany action or non-action on the part ofany other person

whomsoever in connection with any obligation hereby guaranteed; (d) any defense based upon an

election ofremedies by Lender which destroys or otherwise impairs any subrogation rights of

Guarantor or the right ofGuarantor to proceed against Borrower for reimbursement, or both; (e)

2

AmR.Est 00306

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 53 of 136
any defense based upon failure ofLender to commence an action against Borrower; (f) any duty

onthe part ofLender to disclose to Guarantor any facts it maynow or hereafterknow regarding

Borrower, (g) acceptance or notice ofacceptance ofthis Guaranty by Lender; (h)notice of

presentment and demand for payment ofany ofthe indebtedness orperformance ofany ofthe

obligations hereby guaranteed; (1) protest and notice ofdishonor or ofdefault to Guarantor or to

any other partywith respect to the indebtedness or performance ofobligations hereby guaranteed;

(j) any and all other notices whatsoever to whichGuarantor might otherwise be entitled, (k) any

defensebased onlack ofdue diligence byLender in collection, protection or realization upon any

collateral securing the indebtedness evidenced bythe Note; (1) the invalidity or unenforceability

ofany ofthe LoanDocuments; (m) any exculpation ofliability contained in the Note or in the

Loan Documents; (n) any transfer byBorrower ofall or any part ofthe securityencumbered by

theLoanDocuments; (o) the failure ofLenderto perfect any security or to extend or renew the

perfection ofany security, or (p) any other legal or equitable defenses whatsoeverto which

Guarantormight otherwise be entitled.

This is a guaranty ofpayment and performance and not ofcollection. The liability of

Guarantor under this Guarantyshall be direct and immediate and not conditional or contingent

upon the pursuit ofany remedies against Borrower or any other person, nor against securities or

liens available to Lender, its successors, successors-in-title, endorsees or assigns. Guarantor

waives any right to require that an action be brought against Borroweror any other person or to

require that resortbe had to any security or to any balance ofany deposit account or credit on the

books ofLender in favor ofBorroweror any other person. In the event ofa default underthe

Loan Documents, or any ofthem, Lender shall have the right to enforce its rights, power and

remedies thereunder or hereunder or under any ofthe Loan Documents in any order, and all

rights, powers and remedies available to Lender in such event shall be nonexclusive and

cumulative ofall other rights, powers and remedies provided thereunder or hereunder or bylaw

or in equity. Accordingly, Guarantor hereby authorizes and empowers Lender upon acceleration

ofthe maturityofthe Note, at its sole discretion, and without notice to Guarantor, to exercise any

right or remedywhichLender mayhave, including, but not limited to,judicial foreclosure,

exercise ofrights ofpowerofsale, acceptance ofa deed or assignment in lieu offoreclosure,

appointment ofa receiver to collect rents and profits, exercise ofremedies against personal

property, or enforcement ofany assignment ofleases, as to any.security, whether real, personal or

intangible. Ifthe indebtedness guaranteed hereby is partiallypaid byreason ofthe election of

Lender, its successors, endorsees, or assigns, to pursue any ofthe remedies available to Lender,

or ifsuchindebtednessis otherwise partiallypaid, this Guaranty shall nevertheless remain in full

force and effect, Guarantor shall remain liable for the entire unpaid balance Ofthe indebtedness

guaranteed hereby, even though any rights which Guarantor mayhave against Borrower may be

destroyed or diminishedby the exercise ofany suchremedy. Until all ofthe obligations of

Borrower to Lenderhave been paid and performed in full, Guarantor shall have no right of

subrogation to Lender againstBorrower, and Guarantor hereby waives any rights to participate in

any security for the Note.

Guarantor hereby waives to the fullest extent possible as against Borrower and all other

3 ~

AmR.Est 00307

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 54 of 136
persons and entities that maybe contingently, secondarily, orindirectly obligated to Lender for

any sums due under the Loan Documents (hereinafter the “contingent Obligors”), and as against

all assets ofBorrower and the Contingent Obligors, any and allrights, whether at law, in equity,

by agreement or otherwise, to subrogation, indemnity, reimbursement, contribution, paymentor

any other claim, cause ofaction, right orremedythat would otherwise arise out ofany payment

by Guarantor to Lender ofany sums due under the LoanDocuments, notwithstanding the manner

or nature ofsuch payments, including but not limited to (a) direct payment by Guarantor to

Lender, (b)set-offby Lender against any liability or deposit owedby Lender to Guarantor, ©

recoverybyLender against Guarantor, or any property ofGuarantor, as theresult ofany

judgment,judgment lien, or legal process, (d) the application ofthe proceeds ofany disposition

ofany or all collateral held byLender to the repayment ofany sums due under the Loan

Documents, or (e) the conveyance of any or all collateral held by Lender to Lenderin satisfaction

ofany sums due under the Loan Documents.

The waivers set forth in thepreceding paragraph are intendedby both Guarantor and

Lender tobe for the benefit oftheBorrower, and such waiver shall be enforceableby Borrower

or any ofthe Contingent Obligors, or any oftheirsuccessors or assigns, as an absolute defense to

any action by Guarantor against Borrower or any ofthe Contingent Obligors, or the assets of

Borroweror any ofthe Contingent Obligors, whichaction arises out ofany payment by

Guarantor to Lenderofany sum due under the Loan Documents.

Guarantor hereby authorizes Lender,without notice to Guarantor, to applyall payments

and credits received from Borrower or from Guarantor or realized from any security in such

manner and in such priority as lender in its solejudgment shall see fit to the indebtednesses,

obligations and undertakings which are the subjectofthis Guaranty.

The books and records ofLendershowing the accountsbetween Lender and Borrower

shall be admissible in evidence in any action or proceedinghereon asprimafade proofofthe

items set forth therein.

Guarantor agreesto furnish Lender withinninety (90) days following the end of

Guarantor’s fiscal year a statement ofincome and retained earnings and a balance sheet of

Borroweras ofthe end ofsuch fiscal year, including a listing ofall contingent liabilities. Such

statementshall be in such form and content as Lender shall reasonably require and shall be

prepared in accordance with generally accepted accounting principles. Upon requestby Lender,

Guarantor shall provide such statement audited by a certified public accountant acceptable to

Lender.

Guarantor acknowledges that this Guaranty, theNote and the LoanDocuments were

negotiated, executed and delivered in the State ofGeorgia, and shall be governed and construed

in accordance with the law ofthe State ofGeorgia.

Guarantor hereby(a) submits to personal jurisdictionin the State ofGeorgia for the

4

AmR.Est 00308

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 55 of 136
enforcement ofthis Guaranty, and (b)waives any and all personal rights under the law ofany

stateto object tojurisdiction within the State ofGeorgia for thepurposes oflitigation to enforce

this Guaranty. Nothing containedherein, however, shall prevent Lender from bringing any

action or exercising any rights againstany security or against Guarantor personally, or against

any propertyofGuarantor, within any otherstate. Initiating such proceeding or taking such

action in any other state shall in no event constitute a waiver ofthe agreement containedherein

that the law ofthe StateofGeorgia shall govern the rights and obligations ofGuarantor and

Lender hereunder or ofthe submission hereinmade by Guarantorto personaljurisdiction within

the State of Georgia. The aforesaid means ofobtaining personal jurisdiction and perfecting

service ofprocess arenot intended to be exclusive but are cumulative and in addition to all other

means ofobtaining personaljurisdiction and perfecting service ofprocess now or hereafter

providedby the law ofthe State ofGeorgia.

Each Guarantor warrants and represents to Lenderthat any and all financial statements

heretofore deliveredto him byLender are true and correct in all respects as ofthe date hereof.

Each Guarantor severally waives, for himself and family, any and all homestead and exemption

rights which any ofthem or the family ofany ofthem mayhave under or byvirtue ofthe

Constitution or the laws ofthe United States ofAmerica or ofany state as against this Guaranty,

any renewal hereof, or any indebtednessrepresented hereby, and doesjointly and severally

transfer, convey and assign to Lender a sufficient amount ofsuch homestead or transfer,

exemption as may be allowed, including such homestead or set apart in bankruptcy, to payall

amounts duehereunder in full, with all costs ofcollection, and does hereby direct any trustee in

bankruptcy having possession ofsuch homestead or exemption to deliver to Lender a sufficient

amount ofproperty or money set apart as exempt to pay the indebtedness guaranteed hereby, or

any renewal thereof, and does hereby,jointly and severally, appoint Lenderthe attorney-in-fact

for each o them to claim any and all homestead exemptions allowed by law.

As security for the liabilities and obligations ofGuarantor hereunder, each Guarantor

hereby transfers and conveysto Lender any and all balances, credits, deposits, accounts, items

andmonies ofeach Guarantor now or hereafter in the possession or control ofor otherwisewith

Lender, andLender is hereby given a lien upon, securitytitle to and a securityinterest in all

property ofGuarantor of everykind and description now or hereafterin the possession or control

ofLender for any reason, including all dividends and distributions on or other rights in

connectiontherewith. Lender maywithout demandor notice ofany kind, at any time, or from

time to time, when any amount shall be due and payable hereunder bysuch Guarantor,

appropriate and apply toward the paymentofsuch amount, and in such order ofapplication

deposits, accounts, items, ormonies ofany Guarardor in the possession or ~

any purpose.

This Guarantymaynot be changed orally, and no obligation ofGuarantor can be released

or waived by Lender or any officer or agent ofLender, except by a writing signedby a duly

authorized officer ofLender and bearing the seal ofLender. This Guarantyshall be irrevocable

by Guarantor until all indebtedness guaranteedhereby has been completely repaid and all

5 ~

AmR.Est 00309

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 56 of 136
obligations and undertakings ofBorrower under, byreason or, or pursuant to the Loan

Documents have been completely performed.

Any and all notices, elections, demands, requests and responses thereto permitted or

required to be given underthis Guaranty shallbe in writing, signed by oron behalfofthe party

giving the same, and shall be delivered personally, or sent byregistered or certified UnitedStates

mail, postage prepaid, to the otherpartyat the address set forth below, or at such other address

withinthe continental United States as such otherparty may designate by notice specifically

designated as a notice ofchange ofaddress and given in accordance herewith. The effective date

ofsuch notice shallbe the date ofpersonalservice or the date such notice is deposited in the

mail. Rejection or otherrefusal to accept or inabilityto deliver because ofchanged address of

which no notice hasbeen received shall also constitute receipt. Any such notice, election,

demand, request or response shall be addressed as follows:

Ifto Lender: N. D. Horton, Jr. and James M. Reynolds, ifi

2561 Lake Oconee Parkway

Greensboro, GA 30642

Ifto Guarantor: TerryManufacturing Company

do P. 0. Box 648

924 South Street

Roanoke, AL 36274

The provisions ofthis Guarantyshall be be binding upon each Guarantor and his

successors, successors-in-title, heirs, legal representatives and assigns and shall inure to the

benefit ofLender, its successors, successors-in-title, heirs, legal representatives and assigns. This

Guaranty shall in no event be impairedbyany change which may ariseby reason ofthe death of

Borrower or Guarantor, ifindividuals, or byreason ofthe dissolution ofBorrower or Guarantor,

ifBorrower or Guarantor is a corporation or partnership.

As usedherein, the terms “Guarantor” and “any Guarantor” shall referto the undersigned

single Guarantor, or, ifmore than one, shall referrespectivelyto each or any separate ember of

the undersigned collective Guarantor. Ifmore than one person or entity constitutes, collectively,

Borrower, all ofthe foregoing provisions referring to Borrower shall be construed to refer to each

such person or entity individually as well as collectively, and all such Guarantors shall be jointly

and severally liable for thepayment and performance of all obligations impo~edhereunder. In

case ofdefault in payment or performanceby Borrower ofany ofthe obligations tobe paidor

performed underthe LoanDocuments, Lender mayproceed against the Guarantorjointly or

severally, or any ofthem, without pursuing any rights or remedies against the Borrower orthe

other Guarantor(s), or against any property taken as security.

Each Guarantor has executedthis Guaranty individually and not as a partner orBorrower

or ofany other member ofGuarantor.

6

AmR.Est 00310

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 57 of 136
Iffrom any circumstances whatsoever fulfillment ofany provisions ofthis Guaranty, at

the time performance of suchprovision shall be due, shall involve transcending the limitof

validity presentlyprescribed by any applicable usury statute or any other applicable law, with

regard to obligations oflike character and amount, then ~ facto the obligationto be fulfilled

shall be reduced to the limit ofsuch validity, so that in no event shall any exactionbe possible

under this Guaranty that is in excess ofthe enrrent limit ofsuch validity, but such obligation shall

be fulfilled to the limit ofsuch validity, but such obligation shall be fulfilled to the limit ofsuch

validity. The provisions ofthis paragraph shall control everyother provision ofthis Guaranty.

Ifany termor provision ofthis Guaranty shall be determined to be illegal or

unenforceable, all other terms and provisions hereofshall nevertheless remain effective and shall

be enforceable to the fullest extent permitted by law.

This Guarantyis assignable byLender, and any full or partial assignment hereofby

Lender shall operate to vestin the assignee all rights and powers herein conferred upon and

grantedto Lender and so assigned by Lender.

This Guarantymay be executed in any number ofcounterparts, each ofwhich shall

constitute an original, but all ofwhich together shall constitute one and the same instrument.

Any ofthe Guarantors may execute this Guaranty by signing any such counterpart.

IN WiTNESS WHEREOF, Guarantor has executedthis Guarantyunder seal as ofthe

10th day ofNovember, 2000

7

TERRY MANUFACTURING COMPANY, INC.

My Commission Expires:.

(AFFIX NOTARY

AmR.Est 00311

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 58 of 136
Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 59 of 136
UNCONDITIONAL GUARANTY OF PAYMENTAN) PERFORMANCE

GREENE COUNTY, GEORGIA

FORM~II)IN CONSIDERATION OF the sum of Ten and 00/100 ($10.00) Dollars and

other good and valuable considerations, paid or delivered to Roy Terry and Rudolph Terry

(hereinafterreferred to as “Guarantor”) the receipt and sufficiency whereof are hereby

acknowledged by Guarantor, and forthe purpose ofseekingto induce N. D. Horton,Jr. and

James M. Reynolds, ifi (hereinafter“Lender”) to extend credit or obligation to Cotina Terry

(hereinafterreferred to as “Borrower”), which extension ofcredit orobligation will be to the

direct interest and advantageofGuarantor, Guarantor doe~herebyunconditionally guarantee to

Lender and its successors, successors-in-title and assigns (a) the full and promptpayment when

due, whether byacceleration or otherwise, with such interest as may accrue thereon, either before

or aftermaturity thereof, ofthat certainpromissory note datedNovember 10,2000 made by

Borrower to the order ofLender in theprincipal face amount ofTwo Hundred Thousand and

O0\l 00 Dollars ($200,000.00) (hereinafterreferred to as the “Note”),togetherwith any renewals,

modifications, consolidations and extensions thereof, (b) the full and prompt payment and

performance ofany and all other obligations ofBorrowerto Lender under and other documents

or instruments now or hereafter evidencing, securing, orotherwise relating to the indebtedness

evidenced bythe Note (said other documents and instrumentsbeing hereinafterreferred to

collectively as the“Loan Documents”), and © all present and future obligations and liabilities of

Borrower to Lender under any instrument ordocument given to evidence, secure, support or

relate to any indebtedness ofBorrowerto Lenderwhethernow existing or hereafter arising,

contracted or incurred, and whether individually or jointlywith others, and whether direct,

indirect, absolute or contingent asmaker, endorser, guarantor, surety or otherwis; and all

extensions or renewals in whole or in part ofsuch liabilities. Guarantor does hereby agreethat if

the Note is notpaid by Borrower in accordancewith its terms, or if any and all sums which are

now or mayhereafter become due from Borrower to Lender underthe Loan Documents arenot

paidbyBorrower in accordance withtheir terms, Or if any other obligation ofBorrower to be

performed under the Loan Documents is notperformed in accordance with their terms, Guarantor

will immediately make suchpayments or perform such obligations. Guarantor further agrees to

pay Lender all expenses (including reasonable attorneys’ fees) paidor incurredbyLender in

endeavoring to collect the indebtedness, to enforce the obligations ofBorrower guaranteed

hereby, or any portion thereof, or to enforce this Guaranty.

The obligations incurred under this guaranty include all obligations ofBorrower to

Lender now existing or hereafter coming into existence and ofrenewals or extensions in whole or

in part ofany ofthe obligations before described, togetherwith all damages, losses, costs,

interests, charges, expenses, and liabilities ofeverykind, nature, and description suffered or

incurred by Lender, arising in anymanner out oforin any way connected with, or growing out

of, said indebtedness orliabilities ofBorrowerto Lender.

Guarantorhereby consents and agrees that Lendermay at any time, and from time to time,

1 ~

AmR.Est 00312

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 60 of 136
without notice to or further consent from Guarantor, either with or without consideration,

snrrender any property or other securityofany kind or nature whatsoever held by it or by any

person, firm, or corporation on its behalfor for its account, securing any indebtedness orliability

hereby guaranteed; substitute for any collateral so held by it, other collateral oflike kind, or of

any kind; agree to modifythe terms oftheNote or the Loan Documents; extend or renew the

Note for any period; grant releases, compromises and indulgences with respect to theNote, orthe

Loan Documents and to any persons or entities now or hereafter liable thereunder or hereunder;

release any Guarantor or any other guarantor or endorser ofthe Note or any other ofthe Loan

Documents; or take or fail to take any action ofany type whatsoever. No such actionwhich

Lender shall take or failto take in connection withthe LoanDocuments, or any ofthem, or any

security forthe paymentofthe indebtedness ofBorrowerto Lender or for theperformance ofany

obligations or undertakings ofBorrower, nor any course ofdealing withBorrower of any other

undertakings ofBorrower,nor any course ofdealing withBorrower or any other person, shall

release Guarantor’s obligations hereunder, affect this Guaranty in anywayor afford Guarantor

any recourse againstLender. Theprovisions ofthis Guaranty shall extend and be applicable to

all renewals, amendments, extensions, consolidations and modifications ofthe LoanDocuments,

and any and all references herein to the Loan Documents shall be deemed to include any such

renewals, extensions, amendments, consolidations or modifications thereof. This Guaranty

unconditionally guaranteesthe performance ofall obligations to Lender made on behalfof

Borrowerby any officer, partner, or agent ofBorrower.

Guarantor hereby subordinates any and all indebtedness ofBorrowernow or hereafter

owed to any Guarantor to all indebtedness ofBorrower to Lender, and agrees with Lender that

Guarantor shall not demand or accept any payment ofprincipal or interest from Borrower, shall

not claim any offset or other reduction of Guarantor’s obligations hereunderbecause ofany such

indebtedness and shall not take any action to obtain any ofthe security described in and

encumbered by any document orinstrument securing any ofthe obligations under the Loan

Documents; provided, however, that, ifLenderso requests, such indebtedness shall be collected,

enforcedand received by Guarantor as trustee forLender and be paid over to Lender on account

ofthe indebtedness ofBorrowerto Lender, but without reducing or affecting in any manner the

liability ofGuarantor under the other provisions ofthis Guaranty.

Guarantor hereby waives and agrees not to assert or take advantage of(a) the defense of

the statute oflimitations in any action hereunder or for the collection ofthe indebtedness or the

performance ofany obligation hereby guaranteed; (b) any defense that may ariseby reason ofthe

incapacity, lack ofauthority, death or disability ofGuarantor or any other personor entity, or the

failure ofLenderto file or enforce a claim against the estate (either in administration, bankruptcy,

or any other proceeding) ofBorrower or any other personor entity; © any defense based on the

failure ofLanderto givenotice ofthe existence, creation or incurring ofany new or additional

indebtedness or obligation or ofany action or non-action on the part ofany other person

whomsoever in connection with any obligation hereby guaranteed; (d) any defensebased upon an

election ofremedies by Lenderwhich destroys or otherwise impairs any subrogation rights of

Guarantor or the right ofGuarantor to proceed against Borrower for reimbursement, or both; (e)

2

AmR.Est 00313

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 61 of 136
any defensebased upon failure ofLender to commence an action against Borrower; (f) any duty

on the part ofLender to disclose to Guarantor any factsit maynow or hereafterknow regarding

Borrower; (g) acceptance or notice ofacceptance ofthis GuarantybyLender; (h) notice of

presentment and demand for payment ofany ofthe indebtedness orperformance ofany ofthe

obligations hereby guaranteed; (1) protest and notice ofdishonor or ofdefault to Guarantor orto

any other party with respect to the indebtedness or performance ofobligations hereby guaranteed;

(j) any and all other notices whatsoeverto which Guarantor might otherwise be entitled; (k) any

defense based on lack ofdue diligence by Lenderin collection, protection orrealization upon any

collateralsecuringthe indebtedness evidencedby the Note; (I) the invalidity orunenforceability

ofany ofthe Loan Documents; (m) any exculpation ofliability contained in the Note or in the

Loan Documents; (n) any transfer byBorrower ofall or any part ofthe security encumbered by

the LoanDocuments; (o) the failure ofLender to perfect any security orto extend orrenew the

perfection ofany security, or (p) any other legal or equitable defenses whatsoever to which

Guarantor might otherwise be entitled.

This is a guaranty ofpayment and performance and not of collection. The liability of

Guarantor under this Guaranty shall be direct and immediate and not conditional or contingent

upon thepursuit ofany remedies against Borrower or any other person, nor against securities or

liens available to Lender, its successors, successors-in-title, endorsees or assigns. Guarantor

waives any right to require that an action be brought againstBorrower or any other person or to

require that resort be had to any security or to any balance ofany deposit account or credit on the

books ofLenderin favor ofBorrower or any other person. In the event ofa default underthe

LoanDocuments, or any ofthem, Lendershall have the rightto enforceits rights, power and

remediesthereunder or hereunder or under any ofthe Loan Documents in any order, and all

rights, powers and remedies available to Lender in such event shallbe nonexciusive and

cumulative ofall otherrights, powers and remedies provided thereunder or hereunder or by law

orin equity. Accordingly, Guarantor hereby authorizes and empowers Lenderupon acceleration

ofthe maturity ofthe Note, at its sole discretion, and withoutnotice to Guarantor, to exercise any

right or remedywhich Lender mayhave, including, but not limited to, judicial foreclosure,

exercise ofrights ofpowerofsale, acceptance ofa deed or assignment in lieu offoreclosure,

appointment of a receiver to collect rents and profits, exercise ofremedies againstpersonal

property, or enforcement ofany assignment ofleases, as to any security, whether real,personal or

intangible. Ifthe indebtedness guaranteed hereby is partially paid byreason ofthe election of

Lender, its successors, endorsees, or assigns, to pursue any ofthe remedies available to Lender,

or if such indebtedness is otherwise partially paid, this Guaranty shall neverthelessremain in full

force and effect, Guarantor shall remain liable for the entire unpaidbalance ofthe indebtedness

guaranteed hereby, even though any rights which Guarantor may have against Borrower maybe

destroyed or diminished bythe exercise ofany suchremedy. Until all ofthe obligations of

Borrowerto Lender have been paid and performed in full, Guarantor shall have no right of

subrogation to Lender against Borrower, and Guarantor hereby waives any rights to participate in

any security for the Note.

Guarantor hereby waivesto the fullest extent possible as against Borrower and all other

3 ~

AmR.ESt 00314

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 62 of 136
persons and entities that maybe contingently, secondarily, orindirectly obligated to Lender for

any sums due under the LoanDocuments (hereinafter the “contingent Obligors”), and as against

all assets ofBorrower and the Contingent Obligors, any and all tights, whetherat law, in equity,

by agreement or otherwise, to subrogation, indemnity, reimbursement, contribution,payment or

any other claim, cause ofaction, right orremedy that would otherwise arise out ofany payment

by Guarantor to Lender ofany sumsdue under the Loan Documents, notwithstanding the manner

or natureofsuchpayments, including but not limited to (a) direct payment by Guarantor to

Lender, (b) set-offbyLender against any liability or deposit owedby Lender to Guarantor, ©

recoverybyLender against Guarantor, or any property ofGuarantor, as the result ofany

judgment,judgment lien, or legal process, (d) the application ofthe proceeds ofany disposition

ofany or all collateral held by Lender to the repayment ofany sums due under the Loan

Documents, or (e) the conveyance of any or all collateralheld byLender to Lender in satisfaction

ofany sums due under the LoanDocuments.

The waivers set forth in the preceding paragraph are intended byboth Guarantor and

Lender to be for the benefit ofthe Borrower, and such waiver shall be enforceable byBorrower

or any ofthe Contingent Obligors, or any oftheirsuccessors or assigns, as an absolute defenseto

any action byGuarantor against Borrower or any ofthe Contingent Obligors, or the assets of

Borrower or any ofthe Contingent Obligors, which action arises out of any payment by

Guarantor to Lender ofany sum due under the LoanDocuments.

Guarantor hereby authorizes Lender, without noticeto Guarantor, to apply all payments

and credits received from Borrower or from Guarantor or realized from any security in such

manner and in such priority as lender in its sole judgment shall see fit to the indebtednesses,

obligations and undertakings which are the subject ofthis Guaranty.

The books and records ofLendershowing the accountsbetween Lender and Borrower

shall be admissible in evidence in any action or proceeding hereon asprima f~jeproofofthe

items set forth therein.

Guarantor agreesto furnishLenderwithin ninety (90) days followingthe end of

Guarantor’s fiscalyear a statement ofincome and retained earnings and a balance sheet of

Borrower as ofthe end ofsuch fiscal year, including a listing ofall contingent liabilities. Such

statementshallbe in such form and content as Lendershall reasonably require and shall be

prepared in accordancó with generallyaccepted accounting principles. Upon request byLender,

Guarantor shall provide such statement audited by a certified public accountant acceptable to

Lender.

Guarantor acknowledgesthat this Guaranty, theNote and the LoanDocuments were

negotiated, executed and delivered in the State ofGeorgia, and shall be govemed and construed

in accordance with the law ofthe State of Georgia.

Guarantor hereby(a) submits to personaljurisdiction in the State ofGeorgia for the

4)

AmR.Est 00315

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 63 of 136
enforcement ofthis Guaranty, and (b) waives any and all personal rights under the law ofany

state to object to jurisdiction within the State ofGeorgia forthe purposes oflitigation to enforce

this Guaranty. Nothing containedherein, however, shall preventLender from bringing any

action or exercising any rights against any security or against Guarantor personally, or against

any property ofGuarantor, within any otherstate. Initiating such proceeding ortaking such

action in any other state shall in no event constitute a waiver ofthe agreement contained herein

thatthe law ofthe State ofGeorgia shall govern the rights and obligations ofGuarantor and

Lender hereunder or ofthe submissionherein madeby Guarantor to personaljurisdiction within

the State ofGeorgia. The aforesaid means ofobtaining personaljurisdiction and perfecting

serviceofprocess are not intended to be exclusive but are cumulative and in addition to all other

means ofobtaining personaljurisdiction and perfecting service ofprocess now or hereafter

provided by the law ofthe State ofGeorgia.

EachGuarantor warrants and represents to Lenderthat any and all financial statements

heretofore delivered to him by Lender are true and correct in all respects as ofthe date hereof.

Each Guarantor severally waives, for himselfand family, any and allhomestead and exemption

rights which any ofthem or the familyofany ofthem mayhave under or by virtue ofthe

Constitution or the laws ofthe United States ofAmerica or ofany state as against this Guaranty,

any renewal hereof, or any indebtedness representedhereby, and doesjointly and severally

transfer, convey and assign to Lender a sufficient amount ofsuch homestead ortransfer,

exemption as may be allowed, including such homesteador set apartin bankruptcy, to pay all

amounts duehereunder in full, with all costs ofcollection, and does hereby direct any trustee in

bankruptcy having possessionofsuch homestead or exemption to deliver to Lender a sufficient

amount ofproperty or money set apart as exemptto pay the indebtedness guaranteed hereby, or

any renewalthereof~and does hereby,jointly and severally, appointLenderthe attorney-in-fact

for each o them to claim any and all homestead exemptions allowed bylaw.

As security for the liabilities and obligations ofGuarantor hereunder, each Guarantor

hereby transfers and conveys to Lender any and all balances, credits, deposits, accounts, items

and monies ofeach Guarantor now or hereafter in the possession or control of or otherwise with

Lender, and Lender is hereby given a lien upon, security title to and a security interest in all

property ofGuarantor ofevery kind and description noworhereafter in the possession or control

ofLenderfor any reason, including all dividends and distributions onor other rights in

connection therewith. Lender maywithout demand or notice ofanykind, at any time, or from

time to time, when any amount shall be due and payable hereunderby such Guarantor,

appropriate and apply toward the payment ofsuch amount, and in such order ofapplication

deposits, accounts, items, ormonies ofany Guarantor in the possession or control ~

any purpose.

This Guaranty maynot be changed orally, and no obligation ofGuarantor can be released

or waived byLender or any officer or agent ofLender, exceptby a writing signed by a duly

authorized officer ofLender and bearing the seal ofLender. This Guaranty shall be irrevocable

by Guarantoruntil all indebtedness guaranteed hereby has been completely repaid and all

5 ) ~

AmR.Est 00316

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 64 of 136
obligations and undertakings ofBorrower under, by reason or, or pursuant to the Loan

Documents havebeen completely performed.

Any and all notices, elections, demands, requests and responsesthereto permitted or

requiredto be given underthis Guaranty shallbe in writing, signed by oron behalfoftheparty

giving the same, and shallbe deliveredpersonally, or sent byregistered or certifiedUnited States

mail, postageprepaid, to the other partyat the address set forth below, or at such other address

within the continental United States assuch otherpartymaydesignate by notice specifically

designated as a notice ofchangeofaddress and given in accordanceherewith. The effective date

ofsuch notice shall be the date ofpersonalservice orthe date such notice is deposited in the

mail. Rejection or other refusal to accept or inability to deliver because ofchanged address of

whichno notice has beenreceived shall also constitute receipt. Any such notice, election,

demand, request or response shall be addressed as follows:

Ifto Lender: N. D. Horton, Jr. and James M. Reynolds, ifi

2561 Lake OconeeParkway

Greensboro, GA 30642

Ifto Guarantor: Cotina Terry

do P.O.Box 648

924 South Street

Roanoke, AL 36274

The provisions ofthis Guaranty shall be be binding upon each Guarantor and his

successors, successors-in-title, heirs, legal representatives and assigns and shallinure to the

benefit ofLender, its successors, successors-in-title, heirs, legal representatives and assigns. This

Guaranty shall in no event be impairedby any change whichmay arise by reasonofthe death of

Borrower or Guarantor, ifindividuals, or byreason ofthe dissolution ofBorrower or Guarantor,

ifBorrower or Guarantor is a corporation or partnership.

As used herein, the terms “Guarantor” and “any Guarantor” shall refer to the undersigned

single Guarantor, or, if more than one, shall refer respectivelyto each or any separate ember of

theundersigned collective Guarantor. Ifmore than one person or entity constitutes, collectively,

Borrower, all ofthe foregoing provisions referring to Borrower shall be construed to refer to each

such person or entity individually as well as collectively, and all such Guarantors shall be jointly

and severally liable for the payment and performance ofall obligations impo~edhereunder. In

case ofdefault in paymentor performancebyBorrower ofany ofthe-obligations to be paid or

performed under the Loan Documents, Lender mayproceed against the Guarantor jointly or

severally, or any ofthem, without pursuing any rights or remedies against the Borrower or the

other Guarantor(s), or against any propertytaken assecurity.

Each Guarantor has executedthis Guaranty individually and not as a partner or Borrower

or of any other member ofGuarantor.

6

AmR.Est 00317

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 65 of 136
Iffrom any circumstances whatsoever fulfillment ofany provisions ofthis Guaranty, at

the time performance of such provision shall be due, shall involve transcending the limit of

validitypresentlyprescribed byany applicable usury statute or any other applicable law, with

regard to obligations oflike character and amount, thenjp~facto the obligation to be fulfilled

shall be reduced to the limitofsuch validity, so that in no event shall any exaction be possible

under this Guaranty thatis in excess ofthe current limit ofsuch validity, but such obligation shall

be fulfilled to the limit ofsuch validity, but such obligation shall be fulfilled to the limitofsuch

validity. The provisions ofthis paragraph shall control every other provision ofthis Guaranty.

Ifany termor provision ofthis Guaranty shall be determined to be illegal or

unenforceable, all other terms and provisions hereofshall nevertheless remain effective and shall

be enforceable to the fullest extent permitted bylaw.

This Guaranty is assignable by Lender, and any full or partial assignment hereofby

Lender shall operate to vest in the assignee all rights and powers herein conferred upon and

granted to Lender and so assigned byLender.

This Guarantymaybe executed in any number ofcounterparts, each ofwhich shall

constitute an original, but all ofwhichtogether shall constitute one and the same instrument.

Any ofthe Guarantors may execute this Guaranty by signing any such counterpart.

IN WJTNIESS WHEREOF, Guarantor has executed this Guaranty under seal as ofthe

10th day ofNovember, 2000

7

My

(AFFIX NOTARY

AmR.Est 00318

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 66 of 136
Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 67 of 136
A M 0 RT~i.Z A T I 0 N S C H E D U L E

IXJE P~.INItI3 MtmiLY m~r. !1~IGPL~E PRTh~IP~L INIEREST

D~aE PRfl~IPAL P?,YI4ENr RPL~E INSURA1~E PA~4EN~ PAYMEIIT

1 12/10/01 10,382.09

11,965.42 0.00 10,382.09

2 01/10/02 179,153.63 11,965.42 9.500 10,464.28 * 1,501.14

3 02/10/02 168,606.51 11,965.42 9.500 10,547.12 1,418.30

4 03/10/02 157,975.89 11,965.42 9.500 10,630.62 1,334.80

5 04/10/02 147,261.11 11,965,42 9.500 10,714.78 1,250.64

6 05/10/02 136,461.51 11,965.42 9.500 10,799.60 1,165.82

7 06/10/02 125,576.4]. 11,965.42 9.500 10,885.10 1,080.32

8 07/10/02 114,605.14 11,965.42 9.500 10,971.27 994.15

9 08/10/02 103,547.01 11,965.42 9.500 11,058.13 907.29

10 09/10/02 92,401.34 11,965.42 9.500 11,145.67 819.75

11

12

10/10/02

11/10/02

81,167.43

69,844.59

11,965.42

11,965.42

9.500

9.500

11, 233.91

11,322.84

731.51

642.58

13 12/10/02 58,432.11 11,965.42 9.500 11,412.48 552.94

‘gJI2~ISLXJRIt~2002 143,585.04 0.00 131,185.80 12,399.24

14 01/10/03 46,929.28 11,965.42 9.500 11,502.83 462.59

15

16

02/10/03

03/10/03

35,335.38

23,649.70

11,965.42

11,965.42

9.500

9.500

11,593.90

11,685.68

371.52

279.74

17

18

04/10/03

05/10/03

11,871.51

0.00

11,965.42

11,965.49

9.500

9.500

11,778.19

11,871.51

187.23

93:.~8

59,827.17 0.00 58,432.11

~1m.L~ WRfl~2001

189,617,91 11,965.42 9.500 1,583.33

1,583.33

‘IclrALS ~~3RIM~2003 1,395.06

AmR.Est 00294

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 68 of 136
Ffl~E G3ARGE.

~1~L PAYNENI~:.

HI~~B~tJ~N~E.

~L PERCENI~GER~IE:...

NU’4BER OF PA~’~I~(S) 17 AT

NU~1BEROF PA~tIt(S) 1 AT

215,377.63

200,000.00

9,500

11,965.42 B~3INNfl~12/10/2001

11,965.49 B 3INN]N. 05/10/2003

AmR.Eat 00295

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 69 of 136
Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 70 of 136
HORTON/REYNOLDS NOTE jt~V~i~ #1 11-21-2001 Pg

pounding period...: Monthly

Nominal annual rate,.:

Effective annual rate:

Periodic rate........:

Equivalent daily rate:

CASH FLOW DATA

9.500 %

9.925 %

0.7917 %

0.02603 %

Date Amount # Period End-date

1 Loan

2 Payment

11-10-01

12-10-01

200,000.00

11,965.42

AMORTIZATION SCHEDULE - Normal amortization

Pmt Date Payment Interest Principal

1,583 .33

1,583 .33

Loan 11-10-2001

1 12-10-2001

2001 totals

2 01-10-2002 11,965.42 1,501.14 10,464.28

3 02-10-2002 11,965.42 1,418.30 10,547.12

4 03-10-2002 11,965.42 1,334.80 10,630.62

5 04-10-2002 11,965.42 1,250.64 10,714,78

6 05-10-2002 11,965.42 1,165.82 10,799.60

7

,8

06-10-2002

07-10-2002

11,965.42

11,965.42”

1,080.32

994.15

10,885.10

10,971.27

9 08-10-2002 11,965.42 907.29 11,058.13

10 09-10-2002 11,965.42 819.75 11,145.67

11 10-10-2002 11,965.42 731.51 11,233.91

12 11-10-2002 11,965.42 642.58 11,322.84

13 12-10-2002 11,965.42 552.94 11,412.48

2002 totals 143,585.04 12,399.24 131,185.80

01-10-2003 11,965.42 462.59 11,502.83

02-10-2003 11,965.42 371.52 11,593.90

03-10-2003 11,965.42 279,74 11,685.68

04-10-2003 11,965.42 187.23 11,778.19

05-10-2003 11,965.42 93.91 11,871.51

totals 59,827.10 1,394.99 58,432.11

10,382 .09

10,382.09

200,000.00

189,617.91

179,153 .63

168,606.51

157,975.89

147,261.11

136,461.51

125,576.41

114, 605.14

103,547.01

92,401.34

81, 167.43

69,844.59

58,432.11

46,929.28

35,335.38

23, 649.70

11,871.51

0.00

Grand totals 215,377.56 15,377,56 200,000.00

Event

1

18 Monthly 05-10-03

11,965.42

11,965.42

Balance

14

15

16

17

18

2003

p~mR.ESt00296

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 71 of 136
CONTRACT FOR SALE OF STOCK (PERKY CAP COMPANY, INC.)

This Agreement made as of this 10th day of February, 1994, by and

between N. D. Horton, Jr., and James N. Reynolds, III, (hereinafter

referred to as “Sellers”) and Rudolph Terry and.Roy Terry (hereinafter

referred to as “Purchasers”).

WITNESSETH

WHEREAS, the parties hereto did on August 10, 1993, enter into

that certain agreement wherein Sellers granted to Purchasers an option

to purchase 33% of the outstanding common stock of Perky Cap Company,

Inc.;

WHEREAS, under paragraph 10 of the initial Stock Purchase Option

Purchasers were to consummate the purchase of said stock on or before

February 10, 1994;

WHEREAS, Purchasers wish to exercise their option and convert the

same into a binding contract for sale pursuant to the terms set forth

herein.

NOW THEREFORE, in consideration of the premises the mutual

covenants, agreements and undertakings hereinafter set forth the

parties do agree and contract as follows:

1). EXERCISE OF OPTION:

Purchaser does hereby exercise it’s option to purchase 33% of The

Common Stock of Perky Cap Company, Inc., pursuant to that certain

option agreement between the parties dated August 10, 1993,

2), PURCHASE PRICE:

The purchase price herein shall be $600,000.00 cash at closing

with credit for non—refundable earnest money as set forth herein.

3). NON-REFUNDABLE EARNEST MONEY:

Seller acknowledges that Purchaser has pursuant to the aforesaid

option a~eement and as of the date hereof paid to Seller the suni of J~-$ ~ as non—refundable earnest money. Purchaser in order to

“ preserve his rights under this contract shall pay to Seller additional

non—refundable earnest money as follows:

$25,000.OO due March 10, 199k,

Should Purchaser consummate the purchase under this contract then

Purchaser shall receive credit fOr such non—refundable earnest money

against the purchase price set forth above.

4). DATE OF CLOSING:

Closing shal occur on or before April 6, 1994.

5). CLOSING EXPENSES:

The parties hereto shall bear expenses of closing equally. Seller

guarantees that closing expenses will not exceed $5,000.00.

~. ~L~/ AREOO84B

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 72 of 136
6). SURVIVAL OF OPTION AGREEMENT DATED AUGUST 10, 1993:

The parties hereto agree that any provision contained in said

option agreement of August 10, 1993, not in conflict herewith shall

survive the execution of this contract and remain in full force and

effect between the parties. Said option agreement being incorporated

herein and made a part hereof by reference.

7). DEFAULT:

Should Purchaser default and fail to close the aforesaid

transaction on or before the closing date set forth herein Seller

shall be entitled to enforce this contract by all remedies available

at law.

8). ASSIGNABILITY:

Purchaser shall be able to assign this contract with the written

consent of the Seller which said written consent shall not be

unreasonably withheld.

9). NOTICES:

All notices hereunder shall be given to the addresses set forth in

that certain option agreement between the parties dated August 10,

1993, copy of which is affixed hereto and made a part hereof.

IN WITNESS WHEREOF, the parties hereto, have hereunto set their

hands and affixed their seals as of the day and year first herein

written.

Signed, sealed and delivered

in the presence of:

otary ub ic

My Coimuissiori Expires:

/-~z~9-~95~’

(AFFIX NOThRY SEAL)

Signed, sealed and delivered

in the presence of:

Unofficial Witness

SELLERS:

PURCHASERS:

Rudolph Terry

Roy Terry

(SEAL)

(SEAL)

(SEAL)

(SEAL)

ARE 00849

Notary PUrLL1C

My Commission Expires

(AFFIX NOTARY SEAL)

t1~ti

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 73 of 136
COUI’ITY OF’ PUTNAM

For and in consideration of the terms and conditions herè’inafter set

forth and other valuable considerations and Ten and 00/100 ($10.00). Dollars

the undersigned N, D, Horton, Jr., and James N. Reynolds, III, (hereinafter

Grantor), do hereby grant unto Rudolph Terry and Roy Terry (hereinafter

Grantee) their heirs or assigns an irrevocable option to purchase, subject

to the terms hereof, certain-shares of common stock of the Perky Cap Company, Inc., Eatonton, Putnam County, Georgia.

The terms of this Option are as follows:

Initial Stock Purchase

(Thirty-three (33%) of the outstanding common stock of the Perky Cap

Company, Inc.)

1. Option, The undersigned does during the Option period, offer to

sell to the Grantee 33% of the outstanding shares of common stock of the

Perky Cap, Company, Inc. (Initial Stock Purchase),

2. Purchase Price, Purchase price for the Initial Stock Purchase is

$600,000.00 cash at closing.

3. Term. The initial term of this Option for the Initial Stock Purchase of 33% of the common stock of Perky Cap Company, Inc., shall be sixty

(60) days from the date hereof.

4. Renewal of term of option. Provided the Grantee makes’the Option

payments set forth below the, undersigned agrees to grant four additional

renewals of this Option of thirty (30) days each. If all renewals are exercised Grantee would have a total of one hundred eighty (180) days for

this Option,

5. Option price. Grantee-has paid to the undersigned Grantor $25,000.0.

concurrently with the execution of this Agreement which is the option price

for the initial sixty (60) day option term; ~hou1d Grantee desire to..renow

this Option for the aforesaid thirty (30) day renewal terms, Grantee shall

on or before the expiration of the initial term or the then current renewal

term pay to the Grantor Twenty Five Thousand ($25,000.00) Dollars for each

such thirty (30) day nenewal term.

- 6. The monies paid for this Option shall, if the Option is exercised,

be credited against the purchase price.

7. Payment of purchase price. Should Grantee exercise its rights

under this Option they shall pay the purchase priôe (loss credit for option

monies actually paid hereunder) in cash at closing on or before the expiratirn

of the initial term or any renewal term of this Option not to exceed One

Hundred Eighty (180) days from the date hereof. Payment hereunder shall be

made in cash or other certified or good funds at closing.

ARE 00850

p

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 74 of 136
- 8. Closing Expenses, Grantee and Grantor shall bear the expenses of

closing equally. Grantor-.guaram±ees that closing expenses will not exceed

$5,000.00, . - - - . -

9. Place of Closing. Closing shall occur at the law office of 1.1.

Seaborn Ashley, Jr., P.C., p. o, Box 67, 122 N, Main Street, Greensboro,

Georgia 30642 or such other place as the undersigned may designate to the

Grantee in writing.

10, NotIce of exorcise of Option / Date of Closing. Should Grantee

exercise their rights under this Option Grantee shall notify Grantor at the

address set forth herein in writing of their election to exorcise this

Option. Closing shall occur within ten (10) days from receipt by Grantor

of such notice but in no event more than one hundred eight (180) days from

the date hereof or the expiration of the Option term, whichever first occur

11. Default by Grantee. Should Grantee fail to renew the term of this

Option before the expiration of the then current term or close the transaction prior to the expiration of the initial or any renewal term then all

monies paid herewith for the initial or any renewal term shall be forfeited

and constitute liquidated damages hereunder for the benefit of the Grantor.

12. Initial Stock Purchase. Should Grantee purchase the Initial Stock

Purchase (33% of the outstanding stock) and at such time own thirty-three

(33%) percent of the stock of the Perky Cap Company, Inc., then in that

event the undersigned shall provide for the removal from the obligation of

Perky Cap Company, Inc., the following Promissory Notes currently payable,

by Perky Cap Company, Inc., to wit:

- 1, $175,000.00 note payable to American Real Estate”Investment Compan~

Ltd. *

2. $100,000.00 note paid to N~ D. Hortor~, Sr’.

CONTINGENT ADDITIONAL STOCK OPTION -

Grantor does agree with the Grantee that should Grantee close the sale

contemplated by the. foregoing Option and acquire p~rsuant to the terms hereinabove set forth thirty three (33%) percent of the outstanding common stock

of the Perky Cap Company, Inc., Initial Stock Purchase then in that event

the undersigned shall grant unto the Grantee the irrevocable option to purchase an additional fifty-one (51%) percent of the outstanding common stock

of the Perky Cap Company, Inc., (Additional Stock Purchase) subject to the

-terms and conditions hereinafter set forth.

A, Purchase Price: The purchase price for such fifty-one (51%) per

cent of the outstanding common stock of the Perky C~p Company, Inc.,

(Additional Stock Purchase) shall be computed as follows:

ARE 00851

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 75 of 136
on or before twelve (J~) montiis from ttie date of closing or tne initial

stock Purchase herein, the purchase price shall be a minimum price of

$1,400,000.00 and a maximum price of $2,000,000.00 cash at closing, adjusted for annual earnings (rounded to the nearest $10,000.00) as per

table below.

(ii) If this option for additional stock purchase is exercised during the thirteen through the twenty-fourth (13-24) months from the date of

closing pf the initial Stock Purchase heroin, the purchase price shall be a

rninirnum”prlce of $1,600,000.00 and a maximum price of $2,300,000.00 cash at

closing, adjusted for annual earnings (rounded to the nearest $10,000.00)

as per table below,

ANNUALIZED EARNINGS PURCHASE PRICE

$150,000.00 $1,500,000.00

$160,000.00 $1,600,000.00

- $170,000.00 $1,700,000.00

$180,000.00 $1,800,000.00

$190,000.00 $1, 900,000.00

$200,000.00 $2,000,000.00

$210,000.00 #2,100,000.00 -

$220,000.00 $2,206,000.00

$230,000.00 $2,300,000.00

B. This Contingent Additional Stock Purchase Option shall expire

twenty-’four (24) months after the date of closing of the Initial Stock

Purchase.

C. Grantor and Grantee agree that if the Initial Stock Purchase is

made, during the options for the Additional Stock Purchase, no dividends

will be paid to the stockholders unless mutually agreed to by Grantee and

Grantor, -

1. Provided~that all earnings accruing from the date of the Option

shall be calculated to reduce the following:

(i). Land and buildingnote of $275,000;OO payable tà N, D. Horton,

Sr.

(ii). Equipment note ‘of $188,314.34 payable to N, D. Horton, Sr.

2. Provided further, that if the earnings during the Additional Stock

Purchase Option Period are not sufficient to repay the said land, building

and equipment notes described In C—i (i) and (ii) above, then in that event

N, D, Horton, Jr., and James M. Reynolds, III, will retire the balance ~

owing on such notes at the time of closing of the Additional Stock Purchase

herein, -~

ARE 00852

The actual earnings shall remain in the company as working capital

until, closing. At closing on the- 51% of the stock an amount equal to earnings from the date of original option to the date of closing on the said

51% of the stock will be paid by Perky Cap Company, Inc. toward the retirement of the herein described two notes. ‘ Until such closing all application

(/ of earnings shall be calculated periodically but actually paid only upon

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 76 of 136
3, Notices, All notices required to begivenherein shall be deemed

properly given when given in writing and addressed to the parties at the

addresses sot f~orthherein or at such other address as the parties may from

time to time give to the other in writing specifically referencing this

option agreement:

GRANTOR GRANTEE

N. D, Horton Jr.

P. 0. Box 560

Eatonton, Georgia 31024

(706) 453-7842 - Fax

James M. Reynolds, III

2561 Eatonton Highway

Greensboro, Georgia 30642

(706)4,53-7842 — Fax

With Copy to: -

W. Seaborn Ashley, Jr., P. C..

122 N. Nain Street

P. 0. Box 67

Greensboro , Georgia 30642

(706)453-7842 - Fax

Rudolph Terry and Roy Terry

c/o Terry Manufacturing Co., Inc.

P. 0. Box 648

94 5, Street

Roanoke, Alabama 35274

(205)863—8835 — Fax

IN WITNESS WHEREOF, the undersigned has hereunto set their hands and

affixed their seals this 1ô’f4~ day of August, 1993.

Sigrxed.4 sealed and d~1ivered

in thi

My cOmmission

SEAL

(A~ifixNotary Seal)

‘a

ARE 00853

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 77 of 136
Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 78 of 136
CONSENT TO ACTION DIRECTORS PERKY CAP COMPANY, INC.

The undersigned being all of the directors currently qualified and

acting of Perky Cap Company, Inc., (Corporation) do consent to the

following actions and adopt the following resolutions to wit:

1). Resolved that the Corporation consents to the transfer and

‘sale by N. D. Horton, Jr., (Horton) and James M. Reynolds, III,

(Reynolds.) of an aggregate 30,000 shares of common stock of the

corporation currently held and owned by Horton and Reynolds as

follows: -

10,000 shares to Rudolph Terry

10,000 shares to Roy Terry

10,000 shares to Rudolph Terry and Roy Terry jointly

2). Resolved that the Corporation acknowledges and approves the

granting by N. D.. Horton, Jr., (Horton) and James M. Reynolds, III,

(Reynolds) of an option dated June 6, 1994, to Rudolph and Roy Terry

to purchase an additional 45,900 shares (51%) of the current

outstanding stock of the corporation.

-- 3).. Resolved that the Corporation shall not issue additional

shares of common stock without granting preemptive rights to all

shareholders so as to preserve and not dilute the ownership of Rudolph

and Roy Terry.

4). Resolved that the Corporation currently has issued an

outstanding 90,000 shares of common stock.

The above-actions consented to and effective as f June 6, 1994.

This is to certify that the within

and foregoing is a true and correct

~theOl~ of same executed

(SEAL)

(SEAL)

(SEAL)

I-.-

m:agreement/horton.004

ARE 00861

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 79 of 136
Covenants from Sell.r~ (Horton & R-sy~o1ds)

Between the data hereof and the xerciae ‘of th. option to

purchase additional shares, the Sellers:

1. Shall not, and will not permit the Corporation to, take

any action, or fail to take any action which would prevent, the

material inaccuracy of any of the representations and warranties

net forth h*rain~

2. Will not, and will not allow the Corporation to, create

any indebtedness or borrow any money without the approval of

purchasers (Terrys & Goodrum).

3. Will cause the Corporation to maintain its property and

assets in good operating condition, with the exception of

ordinary wear and tear. . - -

4. Will not cause or permit the Corporation to issue any

additional shares of capital stock; or to declare, aet aside or

pay any dividend or make any distribution with raspeot to its

capital stock or other eguity ownership interests.

5. Will not cause or permit tha corporation to sail,

mortgage, lease, buy or otherwise acquire, or transfer any real

or personal property, without the consent of Purchasers. EXCEPTfl4G

Inventory and products sold in the ordinary course of business.

6~ Will not cause or permit the corporation to make any

increase in the compensation of (or ~y any bonus to) any off ic

or managerial employs.. In Excess of existing personnel compensation agre eats

7. - Will not cause or permit the Corporation to enter into

any agreement, contract or commitment relating to capital

expenditures or investments aggregating more than $5,000, without

the consent .0-f Sellers,

8. Immediately cause stock transfer records of the

Corporation to reflect the ~

ARE 00862

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 80 of 136
CLOSING DOCUMENT FROM SELLERS

The Sellers of capital stock of the Perky Cap Company, Inc.

represent that:

l~ The Co~poration has authorized capital stock coneisting

of:

l00~000 ~ares of common stock, 90,000 ahares of

which ar* ~.iseus~and outstanding.

2. All of the issued and outstanding stock is duly

authorized and validly issued, fully~paidand nonasasasable, and

there -are no preemptive right; in respect thereof.

3. Sellers own 89,505 shares of common stock,

constituting 99~45% - of the isau~d and outstanding shares.

4. There are no outstanding options, warrants or other

rights to subscribe for or purchasa from the Corporation, or any

contracts or commitments providing for th. issuance of, or the

granting by the Corporation of rights to acguire, any shares of

capital stock or any other equity ownership interest of the

Corporation. -

5. Sellers have the full power and authority to enter into

the transaction; contemplated hereby, and. such transactions shall

not violata any provision (i) of thz Corporation’s Articles of~

Incorporation, Bylaws, or other governing document; (ii) any

agreement or contract or legally binding commitment to. which - -

either the Sellers or the Corporation is a party; or (iii~ any

judgment, order, decree, injunction or ruling-of any court or

governmental authority to which either tha Sellers or the

- Corporation iá subject. -

- 6. ma transactions contemplated hereby shall not (i) give

any person any rights of termination, cancellation or acceleration, in or with respect to any agreements, contracts,

indenture, or legally bind~ng~co~it~erita by which the Sellers or

the corporation is bound; (ii) result in the creation or

imposition of (or the obligation to create or impose) any lien.,

charge or encumbrance..~upon--any of the pronertv or assets of the

Corporation. - - “ - - - - - - --

7. As of A~r1]. 30, l99&th~ Corporation has no debt

liability or obligation of any kind, whether accrued., absolute,

contingent or otherwise, including, without limitation, an~(

- - -- liability or obligatLoa. arisLng out, ofarty gov*rnasnt&l charges

or penalty, interest or fines,, except for those liabilities set

forth on Schedule 1.

ARE 00863

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 81 of 136
8. The Corporation owns good and marketable title to all

real and personal (tangible and intangible) property used in the

business of the Corporation, or reflected on the financial

statements of the Corporation, free and. clear of any liens,

charges, mortgages, pledges or other encumbrances, except as

reflected on Schedule 2.

9. All material mortgages, deeds to secure debt, and any

other debt which encumbers or affects the personal or real

property owned by the Corporation are in good standing, all

payments of interest and all reserves, deposits and other charges

have been made, and no default or breach exists thereunder.

10. There is no action, suit, claim or proceeding pending

or, to the knowledge of Sellers, threatened against or affecting

the Corporation in any court or before any governmental agency,

except as set forth ‘In Schedule 3.. Except as set forth in

S~hedule 3, there are no unsatisfied judgments against the

Corporation. - - - -

11. Except as set forth in Schadule 4, the Corporation is

not in violation of any applicable law, statute, order, rule, or

regulation promulgated or judgment entered by any federal, state,

local or foreign, court or governmental authority, nor has tha

corporation been charged with or is under investigation with

respect to any such violation.

12. Except as sat forth on ~ the Corporation is

in compliance in all material respects with all federal, state,

and local laws and - ordinances relating to clean air, vat-er, waste

disposal, toxic - substances, and other environmental ragurat iana,

as well as those relating to occupational health and safety.

Sel er

~‘1Y Date

ARE 00864

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 82 of 136
Perky Cap Company, Inc. -

Attachment to Closing Document from Sellers

Description

Financial statements of April 30, 1994 of Perky Cap

Company, Inc. -

None Except as shown on the financial statements of April 30,

Perky Cap Company, Inc.

None

None -

None

Schedules

1

2

3

4

5

ARE 00865

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 83 of 136
Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 84 of 136
OPTION

STATE OF GEORGIA

COUNTY OP PUTNAM

For and in consideration of the termS -and conditions hereinafter

set forth and other valuable considerations and Ten and 00/ 100

($10.00) Dollars the undersigned N. D, Horton, Jr., and James H,

Reynolds, III, (hereinafter Grantor),do hereby grant unto Rudolph

Terry and Roy Terry (hereafter Grantee) their heirs or assigns an

irrevocable option to purchase, subject to the terms hereof, certain

shares of common stock of the Perky Cap Company, Inc., Eatonton,

Putnam County, Georgia.

The terms of this Option are as follows:

1. Option. The undersigned does during the Option period, offer

to sell to the Grantee 51% (45,900 shares) of the outstanding shares

of common stock of the Perky Cap Company, Inc. (Stock Purchase)

2. Purchase Price: The purchase price for such fifty—one (51%)

percent of the outstanding common stock of the Perky Cap Company,

- Inc.-, shall be computed as follows: -

(i) If this Option for Stock Purchase is exercised on or

before June 6., 1995, the purchase price shall be a minimum of

$1,400,000.00 and a maximum price of $2,000,000.00 cash at closing,

adjusted for annual earnings (rounded to the nearest ten thousand

dollars) as per table below.

(ii) If this option for Stock Purchase is exercised during the

period from June 6, 1995 through June 6, 1996, the purchase price

shall be a minimum price of $1,600,000.00 and a maximum price of

$2,300,000.00 cash at closing, adjusted for annual earnings (rounded

to the nearest $10,000.00) as per table below.

~NNUALI’ZTED EA1~NTNGS PIJRCHASE PRICg

- $150,000.00 $1,500,000.00

$160,000.00 - $1,600,000.00 -

$170,000.00 $1,700,000.00

$180,000.00 $1,800,000.00

$190,000.00 $1,900,000.00

$200,000.00 $2,000,000.00

$210,000.00 $2,100,000.00

$220,000.00 $2,200,000.00

$230,000.00 $2,300,000.00

(iii) Grantor and Grantee agree that no additional shares shall

be issued and no dividends will be paid to the stockholders unless

mutually agreed to by Grantee and Grantor.

(iv) Provided that all earnings accruing from June 6, 1994,

shall be used to reduce the following:

(1). Land and building note of $275,000.00 payable to N. D.

Horton, Sr.

In: agreement/horton. 004

ARE 00825

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 85 of 136
(ii). Equipment note of $188,314.34 payable to N. D. Horton,

Sr.

(v) Provided further, that if the earnings during the Stock

Purchase Option Period described herein are not sufficient to repay

the said land, building and equipment notes described in 2(iv) and

(ii) above, then in that event N. D. Horton, Jr., and James N.

Reynolds, III, will retire the balance owing on such notes at the time

of closing of the Stock Purchase herein.

3. Term. The term of this Option for the Stock Purchase of 51% of

the common stock of Perky Cap Company, Inc., shall be from’ the date

hereof until June 6, 1996.

4. Payment of purchase price. Should Grantee exercise its rights

under this Option they shall pay the purchase price in cash at closing

on or before the expiration of the term hereof. Payment hereunder

shall be made in cash or other certified or good funds- at closing.

5. Closing Expenses. Grantee and Grantor shall bear the expenses

of closing equally. Grantor guarantees that closing expenses will not

exceed $5,000.00. -

-6. Place of Closing. Closing shall occur at the law office of W.

Seaborn Ashley, Jr., P.C., P.O. Box 67, 122 N. Main Street,

Greensboro, Georgia 30642 or such other place as the undersigned may

designate to the Grantee in writing.

7. Notice of exercise of Option / Date of Closing. Should Grantee

exercise their rights under this Option Grantee shall notify Grantor

at the address set forth herein in writing of their election to

exercise this Option. Closing shall occur within ten (10) days from

receipt by Grantor of such notice but in no event later than June 6,

1996. - -

8. Default by Grantee. Should Grantee fail to close the

transaction prior to the expiration of the term hereof all rights

hereunder shall cease and Grantee shall have no further rights to

purchase the stock described herein.

9. Notices. All notices required to be-given herein shall be

deemed properly given when- given in writing and addressed to the

parties at the addresses set forth herein or at such other address as

the parties may front time to time give to the other in writing

specifically referencing this option agreement:

GRANTOR GRANTEE

N. D. Horton, Jr. Rudolph Terry and Roy Terry

P.O. Box 560 c/o Terry Manufacturing Co., Inc.

Eatonton, Georgia 31024 P.O. Box 648

(706) 453—7842 — Fax 924 S. Street

Roanoke, Alabama 36274

(205) 863—8835 — Fax

With copy to:

James N. Reynolds, III Michael Harrison, P.C.

