Exhibit
10.08




EXECUTION
COPY







$25,000,000




CREDIT
AGREEMENT




between




SANDERS MORRIS HARRIS GROUP
INC.,




as
Borrower




and




PROSPERITY BANK,




as
Lender




Dated as
of May 11, 2009





TABLE
OF CONTENTS




PageARTICLE
      I
                DEFINITIONS
                1Section
      1.01.
                Defined
      Terms
                1Section
      1.02.
                Other
      Definitional Provisions
                22ARTICLE
      II
                AMOUNT
      AND TERMS OF COMMITMENT
                23Section
      2.01.
                Commitment
                23Section
      2.02.
                Procedure
      for Loan Borrowing
                23Section
      2.03.
                Repayment
      of Loan
                24Section
      2.04.
                Optional
      Prepayments
                24Section
      2.05.
                Mandatory
      Prepayments and Commitment Reductions
                24Section
      2.06.
                Interest
      Rates and Payment Dates
                25Section
      2.07.
                Computation
      of Interest and Fees
                26Section
      2.08.
                Pro
      Rata Treatment and Payments
                26Section
      2.09.
                Increased
      Costs
                26Section
      2.10.
                Taxes
                28Section
      2.11.
                Use
      of Proceeds
                30Section
      2.12.
                Evidence
      of Debt
                30Section
      2.13.
                Mitigation
      Obligations
                30ARTICLE
      III
                CONDITIONS
      PRECEDENT
                31Section
      3.01.
                Conditions
      to Making the Loan
                31ARTICLE
      IV
                REPRESENTATIONS
      AND WARRANTIES
                35Section
      4.01.
                Financial
      Condition
                35Section
      4.02.
                No
      Change
                36Section
      4.03.
                Corporate
      Existence; Compliance with Law
                36Section
      4.04.
                Corporate
      Power; Authorization; Enforceable Obligations
                36Section
      4.05.
                No
      Legal Bar
                37Section
      4.06.
                Litigation
                37Section
      4.07.
                No
      Default
                37Section
      4.08.
                Ownership
      of Property; Liens
                37Section
      4.09.
                Intellectual
      Property
                37Section
      4.10.
                Taxes
                37Section
      4.11.
                Labor
      Matters
                38Section
      4.12.
                ERISA
                38Section
      4.13.
                Investment
      Company Act; Investment Advisers Act; Other Regulations
                38Section
      4.14.
                Federal
      Reserve Regulations
                39Section
      4.15.
                Subsidiaries
                39Section
      4.16.
                Environmental
      Matters
                39Section
      4.17.
                Accuracy
      of Information, Etc
                40Section
      4.18.
                Security
      Documents
                40


-i-




TABLE
OF CONTENTS
 (continued)




PageSection
      4.19.
                          Solvency
                          41Section
      4.20.
                          Certain
      Documents
                          41Section
      4.21.
                          Material
      Contracts
                          41Section
      4.22.
                          Insurance
                          41Section
      4.23.
                          Foreign
      Assets Control Regulations, Etc
                          41Section
      4.24.
                          Net
      Capital
                          41Section
      4.25.
                          Loan
      Party Accounts
                          42ARTICLE
      V
                          AFFIRMATIVE
      COVENANTS
                          42Section
      5.01.
                          Financial
      Statements
                          42Section
      5.02.
                          Certificates;
      Other Information
                          43Section
      5.03.
                          Payment
      of Obligations
                          45Section
      5.04.
                          Maintenance
      of Existence; Compliance
                          45Section
      5.05.
                          Maintenance
      of Property; Insurance
                          46Section
      5.06.
                          Inspection
      of Property; Books and Records; Discussions
                          46Section
      5.07.
                          Notices
                          46Section
      5.08.
                          Environmental
      Laws
                          47Section
      5.09.
                          Additional
      Collateral
                          48Section
      5.10.
                          Further
      Assurances
                          49Section
      5.11.
                          Compliance
      with Leases
                          49Section
      5.12.
                          Material
      Contracts
                          49Section
      5.13.
                          Valuation
      and Appraisals
                          50Section
      5.14.
                          Board
      Visitation
                          50Section
      5.15.
                          Operating
      Accounts and Other Business
                          50Section
      5.16.
                          Net
      Capital
                          50Section
      5.17.
                          Capital
      Markets Division Disposition
                          50Section
      5.18.
                          Concept
      Capital Division Disposition and Indemnification
                          51ARTICLE
      VI
                          NEGATIVE
      COVENANTS
                          51Section
      6.01.
                          Financial
      Covenants
                          51Section
      6.02.
                          Indebtedness
                          51Section
      6.03.
                          Liens
                          52Section
      6.04.
                          Fundamental
      Changes
                          53Section
      6.05.
                          Disposition
      of Property
                          54Section
      6.06.
                          Restricted
      Payments
                          54Section
      6.07.
                          Capital
      Expenditures
                          55Section
      6.08.
                          Investments
                          55Section
      6.09.
                          Transactions
      with Affiliates
                          56Section
      6.10.
                          Sales
      and Leasebacks
                          56Section
      6.11.
                          Changes
      in Fiscal Periods
                          56Section
      6.12.
                          Negative
      Pledge Clauses
                          56Section
      6.13.
                          Clauses
      Restricting Subsidiary Distributions
                          57


-ii-




TABLE
OF CONTENTS
 (continued)




PageSection
      6.14.
                        Lines
      of Business
                        57Section
      6.15.
                        Amendments
      to Acquisition Documents
                        57Section
      6.16.
                        Amendments
      to Organizational Documents
                        57Section
      6.17.
                        Material
      Contracts
                        57Section
      6.18.
                        Terrorism
      Sanctions Regulations
                        58Section
      6.19.
                        Management
      and Director Compensation
                        58Section
      6.20.
                        Swap
      Contracts
                        58Section
      6.21.
                        Margin
      Stock
                        58Section
      6.22.
                        Loan
      Party Accounts
                        58Section
      6.23.
                        Subordinated
      Note
                        59Section
      6.24.
                        SMHG
      - Salient Intercreditor Agreement
                        59ARTICLE
      VII
                        EVENTS
      OF DEFAULT
                        59Section
      7.01.
                        Events
      of Default
                        59ARTICLE
      VIII
                        MISCELLANEOUS
                        62Section
      8.01.
                        Amendments
      and Waivers
                        62Section
      8.02.
                        Notices;
      Electronic Communication
                        63Section
      8.03.
                        No
      Waiver; Cumulative Remedies; Enforcement
                        64Section
      8.04.
                        Survival
                        64Section
      8.05.
                        Expenses;
      Indemnity; Damage Waiver
                        64Section
      8.06.
                        Successors
      and Assigns; Participations and Assignments
                        65Section
      8.07.
                        Setoff
                        67Section
      8.08.
                        Counterparts;
      Integration; Effectiveness; Electronic Execution
                        67Section
      8.09.
                        Severability
                        68Section
      8.10.
                        GOVERNING
      LAW; JURISDICTION, ETC
                        68Section
      8.11.
                        Acknowledgments
                        69Section
      8.12.
                        Treatment
      of Certain Information; Confidentiality
                        69Section
      8.13.
                        Interest
      Rate Limitation
                        70Section
      8.14.
                        Headings
                        70Section
      8.15.
                        Time
      of the Essence
                        70Section
      8.16.
                        WAIVER
      OF JURY TRIAL
                        70Section
      8.17.
                        Electronic
      Execution of Assignments and Certain Other Documents
                        70Section
      8.18.
                        USA
      PATRIOT Act Notice
                        71Section
      8.19.
                        Press
      Releases and Related Matters
                        71Section
      8.20.
                        No
      Advisory or Fiduciary Responsibility
                        71Section
      8.21.
                        Independence
      of Covenants
                        72Section
      8.22.
                        ENTIRE
      AGREEMENT
                        72




-iii-




SCHEDULES:




1.01
              Existing
      Letters of Credit4.04
              Consents,
      Authorizations, Filings and Notices4.13
              Investment
      Advisers4.15
              Subsidiaries4.18
              UCC
      Filing Jurisdictions4.21
              Material
      Contracts4.22
              Insurance4.25
              Existing
      Accounts6.02(d)
              Existing
      Indebtedness6.03(f)
              Existing
      Liens6.06
              Contractually
      Obligated Restricted Payments6.08(a)
              Existing
      Investments




EXHIBITS:




A
              Form
      of Guarantee and Security AgreementB
              Form
      of Closing CertificateC
              Form
      of MortgageD
              Form
      of Term NoteE
              Form
      of Legal OpinionF
              Form
      of Solvency CertificateG
              Form
      of Notice of BorrowingH
              Form
      of Compliance CertificateI
              Form
      of Edelman Subordination
Agreement


-iv-


CREDIT
AGREEMENT




CREDIT
AGREEMENT, dated as of May 11, 2009, between SANDERS MORRIS HARRIS GROUP INC., a
Texas corporation (the "Borrower") and
PROSPERITY BANK, as lender (the "Lender").




WHEREAS,
the Borrower has requested that the Lender extend to the Borrower a term loan;
and




WHEREAS,
the Lender has agreed to extend a term loan to the Borrower on the terms and
subject to the conditions set forth in this Agreement.




ARTICLE
I




DEFINITIONS




Section
1.01.   Defined
Terms.  As used in this Agreement, the terms listed in this
Section 1.01
shall have the respective meanings set forth in this Section
1.01.




"Account Debtor" means
any person obligated on an Account.




"Accounts" has the
meaning specified in the UCC.




"Acquisition" has the
meaning specified in Section
3.01(b)(i).




"Acquisition
Agreement" means that certain letter agreement, dated as of January 1,
2009, among Fredric M. Edelman, an individual, Edward Moore, an individual, and
the Borrower, which sets forth agreements between the parties thereto regarding
transactions contemplated by the Reorganization and Purchase
Agreement.




"Acquisition
Documents" means the collective reference to the Acquisition Agreement,
the Subordinated Note, the Reorganization and Purchase Agreement and all
schedules, exhibits and annexes thereto and all other agreements, instruments
and documents governing, evidencing or affecting the terms thereof or entered
into in connection therewith.




"Affiliate" means, as
to any Person, any other Person that, directly or indirectly, is in control of,
is controlled by, or is under common control with, such Person.  For
purposes of this definition, "control" of a Person means the power, directly or
indirectly, either to (a) vote 5% or more of the Equity Interests having
ordinary voting power for the election of directors (or persons performing
similar functions) of such Person or (b) direct or cause the direction of the
management and policies of such Person, whether through the ownership of Equity
Interests, by contract or otherwise.




"Aggregate
Indebtedness" means, at any time, "aggregate indebtedness" as defined in
and as computed in accordance with Rule 15c3-1.




"Agreement" means this
Credit Agreement.





"Anti-Terrorism Order"
means Executive Order No. 13,224 of September 24, 2001, Blocking Property and
Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support
Terrorism, 66 U.S. Fed. Reg. 49, 079 (2001), as amended.




"Approved Fund" means
any Fund that is administered or managed by (a) the Lender, or (b) an Affiliate
of the Lender, or (c) an entity or Affiliate of an entity that administers or
manages the Lender.




"Asset Sale" means (a)
any Disposition or series of related Dispositions of any Equity Interests in a
Subsidiary of the Borrower, all or substantially all of the assets of a
Subsidiary of the Borrower, or all or substantially all of the assets of a
business unit of the Borrower or any Subsidiary of the Borrower, excluding the
Capital Markets Division Disposition and the Concept Capital Division
Disposition or (b) any Disposition or series of related Dispositions (excluding
any such Disposition permitted by clause (a), (b), (c) or (d) of Section 6.05) that
yields gross proceeds to any Group Member (valued at the initial principal
amount thereof in the case of non-cash proceeds consisting of notes or other
debt securities and valued at fair market value in the case of other non-cash
proceeds) in excess of $500,000.




"Assigned Agreement
Payment" means any payment made by any Person to the Borrower and/or to
SMH SPEADV under any Assigned Agreement.




"Assigned Agreement Payment
Account" means that certain deposit account maintained by the Borrower
and/or SMH SPEADV with the Lender into which the Borrower and/or SMH SPEADV
transfers or deposits Assigned Agreement Payments.




"Assigned Agreement Payment
Escrow Account" means that certain deposit account maintained by the
Lender into which the Lender transfers or deposits and holds Assigned Agreement
Payment Escrow Amounts in escrow until applied in accordance with this
Agreement.




"Assigned Agreement Payment
Escrow Amount" has the meaning specified in Section
2.06(d).




"Assigned Agreements"
means the collective reference to the Redemption Agreement, the Purchase and
Sale Agreement, the Salient Note, the Servicing Agreement, the SMH SPEADV
Assignments, and all schedules, exhibits and annexes thereto, and all side
letters and agreements affecting the terms thereof or entered into in connection
therewith.




"Attributable
Indebtedness" means, on any date, (a) in respect of any Capital Lease
Obligation of any Person, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP,
(b) in respect of any Synthetic Lease Obligation, the capitalized amount of the
remaining lease or similar payments under the relevant lease or other applicable
agreement or instrument that would appear on a balance sheet of such Person
prepared as of such date in accordance with GAAP if such lease or other
agreement or instrument were accounted for as a Capital Lease Obligation, and
(c) all Synthetic Debt of such Person.


-2-


"Available Cash"
means, at any time, (a) the aggregate amount of all unrestricted and
unencumbered cash and Cash Equivalents of the Borrower and its Subsidiaries at
such time minus
(b) the aggregate amount of taxes that would then be payable if the cash or Cash
Equivalents of the Foreign Subsidiaries were paid as a dividend to the Borrower
or any of its Domestic Subsidiaries as a result of the payment of any such
dividend.




"Board" means the
Board of Governors of the Federal Reserve System of the United States (or any
successor).




"Borrower" has the
meaning specified in the preamble hereto.




"Borrowing Date" means
the Business Day specified by the Borrower as the date on which the Borrower
requests the Lender to make the Loan hereunder.




"Business" has the
meaning specified in Section
4.16(b).




"Business Day" means a
day other than a Saturday, Sunday or other day on which commercial banks in New
York City are authorized or required by law to close.




"Capital Expenditures"
means for any period, with respect to any Person, the aggregate of all
expenditures by such Person and its Subsidiaries for the acquisition or leasing
(pursuant to a capital lease) of fixed or capital assets or additions to
equipment (including replacements, capitalized repairs and improvements during
such period) that should be capitalized under GAAP on a consolidated balance
sheet of such Person and its Subsidiaries.




"Capital Lease
Obligations" means, as to any Person, the obligations of such Person to
pay rent or other amounts under any lease of (or other arrangement conveying the
right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP and, for the purposes of this
Agreement, the amount of such obligations at any time shall be the capitalized
amount thereof at such time determined in accordance with GAAP.




"Capital Markets Division
Disposition" means the sale of certain assets of SMH Capital Inc.
pursuant to that certain Contribution Agreement, dated as of January 1, 2009, by
and among the Borrower, SMH Capital Inc., Pan Asia China Commerce Corp., Siwanoy
Capital, LLC and Siwanoy Securities, LLC.




"Cash" or "cash" means money,
currency or a credit balance in a deposit account.




"Cash Equivalents"
means any of the following:




(a)           marketable
direct obligations issued by, or unconditionally guaranteed by, the United
States Government or issued by any agency thereof and backed by the full faith
and credit of the United States, in each case maturing within one year from the
date of acquisition;




(b)          certificates
of deposit, time deposits, Eurodollar time deposits or overnight bank deposits
having maturities of six months or less from the date of acquisition issued by
the Lender or by any commercial bank organized under the laws of the United
States or any state thereof having combined capital and surplus of not less than
$500,000,000;


-3-


(c)           commercial
paper of an issuer rated at least A-1 by Standard & Poor's Ratings Services
("S&P") or
P-1 by Moody's Investors Service, Inc. ("Moody's"), or
carrying an equivalent rating by a nationally recognized rating agency, if both
of the two named rating agencies cease publishing ratings of commercial paper
issuers generally, and maturing within six months from the date of
acquisition;




(d)           fully
collateralized repurchase obligations of the Lender or of any commercial bank
satisfying the requirements of clause (b) of this definition, having a term of
not more than thirty (30) days, with respect to securities issued or fully
guaranteed or insured by the United States government;




(e)           securities
with maturities of one year or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, or by
any political subdivision or taxing authority of any such state, commonwealth or
territory the securities of which state, commonwealth, territory, political
subdivision, or taxing authority (as the case may be) are rated at least A by
S&P or A by Moody's;




(f)          
 securities with maturities of six months or less from the date of
acquisition backed by standby letters of credit issued by the Lender or any
commercial bank satisfying the requirements of clause (b) of this
definition;




(g)           shares
of money market mutual or similar funds that invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this definition;
or




(h)           shares
of money market mutual funds that (i) comply with the criteria set forth in
Securities and Exchange Rule 2a-7 under the Investment Company Act of 1940, (ii)
are rated AAA by S&P or Aaa by Moody's, and (iii) have portfolio assets of
at least $5,000,000,000.




"Cash Management
Agreement" means any agreement to provide cash management services,
including treasury, depository, overdraft, credit or debit card, electronic
funds transfer and other cash management arrangements.




"Change in Law" means
the occurrence, after the date of this Agreement, of any of the following: (a)
the adoption or taking effect of any law, rule, regulation or treaty, (b) any
change in any law, rule, regulation or treaty or in the administration,
interpretation or application thereof by any Governmental Authority or (c) the
making or issuance of any request, guideline or directive (whether or not having
the force of law) by any Governmental Authority.




"CFTC" means the
Commodity Futures Trading Commission and any successor entity.




"Clearing Account"
means any deposit account, securities account or commodity account established
and maintained by any Loan Party with any other Person pursuant to a Clearing
Agreement.


-4-




"Clearing Agreement"
means any agreement, contract or other arrangement between or among the Borrower
or any other Loan Party and any broker, dealer, clearing firm, clearing
organization, or other Person governing, evidencing or relating to the purchase,
sale, brokering, trading, clearing and/or settlement of or the provision of
margin or other collateral for any securities transactions by, for, in the name
of or on behalf of any customer or other third party.


"Closing Date" means
the date on which the conditions precedent set forth in Section 3.01 shall
have been satisfied, which date is May 11, 2009.




"Code" means the
Internal Revenue Code of 1986, as amended from time to time.




"Collateral" means all
property of the Loan Parties, now owned or hereafter acquired, upon which a Lien
is purported to be created by any Security Document.




"Collateral Account"
has the meaning specified in the Guarantee and Security Agreement.




"Commitment" means the
obligation of the Lender, if any, to make the Loan to the Borrower hereunder in
the original principal amount of $25,000,000.




"Commitment Letter"
means the letter agreement dated February 13, 2009 between the Borrower and the
Lender.




"Commonly Controlled
Entity" means an entity, whether or not incorporated, that is under
common control with the Borrower within the meaning of Section 4001 of ERISA or
is part of a group that includes the Borrower and that is treated as a single
employer under Section 414 of the Code.




"Compliance
Certificate" means a certificate duly executed and properly completed by
a Responsible Officer of the Borrower substantially in the form of Exhibit H, or in such
other form as may be required by the Lender.




"Concept Capital
Division" means the division of SMH Capital Inc. known as the Concept
Capital Division based in New York, New York.




"Concept Capital Division
Disposition" means the sale of the assets of SMH Capital Inc. comprising
the Concept Capital Division to NewCo LLC pursuant to the terms of that certain
Term Sheet dated as of January 1, 2009 by and among the Borrower, SMH Capital
Inc., Michael S. Rosen, and Jack D. Seibald and other agreements, instruments
and documents.




"Concept Capital
Obligations" means any damages, costs, expenses, claims, liabilities,
obligations and other amounts which may be or have been paid or incurred from
time to time by the Borrower or any other Group Member directly or indirectly
from, as a result of or in connection with any Concept Capital Short Sales
Exposure or any other liability, obligation, transaction or matter, in each case
whether now existing or hereafter arising, with respect to NewCo LLC or the
Concept Capital Division from, under, with respect to or in connection with any
Clearing Agreement or other agreement, contract or arrangement, applicable law
or otherwise.


-5-


"Concept Capital Short Sales
Exposure" means, at any date, an aggregate amount equal to the absolute
value of the difference of (a) all amounts that NewCo LLC has received from
selling securities that NewCo LLC either does not own (or owns but has not
delivered to any other Person (which securities have been borrowed by NewCo LLC
from one or more third parties) to any Person on or prior to such date minus (b) all amounts
that NewCo LLC has paid (or would be required to pay) on such date as a result
of purchasing such securities in the open market on such date and returning such
securities to such third party lenders.




"Consent and
Agreement" means, individually and collectively, (a) the Consent and
Agreement among the Borrower, SMH Capital Inc., the Lender, Endowment Advisers,
L.P., The Endowment Fund Management, LLC, and The Endowment Fund, GP, L.P.,
dated as of May 11, 2009 and (b) the Consent and Agreement among the Borrower,
SMH Capital Inc., the Lender, Salient Partners, L.P., and Salient Capital
Management, LLC, dated as of May 11, 2009.




"Consolidated Client
Assets" means, at any date, the aggregate fair market value of all
financial assets of all Persons that are invested in any account maintained
with, or that are under the management of or held and maintained by, the
Borrower or any of its Subsidiaries on behalf of such Persons at such date, in
any case on account of which the Borrower or any of its Subsidiaries receive
management fees or commission income in exchange for the ongoing management of
such financial assets or such accounts.




"Consolidated Current
Assets" means, at any date, all amounts (other than cash and Cash
Equivalents) that would, in conformity with GAAP, be set forth opposite the
caption "total current assets" (or any like caption) on a consolidated balance
sheet of the Borrower and its Subsidiaries at such date.




"Consolidated Current
Liabilities" means, at any date, all amounts that would, in conformity
with GAAP, be set forth opposite the caption "total current liabilities" (or any
like caption) on a consolidated balance sheet of the Borrower and its
Subsidiaries at such date.




"Consolidated Leverage
Ratio" means, as at the last day of any period, the ratio of (a)
Consolidated Total Debt on such date to (b) Consolidated Tangible Net Worth on
such date.




"Consolidated Liquid
Assets" means, at any date, (a) Available Cash and all Cash Equivalents
at such date, (b) all Marketable Equity Securities at such date, (c) all fee and
commission income earned but not yet received under investment advisory and
brokerage accounts managed by the Borrower and its Subsidiaries which are due
and payable to the Borrower within ninety (90) days of such date, and (d) all
amounts under the Redemption Agreement which are due and payable to the Borrower
within ninety (90) days of such date, in each case that would, in conformity
with GAAP, be included as an asset on a consolidated balance sheet of the
Borrower and its Subsidiaries at such date.


-6-


"Consolidated Net
Income" means, for any period, the consolidated net income (or loss) of
the Borrower and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP; provided that there
shall be excluded (a) the income (or loss) of any Person accrued prior to the
date it becomes a Subsidiary of the Borrower or is merged into or consolidated
with the Borrower or any of its Subsidiaries, (b) the income (or loss) of any
Person (other than a Subsidiary of the Borrower) in which the Borrower or any of
its Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by the Borrower or such Subsidiary in the form of
cash dividends or similar cash distributions, (c) the undistributed earnings of
any Subsidiary of the Borrower (other than a Subsidiary Guarantor) to the extent
that the declaration or payment of dividends or similar distributions by such
Subsidiary is not at the time permitted by the terms of any Contractual
Obligation (other than under any Loan Document) or Requirement of Law applicable
to such Subsidiary, (d) unrealized appreciation or depreciation in the value of
any Investment owned by the Borrower or its Subsidiaries, and (e) any charge to
or write-down of goodwill recorded by the Borrower in accordance with Statement
of Financial Accounting Standards No. 142 as in effect on the date hereof (i)
for the fiscal Quarter ended as at December 31, 2008, (ii) for the fiscal
Quarter ended as at March 31, 2009, or (iii) for the fiscal Quarter ended
as at June 30, 2009 solely as a result of an impairment of goodwill arising
directly as a result of the Acquisition.




"Consolidated Short Sales
Amount" means, at any date, an aggregate amount equal to all amounts that
the Borrower or any Group Member has received from selling securities that such
Person does not own (or owns but does not deliver to any other Person (which
securities have been borrowed by the Borrower or such other Group Member from
one or more third parties)) to any other Person on or prior to such date which
securities have neither been purchased or repurchased in the open market prior
to such date nor returned to such third party lender on or prior to such
date.




"Consolidated Short Sales
Exposure" means, at any date, an aggregate amount equal to the absolute
value of the difference of (a) all amounts that the Borrower or any such
Subsidiary has received from selling securities that the Borrower or any such
Subsidiary does not own (or owns but has not delivered to any other Person
(which securities have been borrowed by the Borrower or any such other Group
Member from one or more third parties) to any other Person on or prior to such
date, minus (b)
all amounts that the Borrower or any such other Group Member has paid (or would
be required to pay) on such date as a result of purchasing such securities in
the open market on such date and returning such securities to such third party
lenders; provided, however, that if such
difference (prior to taking the absolute value thereof) on any date is a
positive number, then the absolute value of such difference shall be deemed to
be zero on such date.




"Consolidated Tangible Net
Worth" means, at any date, (a) all amounts that would, in conformity with
GAAP, be included on a consolidated balance sheet of the Borrower and its
Subsidiaries under stockholders' equity at such date, minus (b) the net
amount of all goodwill and all other intangible assets of the Borrower and its
Subsidiaries, determined on a consolidated basis in conformity with GAAP at such
date.




"Consolidated Total
Debt" means, at any date, the aggregate principal amount of all
Indebtedness for Borrowed Money of the Borrower and its Subsidiaries at such
date, determined on a consolidated basis in accordance with GAAP.




"Continuing Directors"
means the directors of the Borrower on the Closing Date, after giving effect to
the Acquisition and the other transactions contemplated hereby, and each other
director, if, in each case, such other director's nomination for election to the
board of directors of the Borrower is recommended by at least 66-2/3% of the
then Continuing Directors.


-7-


"Contractual
Obligation" means, as to any Person, any provision of any security issued
by such Person or of any agreement, instrument or other undertaking to which
such Person is a party or by which it or any of its property is
bound.




"Cumulative Consolidated Net
Income" means, on any date, the sum of Consolidated Net Income for the
Fiscal Quarter commencing on January 1, 2008 and for each Fiscal Quarter
thereafter up to and including the Fiscal Quarter most recently ended on such
date.




"Cumulative Dividend
Amount" means, on any date, the sum of all cash dividends made by the
Borrower on its issued and outstanding shares of common stock from the Closing
Date and through and including such date.




"Customer Security"
has the meaning specified in Rule 15c3-3.




"Default" means any of
the events specified in Section 7.01,
whether or not any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.




"Default Rate" means a
rate per annum equal to the Highest Lawful Rate.




"Disposition" means
with respect to any property, any sale, lease, license, sale and leaseback,
assignment, conveyance, transfer or other disposition thereof.  The
terms "Dispose"
and "Disposed
of" shall have correlative meanings.




"Dollars" and "$" means dollars in
lawful currency of the United States.




"Domestic Subsidiary"
means any Subsidiary of the Borrower organized under the laws of any
jurisdiction within the United States.




"Edelman Subordination
Agreement" means the Subordination Agreement to be executed by the
Lender, the Borrower, Fredric M. Edelman, an individual, and any other Person
which from time to time is a permitted holder of all or any part of the
Subordinated Note, substantially in the form of Exhibit
I.




"EFA LLC Interests"
has the meaning specified in Section
3.01(b)(iv).




"EFC LLC Interests"
has the meaning specified in Section
3.01(b)(iv).




"Eligible Assignee"
means (a) an Affiliate of the Lender, (b) an Approved Fund and (c) any other
Person (other than a natural person) approved by the Borrower (such approval not
to be unreasonably withheld or delayed); provided that no such
approval shall be required if a Default or an Event of Default has occurred and
is continuing.




"Environmental Laws"
means any and all foreign, Federal, state, local or municipal laws, rules,
orders, regulations, statutes, ordinances, codes, decrees, requirements of any
Governmental Authority or other Requirements of Law (including common law)
regulating, relating to or imposing liability or standards of conduct concerning
protection of human health or the environment, as now or may at any time
hereafter be in effect.


-8-


"Environmental
Liability" means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or
indemnities), of the Borrower or any Subsidiary directly or indirectly resulting
from or based upon (a) violation of any Environmental Law, (b) the generation,
use, handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.




"Equity Interests"
means shares of capital stock, partnership interests, membership interests in a
limited liability company, beneficial interests in a trust or other equity
ownership interests in a Person, and any warrant, options or other rights
entitling the holder thereof to purchase or acquire any such equity
interest.




"ERISA" means the
Employee Retirement Income Security Act of 1974, as amended from time to
time.




"Event of Default"
means any of the events specified in Section 7.01, provided that any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.




"Excess Payment"
means, for any Fiscal Quarter, the aggregate amount of cash, securities or other
property received by the Borrower under or in respect of the Redemption
Agreement which is in excess of $3,000,000 during such Fiscal
Quarter.




"Exchange Act" means
the Securities Exchange Act of 1934, as amended.




"Excluded Foreign
Subsidiary" means any Foreign Subsidiary in respect of which either (a)
the pledge of all of the Equity Interests of such Subsidiary as Collateral or
(b) the guaranteeing by such Subsidiary of the Obligations, would, in the good
faith judgment of the Borrower, result in adverse tax consequences to the
Borrower.




"Excluded Taxes"
means, with respect to the Lender, the Lender (a) taxes imposed on or measured
by its overall net income (however denominated), and franchise taxes imposed on
it (in lieu of net income taxes), by the jurisdiction (or any political
subdivision thereof) under the laws of which such recipient is organized or in
which its principal office is located or in which its applicable Lending Office
is located, (b) any branch profits taxes imposed by the United States or any
similar tax imposed by any other jurisdiction in which the Borrower is located,
and (c) any backup withholding tax that is required by the Code to be withheld
from amounts payable to the Lender because the Lender has failed to comply with
clause (A) of Section
2.10(e)(i).




"Existing Accounts"
has the meaning specified in Section
4.25.




"Existing Credit
Facility" means the Credit Agreement, dated as of May 9, 2005, between
JPMorgan Chase Bank, National Association, as lender, and Sanders Morris Harris
Group Inc., as borrower, as amended, restated, supplemented or otherwise
modified prior to the date hereof.


