Document:

exv10w3

 

Exhibit
10.3

GUARANTEE AGREEMENT

by and between

TEXAS CAPITAL BANCSHARES, INC.

and

WILMINGTON TRUST COMPANY

Dated as of October 6, 2005

 

 

GUARANTEE AGREEMENT

     This GUARANTEE AGREEMENT (this “Guarantee”), dated as of October 6, 2005, is executed and
delivered by Texas Capital Bancshares, Inc., a Delaware corporation (the “Guarantor”), and
Wilmington Trust Company, a Delaware banking corporation, as trustee (the “Guarantee Trustee”), for
the benefit of the Holders (as defined herein) from time to time of the Capital Securities (as
defined herein) of Texas Capital Statutory Trust III, a Delaware statutory trust (the “Issuer”).

     WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the “Declaration”), dated
as of the date hereof among Wilmington Trust Company, not in its individual capacity but solely as
institutional trustee, the administrators of the Issuer named therein, the Guarantor, as sponsor,
and the holders from time to time of undivided beneficial interests in the assets of the Issuer,
the Issuer is issuing on the date hereof those undivided beneficial interests, having an aggregate
liquidation amount of $25,000,000.00 (the “Capital Securities”); and

     WHEREAS, as incentive for the Holders to purchase the Capital Securities, the Guarantor
desires irrevocably and unconditionally to agree, to the extent set forth in this Guarantee, to pay
to the Holders of Capital Securities the Guarantee Payments (as defined herein) and to make certain
other payments on the terms and conditions set forth herein;

     NOW, THEREFORE, in consideration of the purchase by each Holder of the Capital Securities,
which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and
delivers this Guarantee for the benefit of the Holders.

ARTICLE I

DEFINITIONS AND INTERPRETATION

     Section 1.1. Definitions and Interpretation. In this Guarantee, unless the context
otherwise requires:

     (a) capitalized terms used in this Guarantee but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;

     (b) a term defined anywhere in this Guarantee has the same meaning throughout;

     (c) all references to “the Guarantee” or “this Guarantee” are to this Guarantee as modified,
supplemented or amended from time to time;

     (d) all references in this Guarantee to “Articles” or “Sections” are to Articles or Sections
of this Guarantee, unless otherwise specified;

     (e) terms defined in the Declaration as at the date of execution of this Guarantee have the
same meanings when used in this Guarantee, unless otherwise defined in this Guarantee or unless the
context otherwise requires; and

     (f) a reference to the singular includes the plural and vice versa.

     “Affiliate” has the same meaning as given to that term in Rule 405 of the Securities
Act of 1933, as amended, or any successor rule thereunder.

     “Beneficiaries” means any Person to whom the Issuer is or hereafter becomes indebted
or liable.

 

 

     “Capital Securities” has the meaning set forth in the recitals to this Guarantee.

     “Common Securities” means the common securities issued by the Issuer to the Guarantor
pursuant to the Declaration.

     “Corporate Trust Office” means the office of the Guarantee Trustee at which the
corporate trust business of the Guarantee Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Guarantee is located at Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-1600, Attention: Corporate Trust
Administration.

     “Covered Person” means any Holder of Capital Securities.

     “Debentures” means the debt securities of the Guarantor designated the Fixed/Floating
Rate Junior Subordinated Deferrable Interest Debentures due 2035 held by the Institutional Trustee
(as defined in the Declaration) of the Issuer.

     “Declaration Event of Default” means an “Event of Default” as defined in the
Declaration.

     “Event of Default” has the meaning set forth in Section 2.4(a).

     “Guarantee Payments” means the following payments or distributions, without
duplication, with respect to the Capital Securities, to the extent not paid or made by the Issuer:
(i) any accrued and unpaid Distributions (as defined in the Declaration) which are required to be
paid on such Capital Securities to the extent the Issuer shall have funds available therefor, (ii)
the Redemption Price to the extent the Issuer has funds available therefor, with respect to any
Capital Securities called for redemption by the Issuer, (iii) the Special Redemption Price to the
extent the Issuer has funds available therefor, with respect to Capital Securities redeemed upon
the occurrence of a Special Event, and (iv) upon a voluntary or involuntary liquidation,
dissolution, winding-up or termination of the Issuer (other than in connection with the
distribution of Debentures to the Holders of the Capital Securities in exchange therefor as
provided in the Declaration), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid Distributions on the Capital Securities to the date of payment, to the extent
the Issuer shall have funds available therefor, and (b) the amount of assets of the Issuer
remaining available for distribution to Holders in liquidation of the Issuer (in either case, the
“Liquidation Distribution”).

     “Guarantee Trustee” means Wilmington Trust Company, until a Successor Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the terms of this
Guarantee and thereafter means each such Successor Guarantee Trustee.

     “Guarantor” means Texas Capital Bancshares, Inc. and each of its successors and
assigns.

     “Holder” means any holder, as registered on the books and records of the Issuer, of
any Capital Securities; provided, however, that, in determining whether the Holders
of the requisite percentage of Capital Securities have given any request, notice, consent or waiver
hereunder, “Holder” shall not include the Guarantor or any Affiliate of the Guarantor.

     “Indemnified Person” means the Guarantee Trustee, any Affiliate of the Guarantee
Trustee, or any officers, directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Guarantee Trustee.

     “Indenture” means the Indenture dated as of the date hereof between the Guarantor and
Wilmington Trust Company, not in its individual capacity but solely as trustee, and any indenture

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supplemental thereto pursuant to which the Debentures are to be issued to the institutional
trustee of the Issuer.

     “Issuer” has the meaning set forth in the opening paragraph to this Guarantee.