2561 Eatonton Highway 3060 Mercer University Dr.

Greensboro, Georgia 30642 Suite 300

(706) 453—7842 — Fax Atlanta, Georgia 30341

Fax (404) 455—4363

m: agreement/hortonOo4

ARE 00826

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 86 of 136
With Copy to:

W. Seaborn Ashley, Jr., P.C.

122 N. Main Street

P.O. Box 67

Greensboro, Georgia 30642

(7.06 453—7842 — Fax

IN WITNESS WHEREOF, the undersigned has hereunto set their hands

‘and affixed their seals this 6th day of June, 19 4

~-7>~ /

/

Signed, sealed and de

in t1~pr~senc

(AFFIX NOTARY SEAL) My Cc .~-i ~ Vi, icc~

In: agreement/horton.004 ARE 00827

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 87 of 136
~~~NTY NINE THOUSAND SEVEN HUNDRED FIFTY TWO AND ONE HALF

gw,2~ ~oLn4~~

J(~YIL) -9/~-C~

&~W~è~Wjeo~

(7~.1-,’ JUNE 6, 1994

S

C~~4

0

0

w

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 88 of 136
JAMES H.

- ~-~-

C~L€0

~ ~nu~m~

F~ 1994

C)

co

0

0

w

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 89 of 136
Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 90 of 136
ACKNOWLEDGMENT

The undersigned who on this day purchasing Common Stock of the

Perky Cap Company, Inc., from N. D, Horton, Jr., and James M.

Reynolds, III, as follows:

Rudolph Terry — 10,000 shares

Roy Terry — 10,000 shares

Rudolph Terry and Roy Terry - 10,000 shares

do certify as follows:

1), That they are aware that this is a sale from existing

shareholders and not from Perky Cap Company, Inc..

2). That they are aware and acknowledge that all the shares of

the Corporation have been beneficially held by Dr. Barry D~arugar, N.

D. Horton, Jr., and James M. Reynolds, III, and have been so held for

a period in excess of twelve. (12) months proceeding the date of sale

of June 6, 1994.

3). That the undersigned did not purchase the above shares nor

receive any offers for sale of such shares by means of any form of

general or public solicitation or advertisement including but not

limited to the following:

1). Publicly disseminated advertisement or sale of literature

through the mail or otherwise;

2). Any advertisement, article notice or other communication

published in any newspaper, magazine or other similar media or

broadcast over television or radio;

3). Any seminar or meeting whose attendees have been invited by

any general solicitation with general advertising.

The undersigned acknowledge that each of the undersigned have

purchased for investment for their own account the foregoing stock

without the intent of participating directly, indirectly. in a

distribution of such securities.

The undersigned acknowledge that the foregoing securities were

issued by Perky Cap Company, Inc., to N. D. Horton, Jr., and James M.

Reynolds, III, as replacement shares for shares purchased by N. D.

Horton, Jr., and James N. Reynolds, III, from previous shareholders

and that the transaction is deemed exempt from securities registration

in reliance on Paragraph 13 of Code Section .10-5-9 of the Georgia

Securities Act of 1973 and may not be sold or transferred except in a

transaction which is exempt under such act or pursuant to an effective

registration under such act.

~

Rudolph Terry by his

duly constituted attorney-infact Michael Harrison by Power

of Attorney dated June 6, 1994 2~~~_—z’~ ~ (SEAL)

Roy Terry by his

duly constituted attorney-infact Michael Harrison by Power

of Attorney dated June 6, 1994

Rudolph Terry and Roy Terry

by their duly constituted

attorney-in-fact Michael Harrison -

by Power of Attorney dated June 6,

1994

ARE 00820

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 91 of 136
RECEIPT OF STOCK SHARE CERTIFICATE

PERKY -CAP COMPANY, INC. , -

The undersigned does acknowledge receipt of certificate #28,

representing 10,000 shares of the common stock of Perky Cap Company,

Inc

This 6th day of June, 1994.

(SEAL)

Roy Terry

m: agreement/hortori.OO4 ARE 008~2

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 92 of 136
‘U

- ~ -~

i~I~JROY TRR1~Y

TEN THOUSAND

-- ~i!~---— --- ~-~--‘ -

0~c~L~ ~

6. 1994

c~)

cC

0

0

LU

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 93 of 136
RECEIPT OF STOCK SHARE CERTIFICATE

PERKY CAP COMPANY, INC.

The undersigned does acknowledge receipt of certificate #29,

representing 10,000 shares of the common stock of Perky Cap Company,

Inc.

This 6th day of June, 1994. ‘ -

____________________________(SEAL)

- - J~—Rudolph Terry

- ARE 00814

m:agreement/horton.004

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 94 of 136
RUDOLPH TERRY

_.~TEN_THOtI~A1Th

.iuw-ctJdi~~dizI’~ 9~d-(/4~’e.e76’e (4~,/~?1~z 4~z~&Ø~iw (/fl/~,’O72/Z~

/(~(‘/~)~/:%~/(~/(1W%’N /~//~1~A~?’ “fr~~~’~’ ‘~/(/f(4/ (‘ff,~(1)r7/r/

-- ~ (Ø(uli J((/?C2/(f~/’~/~‘(Z/) ~ (r( ‘~

~5~CcI~ ~ ~ ~a/~ ~‘

• (9’ (~ (ii ~ ~///~-~Iom~m’,

,~,~/~J1JNE6, .994

U,

cC

0

0

LU

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 95 of 136
RECEIPT OF STOCK SHARE CERTIFICATE -

PERKY CAP COMPANY, INC.

The undersigned does acknowledge receipt of certificate #30,

representing 10,000 shares of the common stock of Perky Cap Company,

Inc. -

This 6th day of June, 1994. -

___________________________(SEAL)

- Roy Terry

- - ~ ~ (SEAL)

- ~ Rudolph Terry

m:agreement/horton.004 - ARE 00816

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 96 of 136
ROY TPRRY ANT) RIJDOLPH r1~v

- -~-

occ~L~~

~ Io,~n~

~ J~~E6,1994

cC

0

0

LU

-‘--S ~

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 97 of 136
Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 98 of 136
CLOSING STATEMENT -

RE: PURCHASE OF 33 1/3% (30,000 SHARES)OF THE OUTSTANDING SHARES OF

COMMON STOCK OF PERKY CAP COMPANY, INC., PURSUANT TO OPTION

AGREEMENT DATED AUGUST 10, 1993, LAST AMENDED APRIL 6, 1994,

PURCHASE PRICE: (30,000 SHARES — 33 1/3%) $600,000.00

CREDIT:

EARNEST MONEY $225,000.00

BALANCE DUE $375,000.00

The foregoing checked and approved this 6th day of June, 1994,

SELLERS:

(SEAL)

SEAL)

‘ames 1•~.

PURCHASERS -

_____________________________(SEAL)

‘ }v- Rudolph Terry

___________________________(SEAL)

— Roy Terry

ARE 00847

m:agreementfhorton. 004

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 99 of 136
Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 100 of 136
OPTION EXTENSION AGREEMENT

In Re: Option dated June 6, 1994; N.D. Horton, Jr. and James i4,

Reynolds, III (Grantors) and Rudolph Terry and Roy Terry

(Grantees) to purchase certain of the common stock of

Perky Cap Company, Inc.

STATE OF GEORGIA S

S

COUNTY OF PUTNAM 5

THIS AGREEMENT made as of this 6th day of June, 1996 by~and

between N.D. Horton, Jr. and James H. Reynolds, III as Grantors and

Rudolph Terry and Roy Terry as Grantees.

W I T N B S S B T H:

WHEREAS, on June 6, 1994 Grantors did grant unto Grantees an

option to purchase fifty-one percent (51%) (forty-five thousand

nine hundred (45,900) shares) of the outstanding common stock of

Perky Cap Company, Inc. (the “Option”); and

WHEREAS, the said Option was to expire on June 6, 1996; and

WHEREAS, the parties wish to modify the Option to extend the

closing date thereof, provide for extension payments and certain

credits.

NOW, THEREFORE in consideration of. the premises and other good

and valuable considerations and ten dollars ($10.00) the Grantors

do extend and modify the Option pursuant to the~terms hereof as

follows:

1. -

Paragraph 2(u) is amended by striking said paragraph and

substituting in lieu therefore the following:

(ii) If this Option for stock purchase is exercised during the

period from June 6, 1996 through the earlier of the date

of closing or absolute termination date (December 6,

52IS~3\opIk~u.agr

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 101 of 136
1996), the purchase price shall be a minimum price of One

Million Six Hundred Thousand and No/l00 Dolla~s

($1,600,000.00) and a maximum price of Two Million Three

Hundred Thousand and No/100 Dollars ($2,300,000.00) cash

at closing, adjusted for annual earnings (rounded to the

nearest Ten Thousand and No/100 Dollars ($10,000.00)) as

per the table below:

Annualized Earnings Purchase Price

$160,000.00 $1,600,000.00

$170,000.00 $1,700,000.00

$180,000.00 $1,800,000.00

$190,000.00 $1,900,000.00

$200,000.00 $2,000,000.00

$210,000.00 - $2,100,000.00

$220,000.00 $2,200,000.00

$230,000.00 $2,300,000.00

2.

Paragraph 3. Term: is stricken and the following substituted

in lieu thereof: -

3. Term: The initial extended term of this Option for

the stock purchase shall be from the date hereof

until July 6, 1996.

3,1 Extension of Term:- This Option may be extended by

Grantees from month to month (the 6th day of the

month) until December 6, 1996 (“Ak solute Option

Termination Date”) upon the payment of Extension

Payments (as defined below) by Grantees to Grantors

on or before the 6th day of the ensuing month.

3.2 Extension Payments: Grantors acknowledge receipt

of Twenty-five Thousand and No/iQO Dollars

($25,000.00) (“Initial Extension Payment”) for

.2 S21S~3~cp4icn..gr

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 102 of 136
extending the term of this Option until July 6,

1996. Upon payment of - additional Extension

Payments in the amount of Twenty-five Thousand and

No/lOO Dollars ($25,000.00) per month on or before

the 6th day of the ensuing month, this Option shall

automatically be extended until the 6th day of the

month following the ensuing month.

3.3 Application of Extension Payments: -

(a) If the Option is not ultimately exercised and

stock purchased on or before December 6, 1996

(the “Absolute Option Termination Date”), the

Extension Payments and all Option payments

shall be forfeited to the Grantors.

(b) (1) If the Grantees exercise this Option and

close the purchase between June 6, 1996

and October 5, 1996, sixty percent (60%)

of the Extension Option Payments made

from the date hereof (June 6, 1996) to

the date, of closing shall be credited to

the purchase price (sixty percent (60%)

credit).

(ii) If the Grantees exercise this Option and

close the purchase between October 6,

1996 and December 6, 1996, one hundred

percent (100%) of the Extension Option

Payments made- on or after October 6, 1996

to the date of closing shall be credited

.3 5215\3\optico.agr

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 103 of 136
to the purchase price in addition to the

sixty percent (60%) credit granted in

3.3(b)(i) above.

(iii)The maximum credit available from June 6,

1996 to December 6, 1996 shall be One

Hundred Ten Thousand and No/100 Dollars

($110,000.00) provided all Extension

Payments (One Hundred Fifty Thousand and

No/100 Dollars ($150,000.00)) are made

hereunder.

(iv) Failure to make an Extension Payment on

or before the 6th day of the ensuing

month shall terminate Grantees rights

under the Option effective at midnight of

the 6th day of such month.

3.4 Absolute Termination Date: This Option shall

terminate, if not sooner terminated as provided in

3 • 3(b) (iv) above at midnight on December 6, 1996

(“Absolute Termination Date”).

3.

Paragraph 7 of the Option is stricken and the following

substituted in lieu thereof:

7. Notice of Exercise of Option/Date of Closing:

Should Grantees exercise their rights under this

Option, Grantees shall notify Grantors at the

addresses set forth herein in writing of their

election to exercise this Option. Closing shall

S2I3\3~opGon.agr

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 104 of 136
occur within ten (10) days from receipt by Grantors

of such notice, but in no- event later than the

Absolute Termination Date (December 6, 1996).

4,

The Option Agreement as amended herein is ratified and

affirmed by the Grantors.

IN WITNESS WHEREOF the undersigned have hereunto set their

hands and affixed their seals as of this 6th day of June, 1996.

Signed, sealed and delivered

in the presence of: &~I~-a4~P~1

)

Un fficial W n s

Notary Public /7

My Commission Expires: /.2-7_

(AFFIX NOTARY SEAL)

III

-S. 5215\3\cpticuagr

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 105 of 136
Transcript of the Testimony of

Ira Axeirod

Date taken: July 12, 2005

In Re: Terry Manufacturing Co1, Inc.,

Professional Shorthand Reporters, Inc

Phone: 504-529-5255

Fax: 504-5295257

Email: production@psrdocs.com

Internet: www.psrdocs.com

EXHiBIT

14U

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 106 of 136
IN RE: NO, 03-32213-WRS

TERRY UNIFORM COMPANY,

LLC,

DEBTOR CHANTER 7

1 APPEARANCES CONTINUED:

2

PHELPS DUNBAR

3 (BY: KATHERINE M. DETERMAN, ESQ.)

365 CANAL STREET, SUiTE 2000

NEW ORLEANS, LOUISIANA 70130-6534

ATIORNEYS FOR TERRY MANUFACTURING

COMPANY, INC. AND TERRY UNIFORM

COMPANY, LLC

BALCH & BINGHAM

(BY: )EREMY RETHERFORD, ESQ.)

1910SIXTH AVENUE NORTH, SUITE 2600

BIRMINGHAM, ALABAMA 35203

(Present via Telephone)

ATrORNEYS FOR BANK OF WEDOWEE

REPORTED BY:

PAT KENNEDY QUINTINI

CERTIFIED COURT REPORTER

EXAMINATION INDEX

Page

EXAMINATION BY MS. DETERMAN 5

* * *

INDEX OF EXHIBITS

Page

Exhibit No, 1 8

Account information from Terry

Manufacturing

Exhibit No. 2 8

Notices of Deposition

In Re: Terry Manufacturing Co., Inc.,

UNITED STATES BANKRUPTCY COURT

FOR THE MIDDLE DISTRICT OF ALANANK

IN RE: MO. 03-32063-WRS

TERRY MANUFACTURING

COMPANY, INC.,

DEBTOR CHANTER 7

** *

Ira Axefrod

J, LESTER ALEXANDER ADVERSARY PROCEEDING

III, TRUSTEE OF TERRY

RJ~tJThcTURING COMPI, NO. 04-03061

INC., AND TERRY UNIFORM C/W 04-03062

COMPANY, LLC AND 04-03063

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Deposition of IRA REELROD,

777 ~jnerican Expressway, Plantation,

Florida 33337, taken in the offices of

phelps Dunbar , 365 Canal Street, Suite

2000, New Orleans, Louisiana, on Tuesday,

the 12th day of ~u1y, 2005.

APPEABANCES

SMITH, GIACOMETTI & CHIKOWSEI,I.LC

(BY: COLLEEN GARRITY, ESQ.)

100 SOUTH BROAD STREET, SUITE 200

PHILADELPHIA, PENNSYLVANIA 19110

(Present via Telephone)

ATTORNEYS FOR AMERICAN EXPRESS TRAVEL

BELATED SERVICES CO., INC.

Page 1 Page 3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

STIPULATION

It is stipulated and agreed by and

between counsel forthe parties hereto that

the deposition oftheaforementioned witness

is hereby being taken for all purposes

allowed under the Federal Rules of Civil

Procedure, in accordancewith law, pursuant

to notice;

Thatthe formalities of reading and

signing are specifically not waived;

That the formalities of filing,

sealing, and certification are specifically

waived;

That all objections, save those asto

the form of the question and the

responsiveness of the answer, are hereby

reserved until such time as this deposition,

or any part thereof, may be used or sought

to be used in evidence.

PAT KENNEDY QUINTINI, Certified

Shorthand Reporter, in and for the State of

Louisiana, officiated in administering the

oath to the witness.

Page 2 Page 4

1 (Pages 1 to 4)

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 107 of 136
In Re: Terry Manufacturing Co., Inc., Ira Axeirod

1 IRA AXELROD,

2 having been dulysworn by the above

3 mentioned court reporter, did testify as

4 follows:

5 EXAMINATION BY MS. DETERMAN:

6 Q. This is Kathy Determan from Phelps

7 Dunbar. I represent 3. LesterAlexander,

8 the Trustee of Terry Manufacturing and Terry

9 Uniform Company.

10 MS. DETERMAN:

11 Do you wantto make appearances

12 for the record?

13 MR. RETHERFORD

14 This isJeremy Retherford withthe

15 law firm of Balch & Bingham. I represent

16 the Bank of Wedowee.

17 MS. GARRrrY:

18 Colleen Garrity of the law firm of

19 Smith, Giacometti and Chikowski,

20 representing American ExpressTravel Related

21 Service Company, Inc.

22 MS. DETERNAN:

23 Colleen, do you want to reserve

24 the rightto read and sign the deposition?

25 MS. GARRITY:

Page 5

Yes, I guess we probably should do

that.

EXAMINATION BY MS. DETERMAN:

Q. Would the witness please state his

name forthe record?

A. Ira Axelrod.

Q. And your address, please?

A. 777 American Express Way,

Plantation, Florida 33337.

Q, And are you currently employed?

A. Yes, I am.

Q. By whom?

A. American Express.

Q. And whatis your position there?

A. Manager credit operations.

Q. And how long have you held that

position?

A. That position about eight years.

Q. And as manager of credit

operations, what are the scope of your

responsibilities at American Express?

A. I manage several departments. One

is the collection department. One is the

legal assist department, which is what I’m

doing. One is a customer service area that

Page 6

is card membersthat are in collection

agencies or bankruptcies, if they have

disputes.

Q. During the time that you have been

manager of creditor operations, did you have

any responsibility forthe Terry

Manufacturing Company, Inc. account at

American Express?

A. No, I did not.

Q. Are you familiar with the records

that you produced this morning indicating

what the balances owed to American Express

by Terry Manufacturing are?

A. Yes, I am.

Q. And are these records kept in the

ordinary course of American Express’

business?

A. Yes, they are.

Q, Did you assist orsupervise in the

preparation of the documents that you

produced this morning?

A. Yes, I did.

Q. I would like to introduce into

evidence these documents which consist of 12

pages of balance owed -- I don’t know how

Page 7

1 you would describe it -- account information

2 from Terry Manufacturing on the Terry

3 Manufacturing account as Exhibit 1.

4 (Exhibit No. 1 marked for identification.)

5 And I would also like to introduce

6 the notices of deposition as Exhibit 2.

7 (Exhibit No. 2 marked for identification.)

8 Referring to these documents that

9 you produced, could you please state the

10 balance owed by Terry Manufacturing to

11 American Express as of January 1, 1999?

12 A. I don’t have that in front of me.

13 The oldest date is January 27, 2000,

14 Q. As of January 27, 2000, how much

15 money did Terry Manufacturing owe to

16 American Express?

17 A. 31,638.96.

18 Q. What isthe next date that you

19 have the balance owed? Would it also be

20 January 27,2001?

21 A. Yes.

22 Q. And how much did Terry

23 Manufacturing oweAmerican Express on

24 January 27,2001?

25 A. $88,195.40,

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2 (Pages 5 to 8)

Page 8

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 108 of 136
In Re: Terry Manufacturing Co., Inc., Ira Axelrod

Q, And as of January 27, 2002, how

much didTerry Manufacturing owe American

Express?

A. $51,546.75.

Q, And as ofJanuary 27, 2003, how

much money did Terry Manufacturing owe

American Express?

A. $98,113.92.

Q, And as ofJuly 7, 2003, which is

the date that Terry Manufacturing filed for

bankruptcy, do you know whatthe balance was

that Terry Manufacturing owed to American

Express?

A. Yes, $103,179.63.

MS. DETERMAN:

Thank you. I passthe witness.

MR. RETHERFORD:

I haveno questions.

(Whereupon, the depositionwas concluded.)

I have read or have had the foregoing

testimony read to me and hereby certify that

it is a true and correcttranscription of my

testimony withthe exception of any attached

corrections or changes.

PLEASE INDICATE

()N0 CORRECTIONS

()CORRECTIONS; ERRATA SKEET(S) ENCLOSED

REPORTER’S CERTIFICATE

I, Pat Kennedy Quintini, CCR, Certified

Court Reporter, State of Louisiana, do

hereby certify thatthe above-named witness,

after having been duly sworn by me to

testify to the truth, did testify as

hereinabove set forth,

Thatthistestimony was reported by me

in the stenotype reporting method and

transcribed thereafter by me on computer,

and that same is a true and correct

transcriptto the best of my ability and

understanding.

That I am not of counsel, nor related

to counsel or the parties hereto, and in no

way interested in the outcome of this

matter.

PAT KENNEDY QIJINTINI

CERTIFIED COURT REPORTER

3 (Pages 9 to 11)

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* * *

Page 9

WITNESS’ CERTIFICATE

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(Witness Signature)

Page 10

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 109 of 136
Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 110 of 136
• Transcript of the Testimony of

Mark Christman

Date taken: July 6, 2005

In Re: Terry Manufacturing Co., Inc

Professional Shorthand Reporters, Inc.

Phone: 504-529-5255

Fax: 504-5295257

Email: production@psrdocs.com

Internet: www.psrdocs.com

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 111 of 136
IN THE UNITED STATES BANKRUPTCY COURT

FOR THE MIDDLE DISTRICT OFALABAMA

IN RE: CASE NO. 03-32063-WRS

TERRY MANUFACTURING CHAPTER 7

COMPANY, INC.

Debtor

IN RE: CASE NO. 03-32213-WRS

TERRYUNIFORM CHAPTER 7

COMPANY, LLC,

** ** * ****   ** * an**** ** ** a

J. LESTER ALEXANDER, ADVERSARY PROCEEDING

Ill, TRUSTEE OF TERRY

MANUFACTURING COMPANY, NO. 04-03051 c/w

INC. AND TERRY UNIFORM NO, 04-03062 and

COMPANY, LLC NO. 04-03063

16

VERSUS

17

THE PEOPLES BANK

Rule 30(b)(5) and Rule 7030 Deposition

via telephone ofSOUTHERN MILLS, INC.,

through its designated representative, MARK

DANIEL CHRISTMAN, 6501 Mall Boulevard, Unhn

City, Georgia 30291, taken in the officesof

Phelps Dunbar, LLP, 365 Canal Street, Suite

2000, New Orlesns, Louisiana 70130, on

Wednesday, the 6th day of July, 2005.

APPEARANCES:

PHELPS DUNBAR, LL,P.

(By: Katherkie M. Deterrnan, Bug.)

365 Canal Street, Suite 2000

New Orleans, LouisIana 70130

ATTORNEYS FOR J. LESTER ALEXANDER,

III, TRUSTEE OF TERRY MANUFACTURING COMPANY, INC. AND

TERRYUNIFORM COMPANY, LLC

SUTHERLAND, ASBILL & BRENNAN, LLP

(By: Jennifer M. Rubin, Esq. -

via telephone)

999 Peachtree Street, N.E.

Atlanta, Georgia 30309

ATTORNEYS FOR SOUTHERN MILLS, INC.

AND MARK CHPJSTMAN

BALCH & BINGHAM, LLP

(By: Jeremy L. Retherford, Esq. -

via telephone)

1901 Srxth Avenue North, Suite 2600

Birmingham, Alabama 35203

JAMES T. BRADLE

CERTIFIED COURT REPORTER

In Re: Terry Manufacturing Co., Inc.

Page 1

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Debtor.

Mark Christman

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Page 3

* * *

EXAMINATION INDEX

Page

EXAMINATION BY MS. DETERMAN 5

* * *

INDEX OF EXHIBITS

Page

Exhibit No. 1 12

Southern Mills, Inc. A/R Aged Summary Trial

Balance documents (SM/T000001 through

SM/T000008)

Exhibit No. 2 12

Notice of Deposition to Southern Mills, Inc.

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1 STIPULATION

2

3 It is stipulated and agreed by and

4 between counsel for the parties hereto that

5 the deposition of the aforementioned witness

6 is hereby being taken for all purposes

7 allowed under the Federal Rules of Civil

8 Procedure, in accordance with law, pursuant

9 to notice;

10 That the formalities of reading

ii and signing are specifically not waived;

12 That the formalities of sealing,

13 certification and filing are specifically

14 waived;

15 That all objections, save those as

16 to the form of the question and the

17 responsiveness of the answer, are hereby

18 reserved until such time as this deposition,

19 or any part thereof, may be used or sought

20 to be used in evidence.

21 * * * *

22 JAMES T. BRADLE, Certified Court

23 Reporter in and for the State of Louisiana,

24 officiated in administering the oath to the

25 witness.

ATTORNEYS FOR BANK OF WEDOWEE

CHAM BLESS MATH, P.C.

(By: Leonard N. Math, Esq. -

via telephone)

5720 CarmIchael Road

Montgomery, Alabama 36117

ATTORNEYS FOR FIRST TUSKEGEE BANK

REPORTED BY:

1 (Pages ito 4)

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 112 of 136
In Re: Terry Manufacturing Co., Inc. Mark Christman

Page 5

1 MARK DANIEL CHRISTMAN,

2 after having been first duly sworn by the

3 above-mentioned court reporter, did

4 testify as follows:

5 MS. DETERMAN:

6 This is Kathy Determan. Im

7 counsel for 1 LesterAlexander, Trustee of

8 Terry Manufacturing and Terry Uniform.

9 Jennifer, do you want to make an

10 appearance for the record?

11 MS. RUBIN:

12 For the record, my name is

13 Jennifer Rubin. I’m with the firm of

14 Sutherland, Asbill & Brennan and we

15 represent Southern Mills and the witness,

16 Mark Christman, in this deposition.

17 MS. DETERMAN:

18 Jeremy, do you want to make an

19 appearance for the record?

20 MR. RETHERFORD:

21 Sure. This is Jeremy Retherford

22 from the law firm of Balch & Bingham. We

23 represent the Bank of Wedowee.

24 EXAMINATION BY MS. DETERMAN:

25 Q Mark, this is Kathy Determan.

Page 6

1 Would you please state your full name and

2 address forthe record?

3 A My full name is Mark Daniel

4 Christman. My business address is 6501 Mall

5 Boulevard, Union City, Georgia, 30291.

6 Q Are you currently employed?

7 A Yes.

8 Q And by whom?

9 A Southern Mills.

10 Q And Southern Mills is located

11 where?

12 A At 6501 Mall Boulevard, Union

13 City, Georgia 30291,

14 Q And what is your position with

15 Southern Mills?

16 A I’m vice president of finance.

17 Q And how long have you held that

18 position?

19 A About 13 months.

20 Q And how long have you been

21 employed at Southern Mills?

22 A For six and a half years.

23 Q And what isthe scope of your

24 employment at Southern Mills? What are your

25 job duties?

Page 7

A My current responsibilities, I’m

responsible for all aspects of finance and

accounting for the company, ranging from

cost accounting, financial reporting, tax,

payroll, treasury/cash management, trade

credit management.

Q And what was your position before

you were vice president?

A Immediately before, I was director

of finance.

Q And how long did you hold that

position?

A For three years.

Q So beginning about 2002?

A It was the summer of 2001, I

believe. I better justtriple check that

I’m not telling you wrong, the timing on

that. Do you want to circle back to that in

a second after I look something up and make

sure I know when it was that my title

changed.

Q Sure. What was your position

before that?

A Before that, I was assistant

treasurer.

Q And during the course of your

employment, would you have had any

responsibility for the Terry Manufacturing

account?

A Yes, As assistant treasurer, one

of my primary responsibilities was managing

trade credit relationships with all of our

customers, and then subsequently, as

director of finance and vice president of

finance, it would be for any large

customers, large accounts, I stay involved

and keep kind of up to date as to what the

status is. And so in the particular case of

Terry, I was very involved right up until

the bitter end.

I do need to go back to the

previous question and restate it. It looks

like it was September of 2000 that I was

promoted to director of finance.

Q All right. And in overseeing the

Terry Manufacturing account, what year would

you have begun to be involved in that?

A Novemberof 1998.

Q Thankyou. Iwould like to

introduce into the record document

2 (Pages 5 to 8)

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Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 113 of 136
In Re: Terry Manufacturing Co., Inc. Mark Christman

Page 9

SM/T000001 through 8 marked “confidential,”

which was produced to us through Southern

Mills.

Mr. Christman, can you identify

these documents for me?

A I can. Those are from our

accounts receivable subledger. Those are

summary trial balances as of the indicated

dates, and typically we would run those each

month end, but in these cases, it’s mostly

year end dates, and they’re generated

directly offof our accounts receivable

system.

Q And were these documents kept in

the ordinary course of Southern Mills’s

business?

A Yes.

Q Referring now to SM/T000008, could

you state forthe record the balance owed by

Terry Manufacturing to Southern Mills as of

12-31-98?

A As of 12-31-98, Southern Mills was

owed $281,611.51 by Terry Manufacturing.

Q And would they have been owed that

same amount on January 1st, 1999?

Page 10

1 A Yes.

2 Q And referring to document

3 SM/T000007, could you state for me the

4 balance owed by Terry Manufacturing to

5 Southern Mills as of 12-31-99?

6 A Yes. As of 12-31-99, Southern

7 Mills was owed $519,314.85 by Terry

8 Manufacturing.

9 Q And would the balance have been

10 the same as of January 1st, 2000?

11 A Yes, it would have been the same.

12 Q And referring to document

13 SM/T000006, would you please state for the

14 record the balance owed by Terry

15 Manufacturing to Southern Mills as of

16 December 3 1st, 2000, or did wejust do that?

17 A We have not done that one yet.

18 Q Okay. I’m sorry.

19 A As of 12-31-2000, Southern Mills

20 was owed $1,062,402.99 by Terry

21 Manufacturing.

22 Q And would the balance have been

23 the same on January 1st, 2001?

24 A Yes.

25 MS. RUBIN:

Page 11

Would you repeat that balance just

real quick.

THE WITNESS:

Sure. $1,062,402.99.

MS. RUBIN:

Thank you.

EXAMINATION BY MS. DETERMAN:

Q And referring to SM/T000004, what

would the balance have been that Terry

Manufacturing owed to Southern Mills as of

December 31st, 2001?

A We would have been owed

$1,895,506.59.

Q And would that balance have been

the same on January 1st, 2002?

A Yes.

Q And referring to SM/T000001, what

was the balance owed by Terry Manufacturing

as of December 31st, 2002?

A As of December 31st, 2002, we were

owed $3,039,699.82.

Q And would that balance have been

the same on January 1st, 2003?

A Yes.

Q And do you know the balance owed

Page 12

by Terry Manufacturing to Southern Mills as

of July 7th, 2003, which was the date of the

filing of the petition?

A Yes. Prior to, ignoring any

preference activities in a recent settlement

that has not yet been approved by the Court,

our outstanding balance as ofJuly 7th,

2003, was $3,447,958.78.

MS. DETERMAN:

I would like to introduce into the

record Southern Mills Aged Summary Trial

Balance, Bates labeled SM/T000001 through

000008 as an in globo Exhibit 1, and I would

also like to introduce into the record the

Notice of Deposition.

I have no further questions of the

witness.

Jeremy, do you have any questions?

MR. RETHERFORD:

I do not.

MS. DETERMAN:

I think somebody else joined us.

MR. MATH:

It’s Mr. Math.

MS. DETERMAN:

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3 (Pages 9 to 12)

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 114 of 136
In Re: Terry Manufacturing Co., Inc. Mark Christman

ahead.

MR. MATH:

No, that’s fine. I was stuck in

court and I anticipated that you would.

MS. DETERMAN:

Do you have any questions for the

witness?

MR. MATH:

No, not atthistime. I just

wanted to advise the court reporter that I

do want to get a copy of the transcript.

MS. RUBIN:

We will also want a copy of the

transcript.

MR. RETHERFORD:

Yes, we will, too.

MS. RUBIN:

And I believethat we would like

to reserve the right for Mr. Christman to

review and sign the transcript.

MS. DETERMAN:

Is that it?

MS. RUBIN:

That’s it from our end.

MS. DETERMAN:

That’s it from here.

MR. RETHERFORD:

Okay.

MR. MATH:

Okay. Thank you.

* * * *

I have read or have had the

foregoing testimony read to me and hereby

certify that it is a true and correct

transcription of my testimony with the

exception of any attached corrections or

changes.

PLEASE INDICATE

~ NO CORRECTIONS

() CORRECTIONS; ERRATA SHEET(S) ENCLOSED

REPORTER’S CERTIFICATE

Page 16

I, James T. Bradle, Certified

Court Reporter, do hereby certify that the

above-named witness, after having been first

duly sworn by me to testify to the truth,

did testify as hereinabove set forth;

That the testimony was reported by

me in shorthand and transcribed under my

personal direction and supervision, and is a

true and correct transcript, to the best of

my ability and understanding;

That I am not of counsel, not

related to counsel or the parties hereto,

and not in any way interested in the outcome

of this matter.

JAMES T. BRADLE

Certified Shorthand Reporter

Hi, Leo. I’m sorry. We went

Page 13 Page 15

WITNESS’ CERTIFICATE

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Witness signature)

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4 (Pages 13 to 16)

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 115 of 136
Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 116 of 136
IN RE: TERRY MANUFACTURING COMPANY

— SHEET 1 PAGE 1

• — PAGE

I

LARRY DICKERSON

— PAGE 3

7-8-05

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE MIDDLE DISTRICT OF ALABAMA

IN RE~

TERRY MANUFACTURING COMPANY. INC.

DEBTOR

CASE NO. 03-32063-MRS

CHAPTER 7

IN RE~

TERRY UNIFORM COMPANY. LLC.

DEBTOR

CASE 140. 03-32213-WRS

CHAPTER 7

J. LESTER ALEXANDER. III.

TRUSTEE OF TERRY MANUFACTURING

COMPANY. INC. AND

TERRY UNIFORM COMPANY. LLC

VERSUS

THE PEOPLES BANK

ADVERSARY PROCEEDING

NO. 014-03061

C/C NO, 014-03062 and

NO. 014-03063

3

Takeni on toe Bth day Of JUly. 2005. coemencing at 1~59

p.m. at toe Arkansas State Highway Department. 103214

Interstate 30. Suite 405. Little ROCK, Arkansas, Said

deposition was taken according to the terms and provisions of

the Federal RUleS of Clvii Procedure under Rule 26 ror all

purposes.

All forms and formoilties as to the taking of this

deposition are expressly waived. All objections and

excePtions as to the incompetency.. irrelevdnCy and

irIm)dterlallty of the testimony is expressly reserved, other

than the form of queStions as propounded to the witness, and

may be hereinafter asserted at the time of trial without the

necessity 01’ noting some at the time 01’ taking of said

deposition,

INDEX

WITNESS~

LARRY DICKERSON

Examination Dy Mr. Barriere page 14

EXHIBITS~

Deposition Exhibit One page 21

Proof of Ciolm

Deposition Exhibit Two ,......,,.... page 22

Subordinated Promissory Nate, Letter of Terry

Manufacturing & Payment Schedule

Certificate or Reporter ............... page 23

HENDRIX REPORTING SERVICE

1701 SOUTH ARCH

LITTLE ROCK. ARKANSAS 72206

(501) 372-2768

TELEPHONIC DEPOSITION OF LARRY DICKERSON

TAKEN IN LITTLE ROCK, ARKANSAS

ON JULY 8. 2005

HENDRIX REPORTING SERVICE

1701 SOUTH ARCH

LITTLE ROCK, ARKANSAS 72206

(501) 372-27148

2

APPEARANCES~ (Via Telephone)

On Behalf of J. Lester Alexander. Trustee of

Terry Manufacturing~

BRENT B. BARRIERE. T.A, Esqulre

Phelps Ounbor

365 Canal Street, Suite 2DOO

New Orleans, LA 70130

On Behalf of the Steele Law Firm and Brian Steeie~

MONICA V1NING, Esquire

Jones dnd Walden

21 Eighth Street

Atlanta, GA 30309

On Behalf of the Sank of WIdaila~

JEREMY RUTHERFORD. Esaulre

1901 Sixth Avenue North. Suite 2600

Birmingham. AL 35203

On Behalf of Ernest DeLong and DeLong. Coidweli

Novatney and Bridgers. LLC

SUSIE EDWARDS. Esquire

Malcolm. Anthony and Williams

301 Adoms Avenue

Montgomery, AL 36103

On Behalf of First Tuskegee 6onk~

LEO MATH. Esquire

P.O. Box 230759

Montgomery, AL 36123

HENDRIX REPORTING SERVICE

1701 SOUTH ARCH

LITTLE ROCK, ARKANSAS 72206

(501) 372-27148

— PAGE 4 _______________________

1 (Witness sworn)

2 Thereupon.

3 LARRY DEWAYNE DICKERSON,

44 having been called for examination, and having been first duly

5 sworn, was exomlned ond testified os foiiows~

6 EXAMINATION BY COUNSEL FOR DEBTOR

7 BY MR. BARRIERE~

B II Good afternoon, sir. Let me reintroduce myself. I’m

9 Brent Barniere, I represent J. Lester Alexander. toe Trustee

10 of Terry Manufacturing, and I’ll be conducting what I trust

11 will be a brief deposItion this afternoon,

12 I’ll be asking a number Dl’ questions. If at any point

13 during my questioning you find my question confusing or

144 ambiguous in any way, please so advise me and I’ll attempt to

15 restate them.

16 MY first question, sir. Is would you state your full home

17 for the record?

18 A My name is Larry bewoyne Dickerson.

19 0 By whom are you employed, sir?

20 A Arkansas Highway and Transportation Department.

21 0 Whot Is your position with that deportment?

22 A I am the Chief Financial Officer for the department and

23 the Executive Secretary far the retirement system.

24 0 Wilot Is the reiatlonshlp between the department and the

25 retirement system?

HENDRIX REPORTING SERVICE

1701 SOUTH ARCH

LITTLE ROCK, ARKANSAS 72206

(6011 X73_7714g

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 117 of 136
iN RE: TERRY MANUFACTURING COMPANY

a

SHEET 2 PAGE 5

LARRY DICKERSON

— PAGE 7

7-8-05

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A They are the same entity by law with separate

apPropriatIOn and trust fUnds,

o Could you state your business address for me, sir?

A The physical address is 10320 Interstate 30, Littie Rock,

Arkansas. 72209 The mailing address Is P.O. Box 2261. Little

Rock, Arkansas. 72203.

O PrIor tO today’s deposition we Issued a notice in which

we requested that the highway employees’ retirement system

designate a witness mast knowiedgeable to testify with respect

a aebt posed to it by Terry Manufacturing Company. Hove you

been so designated?

A yes,

O And in the interest Of brevity, if I refer to it as “The

Retirement System,” you’ii understand I’m referring to the

Arkansas State Highway Employees’ Retirement System?

A Absoluteiy.

0 Very well. In advance of today’s deposition, sir, fly

office should hove faxed you a copy of the Proof of Claim

filed by The Retirement System on or about July 17. 2003.

together with certain attachments thereto. Old you receive

those documents?

A I received a Notice Of Deposition, arid I received the

notice Of this Conference call, and the other thing I received

was -- it really wasn’t a iegai document, it’s Just On the

letterhead of Phelps Dunbar stating that--

HENDRIX REPORTING SERVICE

1701 SOUTH ARCH

LITTLE ROCK, ARKANSAS 72206

(501) 372-2748

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that Proof or Claim be marked as Exhibit Number One to

the deposition,

THE WITNESSr She’s aolng so right now.

MR. BARRIEREr Thank you.

THE WITNESS Okay. l have It back.

MR. BARRIEREr (Continuing)

0 I would ask you next to turn to the computer orintaut.

Mine does not hove a page number., but it’s titled Arkansas

State Highway Employees’ Retirement System, Terry

Manufacturing Debt, June 30. 2003. Do you have that before

you, sir?

A yes, I do.

0 Who prepared that document?

A Our occauntant, Jan Garrett.

0 iS this document, along with the other attactmrents to it.

kept in the file maintained by the retirement system on its

Terry Manufacturing debt?

A Yes, it is.

0 Are you the custodian of that file?

A Yes. I om.

0 00 you maintain that file with the documents to be placed

therein under the Terry Manufacturing head?

A Yes. I do.

0 Is this document among those maintained In the Terry

HENDRIX REPORTING SERVICE

1701 SOUTH ARCH

LITTLE ROCK. ARKANSAS 72206

(501) 372-2708

PAGE 6 — PAGE 8

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1 0 If I can get you to kind of pause for a moment, let me

2 tell you wnat I’m trying to get to. I have before me a Proof

3 of Claim showing on unsecured claim by the retirement system

4 for three million six hundred twenty-nine thousand three

5 hundred and ninety-twa dollars ($3,629,392.00),

6 I also then hove a copy Of what appears to be a computer

7 printout showing amounts due under the Subordinated Promissory

8 Note, a ietter from Terry Manufacturing to The Retirement

9 System dated June 15. 1998. and a copy of the Subordlnated

10 PromIssory Note.

11 A Yes, I have those.

12 II Do you have oil those materials, sir?

13 A Yes.

14 0 Okay, very goad. Starting first with the Proof of Claim,

15 sir, it appears -- well, you tell me. is that your signature

16 that appears on the Proof of Ciairn?

17 A Yes.

18 0 Are you the retirement system employee responsible for

19 Overseeing the Terry Manufacturing loon?

20 A Yes.

21 0 Does that appear to De a true and correct copy of the

22 Proof of Claim filed by the retirement system?

23 A Yes, it does.

24 0 All right.

25 MR. BARRIERE~Madame Court Reporter. Ill ask that

HENDRIX REPORTING SERVICE

1701 SOUTH ARCH

LITTLE ROCK, ARKANSAS 72206

(501) ~77-77lrM

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Manufacturing file?

A Yes, it Is.

0 Are all the attachments thereto among those maintained in

the Terry Manufocturing file?

A Yes, they are,

0 All right.

Could you explain, sir. what does this page titled Terry

Manufacturing Debt refiect?

A It reflects the initial loon Of three-and-a-half million

dollars 183.5 million), the princloal payments that we

received on that loan, and the balance remaining of three

million one hundred and fifty-five thousand dollars

153,155.000.00), the amount of interest that we received and

the dates we received thot interest. ond then interest that

was outstanding through June 15th or ‘03. along wlth some

penalties.

0 Au right. So I’m clear, sir, under the column of

Principal there ore two figures in parentheses. one of a

hunarea sixty-five thousand (8165.000,00) and one a hundred

and eighty thousand ($180,000.00). Do those represent

principal payments on this promissory note?

A They sure do.

0 All right,

What was the basis for the penalties, as you recall?

A In accordance with the Promissory Note, they were late In

HENDRIX REPORTING SERVICE

1701 SOUTH ARCH

LITTLE ROCK, ARKANSAS 72206

(Shil fl77-9745

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 118 of 136
IN RE: TERRY MANUFACTURING COMPANY

a

SHEET 3 PAGE 9

— PAGE 10

LARRY DICKERSON 7-8-05

penalty.

remitting those payments. and the principal would go from

eight percent to ten percent, so there would be a two-percent

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O There is a box below that that shows Interest Not Paid,

Could you explain what that reflects?

A Interest Not Polo. Yes, that woula be interest that

accrued from June 16th of ‘01 through June 30th Of ‘03 at o

rote Of eight percent.

O Now you have a box called Partial Payments. What does

THE WITNESSr Right. Okay. I’m back with you,

MR. BARRIERE Very well,

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MR. BARRIERE (ContInuing)

0 My first Ouestlan. sir, is the letter dated June 15th and

oadressea to you, could you describe for us generally what

role you personally played in the loan made by the retirement

system to Terry Manufacturing?

that represent?

A That woulo be when Terry Manufacturing become deiinauent

ana we would coil them and reauest that they would sena us

something, some form of consideration, and they would send us

the twenty-five thousand dollars ($25,000.00), and then --

four Of them at tw~nty_flVethousand (825.000,00) and one at

fifty-one thousond two hundred and twenty dollars

($51,220.00), for a total Of 0 hunared fifty-one thousand two

twenty ($151,220.00).

0 And that’s the figure that appears in Less Partial

Payments under the blocks to the left-hand sloe of the poge?

— PAGE 11

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A I would hove reviewed the financial statements, the

audited financial statements provided by Terry Manufocturing,

an audit performea by Richard S. Ross. aria based on flnoncioi

statements and what we’re trying to do here in the State of

Arkansas with In-state investments. I would make the

recommendation to our retirement committee whether or not we

should make this investment,

0 What sort of application did Terry Manufacturing make in

connection with this loon?

A They. along with the financial statements, and I don’t

have it in front of me. there would have been some pro forma

statements as well.

A Yes. O Okay. And those Pro forma statements were related to

0 LeavIng a grand total of three million six hundred

twenty-nine thousand three Ilunared ninety-two dollars

($3,629,392.00). is that correct?

A Yes, old that would include the accrued interest through

what?

HENDRIX REPORTING SERVICE

1701 SOUTH ARCH

LITTLE ROCK, ARKANSAS 72206

(Sill) 372-7744R

A Related to the growth, anticipated growth of the company.

0 Would that hove been growth ontlclpatea within the State

of Arkansas?

PAGE 12

HENDRIX REPORTING SERVICE

1701 SOUTH ARCH

LITTLE ROCK. ARKANSAS 72206

(501) 372-774A

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1 what we Just talked about. ‘01 through June of ‘03. ono then

2 penOities or a hundred seven thousana six sixty-six ninety3 four ($107,666.94). and then the remaining principal.

(4 0 Excuse me. sir. If I could ask you to turn to the next

S page. which is on the letterhead at least of Terry

6 Manufacturing.

7 A Okay. Question, do you need this sheet marked Exhibit

5 Twa for anything?

9 0 Well, if it’s itke my set. all of these ore grouped

10 together and I’m going to mark them en giobo as Exhibit Two.

11 A Okay, I’m with you. Okay, go ahead, I’m sorry, what wos

12 the next?

13 MR. BARRIERE That’s Oil right. Why don’t we toke a

iL moment and have the court reporter mark the entire

15 package as Exhibit Two so we hove that aone,

16 THE WITNESS Okay, And the second part or that

17 package would be whdt?

18 MR. BARRIERE Well, in my package at least It is the

19 page we JUst looked Ot. and then the letter to you from

20 Terry Manufacturing, and then a copy Of the Promissory

21 Note, If they’re in your QrOuping as three separate --

22 THE WITNESS Okay. That would be the letter dated

23 June 15th of ‘98?

24 MR. BARRIERE Yes, sir, and the Subordinated

25 PromIssory Note itself.

HENDRIX REPORTING SERVICE

1701 SOUTH ARCH

LITTLE ROCK, ARKANSAS 72206

(501) 372-2748

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1 A Within the State of Arkansas and outside the State of

2 Arkansas.

3 0 OKay. Was there any formol loon Opplicotion form that

4 Terry Manufacturing would nave submitted to you or other

S representatives of the retirement system?

6 A No,

7 0 Are these sorts of loans recommended py local

8 municipalities? How does a borrower go about being Introduced

9 to the retirement system?

10 A There is a state law that encourages state retIrement

11 systems to invest a minimum of five percent and a maximum of

12 ten percent in Arkonsos-related investments. From time to

13 time companies would come to us and reauest loans from that

14 program.

15 0 I see. Did you hove occasion to meet Mr. Roy Terry?

16 A Roy Terry, yes.

17 0 When did that occur?

18 A Prior to June of ‘98, The exact date I don’t know, but

19 then I Would think on June of ‘98, if that was the dote we aid

20 the promissory note, there was a meeting in Little Rock.

21 0 Who physicolly delivered to you the pro forma and audited

22 finanCial statements that you reviewed?

23 A Let me think. There was a minority-owned broker here in

24 town that is no longer here, and right now I can’t recall his

25 name,

HENDRIX REPORTING SERVICE

1701 SOUTH ARCH

LITTLE ROCK. ARKANSAS 72206

(501) 372—27(48

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 119 of 136
IN RE: TERRY MANUFACTURING COMPANY

I

— SHEET 4 PAGE 13

LARRY DICKERSON

— PAGE 15

7-8-05

13

1 0 Was that the gentleman who lntrpauced Terry Manufacturing

2 to the retirement system?

3 A Yes.

4 0 If I can, I would ask you to turn to the letter for

5 specific comments. Number one is that ASHERS. as defined as

6 the Arkansas State Highway Employees’ Retirement System.

7 agrees to purchase at a purchase Price of three million five

8 hundred thousand dollars ($3,500,000.00) a Subordinated

9 Promissory Note in the principal amount of three million five

10 hundred thousand dollars ($3,500,000.00).

ii Is the promissory note, which is the next attachment and

12 styled Subordinated Promissory Note, the note which in fact

13 was purchosed by the retirement system?

1~4 A Yes, it was,

15 Ii Okay, It then stated that the purchase price will be

16 remitted by wire to CitiBank NA. Did that in fact occur?

17 A it did occur.

18 0 All right. There’s P representation or undertoking in

19 Paragraph Pour with respect to Job creation in the Delta

20 regiOn of Arkansas. To your knowledge, did that in fact

21 Occur?

22 A No. it did not occur in my thinking. In Terry

23 Manufacturing’s thinking. it did.

2(4 0 Can you exploin that distinction?

25 A Yes. In my thinking it was 100 Jobs onsite ot the

HENPRIX REPORTING SERVICE

1701 SOUTH ARCH

LITTLE ROCK, ARKANSAS 72206

(Sill ~77_57Ll

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1 those warrants ever issued to the retirement system?

2 A NO.

3 0 Did the retirement system ever ocauire any common stock

(4 In Terry ManufacturIng?

S A NO. they did not,

6 0 Did they acquire any stock, preferred, common or

7 otherwise, In any Terry—related entity?

8 A NO. did hot,

9 0 I’ll preface this by saying I’m hot an Arkonsos lawyer.

10 sIr, Under the lows of the State of Arkansas, is the

11 retirement system in a Position to own common stock?

12 A Yes,

13 0 At ony time did the retirement system seek to acauire

14 coremon stock in Terry Manufacturing?

15 A No.

16 0 At any time did it seek to ocaulre preferred stock in

17 Terry Manufacturing?

18 A NO,

19 0 Was it your understanding at any time that what you were

20 receiving under the SuOordinoted Promissory Note was the

21 funCtional equivalent of common stock?

22 A No.

23 9 Wos it ever your understanding what you were receiving

2L4 was the functional eQuivalent of preferred stock?

25 A NO.

HENPRIX REPORTING SERVICE

1701 SOUTH ARCH

LITTLE ROCK, ARKANSAS 72206

(SOil ~79_97LLR

_PAGE14

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1 locatiOn in Eastern Arkohsos, In Mr. Terry’s thinking it WO5

2 through the ripple effect the economic impact to the orea

3 woulO be 100 Jobs. and he felt like that was done.

4 0 HOW many employees 0t point Of fact dia Terry

S Manufacturing directly, not the ripple effect, but directly

6 hove in that facility?

7 A There was one count I had Of close to SO. but the exact

8 cOunt I do not know.

9 0 In o prior deposition we discussed o factory locotea in

10 Marionna, Arkonsas. Is this the same facility we’re talking

11 about?

12 A Yes,

13 0 00 you know how that facility was employed?

14 A It was employed with local residents of that area of the

15 state.

16 0 My question was Inortful. What did they do at that

17 facility?

18 A It was to produce uniforms or some type or clothing.

19 Q The fifth paragraph says The parties ocknoWiedge that

20 Terry intends to form and organize a company. NEWC0. to

21 conduct the apparel business of Terry on or 000Ut January 31.

22 2000, To your knowledge. was that ever accomplished?

23 A Not to my knowledge, no.

2 II Paragraph Six grants to, as I read it, the retirement

25 system the right to obtain warrants for common stock. Were

HENPRIX REPORTING SERVICE

1701 SOUTH ARCH

LITTLE ROCK, ARKANSAS 72206

(501) 372-2748

— PAGE 16

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1 0 As you appreciate it. sir, to what claim or creditors was

2 the retirement system subordinate?

3 A There were a couple of banks that we were subordinote

4 to -- Hang on. I’ve got those here. --the Southern Trust

5 Bank of Atlanta, Georgia.

6 0 Okay.

7 A And the First Sank of Roonoke, Alobomo,

8 0 Did you have any understanding where the retirement

9 system would fail in the event of a liquidation of the assets

10 of Terry Manufacturing?

11 A We would participate after the secured creditors but

12 before any preferred stackhoiOers or eoulty holders, common

13 eauity holders,

iLl 0 What was the bosis of that understanding?

15 A My understanding Of where 0 hon—secured creditor falls in

16 business low.

17 0 Sir, the next -- well, Just a auestlon. I see that

18 there’s a choice of law for the City of New York, WhY was

19 that done?

20 A The attorney that represented Roy Terry and Terry

21 ManUfacturing was an attorney in New York City,

22 0 Do you recoil either that gentleman’s name or his firm?

23 A NO. I don’t, sure don’t.

24 0 Is the next document a true and correct copy of the

25 Subordinated Promissory Note made payable by Terry

HENPRIX REPORTING SERVICE

1701 SOUTH ARCH

LITTLE ROCK. ARKANSAS 72206

(501) ~577-27(4A

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 120 of 136
.

a

— SHEET 5 PAGE 17

IN RE: TERRY MANUFACTURING COMPANY

PAGE 19

Manufacturing to the retirement system?

A Yes, it is.

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0 And did in fact the retirement system advance to Terry

Manufacturing Oh or about the day Of this note the sum of

three million five hundred thousand dollars ($3,500,000.00)?

A Yes,

0 And did Terry Manufacturing make payments as specifIed In

the computer sheet we spoke Of 0 moment ago. the first page of

Exhibit Two?

A I met on emOloyee of Centas at the creditors’ meetIng

prior to -- tind you’ll have to forgive me. but the earlier

phase or the bankruptcy is Chapter—-

0 Eleven.

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A Yes.

0 At any time did Terry Manufacturing or anyone

representIng Terry Manufacturing assert that the note was

unenforceable?

A -- Eleven, Okay, that’s the lesser, okay? That’s what

he voluntarily did. I met an employee Of Centas at the

creditors’ meeting in Alabama,

A NO.

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0 At any time did anyone representing Terry Manufacturing

assert that the retirement system was either a common or

preferred shareholder?

A Na,

0 Was the retirement system rePresented by counsel with

respect to this note?

0 But you had had no dealings with Centas prior to Terry

filing far Chapter ii relief?

A No direct contoct, We owned stock in this retirement

system of Centos,

0 All right, My auestion was inartfui, You naa no

dealings with Centos concerning Terry Manufacturing?

A NO. hove not.

MR. BARRIERE All right. Thank you very much, sir.

for your time. I’m going to pass the witness.

MR. RUTHERPORPr This is Jeremy Rutherford. I have

no auestlons,

MS. EDWARDS This is Susie Edwards, I have no

A Yes.

0 Who might that be?

A The MItchell Law Firm here in Little Rock.

0 And I take it it’s your recollection that Terry

Monufocturing was represented by counsel, although you cannot

HENORIX REPORTING SERVICE

1701 SOUTH ARCH

LITTLE ROCK. ARKANSAS 72206

(501) 372-2748

auest ions.

MR. MATH This is Leo Math. I have rio Ouestions.

MS. VININ6r This is Monica Vining. I hove no

questions. I Just want to reserve the right to abject

that this deposition was token after discovery hod

expired.

— PAGE 18 — PAGE 20

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identify the specific attorney?

A That’s correct.

0 DId the retirement system ever issue a notice, a written

notice of defoult to Terry Manufacturing?

A NO.

0

HENPRIX REPORTING SERVICE

1701 SOUTH ARCH

LITTLE ROCK, ARKANSAS 72206

(501) 372-2748

No.

Did it ever accelerate the note?

20

MR. 8ARRIEREr Mr. Dickerson. thonk you very much for

your time, sir.

p.m.)

Am I correct, sir, that the Initial payment under this

was due on Oecember 15. 1998?

(Whereupon. sold proceeding was concluded at 122S

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note

A Yes.

0 And the note itself soys June iS. 1998. is that correct?

A The note itself says June 15. 1998. and the initial

payment was December 15. 1998. that’s correct,

0 con you ascertain from these documents or onything else

in your rile when the funding was actually mode?

A The funding would nave been made on the 15th of June,

1998,

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Very good.

MR. BARRIERE I think that concludes my questions.

sir, Oh. I hove actually one other.

MR. BARRIERE (Continuing)

0 At any time did you have contact with onyone associated

with Cehtas (Phonetic spelling) with respect to Terry

Manufacturing?

HENDRIX REPORTING SERVICE

1701 SOUTH ARCH

LITTLE ROCK. ARKANSAS 72206

(501) 372—27(48

HENDRIX REPORTING SERVICE

1701 SOUTH ARCH

LITTLE ROCK. ARKANSAS 72206

(501) 372-2748

LARRY DICKERSON 7-8-05

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 121 of 136
Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 122 of 136
Transcript of the Testimony of

Martin Forcina

Date taken: July 12, 2005

In Re: Terry Manufacturing, Inc.,

Professional Shorthand Reporters, Inc

Phone: 504-529-5255

Fax: 504-5295257

Email: production@psrdocs~com

Internet: www.psrdocscom

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 123 of 136
In Re: Terry Manufacturing, Inc.,

tj3~I’i’EDSTATES BANIcRIWTCY COURT

FOR THE MIDDLE DISTRICT OF ALANANA

IN RE:

TERRY $3.3~UFACTURING

COMPANY, INC.,

DEBTOR

IN ~ NO, 03-32213-MRS

TERRY UNIFORM COMPANY,

LLC,

DEBTOR CHAPTER 7

Deposition of MARTIN J, FORCINA,

301 South Tryon Street, 2 Wachovia Center,

Charlotte, North Carolina 28202, taken in

the oUlCes of Phelps Ilunbar, 365 Canal

Street, Suite 2000, New Orleans, Louisiana,

on ‘oms4ay, the 12th day of July, 2005.

HAND, 7,BBNDALE, LLC

(BY* LOUIS NORVELX,, ESQ.)

1200 PARK PLACE TOWER

2001 pARK PLACE NORTH

BIRMINGHAM, ALABAMA 35203

ATTORNEYS FOR CIT GROUP/COMMERCIAL

SERVICES, INC.

1 APPEARANCES CONTINUED:

2

PHELPS DUNBAR

3 (BY: KATHERINE M, DETERMAN, ESQ.)

365 CANAL STREET, SUITE 2000

4 NEW ORLEANS, LOUISIANA 70130-6534

5 ATFORNEYS FOR TERRY MANUFACTURING

COMPANY, INC. AND TERRY UNIFORM

6 COMPANY, LLC

7

BALCH & BINGHAM

(BY: JEREMY RETHERFORD, ESQ.)

1910 SIXTH AVENUE NORTH, SUITE 2600

BIRMINGHAM, ALABAMA 35203

(Present via Telephone)

A1TORNEYS FOR BANK OF WEDOWEE

ALSO PRESENT:

JAMES HEAD, ESQ.

REPORTED BY:

PAT KENNEDY QUINTINI

CERTIFIED COURT REPORTER

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NO. 03—32063—WAS

CHAPTER 7

Martin Forcina

J. LESTER ALEXANDER, ADVERSARY PROCEEDING

III, TRUSTEE OF TERRY

MANUFACTURING COMPANY, NO. 04-03061

INC., AND TERRY UNIFORM C/W 04-03062

COMPANY, LLC AND 04-03063

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** *

EXAMINATION INDEX

Page

EXAMINATION BY MS. DETERMAN: .,.,,,,, 5

* * *

INDEX OF EXHIBITS

Page

ExhibitNo. 1 ..,.........,,,.....,. 6

Notice of Deposition & Subpoena

Exhibit No. 2 8

Documents produced by CIT

Page 1 Page 3

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STIPULATION

It is stipulated and agreed by and

between counsel for the parties hereto that

the deposition of the aforementioned witness

ishereby being taken for all purposes

allowed under the Federal Rules of Civil

Procedure, in accordance with law, pursuant

to notice;

That the formalities ofreading and

signing are specifically not waived;

That the formalities offiling,

sealing, and certification are specifically

waived;

That all objections, save those asto

the form ofthe question and the

responsiveness ofthe answer, are hereby

reserved until such time as this deposition,

or any partthereof, may be used or sought

to be used in evidence.

PAT KENNEDY QUINTINI, Certified

Shorthand Reporter, in and for the State of

Louisiana, officiated in administering the

oath to the witness.

Page 2 Page 4

1 (Pages 1 to 4)

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 124 of 136
In Re: Terry Manufacturing, Inc., Martin Forcina

MARTIN). FORCINA,

having been duly sworn by the above

mentioned court reporter, did testify as

follows:

EXAMINATION BY MS. DETERMAN:

Q. This is Kathy Determan at Phelps

Dunbar appearing for). Lester Alexander the

trustee of Terry Manufacturing and Terry

Uniform Company.

MS. DETERMAN:

Does anybody else wantto make an

appearance for the record?

MR. RETHERFORD:

This is Jeremy Retherford with the

law firm of Balch & Binyham representing the

Bank of Wedowee.

MS. DETERMAN:

Lou, do you want to reserve the

witness’ right to read and sign the

deposition?

MR. NORVELL:

Yes, we will reservethe right to

read and sign.

EXAMINATION BY MS. DETERMAN:

Q. Okay. Mr. Forcina --

Page 5

MS. DETERMAN:

First I’d like to introduce into

the record the notices of depositions and

subpoenas and all attached exhibits and they

will be marked as Exhibit 1.

(Exhibit No. 1 marked for identification.)

EXAMINATION BY MS. DETERMAN:

Q. Mr. Forcina, for the record, would

you state your full name and address?

A. Martin 3. Forcina, 301 South Tryon

Street, 2 Wachovia Center, Charlotte, North

Carolina 28202.

Q. And are you currently employed?

A. Yes.

Q, And by whom are you employed?

A. CIT.

Q. Where is that located? Is it the

same address?

A. Yes,

Q, And how long have you been

employed at CIT?

A. Since July of 1977.

Q. And what isyour current position

at CIT?

A. I’m a vice president, division

manager.

Q, Of what division?

A. Of the Charlotte wholesale credit

department.

Q. And what is the scopeof your

responsibilities in that position?

A. I oversee a portfolio of clients

who -- their customers accounts, the

indebtedness owed to CIT to the factory of

their accounts receivable.

Q. And how long have you been in your

current position?

A. Oh, gee, wow.

Q. Approximately.

A. Probably -- I would say probably

closeto 20 years.

Q. And in the courseof your

employment as a vice president and division

manager, did you have any responsibilityfor

the Terry Manufacturing Company, Inc.

account?

A. I didn’t have any day-to-day

responsibility but it was in my group, yes.

MS. DETERMAN:

I would like at this time to

Page 7

introduce intothe record the documents that

were produced by CIT as in globo Exhibit 2.

(Exhibit No. 2 marked for identification.)

Can you identify these documents

for me?

