UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1 )*
Acap Corporation
(Name of Issuer)
Common Stock, $.10 Par Value
(Title or Class of Securities)
004290-20-1
(CUSIP Number)
William F. Guest, 10555 Richmond Houston, Tx 77042 (713)974-2242
(Name, Address & Telephone No. of Person Authorized to Receive
Communications)
January 31, 1997
(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 [ ].
(A fee is not required only if the filing person: (1) has a previous
statement on file reporting beneficial ownership of more that 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 the disclosures provided in a prior cover page.
The information required in 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).
<PAGE>
CUSIP NO. 004290-20-1 13D Page 2 of 16 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
InsCap Corporation 76-0064362
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC,OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF 3,317
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 3,317
10 SHARED DISPOSITIVE POWER
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,317
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
43.6%
14 TYPE OF REPORTING PERSON*
HC
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
Item 1. Security and Issuer
The class of equity securities to which this statement relates is the
Common Stock, $.10 par value per share (the "Stock") of Acap Corporation
("Acap"), a Delaware corporation. Acap's principal executive offices are
located at 10555 Richmond Avenue, Houston, Texas 77042.
Item 2. Identity and Background
This statement is being filed by InsCap Corporation ("InsCap"), a Delaware
Corporation. InsCap's principal office and business are located at 10555
Richmond Avenue, Houston, Texas 77042. InsCap's business is investing in
life insurance companies. InsCap's only significant asset is its
ownership of the Acap Stock. Acap's only significant asset is 100% of the
common stock of American Capitol Insurance Company ("American Capitol"), a
Texas life insurance corporation. American Capitol is engaged in the
business of life insurance.
During the past five years, neither InsCap, nor any of its officers or
directors, has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors), or has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is 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.
Item 3. Source and Amount of Funds or Other Consideration
On January 31, 1997, InsCap purchased 171 shares of the Acap Stock from
the Estate of Joe Barnhart ("Seller"). InsCap paid $25,895 in cash from
its working capital and the Seller financed $16,000 through a promissory
note ("Note"). The Note is payable in four equal annual installments.
The Note bears interest at 8.25%. The Note is secured by the pledge of
the 171 shares of Acap Stock.
Item 4. Purpose of Transaction
The purpose of the Liquidation was to increase InsCap's investment in
Acap. Since InsCap already held a controlling interest in Acap, the
transaction did not alter InsCap's ability to direct or influence the
operations of Acap.
(a) Other than the fact that in the future, as such shares may from time-
to-time become available, InsCap may continue to purchase shares of
the Stock, InsCap knows of no plans or proposals related to the
acquisition by any person of additional shares of Stock, or the
disposition of shares of Stock.
(b) InsCap, through Acap and its subsidiary, is engaged in the business
of acquiring life insurance companies (the "Acquisition Plan"). In
connection with the Acquisition Plan, Acap and/or its subsidiary may
discuss with acquisition candidates various forms and means of
accomplishing an acquisition transaction. Such discussions may
involve a cash acquisition of the candidate, a merger of the
candidate with Acap or its subsidiary or an exchange of the stock of
Acap or its subsidiary for the stock of the acquisition candidate.
<PAGE>
Except as might develop through the Acquisition Plan, InsCap knows of
no plans or proposals related to an extraordinary corporate
transaction, such as a merger, reorganization or liquidation,
involving Acap or its subsidiary.
(c) Except as might develop through the aforementioned Acquisition Plan,
InsCap knows of no plans or proposals related to a sale or transfer
of a material amount of assets of Acap or its subsidiary.
(d) InsCap knows of no plans or proposals related to any change in the
present board of directors or management of Acap.
(e) InsCap knows of no plans or proposals related to any material change
in the present capitalization or dividend policy of Acap.
(f) InsCap knows of no plans or proposals related to any other material
change in Acap's business or corporate structure.
(g) InsCap knows of no plans or proposals related to changes in Acap's
charter, bylaws or instruments corresponding thereto or other actions
which may impede the acquisition of control of Acap by any person.
(h) InsCap knows of no plans or proposals which would cause a class of
securities of Acap to cease being quoted in an inter-dealer quotation
system of a registered national securities association.