     “Liquidation Distribution” has the meaning set forth in the definition of “Guarantee
Payments” herein.

     “Majority in liquidation amount of the Capital Securities” means Holder(s) of
outstanding Capital Securities, voting together as a class, but separately from the holders of
Common Securities, of more than 50% of the aggregate liquidation amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of all Capital
Securities then outstanding.

     “Obligations” means any costs, expenses or liabilities (but not including liabilities
related to taxes) of the Issuer other than obligations of the Issuer to pay to holders of any Trust
Securities the amounts due such holders pursuant to the terms of the Trust Securities.

     “Officer’s Certificate” means, with respect to any Person, a certificate signed by one
Authorized Officer of such Person. Any Officer’s Certificate delivered with respect to compliance
with a condition or covenant provided for in this Guarantee shall include:

     (a) a statement that the officer signing the Officer’s Certificate has read the
covenant or condition and the definitions relating thereto;

     (b) a brief statement of the nature and scope of the examination or investigation
undertaken by the officer in rendering the Officer’s Certificate;

     (c) a statement that the officer has made such examination or investigation as, in such
officer’s opinion, is necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and

     (d) a statement as to whether, in the opinion of the officer, such condition or
covenant has been complied with.

     “Person” means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint stock company, limited liability company, trust,
unincorporated association, or government or any agency or political subdivision thereof, or any
other entity of whatever nature.

     “Redemption Price” has the meaning set forth in the Indenture.

     “Responsible Officer” means, with respect to the Guarantee Trustee, any officer within
the Corporate Trust Office of the Guarantee Trustee including any Vice President, Assistant Vice
President, Secretary, Assistant Secretary or any other officer of the Guarantee Trustee customarily
performing functions similar to those performed by any of the above designated officers and also,
with respect to a particular corporate trust matter, any other officer to whom such matter is
referred because of that officer’s knowledge of and familiarity with the particular subject.

     “Special Event” has the meaning set forth in the Indenture.

     “Special Redemption Price” has the meaning set forth in the Indenture.

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     “Successor Guarantee Trustee” means a successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under Section 3.1.

     “Trust Securities” means the Common Securities and the Capital Securities.

ARTICLE II

POWERS, DUTIES AND RIGHTS OF

GUARANTEE TRUSTEE

     
Section 2.1. Powers and Duties of the Guarantee Trustee.

     (a) This Guarantee shall be held by the Guarantee Trustee for the benefit of the Holders of
the Capital Securities, and the Guarantee Trustee shall not transfer this Guarantee to any Person
except a Holder of Capital Securities exercising his or her rights pursuant to Section 4.4(b) or to
a Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its appointment
to act as Successor Guarantee Trustee. The right, title and interest of the Guarantee Trustee
shall automatically vest in any Successor Guarantee Trustee, and such vesting and cessation of
title shall be effective whether or not conveyancing documents have been executed and delivered
pursuant to the appointment of such Successor Guarantee Trustee.

     (b) If an Event of Default actually known to a Responsible Officer of the Guarantee Trustee
has occurred and is continuing, the Guarantee Trustee shall enforce this Guarantee for the benefit
of the Holders of the Capital Securities.

     (c) The Guarantee Trustee, before the occurrence of any Event of Default and after curing all
Events of Default that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Guarantee, and no implied covenants shall be read into this
Guarantee against the Guarantee Trustee. In case an Event of Default has occurred (that has not
been waived pursuant to Section 2.4) and is actually known to a Responsible Officer of the
Guarantee Trustee, the Guarantee Trustee shall exercise such of the rights and powers vested in it
by this Guarantee, and use the same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the conduct of his or her own affairs.

     (d) No provision of this Guarantee shall be construed to relieve the Guarantee Trustee from
liability for its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

     (i) prior to the occurrence of any Event of Default and after the curing or waiving of
all such Events of Default that may have occurred:

     (A) the duties and obligations of the Guarantee Trustee shall be determined
solely by the express provisions of this Guarantee, and the Guarantee Trustee shall
not be liable except for the performance of such duties and obligations as are
specifically set forth in this Guarantee, and no implied covenants or obligations
shall be read into this Guarantee against the Guarantee Trustee; and

     (B) in the absence of bad faith on the part of the Guarantee Trustee, the
Guarantee Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or opinions
furnished
to the Guarantee Trustee and conforming to the requirements of this Guarantee;
but in the

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case of any such certificates or opinions that by any provision hereof
are specifically required to be furnished to the Guarantee Trustee, the Guarantee
Trustee shall be under a duty to examine the same to determine whether or not they
conform to the requirements of this Guarantee;

     (ii) the Guarantee Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer of the Guarantee Trustee, unless it shall be proved that such
Responsible Officer of the Guarantee Trustee or the Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made;

     (iii) the Guarantee Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the written direction of the
Holders of not less than a Majority in liquidation amount of the Capital Securities relating
to the time, method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee, or relating to the exercise of any trust or power conferred upon the
Guarantee Trustee under this Guarantee; and

     (iv) no provision of this Guarantee shall require the Guarantee Trustee to expend or
risk its own funds or otherwise incur personal financial liability in the performance of any
of its duties or in the exercise of any of its rights or powers, if the Guarantee Trustee
shall have reasonable grounds for believing that the repayment of such funds is not
reasonably assured to it under the terms of this Guarantee or security and indemnity,
reasonably satisfactory to the Guarantee Trustee, against such risk or liability is not
reasonably assured to it.

     Section 2.2. Certain Rights of Guarantee Trustee.