-9-


"Extraordinary
Receipts" means any and all cash received by or paid to or for the
account of any Group Member not in the ordinary course of business (and not
consisting of proceeds from an Asset Sale or Recovery Event), including, without
limitation, (a) foreign, United States, state or local tax refunds, (b) pension
plan reversions, (c) proceeds of insurance (other than proceeds of business
interruption insurance to the extent such proceeds constitute compensation for
lost earnings) or casualty claims, (d) judgments, proceeds of settlements or
other consideration of any kind in connection with any claim or cause of action,
(e) indemnity payments, and (f) any purchase price adjustments.




"FINRA" means
Financial Institution Regulatory Authority, Inc., and any successor
entity.




"Fiscal Quarter" means
any of the four quarters of any Fiscal Year.




"Fiscal Year" means
the fiscal year of the Borrower and its Subsidiaries ending on December 31 in
any calendar year.




"FOCUS Report" means,
for any Person, the Financial and Operational Combined Uniform Single Report
required to be filed on a monthly or quarterly basis, as the case may be, with
the SEC or the NYSE, or any report that is required in lieu of such
report.




"Foreign Subsidiary"
means any Subsidiary of the Borrower that is not a Domestic
Subsidiary.




"Fund" means any
Person (other than a natural person) that is (or will be) engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar
extensions of credit in the ordinary course of its business.




"Funding Office" means
the office of the Lender specified in Section 8.02 or such
other office as may be specified from time to time by the Lender as its funding
office by written notice to the Borrower.




"GAAP" means generally
accepted accounting principles in the United States as in effect from time to
time, except that for purposes of Section 6.01, GAAP
shall be determined on the basis of such principles in effect on the date hereof
and consistent with those used in the preparation of the most recent audited
financial statements referred to in Section
5.01(b).  In the event that any "Accounting Change" (as defined
below) shall occur and such change results in a change in the method of
calculation of financial covenants, standards or terms in this Agreement, then
the Borrower and the Lender agree to enter into negotiations in order to amend
such provisions of this Agreement so as to reflect equitably such Accounting
Changes with the desired result that the criteria for evaluating the Borrower's
financial condition shall be the same after such Accounting Changes as if such
Accounting Changes had not been made.  Until such time as such an
amendment shall have been executed and delivered by the Borrower and the Lender,
all financial covenants, standards and terms in this Agreement shall continue to
be calculated or construed as if such Accounting Changes had not
occurred.  "Accounting Changes"
refers to changes in accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants or, if
applicable, the SEC.


-10-


"Governmental
Authority" means any nation or government, any state or other political
subdivision thereof, any agency, authority, instrumentality, regulatory body,
court, central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative functions of or pertaining to government,
any securities exchange and any Self-Regulatory Organization.




"Group Members" means
the collective reference to the Borrower and its Subsidiaries.




"Guarantee and Security
Agreement" means the Guarantee and Security Agreement to be executed and
delivered by the Borrower and each Guarantor, substantially in the form of Exhibit A.




"Guarantee Obligation"
means, as to any Person (the "Guaranteeing Person"), any obligation of (a) the
Guaranteeing Person or (b) another Person (including any bank under any letter
of credit) to induce the creation of which the Guaranteeing Person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or
other obligations (the "Primary Obligations")
of any other third Person (the "Primary Obligor") in
any manner, whether directly or indirectly, including any obligation of the
Guaranteeing Person, whether or not contingent, (i) to purchase any such Primary
Obligation or any property constituting direct or indirect security therefor,
(ii) to advance or supply funds (1) for the purchase or payment of any such
Primary Obligation or (2) to maintain working capital or equity capital of the
Primary Obligor or otherwise to maintain the net worth or solvency of the
Primary Obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such Primary Obligation of the
ability of the Primary Obligor to make payment of such Primary Obligation or
(iv) otherwise to assure or hold harmless the owner of any such Primary
Obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business.  The amount
of any Guarantee Obligation of any Guaranteeing Person shall be deemed to be the
lower of (a) an amount equal to the stated or determinable amount of the Primary
Obligation in respect of which such Guarantee Obligation is made and (b) the
maximum amount for which such Guaranteeing Person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless such Primary
Obligation and the maximum amount for which such Guaranteeing Person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such Guaranteeing Person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in good
faith.




"Guarantors" means the
collective reference to each Material Subsidiary of the Borrower.




"Hazardous Materials"
means (a) petroleum or petroleum products, by-products or breakdown products,
radioactive materials, asbestos-containing materials, polychlorinated biphenyls
and radon gas and (b) any other chemicals, materials or substances designated,
classified or regulated as hazardous or toxic or as a pollutant or contaminant
under any Environmental Law.


-11-


"Highest Lawful Rate"
means the maximum nonusurious interest rate, if any, that at any time or from
time to time may be contracted for, taken, reserved, charged or received on the
Obligations under laws applicable to the Lender which are currently in effect
or, to the extent allowed by law, under such applicable laws which may hereafter
be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow.  On each day, if any, that Texas law
establishes the Highest Lawful Rate, the Highest Lawful Rate shall be the
"weekly ceiling" (as defined in Section 303 of the Texas Finance Code) for that
day.




"Indebtedness" means,
with respect to any Person, without duplication:




(a)           all
indebtedness of such Person for borrowed money;




(b)           all
obligations of such Person for the deferred purchase price of property or
services (other than trade payables incurred in the ordinary course of such
Person's business that are not past due by more than sixty (60) days after the
respective dates on which such trade payables were created);




(c)           all
obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments;




(d)           all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such
property);




(e)           all
Attributable Indebtedness in respect of Capital Lease Obligations (but not
operating leases) and Synthetic Lease Obligations of such Person and all
Synthetic Debt of such Person;




(f)           the
maximum amount of all obligations of such Person, contingent or otherwise, with
respect to bankers' acceptances, letters of credit (except to the extent such
letters of credit are secured by cash collateral), letters of guaranty, surety
bonds, performance bonds and similar obligations;




(g)           all
obligations of such Person to purchase, redeem, retire, defease or otherwise
make any payment in respect of any Equity Interests in such Person or any other
Person, valued, in the case of redeemable Preferred Interests, at the greater of
its voluntary or involuntary liquidation preference plus all accrued and
unpaid dividends;




(h)           all
Guarantee Obligations of such Person in respect of obligations of the kind
referred to in clauses (a) through (g) above;




(i)           all
obligations of the kind referred to in clauses (a) through (h) above secured by
(or for which the holder of such obligation has an existing right, contingent or
otherwise, to be secured by) any Lien on property (including accounts and
contract rights) owned by such Person, whether or not such Person has assumed or
become liable for the payment of such obligation; and




(j)           all
obligations of such Person in respect of Swap Contracts, valued at the Swap
Termination Value thereof.


-12-


The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness expressly provide that such Person is not liable
therefor.




"Indebtedness for Borrowed
Money" means, with respect to any Person, without duplication, all
Indebtedness of such Person, except for obligations constituting Indebtedness
under clauses (b), (d) or (g) of the definition of Indebtedness in this
Agreement.




"Indemnified Taxes"
means Taxes other than Excluded Taxes.




"Indemnitee" has the
meaning specified in Section
8.05(b).




"Insolvency" means,
with respect to any Multiemployer Plan, the condition that such Plan is
insolvent within the meaning of Section 4245 of ERISA.




"Insolvent" means
pertaining to a condition of Insolvency.




"Intellectual
Property" means the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including copyrights,
copyright licenses, patents, patent licenses, trademarks, trademark licenses,
technology, know-how and processes, and all rights to sue at law or in equity
for any infringement or other impairment thereof, including the right to receive
all proceeds and damages therefrom.




"Investment" means,
with respect to any Person, any direct or indirect acquisition or investment by
such Person, whether by means of (a) the purchase or other acquisition of any
Equity Interest of another Person, (b) the purchase or other acquisition (in one
transaction or a series of transactions) of assets of another Person that
constitute a business unit or all or a substantial part of the business of such
Person, (c) any loan, advance, extension of credit or capital contribution to,
assumption of debt of, or purchase or other acquisition of any other debt or
interest in, another Person, (d) any Guarantee Obligation incurred by that
Person in respect of Indebtedness of any other Person, and (e) any other
investment by that Person in any other Person.  For purposes of
covenant compliance, the amount of any Investment shall be the amount actually
invested, without adjustment for subsequent increases or decreases in the value
of such Investment.




"L/C Collateral
Account" means a deposit account established and maintained by the
Borrower at JPMorgan Chase Bank, N.A. containing cash collateral permitted under
Section
6.03(i)(i).




"Lender" has the
meaning specified in the preamble hereto.




"Lending Office" means
the office or offices of the Lender as the Lender may from time to time notify
the Borrower.


-13-


"Lien" means any
mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other), charge or other security interest or any preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any capital lease having substantially the same economic effect as
any of the foregoing, and any easement, right of way or other encumbrance on
title to real property).




"Loan" means the term
loan made by the Lender to the Borrower pursuant to this Agreement in the
original principal amount of $25,000,000.




"Loan Documents" means
this Agreement, the Term Note, each Secured Cash Management Agreement, each
Consent and Agreement, the Commitment Letter, the Security Documents, and the
Edelman Subordination Agreement.




"Loan Parties" means
each Group Member that is or hereafter becomes a party to a Loan
Document.




"Margin Stock" has the
meaning assigned to that term under Regulation U.




"Marketable Debt
Securities" means, at any time, any debt securities for which an active
trading market exists, and price quotations are available from dealers of such
securities and third-party pricing sources acceptable to the Lender at such
time.




"Marketable Equity
Securities" means, at any time, any equity securities listed on a
national securities exchange located in the United States or quoted on the
Nasdaq Stock Market, Inc. quotation system for which valuations are available on
such exchange or from such quotation system at such time.




"Material Adverse
Change" means any material adverse change in the business, property,
assets, liabilities, operations, condition (financial or otherwise) or prospects
of the Loan Parties and their respective Subsidiaries taken as a
whole.




"Material Adverse
Effect" means a material adverse effect on (a) the Acquisition, (b) the
business, property, assets, liabilities, operations, condition (financial or
otherwise) or prospects of the Loan Parties and their respective Subsidiaries
taken as a whole, (c) the validity or enforceability of this Agreement or any of
the other Loan Documents or the rights or remedies of the Lender under any Loan
Document, (d) the validity, perfection or priority of any Lien granted pursuant
to the Security Documents, (e) the timing or amount of any payment made (or to
be made) by any Person to any Loan Party under any Assigned Agreement, (f) the
value of the Collateral taken as a whole, or (g) the ability of any Loan Party
to perform its obligations under any Loan Document to which it is or is to be a
party.




"Material Contract"
means any agreement or contract of any Group Member which (a) involves
consideration to any Group Member of $500,000 or more in any year, (b) involves
consideration by any Group Member of $500,000 or more in any year, (c) imposes
financial obligations on any Group Member of $500,000 or more in any year, (d)
is an Acquisition Document, an Assigned Agreement, a Swap Contract, or a
Clearing Agreement or (e) is otherwise material (or together with related
agreements and contracts, is material) to the business, operations, financial
condition, performance or properties of the Group Members, taken as a
whole.


-14-


"Material Subsidiary"
means, on any date, (a) each Wholly-Owned Subsidiary of the Borrower and each
other Subsidiary of the Borrower which accounts for at least 10% of the
Consolidated Tangible Net Worth of the Borrower and its Subsidiaries on such
date and (b) SMH SPEADV.




"Maturity Date" means
October 31, 2012; provided, however, that if such
date is not a Business Day, the Maturity Date shall be the next preceding
Business Day.




"Minority Owner"
means, with respect to any Subsidiary of the Borrower, any Person (other than a
Group Member) who or which directly owns on the Closing Date any Equity
Interests in such Subsidiary.




"Mortgages" means the
collective reference to the fee mortgages, deeds of trust and similar documents
made by any Loan Party in favor of, or for the benefit of, the Lender
substantially in the form of Exhibit C (with such
changes thereto as shall be advisable under the law of the jurisdiction in which
such mortgage or deed of trust is to be recorded).




"MSRB" means the
Municipal Securities Rulemaking Board and any successor entity.




"Multiemployer Plan"
means a Plan that is a multiemployer plan as defined in Section 4001(a)(3)
of ERISA.




"Net Capital" means,
at any time, "net capital" computed in accordance with Rule 15c3-1.




"Net Cash Proceeds"
means:




(a)           in
connection with any Asset Sale, any Recovery Event or any Extraordinary Receipt
received or paid to the account of any Group Member, the proceeds thereof in the
form of cash and Cash Equivalents (including any such proceeds received by way
of deferred payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as and when
received) received in connection with such transaction, net of attorneys' fees,
accountants' fees, investment banking fees, amounts required to be applied to
the repayment of Indebtedness secured by a Lien expressly permitted hereunder on
any asset that is the subject of any such Asset Sale or Recovery Event (other
than any Lien pursuant to a Security Document) and other customary fees and
expenses actually incurred in connection therewith and net of taxes paid or
reasonably estimated to be payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements); and




(b)           in
connection with any issuance or sale of Equity Interests or any incurrence of
Indebtedness, the cash proceeds received from such issuance or incurrence, net
of attorneys' fees, investment banking fees, accountants' fees, underwriting
discounts and commissions and other customary fees and expenses actually
incurred in connection therewith.




"NewCo LLC" means
Concept Capital Advisors, LLC.


-15-


"Notice of Borrowing"
means a Notice of Borrowing, substantially in the form of Exhibit G, duly
executed by a Responsible Officer of the Borrower.




"Obligations" means
the unpaid principal of and interest on (including interest accruing after the
maturity of the Loan and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to any Loan Party, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding) the Loan and all other
obligations, indebtedness liabilities of the Loan Parties to the Lender and each
of them, whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out of, or in
connection with, this Agreement, any other Loan Document, or any other document,
instrument or agreement made, delivered or given in connection herewith or
therewith, whether on account of principal, interest, reimbursement obligations,
guarantee obligations, fees, indemnities, costs, expenses (including all fees,
charges and disbursements of counsel to the Lender that are required to be paid
by the Loan Parties pursuant to any Loan Document) or otherwise.




"Organizational
Documents" means, (a) with respect to any corporation, the certificate or
articles of incorporation and the bylaws (or equivalent or comparable
constitutive documents with respect to any non-U.S. jurisdiction); (b) with
respect to any limited liability company, the certificate or articles of
formation or organization and operating agreement; and (c) with respect to any
partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.




"Other Taxes" means
all present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies arising from any payment made hereunder or
under any other Loan Document or from the execution, delivery or enforcement of,
or otherwise with respect to, this Agreement or any other Loan
Document.




"Participant" has the
meaning specified in Section
8.06(c).




"Payment Date" means
the last day of each calendar month to occur while the Loan is outstanding and
the Maturity Date.




"PBGC" means the
Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title
IV of ERISA (or any successor).




"Permitted Letters of
Credit" means each letter of credit described on Schedule
1.01.




"Person" means a
natural person, partnership, corporation, limited liability company, business
trust, joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.




"Plan" means at a
particular time, any employee benefit plan that is covered by ERISA and in
respect of which the Borrower or a Commonly Controlled Entity is (or, if such
plan were terminated at such time, would under Section 4069 of ERISA be deemed
to be) an "employer" as defined in Section 3(5) of ERISA.


-16-


"Pledged Equity
Interests" has the meaning specified in the Guarantee and Security
Agreement.




"Pledged Notes" has
the meaning specified in the Guarantee and Security Agreement.




"Preferred Interests"
means, with respect to any Person, Equity Interests issued by such Person that
are entitled to a preference or priority over any other Equity Interests issued
by such Person upon any distribution of such Person's property and assets,
whether by dividend or upon liquidation.




"Prime Rate" means,
for any date, the greater of (a) the prime rate published by The Wall Street Journal on
such date, or (b) 5.00%.  If at any time The Wall Street Journal does
not publish such prime rate, the Lender in its sole discretion shall determine
such prime rate using another source of information.




"Pro Forma Balance
Sheet" has the meaning specified in Section
4.01(a).




"Projections" has the
meaning specified in Section
5.02(c).




"Properties" has the
meaning specified in Section
4.16(a).




"Purchase and Sale
Agreement" means that certain Purchase and Sale Agreement dated as of
August 29, 2008 by and among Sanders Morris Harris Group Inc., Salient Partners,
L.P. and Salient Capital Management, LLC and their respective partners and
members.




"Recovery Event" means
any settlement of or payment in respect of any property or casualty insurance
claim or any condemnation proceeding relating to any asset of any Group
Member.




"Redemption Agreement"
means that certain Agreement to Retire Partnership Interest and Second Amendment
to the Limited Partnership Agreement of Endowment Advisors, L.P., dated as of
August 29, 2008, among the Borrower, Endowment Advisors, L.P., The
Endowment Fund, GP, L.P., and The Endowment Fund Management, LLC and their
respective partners and members.




"Regulation T" has the
meaning specified in Regulation T of the Board as in effect from time to
time.




"Regulation U" has the
meaning specified in Regulation U of the Board as in effect from time to
time.




"Regulation X" has the
meaning specified in Regulation X of the Board as in effect from time to
time.


-17-


"Reinvestment Deferred
Amount" means, with respect to any Reinvestment Event, the aggregate Net
Cash Proceeds received by any Group Member in connection therewith that are not
applied to prepay the Loan or reduce the Revolving Commitments pursuant to Section 2.05(b)
as a result of the delivery of a Reinvestment Notice.




"Reinvestment Event"
means any Asset Sale, Recovery Event or Extraordinary Receipt in respect of
which the Borrower has delivered a Reinvestment Notice.




"Reinvestment Notice"
means a written notice executed by a Responsible Officer stating that no Default
or Event of Default has occurred and is continuing and that the Borrower
(directly or indirectly through a Subsidiary) intends and expects to use all or
a specified portion of the Net Cash Proceeds of an Asset Sale, Recovery Event or
Extraordinary Receipt to acquire or repair fixed or capital assets useful in its
business.




"Reinvestment Prepayment
Amount" means, with respect to any Reinvestment Event, the Reinvestment
Deferred Amount relating thereto less any amount expended prior to the relevant
Reinvestment Prepayment Date to acquire assets useful in the Borrower's
business.




"Reinvestment Prepayment
Date" means, with respect to any Reinvestment Event, the earlier of (a)
the date occurring six (6) months after such Reinvestment Event and (b) the date
on which the Borrower shall have determined not to, or shall have otherwise
ceased to, acquire assets useful in the Borrower's business with all or any
portion of the relevant Reinvestment Deferred Amount.




"Related Parties"
means, with respect to any Person, such Person's Affiliates and the partners,
directors, officers, employees, agents, trustees and advisors of such Person and
of such Person's Affiliates.




"Reorganization"
means, with respect to any Multiemployer Plan, the condition that such plan is
in reorganization within the meaning of Section 4241 of ERISA.




"Reorganization and Purchase
Agreement" means that certain Reorganization and Purchase Agreement,
dated as of May 10, 2005, among the Borrower, the Edelman Financial Center,
Inc., The Edelman Financial Center, LLC and Fredric M. Edelman, an
individual.




"Reportable Event"
means any of the events set forth in Section 4043(c) of ERISA, other than those
events as to which the thirty day notice period is waived under subsections .27,
..28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. § 4043.




"Requirement of Law"
means, as to any Person, the Organizational Documents of such Person, and any
law, treaty, rule or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.




"Responsible Officer"
means the chief executive officer, president or chief financial officer,
treasurer, assistant treasurer or controller of a Loan Party and any other
officer or employee of the applicable Loan Party so designated by any of the
foregoing officers in a notice to the Lender, but, in any event with respect to
financial matters, the chief financial officer of the applicable Loan
Party.  Any document delivered hereunder that is signed by a
Responsible Officer of a Loan Party shall be conclusively presumed to have been
authorized by all necessary corporate, partnership and/or other action on the
part of such Loan Party and such Responsible Officer shall be conclusively
presumed to have acted on behalf of such Loan Party.


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"Restricted Payment"
means any dividend or other distribution (whether in cash, securities or other
property) with respect to any capital stock or other Equity Interest of any
Person or any of its Subsidiaries, or any payment (whether in cash, securities
or other property), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, defeasance, acquisition, cancellation or
termination of any such capital stock or other Equity Interest, or on account of
any return of capital to any Person's stockholders, partners or members (or the
equivalent of any thereof), or any option, warrant or other right to acquire any
such dividend or other distribution or payment.




"Rule 8c1" means Rule
8c1 of the General Rules and Regulations as promulgated by the SEC under the
Exchange Act, as such rule may be amended from time to time, or any rule or
regulation of the SEC which replaces Rule 8c1.




"Rule 15c2-1" means
Rule 15c2-1 of the General Rules and Regulations as promulgated by the SEC under
the Exchange Act, as such rule may be amended from time to time, or any rule or
regulation of the SEC which replaces Rule 15c2-1.




"Rule 15c3-1" means
Rule 15c3-1 of the General Rules and Regulations as promulgated by the SEC under
the Exchange Act, as such rule may be amended from time to time, or any rule or
regulation of the SEC which replaces Rule 15c3-1.




"Rule 15c3-3" means
Rule 15c3-3 of the General Rules and Regulations as promulgated by the SEC under
the Exchange Act, as such rule may be amended from time to time, or any rule or
regulation of the SEC which replaces Rule 15c3-3.




"Salient Note" means
that certain Unsecured Subordinated Promissory Note, dated as of August 29,
2008, in the original principal amount of $9,349,340 made by Salient Partners,
L.P. and payable to the order of the Borrower.




"SEC" means the
Securities and Exchange Commission, any successor thereto and any analogous
Governmental Authority.




"Secured Cash Management
Agreement" means any Cash Management Agreement that is entered into by
and between any Loan Party and the Lender.




"Security Documents"
means the collective reference to the Guarantee and Security Agreement, each
Consent and Agreement and all other security and collateral agreements and
documents hereafter delivered to the Lender that create or purport to create a
Lien in favor of the Lender.




"Servicing Agreement"
means the Servicing Agreement, dated effective as of September 5, 2006, between
Endowment Advisers, L.P. and the Borrower.


-19-


"Single Employer Plan"
means any Plan that is subject to Title IV of ERISA, but that is not a
Multiemployer Plan.




"SMHG Operating
Account" has the meaning specified in Section
3.01(q).




"SMHG - Salient Intercreditor
Agreement" means any intercreditor agreement, subordination agreement or
other similar agreement between or among any of Salient Partners, L.P., as
borrower, the Borrower, as junior lender, and a to-be-specified entity, as
senior lender, in form and substance satisfactory to the Borrower and the
Lender.




"SMHG - Salient Intercreditor
Agreement Form" means a proposed execution copy of an Intercreditor
Agreement among Salient Partners, L.P., as borrower, the Borrower, as junior
lender, and a to-be-specified entity, as senior lender, relating to the Salient
Note, in form and substance satisfactory to the Borrower and the
Lender.




"SMH SPEADV" means SMH
SPEADV, LLC, a Delaware limited liability company.




"SMH SPEADV
Assignments" means the collective reference to (a) the Assignment and
Assumption Agreement, dated as of May 1, 2009 between the Borrower and SMH
SPEADV, pursuant to which the Borrower transfers all of its right, title and
interest in the Redemption Agreement to SMH SPEADV and (b) the Assignment and
Assumption Agreement, dated as of May 1, 2009 between the Borrower and SMH
SPEADV, pursuant to which the Borrower transfers all of its right, title and
interest in the Salient Documents to SMH SPEADV.




"SMH SPEADV LLC
Interests" means 100% of the limited liability company membership
interests of SMH SPEADV.




"Solvent" means, with
respect to any Person as of any date of determination, that on such date (a) the
amount of the "present fair saleable value" of the assets of such Person will,
as of such date, exceed the amount of all "liabilities of such Person,
contingent or otherwise," as of such date, as such quoted terms are determined
in accordance with applicable federal and state laws governing determinations of
the insolvency of debtors, (b) the present fair saleable value of the assets of
such Person will, as of such date, be greater than the amount that will be
required to pay the liability of such Person on its debts as such debts become
absolute and matured, (c) such Person will not have, as of such date, an
unreasonably small amount of capital with which to conduct its business, and (d)
such Person will be able to pay its debts as they mature.  For
purposes of this definition, (i) "debt" means liability on a "claim," and (ii)
"claim" means any (x) right to payment, whether or not such a right is reduced
to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an
equitable remedy for breach of performance if such breach gives rise to a right
to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured
or unsecured.




"Specified FOCUS
Reports" has the meaning specified in Section
4.01(b).




"Subordinated Note"
means that certain Unsecured Subordinated Promissory Note dated May 7,
2009, issued by the Borrower and payable to the order of Fredric M. Edelman, an
individual, in the principal amount of $10,000,000 as consideration under the
Acquisition Agreement.


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"Subsidiary" means as
to any Person, a corporation, partnership, limited liability company or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) representing a majority
of such shares of stock or such other ownership interests or to elect a majority
of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person; provided, however,
that the term Subsidiary shall not include any limited partnership, limited
liability company, trust, or other special purpose investment entity managed by
a Group Member solely because any of the partners, members, or other beneficial
owners is a customer of such Group Member.  Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a direct or indirect Subsidiary or Subsidiaries of the
Borrower.




"Swap Contract" means
(a) any and all rate swap transactions, basis swaps, credit derivative
transactions, forward rate transactions, commodity swaps, commodity options,
forward commodity contracts, equity or equity index swaps or options, bond or
bond price or bond index swaps or options or forward bond or forward bond price
or forward bond index transactions, interest rate options, forward foreign
exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions,
currency options, spot contracts, or any other similar transactions or any
combination of any of the foregoing (including any options to enter into any of
the foregoing), whether or not any such transaction is governed by or subject to
any master agreement, and (b) any and all transactions of any kind, and the
related confirmations, which are subject to the terms and conditions of, or
governed by, any form of master agreement published by the International Swaps
and Derivatives Association, Inc., any International Foreign Exchange Master
Agreement, or any other master agreement (any such master agreement, together
with any related schedules, a "Master Agreement"),
including any such obligations or liabilities under any Master
Agreement.




"Swap Termination
Value" means, in respect of any one or more Swap Contracts, after taking
into account the effect of any legally enforceable netting agreement relating to
such Swap Contracts, (a) for any date on or after the date such Swap Contracts
have been closed out and termination value(s) determined in accordance
therewith, such termination value(s), and (b) for any date prior to the date
referenced in clause (a), the amount(s) determined as the mark-to-market
value(s) for such Swap Contracts, as determined based upon one or more
mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include the Lender or any Affiliate of
the Lender).




"Synthetic Debt"
means, with respect to any Person as of any date of determination thereof, all
obligations of such Person in respect of transactions entered into by such
Person that are intended to function primarily as a borrowing of funds
(including any minority interest transactions that function primarily as a
borrowing) but are not otherwise included in the definition of "Indebtedness" or as a
liability on the consolidated balance sheet of such Person and its Subsidiaries
in accordance with GAAP.


-21-


"Synthetic Lease"
means, at any time, any lease (including leases that may be terminated by the
lessee at any time) of any property (a) that is accounted for as an operating
lease under GAAP and (b) in respect of which the lessee retains or obtains
ownership of the property so leased for income tax purposes, other than any such
lease under which such Person is the lessor.




"Synthetic Lease
Obligations" means, with respect to any Synthetic Lease, at any time, an
amount of equal to the higher of (a) the aggregate termination value or purchase
price or similar payments in the nature of principal payable thereunder and (b)
the then aggregate outstanding principal amount of the notes or other
instruments issued by, and the amount of the equity investment, if any, in, the
lessor under such Synthetic Lease.




"Taxes" means all
present or future taxes, levies, imposts, duties, deductions, withholdings
(including backup withholding), assessments, fees or other charges imposed by
any Governmental Authority, including any interest, additions to tax or
penalties applicable thereto.




"Term Note" has the
meaning specified in Section
2.12(c).




"UCC" means the
Uniform Commercial Code as in effect in the State of Texas; provided that if
perfection or the effect of perfection or non-perfection is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of
Texas, "UCC"
means the Uniform Commercial Code as in effect from time to time in such other
jurisdiction for purposes of the provisions hereof relating to such perfection,
effect of perfection or non-perfection or priority.




"United States" and
"U.S." mean the
United States of America.




"USA PATRIOT Act"
means United States Public Law 107-56, Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA
PATRIOT ACT) Act of 2001, as amended from time to time, and the rules and
regulations promulgated thereunder from time to time in effect.




"Wholly Owned
Subsidiary" means, as to any Person, any other Person all of the Equity
Interests of which (other than directors' qualifying shares required by law) is
owned by such Person directly and/or through other Wholly Owned
Subsidiaries.




Section
1.02.   Other Definitional
Provisions.




(a)           Unless
otherwise specified therein, all terms defined in this Agreement shall have the
defined meanings when used in the other Loan Documents or any certificate or
other document made or delivered pursuant hereto or thereto.




(b)           As
used herein and in the other Loan Documents, and any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms relating
to the Borrower and its Subsidiaries not defined in Section 1.01 and
accounting terms partly defined in Section 1.01, to the
extent not defined, shall have the respective meanings given to them under
GAAP.


-22-


(c)           The
definitions of terms herein shall apply equally to the singular and plural forms
of the terms defined.  Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter
forms.  The words "include," "includes" and "including" shall be
deemed to be followed by the phrase "without limitation."  The word
"will" shall be construed to have the same meaning and effect as the word
"shall."  Unless the context requires otherwise (i) any definition of
or reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, amended and restated, supplemented or otherwise modified
from time to time (subject to any restrictions on such amendments, amendments
and restatements, supplements or modifications set forth herein), (ii) any
reference herein to any Person shall be construed to include such Person's
successors and assigns, (iii) the words "herein," "hereof" and "hereunder," and
words of similar import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision hereof, (iv) the word "incur" shall
be construed to mean incur, create, issue, assume, become liable in respect of
or suffer to exist (and the words "incurred" and "incurrence" shall have
correlative meanings), (v) all references herein to Articles, Sections, Exhibits
and Schedules shall be construed to refer to Articles and Sections of, and
Exhibits and Schedules to, this Agreement, (vi) any reference to any law or
regulation herein shall, unless otherwise specified, refer to such law or
regulation as amended, modified or supplemented from time to time and (vii) the
words "asset" and "property" shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, Equity Interests, securities, accounts and contract
rights.