(i) InsCap knows of no plans or proposals related to a class of equity
securities of Acap becoming eligible for termination of registration
pursuant to Section 12(g)(4) of the Act.
(j) InsCap knows of no plans or proposals related to any action similar
to any of those enumerated above.
Item 5. Interest in Securities of the Issuer
(a) InsCap owns an aggregate of 3,317 (approximately 43.6%) shares of the
Stock of Acap.
(b) InsCap has sole power to dispose of and sole power to vote all of the
3,317 shares of Stock noted above.
(c) InsCap has not effected any transactions in the Stock during the past
sixty days.
(d) 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 Stock.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
There are no contracts, arrangements, understandings or relationships
between InsCap and any other person with respect to the Stock.
<PAGE>
Item 7. Material to be Filed as Exhibits
Exhibit A - Promissory Note
Exhibit B - Commercial Pledge Agreement
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Date: February 4, 1997
INSCAP CORPORATION
by
/s/ William F. Guest, President
PROMISSORY NOTE
$16,000.00 Houston, Texas January 31, 1997
FOR VALUE RECEIVED, InsCap Corporation, a Delaware corporation with
its principal office at 10555 Richmond Avenue, Houston, Harris County,
Texas 77042, (the "Maker") promises to pay to the order of the Estate of
Joe Barnhart, with an office address at 601 Jefferson, Suite 4000,
Houston, Harris County, Texas 77002, or assigns (the "Holder"), at the
aforesaid address, or at such other place as Holder may designate in
writing from time to time, the principal sum of SIXTEEN THOUSAND DOLLARS
($16,000.00) in legal and lawful money of the United States of America,
together with interest on the unpaid principal balance outstanding from
time to time hereon from the date hereof until maturity at the rate of
8.25% per annum.
This Note is payable in installments, each consisting of Four
Thousand Dollars ($4,000) principal, plus interest accrued hereon to and
including the due date, and shall be due and payable on January 31, 1998,
January 31, 1999, and January 31, 2000; and the entire remaining unpaid
principal and interest shall be due and payable on January 31, 2001. It
is expressly agreed that time is of the essence to this Note.
This Note is secured by pledge of common stock issued by Acap
Corporation in accordance with and governed by a certain "Commercial
Pledge Agreement" executed and delivered by Maker on even date herewith,
to which reference is made for all purposes.
The Maker shall have the right to prepay all or any part of the
indebtedness evidenced by this Note, whether principal or interest, at
any time without notice, premium or penalty, and interest shall
immediately cease to accrue on any principal so prepaid. Any partial
prepayment shall be applied first to accrued but unpaid interest and then
to principal outstanding.
Upon any default in the punctual payments of this Note, or any part
hereof, whether principal or interest, as the same shall become due and
payable, the entire principal indebtedness evidenced hereby may be
accelerated and matured, at the option of the Holder of this Note,
without notice or demand. In the event that this Note, or any part
hereof, is collected through bankruptcy or any other judicial proceedings
by an attorney or is placed in the hands of an attorney for collection,
the Maker will pay to the owner and holder of this Note a reasonable
amount of attorneys' fees for collection.
The Maker and each surety, guarantor, endorser and other party ever
liable for payment for any sums of money pursuant or with respect to this
Note expressly and unconditionally waive presentment and demand for
payment, protest, notice of protest and non-payment or dishonor, notice
of acceleration, notice of intent to accelerate, notice of intent to
<PAGE>
demand, diligence in collection, collecting, and grace, as to this Note
and as to each and every payment due hereunder, and all of such parties
expressly and unconditionally consent to all extensions without notice
for any period or periods of time, acceptances of partial payments,
before or after maturity, and the granting of all other indulgences with
respect to this Note, without prejudice to the holder hereof.
Notwithstanding any provision to the contrary contained in this Note
or in any other document or instrument executed in connection herewith,
Holder shall never be entitled to receive, collect or apply, or charge,
as interest hereon, any amount or amounts in excess of the maximum rate
of interest permitted to be charged from time to time by applicable law.