     (a) Subject to the provisions of Section 2.1:

     (i) The Guarantee Trustee may conclusively rely, and shall be fully protected in acting
or refraining from acting upon, any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to have been
signed, sent or presented by the proper party or parties.

     (ii) Any direction or act of the Guarantor contemplated by this Guarantee shall be
sufficiently evidenced by an Officer’s Certificate.

     (iii) Whenever, in the administration of this Guarantee, the Guarantee Trustee shall
deem it desirable that a matter be proved or established before taking, suffering or
omitting any action hereunder, the Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officer’s Certificate of the Guarantor which, upon receipt of such
request, shall be promptly delivered by the Guarantor.

     (iv) The Guarantee Trustee shall have no duty to see to any recording, filing or
registration of any instrument (or any re-recording, refiling or re-registration thereof).

     (v) The Guarantee Trustee may consult with counsel of its selection, and the advice or
opinion of such counsel with respect to legal matters shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and
in accordance with such advice or opinion. Such counsel may be counsel to the Guarantor
or any

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of its Affiliates and may include any of its employees. The Guarantee Trustee shall
have the right at any time to seek instructions concerning the administration of this
Guarantee from any court of competent jurisdiction.

     (vi) The Guarantee Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Guarantee at the request or direction of any Holder, unless
such Holder shall have provided to the Guarantee Trustee such security and indemnity,
reasonably satisfactory to the Guarantee Trustee, against the costs, expenses (including
attorneys’ fees and expenses and the expenses of the Guarantee Trustee’s agents, nominees or
custodians) and liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the Guarantee Trustee;
provided, however, that nothing contained in this Section 2.2(a)(vi) shall
relieve the Guarantee Trustee, upon the occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this Guarantee.

     (vii) The Guarantee Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may see fit.

     (viii) The Guarantee Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, nominees, custodians
or attorneys, and the Guarantee Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it hereunder.

     (ix) Any action taken by the Guarantee Trustee or its agents hereunder shall bind the
Holders of the Capital Securities, and the signature of the Guarantee Trustee or its agents
alone shall be sufficient and effective to perform any such action. No third party shall be
required to inquire as to the authority of the Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this Guarantee, both of which shall be
conclusively evidenced by the Guarantee Trustee’s or its agent’s taking such action.

     (x) Whenever in the administration of this Guarantee the Guarantee Trustee shall deem
it desirable to receive instructions with respect to enforcing any remedy or right or taking
any other action hereunder, the Guarantee Trustee (i) may request instructions from the
Holders of a Majority in liquidation amount of the Capital Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action until such instructions are
received, and (iii) shall be protected in conclusively relying on or acting in accordance
with such instructions.

     (xi) The Guarantee Trustee shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith, without negligence, and reasonably believed by it
to be authorized or within the discretion or rights or powers conferred upon it by this
Guarantee.

     (b) No provision of this Guarantee shall be deemed to impose any duty or obligation on the
Guarantee Trustee to perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it, in any jurisdiction in which it shall be illegal or in which the
Guarantee Trustee shall be unqualified or incompetent in accordance with applicable law to perform
any such act or acts or to exercise any such right, power, duty or obligation. No permissive power
or authority available to the Guarantee Trustee shall be construed to be a duty.

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     Section 2.3. Not Responsible for Recitals or Issuance of Guarantee. The recitals
contained in this Guarantee shall be taken as the statements of the Guarantor, and the Guarantee
Trustee does not assume any responsibility for their correctness. The Guarantee Trustee makes no
representation as to the validity or sufficiency of this Guarantee.

     Section 2.4. Events of Default; Waiver.

     (a) An Event of Default under this Guarantee will occur upon the failure of the Guarantor to
perform any of its payment or other obligations hereunder.

     (b) The Holders of a Majority in liquidation amount of the Capital Securities may, voting or
consenting as a class, on behalf of the Holders of all of the Capital Securities, waive any past
Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to
exist, and shall be deemed to have been cured, for every purpose of this Guarantee, but no such
waiver shall extend to any subsequent or other default or Event of Default or impair any right
consequent thereon.

     Section 2.5. Events of Default; Notice.

     (a) The Guarantee Trustee shall, within 90 days after the occurrence of an Event of Default,
transmit by mail, first class postage prepaid, to the Holders of the Capital Securities and the
Guarantor, notices of all Events of Default actually known to a Responsible Officer of the
Guarantee Trustee, unless such defaults have been cured before the giving of such notice,
provided, however, that the Guarantee Trustee shall be protected in withholding
such notice if and so long as a Responsible Officer of the Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the Holders of the Capital
Securities.

     (b) The Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless
the Guarantee Trustee shall have received written notice from the Guarantor or a Holder of the
Capital Securities (except in the case of a payment default), or a Responsible Officer of the
Guarantee Trustee charged with the administration of this Guarantee shall have obtained actual
knowledge thereof.

ARTICLE III

GUARANTEE TRUSTEE

     Section 3.1. Guarantee Trustee; Eligibility.

     (a) There shall at all times be a Guarantee Trustee which shall:

     (i) not be an Affiliate of the Guarantor, and

     (ii) be a corporation organized and doing business under the laws of the United States
of America or any State or Territory thereof or of the District of Columbia, or Person
authorized under such laws to exercise corporate trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to above, then, for the
purposes of this Section 3.1(a)(ii), the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published.

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     (b) If at any time the Guarantee Trustee shall cease to be eligible to so act under Section
3.1(a), the Guarantee Trustee shall immediately resign in the manner and with the effect set out in
Section 3.2(c).

     (c) If the Guarantee Trustee has or shall acquire any “conflicting interest” within the
meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trustee shall either eliminate
such interest or resign to the extent and in the manner provided by, and subject to this Guarantee.

