<PAGE> 1
SECURITIES EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
TEAM, INC.
(Name of Issuer)
Common Stock, $.30 par value per share
(Title of Class of Securities)
878155 10 0
(CUSIP Number)
Houston Post Oak Partners, Ltd.
Louis A. Waters, General Partner
520 Post Oak Boulevard, Suite 850
Houston, Texas 77027
(713) 629-9172
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(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
June 19, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box
[ ].
Check the following box if a fee is being paid with this statement |X|.
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class. (See Rule 13d-7).
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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CUSIP NO. 878155 10 0 Page 2 of 6 Pages
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1 Name of Reporting Person Houston Post Oak
S.S. or I.R.S. Identification No. of Above Partners, Ltd.
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2 Check the Appropriate Box if a Member of a Group (See (a) [X]
Instructions) (b) [ ]
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3 SEC Use Only
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4 Source of Funds (See Instructions) - WC - BK -
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5 Check if Disclosure of Legal Proceedings is Required [ ]
Pursuant to Items 2(d) or 2(e)
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6 Citizenship or Place of Organization Texas, U.S.A.
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Number of Shares 7 Sole Voting Power 1,200,000
Beneficially Owned by -----------------------------------------------------
Each Reporting Person 8 Shared Voting Power -0-
With -----------------------------------------------------
9 Sole Dispositive Power 1,200,000
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10 Shared Dispositive Power -0-
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11 Aggregate Amount Beneficially Owned by Each 1,200,000
Reporting Person
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12 Check if the Aggregate Amount in Row (11) Excludes [ ]
Certain Shares (See Instructions)
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13 Percent of Class Represented by Amount in Row (11) 16.5%
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14 Type of Reporting Person (See Instructions) PN
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CUSIP NO. 878155 10 0 Page 3 of 6 Pages
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1 Name of Reporting Person Louis A. Waters
S.S. or I.R.S. Identification No. of Above
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2 Check the Appropriate Box if a Member of a Group (See (a) [ X ]
Instructions) (b) [ ]
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3 SEC Use Only
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4 Source of Funds (See Instructions) - AF -
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5 Check if Disclosure of Legal Proceedings is Required [ ]
Pursuant to Items 2(d) or 2(e)
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6 Citizenship or Place of Organization U.S.A.
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Number of Shares 7 Sole Voting Power 1,200,000
Beneficially Owned by -----------------------------------------------------
Each Reporting Person 8 Shared Voting Power -0-
With -----------------------------------------------------
9 Sole Dispositive Power 1,200,000
-----------------------------------------------------
10 Shared Dispositive Power -0-
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11 Aggregate Amount Beneficially Owned by Each Reporting 1,200,000
Person
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12 Check if the Aggregate Amount in Row (11) Excludes [ ]
Certain Shares (See Instructions)
- --------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11) 16.5%
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14 Type of Reporting Person (See Instructions) IN
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<PAGE> 4
CUSIP NO. 878155 10 0 Page 4 of 6 Pages
The following statement of information ("Statement") is being filed by
Houston Post Oak Partners, Ltd. and Louis A. Waters pursuant to SEC Rule 13d-1
under the Securities Exchange Act of 1934, as amended. This Statement is being
filed as a result of the acquisition by Houston Post Oak Partners, Ltd. of
beneficial ownership of 1,200,000 shares of the Common Stock of Team, Inc. Louis
A. Waters is filing this Statement jointly with Houston Post Oak Partners, Ltd.
because he is its sole General Partner.
ITEM 1. SECURITY AND ISSUER.
The class of securities to which this Statement relates is the common
stock, par value $.30 per share (the "Common Stock"), of Team, Inc., a Texas
corporation ("Team"), whose principal business address is 200 Hermann Drive,
Alvin, Texas 77511.
ITEM 2. IDENTITY AND BACKGROUND.
This Statement is filed by Houston Post Oak Partners, Ltd., a Texas
limited partnership (the "Partnership"), and Louis A. Waters. Mr. Waters'
business address is 520 Post Oak Boulevard, Suite 850, Houston, Texas 77027. Mr.
Waters' principal occupation is managing his investments. Mr. Waters is a
director of Team.
Mr. Waters also serves as the sole General Partner of the Partnership,
whose principal business purpose is to acquire properties and securities for
investment purposes. The Partnership directly holds 100% of the securities to
which this Statement relates. The principal business address of the Partnership
is 520 Post Oak Boulevard, Suite 850, Houston, Texas 77511.
Neither Mr. Waters nor the Partnership has ever been convicted in a
criminal proceeding. During the last five years, neither Mr. Waters nor the
Partnership has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
been subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or state
securities laws, or finding any violation with respect to such laws. Mr. Waters
is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Effective May 22, 1998, the Partnership entered into that certain
Purchase Agreement by and between the Partnership and Team (the "Purchase
Agreement"), under which the Partnership agreed to purchase from Team on the
closing date 1,200,000 shares of Common Stock. The aggregate purchase price
under the Purchase Agreement was $3,300,000. The closing date under the Purchase
Agreement was June 19, 1998.
The Partnership funded approximately $1,575,000 of the purchase price
under the Purchase Agreement from the proceeds obtained through a private
placement of its securities in a negotiated transaction not involving a public
offering and the remainder of the purchase price through bank loans in the
original principal amount of $1,975,000 from a commercial bank in the ordinary
course of business.
No funds or other consideration were otherwise obtained for the purpose
of acquiring, holding, trading or voting the securities, and neither the
Partnership nor Mr. Waters, except for the transactions described herein, have
made any prior acquisitions of the Common Stock.
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CUSIP NO. 878155 10 0 Page 5 of 6 Pages
ITEM 4. PURPOSE OF TRANSACTION.
The purpose of the acquisition by the Partnership of the shares of
Common Stock to which this Statement relates is for investment purposes.
The number of shares of Common Stock acquired by the Partnership does
not constitute a majority of the outstanding shares of Common Stock and is
insufficient to permit it to exercise control over Team. In addition, Mr.
Waters' position as a director of Team is insufficient to permit him to exercise
control over Team.
Mr. Waters, in his capacity as a director of Team, expects to propose
that the Board of Directors explore the alternatives that might be available to
Team with respect to strategic planning for the future business operations of
the company. It is expected that such alternatives may involve acquisitions or
the disposition of material assets by Team. But there are presently no specific
plans, proposals, agreements or arrangements agreed to among the directors of
Team regarding such matters.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The aggregate number of shares of Common Stock issued and
outstanding was 6,083,742 shares, as of June 4, 1998. The Partnership is now the
beneficial owner of 1,200,000 shares of Common Stock. Such shares were acquired
by the Partnership in the transactions described in Item 3 above. Mr. Waters is
the sole General Partner of the Partnership, and as such, is also the beneficial
owner of such shares of Common Stock, which now represent 16.5% of the total
number of shares of Common Stock issued and outstanding.
(b) Mr. Waters, in his capacity as the sole General Partner of the
Partnership, retains the sole voting and investment power with respect to all of
the Common Stock described in Item 5(a), above. However, Mr. Waters' pecuniary
interest in such Common Stock is less than all of the Partnership' holdings.
(c) All the securities described in Item 5(a) above were acquired in
the transactions described in Item 3 above within the past sixty (60) days.
(d) Other than the stock pledge described in Item 6, no other person is
known to have the right to receive, or the power to direct the receipt of,
dividends from or the proceeds from the sale of, the securities described herein
as being beneficially owned by the Partnership and Mr. Waters.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
As described in Item 2, above, Mr. Waters is the sole General Partner
of the Partnership and, as such, he has the sole voting and investment power
with respect to the securities to which this Statement relates. Subject to the
following sentence, there are no contracts, arrangements, understandings or
relationships (legal or otherwise) between Mr. Waters or the Partnership and any
other person with respect to any securities of Team, including but not limited
to transfer or voting of any of the securities, finders' fees, joint ventures,
loan or option agreements, puts or calls, guarantees of profits, division of
profits or loss, whether giving or withholding of proxies. A total of 1,200,000
shares of the Common Stock held by the Partnership is pledged to a commercial
bank to secure the indebtedness of the Partnership described in Item 3, above;
none of the securities that are the subject of this
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CUSIP NO. 878155 10 0 Page 6 of 6 Pages
Statement is otherwise subject to a contingency, the occurrence of which would
give another person voting power or investment power over such securities.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
The following instruments, which relate to the borrowing of funds to
finance the acquisition as disclosed in Item 3, above, are filed as exhibits to
this Statement:
Exhibit "A" - Agreement in Writing in Accordance with SEC Rule
13d-1(f)(1)(iii).
Exhibit "B" - Promissory Note, by the Partnership, as Maker, in the
original principal amount of $1,650,000, dated June 12, 1998.
Exhibit "C" - Security Agreement - Pledge, by the Partnership, as
Owner, dated June 12, 1998.
Exhibit "D" - Specific Guaranty, by Louis A. Waters, as Guarantor,
dated June 12, 1998.
Exhibit "E" - Promissory Note, by the Partnership, as Maker, in the
original principal amount of $325,000, dated June 12, 1998.
Exhibit "F" - Security Agreement - Pledge, by the Waters Trust, as
Owner, dated June 12, 1998.
Exhibit "G" - Specific Guaranty, by Louis A. Waters, as Guarantor,
dated June 12, 1998.
ITEM 8. SIGNATURE.
After reasonable inquiry and to the best of our knowledge and belief,
we certify that the information set forth in this Statement is true, complete
and correct.
Dated: June 19, 1998
HOUSTON POST OAK PARTNERS, LTD.
By: /s/ Louis A. Waters
--------------------------------------
Louis A. Waters, General Partner
/s/ Louis A. Waters
-----------------------------------------
Louis A. Waters, Individually
<PAGE> 1
EXHIBIT "A"
Agreement in Writing in Accordance with SEC Rule 13d-1(f)(1)(iii)
The undersigned hereby agree:
1. that each of them is responsible for the timely filing of Form
13D and any amendments thereto with regard to Team, Inc., and for
the completeness and accuracy of the information concerning each
of them that is contained therein; and,
2. such Form 13D identifies each of the undersigned, contains the
required information with regard to each of the undersigned, and
is filed on behalf of each of the undersigned.
Dated: June 19, 1998.