(d)           No
inference in favor of, or against, any party to this Agreement shall be drawn
from the fact that such party has drafted any portion of this
Agreement.




(e)           All
obligations of the Borrower and each other Loan Party under this Agreement and
the other Loan Documents shall be performed and satisfied by or on behalf of the
Borrower or such other Loan Party, as applicable, at its sole cost and
expense.




ARTICLE
II




AMOUNT
AND TERMS OF COMMITMENT




Section
2.01.   Commitment.  Subject
to the terms and conditions hereof, the Lender agrees to make the Loan to the
Borrower on the Closing Date in an amount not to exceed the amount of the
Commitment.




Section
2.02.   Procedure for Loan
Borrowing.  The Borrower shall give the Lender irrevocable
notice in the form of a Notice of Borrowing (which notice must be received by
the Lender prior to 10:00 A.M., Houston, Texas time, one (1) Business Day prior
to the anticipated Closing Date) requesting that the Lender make the Loan to the
Borrower on the Closing Date and specifying the amount to be
borrowed.


-23-


Section
2.03.   Repayment of
Loan.  The Borrower unconditionally promises to repay the Loan
in forty-two (42) consecutive amortizing equal monthly installments, due on each
Payment Date, commencing on May 29, 2009, subject to adjustment as provided
in Section 2.04
and Section
2.05; provided, however, that the
final principal repayment installment of the Loan shall be repaid on the
Maturity Date and in any event shall be in an amount equal to the unpaid
principal amount of the Loan outstanding on such date.




Section
2.04.   Optional
Prepayments.  The Borrower may at any time and from time to
time prepay the Loan, in whole or in part, without premium or penalty, upon
irrevocable notice delivered to the Lender at least one Business Day prior
thereto, which notice shall specify the date and amount of
prepayment.  If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein, together with
accrued interest to such date on the amount prepaid.  Partial
prepayments of the Loan shall be in an aggregate principal amount of $500,000 or
a whole multiple thereof.  Each prepayment of the Loan pursuant to
this Section
2.04 shall be applied to the principal repayment installments thereof in
inverse order of maturity.




Section
2.05.   Mandatory Prepayments and
Commitment Reductions.




(a)           If
any Indebtedness shall be incurred by any Group Member (excluding any
Indebtedness incurred in accordance with Section 6.02), an
amount equal to 100% of the Net Cash Proceeds thereof shall be applied on the
date of such issuance or incurrence toward the prepayment of the Loan as set
forth in Section
2.05(d).




(b)           If
on any date any Group Member shall receive Net Cash Proceeds from any Asset Sale
(other than the Capital Markets Division Disposition and the Concept Capital
Markets Division Disposition), Recovery Event or Extraordinary Receipt then,
unless a Reinvestment Notice shall be delivered in respect thereof, such Net
Cash Proceeds shall be applied on such date toward the prepayment of the Loan as
set forth in Section
2.05(d); provided, that (i)
the aggregate Net Cash Proceeds of Asset Sales, Recovery Events and
Extraordinary Receipts that may be excluded from the foregoing requirement
pursuant to a Reinvestment Notice shall not exceed $1,000,000 in any Fiscal Year
and (ii) on each Reinvestment Prepayment Date, an amount equal to the
Reinvestment Prepayment Amount with respect to the relevant Reinvestment Event
shall be applied toward the prepayment of the Loan as set forth in Section
2.05(d).




(c)           If,
at any time during any Fiscal Quarter, the Borrower receives Excess Payments
under the Redemption Agreement, an amount equal to 100% of such Excess Payments
shall be applied on the Payment Date immediately succeeding the last day of such
Fiscal Quarter toward the prepayment of the Loan as set forth in Section
2.05(d).




(d)           All
amounts to be applied in connection with prepayments of the Loan made pursuant
to this Section
2.05 shall be applied to the Loan and to the principal repayment
installments thereof in inverse order of maturity.  Each prepayment of
the Loan under Section
2.05 shall be accompanied by accrued interest to the date of such
prepayment on the amount so prepaid.


-24-


Section
2.06.   Interest Rates and Payment
Dates.




(a)           The
Loan shall bear interest for each day at a rate per annum equal to the Prime
Rate.




(b)           (i)           If
any amount of principal of the Loan is not paid when due (without regard to any
applicable grace periods), whether at stated maturity, by acceleration or
otherwise, such amount shall thereafter bear interest at a rate per annum at all
times equal to the Default Rate to the fullest extent permitted by applicable
Requirements of Law.




(ii)           If
any amount (other than principal of the Loan) payable by the Borrower under any
Loan Document is not paid when due (without regard to any applicable grace
periods), whether at stated maturity, by acceleration or otherwise, then such
amount shall thereafter bear interest at a rate per annum at all times equal to
the Default Rate to the fullest extent permitted by applicable Requirements of
Law.




(iii)           While
any Event of Default exists, the Borrower shall pay interest on the principal
amount of all outstanding Obligations hereunder at a rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable
Requirements of Law.




(iv)           Accrued
and unpaid interest on past due amounts (including interest on past due
interest) shall be due and payable upon demand.




(c)           Principal
and interest on the Loan shall be due and payable on each Payment Date
applicable thereto and at such other times as may be specified
herein.  Interest hereunder shall be due and payable in accordance
with the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any bankruptcy, insolvency, reorganization
or similar law.




(d)           The
Borrower covenants and agrees that (i) each Assigned Agreement Payment made (or
to be made) by any Person to the Borrower and/or to SMH SPEADV shall be made,
transferred or deposited directly into the Assigned Agreement Payment Account,
(ii) on or at any time after any Assigned Agreement Payment is made, transferred
or deposited into the Assigned Agreement Payment Account, the Lender will,
without notice to or consent of or other action by any other Person,
automatically debit and transfer from the Assigned Agreement Payment Account
into the Assigned Agreement Payment Escrow Account all or a portion of such
Assigned Agreement Payment such that the balance in the Assigned Agreement
Payment Escrow Account shall be equal to the next three (3) principal and
interest payments scheduled to be made on the Loan (as determined by the Lender)
(each such amount, an "Assigned Agreement Payment
Escrow Amount"), and then on the next scheduled principal and interest
payment date on the Loan, apply a portion of such Assigned Agreement Payment
Escrow Amount to the payment and satisfaction of the next scheduled principal
and interest payment on the Loan and hold the remaining portion of such Assigned
Agreement Payment Escrow Amount in the Assigned Agreement Payment Escrow Account
and apply such amounts to the next two (2) scheduled principal and interest
payments on the Loan as and when due under this Agreement, and (iii) neither the
Borrower nor SMH SPEADV shall use, withdraw or transfer any funds from the
Assigned Agreement Payment Account with respect to any Assigned Agreement
Payment until the Lender has confirmed to the Borrower that the Lender has
debited and transferred the Assigned Agreement Payment Escrow Amount pertaining
to such Assigned Agreement Payment to the Assigned Agreement Payment Escrow
Account; provided that if at
any time an Event of Default has occurred and is continuing, the Lender may
immediately apply any funds on deposit in the Assigned Agreement Payment Account
and/or the Assigned Agreement Payment Escrow Account to the payment and
performance of the Obligations in such order and manner as the Lender may from
time to time determine in its sole discretion.


-25-


Section
2.07.   Computation of Interest and
Fees.




(a)           Interest
and fees payable pursuant hereto shall be calculated on the basis of a 360-day
year for the actual days elapsed.  Any change in the interest rate on
the Loan resulting from a change in the Prime Rate shall become effective as of
the opening of business on the day on which such change becomes
effective.  The Lender shall as soon as practicable notify the
Borrower of the effective date and the amount of each such change in interest
rate.




(b)           Each
determination of an interest rate by the Lender pursuant to any provision of
this Agreement shall be conclusive and binding on the Borrower in the absence of
manifest error.




Section
2.08.   Pro Rata Treatment and
Payments.




(a)           All
payments (including prepayments) to be made by the Borrower hereunder, whether
on account of principal, interest, fees or otherwise, shall be made without any
condition or deduction for any counterclaim, defense, recoupment or setoff and
shall be made prior to 12:00 Noon, Houston, Texas time, on the due date thereof
to the Lender at the Funding Office, in Dollars and in immediately available
funds.  If any payment hereunder becomes due and payable on a day
other than a Business Day, such payment shall be extended to the next succeeding
Business Day.




(b)           The
Borrower hereby authorizes the Lender and the Lender's Affiliates, if and to the
extent any payment owed to the Lender is not made when due hereunder or any
other Loan Document, to charge from time to time, to the fullest extent
permitted by applicable law, against any or all of the Borrower's accounts with
the Lender or such Affiliate any amount so due.




(c)           Nothing
herein shall be deemed to obligate the Lender to obtain the funds for the Loan
in any particular place or manner or to constitute a representation by the
Lender that it has obtained or will obtain funds for the Loan in any particular
place or manner.




Section
2.09.   Increased
Costs.




(a)           Increased Costs
Generally.  If any Change in Law shall:




(i)           impose,
modify or deem applicable any reserve, special deposit, compulsory loan,
insurance charge or similar requirement against assets of, deposits with or for
the account of, or credit extended or participated in by, the
Lender;




(ii)           subject
the Lender to any tax of any kind whatsoever with respect to this Agreement, or
change the basis of taxation of payments to the Lender in respect thereof
(except for Indemnified Taxes or Other Taxes covered by Section 2.10) and the
imposition of, or any change in the rate of, any Excluded Tax payable by the
Lender; or


-26-


(iii)           impose
on the Lender any other condition, cost or expense affecting this Agreement made
by the Lender; and




the
result of any of the foregoing shall be to reduce the amount of any sum received
or receivable by the Lender hereunder (whether of principal, interest or any
other amount) then, upon request of the Lender, the Borrower will pay to the
Lender such additional amount or amounts as will compensate the Lender for such
additional costs incurred or reduction suffered.




(b)           Capital
Requirements.  If the Lender determines that any Change in Law
affecting the Lender or any Lending Office of the Lender or the Lender's holding
company, if any, regarding capital requirements has or would have the effect of
reducing the rate of return on the Lender's capital or on the capital of the
Lender's holding company, if any, as a consequence of this Agreement or the
Loan, to a level below that which the Lender or the Lender's holding company
could have achieved but for such Change in Law (taking into consideration the
Lender's policies and the policies of the Lender's holding company with respect
to capital adequacy), then from time to time the Borrower will pay to the Lender
such additional amount or amounts as will compensate the Lender or the Lender's
holding company for any such reduction suffered.




(c)           Certificates for
Reimbursement.  A certificate of the Lender setting forth in
reasonable detail the amount or amounts necessary to compensate the Lender or
its holding company, as the case may be, and how such amount or amounts were
determined as specified in paragraph (a) or (b) of this Section and delivered to
the Borrower shall be conclusive absent manifest error.  The Borrower
shall pay the Lender the amount shown as due on any such certificate within ten
(10) days after receipt thereof.




(d)           Requests.  Failure
or delay on the part of the Lender to demand compensation pursuant to this
Section shall not constitute a waiver of the Lender's right to demand such
compensation, provided that the
Borrower shall not be required to compensate the Lender pursuant to this Section
for any increased costs incurred or reductions suffered more than nine (9)
months prior to the date that the Lender notifies the Borrower of the Change in
Law giving rise to such increased costs or reductions and of the Lender's
intention to claim compensation therefor (except that, if the Change in Law
giving rise to such increased costs or reductions is retroactive, then the
nine-month period referred to above shall be extended to include the period of
retroactive effect thereof).




(e)           Survival.  The
obligations of the Borrower pursuant to this Section shall survive the
termination of this Agreement and the payment of the Loan and all other amounts
payable hereunder.


-27-


Section
2.10.   Taxes.




(a)           Payments Free of Taxes;
Obligation to Withhold; Payments on Account of Taxes.




(i)           Any
and all payments by or on account of any obligation of the Borrower hereunder or
under any other Loan Document shall to the extent permitted by applicable laws
be made free and clear of and without reduction or withholding for any
Taxes.  If, however, applicable laws require the Borrower or the
Lender to withhold or deduct any Tax, such Tax shall be withheld or deducted in
accordance with such laws as determined by the Borrower or the Lender, as the
case may be, upon the basis of the information and documentation to be delivered
pursuant to subsection (e) below.




(ii)           If
the Borrower or the Lender shall be required by the Code to withhold or deduct
any Taxes, including both United States Federal backup withholding and
withholding taxes, from any payment, then (A) the Lender shall withhold or make
such deductions as are determined by the Lender to be required based upon the
information and documentation it has received pursuant to subsection (e) below,
(B) the Lender shall timely pay the full amount withheld or deducted to the
relevant Governmental Authority in accordance with the Code, and (C) to the
extent that the withholding or deduction is made on account of Indemnified Taxes
or Other Taxes, the sum payable by the Borrower shall be increased as necessary
so that after any required withholding or the making of all required deductions
(including deductions applicable to additional sums payable under this Section)
the Lender receives an amount equal to the sum it would have received had no
such withholding or deduction been made.




(b)           Payment of Other Taxes by
the Borrower.  Without limiting the provisions of subsection
(a) above, the Borrower shall timely pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.




(c)           Tax
Indemnifications.




(i)           Without
limiting the provisions of subsection (a) or (b) above, the Borrower shall, and
does hereby indemnify the Lender and shall make payment in respect thereof
within 10 days after demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) withheld or
deducted by the Borrower or the Lender and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority.  A certificate as to
the amount of any such payment or liability delivered to the Borrower by the
Lender shall be conclusive absent manifest error.




(ii)           Without
limiting the provisions of subsection (a) or (b) above, the Lender shall, and
does hereby, indemnify the Borrower and shall make payment in respect thereof
within 10 days after demand therefor, against any and all Taxes and any and all
related losses, claims, liabilities, penalties, interest and expenses (including
the fees, charges and disbursements of any counsel for the Borrower incurred by
or asserted against the Borrower by any Governmental Authority as a result of
the failure by the Lender to deliver, or as a result of the inaccuracy,
inadequacy or deficiency of, any documentation required to be delivered by the
Lender to the Borrower to subsection (e).  The agreements in this
clause (ii) shall survive the termination of the Commitments and the repayment,
satisfaction or discharge of all other Obligations.


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(d)           Evidence of
Payments.  Upon request by the Borrower or the Lender, as the
case may be, after any payment of Taxes by the Borrower or the Lender to a
Governmental Authority as provided in this Section 2.10,
the Borrower shall deliver to the Lender or the Lender shall deliver to the
Borrower the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of any return required by
applicable law to report such payment or other evidence of such payment
reasonably satisfactory to the Borrower or the Lender, as the case may
be.




(e)           Status of Lender; Tax
Documentation.




(i)           The
Lender shall deliver to the Borrower at the time or times prescribed by
applicable laws or when reasonably requested by the Borrower such properly
completed and executed documentation prescribed by applicable laws or by the
taxing authorities of any jurisdiction and such other reasonably requested
information as will permit the Borrower, as the case may be, to determine (A)
whether or not payments made hereunder or under any other Loan Document are
subject to Taxes, (B) if applicable, the required rate of withholding or
deduction, and (C) the Lender's entitlement to any available exemption from, or
reduction of, applicable Taxes in respect of all payments to be made to the
Lender by the Borrower pursuant to this Agreement or otherwise to establish the
Lender's status for withholding tax purposes in the applicable
jurisdiction.




(ii)           Without
limiting the generality of the foregoing, if the Borrower is resident for tax
purposes in the United States, Lender shall deliver to the Borrower executed
originals of Internal Revenue Service Form W-9 or such other documentation or
information prescribed by applicable laws or reasonably requested by the
Borrower as will enable the Borrower, as the case may be, to determine whether
or not the Lender is subject to backup withholding or information reporting
requirements; and




(iii)           The
Lender shall promptly (A) notify the Borrower of any change in circumstances
which would modify or render invalid any claimed exemption or reduction, and (B)
take such steps as shall not be materially disadvantageous to it, in the
reasonable judgment of the Lender, and as may be reasonably necessary (including
the re-designation of its Lending Office) to avoid any requirement of applicable
laws of any jurisdiction that the Borrower make any withholding or deduction for
taxes from amounts payable to the Lender.




(f)           Treatment of Certain
Refunds.  If the Lender determines, in its sole discretion,
that it has received a refund of any Taxes or Other Taxes as to which it has
been indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section, it shall pay to the Borrower an
amount equal to such refund (but only to the extent of indemnity payments made,
or additional amounts paid, by the Borrower under this Section with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses incurred by the Lender and without interest (other than any interest
paid by the relevant Governmental Authority with respect to such refund), provided that the
Borrower, upon the request of the Lender, agrees to repay the amount paid over
to the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Lender in the event the Lender is
required to repay such refund to such Governmental Authority.  This
subsection shall not be construed to require the Lender to make available its
tax returns (or any other information relating to its taxes that it deems
confidential) to the Borrower or any other Person.


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(g)           Survival.  The
agreements in this Section 2.10 shall
survive the termination of this Agreement and the payment of the Loan and all
other amounts payable hereunder.




Section
2.11.   Use of
Proceeds.  The proceeds of the Loan shall be used to finance a
portion of the Acquisition, to repay certain Indebtedness of the Borrower
outstanding on the Closing Date, to pay related transaction fees and expenses,
and for other general corporate purposes.




Section
2.12.   Evidence of
Debt.




(a)           The
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing indebtedness of the Borrower to the Lender resulting from
the Loan from time to time, including the amounts of principal and interest
payable and paid to the Lender from time to time under this
Agreement.




(b)           The
entries made in the account of the Lender maintained pursuant hereto shall, to
the extent permitted by applicable law, be prima facie evidence of the existence
and amounts of the obligations of the Borrower therein recorded, provided, however, that the
failure of the Lender to maintain such account, or any error therein, shall not
in any manner affect the obligation of the Borrower to repay (with applicable
interest) the Loan in accordance with the terms of this Agreement.




(c)           The
Borrower agrees that, upon the request by the Lender, the Borrower will execute
and deliver to the Lender, a promissory note of the Borrower evidencing the Loan
substantially in the form of Exhibit D with
appropriate insertions as to date and principal amount (the "Term
Note").  The Lender is hereby authorized to record the
Borrowing Date, the amount of the Loan and the date and amount of each payment
or prepayment of principal thereof, on the schedule annexed to and constituting
a part of the Term Note and any such recordation shall constitute prima facie
evidence of the accuracy of the information so recorded, provided that the
failure by the Lender to make any such recordation (or any error therein) shall
not affect any of the obligations of the Borrower under the Term Note or this
Agreement.




Section
2.13.   Mitigation
Obligations.  If the Lender requests compensation under Section 2.09, or
requires the Borrower to pay any additional amount to the Lender or any
Governmental Authority for the account of the Lender pursuant to Section 2.10, then
the Lender shall use reasonable efforts to designate a different Lending Office
for funding or booking the Loan hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of the Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to Section 2.09 or 2.10, as the case may
be, in the future and (ii) would not subject the Lender to any unreimbursed cost
or expense and would not otherwise be disadvantageous to the
Lender.  The Borrower hereby agrees to pay all reasonable costs and
expenses incurred by the Lender in connection with any such designation or
assignment.


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ARTICLE
III





CONDITIONS
PRECEDENT




Section
3.01.   Conditions to Making the
Loan.  The agreement of the Lender to make the Loan is subject
to the satisfaction, prior to or concurrently with the making of the Loan on the
Closing Date, of the following conditions precedent:




(a)           Credit Agreement; Other Loan
Documents.  The Lender shall have received the following, each
of which shall be originals or, at the discretion of the Lender, telecopies
(followed promptly by originals) unless otherwise specified, each properly
executed by a Responsible Officer of the signing Loan Party, and each in form
and substance satisfactory to the Lender:




(i)           this
Agreement, duly executed and delivered by the Lender and the
Borrower;




(ii)          the
Term Note, duly executed and delivered by a duly authorized officer of the
Borrower;




(iii)         the
Guarantee and Security Agreement, duly executed and delivered by each Loan
Party;




(iv)         each
Control Agreement required by Section 5.01 of the Guarantee and Security
Agreement, duly executed by the Lender, the applicable Loan Parties, and the
applicable depository institutions, commodity intermediaries and securities
intermediaries, which is required to be delivered by any Loan Party on or prior
to the Closing Date pursuant to the Guarantee and Security
Agreement;




(v)          each
Acknowledgment and Consent, in the form attached to the Guarantee and Security
Agreement, duly executed and delivered by each Issuer (as defined therein), if
any, that is not a Loan Party, which is required to be delivered by any Loan
Party on or prior to the Closing Date pursuant to the Guarantee and Security
Agreement;




(vi)         executed
copies of the Assigned Agreements referred to in the Guarantee and Security
Agreement, together with each Consent and Agreement relating thereto and the SMH
SPEADV Assignments, duly executed and delivered by each party thereto;
and




(vii)        the
Edelman Subordination Agreement, duly executed and delivered by the Borrower and
Fredric M. Edelman, an individual; and




(viii)       the
SMHG - Salient Intercreditor Agreement Form.




(b)           Acquisition,
Etc.  The Lender shall be satisfied that the following
transactions shall have been consummated, in each case on terms and conditions
satisfactory to the Lender:


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(i)           The
Borrower shall have purchased (A) from Fredric M. Edelman, an individual, 58% of
the limited liability company membership interests of Edelman Financial
Advisors, LLC, and (B) from Edward Moore, an individual, 8% of the limited
liability company membership interests of Edelman Financial Advisors, LLC
pursuant to the Acquisition Documents (such purchase transactions, collectively,
the "Acquisition");




(ii)          the
aggregate purchase price for the limited liability company membership interests
of Edelman Financial Advisors, LLC to be purchased by the Borrower pursuant to
the Acquisition shall not exceed $35,500,000;




(iii)         the
aggregate Indebtedness for Borrowed Money of the Borrower and its Subsidiaries
on the Closing Date, after giving effect to the Acquisition, shall not exceed
$37,000,000;




(iv)         immediately
following the consummation of the Acquisition, the Borrower shall own 76% of the
limited liability company membership interests of each of (A) The Edelman
Financial Center, LLC (the "EFC LLC Interests")
and (B) Edelman Financial Advisors, LLC (the "EFA LLC Interests");
and




(v)          the
Lender shall (A) have received satisfactory evidence that the Existing Credit
Facility shall have been terminated and all amounts thereunder shall have been
paid in full and (B) be satisfied that acceptable satisfactory arrangements
shall have been made for the termination of all letters of credit issued by any
Person for the account of the Borrower or any of its Subsidiaries (other than
the Permitted Letters of Credit) and the termination of all Liens granted in
connection with the Existing Credit Facility and any such letters of credit
(other than Liens securing reimbursement obligations arising from Permitted
Letters of Credit).




(c)           Closing Certificates,
Etc.  The Lender shall have received from each Loan Party, as
applicable, (i) a copy of a long form good standing certificate, dated a date
reasonably close to the Closing Date, for each such Person and (ii) a Closing
Certificate for each such Person substantially in the form of Exhibit B, with
appropriate insertions and attachments, dated the Closing Date duly executed and
delivered by such Person's Secretary or Assistant Secretary, other Responsible
Officer, managing member or general partner, as applicable, as to:




(i)           resolutions
of each such Person's Board of Directors (or general partner, manager or
managers, other managing body, in the case of an entity other than a
corporation) then in full force and effect authorizing, to the extent relevant,
all aspects of the Acquisition applicable to such Person and the execution,
delivery and performance of each Loan Document to be executed by such Person and
the transactions contemplated hereby and thereby;




(ii)          the
incumbency and signatures of such Person's officers, managing member or general
partner, as applicable, authorized to act with respect to each Loan Document to
be executed by such Person;




(iii)         the
full force and validity of each Organizational Document of such Person and
copies thereof; and




(iv)         the
other matters specified therein;


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upon
which certificates the Lender may conclusively rely until they shall have
received a further certificate of the Secretary, Assistant Secretary, other
Responsible Officer, managing member or general partner, as applicable, of any
such Person canceling or amending the prior certificate of such
Person.




(d)           Pro Forma Balance Sheet;
Financial Statements.  The Lender shall have received (i) if
requested by the Lender, the Pro Forma Balance Sheet, (ii) audited consolidated
and consolidating financial statements of the Borrower and its Subsidiaries for
the 2006, 2007 and 2008 Fiscal Years and unaudited interim consolidated and
consolidating financial statements of the Borrower and its Subsidiaries for each
fiscal month and quarterly period ended subsequent to the date of the latest
applicable financial statements delivered pursuant to clause (ii) of this
paragraph as to which such financial statements are available, and such
financial statements shall not, in the reasonable judgment of the Lender,
reflect any material adverse change in the consolidated financial condition of
the Borrower and its Subsidiaries.




(e)           Approvals.  All
governmental and third-party approvals (including landlords' and other consents)
necessary in connection with the Acquisition, the continuing operations of the
Borrower and its Subsidiaries and the transactions contemplated hereby shall
have been obtained and be in full force and effect, and all applicable waiting
periods shall have expired without any action being taken or threatened by any
competent authority that would restrain, prevent or otherwise impose adverse
conditions on the Acquisition or the Loan contemplated hereby.  There
shall not exist any order, decree, judgment, ruling or injunction which
restrains the consummation of the transactions contemplated by the Loan
Documents or the Acquisition Documents.




(f)           Lien
Searches.  The Lender shall have received the results of recent
Lien searches by a Person satisfactory to the Lender, of the Uniform Commercial
Code, Intellectual Property, judgment and tax lien filings that may have been
filed with respect to personal property of the Loan Parties, and the results of
such searches shall be satisfactory in form and substance to the
Lender.




(g)           Fees and
Expenses.  The Lender shall have received payment in full of
the Commitment Fee (as defined in the Commitment Letter), and all fees, costs
and expenses for which invoices have been presented (including, without
limitation, all fees, costs and expenses of legal counsel to the Lender), on or
before the Closing Date.  All such amounts will be paid with proceeds
of the Loan made on the Closing Date and will be reflected in the funding
instructions given by the Borrower to the Lender on or before the Closing
Date.




(h)           Legal
Opinion.  The Lender shall have received the legal opinion of
John T. Unger, general counsel of the Borrower and its Subsidiaries,
substantially in the form of Exhibit
E.




(i)           Pledged Equity Interests;
Pledged Notes.  The Lender shall have received (i) the
certificates representing each of the EFC LLC Interests, the EFA LLC Interests,
the SMH SPEADV LLC Interests, and each of the other Pledged Equity Interests
required to be delivered by a Loan Party to the Lender on or prior to the
Closing Date pursuant to the Guarantee and Security Agreement, in each case
together with an undated stock power for each such certificate executed in blank
by a duly authorized officer of the pledgor thereof, and (ii) the original
executed Salient Note and each of the other Pledged Notes required to be
delivered by any Loan Party to the Lender on or prior to the Closing Date
pursuant to the Guarantee and Security Agreement, in each case endorsed (without
recourse to the Lender) in blank (or accompanied by an executed transfer form in
blank) by the pledgor thereof.


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(j)           Actions to Perfect
Liens.  The Lender shall have received evidence satisfactory to
it that all filings, recordings, registrations, and other actions necessary, or
in the opinion of the Lender, desirable to perfect and protect the Liens created
by the Security Documents shall have been completed (including, without
limitation, the filing of financing statements on form UCC-1, and receipt by the
Lender of duly executed payoff letters, UCC-3 termination statements (or
authorizations to terminate financing statements).




(k)           Solvency
Certificate.  The Lender shall have received a Solvency
Certificate, in substantially the form of Exhibit F, executed
by the chief financial officer of the Borrower.




(l)           Insurance.  The
Lender shall have received insurance certificates and endorsements satisfying
the requirements of Section 5.02(b) of
the Guarantee and Security Agreement.




(m)           Related
Agreements.  The Lender shall have received true and correct
executed copies, certified as to authenticity by the Borrower, of the
Acquisition Documents, the Assigned Agreements, each Material Contract then in
effect and such other documents or instruments as may be requested by the
Lender, including a copy of each employment agreement, non-competition agreement
and other agreement with each officer of any Loan Party.




(n)           Capitalization; Legal
Structure.  The Lender shall be satisfied with the corporate
(or other organizational) and legal structure and capitalization of each Loan
Party and each of its Subsidiaries, including the terms and conditions of their
Organizational Documents and each class of Equity Interests in each Loan Party
and each such Subsidiary and of each agreement or instrument relating to such
structure or capitalization.




(o)           FOCUS
Reports.  The Lender shall have received copies of the FOCUS
Reports referred to in Section 4.01.




(p)           Business
Plan.  If Lender has so requested, the Lender shall have
received a business plan for the Borrower and its Subsidiaries for the Fiscal
Year ending on December 31, 2009, which business plan shall be satisfactory
in form and substance to the Lender.




(q)           Operating
Accounts.  The Borrower shall have established its primary
operating accounts with the Lender pursuant to one or more Cash Management
Agreements (each, an "SMHG Operating
Account").




(r)           Representations and
Warranties.  Each of the representations and warranties of the
Loan Parties contained in the Loan Documents shall be true and correct on and as
of such date, before and after giving effect to the Loan and application of the
proceeds therefrom, as if made on and as of such date (except to the extent that
such representations and warranties specifically refer to an earlier date, in
which case, they shall be true and correct as of such earlier
date).


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(s)           No
Default.  No Default or Event of Default shall have occurred
and be continuing on such date or would result from the Loan or the application
of the proceeds therefrom.




(t)           Additional
Matters.  All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement, the other Loan Documents, the
Assigned Agreements, the Clearing Agreements and the Acquisition Documents shall
be satisfactory in form and substance to the Lender, and the Lender shall have
received such other documents and legal opinions in respect of any aspect or
consequence of the transactions contemplated hereby or thereby as it shall
reasonably request.




ARTICLE
IV




REPRESENTATIONS
AND WARRANTIES




To induce
the Lender to enter into this Agreement and to make the Loan, the Borrower
hereby represents and warrants to the Lender that:




Section
4.01.   Financial
Condition.