MR. NORVELL:

Kathy, if we can just clarify. We

are talking about the packet of seven

documentsthat startoffwith this month in

July 2003?

MS. DETERMAN3

Right.

MR. NORVELL:

The second documentis the year

end 2002. The third one is the year end

2001. The fourth one is year end 2000. The

fifth is year end 1999. Sixth is year end

1998. And the seventh documentis some type

of a, apparently a print screen document

with a Customer Summary July 1, 2005 atthe

top. Arethese the documents that we are

referring to?

MS. DETERMAN:

Yes.

MR. NORVELL:

Page 8

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Page 6

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 125 of 136
In Re: Terry Manufacturing, Inc., Martin Forcina

Okay.

THE WITNESS:

Can you please repeat the

question?

EXAMINATION BY MS. DETERMAN:

Q. Yes, Can you identify these

documents for me the ones just described by

Mr. Norvell?

A. Yes, these documents are a

snapshot of what was outstanding to CIT by

Terry Manufacturing on the dates stated.

Q. Were these documents keptin the

normal course of CIT’s business?

A. Yes.

Q. And did you assist or supervise in

the preparation of these documents?

A. Yes.

Q. Referring now to year end customer

review 1998, could you state for the record

how much Terry Manufacturingowed to CIT as

of January 1?

A. That should be December 31.

Q. December 31, 1998?

A. Zero.

Q. And based on the customer review

______ Page 9

year end 1999, could you state for the

record how much was owed by Terry

Manufacturing to CIT as of December 31,

1999?

A. 12,000 -- no, that was the

total -- the balance was $1,052.

Q. And would that bethe same balance

owed as of January 1, 2000?

A. Most likely.

Q. And now referring to customer

review year end 2000, could you state the

balance owed by Terry Manufacturing to CIT

on December 31, 2000?

A. $17,902.

Q. And would that be the same balance

owed as of January 1, 2001?

A. Most likely.

Q, Going to the next page of the

customer review year end 2001, could you

state the balance owed by Terry

Manufacturing to CIT as of December 31,

2001?

A. 5,794.

Q. Would that be the same balance

owed on January 1, 2002?

Page 10

1 A. Most likely.

2 Q. Going to the next page of the

3 customer review, could you state the balance

4 owed by Terry Manufacturing as of

5 December 31, 2002?

6 A. 83,794.

7 Q. And would that be the same balance

8 owed as of January 1, 2003?

9 A. Most likely.

10 Q. And as of going to the next page

11 of the customer review for the month ended

12 July 2003, could you statethe balance owed

13 as of July 7, 2003, the date Terry

14 Manufacturing filed bankruptcyto crr~

15 A. It would be 108,748.

16 Q. Is that as of July 30?

17 A. This document is as ofthe end of

18 the month.

19 Q. Uh-huh.

20 A. So if hefiled bankruptcy on

21 July 7, the balance would bethere through

22 the entire month.

23 Q. That balance would be $108,748?

24 A. Correct.

25 MS. DETERMAN:

14

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17

18

19

20

21

22

23

24

25

I have no further questions.

MR. RETHERFORD:

I have no questions.

Page 11

(Whereupon, the deposition was concluded.)

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* * *

Page 12

3 (Pages 9 to 12)

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 126 of 136
In Re: Terry Manufacturing, Inc., Martin Forcina

1

2

3

4 WITNESS’ CERTIFICATE

5

6

7 I have read or have had the foregoing

8 testimony read to me and hereby certify that

9 it is a true and correcttranscription of my

10 testimony with the exception of any attached

11 corrections or changes,

12

13

14

15

16

17 __________________________________

18 Martin 3. Forcina

19

20 PLEASE INDICATE

21 QNO CORRECTIONS

22 ()CORRECTIONS; ERRATA SHEET(S) ENCLOSED

23

24

25

Page 13

1 REPORTER’S CERTIFICATE

2

3 I, Pat Kennedy Quintini, CCR, Certified

4 Court Reporter, State of Louisiana, do

5 hereby certify that the above-named witness,

6 after having been duty sworn by me to

7 testify to the truth, did testifyas

8 hereinabove set forth.

9 That this testimony was reported by me

10 in the stenotype reporting method and

11 transcribed thereafter by me on computer,

12 and that same is a true and correct

13 transcript to the best of my ability and

14 understanding.

15 That I am not of counsel, nor related

16 to counsel or the parties hereto, and in no

17 way interested inthe outcome of this

18 matter.

19

20

21

22 _______________________________

23 PAT KENNEDY QUINTINI

CERTIFIED COURT REPORTER

24

25

Page 14

4 (Pages 13 to 14)

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 127 of 136
Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 128 of 136
3. Lester Alexander, III V. DelOng, CaIdwell, Novotny & Bridges, et al Denis Golden

Page 1

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE MIDDLE DISTRICT OF LOUISIANA

IN RE:

TERRY MANUFACTURING ) NO. 03~-32063--WRS

COMPANY, INC.

CHAPTER 7

Debtor

IN RE:

TERRY UNIFORM ) NO. 03-32213--WRS

COMPANY, LLC,

CHAPTER 7

Debtor.

J. LESTER ALEXANDER,

III, TRUSTEE OF

TERRY MANUFACTURING

COMPANY, INC., AND ) ADVERSARY

TERRY UNIFORM COMPANY, ) PROCEEDING

LLC, ) NO. 04—03135

VERSUS

DELONG, CALDWELL,

& BRIDGERS, ) 0 R 161 N A L

L.L.C. AND EARNEST

H. DELONG, JR.

Telephone deposition of DENIS MATTHEW

GOLDEN, taken on Thursday, the 14th day of

July, 2005.

APPEARANCES:

PHELPS DUNBAR, L.L.P.

(By: Katherine M. Determan, Esq.)

365 Canal Street, Suite 2000

New Orleans, Louisiana 70130

ATTORNEYS FOR J. LESTER ALEXANDER,

III, TRUSTEE OF TERRY

S

MANUFACTURING COMPANY, INC., AND

TERRY UNIFORM COMPANY, L.L.C.

(Appearances cont’d on next page)

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Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 129 of 136
3. Lester Alexander, III V. Delong, CaIdwell, NoVotny &Bridges, et al Denis Golden

Page 2

APPEARANCES CONTINUED:

2 OTTERBOURG, STEINDLER, HOUSTON &

ROSE, P.C.

3 (By: Stan Lane, Esquire)

230 Park Avenue

4 New York, New York 10160

5 ATTORNEYS FOR MILLIKEN & COMPANY

6 BALCH & BINGHAM, LLP

(By: Jeremy Rutherford, Esquire)

7 1901 Sixth Avenue North

Suite 2600

8 Birmingham, Alabama 35203

9 ATTORNEYS FOR THE BANK OF WEDOWEE

10 MELTON, ESPY & WILLIAMS, P.C.

(By: Susan Edwards, Esquire)

11 301 Adams Avenue

Montgomery, Alabama 36104

S

12

ATTORNEYS FOR EARNEST DELONG AND

13 DELONG, CALDWELL, NOVOTNY &

BRIDGERS, L.L.C.

14

ALSO PRESENT:

15

Mike Reich

16

REPORTED BY:

17

BECKY C. DAME, CCR, RPR

18 CERTIFIED COURT REPORTER

19 * * *

20 INDEX OF EXHIBITS

21 Page

22 Exhibit No. 1 8

23 Subpoenas 5 24 Exhibit No. 2 8

25 Accounts Receivable Trial Balance

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Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 130 of 136
3. Lester Alexander, III v. Delong, Caldwell, Novotny & Bridges, et al Denis Golden

Page 3

1 STIPULATION

2

3 It is stipulated and agreed by and

4 between counsel for the parties hereto that

5 the deposition of the aforementioned witness

6 is hereby being taken for all purposes

7 allowed under the Federal Rules of Civil

8 Procedure, in accordance with law, pursuant

to notice;

10 That the formalities of reading

11 and signing are specifically waived;

12 That the formalities of sealing,

13 certification and filing are specifically

14 waived;

15 That all objections, save those as

16 to the form of the question and the

17 responsiveness of the answer, are hereby

18 reserved until such time as this deposition,

19 or any part thereof, may be used or sought

20 to be used in evidence.

21 * * * *

22 BECKY C. DANE, Certified Court

23 Reporter in and for the State of Louisiana,

5 24 officiated in administering the oath to the

25 witness.

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Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 131 of 136
3. Lester Alexander, III V. Delong, Caldwell, Novotny & Bridges, et al Denis Golden

Page 4

1

2 DENIS MATTHEW GOLDEN,

3 after having been first duly sworn by the

4 above-mentioned court reporter, did

S testify as follows:

6 MS. DETERMA,N:

7 For appearances purposes this is

8 Katherine Determan of Phelps Dunbar,

9 representing J. Lester Alexander, III,

10 Trustee for Terry Manufacturing Company,

11 Inc.

12 MR. RUTHERFORD:

13 This is Jeremy Rutherford

14 representing Bank of Wedowee.

15 MS. EDWARDS:

16 This is Susie Edwards at Melton,

17 Espy & Williams, representing Earnest Delong

18 and the law firm of Delong, Caldwell,

19 Novotny & Bridges.

20 EXAMINATION BY MS. DETERNAN:

21 Q Mr. Golden, will you please state

22 your full name and address for the record?

23 A Sure. Denis, D-e-n-i-s, Matthew,

S

24 Mat,~the,w Golden. My home address is

25 200 West 21st Street, Apartment 3A, New

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Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 132 of 136
3. Lester Alexander, III v. Delong, Caldwell, Novotny & Bridges, at al Denis Golden

Page 5

1 York, New York, 10011.

2 Q And Mr. Golden, are you currently

3 employed?

4 A lam,

5 Q And where are you employed?

6 A I’m employed at Milliken &

Company.

8 Q And where is that company located?

9 A Our New York office is at 1045

10 Sixth Avenue, New York, New York, 10018.

11 Q And how long have you been

12 employed at Milliken.

13 A I’ve been employed at Milliken for

14 21 years.

15 Q And what is your current position

16 at Milliken?

17 A I am general credit manager at

18 Milliken & Company.

19 Q And as general credit manager,

20 would you have had responsibility or any

21 supervision over the Terry Manufacturing

22 Company, Inc. account with Milliken?

23 A I would.

S

24 Q And what year did that

25 responsibility begin?

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Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 133 of 136
3. Lester Alexander, III V. Delong, CaIdwell, Novotny & Bridges, at al Denis Golden

Page 6

1 A Approximately 1990.

2 Q At this time I would like to

3 introduce into the record the accounts

4 receivable trial balance that was produced

5 by Milliken. Are you familiar with this

6 document?

7 A lam.

8 Q And are these documents kept in

9 the ordinary course of Milliken’s business?

10 A Yes.

11 Q Did you assist or supervise in the

12 preparation of these documents?

13 A I did not personally.

14 Q But can you attest to their

15 accuracy?

16 A Yes.

17 Q Could you please state for me the

18 balance owed by Terry Manufacturing to

19 Milliken as of January 1st, 1999?

20 A I have December 27th, 1999.

21 Q Okay. Could you state that

22 balance for me, please?

23 A $357,713.96.

24 Q And as of December 27th, 2000,

25 could you tell me the balance owed by Terry

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Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 134 of 136
3. LesterAlexander, III V. Delong, Caldwell, Novotny & Bridges, et al Denis Golden

Page 7

1 Manufacturing to Milliken?

2 A I have as of January 2nd, 2001,

3 the amount owing to Milliken as $723,021.10,

4 Q And what date would you have for

5 the balance owing as of 2002?

6 A At the end of 2002?

7 Q Well, do you have a balance for

8 January 2nd, 2002?

9 A I have December 31, 2001.

10 Q Okay. What would that balance be?

11 A $537,031.18.

12 Q And what date would you have a

13 balance for the beginning of the year in

14 2002, or the end of the year in 2001?

15 A As of December 30th, 2002, the

16 balance was $272,305.20.

17 Q And would that be the same balance

18 that would be owed as of January 1st, 2003,

19 the balance you stated for December 30th,

20 2002?

21 A I have July 14th, 2003, balance.

22 Q And what would that balance be?

23 A $336,221.22.

24 MS. DETERNAN:

25 Thank you.

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 135 of 136
3. Lester Alexander, III V. Delong, Caldwell, Novotny & Bridges, at al Denis Golden

Page 8

1 I have no more questions.

2 MR. RUTHERFORD:

3 This is Jeremy Rutherford. I have

4 no questions.

5 MS. EDWARDS:

6 This is Susie Edwards. I have no

7 questions.

8 MS. DETERMAN:

9 Thank you all.

10 MR. LANE:

11 We’ll waive reading and signing.

12

13

14

15

16

17

18

19

20

21

22

23

::

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-4 Filed 08/18/2006 Page 136 of 136
In Re: Terry Manufacturing Co., Inc., Patrick Kelley

Page 1

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE MIDDLE DISTRICT OF ALABAMA

* * * *

CASE NO. 03-32063-WRS

CHAPTER 7

IN RE:

TERRY MANUFACTURING COMPANY, INC.

* * * *

CASE NO. 03-32213-WRS

CHAPTER 7

IN RE:

TERRY UNIFORM COMPANY, LLC

* * * *

ADVERSARY PROCEEDING

NO. 04—03061

c/w NO. 04-03062 and NO. 04—03063

J. LESTER ALEXANDER, III,

TRUSTEE OF TERRY MANUFACTURING COMPANY,

INC. AND TERRY UNIFORM COMPANY, LLC

VERSUS

THE PEOPLES BANK * * * * ORIGINAL

ADVERSARY PROCEEDING

NO. 04—03135

J. LESTER ALEXANDER, III,

TRUSTEE OF TERRY MANUFACTURING COMPANY,

INC. AND TERRY UNIFORM COMPANY, LLC

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 1 of 146
In Re: Terry Manufacturing Co., Inc., Patrick Kelley

Page 2

1 VERSUS

2 DELONG, CALDWELL, NOVOTNY & BRIDGERS, LLC

AND EARNEST H. DELONG, JR.

3

4 * * * *

5 ADVERSARY PROCEEDING

6 NO. 05—03042

7 J. LESTER ALEXANDER, III,

TRUSTEE OF TERRY MANUFACTURING COMPANY, INC.

8 AND TERRY UNIFORM COMPANY, LLC

9 VERSUS

10 N.D. HORTON AND JAMES. M. REYNOLDS, III

11

12 * * * *

13 ADVERSARY PROCEEDING

14 NO. 04—03114

15 J. LESTER ALEXANDER, III,

TRUSTEE OF TERRY MANUFACTURING COMPANY, INC.

16 AND TERRY UNIFORM COMPANY, LLC

17 VERSUS

18 THE STEEL LAW FIRM, P.C. AND BRIAN STEEL

19 * * * *

20 DEPOSITION OF PATRICK KELLEY, VIA

TELEPHONE, TAKEN AT PHELPS DUNBAR, ON

21 FRIDAY, JULY THE 22ND, 2005.

22

23

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Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 2 of 146
In Re: Terry Manufacturing Co., Inc., Patrick Kelley

Page 3

1 APPEARANCES:

2 PHELPS DUNBAR

BY: KATHERINE M. DETERMAN, ESQUIRE

3 365 CANAL STREET, SUITE 2000

NEW ORLEANS, LOUISIANA 70130

4

COUNSEL FOR J. LESTER ALEXANDER,

III, TRUSTEE OF TERRY MANUFACTURING

6 COMPANY, INC. AND TERRY UNIFORM

COMPANY, LLC

7

8 MELTON, ESPY & WILLIAMS

BY: BEN ESPY, ESQUIRE

9 VIA TELEPHONE

301 ADAMS AVENUE

10 MONTGOMERY, ALABAMA 35203

11 COUNSEL FOR DELONG, CALDWELL,

NOVOTNY & BRIDGERS

12

13 MOORE, CLARK, DUVALL & RODGERS

BY: JIM MOORE, ESQUIRE

14 VIA TELEPHONE

2829 OLD DAWSON ROAD

15 ALBANY, GEORGIA 31708

16

17 COUNSEL FOR DARWOOD MANUFACTURING

18

19 BALCH & BINGHAN

BY: JEREMY RUTHERFORD, ESQUIRE

20 VIA TELEPHONE

1901 SIXTH AVENUE NORTH, SUITE 2600

21

22 COUNSEL FOR BANK OF WIDALI

23 REPORTED BY:

S 24 KRISTINA CertifiedD.Court REA Reporter 25

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 3 of 146
In Re: Terry Manufacturing Co., Inc., Patrick Kelley

Page 4

1 EXAMINATION INDEX

2 PAGE

3 EXAMINATION BY MS. DETERMAN 5

4

5

6 EXHIBIT INDEX

7 PAGE

8 EXHIBIT NO. 1 5

Re-Notices of Deposition

9

10 EXHIBIT NO. 2 6

Documents Produced by Mr. Kelley

11

12

13

14

15

16

17

18

19

20

21

22

23

•

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Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 4 of 146
In Re: Terry Manufacturing Co., Inc., Patrick Kelley

Page 5

1 PATRICK KELLEY,

2 after having been first duly sworn by the

3 above-mentioned court reporter, did testify

as follows:

5 EXAMINATION BY MS. DETEEJYIAN:

6 Q Mr. Kelley, this is Katherine

7 Determan. I represent J. Lester Alexander,

8 the trustee in the Terry Manufacturing

9 bankruptcy matter.

10 At this time, I would like to

11 introduce the re-notices of deposition into

S

12 the record for the court reporter.

13 Mr. Kelly, would you please state

14 your full name and address for the record?

15 A Do you want my home address or

16 what?

17 Q Business is fine.

18 A Patrick D. Kelley, 620 West

19 Railroad Street South; Pelham, Georgia

20 31779.

21 Q Mr. Kelley, are you currently

22 employed?

23 A Yes.

S

24 Q By whom are you employed?

25 A Darwood Manufacturing.

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 5 of 146
In Re: Terry Manufacturing Co., Inc., Patrick Kelley

Page 6

1 Q Where is that company located?

2 A Same address.

3 Q And did Darwood do business with

4 Terry Manufacturing Company, Inc.?

5 A Yes.

6 Q And how long have you been

‘7 employed by Darwood?

8 A Since 1986. So 18, 19 years.

9 Q What is your current position at

10 that company?

11 A I’m the vice-president and

12 controller.

13 Q During the scope and course of

14 your employment at Darwood, did you have any

15 responsibility or oversight for the Terry

16 Manufacturing account?

17 A Yes, I did.

18 Q And what year did that

19 responsibility begin?

20 A I’m not really sure. Probably

21 around ‘90 or ‘92, somewhere in that area.

22 Q And I would like to introduce into

23 evidence the documents that you produced,

24 which appear to me to be accounts receivable

25 aging reports and customer balance reports.

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Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 6 of 146
In Re: Terry Manufacturing Co., Inc., Patrick Kelley

Page 7

1 A Yes, ma’am.

2 Q Can you identify those documents?

3 A Okay. There is one that has my

4 handwritten note on it. It says 7/07/03,

5 $67,689.13. That’s what you had asked for,

6 or my understanding of what you asked for,

7 of what Terry owed us as of that date.

8 Q Right. Are you generally familiar

9 with these documents?

10 A Yes, ma’am.

11 Q And were they prepared in the

12 ordinary course of Darwood’s business?

13 A Yes, ma’am.

14 Q And did you assist or supervise or

15 oversee the preparation of these documents?

16 A Yes, ma’am.

17 Q And could you state for the record

18 the balance owed by Terry Manufacturing to

19 Darwood as of January 1st, 1999?

20 A I think that’s the one that we had

21 told you that I could not locate. And for

22 me to be able to locate those documents, I

23 would have to go back through a year’s worth

24 of general ledger entries and there are item

25 numbers, et cetera.

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 7 of 146
Q Could you tell me as of

January 1st, or January 6th maybe, how many

Terry Manufacturing owed to Darwood?

MR. MOORE:

For what year?

MS. DETERMAN:

I’m sorry. Of 2000.

EXAMINATION BY MS. DETERMAN:

Q I believe you produced a document

11 A Here it is. I’m just trying get

12 my notes straight. $80,611.80 .

13 Q And is that balance as of

14 January 6, 2000?

15 A Right.

16 Q Could you tell me as of January 5,

17 2001 how much Terry Manufacturing owed to

18 Darwood?

A $128,083.97.

Q January 5th, 2001?

In Re: Terry Manufacturing Co., Inc., Patrick Kelley

Page 8

1

2

3

4

5

6

7

8

9

10

19

20

21 A

22 Q

23 by Terry

24 sometime

25 A

Right.

And do you know the balance owed

Manufacturing to Darwood as of

in the beginning of January 2002?

Yes. It is $128,592.45.

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Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 8 of 146
In Re: Terry Manufacturing Co., Inc., Patrick Kelley

Page 9

1 Q What date would that be? What

2 date and month?

3 A 1/05/02.

4 Q Do you know the balance owed by

5 Terry Manufacturing to Darwood as of

6 January 5, 2003?

7 A I don’t think that was asked for,

8 so I don’t have it in front of me. I think

9 you asked for July 7th, 2003.

10 Q I think we asked for both. But

11 it’s my understanding that your testimony is

12 as of July 7th, 2003 that Terry owed you

13 $67,689.13; is that correct?

14 A That’s correct,

15 MS. DETERMAN:

16 I pass the witness. I have no

17 other questions.

18 MR. RUTHERFORD:

19 This is Jeremy Rutherford. I have

20 no questions.

21 MR. MOORE:

22 I have nothing for witness. This

23 is Jim Moore.

24 MR. ESPY:

25 This is Ben Espy. I have nothing

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 9 of 146
In Re: Terry Manufacturing Co., Inc., Patrick Kelley

Page 10

1 for witness.

2 MS. DETERMAN:

3 Thank you all,

4 (Whereupon the deposition was concluded,)

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Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 10 of 146
Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 11 of 146
Transcript of the Testimony of

Diane Murphy

Date taken: July 12, 2005

In Re: Terry Manufacturing, Inc11

Professional Shorthand Reporters, Inc

Phone: 504-529-5255

Fax: 504-5295257

Email: production@psrdocs.com

Internet: www.psrdocs.com

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 12 of 146
In Re: Terry Manufacturing, Inc., Diane Murphy

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Page

Document produced by HLC showing

accounts receivable aging for Terry

Manufacturing

Page 3

STIPULATION

It is stipulated and agreed by and

between counsel for the parties hereto that

the deposition of the aforementioned witness

is hereby being taken for all purposes

allowed under the Federal Rules of Civil

Procedure, in accordance with law, pursuant

to notice;

That the formalities of reading and

signing are specifically not waived;

That the formalities of filing,

sealing, and certification are specifically

waived;

That all objections, save those asto

the form ofthe question and the

responsiveness of the answer, are hereby

reserved until such time as this deposition,

or any part thereof, may be used or sought

to be used in evidence.

PAT KENNEDY QUINTINI, Certified

Shorthand Reporter, in and for the State of

Louisiana, officiated in administering the

oath to the witness.

Page 4

1 (Pages 1 to 4)

UNITED STATES ERnJPTCY COURT

FOR THE MIDDLE DISTRICT OF AL?.B).NA

IN RE: NO. 03-32063—WRE

TERRY MANUFACTURING

COMPANY, INC.,

DEBTOR CHAPTER 7

IN RE:

TERRY UNIFORM COMPANY,

LW,

DEBTOR

NO. 03-32213-WRB

CHAPTER 7

* * *

EXAMINATION INDEX

Page

EXAMINATION BY MS. DETERMAN~ 6

* * *

INDEX OF EXHIBITS

1

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3

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5

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11

12

13

J. LESTER ALEXANDER, ADVERSARY PROCEEDING

III, TRUSTEE OF TERRY

HANUYACTURING COMPANY, NO. 04-03061

AND TERRY UNIFORM C/W 04-03062

co’~NY, LW AND 04-03063

Exhibit No. 1 . 8

DepoSition of DIANE MURPHY,

812 Fanshaw Street, Philadelphia,

Pennsylvania 19111, taken in the of~icee of

Phelps Dunb*r, 365 Canal Street, Suite 2000,

New Orloane, Louisiana, on Tuesday, the 12th

day of July, 2005.

WOLF, BLOCK, SCEARR & SOLIS-COKEN, LLP

(BY: Z4ICR7.EL ‘rEMIN, ESQ.)

1650 ARCH STREET, 22ND FLOOR

PHILADELPHIA, PENNSYLVANIA 19103

(Present Via Telephone)

ATTORNEYS FOR MDC INDUSTRIES, INC.

Page 1

1 APPEARANCES CONTINUED:

2

PHELPS DUNBAR

3 (BY: KATHERINE M. DETERMAN, ESQ.)

365 CANAL STREET, SUiTE 2000

4 NEW ORLEANS, LOUISIANA 70130-6534

5 AUORNEYS FOR TERRY MANUFACTURING

COMPANY, INC. AND TERRY UNIFORM

6 COMPANY, LLC

7

BALCH & I3INGHAM

8 (BY: 3EREMY RETHERFORD, ESQ.)

1910 SIXTHAVENUE NORTH, SUiTE 2600

9 BIRMINGHAM, ALABAMA 35203

(Present via Telephone)

10

ATrORNEYS FOR BANK OF WEDOWEE

11

12

13

14 REPORTED BY:

15 PAT KENNEDY QUINTINI

CERTIFIED COURT REPORTER

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Page 2

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 13 of 146
In Re: Terry Manufacturing, Inc., Diane Murphy

DIANE MURPHY,

having been dulysworn by the above

mentioned court reporter, did testify as

follows:

MS. DETERMAN:

Mike, if you and .Jeremy would

agree, let’s make appearances for the

record.

I’m Katherine Determan from Phelps

Dunbar. We represent the trustee,).

Lester Alexander in these matters in which

we aretaking this deposition.

MR. RETHERFORD:

This is 3eremy Retherford withthe

law firm of Balch & Bingham. I represent

the Bank of Wedowee.

MR. TEMIN:

Michael Temin ofWolf, Block,

Scharr & Solis-Cohen, LLP. I represent HLC

Industries, Inc., the deponent.

MS. DETERMAN:

If you all would agree, I would

like to stipulate that this deposition is

being taken for all purposes allowed under

the Federal Rules of Civil Procedure in

Page 5

accordance with the law.

Does anybody have an objection to

that?

MR. RETHERFORD:

I don’t know what it means but I

don’t have an objection.

MS. DETERMAN:

Do you want to reserve the right

to read and sign?

MR. RETHERFORD:

Yes.

EXAMINATION BY MS. DETERMAN:

Q. Ms. Murphy, could you please state

your name and address forthe record?

A. Diane Murphy, 812 Fanshaw Street,

Philadelphia, Pennsylvania 19111.

Q. Are you currently employed?

A. Yes.

Q. By whom are you employed?

A. HLC Industries.

Q. And where is that company located?

A. Bala Cynwyd, Pennsylvania.

Q. And what is that company’s

address?

A. Four East Montgomery Avenue.

Page 6

Q. And how long have you been

employed with HLC?

A. Approximately 13 years.

Q. And what is your current position

with that company?

A. Controller.

Q, How long have you held that

position?

A. Five years.

Q. And what was your position

previous to being controller?

A. Accounting clerk.

Q. And in your current position as

controller, what is the scope of your

employmentand yourjob duties in essence?

A. I maintain the financial records

and record financial transactionsfor the

company.

Q. And during the scope and courseof

your employment, did you have any

responsibility or oversight for the Terry

Manufacturing Company, Inc. account?

A. Yes,Idid.

Q. And whatwas that responsibility?

A. Iwould apply payments, cash

Page 7

payments against their account and check

their credit.

Q. And what year did you first have

any oversight over the Terry Manufacturing

account?

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5

6 A. I don’t remember.

7 Q. Does it go back as far as 1999?

8 A. Yes, it would have.

9 Q. Okay. Thank you. I would like to

10 introduce into the record in globo

11 Exhibit 1, which were documents produced by

12 HLC that show the accounts receivable aging

13 for the Terry Manufacturing account.

14 (Exhibit No. 1 marked for identification.)

15 Ms. Murphy, can you identify those

16 documents?

17 A. They are invoices in which HLC

18 shipped goods to Terry Manufacturing.

19 Q. Were these documents kept in the

20 ordinary course of HLC’s business?

21 A. Yes.

22 Q. Are you familiar with these

23 documents?

24 A. Not individually.

25 Q. Did you in any way assist or

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Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 14 of 146
In Re: Terry Manufacturing, Inc., Diane Murphy

not sure.

Q. As controller of the company,

would you have supervision over and be

knowledgable to testify regarding how much

money Terry Manufacturing owed to HLC on

certain dates?

A. Yes.

Q. I would refer you to Page 2 of 13

in this accounts receivable aging that you

forwarded to us. Do you know what I’m

talking about?

A. Yes.

Q. Couldyou state for us the balance

owed to Terry Manufacturing -- the balance

owed to HLC by Terry Manufacturing as of

January 1, 19 -- or as of December 31, 1998?

A. As of December 31, 1998, Terry

Manufacturing owed HLC Industries

$2,549,427.36.

Q. And would that have been -- would

that balance have been owed to HLC as of

January 1, 1999?

Page 9

A. Yes.

Q. And referring to Page 3 of 13 of

that same exhibit under the accounts

receivable aging, could you state the

balance owed to HLC byTerry Manufacturing

asof 12/31199?

A. $2,606,749.82.

Q. And would that have beenthe same

balance that would have beenowed to HLC by

Terry Manufacturing as of January 1, 2000?

A. Yes.

Q. And turning to Page 4 of 13, could

you state for me the balance owed to HLC by

Terry Manufacturing as of 12131/00?

A. $1,740,137.78.

Q. And would this have beenthe same

balance that would be owed to HIC by Terry

Manufacturing as of January 1, 2001?

A. Yes.

Q. And turning to Page 5 of 13 under

the accounts receivable aging document,

would you state for the record how much

money Terry Manufacturing owed to HIC as of

12/31/01?

A. $2,261,215.72.

Page 10

Q, And would this have been the same

balance that Terry Manufacturing owedto HLC

as of January 1, 2002?

A. Yes.

Q. And turning to Page 6 of 13 under

the accounts receivable aging report, would

you state forthe record how much money

Terry Manufacturingowed to HLC as of

December 31, 2002?

A. $2,422,084.40,

Q. And would that be the same balance

that would have been owed to HLC as of

January 1, 2003?

A. Yes.

Q. And turning to Page 7 outof 13 on

the accounts receivable aging sheet, would

you state for the record how much money HLC

was owed by Terry Manufacturing as of

June 30, 2003?

A. $1,900,728.98.

Q. Do you know whetherthat would be

the same balance owed to HLC as of July 7,

2003?

A. I believe it is.

MS. DETERMAN:

Thank you. I have no further

questions. I pass the witness.

MR. TEMIN:

I have no questions.

MS. DETERMAN:

Thank you.

(Whereupon, the deposition was concluded.)

supervise in the preparation of these

documents?

A. Of the invoices? I may have. I’m

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Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 15 of 146
In Re: Terry Manufacturing, Inc., Diane Murphy

1

2

3

4 WITNESS’ CERTIFICATE

5

6

7 I have reador have had the foregoing

8 testimony readto me and hereby certify that

9 it is a true and correcttranscription of my

10 testimony with the exception of any attached

11 corrections or changes.

12

13

14

15

16

17 ________________________________

18 Diane Murphy

19

20 PLEASE INDICATE

21 ()NOCORRECTIONS

22 ()cORRECTIONS; ERRATA SHEET(S) ENCLOSED

23

24

25

Page 13

1 REPORTER’S CERTIFICATE

2

3 I, Pat Kennedy Quintini, CCR, Certified

4 Court Reporter, State of Louisiana, do

5 hereby certify that the above-named witness,

6 after having been duly sworn by me to

7 testify to the truth, did testify as

8 hereinabove set forth.

9 That this testimony was reported by me

10 in the stenotype reporting method and

11 transcribed thereafter by me on computer,

12 and that same is a true and correct

13 transcript to the best of my ability and

14 understanding.

15 That I am not of counsel, nor related

16 to counsel or the parties hereto, and in no

17 way interested in the outcome ofthis

18 matter.

19

20

21

22 _________________________________

23 PAT KENNEDY QUINTINI

CERTIFIED COURT REPORTER

24

25

Page 14

4 (Pages 13 to 14)

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 16 of 146
Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 17 of 146
IN RE:

TERRY UNIFORM

COMPANY, LLC,

Debtor,

J. LESTER ALEXANDER, III,

TRUSTEE OF

TERRY MANUFACTURING

COMPANY, INC., AND

TERRY UNIFORM COMPANY, LLC

VERSUS

DEPOSITION OF

DAVID NEVALA

Produced, sworn, and examined in the offices of Williams &

Anderson, 111 Center Street, 22nd Floor, Little Rock, Arkansas

by telephonic communication with the witness, court reporter,

and attorney for Arkansas Department of Economic Development

being present at 111 Center Street, 22nd Floor, Little Rock,

Arkansas; and all others being present as listed below;

commencing at 1:35 p.m., on, July 8, 2005, in the abovecaptioned case now pending in the United States Bankruptcy

Court, For the Middle District of Alabama; said deposition

being taken pursuant to provisions of the Federal Rules of

KAY BUTLER, CVR-CM, CCR

(501) 868-8134

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE MIDDLE DISTRICT OF ALABAMA

IN RE:

TERRY MANUFACTURING

COMPANY, INC.

Debtor

CASE NO. 03-32063-WRS

CHAPTER 7

CASE NO. 03-32213-WRS

CHAPTER 7

)

)

)

)

)

)

)

THE PEOPLES BANK )

ADVERSARY PROCEEDING

NO. 04-03061

cjw NO. 04-03062

and NO. 04-03063

0

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 18 of 146
2

Civil Procedure, for discovery and all other purposes, at the

instance of counsel for J. Lester Alexander, III, Trustee of

Terry Manufacturing Company, Inc., and Terry Uniform Company,

LLC.

It is stipulated and agreed that all forms and formalities

as to the taking, transcribing, certification, and signing of

said deposition in this action are hereby waived; however, the

right to object to the testimony of the witness on the grounds

of incompetency, irrelevancy and immateriality is expressly

reserved, other than as to the form of questions as propounded

to the witness, and may be hereinafter asserted if and when

presented at the trial of this cause without the necessity of

noting same at the time of taking of said deposition.

APPEARANCES:

ON BEHALF OF ARKANSAS DEPARTMENT OF ECONOMIC DEVELOPMENT

BY TELEPHONIC COMMUNICATION BEING PRESENT AT 111 CENTER

STREET, 22ND FLOOR, LITTLE ROCK, ARKANSAS:

JOHN KOOISTRA, III, Esquire

WILLIAMS & ANDERSON, PLC

111 Center Street, 22nd Floor

Little Rock, Arkansas

ON BEHALF OF BANK OF WEDOWEE BY TELEPONIC COMMUNICATION

BEING PRESENT AT 1901 6TH AVENUE NORTH, SUITE 2600,

BIRMINGHAM, ALABAMA:

JEREMY RUTHERFORD, Esquire

BOSCH & BINGHAM

1901 6th Avenue North, Suite 2600

Birmingham, Alabama 35203

KAY BUTLER, CVR-CM, CCR

(501) 868-8134

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 19 of 146
3

ON BEHALF OF STEEL LAW FIRM AND BRYAN STEEL BY TELEPHONIC

COMMUNICATION BEING PRESENT AT 21 EIGHTH STREET, ATLANTA,

GEORGIA:

MONICA VINING, Esquire

JONES & WALDEN, LLC

21 Eighth Street

Atlanta, Georgia 30309

ON BEHALF OF WOODY DELONG, FIRM OF DELONG, CALDWELL,

NOVOTNY and BRIfGER, LLC BY TELEPHONIC COMMUNICATION

BEING PRESENT AT 301 ADAMS AVENUE, MONTGOMERY,

ALABAMA:

SUSIE EDWARDS, Esquire

MELTON, ESPY & WILLIAMS

301 Adams Avenue

Montgomery, Alabama 36103

ON BEHALF OF FIRST TUSKEGEE BANK BY TELEPHONIC

COMMUNICATION BEING PRESENT AT MONTGOMERY, ALABAMA:

LEO MATH, Esquire

ATTORNEY AT LAW

P. 0. Box 230759

Montgomery, Alabama 36123

ON BEHALF OF J. LESTER ALEXANDER, III, TRUSTEE OF TERRY

MANUFACTURING COMPANY, INC., AND TERRY UNIFORM COMPANY,

LLC, BY TELEPHONIC COMMUNICATION, BEING PRESENT AT 365

CANAL STREET, SUITE 2000, NEW ORLEANS, LOUISIANA:

BRENT B. BARRIERE, Esquire

PHELPS DUNBAR LLP

365 Canal Street, Suite 2000

New Orleans, LA 70130-6534

KAY BUTLER, CVR-CM, CCR

(501) 868-8134

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 20 of 146
4~

INDEX

Page

Caption . . . . . . . . . . . . 1

Stipulations. . . . . . . . . . . 1

Appearances . . . . . . . . . . . 2

Index . , . . . . . , . . . 4

Examination by Mr. Barriere . . . . . . . 5

Requests . . . . . . . . . . 14,17,19

Reporters Certificate . . . . . . . . 22

EXHIBITS

MARKED APPENDED

Trustee~s Exhibit 1 . . . . . . . 15 Ex Tab 1

proof of Claim and Attachments

. Truste&s Exhibit 2 . . . . . . . 15 Ex Tab 2

printouts

KAY BUTLER, CVR-CM, CCR

(501) 868-8134

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 21 of 146
1 PROCEEDINGS

2 THEREUPON,

3 DAVID NEVALA,

4 having been called for examination by counsel for J. Lester

5 Alexander, III, Trustee, and having been first duly sworn by

6 the undersigned notary public, was examined and testified as

7 follows:

8 EXAMINATION BY COUNSEL FOR J. LESTER

9 ALEXANDER, III, TRUSTEE OF TERRY MANUFACTURING

10 COMPANY, INC., AND TERRY UNIFORM COMPANY, INC.,

11 AND TERRY UNIFORM COMPANY, LLJC

12 BY MR. BARRIERE:

13 Q Good afternoon, sir. Let me re-introduce myself. My name

14 is Brent Barriere. I represent the Trustee of Terry

is Manufacturing, J. Lester Alexander. I~1lbe asking you some

16 questions this afternoon. We anticipate this will be a brief

17 deposition. If, at any time during the course of the

18 deposition, you find my questions to be ambiguous or confusing,

19 please so advise me, and I’ll attempt to restate them.

20 MR. BARRIERE: As the several attorneys on the line

21 are participating by telephone, and the court reporter

22 cannot identify who is speaking, I would ask that

23 whoever’s asking a question first identify themselves, and

24 likewise, anyone raising an objection identify themselves

25 so the court reporter can accurately transcribe the

KAY BUTLER, CVR-CM, CCR

(501) 868-8134

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 22 of 146
identity of the speaker.

BY MR. BARRIERE:

Q Sir, would you state your full name for the record?

A David Nevala.

Q And by whom are you employed, sir?

A The Arkansas Department of Economic Development.

Q And what is your position with that department?

A I’m currently a loan officer with that department.

Q All right. And what is your business address, sir?

A 1 State Capitol Mall, Little Rock, Arkansas, 72201.

All right. In connection with today’s deposition, we

asked that the Department designate a representative to speak

with respect to - - or testify with respect to indebtedness owed

to the Department by Terry Manufacturing. Have you been so

designated?

A Yes.

Q All right. When were you first employed by the State

Department of Economic Development?

A I’ve been employed since July of 1983.

Q 1983, What role, it any, did you play in the extension of

credit by the Arkansas Department of Economic Development to

Terry Manufacturing Company?

A In 1998, I was a grant manager. Basically, I inherited

projects that had already -- that had been -- that management

had decided to extend grants and loans to companies, and I

KAY BUTLER, CVR-CM, CCR

(501) 868-8134

.

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Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 23 of 146
14

. 1 A Yes.

2 Q Is this a format typically used by the Department as of

3 November, 1998?

4 A Yes.

~ Q The cover page of the package you’ve been provided shows a

6 claim as of the filing date, calculated at two hundred

7 thousand, four hundred sixteen dollars and seventy-nine cents.

8 What was the basis for that calculation, sir?

9 A I think it’s the balance of our -- like I say, I don’t

10 have the file with me, but I think that’s the balance, the

11 principal balance, of the loan at the time that this filing was

12 made.

13 Q Okay. If I’m understanding you correctly, sir, in order

14 to confirm the balance due on a loan, you would look on to some

is computer --

16 A Right.

17 Q -- system you maintain; is that correct?

18 A Right.

19 Q And there would be a -- a screen, or a page on that, that

20 would identify the amounts due under this loan?

21 A Right.

22 MR. BARRIERE: John, if I may ask, could I

23 impose upon you to have the witness print that out

24 and attach it to this deposition?

26 MR. KOOISTRA: Sure.

KAY BUTLER, CVR-CM, CCR

(501) 868-8134

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 24 of 146
1

a. MR. BARRIERE: All right. I’m going to go ahead

2 and mark and attach as Exhibit 1 en globo the

3 documents we’ve just gone through, which are the

4 Proof of Claim and related attachments, and ask that

the computer print-out of the balance due on this

6 loan be attached as Exhibit 2,

7 MR. KOOISTRA: Let me add one caveat to that.

8 don’t know the status on your computer system of

9 Terry Manufacturing now, since you’ve probably

10 written the loan of f. So, you -- David, can you

ii resurrect - - he says he can resurrect that screen.

12 So, we will -- we will have that photocopied and make

13 that as an exhibit and I’ll furnish that to the court

14 reporter.

15 MR. BARRIERE: Thank you, sir.

16 (THEREUPON, twenty pages of documents were

17 marked for identification as Trustee Exhibit 1 and

18 made a part of the record and are appended at Exhibit

19 Tab 1 and three-pages of documents were marked for

20 identification as Trustee Exhibit 2 and made a part

21 of the record and are appended at Exhibit Tab 2.)

22 BY MR. BARRIERE:

23 Q A question, sir. I see that you listed a hundred seventy24 eight thousand dollars as secured and twenty-one thousand

25 dollars -- pardon me - - a hundred seventy-eight thousand

KAY BUTLER, CVR-CM, CCR

(501) 868-8134

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 25 of 146
1

1 dollars unsecured, and twenty-one thousand dollars secured.

2 Can you tell me, first, how the Department determined that

3 twenty-one thousand dollars of its approximate two hundred

4 thousand dollar claim, was secured?

s A Ms. Dixon, from the Burr and Foreman Law Firm, was the one

6 that completed that,and I would assume that the determination

7 of the twenty-one seven is -- is what the figure is that was

8 derived by the trustee from the sale of equipment at Marianna,

9 and the rest is -- is what would -- the remaining balance of

10 the loan would be. That’s my assumption only.

11 Q All right. You did not make that calculation, I take it?

12 A Right.

13 Q Okay. At any time, to your knowledge, did Terry

14 Manufacturing, or anyone acting on behalf of Terry

15 ManufactUring, contest the company’s liability for this

16 promissory note?

17 A No.

18 Q All right.

19 A Not to my knowledge.

20 Q And to the best of your knowledge, I take it based on your

21 prior testimony, payments were made on this note from July, of

22 1999, up until approximately the Chapter 11 filing in July,

23 2003?

24 A To the best of my knowledge, yes.

25 Q Very well. Sir, as you sit there today, can you tell me

KAY BUTLER, CVR-CM, CCR

(501) 868-8134

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 26 of 146
Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 27 of 146
3. LesterAlexander, Ill V. Delong, Caidwell, Novotny & Bridges, et al Popi Paraglos

Page 1

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE MIDDLE DISTRICT OF LOUISIANA

IN RE:

TERRY MANUFACTURING ) NO. 03-32063-WRS

COMPANY, INC.

CHAPTER 7

Debtor

IN RE:

TERRY UNIFORM ) NO. 03-32213-WRS

COMPANY, LLC,

CHAPTER 7

Debtor.

J. LESTER ALEXANDER,

III, TRUSTEE OF

TERRY MANUFACTURING

COMPANY, INC., AND ) ADVERSARY

TERRY UNIFORM COMPANY, ) PROCEEDING

LLC, ) NO. 04—03135

VERSUS

DELONG, CALDWELL, ) nD1GI~NAL

NOVOTNY & BRIDGERS, )

L.L.C. AND EARNEST

H. DELONG, JR.

Telephone deposition of POPI PARAGIOS,

taken on Thursday, the 14th day of July,

2005.

APPEARANCES:

PHELPS DUNBAR, L.L.P.

(By: Katherine M. Determan, Esq.)

365 Canal Street, Suite 2000

New Orleans, Louisiana 70130

ATTORNEYS FOR J. LESTER ALEXANDER,

III, TRUSTEE OF TERRY

MANUFACTURING COMPANY, INC., AND

TERRY UNIFORM COMPANY, L.L.C.

(Appearances cont’d on next page)

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 28 of 146
3. Lester Alexander, III v. Delong, Caldwefl, Novotny & Bridges, et al Popi Paragios

Page 2

1 APPEARANCES CONTINUED:

2 WALDROP & ASSOCIATES, P.C.

(By: Raymond D. Waldrop, Jr., Esq)

3 415 Church Street, Suite E-1

Huntsville, Alabama 35801

ATTORNEYS FOR ATLANTIC THREAD &

5 SUPPLY COMPANY

6 BALCH & BINGHAN, LLP

(By: Jeremy Rutherford, Esquire)

7 1901 Sixth Avenue North

Suite 2600

8 Birmingham, Alabama 35203

9 ATTORNEYS FOR THE BANK OF WEDOWEE

10 MELTON, ESPY & WILLIAMS, P.C.

(By: Susan Edwards, Esquire)

11 301 Adams Avenue

Montgomery, Alabama 36104

12

ATTORNEYS FOR EARNEST DELONG AND

13 DELONG, CALDWELL, NOVOTNY &

BRIDGES, L.L.C.

14

REPORTED BY:

15

BECKY C. DANE, CCR, RPR

16 CERTIFIED COURT REPORTER

17 * * *

18 INDEX OF EXHIBITS

19 Page

20 Exhibit No. 1 9

21 Subpoenas

22 Exhibit No, 2 9

23 Aged Trial Balance

24

25

Professional Shorthand Reporters, Inc. 1-800~536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 29 of 146
3. Lester Alexander, UI V. Delong, Caidwell, NoVotny & Bridges, et al Popi Paragios

Page 3

1 STIPULATION

3 It is stipulated and agreed by and

4 between counsel for the parties hereto that

5 the deposition of the aforementioned witness

6 is hereby being taken for all purposes

7 allowed under the Federal Rules of Civil

8 Procedure, in accordance with law, pursuant

9 to notice;

10 That the formalities of reading

11 and signing are specifically waived;

12 That the formalities of sealing,

13 certification and filing are specifically

14 waived;

15 That all objections, save those as

16 to the form of the question and the

17 responsiveness of the answer, are hereby

18 reserved until such time as this deposition,

19 or any part thereof, may be used or sought

20 to be used in evidence.

21 * * * *

22 BECKY C. DAME, Certified Court

23 Reporter in and for the State of Louisiana,

24 officiated in administering the oath to the

25 witness.

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 30 of 146
3. Lester Alexander, UI V Delong, CaIdwell, NoVotny & Bridges, at al Popi Paraglos

Page 4

1 POPI PARAGIOS,

2 after having been first duly sworn by the

3 above-mentioned court reporter, did

4 testify as follows:

5 MS. DETERNAN:

6 For the record, this is Katherine

7 iJeterman, representing J. Lester Alexander,

8 the trustee of Terry Manufacturing. Do

9 y’all want to make appearances for the

10 record?

11 MR. RUTHERFORD:

12 This is Jeremy Rutherford with the

13 law firm of Balch & Bingham, representing

14 the Bank of Wedowee.

15 MS. EDWARDS:

16 This is Susie Edwards from the

17 firm of Melton, Espy & Williams,

18 representing Earnest Delong and the law firm

19 of Delong, Caldwell, Novotny & Bridges.

20 MR. WALDROP:

21 This is Raymond Waldrop, Jr. I

22 represent the deponent, Atlantic Thread &

23 Supply Co., Inc., and the deponent,

24 Mr. Paragios.

25 THE WITNESS:

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 31 of 146
3. Lester Alexander, III V. Delong, Caidwell, NoVotny & Bridges, at al Popi Paragios

This is Popi Paragios. I’m the

bookkeeper for Atlantic Thread & Supply

Company, Inc.

EXAMINATION BY MS. DETERMAN:

Q In is Kathy Determan for the

Trustee. For the record, will you state

your full name and address?

A Popi Paragios. Which address did

you want me to state, my home or --

Q Business is fine.

A 8515 Kelso Drive, Units G and H,

Baltimore, Maryland, 21221.

Q And are you currently employed?

A Yes.

Q And by whom are you employed?

A Atlantic Thread & Supply Company,

17 Inc.

18 Q And is that company located at the

19 same address you just stated?

20 A

21 Q

22 employed

23 A

24 Q

25 Atlantic

Page 5

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

Yes.

And how long have you been

at Atlantic Thread?

Over three years.

And what is your position with

Thread?

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Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 32 of 146
3. Lester Alexander, III V. Delong, Caidwell, Novotny &Bridges, et al Popi Paraglos

Page 6

1 A Bookkeeper.

2 Q And what are your responsibilities

3 as the bookkeeper?

4 A I’m in charge of all financial

5 aspects of the business.

6 Q And during the scope and course of

7 your employment, did you have any

8 responsibility or oversight for the Terry

9 Manufacturing Company, Inc., account with

10 Atlantic Thread?

11 A Yes.

12 Q And what year did that

13 responsibility begin?

14 A 2002.

15 MS. DETERNAN:

16 I would like to introduce into the

17 record at this time the documents produced

18 by Atlantic Thread, which are aged trial

19 balances by due date.

20 Ms. Paragios, do you recognize

21 these documents?

22 MR. WALDROP:

23 How many pages are there?

24 EXAMINATION BY MS. DETERMAN:

25 Q Ms. Paragios, could you answer

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Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 33 of 146
3. Lester Alexander, Ill v. Delong, CaIdwell, NoVotny & Bridges, at al Popi Paraglos

Page 7

1 that?

2 A Give me one second. I have one --

3 five trial balances and one cover letter,

4 Q Did you assist in the preparation

5 of these documents?

6 A Yes.

7 Q Are these documents kept in the

8 ordinary course of Atlantic Thread’s

9 business?

10 A Yes.

11 Q Referring to these documents and

12 indicating which page your answers come

13 from, could you state the balance owed by

14 Terry Manufacturing to Atlantic Thread as of

15 January 1st, 1999?

16 A $12,343.90.

17 Q And could you please state the

18 balance owed by Terry Manufacturing to

19 Atlantic Thread as of January 1st, 2000?

20 A Zero.

21 Q And could you please state the

22 balance owed by Terry Manufacturing to

23 Atlantic Thread as of January 1st, 2001?

24 A $27,499.63.

25 Q And could you please state the

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 34 of 146
3. Lester Alexander, III V. Delong, Caidwell, Novotny & Bridges, at a! Popi Paraglos

Page 8

1 balance owed by Terry Manufacturing to

2 Atlantic Thread as of January 1st, 2002?

3 A $57,420.98,

4 Q And could you please state for the

5 record the balance owed by Terry

6 Manufacturing to Atlantic Thread as of

7 January 1st, 2003?

8 A $52,602.05.

9 Q And could you please the balance

10 owed by Terry Manufacturing to Atlantic

11 Thread as of July 7, 2003, which was the

12 petition date of Terry Manufacturing?

13 A $47,308.56.

14 MS. DETERMAN:

15 I have no more questions for the

16 witness.

17 MR. RUTHERFORD:

18 This is Jeremy Rutherford. I have

19 no questions.

20 MS. EDWARDS:

21 This is Susie Edwards, I have no

22 questions.

23 MS. DETERMAN:

24 Thank you.

25 MR. WALDROP:

Professional Shorthand Reporters, Inc. 1-800-536-5255 New Orleans, Baton Rouge, Shreveport

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 35 of 146
Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 36 of 146
FOSHEE & TURNER COURT REPORTERS

1 IN THE UNITED STATES BANKRUPTCY COURT

2 FOR THE MIDDLE DISTRICT OF ALABAMA

6 CASE NUMBER: 03—32063-MRS

I CHAPTER 7

8 TERRY MANUFACTURING COMPANY, INC.,

9 Debtor,

IN RE:

CASE NUMBER: 03—32213-WRS

TERRY UNIFORM COMPANY, LLC,

Debtor,

15

16 ADVERSARY PROCEEDING

17 No. 04—03061

18 Consolidated with No. 04-03062

19 and 04-03063

20

J. LESTER ALEXANDER III, TRUSTEE TERRY

MANUFACTURING COMPANY, INC. AND TERRY

UNIFORM COMPANY, LLC.,

PEOPLES BANK OF EATONTON

1

STIPULATION

IT IS STIPULATED AND AGREED by

and between the parties through their

respective counsel, that the deposition

of TERRY PRICE may be taken before

Leslie K. Hartsfield, at the United

States Courthouse Complex, One Church

Street, 36104,

DEPOSITION OF TERRY PRICE

taken on the 27th of June, 2005.

IT IS FURTHER STIPULATED AND

AGREED that the signature to and the

reading of the deposition by the witness

is waived, the deposition to have the

same force and effect as if full

compliance had been had with all laws

and rules of Court relating to the

taking of the deposition.

1 IT IS FURTHER STIPULATED AND

2 AGREED that it shall not be necessary

3 for any objections to be made by counsel

4 to any questions except as to the form

5 or leading questions, and that counsel

6 for the parties may make objections and

7 assign grounds at the time of the trial,

8 or at the time said deposition is

9 offered in evidence, or prior thereto.

10 IT IS FURTHER STIPULATED AND

11 AGREED that the notice of filing of the

12 deposition by the Commissioner is

13 waived.

14

15

16

17

18

19

20

21

22

23

EXHIBITS:

1 — Notice

2 — Customer balance

3 — 7—7—03 customer

balance

INDEX

PAGE NUMBER:

7

IN RE:

10

ii

12

13

14

21

22

~,. 23

VERSUS

3

EXAMINATION BY:

Ms. Lasky

10

11

12

13

14

15

16

17

18

19

7

8

14

1

2

3

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 37 of 146
FOSHEE & TURNER COURT REPORTERS

1 BEFORE:

2 LESLIE K. HARTSFIELD,

3 Commissioner.

5 APPEARANCES:

6 PHELPS, DUNBAR, LLP, by Ms. Katie

7 E. Lasky, Canal Place, 365 Canal Street,

8 Suite 2000, New Orleans, Louisiana,

70130-6534, appearing on behalf of the

10 Trustee J, Lester Alexander, III,

11 MELTON, ESPY & WILLIAMS, by

12 Ms. Suzanne Edwards, 301 Adams Avenue,

13 Montgomery, Alabama, 36103, appearing on

14 behalf of Delong, Caldwell, Novotny and

15 Bridgers and Ernest Delong, Jr.

16

17

18

19 I, LESLIE K. HARTSFIELD, a Court

20 Reporter of Prattville, Alabama, acting

21 as Commissioner, certify that on this

22 date, as provided by the Federal Rules

23 of Civil Procedure and the foregoing

5

1 04-03061 in the United States Bankruptcy

2 Court for the Middle District of

3 Alabama.

6 (Exhibit No. 1 was marked for

7 identification.)

9 EXAMINATION BY MS. LASKY:

10 Q. I’m going to introduce as

11 Exhibit 1 -- and I’ll give this to you,

12 Mr. Price -- this is the notice of

13 issuance of subpoena to Terry Price.

14 And when was this served upon you,

15 Mr. Price?

16 A. June 25th at 1:25 p.m.

17 Q. And you have been deposed

18 before. You are still under oath.

19 A. Okay.

20 Q. Just so we’re clear. What

21 is your position with Bonifay

22 Manufacturing?

23 A. President.

I stipulation of counsel, there came

2 before me at the United States

3 Courthouse Complex, One Church Street,

4 Montgomery, Alabama, 36104, beginning at

5 3:22 p.m., TERRY PRICE, witness in the

6 above cause, for oral examination,

7 whereupon, the following proceedings

8 were had:

10 TERRY PRICE

11 being previously sworn, was examined

12 and testified as follows:

13

14 MS. LASKY: This is the

15 deposition of Terry Price, president of

16 Bonifay Manufacturing, Incorporated in

17 the matter of Jay Lester Alexander, III,

18 trustee of Terry Manufacturing Company,

19 Inc. and Terry Uniform Company, LLC

20 versus the Peoples Bank of Eatonton,

•21 Bank of Wedowee, The First Tuskegee

22 Bank. It is adversary proceeding —-

23 accelerated adversary proceeding No.

1 Q. And how long have you served

2 as president of Bonifay Manufacturing?

3 A. About 25 1/2 years.

4 Q. And when did Bonifay

5 Manufacturing start to do business with

6 Terry Manufacturing Company to the best

7 of your recollection?

8 A. 1986.

9 Q. What did Bonifay provide for

10 Terry Manufacturing Company, what was

11 the nature of your ——

12 A. We manufactured knit

13 shirts.

14

15 (Exhibit No. 2 was marked for

16 identification.)

17

18 Q. And I’m going to show you

19 what I’m going to mark as Exhibit A --

20 sorry, Exhibit 2 in globo. Can you

21 describe this document for me, please,

22 Mr. Price?

23 A. This is our customer balance

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 38 of 146
FOSHEE & TURNER COURT REPORTERS

14 A. Yes.

15 Q.

16 this document?

17

18

19 position?

manager.

10 that

11 amount?

12 A. I’m on Page 15 and the

13 amount is $275,643.89

14 Q. What does that amount

15 represent?

8 A.

9 Q.

10 the amount

11 2001?

1 detail for Terry Manufacturing.

2 Q. Does this represent a true

3 and correct copy?

4 A. Yes, it is.

5 Q. And just so the record

6 reflects, this was produced by Bonifay

7 Manufacturing to the trustee in

8 litigation between Bonifay Manufacturing

9 and the trustee?

10 A. Correct.

Ii Q. Was this prepared in the —-

12 created in the ordinary course of

13 business of Bonifay Manufacturing?

And do you know who prepared

1 you find that.

2 A. On Page 21. The amount owed

3 was $350,571.31.

4 Q. And again this reflected

5 amounts owed by Terry Manufacturing to

6 Bonifay Manufacturing -—

7 A. That’s correct.

8 Q. —- on January 4, 2000?

9 A. Correct.

10 Q. Now, just so I’m clear, the

11 dates on this spread sheet or on this

12 customer balance detail, excuse me, what

13 is the significance of the dates listed?

14 A. Every time we sent an

15 invoice it’s entered here. And actually

16 this is a program —— computer program

17 that we prepare invoices on so it

18 automatically goes into —— and every

19 time we received a payment. Every time

20 we received a payment, it went on here

21 and every time we invoiced it went on

22 here.

23 Q. Can we look at the date

11

A. Kim Williams.

Q. And what was Ms. Williams’

20

21

22

23

A. She was secretary and office

Q. Secretary to you ——

A. Yes.

Q. —— as president? And were

you and are you currently the custodian

3 of this document?

4 A. Yes.

5 Q. Can you read for me the

6 amounts receivable listed on this

7 document as of 1/1/99?

A. 1/1/99.

Q. And where do you find

—— on what page do you find that

1 listed December 20, 2000, please, and

2 tell me what page you find that on.

3 A. On Page 27 and the figure

4 was $71,000 —— $71,006.12.

5 Q. And again this was amounts

6 that Terry Manufacturing owed to Bonifay

7 Manufacturing?

That’s correct.

Can you please read for me

below it for January 11,

16 A. Accounts receivable balance

17 from Terry Manufacturing.

18 Q. Is that an amount that Terry

19 Manufacturing owed to Bonifay

20 Manufacturing?

A. That’s correct.

Q. Can we turn to the entry

marked January 4, 2000 and tell me where

‘U

12 A. Well, there were two

13 invoices on that day. The first figure

14 is $75,948.33 and then 76,608.99.

is Q. So is it correct that

16 Bonifay Manufacturing issued two

17 invoices to Terry Manufacturing on

18 January 11, 2001?

19 A. Right. They requested -- we

20 did the shirts by cut number and they

21 requested that each cut number be a

22 separate invoice. So if we happened to

23 send two on the same day, there would be

12

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 39 of 146
Correct

And turn to the amount

January 7, 2002 and read what

5 A.

6 Q.

7 listed for

8 page that’s on as well,

9 A. Page 29. $236,590.05.

10 Q. And again this was amounts

11 Terry Manufacturing owed to Bonifay

12 Manufacturing?

A. That’s correct.

Q. Turn to the entry marked

January 8, 2003. Again there appear to

be two so if you could read both of

those and tell me what page you find

them on.

A. Page 31, $248,341.18 and

$252,148.57.

Q. If we look at the entry for

December 20, 2002 that’s listed as

payment, can you explain what that

___________ ‘3

2 A. Prior to that, the balance

3 was $271,642.68. We received a payment

4 of $26,516.79 which subtracted away

5 leaves a balance of 245,125.89.

6 Q. So as of December 20, 2002

7 Terry Manufacturing owed Bonifay

8 Manufacturing $245,125.89?

9 A. Correct.

10 Q. We look at the last entry on

11 this customer balance detail on Page 32.

12 A. Right.

13 Q. And just read the date and

14 then the balance.

18 Yeah.

A. A hundred -- now this is

I may have a more current one

here, I think. I think I do.

Q, Let’s introduce that and

we’ll make copies. That’s going to be

Exhibit 3. This is a document that

Mr. Price brought with him in response

to the subpoena today.

2 (Exhibit No. 3 was marked for

3 identification.)

5 A, There was a couple more

6 entries that went after the page you

7 had.

8 Q. Okay. That was on Exhibit

92?

10 A. Right. See, the figure on

11 here is 110,082 and that’s 115.

12 Q. Just so we’re clear, the

13 record is clear, the last entry on

14 Exhibit 2, what is the date of that?

15 A. The date of the last entry

16 is 6/20 of ‘03. And the figure, the

17 balance is $110,082.49.

18 Q. What is the last date of the

19 entry on Exhibit 3?

20 A. 7/1 of ‘03. And the balance

21 is $115,482.52.

22 Q. And do you know what date

23 Terry Manufacturing filed for

bankruptcy?

A. I think it was July 9th,

Q. Of 2003?

A. 2003.

11.L.i

Q. So the amount of

$115,482.52, does that represent the

proof of claim that Bonifay

Manufacturing filed?

A. I believe that’s correct.

Q. Was that the amounts that

Terry Manufacturing Company owed Bonifay

Manufacturing as of the date of its

bankruptcy petition?

A. Correct.

Q. And that Exhibit 3 you

brought with you today?

A. That’s correct.

Q. And again, it was prepared

in the ordinary course of business of

Bonifay Manufacturing?

A. Right.

Q. And you were the custodian

of that document?

16

two invoices.

FOSHEE & TURNER

Q.

the amount

to Bonifay

COURT REPORTERS

So as of January 11, 2001

owed by Terry Manufacturing

Manufacturing was $76,608.99?

13

14

15

16

17

18

19

20

21

22

23

1 reflects?

15

16

17

2

3

10

11

12

13

14

15

16

17

18

19

20

21

22

23

where

right

14

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 40 of 146
Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 41 of 146
6. Unsecured Priority Claim.

ElCheck this box ifyou have an unsecured priority claim

Amount entitledto priority $____________________________

Specify the priority ofthe claim:

El Wages,salaries, or commissions (up to 54,650), earned within oo days before

tiling ofthe bankruptcy petition or cessation ofthe debtor’, business, whichever

is earlier - II U.S.C. ~507(a)(3).

El Coatributiona to an employee benefit plan ti u.s.c. § 507(a)(4).

D Up to32,100 ofdepoails toward purchase, tease, orrental of property or

services f~rpersonal, family, or household use- 1 U.S.C. § 507(a)(6).

El Alimony. tnaintanance, or support owed to a specIe, former apouse. or child -

11 U.S.C. § 507(a)f7). El Taxes orpenalties owed in governmental units- 1: U.S.C. § 507(a)(8).

El Other. SpecU5r applicable paragraphof II U.S.C. 8

~Amoun(.gare subject to adjustment on 4/1/04 and eve!y 3 years thereafter edth

respect to cases commenced as or alter the date o,(adjassrment.

FORM BlO (Official Forri 10) (4/01)

UNITED STATES BANKJtUPTcY COURT Middle DISTRICT OF Alabama PROOF OF CLAIM

NameofDebtor I CaseNumber Terry }lfg.. Co.,, Inc..

03 32063 DIII’!

FI LED

SEP 2 8 2003

U.S. BANKRUPTCY COURT MO~4TSOMERY,ALABAMA

THis SPACS tS FOR COURT Us~ONLY

NOTE: This form should n,t be used to make a claim for sri a&ninistrative expense arising after the commencement

of the case. A “request” for payment of an administrative expense may be filed purauant to 11 U.S.C. § 503,

Name of Creditor (The pertosi or other entity to whom the debtor owes

money orproperty):