HOUSTON POST OAK PARTNERS, LTD.
By: /s/ Louis A. Waters
--------------------------------------
Louis A. Waters, General Partner
/s/ Louis A. Waters
-----------------------------------------
Louis A. Waters, Individually
<PAGE> 1
EXHIBIT B
PROMISSORY NOTE
$1,650,000.00 HOUSTON, TEXAS JUNE 12, 1998
FOR VALUE RECEIVED, HOUSTON POST OAK PARTNERS, LTD., a Texas limited
partnership ("Maker"), promises to pay to the order of ("Payee"), at
its banking house in the City of Houston, Harris County, Texas, in lawful money
of the United States of America, the sum of ONE MILLION SIX HUNDRED FIFTY
THOUSAND AND NO/100 DOLLARS ($1,650,000.00), together with interest on the
unpaid principal balance hereof from time to time outstanding until maturity at
a rate per annum equal to the Prime Rate (as hereinafter defined) from time to
time in effect plus one-half percent (0.5%) (the Prime Rate plus 0.5% is herein
referred to as the "Stated Rate"); provided, however, in no event shall interest
on this note ever be charged or paid at a rate greater than the maximum
non-usurious rate permitted by applicable federal or Texas law from time to time
in effect, whichever shall permit the higher lawful rate (the "Highest Lawful
Rate").
If at any time or times the Stated Rate would exceed the Highest Lawful
Rate but for the limitation set forth above, the rate of interest to accrue on
the unpaid principal balance of this note during all such times shall be limited
to the Highest Lawful Rate, but any subsequent reduction in the Stated Rate due
to reductions in the Prime Rate shall not become effective to reduce the
interest rate payable below the Highest Lawful Rate until the total amount of
interest accrued on the unpaid balance of this note equals the total amount of
interest which would have accrued if the Stated Rate had at all times been in
effect.
If, at maturity or final payment of this note, the total amount of interest
paid or accrued under the foregoing provisions is less than the total amount of
interest which would have accrued if the Stated Rate had at all times been in
effect, then Maker agrees to pay to Payee, to the extent allowed by law, an
amount equal to the difference between (a) the lesser of (i) the amount of
interest which would have accrued on this note if the Highest Lawful Rate had at
all times been in effect, or (ii) the amount of interest which would have
accrued if the Stated Rate had at all times been in effect, and (b) the amount
of interest accrued in accordance with the other provisions of this note.
Interest shall be computed on the basis of the actual number of days
elapsed in a year composed of 360 days; however, if such computation would cause
the Stated Rate to exceed the Highest Lawful Rate, interest shall be computed on
the basis of a year composed of 365 or 366 days, as the case may be. At all such
times, if any, as Texas law shall establish the Highest Lawful Rate, the Highest
Lawful Rate shall be the "indicated rate ceiling" (as defined in Tex. Rev. Civ.
Stat. Ann. Art. 5069-1.04(a), as amended) from time to time in effect; provided
that Payee may also rely on alternative maximum rates of interest from time to
time in effect under other applicable laws, if they are higher.
This note is payable as follows:
Accrued interest shall be due and payable monthly, on the 12th day of each
and every calendar month, commencing July 12, 1998 and continuing regularly and
monthly thereafter until two (2) years from date hereof, at which time the
entire unpaid balance of this note, principal together with unpaid accrued
interest, shall be due and payable in full.
This note may be prepaid in whole or in part at any time without penalty;
provided, however, that all payments received by Payee from Maker upon this note
shall first be applied to the payment of accrued but unpaid interest, with the
balance thereof to be applied to the reduction of the outstanding principal of
this note. All prepayments in excess of accrued interest shall be applied to the
outstanding principal balance of this note in the inverse order of maturity.
Whenever any payment to be made under this note shall be stated to be due
on a Saturday, Sunday or legal holiday for commercial banks under the laws of
the State of Texas, then such payment shall be made on the next succeeding
business day.
L. A. W.
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<PAGE> 2
The term "Prime Rate", as used herein, shall mean the prime rate as
published in The Wall Street Journal's "Money Rates" table. If multiple prime
rates are quoted in the table, then the highest prime rate will be the Prime
Rate. In the event that the prime rate is no longer published in the "Money
Rates" table, then Payee will choose a substitute Prime Rate which is based upon
comparable information.
In addition to all principal and accrued interest on this note, Maker
agrees to pay (a) all reasonable costs and expenses incurred by all owners and
holders of this note in collecting this note through probate, reorganization,
bankruptcy or any other proceeding, (b) the reasonable attorneys' fees when and
if this note is placed in the hands of an attorney for collection after default,
and (c) the reasonable attorneys' fees, costs and expenses incurred by Payee in
connection with the preparation and filing of the agreements and documents
contemplated herein.
Unless as otherwise provided by law, Maker and any and all co-makers,
endorsers, guarantors and sureties severally waive notice (including, but not
limited to, notice of protest, notice of dishonor and notice of intent to
accelerate and notice of acceleration), demand, presentment for payment, protest
and the filing of suit for the purpose of fixing liability and consent that the
time of payment hereof may be extended and re-extended from time to time without
notice to them or any of them, and each agrees that his, her or its liability on
or with respect to this note shall not be affected by any release of or change
in any security at any time existing or by any failure to perfect or to maintain
perfection of any lien on or security interest in any such security.
Maker warrants and represents to Payee, and to all other owners and holders
of any indebtedness evidenced hereby, that the loan evidenced by this Note is
and shall be solely for business, commercial or agricultural purposes and not
primarily for personal, family or household use. Maker acknowledges that the
loan evidenced by this Note is specifically exempted under Section 226.3(a) of
Regulation Z issued by the Board of Governors of the Federal Reserve System and
under the Truth-in-Lending Act and that no disclosures are required to be given
under such regulations and federal laws in connection with this Note.
It is agreed that time is of the essence of this agreement, and that in the
event of default in the payment of any installment of principal or interest when
due the holder hereof may declare the unpaid principal balance plus all accrued
but unpaid interest due thereon immediately due and payable without notice, and
failure to exercise said option shall not constitute a waiver on the part of the
holder of the right to exercise the same at any other time.
In the event of (i) the failure of Maker to make any payment herein
provided when due (either of principal and/or interest), or (ii) in the event
the entirety of the unpaid principal balance plus accrued unpaid interest
thereon is declared due, interest on such past-due indebtedness (either
principal and/or interest) shall accrue at the Highest Lawful Rate.
All agreements between the Maker and the Payee, whether now existing or
hereafter arising and whether written or oral, are hereby expressly limited so
that in no event, whether by reason of acceleration of maturity hereof or
otherwise, shall the amount paid or agreed to be paid to the Payee for the use,
forbearance, or detention of the money to be loaned hereunder or otherwise
exceed the Highest Lawful Rate. If fulfillment of any provision hereof or of any
mortgage, loan agreement, or other document evidencing or securing the
indebtedness evidenced hereby, at the time performance of such provision shall
be due, shall involve transcending the limit of validity prescribed by law,
then, ipso facto, the obligation to be fulfilled shall be reduced to the limit
of such validity; and if the Payee shall ever receive anything of value deemed
interest under applicable law which would exceed interest at the Highest Lawful
Rate, an amount equal to any excessive interest shall be applied to the
reduction of the principal amount owing hereunder and not to the payment of
interest, or if such excessive interest exceeds the unpaid balance of principal
hereof, such excess shall be refunded to the Maker. All sums paid or agreed to
be paid to the Payee for the use, forbearance, or detention of the indebtedness
of the Maker to the Payee shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full term of such
indebtedness until payment in full so that the rate of interest on account of
such indebtedness is uniform throughout the term thereof. The provisions of
this paragraph shall control all agreements between the Maker and the Payee.
L. A. W.
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2
<PAGE> 3
The Maker hereby acknowledges and agrees that the Payee has and shall have
the right, at any time, without the consent of or notice to the Maker, to grant
participations in all or part of the obligations of the Maker evidenced by this
note, together with any liens or collateral securing the payment hereof. In the
event Payee elects to participate any Overline Portion (as hereinafter defined)
of the obligations evidenced by this note and if Payee is unable to procure a
participant or a participant fails or refuses to advance to Maker any Overline
Portion through no fault of Payee, it is agreed that Payee shall have no
liability to Maker to fund such Overline Portion, nor shall Payee have any
obligation to procure funds from other sources or fund any amounts that would
cause Payee to be in violation of any state or federal law with respect to Maker
being liable to Payee in an amount in excess of that permitted by such
applicable law. The term "Overline Portion" shall mean the amount of loan
proceeds in excess of the amount that Payee is permitted by applicable law to
loan to Maker.
Payment of this note is secured by (1) a Security Agreement of even date
herewith executed by Maker in favor of Payee covering certain marketable
securities more particularly described therein, (2) a Security Agreement of even
date herewith executed by Louis A. Waters in favor of Payee covering certain
marketable securities more particularly described therein, and (3) a Specific
Guaranty executed by Louis A. Waters.
Reference is hereby made to (1) that certain promissory note dated as of
even date herewith in the principal amount of $1,000,000.00 (the "$1,000,000.00
Note"), executed by Louis A. Waters and payable to Payee, (2) that certain
promissory note dated as of even date herewith in the principal amount of
$325,000.00 (the "$325,000.00 Note"), executed by Maker and payable to Payee,
and (3) that certain promissory note dated as of even date herewith in the
principal amount of $500,000.00 (the "$500,000.00 Note"), executed by The Waters
Trust and payable to Payee. Should an event of default occur pursuant to the
terms of any or all of the $1,000,000.00 Note, the $325,000.00 Note or the
$500,000.00 Note, such event shall also, at the option of the Payee, constitute
an event of default hereunder.
This note has been executed and delivered in and shall be construed in
accordance with and governed by the laws of the State of Texas and of the United
States of America, except that Tex. Rev. Civ. Stat. Ann. Art. 5069, Ch. 15, as
amended (which regulates certain revolving credit loan accounts and revolving
tri-party accounts), shall not apply hereto.
For purposes of any suit relating to this note, Maker hereof submits itself
to the jurisdiction of any court sitting in the State of Texas and further
agrees that venue in any suit arising out of this note or any venue shall be
fixed in Harris County, Texas. Final judgment in any suit shall be conclusive
and may be enforced in any jurisdiction within or without the United States of
America, by suit on the judgment, a certified or exemplified copy of which shall
be conclusive evidence of such liability.