(a)           If
required by the Lender, the unaudited pro forma consolidated and consolidating
balance sheets of the Borrower and its consolidated Subsidiaries as at the
Closing Date (including the notes thereto) (the "Pro Forma Balance
Sheet") has been prepared giving effect (as if such events had occurred
on such date) to (i) the consummation of the Acquisition, (ii) the Loan to be
made and the Subordinated Note to be issued on the Closing Date and the use of
proceeds thereof and (iii) the payment of fees and expenses in connection with
the foregoing.  If furnished to the Lender, the Pro Forma Balance
Sheet has been prepared based on the best information available to the Borrower
as of the date of delivery thereof, and presents fairly on a pro forma basis the
estimated financial position of Borrower and its consolidated Subsidiaries as at
the Closing Date, assuming that the events specified in the preceding sentence
had actually occurred at such date.




(b)           The
audited consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as at December 31, 2006, December 31, 2007 and
December 31, 2008, and the related consolidated and consolidating
statements of income, changes in shareholders' equity, and of cash flows for the
Fiscal Years ended on such dates, reported on by and accompanied by an
unqualified report from KPMG LLP (or, with the written approval of the Lender,
other independent certified public accountants of nationally recognized
standing), present fairly on a consolidated and consolidating basis the
financial condition of the Borrower as at such date, and on a consolidated and
consolidating basis the results of its operations and its cash flows for the
respective Fiscal Years then ended.  All such financial statements,
including the related schedules and notes thereto, have been prepared in
accordance with GAAP applied consistently throughout the periods involved
(except as approved by the aforementioned firm of accountants and disclosed
therein).  No Group Member has any material Guarantee Obligations,
contingent liabilities or liabilities for taxes, or any long-term leases or
unusual forward or long-term commitments, or any Swap Contracts or other similar
obligations, in each case that are not reflected in the most recent financial
statements referred to in this paragraph.  During the period from
December 31, 2008 to and including the date hereof, other than the Capital
Markets Division Disposition and the Concept Capital Division Disposition, there
has been no Disposition by any Group Member of any material part of its business
or property.  The Borrower has also provided the Lender the quarterly
FOCUS Reports provided by SMH Capital Inc. to the SEC during 2008 (the "Specified FOCUS
Reports").  The Specified FOCUS Reports are correct and
complete in all material respects and conform in all material respects to
Exchange Act requirements and applicable SEC rules and
regulations.


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Section
4.02.   No
Change.  Since December 31, 2008 there has been no development
or event that has had or could reasonably be expected to have a Material Adverse
Effect.




Section
4.03.   Corporate Existence;
Compliance with Law.  Each Group Member (a) is duly
incorporated or organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or other organization, (b) has the
corporate or other organizational power and authority, and the legal right, to
own and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, (c) is duly qualified as
a foreign corporation or other entity and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification, (d) possesses all licenses,
registrations and authorizations from and with any Governmental Authority
necessary or material to the conduct of its business as now or presently
proposed to be conducted, (e) is in compliance, and after entering into this
Agreement will be in compliance, with all Requirements of Law except to the
extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect, (f) is not in arrears
in regard to any assessment made upon it by the SIPC or any other applicable
Governmental Authority, and (g) has not received any notice from the SEC, FINRA,
MSRB, CFTC or any other Governmental Authority of any alleged rule violation or
other circumstance which could reasonably be expected to have a Material Adverse
Effect.




Section
4.04.   Corporate Power;
Authorization; Enforceable Obligations.  Each Loan Party has
the corporate or other organizational power and authority, and the legal right,
to make, deliver and perform the Loan Documents to which it is a party and, in
the case of the Borrower, to obtain the Loan hereunder.  Each Loan
Party has taken all necessary organizational action to authorize the execution,
delivery and performance of the Loan Documents and the Acquisition Documents to
which it is a party and, in the case of the Borrower, to authorize the Loan on
the terms and conditions of this Agreement and to authorize the transactions and
payments contemplated for the Acquisition.  No consent or
authorization of, filing with, notice to or other act by or in respect of, any
Governmental Authority or any other Person is required in connection with the
Acquisition or the Loan or with the execution, delivery, performance, validity
or enforceability of this Agreement or any of the Loan Documents, except (i)
consents, authorizations, filings and notices described in Schedule 4.04, which
consents, authorizations, filings and notices have been obtained or made and are
in full force and effect and (ii) the filings referred to in Section
4.18.  Each Loan Document has been duly executed and delivered
on behalf of each Loan Party thereto.  This Agreement constitutes, and
each other Loan Document upon execution will constitute, a legal, valid and
binding obligation of each Loan Party thereto, enforceable against each such
Loan Party in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).


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Section
4.05.   No Legal
Bar.  The execution, delivery and performance of this Agreement
and the other Loan Documents, the making of the Loan hereunder and the use of
the proceeds thereof will not violate, conflict with or create a default under
any Requirement of Law or any Contractual Obligation of any Group Member and
will not result in, or require, the creation or imposition of any Lien on any of
their respective properties or revenues pursuant to any Requirement of Law or
any such Contractual Obligation (other than the Liens created by the Security
Documents).  No Requirement of Law or Contractual Obligation
applicable to the Borrower or any of its Subsidiaries could reasonably be
expected to have a Material Adverse Effect.  The Acquisition and the
Acquisition Documents comply with all applicable Requirements of
Law.




Section
4.06.   Litigation.  No
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against any Group Member or against any of their respective
properties or revenues (a) with respect to any of the Loan Documents, the
Acquisition Documents or the Assigned Agreements or any of the transactions
contemplated hereby or thereby, or (b) that could reasonably be expected to have
a Material Adverse Effect.




Section
4.07.   No
Default.  No Group Member is in default under or with respect
to any of its Contractual Obligations in any respect that could reasonably be
expected to have a Material Adverse Effect.  No Default or Event of
Default has occurred and is continuing.




Section
4.08.   Ownership of Property;
Liens.  Each Group Member has title in fee simple to, or a
valid leasehold interest in, all its real property, and good title to, or a
valid leasehold interest in, all its other property, and none of such property
is subject to any Lien except as permitted by Section
6.03.




Section
4.09.   Intellectual
Property.  Each Group Member owns, or is licensed to use, all
Intellectual Property necessary for the conduct of its business as currently
conducted.  No claim has been asserted and is pending by any Person
challenging or questioning the use of any Intellectual Property or the validity
or effectiveness of any Intellectual Property, nor does the Borrower know of any
valid basis for any such claim.  The use of Intellectual Property by
each Group Member does not infringe on the rights of any Person in any material
respect.




Section
4.10.   Taxes.  Each
Group Member has filed or caused to be filed all Federal, state and other Tax
returns that are required to be filed and has paid all Taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other Taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any the amount or validity of
which are currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided on the
books of the relevant Group Member).  No Tax Lien has been filed, and,
to the knowledge of the Borrower, no claim is being asserted, with respect to
any such Tax, fee or other charge.  No Group Member is a party to any
Tax sharing or Tax allocation agreement.


-37-


Section
4.11.   Labor
Matters.  Except as, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect:  (a) there are no strikes
or other labor disputes against any Group Member  pending or, to the
knowledge of the Borrower, threatened; (b) hours worked by and payment made to
employees of each Group Member have not been in violation of the Fair Labor
Standards Act or any other applicable Requirement of Law dealing with such
matters; and (c) all payments due from any Group Member on account of employee
health and welfare insurance have been paid or accrued as a liability on the
books of the relevant Group Member.




Section
4.12.   ERISA.




(a)           Neither
a Reportable Event nor an "accumulated funding deficiency" (within the meaning
of Section 412 of the Code or Section 302 of ERISA) has occurred during the
five-year period prior to the date on which this representation is made or
deemed made with respect to any Plan, and each Plan has complied in all material
respects with the applicable provisions of ERISA and the Code.




(b)           No
termination of a Single Employer Plan has occurred, and no Lien in favor of the
PBGC or a Plan has arisen, during such five-year period.




(c)           The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by more than $250,000 in the aggregate as to all such
Plans.




(d)           Neither
the Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan that has resulted or could reasonably be
expected to result in a material liability under ERISA, and neither the Borrower
nor any Commonly Controlled Entity would become subject to any material
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made.  No such Multiemployer Plan is in Reorganization or
Insolvent.




Section
4.13.   Investment Company Act;
Investment Advisers Act; Other Regulations.




(a)           No
Loan Party is an "investment company," or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of
1940.




(b)           No
Loan Party is an "investment adviser" under the Investment Advisers Act of 1940,
except as set forth in Schedule
4.13.  Each Loan Party set forth on Schedule 4.13 is duly
registered as an "investment adviser" under the Investment Advisers Act of
1940.




(c)           No
Loan Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) that limits its ability to incur
Indebtedness.


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Section
4.14.   Federal Reserve
Regulations.  Neither the making of the Loan hereunder nor the
use of any of the proceeds thereof will violate or be inconsistent with the
provisions of Regulation T, Regulation U, or
Regulation X.  Following the application of the proceeds of the
Loan, less than 25% of the value of the assets of the Borrower and its
Subsidiaries which are subject to any limitation on sale, pledge or other
restriction hereunder taken as a whole have been, and will continue to be,
represented by Margin Stock.  If requested by the Lender, the Borrower
will furnish to the Lender a statement to the foregoing effect in conformity
with the requirements of FR Form G-3 or FR Form U-1, as applicable, referred to
in Regulation U.




Section
4.15.   Subsidiaries.  Except
as disclosed to the Lender by the Borrower in writing from time to time after
the Closing Date, (a) Schedule 4.15 sets
forth the name and jurisdiction of incorporation of each Subsidiary and, as to
each such Subsidiary, the percentage of each class of Equity Interests owned by
any Loan Party and (b) there are no outstanding subscriptions, options,
warrants, calls, rights or other agreements or commitments (other than stock or
similar options granted to employees or directors and directors' qualifying
shares) of any nature relating to any Equity Interests of the Borrower or any
Subsidiary.  All of the outstanding shares of capital stock and other
Equity Interests of each Subsidiary are validly issued and outstanding and fully
paid and nonassessable, and all such shares and other Equity Interests owned by
the Borrower or a Subsidiary are owned, beneficially and of record, by the
Borrower or such Subsidiary free and clear of all Liens.




Section
4.16.   Environmental
Matters.  Except as, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect:




(a)           the
facilities and properties owned, leased or operated by any Group Member (the
"Properties")
do not contain, and have not previously contained, any Hazardous Materials in
amounts or concentrations or under circumstances that constitute or constituted
a violation of any Environmental Law or could give rise to any Environmental
Liability;




(b)           no
Group Member has received or is aware of any notice of violation, alleged
violation, non-compliance, Environmental Liability or potential Environmental
Liability or compliance with Environmental Laws with regard to any of the
Properties or the business operated by any Group Member (the "Business"), nor does
the Borrower have knowledge or reason to believe that any such notice will be
received or is being threatened;




(c)           Hazardous
Materials have not been transported or disposed of from the Properties in
violation of any Environmental Law, or in a manner or to a location that could
give rise to any Environmental Liability, nor have any Hazardous Materials been
generated, treated, stored or disposed of at, on or under any of the Properties
in violation of, or in a manner that could give rise to any Environmental
Liability;




(d)           no
judicial proceeding or governmental or administrative action is pending or, to
the knowledge of the Borrower, threatened, under any Environmental Law to which
any Group Member is or will be named as a party with respect to the Properties
or the Business, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect to
the Properties or the Business;


-39-


(e)           there
has been no release or threat of release of Hazardous Materials at or from the
Properties, or arising from or related to the operations of any Group Member in
connection with the Properties or otherwise in connection with the Business, in
violation of or in amounts or in a manner that could give rise to any
Environmental Liability;




(f)           the
Properties and all operations at the Properties are in compliance, and have in
the last five years been in compliance, with all applicable Environmental Laws,
and there is no contamination at, under or about the Properties or violation of
any Environmental Law with respect to the Properties or the Business;
and




(g)           no
Group Member has assumed any Environmental Liability of any other
Person.




Section
4.17.   Accuracy of Information,
Etc.  No statement or information contained in this Agreement,
any other Loan Document, any Assigned Agreement, or any Acquisition Document or
any other document, report, certificate or statement furnished by or on behalf
of the Borrower or any Subsidiary to the Lender, or any of them, in connection
with the transactions contemplated by this Agreement, any other Loan Document,
any Assigned Agreement, or any Acquisition Document contained as of the date
such statement, information, document or certificate was so furnished, any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements contained herein or therein not
misleading.  The projections and pro forma financial information
contained in the materials referenced above are based upon good faith estimates
and assumptions believed by management of the Borrower to be reasonable at the
time made, it being recognized by the Lender that such financial information as
it relates to future events is not to be viewed as fact and that actual results
during the period or periods covered by such financial information may differ
from the projected results set forth therein by a material amount.  As
of the date hereof, all of the representations and warranties of the Borrower or
any Subsidiary contained in the Acquisition Documents and the Assigned
Agreements are true and correct in all material respects.  There is no
fact known to the Borrower or any Subsidiary that could reasonably be expected
to have a Material Adverse Effect that has not been expressly disclosed herein,
in any other Loan Document, in any Assigned Agreement, in any Acquisition
Document or in any other documents, certificates and statements furnished to the
Lender for use in connection with the transactions contemplated hereby and by
the other Loan Documents.




Section
4.18.   Security
Documents.  The Guarantee and Security Agreement is effective
to create in favor of the Lender a legal, valid and enforceable security
interest in all of the Collateral described therein and proceeds
thereof.  In the case of the Pledged Equity Interests and the Pledged
Notes described in the Guarantee and Security Agreement, when certificates
representing such Pledged Equity Interests and when such Pledged Notes are
delivered to the Lender, and in the case of the other Collateral described in
the Guarantee and Security Agreement, when financing statements and other
filings specified on Schedule 4.18 in
appropriate form are filed in the offices specified on Schedule 4.18, the
Guarantee and Security Agreement shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in and
to all such Collateral and the proceeds thereof, as security for the
Obligations, in each case prior and superior in right to any other Person
(except, in the case of Collateral other than Pledged Equity Interests and
Pledged Notes, Liens permitted by Section
6.03).


-40-


Section
4.19.   Solvency.  Each
Loan Party is, and after giving effect to the Acquisition and the incurrence of
all Indebtedness and obligations being incurred in connection herewith and
therewith will be and will continue to be, Solvent.




Section
4.20.   Certain
Documents.  The Borrower has delivered to the Lender complete
and correct copies of the Acquisition Documents and the Assigned Agreements,
including any amendments, supplements or modifications with respect to any of
the foregoing.




Section
4.21.   Material
Contracts.  Schedule 4.21 sets
forth as of the Closing Date a complete and accurate list of all Material
Contracts of each Group Member, showing the parties, subject matter and term
thereof.  Each such Material Contract has been duly authorized,
executed and delivered by all of the parties thereto, has not been amended,
supplemented or otherwise modified, is in full force and effect and is binding
upon and enforceable against all parties thereto in accordance with its terms,
and there exists no default under any Material Contract by any party
thereto.




Section
4.22.   Insurance.  Schedule 4.22 sets
forth as of the Closing Date a complete and accurate list of all policies of
insurance maintained by each Group Member, showing with respect to each such
policy the type of insurance, the coverage amount, the carrier, and the duration
of coverage.  All premiums with respect to such policies of insurance
have been fully paid.




Section
4.23.   Foreign Assets Control
Regulations, Etc.




(a)           Neither
the making of the Loan hereunder nor the use of the proceeds thereof will
violate the Trading with the Enemy Act, as amended, or any of the foreign assets
control regulations of the United States Treasury Department (31 CFR, subtitle
B, Chapter V, as amended) or any enabling legislation or executive order
relating thereto.




(b)           No
Group Member (i) is a Person described or designated in the Specially Designated
Nationals and Blocked Persons List of the Office of Foreign Assets Control or in
Section 1 of the Anti-Terrorism Order or (ii) engages in any dealings or
transactions with any such Person.  Each Group Member is in compliance
with the USA PATRIOT Act.




(c)           No
part of the proceeds from the Loan will be used, directly or indirectly, for any
payments to any governmental official or employee, political party, official of
a political party, candidate for political office, or anyone else acting in an
official capacity, in order to obtain, retain or direct business or obtain any
improper advantage, in violation of the United States Foreign Corrupt Practices
Act of 1977, as amended, assuming in all cases that such Act applies to the
Borrower.




Section
4.24.   Net
Capital.




(a)           SMH
Capital Inc. is operating pursuant to the Aggregate Indebtedness requirements
provided in paragraph (a)(1) of Rule 15c3-1;


-41-




(b)           SMH
Capital Inc. is not in arrears with respect to any assessment made upon it by
the SIPC, except for any such assessment being contested in good faith and by
appropriate proceedings; and




(c)           No
Loan Party is subject to regulation under Rule 8c-1, Rule 15c2-1, Rule 15c3-1 or
Rule 15c3-3, other than SMH Capital Inc.




Section
4.25.   Loan Party
Accounts.  No Loan Party has established or is maintaining, for
its own account, any deposit account, securities account or commodity account
with any other Person, other than (i) the SMHG Operating Accounts, (ii) the
Clearing Accounts in effect on the date hereof, (iii) the L/C Collateral Account
in effect on the date hereof, and (iv) the deposit accounts described on Schedule 4.25 as in
effect on the date hereof (such scheduled accounts being referred to herein
collectively as the "Existing
Accounts").




ARTICLE
V




AFFIRMATIVE
COVENANTS




The
Borrower hereby agrees that, so long as any of the Obligations remain
outstanding or any Loan Document remains in effect, the Borrower shall and shall
cause each of its Subsidiaries to:




Section
5.01.   Financial
Statements.  Furnish to the Lender:




(a)           as
soon as available, but in any event within ninety (90) days after the end of
each Fiscal Year of the Borrower, a copy of the audited consolidated and
consolidating balance sheet of the Borrower and its consolidated Subsidiaries as
at the end of such year and the related audited consolidated and consolidating
statements of income, changes in shareholders' equity, and of cash flows for
such year, setting forth in each case in comparative form the figures for the
previous year, reported on without a "going concern" or like qualification or
exception, or qualification arising out of the scope of the audit, by KPMG LLP
or other independent certified public accountants of nationally recognized
standing; and




(b)           as
soon as available, but in any event not later than fifty (50) days after the end
of each of the first three quarterly periods of each Fiscal Year of the
Borrower, the unaudited consolidated and consolidating balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter and the
related unaudited consolidated and consolidating statements of income, changes
in shareholders' equity, and of cash flows for such quarter and the portion of
the Fiscal Year through the end of such quarter, setting forth in each case in
comparative form the figures for the previous year, certified by a Responsible
Officer of the Borrower as being fairly stated in all material respects (subject
to normal year-end audit adjustments and the absence of footnotes).




All such
financial statements shall be complete and correct in all material respects and
shall be prepared in reasonable detail and in accordance with GAAP applied
(except as approved by such accountants or officer, as the case may be, and
disclosed in reasonable detail therein) consistently throughout the periods
reflected therein and with prior periods.


-42-




Section
5.02.   Certificates; Other
Information.  Furnish to the Lender:




(a)           concurrently
with the delivery of the financial statements referred to in Section 5.01(a),
(i) a certificate of the independent certified public accountants reporting on
such financial statements stating that (A) in making the examination necessary
therefor no knowledge was obtained of any Default or Event of Default, except as
specified in such certificate, and (B) the Compliance Certificate delivered
concurrently with such financial statements is true and correct in all respects,
(ii) a certificate, executed by an authorized officer of an independent third
party reasonably acceptable to the Lender, stating the assets under management
of each of The Edelman Financial Center, LLC, and Edelman Financial Advisors,
LLC, and (iii) either a certificate, executed by an authorized officer of an
independent third party reasonably acceptable to the Lender, stating the assets
under management of The Endowment Master Fund, L.P. or a copy of the form N-CSR
Certified Shareholder Report filed by the Endowment Master Fund, L.P. with the
SEC;




(b)           concurrently
with the delivery of any financial statements pursuant to Section 5.01, a
Compliance Certificate executed by a Responsible Officer of the Borrower (x)
stating that, to the best of such Responsible Officer's knowledge, each Loan
Party during such period has observed or performed all of its covenants and
other agreements, and satisfied every condition, contained in this Agreement and
the other Loan Documents to which it is a party to be observed, performed or
satisfied by it, and that such Responsible Officer has obtained no knowledge of
any Default or Event of Default except as specified in such certificate, and (y)
containing all information and calculations necessary for determining compliance
with the financial covenants and other provisions of this Agreement specified by
the Lender referred to therein as of the last day of the Fiscal Quarter or
Fiscal Year of the Borrower, as the case may be;




(c)           as
soon as available, and in any event no later than forty-five (45) days after the
end of each Fiscal Year of the Borrower, a detailed consolidated budget for the
following Fiscal Year (including the projected consolidated and consolidating
balance sheet of the Borrower and its Subsidiaries as of the end of the
following Fiscal Year, the related consolidated and consolidating statements of
projected cash flow, projected changes in financial position and projected
income and a description of the underlying assumptions applicable thereto), and,
as soon as available, significant revisions, if any, of such budget and
projections with respect to such Fiscal Year (collectively, the "Projections"), which
Projections shall in each case be accompanied by a certificate of a Responsible
Officer stating that such Projections are based on reasonable estimates,
information and assumptions and that such Responsible Officer has no reason to
believe that such Projections are incorrect or misleading in any material
respect;




(d)           within
forty-five (45) days after the end of each of the first three Fiscal Quarters of
each Fiscal Year and ninety (90) days after the end of the fourth Fiscal Quarter
of each Fiscal Year of the Borrower, a narrative discussion and analysis of the
financial condition and results of operations of the Borrower and its
Subsidiaries for such Fiscal Quarter and for the period from the beginning of
the then current Fiscal Year to the end of such Fiscal Quarter, as compared to
the portion of the Projections covering such periods and to the comparable
periods of the previous year;


-43-




(e)           no
later than ten (10) Business Days prior to the effectiveness thereof, copies of
substantially final drafts of any proposed amendment, supplement, waiver or
other modification under or pursuant to any Acquisition Document or any Assigned
Agreement;




(f)           within
five (5) days after the same are sent, copies of all financial statements and
reports that any Group Member sends to any holder of any of its debt securities
or public equity securities and, within five days after the same are filed,
copies of all financial statements and reports that the Borrower or any other
Loan Party may make to, or file with, the SEC;




(g)           no
later than twenty (20) days prior to the closing of any Asset Sale, a notice (i)
describing such Asset Sale and the material terms thereof, and (ii) stating the
estimated Net Cash Proceeds anticipated to be received by the Group Members from
such Asset Sale;




(h)           promptly,
copies of all federal, state, local and foreign Tax returns and reports filed by
each Group Member in respect of Taxes measured by income (excluding sales, use
and like Taxes);




(i)           as
soon as available and in any event within ninety (90) days after the end of each
Fiscal Year of the Borrower, (i) a report in form and substance satisfactory to
the Lender outlining all insurance coverage maintained as of the date of such
report by the Group Members (specifying the type, amount, deductibles and
carrier) and the duration of such coverage, and (ii) an insurance broker's
statement that all premiums then due and payable with respect to such coverage
have been paid and confirming compliance by the Group Members with
Section 5.02(a) of the Guarantee and Security Agreement;




(j)           as
soon as available and in any event within five (5) Business Days after the
receipt thereof, copies of any "management letter" or similar letter or report
received by the Borrower from its independent public accountants;




(k)           as
soon as available and in any event within twenty-five (25) days after the end of
each Fiscal Quarter of the Borrower, the FOCUS Reports for such Fiscal Quarter
filed by each applicable Loan Party with the SEC;




(l)           as
soon as available and in any event within forty-five (45) days after the end of
each Fiscal Quarter of the Borrower, a report from the Borrower's general
counsel showing all litigation to which the Borrower or any of its Subsidiaries
is a party;




(m)           as
soon as available and in any event within five (5) Business Days after the end
of each calendar month, (i) a report describing the Consolidated Short Sales
Exposure, the Concept Capital Short Sales Exposure, the Consolidated Short Sales
Amount, and Available Cash and Cash Equivalents in each case as of the last
Business Day of such calendar month, and all Clearing Agreements in effect as of
the last Business Day of such calendar month, (ii) a report describing any
claims made or reasonably expected to be made by any Person, directly or
indirectly, against the Borrower or any other Group Member from, as a result of
or in connection with (A) any short sale transaction or (B) any other claim,
liability or obligation under any Clearing Agreement (including any Concept
Capital Obligation), (iii) a report describing in reasonable detail all
outstanding Swap Contracts and securities repurchase (and reverse repurchase)
agreements to which any Loan Party is a party and the estimated Swap Termination
Value or other liability of such Loan Parties thereunder, (iv) to the extent not
previously disclosed to the Lender in writing, a description of any change in
the jurisdiction of organization or name of any Loan Party and a list of all
Intellectual Property and real property (including any leasehold interests)
acquired by any Loan Party since the date of the most recent list delivered
pursuant to this subsection (m) (or, in the case of the first such list so
delivered, since the Closing Date), (v) a list of all Investments that have been
made or are held by any Loan Party and permitted under Section 6.08, and
(vi) updated versions of each Schedule to the Guarantee and Security Agreement
containing information to the effect that such Schedule is true, correct and
complete in all respects as of the last Business Day of such calendar month;
and


-44-




(n)           promptly,
such additional financial and other information as the Lender may from time to
time reasonably request.




Documents
required to be delivered pursuant to Section 5.01(a) or
(b) or Section 5.02(f)(to
the extent any such documents are included in materials otherwise filed with the
SEC) may be delivered electronically and if so delivered, shall be deemed to
have been delivered on the date (i) on which the Borrower posts such documents,
or provides a link thereto on the Borrower's website on the Internet at www.smhgroup.com; or
(ii) on which such documents are posted on the Borrower's behalf on an Internet
or intranet website, if any, to which the Lender has access (whether a
commercial, third-party website or whether sponsored by the Lender); provided
that:  (x) if requested by the Lender, the Borrower shall deliver
paper copies of such documents to the Lender and (y) the Borrower shall notify
the Lender (by telecopier or electronic mail) of the posting of any such
documents and provide to the Lender by electronic mail electronic versions
(i.e., soft
copies) of such documents.  Notwithstanding anything contained herein,
in every instance the Borrower shall be required to provide paper copies of the
Compliance Certificates required by Section 5.02(b) to
the Lender.




Section
5.03.   Payment of
Obligations.  Pay, discharge or otherwise satisfy at or before
maturity or before they become delinquent, as the case may be, all its material
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
the relevant Group Member.




Section
5.04.   Maintenance of Existence;
Compliance.




(a)           (i)
Preserve, renew and keep in full force and effect its organizational existence
and (ii) maintain all registrations, consents, approvals, authorizations,
rights, permits, licenses, privileges and franchises from any Governmental
Authority, Self-Regulatory Organization or securities exchange necessary or
desirable in the normal conduct of its business, except, in each case, as
otherwise permitted by Section 6.04 and
except, in the case of clause (ii) above, to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect;
and




(b)           comply
with all Contractual Obligations and Requirements of Law, except to the extent
that failure to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.


-45-




Section
5.05.   Maintenance of Property;
Insurance.




(a)           Keep
all property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted; and




(b)           maintain
with financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks (but including
in any event public liability, product liability and business interruption) as
are usually insured against in the same general area by companies engaged in the
same or a similar business.




Section
5.06.   Inspection of Property;
Books and Records; Discussions.




(a)           Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and




(b)           at
the sole cost and expense of the Borrower, representatives of the Lender to
visit and inspect any of its properties and examine and make abstracts from any
of its books and records at any reasonable time and as often as may reasonably
be desired and to discuss the business, operations, properties and financial and
other condition of any Group Member with officers and employees of any Group
Member and with its independent certified public accountants.




Section
5.07.   Notices.  Promptly
give notice to the Lender of:




(a)           the
occurrence of any Default or Event of Default;




(b)           any
(i) default, event of default, termination event or other similar event or
circumstance under any Contractual Obligation of any Group Member or (ii)
litigation, investigation or proceeding that may exist at any time between any
Group Member and any Governmental Authority, that in either case, if not cured
or if adversely determined, as the case may be, could reasonably be expected to
have a Material Adverse Effect;




(c)           any
litigation, proceeding or other claim against or affecting any Group Member (i)
in which the amount involved is $250,000 or more and not covered by insurance,
(ii) in which injunctive or similar relief is sought or (iii) which relates to
any Loan Document;




(d)           as
soon as possible, and in any event within ten (10) days after any Responsible
Officer of the Borrower learns thereof, notice of the assertion or commencement
of any claim, action, litigation, suit or proceeding against or affecting any
Group Member, commenced by any Governmental Authority, which could reasonably be
expected to have a Material Adverse Effect;




(e)           any
assertion of any Environmental Liability or any other claim under any
Environmental Law against, or with respect to any activities or properties of,
any Group Member in which the amount of the Environmental Liability or claim is
$250,000 or more;


-46-


(f)           the
following events, as soon as possible and in any event within thirty (30) days
after any Group Member knows or has reason to know thereof:  (i) the
occurrence of any Reportable Event with respect to any Plan, a failure to make
any required contribution to a Plan, the creation of any Lien in favor of the
PBGC or a Plan or any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or
the taking of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the withdrawal from,
or the termination, Reorganization or Insolvency of, any Plan;




(g)           any
material change in accounting policies or financial reporting practices by any
Group Member;




(h)           the
occurrence of any Asset Sale, Recovery Event, incurrence or issuance of
Indebtedness or receipt of any Extraordinary Receipt for which the Borrower is
required to make a mandatory prepayment pursuant to Section
2.05;




(i)           as
soon as possible, and in any event, within two (2) Business Days, any
information or notice provided to the Borrower by (A) any Person under or in
connection with any Consent and Agreement or any Assigned Agreement, (B) The
Edelman Financial Center, LLC or Edelman Financial Advisors, LLC, (C) Fredric M.
Edelman or any other Person under or in connection with the Edelman
Subordination Agreement, (D) any Person under or in connection with any SMHG -
Salient Intercreditor Agreement or (E) The Endowment Master Fund, L.P. or any of
its Affiliates;




(j)           any
default, event of default or similar occurrence by any party to any of the
Acquisition Documents or any of the Assigned Agreements;




(k)           prior
to its occurrence, any change in the management of the Borrower;
and




(l)           any
development or event that has had or could reasonably be expected to have a
Material Adverse Effect.