American & Efird, Inc.

[] Check box ifyou are aware that

anyone else hasfiled a proof of

claimrelating to your claim. Attach

copyofatatementgiving

particulars.

LI Cheek box if you havenever

received any noticesfrom the

bankruptcy courtin this case.

El Check box ifthe addressdiffers

from the address on the envelope

senttoyoubythecourt.

Name and addresswhere n )tioea should be sent:

American & Efird, Inc.,

P.O. Box 501

Mt. Holly, NC 28120

Telephonenumber g~wf~~‘s~ç~ ~

Account oc other number by which creditor identifies debtor:

88944

Check here

ifthis cirimEl laces a previouslyfiled claim, dated:_________

El amends

1. Basis for Claim El Retiree benefits as defmed in 11 U.S.C. § l114(a)

L~Goods sold El Wages, salaries, and compensation (fill out below)

o Services perfztrmed Your SS #:

o Money loanef

0 Personal injuy/wrongful death Unpaid compensation for services performed

o Taxes from to

o Other (date) (date)

2. Date debt was ircurred: 4 & 5 ‘03 3. If court judgment, date obtained:

4. Total Amount of Claim at Time Case Filed: $ ~g,ng~rj

If all or part of your claim is secured or entitled to priority, also complete Item 5 or 6 below.

0 Check this box if claim includes interest or other charges in addition to the principal amount ofthe claim. Attach iteimzed statement

of all interest or additional charges.

5. Secured Claim.

~ Check this box if your claim issecured by collateral (including a

right ofsetofi).

Brief Description ofCollateral:

0 Real Estate 0 Motor Vehicle

0 Other____________________________________

Value ofCollateral: _________________

Amount ofarrearage aidother charges at timeca~filed included in

securedclaim, ifany: $...__...

7. Credits: The amount of all payments on this claim nas been credited and Tms SPACE IS FOR COURT Usa ONLY

deducted for the purpose, of making this proof of claim.

8. Supporting Documents: Attach copies of supporting documents, such as

promissory notes, purchase orders, invoices, itemized statements of running

accounts, contracts, court judgments, mortgages, security agreements, and evidence

of perfection of lien, DO NOT SEND ORIGINAL DOCUMENTS. If the documents

are not available, explain. If the documents are voluminous, attach a summary,

9. Date-Stamped Copy: To receive an acknowledgment of the filing of your claim,

enclose a stamped, self-addressed envelope and copy of this proof of claim.

Date SiEn and p the namea ,ifany, ofthe creditor or other parson authorized to file

9/24/03 ~ it IIeavener-’~V. Pres

Penalty for prese,ttingfraudulenl claOn: Fioeofup to $500,000arimprisonmentforup to 5 years, orboth. 18 U.S.C. §~152and3571.

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 42 of 146
Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 43 of 146
FORM BlO (Official Form 10) (4101)

6. Unsecured Priority Claim.

ElCheck this box if youhave an unsecured priority claim

Amount entitled to priority $__________________________

Specify the priority ofthe claim:

El Wates, salaries, or commissions (up to $4,650),” earned within 90 days before

tIlIng ofthe bankruptcy petition orcessation ofthe debtors business, whichever

is earlier. II U.S.C. § S07(a)(3).

El Contributions to soemployee benefit plan- 11 U.S.C. § 507(a)(4).

~ Up to S2,100

5

ofdeposits toward purchase, lease, or rental ofpropesty or

serrices for personal, family, or household use- 11 U.S.C. § 507(a)(6).

LI Alimony, maintenance, orsuppore owed to a spouse, former spouse, or child11 U.S.C. § 507(a)(

7

).

[J Taxes or penalties owed to governmental units- It U.S.C.

Other - Specify applicable paragraph of 11 U.S.C. §

Amounts are subject to adjustment on 4/1/04 and every 3years thereafter ssdlh

respect Ia cases commenced on or atler (he date ofadjumlment.

UNITED STATES BANKRUPTCY COURT Middle DISTRICT OF Alabama PROOF CF CLAIM

Name ofDebtor I Case Number

j-i~t~/ ~ Co. 03 -.

FILED

JUL 2 2 2003

U.S. BANKRUPTCY coum

MONTGOMERY, Al_A13AMA

THis SPACS IS FOR COURT Usa ONLY

NOTE: This form should not be used to make a claim for an administrative expense arising after the commencement

ofthe case.. A “request” for payment of an administrative expense may be (sled pursuant to 11 U.S.C. § 503.

Name of Creditor (l’he person or other entity to whom the debtor owes

money orproperty):

C-A(C4~~k.t-~L1~‘~Au~1IF.~.

Check box ifyou are aware that

anyone else hasfiled a pntofof

claimrelating to your claim, Attach

copy ofstatement giving

particulars. 0 Check box ifyou have never

receivedanynoticesfromthe

bankruptcycourtin this case.

El Checkboxiftheaddressdiffers

from the address on the envelope

senttoyoubythecourt.

Name and address where noticesshouldbe sent:

CASLCRAi-T ~ ~JI t’~i~’

245 WEST COMMEP1:. ~

MOONACHIE, N~i: ‘

Telephone number: ~ 1 1 a-fl — 9~500

Account orother number by which creditoridentifies debtor:

(,~..-(~

Check here

if this claim~rej es a previously filed claim, dated:_________

0 amends

1. Basis for Claim 0 Retiree benefits as defined in 11 U.S.C. § 1114(a)

~ Goods sold 0 Wages, salaries, and compensation (fill out below)

O Services performed Your SS /1:

LI Money loaned

o Personal injury/wrongful death Unpaid compensation for services performed

El Taxes from ‘ to 0 Other (date) — (date)

2. Date debt was incurred: ~ ~ ~js4~3. if court judgment, date obtained:

Is

4. Total Amount of Claim at Time Case Filed: $ cZe~,SL1,71

If all or part of your claim is secured or entitled to priority, also complete Item 5 or 6 below.

0 Check this box if claim includes interest or other charges in addition to the principal amount of the claim. Attach itemized statement

ofall interest or additional charges.-~

5. Secured Claim.

U Check this box ifyour claimis securedby collateral (including a

right ofsetoff).

Brief Description ofCollateral:

U Real Estate El Motor Vehicle

0 Other____________________________________

Value of Collateral: $~

Amount ofarrearage and other chargesat time case filed included in

secured claim, if any: $_______________

7. Credits: The amount of all payments on this claim nas been credited and THIS SPAin IS FOR COURT UsE OHL?

deducted for the purpose of making this proof of claim.

8. Supporting Documents: Attach copies of supporting documents, such as

promissory notes, purchase orders, invoices, itemized statements of running

accounts, contracts, court judgments, mortgages, security agreements, and evidence

of perfection of lien. DO NOT SEND ORIGINAL DOCUMENTS. If the documents

are not available, explain. If the documents are voluminous, attach a summary.

9. Date-Stamped Copy: To receive an acknowledgment of the filing of your claim,

enclose a stamped, self-ad ed envelope and copy of this proof of claim.

Date Sign an ‘ t e and title, ifany, ofthe creditor or otherperson authorized to file

h4 I ~ I ~s’a ofpowerof attorney, ifany):

Penalty for presentingfraudulent claim: Fine of up to $500,000 or imprisonment thr up to 5 years, or both. 18 U.S.C. §~152 and 3571.

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 44 of 146
PHELPS DUNBARLLP

UNITE ~ ~ KRIJPTCY COURT (fltOD~A~ Dls39~ToF frctl?klM

r

Name of Debtor 65 ~nal I Case Nuni,ber.

~ ~ ~rMk~tJt~ ~ —

NOTE: ~g~~qu~uld not be used to thalis~a

ofthe case. A “request” For payment of an adittipfstratbo expense ~ U S.C. § 503.

Nimebftdresldrsrg~Thdp:rson or other entity to whom the debto~w~es( ~ are aaware proofthat of

money or property):

claimrelating to yourclaim. Attach

PROOF OF CLAIM

T~r4,~A4’..

tupclo, MS

1

G~ 515 FIL4~~.L

SEP 3 0 2003

U S. lsAt4tcR,(~’c~~R

~00I,t’~

‘~“~1~

THIs SPACE IS FOR COURT Usa ONLY

~kt~ ~!~vww.pl coovoifstatementgiving elp~~com

U Check box ifyou have never

received any notices from the

bankmptcy court in this case.

o Check box ifthe address differs

from the address on the envelope

sent to you by the court.

Name an t~ ~

t~~4~

ES INC.

245 WEST COMMERCIAL AVE.

MOOI”4ACHIE, NJ 07074

Telephone number: ~ I I -7;~e~~

Account or other numbes by which creditoridentifies debtor:

, I ç,’

Check here tjreplaces ifthis claim,~,amends a previously filed claim, dated

1. Basis for Claim O Retiree benefits as defined in II U.S.C. § 1114(a)

Goods sold o Wages, salaries, and compensation (fill out below)

O Services pcrformed Your SS #:

o Money loaned

0 Personal iniury/wrongful death Unpaid compensation for services performed

U Taxes

Other ~9ç~ç”, .~L ~ from (date) (date)

2. Date debt was incurred: ~3. If court judgment, date obtained:

VM.4b~&5i. c*~~7

4. Total Amount ef Claim at Time Case Filed: $ ~ 1~,

if all or part of ycur claim is secured or entitled to priority, also complete Item 5 or 6 below,

O Check this box ifilairti includes interest or other charges in addition to the principal amount ofthe claim. Attach itemized statement

of all interest or additional charges.

5. Secured Claim.

0 Check this box ifyour claim is securedby collateral (including a

right of setoff).

Brief Description of Collateral:

,

0 Real Estate [ Motor Vehicle

0 Other.._—_.___~-—.——

Value ofCollateral: .$____________________

Amount ofarrearag’: and other charges at time case filed included in

secured claim, ifany. S____

6. Unsecured Priority Claim.

0 Check this box if you have an unsecured prIority claim

Amount entitled to priority $ —

Specil~’the priority ofthe claim:

j Wages, salaries, or commissions (upto $4,650),* earnedwithin 90 days before

filisgofthe bankruptcy petition or crssation ofthe debtor’s business, whichever

is earlier- II U.S.C. S 5O7ta~3t.

0 Contributions to an employee benefit plan - II U.S.C. § 507(a)(4).

o Upen $2,100” ofdeposits towardpurchase, tease, orrental ofproperty or

servicrsfor personal, family, or household use - It U.S.C. § 5O7(n)(S),

O AlImony, maintenance, orsuppnst owedto a spouse, former spouse, or child -

it U.S.C. § 507(a)f7).

o laces or penaleies owed to governmental unite - II U.S.C. § 507(a)(8), ~J Other -Specifr applicable paragraph ofII U S.C. § 507(a)(......). 5

Amountn are subject toadjustment on 4/1/04 and evesy 3 years thereafter with

re-sped to cases commenced on or after she date ofudjustrnens.

7. Credits: The amount of all payments on this claim has been credited and

deducted for the purpose of making this proof of claim.

8. Supporting Documents: Attach copies of supporting documents, such as

promissory notes, purchase orders, invoices, itemized statements of running

accounts, contracts, court judgments, mortgages, security agreements, and evidence

of perfection o~lien. DO NOT SEND ORIGINAL DOCUMENTS. If the documents

are not available, explain. If the documents are voluminous, attach a summary.

9. Date-Stamped Copy: To receive an acknowledgment of the filing of your claim,

enciose a stamped, sclf-addresse envelope and copy of this proof of claim.

Titts Sp&ca ts FOR COURT USE ONLY

Date ~i~iiind prin n a title, if any, ofthe creditor or other person authorized to file

this cI ni(a co o wer ofattorney, ifany):

~ ~ AA-~~

Penalty for prc.venti faudu ant ‘m: Fine ofup to $500,000 or imprisonment for up to 5 years, or both. 18 U.S.C. §~152 and 3571.

FORM BlO (Official Font 10) (4/01)

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 45 of 146
Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 46 of 146
O Check box ifyou are aware

that anyone else has tileda

proofofelaim relatingto your

claim. Attach copy of

stalement giving particulars

O Check box ifyou have never

received any notices from the

bankruptcy court in this case.

(~l Check box if theaddress

differs from the addresson the

envelope sent to you by the

Court

United St~i.tesBankruptcy Court Middle District ofAlabama

Montgomery

Name of Debtor: Case Number~

TERRY MANUFACTURINGCOMPANY5INC. 03-32063

Note: This them shouldnot be us itt to make a claim foran administrative expense arising after the conunencementofthe case. A

“request” ofpayment ofan aelrniuistmtive expense maybe filed pursuant to 11 U.S.C. * 503. _______________________________

Name ofCreditor (The personor other entity towhom the debtor owes moneyor property)

United Parcel Service

Name and addresswhere notices should be sent:

United Parcel Service

do D&B/RMS Bankrupty Services

P.O. Box 4396

Timonium, Maryland 21094

Telephone Number: (410) 453~659l

Proof of Claim

FILED

OCT i? 2003

us ass~ogsu~’rcyCOVE?

ItONTOOM~RY,ALABAMA

Deputy Clark

This apace is for court use only

Account or othernumber by whit itcreditoridentifies debtor:

330095; 49X296

Check here Q Replaces

ifthis claim 0 Amends apreviously filed claim dated

I. Rasis For Claim

O Goods sold 0 Retireebenetitsasdefinedinll U.S.C.* 1114(a)

~ Setvices perfonned 0 Wages, salaries, and compensations (Fill out below) Your SS#

O Money loaned - - Unpaid Compensations for

O Personal injuly/ wrongful death services performed from_____ to

O Taxes

O Other (date) (date)

2. Date debt was incurred: 3. If court judgement ,date obtained:

SeeAttached

4. Total Amount ofClaim at Time Case Filed:

$ $93297.61

Ifall orpart ofyour claim is secured or entitled to priority, also complete item 5 or6 below

O Checkthis box ifclaim includesinterest or othercharges in addition to the principal amount ofthe claim. Attach itemized statement ofall interest or

additional charges

S. Secured Claim

O Cheek this box if your claimis secured by collateml

(including a sight ofsetafi).

Brief Description of ollatesal:

O Real llstate

O Motor Vehicle

o Other

5..-. ~ ue 0 0 toTe.

Mnount ofalTearage and oth it charges at timecase filed included in

secured claim above ifany:

~

6. Unsecured Priority Claim.

0 Check this box ifyou have an unsecured priority claim Amount entitled to

priority $__________________ Specific the priority of the claim:

a Wages, salaries, or commissions (up to $4000). ‘earned within 90 days before filing of

the bankruptcy petition or cessation ofthe debtor’s business, whichever is earlier — II

U.S. C. §507(a)(3)

0 Contribution toan employee benefit plait-II U.S.C. § 507 (a) (4)

0 Up so $1,500 ofdeposits towardpurchase, loose. Ce rental ofproperty or services for

personal, family, or household use-Il U.S.C. § S07(a~6) 0 Alimony, maintenance, orsupport owed to aspouse, former spouse. or child — II U.S.C. §

0 laxes or penalties ofgovernmental units-il U.S.C. §507 (aX6)

0 Other- Spec4~rapplicable pantgnsph of II U.S.C. § (a) (J

°Amotmnt.s are subJect to adjustment on 4/1/9.9and evez)~3yesrs thereafter

willrespect to cases commenced on or after the dateofadjtertment

7. Credits: The Amount of~11 payments on this claim hasbeen credited and deducted for the purpose of

making this pmofofclaium.

8. Supporting Documents: duds copies ofsupporting documents, suchas promissoty motes,purchase

others, invoices, itemized statements ofrunning accounts, contracts, court judgements, mortgages,

securityagreements, and rvidcncc of perfecting oflien.

9. Date-Stamped Copy: To receive anacknowledgement ofthe filing ofyourclaim, enclose a stamped,

self-addressed envelope and copy ofthis proofofclaim.

Thia space is for courtuse only

Da e Sign (snscliespyofpowerofattorney4 end print thename andtitle, ifsoy, oroilier authorizedto nte this claim

09/29/03 ~•~____________________________________________

‘ DsvtdJ L S~eet Creditor

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 47 of 146
S S

IN THE UNITED STATES BANKRUPTCY COURT

MIDDLE DISTRICT OF ALABAMA

In re: Case No. 03-32063

TERRY MANUFACTURING Chapter7

COMPANY, INC.

Debtor.

In re: CaseNo. 03-32213

TERRY UNIFORM Chapter7

COMPANY, LLC,

Debtor.

J. LESTER ALEXANDER ifi,

TRUSTEE OF TERRY

MANUFACTURING COMPANY, INC.

AND TERRY UNIFORM COMPANY,

LLC

Plaintiff, Adv. Pro. No. 04-3072-WRS

V.

BONIFAY MANUFACTURING INC.,

Defendant.

Summary Report of AEA Group, LLC

By: J. Lester Alexander, III

As ofFebruary 24,2005

EXH~B~T

3—A’

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 48 of 146
S S

Summary Report of AEA Group, LLC

By: J. Lester Alexander, III

Terry Manufacturing Company, Inc.,

Terry Uniform Company, LLC,

J~Lester Alexander,Ill, Trustee

V.

Bonifay Manufacturing Inc.

As ofFebruary 24,2005

This letter and the attached appendices are my report offindings to date in the above referenced

matter.

I am a certified public accountant and have approximately twenty-six years of professional

experience. I am a certified fraud examiner and I hold an accounting degree from the University

of Alabama. As a certified public accountant, I have experience in auditing which has required

the evaluation of accounts receivable aging and the collection of accounts receivable, both in

terms of the history ofthe client and the norms forthe relevant industry. I am the duly appointed

and acting Trustee of Terry Manufacturing Company, Inc. (“TMC”) and my compensation as

Trustee is subject to determination by the Court. I am the Managing Principal of AEA Group,

LLC. I was assisted by members of my firm who worked under my direction in performing this

analysis. Billing rates for AEA Group for this engagement range from $185 to $55 per hour. My

resume, including my testimony experience, is attached as an appendix to this report.

SCOPE

As to the above-referenced matter, I am presented as expert witness to report my findings

regarding the solvency of TMC; the nature and relationship of payments by TMC to Bonifay

Manufacturing, Inc. (“Bonifay”) with respect to the TMC bankruptcy; whether payments to

Bonlfay were or were not in the ordinary course of business; and whether the timing of TMC’s

payments to Bonifay were or were not typical of TMC’s industry classification. I utilized the

business records of TMC; to the extent they exist or could be recreated. Since July, 2003, 1 or

people under my direction have reconstructed the records pertaining to accounts payable of

TMC. In addition, I utilized certain case pleadings, bank records, business and financial records

produced by Bonifay, industry research and other information listed in an appendix to this report.

FiNDINGS AND OPINIONS

It is my understanding that pursuant to 11 U.S.C. § 547, TIVIC is presumed to have been

insolvent during the 90 days preceding its Chapter 11 filing on July 7, 2003. As a result of my

analysis, I have determined that TMC was insolvent throughout the ninety days preceding its

Chapter 11 filing with the amount ofTerry Manufacturing’s liabilities exceeding its assets by an

amount in excess of $30,000,000. In addition. if all of the proofs of claim filed in this case

2

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 49 of 146
S S

accurately state the amount ofindebtedness owed by TMC (and such proofof claims have been

filed under penalty of perjury), TMC’s liabilities exceeded the value ofits assets by more than

$60,000,000.

TMC made 6 payments to Bonifay totaling $107,713.15 during the 90 day preference period

preceding its Chapter 11 filing. Each payment to Bonifay was in satisfaction of an antecedent

debt. The payments made to IBonifay during the preference period permittedBonifay to receive

more than it would have received in a liquidation assuming the transfer had not been made, Had

Bonifay not received the payments and instead made an additional unsecured claim for these

amounts, it is certain that Bonifay would not receive a distribution equal to the challenged

payments.

Furthermore the payments made to Bonifay were not made in the ordinary course of business as

evidenced by the following:

‘ All payments were outside ofthe terms indicated on the relatedinvoice.

• The number of days between the related invoice date and the date the check cleared the

bank account ofTMC ranged from 138 days to 182 days.

• Analysis of actual payment history data for the textile industry shows that payments on

account were made in 39 to 41 days (median of companies reporting to Risk Management

Association forthe year ended March 31, 2003 and 2004, respectively).

• Analysis of actual trade receivables history for the Apparel arid Other Finished Products

segment of the textile industry during the second quarter of 2003 shows the median

number of days of sales outstanding were 55 days (median for companies reporting to

Credit Research Foundation.)

OTHER CONSIDERATIONS

My report is issued in accordance with the Management Consulting Standards of the American

Institute of Certified Public Accountants. This report is to be used solely in connection with

proceedingsrelated to the above referenced matter and should not be used for any otherpurpose.

Outside distribution of this report to others is not permitted without the written consent of AEA

Group, LLC. The information in this report is based on information learned through February 24,

2005. I reserve the right to consider any additional information that is presented to me. Further,

I reserve the right to supplement and amend my opinions for information learned up to and

throughout trial.

3

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 50 of 146
S S

Very truly yours,

By:___ ________

3. Lester Alexander, III, CPA

Chapter 7 Trustee

Terry Manufacturing Co. Inc and Terry Uniform, LLC

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 51 of 146
S S

Index of Appendices

Appendix A — Resume and testimony experience

Appendix B — Documents considered

Appendix C — Payments

5

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 52 of 146
S S

Appendix A Resume of J, Lester Alexander, III

Professional Experience

Mr. Alexander is the President and Managing Principal of AEA Group LLC, a consulting firm

specializing in accounting, economic and appraisal consulting. Mr. Alexander has approximately

twenty-six years of experience providing audit and advisory services to a wide range of entities,

stakeholders and governing boards. As a former PricewaterhouseCoopers LLP Partner, Mr.

Alexander has provided audit and advisory services to various types of companies including

financial services, manufacturing, healthcare, technology, real estate, contracting, and retail

companies. In addition Mr. Alexander has provided accounting, economic and appraisal consulting

services to clients in connection with investment transactions, public securities offerings, private

placement security offerings and debt offerings of various types. He holds a Bachelor of Science

in Accounting from the University ofAlabama and is a CertifiedPublic Accountant and aCertified

Fraud Examiner.

Mr. Alexander has provided services and, from time to time, expert testimony in various courts

and in situations involving alternative dispute resolution. He has provided services in connection

with contract disputes, security issues, insurance coverage issues, non-compete agreements, lost

profits, business valuation and various other matters. He has testified in connection with class

action certification hearings and class action fairness hearings. Mr.. Alexander’s experience

includes testimony about customary practices and standards of care in auditing, operating and

controlling business activities,

Mr. Alexander is experienced in the areas of business valuation, acquisition due diligence and

cost accounting matters. He has evaluated the value of ownership interests in businesses in

connection with acquisitions, disposals and disputes. He has performed suitability studies in

connection with investment transactions in a wide range offinancial instruments. In addition, he

has performed incremental cost studies, contribution margin studies and other applications of

cost accounting for clients in connection with new products, acquisitions, patent valuations and

evaluation of trademarks. This experience includes making projections of Incremental revenues

and costs in connection with profitability analysis of proposed business ventures, new products

and other profitability analysis for companies.

Mr. Alexander has advised governing bodies, committees and members on their role in

overseeing the activities of companies and senior management. His clients have included

publicly-traded companies, privately-held companies, governmental entities and tax-exempt

companies. He has advised governing bodies overseeing companies in the start-up/growth,

mature and restructuring phases ofoperational development. He has performed these services for

governing bodies overseeing companies operating in the manufacturing, healthcare, technology,

financial services,real estate, contracting, and retail industries.

6

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 53 of 146
S S

Professional/Business/Community Affiliations

Lecturer on Financial Damages — 2004 Cumberland Law School Continuing Education Seminar,

Birmingham Alabama

Lecturer on Financial and Business Fraud Schemes - 2004 Corporate Counsel Seminar,

Birmingham Alabama

Lecturer on Detecting Fraud Schemes — Fall Bankruptcy Seminar, Fall 2003, Alabama Bar

Continuing Education Series, Birmingham Alabama

Lecturer on Accountant’s View of Sarbanes Oxicy — 2003 Seminar, Alabama Bar Continuing

Education Series, Birmingham Alabama

Lecturer on Online Fraud Prevention — 2002 Institute ofManagement Accountants, Birmingham,

Alabama

Lecturer on Forensic Computer Investigation — 2001 Discovery Seminar, Alabama Bar

Continuing Education Series, Birmingham, Alabama

Lecturer on Online Business & Financial Research Methods — 2001 Federation ofInsurance &

Corporate Counsel’s Internet University, Napa, California

Lecturer on Identifying and Investigating Fraud — 2001 institute of Management Accountants,

Birmingham, Alabama

Lecturer on Interpreting Financial Statements — 1999 National Judicial College, Gulf Shores,

Alabama

Panelist on Consumer Fraud Issues — Coopers & Lybrand 1997 National Banking Conference,

Washington, DC

Panelist on Business Strategy and Planning -NASA Technology Transfer Conference, Jackson,

Mississippi

Lecturer on Business and Operational Controls — Institute ofManagement Accountants, Regional

Conference, GulfShores, Alabama

Lecturer on Online Discovery — Defense Research Institute’s 2001 Annual Meeting of Young

Lawyers, Miami, Florida

Lecturer on Online Expert Witness Research — 2001 Louisiana State Bar 17th Summer School

for Lawyers, Destin, Florida

7

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 54 of 146
S S

Professional/Business/Community Affiliations (continued)

Panelist on Business Strategy and Planning -NASA Technology Transfer Conference, Jackson,

Mississippi

Lecturer on Business and Operational Controls—Institute ofManagement Accountants,Regional

Conference, Gulf Shores, Alabama

Former National Practice Leader — Coopers & Lybrand’s Financial Services Consumer Dispute

Resolution Practice

Former Regional Service Line Leader — Coopers & Lybrand’s Litigation Consulting Services

Southern Region

Former Practice Leaderfor Dispute Analysis and Investigations - PricewaterhouseCoopers LLP,

Birmingham, Alabama

FormerMember - Banking and Insurance Industry Groups - PricewaterhouseCoopers LLP

American Institute ofCertifiedPublic Accountants

Alabama Society ofCertified Public Accountants

Florida Institute of Certified Public Accountants

Association of Certified Fraud Examiners

Associate Member-American BarAssociation

Commerce Ex~ecutiveSociety — University of Alabama

Past Regional Director — Exchange Club of Alabama

Past President, Secretary, Director and Treasurer — BirminghamBreakfast Exchange Club

Past Administrative Board Member and Finance Committee Member — Canterbury United

Methodist Church

8

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 55 of 146
S S

Testimony in Last Four Years

Vulcan Engineering, Inc. v. FATA Aluminum, Inc. (Federa’ Court, Michigan EasternDistrict)

Stockholders of Alalooska Inc. v. Performance Foods Group Companies (Arbitration. Atlanta,Georgia)

SouthTrustBank v. ServiceMaster DiversifiedHealth Services, LI’. (Federal District Court, northernDistrict of

Alabama-Southern Division)

Sabrina Abernathy, et al. v. Monsanto Company, et al. (Circuit Court of CalhounCounty, Alabama)

Central Parking System v. Alta Health and Life Insurance Company (ArbitrationHearing)

Susan K. Kearney v. Regions Bank (Federal Bankruptcy Court, Northern District of Alabama)

Union Iiea~thcare,Inc. ChapterII Bankruptcy Proceeding(‘United States Bankruptcy Court, Southern District of

Mississippi)

liMb Regal &Hamilton Companyof Alabama v.Werner Beiersdoerfer (Alabama District Court,Jefferson County)

Intergraph Corporation v. Bentley Software Systems, Inc (Circuit Court of Madison County, Alabama)

UBS PaineWebber, Inc. v. Roger H. Aiken, Michael S. l3oulos, Patrick 0. McQuilling and kG. Edwards& Sons,

Inc., et aL (Arbitration Hearing)

Vanderbilt Integrated ProvidersfNashvilleHealthcare Group, LLCand Vanderbilt University v.

Prudential Insurance Company of America, Inc. and Prudential Healthcare Plan, Inc. (United States District Court,

MiddleDistrict of Tennessee. Nashville)

Cothran Inc., James Cothran, Mary Lou Cethran v. Pali USA Lid, PaJi Linens,LLC, Loretto Pall &Richard Levine

(Circuit Court of Baldwin County, Alabama)

HydroPower Inc v. Eaton Manufacturing (Circuit Court ofJefferson County Alabama)

The Utilities Board of the City of Daphne v.City of Spanish Fort et al (Federal District Court, Southern District of

Alabama)

Compass Bank v. Blitz Media, Inc., et al. (United States District Court, The Northern District o~Alabama, Southern

Division)

Steward Machine V. White Oak, et aL (United States District Court, Connecticut)

RefrigeratedConstruction Services v. Coldmatic Building Systems. Inc. et al (United StatesDistrict Court, Northern

District of Alabama, Southern Division)

ABB Automation, Inc. V. DeVries, et al. (Circuit Courtof Jefferson County)

Proliance, bc, v. City of Huntsville (Circuit Court of Madison County, Alabama)

Steve Jamison, et al- v. Kerr-McGee Corporation, et al. (State Court. Mississippi)

Mason Dillard et al v Bellsouth Advertising et al (Circuit Court of Jefferson County, Alabama)

Vesta Insurance v. A-CEICigna (ArbitrationRearing)

9

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 56 of 146
S S

Appendix 13- Documents Considered

Proofs ofclaim and filings in the bankruptcy proceedings

Pleadings filed to date in adversaryproceeding

Defendant account statements and correspondence

Documents produced to date by defendant

Bank statements and enclosures for TMC

Risk Management Association Financial Statement Studies 2004/2005

National Summary of Domestic Trade Receivables,Credit Research Foundation, Second Quarter

2003

Documents listed on the index ofdocuments located at the Trustee’s office which is available for

inspection.

10

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 57 of 146
Invoice Invoice

No. Date

18788 10/17/2002

18790 10/22/2002

18791 10/23/2002

18794 10/24/2002

18797 10/28/2002

18799 1012912002

18799 10/29/2002

18803 10/31/2002

18810 11/7/2002

18815 11/8/2002

18820 11/13/2002

18822 11/18/2002

18822 11/1812002

18825 11/20/2002

18831 11/21/2002

18835 12/5/2002

18835 12/5/2002

18838 12/9/2002

18839 12110/2002

18842 12/12/2002

18847 12/17/2002

18847 12/17/2002

18848 12/18/2002

18853 1/8/2003

Date of

Due Date Payment*

11/16/2002 4/9/2003

11/21/2002 4/9/2003

11/22/2002 4/9/2003

11/23/2002 4/9/2003

11/27/2002 4/9/2003

11/28/2002 41912003

4/9/2003

11/28/2002 4/29/2003

11/30/2002 4/29/2003

12/7/2002 4/29/2003

12/8/2002 4/29/2003

12/13/2002 4/29/2003

12/18/2002 4/29/2003

4/29/2003

12118(2002 519/2003

12/20/2002 5/9/2003

12/21/2002 5/9/2003

1/4/2003 5/9/2003

5/9/2003

1/4/2003 5/15/2003

118/2003 5/15/2003

1/9/2003 5/15/2003

1/1 1/2003 5/15/2003

1/16/2003 Sf15/2003

5/15/2003

1/16/2003 5/30/2003

1/17/2003 5/30/2003

2/7/2003 5/30/2003

5/3 0/2003

2/7/2003 6/9/2003

2/7/2003 6/9/2003

2/8/2003 6/9/2003

2/14/2003 6/9/2003

Check Invoice

______ Amount’

2,490.90

3,453.85

2,7 18.30

8,385.37

2,969.60

2,739.98

71427

71427

71427

71427

71427

71427

71427

71631

71631

71631

71631

71631

71631

71631

71790

71790

71790

71790

71790

71829

71829

71829

71829

71829

71829

71998

71998

71998

71998

72142

72142

72142

72142

Days from

Invoice to

Honor of

Check

174

169

168

167

163

162

Days

Past

Due

144

139

138

137

133

132

S S

Appendix C

Terry Manufacturing Company, Inc.,

Bonifay Manufacturing Inc.

Preference Payments

Check

Amount

22,758.00

315.95 182 152

4,486.91 180 150

5,340.78 173 143

4,668.30 172 142

4,342.95 167 137

3,534.65 162 132

22,689.54

347.18 172 142

4,981.34 170 140

2,983.36 169 139

2,402.44 155 125

10,714.92

5,214.15 161 131

4,229,91 157 127

3,454.21 156 126

4,272.99 154 124

3,836.43 149 119

21,007.69

681.51 164 134

6,681.74 163 133

3,179.75 142 112

10,543.00

35.54 152 122

3,807.39 152 122

239.49 151 121

4,482.04 145 115

18853

18854

18857

18861

1/8/2003

1/8/2003

1/9/2003

1/15/2003

11

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 58 of 146
S S

Terry Manufacturing Company, Inc.,

Bonifay Manufacturing Inc.

Preference Payments

(Continued)

Days from

Invoice to Days

Invoice Invoice Date of Check Invoice Check Honor of Past

No. Date Due Date Pajment* # Amount Amount -~ Check Due

18863 1/16/2003 2/15/2003 6/9/2003 72142 4,851.86 144 114

18866 1/21/2003 2/20/2003 6/912003 72142 4,354.67 139 109

18868 1/22/2003 2/21/2003 6/9/2003 72142 2,229.01 138 108

6/9/2003 72142 ___________ 20,000.00

107,713.15 107,713.15

*Payrnent deemed to occur on the date check is honored.

“~‘Allocationof payment to specific invoices according toPayment History by Bonifay Manufacturing Inc.

12

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 59 of 146
Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 60 of 146
S

IN THE UNITED STATES BANKRUPTCY COURT

MIDDLE DISTRICT OF ALABAMA

In re: CaseNo. 03-32063

TERRY MANUFACTURING Chapter 7

COMPANY, INC.

Debtor.

Inre: Case No. 03-32213

TERRY UNIFORM Chapter 7

COMPANY, LLC,

Debtor.

J. LESTERALEXANDER III,

TRUSTEE OF TERRY

MANUFACTURING COMPANY, INC.

AND TERRY UNIFORM COMPANY,

LLC

Plaintiff, Adv. Pro. No. 04-3068-WRS

V.

HLC INDUSTRIES,

Defendant.

Summary Report of AEA Group, LLC

By: J. Lester Alexander, III

As of February 24, 2005

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 61 of 146
S S

Summary Report ofAEA Group, LLC

By: J. Lester Alexander, III

Terry Manufacturing Company, Inc.,

Terry Uniform Company, LLC,

J. Lester Alexander, III, Trustee

V.

HLC Industries,

As ofFebruary 24, 2005

This letter and the attached appendices are my report offindings to date in the above referenced

matter.

I am a certified public accountant and have approximately twenty-six years of professional

experience. I am a certified fraud examiner and I hold an accounting degree from the University

of Alabama. As a certified public accountant, I have experience in auditing which has required

the evaluation of accounts receivable aging and the collection of accounts receivable, both in

terms ofthe history ofthe client and the norms forthe relevant industry. I am the duly appointed

and acting Trustee of Terry Manufacturing Company, Inc. (“TMC”) and my compensation as

Trustee is subject to determination by the Court. I am the Managing Principal of ABA Group,

LLC. I was assisted by members ofmy firm who worked under my direction in performing this

analysis. Billing rates for ABA Group for this engagementrange from $185 to $55 per hour. My

resume, including my testimony experience, is attached as an appendix to this report.

SCOPE

As to the above-referenced matter, I am presented as expert witness to report my findings

regarding the solvency of TMC; the nature and relationship of payments by TMC to HLC

Industries (“HLC”) with respect to the TMC bankruptcy; whether payments to HLC were or

were not in the ordinary course of business; and whether the timing ofTMC’s payments to HLC

were or were not typical of TMC’s industry classification. I utilized the business records of

TMC; to the extent they exist or could be recreated. Since July, 2003, I or people under my

direction have reconstructed the records pertaining to accounts payable of TMC. In addition, I

utilized certain case pleadings, bank records, business and financial records produced by HLC,

industry research and other information listed in an appendix to this report.

FINDINGS AND OPINIONS

It is my understanding that pursuant to 11 U.S.C. § 547, TMC is presumed to have been

insolvent during the 90 days preceding its Chapter 11 filing on July 7, 2003. As a result of my

analysis, I have determined that TMC was insolvent throughout the ninety days preceding its

Chapter 11 filing with the amount ofTerry Manufacturing’s liabilities exceeding its assets by an

amount in excess of $30,000,000. In addition, if all of the proofs of claim filed in this case

2

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 62 of 146
S S

accurately state the amount ofindebtedness owed by TMC (and such proofs of claim have been

filed under penalty of perjury), TMC’s liabilities exceeded the value of its assets by more than

$60,000,000.

TMC made 13 payments to HLC totaling $916,262.04 during the 90 day preference period

preceding its Chapter 11 filing. Each payment to HLC was in satisfaction of an antecedent debt.

The payments made to HLC during the preference period permitted HLC to receive more than it

would have received in a liquidation assuming the transfer had not been made. Had HLC not

received the payments and instead made an additional unsecured claim for these amounts, it is

certain that HLC would not receive a distribution equal to the challenged payments.

Furthermore the payments made to HLC were not made in the ordinary course of business as

evidenced by the following:

• All 13 of the payments were for past due invoices, and were outside of the indicated

payment terms.

• The number of days between the related invoice date and the date the check cleared the

bank account of TMC ranged from 104 days to 290 days.

• Analysis of actual payment history data for the textile industry shows that payments on

account were made in 39 to 41 days (median of companies reporting to Risk Management

Association for the year ended March 31, 2003 and 2004, respectively).

• Analysis of actual trade receivables history for the textile mill segment of the textile

industry during the second quarter of 2003 shows the median number of days of sales

outstanding were 47 days (median for companies reporting to Credit Research

Foundation).

• Of the thirteen payments made by TMC to HLC during the 90 day preference period,

nine payments were made using post dated trade acceptances. The trade acceptances

evidenced TMC’s obligation to make payment and served as a pre-authorized payment

against TMC’s bank account in exactly the same fashion as an ordinary check. For

example, all nine payments were signed by the maker; contained an unconditional

promise or order to pay a sum certain in money and no other promise, order, obligation or

power given by the maker; was payable at a definite time; and was payable to order

exactly the same as an ordinary check. Furthermore, all nine payments were drawn on

TMC’s bank and payable to the holder on demand exactly the same as an ordinary check.

Moreover, all nine ofthe post dated trade acceptances were tendered to HLC to settle old,

past due invoices, and not for a bona fide, contemporaneous commercial transaction,

Based on documentation included with the payments, the payments were marked up by

amounts ranging from 7% to 2.5% above the related HLC invoice.

3

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 63 of 146
S S

OTHER CONSIDERATIONS

My report is issued in accordance with the Management Consulting Standards ofthe American

Institute of Certified Public Accountants. This report is to be used solely in connection with

proceedings related to the above referenced matter and should not be used for any other purpose.

Outside distribution ofthis report to others is not permitted without the written consent of AEA

Group, LLC. The information in this report is based on information learned through February 24,

2005. Accordingly, I reserve the right to consider any additional information that is presented to

meincluding, but not limited to, defendant’s production which, as of this date, has not been

received by me. It is my understanding that the defendant began producing documents late

yesterday and, as ofthis date, I have received no production, nor is there adequate time to review

same. Further, Ireserve the right to supplement and amend my opinions for information learned

up to and throughout trial.

Very truly yours,

By:_____________

J. Lester Alexander, III, CPA

Chapter 7 Trustee

Terry Manufacturing Co. Inc and Terry Uniform, LLC

4

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 64 of 146
, S

Index ofAppendices

Appendix A — Resume and testimony experience

Appendix B — Documents considered

Appendix C — Payments

5

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 65 of 146
, S

Appendix A Resume ofJ. Lester Alexander, III

Professional Experience

Mr. Alexander is the President and Managing Principal of AEA Group LLC, a consulting firm

specializing in accou1ting,e~Qromic~ndappraisal cousujting. Mr. Alexander has approximately

twenty-six years of experience providing audit and advisory services to a wide range of entities,

stakeholders and governing boards. As a former PricewaterhouseCoopers LLP Partner, Mr.

Alexander has provided audit and advisory services to various types of companies including

financial services, manufacturing, healthcare, tecimology, real estate, contracting, and retail

companies. In addition Mr. Alexander has provided accounting, economic and appraisal consulting

services to clients in connection with investment transactions, public securities offerings, private

placement security offerings and debt offerings of various types. He holds a Bachelor of Science

in Accounting from the University ofAlabama and is a Certified Public Accountant and a Certified

Fraud Examiner.

Mr. Alexander has provided services and, from time to time, expert testimony in various courts

and in situations involving alternative dispute resolution. He has provided services in connection

with contract disputes, security issues, insurance coverage issues, non-compete agreements, lost

profits, business valuation and various other matters. He has testified in connection with class

action certification hearings and class action fairness hearings. Mr. Alexander’s experience

includes testimony about customary practices and standards of care in auditing, operating and

controlling business activities.

Mr. Alexander is experienced in the areas of business valuation, acquisition due diligence and

cost accounting matters. He has evaluated the value of ownership interests in businesses in

connection with acquisitions, disposals and disputes. He has performed suitability studies in

connection with investment transactions in a wide range offinancial instruments. In addition, he

has performed incremental cost studies, contribution margin studies and other applications of

cost accounting for clients in connection with new products, acquisitions, patent valuations and

evaluation oftrademarks. This experience includes making projections of incremental revenues

and costs in connection with profitability analysis of proposed business ventures, new products

and other profitability analysis for companies.

Mr. Alexander has advised governing bodies, committees and members on their role in

overseeing the activities of companies and senior management. His clients have included

publicly-traded companies, privately-held companies, governmental entities and tax-exempt

companies. He has advised governing bodies overseeing companies in the start-up/growth,

mature and restructuring phases ofoperational development. He has performed these services for

governing bodies overseeing companies operating in the manufacturing, healthcare, technology,

financial services, real estate, contracting, and retail industries.

6

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 66 of 146
, S

Professional/Business/Community Affiliations

Lecturer on Financial Damages — 2004 Cumberland Law School Continuing Education Seminar,

Birmingham Alabama

Lecturer on Financial and Business Fraud Schemes - 2004 Corporate Counsel Seminar,

Birmingham Alabama

Lecturer on Detecting Fraud Schemes — Fall Bankruptcy Seminar, Fall 2003, Alabama Bar

Continuing Education Series, Birmingham Alabama

Lecturer on Accountant’s View of Sarbanes Oxley — 2003 Seminar, Alabama Bar Continuing

Education Series, Birmingham Alabama

Lecturer on Online Fraud Prevention — 2002 Institute ofManagement Accountants, Birmingham,

Alabama

Lecturer on Forensic Computer Investigation — 2001 Discovery Seminar, Alabama Bar

Continuing Education Series, Birmingham , Alabama

Lecturer on Online Business & Financial Research Methods — 2001 Federation ofInsurance &

Corporate Counsel’s Internet University, Napa, California

Lecturer on Identifying and Investigating Fraud — 2001 Institute of Management Accountants,

Birmingham, Alabama

Lecturer on Interpreting Financial Statements — 1999 National Judicial College, Gulf Shores,

Alabama

Panelist on Consumer Fraud Issues — Coopers & Lybrand 1997 National Banking Conference,

Washington, DC

Panelist on Business Strategy and Planning -NASA Technology Transfer Conference, Jackson,

Mississippi

Lecturer on Business and Operational Controls — Institute ofManagement Accountants, Regional

Conference, Gulf Shores, Alabama

Lecturer on Online Discovery — Defense Research Institute’s 2001 Annual Meeting of Young

Lawyers, Miami, Florida

Lecturer on Online Expert Witness Research — 2001 Louisiana State Bar 17th Summer School

for Lawyers, Destin, Florida

7

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 67 of 146
, S

Professional/Business/Community Affiliations (continued)

Panelist on Business Strategy and Planning -NASA Technology Transfer Conference, Jackson,

Mississippi

Lecturer on Business and Operational Controls — Institute ofManagement Accountants, Regional

Conference, Gulf Shores, Alabama

Former National Practice Leader — Coopers & Lybrand’s Financial Services Consumer Dispute

Resolution Practice

Former Regional Service Line Leader — Coopers & Lybrand’s Litigation Consulting Services

HLC Region

Former Practice Leader for Dispute Analysis and Investigations - PricewaterhouseCoopers LLP,

Birmingham, Alabama

Former Member - Banking and Insurance Industry Groups - PricewaterhouseCoopers LLP

American Institute ofCertified Public Accountants

Alabama Society ofCertified Public Accountants

Florida Institute ofCertified Public Accountants

Association ofCertified Fraud Examiners

Associate Member-American Bar Association

Commerce Executive Society — University of Alabama

Past Regional Director — Exchange Club ofAlabama

Past President, Secretary, Director and Treasurer — Birmingham Breakfast Exchange Club

Past Administrative Board Member and Finance Committee Member — Canterbury United

Methodist Church

8

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 68 of 146
, S

Testimony in Last Four Years

Vulcan Engineering, Inc. v. FATA Aluminum, Inc. (Federal Court, Michigan Eastern District)

Stockholders of Alalooska Inc. v. Performance Foods Group Companies (Arbitration, Atlanta, Georgia)

SouthTrust Bank V. ServiceMasterDiversified Health Services, L.P. (Federal District Court, Northern District of

Alabama-HLC Division)

Sabrina Abernathy, et al. v, Monsanto Company, et al. (Circuit Court ofCalhoun County, Alabama)

Central Parking System v. Alta Health and Life Insuràin~é~Cö~h~any (Arbitration Hearing)

Susan K. Kearney v. Regions Bank (Federal Bankruptcy Court, Northern District of Alabama)

Union Healthcare, Inc. Chapter 11 Bankruptcy Proceeding (United States Bankruptcy Court, HLC District of

Mississippi)

Hilb Rogal & Hamilton Company of Alabama v. Werner Beiersdoerfer (Alabama District Court, Jefferson County)

Intergraph Corporation v. Bentley Software Systems, Inc (Circuit Court ofMadison County, Alabama)

UBS PaineWebber, Inc. v.Roger H. Aiken, Michael S. Boulos, Patrick G. McQuilling and A.G. Edwards & Sons,

Inc., et a!. (Arbitration Rearing)

Vanderbilt Integrated Providers/Nashville Healthcare Group, LLC and Vanderbilt University v.

Prudential Insurance Company of America, Inc. and Prudential Healthcare Plan, Inc. (United States District Court,

Middle District of Tennessee, Nashville)

Cothran Inc., James Cothran, Mary Lou Cothran v. Pali USA Ltd, Pali Linens, LLC, Loretto Pali & Richard Levine

(Circuit Court ofBaldwin County, Alabama)

HydroPower Inc v. Eaton Manufacturing (Circuit Court ofJefferson County Alabama)

The Utilities Board ofthe City of Daphne v. City of Spanish Fort et a! (Federal District Court, HLC District of

Alabama)

Compass Bank v. Blitz Media, Inc., et a!, (United States District Court, The Northern District of Alabama, HLC

Division)

Steward Machine v. White Oak, et al. (United States District Court, Connecticut)

Refrigerated Construction Services v. CoidmaticBuilding Systems, mc, et al (United States District Court, Northern

District of Alabama, HLC Division)

ABB Automation, Inc. v. DeVries, et al. (Circuit Court ofJefferson County)

Proliance, Inc. v. City of Huntsville (Circuit Court of Madison County, Alabama)

Steve Jamison, et a!. V. Kerr-McGee Corporation, et al. (State Court, Mississippi)

Mason Dillard et al V Bellsouth Advertising et al (Circuit Court ofJefferson County, Alabama)

Vesta Insurance v. ACE/Cigna (Arbitration Hearing)

9

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 69 of 146
,

Appendix B - Documents Considered

Proofs ofclaim and filings in the bankruptcy proceedings

Pleadings filed to date in adversary proceeding

Defendant account statements and correspondence

Documents produced to date by defendant

Bank statements and enclosures for TMC

Risk Management Association Financial Statement Studies 2004/2005

National Summary ofDomestic Trade Receivables, Second Quarter 2003, Credit Research

Foundation

Documents produced to date or made available by Trustee

Actrade Capital, Inc. “Trade Acceptance Draft Program Buyer Acknowledgement,” signed on

behalfofTerry Manufacturing Company, Inc. by Roy Terry.

Uniform Commercial Code ofNew York, § 3-104.

10

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 70 of 146
, ,

Appendix C

Terry Manufacturing Company, Inc.,

HLC Industries, Inc.

Preference Payments

Days

from

Invoice to Days

Invoice Invoice Date of Invoice Amount Check Honor of Past

No. Date Due Date Payment2 Check # Amount Applied Amount Check Due

H33487’ 8/16/2002 11/14/2002 4/8/2003 139449 253,485.58 84,494.39 90,409.00 235 145

H33470’ 7/26/2002 10/24/2002 4/10/2003 139321 93,545.98 31,181.31 33,364.00 258 168

H33677 12/31/2002 3/31/2003 4/14/2003 71463 2,486.91 2,486.91 2,486.91 104 14

H33678 12/31/2002 3/31/2003 4/15/2003 71464 204,548.83 100,000.00 100,000.00 105 15

H33678 12/31/2002 3/31/2003 4/15/2003 71465 204,548.83 104,548.83 104,548.83 105 15

H33476’ 8/3/2002 11/1/2002 4/22/2003 139352 226,525.71 75,508.41 80,794.00 262 172

H3346317/20/2002 10/18/2002 4/25/2003 139250 139,228.30 46,409.61 49,658.28 279 189

H33684 1/11/2003 4/11/2003 5/2/2003 71694 34,672.83 34,672.83 34,672.83 111 21

H335l519/10/2002 12/9/2002 5/5/2003 139549 241,664.49 80,554.21 86,193.00 237 147

H33487’ 8/16/2002 11/14/2002 5/8/2003 139450 253,485.58 84,494.39 90,409.00 265 175

H33470’ 7/26/2002 10/24/2002 5/12/2003 139322 93,545.98 31,183.36 33,366.19 290 200

H33662112/10/2002 3/10/2003 5/14/2003 140037 232,103.88 116,051.71 118,953.00 155 65

H33539’ 9/21/2002 12/20/2002 5/14/2003 139568 256,281.94 85,427.10 91,407.00 235 145

877,013.06 916,262.04

I -Original Invoice number and date. Invoice subsequently modified by appending ‘R” to invoice number and altering invoice date.

2- Payment deemed to occur on the date check is honored.

11

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 71 of 146
Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 72 of 146
IN THE UNITE]) STATES BANKRUPTCY COURT

MIDDLE DISTRICT OF ALABAMA

In re: Case No. 03-32063

TERRY MANUFACTURiNG Chapter 7

COMPANY, INC.

Debtor.

In re: Case No. 03-32213

TERRY UNIFORM Chapter 7

COMPANY, LLC,

Debtor.

J. LESTER ALEXANDER III,

TRUSTEE OF TERRY

MANUFACTURING COMPANY, INC

AND TERRY UNIFORM COMPANY,

LLC

Plaintiff, Adv. Pro. No. 04-3081-WRS

v.

SOUTHERN MILLS, INC

Defendant.

Summary Report of AEA Group, LLC

By: J. Lester Alexander, III

As ofFebruary 17, 2005

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 73 of 146
Summary Report of AEA Group, LLC

By: J, Lester Alexander, III

Terry Manufacturing Company, Inc.,

Terry Uniform Company, LLC,

J, Lester Alexander, III, Trustee

V.

Southern Mills, Inc.

As ofFebruary 17, 2005

This letter and the attached appendices are my report of findings to date in the above referenced

matter.

I am a certified public accountant and have approximately twenty-four years of professional

experience. I am a certified fraud examiner and I hold an accounting degree from the University

of Alabama. As a certified public accountant, I have experience in auditing which has required

the evaluation of accounts receivable aging and the collection of accounts receivable, both in

terms of the history of the client and the norms for the relevant industry. I am the duly appointed

and acting Trustee of Terry Manufacturing Company, Inc. (“TMC”) and my compensation as

trustee is subject to determination by the court. I am the Managing Principal of AEA Group,

LLC. I was assisted by members of my firm who worked under my direction in performing this

analysis. Billing rates for ABA Group for this engagement range from $185 to $55 per hour. My

resume, including my testimony experience, is attached as an appendix to this report.

SCOPE

As to the above-referenced matter, I am presented as expert witness to report my findings

regarding the solvency of TMC; the nature and relationship of payments by TMC to Southern

Mills, Inc. (“Southern”) with respect to the TMC bankruptcy; whether payments to Southern

were or were not in the ordinary course ofbusiness; and whether the timing of TMC’s payments

to Southern were or were not typical of TMC’s industry classification. I utilized the business

records of TMC; to the extent they exist or could be recreated. Since July, 2003, I or people

under my direction have reconstructed the records pertaining to accounts payable of TMC. In

addition, I utilized certain case pleadings, bank records, business and financial records produced

by Southern, industry research and other information listed in an appendix to this report.

FINDINGS AND OPINIONS

It is my understanding that pursuant to 11 U.S.C. § 547, TMC is presumed to have been

insolvent during the 90 days preceding its Chapter 11 filing on July 7, 2003. As a result of my

analysis, I have determined that TMC was insolvent throughout the ninety days preceding its

Chapter 11 filing with the amount of Terry Manufacturing’s liabilities exceeding its assets by an

amount in excess of $30,000,000. In addition, if all of the proofs of claim filed in this case

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 74 of 146
accurately state the amount ofindebtedness owed by TMC (and such proofs of claim have been

filed under penalty of peijury), TMC’s liabilities exceeded the value of its assets by more than

$45,000,000.

TMC made 8 payments to Southern totaling $981,808.29 during the 90 day preference period

preceding its Chapter 11 filing. Each payment to Southern was in satisfaction of an antecedent

debt. The payments made to Southern during the preference period permitted Southern to receive

more than it would have in a liquidation assuming the transfer had not been made. Had Southern

not received the payments and instead made an additional unsecured claim for these amounts, it

is certain that Southern would not receive a distribution equal to the challenged payments.

Furthermore the payments made to Southern were not made in the ordinary course of business as

evidenced by the following:

• All of the payments were for past due invoices, and were outside of the indicated

payment terms.

The number of days between the related invoice date and the date the check cleared the

bank account ofTMC ranged from 135 daysto 286 days.

The date of each payment was later than the delinquent date indicated on the related

invoice.

• Analysis of actual payment history data for the textile industry shows that payments on

account were made in 39 to 41 days (median of companies reportingto Risk Management

Association for the year ended March 31, 2003 and 2004, respectively).

Analysis of actual trade receivables history for the textile mill segment of the textile

industry during the second quarter of 2003 shows the median number of days ofsales

outstanding were 47 days (median for companies reporting to Credit Research

Foundation).

~ Southern and TMC entered into a letter agreement dated March 25, 2003 that provided

for “special terms and conditions.” The letter agreement was signed by Roy Terry on

March 26, 2003, which is approximately 13 days before the 90 period prior to TMC’s

bankruptcy filing on July 7, 2003.

• Two checks (#70805 for $156,600 and #71985 for $125,915.22) were listed as “NSF” by

Southern on its Proof ofClaim. These checks were returned “NSF” per overdraft notices

issued by TMC’s bank on March 3, 2003 and May 28, 2003 respectively.

2

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 75 of 146
OTHER CONSIDERATIONS

My report is issued in accordance with the Management Consulting Standards ofthe American

Institute of Certified Public Accountants. This report is to be used solely in connection with

proceedings related to the above referenced matter and should not be used for any other purpose.

Outside distribution ofthis report to others is not permitted without the written consent of ABA

Group, LLC. The information in this report is based on information learned through February 17,

2005. I reserve the right to consider any additional information that is presented to me. Further,

I reserve the right to supplement and amend my opinions for information learned up to and

throughout trial.

Very truly yours,

By:______

J. Lester Alexander, ifi, CPA

Chapter 7 Trustee

Terry Manufacturing Co. Inc and Terry Uniform, LLC

3

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 76 of 146
Appendix A Resume ofJ Lester Alexander, III

Professional Experience

Mr. Alexander is the President and Managing Principal of ABA Group LLC, a consulting firm

specializing in accounting, economic and appraisal consulting. Mr. Alexander has approximately

twenty-four years of experience providing audit and advisory services to a wide range of entities,

stakeholders and governing boards. As a former PricewaterhouseCoopers LLP Partner, Mr.

Alexander has provided audit and advisory services to various types of companies including

financial services, manufacturing, healthcare, technology, real estate, contracting, and retail

companies. In addition Mr. Alexander has provided accounting, economic and appraisal consulting

services to clients in connection with investment transactions, public securities offerings, private

placement security offerings and debt offerings ofvarious types. He holds a Bachelor of Science

in Accounting from the University of Alabama and is a Certified Public Accountant and aCertified

Fraud Examiner.

Mr. Alexander has provided services and, from time to time, expert testimony in various courts

and in situations involving alternative dispute resolution. He has provided services in connection

with contract disputes, security issues, insurance coverage issues, non-compete agreements, lost

profits, business valuation and various other matters. He has testified in connection with class

action certification hearings and class action fairness hearings. Mr. Alexander’s experience

includes testimony about customary practices and standards of care in auditing, operating and

controlling business activities.

Mr. Alexander is experienced in the areas of business valuation, acquisition due diligence and

cost accounting matters. He has evaluated the value of ownership interests in businesses in

connection with acquisitions, disposals and disputes. He has performed suitability studies in

connection with investment transactions in a wide range of financial instruments. In addition, he

has performed incremental cost studies, contribution margin studies and other applications of

cost accounting for clients in connection with new products, acquisitions, patent valuations and

evaluation of trademarks. This experience includes making projections ofincremental revenues

and costs in connection with profitability analysis of proposed business ventures, new products

and other profitability analysis for companies.

Mr. Alexander has advised governing bodies, committees and members on their role in

overseeing the activities of companies and senior management. His clients have included

publicly-traded companies, privately-held companies, governmental entities and tax-exempt

companies. He has advised governing bodies overseeing companies in the start-up/growth,