     Section 3.2. Appointment, Removal and Resignation of Guarantee Trustee.

     (a) Subject to Section 3.2(b), the Guarantee Trustee may be appointed or removed without cause
at any time by the Guarantor except during an Event of Default.

     (b) The Guarantee Trustee shall not be removed in accordance with Section 3.2(a) until a
Successor Guarantee Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Guarantee Trustee and delivered to the Guarantor.

     (c) The Guarantee Trustee appointed to office shall hold office until a Successor Guarantee
Trustee shall have been appointed or until its removal or resignation. The Guarantee Trustee may
resign from office (without need for prior or subsequent accounting) by an instrument in writing
executed by the Guarantee Trustee and delivered to the Guarantor, which resignation shall not take
effect until a Successor Guarantee Trustee has been appointed and has accepted such appointment by
an instrument in writing executed by such Successor Guarantee Trustee and delivered to the
Guarantor and the resigning Guarantee Trustee.

     (d) If no Successor Guarantee Trustee shall have been appointed and accepted appointment as
provided in this Section 3.2 within 60 days after delivery of an instrument of removal or
resignation, the Guarantee Trustee resigning or being removed may petition any court of competent
jurisdiction for appointment of a Successor Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor Guarantee Trustee.

     (e) No Guarantee Trustee shall be liable for the acts or omissions to act of any Successor
Guarantee Trustee.

     (f) Upon termination of this Guarantee or removal or resignation of the Guarantee Trustee
pursuant to this Section 3.2, the Guarantor shall pay to the Guarantee Trustee all amounts owing to
the Guarantee Trustee under Sections 7.2 and 7.3 accrued to the date of such termination, removal
or resignation.

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ARTICLE IV

GUARANTEE

     Section 4.1. Guarantee.

     (a) The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the
Guarantee Payments (without duplication of amounts theretofore paid by the Issuer), as and when
due, regardless of any defense (except the defense of payment by the Issuer), right of set-off or
counterclaim that the Issuer may have or assert. The Guarantor’s obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders
or by causing the Issuer to pay such amounts to the Holders.

     (b) The Guarantor hereby also agrees to assume any and all Obligations of the Issuer and in
the event any such Obligation is not so assumed, subject to the terms and conditions hereof, the
Guarantor hereby irrevocably and unconditionally guarantees to each Beneficiary the full payment,
when and as due, of any and all Obligations to such Beneficiaries. This Guarantee is intended to
be for the benefit of, and to be enforceable by, all such Beneficiaries, whether or not such
Beneficiaries have received notice hereof.

     Section 4.2. Waiver of Notice and Demand. The Guarantor hereby waives notice of
acceptance of this Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer or any other Person
before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice
of redemption and all other notices and demands.

     Section 4.3. Obligations Not Affected. The obligations, covenants, agreements and
duties of the Guarantor under this Guarantee shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:

     (a) the release or waiver, by operation of law or otherwise, of the performance or observance
by the Issuer of any express or implied agreement, covenant, term or condition relating to the
Capital Securities to be performed or observed by the Issuer;

     (b) the extension of time for the payment by the Issuer of all or any portion of the
Distributions, Redemption Price, Special Redemption Price, Liquidation Distribution or any other
sums payable under the terms of the Capital Securities or the extension of time for the performance
of any other obligation under, arising out of or in connection with, the Capital Securities (other
than an extension of time for payment of Distributions, Redemption Price, Special Redemption Price,
Liquidation Distribution or other sum payable that results from the extension of any interest
payment period on the Debentures or any extension of the maturity date of the Debentures permitted
by the Indenture);

     (c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce,
assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the
terms of the Capital Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;

     (d) the voluntary or involuntary liquidation, dissolution, sale of any collateral,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;

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     (e) any invalidity of, or defect or deficiency in, the Capital Securities;

     (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or

     (g) any other circumstance whatsoever that might otherwise constitute a legal or equitable
discharge or defense of a guarantor, it being the intent of this Section 4.3 that the obligations
of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances.

     There shall be no obligation of the Holders to give notice to, or obtain consent of, the
Guarantor with respect to the happening of any of the foregoing.

     Section 4.4. Rights of Holders.

     (a) The Holders of a Majority in liquidation amount of the Capital Securities have the right
to direct the time, method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of this Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under this Guarantee; provided, however, that
(subject to Section 2.1) the Guarantee Trustee shall have the right to decline to follow any such
direction if the Guarantee Trustee being advised by counsel determines that the action or
proceeding so directed may not lawfully be taken or if the Guarantee Trustee in good faith by its
board of directors or trustees, executive committees or a trust committee of directors or trustees
and/or Responsible Officers shall determine that the action or proceedings so directed would
involve the Guarantee Trustee in personal liability.

     (b) Any Holder of Capital Securities may institute a legal proceeding directly against the
Guarantor to enforce the Guarantee Trustee’s rights under this Guarantee, without first instituting
a legal proceeding against the Issuer, the Guarantee Trustee or any other Person. The Guarantor
waives any right or remedy to require that any such action be brought first against the Issuer, the
Guarantee Trustee or any other Person before so proceeding directly against the Guarantor.

     Section 4.5. Guarantee of Payment. This Guarantee creates a guarantee of payment and
not of collection.

     Section 4.6. Subrogation. The Guarantor shall be subrogated to all (if any) rights of
the Holders of Capital Securities against the Issuer in respect of any amounts paid to such Holders
by the Guarantor under this Guarantee; provided, however, that the Guarantor shall
not (except to the extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Guarantee, if, after giving effect
to any such payment, any amounts are due and unpaid under this Guarantee. If any amount shall be
paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such
amount in trust for the Holders and to pay over such amount to the Holders.