Each
notice delivered to the Lender pursuant to this Section 5.07 shall be
accompanied by a statement of a Responsible Officer setting forth details of the
occurrence referred to therein and stating what action the relevant Group Member
proposes to take with respect thereto.




Section
5.08.   Environmental
Laws.




(a)           Comply
with, and ensure compliance by all tenants and subtenants, if any, with, all
applicable Environmental Laws, and obtain and comply with and maintain, and
ensure that all tenants and subtenants obtain and comply with and maintain, any
and all licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws; and




(b)           Conduct
and complete all investigations, studies, sampling and testing, and all
remedial, removal and other actions required under Environmental Laws and
promptly comply in all material respects with all lawful orders and directives
of all Governmental Authorities regarding Environmental Laws.


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Section
5.09.   Additional
Collateral.




(a)           With
respect to any property acquired after the Closing Date by any Group Member
(other than any
property described in paragraph (b), (c) or (d) below, and property acquired by
any Excluded Foreign Subsidiary) as to which the Lender does not have a
perfected Lien, promptly (i) execute and deliver to the Lender such amendments
to the Guarantee and Security Agreement or such other documents or agreements as
the Lender may require to grant to the Lender, a perfected first priority
security interest in such property and (ii) take all actions required by the
Lender to grant to the Lender a perfected first priority security interest in
such property, including the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the Guarantee and
Security Agreement or by law or as may be requested by the Lender.




(b)           With
respect to any fee interest in any real property having a value (together with
improvements thereof) of at least $100,000 acquired after the Closing Date by
any Group Member, promptly (i) execute and deliver a first priority Mortgage, in
favor of the Lender covering such real property, (ii) if requested by the
Lender, provide the Lender with (A) title and extended coverage insurance
covering such real property in an amount at least equal to the purchase price of
such real property (or such other amount as shall be specified by the Lender),
together with such endorsements as the Lender may require, (B) a current ALTA
survey of such real property, together with a surveyor's certificate, (C) an
environmental site assessment report for such real property, (D) an appraisal of
such real property, and (E) such consents, waivers, and estoppels, and
intercreditor, attornment and subordination agreements as may be required by the
Lender in connection with such Mortgage, each of the foregoing to be in scope,
form and substance satisfactory to the Lender, and (iii) if requested by the
Lender, deliver to the Lender legal opinions relating to the matters described
above, which opinions shall be in form and substance, and from counsel,
satisfactory to the Lender.




(c)           With
respect to any new Material Subsidiary (other than an Excluded Foreign
Subsidiary) which is created or acquired after the Closing Date by any Group
Member (which, for the purposes of this paragraph (c), shall include any
existing Subsidiary that ceases to be an Excluded Foreign Subsidiary), promptly
(i) execute and deliver to the Lender such amendments to the Guarantee and
Security Agreement and take such other action as the Lender may require to grant
to the Lender, for the benefit of the Lender, a perfected first priority
security interest in the Equity Interests of such new Material Subsidiary that
is owned by any Group Member, (ii) deliver to the Lender the certificates
representing such Equity Interests, together with undated stock powers, in
blank, executed and delivered by a duly authorized officer of the relevant Group
Member, (iii) cause such new Material Subsidiary (A) to become a party to the
Guarantee and Security Agreement, (B) to take all actions required by the Lender
to grant to the Lender a perfected first priority security interest in the
Collateral described in the Guarantee and Security Agreement with respect to
such new Material Subsidiary, including the filing of Uniform Commercial Code
financing statements in such jurisdictions as may be required by the Guarantee
and Security Agreement or by law or as may be requested by the Lender and (C) to
deliver to the Lender a certificate of such Material Subsidiary, substantially
in the form of Exhibit
B, with appropriate insertions and attachments, and (iv) if requested by
the Lender, deliver to the Lender legal opinions relating to the matters
described above, which opinions shall be in form and substance, and from
counsel, satisfactory to the Lender.


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(d)           With
respect to any new Excluded Foreign Subsidiary that is a Material Subsidiary
which is created or acquired after the Closing Date by any Group Member (other
than by any Group Member that is an Excluded Foreign Subsidiary), promptly (i)
execute and deliver to the Lender such amendments to the Guarantee and Security
Agreement and take such other action as the Lender may require to grant to the
Lender a perfected first priority security interest in the Equity Interests of
such new Material Subsidiary that is owned by any such Group Member (provided that in no
event shall more than 66% of the total outstanding voting Equity Interests of
any such new Material Subsidiary be required to be so pledged), (ii) deliver to
the Lender the certificates representing such Equity Interests, together with
undated stock powers, in blank, executed and delivered by a duly authorized
officer of the relevant Group Member and take such other action as may be
required by the Lender to perfect the Lender's security interest therein, and
(iii) if requested by the Lender, deliver to the Lender legal opinions relating
to the matters described above, which opinions shall be in form and substance,
and from counsel, satisfactory to the Lender.




Section
5.10.   Further
Assurances.




(a)           Promptly
upon request by the Lender, correct any defect or error that may be discovered
from time to time in any Loan Document or in the execution, acknowledgment,
filing or recordation thereof; and




(b)           Promptly
upon request by the Lender, execute, acknowledge, deliver, record, re-record,
file, re-file, register and re-register any and all such further acts, deeds,
conveyances, pledge agreements, mortgages, deeds of trust, trust deeds,
assignments, financing statements and continuations thereof, termination
statements, notices of assignment, transfers, certificates, assurances and other
instruments as the Lender may require from time to time in order to (i) carry
out more effectively the purposes of the Loan Documents, (ii) to the fullest
extent permitted by applicable law, subject any Group Member's properties,
assets, rights or interests to the Liens now or hereafter intended to be covered
by any of the Security Documents, (iii) perfect and maintain the validity,
effectiveness and priority of any of the Security Documents and any of the Liens
intended to be created thereunder and (iv) assure, convey, grant, assign,
transfer, preserve, protect and confirm more effectively unto the Lender the
rights granted or now or hereafter intended to be granted to the Lender under
any Loan Document or under any other instrument executed in connection with any
Loan Document to which any Group Member is or is to be a party.




Section
5.11.   Compliance with
Leases.  Make all payments and otherwise perform all
obligations in respect of all leases of real property to which any Group Member
is a party, keep such leases in full force and effect and not allow such leases
to lapse or be terminated or any rights to renew such leases to be forfeited or
canceled, notify the Lender of any default by any party with respect to such
leases and cooperate with the Lender in all respects to cure any such
default.




Section
5.12.   Material
Contracts.  Perform and observe all the terms and provisions of
each Material Contract to be performed or observed by it, maintain each such
Material Contract in full force and effect, enforce each such Material Contract
in accordance with its terms, take all such action to such end as may be from
time to time requested by the Lender and, upon request of the Lender, make to
each other party to each such Material Contract such demands and requests for
information and reports or for action as any Group Member is entitled to make
under such Material Contract, except, in any case, where the failure to do so,
either individually or in the aggregate, could not be reasonably expected to
have a Material Adverse Effect.


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Section
5.13.   Valuation and
Appraisals.  Promptly upon the request of the Lender at any
time and from time to time, and at the sole cost and expense of the Borrower,
provide the Lender with descriptions, valuations, appraisals and updates of any
or all of the Collateral (including, to the extent requested by the Lender,
valuations and appraisals from third parties selected or approved by the
Lender), and prepared on a basis satisfactory to the Lender, such appraisals and
updates to include, without limitation, information required by applicable
Requirements of Law and by the internal policies of the Lender.




Section
5.14.   Board
Visitation.  Permit the Lender to designate an observer,
without voting rights, who will be entitled to attend, observe or otherwise
participate in all meetings of the board of directors (or equivalent governing
body) of the Borrower (including meetings of committees and subcommittees
thereof).  The Borrower shall deliver to the Lender reasonable prior
notice of the time and place of each meeting of the board of directors (or
equivalent governing body) of the Borrower.  The Borrower shall
deliver to the Lender (a) in advance of execution, any resolutions adopted or
taken by the board of directors (or equivalent governing body), or any committee
or subcommittee thereof, without a meeting, and (b) all other materials provided
to the board of directors (or equivalent governing body) of the
Borrower.  The Borrower shall reimburse such observer on demand for
all expenses incurred by it in attending such meetings.




Section
5.15.   Operating Accounts and Other
Business.  At all times maintain all of the Borrower's primary
operating accounts with the Lender and enter into Cash Management Agreements
with the Lender to the extent required by the Lender to operate and maintain all
such operating accounts, and take all actions reasonably requested by the Lender
from time to time to enable the Lender to provide any Group Member with
information regarding any products or services offered by the Lender, including
Cash Management Agreements and overnight investments.




Section
5.16.   Net
Capital.  Cause SMH Capital Inc. to (a) maintain at all times a
ratio of Net Capital to Aggregate Indebtedness (computed in accordance with Rule
15c3-1) of not less than 10% and (b) at all times extend or maintain credit to
or for its customers in compliance with the applicable provisions of Regulation
T, and with respect to any Customer Securities, in compliance with Regulation T,
Rule 8c-1, Rule 15c2-1, and Rule 15c3-1, and all other applicable Requirements
of Law from time to time in effect.




Section
5.17.   Capital Markets Division
Disposition.  Consummate in full to the satisfaction of the
Lender the Capital Markets Division Disposition on or prior to June 30,
2009.


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Section
5.18.   Concept Capital Division
Disposition and Indemnification.




(a)           Consummate
in full to the satisfaction of the Lender the Concept Capital Division
Disposition on or prior to September 30, 2009 (including the transfer by the
Borrower to NewCo LLC of all short sales transactions and exposures of the
Concept Capital Division, either by assignment and assumption or by termination
of all short sales transactions, in effect on or immediately prior to the date
of such consummation; and




(b)           take
all actions necessary or requested by the Lender to terminate each Contractual
Obligation (including any Clearing Agreement), the terms and provisions of which
directly or indirectly create (or may create) any Concept Capital Obligations,
on or prior to the date which is thirty (30) days after the date of consummation
of the Concept Capital Division Disposition, and provide evidence of each such
termination to the Lender.




ARTICLE
VI




NEGATIVE
COVENANTS




The
Borrower hereby agrees that, so long as any Obligations remain outstanding or
any Loan Document remains in effect, the Borrower shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly:




Section
6.01.   Financial
Covenants.




(a)           Consolidated Leverage
Ratio.  Permit the Consolidated Leverage Ratio as at the last
day of any Fiscal Quarter of the Borrower to exceed 0.50 to 1.00.




(b)           Consolidated Tangible Net
Worth.  Permit Consolidated Tangible Net Worth as at the last
day of any calendar month to be less than $90,000,000.




(c)           Consolidated Liquid
Assets.  Permit (i) Consolidated Liquid Assets as at the last
day of any Fiscal Quarter of the Borrower to be less than $40,000,000, or (ii)
the portion of Consolidated Liquid Assets consisting of Available Cash and Cash
Equivalents as at the last day of any calendar month to be less than
$20,000,000.




(d)           Consolidated Client
Assets.  Permit Consolidated Client Assets at any time to be
less than $8,000,000,000.




(e)           Consolidated Short Sales
Exposure.  Permit (i) Consolidated Short Sales Exposure at any
time during the period from the Closing Date until September 30, 2009 to be
greater than $1,000,000, or (ii) Consolidated Short Sales Amount at any time
during the period from October 1, 2009 until the Maturity Date to be greater
than $1,000,000.




(f)           Consolidated Net
Income.  Permit (i) Consolidated Net Income for any Fiscal Year
of the Borrower to be less than zero, or (ii) Consolidated Net Income for any
three (3) consecutive Fiscal Quarters of the Borrower to be less than zero for
any such Fiscal Quarter.




Section
6.02.   Indebtedness.  Create,
issue, incur, assume, become liable in respect of or suffer to exist any
Indebtedness, except:




(a)           Indebtedness
of any Loan Party pursuant to any Loan Document;


-51-




(b)           Indebtedness
of (i) the Borrower to any Subsidiary, (ii) of any Material Subsidiary to the
Borrower or any other Subsidiary, and (iii) subject to Section 6.08(h), of
any Foreign Subsidiary to the Borrower or any Material Subsidiary;




(c)           Guarantee
Obligations incurred by the Borrower or any Material Subsidiary in respect of
any Indebtedness of the Borrower or any Material Subsidiary otherwise permitted
by this Section
6.02;




(d)           Indebtedness
outstanding on the date hereof and listed on Schedule 6.02(d) and
any refinancings, refundings, renewals or extensions thereof (without
increasing, or shortening the maturity of, the principal amount
thereof);




(e)           Unsecured
Indebtedness arising under Swap Contracts permitted by Section 6.20 entered
into in the ordinary course of business having an aggregate Swap Termination
Value not to exceed $100,000 at any time outstanding;




(f)           Indebtedness
arising under securities repurchase agreements entered into in the ordinary
course of business in an aggregate amount not to exceed $100,000 at any time
outstanding;




(g)           Indebtedness
arising from liabilities and obligations (including Concept Capital Obligations)
under any Clearing Agreement in an aggregate amount not to exceed $500,000 at
any time outstanding;




(h)           Indebtedness
of the Borrower in respect of the Subordinated Note in an aggregate principal
amount not to exceed $10,000,000, provided that such
Indebtedness is at all times subject in all respects to the Edelman
Subordination Agreement;




(i)           Indebtedness
arising from (i) Permitted Letters of Credit and any renewals thereof in an
aggregate stated face amount not to exceed $1,250,000 at any time outstanding
and (ii) any letter of credit issued from time to time by the Lender for the
account of any Loan Party, provided that any
reimbursement obligations in respect of any letter of credit issued by the
Lender is fully cash-collateralized by the Borrower at all times in a manner
satisfactory to the Lender; and




(j)           Additional
Indebtedness of the Borrower or any of its Subsidiaries in an aggregate
principal amount (for the Borrower and all Subsidiaries) not to exceed $250,000
at any one time outstanding.




Section
6.03.   Liens.  Create,
incur, assume or suffer to exist any Lien upon any of its property, whether now
owned or hereafter acquired, except for:




(a)           Liens
for taxes, assessments or governmental charges not yet due or that are being
contested in good faith by appropriate proceedings, provided that
adequate reserves with respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity with
GAAP;


-52-




(b)           carriers',
warehousemen's, mechanics', materialmen's, repairmen's or other like Liens
arising in the ordinary course of business that are not overdue or that are
being contested in good faith by appropriate proceedings;




(c)           pledges
or deposits in connection with workers' compensation, unemployment insurance and
other social security, retirement benefit, or similar legislation;




(d)           deposits
to secure the performance of bids, trade contracts (other than for borrowed
money), leases, statutory obligations, surety and appeal bonds (not in excess of
$100,000 in the aggregate), performance bonds and other obligations of a like
nature incurred in the ordinary course of business;




(e)           easements,
rights-of-way, restrictions and other similar encumbrances incurred in the
ordinary course of business that, in the aggregate, are not substantial in
amount and that do not in any case materially detract from the value of the
property subject thereto or materially interfere with the ordinary conduct of
the business of the Borrower or any of its Subsidiaries;




(f)           Liens
in existence on the date hereof listed on Schedule 6.03(f),
securing Indebtedness permitted by Section 6.02(d),
provided that
no such Lien is spread to cover any additional property after the Closing Date
and that the amount of Indebtedness secured thereby is not
increased;




(g)           Liens
created pursuant to the Security Documents;




(h)           any
interest or title of a lessor under any lease entered into by the Borrower or
any other Subsidiary in the ordinary course of its business and covering only
the assets so leased;




(i)           Liens
arising (i) under any Clearing Agreement as in effect on the date hereof (provided that such
Lien, the obligations secured by any such Lien and the property (and amount or
value of property) subject to any such Lien is not or are not increased or
extended in any manner after the date hereof), (ii) under any other Clearing
Agreement which are approved in writing by the Lender, and (iii) by operation of
law in the ordinary course of the clearance and settlement of securities
purchase and sale transactions; and




(j)           Liens
securing reimbursement obligations in respect of letters of credit permitted
under Section
6.02(i).




Section
6.04.   Fundamental
Changes.  Enter into any merger, consolidation or amalgamation,
or liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or Dispose of, all or substantially all of its property or
business, except that:




(a)           any
Subsidiary of the Borrower may be merged or consolidated with or into the
Borrower (provided that the
Borrower shall be the continuing or surviving corporation) or with or into any
Material Subsidiary (provided that the
Material Subsidiary shall be the continuing or surviving
Person);


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(b)           any
Subsidiary of the Borrower may Dispose of any or all of its assets (i) to the
Borrower or any Material Subsidiary (upon voluntary liquidation or otherwise) or
(ii) pursuant to a Disposition permitted by Section
6.05;




(c)           any
Investment expressly permitted by Section 6.08 may be
structured as a merger, consolidation or amalgamation, provided that in no event
shall the Borrower participate in a merger, consolidation, or amalgamation
without being the surviving entity; and




(d)           any
Subsidiary with assets of less than $50,000 may be liquidated, wound up, or
dissolved.




Section
6.05.   Disposition of
Property.  Dispose of any of its property, whether now owned or
hereafter acquired, or, in the case of any Subsidiary, issue or sell any of such
Subsidiary's Equity Interests to any Person, except:




(a)           Dispositions
of obsolete or worn out property in the ordinary course of
business;




(b)           Dispositions
of securities in the ordinary course of business;




(c)           Dispositions
permitted by Sections
6.04(a), (b) or (d);




(d)           the
sale or issuance of any Subsidiary's Equity Interests to the Borrower or any
Material Subsidiary;




(e)           the
Capital Markets Division Disposition and the Concept Capital Division
Disposition; and




(f)           the
Dispositions of other property having a fair market value not to exceed
$3,000,000 in the aggregate during the period from and including the Closing
Date and to but excluding the Maturity Date.




Section
6.06.   Restricted
Payments.  Declare or make any Restricted Payment, or incur any
obligation (contingent or otherwise) to do so, except that (a) any Subsidiary
may make any Restricted Payment to the Borrower or any Material Subsidiary, (b)
provided that no Default or Event of Default has occurred and is continuing at
the time of any such dividend or distribution or would result from the
declaration of or making of any such dividend or distribution, any Subsidiary
may make any dividends or distributions to any Minority Owner of such Subsidiary
in an aggregate amount during any consecutive twelve (12) month period not to
exceed the lesser of (i) such Minority Owner's pro rata share of the net income
of such Subsidiary for such period or (ii) any amounts such Subsidiary is
obligated to pay to such Minority Owner during such period pursuant to a
Contractual Obligation listed on Schedule 6.06, and
(c) the Borrower may declare and pay a cash dividend on its issued and
outstanding shares of common stock, provided that (x) no
Default or Event of Default has occurred and is continuing at the time of any
such dividend or would result from the declaration of or making of any such
dividend, and (y) on the day of and after giving effect to the making of any
such dividend, the Cumulative Dividend Amount on such date would be less than
Cumulative Consolidated Net Income on such date.


-54-




Section
6.07.   Capital
Expenditures.  Make or commit to make any Capital Expenditure,
except Capital Expenditures of the Borrower and its Subsidiaries made in the
ordinary course of business in an aggregate amount during any of the Fiscal Year
of the Borrower not to exceed the amount set forth below opposite such Fiscal
Year below:




Fiscal Year
                    
                    Amount2009
                    
                    $
                    6,000,0002010
                    
                    $
                    6,000,0002011
                    
                    $
                    6,000,0002012
                    
                    $
                    4,500,000





provided, that (a) up
to $1,000,000 of any such amount referred to above, if not so expended in the
Fiscal Year for which it is permitted, may be carried over for expenditure in
the next succeeding Fiscal Year and (b) Capital Expenditures made pursuant to
this Section
6.07 during any Fiscal Year of the Borrower shall for purposes hereof be
deemed made, first, in respect of
amounts permitted for such Fiscal Year as provided above and, second, in respect of
amounts carried over from the prior Fiscal Year pursuant to clause (a)
above.




Section
6.08.   Investments.  Make,
hold, maintain,  or permit to exist any Investments,
except:




(a)           Investments
in Subsidiaries and Affiliates existing on the date hereof and listed on Schedule 6.08(a)
hereof;




(b)           Investments
in Cash Equivalents;




(c)           Investments
in (i) Marketable Equity Securities and Marketable Debt Securities made in the
ordinary course of business, and (ii) private equity participations, other
non-publicly traded debt or equity securities or other private Investments,
provided that
the aggregate cost of all such Investments shall not exceed (A) $55,000,000 in
the aggregate at any time outstanding or (B) with respect to all such
Investments made during any Fiscal Year of the Loan Parties, $10,000,000 in the
aggregate at any time outstanding during such Fiscal Year;




(d)           Guarantee
Obligations permitted by Section
6.02;




(e)           securities
purchased under repurchase agreements entered into in the ordinary course of
business;




(f)           securities
owned and loaned under securities lending agreements entered into in the
ordinary course of business;




(g)           repurchases
of up to 1,000,000 shares of the Borrower's common stock to fund the Borrower's
incentive stock option and stock purchase plan;




(h)           loans
and advances to employees of any Group Member in the ordinary course of business
(including for travel, entertainment and relocation expenses) in an aggregate
amount for all Group Members not to exceed $100,000 on the last day of any
quarter;


-55-




(i)           upfront
or bonus loans to employees of any Group Member in the ordinary course of
business in an aggregate amount for all Group Members not to exceed $5,000,000
at any time outstanding;




(j)           the
Acquisition;




(k)           Investments
in assets useful in the business of the Borrower and its Subsidiaries made by
the Borrower or any of its Subsidiaries with the proceeds of any Reinvestment
Deferred Amount;




(l)           intercompany
Investments by any Group Member in any other Group Member; and




(m)           any
other Investments by the Borrower or any of its Subsidiaries in an aggregate
amount (valued at cost) not to exceed $250,000 at any time
outstanding.




Section
6.09.   Transactions with
Affiliates.  Enter into any transaction, including any
purchase, sale, lease or exchange of property, the rendering of any service or
the payment of any management, advisory or similar fees, with any Affiliate
(other than the Borrower or any Material Subsidiary) unless such transaction is
(a) otherwise expressly permitted under this Agreement, (b) in the ordinary
course of business of the relevant Group Member, and (c) upon fair and
reasonable terms no less favorable to the relevant Group Member than it would
obtain in a comparable arm's length transaction with a Person that is not an
Affiliate.




Section
6.10.   Sales and
Leasebacks.  Enter into any arrangement with any Person
providing for the leasing by any Group Member of real or personal property that
has been or is to be sold or transferred by such Group Member to such Person or
to any other Person to whom funds have been or are to be advanced by such Person
on the security of such property or rental obligations of such Group
Member.




Section
6.11.   Changes in Fiscal
Periods.  Permit the Fiscal Year of the Borrower to end on a
day other than December 31 or change the Borrower's method of determining Fiscal
Quarters.




Section
6.12.   Negative Pledge
Clauses.  Enter into or suffer to exist or become effective any
agreement that prohibits or limits the ability of any Group Member to create,
incur, assume or suffer to exist any Lien upon any of its property or revenues,
whether now owned or hereafter acquired, to secure its obligations under the
Loan Documents to which it is a party or any refinancings thereof, other than
(a) this Agreement and the other Loan Documents and (b) any agreements governing
any purchase money Liens or Capital Lease Obligations otherwise permitted hereby
(in which case, any prohibition or limitation shall only be effective against
the assets financed thereby).


-56-


Section
6.13.   Clauses Restricting
Subsidiary Distributions.  Enter into or suffer to exist or
become effective any consensual encumbrance or restriction on the ability of any
Subsidiary of the Borrower to (a) make Restricted Payments in respect of any
Equity Interests of such Subsidiary held by, or pay any Indebtedness owed to,
the Borrower or any other Subsidiary, (b) make loans or advances to, or other
Investments in, the Borrower or any other Subsidiary or (c) transfer any of its
assets to the Borrower or any other Subsidiary except for such encumbrances or
restrictions existing under or by reason of (i) any restrictions existing under
the Loan Documents, (ii) any restrictions with respect to a Subsidiary imposed
pursuant to an agreement that has been entered into in connection with the
Disposition of all or substantially all of the Equity Interests or assets of
such Subsidiary, or (iii) any restrictions imposed by the Exchange Act or rules
issued thereunder or rules of any Governmental Authority having jurisdiction
over the Borrower or any Subsidiary.




Section
6.14.   Lines of
Business.  Enter into any business, either directly or through
any Subsidiary, except for those businesses in which the Borrower and its
Subsidiaries are engaged on the date of this Agreement (after giving effect to
the Acquisition) or that are reasonably related thereto.




Section
6.15.   Amendments to Acquisition
Documents.




(a)           Amend,
supplement or otherwise modify (pursuant to a waiver or otherwise) the terms and
conditions of the indemnities and licenses furnished to the Borrower or any of
its Subsidiaries pursuant to the Acquisition Documents or any other document
delivered in connection therewith such that after giving effect thereto such
indemnities or licenses shall be materially less favorable to the interests of
the Loan Parties or the Lenders with respect thereto; or




(b)           amend,
supplement or otherwise modify the terms and conditions of any of the
Acquisition Documents or any such other documents in any other manner except for
any such amendment, supplement or modification that (i) becomes effective after
the Closing Date and (ii) could not reasonably be expected to have a Material
Adverse Effect.




Section
6.16.   Amendments to Organizational
Documents.  Amend, modify or supplement any Organizational
Document of any Group Member, in any manner that could be materially adverse to
the rights of the Lender.




Section
6.17.   Material
Contracts.  (a) Cancel or terminate any Assigned Agreement or
any other Material Contract or permit, consent to or accept any cancellation or
termination thereof (other than as expressly permitted, without any requirement
that consent to such cancellation or termination be provided by any
non-terminating party, pursuant to the existing terms of any such Assigned
Agreement or other Material Contract), (b) except as and to the extent set forth
in the SMH SPEADV Assignments, amend, modify or supplement in any manner any
term or provision of any Assigned Agreement or any other Material Contract or
give any consent, waiver or approval thereunder, (c) waive any default or
termination event under or any breach or violation of any term or condition of
any Assigned Agreement or any other Material Contract, (d) agree in any manner
to any other amendment, modification or change of any term or condition of any
Assigned Agreement or any other Material Contract, (e) fail to perform any of
its obligations under any Assigned Agreement or any other Material Contract, or
(f) take any other action in connection with any Assigned Agreement or any other
Material Contract that would impair the value of the interests or rights of any
Loan Party thereunder or the timing or amount of any payment made (or to be
made) by any Person to any Loan Party thereunder or that would otherwise be
adverse to the interests or rights of the Lender thereunder or under any Consent
and Agreement or with respect to any of the foregoing.


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Section
6.18.   Terrorism Sanctions
Regulations.  Become a Person described or designated in the
Specially Designated Nationals and Blocked Persons List of the Office of Foreign
Assets Control or in Section 1 of the Anti-Terrorism Order or engage in any
dealings or transactions with any such Person.




Section
6.19.   Management and Director
Compensation.  Pay any management, consulting or similar fee
(excluding salary and bonus payments made to employees in the ordinary course of
business) to any Affiliate of any Loan Party or to any officer, director or
employee of any Loan Party or any Affiliate of any Loan Party, except the
payment of directors' fees in an aggregate amount not to exceed $500,000 during
any Fiscal Year of the Borrower; provided, however, the Borrower
shall not, and shall not permit any of its Subsidiaries to, pay any such
directors' fees if a Default or Event of Default shall have occurred and be
continuing or would result from any such payment.




Section
6.20.   Swap
Contracts.  Enter into any Swap Contract, except Swap Contracts
that are reasonably acceptable to the Lender and which (a) hedge or mitigate
risks to which the Borrower or any Subsidiary of the Borrower has actual
exposure (other than those in respect of Equity Interests), and (b) effectively
cap, collar or exchange interest rates (from fixed to floating rates, from one
floating rate to another floating rate or otherwise) with respect to any
interest-bearing liability or investment of the Borrower or any Subsidiary of
the Borrower.




Section
6.21.   Margin
Stock.  Use any of the proceeds of the Loan to purchase or
carry any Margin Stock in violation of Regulation T, Regulation U or
Regulation X.




Section
6.22.   Loan Party
Accounts.




(a)           Establish
or maintain any deposit account, securities account or commodity account with
any Person, other than (i) the SMHG Operating Accounts, (ii) the Clearing
Accounts in effect on the date hereof, (iii) the L/C Collateral Account in
effect on the date hereof, and (iv) the Existing Accounts;




(b)           hold
or maintain cash or any other assets or properties in the Existing Accounts in
an aggregate amount which (i) at any time from the Closing Date through
September 30, 2009 exceeds $500,000, or (ii) at any time from October 10, 2009
through the Maturity Date exceeds $400,000; or




(c)           cause
(or permit SMH SPEADV to cause) any Assigned Agreement Payment made to the
Borrower and/or SMH SPEADV to be initially deposited or transferred into any
deposit account, securities account or other account other than the Assigned
Agreement Payment Account.


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Section
6.23.   Subordinated
Note.




(a)           Make
or offer to make any optional or voluntary payment, prepayment, repurchase or
redemption of or otherwise optionally or voluntarily defease or segregate funds
with respect to the Subordinated Note;




(b)           make
any payment, repurchase or redemption with respect to the Subordinated Note or
take any other action in violation of the Edelman Subordination
Agreement;




(c)           amend,
modify, waive or otherwise change, or consent or agree to any amendment,
modification, waiver or other change to, any of the terms of any Subordinated
Loan Document (as defined in the Edelman Subordination Agreement) (other than
any such amendment, modification, waiver or other change that (i) would extend
the maturity or reduce the amount of any payment of principal thereof or reduce
the rate or extend any date for payment of interest thereon and (ii) does not
involve the payment of a consent fee); or




(d)           amend,
modify or supplement any Subordinated Loan Document (as defined in the Edelman
Subordination Agreement).




Section
6.24.   SMHG - Salient Intercreditor
Agreement.  Enter into, or amend, modify or supplement in any
respect, any SMHG - Salient Intercreditor Agreement, in each case without the
prior written consent of the Lender.