In the event Holder ever receives, collects or applies, or is adjudicated
to have charged, as interest, any such excessive amount or amounts
hereunder, such amount or amounts which would be excessive interest shall
be deemed a partial prepayment of principal and treated hereunder as
such, and, if the principal indebtedness hereof has been or is thereby
paid in full, any of such excessive amount or amounts which remains
unapplied shall forthwith be refunded to Maker. In determining whether
or not the interest paid or payable under any specific contingency as
provided by this Note exceeds the highest lawful rate, Maker and Holder
shall, to the maximum extent permitted under applicable law, (i)
characterize any non-principal payment as an expense, fee or premium
rather than as interest, (ii) exclude voluntary prepayments and the
effects thereof, and (iii) amortize, prorate, allocate and spread, in
equal parts, the total amount of interest paid or required to be paid
hereunder throughout the entire contemplated term of this Note so that
the interest rate is uniform over the entire term hereof. If the
principal indebtedness evidenced by this Note is paid in full prior to
the end of the contemplated term hereof, and if the interest received by
Holder for the actual period of existence of such indebtedness exceeds
the maximum lawful rate, Holder shall forthwith refund to Maker the
amount of any such excess, and in such event Holder shall not be subject
to any penalties imposed by any applicable laws for contracting for,
receiving, collection or applying, or charging interest in excess of the
maximum lawful rate.
This Note shall be construed, interpreted and enforced in accordance
with the laws of the State of Texas, and the exclusive venue for any suit
based upon, related to or arising out of this Note shall be Harris
County, Texas.
No assignment of this Note shall be valid unless it is presented to
the Maker for registration in the name of the assignee duly authorized by
the registered Holder in writing satisfactory to the Maker as to form and
substance and such assignment is accepted in writing by the Maker. The
Maker is authorized to conduct all transactions under this Note
exclusively with the registered Holder.
<PAGE>
EXECUTED AND DELIVERED in Harris County, Texas on this 31st day of
January, 1997, to be effective on and as of such date.
INSCAP CORPORATION
By: /s/William F. Guest, President
ATTEST: /s/John D. Cornett, Secretary
COMMERCIAL PLEDGE AGREEMENT
THIS COMMERCIAL PLEDGE AGREEMENT is entered into between InsCap
Corporation, a Delaware Corporation with its principal office at 10555
Richmond Avenue, Houston, Harris County, Texas 77042 (referred to below as
"Grantor"); and the Estate of Joe Barnhart, with its principal office at
601 Jefferson, Suite 4000, Houston, Harris County, Texas 77042 (referred
to below as "Lender").
GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to
Lender a security interest in the Collateral to secure the Note and agrees
that Lender shall have the rights stated in this Agreement with respect to
the Collateral, in addition to all other rights which Lender may have by
law.
DEFINITIONS. The following words shall have the following meanings when
used in this Agreement:
Agreement. The word "Agreement" means this Commercial Pledge
Agreement, which may be amended or modified from time to time,
together with all exhibits and schedules attached to this Commercial
Pledge Agreement from time to time.
Collateral. The word "Collateral" means the following specifically
described property, which Grantor has delivered or agrees to deliver
(or caused to be delivered) immediately to Lender, together with all
Income and Proceeds as described below:
One Hundred Seventy One (171) shares of
common stock of Acap Corporation, a Delaware
corporation with its principal office in
Houston, Harris County, Texas, represented
by Acap Corporation stock certificate
No._____ issued in the name of InsCap
Corporation.
Event of Default. The words "Event of Default" mean and include any
of the Events of Default set forth below in the section titled
"Events of Default."
Income and Proceeds. The words "Income and Proceeds" mean all
present and future income, proceeds, earnings, increases, and
substitutions from or for the Collateral of every kind and nature,
including without limitation all payments, interest, profits,
distributions, benefits, rights, options, warrants, dividends, stock
dividends, stock splits, stock rights, regulatory dividends,
distributions, subscriptions, monies, claims for money due and to
become due, proceeds of any insurance on the Collateral, shares of
stock of different par value or no par value issued in substitution
or exchange for shares included in the Collateral, and all other
property Grantor is entitled to receive on account of such
Collateral, including accounts, contract rights, documents,
instruments, chattel paper, and general intangibles.