mature and restructuring phases ofoperational development. He has performed these services for

governing bodies overseeing companies operating in the manufacturing, healthcare, technology,

financial services, real estate, contracting, and retail industries.

5

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 77 of 146
Professional/Business/Community Affiliations

Lecturer on Financial Damages — 2004 Cumberland Law School Continuing Education Seminar,

Birmingham Alabama

Lecturer on Financial and Business Fraud Schemes - 2004 Corporate Counsel Seminar.

Birmingham Alabama

Lecturer on Detecting Fraud Schemes — Fail Bankruptcy Seminar, Fall 2003, Alabama Bar

Continuing Education Series, Birmingham Alabama

Lecturer on Accountant’s View of Sarbanes Oxley — 2003 Seminar, Alabama Bar Continuing

Education Series, Birmingham Alabama

Lecturer on Online Fraud Prevention — 2002 Institute ofManagement Accountants, Birmingham,

Alabama

Lecturer on Forensic Computer Investigation — 2001 Discovery Seminar, Alabama Bar

Continuing Education Series, Birmingham , Alabama

Lecturer on Online Business & Financial Research Methods — 2001 Federation ofInsurance &

Corporate Counsel’s Internet University, Napa, California

Lecturer on Identifying and Investigating Fraud — 2001 Institute of Management Accountants,

Birmingham, Alabama

Lecturer on Interpreting Financial Statements — 1999 National Judicial College, Gulf Shores.

Alabama

Panelist on Consumer Fraud Issues — Coopers & Lybrand 1997 National Banking Conference,

Washington, DC

Panelist on Business Strategy and Planning -NASA Technology Transfer Conference, Jackson,

Mississippi

Lecturer on Business and Operational Controls — Institute of Management Accountants, Regional

Conference, GulfShores, Alabama

Lecturer on Online Discovery — Defense Research Institute’s 2001 Annual Meeting of Young

Lawyers, Miami, Florida

Lecturer on Online Expert Witness Research — 2001 Louisiana State Bar 17th Summer School

for Lawyers, Destin, Florida

6

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 78 of 146
Professional/Business/Community Affiliations (continued)

Panelist on Business Strategy and Planning -NASA Technology Transfer Conference, Jackson,

Mississippi

Lecturer on Business and Operational Controls — Institute of Management Accountants, Regional

Conference, Gulf Shores, Alabama

Former National Practice Leader — Coopers & Lybrand’s Financial Services Consumer Dispute

Resolution Practice

Former Regional Service Line Leader — Coopers & Lybrand’s Litigation Consulting Services

Southern Region

Former Practice Leader for Dispute Analysis and Investigations - PricewaterhouseCoopers L ~P.

Birmingham, Alabama

Former Member - Banking and Insurance Industry Groups - PricewaterhouseCoopers LLP

American Institute of Certified Public Accountants

Alabama Society ofCertified Public Accountants

Florida Institute ofCertified Public Accountants

Association ofCertified Fraud Examiners

Associate Member-AmericanBar Association

Commerce Executive Society — University ofAlabama

Past Regional Director — Exchange Club of Alabama

Past President, Secretary, Director and Treasurer — Birmingham Breakfast Exchange Club

Past Administrative Board Member and Finance Committee Member — C:anterbury United

Methodist Church

7

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 79 of 146
Testimony in Last Four Years

Vulcan Engineering, Inc. v. FATA Aluminum, Inc. (Federal Court, Michigan Eastern District)

Stockholders ofAlalooska Inc. v. Performance Foods Group Companies (Arbitration, Atlanta, Georgia)

Southlrust Bank v. ServiceMaster Diversified Health Services, L.P, (Federal District Court, Northern District of

Alabama-Southern Division)

Sabrina Abernathy, et al. v. Monsanto Company, et a!. (Circuit Court of Calhoun County, Alabama)

Central Parking System V. Alta Health and Life Insurance Company (Arbitration Hearing)

Susan K. Kearney v. Regions Bank (Federal Bankruptcy Court, Northern District of Alabama)

Union Healthcare, Inc. Chapter 11 Bankruptcy Proceeding (United States Bankruptcy Court, Southern District of

Mississippi)

Hilb Rogal & Hamilton Company ofAlabama v. Werner Beiersdoerfer (Alabama District Court, Jefferson County)

Intergraph Corporation v. Bentley Software Systems,Inc (Circuit Court of Madison County, Alabama)

UBS PaineWebber, Inc. v. Roger H. Aiken, Michael S. Boulos, Patrick G. McQuilling and A.G. Edwards & Sons,

Inc., et al. (Arbitration Hearing)

Vanderbilt Integrated Providers/Nashville Healthcare Group, LLC and Vanderbilt University v.

Prudential Insurance Company of America, Inc. and Prudential Healthcare Plan, Inc. (United States District Court,

Middle District ofTennessee, Nashville)

Cothran Inc., James Cothran, Mary Lou Cothran v. Pali USA Ltd, Pali Linens, LLC, Loretto Pali & Richard Levine

(Circuit Court of Baldwin County, Alabama)

HydroPowerInc v. Eaton Manufacturing (Circuit Court ofJefferson County Alabama)

TheUtilities Board of the City of Daphne v. City of Spanish Fort etal (Federal District Court, Southern District of

Alabama)

Compass Bank v. Blitz Media,Inc., et al. (United States District Court, The Northern District ofAlabama, Southern

Division)

Steward Machine v. White Oak, et al. (United States District Court, Connecticut)

Refrigerated Construction Services v. Coidmatic Building Systems, mc, et al (United States District Court, Northern

District of Alabama, Southern Division)

ABB Automation, Inc. V. DeVries, et al. (Circuit Court of Jefferson County)

Proliance, Inc. v. City ofHuntsville (Circuit Court ofMadison County, Alabama)

Steve Jamison, et al. v. Kerr-McGee Corporation, et a!. (State Court, Mississippi)

Mason Dillard et al v Bellsouth Advertising et al (Circuit Court of Jefferson County, Alabama)

VestaInsurance v. ACE/Cigna (Arbitration Hearing)

8

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 80 of 146
Documents Considered

Proofs ofclaim and filings in the bankruptcy proceedings

Pleadings filed to date in adversaryproceeding

Defendant account statements and correspondence

Documents produced to date by defendant

Bank statements and enclosures for TMC

Risk Management Association Financial Statement Studies 2004/2005

National Summary ofDomestic Trade Receivables, Second Quarter 2003, Credit Research

Foundation

9

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 81 of 146
Terry Manufacturing Company, Inc.,

Southern Mills, Inc.

Preference Payments

Days

Invoice Invoice Date of Invoice Amount Check Days from Invoice Past

No. Date Due Date Payment’ Check# Amount Applied 2 Amount to Honor of Check Due

206610 8t20/2002 ~‘ 4/9/2003 99,271.58 46,796.72 232

207253 9/4/2002 4/9/2003 87,436.68 6,078.28 217

4/9/2003 52,875.00

207253 9/4/2002 4/14/2003 87,436.68 56.58 222 162

211287 11/30/2002 4/14/2003 31,432.51 31,432.51 135 125

206947 8/27/2002 4/14/2003 124,684.63 124,684.63 230 170

208528 10/1/2002 4/14/2003 123,120.00 6,078.28 195 135

4/14/2003 162,252.(X)

207253 9/4/2002 4/24/2003 87,436.68 57,991.95 232 172

4/24/2003 57,991.95

207254 9/4/2002 4/28/2003 39,629.16 39,629.16 236 176

207583 9/10/2002 4/28/2003 122,380.86 122,380.86 230 170

207902 9/17/2002 4/28/2003 92,163.54 14,532.18 223 163

4/28/2003 176,542.20

207253 9/4/2002 5/6/2003 87,436.68 23,309.87 244 184

207902 9/17/2002 5/6/2003 92,163.54 77,631.36 231 171

208224 9/24/2002 5/6/2003 125,511.91 93,407.47 224 164

5/6/2003 194,348.70

208224 9/24/2002 5/15/2003 125,511.91 32,104.44 233 173

207903 9/17/2002 5/15/2003 27,300.91 27,300.91 240 180

208528 10/1/2002 5/15/2003 123,120.00 21,594.65 226 166

5/15/2003 81,000.00

2 12233 12/31/2002 5/20/2003 36,494.62 36,494.62 140 130

208528 10/1/2002 5t20/2003 123,120.00 90,216.74 231 171

5/20/2003 126,711.36

204781 7/16/02 02/28/03 119,340.89 101,720.47 280 220

204547 7/10/02 02/28/03 31,156.85 31,156.85 286 226

208557 9/30/02 02/28/03 23,722.68 23,722.68 204 194

(156,600.00)

NSF Check #70805 ~ 156,600.00 130,087.08

4/22/2003 71569 130,087.08

981,808.29

1 . Payment deemed to occur on the date check is honored.

2 - Payment allocation per Southern MillsCustomer Statements and FinanceCharge Invoices for dates referenced.

3 . Per Southern Mills Proof ofClaim and Finance Charge Invoice dated 2/28t2003

4 . Payment deemed to occuron date replacement check honored. Cheekii 71569, as replacement for NSF Cheek # 70805,

5 . Asshown on Proofofclaim, the amount ofReplacement check # 71569 is $26,405.56 less than check ~7O8O5.

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 82 of 146
Cash

Accounts receivables

Inventories

Land and building

Fixed assets

431 Building

Land sold to Rudolph Terry

Total Assets

Subordinated note payable

Capital tease obligation

Totalliabilities

Liabilities exceed Assets

L Using Reconstructed Records -

July 7, 2003

$ 236,000 I

December31, 2002

$ 1,596,000

855,000 ~°

556,000 2

300,000 2

354,000 2

3,629,000 3,490,000 ~

62,469,000

$ (58,808,000)

83ç~’

66,195,000

$ (63,894,000)

Bank statements as ofperiod end.

2

Actual sale ofproperty, before selling cost.

3

Perclaims registerfiledwith Bankruptcy Court.

‘Estimated based on July 7, 2003 accounts payable minus net cash flow from operations for the six months ending July 7, 2003,

‘Statement provided by lender.

‘Sale leaseback between Paul Marshall and Terry Manufacturing Co., Inc. in June 2001 of$1,000,000. The obligation is $1,000,000 less payments made to date.

7

Fonn 1120, Schedule L, asfiled with the Internal RevenueService.

‘Inventorymarked up to estimated value assuming goods were finished, Inventory markup was determineed using gross receipts and disbursements other than thoseclassified asselling, insurance, utilities, other disbursements, and salary wages

(including 28% benefit/tax load)

‘Land subsequentlysold to Rudolph Terry on August 4,2000with a cost basis of$215,594.

~ collections from customers sinceJuly 7, 2003.

~ Total liabilities exclude lease and contingent liabilities including, but not limited, to leases having gross annual rents in 2002 of $268,000 excluding Marshall lease. I~EXH~Bff

H 311

Fair Value of Assets and Liabilities

(Rounded to the nearestthousand)

II

855,000 10

556,000 2

300,000 2

354,000 2

2,301,000 3,661,000

Accounts payable 41,945,000 ~‘ 40,215,000

Notes payable 19,791,000 17,899,000

Based upon Income Tax Returns I

December 31, 2001 December 31, 2000 December31, 1999 December31, 1998

$ 163,000 ‘ $ 137,000 ~

S 224,000 “ $ 394,000 ‘

2,713,000 ~ 2,107,000 2,356,000 2,648,000 “

8,014,000 ~ 7,348,000 8

6,375,000 ~ 6,677,000

300,000 2

300,000 2 300,000 2 300,000

2

354,000 2

-

354,000 2

1,000,000 6

~

354,000 2 354,000

1,000,000 6 1,000,000

341,000 ~ 341,000

2

6

“

11,544,000 11,246,000 10,950,000 11,714,000

3,818,000 3,808,000 ~ 3,907,000 3,635,000

19,270,000 “ 13,086,000 “ 14,886,000 “ 7,684,000 “

3,155,000 ~ 3,335,000 ~ 3,500,000 3,500,000 ‘

945,000 - .- —

27,188,000 20,229,000 22,293,000 14,819,000

$ (15,644,000) $ (8,983,000) S (11,343,000) S (3,105,000)

8651)00 6

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 83 of 146
FOSHEE & TURNER COURT REPORTERS

Page 1

1 IN THE UNITED STATES BANKRUPTCY COURT

2 FOR THE MIDDLE DISTRICT OF ALABAMA

ORIGINAL

5 IN RE: Case No.

6 TERRY MANUFACTURING 03-32063-WRS

7 COMPANY, INC., Chapter 7

8 Debtor.

9

10 IN RE: Case No.

11 TERRY UNIFORM 03-32213-WRS

12 COMPANY, L.L.C., Chapter 7

13 Debtor.

14

15 J. LESTER ALEXANDER, III, TRUSTEE,

16 Plaintiff,

17 vs. Adv. Pro. No.

18 THE BANK OF WEDOWEE, 04-03062

19 Defendant.

20

21 DEPOSITION TESTIMONY VIA TELEPHONE OF:

22 JAMES F. HENDERSON

23 Job #41132

EXHIB~T

A Legalink Company * 1933 Richard Arrington Jr. Blvd. S.*Birmingham, AL 35209 * 2 ~

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 84 of 146
FOSFIEE & TURNER COURT REPORTERS

Page 6

1 I, Lane C. Butler, a Court

2 Reporter and Notary Public, State of

3 Alabama at Large, acting as Notary,

4 certify that on this date, pursuant to

5 the Federal Rules of Civil Procedure and

6 the foregoing stipulation of counsel,

7 there came before me at the offices of

8 AEA Group, LLC, Two Twentieth Street

9 North, Suite 1400, Birmingham, Alabama

10 35203, commencing at approximately 10:00

11 a..m., on the 24th day of June, 2005,

12 JAMES F. HENDERSON, witness in the above

13 cause, for oral examination, whereupon

14 the following proceedings were had:

15

16 JAMES F. HENDERSON,

17 being first duly sworn, was examined and

18 testified as follows:

19

20 EXAMINATION BY MR. BARRIERE:

21 Q. Good morning again,

22 Mr. Henderson. My name is Brent

23 Barriere, I represent Lester Alexander,

A Legalink Company * 1933 Richard Arrington Jr. Blvd. S. * Birmingham, AL 35209 * www.legalink.com

1~800-888-DEPO

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 85 of 146
FOSHEE & TURNER COURT REPORTERS

Page 7

1 who is the trustee of Terry Manufacturing

2 and the plaintiff, as trustee, in

3 litigation against People’s Bank, Bank of

4 Tuskegee, and Bank of Wedowee, I’m going

5 to be asking you a number of questions

6 here today, the first of which: Have you

7 previously been deposed?

8 A. No.

9 Q. All right. Well, let me briefly

10 explain the rules of engagement. I will

11 be asking you a series of questions. I

12 will need an oral response so the

13 stenographer can pick it up. This is as

14 if you’re testifying in a court of law.

15 You’re subject to the rules with respect

16 to perjury. If at any time during the

17 course of the deposition, my questions

18 are ambiguous or confusing, please so

19 advise me, and I will attempt to restate

20 them in a more lucid manner.

21 My first subsequent question,

22 sir, is: Can you state your full name

23 and address, please.

A Legalink Company * 1933 Richard Arrington Jr. Blvd. S. * Birmingham, AL 35209 * www.legalink.com

1-800-888--DEPO

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 86 of 146
FOSHEE & TURNER COURT REPORTERS

Page 8

1 A. My official name is James F.

2 Henderson, Jr. I go by the name of

3 Frank. My address at the office, 1

4 Waits Drive Industrial Park, Andalusia,

5 Alabama 36420, My home address is

6 Antioch Road, Andalusia, Alabama 36420.

7 Q. And by whom are you employed,

8 sir?

9 A. Henderson Sewing Machine Company,

10 Inc.

11 Q. And what is your position with

12 Henderson Sewing Machine Company, Inc.?

13 A. Vice president and CEO.

14 Q. Okay. How long have you been

15 employed by Henderson Sewing Machine?

16 A. Since 1976.

17 Q. All right. Sir, in connection

18 with today’s deposition, I sent, through

19 Mr. Vogtle, a notice to you requesting

20 certain documents. I’ll ask the court

21 reporter to mark that as Henderson

22 Exhibit No. 1. Am I correct that you

23 have brought with you today a number of

A Legalink Company * 1933 Richard Arrington Jr. Blvd. S. * Birmingham, AL 35209 * www.legalink.com

1-800-888-DEPO

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 87 of 146
FOSHEE & TURNER COURT REPORTERS

Page 71

1 I were him, to get the maximum value for

2 that factory, would be to try to market

3 it as a going concern to one of these

4 people. The reason I gave him Mr. Hodo’s

5 name and phone number is because I knew

6 at that particular point in time they

7 were trying to expand that product.

8 Q. “That product” being government

9 contract work?

10 A. The government contract product

11 work. They had more production than they

12 could do on the equipment they had, And

13 I believed that they could for -- Bill

14 Long could get more value than what I

15 could offer him, even though I knew that

16 I would be -- that I would not get this

17 price. Because I have to take a product,

18 put it on the trucks, bring it back to

19 our location, refurbish the equipment,

20 stand a chance of selling it or not

21 selling it over a number of years. And I

22 have a limited marketplace for that

23 product. That’s why I believe the value

A Legalink Company * 1933 Richard Arrington Jr. Blvd. S. ~ Birmingham, AL 35209 * www.legalink.com

1-800-888-DEPO

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 88 of 146
FOSHEE & TURNER COURT REPORTERS

Page 72

1 was $91,760.

2 Q. Are you able to offer to us today

3 what the fair market value -- a

4 nonliquidation value, a fair market value

5 would have been as of that time?

6 A. If I owned that equipment,

7 probably at that time, I would have most

8 likely sold it for somewhere in the

9 range -- after we refurbished and all the

10 other things, somewhere in the range of

11 $200,000.

12 Q. So is that, in your opinion, what

13 the fair market value was as of July

14 2003?

15 A. I can’t say exact. But I would

16 say within close proximity.

17 Q. Okay. Would that be within a

18 range of plus or minus ten percent?

19 A. Sure.

20 Okay. Would that have been the

21 fair market value of that equipment, as

22 of January 1, 1999?

23 A. In my opinion, yes.

A Legalink Company * 1933 Richard Arrington Jr. Blvd. S. * Birmingham, AL 35209 * www.legalink.com

1-800-888-DEPO

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 89 of 146
FOSHEE & TURNER COURT REPORTERS

Page 73

1 Q. Would that have been the value of

2 that equipment between January 1, 1999,

3 and July 2003?

4 A. Yes.

5 Q. Thank you very much, sir,

6

7

8 END OF DEPOSITION

9 (11:30 a.m.)

10

11

12

13

14

15

16

17

18

19

20

21

22

23

A Legalink Company * 1933 Richard Arrington Jr. Blvd. S. * Birmingham, AL 35209 * www.legalink.com

1-800-888-DEPO

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 90 of 146
Resume of J. Lester Alexander, III

Professional Experience

Mr. Alexander is the President and Managing Principal of AEA Group LLC, a consulting firm

specializing in accounting, economic and appraisal consulting. Mr. Alexander has approximately

twenty-six years of experience providing audit and advisory services to a wide range of entities,

stakeholders and governing boards. As a former PricewaterhouseCoopers LLP Partner, Mr.

Alexander has provided audit and advisory services to various types of companies including

financial services, manufacturing, healthcare, technology, real estate, contracting, and retail

companies. In addition Mr. Alexander has provided accounting, economic and appraisal consulting

services to clients in connection with investment transactions, public securities offerings, private

placement security offerings and debt offerings of various types. He holds a Bachelor of Science in

Accounting from the University of Alabama and is a Certified Public Accountant and a Certified

Fraud Examiner.

Mr. Alexander has provided services and, from time to time, expert testimony in various courts and

in situations involving alternative dispute resolution. He has provided services in connection with

contract disputes, security issues, insurance coverage issues, non-compete agreements, lost profits,

business valuation and various other matters. He has testified in connection with class action

certification hearings and class action fairness hearings. Mr. Alexander’s experience includes

testimony about customary practices and standards of care in auditing, operating and controlling

business activities.

Mr. Alexander is experienced in the areas of business valuation, acquisition due diligence and cost

accounting matters. He has evaluated the value of ownership interests in businesses in connection

with acquisitions, disposals and disputes. He has performed suitability studies in connection with

investment transactions in a wide range of financial instruments, In addition, he has performed

incremental cost studies, contribution margin studies and other applications of cost accounting for

clients in connection with new products, acquisitions, patent valuations and evaluation of

trademarks. This experience includes making projections of incremental revenues and costs in

connection with profitability analysis of proposed business ventures, new products and other

profitability analysis for companies.

Mr. Alexander has advised governing bodies, committees and members on their role in overseeing

the activities of companies and senior management. His clients have included publicly-traded

companies, privately-held companies, governmental entities and tax-exempt companies. He has

advised governing bodies overseeing companies in the start-up/growth, mature and restructuring

phases of operational development. He has performed these services for governing bodies

overseeing companies operating in the manufacturing, healthcare, technology, financial services,

real estate, contracting, and retail industries.

Professional/Business/Community Affiliations

EXH~B~T

Iii

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 91 of 146
Lecturer on Financial Damages - 2004 Cumberland Law School Continuing Education Seminar,

Birmingham Alabama

Lecturer on Financial andBusiness Fraud Schemes - 2004 Corporate Counsel Seminar,Birmingham

Alabama

Lecturer on Detecting Fraud Schemes - Fall Bankruptcy Seminar, Fall 2003, Alabama Bar

Continuing Education Series, Birmingham Alabama

Lecturer on Accountant’s View of Sarbanes Oxley - 2003 Seminar, Alabama Bar Continuing

Education Series, Birmingham Alabama

Lecturer on Online Fraud Prevention - 2002 Institute of Management Accountants, Birmingham,

Alabama

Lecturer on Forensic Computer Investigation - 2001 Discovery Seminar, AlabamaBar Continuing

Education Series, Birmingham , Alabama

Lecturer on Online Business & Financial Research Methods - 2001 Federation of Insurance &

Corporate Counsel’s Internet University, Napa, California

Lecturer on Identifying and Investigating Fraud - 2001 Institute of Management Accountants,

Birmingham, Alabama

“Expert Witness Research Post Kumho Tire”, presented at the American Bar Association’s 2000

Annual Meeting, New York, New York

Lecturer on Interpreting Financial Statements - 1999 National Judicial College, Gulf Shores,

Alabama

Panelist on Consumer Fraud Issues - Coopers & Lybrand 1997 National Banking Conference,

Washington, DC

Panelist on Business Strategy and Planning -NASA Technology Transfer Conference, Jackson,

Mississippi

Lecturer on Business and Operational Controls - Institute of Management Accountants, Regional

Conference, Gulf Shores, Alabama

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 92 of 146
Lecturer on Online Discovery - Defense Research Institute’s 2001 Annual Meeting of Young

Lawyers, Miami, Florida

Lecturer on Online Expert Witness Research - 2001 Louisiana State Bar 17th Summer School for

Lawyers, Destin, Florida

Panelist on Business Strategy and Planning -NASA Technology Transfer Conference, Jackson,

Mississippi

Lecturer on Business and Operational Controls - Institute of Management Accountants, Regional

Conference, Gulf Shores, Alabama

Former National Practice Leader - Coopers & Lybrand’s Financial Services Consumer Dispute

Resolution Practice

Former Regional Service Line Leader - Coopers & Lybrand’s Litigation Consulting Services

Southern Region

Former Practice Leader for Dispute Analysis and Investigations - PricewaterhouseCoopers LLP,

Birmingham, Alabama

FormerMember - Banking and Insurance Industry Groups - PricewaterhouseCoopers LLP

American Institute ofCertified Public Accountants

Alabama Society ofCertified Public Accountants

Florida Institute ofCertified Public Accountants

Association ofCertified Fraud Examiners

Associate Member-American Bar Association

Commerce Executive Society - University of Alabama

Past Regional Director - Exchange Club of Alabama

Past President, Secretary, Director and Treasurer - Birmingham Breakfast Exchange Club

Past Administrative Board Member andFinance Committee Member- CanterburyUnitedMethodist

Church

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 93 of 146
Testimony in Last Four Years

Vulcan Engineering, Inc. v. FATA Aluminum, Inc. (Federal Court, Michigan Eastern District)

Stockholders of Alalooska Inc. v. Performance Foods Group Companies (Arbitration, Atlanta,

Georgia)

SouthTrust Bank v. ServiceMaster Diversified Health Services, L.P. (Federal District Court,

Northern District of Alabama-Southern Division)

SabrinaAbernathy, et al. v. Monsanto Company, etal. (Circuit Court ofCalhoun County, Alabama)

Central Parking System v. Alta Health and Life Insurance Company (Arbitration Hearing)

Susan K. Kearney v. Regions Bank (Federal Bankruptcy Court, Northern District of Alabama)

Union Healthcare, Inc. Chapter 11 Bankruptcy Proceeding (United States Bankruptcy Court,

Southern District of Mississippi)

Hilb Rogal & Hamilton Company of Alabama v. Werner Beiersdoerfer (Alabama District Court,

Jefferson County)

Intergraph Corporation v. Bentley Software Systems, Inc (Circuit Court of Madison County,

Alabama)

UBS PaineWebber, Inc. v. Roger H. Aiken, Michael S. Boulos, Patrick G. McQuilling and A.G.

Edwards & Sons, Inc., et a!. (Arbitration Hearing)

Vanderbilt Integrated Providers/Nashville Healthcare Group, LLC and Vanderbilt University v.

Prudential Insurance CompanyofAmerica, Inc. and Prudential Hea!thcare Plan, Inc. (United States

District Court, Middle District of Tennessee, Nashville)

Cothran Inc., James Cothran, Mary Lou Cothran v. Pali USA Ltd, Pali Linens, LLC, Loretto Pali &

Richard Levine (Circuit Court ofBaldwin County, Alabama)

HydroPower Inc v. Eaton Manufacturing (Circuit Court of Jefferson County Alabama)

The Utilities Board of the City of Daphne v. City of Spanish Fort et al (Federal District Court,

Southern District of Alabama)

Compass Bank v. Blitz Media, Inc., et a!. (United States District Court, The Northern District of

Alabama, Southern Division)

Steward Machine v. White Oak, et a!. (United States District Court, Connecticut)

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 94 of 146
RefrigeratedConstruction Services v. Coldmatic Building Systems, Inc, et al (United States District

Court, Northern District of Alabama, Southern Division)

ABB Automation, Inc. v. DeVries, et a!. (Circuit Court ofJefferson County)

Proliance, Inc. v. City of Huntsville (Circuit Court of Madison County, A!abama)

Steve Jamison, et a!. v. Kerr-McGee Corporation, et a!. (State Court, Mississippi)

Mason Dil!ard et a! v Bellsouth Advertising et a! (Circuit Court of Jefferson County, Alabama)

Vesta Insurance v. ACE/Cigna (Arbitration Hearing)

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 95 of 146
~.

PURCHASE MONEY

PROMISSORY NOTE

$200,000.00 Greensboro, Georgia November 10, 2000

FOR VALUE RECEIVED, the undersignedpromise to pay to the order ofN. D,

HORTON, JR. AND JAMES M. REYNOLDS, ifi, equally (“Holder”) the principal sum of

Two Hundred Thousand and No/i 00 Dollars ($200,000.00) with interest from date at the rate of

Nine and One-Halfpercent (9.5%) per annum, interest only payable monthly, beginning

December 10, 2000, and monthly thereafter through November 10, 2001, thenpayable in 18

equal monthly installments ofprincipal, plus accrued interest in the amount of$11,965.42

beginning December 10,2001, and monthly thereafter with a final installment ofprincipal and all

accrued but unpaidinterest due onMay 10, 2003, (the “MaturityDate”).

Principal and interest arepayable at 2561 Lake OconeeParkway, Greensboro, Georgia

30642 or at such otherplace as the Holder hereofmay designate in writing.

Should payment notbe paid when due, or should the Maker, or Makers, hereoffail to

comply with any ofthe terms or requirements ofa Pledge Agreement ofeven dateherewith, the

entire unpaid principal sum evidenced bythis note, with all accrued interest, shall at the option of

the Holder, and without notice to theundersigned, becomedue and may be collected forthwith,

time being ofthe essence ofthis contract. It is further agreed that failure ofthe Holder to

exercise this right ofaccelerating thematurity ofthe debt, or indulgence grantedform time to

time, shall in no event be considered as a waiver ofsuch right ofaccelerationor estop the Holder

from exercising such right.

In case this note is collected bylaw, as through an attorney at law, all costs ofcollection,

including fifteenpercent (15%) oftheprincipal and interest as attorney’s fees, shall be paidby the

Makerhereof.

And each ofus, whetherMaker, endorser, guarantor, or surety, hereby severally waives

and renounces,for himselfand family, any and all exemption rights either ofus, or the family of

either ofus, may have under or byvirtue ofthe Constitution or laws ofGeorgia, or any other

State, or the UnitedStates, as against this debt or any renewal thereof and each further waives

demand, protest and notice ofdemand, protest and non-payment.

In case ofdefault in the payment ofthe notewhen due, and in case the Holder ofthis note

should elect onaccount ofsuch default, to declare the unpaidbalance ofthe principal sum due

and payable, saidprincipal sum, or so much thereofas may remain unpaid at the time ofsuch

AmR.Est 00265

8

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 96 of 146
default, shall bear interest at the rate offifteen percent (15%) per annum from the date ofsuch

default.

Purchase Money SecurityInterest: To secure payment ofthis note and any other

indebtedness ofthe Maker to Holder, whether now or existing or arising hereinafter, the Maker

hereby delivers, pledges, assigns, conveys and transfers to the Holder the following described

property (hereinafterreferred to as collateral):

The undersigned’s right, title and interest in and to:

1. All ofthe undersigned’s common stock in Perky Cap Company, Inc., including

but not limited to Certificate Number ~,l (~1f~7TC)shares).

This contract is to be construed in all respects and enforcedaccording to the laws ofthe

State ofGeorgia.

Prepayment Privilege: Makermay prepay in whole orin part at any timewithout penalty.

If all or any part ofthe property describedin the aforementioned Security Agreement or

any interest in itis sold ortransferred withoutHolder’s priorwritten consent, Holder may at its

optionrequire immediate payment ofall sums owing hereunder.

Signed, sealed and delivered by the undersigned the date first above written.

__________________(Seal)

MileP.. Robinson

do Post Office Box 648

924 South Street

Roanoke, Alabama 36274

(205) 863-8835 (facsimile)

R.\MTh\WPtS\SOO1\i94~nc~.-rbAnicm.~.pd

AmR.Est 00266

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 97 of 146
Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 98 of 146
BILL OF SALE OF COMMON STOCK

For and in consideration ofthe sum ofTwo Hundred Thousand Dollars ($200,000.00)

evidenced by Promissory Note from Granteeto Grantors and applicable securitydocuments, the

undersigned N. D. Horton, Jr. and James M Reynolds, ifi, Grantors do hereby transfer unto Allie

R. Robinson, Grantee, Nine Thousand Shares (10%) ofthe outstanding Common Stock ofPerky

Cap Company, Inc. and by these presents do bargain, sell, conveyand set over unto Grantee the

aforesaid Stock.

The undersigned warrant that said Stock is unencumbered and theyshall take such action

as is necessary to transfer the same on the books ofthe Company.

In Witness Whereof, the undersigned have hereunto set their hands and affixed their seals

this the 10th day ofNovember,.2000.

AmR.Est 00270

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 99 of 146
Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 100 of 146
PLEDGE AGREEMENT

This Agreement made this /0 day of November, 2000, by and between Allie R.

Robinson, hereinafter Pledgor, and N. D. Horton,Jr. and James M. Reynolds, III, 2561 Lake

Oconee Parkway, Greensboro, Georgia 30642, hereinafterPledgee;

W I T N E S S E T H:

Whereas, Pledgee has loaned to Pledgor the sum ofTwo Hundred Thousand andNo/I 00

Dollars ($200,000.00)for thepurchase ofCommon Stock ofPerky Cap Company as ofNovember

10, 2000 (Loan Documents); and

Whereas, in orderto inducethePledgeeto make such loan, Pledgor hasagreed to pledgethe

Common Stock hereinaftermentioned to the Pledgee assecurity for the repayment ofsaid loan.

Now Therefore, it is agreed between the parties as follows:

1.

Inconsideration ofthe loan made by Pledgee to the Pledgor as hereinbefore mentioned,the

Pledgor hereby delivers to the Pledgee Ten percent ownership in Perky Cap Company,Inc., a

Georgia Corporation represented by CertificateNo. ~3L( ~~1~cQO shares), together with that certain

Pledge Agreement/Irrevocable Limited Power ofAttorney and Assignment, and do hereby assign

such Common Stock and Certificate to thePledgee and do herebyappoint Pledgee astheirtrue and

lawful attorney for them and in their name, place and stead to cause said Common Stock to be

transferred on the books ofthe said Perky Cap Company to the name ofthe Pledgee.

2.

The Pledgee shall hold said Common Stock as security for the repayment ofthe aforesaid

loan and loan incentives as described in the Loan Documents, together with interest thereon, shall

not at any time dispose ofsuch Common Stock or encumber the same, except as herein otherwise

provided.

3.

Pledgorshall repaythe indebtednessand loanincentivesto thePledgeewith interest thereon

according to the terms contained in said Loan Documents.

AmR.Est 00454

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 101 of 146
4.

At all times whilePledgeeis theholder ofsaid CommonStock,the Pledgorshall receive any

dividends distributed thereon. Provided such dividends shall be approved by Pledgee.

5.

While the Pledgee is the holder ofsaid Common Stock, the Pledgorshall have the right to

vote the same at meetings of Perky Cap Company so long as they are not in default in the

performance ofany ofthe terms ofthis Agreement, thepayment oftheprincipal and interest ofthe

said loan orunder the terms ofthat certainLoan Agreement by and amongthe parties hereto (Loan

Documents).

6.

Upon the repayment ofthe entire amount of the loan and interest as herein provided and

satisfaction ofthe Stock Option - Put/Call and equity return guarantee, the Pledgeeshall transfer to

the Pledgor the Stock Certificate pledged hereunder.

7.

In the event that the Pledgor shall fail to perform any ofthe terms ofthis Agreement orto

makepayment oftheprincipaland interest ofsaid loan asrequired pursuant to the terms ofsaid loan

as evidenced in the Note, fails to comply with the terms ofthe Loan Agreement or default on any

ofthe Loan Documents, Pledgee may, upon thirty (30) days notice in writing to the Pledgor by

Registered Mail,sell any orall oftheCommon Stock herein mentioned in such manner and forsuch

price asthe Pledgeemay determine, and out oftheproceeds ofsuch sale retain an amountsufficient

to pay the principal and interest then due on said loan together with expenses ofsale together with

any balance due on the Stock Option and guaranteed value of equity participation, and pay any

balance ofsuch proceedsto thePledgor. At any bona fide public sale, the Pledgeemay purchase all

orpartofsuch Common Stock at suchprice as he deems proper. In the event that the proceeds of

any sale arenotsufficientto pay the said loan and interest togetherwith expenses ofsuch saleorany

obligations ofthe pledgeorundertheLoanAgreement, thenthe Pledgorshall pay to the Pledgeeany

deficiency.

8.

All notices hereundershall be addressed to the Pledgee and sent by RegisteredMail, Return

Receipt Requested at the following address or such other address as Pledgee shall give to Pledgor

in writingmaking specific reference to this Pledge Agreement, to-wit:

N. D. Horton,Jr. and

James M. Reynolds, III

2561 Lake Oconee Parkway

Greensboro, GA 30642. AmR.Est 00455

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 102 of 146
Allie R. Robinson

c/oP. 0. Box 648

924 South Street

Roanoke, AL 36274

9,

This Agreement shall be governed by the laws ofthe State ofGeorgia.

In Witness Whereof, the undersigned have hereunto set theirhands and affixed theirseals

the day and year first abovewritten.

Executed and acknowledged before me

this~Q~-&day ofNovember, 2000:

Notary Public,

My Commission Expires:

(AFFIX NOTARY SEAL)

AmR.Est 00456

~

t Notavy Pubflc, DeKa!b County, Georgia

My Commission Expires January 10, 2003

My

(AFFIX NOTARY

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 103 of 146
Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 104 of 146
PLEDGE AGREEMENT/IRREVOCABLE LIMITED POWER

OFATTORNEY AND ASSIGNMENT

FOR VALUE RECEWED and to secure a loan from N. D. Horton, Jr. and James M. Reynolds,

ifi, equally to the undersigned dated November 10, 2000 in the original amount of$200,000.00

(Note), theundersigneddoes(do) herebysell, assign and transferto N. D. Horton,Jr. and James M.

Reynolds, III, Ten percent ownership ofPerky Cap Company, Inc., (Company) represented by

r~o

Certificate No. ‘~ (j~),inclusive, standingin the nameofthe undersigned on thebooks

ofsaid Company.

Upon default ofthe undersigned under the Note, or Pledge Agreement or Loan Documents, the

undersigned does hereby irrevocably constitute and appoint N. D. Horton, Jr. and James M.

Reynolds, ifi, attorney, or such personas theymay appoint in writing, to transfer the said Common

Stock onthe books ofsaid Company, with full power ofsubstitution in the premises.

Dated: /7 ,9 ~

Executed and acknowledgedbefore me

this ____ y ofNovember, 2000:

Notary Public,

My Commission Expires:

(AFFIX NOTARYSEAL)

S. 2000

AilieR. Robinson

AmR.Est 00271

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 105 of 146
Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 106 of 146
UNCONDITIONAL GUARANTY OF PAYMENT AN]) PERFORMANCE

GREENE COUNTY, GEORGIA

FORAND IN CONSIDERATION OF the sum ofTen and 00/100 ($10.00) Dollars and

other good and valuable considerations, paid ordelivered to Terry Manufacturing Company,

Inc. (hereinafter referred to as “Guarantor”) the receipt and sufficiency whereof arehereby

acknowledged by Guarantor, and for the purpose ofseeking to induce N. D. Horton,Jr. and

James M. Reynolds, ifi (hereinafter “Lender”) to extend credit or obligationto Allie It

Robinson (hereinafterreferred to as “Borrower”), which extension ofcredit or obligation will be

to the direct interest and advantage ofGuarantor, Guarantor doeshereby unconditionally

guarantee to Lender and its successors, successors-in-title and assigns (a) the full and prompt

payment when due, whetherby acceleration or otherwise,with such interest as may accrue

thereon, either before or after maturity thereof, ofthat certain promissory note datedNovember

10,2000 madeby Borrowerto the order OfLender in the principal face amount ofTwo Hundred

Thousand and 00\100 Dollars ($200,000.00) (hereinafterreferred to as the “Note”),together with

any renewals, modifications, consolidations and extensions thereof, (b) the full and prompt

payment and performance ofany and all other obUgations ofBorrower to Lenderunder and other

documents or instruments now orhereafter evidencing,securing, or otherwise relating to the

indebtedness evidenced by theNote (said other documents and instruments being hereinafter

referred to collectivelyasthe “Loan Documents”), and C) all present and future obligations and

liabilitiesofBorrowerto Lenderunder any instrument or document given to evidence, secure,

support orrelate to any indebtedness ofBorrowerto Lender whethernow existing orhereafter

arising, contracted or incurred, and whetherindividually orjointlywith others, and whether

direct, indirect, absolute orcontingent as maker, endorser, guarantor, surety orotherwise, and all

extensions orrenewals in whole or in partofsuch liabilities. Guarantordoes hereby agreethat if

theNote is not paidby Borrowerin accordancewith its terms, orif any and all sums which are

nowormayhereafter become due from Borrowerto Lenderunder the LoanDocuments arenot

paidby Borrowerin accordance with their terms, or if’ any other obligation ofBorrowerto be

performedundertheLoan Documentsis not performed in accordance with their terms, Guarantor

will immediately make such payments or performsuch obligations. Guarantorfurther agrees to

payLender all expenses (including reasonable attorneys’ fees) paid or incurredby Lender in

endeavoring to collectthe indebtedness, to enforce the obligations ofBorrower guaranteed

hereby, orany portion thereof; orto enforcethis Guaranty.

Theobligations incurredunder this guaranty include all obligations ofBorrowerto

Lendernow existing or hereafter coming into existence and ofrenewals or extensions in whole or

in part ofany ofthe obligations before described, togetherwith all damages, losses, costs,

interests, charges, expenses, and liabilities ofevery kind, nature, and description suffered or

incurredby Lender, arising in any mannerout oforin any way connectedwith, or growing out

of,said indebtedness or liabilities ofBorrowerto Lender.

Guarantor hereby consents and agrees that Lender mayat any time, and from time to time,

1

AmR.Est 00469

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 107 of 146
without noticeto orfurther consent from Guarantor, eitherwith or without consideration,

surrender any property or other security ofany kind ornature whatsoever heldby it or by any

person, firm, or corporation on its behalf or for its account, securing any indebtedness or liability

hereby guaranteed; substitute for any collateral so heldby it, other collateral oflike kind, or of

any kind; agree to modifythe terms oftheNoteor the LoanDocuments; extend or renew the

Note for any period; grant releases, compromises and indulgences withrespect to the Note, or the

LoanDocuments and to any persons or entities. now or hereafter liable thereunder or hereunder,

release any Guarantor or any other guarantor or endorser oftheNote or any other ofthe Loan

Documents; or take or fail totake any action ofany typewhatsoever. No such action which

Lender shall take or fail to take in connection withthe LoanDocuments, or any ofthem, or any

security for the payment ofthe indebtedness ofBorrowerto Lender or for theperformance ofany

obligations or undertakingsofBorrower, nor any course of dealing withBorrower of any other

undertakings ofBorrower, nor any course ofdealing with Borrower or any other person,shall

releaseGuarantor’s obligations hereunder, affect this Guaranty in any way or afford Guarantor

any recourse against Lender. The provisions ofthis Guaranty shall extend and be applicable to

all renewals, amendments, extensions, consolidations and modifications ofthe LoanDocuments,

and any and all references herein to the Loan Documents shall be deemed to include any such

renewals, extensions, amendments, consolidations or modifications thereof. This Guaranty

unconditionally guaranteesthe performance ofall obligations to Lender made on behalfof

Borrower byany officer, partner, or agentofBorrower.

Guarantor hereby subordinates any and all indebtedness ofBorrower now or hereafter

owed to any Guarantor to allindebtedness ofBorrower to Lender, and agrees with Lenderthat

Guarantor shall not demand or accept any payment ofprincipal or interestfrom Borrower, shall

not claim any offset or other reduction ofGuarantor’s obligations hereunder because of any such

indebtedness and shall not take any action to obtain any ofthe securitydescribed in and

ncumbered byany document or instrument securing any oftheobligations under the Loan

Documents;provided, however, that, ifLenderso requests, such indebtedness shall be collected,

enforced and receivedby Guarantor astrustee forLender and be paid over to Lender on account

ofthe indebtedness ofBorrowerto Lender,but without reducing or affectingin any manner the

liability ofGuarantor underthe other provisions ofthis Guaranty.

• Guarantor hereby waives and agrees not to assert or take advantage of(a) the defense of

the statute oflimitations in any action hereunder or for the collection ofthe indebtedness or the

performance ofany obligation hereby guaranteed, (b) any defense that may arisebyreason ofthe

incapacity, lack ofauthority, death or disability ofGuarantor or any otherperson or entity, or the

failureofLenderto file or enforce a claim againstthe estate (either in administration, bankruptcy,

or any other proceeding) ofBorrower or any other person or entity C) any defense based on the

failure ofLander to givenotice ofthe existence, creation or incurring of anynew or additional

indebtedness or obligation or ofany action or non-action on thepart ofany other person

whomsoeverin connection with any obligation hereby guaranteed; (d) any defense based upon an

election ofremedies byLender which destroys or otherwise impairs any subrogation rights of

Guarantor or the right ofGuarantor to proceed against Borrower for reimbursement, or both; (e)

2

AmR.Est 00470

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 108 of 146
any defense based upon failure ofLender to commence an action against Borrower; (f) any duty

onthe part ofLender to disclose to Guarantor any factsit maynow or hereafter knowregarding

Borrower, (g) acceptance ornotice ofacceptance ofthis Guaranty by Lender; (h) notice of

presentmentand demand for payment ofany ofthe indebtedness orperformance ofany ofthe

obligations hereby guaranteed;(I) protest and notice ofdishonor or ofdefault to Guarantor or to

any otherpartywith respect to the indebtedness or performance of obligations herebyguaranteed;

(j) any and all other notices whatsoever to which Guarantor might otherwise be entitled; (k) any

defense based onlack ofdue diligence by Lenderin collection, protection orrealization upon any

collateral securing the indebtedness evidenced by the Note; (1) the invalidity or unenforceability

ofany ofthe LoanDocuments; (m) any exculpation ofliability contained in theNote or in the

LoanDocuments; (n) any transferbyBorrower ofall or any part ofthe security encumbered by

the LoanDocuments; (0) the failure ofLender to perfect any security or to extend or renew the

perfection of any security; or (p) any other legal or equitable defenses whatsoever to which

Guarantormight otherwise be entitled.

This is a guaranty ofpayment and performance andnot ofcollection. The liability of

Guarantor under this Guaranty shallbe direct and immediate and not conditional or contingent

upon the pursuit ofany remedies againstBorrower or any other person, nor againstsecurities or

liens available to Lender, its successors, successors-in-title, endorsees or assigns. Guarantor

waives any right to require that an action be brought againstBorrower or any other person or to

require that resort be had to any securityor to any balance ofany deposit accountor credit on the

books ofLender in favor ofBorrower or any other person. In the event ofa default under the

LoanDocuments, or any ofthem, Lendershall have the rightto enforce itsrights,power and

remediesthereunder or hereunder or under any ofthe LoanDocuments in any order, and all

rights, powers and remedies available toLender in such event shall be nonexclusive and

cumulative of all other rights, powers and remediesprovided thereunder or hereunder or bylaw

or in equity. Accordingly, Guarantor hereby authorizes and empowersLender upon acceleration

ofthematurity oftheNote, at its sole discretion, and without notice to Guarantor,to exercise any

rightor remedywhich Lender may have, including, but not limited to,judicial foreclosure,

exerciseofrights ofpowerofsale, acceptance ofa deed or assignment in lieu offoreclosure,

appointment ofa receiver to collect rents and profits, exercise ofremedies againstpersonal

property, or enforcement ofany assignment ofleases, as to any security, whether real, personal or

intangible. Ifthe indebtedness guaranteed hereby is partiallypaidby reason ofthe election of

Lender, its successors, endorsees, or assigns, to pursue any ofthe remedies available to Lender,

or ifsuch indebtednessis otherwise partially paid, this Guaranty shall neverthelessremain in full

force and effect, Guarantor shall remain liable for the entire unpaidbalance ofthe indebtedness

guaranteed hereby, even though any rights which Guarantor may have against Borrower maybe

destroyed or diminished bythe exercise ofany such remedy. Until all ofthe obligations of

Borrowerto Lender have been paid and performed in full, Guarantor shall have no rightof

subrogation to Lender against Borrower, and Guarantor herebywaives any rights to participate in

any security for theNote.

Guarantor hereby waivesto the fullest extent possible as against Borrower and all other

3

AmR.Est 00471

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 109 of 146
persons and entities that maybe contingently, secondarily, or indirectly obligated to Lender for

any sumsdue undertheLoan Documents (hereinafterthe “contingent Obligors”), and as against

all assets ofBorrowerand the Contingent Obligors, any and all rights, whether at law, in equity,

by agreement or otherwise, to subrogation, indemnity, reimbursement, contribution, payment or

any other claim, cause of action, right or remedy that would otherwise arise out ofany payment

by Guarantor to Lender ofany sums due under the LoanDocuments, notwithstandingthe manner

or nature ofsuch payments, including but not limited to (a) direct payment by Guarantorto

Lender, (b)set-offby Lender against any liability or deposit owedby Lender to Guarantor, C)

recovery by Lender against Guarantor, or any property ofGuarantor, asthe result of any

judgment,judgmentlien, or legal process, (d) the application oftheproceeds of anydisposition

ofany or all collateral held by Lender to the repayment. ofany sums due under the Loan

Documents, or (e) the conveyance ofany or all collateral held by Lenderto Lender in satisfaction

ofany sums due under the Loan Documents.

The waivers set forthin the preceding paragraph are intended by both Guarantor and

Lenderto be for the benefit ofthe Borrower, and such waiver shall be enforceable byBorrower

or any oftheContingent Obligors, or any oftheirsuccessors or assigns, as an absolutedefense to

any action byGuarantor against Borrowerorany ofthe Contingent Obligors, or the assets of

Borrower or any ofthe Contingent Obligors, which action arises out ofanypayment by

Guarantor to Lender ofany sum due under the Loan Documents.

Guarantor hereby authorizes Lender, without notice to Guarantor, to apply all payments

and credits received from Borroweror from Guarantor or realizedfrom any securityin such

manner and in such priority aslender in its sole judgment shall see fitto the indebtednesses,

obligations and undertakings which are the subject ofthis Guaranty.

The books and records ofLendershowing the accounts between Lender andBorrower

shall be admissible in evidence in any action or proceeding hereon as prima fg~jeproofofthe

items set forththerein.

Guarantoragrees to furnish Lander withinninety (90) days following the end of

Guarantor’s fiscal year a statement ofincome and retained earnings and a balance sheet of

Borrower as ofthe end ofsuch fiscal year, including a listing of all contingent liabilities. Such

statement shall be in such form and content asLender shall reasonably require and shall be

prepared in accordance with generally accepted accounting principles. Upon request byLender,

Guarantor shall provide such statement audited bya certified public accountant acceptable to

Lender. .

Guarantor acknowledges thatthis Guaranty, theNote and the Loan Documents were

negotiated, executed and delivered in the State ofGeorgia, and shallbe governed and construed

in accordancewith the law ofthe State ofGeorgia.

Guarantorhereby (a) submits to personal jurisdiction in the State ofGeorgia for the

4

AmR.Est 00472

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 110 of 146
enforcement ofthis Guaranty, and (b) waives any and all personal rights under the law ofany

state to object tojurisdiction within the State ofGeorgia for thepurposes oflitigation to enforce

this Guaranty. Nothing contained herein, however, shall prevent Lenderfrom bringing any

action or exercising any rights against any security or against Guarantor personally, or against

any property ofGuarantor, within any otherstate. Initiating such proceeding or taking such

action in any other state shall in no eventconstitute awaiver ofthe agreement contained herein

that the law ofthe State ofGeorgia shall govern the rights and obligations ofGuarantor and

Lenderhereunder or ofthe submissionherein made by Guarantor to personaljurisdictionwithin

the State ofGeorgia. The aforesaidmeans ofobtaining personaljurisdiction and perfecting

service ofprocess are not intended to be exclusivebut are cumulative and in addition to all other

means ofobtaining personaljurisdiction and perfecting service ofprocessnow or hereafter

providedby the law ofthe State ofGeorgia.

Each Guarantorwarrants and represents to Lender that any and all financial statements

heretofore delivered tohim byLender are true and correctin all respects as ofthe date hereof.

Each Guarantor severally waives, for himself and family, any and all homestead and exemption

rights which any ofthem or the family ofany ofthem mayhave underor by virtue ofthe

Constitution or the laws oftheUnited States ofAmerica or of any state as against this Guaranty,

any renewalhereof, or any indebtedness represented hereby, and doesjointly and severally

transfer, convey and assign to Lender a sufficient amount ofsuch homestead or transfer,

exemption as maybe allowed, including suchhomestead orset apart in bankruptcy, to pay all

amounts due hereunderin full, with all costs ofcollection, and does hereby direct any trustee in

bankruptcy havingpossession ofsuch homestead or exemption to deliver to Lendera sufficient

amount ofproperty or money set apart as exempt to pay the indebtedness guaranteed hereby, or

any renewal thereof, and does hereby,jointly and severally, appoint Lenderthe attorney-in-fact

for each o them to claim any and all homestead exemptions allowedby law.

As security for the liabilities and obligations ofGuarantorhereunder, each Guarantor

herebytransfers and conveysto Lenderany and all balances, credits, deposits, accounts, items

and monies ofeach Guarantornow or hereafterin thepossession orcontrol of or otherwisewith

Lender, andLender is hereby.given a lien upon, security titleto and a securityinterest in all

property ofGuarantor ofevery kind and description now or hereafterin the possession or control

ofLenderfor any reason, including all dividends and distributions on or other rights in

connection therewith. Lendermay without demand or notice ofany kind, at any time, or from

time to time, when any amount shall be due and payable hereunderby such Guarantor,

appropriate and apply toward thepayment ofsuch amount, and in such order ofapplication

deposits, accounts, items, ormonies ofany Guarantor in the possession or control ofLenderfor

any purpose.

This Guarantymay not be changed orally, and no obligation ofGuarantorcan be released

or waived by Lender or any officer or agent ofLender, except by awriting signedby a duly

authorized officer ofLender and bearingthe seal ofLender. This Guaranty shall be irrevocable

by Guarantor until all indebtedness guaranteed herebyhas been completely repaid and all

5

AmR.Est 00473

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 111 of 146
obligations and undertakings ofBorrower under, by reason or, orpursuant to theLoan

Documents have been completely performed.

Any and all notices, elections, demands, requests and responses thereto permitted or

requiredto be given under this Guaranty shall be inwriting, signed byor on behalfoftheparty

giving the same, and shall be delivered personally, orsent by registered or certified United States

mail, postageprepaid, to the otherparty atthe. address set forth below, or at such other address

within the continental United States as such other partymaydesignate by notice specifically

designated as a noticeofchange of address and givenin accordance herewith. The effectivedate

ofsuchnotice shallbe the date ofpersonal service orthe date such notice is deposited in the

mail. Rejection or other refusal to accept or inability to deliver because ofchanged address of

which no notice has beenreceived shall also constitute receipt. Anysuch notice, election,

demand, request orresponse shall be addressed as follows:

Ifto Lender: N. D. Horton,Jr. and James M. Reynolds, rn

2561 Lake Oconee Parkway

Greensboro, GA 30642

Ifto Guarantor: Terry Manufacturing Company

do P.O. Box 648

924 South Street

Roanoke, AL 36274

The provisions ofthis Guaranty shall be be bindingupon each Guarantor and his

successors, successors-in-title, heirs, legalrepresentatives and assigns and shall inure to the

benefit ofLender, its successors, successors-in-title, heirs, legal representatives and assigns. This

Guaranty shall in no event be impaired by any change whichmayarise by reason ofthe death of

Borrower or Guarantor, ifindividuals, or byreason ofthe dissolution ofBorrower or Guarantor,

ifBorrower or Guarantor is a corporation or partnership.

As used herein, theterms “Guarantor” and “anyGuarantor” shall refer to the undersigned

single Guarantor, or,if more than one, shall refer respectively to eachor any separate emberof

the undersigned collective Guarantor. Jfmore than one person or entity constitutes, collectively,

Borrower, all ofthe foregoingprovisions referringto Borrower shall be construed to refer to each

suchpersonor entity individually as well as collectively, and all such Guarantors shallbe jointly

and severally liable for thepayment and performanceof all obligations impo~edhereunder. In

case ofdefault in payment or performance by Borrowerofany ofthe obligations to be paid or

performed undertheLoanDocuments, Lendermayproceed against the Guarantorjointly or

severally, or any ofthem, withoutpursuing any rights or remedies against the Borrower or the

otherGuarantor(s), or against any propertytaken as security.

Each Guarantorhas executed this Guaranty individually and not as a partner orBorrower

or ofany other member ofGuarantor.

6

AmR.Est 00474

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 112 of 146
Iffrom any circumstanceswhatsoever fulfillment ofany provisions ofthis Guaranty, at

the time performance of such provision shall be due, shall involve transcending the limit of

validity presentlyprescribedby any applicable usury statute or any other applicable law, with

regard to obligations oflike character and amount, thenjj~f~ç~the obligation to be fulfilled

shall be reduced to the limit ofsuch validity, so that in no eventshall any exactionbe possible

under this Guaranty that is in excess ofthe current limit ofsuch validity, but such obligation shall

be fulfilled to the limit ofsuch validity, but such obligation shall be fulfilled to the limit ofsuch

validity. The provisions ofthis paragraph shall control everyotherprovision ofthis Guaranty,

Ifany term or provision ofthis Guaranty shall be determined to be illegal or

unenforceable, all other terms and provisions hereofshall nevertheless remain effective and shall

be enforceable to the fullest extent permitted bylaw.

This Guaranty is assignableby Lender, and any full or partial assignment hereofby

Lendershall operate to vest in the assignee all rights and powers herein conferredupon and~

grantedto Lender and so assigned byLender.

This Guarantymaybe executed in any number ofcounterparts, each ofwhich shall

constitute an original, but all ofwhich together shall constitute one and the same instrument.

Anyofthe Guarantors may execute this Guaranty by signing any such counterpart.

lisT WITNESS WHEREOF, Guarantorhas executed this Guaranty under seal as ofthe

10th day ofNovember, 2000

7

I

TERRY MANUFACTURING COMPANY, INC.

NotaryPubt~V

Commisslçn Ex~re~?

NflTARY~EIM~

AmR.Est 00475

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 113 of 146
Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 114 of 146
UNCONDITIONAL GUARANTY OF PAYMENT AND PERFORMANCE

GREENE COUNTY, GEORGIA

FOR AND IN CONSIDERATION OF the sum ofTen and 00/100 ($10.00) Dollars and

other good and valuable considerations, paid or delivered to RoyTerry and Rudolph Terry

(hereinafter referred to as “Guarantor”) the receipt and sufficiency whereof arehereby

acknowledged by Guarantor, and for thepurpose ofseeking to induce N0ft Horton, Jr0and

James M, Reynolds,ifi (hereinafter “Lender”) to extend credit or obligation to Allie R.

Robinson (hereinafter referred to as “Borrower”), which extension ofcredit or obligation will be

to the direct interest and advantage ofGuarantor, Guarantor does hereby unconditionally

guarantee to Lender and its successors, successors-in-title and assigns (a) the full and prompt

paymentwhen due, whetherby acceleration or otherwise, with such interest as may accrue

thereon, eitherbefore or aftermaturitythereof, ofthat certainpromissorynote datedNovember

10,2000 made by Borrowerto the order ofLender in the principal face amount ofTwo Hundred

Thousand and 00\100 Dollars ($200,000.00) (hereinafterreferred to as the “Note”), together with

any renewals, modifications, consolidations and extensions thereof, (b) the full and prompt

payment and performance ofany and all other obligations ofBorrowerto Lender under and other

documents or instruments now or hereafter evidencing, securing, or otherwise relating tothe