HOUSTON POST OAK PARTNERS, LTD.
By: /s/ LOUIS A. WATERS
------------------------------------
Louis A. Waters, its general partner
3
<PAGE> 4
Payee may proceed directly against any general partner of Maker without
first exhausting its remedies against Maker. In connection herewith, the Maker
and Payee hereby agree that the Payee is not required to comply with Section
3.05(d) of the Texas Revised Partnership Act. Maker and Payee agree that this
paragraph is intended to comply with the provisions of Section 3.05(e)(2) of the
Texas Revised Partnership Act.
"MAKER"
HOUSTON POST OAK PARTNERS, LTD.
By: /s/ LOUIS A. WATERS
------------------------------------
Louis A. Waters, its general partner
"PAYEE"
4
<PAGE> 1
EXHIBIT C
SECURITY AGREEMENT - PLEDGE
HOUSTON POST OAK PARTNERS, LTD., whose address is 520 Post Oak Boulevard,
Suite 850, Houston, Texas 77027, hereinafter called "Debtor", for value
received, the receipt and sufficiency of which is hereby acknowledged, hereby
grants to whose address is hereinafter
called "Secured Party", the security interest hereinafter set forth and agrees
with Secured Party as follows:
I. SECURITY INTEREST
Debtor hereby grants to Secured Party a security interest in and agrees and
acknowledges that Secured Party has and shall continue to have a security
interest in the following described property, to-wit:
1,200,000 shares of common stock of Team, Inc.
together with all monies, income, proceeds and benefits attributable or accruing
to said property, including, but not limited to, all stock rights, rights to
subscribe, liquidating dividends, stock dividends, property, cash distributions,
dividends paid in stock, new securities, cash dividends or other properties or
benefits of which Debtor is or may hereafter become entitled to receive on
account of said property, and in the event that Debtor shall receive any such,
Debtor shall hold same as Trustee for Secured Party and will immediately deliver
same to Secured Party, to be held by Secured Party in the same manner as the
property specifically described above is held hereunder. All property of all
kinds in which the Secured Party is herein granted a security interest shall
hereinafter be called the "Collateral". The undersigned agrees to execute such
stock powers, endorse such instruments, or execute such additional pledge
agreements or other documents as may be required by the Secured Party in order
to effectively grant to Secured Party the security interest in the Collateral.
The security interest granted hereby is to secure the payment of (1) that
certain promissory note of even date herewith, executed by Debtor in favor of
Secured Party in the principal amount of $1,650,000.00, and (2) that certain
promissory note of even date herewith executed by Louis A. Waters in favor of
Secured Party in the principal amount of $1,000,000.00 (the "$1,000,000.00
Note"), together with any and all other indebtedness and liabilities whatsoever
of the Debtor to Secured Party whether direct or indirect, absolute or
contingent, due or to become due, and whether now existing or hereafter arising
and howsoever evidenced or acquired, and whether joint or several (all of which
are hereinafter sometimes called the "Obligations").
II. WARRANTIES AND COVENANTS OF DEBTOR
Debtor warrants, covenants and agrees that:
(1) Except for the security interest granted hereby, the Debtor is the
owner of the Collateral free of any adverse claim, security interest or
encumbrance; and the Debtor will defend the Collateral against all claims and
demands of all persons at any time claiming the same or interest therein;
(2) Debtor authorizes the Secured Party to file, in jurisdictions where
this authorization will be given effect, a Financing Statement signed only by
the Secured Party covering the Collateral; and at the request of Secured Party,
the Debtor will join the Secured Party in executing one or more Financing
Statements pursuant to the Uniform Commercial Code, in form satisfactory to
the Secured Party, and will pay the cost of filing the same or filing or
recording the Security Agreement in all public offices wherever filing or
recording is deemed by the Secured Party to be necessary or desirable, it being
further stipulated in this regard that the Secured Party may also at any time or
times sign any counterpart of this Security Agreement signed by the Debtor and
file same as a Financing Statement if the Secured Party shall elect to do so;
<PAGE> 2
(3) Debtor will not sell or offer to sell or otherwise transfer or encumber
the Collateral or any interest therein without the written consent of the
Secured Party;
(4) Debtor will keep the Collateral free from any adverse lien, security
interest or encumbrances;
(5) Debtor will deliver to the holder of the Obligations additional
collateral, upon demand by such holder, if such holder deems the Collateral then
held hereon to be insufficient, to properly and amply secure all Obligations
secured hereby;
(6) Debtor will pay to Secured Party all expenses and expenditures,
including reasonable attorneys' fees and legal expenses, incurred or paid by the
Secured Party in exercising or protecting its interest, rights and remedies
under this Security Agreement.
III. GENERAL COVENANTS
(1) The security interest granted hereby shall in no way be affected by any
indulgence or indulgences, extension or extensions, change or changes in the
form, evidence, maturity, rate of interest or otherwise of any of the
Obligations hereby secured, nor by want of presentment, notice, protest, suit or
indulgence upon any of such Obligations, nor shall any release of any security
for or of any of the parties liable for the payment of any of the Obligations
secured hereby in any manner affect or impair this pledge, and same shall
continue in full force and effect in accordance with the terms until all of the
Obligations have been fully paid.
(2) Any and all securities and other properties heretofore, now or
hereafter delivered to Secured Party, or in Secured Party's possession, shall
also secure all Obligations and shall be held and construed to be a part of the
Collateral hereunder to the same extent as fully described herein.
(3) Secured Party shall have the power to endorse and is hereby appointed
Debtor's agent for the purpose of endorsing in the name of Debtor any instrument
or document constituting Collateral or which may be received in payment of or on
account of the Collateral.
IV. EVENTS OF DEFAULT
The Debtor shall be in default under this Security Agreement upon the
happening of any of the following events or conditions:
(1) Default in the payment or performance of any liability or obligation of
the Debtor or of any maker, endorser or guarantor of any liability or obligation
of the Debtor to the holder of the Obligations, including, but not by way of
limitation, default in the payment of any principal or interest on any of the
Obligations when due;
(2) Failure of the Debtor to deliver additional collateral as provided;
(3) Any deterioration or impairment of the Collateral or any part thereof
or any decline or depreciation in the market price thereof (whether actual or
reasonably anticipated) which, in the judgment of the Secured Party, causes the
Collateral to become unsatisfactory as to value or character;
(4) The levy of any attachment, execution or other process against the
Debtor or any of the Collateral;
(5) Death, dissolution, termination of existence, insolvency or business
failure of the Debtor or any endorser, guarantor or surety of any of the
Obligations, or the commission of the act of bankruptcy by, or the appointment
of receiver or other legal representative for any part of the property of,
assignment for the benefit of creditors by, or the
2
<PAGE> 3
commencement of any proceedings under any bankruptcy or insolvency law by or
against, the Debtor or any endorser, guarantor or surety for any of the
Obligations.
(6) Default in the performance of any other covenant or agreement of Debtor
to Secured Party, whether under this Security Agreement or otherwise;
(7) The occurrence of any event which under the terms of any evidence of
indebtedness, indenture, loan agreement, security agreement or similar
instrument permits the acceleration of maturity of any indebtedness of Debtor to
Secured Party, or to others than Secured Party; or Secured Party receives
notification that another person has or expects to acquire a security interest
in the Collateral or any part thereof.
V. REMEDIES
In the event of the default in the payment of any of the Obligations or any
principal, interest or other amount payable thereunder, when due, or upon the
happening of any of the events of default specified herein, and at any time
thereafter, at the option of the holder thereof, any or all of the Obligations
shall become immediately due and payable without presentment or demand or any
notice to the Debtor or any other person obligated thereon and the Secured Party
shall have and may exercise with reference to the Collateral and Obligations any
and all of the rights and remedies of a secured party under the Uniform
Commercial Code as adopted in the State of Texas, and as otherwise granted
herein or under any other applicable law or under any other agreement executed
by Debtor, including, without limitation, the right and power to sell, at public
or private sale or sales, or otherwise dispose of or utilize the Collateral and
any part or parts thereof in any manner authorized or permitted under this
Security Agreement or under the Uniform Commercial Code after default by the
Debtor, and to apply the proceeds thereof toward payment of any costs and
expenses and attorneys' fees and legal expenses thereby incurred by the Secured
Party and toward payment of the Obligations, in such order or manner as Secured
Party may elect. To the extent permitted by law, Debtor expressly waives any
notice of sale or other disposition of the Collateral and any other rights or
remedies of Debtor or formalities prescribed by law relative to sale or
disposition of the Collateral or exercise of any other right or remedy of
Secured Party existing after default hereunder, and to the extent any such
notice is required and cannot be waived, Debtor agrees that if such notice is
mailed, postage prepaid, to the Debtor at the address shown hereinabove at least
five (5) days before the time of the sale or disposition, such notice shall be
deemed reasonable and shall fully satisfy any requirement for giving of said
notice.
Secured Party is hereby granted the right, after default in payment of any
of the Obligations or in the performance of any covenants secured hereby, to
transfer at any time to itself or its nominee the securities or other property
hereby pledged, or any part thereof, and to thereafter exercise all voting
rights with respect to such security so transferred and to receive the proceeds,
payments, moneys, income or benefits attributable or accruing thereto and to
hold the same as security for the Obligations hereby secured, or at Secured
Party's election, to apply such amounts to the Obligations, whether or not then
due, in such order as Secured Party may elect, or, Secured Party may, at its
option, without transferring such securities or property to its nominee,
exercise all voting rights with respect to the securities pledged hereunder and
vote all or any part of such securities at any regular or special meeting of
shareholders, and the undersigned does hereby name, constitute and appoint as a
proxy of the undersigned the President or any Vice President of Secured Party,
in the undersigned's name, place and stead to vote any and all such securities,
as said proxy may elect, for and in the name, place and stead of the
undersigned, such proxy to be irrevocable and deemed coupled with an interest.
Debtor hereby agrees to cooperate fully with Secured Party in order to
permit Secured Party to sell, at foreclosure or other private sale, the
Collateral pledged hereunder. Specifically, Debtor agrees to fully comply with
the Securities Laws of the United States and of the State of Texas and to take
such action as may be necessary to permit Secured Party to sell or otherwise
transfer the securities pledged hereunder in compliance with such laws.