<PAGE>
Note. The word "Note" means that certain promissory note of even
date herewith in which the maker is InsCap Corporation, herein
referred to as Grantor, payable to the Estate of Joe Barnhart, herein
referred to as Lender, in the principal amount of Sixteen Thousand
Dollars ($16,000), payable in principal installments of Four Thousand
Dollars ($4,000) each, together with interest accrued to date of
payment at the rate of 8.25% per annum, each installment due and
payable on January 31st of 1998, 1999, 2000; and the entire remaining
unpaid balance of principal and interest shall be due and payable on
January 31, 2001, the specific provisions of which are fully set
forth in said Note, which is incorporated herein by reference thereto
for all purposes.
GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL.
Grantor represents and warrants to Lender that:
Ownership. Grantor is the lawful owner of the Collateral free and
clear of all security interests, liens, encumbrances and claims of
others except as disclosed to and accepted by Lender in writing prior
to execution of this Agreement.
Right to Pledge. Grantor has the full right, power and authority to
enter into this Agreement and to pledge the Collateral.
Binding Effect. This Agreement is binding upon Grantor, as well as
Grantor's successors, representatives and assigns, and is legally
enforceable in accordance with its terms.
No Further Assignment. Grantor has not, and will not, sell, assign,
transfer, encumber or otherwise dispose of any of Grantor's rights in
the Collateral except as provided in this Agreement.
No Violation. The execution and delivery of this Agreement will not
violate any law or agreement governing Grantor or to which Grantor is
a party, and its certificate or articles of incorporation and bylaws
do not prohibit any term or condition of this Agreement.
LENDER'S RIGHTS AND OBLIGATIONS WITH RESPECT TO COLLATERAL. Lender may
hold the Collateral until all the Indebtedness has been paid and
satisfied, whereupon Lender shall immediately deliver the Collateral to
Grantor. Lender shall have the following rights in addition to all other
rights it may have by law:
Maintenance and Protection of Collateral. Lender may, but shall not
be obligated to, take such steps as it deems necessary or desirable
to protect, maintain, insure, store, or care for the Collateral,
including payment of any liens or claims against the Collateral.
Income and Proceeds from the Collateral. Lender may receive all
Income and Proceeds and add it to the Collateral. Grantor agrees to
deliver to Lender immediately upon receipt, in the exact form
received and without commingling with other property, all Income and
Proceeds from the Collateral which may be received by, paid, or
delivered to Grantor or for Grantor's account, whether as an addition
to, in discharge of, in substitution of, or in exchange for any of
the Collateral.
<PAGE>
Application of Cash. At Lender's option, Lender may apply any cash,
whether included in the Collateral or received as Income and Proceeds
or through liquidation, sale, or retirement, of the Collateral, to
the satisfaction of the Indebtedness or such portion thereof as
Lender shall choose, whether or not matured.
Power of Attorney. Grantor irrevocable appoints Lender as Grantor's
attorney-in-fact, with full power of substitution, (a) to demand,
collect, receive, receipt for, sue and recover all Income and
Proceeds and other sums of money and other property which may now or
hereafter become due, owing or payable from the Obligors in
accordance with the terms of the Collateral; (b) to execute, sign
and endorse any and all instruments, receipts, checks, drafts and
warrants issued in payment for the Collateral; (c) to settle or
compromise any all claims arising under the Collateral, and in the
place and stead of Grantor, execute and deliver Grantor's release
and acquittance for Grantor; (d) to file any claim or claims or to
take any action or institute or take part in any proceedings, either
in Lender's own name or in the name of Grantor, or otherwise, which
in the discretion of Lender may seem to be necessary or advisable;
and (e) to execute in Grantor's name and to deliver to the Obligors
on Grantor's behalf, at the time and in the manner specified by the
Collateral, any necessary instruments or documents.
Perfection of Security Interest. Upon request of Lender, Grantor
will deliver to Lender any and all of the documents evidencing or
constituting the Collateral. Grantor hereby appoints Lender as
Grantor's irrevocable attorney-in-fact for the purpose of executing
any documents necessary to perfect or to continue the security
interest granted in this Agreement.
EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may
(but shall not be obligated to) discharge or pay any amounts required to
be discharged or paid by Grantor under this Agreement, including without
limitation all taxes, liens, security interests, encumbrances, and other
claims, at any time levied or placed on the Collateral. Lender also may
(but shall not be obligated to) pay all costs for insuring, maintaining
and preserving the Collateral. All such expenditures incurred or paid by
Lender for such purposes will then bear interest at the Note rate from the
date incurred or paid by Lender to the date of repayment by Grantor. All
such expenses shall become a part of the Indebtedness and, at Lender's
option, will (a) be payable on demand, (b) be added to the balance of
the Note and be apportioned among and be payable with any installment
payments to become due during either (i) the term of any applicable
insurance policy or (ii) the remaining term of the Note, or (c) be
treated as a balloon payment which will be due and payable at the Note's
maturity. This Agreement also will secure payment of these amounts. Such
right shall be in addition to all other rights and remedies to which
Lender may be entitled upon the occurrence of an Event of Default.
LIMITATIONS ON OBLIGATIONS OF LENDER. Lender shall use ordinary
reasonable care in the physical preservation and custody of the Collateral
in Lender's possession, but shall have no other obligation to protect the
Collateral or its value. In particular, but without limitation, Lender
shall have no responsibility for (a) any depreciation in value of the
Collateral or for the collection or protection of any Income and Proceeds
from the Collateral, (b) preservation of rights against parties to the
Collateral or against third persons, (c) ascertaining any maturities,
calls, conversions, exchanges, offers, tenders, or similar matters
<PAGE>
relating to any of the Collateral, or (d) informing Grantor about any of
the above, whether or not Lender has or is deemed to have knowledge of
such matters. Except as provided above, Lender shall have no liability
for depreciation or deterioration of the Collateral.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:
Default on Note. Failure of Grantor to make any payment when due as
required by the Note.
Other Defaults. Failure of Grantor to comply with or to perform any
term, obligation, covenant or condition contained in this Agreement
or in the Note. If any default, other than a Default on the Note is
curable and if Grantor has not been given a prior notice of a breach
of the same provision of this Agreement, it may be cured (and no
Event of Default will have occurred) if Grantor, after Lender sends
written notice demanding cure of such default, (a) cures the default
within ten (10) days; or (b), if the cure requires more than ten
(10) days, immediately initiates steps which Lender deems in Lender's
sole discretion to be sufficient to cure the default and thereafter
continues and completes all reasonable and necessary steps sufficient
to produce compliance as soon as reasonably practical.
False Statements. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Grantor under this Agreement
is false or misleading in any material respect, either now or at the
time made or furnished.
Defective Collateralization. This Agreement or the Note ceases to be
in full force and effect (including failure of any collateral
documents to create a valid and perfected security interest or lien)
at any time and for any reason.
Insolvency. The dissolution or termination of Grantor's existence as
a going business, the insolvency of Grantor, the appointment of a
receiver for any part of Grantor's property, any assignment for the
benefit of creditors, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Grantor.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Grantor or by
any governmental agency against the Collateral or any other
collateral securing the Indebtedness. This includes a garnishment of
any of Grantor's deposit accounts with Lender. However, this Event
of Default shall not apply if there is a good faith dispute by
Grantor as to the validity or reasonableness of the claim which is
the basis of the creditor or forfeiture proceeding and if Grantor
gives Lender written notice of the creditor or forfeiture proceeding
and deposits with Lender monies or a surety bond for the creditor or
forfeiture proceeding, in an amount determined by Lender, in its sole
discretion, as being an adequate reserve or bond for the dispute.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender may exercise any one or more of
the following rights and remedies:
<PAGE>
Collect the Collateral. Collect any of the Collateral and, at
Lender's option and to the extent permitted by applicable law, retain
possession of the Collateral while suing on the Indebtedness.