ARTICLE
VII




EVENTS
OF DEFAULT




Section
7.01.   Events of
Default.  If any of the following events shall occur and be
continuing:




(a)           the
Borrower shall fail to pay any principal of the Loan when due in accordance with
the terms hereof; or the Borrower shall fail to pay any interest on the Loan, or
any other amount payable hereunder or under any other Loan Document, within
three (3) Business Days after any such interest or other amount becomes due in
accordance with the terms hereof; or




(b)           any
representation or warranty made or deemed made by any Loan Party herein or in
any other Loan Document or that is contained in any certificate, document or
financial or other statement furnished by it at any time under or in connection
with this Agreement or any such other Loan Document shall prove to have been
inaccurate in any material respect on or as of the date made or deemed made;
or




(c)           any
Loan Party shall default in the observance or performance of any agreement
contained in clause (i) or (ii) of Section 5.04(a) (with
respect to the Borrower only), Section 5.07(a),
Section 5.16,
Section 5.17,
Section 5.18,
Section 5.19 or
Article VI of
this Agreement or Section 5.05 or Section 5.07(b) of
the Guarantee and Security Agreement; or


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(d)           any
Loan Party shall default in the observance or performance of any other agreement
contained in this Agreement or any other Loan Document (other than as provided
in paragraphs (a) through (c) of this Section), and such default shall continue
unremedied for a period of thirty (30) days after notice to the Borrower from
the Lender; or




(e)           any
Group Member shall (i) default in making any payment of any principal of any
Indebtedness (including any Guarantee Obligation, but excluding the Loan) on the
scheduled or original due date with respect thereto; or (ii) default in making
any payment of any interest on any such Indebtedness when the same becomes due
and payable; or (iii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or (in the case of any such Indebtedness
constituting a Guarantee Obligation) to become payable; or




(f)           (i)
any Group Member shall commence any case, proceeding or other action (A) under
any existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or any Group Member shall make a general
assignment for the benefit of its creditors; or (ii) there shall be commenced
against any Group Member any case, proceeding or other action of a nature
referred to in clause (i) above that (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of sixty (60) days; or (iii) there shall
be commenced against any Group Member any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets that results in the
entry of an order for any such relief that shall not have been vacated,
discharged, or stayed or bonded pending appeal within sixty (60) days from the
entry thereof; or (iv) any Group Member shall take any action in furtherance of,
or indicating its consent to, approval of, or acquiescence in, any of the acts
set forth in clause (i), (ii), or (iii) above; or (v) any Group Member shall
generally not, or shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due; or




(g)           (i)
any Person shall engage in any "prohibited transaction" (as defined in Section
406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any
"accumulated funding deficiency" (as defined in Section 302 of ERISA), whether
or not waived, shall exist with respect to any Plan or any Lien in favor of the
PBGC or a Plan shall arise on the assets of the Borrower or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is,
in the reasonable opinion of the Lender, likely to result in the termination of
such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Lender is likely
to, incur any liability in connection with a withdrawal from, or the Insolvency
or Reorganization of, a Multiemployer Plan or (vi) any other event or condition
shall occur or exist with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other such events
or conditions, if any, could, in the sole judgment of the Lender, reasonably be
expected to have a Material Adverse Effect; or


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(h)           one
or more judgments or decrees for the payment of money in an aggregate amount in
excess of $250,000 shall be rendered against any of the Group Members or any
combination thereof and the same shall remain undischarged for a period of
thirty (30) consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to attach or
levy upon any assets of any Group Member to enforce any such judgment;
or




(i)           any
non-monetary judgment or order shall be rendered against any Group Member that
could reasonably be expected to have a Material Adverse Effect, and there shall
be any period of ten (10) consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect; or




(j)           any
of the Security Documents shall cease, for any reason, to be in full force and
effect, or any Loan Party or any Affiliate of any Loan Party shall so assert, or
any Lien created by any of the Security Documents shall cease to be perfected,
enforceable and of the same effect and priority purported to be created thereby;
or




(k)           the
guarantee of any Loan Party contained in Article II of the Guarantee and
Security Agreement shall cease, for any reason, to be in full force and effect
or any Loan Party or any Affiliate of any Loan Party shall so assert;
or




(l)           The
SEC or any Self-Regulatory Organization has notified the SIPC pursuant to
Section 5(a)(1) of the SIPA of facts which indicate that the Borrower or any
other Loan Party is in or is approaching financial difficulty, or the SIPC shall
file an application for a protective decree with respect to the Borrower, or
such other Loan Party under Section 5(a)(3) of the SIPA; or




(m)           The
SEC or other Governmental Authority shall revoke or suspend the license or
authorization of the Borrower or any other Loan Party under Federal or state law
to conduct business as a securities broker-dealer (and such license or
authorization shall not be reinstated within 5 days), or the Borrower or any
other Loan Party shall be suspended or expelled from membership in the FINRA or
any other Self-Regulatory Organization or securities exchange; or




(n)           there
shall occur in the judgment of the Lender any Material Adverse Change;
or




(o)           except
to the extent expressly permitted under this Agreement, any of the Assigned
Agreements shall be terminated by any party thereto or shall otherwise cease for
any reason to be in full force and effect, or any Loan Party or any other party
thereto shall so assert, or any failure by any Person to make any payment
required to be made to the Borrower or any other Loan Party or other default
shall occur and be continuing under any Assigned Agreement; or


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(p)           the
Subordinated Note shall cease, for any reason, to be validly subordinated to the
payment of the Obligations, as provided in the Edelman Subordination Agreement,
or any holder of the Subordinated Note shall so assert;




then, and
in any such event, (A) if such event is an Event of Default specified in clause
(i) or (ii) of paragraph (f) above with respect to the Borrower, automatically
the Commitment shall immediately terminate and the Loan hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement and the other
Loan Documents shall immediately become due and payable, and (B) if such event
is any other Event of Default, either or both of the following actions may be
taken: (i) the Lender may by notice to the Borrower declare the Commitment to be
terminated forthwith, whereupon the Commitment shall immediately terminate; and
(ii) the Lender may by notice to the Borrower, declare the Loan hereunder (with
accrued interest thereon) and all other amounts owing under this Agreement and
the other Loan Documents to be due and payable forthwith, whereupon the same
shall immediately become due and payable.  Except as expressly
provided above in this Section, the Borrower waives presentment, demand,
protest, notice of acceleration, notice of intent to accelerate, and all other
notices of any kind.  If any Event of Default occurs and is
continuing, the Lender may exercise and all rights and remedies available to it
under the Loan Documents, and the Lender may apply all payments made in respect
of any of the Obligations, all funds on deposit in any Collateral Account or
other account pledged to the Lender under the Guarantee and Security Agreement,
and all other proceeds of Collateral, to the payment and performance of the
Obligations in such order and manner as the Lender may from time to time
determine in its sole discretion..




ARTICLE
VIII




MISCELLANEOUS




Section
8.01.   Amendments and
Waivers.  Neither this Agreement, any other Loan Document, nor
any terms hereof or thereof may be amended, supplemented or modified except in
accordance with the provisions of this Section
8.01.  The Lender and each Loan Party to the relevant Loan
Document may from time to time, (a) enter into written amendments, supplements
or modifications hereto and to the other Loan Documents for the purpose of
adding any provisions to this Agreement or the other Loan Documents or changing
in any manner the rights of the Lenders or of the Loan Parties hereunder or
thereunder or (b) waive, on such terms and conditions as the Lender may specify
in such instrument, any of the requirements of this Agreement or the other Loan
Documents or any Default or Event of Default and its
consequences.  Any such waiver and any such amendment, supplement or
modification shall be binding upon the Loan Parties and the
Lender.  In the case of any waiver, the Loan Parties and the Lender
shall be restored to their former position and rights hereunder and under the
other Loan Documents, and any Default or Event of Default waived shall be deemed
to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.


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Section
8.02.   Notices; Electronic
Communication.




(a)           Notices
Generally.  Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in paragraph (b) below), all notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopier as
follows:




(i)           if
to the Borrower or any other Loan Party, to it at 600 Travis Street, Suite 5800,
Houston, Texas 77002, Attention of Rick Berry, Chief Financial Officer
(Telecopier No. 713.993.4677; Telephone No. 713.993.4614);




(ii)           if
to the Lender, to Prosperity Bank at 777 Walker Street, Suite L140, Houston,
Texas 77002, Attention of Randall R. Reeves, President-Houston Area (Telecopier
No. 713.693.9259; Telephone No. 713.693.9251);




Notices
and other communications sent by hand or overnight courier service, or mailed by
certified or registered mail, shall be deemed to have been given when received;
notices and other communications sent by telecopier shall be deemed to have been
given when sent (except that, if not given during normal business hours for the
recipient, shall be deemed to have been given at the opening of business on the
next business day for the recipient).  Notices and other
communications delivered through electronic communications to the extent
provided in paragraph (b) below, shall be effective as provided in said
paragraph (b).




(b)           Electronic
Communications.




(i)           The
Lender or the Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it, provided that
approval of such procedures may be limited to particular notices or
communications.




(ii)           Unless
the Lender otherwise prescribes, (A) notices and other communications sent to an
e-mail address shall be deemed received upon the sender's receipt of an
acknowledgement from the intended recipient (such as by the "return receipt
requested" function, as available, return e-mail or other written
acknowledgement), provided that if such
notice or other communication is not sent during the normal business hours of
the recipient, such notice or communication shall be deemed to have been sent at
the opening of business on the next business day for the recipient, and (B)
notices or communications posted to an Internet or intranet website shall be
deemed received upon the deemed receipt by the intended recipient at its e-mail
address as described in the foregoing clause (A) of notification that such
notice or communication is available and identifying the website address
therefor.




(c)           Change of Address,
Etc.  Each of the Borrower and the Lender may change its
address, telecopier or telephone number for notices and other communications
hereunder by notice to the other parties hereto.




(d)           Reliance by the
Lender.  The Lender shall be entitled to rely and act upon any
notices (including telephonic borrowing requests) purportedly given by or on
behalf of the Borrower even if (i) such notices were not made in a manner
specified herein, were incomplete or were not preceded or followed by any other
form of notice specified herein, or (ii) the terms thereof, as understood by the
recipient, varied from any confirmation thereof.  The Borrower shall
indemnify the Lender and Related Parties from all losses, costs, expenses and
liabilities resulting from the reliance by such Person on each notice
purportedly given by or on behalf of the Borrower.  All telephonic
notices to and other telephonic communications with the Lender may be recorded
by the Lender and each of the parties hereto hereby consents to such
recording.


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Section
8.03.   No Waiver; Cumulative
Remedies; Enforcement.  No failure to exercise and no delay in
exercising, on the part of the Lender, any right, remedy, power or privilege
hereunder or under the other Loan Documents shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.  The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.




Section
8.04.   Survival.  All
covenants, agreements, representations and warranties made by the Borrower
herein and in the certificates or other instruments delivered in connection with
or pursuant to this Agreement shall be considered to have been relied upon by
the other parties hereto and shall survive the execution and delivery of this
Agreement and the making of the Loan, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the Lender may
have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on any
Loan or any fee or any other amount payable under this Agreement is outstanding
and unpaid.




Section
8.05.   Expenses;
Indemnity; Damage Waiver.




(a)           Costs and
Expenses.  The
Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the
Lender and its Affiliates (including the reasonable fees, charges and
disbursements of counsel for the Lender), and shall pay all fees and time
charges and disbursements for attorneys who may be employees of the Lender, in
connection with the preparation, negotiation, execution, delivery and
administration of this Agreement and the other Loan Documents or any amendments,
modifications or waivers of the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), and (ii) all
out-of-pocket expenses incurred by the Lender (including the fees, charges and
disbursements of counsel), in connection with any Default or the enforcement or
protection of its rights (a) in connection with this Agreement and the other
Loan Documents, including its rights under this section, or (b) in connection
with the Loan, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of the
Loan.


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(b)           Indemnification
by the Borrower.  The Borrower shall
indemnify the Lender and each of its Related Parties (each such Person being
referred to herein as an "Indemnitee") against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities, penalties,
actions, judgments, suits, costs, expenses, and disbursements (including the
fees, charges and disbursements of any counsel for any Indemnitee), incurred by
any Indemnitee or asserted against any Indemnitee by any third party or by the
Borrower or any other Loan Party arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto of their respective obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby, (ii) the Loan or the use or proposed use of the proceeds therefrom,
(iii) any actual or alleged presence or release of Hazardous Materials on or
from any property owned or operated by any Group Member, or any Environmental
Liability related in any way to any Group Member, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory, whether
brought by a third party or by any Group Member, and regardless of whether any
Indemnitee is a party thereto,providedthat such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities, penalties, actions, judgments, suits, costs, expenses or
disbursements (x) are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Indemnitee or (y) result from a claim brought by any Group
Member against an Indemnitee for breach in bad faith of such Indemnitee's
obligations hereunder or under any other Loan Document, if such Group Member has
obtained a final nonappealable judgment in its favor on such claim as determined
by a court of competent jurisdiction.  Without limiting any provisions
of this Agreement or of any other Loan Document, it is the express intention of
the parties hereto that each Indemnitee shall be indemnified from and held
harmless against any and all losses, claims, damages, liabilities, penalties,
actions, judgments, suits, costs, expenses and disbursements (including the
fees, charges and disbursements of counsel) arising out of or caused in whole or
in part by the ordinary negligence of any Indemnitee.




(c)           Waiver of
Consequential Damages.  To the fullest extent
permitted by applicable law, the Borrower shall not assert, and the Borrower
hereby irrevocably and unconditionally waives, any claim against any Indemnitee,
on any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement, any other Loan Document or any
agreement or instrument contemplated hereby, the transactions contemplated
hereby or thereby, the Loan or the use of the proceeds thereof.  No
Indemnitee shall be liable for any damages arising from the use by unintended
recipients of any information or other materials distributed by it through
telecommunications, electronic or other information transmission systems in
connection with this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby.




(d)           Payments.  All amounts due under
thisSection
8.05shall be payable
not later than ten (10) days after written demand therefor.  The
agreements in thisSection
8.05shall survive
repayment of the Loan and all other amounts payable
hereunder.




Section
8.06.   Successors and Assigns;
Participations and Assignments.




(a)           The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted hereby,
except that the Borrower may not assign or otherwise transfer any of its rights
or obligations hereunder without the prior written consent of the Lender and the
Lender may not assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an Eligible Assignee in accordance with the provisions
of subsection (b) of this Section, (ii) by way of participation in accordance
with the provisions of subsection (c) of this Section, or (iii) by way of pledge
or assignment of a security interest subject to the restrictions of subsection
(e) of this Section (and any other attempted assignment or transfer by any party
hereto shall be null and void).  Nothing in this Agreement, expressed
or implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, Participants
to the extent provided in subsection (c) of this Section and, to the extent
expressly contemplated hereby, the Indemnitees) any legal or equitable right,
remedy or claim under or by reason of this Agreement.


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(b)           The
Lender may at any time assign to one or more Eligible Assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of the Loan at the time owing to it) pursuant to documentation acceptable to the
Lender and the assignee.  From and after the effective date specified
in such documentation, such Eligible Assignee shall be a party to this Agreement
and, to the extent of the interest assigned by the Lender, have the rights and
obligations of the Lender under this Agreement, and the Lender shall, to the
extent of the interest so assigned, be released from its obligations under this
Agreement (and, in the case of an assignment of all of the Lender's rights and
obligations under this Agreement, shall cease to be a party hereto but shall
continue to be entitled to the benefits of Sections 2.09, 2.10 and 8.05 with respect to
facts and circumstances occurring prior to the effective date of such
assignment.  Upon request, the Borrower (at its expense) shall execute
and deliver a new or replacement Note to the Lender and the assignee, and shall
execute and deliver any other documents reasonably necessary or appropriate to
give effect to such assignment and to provide for the administration of this
Agreement after giving effect thereto.




(c)           The
Lender may at any time, without the consent of, or notice to, the Borrower, sell
participations to any Person (other than a natural person or the Borrower or any
of the Borrower's Affiliates or Subsidiaries) (each, a "Participant") in all
or a portion of the Lender's rights and/or obligations under this Agreement
(including all or a portion of the Loan); provided that (i) the
Lender's obligations under this Agreement shall remain unchanged, (ii) the
Lender shall remain solely responsible to the Borrower for the performance of
such obligations and (iii) the Borrower shall continue to deal solely and
directly with the Lender in connection with the Lender's rights and obligations
under this Agreement.  Any agreement or instrument pursuant to which
the Lender sells such a participation shall provide that the Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any  provision of this Agreement; provided that such
agreement or instrument may provide that the Lender will not, without the
consent of the Participant, agree to any amendment, waiver or other modification
that would (i) postpone any date upon which any payment of money (other than a
mandatory prepayment) is scheduled to be made to such Participant, (ii) reduce
the principal, interest, fees or other amounts payable to such Participant
(provided,
however, that
the Lender may, without the consent of the Participant, (A) amend any financial
covenant hereunder (or any defined term used therein) even if the effect of such
amendment would be to reduce the rate of interest on the Loan or to reduce any
fee payable hereunder and (B) waive the right to be paid interest at the Default
Rate), or (iii) release any Guarantor from its obligations under the Guarantee
and Security Agreement.  Subject to subsection (d) of this Section,
the Borrower agrees that each Participant shall be entitled to the benefits of
Section 2.09 to
the same extent as if it were the Lender and had acquired its interest by
assignment pursuant to subsection (b) of this Section.  To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 8.07as though it were the
Lender.


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(d)           A
Participant shall not be entitled to receive any greater payment under Section 2.09 or 2.10 than the Lender
would have been entitled to receive with respect to the participation sold to
such Participant, unless the sale of the participation to such Participant is
made with the Borrower's prior written consent.  A Participant that is
not a "United States person" within the meaning of Section 7701(a)(30) of the
Code shall not be entitled to the benefits of Section 2.10 unless
the Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to provide to the Lender
such tax forms prescribed by the IRS as are necessary or desirable to establish
an exemption from, or reduction of, U.S. withholding tax.




(e)           The
Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement (including under the Term Note, if
any) to secure obligations of the Lender, including any pledge or assignment to
secure obligations to a Federal Reserve Bank; provided that no such
pledge or assignment shall release the Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for the Lender as a party
hereto.




Section
8.07.   Setoff.  If
an Event of Default shall have occurred and be continuing, each of the Lender
and its Affiliates is hereby authorized at any time and from time to time, to
the fullest extent permitted by applicable law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final, in whatever
currency) at any time held and other obligations (in whatever currency) at any
time owing by the Lender and its Affiliates to or for the credit or the account
of the Borrower or any other Loan Party against any and all of the obligations
of the Borrower or such other Loan Party now or hereafter existing under this
Agreement or any other Loan Document to the Lender irrespective of whether or
not the Lender shall have made any demand under this Agreement or any other Loan
Document and although such obligations of the Borrower or such other Loan Party
may be contingent or unmatured or are owed to a branch or office of the Lender
different from the branch or office holding such deposit or obligated on such
indebtedness.  The rights of the Lender and its Affiliates under this
Section are in addition to other rights and remedies (including other rights of
setoff) that the Lender or its Affiliates may have.  The Lender agrees
to notify the Borrower promptly after any such setoff and application, provided that the
failure to give such notice shall not affect the validity of such setoff and
application.




Section
8.08.   Counterparts; Integration;
Effectiveness; Electronic Execution.  This Agreement may be
executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract.  This Agreement and
the other Loan Documents, and any separate letter agreements with respect to
fees payable to the Lender, constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof.  Except as provided in Section 3.01, this
Agreement shall become effective when it shall have been executed by the Lender
and when the Lender shall have received counterparts hereof that, when taken
together, bear the signatures of each of the other parties
hereto.  Delivery of an executed counterpart of a signature page of
this Agreement by telecopy or other electronic imaging means shall be effective
as delivery of a manually executed counterpart of this
Agreement.


-67-




Section
8.09.   Severability.  Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.




Section
8.10.   GOVERNING LAW; JURISDICTION,
ETC.




(a)           THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF TEXAS.




(b)           THE
BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY,
TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF TEXAS SITTING IN
HARRIS COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT
OF TEXAS, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH TEXAS STATE COURT OR,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL
COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL
AFFECT ANY RIGHT THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE
BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.




(c)           THE
BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B)
OF THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.




(d)           EACH
PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED
FOR NOTICES IN SECTION
8.02.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY
PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE
LAW.




-68-




Section
8.11.   Acknowledgments.  The
Borrower hereby acknowledges that:




(a)           it
has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents;




(b)           the
Lender nor the Lender has no fiduciary relationship with or duty to the Borrower
arising out of or in connection with this Agreement or any of the other Loan
Documents, and the relationship between the Lender, on one hand, and the
Borrower, on the other hand, in connection herewith or therewith is solely that
of debtor and creditor; and




(c)           no
joint venture is created hereby or by the other Loan Documents or otherwise
exists by virtue of the transactions contemplated hereby between the Borrower
and the Lender.




Section
8.12.   Treatment of Certain
Information; Confidentiality.




(a)           The
Lender agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its Affiliates and to
its and its Affiliates' respective partners, directors, officers, employees,
agents, advisors and other representatives (it being understood that the Persons
to whom such disclosure is made will be informed of the confidential nature of
such Information and instructed to keep such Information confidential), (b) to
the extent requested by any regulatory authority purporting to have jurisdiction
over it (including any Self-Regulatory Authority), (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party hereto, (e) in connection with the exercise of any remedies
hereunder or under any other Loan Document or any action or proceeding relating
to this Agreement or any other Loan Document or the enforcement of rights
hereunder or thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, (ii) any actual or prospective
counterparty (or its advisors or representatives) to any swap or derivative
transaction relating to the Borrower and its obligations, (iii) any rating
agency, or (iv) the CUSIP Bureau Service or any similar organization, (g) with
the consent of the Borrower or (h) to the extent such Information (x) becomes
publicly available other than as a result of a breach of this Section or (y)
becomes available to the Lender or any of its Affiliates on a nonconfidential
basis from a source other than the Borrower.




For
purposes of this Section, "Information" means all information received from the
Borrower or any of its Subsidiaries relating to the Borrower or any of its
Subsidiaries or any of their respective businesses, other than any such
information that is available to the Lender on a nonconfidential basis prior to
disclosure by the Borrower or any of its Subsidiaries, provided that, in the
case of information received from the Borrower or any of its Subsidiaries after
the date hereof, such information is clearly identified at the time of delivery
as confidential.  Any Person required to maintain the confidentiality
of Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.


-69-


Section
8.13.   Interest Rate
Limitation.  It is the intent of the Lender and the Borrower to
conform to and contract in strict compliance with all applicable usury laws from
time to time in effect.  Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the Highest Lawful Rate.  If Lender
shall receive interest in an amount that exceeds the Highest Lawful Rate, the
excess interest shall be applied to the principal of the Loan or, if it exceeds
such unpaid principal, refunded to the Borrower.  In determining
whether the interest contracted for, charged, or received by the Lender exceeds
the Highest Lawful Rate, such Person may, to the extent permitted by applicable
law, (a) characterize any payment that is not principal as an expense, fee, or
premium rather than interest, (b) exclude voluntary prepayments and the effects
thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal
parts the total amount of interest throughout the contemplated term of the
Obligations hereunder.  The right to accelerate maturity of the Loan
and the other Obligations does not include the right to accelerate any interest
which has not otherwise accrued on the date of such acceleration, and the Lender
does not intend to charge or receive any unearned interest in the event of
acceleration.




Section
8.14.   Headings.  Article
and Section headings and the Table of Contents used herein are for convenience
of reference only, are not part of this Agreement and shall not affect the
construction of, or be taken into consideration in interpreting, this
Agreement.




Section
8.15.   Time of the
Essence.  Time is of the essence of this Agreement and the
other Loan Documents.




Section
8.16.   WAIVER OF JURY
TRIAL.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.




Section
8.17.   Electronic Execution of
Assignments and Certain Other Documents.  If expressly stated
in such document, the words "execution," "signed," "signature," and words of
like import in any Assignment and Assumption or in any amendment or other
modification hereof (including waivers and consents) shall be deemed to include
electronic signatures or the keeping of records in electronic form, each of
which shall be of the same legal effect, validity or enforceability as a
manually executed signature or the use of a paper-based recordkeeping system, as
the case may be, to the extent and as provided for in any applicable law,
including the Federal Electronic Signatures in Global and National Commerce Act
or any other similar state laws based on the Uniform Electronic Transactions
Act.


-70-


Section
8.18.   USA PATRIOT Act
Notice.  The Lender hereby notifies the Borrower that pursuant
to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the "Act"), it is required
to obtain, verify and record information that identifies each Loan Party, which
information includes the name and address of each Loan Party and other
information that will allow the Lender to identify each Loan Party in accordance
with the Act.  The Borrower shall, promptly following a request by the
Lender, provide all documentation and other information that the Lender requests
in order to comply with its ongoing obligations under applicable "know your
customer" and anti-money laundering rules and regulations, including the
Act.




Section
8.19.   Press Releases and Related
Matters.  The Borrower agrees that neither it nor any of its
Affiliates will issue any press release or public disclosure using the name of
Prosperity Bank or any of its Affiliates or referring to this Agreement or any
of the other Loan Documents without at least two (2) Business Days prior notice
to Prosperity Bank and without the prior written consent of Prosperity Bank
unless (and only to the extent that) the Borrower or such Affiliate is required
to do so under applicable Requirements of Law and then, in any event, the
Borrower or such Affiliate will consult with Prosperity Bank before issuing such
press release or other public disclosure.  The Borrower consents to
the publication by the Lender of a tombstone or similar advertising material
relating to the financing transactions contemplated by this
Agreement.  The Lender reserves the right to provide to industry trade
organizations information necessary and customary for inclusion in league table
measurements.




Section
8.20.   No Advisory or Fiduciary
Responsibility.  In connection with all aspects of each
transaction contemplated hereby, the Borrower acknowledges and agrees, and
acknowledge its Affiliates' understanding, that:  (i) the credit
facility provided for hereunder and any related arranging or other services in
connection therewith (including in connection with any amendment, waiver or
other modification hereof or of any other Loan Document) are an arm's-length
commercial transaction between the Borrower and its Affiliates, on the one hand,
and the Lender, on the other hand, and the Borrower is capable of evaluating and
understanding and understands and accepts the terms, risks and conditions of the
transactions contemplated hereby and by the other Loan Documents (including any
amendment, waiver or other modification hereof or thereof); (ii) in connection
with the process leading to such transaction, the Lender is and has been acting
solely as a principal and is not the financial advisor, agent or fiduciary, for
the Borrower or any of its Affiliates, stockholders, creditors or employees or
any other Person; (iii) the Lender has not assumed nor will assume an advisory,
agency or fiduciary responsibility in favor of the Borrower with respect to any
of the transactions contemplated hereby or the process leading thereto,
including with respect to any amendment, waiver or other modification hereof or
of any other Loan Document (irrespective of whether the Lender has advised or is
currently advising the Borrower or any of its Affiliates on other matters) and
the Lender has no obligation to the Borrower or any of its Affiliates with
respect to the transactions contemplated hereby except those obligations
expressly set forth herein and in the other Loan Documents; (iv) the Lender and
its Affiliates may be engaged in a broad range of transactions that involve
interests that differ from those of the Borrower and its Affiliates, and the
Lender has no obligation to disclose any of such interests by virtue of any
advisory, agency or fiduciary relationship; and (v) the Lender has not provided
and will not provide any legal, accounting, regulatory or tax advice with
respect to any of the transactions contemplated hereby (including any amendment,
waiver or other modification hereof or of any other Loan Document) and the
Borrower has consulted its own legal, accounting, regulatory and tax advisors to
the extent it has deemed appropriate.  The Borrower hereby waives and
releases, to the fullest extent permitted by law, any claims that it may have
against the Lender with respect to any breach or alleged breach of agency or
fiduciary duty.


-71-




Section
8.21.   Independence of
Covenants.  All covenants and agreements hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants or agreements, the fact that it would be
permitted by an exception to, or would otherwise be within the limitations of,
another covenant or agreement, shall not avoid the occurrence of a Default or
Event of Default if such action is taken or such condition exists.




Section
8.22.   ENTIRE
AGREEMENT.  THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS
AMONG THE PARTIES.




[remainder
of this page intentionally left blank]


-72-




IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.




SANDERS
      MORRIS HARRIS GROUP INC.By:
                        /s/ Bruce R.
      McMakenName:
                        Bruce R.
      McMakenTitle:
                        Executive Vice
      President




PROSPERITY
      BANKBy:
                  /s/
      Randall
      R. ReevesName:
                  Randall
      R. ReevesTitle:
                  President-Houston
      Area


Signature
Page to Credit Agreement







SCHEDULE
4.04




Consents,
Authorizations, Filings and Notices





SCHEDULE
4.13




Investment
Advisers









SCHEDULE
4.15




Subsidiaries





SCHEDULE
4.18




UCC
Filing Jurisdictions





SCHEDULE
4.22




Material
Contracts





SCHEDULE
4.23




Insurance





SCHEDULE
4.25




Existing
Accounts





SCHEDULE
6.02(d)




Existing
Indebtedness





SCHEDULE
6.03(f)




Existing
Liens





SCHEDULE
6.06




Contractually
Obligated Restricted Payments









SCHEDULE
6.08(a)




Existing
Investments





EXHIBIT
A




Form of
Guarantee and Security Agreement





EXHIBIT
B




Form of
Closing Certificate





EXHIBIT
C




Form of
Mortgage





EXHIBIT
D




Form of
Term Note





EXHIBIT
E




Form of
Legal Opinion





EXHIBIT
F




Form of
Solvency Certificate





EXHIBIT
G




Form of
Notice of Borrowing





EXHIBIT
H




Form of
Compliance Certificate





EXHIBIT
I




Form of
Edelman Subordination Agreement





SCHEDULE
1.01




Existing
Letters of Credit




Effective
                
                Expiration
                
                Stated
      FaceName
      of Beneficiary
                
                Issued
      By
                
                Account
      Party
                
                Date
                
                Date
                
                AmountNY
      - 527 Madison, LLC
                
                JP
      Morgan Chase
                
                SMH
      Capital Inc.
                
                11/19/2008
                
                11/24/2009
                
                $
                420,003111
      South Wacker LLC
                
                JP
      Morgan Chase
                
                SMH
      Capital Inc.
                