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VI. MISCELLANEOUS
Secured Party may, at its option, following the occurrence of an Event of
Default, demand, sue for, collect or make any compromise or settlement it deems
desirable with reference to the Collateral. The Secured Party shall not be
obligated to take any steps necessary to preserve any rights in the Collateral
against prior parties, which Debtor hereby assumes to do.
No delay or omission on the part of Secured Party in exercising any rights
hereunder shall operate as a waiver of any such right or any other right. A
waiver on any one or more occasions shall not be construed as a bar to or waiver
of any right or remedy on any future occasion.
It is the intention of the parties hereto to comply with the usury laws of
the State of Texas; accordingly, it is agreed that notwithstanding any provision
to the contrary in the Security Agreement, or in any of the documents evidencing
the Obligations or otherwise relating thereto, no such provision shall require
the payment or permit the collection of interest in excess of the maximum
permitted by law. If any excess of interest in such respect is provided for, or
shall be adjudicated to be so provided for, in this Security Agreement, or in
any of the documents evidencing the Obligations or otherwise relating thereto,
then in such event (a) the provisions of this paragraph shall govern and
control, (b) neither the Debtor hereof nor his heirs, legal representatives,
successors or assigns or any other party liable for the payment hereof, shall
be obligated to pay the amount of such interest to the extent that it is in
excess of the maximum amount permitted by law, (c) any such excess which may
have been collected shall be, at the option of the holder of the instrument
evidencing the Obligations, either applied as a credit against the then unpaid
principal amount thereof or refunded to the Maker thereof and (d) the
effective rate of interest shall be automatically subject to reduction to the
maximum lawful contract rate allowed under the usury laws of the State of
Texas as now or hereafter construed by the courts having jurisdiction.
In order to induce Secured Party to advance and loan such funds to and/or
for the benefit of Debtor, Debtor hereby covenants and agrees that in the event
of default by the Debtor (an event of default shall be any one of those events
of default stated above) that the Secured Party shall have the absolute and
unconditional right, without the prior notice and/or any prior hearing of any
kind whatsoever, to seize and take possession of the Collateral, and furthermore
the Debtor does hereby expressly waive any right to any prior notice and/or any
prior hearing prior to seizure and taking possession of the Collateral and/or
property by the Secured Party in the event of default by the Debtor.
Debtor and Secured Party agree that, upon the earlier to occur of (i)
mutual agreement by both Debtor and Secured Party, or (ii) one (1) year from the
date hereof, the $1,000,000.00 Note shall no longer be secured by this Security
Agreement and shall no longer be considered part of the Obligations.
All rights of Secured Party hereunder shall inure to the benefit of its
successors and assigns; and all obligations of Debtor shall bind his heirs,
executors or administrators and his or its successors or assigns. The rights and
remedies of Secured Party hereunder are cumulative and the exercise of any one
or more of the remedies provided herein shall not be construed as a waiver of
any of the other remedies of Secured Party.
Any provision found to be invalid under the laws of the State of Texas, or
any other state having jurisdiction, shall be invalid only with respect to the
offending provision. All words used herein shall be construed of such gender or
number as the circumstances require. If this Security Agreement is executed by
more than one debtor, the Obligations of all such debtors shall be joint and
several. The law of the State of Texas shall apply to this Security Agreement
and its construction and interpretation.
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EXECUTED on this 12th day of June, 1998.
"DEBTOR":
HOUSTON POST OAK PARTNERS, LTD.
By: /s/ LOUIS A. WATERS
------------------------------------
Louis A. Waters, its general partner
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<PAGE> 1
EXHIBIT D
SPECIFIC GUARANTY
This guaranty, dated the 12th day of June, 1998, is executed by the
undersigned, LOUIS A. WATERS (hereinafter referred to as "Guarantor"), in favor
of (hereinafter referred to as "Obligee").
W I T N E S S E T H:
WHEREAS, HOUSTON POST OAK PARTNERS, LTD. (hereinafter referred to as
"Borrower"), and Guarantor desire Obligee to extend financial and credit
accommodations to Borrower;
WHEREAS, Obligee is willing to Extend credit and financial accommodations
to Borrower only upon the condition that Guarantor execute and deliver to
Obligee This Specific Guaranty and undertake the obligations of Guarantor set
out herein;
NOW, THEREFORE, in consideration of financial and credit accommodations
extended or to be extended by Obligee to Borrower and other good and valuable
consideration, receipt of which is hereby acknowledged, Guarantor agrees as
follows:
1. OBLIGATION OF GUARANTOR.
Guarantor absolutely and unconditionally guarantees to the Obligee the
payment and performance of all indebtedness, obligations and liabilities (the
"Indebtedness") of or owed by Borrower to Obligee (and also to others, to the
extent of participations granted them by Obligee) now existing or hereafter
incurred or created, direct or indirect, absolute or contingent, arising in
connection with that one certain Promissory Note of even date herewith from
Borrower to Obligee in the original principal amount of $1,650,000.00. The
obligations of Guarantor contained in this guaranty shall be absolute and
unconditional, without regard to the validity, legality, regularity or
enforceability of the Indebtedness or any instrument evidencing, securing or
relating to said Indebtedness and shall not be reduced or affected in any way by
any failure or omission to enforce any right against Borrower or Guarantor or by
any other action which may in any manner or to any extent vary the risks of
Guarantor or which might otherwise constitute a legal or equitable discharge of
Guarantor; it being the purpose and intent of the parties hereto that this
guaranty and the obligations of Guarantor hereunder shall be absolute and
unconditional under any and all circumstances and shall not be discharged except
by payment and performance as herein provided. Guarantor agrees that, without
the necessity of any reservation of rights against Guarantor and without notice
to or further assent by Guarantor, (1) any demand for payment of any or all of
the Indebtedness may be rescinded by the party making such demand and the
Indebtedness reinstated or continued, and (2) the Indebtedness or any collateral
security therefor or rights of offset with respect thereto may, from time to
time, in whole or in part, be renewed, extended, modified, rearranged,
compromised or released by Obligee or, without notice to or further assent by
Guarantor, who will remain bound hereunder; notwithstanding any such rescission,
renewal, extension, modification, rearrangement, compromise or release.
2. WAIVER BY GUARANTOR.
Guarantor waives:
(a) Notice of the granting of any loan to Borrower or the incurring of any
indebtedness of Borrower or the terms or conditions thereof;
(b) Presentment, demand for payment, protest or notice of dishonor of any
indebtedness of Borrower;
(c) Any other notice to which Guarantor might be entitled;
<PAGE> 2
(d) Joinder of the Borrower in any suit or action to enforce this guaranty,
in particular, and without in any way limiting the foregoing, Guarantor
waives any right to have Obligee sue Borrower or take any other action
against Borrower as a prerequisite to Obligee's taking any action or
bringing any suit against Guarantor under this guaranty; and
(e) The right to interpose against Obligee any setoff or counterclaim of
any nature or description, whether of Borrower or Guarantor, in the
computation of any amounts payable by Guarantor hereunder or in any
litigation arising out of or relating to this guaranty; and Guarantor
further agrees that his obligations and liabilities hereunder shall not be
affected or impaired, regardless of any impossibility or illegality of
performance on the part of the Borrower.
3. RIGHTS OF OBLIGEE.
Obligee may, at any time, without consent of or notice to Guarantor,
without incurring responsibility to the Guarantor, without impairing or
releasing the obligations of the Guarantor, upon or without terms or conditions
and in whole or in part:
(a) Change the manner, place or terms of payment or change or extend the
time of payment of, renew or alter any indebtedness, obligation or
liability of Borrower hereby guaranteed or any liabilities incurred
directly or indirectly hereunder and the guaranty herein made shall apply
to the indebtedness, obligations and liabilities of the Borrower, changed,
extended, renewed or altered in any manner;
(b) Sell, exchange, release, surrender, realize, upon or otherwise, deal
with in any manner and in any order, any property at any time pledged or
mortgaged to secure or securing the indebtedness, obligations or
liabilities hereby guaranteed or pledged or mortgaged to secure this
guaranty or any indebtedness, obligations or liabilities incurred directly
or indirectly hereunder or any offset against any of said indebtedness,
obligations or liabilities;
(c) Exercise or refrain from exercising any rights against Borrower or
others or otherwise act or refrain from acting;
(d) Settle or compromise any indebtedness, obligations or liabilities
hereby guaranteed or hereby incurred and may subordinate the payment of all
or any part of such liabilities to the payment of any liabilities which may
be due Obligee or others;
(e) Apply any sums paid to any Indebtedness of Borrower to Obligee,
regardless of what Indebtedness of Borrower to Obligee remains unpaid; and
(f) Release Borrower or any other guarantor of Borrower's Indebtedness to
Obligee from any liability to Obligee.
4. TERMINATION OF GUARANTY.
The obligations of Guarantor hereunder shall terminate upon, and only upon,
written release of Guarantor by Obligee; provided, however, no termination
hereof shall affect in any manner any rights of Obligee arising under this
guaranty with respect to liabilities arising prior to such written release by
Obligee and the sole effect of any such written release by Obligee shall be to
exclude from this guaranty liabilities arising thereafter which are unrelated to
liabilities theretofore arising or transactions theretofore entered into.
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5. PARTIES IN INTEREST.
This guaranty shall continue in full force and effect, notwithstanding the
death, incapacity or legal disability of Guarantor and shall be binding on the
successors, assigns, estate, personal representatives and heirs, as the case may
be, of Guarantor and shall inure to the benefit of Obligee, its successors,
heirs and assigns.
6. PLACE OF PERFORMANCE.
The obligations of Guarantor hereunder shall be payable and performable at
Houston, Harris County, Texas.
7. ADDITIONAL OBLIGATIONS OF GUARANTOR.
In addition to obligations of Guarantor set forth elsewhere herein,
Guarantor agrees to pay to Obligee:
(a) All costs, attorney's fees and other expenses incurred by Obligee in an
effort to enforce and/or collect all or any part of the Indebtedness; and
(b) All costs, attorney's fees and expenses incurred by Obligee in an
effort to enforce or collect the obligations of Guarantor pursuant to this
guaranty.