Sell the Collateral. Sell the Collateral, at Lender's discretion, as
a unit or in parcels, at one or more public or private sales. Unless
the Collateral is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market, Lender
shall give or mail to Grantor, or any of them, notice at least thirty
(30) days in advance of the time and place of any public sale, or of
the date after which any private sale may be made. Grantor agrees
that any requirement of reasonable notice is satisfied if Lender
mails notice by ordinary mail addressed to Grantor at the last
address Grantor has given Lender in writing. If a public sale is
held, there shall be sufficient compliance with all requirements of
notice to the public by a single publication in any newspaper of
general circulation in the county where the Collateral is located,
setting forth the time and place of sale and a brief description of
the property to be sold. Lender may be a purchaser at any public
sale.
Register Securities. Register any securities included in the
Collateral in Lender's name and exercise any rights normally incident
to the ownership of securities.
Sell Securities. Sell any securities included in the collateral in a
manner consistent with applicable federal and state securities laws
or other applicable laws, notwithstanding any other provision of this
or any other agreement. If, because of restrictions under such laws,
Lender is or believes it is unable to sell the securities in an open
market transaction, Grantor agrees that Lender shall have no
obligation to delay sale until the securities can be registered, and
may make a private sale to one or more persons or to a restricted
group of persons, even though such sale may result in a price that is
less favorable than might be obtained in an open market transaction,
and such a sale shall be considered commercially reasonable. If any
securities held as Collateral are "restricted securities" as defined
in the Rules of the Securities and Exchange Commission (such as
Regulation D or Rule 144) or state securities departments under state
"Blue Sky" laws, or if Grantor is an affiliate of the issuer of the
securities, Grantor agrees that neither Grantor nor any member of
Grantor's family will sell or dispose of any securities of such
issuer without obtaining Lender's prior written consent.
Foreclosure. Maintain a judicial suit for foreclosure and sale of
the Collateral.
Transfer Title. Effect transfer of title upon sale of all or part of
the Collateral. For this purpose, Grantor irrevocably appoints
Lender as its attorney-in-fact to execute endorsements, assignments
and instruments in the name of Grantor and each of them (if more than
one) as shall be necessary or reasonable.
Other Rights and Remedies. Have and exercise any or all of the
rights and remedies of a secured creditor under the provisions of the
Uniform Commercial Code, at law, in equity, or otherwise.
Application of Proceeds. Apply any cash which is part of the
Collateral, or which is received from the collection or sale of the
Collateral, to reimbursement of any expenses, including any costs for
<PAGE>
registration of securities, commissions incurred in connection with a
sale, attorney fees as provided below, and court costs, whether or
not there is a lawsuit and including any fees on appeal, incurred by
Lender in connection with the collection and sale of such Collateral
and to the payment of the Indebtedness of Grantor to Lender, with any
excess funds to be paid to Grantor as the interests of Grantor may
appear. Grantor agrees, to the extent permitted by law, to pay any
deficiency after application of the proceeds of the Collateral to the
Indebtedness.
Cumulative Remedies. All of Lender's rights and remedies, whether
evidenced by this Agreement of by any other writing, shall be
cumulative and may be exercised singularly or concurrently. Election
by Lender to pursue any remedy shall not exclude pursuit of any other
remedy, and an election to make expenditures or to take action to
perform an obligation of Grantor under this Agreement, after
Grantor's failure to perform, shall not affect Lender's right to
declare a default and to exercise its remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a
part of this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as
to the matters set forth in this Agreement. No alteration of or
amendment to this Agreement shall be effective unless given in
writing and signed by the party or parties sought to be charged or
bound by the alteration or amendment.
Applicable Law. This Agreement has been delivered to Lender and
accepted by Lender in the State of Texas. If there is a lawsuit, and
if the transaction evidenced by this Agreement occurred in Harris
County, Grantor agrees upon Lender's request to submit to the
jurisdiction of the courts of Harris County, the State of Texas.
Subject to the provisions on arbitration, this Agreement shall be
governed by and construed in accordance with the laws of the State of
Texas and applicable Federal laws.