     Section 4.7. Independent Obligations. The Guarantor acknowledges that its obligations
hereunder are independent of the obligations of the Issuer with respect to the Capital Securities
and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee
Payments pursuant to the terms of this Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 4.3 hereof.

     Section 4.8. Enforcement by a Beneficiary. A Beneficiary may enforce the obligations
of the Guarantor contained in Section 4.1(b) directly against the Guarantor and the Guarantor
waives any right or remedy to require that any action be brought against the Issuer or any other
person or entity

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before proceeding against the Guarantor. The Guarantor shall be subrogated to all
rights (if any) of any Beneficiary against the Issuer in respect of any amounts paid to the
Beneficiaries by the Guarantor under this Guarantee; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to
enforce or exercise any rights that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under this Guarantee, if at
the time of any such payment, and after giving effect to such payment, any amounts are due and
unpaid under this Guarantee.

ARTICLE V

LIMITATION OF TRANSACTIONS; SUBORDINATION

     Section 5.1. Limitation of Transactions. So long as any Capital Securities remain
outstanding, if (a) there shall have occurred and be continuing an Event of Default or a
Declaration Event of Default or (b) the Guarantor shall have selected an Extension Period as
provided in the Declaration and such period, or any extension thereof, shall have commenced and be
continuing, then the Guarantor shall not and shall not permit any Affiliate to (x) declare or pay
any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with
respect to, any of the Guarantor’s or such Affiliate’s capital stock (other than payments of
dividends or distributions to the Guarantor) or make any guarantee payments with respect to the
foregoing or (y) make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Guarantor or any Affiliate that rank pari passu in
all respects with or junior in interest to the Debentures (other than, with respect to clauses (x)
and (y) above, (i) repurchases, redemptions or other acquisitions of shares of capital stock of the
Guarantor in connection with any employment contract, benefit plan or other similar arrangement
with or for the benefit of one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance
of capital stock of the Guarantor (or securities convertible into or exercisable for such capital
stock) as consideration in an acquisition transaction entered into prior to the occurrence of the
Event of Default, Declaration Event of Default or Extension Period, as applicable, (ii) as a result
of any exchange or conversion of any class or series of the Guarantor’s capital stock (or any
capital stock of a subsidiary of the Guarantor) for any class or series of the Guarantor’s capital
stock or of any class or series of the Guarantor’s indebtedness for any class or series of the
Guarantor’s capital stock, (iii) the purchase of fractional interests in shares of the Guarantor’s
capital stock pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, (iv) any declaration of a dividend in connection with any
stockholders’ rights plan, or the issuance of rights, stock or other property under any
stockholders’ rights plan, or the redemption or repurchase of rights pursuant thereto, (v) any
dividend in the form of stock, warrants, options or other rights where the dividend stock or the
stock issuable upon exercise of such warrants, options or other rights is the same stock as that on
which the dividend is being paid or ranks pari passu with or junior to such stock and any cash
payments in lieu of fractional shares issued in connection therewith, or (vi) payments under this
Guarantee).

     Section 5.2. Ranking. This Guarantee will constitute an unsecured obligation of the
Guarantor and will rank subordinate and junior in right of payment to all present and future Senior
Indebtedness (as defined in the Indenture) of the Guarantor. By their acceptance thereof, each
Holder of Capital Securities agrees to the foregoing provisions of this Guarantee and the other
terms set forth herein.

     The right of the Guarantor to participate in any distribution of assets of any of its
subsidiaries upon any such subsidiary’s liquidation or reorganization or otherwise is subject to
the prior claims of creditors of that subsidiary, except to the extent the Guarantor may itself be
recognized as a creditor of that subsidiary. Accordingly, the Guarantor’s obligations under this
Guarantee will be effectively

11

 

subordinated to all existing and future liabilities of the
Guarantor’s subsidiaries, and claimants should look only to the assets of the Guarantor for
payments hereunder. This Guarantee does not limit the incurrence or issuance of other secured or
unsecured debt of the Guarantor, including Senior Indebtedness of the Guarantor, under any
indenture that the Guarantor may enter into in the future or otherwise.

ARTICLE VI

TERMINATION

     Section 6.1. Termination. This Guarantee shall terminate as to the Capital Securities
(i) upon full payment of the Redemption Price or Special Redemption Price of all Capital Securities
then outstanding, (ii) upon the distribution of all of the Debentures to the Holders of all of the
Capital Securities or (iii) upon full payment of the amounts payable in accordance with the
Declaration upon dissolution of the Issuer. This Guarantee will continue to be effective or will
be reinstated, as the case may be, if at any time any Holder of Capital Securities must restore
payment of any sums paid under the Capital Securities or under this Guarantee.

ARTICLE VII

INDEMNIFICATION

     Section 7.1. Exculpation.

     (a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise
to the Guarantor or any Covered Person for any loss, damage or claim incurred by reason of any act
or omission performed or omitted by such Indemnified Person in good faith in accordance with this
Guarantee and in a manner that such Indemnified Person reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by this Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of such
Indemnified Person’s negligence or willful misconduct with respect to such acts or omissions.

     (b) An Indemnified Person shall be fully protected in relying in good faith upon the records
of the Issuer or the Guarantor and upon such information, opinions, reports or statements presented
to the Issuer or the Guarantor by any Person as to matters the Indemnified Person reasonably
believes are within such other Person’s professional or expert competence and who, if selected by
such Indemnified Person, has been selected with reasonable care by such Indemnified Person,
including information, opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets
from which Distributions to Holders of Capital Securities might properly be paid.