8. COMPLIANCE WITH LAWS.
It is the intention of the parties hereto to comply with all laws in force
and applicable hereto; accordingly, it is agreed that, notwithstanding any
provision to the contrary herein or in any note, instrument or other document
evidencing or securing the Indebtedness or otherwise related hereto or thereto,
no such provision shall require the payment or permit the collection of interest
from Guarantor in excess of the maximum non-usurious rate permitted by
applicable law. If any excess of interest in such respect is provided for or
shall be adjudged to be so provided for, then in such event, (i) the provisions
of this paragraph shall govern and control, (ii) neither Guarantor nor his
heirs, executors or administrators, successors or assigns or any other party
liable under Guarantor, shall be obligated to pay the amount of such interest,
to the extent that it is in excess of the maximum non-usurious amount permitted
by applicable law, (iii) any such excess which may have been collected shall be,
at Obligee's option, either refunded or applied to the Indebtedness, and (iv)
the effective rate of interest covered by this guaranty shall be automatically
subject to reduction to the maximum non-usurious lawful contract rate allowed
under the applicable law as now or hereafter construed by the courts having
jurisdiction thereof.
9. NO WAIVER BY OR ESTOPPEL AGAINST OBLIGEE.
No failure to exercise and no delay in exercising on the part of Obligee
any right, power or privilege hereunder or at law or in equity shall operate as
waiver thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude any other or future exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
are cumulative and not exclusive of any rights or remedies provided by law or in
equity.
10. SUBROGATION AND SUBORDINATION.
Guarantor hereby agrees that Guarantor shall not be entitled to be
subrogated to any of the rights of Obligee or my of its successors, endorsees
and assigns against the Borrower of any collateral security held for payment of
the Indebtedness until all of the Indebtedness has been paid in full, performed
and discharged. Guarantor further agrees that any indebtedness of Borrower to
Guarantor, whether now existing or hereafter incurred, shall be subordinate to
the Indebtedness of Borrower to Obligee and shall not be paid or entitled to be
paid in whole or in part until the Indebtedness of Borrower to Obligee has been
paid and satisfied in full.
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11. REINSTATEMENT OF OBLIGATIONS.
This guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time payment of any of the Indebtedness is rescinded or must
otherwise be restored or returned to the Borrower upon insolvency, bankruptcy or
reorganization of Borrower or otherwise, all as though such payment had never
been made.
12. GOVERNING LAW.
This guaranty has been executed and delivered in and shall be construed
and enforced in accordance with the laws of the State of Texas.
13. JURISDICTION AND VENUE.
Any suit or action by Guarantor to enforce any right under this agreement
or to obtain a declaration thereof shall be brought in a court of competent
jurisdiction in Harris County, Texas. Any suit by Obligee to enforce any right
hereunder or to obtain a declaration of any right or obligation hereunder may,
at the sole option of Obligee, be brought (i) in any court of competent
jurisdiction in Houston, Harris County, Texas, or (ii) in any court of competent
jurisdiction where jurisdiction may be had over Guarantor. Guarantor hereby
expressly consents to the jurisdiction of the foregoing courts for such purpose,
14. SEVERABILITY.
If any clause or portion of this guaranty shall be declared unenforceable,
invalid or illegal, the remaining clauses and portions shall not be affected
thereby.
15. PAROL EVIDENCE.
Guarantor hereby acknowledges that this guaranty sets forth all the terms
of the agreement between Obligee and Guarantor and that any statements,
representations or affirmations made by the Obligee and its agents or Guarantor
prior to or contemporaneously with the execution of this guaranty are to be of
no force and effect whatever in determining the liability of Guarantor under
this guaranty. Without limiting the foregoing, Guarantor warrants, represents
and acknowledges that Obligee has made no representations or statements to
Guarantor which have been relied upon by Guarantor in executing this guaranty
concerning the financial condition of Borrower, the likelihood that Guarantor
will be required to pay or perform the Indebtedness hereby guaranteed or
otherwise.
16. INDEPENDENT GUARANTY.
This guaranty shall be independent of, in addition to and cumulative of any
other guaranty which may be executed by any guarantor in favor of the Obligee.
17. MULTIPLE PARTIES.
Anyone signing this guaranty shall be bound thereby, whether or not any
other party signs this guaranty or is released therefrom at any time.
18. INSOLVENCY OF GUARANTOR.
Without limiting the other provisions hereof, in the event of bankruptcy or
insolvency of Guarantor, the entire Indebtedness of Borrower, whether direct or
indirect, absolute or contingent, due or to become due, shall become due and
payable from Guarantor to Obligee and shall be paid immediately by Guarantor to
Obligee.
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<PAGE> 5
EXECUTED AND EFFECTIVE as of the date first set forth above.
/s/ LOUIS A. WATERS
-------------------------------
LOUIS A. WATERS
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EXHIBIT E
PROMISSORY NOTE
$325,000.00 HOUSTON, TEXAS JUNE 12, 1998
FOR VALUE RECEIVED, HOUSTON POST OAK PARTNERS, LTD., a Texas limited
partnership ("Maker"), promises to pay to the order of ("Payee"), at
its banking house in the City of Houston, Harris County, Texas, in lawful money
of the United States of America, the sum of THREE HUNDRED TWENTY FIVE THOUSAND
AND NO/100 DOLLARS ($325,000.00), together with interest on the unpaid principal
balance hereof from time to time outstanding until maturity at a rate per annum
equal to the Prime Rate (as hereinafter defined) from time to time in effect
plus one-half percent (0.5%) (the Prime Rate plus 0.5% is herein referred to as
the "Stated Rate"); provided, however, in no event shall interest on this note
ever be charged or paid at a rate greater than the maximum non-usurious rate
permitted by applicable federal or Texas law from time to time in effect,
whichever shall permit the higher lawful rate (the "Highest Lawful Rate").
If at any time or times the Stated Rate would exceed the Highest Lawful
Rate but for the limitation set forth above, the rate of interest to accrue on
the unpaid principal balance of this note during all such times shall be limited
to the Highest Lawful Rate, but any subsequent reduction in the Stated Rate due
to reductions in the Prime Rate shall not become effective to reduce the
interest rate payable below the Highest Lawful Rate until the total amount of
interest accrued on the unpaid balance of this note equals the total amount of
interest which would have accrued if the Stated Rate had at all times been in
effect.
If, at maturity or final payment of this note, the total amount of interest
paid or accrued under the foregoing provisions is less than the total amount of
interest which would have accrued if the Stated Rate had at all times been in
effect, then Maker agrees to pay to Payee, to the extent allowed by law, an
amount equal to the difference between (a) the lesser of (i) the amount of
interest which would have accrued on this note if the Highest Lawful Rate had at
all times been in effect, or (ii) the amount of interest which would have
accrued if the Stated Rate had at all times been in effect, and (b) the amount
of interest accrued in accordance with the other provisions of this note.
Interest shall be computed on the basis of the actual number of days
elapsed in a year composed of 360 days; however, if such computation would cause
the Stated Rate to exceed the Highest Lawful Rate, interest shall be computed on
the basis of a year composed of 365 or 366 days, as the case may be. At all such
times, if any, as Texas law shall establish the Highest Lawful Rate, the Highest
Lawful Rate shall be the "indicated rate ceiling" (as defined in Tex. Rev. Civ.
Stat. Ann. Art. 5069-1.04(a), as amended) from time to time in effect; provided
that Payee may also rely on alternative maximum rates of interest from time to
time in effect under other applicable laws, if they are higher.
This note is payable as follows:
Accrued interest shall be due and payable monthly, on the 12th day of each
and every calendar month, commencing July 12, 1998 and continuing regularly and
monthly thereafter until two (2) years from date hereof, at which time the
entire unpaid balance of this note, principal together with unpaid accrued
interest, shall be due and payable in full.
This note may be prepaid in whole or in part at any time without penalty;
provided, however, that all payments received by Payee from Maker upon this note
shall first be applied to the payment of accrued but unpaid interest, with the
balance thereof to be applied to the reduction of the outstanding principal of
this note. All prepayments in excess of accrued interest shall be applied to the
outstanding principal balance of this note in the inverse order of maturity.
Whenever any payment to be made under this note shall be stated to be due
on a Saturday, Sunday or legal holiday for commercial banks under the laws of
the State of Texas, then such payment shall be made on the next succeeding
business day.
L. A. W.
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<PAGE> 2
The term "Prime Rate", as used herein, shall mean the prime rate as
published in The Wall Street Journal's "Money Rates" table. If multiple prime
rates are quoted in the table, then the highest prime rate will be the Prime
Rate. In the event that the prime rate is no longer published in the "Money
Rates" table, then Payee will choose a substitute Prime Rate which is based upon
comparable information.
In addition to all principal and accrued interest on this note, Maker
agrees to pay (a) all reasonable costs and expenses incurred by all owners and
holders of this note in collecting this note through probate, reorganization,
bankruptcy or any other proceeding, (b) the reasonable attorneys' fees when and
if this note is placed in the hands of an attorney for collection after default,
and (c) the reasonable attorneys' fees, costs and expenses incurred by Payee in
connection with the preparation and filing of the agreements and documents
contemplated herein.
Unless as otherwise provided by law, Maker and any and all co-makers,
endorsers, guarantors and sureties severally waive notice (including, but not
limited to, notice of protest, notice of dishonor and notice of intent to
accelerate and notice of acceleration), demand, presentment for payment, protest
and the filing of suit for the purpose of fixing liability and consent that the
time of payment hereof may be extended and re-extended from time to time without
notice to them or any of them, and each agrees that his, her or its liability on
or with respect to this note shall not be affected by any release of or change
in any security at any time existing or by any failure to perfect or to maintain
perfection of any lien on or security interest in any such security.
Maker warrants and represents to Payee, and to all other owners and holders
of any indebtedness evidenced hereby, that the loan evidenced by this Note is
and shall be solely for business, commercial or agricultural purposes and not
primarily for personal, family or household use. Maker acknowledges that the
loan evidenced by this Note is specifically exempted under Section 226.3(a) of
Regulation Z issued by the Board of Governors of the Federal Reserve System and
under the Truth-in-Lending Act and that no disclosures are required to be given
under such regulations and federal laws in connection with this Note.