indebtedness evidenced by theNote (said other documents and instruments being hereinafter

referred to collectively as the “Loan Documents”), and © all present and future obligations and

liabilities ofBorrowerto Lenderunder any instrument or document given to evidence, secure,

support or relate to any indebtedness ofBorrowerto Lender whether now existing or hereafter

arising, contracted or incurred, and whetherindividually orjointly with others, and whether

direct, indirect, absolute or contingent as maker, endorser, guarantor, surety or otherwise, and all

extensions or renewals in whole or in part ofsuch liabilities. Guarantor does hereby agreethat if

the Noteis notpaid byBorrower in accordancewith its terms, or if any and all sums which are

now or may hereafter become due from Borrower to Lender under the LoanDocuments are not

paid byBorrower in accordance with their terms, or if any other obligation ofBorrowerto be

performed under the LoanDocuments is notperformed in accordancewith theirterms, Guarantor

will immediatelymake such payments or perform such obligations. Guarantor further agreesto

pay Lender all expenses (including reasonable attorneys’ fees) paidor incurred byLenderin

endeavoring to collect the indebtedness, to enforce the obligations ofBorrowerguaranteed

hereby, or anyportion thereof, or to enforce this Guaranty.

The obligations incurredunder this guarantyinclude all obligations ofBorrower to

Lender now existing oriiereafter coming into existence and ofrenewals or extensions in whole or

in part ofany ofthe obligations before described, together with all damages, losses, costs,

interests, charges, expenses, and liabilities ofeverykind, nature, and description suffered or

incurred byLender, arising in anymanner out ofor in any wayconnected with, or growing out

of,said indebtedness or liabilities ofBorrower to Lender.

Guarantor hereby consents and agrees that Lender may at any time, and from time to time,

1

AmR.Est 00462

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 115 of 146
without notice to or further consent from Guarantor, eitherwith or without consideration,

surrender any property or other security ofany kind or nature whatsoeverheld by it or by any

person, firm, or corporation on its behalfor for its account, securing any indebtedness or liability

herebyguaranteed; substitute for any collateral so held byit, other collateral oflike kind, or of

any kind; agree to modif~’the terms oftheNote or theLoan Documents; extend orrenewthe

Note for any period; grant releases, compromises and indulgences with respect to the Note, or the

Loan Documents and to any persons or entities now or hereafter liable thereunder or hereunder;

release any Guarantor or any other guarantoror endorser ofthe Note or any other oftheLoan

Documents; or takeor fail to take any action of any typewhatsoever. No such action which

Lendershalltake or fail to take in connection with the LoanDocuments, or any ofthem, or any

securityfor the payment ofthe indebtedness ofBorrowerto Lender or for the performance of any

obligations or undertakings ofBorrower, nor any course ofdealing with Borrower ofany other

undertakings ofBorrower, nor any course ofdealing with Borroweror any other person, shall

release Guarantor’sobligations hereunder, affect this Guaranty in any way or afford Guarantor

any recourse against Lender. The provisions ofthis Guaranty shall extend and be applicable to

all renewals, amendments, extensions, consolidations and modifications ofthe Loan Documents,

and any and all references herein to the LoanDocuments shall be deemed to include any such

renewals, extensions, amendments, consolidations or modifications thereof. This Guaranty

unconditionally guarantees the performance ofall obligations to Lender made onbehalf of

Borrower byany officer, partner, or agent ofBorrower.

Guarantor hereby subordinates any and all indebtedness ofBorrowernow or hereafter

owed to any Guarantorto all indebtedness ofBorrower to Lender, and agrees with Lender that

Guarantor shall not demand or accept any payment ofprincipal or interest from Borrower, shall

not claim any offset or other reduction ofGuarantor’s obligations hereunder because ofany such

indebtedness and shall not take any action to obtain any ofthe securitydescribed in and

encumbered by any document or instrument securing any ofthe obligations under the Loan

Documents; provided, however, that, ifLender so requests, such indebtedness shall be collected,

enforced and received by Guarantor as trustee forLender and be paid over to Lender on account

ofthe indebtedness ofBorrower to Lender, but without reducing or affecting in anymanner the

liability ofGuarantor under the other provisions ofthis Guaranty.

Guarantor herebywaives and agrees notto assert or take advantage of(a) the defense of

the statute oflimitations in any action hereunder or for the collection ofthe indebtedness or the

performance ofany obligation hereby guaranteed; (b) any defense thatmay arise byreason ofthe

incapacity, lack ofauthority, death or disability ofGuarantor or any other person or entity, or the

failure ofLenderto ifie or enforce a claim againstthe estate (either in administration, bankruptcy,

or any other proceeding) ofBorrower or any other person orentity; C any defense based onthe

failure ofLander to give notice ofthe existence, creation or incurring ofany new or additional

indebtedness or obligation or of any action or non-action onthe part ofany other person

whomsoever in connection with any obligation hereby guaranteed; (d) any defense based upon an

election ofremedies byLender which destroys or otherwise impairs any subrogation rights of

Guarantoror the right ofGuarantor to proceed againstBorrower for reimbursement, or both (e)

2 ~3OOt\&9y.~obi~

AmR.Est 00463

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 116 of 146
any defensebased upon failure ofLender to commence an action against Borrower; (f) any duty

onthe part ofLender to disclose to Guarantorany facts it may now or hereafter know regarding

Borrower, (g) acceptance or notice ofacceptance ofthis GuarantybyLender (h) notice of

presentment and demand for payment of any ofthe indebtedness or performance of any ofthe

obligations hereby guaranteed; (1) protest and notice ofdishonor or ofdefault to Guarantor orto

any other partywith respectto the indebtedness orperformance ofobligations hereby guaranteed,

U) any and all other notices whatsoever to which Guarantor might otherwise be entitled; (k) any

defensebased on lack ofdue diligence byLender in collection, protection or realizationupon any

collateral securing the indebtedness evidencedbythe Note; (1) the invalidity or unenforceability

ofany ofthe LoanDocuments; (m) any exculpationofliability contained in the Note or in the

Loan Documents; (n) any transferbyBorrower ofall or any part ofthe security encumbered by

the LoanDocuments; (o)the failure ofLender to perfect any security or to extend or renewthe

perfection ofany security or (p) any other legal or equitable defenses whatsoeverto which

Guarantor might otherwise be entitled.

This is a guaranty ofpayment and performance and not ofcollection. The liability of

Guarantor underthis Guaranty shall be direct and immediate and not conditional or contingent

upon the pursuit ofany remedies againstBorrower or any other person, nor against securities or

liens available to Lender, its successors, successors-in-title, endorsees or assigns. Guarantor

waives any right to require that anaction be brought againstBorrower or any other person or to

require that resort be had to any security or to anybalance ofany deposit account orcredit on the

books ofLender in favor ofBorrower or any other person. In the event ofa default under the

S

LoanDocuments, or any ofthem, Lender shall have the right to enforce its rights, power and

remedies thereunder or hereunder or under any ofthe Loan Documents in any order, and all

rights, powers and remedies available to Lender in such event shallbe nonexclusive and

cumulative ofall other rights, powers and remedies provided thereunder or hereunder orby law

or in equity. Accordingly, Guarantor hereby authorizes and empowers Lenderupon acceleration

ofthe maturityofthe Note, at its sole discretion, and without notice to Guarantor, to exercise any

right or remedy which Lendermayhave, including, but not limited to,judicial foreclosure,

exercise ofrights ofpower ofsale, acceptance ofa deed or assignment in lieu offoreclosure,

appointment ofa receiver to collect rents and profits, exercise ofremedies againstpersonal

property, or enforcement ofany assignment ofleases, as to any security, whether real, personal or

intangible. Ifthe indebtedness guaranteed hereby is partially paid byreason ofthe election of

Lender, its successors, endorsees, or assigns, to pursue any ofthe remedies available to Lender,

or ifsuch indebtedness is otherwise partiallypaid, this Guarantyshall nevertheless remain in full

forceand effect, Guarantor shall remain liable for the entire unpaid balance ofthe indebtedness

guaranteed hereby, even though any rights whichGuarantormay have againstBorrower maybe

destroyed or diminished by the exercise ofany such remedy. Until all ofthe obligations of

Borrowerto Lender have been paid and performed in full, Guarantor shallhave no right of

subrogation to Lender againstBorrower, and Guarantor hereby waives any rights to participate in

any security for the Note.

Guarantor hereby waivesto the fullest extent possible as againstBorrower and all other

3

AmR.Est 00464

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 117 of 146
persons and entities that may be contingently, secondarily, or indirectly obligated to Lender for

any sums due under the LoanDocuments (hereinafter the “contingent Obligors”), and as against

all assets ofBorrower and the Contingent Obligors, any and all rights,whether at law, in equity,

by agreement or otherwise, to subrogation, indemnity, reimbursement, contribution, payment or

any other claim, cause of action, right or remedy that would otherwise arise out ofanypayment

byGuarantor to Lender ofany sums due under the LoanDocuments, notwithstanding the manner

ornature ofsuch payments, including but not limited to (a) direct paymentby Guarantor to

Lender, (b) set-offbyLender against any liability or deposit owed by Lenderto Guarantor, C

recoverybyLender against Guarantor, or any property ofGuarantor, asthe result ofany

judgment, judgment lien, or legal process, (d) the application ofthe proceeds ofany disposition

of any or all collateral held byLender to the repayment ofany sums due under the Loan

Documents, or (e) the conveyance ofany or all collateral held byLender to Lender in satisfaction

ofany sums due under the LoanDocuments.

The waivers set forth in the precedingparagraph are intendedbyboth Guarantor and

Lender to be for the benefit oftheBorrower, and such waiver shall be enforceableby Borrower

or any ofthe Contingent Obligors, or any oftheirsuccessors or assigns, as an absolutedefense to

any actionbyGuarantor againstBorrower or any ofthe Contingent Obligors, or the assets of

Borrower or any ofthe Contingent Obligors, which action arises out ofany payment by

Guarantor to Lender ofany sum due under the LoanDocuments.

Guarantor hereby authorizes Lender, without notice to Guarantor, to apply all payments

and credits received from Borrower or from Guarantor or realized from any securityin such

manner and in such priority aslender in its sole judgment shall see fitto the indebtednesses,

obligations and undertakings which are the subject ofthis Guaranty.

The books and records ofLender showing the accountsbetween Lender andBorrower

shall be admissible in evidence in any action or proceedinghereon as prima f~jeproofofthe

items set forth therein.

Guarantor agrees to furnish Lender within ninety (90) days following the end of

Guarantor’s fiscal year a statement ofincome and retained earnings and a balance sheet of

Borrower as ofthe endofsuch fiscal year, including a listing ofall contingent liabilities. Such

statement shall be in such form and content as Lender shall reasonably require and shall be

prepared in accordance with generally accepted accounting principles. Upon requestby Lender,

Guarantor shall provide suchstatement audited by a certifiedpublic accountant acceptable to

Lender.

Guarantor acknowledges that this Guaranty, the Note and the LoanDocumentswere

negotiated, executed and delivered in the State ofGeorgia, and shall be governed and construed

in accordance with the law ofthe State ofGeorgia.

Guarantor hereby (a) submits to personal jurisdiction in the State ofGeorgia for the

4

AmR.Est 00465

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 118 of 146
enforcement ofthis Guaranty, and (b) waives any and all personal rights under thelaw of any

state to object tojurisdictionwithin the State ofGeorgia for the purposes oflitigation to enforce

this Guaranty. Nothing contained herein, however, shall prevent Lender from bringing any

action or exercising any rights against any security or against Guarantor personally, or against

any propertyofGuarantor, within any other state. Initiating such proceeding or taking such

action in any other state shall in no event constitute a waiver ofthe agreement containedherein

thatthe law ofthe State ofGeorgia shall govern the rights and obligations ofGuarantor and

Lenderhereunder or ofthe submissionherein madeby Guarantor to personaljurisdiction within

the StateofGeorgia. The aforesaid means ofobtainingpersonal jurisdiction and perfecting

service ofprocess arenot intended to be exclusive but are cumulative and in addition to allother

means ofobtaining personaljurisdiction and perfecting service ofprocess now or hereafter

provided bythe law ofthe State ofGeorgia.

Each Guarantor warrants and represents to Lender that any and all financial statements

heretofore delivered to him byLender are true and correct in all respects as ofthe date hereof.

Each Guarantor severally waives, for himself and family, any and all homestead and exemption

rights which any ofthem or the familyofany ofthem mayhave under or byvirtue ofthe

Constitution or the laws ofthe United States ofAmerica or ofany state as againstthis Guaranty,

any renewal hereof; or any indebtedness represented hereby, and doesjointly and severally

transfer, convey and assign to Lender a sufficient amount ofsuch homestead or transfer,

exemption as may be allowed, including such homestead or set apart in bankruptcy, to pay all

amounts due hereunder in full, with all costs ofcollection, and does hereby direct any trustee in

bankruptcy having possession ofsuch homestead or exemption to deliver to Lender a sufficient

amount ofproperty or money set apart as exempt to pay the indebtedness guaranteed hereby, or

any renewal thereof, and does hereby,jointly and severally, appoint Lender the attorney-in-fact

for each o themto claim any and all homestead exemptions allowed bylaw.

As securityfor the liabilities and obligations ofGuarantor hereunder, each Guarantor

hereby transfers and conveysto Lender any and all balances, credits, deposits, accounts, items

and monies ofeachGuarantor now or hereafter in the possession or control of or otherwise with

Lender, and Lender is hereby given a lien upon, security title to and a securityinterest in all

propertyofGuarantor ofeverykind and description now or hereafter in the possession or control

ofLender for any reason, including all dividends and distributions onor other rights in

connectiontherewith. Lender maywithout demand or notice ofany kind, at any time, or from

time to time, when any amount shall be due and payable hereunder by such Guarantor,

appropriate and apply towardthe payment ofsuch amount, and in such orderof application

deposits, accounts, items, or monies ofany Guarantor in thepossession or control ofLenderior

any purpose.

This Guarantymaynotbe changed orally, and no obligation ofGuarantor can be released

or waived by Lenderor any officer or agent ofLender, except by a writing signed by a duly

authorized officer ofLender and bearing the seal ofLender. This Guaranty shall be irrevocable

by Guarantor until all indebtedness guaranteed hereby has been completely repaid and all

5 ~

AmR.Est 00466

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 119 of 146
obligations and undertakings ofBorrower under, by reason or, or pursuant to the Loan

Documents have been completely performed.

Any and allnotices, elections, demands, requests and responses thereto permitted or

requiredto be given under this Guaranty shall be in writing, signed by or onbehalfoftheparty

giving the same, and shallbe delivered personally, or sent by registered or certified United States

mail, postage prepaid, to the other party at the address set forthbelow, or at such other address

withinthe continental United States as such other partymay designate bynotice specifically

designated as a notice ofchange of address and given in accordance herewith. The effective date

ofsuch notice shall be the date ofpersonal service or the date such notice is deposited in the

mail. Rejection or other refusal to accept or inability to deliver because ofchanged address of

whichno noticehas been received shall also constitute receipt. Any such notice, election,

demand, request or response shall be addressed asfollows:

Ifto Lender: N. D. Horton, Jr. and James M. Reynolds, ifi

2561 Lake Oconee Parkway

Greensboro, GA 30642

Ifto Guarantor: Allie R. Robinson

P.O. Box 648

924 South Street

Roanoke, AL 36274

The provisions ofthis Guaranty shall be binding upon each Guarantor and his successors,

successors-in-title, heirs, legal representatives and assigns and shall inure to thebenefit of

Lender, its successors, successors-in-title, heirs, legal representatives and assigns. This Guaranty

shall in no event be impaired by any change which may arise byreason ofthe death ofBorrower

or Guarantor, ifindividuals, or byreason ofthe dissolution ofBorrower or Guarantor, if

Borroweror Guarantor is a corporation or partnership.

As used herein, the terms “Guarantor” and “anyGuarantor” shall refer to the undersigned

single Guarantor, or, ifmore than one, shall refer respectively to each or any separate emberof

the undersigned collective Guarantor. Ifmore than one person or entity constitutes, collectively,

Borrower, all ofthe foregoingprovisions referring to Borrowershall be construed to refer to each

suchperson or entity individually aswell as collectively, and all such Guarantors shall be jointly

and severally liable for the payment and performance ofall obligations impo~edhereunder. In

caseofdefault in payment or performanceby Borrower ofany ofthe obligations to be paid or

performed underthe LoanDocuments, Lender mayproceed against the Guarantorjointly or

severally, or any ofthem, without pursuing any rights or remedies against the Borrower or the

other Guarantor(s), or against any property taken as security.

Each Guarantor has executed this Guaranty individually and not as a partner or Borrower

or ofany other member ofGuarantor.

6

AmR.Est 00467

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 120 of 146
Iffrom any circumstances whatsoever fulfillment of anyprovisions ofthis Guaranty, at

thetime performance of suchprovision shall be due, shall involve transcending the limit of

validitypresentlyprescribed by any applicable usury statute or any other applicable law, with

regard to obligations oflike character and amount, thenj~ f~the obligation to be fulfilled

shall be reduced to the limit ofsuch validity, so that in no event shall any exaction be possible

under this Guarantythat is in excess ofthe current limit ofsuch validity,but such obligation shall

be fulfilled to the limit ofsuch validity, but such obligation shall be fulfilled to the limit ofsuch

validity, The provisions ofthis paragraph shall control everyother provision ofthis Guaranty.

If any termor provision ofthis Guaranty shall be determined to be illegal or

unenforceable, allother terms and provisions hereofshall nevertheless remain effective and shall

be enforceable to the fullest extent permitted bylaw.

This Guaranty is assignablebyLender, and any full or partial assignment hereofby

Lendershall operate to vestin the assignee all rights and powers herein conferred upon and

grantedto Lender and so assigned byLender.

This Guarantymay be executed in any number ofcounterparts, each ofwhich shall

constitute an original, but all ofwhich together shall constitute one and the same instrument.

Any ofthe Guarantors may executethis Guaranty bysigning any such counterpart.

IN WITNESS WHEREOF, Guarantor has executed this Guaranty under seal as ofthe

10th day ofNovember, 2000

7 ~~l%t94~

AmR.Est 00468

I

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 121 of 146
Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 122 of 146
A N OÜ’T.I Z A T I 0 N S C B E B U L E

tUE REI~INII~I3 Ivt~IHLY INr. MDRIt~E PRINCIPAL INTEREST

PRINCIPAL PA~NEN~ RATh INSURANCE PA~1ME~T PA~MEt~TT

1 12/10/01 189,617,91 11,965.42 9.500 10,382.09 1,583.33

‘IUThLS LURIN3 2001 11,965.42 0.00 10,382.09 1,583.33

2 01/10/02 179,153.63 11,965.42 9.500 10,464.28 1,501.14

3 02/10/02 168,606.51 11,965.42 9.500 10,547.12 1,418.~0

4 03/10/02 157,975.89 11,965.42 9.500 10,630.62 1,334.80

5 04/10/02 • 147,261.11 11,965.42 9.500 10,714.78 1,250.64

6

7

05/10/02

06/10/02

136,461.51

125,576.41

11,965.42

11,965.42

9.500

9.500

10,799.60

10,885.10

1,165.82

1,080.32

8 07/10/02 114,605.14 11,965.42 9.500 10,971.27 994.15

9 08/10/02 103,547.01 11,965.42 9.500 11,058.13 907.29

10

11

09/10/02

10/10/02

92,401.34

81,167.43

11,965.42

11,965.42

9.500

9.500

11,145.67

11,233.91

819.75

731.51

12 11/10/02 69,844.59 11,965.42 9.500 11,322.84 642.58

13 12/10/02 58,432.11 11,965.42 9.500 11,412.48 552.94

~ThLSt~JRINS2002 143,585.04 0.00 131,185.80 12,399.24

14 01/10/03 46,929.28 11,965.42 9.500 11,502.83 462.59

15 02/10/03 35,335.38 11,965.42 9.500 11,593.90 371.52

16 03/10/03 23,649.70 11,965.42 9.500 11,685.68 279.74

17 04/10/03 11,871.51 11,965.42 9.500 11,778.19 187.23

18 05/10/03 0.00 11,965.49 9.500 11,871.51 93.~8

~It1TALSLXJRINS 2003 59,827.17 0.00 58,432.11 1,395.06

AmR.Est 00267

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 123 of 146
FINANCE G~.

~ItTIALPA~MENIS.

~jI~I BALANCE.

~W~L PERCEN~ERATE:...

NtJ~4BEROF PA~r4ENr(S) 17

Nt1~4BER.OF PA~LM~r(S)

63

215, 377 .63

200,000.00

9.500

11,965.42 BE~INNI~12/10/2001

1 AT 11,965.49 BEXINNfl~05/10/2003

AmR.Est 00268

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 124 of 146
HORTON/REYNOLDS NOTE ~ #2.

I

C pounding period...: Monthly

Nominal annual rate..: 9,500

Effective annual rate: 9.925

Periodic rate

Equivalent daily rate:

0.7917 %

0.02603 %

11-21-2001 Pg 1

CASH FLOW DATA

Date Amount # Period End~date

1 Loan

2 Payment

11-10-01

12-10-01

200, 000.00

11,965.42

AMORTIZATION SCHEDULE - Normal amortization

Pmt Date Payment Interest Principal

11,965.42

11,965.42

1,583.33

1,583.33

Loan 11-10-2001 . 200,000.00

1 12-10-2001 10,382.09 189,617.91

200]. totals 10,382.09

2 01-10-2002 11,965.42 1,501.14 10,464.28 179,153.63

3 02-10-2002 11,965.42 1,418.30 10,547.12 168,606.51

4 03-10-2002 11,965.42 1,334.80 10,630.62 157,975.89

5 04-10-2002 11,965.42 1,250.64 10,714.78 147,261.11

6 05-10-2002 11,965.42 1,165,82 10,799,60 136,461.51

7 06-10-2002 11,965.42 1,080.32 10,885.10 125,576.41

8 07-10-2002 11,965.42 994.15 10,971.27 114,605.14

9 08-10-2002 11,965.42 907.29 11,058.13 103,547.01

10 09-10-2002 11,965.42 819.75 11,145.67 92,401.34

11 10-10-2002 11,965.42 731.51 11,233.91 81,167.43

12 11-10-2002 11,965.42 642.58 11,322.84 69,844.59

13 12-10-2002 11,965.42 552.94 11,412.48 58,432.11

2002 totals 143,585.04 12,399.24 131,185.80

14 01-10-2003 11,965,42 462,59 11,502.83 46,929.28

15 02-10-2003 11,965.42 371.52 11,593.90 35,335.38

16 03-10-2003 11,965.42 279.74 11,685,68 , 23,649.70

17 04-10-2003 11,965.42 187.23 11,778.19 11,871.51

18 05-10-2003 11,965.42 93.91 11,871.51 0.00

2003 totals 59,827.10 1,394.99 58,432.11

Grand totals 215,377.56 15,377.56 200,000.00

Event

1

18 Monthly 05-10-03

Balance

AmR.Est 00269

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 125 of 146
Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 126 of 146
PROXY

Forvalue received and in orderto secure a PurchaseMoneyPromissory Note, the

undersigned, Allie R. Robinson (Owner) do hereby grantunto N. D. Horton, Jr. and James M.

Reynolds, III, Proxy to vote at any and all shareholder meetings which may be had inthe

companyknown as PerkyCap Company, Inc., proxy fornine thousand shares (10%) ofthe

outstanding Common Stock ofPerky Cap Company, Inc.

Providedhowever, that for so long as the following obligations are current and not in

default this Proxy shall be suspended, but upon default in any ofthe following named obligations

this Proxy shall be valid and active and shall not be revoked for so long as such default may

exist:

1. Purchase Money Note from Allie R. Robinson to N. D. Horton, Jr., James M.

Reynolds, ifi datedNovember 10, 2000 secured byNine Thousand Shares ofthe

Common Stock ofPerky Cap Company, Inc.

2. 5.5 Million Dollar Line of Credit and affiliated documents evidencedby

PromissoryNote from TerryManufacturing Company, Inc., Roy Terry and

Rudolph Terryto American Real Estate Investment Company, Ltd., L.P. dated

November 10, 2000.

3. PromissoryNotefrom Roy Terry and Rudolph Terryto AmericanReal Estate

Investment Company, Ltd., L.P. datedNovember 24, 1999 in the original

principal amount ofOne Million Dollars.

4. Stock Options gra~itedunderAgreements dated November 10, 2000 to American

Real EstateInvestment Company, Ltd., L.P. and equity participation percentage in

TerryPromotional Products granted in Agreements dated November 10, 2000

betweenTerryManufacturing Company, Inc. and American RealEstate

Investment Company, Ltd., L.P.

In Witness Whereof, the undersigned have hereunto set theirhands and affixed their seals

this 10th day ofNovember, 2000.

~

AmR.Est 00274

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 127 of 146
PROMISSORY NOTE

$624,000.00 Greensboro, Georgia May 30, 2002

FOR VALUE RECEIVED, the undersigned promise topay to the order ofN. I), Horton,

Jr. and James M. Reynolds, III (“Holder”) the principal sum of Six Hundred Twenty-Four

Thousand and No/100 Dollars ($624,000.00) with interest from date at the rate ofNine percent

(9.00%) per annum, interest only in the amount of$4,680.00 payable monthly beginning on July 2,

2002 for a period ofsix (6) months until December 2, 2002 when the outstanding balance shall be

amortized overthirty-six (36) equalpayments ofprincipal and interest in the amount of$19,843.03

beginning January 2, 2003 and due and payable in full on December 2, 2005.

Principal and interest are payable at 2561 Lake Oconee Parkway, Greensboro, Georgia

30642, or at suchother place asthe Holder hereofmay designate in writing.

Should payment not be paidwhendue, orshould theMaker, orMakers,hereoffailto comply

with any ofthe terms or requirements of a security agreement of even date herewith, the entire

unpaid principal sum evidenced by this note, with all accrued interest, shall at the option ofthe

Holder, and without notice to the undersigned, become due and may be collected forthwith, time

being ofthe essence ofthis contract. It is further agreed that failure ofthe Holderto exercise this

right ofaccelerating the maturity ofthe debt, or indulgence granted form time to time, shall in no

event be considered as a waiver ofsuch right of acceleration or estop the Holder from exercising

such right.

In case this note is collected by law, as through an attorney at law, all costs ofcollection,

including fifteen percent (15%) ofthe principal and interest as attorney’s fees, shall be paid by the

Maker hereof.

And each ofus, whetherMaker, endorser, guarantor, orsurety, hereby severally waives and

renounces, for himself and family, any and all exemption rights either ofus, or the family ofeither

ofus, mayhaveunder orby virtue ofthe Constitution or laws ofGeorgia, or any other State, or the

UnitedStates, as against this debt orany renewal thereof; and each furtherwaives demand, protest

and notice ofdemand, protest and non-payment.

In caseofdefault in the payment ofthe note when due, and in case the Holder ofthis note

should elect on account ofsuch default, to declare the unpaidbalance oftheprincipal sum due and

payable, said principal sum, orso much thereofas may remain unpaid at the time ofsuch default,

shall bear interest at the rate offifteen percent (15%) per annum from the date ofsuch default.

In the event any payment due hereunder has not been received by the tenth (lQth) day

following the date it is due hereunder, the undersigned agrees to pay a late charge in the amount of

five percent (5%) ofthe payment amount then due.

AmR.Est 00363

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 128 of 146
SecurityInterest: To secure payment ofthis note and any other indebtedness ofthe Maker

to Holder, whether now or existing or arising hereinafter, the Maker hereby delivers, pledges,

assigns, conveys and transfers to the Holder the following described property(hereinafter referred

to as collateral):

All ofCotina W. Terry’s right, title and interest in and to:

Thirty-One percent (3 1%) percent of the common stock of Perky Cap Company, Inc.,

including those sharesrepresented by Certificate Number — (27,900 shares).

This contract is to be construed in all respects and enforced according to the laws ofthe State

of Georgia.

Prepayment Privilege: Maker may prepay in whole or in part at any time without

penalty.

Ifall orany part ofthe propertydescribed in the aforementioned SecurityAgreement or any

interest in it is sold or transferred without Holder’s prior written consent, Holder may at its option

require immediate payment of all sums owing hereunder.

Signed, sealed and delivered by the undersigned the date first ove written.

/ .~ (Seal)

Post Office Box 648

924 South Street

Roanoke, Alabama 36274

(205) 863-8835 (facsimile)

-2-

AmR.Est 00364

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 129 of 146
-- --..—“-— _,. w ~ W W * *

REMAINING

PRINCI PAL

MONTHLY INT. - MORTGAGE PRINCIPAL INTEREST

PAYMENT RATE INSUPJ~NCE PAYMENT PAYMENT

~. 01/02/03 608,836.97 19,843.03 9.000 15,163.03 4,680.00

2 02/02/03 593,560.22 19,843.03 9.000 15,276.75 4,566.28

3 03/02/03 578,168.89 19,843.03 9.000 15,391.33 4,451.70

4 04/02/03 562,662.13 19,843,03 9.000 15,506.76 4,336.27

5 05/02/03 547,039.07 19,843.03 9.000 15,623.06 4,219.97

‘~ CG~/02/03 531,298.83 19,843.03 9.000 15,740.24 4,102.79

7 07/02/03 515,440.54 19,843.03 9,000 15,858.29 3,984.74

8 08/02/03 499,463.31 19,843.03 9.000 15,977.23 3,865.80

9 09/02/03 483,366.25 19,843.03 9.000 16,097.06 3,745.97

10 10/02/03 467,148.47 19,843.03 9.000 16,217.78 3,625.25

11 11/02/03 450,809.05 19,843.03 9.000 16,339.42 3,503.61

12 12/02/03 434,347.09 19,843.03 9.000 16,461.96 3,381.07

TOTALS DURING 2003 238,116.36 0.00 189,652.91 48,463.45

13 01/02/04 417,761.66 19,843.03 9.000 16,585.43 3,257.60

14 02/02/04 401,051.84 19,843.03 9.000 16,709.82 3,133.21

15 03/02/04 384,216.70 19,843.03 9.000 16,835.14 3,007.89

16 04/02/04 367,255.30 19,843.03 9.000 16,961.40 2,881.63

17 05/02/04 350,166.68 19,843.03 9.000 17,088.62 2,754.41

18 06/02/04 332,949.90 19,843.03 9.000 17,216.78 2,626.25

‘9 07/02/04 315,603,99 19,843.03 9.000 17,345.91 2,497.12

08/02/04 298,127.99 19,943.03 9.000 17,476.00 2,367.03

09/02/04 280,520.92 19,843.03 9.000 17,607.07 2,235.96

10/02/04 262,781.80 19,843.03 9.000 17,739.12 2,103.~1

11/02/04 244,909.63 19,843.03 9.000 17,872.17 1,970.86

12/02/04 226,903.42 19,843.03 9.000 18,006.21 1,836.82

OTALS DURING 2004 0.00 207,443.67 30,672.69

2~ 01/02/05

20 02/02/05

27 03/02/05

28 04/02/05

29 05/02/05

30 06/02/05

31 07/02/05

~2 08/02/05

33 09/02/05

~4 10/02/05

~5 11/02/05

~ 12/02/05

208,762.17

190,484,86

172, 070.47

153,517.97

134, 826.32

115, 994.49

97, 021, 42

77,906.05

58,647.32

39,244.14

19,695.44

0.00

238, 116.36

19,843.03

19, 843.03

19,843.03

19,843.03

19,843.03

19,843.03

19,843.03

19,843.03

19,843.03

19,843.03

19,843 .03

19,843 .16

9.000

9.000

9.000

9.000

9.000

9.000

9.000

9.000

9.000

9.000

9.000

9.000

18,141.25

18,277.31

18,414.39

18,552.50

19,691.65

18,831.83

18, 973.07

19,115.37

19,258.73

19,403.18

19,548.70

19, 695.44

1,701 .78

1,565.72

1,428.64

1,290.53

1,151.39

1,011.20

869.96

727.66

584 .30

439.85

294 .33

147.72

;iALS DURING 2005 238,116.49 0.00 226,903.42 11,213.07

I

NO.

DUE

DATE

AmR.Est 00365

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 130 of 146
TOTAL PAYMENTS

HIGH BALANCE.

ANNUAL PERCENTAGE RATE:...

NUMBER OF PAYMENT(S) 35 AT

NUMBER OF PAYMENT(S) 1 AT

714,349.21

624,000.00

9.000

19,843.03 BEGINNING 01/02/2003

19,843.16 BEGINNING 12/02/2005

AmR.ESt 00366

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 131 of 146
Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 132 of 146
BILL OF SALE OF COMMON STOCK

For and in consideration of the sum of Ten and No/l00 Dollars ($10.00) and other

valuable consideration, the undersigned N. D. Horton, Jr. and James M Reynolds, ifi, Grantors

do hereby transfer unto Jack Perkinson, Grantee, Fourteen Thousand Four Hundred Shares (16%)

ofthe outstanding Common Stock ofPerky Cap Company, Inc. and by these presents do bargain,

sell, conveyand set over unto Grantees the aforesaid Stock.

The undersigned warrant that said Stock is unencumbered and they shall take such action

as is necessary to transfer the same on the books of the Company.

- In Witness Whereof, the undersigned have hereunto set their hands and affixed their seals

this the 30th day ofMay, 2002.

c~ta~wpdocs~5OOI\27I\bill-s~kiP

AmR.ESt 00385

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 133 of 146
Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 134 of 146
BILL OF SALE OF COMMON STOCK

(SEAL)

For and in consideration ofthe sum of Six Hundred Twenty-Four Thousand Dollars

($624,000.00) evidenced by Promissoxy Note from Roy Terry and Rudolph Terry to Grantors and

applicable security documents, the undersigned N. D. Horton, Jr. and James M Reynolds, ifi,

Grantors do hereby transfer unto Cotina W. Terry, Grantee, Twenty-Seven Thousand Nine

Hundred Shares(3 1%) ofthe outstanding Common Stock ofPerky Cap Company, Inc. evidenced

by Stock Certificate No. _____ representing 27,900 shares, and by these presents do bargain, sell,

conveyand set over unto Grantees the aforesaid Stock.

The undersigned warrant that said Stock is unencumbered and theyshall take such action

as is necessary to transfer the same on the books ofthe Company.

In Witness Whereof, the undersigned have hereunto set theirhands and affixed theirseals

this the

30

th day ofMay, 2002.

A (SEAL)

N. . Hoij~n,Jr./ ___

• /th~s

I esM.Reynolds~3/

wpd5OO27I\b~al~

AmR.Est 00368

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 135 of 146
Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 136 of 146
CONSENT TO ACTION BY THE BOARD OF DIRECTORS

OF PERKY CAP COrwIPANY, INC.

The undersigned, being all ofthe Board ofDirectors ofPerky Cap Company, Inc.

(hereinafter “Corporation”), acting by unanimous written consent, pursuant to O.C.G.A. §14-2-

821, do hereby adopt the following resolutions, to-wit:

BE IT RESOLVED, that on the effective thte hereof, the directions of the Corporation,

with the resignation ofN. D. Horton,Jr. and James M. Reynolds, ifi, shall be the

following: -

RoyTerry, Chairman

RudolphTerry

Jack Perkinson

e foregoing Resolutions adopted by unanimous written o t of the Board this ~) 0

day of - , 2002. -

~a~wpdocs\$OO27I\con~ent.act~on3

~R.Est 00369

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 137 of 146
Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 138 of 146
RESIGNATION OF OFFICERS AND DIRECTORS OF

PERKY CAP COMPANY, INC.

Comes now N. D. Horton, Jr. and James M. Reynolds, ifi and do hereby resign each and

everyposition as members ofthe Board ofDirectors and as officers of Perky Cap Company, Inc.

effective the

30

th day ofMay, 2002.

..

N! . gorton4r.

~ ~

AmR.Est 00370

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 139 of 146
Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 140 of 146
CONSENT TO ACTION BY TIlE BOARD OF DIRECTORS

OF PERKY CAP COMPANY, INC.

The undersigned, being all of the Board of Directors of Perky Cap Company, Inc.

(hereinafter “Corporation”), acting by unanimous written consent, pursuant to O.C.G.A. § 14-2-

821, do hereby adopt the followingresolutions, to-wit:

BE IT RESOLVED, that;on the effective date hereof; the following slate ofofficers are

hereby elected and designated as officers ofthe Corporation, to-wit:

Fresident Jack Perkinson

Vice President Roy Terry

Secretary/Treasurer - Rudolph Terry

FURTHER RESOLVED, that the President with his signature attested by the Vice

President or Secretary/Treasurershall be authorized to execute on behalfofthe Corporation all

contracts or other documents necessary orproper in the discretion ofsuch officers ortheir

attorneysto facilitate and consummate the proper operation and business ofthe Corporation.

Provided, however, that thepower ofthe officers to incur debt, other than thirty day accounts in

ordinary course ofbusiness,shall require Board resolution and the signature ofthe President and

one other officer. -

FURTHER RESOLVED, that any ofthe above officersshall be authorizedto enter into

contracts and agreements forservices for general operation ofthe Corporation and its business

subject to such restrictions as set forth herein.

The foregoing Resolutions adopted by unanimous written consent ofthe Board this _____

dayof ,2002.

c~data~wp6oc~\5OOfl27I\con~ent-action2

AmR.Est 00371

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 141 of 146
Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 142 of 146
LOAN AGREEMENT

This Loan Agreement made this 30th day ofMay, 2002, by and between ROY TERRY

and RUDOLPH TERRY as Borrower and COTINA W. TERRY, as Pledgor and N. D,

HORTON, JR and JAMES M. REYNOLDS, 111, as Lender. -

WITNESSETH:

WHEREAS, Borrower hasrequested ofLender a loan in the principal amount of Six

Hundred Twenty-Four-Thousand and 00\l00 ($624,000.00) Dollars and Lender has agreed to

make such loanpursuant to the Promissory Note attached hereto and marked as Exhibit “A”; and

WHEREAS, Cotina W. Terry is pledging to Lender as security and collateral forsuch

loan thirty-one percent (31%) ofCotinaW. Terry’s common stock in the companyknown as

Perky Cap Company, Inc.. -

NOW THEREFORE, in consideration ofthe premises, the mutual covenants,

agreements, and undertakings herein set forth, the making ofthe loan by Lenderto Borrower, and

other good and valuable consideration,the parties do agree as follows:

1.

Lendershall lend to Borrower and Borrowershall borrow and repay to Lender the sum of

Six Hundred Twenty-FourThousand and 00\100 ($624,000.00) Dollars, which said sum shall

bear interest at the rate oftwelve (12%) percent per annum, interest only in the amount of -

$4,680.00 payable monthly beginning on July 2, 2002 for a period ofsix (6) months until

December 2, 2002 when the outstanding balance shall be amortized over thirty-six (36) equal

I

AmR.Est 00372

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 143 of 146
payments of principal and interest in the amount of$ 19,843.03 beginning January 2, 2003 and

due and payable in full on December 2, 2005.

2.

Cotina W. Terry does grant unto Lender a security interest and security title and pledge of

the following common stock, to wit: -

Thirty-One percent (3 1%) ofthe common stock ofPerky Cap Company, Inc., owned by

Cotina W. Terry, the same being represented by share Certificate Number ____ (27,900

shares).

3.

This Loan Agreement maybe executed in counterparts.

- 4.

Time is ofthe essence hereof.

5.

This Agreement, the PromissoryNote, the Security Agreement, and the Irrevocable Stock

Powers, and any other documents hereinafter the “loan documents”, constitute the entire

agreement between the parties. No representation, covenant, or warranties not herein expressly

set forth shall be binding on theparties hereto. Nomodification hereofshall be effective unless

inwriting and subscribed by the parties hereto.

6.

This Loan Agreement and the loan documents shallbe construed with the lawsin the

State ofGeorgia. In any action commenced hereunder, theparties do hereby designate venue in

the Superior Court ofPutnam County,.Georgia.

2 a~wpdocs~SQO1\27I\~oan-agr

AmR.Est 00373

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 144 of 146
IN WITNESSWHEREOF, the parties hereto have set their hands and affixed theirseals

-.

Wit~è~’ . -

Witness

L~3

Witness -

(?a~L~’ui

Witness

Cotina W. Terry

Lender: _____

~774./~ N ]I. Hoj(on,JxJ

M. Reynol ,

a\wpdoc,~5Xfl.271~k~n.agr

this 2nd—4~ayof June, 2002.

Pledgor:

3

AmR.Est 00374

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 145 of 146
IN WITNESS WHEREOF, the parties hereto have set theirhands and affixed theirseals

this 30th day ofMay, 2002.

Witness

Witness

Witness

Witness

Borrower;

Roy Terry

RudolphTerry

Pledgor.

(ü*Y\A~

Cotina W. Terry

Lender~

;Z”~£ton, Jr ~ 4~~

~

.1 es M. Reynol4~~il~/

3

AmR.Est 00377

Case 2:06-cv-00746-WHA Document 3-5 Filed 08/18/2006 Page 146 of 146
PLEDGE AGREEMENT

This Agreement made this

30

th day of May, 2002, by and between Jack Perkinson,

hereinafter Pledgor, and N. D. Horton, Jr. and James M. Reynolds, III, 2561 Lake Oconee

Parkway, Greensboro, Georgia 30642, hereinafter Pledgee;

WITNES SETH:

Whereas, Pledgeehas conveyed to Pledgor 14,400 shares oftheoutstanding stock ofPerky

Cap Company, Inc.; and

Whereas, Pledgee has loaned to Cotina W. Terry (hereinafter “Terrys”) the sum of Six

Hundred Twenty-Four Thousand and No/100 Dollars ($624,000.00) to fund theTerrys purchase

of27,900 shares (thirty-one percent {3l%J) oftheoutstanding stock in Perky Cap Company, Inc.;

and -

Whereas, in order to inducethePledgee to make suchloan, Pledgorhas agreedto pledgethe

CommonStock hereinaftermentionedto thePledgeeasadditionalsecurity forthe repaymentofsaid

loan.

Now Therefore, it is agreed between theparties as follows:

1.

In consideration ofthe loan made by Pledgee to the Terrys as hereinbefore mentioned, the

Pledgor hereby deliversto thePledgee sixteen percent (16.0%)ownership in PerkyCap Company,

a Georgia Corporation represented by Certificate No. _____ (14,400 shares), together with that

certain Irrevocable Stock Power, and do hereby assign such Common Stock and Certificate to the

Pledgee and dohereby appoint Pledgee as their true and lawful attorney forthem and in their name,

place and stead to cause said Common Stock to be transferred on the books ofthe said PerkyCap

Companyto the name ofthe Pledgee.

2.

The Pledgee shall hold said Common Stock as securityforthe repayment ofthe aforesaid

loan as described in the Loan Documents, together with interest thereon, and shall not at any time

dispose ofsuch Common Stock or encumber the same, except as herein otherwiseprovided.

3.

Pledgor shall repay the indebtedness to the Pledgee with interest thereon according to the

terms contained in said Loan Documents.

EDATA,WPDOcS\,OOfl27t4,.~,.JPwpd.~,,d

AmR.Est 00386

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 1 of 156
4.

At all times whilePledgee is theholder ofsaid Common Stock, thePledgor shallreceive any

dividends distributed thereon. Provided such dividends shall be approved by Pledgee.

5.

While the Pledgee is the holder ofsaid Common Stock, the Pledgor shall have the right to

vote the same at meetings of Perky Cap Company so long as they are not in default in the

performance ofany ofthe tenns ofthis Agreement, thepayment ofthe principal and interest ofthe

said loanor under the terms ofthat certain Loan Agreement by and among the partieshereto (Loan

Documents).

- 6.

Upon the repayment ofthe entire amount ofthe loan and interest as herein provided, the

Pledgee shall transferto the Pledgor the Stock Certificate pledged hereunder.

7.

In the event that the Pledgor shall fail to perform anyofthe terms ofthis Agreement orto

makepayment oftheprincipal and interest ofsaid loan asrequiredpursuant to the termsofsaid loan

as evidenced in the Note, fails to comply with the terms ofthe Loan Agreement ordefault on any

ofthe Loan Documents, Pledgee may, upon thirty (30) days notice in writing to the Pledgor by

RegisteredMail, sell any or all ofthe Common Stockherein mentioned in suchmannerand for such

price as the Pledgeemay determine, and out oftheproceeds ofsuch sale retain an amount sufficient

to pay the principal and interest then due on said loan together with expenses ofsale, and pay any

balance ofsuchproceedsto thePledgor. At any bona fidepublic sale, thePledgeemaypurchase all

or part ofsuch Common Stock at such price as he deems proper. In the event that theproceeds of

any sale arenotsufficientto pay the said loan and interest togetherwith expenses ofsuch sale orany

obligations ofthe pledge or under theLoan Agreement,thenthePledgorshall pay to thePledgee any

deficiency.

8.

All notices hereundershallbe addressed to thePledgee and sent by RegisteredMail, Return

Receipt Requested at the following address orsuch other address asPledgee shall give to Pledgor•

in writing making specific reference to this Pledge Agreement, to-wit:

N. D. Horton, Jr. and

James M. Reynolds, ifi

2561 Lake Oconee Parkway

Greensboro, GA 30642

~

AmR.Est 00387

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 2 of 156
With copy to:

Richard W. Schmidt

Attorney at Law

P.O. Box 67

Greensboro, GA 30642

Jack Perkinson

Perky Cap Company, Inc.

186 Industrial Blvd., SE

Eatonton, GA 31024

9.

This Agreement shall be governed by the laws ofthe State ofGeorgia.

In Witness Whereof, the undersigned have hereunto set theirhands and affixed theirseals

the day and year first above written.

Executed and ackno~Wledgedbefore me

2002:

Executed and acknowi

this 2~dayof~une2002:

~L~J

Notary Public,

My Commission

(AFFIX NOTAR

~Qj4.4~(SEAL)

“lack Perkinson

-4A~

(SEAL)

~ i~rton~r~-J~/ ~

(SEAL)

(~,,,,/ames M. Reyn~Is, Ill

AmR.Est 00388

Notary

My Commission

(AFFIX NOTARY

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 3 of 156
IRREVOCABLE STOCK POWER

FOR VALUE RECEIVED, the undersigned does hereby sell, assign and transfer to

N. D. Norton,Jr. and James M. Reynolds, III, FourteenThotisand FourHundred shares ofthe

common stock ofPerky Cap Company, Inc., represented by Certificate No. ______ (14,400

shares) standing in the name ofthe undersigned on the books ofsaid Company.

The undersigned do hereby irrevocably constitute and appoint either N. D. Horton,Jr.

orJames M. Reynolds, ifi, Attorney to transfer the said stock on the books ofsaid Company,

with full power ofsubstitution in thepremises.

Dated: May 30, 2002

nson

E~\a~wpdocs~5OOI~27I\stock.powJP

AmR.Est 00389

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 4 of 156
PROXY

For value received and in order to secure a Purchase Money PromissoryNote, the

undersigned, Jack Perkinson (Owner) does hereby grant unto N. D. Horton,Jr. and James M.

Reynolds, Ill, Proxy to vote at any and all shareholder meetings which may be had in the

companyknown as Perky Cap Company, Inc., proxy for 14,400 shares ofthe outstanding

Common Stock ofPerky Cap Company, Inc.

Provided however, that forso long as the following obligations are current and not in

default this Proxyshall be suspended, but upon default in any ofthe following named obligations

this Proxy shall be valid and active and shall not be revoked forso long as such defaultmay

exist:

1. Purchase MoneyNo~~mCotina W. Terry to N. D. Horton,Jr., James M.

Reynolds, ifi dated e , 2002 securedby 27,900 Shares ofthe Common Stock

ofPerky Cap Company, Inc. -

In Witness Whereof, the undersigned have hereunto set their hands and affixed their seals

this 30~day ofMay, 2002.

____________________________(SEAL)

e:~data\wpdocs\5OO1\27I\proxyJP

~ns on

AmR.Est 00390

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 5 of 156
Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 6 of 156
PLEDGE AGREEMENT

This Agreement made this

30

Ih day of May, 2002, by and between Cotina W Terry,

hereinafter Pledgor, and N. ii Horton, Jr and James M. Reynolds, ifi, 2561 Lake Oconee

Parkway, Greensboro, Georgia 30642, hereinafter Pledgee;

WITNESSET}1:

Whereas, Pledgee has loaned to Roy Terry and Rudolph Terry the sum of Six Hundred

Twenty-Four Thousand andNo/i 00 Dollars ($624,000.00) to fund Pledgor’s purchase of27~900

shares evidenced byNote, and Loan Agreement, dated as ofMay 30, 2002 (Loan Documents) and

thirty-one percent (31%) ofthe outstanding stock in Perky Cap Company, Inc.; and

Whereas, in order to inducethePledgee to make such loan,Pledgor has agreedto pledge the

Common Stock hereinafter mentionedto the Pledgee as security for the repaymentofsaid loan.

Now Therefore, itis agreed between the parties asfollows:

1.

In consideration of the loan made by Pledgee to the Roy Terry and Rudolph Terry as

hereinbeforementioned, the Pledgor hereby deliversto the Pledgee thirty-one percent ownership in

Perky Cap Company, aGeorgia Corporation representedby CertificateNo. — (27,900 shares),

together with that certain irrevocable Stock Power, and do herebyassign suchCommon Stock and

Certificate to the Pledgee and do herebyappoint Pledgee astheirtrue and lawful attorney for them

and in their name,place and stead to cause said Common Stock to be iransferredon the books ofthe

said Perky Cap Company to the name ofthe Pledgee. -

2.

The Pledgee shall hold said Common Stock as security for the repayment ofthe aforesaid

loanas described in the LoanDocuments, together with interest thereon, and shall nor at any time

dispose ofsuch Common Stock or encumber the same, except as herein otherwise provided.

3’

Roy Terry and Rudolph Terry shall repay the indebtedness to the Pledgee with interest

thereon according to the terms contained in said Loan Documents.

4.

At alltimes while Pledgeeis theholderofsaid Common Stack, the Pledgorshall receive any

dividends distributed thereon. Provided such dividends shall be approved by Pledgee.

AmR.Est 00378

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 7 of 156
5.

While the Pledgee is the holder ofsaid Common Stock, the Pledgor shall have the right to

vote the same at meetings of Perky Cap Company so long as they are not in default in the

performance ofany ofthe terms ofthis Agreement, the payment ofthe principal arid interest ofthe

said loan or under the terms ofthat certain Loan Agreement by and among the parties hereto (Loan

Documents).

6.

Upon the repayment ofthe entire amount ofthe loan and interest as herein provided, the

Pledgee shall transfer to the Pledgar the Stock Certificate pledged hereunder.

7.

In theeventthatthePledgor shall failtop~o~any oftheienn.s ofthis Agreement or ifRoy

TerryandRudolph Terry fall tomakepayment ofthe principal and interest ofsaid loanas required

pursuantto the terms ofsaid loan as evidenced in the Note, or fails to complywith the terms ofthe

LoanAgreement or default on. any ofthe LoanDocuments,Pledgee may, upon thirty (30) daysnotice

inWriting tothe Pledgor byRegistered Mail, sell any or all ofthe Common Stock hereinmentioned

in suchmannerand for suchprice asthePledgee may determine, and out oftheproceeds ofsuchsale

retain an amount sui~1cientto pay the principal and interest then due on said loan together with

expenses ofsale, and pay anybalance of’suchproceeds to RoyTerryandRudnlphTerry. At any bona

fide public sale, the Pledgec may purchase all or part ofsuch Common Stock at such price as he

deems proper. In the event that the proceeds ofany sale are not sufficient to pay the said loan and

interest together with expenses of’ such sale or any obligations of the pledge or under the Loan.

Agreement, then the Roy Terry and Rudolph Terry shall pay to the Pledgee any deficiency.

8.

All noticeshereundershallbe addressed to thePledgee and sent by Registered Mail, Return

Receipt Requested at the following address or such other address as Pledgee shall give to Pledgor

lit writing making specific reference to this Pledge Agreement, to-wit:

N. I). Horton, Jr. and

James M. Reynolds, UI

2561 Lake Oconee Parkway

Greensboro, GA 30642

With copy to:

Richard W. Schmidt

Attorney at Law

P.O. Box 67

Greensboro, GA 30642

AmR.Est 00379

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 8 of 156
Cotina W. Terry

P.O. Box 648

924 South Street

Roanoke, AL 36274

9,

This Agreement shall be governed by the laws ofthe State of Georgia.

InWitness Whereof, the undersigned have hereunto set theirhands and affixed theirseals

the day and year first above written.

Executedand acknowledged before rue

this 3Q*I~day ofMay, 2002: _____________________________

My CommissionExpires: &~yCammis~ionEXplta~Jtz~y~

(AFFIX NOTARY SEAL)

(‘~fl±±fr\ajbJ (SEAL)

Cotina W. Terry

(SEAL)

,~%cS £J~I41~EAL)

James M. Reyn ‘,RI

CM7DoMPIIa~u~

Executed and acknowledged before inc

th~30l~~d fMa 2002

~2~A

AmR.Est 00380

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 9 of 156
Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 10 of 156
PROXY

For value received and in orderto secure a Purchase Money Promissory Note to Roy

Terry andRudolphTerry, the undersigned, Cotina W. Terry (Owner) does hereby grantunto N.

1). Horton, Jr. and James M. Reynolds, III, Proxy to vote at any and all shareholder meetings

which may be had in the company known as Perky Cap Company, Inc., proxy for 27,900 shares

of’the outstanding Common Stock ofPerky Cap Company, Inc.

Provided however, that for so long asthe following obligations are current and notin

default this Proxy shall be suspended, but upon default in any ofthe following named obligations

this Proxy shall be valid and active and shall not be revoked for so long assuch default may

exist:

1. Purchase Money Note from Roy Terry and Rudolph Tenyto N. D. Horton,Jr. and

James M. Reynolds, UI dated May 30, 2002 secured by 27,900 Shares ofthe

Common Stock ofPerky Cap Company, Inc.

in Witness Whereof; the undersignedhave hereunto set theirbands and affixed their seals

this 30t1~day ofMay, 2002.

_________(SEAL)

Cotina W. Terry

AmR.Est 00381

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 11 of 156
Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 12 of 156
IRREVOCABLE STOCK POWER

~OR VALUE RECEiVED, the undersigned does hereby sell, assign and transfer to

N. 1). Horton, Jr. and James M. Reynolds, Ill, Twenty-Seven Thousand Nine Hundred shares

ofthe common stock ofPerky Cap Company, Inc., represented by Certificate No. ______

(27,900 shares) standing in the name ofthe undersigned on thebooks ofsaid Company.

The undersigned do hereby irrevocably constitute and appoint eitherN. D. Horton, Jr.

or James M. Reynolds, UI, Attorney to wansfer the said stock onthe books ofsaid Company,

with full power ofsubstitution in the premises.

Dated: May 30, 2002

Cotina W. Terry

. ~

AmR.Est 00382

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 13 of 156
Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 14 of 156
CLOSING STATEMENT

$624,000.00 LOAN

ROY TERRY AND RUDOLPH TERRY

FROM N. D. HORTON, JR. AND JAMES M, REYNOLDS, III

FOR THE PURCHASE OF 31% OF PERKY CAP COMPANY, INC. STOCK

Total Loan Proceeds $ 624,000.00

Disbursements by Borrower:

First draw $ -0-

Attorney’s fees - Blasingame, Burch, et al.-

Total Due From Borrower

The above checked and acknowledged this 30th day of May, 2002.

$ 3,500.00

a\wp~c~~5OOI\27I~os-st.te

AmR.Est 00367

3,500.00

erry

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 15 of 156
Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 16 of 156
•0 0 SECURITY AGREEMENT 000 (IIYPOTHECATION)

Eatonton, Putnam County, Georgia

May 30, 2002

KNOW ALL MEN BY THESEPRESENTS THAT, in consideration ofany loan or other financial accommodation heretofore or hereafterat any

time made or granted to Perky Cap Company, inc. (hereinafter called “Perk/’) or Cotina W. Terry or to the undersigned (orany of them), by

N. B. Horton,Jr. andJames M. Reynolds,lii (hereinafter,togetherwith their heirsand assigns, called“Horton andReynolds”), theundersigned

agree(s) with Horton andReynolds that, to securethepsymentofthe Liabilities (hereinafterdefined), Hortonand Reynoldsshall havea lien upon,

security title to, and a security interest in Stock Certificate Number _,,,_ representing 14,400 shares (16.0%) of Perky Cap Company. inc..

together with all other property at any time delivered, pledged, assigned, conveyed or transferred by the undersigned (orany ofthem) to Horton

and Reynolds andany otherproperty ofevery kindor description oftheundersigned (oranyofthem) now or hereafter inthe possession or control

ofHorton andReynolds for any reason, including all dividendsand distributions on or other rightsin connection with any propertyhereinabove

referred to (all such property, dividends, distributions and rights being hereinafter collectively called the “Collateral”), The term “Liabilities,”

as used herein, shall mean all obligationsof Perky orthe undersigned (orany ofthem), to Hortonand Reynolds, however incurred or evidenced,

whether direct or indirect, absolute or contingent, or now orhereafterexisting, or dueorto become due. The undersigned waive(s) notice ofthe

existence or creation of all or any ofthe Liabilities.

The undersigned who has delivered, pledged, assignedortransferred propertyto Horton and Reynolds wacrants that such unaersignedis thesole

and lawful owner ofsuch property, free ofall claimsand liens other than the security interest hereunder, with full right to deliver, pledge, assign,

convey and transfer such property to Horton and Reynolds as Collateral hereunder.

Horton and Reynolds shall be deemed to have exercised reasonable care in the custody and preservation ofthe Collateral ifit takes such action

for that purpose as the undersigned (or ifmore than one, such ofthe undersigned as shall have an ownership interest in such Collateral) shall

request in writing, but failure of Horton and Reynolds to comply with any such request shall not of itself be deemed a failure to exercise

reasonable care, and no failure ofHorton andReynolds to preserveor protect any rights with respectto the Collateral againstpriorparties, orto

doany actwith respectto preservation ofthe Collateralnot so requested bythe undersigned, shall bedeemed afailure to exercise reasonable care

in the custody or preservation ofthe Collateral.

Horton and Reynolds, from time to time, whether before or after any ofthe Liabilities shall become due and payable, may, without notice to the

undersigned (orany of them), (a) transferall or any part ofthe Collateral into the name of Horton andReynolds orits nominee, with or without

‘disclosing that such Collateral is subject to the lien, security title and security interest hereunder, (b) notif~’the parties obligated on any ofthe

Collateral to make payment to Horton and Reynolds of anyamounts due or to become due thereunder, (c) enforce collection of any of the

Collateral by suit or otherwise, and surrender, release or exchange all or any part thereof, or compromise or extend or renew from time to time

for any period (whether or not longer than the original period)any indebtedness evidenced thereby, and (d)take control of any proceeds of the

Collateral.

Horton and Reynolds may, from time to time, withoutnotice to the undersigned (or any ofthem), (a) retain or obtain security title to or asecurity

interest in any property, in addition to the Collateral, to secure anyofthe Liabilities, (b)retain or obtain the primary or secondary liability ofany

parties, in addition to the undersigned (or any ofthem), with res~,ectto anyofthe Liabilities, (c) extend or renew for any period (whether or not

longer than the original period) or exchange any of the Liabilities or release or compromise any liability of any party or parties primarily or

secondarilyliable thereon, (d)release itssecurity title to and security interest inall or any property, in addition to the Collateral securing any of

the Liabilities and permit any substitution or exchange for any suchproperty, and (e)resort to the Collateral for payment ofany ofthe Liabilities,

whether or not it shall have resorted to any other property or shall have proceeded against any partyprimarily or secondarily liable on anyofthe

Liabilities.

Non.payment, when due,whetherbydeclsration or otherwise, ofanysmountpsysbie onany ofthe Liabilities shall constituteadefaulthereunder.

Upon such default, (a) Horton and Reynoldsmayexercise fromtimeto timeanyrights andremedies available toil underthe UniformCommercial

Code as in effect at that time in Georgiaor otherwise available to it, and (b) Horton and Reynolds may, without demand or notice ofany kind,

appropriate and apply toward the payment ofsuch ofthe Liabilities, and in such order ofapplication as Horton andReynolds may from time to