Arbitration. Lender and Grantor agree that all disputes, claims and
controversies between them, whether individual, joint, or class in
nature, arising from this Agreement or otherwise, including without
limitation contract and tort disputes, shall be arbitrated pursuant
to the Rules of the American Arbitration Association, upon request of
either party. No act to take or dispose of any Collateral shall
constitute a waiver of this arbitration agreement or be prohibited by
this arbitration agreement. This includes, without limitation,
obtaining injunctive relief or a temporary restraining order;
invoking a power of sale under any deed of trust or mortgage;
obtaining a writ of attachment or imposition of a receiver; or
exercising any rights relating to personal property, including taking
or disposing of such property with or without judicial process
pursuant to Article 9 of the Uniform Commercial Code. Any disputes,
claims, or controversies concerning the lawfulness or reasonableness
of any act, or exercise of any right, concerning any Collateral,
including any claim to rescind, reform, or otherwise modify any
agreement relating to the Collateral, shall also be arbitrated,
provided however that no arbitrator shall have the right or the power
to enjoin or restrain any act of any party. Judgment upon any award
<PAGE>
rendered by any arbitrator may be entered in any court having
jurisdiction. Nothing in this Agreement shall preclude any party
from seeking equitable relief from a court of competent jurisdiction.
The statute of limitations, estoppel, waiver, laches, and similar
doctrines which would otherwise be applicable in an action brought by
a party shall be applicable in any arbitration proceeding, and the
commencement of an arbitration proceeding shall be deemed the
commencement of an action for these purposes. The Federal
Arbitration Act shall apply to the construction, interpretation, and
enforcement of this arbitration provision.
Attorneys' Fees and Other Costs. Lender may hire an attorney to help
collect the Note if Grantor does not pay, and Grantor will pay
Lender's reasonable attorneys' fees. Grantor also will pay lender
all other amounts actually incurred by Lender as court costs, lawful
fees for filing, recording, or releasing to any public office any
instrument securing the Note; the reasonable cost actually expended
for repossessing, storing, preparing for sale, and selling any
security; and fees for noting a lien on or transferring a certificate
of title to any motor vehicle offered as security for the Note, or
premiums or identifiable charges received in connection with the sale
of authorized insurance.
Caption Headings. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or
define the provisions of this Agreement.
Notices. All notices required to be given under this Agreement shall
be given in writing and shall be effective when actually delivered or
when deposited with a nationally recognized overnight courier or
deposited in the United States mail, first class, postage prepaid,
addressed to the party to whom the notice is to be given at the
address shown above. Any party may change its address for notices
under this Agreement by giving formal written notice to the other
parties, specifying that the purpose of the notice is to change the
party's address. For notice purposes, Grantor agrees to keep Lender
informed at all times of Grantor's current address. Grantor's
current address is 10,555 Richmond Avenue, Houston, Texas 77042.
Lender's current address is 601 Jefferson, Suite 4000, Houston, Texas
77002.
Severability. If a court of competent jurisdiction finds any
provision of this Agreement to be invalid or unenforceable as to any
person or circumstance, such finding shall not render that provision
invalid or unenforceable as to any other persons or circumstances.
If feasible, any such offending provision shall be deemed to be
modified to be within the limits of enforceability or validity;
however, if the offending provision cannot be so modified, it shall
be stricken and all other provisions of this Agreement in all other
respects shall remain valid and enforceable.
Successor Interests. Subject to the limitations set forth above on
transfer of the collateral, this Agreement shall be binding upon and
inure to the benefit of the parties, their successors and assigns.
Waiver. Lender shall not be deemed to have waived any rights under
this Agreement unless such waiver is given in writing and signed by
Lender. No delay or omission on the part of Lender in exercising any
right shall operate as a waiver of such right or any other right. A
<PAGE>
waiver by Lender of a provision of this Agreement shall not prejudice
or constitute a waiver of Lender's right otherwise to demand strict
compliance with that provision or any other provision of this
Agreement. No prior waiver by Lender, nor any course of dealing
between Lender and Grantor, shall constitute a waiver of any of
Lender's rights or of any of Grantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance
shall not constitute continuing consent to subsequent instances where
such consent is required and in all cases such consent may be granted
or withheld in the sole discretion of Lender.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS PLEDGE
AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED
JANUARY 31, 1997.
GRANTOR: INSCAP CORPORATION
BY: /s/ William F. Guest, President
ATTEST:/s/ John D. Cornett, Secretary