It is agreed that time is of the essence of this agreement, and that in the
event of default in the payment of any installment of principal or interest when
due the holder hereof may declare the unpaid principal balance plus all accrued
but unpaid interest due thereon immediately due and payable without notice, and
failure to exercise said option shall not constitute a waiver on the part of the
holder of the right to exercise the same at any other time.
In the event of (i) the failure of Maker to make any payment herein
provided when due (either of principal and/or interest), or (ii) in the event
the entirety of the unpaid principal balance plus accrued unpaid interest
thereon is declared due, interest on such past-due indebtedness (either
principal and/or interest) shall accrue at the Highest Lawful Rate.
All agreements between the Maker and the Payee, whether now existing or
hereafter arising and whether written or oral, are hereby expressly limited so
that in no event, whether by reason of acceleration of maturity hereof or
otherwise, shall the amount paid or agreed to be paid to the Payee for the use,
forbearance, or detention of the money to be loaned hereunder or otherwise
exceed the Highest Lawful Rate. If fulfillment of any provision hereof or of any
mortgage, loan agreement, or other document evidencing or securing the
indebtedness evidenced hereby, at the time performance of such provision shall
be due, shall involve transcending the limit of validity prescribed by law,
then, ipso facto, the obligation to be fulfilled shall be reduced to the limit
of such validity; and if the Payee shall ever receive anything of value deemed
interest under applicable law which would exceed interest at the Highest Lawful
Rate, an amount equal to any excessive interest shall be applied to the
reduction of the principal amount owing hereunder and not to the payment of
interest, or if such excessive interest exceeds the unpaid balance of principal
hereof, such excess shall be refunded to the Maker. All sums paid or agreed to
be paid to the Payee for the use, forbearance, or detention of the indebtedness
of the Maker to the Payee shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full term of such
indebtedness until payment in full so that the rate of interest on account of
such indebtedness is uniform throughout the term thereof. The provisions of this
paragraph shall control all agreements between the Maker and the Payee.
L. A. W.
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<PAGE> 3
The Maker hereby acknowledges and agrees that the Payee has and shall have
the right, at any time, without the consent of or notice to the Maker, to grant
participations in all or part of the obligations of the Maker evidenced by this
note, together with any liens or collateral securing the payment hereof. In the
event Payee elects to participate any Overline Portion (as hereinafter defined)
of the obligations evidenced by this note and if Payee is unable to procure a
participant or a participant fails or refuses to advance to Maker any Overline
Portion through no fault of Payee, it is agreed that Payee shall have no
liability to Maker to fund such Overline Portion, nor shall Payee have any
obligation to procure funds from other sources or fund any amounts that would
cause Payee to be in violation of any state or federal law with respect to Maker
being liable to Payee in an amount in excess of that permitted by such
applicable law. The term "Overline Portion" shall mean the amount of loan
proceeds in excess of the amount that Payee is permitted by applicable law to
loan to Maker.
Payment of this note is secured by (1) a Security Agreement of even date
herewith executed by The Waters Trust in favor of Payee covering certain
marketable securities more particularly described therein, and (2) a Specific
Guaranty executed by Louis A. Waters.
Reference is hereby made to (1) that certain promissory note dated as of
even date herewith in the principal amount of $1,000,000.00 (the "$1,000,000.00
Note"), executed by Louis A. Waters and payable to Payee, (2) that certain
promissory note dated as of even date herewith in the principal amount of
$1,650,000.00 (the "$1,650,000.00 Note"), executed by Maker and payable to
Payee, and (3) that certain promissory note dated as of even date herewith in
the principal amount of $500,000.00 (the "$500,000.00 Note"), executed by The
Waters Trust and payable to Payee. Should an event of default occur pursuant to
the terms of any or all of the $1,000,000.00 Note, the $1,650,000.00 Note or the
$500,000.00 Note, such event shall also, at the option of the Payee, constitute
an event of default hereunder.
This is a revolving credit note and represents funds which Payee will
advance to Maker from time to time, in a series of increments or at one
funding, not to exceed the original principal amount hereof, and Maker may
repay portions of the principal balance and reborrow hereunder, provided that
the aggregate outstanding principal balance hereof, at no time, ever exceeds
the original principal amount of this note. Each such increment so advanced
shall constitute a part of the principal hereof and shall bear interest from
the respective date of the advance until repaid.
This note has been executed and delivered in and shall be construed in
accordance with and governed by the laws of the State of Texas and of the United
States of America, except that Tex. Rev. Civ. Stat. Ann. Art. 5069, Ch 15, as
amended (which regulates certain revolving credit loan accounts and revolving
tri-party accounts), shall not apply hereto.
For purposes of any suit relating to this note, Maker hereof submits itself
to the jurisdiction of any court sitting in the State of Texas and further
agrees that venue in any suit arising out of this note or any venue shall be
fixed in Harris County, Texas. Final judgment in any suit shall be conclusive
and may be enforced in any jurisdiction within or without the United States of
America, by suit on the judgment, a certified or exemplified copy of which shall
be conclusive evidence of such liability.
HOUSTON POST OAK PARTNERS, LTD.
By: /s/ LOUIS A. WATERS
------------------------------------
Louis A. Waters, its general partner
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<PAGE> 4
Payee may proceed directly against any general partner of Maker without
first exhausting its remedies against Maker. In connection herewith, the Maker
and Payee hereby agree that the Payee is not required to comply with Section
3.05(d) of the Texas Revised Partnership Act. Maker and Payee agree that this
paragraph is intended to comply with the provisions of Section 3.05(e)(2) of the
Texas Revised Partnership Act.
"MAKER"
HOUSTON POST OAK PARTNERS, LTD.
By: /s/ LOUIS A. WATERS
------------------------------------
Louis A. Waters, its general partner
"PAYEE"
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<PAGE> 1
EXHIBIT F
SECURITY AGREEMENT - PLEDGE
THE WATERS TRUST, whose address is 520 Post Oak Boulevard, Suite 850,
Houston, Texas 77027, hereinafter called "Owner", for value received, the
receipt and sufficiency of which is hereby acknowledged, hereby grants to
, whose address is , hereinafter
called "Secured Party", the security interest hereinafter set forth and agrees
with Secured Party as follows:
I. SECURITY INTEREST
Owner hereby grants to Secured Party a security interest in and agrees and
acknowledges that Secured Party has and shall continue to have a security
interest in the following described property, to-wit:
75,000 shares of common stock of Tyler Corporation.
together with all monies, income, proceeds and benefits attributable or accruing
to said property, including, but not limited to, all stock rights, rights to
subscribe, liquidating dividends, stock dividends, property, cash distributions,
dividends paid in stock, new securities, cash dividends or other properties or
benefits of which Owner is or may hereafter become entitled to receive on
account of said property, and in the event that Owner shall receive any such,
Owner shall hold same as Trustee for Secured Party and will immediately deliver
same to Secured Party, to be held by Secured Party in the same manner as the
property specifically described above is held hereunder. All property of all
kinds in which the Secured Party is herein granted a security interest shall
hereinafter be called the "Collateral". The undersigned agrees to execute such
stock powers, endorse such instruments, or execute such additional pledge
agreements or other documents as may be required by the Secured Party in order
to effectively grant to Secured Party the security interest in the Collateral.
The security interest granted hereby is to secure the payment of that
certain promissory note (the "Note") of even date herewith, executed by
Houston Post Oak Partners, Ltd. ("Debtor") in favor of Secured Party in the
principal amount of $325,000.00, together with any and all other indebtedness
and liabilities whatsoever of the Debtor to Secured Party whether direct or
indirect, absolute or contingent, due or to become due, and whether now
existing or hereafter arising and howsoever evidenced or acquired, and
whether joint or several (all of which are hereinafter sometimes called the
"Obligations").
II. WARRANTIES AND COVENANTS OF OWNER
Owner warrants, covenants and agrees that:
(1) Except for the security interest granted hereby, the Owner is the
owner of the Collateral free of any adverse claim, security interest or
encumbrance; and the Owner will defend the Collateral against all claims and
demands of all persons at any time claiming the same or interest therein;
(2) Owner authorizes the Secured Party to file, in jurisdictions where
this authorization will be given effect, a Financing Statement signed only by
the Secured Party covering the Collateral; and at the request of Secured Party,
the Owner will join the Secured Party in executing one or more Financing
Statements pursuant to the Uniform Commercial Code, in form satisfactory to
the Secured Party, and will pay the cost of filing the same or filing or
recording the Security Agreement in all public offices wherever filing or
recording is deemed by the Secured Party to be necessary or desirable, it being
further stipulated in this regard that the Secured Party may also at any time or
times sign any counterpart of this Security Agreement signed by the Owner and
file same as a Financing Statement if the Secured Party shall elect to do so;
(3) Owner will not sell or offer to sell or otherwise transfer or encumber
the Collateral or any interest therein without the written consent of the
Secured Party;
L. A. W.
----------
<PAGE> 2
(4) Owner will keep the Collateral free from any adverse lien, security
interest or encumbrances;
(5) Owner will deliver to the holder of the Obligations additional
collateral, upon demand by such holder, if such holder deems the Collateral then
held hereon to be insufficient, to properly and amply secure all Obligations
secured hereby;
(6) Owner will pay to Secured Party all expenses and expenditures,
including reasonable attorneys' fees and legal expenses, incurred or paid by the
Secured Party in exercising or protecting its interest, rights and remedies
under this Security Agreement.
(7) At all times during the term of the Note the outstanding principal
balance of the Note, together with accrued interest thereon shall not exceed 60%
of the value of the Collateral. The term "value of the Collateral" as used
herein shall mean the average closing price for the prior sixty (60) day period
as quoted on a national securities exchange on which the Collateral is then
listed or on an automated quotation system times the number of shares comprising
the Collateral. In the event the outstanding principal amount of the Note plus
accrued interest thereon exceeds 60% of the value of the Collateral, Owner
and/or Debtor agree to immediately deliver to the Secured Party collateral
acceptable to the Secured Party its sole discretion to further secure the Note
with a value, as reasonably determined by the Secured Party, that when added to
the then value of the Collateral will cause the then outstanding principal
balance of the Note, together with accrued interest thereon, not to exceed 60%
of the combined value of such additional collateral and the value of the
Collateral.