time elect, any balances, credits, deposits, accounts, items or monies of the undersigned (or any ofthem). If any notification of intended

disposition ofany ofthe Collateral is required bylaw, such notification, ifmailed, shall be deemed reasonably and properly given ifmailed at

least five days before such disposition, postage prepaid, addressed to the undersigned (or ifmore than one, to such ofthe undersigned as shall

have an ownership interestin such Collateral), either atthe address ofsuch undersigned shownbelow, or at any other addressofsuch undersigned

appearing onthe records ofHorton and Reynolds. Anyproceeds ofany disposition of Collateral may be applied byHorton and Reynolds to the

payment ofexpensesin connection with the Collateral, includingreasonable attomeys’feet andlegal expenses,and any balanceofsuch proceeds

may be applied byHorton and Reynolds toward the paymentof such ofthe Liabilities, andin such order ofapplication. as Horton andReynolds

may fromtime to time elect. Allrightsand remedies ofHortonand Reynolds expressed hereunder are in addition to all other rights andremedies

possessed byit, includingthose under any other agreement or instrument relating to any ofthe Liabilities or any security therefor. No delay or

failureon thepart ofHortonand Reynolds inthe exercise ofanypghtorremedyshall operate as awaiver thereof,and nosingle or partial exercise

by Horton andReynolds ofany right orremedy shall precludeother orfurther exercise thereof orthe exercise ofany otherright or remedy. No

action of Horton and Reynolds permittedhereunder shall impair or affect therights ofHorton and Reynoldsin andto the Collateral. Time is of

the essence of this Agreement.

This Agreement has been made in the Stateof Georgiaand shall be governed bythe laws ofthat State. Wherever possible each provision ofthis

Agreement shall be interpreted in such manneras lobe effective and validunderapplicable law, but ifany provision ofthis Agreement shall be

prohibited orinvalid under such law, such provision shall be ineffectiveto the extent ofsuch prohibition or invalidity, withoutinvalidating the

remainder ofsuch provision or the remaining provisions ofthis Agreement.

ifmore than one party shall execute thisAgreement the term undersigned as used herein shall mean all parties signing and each ofthem, who

shall be jointly and severally boundhereunder.

Given under the hand sns seal of each ofthe undersigned.

Address: 12 ‘t

AmR.E5t~°391

E~DA1A\w~sO~SsOI57ITh,

5

,th,.~.$

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 17 of 156
J. Lester Alexander III v. N. D. Horton and J. Reynolds

November 10, 2000 Loans to Allie Robinson in the principal amount of $200,000 and to Cotina Terry in the principal amount of $200,000

m

x

Checks total: $234,375.81

Payor Payee Amt Check No. Date Issued Bank Date Invoiced Invoice Description

Terry Manufacturing N. D. Horton, Jr. $1,561.50 61506 12/11/2000 First Bank 12/6/2000 Interest 11/10/2000-12/10/2000

Terry Manufacturing N. D. Horton, Jr. $1,613.55 61836 1/9/2001 First Bank 12/29/2000 Interest 12110/2000-1/10/2001

Terry Manufacturing N. D. Horton, Jr. $1,613.55 62225 2/9/2001 First Bank 1/21/2001 Interest 1/10/2001-2/10/2001

Terry Manufacturing N. D. Horton, Jr. $1,457.40 62530 3/9/2001 First Bank 2/28/2001 Interest 2/1012001-3/10/2001

Terry Manufacturing N. D. Horton, Jr. $1,613.55 62869 4/9/2001 First Bank 3/30/2001 Interest 3/10/2001-4/10/2001

Terry Manufacturing N. D. Horton, Jr. $1,561.50 63221 5/9/2001 First Bank 4/30/2001 Interest4/10/2001-5/10/2001

Terry Manufacturing N. D. Horton, Jr. $1,613.55 63646 6/8/2001 First Bank 5/31/2001 Interest 5/10/2001-6/10/2001

Terry Manufacturing N. D. Horton, Jr. $1,561.50 63944 7/7/2001 First Bank 6/29/2001 Interest6/10/2001-7/10/2001

Terry Manufacturing N. D. Horton, Jr. $1,613.55 64357 8/9/2001 First Bank 7/31/2001 Interest 7/10/2001-8/10/2001

Terry Manufacturing N. D. Horton, Jr. $1,613.55 64739 9/8/2001 First Bank 8/31/2001 Interest 8/10/2001-9/10/2001

Terry Manufacturing N. D. Horton, Jr. $1,561.50 65090 10/9/2001 First Bank 9/28/2001 Interest 9/10/2001-10/10/2001

Terry Manufacturing N. D. Horton, Jr. $1,613.55 65469 11/10/2001 First Bank 10/30/2001 Interest 10/10/2001-11/10/2001

Terry Manufacturing N. D. Horton, Jr. $11,965.42 4418 12/10/2001 Bank of America 11/30/2001 Loan 1, Installment 1

Terry Manufacturing N. D. Horton, Jr. $11,965.42 66042 1/9/2002 First Bank 12/29/2001 Loan 1, Installment 2

Terry Manufacturing N. D. Horton, Jr. $11,965.42 66431 2/8/2002 First Bank 1/31/2002 Loan 1, Installment 3

Terry Manufacturing N. D. Horton, Jr. $11,965.42 66788 3/8/2002 First Bank 02/??/2002 Loan 1, Installment 4

Terry Manufacturing N. D. Horton, Jr. $11,965.42 67156 4/10/2002 First Bank 3/29/2002 Loan 1, InstallmentS

Terry Manufacturing N. D. Horton, Jr. $11,965.42 67470 5/9/2002 First Bank 4/29/2002 Loan 1, Installment 6

Terry Manufacturing N. D. Horton, Jr. $11,965.42 67795 6/7/2002 First Bank 5/31/2002 Loan 1, Installment 7

Terry Manufacturing N. D. Horton, Jr. $11,965.42 68132 7/9/2002 First Bank 6/28/2002 Loan 1, Installment 8

Terry Manufacturing N. D. Horton, Jr. $11,965.42 68521 8/9/2002 First Bank 7/29/2002 Loan 1, Installment 9

Terry Manufacturing N. D. Horton, Jr. $11,965.42 68906 9/9/2002 First Bank 8/30/2002 Loan 1, Installment 10

Terry Manufacturing N. D. Horton, Jr. $11,965.42 69311 10/8/2002 First Bank 9/30/2002 Loan 1, Installment 11

Terry Manufacturing N. D. Horton, Jr. $11,965.42 69610 11/8/2002 First Bank 10/31/2002 Loan 1, Installment 12

Terry Manufacturing N. D. Horton, Jr. $11,965.42 69983 12/9/2002 First Bank 11/25/2002 Loan 1, Installment 13

Terry Manufacturing N. D. Horton, Jr. $11,965.42 70380 1/9/2003 First Bank 12123/2002 Loan 1, Installment 14

Terry Manufacturing N. D. Horton, Jr. $11,965.42 70765 2/7/2003 First Bank 1/23/2003 Loan 1, Installment 15

Terry Manufacturing N. D. Horton, Jr. $11,965.42 71063 3/8/2003 First Bank 2/24/2003 Loan 1, Installment 16

Terry Manufacturing N. D. Horton, Jr. $11,965.42 71514 4/9/2003 First Bank 3/24/2003 Loan 1, Installment 17

Terry Manufacturing N. D. Horton, Jr. $11,965.42 71869 5/9/2003 First Bank 4/22/2003 Loan 1, Installment 18

~es~

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 18 of 156
First Bank

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 19 of 156
First Bank

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 30 of 156
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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 48 of 156
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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 50 of 156
TERRY MANUFACTURING CO., 1NC,

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 51 of 156
F 70380

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 52 of 156
TERRY MANUFACTURING CO., INC.

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 53 of 156
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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 54 of 156
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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 55 of 156
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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 56 of 156
J. Lester Alexander III v. N. 0. Horton and J. Reynolds

November 10, 2000 Loans to Allie Robinson in the principal amount of $200,000 and to Cotina Terry in the principal amount of $200,000

Payor Payee Amt Check No. Date Issued Bank Date Invoiced Invoice Description

Terry Manufacturing James M. Reynolds, Ill $1,561.50 61507 12/11/2000 First Bank 12/6/2000 Interest 11/10/2000-12/10/2000

Terry Manufacturing James M. Reynolds, III $1,613.55 61837 1/9/2001 First Bank 12/29/2000 Interest 12/10/2000-1/10/2001

Terry Manufacturing James M. Reynolds, III $1,613.55 62226 2/9/2001 First Bank 1/21/2001 Interest 1/10/2001-2/10/2001

Terry Manufacturing James M. Reynolds, III $1,457.40 62531 3/9/2001 First Bank 2/28/2001 Interest 2/10/2001-3/10/2001

Terry Manufacturing James M. Reynolds, III $1,613.55 62870 4/9/2001 First Bank 3/30/2001 Interest 3/10/2001-4/10/2001

Terry Manufacturing James M. Reynolds, III $1,561.50 63222 5/9/2001 First Bank 4/30/2001 Interest 4/10/2001-5/10/2001

Terry Manufacturing James M. Reynolds, III $1,613.55 63648 6/8/2001 First Bank 5/31/2001 Interest 5/10/2001-6/10/2001

Terry Manufacturing James M. Reynolds, III $1,561.50 63943 7/7/2001 First Bank 6/29/2001 Interest 6/10/2001-7/10/2001

Terry Manufacturing James M. Reynolds, III $1,613.55 64358 8/9/2001 First Bank 7/31/2001 Interest 7/10/2001-8/10/2001

Terry Manufacturing James M. Reynolds, III $1,613.55 64740 9/8/2001 First Bank 8/31/2001 Interest 8/10/2001-9/10/2001

Terry Manufacturing James M. Reynolds, III $1,561.50 65091 10/9/2001 First Bank 9/28/2001 Interest 9/10/2001-10/10/2001

Terry Manufacturing James M. Reynolds, III $1,613.55 65470 11/10/2001 First Bank 10/30/2001 Interest 10/10/2001-11/10/2001

Terry Manufacturing James M. Reynolds, Ill $11,965.42 4419 12/10/2001 Bank of America 11/30/2001 Loan 2, Installment 1

Terry Manufacturing James M. Reynolds, Ill $11,965.42 66044 1/9/2002 First Bank 12/29/2001 Loan 2, Installment 2

Terry Manufacturing James M. Reynolds, Ill $11,965.42 66432 2/8/2002 First Bank 1/31/2002 Loan 2, Installment 3

Terry Manufacturing James M. Reynolds, III $11,965.42 66789 3/8/2002 First Bank 02/??/2002 Loan 2, Installment 4

Terry Manufacturing James M. Reynolds, UI $11,965.42 67157 4/10/2002 First Bank 3/29/2002 Loan 2, InstallmentS

Terry Manufacturing James M. Reynolds, III $11,965.42 67471 5/9/2002 First Bank 4/29/2002 Loan 2, Installment 6

Terry Manufacturing James M. Reynolds, III $11,965.42 67796 6/7/2002 First Bank 5/31/2002 Loan 2, Installment 7

Terry Manufacturing James M. Reynolds, III $11,965.42 68133 7/9/2002 First Bank 6/28/2002 Loan 2, Installment 8

Terry Manufacturing James M. Reynolds, III $11,965.42 68522 8/9/2002 First Bank 7/29/2002 Loan 2, Installment 9

Terry Manufacturing James M. Reynolds, III $11,965.42 68907 9/9/2002 First Bank 8/30/2002 Loan 2, Installment 10

Terry Manufacturing James M. Reynolds, Ill $11,965.42 69312 10/8/2002 First Bank 9/30/2002 Loan 2, Installment 11

Terry Manufacturing James M. Reynolds, Ill $11,965.42 69611 11/8/2002 First Bank 10/31/2002 Loan 1, Installment 12

Terry Manufacturing James M. Reynolds, III $11,965.42 69984 12/9/2002 First Bank 11/25/2002 Loan 2, Installment 13

Terry Manufacturing James M. Reynolds, III $11,965.42 70381 1/9/2003 First Bank 12/23/2002 Loan 2, Installment 14

Terry Manufacturing James M. Reynolds, III $11,965.42 70766 2/7/2003 First Bank 1/23/2003 Loan 2, Installment 15

Terry Manufacturing James M. Reynolds, III $11,965.42 71064 3/8/2003 First Bank 2/24/2003 Loan 2, Installment 16

Terry Manufacturing James M. Reynolds, Ill $11,965.42 71515 4/9/2003 First Bank 3/24/2003 Loan 2, Installment 17

Terry Manufacturing James M. Reynolds, III $11,965.42 71870 5/9/2003 First Bank 4/22/2003 Loan 2, Installment 18

tabbIes~

m Checks total: $234,375.81

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 57 of 156
First Bank

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 58 of 156
PAY

TERRY MANUFACTURING CO., INC.

P.O. BOX 648 *

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PAY _______________________________________________

TO ThE

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TERRY MANUFACTURING CO., INC.

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ARE 03256

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 59 of 156
TERRY MANUFACTURING CO., INC. F 61835

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ARE 03251

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 60 of 156
TERRY MANUFACTURING CO., INC.

P.O,BOX~ F 6-22 24

ROANOKE, ALABAMA 36274

- FIRST BANK 61-363

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TERRY MANUFACTURING CO., INC.

P.O. BOX648

ROANOKE, ALABAMA 36274 - ROANOKE. ALABAMA

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 61 of 156
FIRST BANK

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ARE 03239

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 62 of 156
TERRY MANUFACTURING CO., -INC,

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ROANOKE, ALABAMA 36274

TERRY MANUFACTURING CO., INC.

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 63 of 156
TERRY MANUFACTURING CO., INC.

P.O. BOX 648

ROANOKE, ALABAMA 36274

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ARE 03229

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 64 of 156
PAY.

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ARE 03224

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 65 of 156
TERRY MANUFACTURING CO., INC.

P.O. BOX 648

ROANOKE, ALABAMA 36274 FIRST BANK

- ROANOKE, ALABAMA

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 66 of 156
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TERRY MANUFACTURING CO., INC.

* P.O. BOX 648

ROANOKE, ALABAMA 36274

OR ~ ~-, -- M. ~61 ffJ OL ~ -

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ROANOKE, ALABAMA 36274 FIRST BAN)( ____

ROANO~~ALABAMA

~ DOt ~CTS ~ DOLLARS

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TERRY MANUFACTURING CO., INC.

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[ DATE

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/

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PAY.

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ROANOKE, ALABAMA 36274

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F 65089

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PAY T~42945DoLS00C~

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t~ ~‘J_7. ~ _______

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— —

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P.O. BOX 648 -

ROANOKE, ALABAMA 36274

PAY__________________ _____________________________

RDEROF N.D.

— _In’o~5o~on’ ‘:o~2o3E~3a~: It’LL O~3O a”’

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P.O. BOX 648 -

ROANOKE, ALABAMA 36274

PAY______________

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ARE 03204

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 69 of 156
TERRY MANUFACTURING CO., INC.

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F ~ -

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PAY*

TERRY MANUFACTURING CO., INC.

P.O. BOX 648

ROANOKE, ALABAMA 36274

TO THE 1k ~ ~ p ~ CI .‘.J

ORDER OF

— ~-~-

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ROANOKE, ALABAMA

~I6I3D0LS~5 Cr3

‘F

61.363

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U— tO-()~

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C~S4G1

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CO., INC.

.CENTS~

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F 65470

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 70 of 156
_-)* ~.00--~- — ** -

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TERRY MFG CO INC ATLANTA GEN

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- TERRY MFG Co INC ATLANTA GEN

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/1 - -

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 71 of 156
TERRY MANUFACTURING CO.,-INC.

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ROANOKL ALABAMA 36274

j F~ ~ cE’S P-i. I i’JCI

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it THE

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- P.O.BOX 648

ROANOKE, ALABAMA 36274

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P.O. BOX 648

ROANOKE, ALABAMA 36274

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 72 of 156
TER~TMANUFACTURING CO.. INC.

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 73 of 156
~1ERR?MANUFAC1URING co INC. - F 66432

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 74 of 156
TERRY MAMJFAC’T1JRB~C~CO., INC.

P,D. iO~44

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 75 of 156
- F.66789

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ARE 00454

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 76 of 156
TERRY NANUFACTUV3INS CO., INC. F 67156

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67156 04/15/2002 - 11,965.42

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 77 of 156
67157

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TERRY MANUFACTURING CD, INC.

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67157

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 78 of 156
TERRY MANUFACTURING CO., INC.

P.O. BOX 648

ROANOKE, ALABAMA 86274

FIRST BANK

ROANOKE, ALABAMA

T~ii9~ 5~DULs42cr5

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P.O. BOX 648

ROANOKE, ALABAMA 36274

E 67470

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ROANOKE, ALABAMA ——

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P.O. BOX 648

ROANOKE, ALABAMA 36274

DOLLARS

DATE CHECK NO.

IAA.0.A048 L..0,N18 I .~—‘~_~z- I~’~47t Iu~6sI4~2J

TERRY MANUF RING CO., INC.

F 67-472

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ROANOKE. ALABAMA 622

PAY ~ 29-45 ~ ~ Cr5 DOLLARS

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TERRY MAN CTURING CO., INC.

* 1- ~*~-~

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ARE 03132

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 79 of 156
-F&7796 I

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 80 of 156
..TERRY.MANUFACTURINGCO

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ARE 00405

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 81 of 156
F68132

TERRY MANUFACTURING CO., P40. -

P~AiCE 84$

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 82 of 156
~r’ TtRRY MAM~MC1UR)U~CO., ~

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 83 of 156
- F68521.

TERRY MANUFACTURING CO., INC.

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ARE 00365

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 84 of 156
TERRY MANUFACTURING CD,, INC.

P.O. BOX Mi

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Ff56522 -

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-

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ARE 00366

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 85 of 156
* - - F68907

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k8907 09/30/2002 -- .11,965.42

ARE 00346

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 86 of 156
- - F69312

TERRY MANUFACTURING CO., INC.

P.O BOX 44

ROANO,cE. AL’-BMM36274 - 81-343

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J,.1t

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ARE 00328

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 87 of 156
-- F69311 *

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ARE 00327

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 88 of 156
FIRST BANK

ROANOKE. ALABAMA

- T~I76I8IDoLS22 CIS

TO THE A ~. ‘- ~ a

~ ~ ~ L.”T.~

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TERRY MANUFACTURING CO., INC.

P.O. BOX 648

ROANOKE, ALABAMA 36274

F 69982

61.363

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DOkI.A#~ C~NT~

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- -- TERRY-MANUEACTURtNG-CO., INC.

.

FIRSTBANK

ROANOKE, ALABAMA

TERRY MFG. ‘r -r t~~ .~Zi-.~i’~i~ .‘( ‘) “ri’ CO. H~lCJ~.’ij ,~‘ ~ ~J .LJUL~).i~ ~ L .‘...‘

TO THE N . 0. 14 o ~. ‘T .o-i

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F 69983

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t:o~ 2 2O3~~38i: LL 0

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TERRY MANUFACTURING CO., INC.

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ROANOKE, ALABAMA 36274

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PAY~

TO

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NP

TERRY MANUFACTURING CO., INC.

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PAY.

PAY.

30’

NP

61-363

622

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 89 of 156
F 70380

TERRY MANUFACTURING CO., INC.

P.O. BOX 648

ROANOKE, ALABAMA 36274

PAY

- F1RS’T BANK

ROANOKE. ALABAMA

TM~1I96~DOLS42CT~

622

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F 70381. TERRY MANUFACTURING CO., INC.

- P.O. BOX 648

ROANOKE, ALABAMA 36274

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 90 of 156
TERRY MANUFACTURING CO., INC.

P.O. BOX 648

ROANOKE, ALABAMA36274

F 70764

FIRST BANK -

ROANOKE,ALABAMA 61.363

622

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~_- ~ ~

TO THE

ORDER OF_ ~T 1-~e--4 -T - ., LTr

-II’O7O?1L,sI• I:o622o3~3aI:. It’LL O~3O Bu’

[ DATE CHECK NO. ~

- DOI.I.AR$ ‘ CENTS I 2.-7..03’ kIo”76 ¶~V7~t8i1Z..t.j

TERRY MANUFACTURING CO., INC.

.*-~

\\~~)

FIRST BANK

ROANOKE. ALABAMA

F 70765

61-363

622

PAY.

J’z-..

ORDER OP

....~DOI~LARS

J - DATE CHECK NO.

- DOt*LAfl CENTS

- 2~—7_c~-37ó1 ~R.~Si )tS~4J~

F 70766

TERRY MANUFACTURING CO., INC.

P.O. BOX 648

ROANOKE, ALABAMA36274

PAY.

FIRST BANK

ROANOKE, ALABAMA

T~~TTq~~.iôis42cTs

ORDE~OF1~S,~ M~REI 4oL~S,TJIE

II’O?O?~tI~ I:o~,2~o3~3aI: )I’LL O~3D Bn’

622

DOLLARS

DATE

L—~J.c~

CHECK NO.

1c~

DOLLARS

t)~~

CENTS

4~

-TERRY MANUFACTURING CO., INC.

_

TERRY MANUFAcTURING CO., INC..

P.O.B0X648 -

- ROANOKE, ALABAMA36274

T~ff~TT~Do’LS42CTS

TERRY CO., INC.

ARE 01851

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 91 of 156
F 71063

TERRY MANUFACTURING CO., INC. -

P.O. BOX 648 - - FIRST BANK

ROANOKE, ALABAMA 36274 - ROANOKE. ALABAMA 61~~

- 622

PAY~ - T~f~7g1195~noLs42crs. - DOLLARS

- DATE CHECK NO. ~M.1IIk’t

- ‘ - ~- -~-: - * - - ~ - - - * - * - :-~ . .DOU~RS----CEpOTS

0:U~Lb i~r~1

J&., ~ ~

. - - --. * - TERRY MANUFACTURING CO.,INC.

v’07L0630’ ‘:o~22o3~3a~:~LL O~3O80’ NP j~3

- 1~ .. — —- ________

- F71064 TERRY MANUFACTURiNG CO., INC. - -

P.O. BOX 648 FIRST BANK

ROANOKE, ALABAMA36274 ROANOKE. ALABAMA 61.363

62

PAY ~ ~..DOLLARS

DATE CHECK NO.

- . - DOI_L.A*$ CtHT711 -~

[~-g-o~ 7to(,j..

TERRY MANUFACTURING CO., INC.

0 ,•~ ~ .~

!1~.. ~ - -

- ~‘O?LO~L,ii’ I:o~22o3~,38I:Il’LL O~3O B~

ARE 03117

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 92 of 156
4....

TERRY MANUFACTURING CO., INC.

- P.O. BOX 648

ROANOKE, ALABAMA 36274

C i~J,D.. j4.~~Jt ~.,j J p,~

TERRY MANUFAcTURING CO., INC.

- P.O. BOX 648

ROANOKE, ALABAMA 36274

FIRST BANK

ROAN~ ALABAMA

T~I~I196 ~ ~ot~42 ~s

‘:o~~22o3~3az: u’L.L O~3O80’

F 71514

61-363

622

-_DOLLARS

- DATE j CHECK NO.

- R0I.I.AJ~S CENTS I4~~—c,3I 1i ,~Jit~-~.J

— - TERRY MANUFACTURING CO., INC.

~TSECURITY SCREEN ONRA

FiRST BANK

ROANOKE ALABAMA

~R9FG~ 196 ~ DOtS 42 CTSPAY.

~ £e,.-~e.S~* “1~~

2~”frJo LO.~. TIlT

‘a

II’O?LSLSI1’ I:o~22oa~,3aI: II’LL O~3O 8n’

F 71515

61-363

622

rv~I ADC

DATE CHECK NO.

- DOLLARS - CENTS

4—1-°~Ths is ~-t~b~14

.

~

TERRY MANUFACTURING CO.,INC.

PAY.

:I14IS000UIJ

ARE 03151

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 93 of 156
ARE 01921

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 94 of 156
,12/11/2e08 13:39 TERRY WG ATLJNTh AM

American Real Estate

In~cs1inentCompany, Ud,

~1 Lake Ocbnee Parkway

~ensboro, Georgia 30642

December 6, 2000

TeL C706) 453-2397

Fax: (706) 453-4749

~.D.Horton.h

3am~sRoynolds.ill

Mr. Rudolph Terry

3725 Zip Industrial Boulevard

Atlanta. GA 30354

Loan Dated c~mb~r 10. 2000. Principal kmou~t? $200,000.00

~. Lopn Dated_November 10.. 2000k Principal Amount: $200,000.00

Interest Due ~ 9.5%

1. November 10, 2000 - December 10, 2000

2. November 10. 2000 - D~oamber 10, 2000

Please makes checks payable as ~o1lowa;

N. D. Horton, Jr.

James ?4. Reynolds, III

Please mail or delivsr to~

2561 L2k9 Oconee Parkway

Greer~sboro, GA 20~2

$1, 5~1.5O

$1, 5~1.50

• .$ 1,561.50

• C 1,5~1.S0 $ 3,123.00

, J

ARE 03257

4047616999 PAGE 84

Received Dec—il—DO l~:38pm F ra~—4D47E16999 To-TERRY WJ{UFACTURIP4G Page 04

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 95 of 156
Am~ricanReal Estate

investment Company, Ltd.

2561 Lake Oconee Parkway

~-eensboro, Georgia 30642

December 29, 2000

Mr. Rudolph Terry

3725 Zip Industrial Boulevard

Atlanta, GA 30354

Tel. (706) 453-2397

Fax: (706) 453-4749

N.D. Horton, Jr.

JamesReynolds, 111

1. Loan Dated Novethber 10, 2000, Principal Amount: $200 ,000. 00

2. Loan Dated November 10, 2000, Principal Amount: $200,000.00

10, 2001.

10, 2001.

•$ 1,613.55

.$ 1,613.55

$ 3,227.10

Please makes checks payable as follows:

N. D. Horton, Jr.

James H. Reynolds, III

Please mail or deliver to:

CEJ/

2561 Lake Oconee Parkway

Greensboro, GA 20642

$1, 613 .55

$1, 613 .55

Interest Due @ 9.5%

1. December 10, 2000 - January

2. December 10, 2000 - January

ARE 02361

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 96 of 156
02/08/2081 17:58 4047616999 TERRY WG ATLANTA AM

American Real Estate

Investment Company, Ltd.

‘~Lake Oconee. P~irkway

JeDsboro, Gwrgia 30642

January 31, 2003.

PAGE 83

‘I~L(70~)4~3-2397

Fa~(706) 453-4749

N.D. Horton,it

Jaine~Reynolds, ill

Mr. Rudolph Terry

3725 Zip Ii~dustrial Bou~.evard

Atlanta, GA 30364

1. I~oanDates NOVetflber1~Qj 2000.

~ ~ T~t~edNovember 10. 2000

~j~ci~al 7~rnou~tL

Prnr~Da1 ~mr~unt!

IntGrs~tDue ~ 9.5*

1. January 10, 2003. - February

2.. January 10, 2001 - Feb~-~iary

10, .2001

10, 2001

-$ 1,613.55

.~ 1.63.3~

$ 3.227.3.0

Pleaee makc~ checks payable as Eollowg:

N. D. Horton, Jr.

Jamee H. R~yno1ds, III

P1ea~e mail or deliver •to:

2561 Lake Oconee Parkway

Greensboro, GA 20642

CE~/

$1,613.55

$1,613.65

ARE 03245

$200. 000.0k

~200. 000.00

Received Feb~O~—OlD~E8p~i Fr~m—4D47t1EEB9 Ic—TERRY MANUFACTURING Pgie U3

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 97 of 156
03/09/2081 13:38 4047616999 ILXNY MF~ñAILP~NTAAM

Axherican Real Estate

Imesliuent Company,Ltd.

- Lake Oconee Parkway ____

eensboro, Georgia 30642

~‘ebruary 28, 2002.

TeL (706) 453-2397

Fax.: (706)4S3-4149

N.D. Horton. Jr.

JamesRcynold~,ill

lir. Rudolph ‘Terry

3725 Zip Industr~.a1 ~oulevard

At1&nt~a, GA 30354

3.. Tjo~Date&Novcmber 10, 2000, Princ~~lAmo~mt, ~20O,000.QQ

2. Loan Date&NOvember 10. 2000, Princ±pal 7~mount: $200,000.00

Intere5t Due @ 9.5%

1. February 10, 2003. - March 10,

2. February 10, 2001 - March 3.0,

2001....

2001.....

$ 1,457.40

~

$ 2,93.4.80

Please ntakes check8 peyable a~ followa:

N. D. Horton, Jr.

James N. Reynolds, Iii

Please mail or deliver ~

2563. Lake Oconee ?arkwa.y

Greensboro, GA 20642

~1,457,40

~1.,457.40

ARE 03238

Received Mar—09—01 Ol:~2p~ Frorn-~04791t999 Ic-TERRY MANUFACTURING Page 03

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 98 of 156
U4/U~/UJ. XLUj’~ .LL;4~ 2’*A. iU~ 4~ W-1..~~1 I~a~.A.XM ~ ~

I~ UU 4

American Real Estate

Investment Compaiiy, Ltd.

2561 Lake Oconee Parkway

‘~Greensbcro,Geor~ie30642 —

March 30, 2001

ThI. (706) 453-2397

Fax; (70~)453-4749

N.D. flottun,Jr.

James Reynolds, Ill

Mr. Rudolph Terry

3725 Zip Industri8.l Boulevard

Atlanta, GA 30354

1. Loan rated ~

~ T,r~r~ D~t~d_NavEmbar 10. 2000.

Pr~1nCiDa1 Arno1.mt~

ii r~~t ~rnr,i i,~4.

Interest Due ~

1. March 2.0, 2003. - April 10,

2. Ivlarch 10.. 2003. - April 10,

2001

2001

.$ 1,613.55

.5 1.613.5j

~ 3,227.3.0

Please make checks payable as ~ol1ows:

N. D. Herto~, Jr.

Jarne~N. Rcyno1d~, III

P1ea~emaiJ. or d2liver to:

CEJ/

2E~1 Lake Oconee l’arkway

~rccn~boro, GA 20642

~2., 613 .55

~1,613 .55

EQ2 P~cL&4~-~

S200. 000. 00.

$200. 000..00

ARE 03234

Received 04—09—01 lO:93a Frcm—709 4E~9131 Ic—TERRY MANUFACTURING Paie 03

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 99 of 156
4~4Ib1b’~~ ~:J-~<YII- ~ A LAN A AM

American Real Estate

Investment Company, Ltd.

2.5~SILak~Oconec Parkway

I. Oreensbom,, Georgia 30642

April 30, 2001

Tot. (706) 453~3~7

Pax. (706) 4$3.4749

NiX Honon,Jr.

Jamc~P~ynoJds,UI

Mr. Rudolph Terry

3725 Zip Industrial Eoulev~rd

Atlanta, GA 30354

3.. Loan D~t~NOvemheilO - 2000_. Princ5~pa1 2~rnoun’t: $200, 000.00

2. Loan Dated Nov~embrl~, 2000, thc~pal Amout~t~ 00,000.0

Interest Due ~

1. April 10, 2001 - May 10, 2001

2. April 10, 2001 - May 3.0, 2003.

Please make checks payable as follows:

Please mail or de.liver to;

2561 Lake 0

Greensboro, 00flQO GA Parkway 20642

CEJ/

N. D. Horton, Jr.

James H. Reynolds, III

$1, 561.50

563. .50

$ 1,561.50

$ 3,123.00

ARE 03228

Received May-OE—Ol 91:ZZpe F rc~—4D47El9999 Ic—TERRY MANUFACTURING Page 03

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 100 of 156
S6/06/2081 14:53 TERRY t’FG ATLAHTA AM

American Real Estate

Investment Company, Ltd.

2561 Lakc Oconcc Parkway

‘

1

Or~nsboro,Georgia 30642

May 3]., 2001

Mr. Rudolph Terry

3725 Zip Industrial ~oulevar~

Atlanta, GA 30354

1,

2.

Lean ~

Lo~Dat~d

~vember

Z~Q~7.aTflber

2.0.

10.

2000.

2000.

Prir~ci~al

Pr~ncipa1

Amei.~nt; $200.o.0~Q,~,Q~

~

$1,613 ..55

$1,613.55

-S 1,63.3.55

.-~ ~

~ 3,227.10

404761

PAGE 83

Tc7~(706)453-2397

F~z;(706) 453-9737

~‘l.D.J~onort.Jr.

JamesReynolds. UI

Ir~erest Due t~ 9.5~

1. May :1.0, 2001 - ~ur~e 10, 2001.

2. May 10, 2003. - JUne 10, 2003..

?leas~ make checks payable as follows:

Ii, ~ Borton, Jr.

James N. Reynolds, lIZ

Please mail or deliver to:

2563. LakQ Oconee Parkway

GreensborO, CA 20642

AR~03223

Received Jun—09—01 02:E~p~ Fr os—4047919999 Ic—TERRY MANUFACTURING Page 03

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 101 of 156
87/8V2883. 8~38 4847616~~ TERRY MPG ATLANTA AM PAGE 82

American Real Estate

Intcstment Company, Ltd.

k~2561 Lake Oconee Parkway

~Greensboro, Georgia ~0642

June 29, 2001

Mr. Rudolph Terry

3725 Zip ~ridustria1 Boulevard

Atlanta, GA 30354

~1~Loan

2J-.,oa~

Dated

D~ted

November

~ovsmnber

10,

10,

2000,

2000,

Principal

p r~ci~a1

Amount:

Amount:

$200.

$200. 00Q,J~

~rxterest Due ~ 95%

3.. June 10, 2003. - ~uly 10, 2001

2. June 10, 2003. - July 10, 2003.

Please make checks payable as follows:

2561 Lake Oconee Parkway

Creensboro, GA 20642

N. D. Horton, Jr.

James M. ~eyno1d~, III

Please mail oZ~deliver to:

CFaJ/

$1,561.50

$1, 561.50

$ 1,561.50

~

$ 3,123.00

~. • ~. 2.

• .-:..... -

i:.. ~

Td~(706) £,53-~Z397

~ (706) 453~9737

~4.D.Hwu~,Jr.

Jaine.s Reynolds. III

ARE 03218

Received Jul—07—01 09~39ae Frc~-4D47E1E999 TO—TERRY MANUFACTURING Page 02

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 102 of 156
UUI U.~i ~.UUL JJ.~t %~ ~ I I•~%~~~

American Real Estate

1uve~tmeutCompanl, Lt&

2561 Lake Ocor~eeParkway

~reensboroiGeorgia 30642

July 31, 2001

Mr. RudoLph Terry

3725 Zip Industrial Boulevard

Atlanta, CA 30354

Tcl: (70G) 453-2397

F:~xt(706) 453-9737

ND. Hoton. Jr.

James Re~mo1ds.III

1. Lcan ~tcd ~Toven±er 10. 2000. P±~1 Amount: ~200~000•Gfl

2. Loan Dated NcDvernber 10. 2000. Pri~cira1 Amount: $200~000. 00.

~ntsrest Due ~ 9.5%

3.. July 10, 2003. - Aug. 10, 2001

2. July 10, 2001 — Aug. 10, 2001

Please make checks payable aa Lollowe:

2563. Lake Oconee Parkway

Greensboro, GA 20642

N. D. Horton, Jr.

Jamnea M. Reynolde, III

~leace mail or deliver to;

$1,613 .55

$1, 613.55

$ 1,63.3.~5

.~ 1,613.55

$ 3,237.10

ARE 03213

Received Aug—09—01 11~3Ba~ Froa—4047919999 Ic-TERRY MANUFACTURING Page 03

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 103 of 156
89/87/2881 16:53 4847616999 TERRY i~ciA1LAF’flA AM t-’A(*. u~

Axnicau Real Estate

Investment Company, Ltd.

I Lake Oconee Parkway

~ureensboro, Georgia 30642

August 33., 2003.

Ie~(706)453.2397

1ax (706) 453-9737

~4.D.Honoci~3r.

JamesReynotds~III

Mr. Rudolph Terry

3725 Zip Industrial ~ou~evard.

Atlanta, (3k 30354

1. Load Dated November 10. 200Q. Prjnc~palAmount?

2~Loan Dated November 10, 2000. Prineical Amount: ~2OO.flflflflfl

~:,nn r~r~nQ~

Thterest ~ue ~ 9.5~ -

1. Aug. 10, 2003. — Sept. 10, 2001

2. Aug. 10, 2003. - Sept. 10, 2001

Please riake checks payable ae foUowe~

N. D. Horton, Jr.

James ?!. Reynolds, II~

Please mail or deli~rerto:

CEO]

2561 Lake 0co~eeParkway

Greensboro, GA 20642

$ 1,613.55

_s~ 3..6~13.S~ $ 3,227.10

ARE 03209

$1, 63.3 . SS

$1, £13.5S

Received Se~—07—D7 04:E5p~ Fro-4O47E1~~ To—TERRY MANUFACTURING Page 83

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 104 of 156
10/09/2001 TUE 09:23 FAX 706 485 0572 PERKY CAP -‘~-~ TERRY JIiFG ATh. i~ID02/003

Froni:AMERICAN REAL ESTATE 10/08/2001 22:16 ~48OP.003

American Iteal tstate

Investment Company, Ltd.

1561 Lake Oconea Par)~Way

Ori~boro~Georgia. 30642

~eptetnher28, 2003.

Tel: (706) 453-2397

Pay (706) 453-9737

14.b. horton, Jr.

J~auReyno1d~.fit

Mr. RUd.01Pb Terry

3725 Zip Industrial ~ou1evar4

Atlanta, GA 30354

3.~Lo5n t,~ted N~rpmb~r lfl

- 1.oan tate~. i~ov~ernber3.~0

200QL Pr~nc±pa1r~nt~

2000. ~rincica1 Amount:

I~~tereotDU~@ 9.5%

~.. Sept. 3.0, ~001 - Oct. 10, 2001

2. Sept. 10, 2001 - Oct, ~.0,2003.

please make checks payable as follows:

N. D. J~orton, Jr..

James M. ~eynolds, III

please mail or deliver to~

2561 Lake Oconee Parkway

Greensboro, GA 20642

$1, 563. • 50

$1,561.50

.$ 1,561.50

.• .S 3.,562~S~ $ 3,3.23.00

706 458 4749

~20o ~

~200.000.00

CE~TJ

ARE 02405

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 105 of 156
ItNl~YM~&iAiLANIA AM PA~ 02 iiIrJ~~IL~3I~1i.Lts;’~’e ‘4~qjbjb~~

American Real Estate

Investment Company, Ltd.

2561 LakeOconee Pazicway

(reen&boro, Georgia 30642

October 30, 2001

Tel: (706) 453.2397

Thx (706) 453-9737

t4.D. J~ottou.Jr.

Jasnes Re~-notd,LU

Mr.. Rudolph Terry

3725 Zip Industrial Boulevard

Atlar1ta~ GA 30354

1~Loan Dated November 10

2. Loan Dated November ~O

2000, Pr±r~cip~lAmount:

2000, ~

Interest Due © 9.5%

1. Oct. 10, 2001 - Nov. 10, 2001

2. Oct. .10. 2001. - Nov. 10, 2003.

Please n~akechecks payable as follows:

Please rnai). or deliver to:

2S~3. I..ake Osonee Parkway

~reeneboro, ~A .0642

CEO]

2~. D. Itorton, Jr.

JameS 14. P.eynolds, III

$3., 613.55

$1,613.55

•$ 1,613.55

.$- 1,613.55 $ 3,227.10

•~‘--‘

...~ ~

~ç;io~‘~c4’lc?’D(f,

~

To-TERRY MANUFACTURING

S200,000.O0

~200~,000.00

.....,_~ ~ ~ -~~

ii ~ .:-

Page 02 Received Nov—O~—01 OE:4Epm F roa—4~476l6999

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 106 of 156
12/10/2001 MON 09:37 FAX 706 485 0572 PERKY CAP -,-+-~ TERRY )~!FGAm. 1~l002/002

FromAMERICAN REAL. ESTATE

American Real Estate

Investment Company, Ltd.

2561 LakeOconee Parkway

Oree.n.sboro, Georgia 30642

12/03/2001 22:81 #649 P.0Cr2

- Tel; (706) 453-2597

Pax (106) 4~3.9737

N.D. Horton. Jr.

3arr~.tReyn~1d~, UI

November 30, 2001

Mr. Rudolph Terry

3725 ~jp ~dustrial ~oulevard

Atlanta, GA 30354

1. Lo~.~ted

~J..,oanDated

Np-~,amber

November

10,

1 0~.

2000. Principal A~nouflt~ S~00,Qpp.0O

2~p np nt~_ ~2 0 0. 000.

Effective with the December 10, 2001, payment, the two loans become

payable in 18 ec~ual monthly installments of $11,96S.42 ea~h.

~oan 1.. Installment *1 ~. $11,965..42

Loan 2. Ixistallmsnt #1 11.,965.42

$23,930.84

Please ~c~a)ce check9 payable as follOwS a

N. D. Horton, Jr..

Jaar~eEM. Reyno1~, III

Please mail or deliver to:

2SG~.Lake Oconeé Parkway

c5reensboro, GA 20642

cE~r/

$11, 965,42

$3.1, 965 .42

I

706 453 4749

p~RE01686

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 107 of 156
f~i~e9/2e@2~3~__ 4~4761E999

.~1nerlcanReal Estate

rt Company, Ltd.

2.561 Lake Oconee ?arkway

C3,~ensboro,Georgia 30642

- TERRY MFG ATLANTA AM

PACE 02

TcI: (‘106) 453.2397

F2x: (706) 453-9737

NI). Bonon. Jr.

3ai~esReynolds, UI

December 29, 2003.

Mr. Rudolpil Terry

3725 Zip Industrial Boulevard

Atlanta, GA 30354

2. Loan Dated November

1O,~2000,

10, 2000,

Pr ci~1~~unt:

Prcipal~mount~

$200 ,Q~.op

$2OD~.0OQ.OO

Effective with the December 1.0, 2001, payment, the two loans become~

payable in 18 equal monthly installments of $11,965.42 each.

Loan 1. Installment *2 S11,9~5.42

Loan 2. Installment ~ ________

S23, 930. 84

Please make cheeks payable ae follows,

2561 Lake Oconee. Parkway

Greensboro, GA 2064~2

~ ~ ‘ ‘~ - ~ ‘-~~“-‘~ --- —- ‘-.~-~ .~-‘j

~. ~ •~ ~ .

-. rr-~.;--:-.~

$11,965.42

~ 965.42

ARE 01887

N. D. Horton, Jr.

James M. Reynolds, ill

Please ‘mail or deliver to:

Received Jan—09—02 lO:ZQam Froa—4047619999 To-TERRY MANUFACTURING Paje 02

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 108 of 156
CZ/88/2882 15:38 4047616999 TERRY MPG ATLANTA AM PA~ 82

Americafl Real Estate

Investment Company, Ltd.

i2561 Lake Ososee Pa~icway / Oreensboro, Georgia 30642

~3anuary 31, 2002

Tel: (706)453-2397

Fax: (705) 453-9737

N.D. )IQnDn, Jr.

J~73C5~C~UOIdS. LU

Mr. Rudolph Terry

3725 Zip Ixidustrial ~oulevard

Atlanta, G~ 30354

1. Loan

2. Loai~

Dated

Dated

Novernb~r

~‘ovember

~0.

10.

2000.

2000,

rinci~al

Principal

Amount;

Amount:

S200,0t~0.~

$200,000.00

~ffective with the Deoem~er 1.0, 2001., payment, tbs two lóan~become

payable in 18 equal monthly installments oi $11,965.42 each.

Loan 3.. Installment 4~3 .$3.1,96S.42

Loan 2.. Installment 4~3 .._________

~23,930.84

Please make checks payable a~follows

N. D.

James

Horton, Jr.

M. Reynold~, II~ $11,965.42 I

Please mail or deliver to:

2563. Lake Ocones Parkway

Greensboro, GA 20642

CEJ/

‘.2..’

:“ ‘~ ‘,z i. ::::;t.~~:~‘m.~

eQ ~f2{(4#

I .. •

I.’,.. -:. ~t •...

ARE 03119

Received Feb—DE—0Z 0~:Z9pi Frcm—4047E19999 To-TERRY MANUFACTURING Page 02

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 109 of 156
a.... s’... P L&a. %JS.,1%J

~rican Real Estate

,Iii~’estzncntCompany, Ltd.

— ~J Lake Oconee Parkw*y

~ensboro,G~.cwgia30642

February, 2002

Mr. 1~u~ol~th~rerry -

3725 Zip Industrial Boulevard

Atlanta, GA 30354

1’,i. (7fl~)4~3.2,3~7

F2,~:(706) 45~,-9737

?.LD. Hoi~on.Jr.

Jamc~ReynaId~.UI

l~L~anyate&November 10, 2000, P~nc±mp-1Amount~ 000.qQ

~. Loax~Dated I’~oVem)~p.rL0. 2000. prjnçjmal 7~rnoi~nt: ~200.000.00

Please make checks payable as rolD.ows:

N. D. ~orton1~7r.

James M. ReynoD.d~, III

Please mail or deliver to:

2563. Lake Oconee Parkway

Greensboro, G~ 2064~

~11P 9~S.42

$3.l,~65.42

Effective w1t1~the J.)ecem~er 10, 2001k p~nent, ~ two lo~.r~becom~

payable in 18 equal monthly installments of $1l,9~5.42each.

Loan 3.. Installment #4

Loan 2. Installrne.nt’#4 _l3.,9-~S.42

ARE 03120

Received ~lar—D1—V2 0I:l~p~ From-494791923E To-TERRY MANUFACTURtNG

Page 03

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 110 of 156
American Real Estate

Investment Company, Ltd.

~1LakeOconce Parkway

reensboro, Georgia 30642

March 29, 2002

Te1 (706) 4S3.239~

T~ax(706) 453-97~7

ND. Hoiton, J~.

iamei~Rtynolds, UI

Mr. Rudolph Terry

3725 Zip Industrial ~oulevard

Atlanta, GA 30354

1~Loan Dated November 10-. 20O0~. Priicipal•Ambunt:- $200.000.00

2. Loan Dated NovernberlO, 2000k Principal Amount: ~200.000.00

Effective with the December io; 2001, payment, the two loans become

payable in 3.8 equal monthly in5tal1ment~ of $11,965.42 each.

Loan 1. Installment #5 Due April 10, 2002 $11,965.42

Loan 2. installment #5 Due April 10, 2002 ll,965.42~

$23,930.84

Please make checks payable as follows:

2563. Lake Oconee Parkway

Greensboro, GA 20642

N. D. }~Orton, Jr.

James H. Reynolds, III

Please mail or deliver to:

$11, 965.42

$13., 9~5.42

ARE. 03127

CEJ/

L~ 3DVd BCZ~t9Lt’Bt’ S~60 ~/Z~/t~

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 111 of 156
05/02/2002 08:42 4047615238

L69l03~

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S96’tt ‘ ~00~ ‘o’t A-sw ~flCJ 9~ W~~UI ~

~‘S96’tt~ ~00~ ‘at A~W~na 9# ~ U).tt5~SUI 1 tr2cYI

t~~9 ~6”fl$ ~O ~ A.~t~tic~ni ~ 9t ~zc

~U&O3~cj ~u~ot ot.i4~q:~‘~uc~w~d‘tQQz ‘oi qw~~~ast~:i t~p~ eAo~~a

OO’0Q0’0o~$ ;~umou.i~-jI~dTzu~d‘0oo~ ‘ot ~t~qwa”~.o~~ u~cD~(~

O00O0’0O~$ ;~txnou~ t~du~t~ ooo~ ‘or ui~-&ot~p~cr tiE~’j •t

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~~m~c~1~t~E0Pfl~ L XM

III ‘~PT~c~.w vow~j’

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9~U~S~L 1133U Ut~~l.~~mV

PAGE 82

Received LIay—O2—O2 08:3Gam Froin—4O47Il5Z3a To—TERRY MANUFACTURING Page 02

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 112 of 156
—— .~ ~ PP~p~p.p~~

.on.as,.a,v, ~

American Real Estatc

‘~nvestmentCompany, Ltd.

Lake Oconc~F~ukway

,,.eensboro, Gt~orgia30642

~ 31, 2002

‘l’ct (‘706) 4~3.2397

Paz (706) ~

ND. Rorthzi Jr.

J.uup~.Rcynolds. U!

Mr. Rudolph Terry

3725 zip :ndu.atri~.3. u1e~-a.rd

Atlanta, ~ ‘3a354

1. Loan rated November 20

~ L€~n Dated November 10

200(1, £~‘rinai~1~inountj

2000. Prinetoal ~mount~

Effective with the tecernber 10, 2003., paymtnt, the two 1oAn~become

payable in 18 equal monthly i~La11ment5 of $1~,9G~.42c~ch,

Loan ‘L Instalitnent #7 Due June 10, 2002 $3.3.,965.42

Loan 2. Installment #7 Due O1.me 10, 2002 :L~~965.42

- $23,930.84

P’le.ase make checks payable as foll~ws:

N. ID. Horton, Jr.

James M. Reynol~.s,, XXI

Please mail or deliver to:

2561 Lake Oconee Parkway

Greensboro, CA 20~2

~l1,965.42

$11,965.42

i’8 3~t~d

ARE 03133

$200,000.00

~200. 000.00

:~ ~

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 113 of 156
— Sfl~I7I I~MMS*

American Real Estate

1~nvestmefltCoxupany, Ltd.

2561 L2keOcofleeParlCWaY

Greexsboro, Georgia 30642

Jufle 28, 2002

Tc1~(706) 4S3.Z397

~“x. (706) 4~3—474~

N.D. Horton, Jr.

Jam~~ktynolds, UI

Mr. Rudolph Terry

3725 zip industrial Thoulevard

Atlanta, GA 30354

1. Loan Dated November 10

2. Tô~n Dated November 10

2000, Princibal 7S~snOifl~1t:

2000. Princinal Amount:

Effective with the December 10, 2003., payment, the two loans become

payable in 113 equal monthly installments of $11,965.42 each.

Loan 1. installment *8 Due July 10, 7.007..,,........ $11,965.42

Loan 2. Installment ~8 Due July 10, 2002...~ 1l~,96S.42

$23,930.84

Please toake checks payable as follows:

N. D. Horton, Jr. $11,965.42

JamesM, Reynolds, III $11,965.42

Please mail or deliver to;

2561 Lake Oconee Parkway

Greensboro, GA 20642

CEJ/

t’~3 3DVd

ARE 01901

$200, 000 .00

~200.00O. 00

8EZ~S19LI?B1’ ~i:~T Z,BGZ/18/L~

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 114 of 156
American Real Estate

, jnvestmeut Corupa~y,Ltd.

2561 Lake Ocoxi~Parkway

Greensboro, Georgia 30642 —

July 29, 2002

Mr. Rudolph Terry

3725 Zip Industrial ~oulevard

Atlanta, GA 30354

~, Loan Dated November 10, 2000~, Prir~cipel

~ T,r~, 1~r~ ~vc~n~h~ 10. ~riOfl. ~r~t’~i

)~rnoUnt:

VYtrfl *v.4— *

T4~(706) 453-2397

Fax~(706) 453474~

ND. HQr~on,iL

-

3~

w~Rc~’noId~. ~I

~200,,00QJ °a

~2 0 0~0O~

Effective with the December 10, 2001, peyment., the two 1oa~nsbecome

payable in 18 equal monthly installments of $l~.,965.42 each.

r.,can 1. Installment *9 Due i~ug.10, 2002

Loan 2. Installment *9 Due Aug. 10, 2002

Please make checks payable as ~o11cws:

N. ID. Horton, Jr.

James M. Reynolds, III

~11, 965.42

~11, 965.42

• . $11,965.42

11,965.42.

$23, 930.84

Please mail or deliver to:

2561 Lake Oconee Parkway

~reensboro, ~A 20642

CEJ/

ARE 01909

Received Jul—20—02 O6:lEpm Froa-404701 E999 Tc—TERRY MANUFACTURING Page 04

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 115 of 156
~.~~UCJh j(~.j I tt~3~YMr~ 1~I LMN I M P.M rM~. ~

American Real Estate

‘Investment Company,Ltd.

61 Lako Oponce Parkway

(3reensborO, Georgia 30642

AuguSt 30, 2002

Te1~(706) 4~.2397

Fix: (706) 453.4749

N.D. Horton,Jr.

J~m,~aR~~o1dg, UI

• Mr. Rudolph Terry

3725 Zip Industrial Doulevard

Atlanta, cA 30354

1. Loan Dated~November10. 2000., Principal 2~mount: ~200Q~.j)~

2~. Loan Dated November l0~ 2000, PrincipalAmount~. ~200,000.00

Effective with the December 10, 2001, payment, the two loans become

payable in 18 equal monthly installments of $11,965.42 each.

Loan 1. Installment 4~10due Sept. 10, 2002 $11,965.42

Loan 2. Installment 4~10 due Sept. 10, 2002 11,965.42 ~23, 930. 84

Please make checks payable as fo1lo~s:

2561 Lake Oconee Parkway

GreenSboro, G7~ 20642

N. ID. norton, Jr.

James M. Reynolds, III

p’ease mail or deliver to:

C.! ~: ~ ~ ..f.*~ ~ •

:~• ~ -: ! ~- : ‘: -

$11,965.42

$11,965.42

ARE01914

~•:

Received ~8p—05—0Z OE:~Zpm Froin-4D4Tt1C0g9 To—’TERRY MANUFACTURING Page 03

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 116 of 156
£0 ~ft4 ~WI~fli3VdfIWV~i )~!~L—Oi 0tZoI00~—WO~ nd~:jD 20—80—)a0 P~AI~~

- ~ American RealEstate

Investment Company, Ltd.

25~1 Laki~Oconee Parkway

Greensboro, Georgia 30642

September 30, 2002

T~I~(706) 453-2397

Fax: (706) 453.474D

N.b.Horton, k.

1arn~Reynn1d~.m

1. Loan Dated November 10, 2000, prIncipal Amount; $200,000.00

2. Loan Dated November 10, 2000/. Principal Amount: $200, 000. 00

Eflective with the December 10, 2001, payment, the two loans become

payable in 18 eqi.ia]. monthly installment8 oe $11,96b.42 each.

Loan 1. Installment *11 due Oct. 10., 2002

Loan 2. Installment *11 due Oct.. 10, 2002

Please make checks payable as follows:

$11;965 .42

$11, 965.42

.$11, g65.47.

11,965.42

$23,930.84

Please mail or deliver to;

2561 Lake Oconee Parkway

Greensboro, GA 20642

Mr. audoiph Terry

37~S zip Industrial Boulevard

~tlanta, G~ 30354

N, D. Horton, Jr.

Jamee M, Reyno1d~, III

CEJ/

E~

ARE 01907

8EZ~t9L~Pø1~ tt,:eT ø?/9~/~I

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 117 of 156
~j-~,eizi~X3Z .Lo:.~s(

American Real Estate

Investment Company, Ltd.

2361 Lake Oco~eeParkway

Greensboro, Georgia 30642 —

November 2S, 2002

,c.rc,cT ~ I~ILf-iI’~lH ~

a .•.,-~.&... ._.._.

Tol (7O~)453-2397

!~x~(706) 453-4749

N~D.Horton, It

3~rne~Reyzzolk, III

Mr. Rudolph Terry

3725 zip Industrial Boulevard

)~tlanta, GA 30354

1. Loan Dated November 1~L 2000

2.Lonp~at~d Ncvernb~r 10. 2000

Principal Amoimt~

~ ?~mrv.i,’~i~

Effective with the Dece.mber 10, 2001, payment, the two loans become

payable in 18 ec~ual monthly in~ta1lrnents of $11,965.42 each.

Lothn 1. Installment ~ff2.3 due Dec. 2.0, 2002 $11,965.42

Loan 2. In~ta11ment4~13due Dec. 3.0, 2002

$23,930.84

Please make checks payable as foIlow~:

N. D. norton, Jr.

James b~. Reynolds, III

Plea.ee ma~.lor deliver to;

cBJf

2562. Lake Oconee Parkway

• Greensboro, ~A 20642

$11, 965.42

$11, 965.42

,_.... ~ . - ,

•a ..—. ._, % .•,~

••~•~. ~ •;•~i . ...•~.. • ~ ~

~ ;;:-z :r~-‘ r~

‘

•

ARE 01903

200 :o Q0 . 00

p200, 0DILun

Received Pec—0Z02 D4:35pj~ Frow—4U4?51~9V To-TERRY MANUFACTURiNG Page 03

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 118 of 156
~fl ~3CJ l~Jfl13V~fl}~ A~I—°1 aEZ(:80 £O—Th—Utt pl~a~

Hz. Rudolph Terry

3725 Zip.Indu~tria]. ~oulevard

Atlanta, GA 30354

Td: (706) 453-2397

Fax: (706) 453-4749

ND. Morton, )t

u~Reyuokis, Zn

j~Loan Dated N’ovember 1Q~,j0OO, Principal Amount: S200,000.00

2~ Loan Dared November 1.0, 2000. Prinç~pa1.~o~nt $200,000.00

Effective w.LLh Lhe D~e~nlbeL 10, 2003., payment, the two loan5 become

payable in 10 equal monthly in~ta1lment~of ~11,965.42 each.

Loan 1. installment i414 du~Jan. 10, 2003 $11,965.42

Loan 2. Installment ft4 due Jan. 10, 2003 1.1,965.42

~23,~30,84

Please make checks payable as ±ollows:

Please mail or deliver to~

2561 Lake Oconee. Parkway

Greensboro, GA 20642

N. D.. horton, Jr.

James N. Reynolds, III

CEJ/

$11,965.42

$11,965.42

i ~merican Real Estate

ivestmeflt Company, Ltd.

- Lake Ocoi~Parkway

GreensborO, Georgia 30642

~ecembe~ 23, 2002

Cø 39~d BET~ST9Lt?B~ 6~:s~~~Z/~EIZt

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 119 of 156
• - American Real Estate

Investment Company, Ltd.

2561 Lake Oconee Parkway

Greensboro, Georgia 30642

January 23, 2003

Mr. Rudolph. Terry

3725 Zip Industrial

A~larita, GA 30354

1. Loan Dated November 10

2 Loan Dated November 10

Boulevard

2000, Principal Amount:

2000. Princinal Amount:

Tel: (706) 453-2397

Fax:(706)453-4749

NJ). Horto~,~It

James Reynolds, Ill

$200. 000.0o~

$200,000.00~

Effective with the December 10, 2001, payment, the two loans become

payable in 18 equal monthly installments of $11,965.42 each.

Loan 1. Installment ~15 due Feb. 10, 2003 $11,965.42

Loan 2. Installment ~15 due Feb. 10, 2003 l1.965.42

$23,930.84

Please make checks payable as follows:

N. D. Horton, Jr.

James 14. Reynolds, III

Please mail or deliver to:

• 2561 Lake Oconee Parkway

Greensboro, GA 20642

CEJ/

$11,965.42

$11,965.42

o~9~6

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 120 of 156
~1t4fl.L~Yd~u~yy~ A~.~L—V,L

From:N~1ERIC/~NREAL ESIATE 705 453 4748

Amer1c~nRealEstute

Inve~tznentCtnnp2ny, Ltd.-

1561 LakeOconee ParkWay

~r~ebo~, Geor~h30642

Feua~ 24, ~003

Mr. Rudol~?hTerry

3725 Zip Industrial ~oule’~axd

Atlanta., GA 30~54

EEZSl~LyDp—woJ~ Wt~’:~ ~O11J’~EO P~AI~e~

03/07/2003 03:46 //019 P.002

Tel: (706) 433-2397 P~x(706) 453.4749

ND. Uoctou.Jt Js~aesPiynold&, UI

~. i~ç~n~ated~1~v~n 10..., ~O0O, Prir~.cin~1~rn~u~tt $200,0O0.~

2. ~ ~ Vni~ 1~ ~000~. ~ Amonnt: $200.000.gQ

f~ctive with U~ Ds~~r 10, 001, paym~nt, t.ha twe loans becon~e

payable in 18 equal monthly install’oien~e o~$11,965.42 eaöZ~.

Loan 1. installment 4f16 dt~e iaz-th ~.Q, ~o03. $il,~S.42

~ 2. installment 1~1Edue )~arch10, 2003. ....••... jj~.9~S.4.~a

Plsase make checks payable ae follewa

tc. P. IZortori, Jx~

JameS M~Reynold~. IXI

Please iiail or ~e1ive~ to:

2~3. LakC ~con~ Iarlrway

~ GA 20642

~.l, 9~5.42

ARE 01882

- .... ,....,. •.•.•...-... ........ .. ... .~. -

5E~St9L~’~j. tc:EL ce~z~~lga

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 121 of 156
American Real Estate

Investment Company, Ltd.

2561 Lake Oconee Parkway

Greensboro, Georgia 30642

March 24, 2003

Mr. Rudolph Terry

3725 Zip Industrial Boulevard

Atlanta, GA 30354

1. Loan

2. Loan

Dated

Dated

November

November

10.

10.

2000,

2000,

Principal

Principal

Amount:

Amount:

Effective with the December 10, 2001, pa~ment, the two loans become

payable in 18 equal monthly installment.s of $11,965.42 each.

Loan 1. installment #17 due April 10, 20Q3 $11,965.42

Loan 2. Installment #17 due April -10, 2003 ,. 11,965,42

Please make checks payable as follows

N. ]). Horton, Jr.

jameg M. Reynolds, III

$11, 965.42

$11,965 .42

$23,930.84

Please mail or deliver to:

:2561 ~a)t~0conee Par3c~wayGreensboro., .GA 20642~

Te1 (706) 453-2397

Fax: (706) 453-4749

NJ). Horton, it

James Reyno’ds, UI

$200, 00Q~~Q

~2OO - 000~fin

ARE 01823

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 122 of 156
Amerkan Real Estate

Investment Company, Ltd.

2561 LakeOcorieePUrk~Y

Greensboro, Georgia 30642

April 22, 2003

Mr. Rudolph Terry

3725 Zip Industrial Boulevard

Atlanta, GA 30354

1. Loan Dated Novemb~r10.. 2000, Principal Amount:

2. Loan Dated November 10. 2000. Principal Amount:

$200,000.00

~2 00 . 000. 00

Effective with the December 10, 2001, payment, the two loans become

payable in 18 equal monthly installments of $11,965.42 each.

Loan 1. Installment #18 due May 10, 2003....

Loan 2. Installment #18 due May 10, 2003....

Please make checks payable as follows:

N. D. Horton, Jr.

James M. Reynolds, III

Please mail or deliver to

CEJ/

256]. Lake Oconee Parkway

Greensboro, GA 20642

$11, 965.42

$11,965.42

• $11, 965 .42

11, 965 42

$23, 930.84

Tbl: (706)453-2397

Fs~:(706)453~4749

ND. Hoxton, Jz~

James Reynolds, rn

ARE O3O~

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 123 of 156
Amerkan Real Estate

Investment.Company, Ltd.

~1Lake Oconee Parkway

Ireensboro, Georgia 30642

April 22, 2003

Mr. Rudolph Terry

3725 Zip Industrial Boulevard

Atlanta, GA- 30354

1. Loan Da..t~Novemb~r 10. 2000, Principal Amount: S200,000.00

2. Loan Dated November 10, 2000, Principal Amount: S200 ,000. 00

Effective with the December 10, 2001, payment, the two loans become payable in 18 equal monthly installments of $11,965.42 each.

Loan 1. installment t~18 due May 10, 2003 $11,965.42

Loan 2. Installment ~l8 due May .10, 2003 11,965.42

Please make checks payable as follows:

N. D. Horton, Jr.

James M. Reynolds, III

Please mail or deliver to:

2561 Lake Oconee Parkway

Greensboro, GA 20642

$11,965.42

$11,965.42

$23,930.84

Tel: (706) 453.2397

Fax: (706) 453-4~749

RD. Horton. Jr.

James Reynolds. III

CEJ/

ARE 02483

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 124 of 156
i~t1~t~~,4’/ñ~~C

~

~ ~/~‘ ~

n~boCWkk~~

___ ____ 2~’o

0

C I

p..,

-.4

p..,

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 125 of 156
RECEIPT OF STOCK SHARE CERTIFICATE

PERKY CAP COMPANY, INC.

The undersigneddoes acknowledge receipt ofCertificate Number 3 ~ representing

~TOOOshares ofthe common stock ofPerky Cap Company, Inc.

This /Q’~”dayofNovember, 2000.

AmR.Est 00273

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 126 of 156
J. Lester Alexander Ill v. N. D. Horton and J. Reynolds

May 30, 2002 Loan to Roy and Rudolph Terry in the principal amount of $624,000

* Check was endorsed to James M. Reynolds

Payor Payee Amt Check No. Date Issued Bank Date Invoiced Invoice Description

Terry Manufacturing James M. Reynolds, $2,538.69 68079 7/1/2002 First Bank 6/20/2002 Interest 5/30/2002-7/2/2002

Terry Manufacturing James M. Reynolds, $2,384.83 68428 8/1/2002 First Bank 7/19/2002 Interest 7/2/2002-8/2/2002

Terry Manufacturing James M. Reynolds, $2,384.83 68824 8/29/2002 First Bank NO INVOICE

Terry Manufacturing James M. Reynolds, $2,384.83 69211 10/1/2002 First Bank 9/20/2002 Interest 9/2/2002-10//2002

Terry Manufacturing James M. Reynolds, $2,384.83 69533 11/1/2002 First Bank 10/22/2002 Interest 1012/2002-1112/2002

Terry Manufacturing James M. Reynolds, $2,307.90 69846 12/2/2002 First Bank 11/22/2002 Interest 11/2/2002-12/2/2002

Terry Manufacturing James M. Reynolds, $9,921.51 70233 1/3/2003 First Bank 12/23/2002 Installment 1

Terry Manufacturing James M. Reynolds, $9,921.51 70657 1/31/2003 First Bank 1/23/2003 Installment 2

Terry Manufacturing James M. Reynolds, $9,921.51 71062 3/8/2003 First Bank 2/24/2003 Installment 3

Terry Manufacturing James M. Reynolds, $9,921.51 71786 5/2/2003 First Bank 4/22/2003 InstallmentS

Terry Manufacturing N. D. Horton, Jr. $9,921.52 5823 4/1/2003 Bank of America 3/24/2003 Installment 4 *

Terry Manufacturing N, D. Horton, Jr. $2,538.69 68080 7/1/2002 First Bank 6/20/2002 Interest 5/30/2002-7/2/2002

Terry Manufacturing N. D. Horton, Jr. $2,384.83 68427 8/1/2002 First Bank 7/19/2002 Interest 7/2/2002-8/2/2002

Terry Manufacturing N. D. Horton, Jr. $2,384.83 68823 8/29/2002 First Bank NO INVOICE

Terry Manufacturing N. D. Horton, Jr. $2,384.83 69210 10/1/2002 First Bank 9/20/2002 Interest 9/2/2002-10//2002

Terry Manufacturing N. D. Horton, Jr. $2,384.83 69532 11/1/2002 First Bank 10/22/2002 Interest 10/2/2002-11/2/2002

Terry Manufacturing N. D. Horton, Jr. $2,307.90 69845 12/2/2002 First Bank 11/22/2002 Interest 11/2/2002-12/2/2002

Terry Manufacturing N. D. Horton, Jr. $9,921.52 70232 1/3/2003 First Bank 12/23/2002 Installment 1

Terry Manufacturing N. D. Horton, Jr. $9,921.52 70656 1/31/2003 First Bank 1/23/2003 Installment 2

Terry Manufacturing N. D. Horton, Jr. $9,921.52 70161 3/8/2003 First Bank 2/24/2003 Installment 3

Terry Manufacturing N. D. Horton, Jr. $9,921.52 5822 4/1/2003 Bank of America 3/24/2003 Installment 4

Terry Manufacturing N. D. Horton, Jr. $9,921.52 71785 5/2/2003 First Bank 4/22/2003 InstallmentS

Reynolds payments - this loan $63,993.47

Horton payments - this loan $63,993.51

Total page 1 234,375.81

Total page 2 234,375.81

r tabbies -, Total $596,738.60

m

x

4~w

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 127 of 156
- 0~~e ,w I a

American Real Estate

Investment Company1Ltd.

2561 Lake Oconee PazicwaY

Greensboro~Georgia 30642 —

~u.ne 20, 2002

Mr. Rudolph Terry

3725 zip Industrial Boulevard

AtlanL~., G?a~ 30354

Prr~rn~~orvNote Dated May 30.

Te~(1O~)~S3~23~1

F~c(706) 4s~.474g

Hznon,Jt James Reynolds,III

2O02~n the amol.3nt ci~ S624.009.00

Interest Due (9.0%) .. $ 5,077.38

(5/30/02 - 7/2/02, 33 dayE ~ ~l53.86)

Interest Due ~Tu.ly2, 2002 $ S,077.38

Please ‘~qritechecks as follows:

N. D. ~ortorj, SIr.

Ja~ie Reynolds

Please Mail or Deliver to:

52,538.69

$2,538~.69

~snerican Real Estate

2561 Lake Oconee Parkway

Greensboro4GA 30642

Z,~ 39Vd

ARE 03060

8CZSt9L~t’ ~t:zI ZaOz/T~/L0

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 128 of 156
TERRY MANUFACTURING CO., INC.

,P.~BOX648 -

ROANOKE, ALABAMA 36274

PAY,

TO THE ~ ~E ‘~(VPiDO~DE~O~

~O~8O?~n’ ‘:o~22o3~3Bi:~‘U 0q30 8n

F68079

FIRST BANK

RO~J’~OKt ALABAMA 61-363

622

r~rui AD~

DATE CHECK NO. D~I.~ARS C NT~

~ ~4~8l~9I

TERRY MAN CTURING CO., INC.

TERRY MANUFACTURING CO., INC.

gO. BOX 648

ROANOKE, ALABAMA36274

PAY.

F68080

FIRST BANK

ROANO+~E.ALABAMA 61-363

622

T~2538DOLSG9crs

ORDER

TOThE

or

fi. D. }-/Q~Z6il)~

N’O~BOEOu ‘:o~2o3~38,: ~U O~3O8”

DOLLARS

DATE CHECK NO.

POLLAJII C

I 1-~9I~-Pd

flITS

~j I

TERRY MANUFACTURING CO., INC.

- T~2~38DaLsG9crs

ARE 03061

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 129 of 156
07/38/2662 18:17 484761 6999 TERRY MEG ATLANTA ~M

PA~ 02

Tsl: (706) 453-2397

Fax: (706) 453-4749

American Real Estate

Investment Conipany, Ltd.

2561 Lake Oconee Fa~1cwny

Gexisboio. Georgia 30642

July 19, 2002

Mr. Rudolph Terry

3725 Zip Industrial Boulevard

Atlanta, GA. 30354

Promissory Note Dated May :30. 2002 In the. ~rnz~nt of. ~2&.O0O.O0

NJ). Horton. 3t

3an~caR~yao1d~, Iii

Interest Due (9.0%)

(7/2/02 - 8/2/02, 31 days ~ $153.86)

$ 4,9G9.66

Intere~tDUeAugust2,2002 . ~4,769G6

Please write checks as follows:

2’l. I). Borto~, Jr.

Jamie Reynolds

Please Mail or Deliver to:

$2, 3 84,. 83

$2,384.83

American Real Estate

2561 Lake Oconee Parkway

Greensboro, GA 30642

•JI~.,I. ~

.:~:I:.:.: •I.

ARE 01828

Received Jul-30—02 OS:lCps Fr—4U4701~gg To-TERRY MANUFACTURING Page 02

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 130 of 156
DATE CHECK NO. .~~.1’JIli~b

I- I

I ~ o~_o~tJ~4e~7

I

TERRYMANUFACTUR$NG.CO~1NC.

-

.i~O~8L,2?n’‘:o~22o3~~3a~: u’U O~3O an’

(

DATE jCHECK NO. ~ThM~jRI~I~

TERRY MANUFACTURING CO., INC.

P.O. BOX 648

ROANOKE, ALABAMA 36274

PAY,

F68427

FIRST BANK

ROANOKE. ALABAMA

TO THE ~ . ~ ~ . J n.m. . -

T~L~2384DoLS83cr3 DOLLARS

TERRY MANUFACTURING CO., INC.

i~o.aox c.~s

ROANOKE, ALABAMA 36274 FIRST BANK

ROANO4~E.ALABAMA

PAY.

TOThE

ORDER O~ •‘~J~ ~ (.J oIJ~.s

T~2384DoLs83 cr3

F68428

61.383

622

_DOLLARS

I ~OL.ot~ ~?A~.&l ~

TERRY-MANUFACTURING.cO., INC.

n’U 0R30 8n’

ARE o3064

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 131 of 156
— American Real Estate

Investment Company, Ltd.

2561 Lake Oconee~‘ar1csvay

Oreex~sborO,Georgia 30642

‘T~1;(706)453-2397

Fax: (706) 453-4749

M.D.Horton.Sr.

Ja~~c~ R~~o1d~,m

July 3.9, 2002

Mr. Rudolph Terry

3725 Zip Industrial Boulevard

Atlanta, GA 30354

~romise~ry Note Dated May 30, 2002 in the. ~tnount of. $424;000.QO

Interest DUe (9.0%) $ 4,7~9.6~

(7/2/02 - 8/2/o2~ 31 days ~ $153.86)

Intere~tDueAugust2,2002 .. .

- Mease write checks as follows;

Z~.P. Eorlon, Jr.

,J~amieReynolds

Please Mail or Deliver to:

$2, 384.. 83

~2,384,B3

American Real Estate

2561 Lake Oconee Parkway

Greensboro, GA 30642

ARE 01829

Received Jul—30—02 D~:lEpm Froffl—404TlE9~ To-TERRY MMIUFACTURING Page 02

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 132 of 156
1’ “ F68824 I

~ItRRY MA~ FACTVR$NG CO.,INC. ,

P.O. aoI(64e

PAY T~~23 8!J.DlJL.~83 as

~

,::: ~ (~~C)OO~S’f57 3~44

____ ______________

68824 09/12/2002 2,384.83

ARE 00342

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 133 of 156
From:NvIERICAN REAI_ ESTATE

~.mericanRealEstate

Investment Company, Ltd.

2561 Lako Oconca Parkway

Oreen3boro. Georgia 30~542

706 453 4749 10/01/2002 03:59 #108 P.001

ml: (706) ‘53-2397

Fax: (706)453-4749

NJ). 3OaIOB., 3r.

limes Reynolds, UI

~eptember.2Or 2002

f~..x:3342(a~a~ ~

Mr. Rudolph Terry

3725 Zip Industrial ~oulevard

Atlanta, GA 30354

Promissory Note Dnt~ May 30, 2002 in the amount of 8624,000.00

Inteest ~u, (9.0P) $ 4,615.80 (9/2/02 10/2/02, 30 days ~ $153.8~)

Interest~UGOotobcr2,2002..

Pleaee write Cheeks as fellowes

w. 3~.Bortea, Jr..

.Ya~nie P~eyno1ds

Please Mail or Deliver to:

$2,384.83

$2,384.83

......,,$ 4,615.00

ARE 03065

American Real Estate

2561 Lake Oconee Parkway

Greensboro, GA 30642

Riceived 10—01—02 032

1

0p1 Frca—700 ~4~2474~ Tcr-TERRY MANUFACTURING P;g~ 01

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 134 of 156
•.

TERRY MANUFACTURING CO., iNC.

P.O. BOX 648

ROANOKE, ALABAMA 36274

Th~2~R4Do,~sR.~crs

‘°~~ t’~D. o~vmJ J a...

o,~Dz~Or

l:o~22o3~3B,:~1L O~O Bu

TERRY MANUFACTURING CO.., INC.

P.O. BOX 648

ROANOKE, ALABAMA 36274

PAY

‘°~~ ji,t1_1_~

DRD~or______________

,~‘oc~T~ 2 ~

F 69210

FIRSTBANK

ROANO$(E. ALABAMA

.DOILARS

DA1E CHECK NO.

DO*.l.A*S

jO-OI--C2..

FIRST BANK

F~OANOKE.ALABAMA

2.~R4r~ütsR.~CT$

~22O3c~3Bs: u’U O~3O8”

I

C~1NC~

~UR~TYIRON.

F69?I1

61 -3~

622

TY~I ~pc

DAlt CHECK NO.

DOl.l.AR~ C~HT*

to—a ~CDL (:4Cf 1..~I 23~

TERRY MANU CTURINGCO~INC.

~

EOURflY coos. U

I

PAY.

ARE 03066

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 135 of 156
.LoI.~J.I~tl(L~ ~

,,_E.a%, ~., ‘.1 ,-.,l_,-.~Ir, r..,

American Real Estate

Investment Company, LtiL

2.561 Lake Oconee Pazkway

Greensboro, Georgia 30642

October 22, 2002

Mr. Rudolp~1?Ferry

3725 zip Ir4ustrial Doulevard

Atlanta, GA 30354

Tc1 (706) 453-2397

PaL~(706) 453-4749

ND. Hozwn, .Ir.

Joznco Reyuolda, UI

promissory Note De€ed Nay 30. 2002 in the amount of S624,Q~fL~

Interest Due (9.a~) $

(10/2/02 - 11/2/02, 33. days @ $153.86)

InterestDueNovenber2, 2002.

Please write, checks as follows:

N. fl. nortox&, Jr.

Ja.mie Reynolds

$2,384.83

$2,384.83

4,769.66

4,769.66

Please Mail or Deliver to

American Real ~etate

2561 Lake Oconee Parkway

Greensboro, GA 30642

I. — - —

ARE 03067

Received Oct—31—02 03:2Ep~ From—4047011990 To-TERRY W.NUFAcTURING Page 02

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 136 of 156
TERRY MANUFACTURiNG CO., INC.

P.O. BOX 648

ROANOKE, ALABAMA 36274

F 69532

FiRST BANK

ROANOKE. AL~EAMA ~

622

PAY_- .T~M~2384~OLs83CTS

DATE CHECK NO. ~

I ~