     Section 7.2. Indemnification.

     (a) The Guarantor agrees to indemnify each Indemnified Person for, and to hold each
Indemnified Person harmless against, any and all loss, liability, damage, claim or expense incurred
without negligence or willful misconduct on the part of the Indemnified Person, arising out of or
in connection with the acceptance or administration of the trust or trusts hereunder, including,
but not limited to, the costs and expenses (including reasonable legal fees and expenses) of the
Indemnified Person defending itself against, or investigating, any claim or liability in connection
with the exercise or performance of any of the Indemnified Person’s powers or duties hereunder.
The obligation to indemnify as set forth in this Section 7.2 shall survive the resignation or
removal of the Guarantee Trustee and the termination of this Guarantee.

12

 

     (b) Promptly after receipt by an Indemnified Person under this Section 7.2 of notice of the
commencement of any action, such Indemnified Person will, if a claim in respect thereof is to be
made against the Guarantor under this Section 7.2, notify the Guarantor in writing of the
commencement thereof; but the failure so to notify the Guarantor (i) will not relieve the Guarantor
from liability under paragraph (a) above unless and to the extent that the Guarantor did not
otherwise learn of such action and such failure results in the forfeiture by the Guarantor of
substantial rights and defenses and (ii) will not, in any event, relieve the Guarantor from any
obligations to any Indemnified Person other than the indemnification obligation provided in
paragraph (a) above. The Guarantor shall be entitled to appoint counsel of the Guarantor’s choice
at the Guarantor’s expense to represent the Indemnified Person in any action for which
indemnification is sought (in which case the Guarantor shall not thereafter be responsible for the
fees and expenses of any separate counsel retained by the Indemnified Person or Persons except as
set forth below); provided, however, that such counsel shall be reasonably
satisfactory to the Indemnified Person. Notwithstanding the Guarantor’s election to appoint
counsel to represent the Guarantor in an action, the Indemnified Person shall have the right to
employ separate counsel (including local counsel), and the Guarantor shall bear the reasonable
fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the Guarantor
to represent the Indemnified Person would present such counsel with a conflict of interest, (ii)
the actual or potential defendants in, or targets of, any such action include both the Indemnified
Person and the Guarantor and the Indemnified Person shall have reasonably concluded that there may
be legal defenses available to it and/or other Indemnified Person(s) which are different from or
additional to those available to the Guarantor, (iii) the Guarantor shall not have employed counsel
satisfactory to the Indemnified Person to represent the Indemnified Person within a reasonable time
after notice of the institution of such action or (iv) the Guarantor shall authorize the
Indemnified Person to employ separate counsel at the expense of the Guarantor. The Guarantor will
not, without the prior written consent of the Indemnified Persons, settle or compromise or consent
to the entry of any judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought hereunder (whether or
not the Indemnified Persons are actual or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of each Indemnified Person from
all liability arising out of such claim, action, suit or proceeding.

     Section 7.3. Compensation; Reimbursement of Expenses. The Guarantor agrees:

     (a) to pay to the Guarantee Trustee from time to time such compensation for all services
rendered by it hereunder as the parties shall agree to from time to time (which compensation shall
not be limited by any provision of law in regard to the compensation of a trustee of an express
trust); and

     (b) except as otherwise expressly provided herein, to reimburse the Guarantee Trustee upon
request for all reasonable expenses, disbursements and advances incurred or made by it in
accordance with any provision of this Guarantee (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense, disbursement or
advance as may be attributable to its negligence or willful misconduct.

     For purposes of clarification, this Section 7.3 does not contemplate the payment by the
Guarantor of acceptance or annual administration fees owing to the Guarantee Trustee for services
to be provided by the Guarantee Trustee under this Guarantee or the fees and expenses of the
Guarantee Trustee’s counsel in connection with the closing of the transactions contemplated by this
Guarantee. The provisions of this Section 7.3 shall survive the resignation or removal of the
Guarantee Trustee and the termination of this Guarantee.

13

 

ARTICLE VIII

MISCELLANEOUS

     Section 8.1. Successors and Assigns. All guarantees and agreements contained in this
Guarantee shall bind the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Capital Securities then outstanding.
Except in connection with any merger or consolidation of the Guarantor with or into another entity
or any sale, transfer or lease of the Guarantor’s assets to another entity, in each case, to the
extent permitted under the Indenture, the Guarantor may not assign its rights or delegate its
obligations under this Guarantee without the prior approval of the Holders of at least a Majority
in liquidation amount of the Capital Securities.

     Section 8.2. Amendments. Except with respect to any changes that do not adversely
affect the rights of Holders of the Capital Securities in any material respect (in which case no
consent of Holders will be required), this Guarantee may be amended only with the prior approval of
the Holders of not less than a Majority in liquidation amount of the Capital Securities. The
provisions of the Declaration with respect to amendments thereof apply to the giving of such
approval.

     Section 8.3. Notices. All notices provided for in this Guarantee shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied or mailed by first
class mail, as follows:

     (a) If given to the Guarantee Trustee, at the Guarantee Trustee’s mailing address set forth
below (or such other address as the Guarantee Trustee may give notice of to the Holders of the
Capital Securities and the Guarantor):

Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware 19890-1600

Attention: Corporate Trust Administration

Telecopy: 302-636-4140

     (b) If given to the Guarantor, at the Guarantor’s mailing address set forth below (or such
other address as the Guarantor may give notice of to the Holders of the Capital Securities and to
the Guarantee Trustee):

Texas Capital Bancshares, Inc.