III. GENERAL COVENANTS
(1) The security interest granted hereby shall in no way be affected by any
indulgence or indulgences, extension or extensions, change or changes in the
form, evidence, maturity, rate of interest or otherwise of any of the
Obligations hereby secured, nor by want of presentment, notice, protest, suit or
indulgence upon any of such Obligations, nor shall any release of any security
for or of any of the parties liable for the payment of any of the Obligations
secured hereby in any manner affect or impair this pledge, and same shall
continue in full force and effect in accordance with the terms until all of the
Obligations have been fully paid.
(2) Any and all securities and other properties heretofore, now or
hereafter delivered to Secured Party, or in Secured Party's possession, shall
also secure all Obligations and shall be held and construed to be a part of the
Collateral hereunder to the same extent as fully described herein.
(3) Secured Party shall have the power to endorse and is hereby appointed
Owner's agent for the purpose of endorsing in the name of Owner any instrument
or document constituting Collateral or which may be received in payment of or on
account of the Collateral.
IV. EVENTS OF DEFAULT
The Owner shall be in default under this Security Agreement upon the
happening of any of the following events or conditions:
(1) Default in the payment or performance of any liability or obligation of
the Debtor or of any maker, endorser or guarantor of any liability or obligation
of the Debtor to the holder of the Obligations, including, but not by way of
limitation, default in the payment of any principal or interest on any of the
Obligations when due;
(2) Failure of the Owner and/or Debtor to deliver additional collateral as
provided;
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<PAGE> 3
(3) Any deterioration or impairment of the Collateral or any part thereof
or any decline or depreciation in the market price thereof (whether actual or
reasonably anticipated) which, in the judgment of the Secured Party, causes the
Collateral to become unsatisfactory as to value or character;
(4) The levy of any attachment, execution or other process against the
Debtor, the Owner or any of the Collateral;
(5) Death, dissolution, termination of existence, insolvency or business
failure of the Debtor, the Owner or any endorser, guarantor or surety of any of
the Obligations, or the commission of the act of bankruptcy by, or the
appointment of receiver or other legal representative for any part of the
property of, assignment for the benefit of creditors by, or the commencement of
any proceedings under any bankruptcy or insolvency law by or against, the
Debtor, the Owner or any endorser, guarantor or surety for any of the
Obligations.
(6) Default in the performance of any other covenant or agreement of Debtor
or Owner to Secured Party, whether under this Security Agreement or otherwise;
(7) The occurrence of any event which under the terms of any evidence of
indebtedness, indenture, loan agreement, security agreement or similar
instrument permits the acceleration of maturity of any indebtedness of Owner or
Debtor to Secured Party or to others than Secured Party; or Secured Party
receives notification that another person has or expects to acquire a security
interest in the Collateral or any part thereof.
V. REMEDIES
In the event of the default in the payment of any of the Obligations or any
principal, interest or other amount payable thereunder, when due, or upon the
happening of any of the events of default specified herein, and at any time
thereafter, at the option of the holder thereof, any or all of the Obligations
shall become immediately due and payable without presentment or demand or any
notice to the Debtor or Owner or any other person obligated thereon and the
Secured Party shall have and may exercise with reference to the Collateral and
Obligations any and all of the rights and remedies of a secured party under the
Uniform Commercial Code as adopted in the State of Texas, and as otherwise
granted herein or under any other applicable law or under any other agreement
executed by Debtor or Owner, including without limitation, the right and power
to sell, at public or private sale or sales, or otherwise dispose of or utilize
the Collateral and any part or parts thereof in any manner authorized or
permitted under this Security Agreement or under the Uniform Commercial Code
after default by the Debtor or the Owner, and to apply the proceeds thereof
toward payment of any costs and expenses and attorneys' fees and legal expenses
thereby incurred by the Secured Party and toward payment of the Obligations, in
such order or manner as Secured Party may elect. To the extent permitted by law,
Debtor and Owner expressly waive any notice of sale or other disposition of the
Collateral and any other rights or remedies of Debtor and/or Owner or
formalities prescribed by law relative to sale or disposition of the Collateral
or exercise of any other right or remedy of Secured Party existing after default
hereunder, and to the extent any such notice is required and cannot be waived,
Debtor and Owner agree that if such notice is mailed, postage prepaid, to the
Owner at the address shown hereinabove at least five (5) days before the time of
the sale or disposition, such notice shall be deemed reasonable and shall fully
satisfy any requirement for giving of said notice.
Secured Party is hereby granted the right, after default in payment of any
of the Obligations or in the performance of any covenants secured hereby, to
transfer at any time to itself or its nominee the securities or other property
hereby pledged, or any part thereof, and to thereafter exercise all voting
rights with respect to such security so transferred and to receive the proceeds,
payments, moneys, income or benefits attributable or accruing thereto and to
hold the same as security for the Obligations hereby secured, or at Secured
Party's election, to apply such amounts to the Obligations, whether or not then
due, in such order as Secured Party may elect, or, Secured Party may, at its
option, without transferring such securities or property to its nominee,
exercise all voting rights with respect to the securities pledged hereunder and
vote all or any part of such securities at any regular or special meeting of
shareholders, and the undersigned does hereby name, constitute and appoint as a
proxy of the undersigned the President
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<PAGE> 4
or any Vice President of Secured Party, in the undersigned's name, place and
stead to vote any and all such securities, as said proxy may elect, for and in
the name, place and stead of the undersigned, such proxy to be irrevocable and
deemed coupled with an interest.
Owner hereby agrees to cooperate fully with Secured Party in order to
permit Secured Party to sell, at foreclosure or other private sale, the
Collateral pledged hereunder. Specifically, Owner agrees to fully comply with
the Securities Laws of the United States and of the State of Texas and to take
such action as may be necessary to permit Secured Party to sell or otherwise
transfer the securities pledged hereunder in compliance with such laws.
VI. MISCELLANEOUS
Secured Party may, at its option, following the occurrence of an Event of
Default demand, sue for, collect or make any compromise or settlement it deems
desirable with reference to the Collateral. The Secured Party shall not be
obligated to take any steps necessary to preserve any rights in the Collateral
against prior parties, which Owner hereby assumes to do.
No delay or omission on the part of Secured Party in exercising any rights
hereunder shall operate as a waiver of any such right or any other right. A
waiver on any one or more occasions shall not be construed as a bar to or waiver
of any right or remedy on any future occasion.
It is the intention of the parties hereto to comply with the usury laws of
the State of Texas; accordingly, it is agreed that notwithstanding any provision
to the contrary in the Security Agreement, or in any of the documents evidencing
the Obligations or otherwise relating thereto, no such provision shall require
the payment or permit the collection of interest in excess of the maximum
permitted by law. If any excess of interest in such respect is provided for, or
shall be adjudicated to be so provided for, in this Security Agreement, or in
any of the documents evidencing the Obligations or otherwise relating thereto,
then in such event (a) the provisions of this paragraph shall govern and
control, (b) neither the Debtor hereof nor his heirs, legal representatives,
successors or assigns or any other party liable for the payment hereof, shall be
obligated to pay the amount of such interest to the extent that it is in excess
of the maximum amount permitted by law, (c) any such excess which may have been
collected shall be, at the option of the holder of the instrument evidencing the
Obligations, either applied as a credit against the then unpaid principal amount
thereof or refunded to the Maker thereof and (d) the effective rate of interest
shall be automatically subject to reduction to the maximum lawful contract rate
allowed under the usury laws of the State of Texas as now or hereafter construed
by the courts having jurisdiction.
In order to induce Secured Party to advance and loan such funds to and/or
for the benefit of Debtor, Owner hereby covenants and agrees that in the event
of default by the Debtor and/or Owner (an event of default shall be any one of
those events of default stated above) that the Secured Party shall have the
absolute and unconditional right, without the prior notice and/or any prior
hearing of any kind whatsoever, to seize and take possession of the Collateral,
and furthermore the Owner does hereby expressly waive any right to any prior
notice and/or any prior hearing prior to seizure and taking possession of the
Collateral and/or property by the Secured Party in the event of default by the
Debtor and/or Owner.
All rights of Secured Party hereunder shall inure to the benefit of its
successors and assigns; and all obligations of Debtor and/or Owner shall bind
their respective heirs, executors or administrators and their successors or
assigns. The rights and remedies of Secured Party hereunder are cumulative and
the exercise of any one or more of the remedies provided herein shall not be
construed as a waiver of any of the other remedies of Secured Party.
Any provision found to be invalid under the laws of the State of Texas, or
any other state having jurisdiction, shall be invalid only with respect to the
offending provision. All words used herein shall be construed of such gender or
number as the circumstances require. If this Security Agreement is executed by
more than one Owner, the
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<PAGE> 5
Obligations of all such Owners shall be joint and several. The law of the State
of Texas shall apply to this Security Agreement and its construction and
interpretation.
EXECUTED on this 12th day of June, 1998.
"OWNER"
THE WATERS TRUST
By: /s/ LOUIS A. WATERS
------------------------------------
Louis A. Waters, Jr., Sole Trustee
"DEBTOR":
HOUSTON POST OAK PARTNERS, LTD.
By: /s/ LOUIS A. WATERS
------------------------------------
Louis A. Waters, its general partner
<PAGE> 1
EXHIBIT G
SPECIFIC GUARANTY
This guaranty, dated the 12th day of June, 1998, is executed by the
undersigned, LOUIS A. WATERS (hereinafter referred to as "Guarantor"), in favor
of (hereinafter referred to as "Obligee").