OR:::U’~~!D. ~ 1Jg~. _c~i..~ 6cj~~

TERRYM-ANUF RING CO., INC.

“p

j~o~532” i:Oc~22o3~3as:u’L~O~3O 80’

TERRY MANUFACTURING CO., INC.

P.O. BOX 648

ROANOKE, ALABAMA 36274

F 69533

FIRSTBANK

ROANO)(E, ALABAMA

61.363

TOTHE j

U~O~jt1533neI:o~,22o3~38I. ~ O~3O 8u’

ARE 01834

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 137 of 156
From N~1ERICANREAL ESTATE 706 453 4749 12/02J2002 0457 #289 P 001

American Real Estate

Investment Company, Ltd. Tel: (706)4S3~2397

2561 Lake Ocoraec Parkway Fsx (706) 453-4749

c3reensboro,Georgia 306421 ND.Hortozi,Jr~

Jen~esR.ey~oldslii

November 22, 2002

Mr. Rudolph Terry .

3725 ~ Industrial goulevard

Atlanta, GA 30354

PrOin~ssOrYNote Dated May 30 2002 ‘r~the amount of S624 000 00

Interest Due (9.O%).....,.., .. . .. ...... $ 4,615,80

~11/2/02 - 12/2/02, 30 days ~ $153 86)

Interest Di~eDecember 2, 2002 . .. . . $ 4,63.5.80

please wr3.te checkø as follows:

N. D norton, Jr $2,307 90

Jainle Reynolds $2,307 90

Please Ma~.lor Deliver to

American Real Estate

2561 Lake Oconee Parkway

Greensboro, GA 30642

ARE 00157

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 138 of 156
TERRY MANUFACTURING CO., INC.

P.O. BOX 648

ROANOKE, ALABAMA 36274

PAY.

~. t’J.D. ~ JL~

FIRST BANK

ROANOKE. ALABAMA

F 69845

~1-363

622

DATE CHECK NO. ~

bOt.~Aur% CENTs

It~~-OL~ 2.~j k~1

TERRY MANUFACTURINGCO., INc.

ii’~J~8I,5II” ‘:O~2o3~,3aI: u’LL 0q30 ~Eu’ i;i~i.~.:~i~ {.~~ ~ ~

F 69846

• TERRY MANUFACTURING CO., INC.

P.O. BOX 648

ROANOKE, ALABAMA 36274

DATE CHECK NO. .~M’~’I~

L

ht-t~o2. ~&~6

DOI.LAJ(3

~

CENTS

TERRY MANUFACTURING CO.,iNC.

--

TERRY MEG. •. • ~ q, (“SI ‘~T5

GO. iNCi~ • £ ~ .,,.. I.

PAY.

FIRST BANK

ROANOKE. ALABAMA

Y~23O7~O~LS(j~CTS

TO THE JA~~-~I € ft~1~ 0 tt~

OWEN O~

61-363

622

.DOILARS

s~LL O~3O 8~’

p~RE01837

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 139 of 156
47~9

3.L~ QLf ~cjca~. S~j. ~f ‘,T.,ef ~ .~ .... . — .

Fr~n:~JER1CANREAL ESTATE * 706 1V02/202 04:57 #289 P.001

-- American Real Zttate ‘ -.

— ~tment C~pan~’,Ltd. - - - TsL06)4S~-2~7-

~a 2561 Lake Oco~se?aitway ~ (71)6) 453.4749 -..

— O~nsbcrGee ~ . - ~4.DEa~tan.J~~‘

* limes Re)’~1ds.m

a ..

* a ~‘‘~

Novc~eX 32, 2003

a .. .q

a — — — — —

- ..-~ - Mr ~1ph ~erry

3725 Zip I~ str~a3. ~ou1evax’d

13W Atlanta, G?* 3~3S4

~ Note D~e&~av~30. 2002 in the amo~nt ~f t~~4~~ ~o

Interest ~ ...... ~ 4~~1S~$0 ~‘. ~

- ~.Z/2/02, 30 d.~y5 a ~.53~sG)

~ ~

please ~ e~ac33~Sas fo13.~wsa N. ~ ~ ... $2..307.s0 ‘~ . .

a~amie~.eyno1d.s $2,~07.90

Please Idail ~r ~eliver t~

V.

~T’ ~

I..

. S

ARE 03070

To-TERRY MANUFACTURING Page 02

Rea ~s~ate

256~ ~a~e Oäcn~e ?ar)~w~y

:C-reensboro, GA 30642

Received Dec—02—02 O

4

:~Sp~ From—4D4701~ff

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 140 of 156
~01I~fl1~V~r9Mi A~31—Oj I~2gI 9L~D~—Oi~ seZt:80 £fl—~—U!t 0IAI$~U~

Boulevard

‘l’tI: (106) 4S3.2301

~ax (706)4534749

NJ~Ho~oe,JL

James Reynolds, UI

Pm1~r~’.r E~rective with Note lDatpd the January M~v ~n. 2,20022003in the payment, ~at~ounttheof SE24.~oo.oo Tiote becomes

payable in 3~equal installments of ~l9,843.03 each:

Payment Due January 2, 2003....................... .$19,843.03

Please write checks as foflowe;

N. D. Borton, Jr.

Ja~nie 1~eynolde

Ple~~M~i1 or Deliver to;

*9,921.52

921. 53.

American Real Estate

2562. Lake Oconee Parkway

Greensboro. GA 30642

ARE 03073

American T Real Er~tate ivestment Company, Ltd.

1 Lake Ocoese Paxk~ay

~censboro,Georgia 30642

~ecetnber 23, 2002

Mr. Rudolph Terry

3725 Zip Industrial

Atlanta, GA 30354

?.~ 3D~d 8EZSt9LP8~ 69:99 Z~88t/BF./~I

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 141 of 156
FIRST BANK

ROANOKE ALABAMA

T~9 921 DOLS ~ 2 C T~

Ji..

II’o?o~3I:o~22o3~3E~ II’LL D~3O 8u

F 70232

61-363

622

r~ni ItDC

• . I )—2~..c~3 I ~7d~3zj~L

TERRY U nIr~rttDn1€~ Co., usc.

FIRST SANK

ROANOKE, ALABAMA

F 70233

61-363

622

PAY

‘om~

.921 DCLS ~ I CYS DOLLARS

DATE CHECK NO. ~~1ll~i~

1

j.4.,.Ô31’7cc133 kc~tiI~il

OWES OF._~.,- -~——-

TERRY MANU FACTURING CO., INC.

ii’D?023311’

~

...

‘:a~22o3~3a’:u’U O~3O 811’

TERRY MANUFACTURING CO., INC.

• P.O. BOX 648

• ROANOKE, ALABAMA 36274

PAY.~

TO THE

ORDER or •‘•__—

TERRY MANUFACTURING CO., INC.

P.O. BOX 648

ROANOKE, ALABAMA 36274

ARE 01840

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 142 of 156
American Real Estate

Investment Company, Ltd.

i2561 Lake Ocoriee Parkway

1 GreensborO, Georgia 30642

January 23, 2003

Mr. Rudolph Terry

3725 Zip Industrial Boulevard

Atlanta, GA 30354

Tel: (706) 453.2397

Fax: (706) 453—4749

N.D. Horton, it

James Reynolds. III

promissory Note Dated May 30, 2002 in the amount of $624,000.00

Effective with the January 2, 2003 payment, the note becomes

payable in 36 eqi.ial installments of $$19,843.03 each:

Installment #2 Due February 2, 2003 $19,843.03

Please write checks as follows:

N. D. Horton, Jr.

Jamie Reynolds

Please Mail or Deliver to:

$9, 921.52

$9, 921.51

American Real Estate

2561 Lake Oconee Parkway

Greensboro, GA 30642

~Ppv~,t~j

ARE 01841

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 143 of 156
TERRY MANUFACTURING CO., INC.

• P.O. BOX 648

ROANOKE, ALABAMA 36274

F 70656

61-363

622

rir~lI ADC

DATE CHECK NO.

0R •~‘LD.~•1••••~•~•••~ ••~JI~. ~J•. ~

TERRY MANUFACTURING CO., INC.

P.O. BOX 648

ROANOKE. ALABAMA 36274

DOLLARS

DA~rE CHECK NO. ‘~ I

• • • DOLLARS CENTS

• ~ 7c*c, ‘~i~I ~

TERRY MANUFACTURING CO., INC.

(/U

PAY l~992IDCLSi5 .2crs

FIRST BANK

ROANOKE, AL’~BAMA

CO., INC.

F 70657

PAY.

FIRST BANK

ROANOKE. ALABAMA

T~992iDoLs~5IC~

‘~ •~.4,.J .~

61-363

622

~i1’o?or,s?R• ‘:o~22o3~3a’: u’U O~3O 8n’

ARE 01842

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 144 of 156
ZU ~ ~NI~fl.L~V~flNWI A~3i-°j,

FroA)~ER1C~N~E~LESTATE 705 453 4749

Amerkan Reiil Estate

Investment Company, Ltd.

2561 LgkeOcon~tPsitW~Y

Q~s~sboro,C3eo~i&30642

~‘e~ru~y 24, 2003

Mr. ~ud~lpb Terzy

372~Zip Iz~dustr~.al~o~2.evexd

GA 30354

4~r~’rv Note ii~~d ~4~’.’ ~ô.

6EZSl~2tUy-sIBi~ ~:~ij EU—LU—EU p~AiE~q

03/07/2003 03~4~~01SP.001

‘Ich (706) 4534397

~ ~1O6)4~3..E749

~LD.I~*~.J*i

J~csP.e7a014,•UZ

e~f ~f~eetive with the &ranuary 2, 2Q03 paym~nt~ U~ ~ b~ote~e

payabLe in 36 equal ir~t~.lltne~ntso~ $$i.9.~43.O3 each~

~3 Due J~a~t 2, 2003.,...,. - ~.~843.o3

P~~e ‘~Lt~~C~$Ck.~~ fo~..~.ows;

)~. D. ~o~ton, 47r.

~a~ie ~.ey~o1d.s

~l~se MaLl or Deli-o’er tot

~9.921,~1.

~xnerthan Real Eet~te

2561 L8.ke Oconee ‘Parkway

Green~cz~o,~

J

p..RE ~~077

-

8CZSt9Li’8~ tCCt EB~/t’8/~

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 145 of 156
TERRY MANUFACTURING CO., INC.

P.O. BOX 648

— ROANOKE., ALABAMA 36274

PAY.

OROE:orjA’116. “f1’JàL~.S --

ii’O?LOE~3~H’‘:oc~22o3~38~: n’LL

F 71062

FIRST BANK

ROANOKE. ALABAMA 61-363

622

DATE CHECK NO. -‘. F

~I

• • • • - .DO~AR5 - CE

~ 7tQ~~

NTS

TERRY MANUFACTURING CO., INC.

•- ~‘

7/ 1,5

Y~ •

/

~ ~:

TERRY MANUFACTURING CO., INC.

P.O. BOX 648

ROANOKE. ALABAMA 36274

PAY.

FIRST BANK

ROANOKE, ALABAMA

F 71061. j~.

61-353

622

TERRY co. It~C.I’. t~’1FG. ~• .LT’ üIJI..~) r” r. .i::-~ c) ~•‘~•;~1. flfll I

ORDER OF±L C) . 1-1 o.~r~ -, J a....

“O?Lot&” ‘:oi22o3~38~:u’~& O~13O Sn’

•

r

t~

DATE CHECK NO. -

• - - -- DOL~SS CE

-~--- 7-Io-~-~

~T$

.

j<

TERRY MANUFACTURING CO., INC.

~ MP LV ~

TE992iiiOLs~iiC1S

oq3o 5ii•

ARE 01884

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 146 of 156
American RealEstate

Investment Conipany3Ltd.

2561 LakeOconee Parkway

Greensboro, Georgia 30642

March 24, 2003

Mr. Rudolph Terry

3725 Zip Industria] Boulevard

Atlanta, GA 30354

PromiS$Qry Note Dated May 30, 2002 in the amount of

Tel:(706)453.2397

Pex: (706) 453.4149

ND. Horto~i,Jt

ian~e&~eynolde.In

$624,000.00

Effective with the January 2, 2003 payment, the

payable in 36 equal installments of $$19,843.03 each:

note becomes

Installment #4 Due April 2, 2003 $19,843.03

Please write checks as followam

N. D. Horton, Jr.

Ja.mie Reynolds

Please Mail or Deliver to

$9,921.52

$9, 921.51

American Real Estate

• - 2561 Lake Ocbnee Parkway

- Greensboro. Gh 30642

ARE 01821

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 147 of 156
S4/~1/2883 iS:07 4647616999

TERRV WG ATLANTA AM

~ ~

TERRY MFcL CO. ~NC.ATLAf,ITA GEN.

P0. BOX 16EV 4~E1-8~388~

ATLANTA, GA 3O3•~

PAY

PA~ 83

:,~ 0A1~. ..

- -_.~.. . . . .~s.~ ~a1~

r~r’~jr ~

if Z~o~~ 2 C ~

Bank ofAmerca...~.

Acli TI1TI.s1Bt1e052

FOE~

u’DQ 58 2 2n’ ~ ~Oooo 5 000W ~51~ ~O3Su’ -.

- .

.~.‘

. -. - —~—-~-

‘~ . .~‘ L

TERRY MEG. CO. INC. ATLANTA.tFN.

r.o. BOX 16629 4O4-761~B2~’ .

A’fl.ANTA, GA 30321

PAY . .

i~ri~’s_.,q1~,,. ./,

-~ ~ 8 ~ 21 D~ 2 cis

BattkofAnleilca, ~

*CN Aftc.ieCOU~

FOR

n’OUSS 2~n’ D~D0D0S

5823

—. .. • —.~• . . &4—S6*a $4

I ..

~~DOLLARS~~

..~.—...-..-———,~.-—,————-——-—.—-- - .-.———-..—~...‘-.-~- . ~ . ..- -

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Page 03

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 148 of 156
4847616999

American Real Estate

Investment Company, Ltd.

2561 Lake Oconee paxkway

•Greensboro, Georgia ~0642

March 24, 2003

Mr. Rudolph ~L’erry

3725 Zip Industrial’ Boulevard

Atlanta, GA 30354

~ Note 1~ar~ed~iav ~O.

TERR MFG ATLANTA AM

~9,921.~52

~9,92l.51

~erican Real Estate

2562. Lake Oc~neeParkway

Greensboro, GA 30642

PA~ 82

PaTel:(706) 453-2391 706) 453-4749

~ NJ). R~ynoIds, Horton. ILIn

2002 in the amount of S~24.o00.00

Effeotive with ~t~ie January 2, 2003 payment,~ the note becomes

payable in 36 equal installments o~$$19,843.03 each:

Installment #4 Due April 2 20D3............,.......$19,843.03

Please write chei~ks as follows:

N. I). Horton. Jr.

Ja~ie Reynolda

Please Mail or Deliver to:

,,~‘

.~1⁄4st ~

~ ~

~ ~. .-. xl.. p. .

- 1’~.

84/87/2003 19:07

Fl Z’~k~

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 149 of 156
Amerkan Real Estate

Investment Company, Ltd.

2561 Lake Oconee Parkway

Greensboro, Georgia 30642

~pril 22, 2003

Mr. Rudolph Terry

3725 Zip Industrial Boulevard

Atlanta, GA 30354

Tel: (706) 453-2397

Fax: (706) 453-4749

ND. Horton, Jr.

isnes Reynolds. HI

Promissory Effective with Note Dated the January May 3Q, 2,2Q02003 _jnjth~payment, ~jnouflt_oL$624~ the note 000becomes *

payable in 36 equal installments of $$19,843.03 each:

Installment 4t5 Due May 2, 2003 $19,843.03

Please write checks as follows:

N. El. Horton, Jr.

Ja,mie Reynolds

Please Mail or Deliver to:

$9, 921.52

$9, 921.51

American Real Estate

2561 Lake Oconee Parkway

Greensboro, GA 30642

ARE 03049

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 150 of 156
:t~ ~ ~

TERRY MANUFACTURING COLN~V ~ ~ P0 B0XT648 r’ .

1

t’ 1~ZC’t-~--.. ~

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 151 of 156
ii s,e~l mII~flJiV~rI~Mi A~~1—ci

0(21 ed~O:2O tIl—204n0~ P$AI~DB~

Atnorlean Real Estate

~ Investment Company, Ltd.

2561 La&ce Oconec Pnrkway

Greeu~bOrO,Georgia 30642

April 22, 2003

Mr. Rudolph Terry

3725 Zip Industrial Boulevard

Atlanta, GA 30354

Tel: (706) 453-Z397

1706) &53.4’74Q

ND.Horton, JL

Jamea Rt~ynaIds,HI

Promissory Note Dated May 30, 2002 in the amount of $624

Effective with the January 2, 2003 payment, the note

payable in 36 equal installments of $$19,843.03 each:

-QQ0.00

becomes

Installment #5DueMay2, 2003,..,,,,,,,,,,.,,.,,.~l9,843,o3

Please write checks as follows:

N. D. Horton, Jr.

,Tainie Reynolds

Please Neil ~. D~liv’er to:

$9,921.52

~9,92i.S1

American Rea~.Estate

2562. Lake Oconëe Parkway

Greensboro, GA 30642

Q4i~/1

I. . *

ARE 01847

~w:ftUti-itq••

j~i~::~

M ~

8E~St9Lt’9~ Lt’:0t 6I3GZ/6~/t’2

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 152 of 156
American Real Estate

Investment Company, Ltd.

2561 LakeOconee Parkway

Greensboro, Georgia 30642

May 22, 2003

Mr. Rudolph Terry

3725 Zip Industrial Boulevard

Atlanta, GA 30354

Tel: (706) 453-2397

Fax: (706) 453-4749~

ND. Horton,Jr.

JamesReynolds, HI

promissor’L Note Dated May 30, 2002 in the amount of $624,000.00

Effective with the January 2, 2003 payment, the note becomes

payable in 36 equal installments of $19,843.03 each:

Installment #6 Due June 2, 2003 $19,843.03

Please write checks as follows:

N. P. Horton, Jr.

Jamie Reynolds

Please Mail or Deliver to:

$9,921.52

$9, 921.51

American Real Estate

2561 Lake Oconee Parkway

Greensboro, GA 30642

.~ ~

ARE 00045

Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 153 of 156
TERRY MFG. CO. INC. ATLANTA

P~O.bOX 16629 404-76:-8888

ATLANTA, GA 30321

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TERRY MFG. CO. INC. ATLANTA GEN,

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Case 2:06-cv-00746-WHA Document 3-6 Filed 08/18/2006 Page 156 of 156
IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE MIDDLE DISTRICT OF ALABAMA 

IN RE: ) 

) 

TERRY MANUFACTURING ) CASE NO. 03-32063-WRS 

 COMPANY, INC. ) 

) CHAPTER 7 

 Debtor ) 

 ) 

 ______________________________________ 

IN RE: ) 

) CASE NO. 03-32213-WRS 

TERRY UNIFORM ) 

 COMPANY, LLC, ) CHAPTER 7 

) 

Debtor. )

 ______________________________________

J. LESTER ALEXANDER, III, ) 

TRUSTEE OF TERRY ) 

MANUFACTURING COMPANY, INC. ) 

AND TERRY UNIFORM ) 

COMPANY, LLC ) ADVERSARY PROCEEDING 

) NO. 05-03042 

VERSUS ) 

) 

N.D. HORTON, JR. AND JAMES ) 

M. REYNOLDS, III ) 

TRUSTEE’S REPLY TO DEFENDANTS’ OPPOSITION TO SUMMARY 

JUDGMENT

J. Lester Alexander, III, Trustee of debtor Terry Manufacturing Company, Inc. 

(“Terry Manufacturing”) respectfully submits this Reply to defendants’ opposition to 

Summary Judgment. 

Case 2:06-cv-00746-WHA Document 3-7 Filed 08/18/2006 Page 1 of 15
This case is the classic example of fraudulent transfer involving principals using an 

insolvent company’s funds to pay their personal obligations. Terry Manufacturing at no time 

received a single benefit from payments made to Defendants on promissory notes executed by 

Cotina Terry, Allie Robinson, and Roy and Rudolph Terry for the purchase of Perky Cap stock 

from Defendants. Notably, Defendants do not contest that the Trustee has satisfied most of the 

core components of his cause of action under the Alabama Fraudulent Conveyance statute. 

Specifically, Defendants do not contest that they received transfers, some $596,000 paid on 

promissory notes given by Terry family members for the Defendants’ common stock in Perky 

Cap Company. Nor do Defendants challenge that these payments were made at a time when 

Terry Manufacturing was insolvent, had unreasonably small capital and incurred, and knowingly 

incurred, debts which it could not repay timely. Likewise, Defendants do not dispute that the 

payments were in satisfaction of promissory notes given by Terry family members in 

consideration of the Defendants’ Perky Cap stock, that the stock was registered in the name of 

the Terry family members and that they alone received the benefits of being stockholders. 

Indeed, Defendants’ only response is that Terry Manufacturing received some indirect benefits 

for its payments, and that these indirect benefits are reasonably equivalent to the payments. 

Specifically, Defendants cite: 

(a) Terry Manufacturing guaranteed payment of the notes of 

Cotina Terry and Allie Robinson. Terry Manufacturing admittedly 

received no consideration for the guaranty, but somehow received 

“value” as it reduced its exposure under the guaranty; 

(b) Terry family members obtained the Defendants’ stock in 

Perky Cap which had some value. According to Defendants, under 

Alabama law, value provided to insiders qualifies as value to the 

debtor; 

(c) Terry Manufacturing required caps for McDonalds 

uniforms, and these caps were produced by Perky Cap Company. 

Stock ownership by Terry family members made this possible; and 

Case 2:06-cv-00746-WHA Document 3-7 Filed 08/18/2006 Page 2 of 15
- 3 - 

(d) Mr. Horton and American Real Estate Limited Partnership, 

a Georgia limited partnership controlled by Messrs. Horton and 

Reynolds, made other loans to Terry Manufacturing or Terry 

family members. 

Notably, Defendants do not assign any monetary value to these supposed benefits. In 

fact, none of these represent meaningful economic value for the payments by Terry 

Manufacturing, much less value equivalent to its payments. 

 Terry Manufacturing received no value, let alone reasonably equivalent value, for 

 payments to the defendants as the guarantor of third party promissory notes.

Defendants claim that Terry Manufacturing received reasonably equivalent value because 

it received a reduction in its obligation as guarantor of the promissory notes of Cotina Terry and 

Allie Robinson.1

 But this analysis misses the central point – whether the transactions at issue 

diminished the estate available to creditors. “[T]he decisive issue is whether the payment of 

[Cotina Terry’s and Allie Robinson’s] obligation conferred an economic benefit upon the debtor 

sufficient to preserve the debtor’s net worth.” In re Rodriguez, 895 F.2d 725, 727 (11th Cir. 

1990). And, the payments made by Terry Manufacturing diminished its net worth. Terry 

Manufacturing did not receive any economic benefit from its payments to the defendants. Not 

directly or indirectly. 

If a debtor grants a guaranty for no consideration, payments on that guaranty are likewise 

for no consideration. The payee cannot boot strap reasonably equivalent value by supposedly 

reducing its exposure on an instrument which itself represents a fraudulent conveyance. Again, 

the basic question is what is the net effect on the debtor’s estate. When, as here, the debtor 

guarantees the debt of an insider and assumes a contingent liability for no consideration, its 

payment of that contingent liability reduces its net worth without corresponding benefit. See, 

 

1

 Terry Manufacturing did guaranty the Robinson and Cotina Terry notes. It did not guaranty that of Roy and 

Rudolph Terry. 

Case 2:06-cv-00746-WHA Document 3-7 Filed 08/18/2006 Page 3 of 15
- 4 - 

e.g. In re BBL Group, Inc., 205 B.R. 625, 636 (Bankr. N.D. Ala. 1996) (holding that in order to 

determine whether the debtor received value in consideration of its guarantee, the court must 

specifically “measure the value of all benefits and burdens to the debtor, direct or indirect”). 

Defendants cite In re Rodriguez for the proposition that reduction of a contingent liability 

represents value and regardless of whether the debtor received value for assuming the contingent 

liability. The Rodriguez court did not reach this conclusion. It simply held that if the debtor had 

no liability for a loan, whether as a principal obligor or guarantor, it could not have received any 

value for the payment. The converse was not addressed. 

In satisfying Cotina Terry and Allie Robinson’s obligation, Terry Manufacturing 

transferred tangible assets – cash – which could have been used to satisfy creditor claims for 

what at most amounts to an intangible benefit, release from a contingent liability (which itself 

was not supported by consideration) and a right of reimbursement. This Court has recognized 

that this trade of tangible property for potential intangible benefits does not constitute equivalent 

value because the net result will be to “deplete the tangible assets of the estate to the detriment of 

the other creditors.” In re Martin, 205 B.R. 646, 650 (Bankr. M.D. Ala. 1993). 

 Terry Manufacturing was not required to pay the debts of its insiders in order to 

 purchase product form Perky Cap.

The Defendants’ opposition appears to suggest that the Terry family members’ purchase 

of Defendants’ stock was somehow tied to Terry Manufacturing’s purchase of caps. Not 

surprisingly, there is no evidence of this arrangement, and the plain fact is that the Terry 

Manufacturing’s purchase of caps was wholly unrelated to the stock sales. According to Mr. 

Horton, Terry Manufacturing was Perky Cap’s largest customer for several years before the 

Terry’s initial purchase of stock in 1994. See Transcript of February 8, 2006 Deposition of N.D. 

Horton, Jr. at 21:10-21:14; relevant excerpts attached hereto as Exhibit A. It continued to 

Case 2:06-cv-00746-WHA Document 3-7 Filed 08/18/2006 Page 4 of 15
- 5 - 

purchase caps before the stock sales at issue here which occurred in 2000 and 2002. In fact, 

Terry Manufacturing purchased more caps before the stock was purchased than after. See 

Affidavit of J. Lester Alexander, II attached hereto as Exhibit B. 

The Trustee acknowledges that, in appropriate cases, an indirect benefit may constitute 

reasonably equivalent value. But “indirect benefits must be of measurable economic benefit. . .” 

In re Martin, 205 B.R. 646, 650 (Bankr. M.D. Ala. 1993). The bold assertion that payments of 

its insiders’ notes permitted Terry Manufacturing to buy caps does not provide this “measurable 

economic benefit” particularly when it is at direct odds with the actual buying history of the 

parties. 

 The Defendants are not entitled to a set off under Alabama Code §8-9A-8(d) and 

 may not assert this provision as a defense.

The Defendants assert that under Ala. Code §8-9A-8(d) they are entitled to an offset for 

value given to parties other than the debtor. Defendants claim they are entitled to an offset for 

the value of the stock given to Allie Robinson, Cotina Terry and Roy and Rudolph Terry. This 

oversimplifies the language of the statute and is not properly applicable to this case. Alabama 

Code §8-9A-8(d) grants a reduction in liability in fraudulent transfer cases for value given to 

another person “as a consequence of the debtor’s making such transfer.” (emphasis added). 

Neither of the defendants transferred anything to Allie Robinson, Cotina Terry, or Roy and 

Rudolph Terry “as a consequence” of Terry Manufacturing making payments on their 

promissory notes. Terry Manufacturing made payments on the notes after the funds were 

advanced for the personal purchases of stock, and therefore, after the value was given to the third 

parties at issue. 

Furthermore, under any possible theory of recoupment, the defendant may reduce the 

amount of a plaintiff’s claim only by asserting a claim against the debtor arising out of the same 

Case 2:06-cv-00746-WHA Document 3-7 Filed 08/18/2006 Page 5 of 15
- 6 - 

transaction. In re Affiliated of Florida, Inc., 258 B.R. 495 (Bankr. M.D. Fla. 2000). The 

payments were separate transactions from the stock to Ms. Robinson, Ms. Terry, or Roy and 

Rudolph Terry by the Defendants to purchase stock. These transactions were separate and 

unrelated. Defendants may not seek recoupment for value given to a third party that benefited 

Terry Manufacturing in no measurable manner. 

The statutory provision cited by the Defendants speaks to a limitation on the damages 

relating to the transfer rather than whether the transfer itself is avoidable. In any event, the 

statute cannot fairly be read to hold that a giving of value by a transfer to an insider somehow 

insulates the transferee from liability. By Defendants’ reasoning insiders are free to loot the 

debtor by causing the debtor to make transfers to a third party. This cannot be what is intended 

by the statute for it permits diminution (and potentially exhaustive waste) of the debtor’s estate. 

Rather, the statute should be read to implicitly require that the debtor receive direct benefit as a 

result of the transfer to the third party such as when the debtor’s payment has the results of 

satisfying its own obligation to that third party. To rule, as suggested by the Defendants, that a 

transfer is insulated if the value may be given to an insider or another entity, related or unrelated 

to the debtor, effectively nullifies the requirement that a transaction is subject to avoidance 

unless the debtor receives reasonably equivalent value. The Official Comments do not indicate 

any intent to make such a fundamental change in the law, and it is simply not credible to suggest 

this is what the Alabama legislature intended. 

 Subsequent Loans by Mr. Horton or His Related Entities 

 Do Not Provide Equivalent Value.

For purposes of the Reply, the Trustee will accept that Mr. Horton or entities controlled 

by him made loans either directly to Terry Manufacturing or to Roy and Rudolph Terry, but 

guaranteed by Terry Manufacturing. These loans occurred after the giving of the notes for the 

Case 2:06-cv-00746-WHA Document 3-7 Filed 08/18/2006 Page 6 of 15
- 7 - 

insider stock; Mr. Horton has repeatedly acknowledged that the loans were entirely unrelated. 

Typical is the following exchange: 

Q. At the time (sic) Exhibit 14 the $624,000 note was signed by 

Roy and Rudolph Terry, did you personally commit to them that 

you would make additional loans to either them personally or to 

Terry Manufacturing? 

A. Not in connection with this. We were working on that Terry 

Promotional Products, but it was totally two different deals. 

Q. Totally separate? 

A. Yes. 

See Transcript of February 8, 2006 Deposition of N.D. Horton, Jr. at 80:21-81:9, relevant 

excerpts attached hereto as Exhibit A. 

The transfers at issue here were wholly unrelated to additional loans, and those loans 

forming parts of separate and unrelated transactions cannot provide reasonably equivalent value 

for the transfers by Terry Manufacturing on the promissory notes executed by Allie Robinson, 

Cotina Terry and Roy and Rudolph Terry. 

The core fraudulent conveyance analysis is whether the debtor’s net worth has been 

diminished as a result of the transfer. See, e.g., In re Grabill Corp., 12 B.R. 983, 994 (N.D. Ill. 

1990). Terry Manufacturing paid nearly $600,000 so that its insiders could purchase stock. It 

received nothing in return. The transfers should be voided and summary judgment should be 

granted in favor of the Trustee. 

Case 2:06-cv-00746-WHA Document 3-7 Filed 08/18/2006 Page 7 of 15
- 8 - 

PHELPS DUNBAR LLP 

By: /s/ Brent B. Barriere___________________

Brent B. Barriere, T.A. (La. Bar No. 2818) 

David L. Patrón (La. Bar No. 22566) 

Catherine E. Lasky (La. Bar No. 28652) 

 One Canal Place 

 365 Canal Street, Suite 2000 

 New Orleans, LA 70130-6534 

 Telephone: 504-566-1311 

 Facsimile: 504-568-9130 

ATTORNEYS FOR J. LESTER ALEXANDER, III, 

TRUSTEE OF TERRY MANUFACTURING 

COMPANY, INC. AND TERRY UNIFORM 

COMPANY, L.L.C.

CERTIFICATE OF SERVICE

 I, Brent B. Barriere, hereby certify that on the 15th day of February, 2006 and on behalf 

of J. Lester Alexander III, Trustee of Terry Manufacturing Co., Inc. and Terry Uniform 

Company, L.L.C., I served a copy of Trustee’s Reply to Defendant’s Opposition to Summary 

Judgment by First Class mail to James M. Reynolds, III and N.D. Horton, Jr. upon C. Ellis 

Brazeal III, Watson, Wells, Anderson & Berchall LLP, 1819 5th Avenue North, Suite 1100, 

Birmingham, AL 35203. 

 /s/ Brent B. Barriere . 

Case 2:06-cv-00746-WHA Document 3-7 Filed 08/18/2006 Page 8 of 15
Case 2:06-cv-00746-WHA Document 3-7 Filed 08/18/2006 Page 9 of 15
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Case 2:06-cv-00746-WHA Document 3-8 Filed 08/18/2006 Page 1 of 3
Case 2:06-cv-00746-WHA Document 3-8 Filed 08/18/2006 Page 2 of 3
Case 2:06-cv-00746-WHA Document 3-8 Filed 08/18/2006 Page 3 of 3
-1- 

NO.99591510.1 

IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE MIDDLE DISTRICT OF ALABAMA 

IN RE: ) 

) 

TERRY MANUFACTURING ) CASE NO. 03-32063-WRS 

 COMPANY, INC. ) 

) CHAPTER 7 

 Debtor ) 

 ) 

 ______________________________________ 

IN RE: ) 

) CASE NO. 03-32213-WRS 

TERRY UNIFORM ) 

 COMPANY, LLC, ) CHAPTER 7 

) 

Debtor. )

 ______________________________________

J. LESTER ALEXANDER, III, ) 

TRUSTEE OF TERRY ) 

MANUFACTURING COMPANY, INC. ) 

AND TERRY UNIFORM ) 

COMPANY, LLC ) ADVERSARY PROCEEDING 

) NO. 05-03042 

VERSUS ) 

) 

N.D. HORTON, JR. AND JAMES ) 

M. REYNOLDS, III ) 

TRUSTEE’S SUPPLEMENT TO HIS OBJECTION TO 

ADMISSION OF TESTIMONY OF RANDY AVERETT AND

MOTION TO STRIKE 

RANDY AVERETT AND JESSE SLATON AS EXPERT WITNESSES

NOW INTO COURT, through undersigned counsel, comes plaintiff, J. Lester Alexander, 

III, the duly appointed and acting Chapter 7 Trustee (the “Trustee”) of Terry Manufacturing 

Company, Inc., (“Terry Manufacturing”) and Terry Uniform, L.L.C. (“Terry Uniform”) and 

respectfully requests that the Court (i) refuse to permit Randy Averett to testify at the trial of the 

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NO.99591510.1 

captioned Adversary Proceeding, and (ii) that Mr. Averett and Mr. Jesse Slaton be stricken as 

expert witnesses for the following reasons. 

(i) Rule 26(a)(2)(B) of the Federal Rules of Civil Procedure and Bankruptcy Rule 

7026 (the “Rules”) require that a proffered expert witness be specifically identified and tender “a 

written report prepared and signed by the witness.” The expert report rendered by defendants 

was prepared and signed by Mr. Slaton; Mr. Averett has testified that he did not draft, edit or 

sign the report. Indeed, he did not even review the report until after it was delivered to counsel 

for the Trustee. Likewise, Mr. Averett has not made any of the other disclosures required by the 

Rules. Mr. Slaton, the author and signatory of the report, is available for trial, and Mr. Averett, 

who has not complied with any of the requirements of the Rules, should not be permitted to 

testify. 

(ii) This case concerns the Trustee’s demand for avoidance of payments made by 

Terry Manufacturing in satisfaction of promissory notes given to the defendants by Cotina Terry, 

Allie Robinson, Roy Terry and Rudolph Terry. The report prepared by Mr. Slaton ignores those 

transactions entirely, and instead attempts to track the application of proceeds of three loans 

which are not at issue in this case and made by entities who are not even defendants. In his 

report, Mr. Slaton purports to provide “analysis...on specific loans that are the subject of the 

claims against the defendants made by the Trustee....” Mr. Slaton simply got it wrong. The 

Trustee has made no claim whatsoever with respect to the three loans Mr. Slaton analyzed. 

(iii) Whether defendants would engage an expert and, if so, when he would render a 

report were the subject of extensive discussions between counsel for the Trustee and counsel for 

the defendants over a several week period. On multiple occasions, both the Trustee and his 

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NO.99591510.1 

counsel were advised that whatever expert might be engaged by defendants, he would not 

address solvency issues. Consistent with that position, Mr. Slaton’s report makes no mention of 

the solvency issue. On March 17th, a bare ten days before trial, counsel for defendants reversed 

position and first announced that Mr. Averett (or in his absence Mr. Slaton) would provide 

expert testimony on whether Terry Manufacturing was insolvent at the time of the various 

transactions in question. This tardy reversal plainly violates the requirement of the Rules that 

“[t]he report shall contain a complete statement of all opinions to be expressed and the basis and 

reasons therefor.” Further, permitting this tidy and undisclosed testimony on solvency will 

significantly prejudice the Trustee. Mr. Averett did offer some opinions on the financial 

conditions of Terry Manufacturing in connection with his engagement by the Bank of Wedowee 

and First Tuskegee Bank. Those opinions are founded on certain appraisals by the Terrys, which 

the Trustee will seek to prove are either wildly inflated or outright fraudulent. That showing will 

require testimony by the appraisers, and, given the late date, the Trustee will not be able to obtain 

their attendance at trial. 

The expert report submitted by defendants is not relevant to this litigation.

The Supreme Court has emphasized that it is the duty of a trial court “to ensure the 

reliability and relevancy of expert testimony.” Kumho Tire Co. v. Carmichael, 526 U.S. 137, 

152 (1999). The expert report submitted by the defendants does not provide any analysis 

relevant to this litigation. According to the expert report, the “purpose of the analysis was to 

determine the specific use of loan proceeds from loans made by N.D. Horton and James M. 

Reynolds, II. Terry Manufacturing, Inc. (sic). The analysis was performed on specific loans 

that are the subject of the claims against the Defendants made by the Trustee of Terry 

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NO.99591510.1 

Manufacturing Company, Inc.” See Defendants’ Expert Report, dated February 24, 2006, at 1 

(emphasis supplied). The report is attached hereto without exhibits as Exhibit A. 

Exhibit D-1 to the expert report defines the loans that were the subject of Mr. Slaton’s 

analysis; a loan dated November 20, 20001 from American Real Estate to Terry Manufacturing 

in the amount of $5,500,000.00; a loan dated August 6, 2001 from American Real Estate to Terry 

Manufacturing in the amount of $1,500,000.00; and a loan dated May 30, 2002 from Peoples 

Bank of Eatonton to Perky Cap Company in the amount of $1,500,000.00. See Exhibit D-1 to 

Defendants’ Expert Report dated February 24, 2006, attached hereto as Exhibit B. None of the 

loans that were listed on Exhibit D-1 as the subject of the defendants’ expert analysis are at issue 

in this case. 

The Trustee’s complaint in this litigation asserts that the purchases of Perky Cap stock by 

Cotina Terry, Allie Robinson, Roy Terry and Rudolph Terry from the defendants, but paid for by 

Terry Manufacturing, are fraudulent conveyances under federal and state law. He does not seek 

to recover any amounts paid by Terry Manufacturing in connection with the loans listed on 

Exhibit D-1 and exclusively addressed by the report. 

Messrs. Slaton and Averett did not conduct any analyses, nor even consider the 

transactions which are at issue in this litigation. Mr. Slaton and Mr. Averett acknowledged in 

their depositions that they made no analysis concerning the Cotina Terry, Allie Robinson, Roy 

Terry or Rudolph Terry stock transactions. See Deposition of Randy Averett at 30-35, attached 

hereto as Exhibit C; Deposition of Jesse Slaton at 13-15, attached hereto as Exhibit D. Both 

admitted that their only knowledge of the transactions at issue in this litigation was what they 

 

1 Mr. Averett testified that this is a typographical error. The loan actually closed on November 10, 2000. 

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NO.99591510.1 

read in the Trustee’s expert report, and that they first read that report some time in the two hours 

preceding the depositions. Id. Typical is the exchange with Mr. Slaton : 

“Q. All right. Have you done any analysis whatsoever with respect to a transactions 

involving Cotina Terry, N.D. Horton, and James Reynolds? 

A. No. 

Q. Have you done any analysis whatsoever in connection with a transaction 

involving Allie Robinson, N. D. Horton, and James Reynolds? 

A. No. 

Q. Are you aware of either of those transactions having taken place? 

A. I am aware of them. 

Q. Based on what? 

A. Based on the summary report prepared by AEA Group, dated November 1st, 2005. 

Q. When did you first review that instrument, sir? 

A. This morning at 9:00. 

Q. All right. Likewise, did you do any analysis in connection with a transaction 

involving Rudolph Terry, Roy Terry, individually, N.D. Horton, and James 

Reynolds? 

A. No. 

Exhibit D at 14:1-14:20. 

Mr. Slaton simply got it wrong. The Trustee has not asserted any claims with respect to 

the three loans he analyzed. Put simply, his analysis and proposed testimony are irrelevant, and 

should not be admitted. 

 Mr. Averett may not testify because he has failed to comply with any of the 

disclosure obligations imposed by Federal Rule of Civil Procedure 26(a)(2)(B) and 

Bankruptcy Rule 7026

Rule 26(a)(2)(B) requires that the written report submitted by the expert be “prepared and 

signed by the witness.” The expert report produced by defendants to the Trustee was signed by 

Jesse Slaton alone. The letter dated February 27, 2006, and submitted by defendants in 

conjunction with the expert report was also signed by Mr. Slaton only. 

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At his deposition, Mr. Averett admitted that he neither drafted the report nor did he 

review or edit the report before it was delivered to Trustee’s counsel. In fact, Mr. Averett had 

not even read the February 27th letter until it was presented to him at his deposition. See 

Deposition of Randy Averett at 23-26, 68-70, attached hereto as Exhibit E; Deposition of Jesse 

Slaton at 9-13, attached hereto as Exhibit F. 

Mr. Averett is neither the author nor signatory of the report as required by the Rules. 

Likewise, he has not provided the other disclosures such as compensation, publications and prior 

expert experience required by the Rules. Indeed, he has not complied with any of the Rules.2

 

The Defendants Should Not Be Permitted to Offer Expert Testimony on Solvency

Counsel for defendants and for the Trustee had multiple discussions over the six-week 

period ending February 22nd on whether the defendants would engage an expert, and, if so, the 

timing of his report. Initially, the report was to be tendered by the end of January, and that date 

was extended until the first week of February, then February 10th, and ultimately February 24th. 

The report was tendered on February 27th.

3

 Importantly, in these discussions and discussions 

which also involved the Trustee, counsel for defendants repeatedly stated that he did not intend 

to contest the Trustee’s findings with respect to insolvency and that the defendants’ expert would 

 

2 Inexplicably, Mr. Slaton, likewise, failed to provide the disclosures required by the Rules with respect to 

his qualifications, compensation, publications and prior experience as an expert. The Trustee does not object to his 

testifying solely on this basis. 

3 On February 24th, counsel for defendants attempted to correspond with counsel for the Trustee to advise 

that the report would not be available until February 27th. The letter was only sent by email, and the records of 

Trustee’s counsel do not indicate that it was received. In any event, the letter did not state that defendants would 

reverse their decision and offer an expert opinion on solvency. The letter did note that “Mr. Averett or Mr. Slaton 

would testify as to...the opinions expressed in Mr. Averett’s previous report in the case against the banks.” In fact, 

Mr. Averett’s firm provided multiple reports in the bank cases totaling over 60 pages in length. The focus of most 

of that work was Mr. Averett’s attempt to trace loan proceeds, the same topic counsel for defendants had indicated 

would be the scope of Mr. Averett’s work in this case. 

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NO.99591510.1 

not address solvency. Consistent with that repeated representation, the report authored by Mr. 

Slaton and tendered on February 27th makes no mention of solvency whatsoever. 

Mr. Averett’s deposition was conducted on March 17th. Moments before it was to 

commence, counsel for defendants announced that he was reversing his long announced and 

often repeated position that his expert would not address solvency and advised that Mr. Averett 

might be asked to opine on that issue. Counsel further stated that Mr. Averett would be relying 

on reports he had rendered in litigation filed against Bank of Wedowee and First Tuskegee Bank. 

On March 21st, counsel for defendants advised that he had decided to examine his expert on 

solvency at trial. 

The report rendered in this case makes no mention of any issue pertaining to solvency, 

and for an expert to offer an opinion in court, his “report shall contain a complete statement of all 

opinions to be expressed and the basis and reasons therefor; the data or other information 

considered by the witness in forming the opinions; [and] any exhibits to be used as a summary of 

or support for the opinions....” Fed. R. Civ. Pro. 26(a)(2)(B). None of this required information 

appears in Mr. Slaton’s report. 

Defendants’ failure to provide any notice that they would not honor their counsel’s 

repeated representations concerning the scope of their experts’ testimony will significantly 

prejudice the Trustee. At this stage and given the flagrant disregard of defendants’ disclosure 

obligations, the Trustee is uncertain of what opinions and what supporting data will be offered. 

Assuming the defense expert testifies in a manner consistent with a May 31, 2005 report in the 

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NO.99591510.1 

bank cases,4 it will be to the effect that Terry Manufacturing was marginally solvent as of 

December 31, 2000. In turn, that opinion is dependent upon the validity of two appraisals 

accepted by Mr. Averett. Given proper notice, the Trustee would call the appraisers who 

allegedly rendered those reports, Messrs. Henderson and Lambert, to establish that one of the 

appraisals is an outright fraud prepared by Roy Terry and that the other is wildly inflated. 

Having only learned today of the Trustee’s need for these witnesses, they have not been 

subpoenaed, and counsel for the Trustee has been told that both will be out of the country on the 

date of trial. 

The required disclosures of Rule 26(a)(2)(B) and Bankruptcy Rule 7026 are designed to 

insure full and timely disclosure of the opinions and qualifications of the expert witness who will 

actually testify so that counsel can avoid trial by ambush. And trial by ambush is what the 

Trustee is now facing. He respectfully requests that the Court bar Mr. Averett from testifying, 

that the Court reject defendants’ grossly tardy attempt to offer solvency opinions, and that it 

reject Mr. Slaton’s opinions and analysis as irrelevant. 

Respectfully submitted this 22nd day of March, 2006. 

 Respectfully submitted, 

 By: /s/_Brent B. Barriere______________ 

 Brent B. Barriere, T.A. (La. Bar No. 2818) 

 David L. Patrón (La. Bar No. 22566) 

 Catherine E. Lasky (La. Bar No. 28652) 

 PHELPS DUNBAR LLP

 Canal Place 

 365 Canal Street • Suite 2000 

 New Orleans, Louisiana 70130-6534 

 

4 The several subsequent reports in those cases only addressed tracing of proceeds from bank loans. 

Case 2:06-cv-00746-WHA Document 3-9 Filed 08/18/2006 Page 8 of 39
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NO.99591510.1 

 Telephone: (504) 566-1311 

 Facsimile: (504) 568-9130 

ATTORNEYS FOR J. LESTER ALEXANDER, 

III, TRUSTEE OF TERRY 

MANUFACTURING COMPANY, INC. AND 

TERRY UNIFORM COMPANY, LLC 

CERTIFICATE OF SERVICE

 I certify that a copy of the foregoing pleading has been filed into the record and further 

served on the following counsel by facsimile, this 22nd day of March, 2006: 

C. Ellis Brazeal III 

Watson, Wells, Anderson & Berchall LLP 

1819 5th Avenue North, Suite 1100 

Birmingham, AL 35203. 

__/s/ Catherine E. Lasky_______________ 

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- 1 - 

NO.99608225.1 

IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE MIDDLE DISTRICT OF ALABAMA 

IN RE: ) 

) 

TERRY MANUFACTURING ) CASE NO. 03-32063-WRS 

 COMPANY, INC. ) 

) CHAPTER 7 

 Debtor ) 

 ) 

 ______________________________________ 

IN RE: ) 

) CASE NO. 03-32213-WRS 

TERRY UNIFORM ) 

 COMPANY, LLC, ) CHAPTER 7 

) 

Debtor. )

 ______________________________________

J. LESTER ALEXANDER, III, ) 

TRUSTEE OF TERRY ) 

MANUFACTURING COMPANY, INC. ) 

AND TERRY UNIFORM ) 

COMPANY, LLC ) ADVERSARY PROCEEDING 

) NO. 05-03042 

VERSUS ) 

) 

N.D. HORTON, JR. AND JAMES ) 

M. REYNOLDS, III ) 

TRUSTEE’S MOTION TO ALTER OR AMEND THIS COURT’S JUDGMENT 

DATED MAY 30, 2006, TO INCLUDE AN AWARD OF COSTS AND INTEREST

NOW INTO COURT, through undersigned counsel, comes J. Lester Alexander, 

III, the duly appointed and acting Chapter 7 trustee (the “Trustee”) of Terry 

Manufacturing Company, Inc. (“Terry Manufacturing”) and Terry Uniform Company, 

LLC, (“Terry Uniform”), who pursuant to Bankruptcy Rule 9023 and Rule 59 of the 

Federal Rules of Civil Procedure respectfully requests that this Court amend its May 30th

judgment in the above-captioned proceeding to include an award of costs and interest to 

the Trustee. In support of his Motion, the Trustee respectfully represents: 

Case 2:06-cv-00746-WHA Document 3-11 Filed 08/18/2006 Page 1 of 6
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NO.99608225.1 

1. 

On May 30, 2006, this Court, after a two day trial, entered a judgment in favor of 

the Trustee and against defendants N.D. Horton, Jr. and James M. Reynolds, III in the 

amount of $596,738.60. In conjunction with that judgment, this Court issued a 16 page 

opinion detailing its factual findings and conclusions of law. The Court held in favor of 

the Trustee on all claims and theories of law asserted in the Trustee’s complaint, 

including claims based upon Section 548 of the Bankruptcy Code and the Alabama 

Fraudulent Transfer Act. 

2. 

Bankruptcy Rule 7054 provides that Rule 54(a)-(c) of the Federal Rules of Civil 

Procedure applies in adversary proceedings and explicitly allows for the award of “costs 

to the prevailing party except when a statute of the United States or these rules otherwise 

provides.” Bankr. Rule 7054. 

3. 

In the Eleventh Circuit, “Rule 54(d) establishes ‘a presumption that costs are to be 

awarded to a prevailing party,’ and that ‘[t]o defeat the presumption and deny full costs, a 

district court must have and state a sound basis for doing so.’” Holton v. City of 

Thomasville School District, 425 F.3d 1325, 1355 (11th Cir. 2005 (quoting Chapman v. 

AI Transp., 229 F.3d 1012, 1038-39 (11th Cir. 2000)). See also, In re Sellers, 2005 WL 

1498320, *1 (Bankr. M.D.Fla. 2005) (applying presumption for award of costs to 

bankruptcy proceeding); In re O’Callaghan, 304 B.R. 887 (Bankr. M.D.Fla. 2003) 

(same). 

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NO.99608225.1 

4. 

While this Court’s judgment did not explicitly deny costs to the Trustee, the 

Eleventh Circuit has held that “‘where the trial court denies the prevailing party its costs, 

the court must give a reason for its denial of costs so that the appellate court may have 

some basis upon which to determine if the trial court acted within its discretionary 

power.’” Holton, 425 F.3d at 1355 (quoting Head v. Medford, 62 F.3d 351, 354 (11th 

Cir. 1995)). 

5. 

In the O’Callaghan case, the Bankruptcy Court for the Middle District of Florida 

recognized that “[i]t is well-established that the allowance of costs under Rule 7054(b) is 

within the discretion of the Bankruptcy Court. ‘The Court has broad discretion to 

determine whether and to what extent to award costs to prevailing parties....There is a 

strong presumption favoring the award of costs to the prevailing party....The losing party 

must satisfy a heavy burden when asserting that he should be excused from paying costs 

and affirmatively establish that the costs either fall outside the parameters of § 1920, 

were not reasonably necessary to the litigator, or that the losing party is unable to pay.’” 

304 B.R. at 889 (quoting In re Franklin Arms Court, L.P., 2003 WL 1883472, at *14 

(Bankr. N.D.Ill. 2003)). The Defendants have not and cannot offer any of those reasons 

to rebut this strong presumption in favor of an award of the costs to the Trustee. 

6. 

In addition, courts have recognized that costs should be awarded when the suit 

brought by the prevailing party is in the public interest or serves a public good. See, e.g., 

Black Hills Alliance v. Regional Forester, 526 F.Supp. 257, 258-59 (D.S.D. 1981); 

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NO.99608225.1 

County of Suffolk v. Secretary of the Interior, 76 F.R.D. 469, 473 (E.D.N.Y. 1977). This 

same reasoning applies in the instant case because the Trustee brought this litigation as a 

representative of the Terry Manufacturing bankruptcy estate on behalf of many innocent 

creditors harmed by the actions that resulted in the company’s extreme insolvency. An 

award of costs serves a public good because it will benefit the many innocent creditors 

harmed as a result of the Terry Manufacturing bankruptcy. 

7. 

 In addition, having prevailed on his causes of action under the Bankruptcy Code 

and Alabama Fraudulent Transfer Act, the Trustee is also entitled to pre-judgment 

interest under Alabama law and post-judgment interest under federal law. The prejudgment interest may be calculated on each of the payments fraudulently transferred by 

Terry Manufacturing to the Defendants from the date each payment cleared the account 

of Terry Manufacturing through May 30, 2006, the date of this Court’s judgment. 

8. 

 In this Circuit, prejudgment interest may be awarded to “compensate the debtor’s 

entire estate for the use of the funds for the period of time in which they were wrongfully 

withheld.” In re International Administrative Services, Inc., 408 F.3d 689, 710 (11th Cir. 

2005)(internal citations omitted). The assessment of prejudgment interest is “not a 

penalty, but compensation to the plaintiff for the use of funds that were rightfully his.” 

Id. 

9. 

 Because this Court’s judgment is based upon the Alabama Fraudulent Transfer 

Act, it must look to Alabama law to determine the application of prejudgment interest. 

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NO.99608225.1 

Under Alabama law, prejudgment interest is “allowable at the legal rate in claims other 

than those contractual in nature where the unliquidated damages could be ascertained by 

mere computation, or where the damages are complete at a given time so as to be capable 

of determination at such time in accordance with known standards of value.” Lapeyrouse 

Grain Corp. v. Tallant, 439 So.2d 105, 111-12 (Ala. 1983). Prejudgment interest may be 

assessed in this case because the damages to the Terry Manufacturing estate were known 

at the instant each fraudulent transfer was made by Terry Manufacturing to Messrs. 

Horton and Reynolds. Accordingly, pre-judgment interest is allowed and calculated 

pursuant to Ala. Code § 8-8-1. 

10. 

 The assessment of post-judgment interest is permitted and “shall be allowed on 

any money judgment in a civil case recovered in a district court...at a rate equal to the 

coupon issue yield equivalent (as determined by the Secretary of the Treasury) of the 

average accepted auction price for the last auction of fifty-two week United States 

Treasury Bills settled immediately prior to the date of judgment.” 28 U.S.C. § 1961. 

This statute is also applicable to money judgment in bankruptcy courts. See, e.g., In re 

Pester Refining Co., 964 F.2d 842 (8th Cir. 1992); Ocasek v. Manville Corp. Asbestos 

Disease Compensation Fund, 956 F.2d 152 (7th Cir. 1992); In re Harvard Knitwear, Inc., 

193 B.R. 389 (Bankr. E.D.N.Y. 1996); In re Southern Indus. Banking Corp., 87 B.R. 518 

(Bankr. E.D.Tenn. 1988). 

 For the foregoing reasons, the Trustee respectfully requests that this Court amend 

its May 30, 2006 judgment and award the Trustee costs incurred in the above-captioned 

proceeding as well as pre-judgment and post-judgment interest. If this Court rules in the 

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NO.99608225.1 

Trustee’s favor, the Trustee will file a statement of costs within 15 days of the date of the 

Court’s order. 

 Respectfully submitted, 

 PHELPS DUNBAR LLP 

 By: /s/ Catherine E. Lasky 

 Brent B. Barriere, T.A. (La. Bar No. 2818) 

 David L. Patrón (La. Bar No. 22566) 

 Catherine E. Lasky (La. Bar No. 28652) 

 365 Canal Street, Suite 2000 

 New Orleans, Louisiana 70130-6534 

 Telephone: (504) 566-1311 

 Facsimile: (504) 568-9130 

 ATTORNEYS FOR J. LESTER ALEXANDER, 

 III, TRUSTEE 

CERTIFICATE OF SERVICE

 I certify that a copy of the foregoing pleading has been filed into the record and 

further served on the following counsel by facsimile, this 7th day of June, 2006: 

C. Ellis Brazeal III 

Watson, Wells, Anderson & Berchall LLP 

1819 5th Avenue North, Suite 1100 

Birmingham, AL 35203. 

 /s/ Catherine E. Lasky 

Case 2:06-cv-00746-WHA Document 3-11 Filed 08/18/2006 Page 6 of 6
-1- 

NO.99615568.1 

IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE MIDDLE DISTRICT OF ALABAMA 

IN RE: ) 

) 

TERRY MANUFACTURING ) CASE NO. 03-32063-WRS 

 COMPANY, INC. ) 

) CHAPTER 7 

 Debtor ) 

 ) 

 ______________________________________ 

IN RE: ) 

) CASE NO. 03-32213-WRS 

TERRY UNIFORM ) 

 COMPANY, LLC, ) CHAPTER 7 

) 

Debtor. )

 ______________________________________

J. LESTER ALEXANDER, III, ) 

TRUSTEE OF TERRY ) 

MANUFACTURING COMPANY, INC. ) 

AND TERRY UNIFORM ) 

COMPANY, LLC ) ADVERSARY PROCEEDING 

) NO. 05-03042 

VERSUS ) 

) 

N.D. HORTON, JR. AND JAMES ) 

M. REYNOLDS, III ) 

TRUSTEE’S REPLY BRIEF IN SUPPORT OF HIS

MOTION TO ALTER OR AMEND JUDGMENT

 In opposing the Trustee’s Motion to Alter or Amend, the Defendants make the following 

arguments: 

(1) Defendant did not engage in any intentional, wrongful conduct, and they should not be 

penalized by an award of pre-judgment interest; 

(2) If interest is to be awarded, it should be at the federal, rather than the state rate; and 

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NO.99615568.1 

(3) Interest should run from the date of the filing of the Trustee’s complaint rather than from 

the dates on which Defendants received the avoided transfers. 

 Defendants premise that pre-judgment interest represents a penalty is wrong. This and 

other circuits have repeatedly recognized that “pre-judgment interest is not a penalty, but 

compensation of the plaintiff for the use of funds that were rightfully his.” See, In re 

International Administrative Services, Inc., 408 F.3d 689, 710 (11th Cir. 2005) and discussion 

infra. And, because the Trustee prevailed on his cause of action under Alabama state law, he 

is entitled to pre-judgment interest at the state rate. Finally, because the amount of the 

avoided transfers is readily ascertainable, the Trustee is entitled to interest from the date the 

Defendants received the avoided transfers. 

1. Pre-judgment interest is not a penalty, but compensation for the Defendants’ use of 

 the estate’s funds. 

 The Defendants assert that the Court did not find that they acted with actual intent to 

hinder, delay or defraud and that it would be inappropriate to penalize them by imposing prejudgment interest. But pre-judgment interest is intended to compensate the plaintiff for the 

defendants’ use of its funds; it is not a penalty. See, In re International Administrative 

Services, Inc., 408 F.3d at 710; Insurance Company of North America v. M/V Ocean Lynx, 

901 F.2d at 934, 942 (11th Cir. 1990) (“Pre-judgment interest is not a penalty, but 

compensation of the plaintiff for the use of funds that were rightfully his.”) Chung Young Il 

v. Overseas Navigation Co., 774 F.2d 1043, 1057 (11th Cir. 1985). (“Pre-judgment interest is 

not a penalty, but rather is the nature of compensation for the use of funds.”). 

 In attempting to characterize pre-judgment interest as a penalty, Defendants note that the 

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Eleventh Circuit has found that the award by a bankruptcy court of pre-judgment interest to a 

trustee who prevails is a “common practice especially when transfers have been made with 

the actual intent to hinder, delay or defraud creditors.” Defendants are mistaken, however, in 

interpreting that language to limit pre-judgment interest to those cases involving actual fraud. 

In approving the award of pre-judgment interest in International Administrative Services, the 

Eleventh Circuit cited with approval four circuit court decisions which had affirmed 

bankruptcy court awards of pre-judgment interest. In three of these, there was no allegation 

of actual fraud. Matter of Texas General Petroleum Corp., 52 F.3d 1330 (5th Cir. 1995); In 

re Cybermech, Inc., 13 F.3d 818 (4th Cir. 1994) and In re Investment Bankers, Inc., 3 F.3d 

528 (9th Cir. 1990). In the fourth decision, In re Agricultural Research and Technology 

Group, the Ninth Circuit affirmed a judgment awarding pre-judgment interest to a plaintiff 

who prevailed both on claims of constructive fraud and actual fraud. 

 The Trustee acknowledges that the award of pre-judgment interest falls within the 

discretion of the Bankruptcy Court. Notably, all of the circuit courts to have considered the 

issue have concluded that exercising that discretion to permit pre-judgment interest “. . . 

furthers the congressional policies of the Bankruptcy Code.” In re Texas General Petroleum 

Corp., 53 F.3d at 1339. The purpose of a fraudulent conveyance action “is to make the estate 

whole. Pre-judgment interest compensates the estate for the time it was without use of the 

transferred funds.” Id. See also, In re Cybermech, Inc., 13 F.3d at 822 (“Indeed, such 

awards [of pre-judgment interest] have been encouraged in cases where they would serve to 

compensate the injured party and are otherwise equitable.”) In re Investment Bankers, Inc., 4 

F.3d 1556, 1566 (“. . . the award of pre-judgment interest to the trustee would unquestionably 

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NO.99615568.1 

serve a compensatory purpose. An award of pre-judgment interest would serve to 

compensate the debtor’s estate for appellant’s use of those funds that were wrongfully 

withheld from the debtor’s estate during the pendency of the current suit.”) 

 2. The Trustee prevails on its cause of action under Alabama law, and should 

 be awarded pre-judgment interest calculated at the state rate. 

 Defendants contend that if the Trustee is entitled to any pre-judgment interest, it may 

only be calculated at the federal rate. They have failed to provide any citation for faulty this 

proposition. The Trustee prevailed on his cause of action under the Alabama Fraudulent 

Conveyance Act. When a federal court grants judgment based on a state law cause of action, 

pre-judgment interest is to be calculated at the state, rather than the federal rate. See, e.g., In 

re Interstate Cigar Co., Inc., 2003 WL 22885591, at 4 (EDNY 2003) (The bankruptcy court 

“properly held that where the cause of action itself has its genesis in state law, the proper 

interest rate to apply when calculating pre-judgment interest is the relevant state law”); In re 

Banks, 225 B.R. 738 (Bankr. C.D.Ca. 1998) (holding plaintiff is entitled to pre-judgment 

interest calculated at state rate with respect to state causes of action and federal rate with 

respect to separate federal causes of action.); and In re Williams, 1998 WL 34072045, at 5 

(Bankr. S.D. Fla. 1998) (“A preference action is unique to bankruptcy; it is a cause of action 

created by the Bankruptcy Code and the federal rate should clearly prevail. The cause of 

action in this proceeding is based on state law. Therefore, the state rate should apply.”) 

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3. Pre-judgment interest should accrue from the date of the avoided transfers.

 The Trustee should be awarded pre-judgment interest calculated at the Alabama rate, and 

consistent with Alabama law, interest should accrue from the date of the avoided transfers. 

See, C.E. Sawyer’s Industrial Sheet Metal Fabricators v. Central Rigging & Contracting 

Corp., 653 F.2d 956, 958 (5th Cir. 1981). A.R. Braswell v. Conagra, Inc., 936 F.2d 1169, 

1177 (11th Cir. 1991). Notably, this rule is in accord with circuit court decisions which have 

affirmed bankruptcy court awards of pre-judgment interest from the date of challenged 

transfers. See, In re International Administrative Services, Inc., 408 F.3d 689, 709 (11th Cir. 

2005) (Affirming pre-judgment interest from the date of the avoided transfers); In re William, 

1998 WL 34072045, at 5 (Bankr. S.D. Fla. 1998) (Awarding pre-judgment interest from date 

of transfers.) 

 The Trustee respectfully requests that he be awarded pre-judgment interest, that it be 

calculated at the state rate, and that it accrue from the date of the challenged transfers. 

Respectfully submitted this 10th day of July, 2006. 

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NO.99615568.1 

 Respectfully submitted, 

 By: /s/ Brent B. Barriere 

 Brent B. Barriere, T.A. (La. Bar No. 2818) 

 David L. Patrón (La. Bar No. 22566) 

 Catherine E. Lasky (La. Bar No. 28652) 

 PHELPS DUNBAR LLP

 Canal Place 

 365 Canal Street • Suite 2000 

 New Orleans, Louisiana 70130-6534 

 Telephone: (504) 566-1311 

 Facsimile: (504) 568-9130 

ATTORNEYS FOR J. LESTER ALEXANDER, 

III, TRUSTEE OF TERRY 

MANUFACTURING COMPANY, INC. AND 

TERRY UNIFORM COMPANY, LLC 

CERTIFICATE OF SERVICE

 I certify that a copy of the foregoing pleading has been filed into the record and further 

served on the following counsel by facsimile, this 10th day of July, 2006: 

C. Ellis Brazeal III 

Watson, Wells, Anderson & Berchall LLP 

1819 5th Avenue North, Suite 1100 

Birmingham, AL 35203. 

 /s/ Brent B. Barriere 

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