                03/09/2006
                
                10/31/2011
                
                $
                144,000Carnegie
      Hall Tower, L.L.C.
                
                JP
      Morgan Chase
                
                SMH
      Capital Inc.
                
                8/15/2007
                
                11/15/2009
                
                $
                229,845Northwest
      546 Fifth Ave
                
                JP
      Morgan Chase
                
                SMH Capital Inc.
                
                12/27/2007
                
                12/31/2009
                
                $
                245,000Federal
      Insurance Co.
                
                Amegy
      Bank N.A.
                
                Sanders
      Morris Harris Group Inc.
                
                8/8/2008
                
                8/8/2009
                
                $
                100,000(Workman’s
      Compensation)VA-Centerponte,
      LLC
                
                James
      Monroe Bank
                
                Edelman
      Financial Services, LLC
                
                02/14/2005
                
                1/13/2013
                
                $
                91,962





SCHEDULE
4.04




Consents,
Authorizations, Filings and Notices




1.           Notice
to Salient Partners, LP and Salient Capital Management, LLC with respect to
assignment of Salient Note and interest in Purchase AND Sale Agreement dated as
of August 29, 2009.





2.           Notice
to Endowment Advisers, L.P., The Endowment Fund GP, L.P., and The Endowment Fund
Management, LLC with respect to assignment of interest in the Agreement to
Retire Partnership Interest and Second Amendment to Limited Partnership
Agreement of Endowment Advisers, L.P.







SCHEDULE
4.13




Investment
Advisers




SMH
Capital Inc.


SMH
Capital Advisors, Inc.


Miller-Green
Financial Services, Inc.


Edelman
Financial Services, LLC


Edelman
Financial Advisors, LLC


SOF
Management, LLC


The
Rikoon Group, LLC


Leonetti
& Associates, LLC


Pool
Capital Partners, LLC





SCHEDULE
4.15




Subsidiaries




Subsidiary
                          
                          State of
                            Organization
                          
                          Percentage Ownership
      ofEquityInterests*SMH
      Capital Inc.
                          
                          Texas
                          
                          
                          100
                          %SMH
      Capital Advisors, Inc.
                          
                          Texas
                          
                          
                          100
                          %Miller-Green
      Financial Services, Inc.
                          
                          Texas
                          
                          
                          100
                          %The
      Edelman Financial Center, LLC
                          
                          Delaware
                          
                          
                          76
                          %Edelman
      Business Services, LLC
                          
                          Delaware
                          
                          
                          100
                          %
      (2)Edelman
      Financial Services, LLC
                          
                          Delaware
                          
                          
                          100
                          %
      (2)Edelman
      Financial Advisors, LLC
                          
                          Delaware
                          
                          
                          10
                          %SOF
      Management, LLC
                          
                          Delaware
                          
                          
                          100
                          %
      (1)SMH
      GP LP
                          
                          Texas
                          
                          
                          100
                          %
      (3)The
      Rikoon Group, LLC
                          
                          Delaware
                          
                          
                          75
                          %The
      Dickenson Group, LLC
                          
                          Ohio
                          
                          
                          50.1
                          %Leonetti
      & Associates, LLC
                          
                          Illinois
                          
                          
                          50.1
                          %SMM
      Corporate Management, LLC
                          
                          Delaware
                          
                          
                          99
                          %
      (1)SMH
      Life Science Management, LLC
                          
                          Delaware
                          
                          
                          50
                          %
      (1)Signet
      Healthcare Partners, LLC
                          
                          Delaware
                          
                          
                          50
                          %
      (1)SMH
      PEG Management, LLC
                          
                          Delaware
                          
                          
                          62.5
                          %
      (1)SMH
      PEG Management II, LLC
                          
                          Delaware
                          
                          
                          51.36
                          %
      (1)SMH
      PE Management, LLC
                          
                          Delaware
                          
                          
                          98
                          %
      (1)SMH
      Colorado, LLC
                          
                          Delaware
                          
                          
                          50
                          %
      (1)PTC
      GP Management, LLC
                          
                          Texas
                          
                          
                          50
                          %
      (1)PTC-Houston
      Management, LP
                          
                          Texas
                          
                          
                          42.5
                          %
      (1)SMH
      NuPhysicia Management, LLC
                          
                          Delaware
                          
                          
                          38.2
                          %
      (1)Select
      Sports Group Holdings, LLC
                          
                          Texas
                          
                          
                          50
                          %Select
      Sports Group, Ltd.
                          
                          Texas
                          
                          
                          50
                          %10
      Sports Marketing GP, LLC
                          
                          Texas
                          
                          
                          50
                          %10
      Sports Marketing, LP
                          
                          Delaware
                          
                          
                          64.95
                          %SMH
      MLS, LLC
                          
                          New
      York
                          
                          
                          100
                          %




*
              Unless
      otherwise specified, the Equity Interests of each Subsidiary are owned by
      the Borrower.


(1)
            By
      SMH Capital Inc.


(2)
            By
      The Edelman Financial Center, LLC


(3)
            By
      SMH Capital Advisors, Inc.





SCHEDULE
4.18




UCC
Filing Jurisdictions




Filing
            
            Filing OfficeUCC-1
      Financing Statement
            
            Texas
      Secretary of StateUCC-1
      Financing Statement
            
            Delaware
      Secretary of StateUCC-1
      Financing Statement
            
            New
      York Secretary of State





SCHEDULE
4.21




Material
Contracts




Clearing
Agreements





1.           Fully
Disclosed Clearing Agreement dated June 5, 2005, between Pershing LLC and
Sanders Morris Harris Inc. with Agreement for Prospectus Delivery Facilitation
Services dated December 11, 2007; B/D Peakadvisor Contract dated June 21, 2005;
Regulation NMS Compliance Addendum dated June 6, 2007; and Amendment for
Utilization of Managed Accounts as Collateral for Non Purpose Credit Agreement
to the Fully Disclosed Clearing Agreement of Pershing, LLC dated June 4,
2008.





2.           Fully
Disclosed Clearing Agreement dated December 13, 2002, between Banc of America
Broker/Dealer Services, a division of Banc of America Securities LLC (now Ridge
Outsourcing and Clearing Solutions, Inc.)





3.           Fully
Disclosed Clearing Agreement dated November 8, 2002, between Spear, Leeds &
Kellogg (now Goldman Sachs Clearing & Execution, LP) and Clearing Agreement
(Independent (non-Guaranteed) Introducing Broker) dated July 1, 2004, between
Spear Leeds & Kellogg and SMH Capital Inc.





4.           Agreement
for Securities Clearance Services dated January 14, 2009, between J.P. Morgan
Clearing Corp. and SMH Capital Inc.





Office
Leases





1.
            Lease
      Agreement dated September 23, 1987, between Texas Tower Limited and
      Sanders Morris Harris Inc., with respect to 57th,
      58th,
      and 59th
      floors at 600 Travis, as amended
by:


a.
            First
      Amendment to Lease Agreement dated October 26,
  1990,


b.
            Second
      Amendment to Lease Agreement dated December 1,
  1990,


c.
            Third
      Amendment to Lease Agreement dated May 21,
1991,


d.
            Fourth
      Amendment to Lease Agreement dated April 20,
  1992,


e.
            Fifth
      Amendment to Lease Agreement dated July 25,
  1994,


f.
            Sixth
      Amendment to Lease Agreement dated September 25,
  1996,


g.
            Seventh
      Amendment to Lease Agreement dated January
1998,


h.
            Eighth
      Amendment to Lease Agreement dated April 27,
  2000,


i.
            Ninth
      Amendment to Lease Agreement dated September 18,
  2000,


j.
            Tenth
      Amendment to Lease Agreement dated December 7, 2001,
  and


k.
            Eleventh
      Amendment to Lease Agreement dated December 21,
  2006





2.
            Office
      Lease Agreement dated as of November 26, 2003, between NY-527 Madison, LLC
      and Sanders Morris Harris Inc., with respect to 6th,
      7th,
      and 14th
      floors at 527 Madison Avenue, New York, New York, as amended by First
      Amendment dated October 16, 2005, between NY-527 Madison, LLC and Sanders
      Morris Harris Inc., with respect to the 10th
      and 15th
      floors of 527 Madison Avenue, and as amended by a Second Amendment
      (Storage Space Supplement) dated August 3, 2006, between NY-517 Madison,
      LLC and Sanders Morris Harris Inc, with respect to storage space on floor
      C1..





3.
            Agreement
      of Lease dated January 8, 1997, between Garden City Associates and
      Blackford Securities Corporation (now Sanders Morris Harris Inc.), as
      modified by Modification of Lease dated July 11, 2005, with respect tom
      1010 Franklin avenue, Garden City, New
York.





4.
            Assignment
      and Assumption of Lease and Novation Agreement dated October 29, 2007,
      between Samco-BD, LLC f/k/a Service Asset Management company and Concept
      Capital, a division of SMH Capital Inc. with respect to Agreement of Lease
      dated July 15, 2001, between Northwest 5th
      & 45th
      Realty Corp. and Service Asset Management Company, with respect to 546
      Fifth Avenue.





5.
            Sub-Sublease
      dated January 31, 2006, between Sagamore Hill Capital Management LP and
      Sanders Morris Harris Group Inc. with respect to the 3rd
      floor of 10 Glenville Street, Greenwich, Connecticut, as modified by
      letter dated June 7, 2007, to become a direct
  lease.





6.
            Deed
      of Lease dated February 16, 2005, between VA-Centerpointe, L.L.C. and
      Edelman Financial Services, LLC, as amended by a First Amendment dated
      March 10, 2006, and a Second Amendment dated as of November 7, 2006,
      with respect to Suites 900  and 1000 at 4000 Legato Road,
      Fairfax, Virginia.





Other
Agreements





1.
            Reorganization
      and Purchase Agreement dated as of May 10, 2005, among Sanders Morris
      Harris Group Inc., The Edelman Financial Center, Inc., The Edelman
      Financial Center, LLC, and Fredric M.
Edelman.





2.
            Letter
      agreement dated as of January 1, 2009, among Sanders Morris Harris Group,
      Inc., Frederic M. Edelman, and Edward
Moore





3.
            Agreement
      to Retire Partnership Interest and Second Amendment to the Limited
      Partnership Agreement of Endowment Advisers, L.P. dated as of August 29,
      2008, among Sanders Morris Harris Group Inc. and Endowment Advisers, L.P.,
      The Endowment Fund GP, L.P., and The Endowment Fund Management, LLC, and
      their respective partners and
members.





4.
            Purchase
      and Sale Agreement dated August 29, 2008, among Sanders Morris Harris
      Group, Inc., Salient Partners, L.P. (“Salient Partners”), and Salient
      Capital Management, LLC (the “SCM”) and the respective limited partners
      and members of Salient Partners and SCM.





5.
            Contribution
      Agreement dated as of January 22, 2009, among Sanders Morris Harris
      Group Inc., SMH Capital Inc., Pan Asia China Commerce Corp., Siwanoy
      Capital, LLC, and Siwanoy Securities,
LLC.





6.
            Term
      Sheet dated as of January 1, 2009, among Sanders Morris Harris group Inc.,
      SMH Capital Inc., Michael S. Rosen, and Jack D.
  Seibald.





7.
            Bloomberg
      Agreements dated March 30, 1990, between Bloomberg L.P. and Blackford
      Securities (Account No. 5939), dated December 3, 1996, between Bloomberg,
      L.P. and Cummer/Moyers Securities (Account No. 55691), dated January 12,
      1994, between Bloomberg, L.P. and Sanders Morris Mundy Inc. (Account No.
      24907), dated February 17, 1994, between Bloomberg, L.P. and Harris Webb
      & Garrison, Inc. (Account No. 23899), pertaining to Bloomberg
      terminals and access.





8.
            Master
      Agreement Number 101843 with Thomson Financial LLC (Customer ID 4275) for
      Thomson ONE services. (Account Nos. 10360 and
  212636).





9.
            Membership
      with Nasdaq Stock Market (Location No. 9087; MPID: SMHI and Location No.
      10082, Site Name SMMITX)(Account Nos. 100003806 and
      100037053).





10.
            Software
      License and Support Agreement dated September 20, 2006, between Advent
      Software, Inc. and Concept Capital for Advent Partner Premium
      Bundle.





11.
            Account
      No. ARTC00979 with NYSE ARCA LLC (MPID:
SMHJ).





12.
            Account
      with NYSE Market Inc. (Account No. 03-77085) for 273 NYSE data
      devices.





13.
            Account
      with NYSE Market, Inc. (Account No. 03-16656) for NYSE data
      services.





14.
            Medical
      Benefit Plan with United Healthcare Insurance
  Co.





15.
            Medical
      Benefit Plan with Anthem Blue Cross Blue
Shield





16.
            Engagement
      with KPMG, LLP





17.
            Engagement
      with CBIZ Risk & Advisory Services,
LLC





18.
            Consulting
      Agreement dated as of November 1, 2004, between SMH Capital Inc. and
      Select Partners, Ltd., as amended March 1, 2008 (Jeff
    Cummer).





19.
            Amended
      and Restated Employment Agreement dated as of August 31, 2003, between SMH
      Capital Inc. and Dwayne Moyers, as amended February 25,
    2008.





20.
            Employment
      Agreement dated May 10, 2005, between The Edelman Financial Center, LLC
      and Fredric M. Edelman.





21.
            Purchase
      Agreement dated May 24, 2007, among Rikoon Investment Advisors,
      Incorporated, Robert A. Rikoon, and Sanders Morris Harris Group
      Inc.





SCHEDULE
4.22




Insurance




Named
      Insureds
                        
                        Carrier
                        
                        Expiration
                        
                        Limits
                        
                        CoverageSMH
      Capital Inc.
                          Sanders
      Morris Harris Group Inc.
                          Edelman
      Financial Services
                          The
      Rikoon Group LLC
                        
                        Scottsdale
      Insurance Co
                        
                        9/8/2009
                        
                        $1,000,000
      each “wrongful act” aggregate, $1000,000 representative aggregate, and
      $3,000,000 policy aggregate
                        
                        Financial
      Services Professional Liability Insurance PolicySMH
      Capital Advisors, Inc
                        
                        National
      Union Fire Ins. Co.
                        
                        1/31/2010
                        
                        $5,000,000
      each “wrongful act” aggregate and policy aggregate
                        
                        Financial
      Services Professional Liability Insurance PolicyEdelman
      Financial Advisors
                        
                        Scottsdale
      Insurance Co.
                        
                        12/18/2009
                        
                        $1,000,000
      each “wrongful act” aggregate; $2,000,000 policy aggregate
                        
                        Financial
      Services Professional Liability Insurance PolicySanders
      Morris Harris Group
                        
                        AIG
                        
                        1/29/2010
                        
                        $5,000,000
      per occurrence and aggregate
                        
                        Directors
      & Officers LiabilitySanders
      Morris Harris Group
                        
                        XL
                        
                        1/29/2010
                        
                        $5,000,000
      per occurrence and aggregate
                        
                        Excess
      Directors & Officers LiabilitySanders
      Morris Harris Group
                        
                        Federal
      Insurance Co
                        
                        7/18/2009
                        
                        $100,000
      per occurrence; $1,000,000 aggregate
                        
                        Workers
      CompensationSanders
      Morris Harris Group
                        
                        Federal
      Insurance Co
                        
                        7/18/2009
                        
                        $1,000,000
      per occurrence and aggregate
                        
                        Automobile
      LiabilitySanders
      Morris Harris Group
                        
                        Great
      Northern Insurance
                        
                        7/18/2009
                        
                        $1,000,000
      per occurrence; $5,000,000 aggregate
                        
                        Commercial
      Liability
Package





SCHEDULE
4.22




Deposit
Accounts









SCHEDULE
6.02(d)




Existing
Indebtedness




1.
            Master
      Installment Payment Agreement Schedule dated June 2, 2008, between Sanders
      Morris Harris Group Inc. and Cisco Systems Capital Corporation, Schedules
      No. 1 and No. 2.




2.
            Agreement
      to purchase an additional 5% Member Interest in the Rikoon Group LLC from
      Rikoon Investment Advisors Incorporated on February 15, 2011, as provided
      in the Purchase Agreement dated May 24, 2007, among Rikoon Investment
      Advisors, Incorporated, Robert A. Rikoon, and Sanders Morris Harris Group
      Inc.





SCHEDULE
6.03(f)




Existing
Liens




1.
            Cisco
      Systems Capital Corporation, UCC Filing No. 08-0036300626, 11/07/2008 and
      08-0036300737, 11/07/2008, Texas




2.
            Equipment
      leases:




Secured
      PartySMH
      Capital Inc. (Sanders Morris Harris Inc.)
                            
                            IBM
      Credit
                            
                            07-0009212384
                            
                            3/20/2007
                            
                            Texas
                            
                            IBM
      equipmentSMH
      Capital Inc. (Sanders Morris Harris Inc.)
                            
                            MidFirst
      Bank
                            
                            08-0006770947
                            
                            .
      2/26/2008
                            
                            TexasSMH
      Capital Inc. (Sanders Morris Harris Inc.)
                            
                            Intrust
      Bank
                            
                            08-0014805884
                            
                            4/30/2008
                            
                            TexasSMH
      Capital Inc. (Sanders Morris Harris Inc.)
                            
                            Union
      Bank assigned to Chase Bank
                            
                            08-003627459
                            
                            12/12/2008
                            
                            TexasSMH
      Capital Inc. (Sanders Morris Harris Inc.)
                            
                            MidFirst
      Bank
                            
                            08-0014806683
                            
                            04/30/2008
                            
                            TexasEdelman
      Business Services, LLC
                            
                            Dell
      Financial Services, LLC
                            
                            2008
      1623238
                            
                            05/09/2008
                            
                            VA
                            
                            Computer
      EquipmentEdelman
      Financial Services, LLC
                            
                            CIT
      Bankl
                            
                            5233777
      3
                            
                            07/28/2005
                            
                            VA
                            
                            Computer
      Equipment





SCHEDULE
6.06




RESTRICTED
PAYMENTS




1.
            Payments
      to The Edelman Financial Center, Inc. or Ric Edelman under the Limited
      Liability Company Agreement of The Edelman Financial Center, LLC dated as
      of May 10, 2005.




2.
            Payments
      to Rikoon Investment Advisors, Incorporated under the Amended and Restated
      Limited Liability Company Agreement of The Rikoon Group, LLC dated as of
      May 24, 2007.




3.
            Payments
      to Michael Leonetti under the Operating Agreement of Leonetti &
      Associates, LLC dated as of February 29,
2008.




4.
            Payments
      to John Olson and Stephen Pouns under the Operating Agreement of Pool
      Capital Partners, LLC dated June
2003.




5.
            Payments
      to Vann McElroy, Jeff Nalley, and Graylan Crain under the Amended and
      Restated Agreement of Limited Partnership of Selects Sports Group, Ltd.
      dated as of November 23, 2004.




6.
            Payments
      to Vann McElroy, Jeff Nalley, Graylan Crain, and William J. Henkel under
      the Agreement of Limited Partnership of 10 Sports Marketing, LP dated as
      of November 14, 2005.




7.
            Payments
      to David S. Dickenson II, D.S.D. III, INC., and Amy P. Dickenson, Inc.
      under the Limited Liability Company Agreement of The Dickenson Group, LLC
      dated effective as of September 14,
2007.




8.
            Payments
      to James C. Gale, Al Hansen, and Joyce Erony under the Limited Liability
      Company Agreement of Signet Healthcare Partners, LLC darted as of December
      12, 2003.




9.
            Payments
      to Bruce R. McMaken, Charles L. Davis, and Ben T. Morris under the Limited
      Liability Company Agreement of SMH PEG Management, LLC dated August 27,
      2004.




10.
            Payments
      to Bruce R. McMaken, Charles L. Davis, Ben T. Morris, and Don Weir under
      the Limited Liability Company Agreement of SMH PEG Management II, LLC
      dated August 24, 2006.




11.
            Payments
      to Bruce R. McMaken and Ben T. Morris under the Limited Liability Company
      Agreement of SMH PE Management, LLC dated September 25,
    2007.




12.
            Payments
      to StylesCo, LP under the Limited Liability Company Agreement of PTC GP
      Management, LLC dated December 19,
2002.





13.
            Payments
      to StylesCo, LP, Bruce R. McMaken, and PTC GP Management LLC under the
      Agreement of Limited Partnership of PTC-Houston Management, LP dated
      December 19, 2002.




14.
            Payments
      to Charles L. Davis, Robert E. Garrison II, Tyson Weihs, and Bruce R.
      McMaken under the Limited Liability Company Agreement of SMH NuPhysicia
      Management, LLC dated August 20,
2007.





SCHEDULE
6.08(a)




Existing
Investments




Common
                      Stock
                    
                    
                    Additional
      Paid-in
                      Capital/Member’s
      or
                      Partner’s
      Interest
                    
                    
                    Shareholders’
                      Equity
                    
                    
                    Estimated
      Fair
                      Market
      ValueSMH
      Capital Inc.
                    
                    $
                    607
                    
                    
                    $
                    60,032,477
                    
                    
                    $
                    62,378,404SMH
      Capital Advisors, Inc.
                    
                    $
                    30
                    
                    
                    
                    (35,169
                    )
                    
                    
                    15,445,855Miller-Green
      Financial Services, Inc.
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    364,270The
      Edelman Financial Center, LLC
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (6,729,472
                    )Edelman
      Business Services, LLC
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (1,700,101
                    )Edelman
      Financial Services, LLC
                    
                    
                    
                    
                    
                    
                    (152,808
                    )
                    
                    
                    32,570,931SMH
      GP LP
                    
                    
                    25,000
                    
                    
                    
                    
                    
                    
                    
                    -The
      Rikoon Group, LLC
                    
                    
                    
                    
                    
                    
                    390694
                    
                    
                    
                    2,120,349The
      Dickenson Group, LLC
                    
                    
                    6,026,123
                    
                    
                    
                    
                    
                    
                    
                    4,531,343Leonetti
      & Associates, LLC
                    
                    
                    
                    
                    
                    
                    (153,819
                    )
                    
                    
                    245,142SOF
      Management, LLC
                    
                    
                    
                    
                    
                    
                    50,000
                    
                    
                    
                    5,725,819
                    
                    
                    $
                    311,753SMH
      Life Science Management, LLC
                    
                    
                    
                    
                    
                    
                    1,500,000
                    
                    
                    
                    5,219,661
                    
                    
                    
                    1,274,053Signet
      Healthcare Partners, LLC
                    
                    
                    
                    
                    
                    
                    455,754
                    
                    
                    
                    965,864
                    
                    
                    
                    167,745SMH
      PEG Management, LLC
                    
                    
                    
                    
                    
                    
                    10,060
                    
                    
                    
                    1,419,245
                    
                    
                    
                    -SMH
      PEG Management II, LLC
                    
                    
                    
                    
                    
                    
                    15,054
                    
                    
                    
                    111,262
                    
                    
                    
                    -SMH
      Colorado, LLC
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    1,814,554
                    
                    
                    
                    N/APTC
      GP Management, LLC and PTC-Houston Management, LP
                    
                    
                    
                    
                    
                    
                    321,849
                    
                    
                    
                    334,278
                    
                    
                    
                    105,147SMH
      NuPhysicia Management, LLC
                    
                    
                    
                    
                    
                    
                    100
                    
                    
                    
                    (2,831
                    )
                    
                    
                    -Select
      Sports Group, Ltd.
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    5,.115,169Pool
      Capital Partners, LLCCommunique
      Compliance & Communications, LLC
                    
                    
                    
                    
                    
                    
                    25,000
                    
                    
                    
                    
                    
                    
                    
                    25,000iPro
      One, Inc.
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    1,258,457





EXHIBIT
      A TOCREDIT AGREEMENT










GUARANTEE AND SECURITY
AGREEMENT





made
by





SANDERS
MORRIS HARRIS GROUP INC.





and
certain of its Subsidiaries





in favor
of





PROSPERITY
BANK





as
Secured Party





Dated as
of May [__], 2009















TABLE OF
CONTENTS




PageARTICLE
      I
                                  
                                  DEFINED
      TERMS
                                  
                                  1Section
      1.01
                                  
                                  Definitions
                                  
                                  1Section
      1.02
                                  
                                  Other
      Definitional Provisions
                                  
                                  7ARTICLE
      II
                                  
                                  GUARANTEE
                                  
                                  8Section
      2.01
                                  
                                  Guarantee
                                  
                                  8Section
      2.02.
                                  
                                  Right
      of Contribution
                                  
                                  9Section
      2.03.
                                  
                                  No
      Subrogation
                                  
                                  9Section
      2.04.
                                  
                                  Guarantee
      Absolute
                                  
                                  9Section
      2.05.
                                  
                                  Waivers
      and Acknowledgments
                                  
                                  11Section
      2.06.
                                  
                                  Reinstatement
                                  
                                  12Section
      2.07.
                                  
                                  Payments
                                  
                                  12Section
      2.08.
                                  
                                  Subordination
                                  
                                  12ARTICLE
      III
                                  
                                  GRANT
      OF SECURITY INTEREST
                                  
                                  13Section
      3.01.
                                  
                                  Grant
      of Security
                                  
                                  13Section
      3.02.
                                  
                                  Security
      for Obligations
                                  
                                  14Section
      3.03.
                                  
                                  Continuing
      Liability Under Collateral
                                  
                                  14ARTICLE
      IV
                                  
                                  REPRESENTATIONS
      AND WARRANTIES
                                  
                                  15Section
      4.01.
                                  
                                  Title;
      No Other Liens
                                  
                                  15Section
      4.02.
                                  
                                  Perfected
      First Priority Liens
                                  
                                  15Section
      4.03.
                                  
                                  Chief
      Executive Office, Etc
                                  
                                  16Section
      4.04.
                                  
                                  Inventory
      and Equipment
                                  
                                  16Section
      4.05.
                                  
                                  Investment
      Property
                                  
                                  17Section
      4.06.
                                  
                                  Receivables
                                  
                                  18Section
      4.07.
                                  
                                  Intellectual
      Property
                                  
                                  18Section
      4.08.
                                  
                                  Securities
      Accounts, Commodities Accounts and Deposit Accounts
                                  
                                  20Section
      4.09.
                                  
                                  Commercial
      Tort Claims
                                  
                                  20Section
      4.10.
                                  
                                  Letters
      of Credit
                                  
                                  20Section
      4.11.
                                  
                                  Independent
      Investigation
                                  
                                  21Section
      4.12.
                                  
                                  Specified
      Agreements
                                  
                                  21ARTICLE
      V
                                  
                                  COVENANTS
                                  
                                  22Section
      5.01.
                                  
                                  Delivery
      and Control of Instruments, Investment Property, Negotiable Documents,
      Chattel Paper, Letter-of-Credit Rights, and Transferable
      Records
                                  
                                  22Section
      5.02.
                                  
                                  Maintenance
      of Insurance
                                  
                                  24Section
      5.03.
                                  
                                  Payment
      of Obligations
                                  
                                  25Section
      5.04.
                                  
                                  Maintenance
      of Perfected Security Interest; Limitation on Dispositions; Further
      Documentation; Inspection
                                  
                                  25Section
      5.05.
                                  
                                  Changes
      in Locations; Name; Jurisdiction of Incorporation
                                  
                                  26Section
      5.06.
                                  
                                  Notices
                                  
                                  27Section
      5.07.
                                  
                                  Investment
      Property
                                  
                                  27Section
      5.08.
                                  
                                  Inventory
      and Equipment
                                  
                                  29Section
      5.09.
                                  
                                  Receivables
                                  
                                  29Section
      5.10.
                                  
                                  Intellectual
      Property
                                  
                                  30Section
      5.11.
                                  
                                  Commercial
      Tort Claims
                                  
                                  31




-i-




TABLE
OF CONTENTS (cont'd)


PageSection
      5.12.
                
                Covenants
      in Credit Agreement
                
                31Section
      5.13.
                
                Specified
      Agreements
                
                31ARTICLE
      VI
                
                REMEDIAL
      PROVISIONS
                
                34Section
      6.01.
                
                Certain
      Matters Relating to Receivables
                
                34Section
      6.02.
                
                Communications
      with Obligors; Grantors Remain Liable
                
                34Section
      6.03.
                
                Investment
      Property
                
                35Section
      6.04.
                
                Proceeds
      to be Turned Over to Secured Party
                
                36Section
      6.05.
                
                Remedies
                
                36Section
      6.06.
                
                Registration
      Rights
                
                38Section
      6.07.
                
                Deficiency
                
                39Section
      6.08.
                
                Sales
      on Credit
                
                39ARTICLE
      VII
                
                THE
      SECURED PARTY
                
                39Section
      7.01.
                
                Secured
      Party's Appointment as Attorney-in-Fact; Etc
                
                39Section
      7.02.
                
                Duty
      of Secured Party
                
                41Section
      7.03.
                
                Financing
      Statements
                
                41ARTICLE
      VIII
                
                MISCELLANEOUS
                
                42Section
      8.01.
                
                Amendments
      in Writing
                
                42Section
      8.02.
                
                Notices
                
                42Section
      8.03.
                
                Security
      Interest Absolute
                
                42Section
      8.04.
                
                Survival
      of Agreement
                
                42Section
      8.05.
                
                No
      Waiver by Course of Conduct; Cumulative Remedies
                
                43Section
      8.06.
                
                EXPENSES
      AND INDEMNIFICATION
                
                43Section
      8.07.
                
                Successors
      and Assigns
                
                44Section
      8.08.
                
                Set-Off
                
                44Section
      8.09.
                
                Counterparts
                
                45Section
      8.10.
                
                Severability
                
                45Section
      8.11.
                
                Headings
                
                45Section
      8.12.
                
                Governing
      Law
                
                45Section
      8.13.
                
                Submission
      to Jurisdiction
                
                45Section
      8.14.
                
                Acknowledgments
                
                45Section
      8.15.
                
                Additional
      Grantors
                
                46Section
      8.16.
                
                Releases
                
                46Section
      8.17.
                
                WAIVER
      OF JURY TRIAL
                
                47Section
      8.18.
                