WITNESSETH:
WHEREAS, HOUSTON POST OAK PARTNERS, LTD. (hereinafter referred to as
"Borrower"), and Guarantor desire Obligee to extend financial and credit
accommodations to Borrower;
WHEREAS, Obligee is willing to extend credit and financial accommodations
to Borrower only upon the condition that Guarantor execute and deliver to
Obligee Us Specific Guaranty and undertake the obligations of Guarantor set out
this herein;
NOW, THEREFORE, in consideration of financial and credit accommodations
extended or to be extended by Obligee to Borrower and other good and valuable
consideration, receipt of which is hereby acknowledged, Guarantor agrees as
follows:
1. OBLIGATION OF GUARANTOR.
Guarantor absolutely and unconditionally guarantees to the Obligee the
payment and performance of all indebtedness, obligations and liabilities (the
"Indebtedness") of or owed by Borrower to Obligee (and also to others, to the
extent of participations granted them by Obligee) now existing or hereafter
incurred or created, direct or Indirect, absolute or contingent, arising in
connection with that one certain Promissory Note of even date herewith from
Borrower to Obligee in the original principal amount of $325,000.00. The
obligations of Guarantor contained in this guaranty shall be absolute and
unconditional, without regard to the validity, legality, regularity or
enforceability of the Indebtedness or any instrument evidencing, securing or
relating to said Indebtedness and shall not be reduced or affected in any way by
any failure or omission to enforce any right against Borrower or Guarantor or by
any other action which may in any manner or to any extent vary the risks of
Guarantor or which might otherwise constitute a legal or equitable discharge of
Guarantor, it being the purpose and intent of the parties hereto that this
guaranty and the obligations of Guarantor hereunder shall be absolute and
unconditional under any and all circumstances and shall not be discharged except
by payment and performance as herein provided. Guarantor agrees that, without
the necessity of any reservation of rights against Guarantor and without notice
to or further assent by Guarantor, (1) any demand for payment of any or all of
the Indebtedness may be rescinded by the party making such demand and the
Indebtedness reinstated or continued, and (2) the Indebtedness or any collateral
security therefor or rights of offset with respect thereto may, from time to
time, in whole or in part, be renewed, extended, modified, rearranged,
compromised or released by Obligee or, without notice to or further assent by
Guarantor, who will remain bound hereunder, notwithstanding any such rescission,
renewal, extension, modification, rearrangement, compromise or release.
2. WAIVER BY GUARANTOR.
Guarantor waives:
(a) Notice of the granting of any loan to Borrower or the incurring of any
indebtedness of Borrower or the terms or conditions thereof;
(b) Presentment, demand for payment, protest or notice of dishonor of any
indebtedness of Borrower;
(c) Any other notice to which Guarantor might be entitled;
<PAGE> 2
(d) Joinder of the Borrower in any suit or action to enforce this guaranty,
in particular, and without in any way limiting the foregoing, Guarantor
waives any right to have Obligee sue Borrower or take any other action
against Borrower as a prerequisite to Obligee's taking any action or
bringing any suit against Guarantor under this guaranty; and
(e) The right to interpose against Obligee any setoff or counterclaim of
any nature or description, whether of Borrower or Guarantor, in the
computation of any amounts payable by Guarantor hereunder or in any
litigation arising out of or relating to this guaranty; and Guarantor
further agrees that his obligations and liabilities hereunder shall not be
affected or impaired, regardless of any impossibility or illegality of
performance on the part of the Borrower.
3. RIGHTS OF OBLIGEE.
Obligee may, at any time, without consent of or notice to Guarantor,
without incurring responsibility to the Guarantor, without impairing or
releasing the obligations of the Guarantor, upon or without terms or conditions
and in whole or in part:
(a) Change the manner, place or terms of payment or change or extend the
time of payment of, renew or alter any indebtedness, obligation or
liability of Borrower hereby guaranteed or any liabilities incurred
directly or indirectly hereunder and the guaranty herein made shall apply
to the indebtedness, obligations and liabilities of the Borrower, changed,
extended, renewed or altered in any manner;
(b) Sell, exchange, release, surrender, realize, upon or otherwise, deal
with in any manner and in any order, any property at any time pledged or
mortgaged to secure or securing the indebtedness, obligations or
liabilities hereby guaranteed or pledged or mortgaged to secure this
guaranty or any indebtedness, obligations or liabilities incurred directly
or indirectly hereunder or any offset against any of said indebtedness,
obligations or liabilities;
(c) Exercise or refrain from exercising any rights against Borrower or
others or otherwise act or refrain from acting;
(d) Settle or compromise any indebtedness, obligations or liabilities
hereby guaranteed or hereby incurred and may subordinate the payment of all
or any part of such liabilities to the payment of any liabilities which may
be due Obligee or others;
(e) Apply any sums paid to any Indebtedness of Borrower to Obligee,
regardless of what Indebtedness of Borrower to Obligee remains unpaid; and
(f) Release Borrower or any other guarantor of Borrower's Indebtedness to
Obligee from any liability to Obligee.
4. TERMINATION OF GUARANTY.
The obligations of Guarantor hereunder shall terminate upon, and only upon,
written release of Guarantor by Obligee; provided, however, no termination
hereof shall affect in any manner any rights of Obligee arising under this
guaranty with respect to liabilities arising prior to such written release by
Obligee and the sole effect of any such written release by Obligee shall be to
exclude from this guaranty liabilities arising thereafter which are unrelated to
liabilities theretofore arising or transactions theretofore entered into.
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<PAGE> 3
5. PARTIES IN INTEREST.
This guaranty shall continue in full force and effect, notwithstanding the
death, incapacity or legal disability of Guarantor and shall be binding on the
successors, assigns, estate, personal representatives and heirs, as the case may
be, of Guarantor and shall inure to the benefit of Obligee, its successors,
heirs and assigns.
6. PLACE OF PERFORMANCE.
The obligations of Guarantor hereunder shall be payable and performable at
Houston, Harris County, Texas.
7. ADDITIONAL OBLIGATIONS OF GUARANTOR.
In addition to obligations of Guarantor set forth elsewhere herein,
Guarantor agrees to pay to Obligee:
(a) All costs, attorney's fees and other expenses incurred by Obligee in
effort to enforce and/or collect all or any part of the Indebtedness; and
(b) All costs, attorney's fees and expenses incurred by Obligee in an
effort to enforce or collect the obligations of Guarantor pursuant to this
guaranty.
8. COMPLIANCE WITH LAWS.
It is the intention of the parties hereto to comply with all laws in force
and applicable hereto; accordingly, it is agreed that, notwithstanding any
provision to the contrary herein or in any note, instrument or other document
evidencing or securing the Indebtedness or otherwise related hereto or thereto,
no such provision shall require the payment or permit the collection of interest
from Guarantor in excess of the maximum non-usurious rate permitted by
applicable law. If any excess of interest in such respect is provided for or
shall be adjudged to be so provided for, then in such event, (i) the provisions
of this paragraph shall govern and control, (ii) neither Guarantor nor his
heirs, executors or administrators, successors or assigns or any other party
liable under Guarantor, shall be obligated to pay the amount of such interest,
to the extent that it is in excess of the maximum non-usurious amount permitted
by applicable law, (iii) any such excess which may have been collected shall be,
at Obligee's option, either refunded or applied to the Indebtedness, and (iv)
the effective rate of interest covered by this guaranty shall be automatically
subject to reduction to the maximum non-usurious lawful contract rate allowed
under the applicable law as now or hereafter construed by the courts having
jurisdiction thereof.
9. NO WAIVER BY OR ESTOPPEL AGAINST OBLIGEE.
No failure to exercise and no delay in exercising on the part of Obligee
any right, power or privilege hereunder or at law or in equity shall operate as
waiver thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude any other or future exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
are cumulative and not exclusive of any rights or remedies provided by law or in
equity.
10. SUBROGATION AND SUBORDINATION.
Guarantor hereby agrees that Guarantor shall not be entitled to be
subrogated to any of the rights of Obligee or any of its successors, endorsees
and assigns against the Borrower of any collateral security held for payment of
the Indebtedness until all of the Indebtedness has been paid in full, performed
and discharged. Guarantor further agrees that any indebtedness of Borrower to
Guarantor, whether now existing or hereafter incurred, shall be subordinate to
the Indebtedness of Borrower to Obligee and shall not be paid or entitled to be
paid in whole or in part until the Indebtedness of Borrower to Obligee has been
paid and satisfied in full.
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11. REINSTATEMENT OF OBLIGATIONS.
This guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time payment of any of the Indebtedness is rescinded or must
otherwise be restored or returned to the Borrower upon insolvency, bankruptcy or
reorganization of Borrower or otherwise, all as though such payment had never
been made.
12. GOVERNING LAW.
This guaranty has been executed and delivered in and shall be construed
and enforced in accordance with the laws of the State of Texas.
13. JURISDICTION AND VENUE.
Any suit or action by Guarantor to enforce any right under this agreement
or to obtain a declaration thereof shall be brought in a court of competent
jurisdiction in Harris County, Texas. Any suit by Obligee to enforce any right
hereunder or to obtain a declaration of any right or obligation hereunder may,
at the sole option of Obligee, be brought (i) in any court of competent
jurisdiction in Houston, Harris County, Texas, or (ii) in any court of competent
jurisdiction where jurisdiction may be had over Guarantor. Guarantor hereby
expressly consents to the jurisdiction of the foregoing courts for such purpose.
14. SEVERABILITY.
If any clause or portion of this guaranty shall be declared unenforceable,
invalid or illegal, the remaining clauses and portions shall not be affected
thereby.
15. PAROL EVIDENCE.
Guarantor hereby acknowledges that this guaranty sets forth all the terms
of the agreement between Obligee and Guarantor and that any statements,
representations or affirmations made by the Obligee and its agents or Guarantor
prior to or contemporaneously with the execution of this guaranty are to be of
no force and effect whatever in determining the liability of Guarantor under
this guaranty. Without limiting the foregoing, Guarantor warrants, represents
and acknowledges that Obligee has made no representations or statements to
Guarantor which have been relied upon by Guarantor in executing this guaranty
concerning the financial condition of Borrower, the likelihood that Guarantor
will be required to pay or perform the Indebtedness hereby guaranteed or
otherwise.
16. INDEPENDENT GUARANTY.
This guaranty shall be independent of, in addition to and cumulative of any
other guaranty which may be executed by any guarantor in favor of the Obligee.
17. MULTIPLE PARTIES.
Anyone signing this guaranty shall be bound thereby, whether or not any
other party signs this guaranty or is released therefrom at any time.
18. INSOLVENCY OF GUARANTOR.
Without limiting the other provisions hereof, in the event of bankruptcy or
insolvency of Guarantor, the entire Indebtedness of Borrower, whether direct or
indirect, absolute or contingent, due or to become due, shall become due and
payable from Guarantor to Obligee and shall be paid immediately by Guarantor to
Obligee.
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EXECUTED AND EFFECTIVE as of the date first set forth above.
/s/ LOUIS A. WATERS
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LOUIS A. WATERS
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