2100 McKinney, Suite 1250

Dallas, Texas 75201

Attention: Mark R. Frears

Telecopy: 214-932-6687

     (c) If given to any Holder of the Capital Securities, at the address set forth on the books
and records of the Issuer.

     All such notices shall be deemed to have been given when received in person, telecopied with
receipt confirmed, or mailed by first class mail, postage prepaid, except that if a notice or other
document is refused delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.

14

 

     Section 8.4. Benefit. This Guarantee is solely for the benefit of the Beneficiaries
and, subject to Section 2.1(a), is not separately transferable from the Capital Securities.

     Section 8.5. Governing Law. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

     Section 8.6. Counterparts. This Guarantee may be executed in one or more
counterparts, each of which shall be an original, but all of which taken together shall constitute
one and the same instrument.

     Section 8.7 Separability. In case one or more of the provisions contained in this
Guarantee shall for any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions of this Guarantee,
but this Guarantee shall be construed as if such invalid or illegal or unenforceable provision had
never been contained herein.

Signatures appear on the following page

15

 

     THIS GUARANTEE is executed as of the day and year first above written.

	 	 	 	 	 
	 	 	TEXAS CAPITAL BANCSHARES, INC., as Guarantor
	 
	 	 	 	 
	 

	 	By:	 	/s/ Peter B. Bartholow
	 

	 	 	 	 
	 

	 	 	 	Name: Peter B. Bartholow
	 

	 	 	 	Title: Chief Financial Officer
	 
	 	 	 	 
	 	 	WILMINGTON TRUST COMPANY, as Guarantee Trustee
	 
	 	 	 	 
	 

	 	By:	 	/s/ Anita E. Dallago
	 

	 	 	 	 
	 

	 	 	 	Name: Anita E. Dallago
	 

	 	 	 	Title: Senior Financial
Services Officer

16exv10w1

 

Exhibit 10.1

SIXTH AMENDMENT TO RESTATED

CREDIT AND SECURITY AGREEMENT

     THIS SIXTH AMENDMENT TO RESTATED CREDIT AND SECURITY AGREEMENT (the “Sixth Amendment”) by and
between EDUCATIONAL DEVELOPMENT CORPORATION, a Delaware corporation, as borrower (the “Company”),
and ARVEST BANK, as lender (the “Bank”), is entered into effective as of the 30th day of June,
2005.

     WITNESSETH:

     WHEREAS, pursuant to the Restated Credit and Security Agreement dated as of June 30, 1999, as
amended by the First Amendment thereto dated as of June 30, 2000, as further amended by the Second
Amendment thereto dated as of June 30, 2001, as further amended by the Third Amendment thereto
dated as of June 30, 2002, as further amended by the Fourth Amendment thereto dated as of June 30,
2003, and as further amended by the Fifth Amendment thereto dated as of June 30, 2004 (collectively
the “Restated Credit Agreement”), the Bank extended a Three Million Five Hundred Thousand and
No/100 Dollars ($3,500,000.00) revolving line of credit (the “Revolving Credit Loan”) to the
Company upon the terms and conditions therein set forth, the Revolving Credit Loan being secured by
the Collateral defined and described in Section 7.1 of the Restated Credit Agreement and in the
Security Agreement more particularly described and defined therein; and

     WHEREAS, the Company has requested the Bank to extend and renew the revolving credit facility
for one (1) year until June 30, 2006, in the maximum principal amount of $3,500,000.00; and

     WHEREAS, subject to the terms, provisions and conditions hereinafter set forth, the Bank is
willing to so extend, amend and modify the Revolving Credit Loan facility established pursuant to
the Restated Credit Agreement in the maximum principal amount of $3,500,000.00 until June 30, 2006;

     NOW, THEREFORE, for good and valuable consideration and for the extension and amendment of the
Restated Credit Agreement, the Company and the Bank hereby agree as follows:

     1. The maturity date of the Revolving Credit Loan shall be extended from June 30, 2005, to
June 30, 2006, and Revolving Credit Loan advances shall be evidenced by that certain replacement
Revolving Credit Note of even date herewith in the original principal amount of Three Million Five
Hundred Thousand and No/100 Dollars ($3,500,000.00) payable to the order of the Bank and bearing
interest at a variable annual rate equal from day to day to Prime Rate (as therein defined) minus
one-quarter of one percentage point (0.25%). A true and correct copy of the replacement Revolving
Credit Note is annexed hereto as Exhibit A and made a part hereof (the “Replacement Note”).

 

 

     2. The remaining terms, provisions and conditions set forth in the Restated Credit Agreement
shall remain in full force and effect for all purposes. The Company restates, confirms and
ratifies the warranties, covenants and representations set forth therein and further represents to
the Bank that no defaults or Events of Default exist under the Restated Credit Agreement as of the
date hereof. The Company further confirms, ratifies, continues, grants and re-grants to and in
favor of the Bank, as secured party, a continuous and continuing first and prior security interest
in all of the items and types of Collateral more particularly described in Section 7.1 of the
Restated Credit Agreement and in Section 2 of the Security Agreement described therein without any
interruption thereof, all of which such terms and provisions are incorporated herein by reference
with the same force and effect as if set forth and restated herein verbatim.

     3. The Company represents and warrants to the Bank that it is a corporation duly organized and
validly existing and in good standing under the laws of the State of Delaware and that the Company
is duly licensed, qualified and in good standing under the laws of the State of Oklahoma as a
foreign corporation. The Company will not change the jurisdiction or state of its incorporation or
otherwise re-incorporate without prior notification thereof to the Bank, including authorization to
the Bank to file amended or supplemental financing statements and execution by the Company of such
supplemental or amended security agreements and/or financing statements as deemed appropriate by
the Bank.

     4. The Company agrees to pay the Bank’s legal fees incurred in connection with the
negotiation, preparation and closing of this Sixth Amendment.

     IN WITNESS WHEREOF, this Sixth Amendment is executed and delivered to the Bank in Tulsa,
Oklahoma, by the undersigned duly authorized corporate officer of the Company, which officer has
full power and authority to do so on behalf and in the name of the Company by virtue of all
necessary corporate action of the Board of Directors of the Company, effective as of the 30th day
of June, 2005.

	 	 	 	 	 	 	 
	 	 	EDUCATIONAL DEVELOPMENT
	 	 	CORPORATION
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	     Randall White	 	 
	 

	 	 	 	     President	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	“Company”	 	 

	 	 	 	 	 	 	 
	 	 	ARVEST BANK  
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	     Dennis Colvard

     Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	“Bank”	 	 

 

 

Exhibit A

REVOLVING CREDIT NOTE

			
	$3,500,000.00
	 	Tulsa, Oklahoma

June 30, 2005

     FOR VALUE RECEIVED, the undersigned (the “Maker”) promises to pay to the order of ARVEST BANK
(the “Payee”), at the Payee’s main banking office in Tulsa, Oklahoma, the principal sum of THREE
MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($3,500,000.00), or so much thereof as shall have
been advanced by Payee to Maker and remains unpaid, on June 30, 2006, together with interest
thereon from the date funds are advanced hereon on the unpaid balances of principal from time to
time outstanding, at the variable annual rate of interest hereinafter specified, which interest is
payable in monthly installments due and payable on the last day of each calendar month, commencing
July 31, 2005, and at final maturity on June 30, 2006.

     The rate of interest payable upon the indebtedness evidenced by this note shall be a variable
annual rate of interest equal from day to day to Prime Rate, as hereinafter defined, minus
one-quarter of one percentage point (0.25%). Prime Rate of interest shall be effective with
respect to this note as of the date upon which any change in such rate of interest shall occur.
Interest shall be computed on the basis of a year of 360 days but assessed only for the actual
number of days elapsed.

     For the purposes of this note, Prime Rate shall mean, as of the date upon which such rate of
interest is to be determined, the prime rate of interest published in the Money Rates column of The
Wall Street Journal (Southwest Edition) or a similar rate as determined by Payee if such rate
ceases to be published.

     All parties (maker, endorsers, sureties, guarantors and all others now or hereafter liable for
payment of the indebtedness evidenced by this note) waive presentment and diligence in collection
and agree that without notice to, and without discharging the liability of any party, this note may
be extended or renewed from time to time and for any term or terms by agreement between the holder
of this note and any of such parties and all parties shall remain liable on each such extension or
renewal.

     If the principal or any installment of interest due upon this note is not paid as and when the
same becomes due and payable (whether by extension, acceleration or otherwise), or any party now or
hereafter liable (directly or indirectly) for payment of this note makes an assignment for benefit
of creditors, becomes insolvent, has an order for relief under the United States Bankruptcy Code,
as amended, entered against it, or any receiver, trustee, custodian or like officer is appointed to
take custody, possession or control of any property of any such party, the holder hereof may,
without notice, declare all of the unpaid balance hereof to be immediately due and payable. Such
right of acceleration is cumulative and in addition to any other right or rights of acceleration
under the Restated Credit and Security Agreement between the Maker and

 

 

the Payee dated as of June
30, 1999, as amended by the First Amendment thereto dated as of
June 30, 2000, as further amended by the Second Amendment thereto dated as of June 30, 2001, as
further amended by the Third Amendment thereto dated as of June 30, 2002, as further amended by the
Fourth Amendment thereto dated as of June 30, 2003, as further amended by the Fifth Amendment
thereto dated as of June 30, 2004, and as further amended by the Sixth Amendment thereto dated as
of even date herewith (collectively the “Credit Agreement”) and any other writing now or hereafter
evidencing or securing payment of any of the indebtedness evidenced hereby. After maturity,
whether by acceleration, extension or otherwise, this note shall bear interest at a variable annual
rate equal to Prime Rate plus four percentage points (4.0%). Maker and all other parties liable
hereon shall pay all reasonable attorney fees and all court costs and other costs and expenses of
collection incurred by the holder hereof.

     This is the Revolving Credit Note defined in the Credit Agreement and constitutes an extension
and renewal of that certain $3,500,000.00 Revolving Credit Note dated as of June 30, 2004.
Reference is made to the Credit Agreement and to the Security Agreement and Assignment dated as of
June 10, 1996, for the provisions with respect to acceleration, description of collateral securing
payment of the indebtedness evidenced hereby, rights and remedies in respect thereof and other
matters, the terms, liens and priorities of which such Security Agreement are hereby ratified,
confirmed and continued in full force and effect in all respects to the fullest extent permitted by
applicable law without any interruption whatsoever.

     This note is executed and delivered to the order of the Payee in Tulsa, Oklahoma, by the
undersigned duly authorized corporate officer of the Maker pursuant to all necessary corporate
action and shall be governed by and construed in accordance with the laws of the State of Oklahoma.

	 	 	 	 	 	 	 
	 	 	EDUCATIONAL DEVELOPMENT
	 	 	CORPORATION, a Delaware corporation
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	     Randall White	 	 
	 

	 	 	 	     President	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	“Maker”	 	 

Due: June 30, 2006

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