                WAIVER
      OF CONSEQUENTIAL DAMAGES; ETC
                
                47


A-ii




SCHEDULES




Schedule
1       Notice Addresses


Schedule
2       Investment Property


Schedule
3       Perfection Matters


Schedule
4       Jurisdictions of Organization and
Chief Executive Offices


Schedule
5       Inventory and Equipment
Locations


Schedule
6       Intellectual Property


Schedule
7       Commercial Tort Claims


Schedule
8       Equipment Subject to Certificate of
Title Statutes


Schedule
9       Letters of Credit


Schedule
10     Existing Prior Liens


Schedule
11     Investment Agreements




ANNEXES




Annex
1            Form of
Assumption Agreement


Annex
2            Form of
Intellectual Property Security Agreement


Annex
3            Form of
Intellectual Property Security Agreement Supplement


Annex
4            Form of
Uncertificated Security Control Agreement


Annex
5            Form of
Securities Account Control Agreement


Annex
6            Form of
Commodity Account Control Agreement


Annex
7            Form of
Deposit Account Control Agreement


Annex
8            Form of
Consent to Assignment of Letter of Credit Rights


Annex
9            Form of
Acknowledgment and Consent


Annex
10          Form of Investment
Consent and Agreement


-iii-


GUARANTEE AND SECURITY
AGREEMENT




GUARANTEE
AND SECURITY AGREEMENT, dated as of May [__], 2009, made by each of the
signatories hereto (together with any other person or entity that may become a
party hereto as provided herein, the "Grantors"), in favor
of PROSPERITY BANK, as Secured Party (the "Secured
Party").




RECITALS




SANDERS
MORRIS HARRIS GROUP INC., a Texas corporation (the "Borrower") has
entered into that certain Credit Agreement dated as of May [__], 2009, with
the Secured Party (said Credit Agreement, as it may be amended, restated,
supplemented or otherwise modified from time to time, the "Credit
Agreement");




Pursuant
to the Credit Agreement, the Secured Party has agreed to make the Loan to the
Borrower upon the terms and subject to the conditions set forth
therein;




The
Borrower is a member of an affiliated group of companies that includes each
other Grantor;




The
proceeds of the Loan under the Credit Agreement will be used in part to enable
the Borrower to make valuable transfers to one or more of the other Grantors in
connection with the operation of their respective businesses;




The
Borrower and the other Grantors are engaged in related businesses, and each
Grantor will derive substantial direct and indirect benefit from the making of
the Loan under the Credit Agreement; and




It is a
condition precedent to the obligation of the Secured Party to make the Loan to
the Borrower under the Credit Agreement that the Grantors shall have executed
and delivered this Agreement to the Secured Party.




NOW,
THEREFORE, in consideration of the premises and to induce the Secured Party to
enter into the Credit Agreement and to induce the Secured Party to make the Loan
to the Borrower thereunder and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each Grantor hereby
agrees with the Secured Party as follows:




(a)




DEFINED
TERMS




(i)           Definitions.  Unless
otherwise defined herein, terms defined in the Credit Agreement and used herein
shall have the meanings specified in the Credit
Agreement.  Furthermore, unless otherwise defined in this Agreement or
in the Credit Agreement, terms defined in Article 8 or 9 of the UCC (as defined
below) are used in this Agreement as such terms are defined in such Article 8 or
9.




(1)           The
following terms shall have the following meanings:


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"Accounts" means all
"accounts" as such term is defined in Article 9 of the UCC.




"Agreement" means this
Guarantee and Security Agreement, as amended, restated, supplemented or
otherwise modified from time to time.




"Assumption Agreement"
means an Assumption Agreement in substantially the form of Annex 1 to this
Agreement.




"Collateral" has the
meaning specified in Section
3.01.




"Collateral Accounts"
means any collateral account established by the Secured Party pursuant to this
Agreement or the Credit Agreement, each of which shall be in the name of the
Secured Party, shall be under the sole dominion and control of the Secured Party
and shall be established in a manner satisfactory to the Secured
Party.




"Commodity Account Control
Agreement" has the meaning specified in Section
5.01(e).




"Consent to Assignment of
Letter of Credit Rights" has the meaning specified in Section
5.01(g).




"Control Agreement"
means a Deposit Account Control Agreement, Securities Account Control Agreement,
Commodity Account Control Agreement or Uncertificated Security Control
Agreement.




"Copyright Licenses"
means any and all agreements (written or oral) naming any Grantor as licensor or
licensee (including, without limitation, those listed in Schedule 6),
providing for the granting of any right in, to or under any Copyright, and all
renewals and extensions thereof.




"Copyrights" (i) all
United States and foreign copyrights, whether or not the underlying works of
authorship have been published, and all works of authorship and other
intellectual property rights therein, all copyrights of works based on,
incorporated in, derived from or relating to works covered by such copyrights,
all right, title and interest to make and exploit all derivative works based on
or adopted from works covered by such copyrights, and all United States and
foreign copyright registrations and applications for copyright, and any renewals
or extensions thereof, including, without limitation, each registration and
application identified in Schedule 6, (ii) the
rights to print, publish and distribute any of the foregoing, (iii) the right to
sue or otherwise recover for any and all past, present and future infringements
and misappropriations of any of the foregoing, (iv) all income, royalties,
damages and other payments now and hereafter due and/or payable with respect to
any of the foregoing and (v) all other rights of any kind whatsoever accruing
thereunder or pertaining to any of the foregoing.




"Deposit Account Control
Agreement" has the meaning specified in Section
5.01(f).




"Equipment" means all
"equipment" as such term is defined in Article 9 of the UCC and all parts
thereof and all accessions thereto and all software related
thereto.


A-2


"Excluded Assets"
means any lease, license, license, contract, property right or agreement to
which any Grantor is a party or any of its rights or interests thereunder if and
only for so long as the grant of a security interest hereunder shall constitute
or result in a breach, termination or default under any such lease, license,
contract, property right or agreement (other than to the extent that any such
term would be rendered ineffective pursuant to Sections 9.406, 9.407, 9.408 or
9.409 of the UCC of any relevant jurisdiction or any other applicable law or
principles of equity); provided, however, that such
security interest shall attach immediately to any portion of such lease,
license, contract, property rights or agreement that does not result in any of
the consequences specified above.




"Excluded Foreign Subsidiary
Voting Interests" means the voting equity interests of any Excluded
Foreign Subsidiary.




"General Intangibles"
means all "general intangibles" as such term is defined in Article 9 of the UCC,
including, without limitation, with respect to each Grantor, (i) all tax
refunds, claims for tax refunds, and tax credits, (ii) all permits,
licenses, approvals, authorizations, consents, variances, and certifications of
any Governmental Authority, (iii) all judgments, claims, tort claims,
causes of action, and choses in action, (iv) all property, casualty,
liability, business interruption, and other insurance of any kind or character,
and all insurance claims and insurance refund claims, (v) all letters of
credit and letter-of-credit rights, (vi) all payment intangibles,
(vii) all lists, customer lists, books, records, recorded knowledge,
goodwill, ledgers, files (whether in printed form or stored electronically),
designs, blueprints, data, specifications, engineering reports, manuals,
computer records, computer programs and computer software (including source
codes, object codes and related applications), (viii) all internet domain names,
registrations and websites and related licenses and agreements, and (ix) all
Swap Contracts, Assigned Agreements, other Material Contracts and all other
contracts, agreements (including, without limitations, all subleases, all
securities repurchase agreements and all securities loan agreements),
instruments and indentures in any form, and portions thereof, to which such
Grantor is a party or under which such Grantor has any right, title or interest
or to which such Grantor or any property of such Grantor is subject, as the same
may from time to time be amended, supplemented, replaced or otherwise modified,
including, without limitation, (A) all rights of such Grantor to receive moneys
due and to become due to it thereunder or in connection therewith, (B) all
rights of such Grantor to damages arising thereunder and (C) all rights of such
Grantor to perform and to exercise all remedies thereunder.




"Guarantors" means the
collective reference to each Grantor other than the Borrower.




"Indemnified Party"
has the meaning specified in Section
8.06(d).




"Intellectual
Property" means the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including, without
limitation, all Copyrights, Patents, Trademarks, IP Agreements, Trade Secrets,
and internet domain names, and all rights to sue at law or in equity for any
infringement or other impairment thereof, including the right to receive all
proceeds and damages therefrom.




"Intercompany Note"
means any promissory note evidencing loans, advances or other extensions of
credit made by any Grantor to the Borrower or any of its
Subsidiaries.


A-3




"Inventory" means all
"inventory" as such term is defined in Article 9 of the UCC.




"Investment Agreement"
means any agreement, instrument or document (including any warrant agreement,
limited partnership agreement, limited liability company agreement, or other
Organizational Document) to which any Grantor is a party which creates, governs
the terms of, or establishes any Grantor's rights, titles or interests in or to,
any Investment Property (including any agreement, instrument and document
identified in Schedule
11 hereto), as amended, restated, supplemented or otherwise modified from
time to time.




"Investment Consent and
Agreement" has the meaning specified in Section
4.12.




"Investment Control
Affiliate" means any Person that is owned or controlled (directly or
indirectly) by any Issuer.




"Investment Financing
Document" means any agreement, instrument or document pursuant to which
any Person makes a loan or provides any other extension of credit to any Issuer
(or to any Investment Control Affiliate of any Issuer) which is or will be
secured by a Lien on all or any material portion of the assets and properties
owned by, or on any of the Equity Interests of, such Issuer or any such
Investment Control Affiliate.




"Investment Party"
means each Person that is a party to an Investment Agreement (other than any
Grantor).




"Investment Property"
means the collective reference to (a) all "investment property" as such term is
defined in Section 9.102(a)(49) of the UCC including, without limitation, all
certificated securities and uncertificated securities, all security
entitlements, all securities accounts, all commodity contracts and all commodity
accounts (other than any Excluded Foreign Subsidiary Voting Interests excluded
from the definition of Pledged Equity Interests), (b) all security entitlements,
in the case of any United States Treasury book-entry securities, as defined in
31 C.F.R. section 357.2, or, in the case of any United States federal agency
book-entry securities, as defined in the corresponding United States federal
regulations governing such book-entry securities, and (c) whether or not
constituting "investment property" as so defined, all Pledged Notes, Pledged
Debt Securities, Pledged Equity Interests, Pledged Commodity Contracts, Pledged
Security Entitlements, securities accounts, and commodity accounts.




"IP Agreements" means
all Copyright Licenses, Patent Licenses, Trademark Licenses and all other
agreements, permits, consents, orders, and franchises relating to the license,
development or use of any Copyright, Patent, Trademark, Computer Software or
Trade Secret.




"Issuer" means any
Person which is an issuer of any Investment Property (including any limited
partnership, limited liability company or trust created by or under any
Investment Agreement to which any Grantor is a party).




"Material Investment
Agreement" means, on any date, any Investment Agreement which creates,
governs the terms of, or establishes any Grantor's rights, titles or interests
in or to, any Material Investment Property.


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"Material Investment
Property" means, on any date, any Investment Property owned or controlled
by any Grantor which has a cost basis or a fair market value (as reasonably
determined by such Grantor or by the Secured Party) which is equal to or greater
than $1,000,000 on such date.




"Obligations" has the
meaning specified in the Credit Agreement.




"Patent Licenses"
means all agreements, whether written or oral, providing for the grant by or to
any Grantor of any right to make, manufacture, use, sell, offer to sell, or
import any invention covered in whole or in part by a Patent, including, without
limitation, those listed on Schedule 6, and
all extensions and renewals thereof.




"Patents" means (i)
all United States and foreign patents, patent applications and patentable
inventions, including, without limitation, each patent and patent application
identified in Schedule 6, all
certificates of invention or similar property rights, (ii) all inventions and
improvements described and claimed therein, (iii) the right to sue or otherwise
recover for any and all past, present and future infringements and
misappropriations of any of the foregoing, (iv) all income, royalties, damages
and other payments now and hereafter due and/or payable with respect thereto and
(v) all reissues, divisions, continuations, continuations-in-part, substitutes,
renewals, and extensions thereof, all improvements thereon and all other rights
of any kind whatsoever accruing thereunder or pertaining thereto.




"Pledged Commodity
Contracts"  means all commodity contracts listed on Schedule 2 and all
other commodity contracts to which any Grantor is party from time to
time.




"Pledged Debt
Securities" means all debt securities now owned or hereafter acquired by
any Grantor, including, without limitation, the debt securities listed on Schedule 2, together
with any certificates, options, rights or security entitlements of any nature
whatsoever in respect of the debt securities of any Person that may at any time
be issued or granted to, or held by, any Grantor.




"Pledged Equity
Interests" means all Pledged Stock, Pledged LLC Interests, Pledged
Partnership Interests and Pledged Trust Interests; provided, however, in no event
shall more than 66% of the total outstanding Excluded Foreign Subsidiary Voting
Interests be required to be pledged hereunder.




"Pledged LLC
Interests" means all membership and other interests of any Grantor now
owned or hereafter acquired in any limited liability company including, without
limitation, all limited liability company interests listed on Schedule 2 hereto
under the heading "Pledged LLC Interests" and the certificates, if any,
representing such limited liability company interests and any interest of such
Grantor on the books and records of such limited liability company and all
dividends, distributions, cash, warrants, rights, options, instruments,
securities and other property or proceeds from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of such
limited liability company interests and any other warrant, right or option to
acquire any of the foregoing.


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"Pledged Notes" means
all Intercompany Notes at any time issued to any Grantor and all other
promissory notes issued to or held by any Grantor, including, without
limitation, the Pledged Notes described on Schedule 2.




"Pledged Partnership
Interests" means all partnership and other interests of any Grantor now
owned or hereafter acquired in any general partnership, limited partnership,
limited liability partnership or other partnership including, without
limitation, all partnership interests listed on Schedule 2 hereto
under the heading "Pledged Partnership Interests" and the certificates, if any,
representing such partnership interests and any interest of such Grantor on the
books and records of such partnership and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such partnership interests and any
other warrant, right or option to acquire any of the foregoing.




"Pledged Securities"
means the collective reference to the Pledged Debt Securities, the Pledged Notes
and the Pledged Equity Interests.




"Pledged Security
Entitlements" means all security entitlements with respect to the
financial assets listed on Schedule 2 and all
other security entitles of any Grantor.




"Pledged Stock" means
all shares of capital stock and other Equity Interests now owned or hereafter
acquired by any Grantor, including, without limitation, all shares of capital
stock described on Schedule 2hereto under the heading "Pledged Stock", and the certificates, if any,
representing such shares and any interest of such Grantor in the entries on the
books of the issuer of such shares and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares and any other warrant,
right or option to acquire any of the foregoing.




"Pledged Trust
Interests" means all interests of any Grantor now owned or hereafter
acquired in a Delaware business trust or other trust including, without
limitation, all trust interests listed on Schedule 2 hereto
under the heading "Pledged Trust Interests" and the certificates, if any,
representing such trust interests and any securities intermediary pertaining to
such interests and all dividends, distributions, cash, warrants, rights,
options, instruments, securities and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of such trust interests and any other warrant, right or option to
acquire any of the foregoing.




"Proceeds" means all
"proceeds" as defined in Article 9 of the UCC.




"Receivables" means
all rights to payment, whether or not earned by performance, for goods or other
property sold, leased, licensed, assigned or otherwise disposed of, or services
rendered or to be rendered, including, without limitation all such rights
constituting or evidenced by any Account, chattel paper, instrument, General
Intangible or Investment Property, together with all rights of the Grantors, if
any, in any goods or other property giving rise to such right to payment and all
supporting obligations related thereto.




"Securities Account Control
Agreement" has the meaning specified in Section
5.01(d).


A-6




"Securities Act" means
the Securities Act of 1933, as amended.




"Specified Agreements"
means the collective reference to each Assigned Agreement and each Investment
Agreement.




"Trademark Licenses"
means all agreements, whether written or oral, providing for the grant by or to
any Grantor of any right in or to any Trademark, including, without limitation,
those listed on Schedule 6, and
all renewals and extensions thereof.




"Trademarks" means (i)
all United States and foreign trademarks, trade names, corporate names, company
names, business names, fictitious business names, service marks, logos, trade
dress, trade styles, designs, know-how, slogans, words, terms, names, symbols
and devices and all combinations thereof, and all other source or business
identifiers, and all goodwill of the business connected with the use thereof as
symbolized thereby, all registrations and recordings thereof, and all
applications therefore or  in connection therewith, whether in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any State thereof or any other country or any political
subdivision thereof, or otherwise, and all common-law rights related thereto,
including, without limitation, those listed on Schedule 6, and
any and all extensions and renewals of any of the foregoing, (ii) the right to
sue or otherwise recover for any and all past, present and future infringements,
misappropriations and dilutions of any of the foregoing, (iii) all income,
royalties, damages and other payments now and hereafter due and/or payable with
respect to any of the foregoing and (iv) all other rights of any kind whatsoever
accruing thereunder or pertaining thereto, together in each case with all of the
goodwill of the business connected with the use of, and symbolized by, each of
the above.




"Trade Secrets" means
all confidential and proprietary information, including, without limitation,
know-how, trade secrets, manufacturing and production processes and techniques,
inventions, research and development information, databases and data, including,
without limitation, technical data, financial, marketing and business data,
pricing and cost information, business and marketing plans and customer and
supplier lists and information.




"UCC" means the
Uniform Commercial Code as in effect from time to time in the State of Texas or,
when the context implies, the Uniform Commercial Code as in effect from time to
time in any other applicable jurisdiction.




"UETA" means the
Uniform Electronic Transactions Act, as in effect in any applicable
jurisdiction.




"Uncertificated Security
Control Agreement" has the meaning specified in Section
5.01(c).




(ii)           Other Definitional
Provisions.




(1)           The
rules of construction specified in Section 1.02 of the Credit Agreement
shall apply to this Agreement.




(2)           The
expressions "payment in full," "paid in full" and any other similar terms or
phrases when used herein with respect to the Obligations shall mean the
unconditional, final, indefeasible and irrevocable payment in full, in
immediately available funds, of all of the Obligations.


A-7




(3)           No
inference in favor of, or against, any party to this Agreement shall be drawn
from the fact that such party has drafted any portion of this
Agreement.




(4)           Where
the context requires, terms relating to the Collateral or any part thereof, when
used in relation to a Grantor, shall refer to such Grantor's Collateral or the
relevant part thereof.




(b)




GUARANTEE




(i)           Guarantee.




(1)           Each
of the Guarantors hereby, jointly and severally, absolutely, unconditionally and
irrevocably, guarantees to the Secured Party and its successors, endorsees,
transferees and assigns, the prompt and complete payment and performance when
due (whether at stated maturity, by acceleration or otherwise) of all of the
Obligations (including, without limitation, any and all extensions,
modifications, substitutions, increases, restructurings, amendments,
restatements, and/or renewals of any or all of the Obligations).  Each
Guarantor is and shall be liable hereunder as a primary obligor and not as a
surety.




(2)           Anything
herein or in any other Loan Document to the contrary notwithstanding, the
maximum liability of each Guarantor hereunder and under the other Loan Documents
shall in no event exceed the amount which can be guaranteed by such Guarantor
under applicable federal and state laws relating to the insolvency of debtors
(after giving effect to the right of contribution established in Section
2.02).




(3)           Each
Guarantor agrees that the Obligations may at any time and from time to time
exceed the amount of the liability of such Guarantor hereunder without impairing
the guarantee contained in this Article II or affecting the rights and remedies
of the Secured Party hereunder.




(4)           The
guarantee contained in this Article II shall remain in full force and effect
until all of the Obligations shall have been paid in full, notwithstanding that
from time to time during the term of the Credit Agreement the Borrower may be
free from any Obligations.




(5)           No
payment made by the Borrower, any of the Guarantors, any other guarantor or any
other Person or received or collected by the Secured Party from the Borrower,
any of the Guarantors, any other guarantor or any other Person by virtue of any
action or proceeding or any set-off or appropriation or application at any time
or from time to time in reduction of or in payment or performance of the
Obligations shall be deemed to modify, reduce, release or otherwise affect the
liability of any Guarantor hereunder which shall, notwithstanding any such
payment (other than any payment made by such Guarantor in respect of the
Obligations or any payment received or collected from such Guarantor in respect
of the Obligations), remain liable for the Obligations up to the maximum
liability of such Guarantor hereunder until the Obligations are paid in
full.


A-8




(6)           If
acceleration of the time for payment of any amount payable by the Borrower under
any Loan Document is stayed upon the insolvency, bankruptcy or reorganization of
the Borrower, all such amounts otherwise subject to acceleration under the terms
of such Loan Document shall nonetheless be payable by each Guarantor hereunder
forthwith on demand by the Secured Party.




(ii)           Right of
Contribution.  Each Guarantor hereby agrees that to the extent
that a Guarantor shall have paid more than its proportionate share of any
payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder which has not paid
its proportionate share of such payment.  Each Guarantor's right of
contribution shall be subject to the terms and conditions of Section
2.03.  The provisions of this Section 2.02 shall in
no respect limit the obligations and liabilities of any Guarantor to the Secured
Party, and each Guarantor shall remain liable to the Secured Party for the full
amount guaranteed by such Guarantor hereunder.




(iii)          No
Subrogation.  Notwithstanding any payment made by any Guarantor
hereunder or any set-off or application of funds of any Guarantor by the Secured
Party, no Guarantor shall be entitled to be subrogated to any of the rights of
the Secured Party against the Borrower or any other Guarantor or any collateral
security or guarantee or right of offset held by the Secured Party for the
payment of the Obligations, nor shall any Guarantor seek or be entitled to seek
any contribution, indemnification or reimbursement from the Borrower or any
other Guarantor in respect of payments made by such Guarantor hereunder, until
all amounts owing to the Secured Party by the Borrower and the Guarantors on
account of the Obligations are paid in full.  If any amount shall be
paid to any Guarantor on account of such subrogation, contribution,
indemnification or reimbursement rights at any time when all of the Obligations
shall not have been paid in full, such amount shall be held by such Guarantor in
trust for the Secured Party, segregated from other funds of such Guarantor, and
shall, forthwith upon receipt by such Guarantor, be turned over to the Secured
Party in the exact form received by such Guarantor (duly indorsed by such
Guarantor to the Secured Party, if required), to be applied against the
Obligations, whether matured or unmatured, in such order as the Secured Party
may determine.




(iv)           Guarantee
Absolute.  Each Guarantor guarantees that the Obligations will
be paid and performed strictly in accordance with their respective terms,
regardless of any Requirement of Law now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Secured Party with
respect thereto.  Each Guarantor agrees that its guarantee hereunder
constitutes a guaranty of payment and performance when due and not of
collection, and waives any right to require that any resort be made by the
Secured Party to any of the Collateral, any other Person or any other
security.  The obligations of each Guarantor under or in respect of
this guarantee are independent of the Obligations of any other Guarantor or any
obligations of any other Person, and a separate action or actions may be brought
and prosecuted against each Guarantor to enforce its guarantee hereunder,
irrespective of whether any action is brought against the Borrower, any other
Guarantor or any other Person or whether the Borrower, any other Guarantor or
any other Person is joined in any such action or actions.  The
liability of each Guarantor under its guarantee hereunder shall be irrevocable,
absolute and unconditional irrespective of, and each Guarantor hereby
unconditionally and irrevocably waives any and all defenses and counterclaims it
may now have or hereafter acquire in any way relating to, any or all of the
following:


A-9




(1)           any
lack of validity or enforceability of any of the Obligations, any Loan Document
or any agreement, document or instrument relating thereto;




(2)           any
extension or change in the time, manner or place of payment of, or in any other
term or provision of, all or any of the Obligations, or any other amendment,
modification or waiver of or any consent to departure from any Loan Document or
any other agreement, document or instrument evidencing, securing or otherwise
relating to any of the Obligations, including, without limitation, any increase
in the Obligations resulting from the extension of additional credit to the
Borrower or otherwise;




(3)           any
taking, exchange, release or non-perfection of any Collateral or any other
collateral, or any taking, release or amendment or waiver of, or consent to
departure from, any other guaranty, for all or any of the
Obligations;




(4)           the
existence of any claim, set-off, recoupment, defense or other right that any
other Guarantor, the Borrower or any other Person may have against any Person,
including, without limitation, the Secured Party;




(5)           any
manner of application of Collateral or any other collateral, or proceeds
thereof, to all or any of the Obligations, or any manner of Disposition of any
Collateral or any other collateral for all or any of the Obligations or any
other assets of any Loan Party or any of its Subsidiaries;




(6)           any
change, restructuring or termination of the corporate or other organizational
structure, ownership or existence of any Loan Party or any of its
Subsidiaries;




(7)           any
insolvency, bankruptcy, reorganization or other similar proceeding affecting any
Grantor, or any other guarantor of or other Person liable for any of the
Obligations, or their assets or any resulting release or discharge of any
obligation of any Loan Party, or any other guarantor of or other Person liable
for any of the Obligations;




(8)           any
failure of the Secured Party to disclose to any Guarantor any information
relating to the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower or any other Loan Party now
or hereafter known to the Secured Party;




(9)           the
failure of any other Person to execute or deliver this Agreement, any Assumption
Agreement or any other guaranty or agreement, or the release or reduction of
liability of any Guarantor or other guarantor, surety or obligor with respect to
the Obligations or any part thereof; or


A-10




(10)           any
other circumstance (including, without limitation, any statute of limitations)
or any existence of or reliance on any representation by the Secured Party that
might otherwise constitute a defense available to, or a discharge of, any Loan
Party or any other guarantor or surety.




(v)           Waivers and
Acknowledgments.




(1)           Each
Guarantor hereby unconditionally and irrevocably waives promptness, diligence,
notice of acceptance, presentment, demand for performance, notice of
nonperformance, notice of default, notice of acceleration, notice of intent to
accelerate, protest or dishonor, notice of the existence or creation of any or
all of the Obligations, and any other notice with respect to any of the
Obligations and the guarantee contained in this Article II and any
requirement that the Secured Party protect, secure, perfect or insure any Lien
or any property subject thereto or exhaust any right or take any action against
the Borrower, any other Guarantor, any other Person, any Collateral, or any
other security.




(2)           Each
Guarantor hereby unconditionally and irrevocably waives any right to revoke its
guarantee hereunder and acknowledges that its guarantee hereunder is continuing
in nature and applies to all of the Obligations, whether existing now or in the
future.




(3)           Each
Guarantor hereby unconditionally and irrevocably waives (i) any defense arising
by reason of any claim or defense based upon an election of remedies by the
Secured Party that in any manner impairs, reduces, releases or otherwise
adversely affects the subrogation, reimbursement, exoneration, contribution or
indemnification rights of such Guarantor or other rights of such Guarantor to
proceed against the Borrower, any other Guarantor, any other guarantor or any
other Person or any Collateral or other security and (ii) any defense based
on any right of set-off, recoupment, or counterclaim against or in respect of
the Obligations of such Guarantor hereunder.




(4)           Each
Guarantor hereby unconditionally and irrevocably waives any duty on the part of
the Secured Party to disclose to such Guarantor any matter, fact or thing
relating to the business, condition (financial or otherwise), operations,
performance, properties or prospects of any Loan Party or any of its respective
Subsidiaries now or hereafter known by the Secured Party.




(5)           Each
Guarantor acknowledges that it will receive substantial direct and indirect
benefits from the financing arrangements contemplated by the Loan Documents and
that its guarantee hereunder and its other agreements herein are knowingly made
in contemplation of such benefits.




(6)           Each
Guarantor unconditionally and irrevocably waives any and all rights and defenses
that it may now or hereafter have under Chapter 34 of the Texas Business
and Commerce Code, Section 17.001 of the Texas Civil Practice and Remedies Code,
Rule 31 of the Texas Rules of Civil Procedure and Sections 51.003, 51.004, and
51.005 of the Texas Property Code.


A-11


(vi)          Reinstatement.  The
guarantee contained in this Article II shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by
the Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrower or any other Loan Party, or upon or as a result
of the appointment of a receiver, intervenor or conservator of, or trustee or
similar officer for, the Borrower or any other Loan Party or any substantial
part of its property, or otherwise, all as though such payments had not been
made.




(vii)         Payments.  Each
Guarantor hereby agrees and guarantees that all payments hereunder will be paid
to the Secured Party when due without set-off, counterclaim, recoupment or other
defense.




(viii)        Subordination.  Each
Guarantor hereby subordinates any and all present and future indebtedness,
liabilities or other obligations owed to such Guarantor by each other Loan Party
(the "Subordinated
Obligations") to the payment and performance of the Obligations to the
extent and in the manner hereinafter set forth in this Section:




(1)           If
no Event of Default shall have occurred and be continuing, each Guarantor may
receive regularly scheduled payments from any other Loan Party on account of the
Subordinated Obligations (excluding payments prohibited by Section
2.03).  Upon the occurrence and during the continuance of any
Event of Default, however, unless the Secured Party otherwise agrees in writing,
no Guarantor shall receive, demand or accept, or take any action to collect, any
payment on account of the Subordinated Obligations.




(2)           In
any proceeding under any law relating to bankruptcy, insolvency, reorganization
or relief of debtors (each a "Bankruptcy Law")
relating to any other Loan Party, each Guarantor agrees that the Secured Party
shall be entitled to receive payment in full of all Obligations (including all
interest and expenses accruing after the commencement of a proceeding under any
Bankruptcy Law, whether or not constituting an allowed claim in such proceeding
("Post Petition
Interest")) before such Guarantor receives payment of any Subordinated
Obligations.




(3)           If
any Event of Default shall have occurred and be continuing (including the
commencement and continuation of any proceeding under any Bankruptcy Law
relating to any other Loan Party), each Guarantor shall, if the Secured Party so
requests, collect, enforce and receive payments on account of the Subordinated
Obligations as trustee for the Secured Party and deliver such payments to the
Secured Party on account of the Obligations (including all Post Petition
Interest), together with any necessary endorsements or other instruments of
transfer, but without reducing or affecting in any manner the liability of such
Guarantor under the other provisions of this Agreement.




(4)           If
any Event of Default shall have occurred and be continuing (including the
commencement and continuation of any proceeding under any Bankruptcy Law
relating to any other Loan Party), the Secured Party is authorized and empowered
(but without any obligation to so do), in its discretion, (i) in the name
of each Guarantor, to collect, enforce and vote, and to submit and file proofs
of claim in respect of, Subordinated Obligations and to apply any amounts
received thereon to the Obligations (including any and all Post Petition
Interest), and (ii) to require each Guarantor (A) to collect and enforce,
and to submit claims in respect of, Subordinated Obligations and (B) to pay
any amounts received on such obligations to the Secured Party for application to
the Obligations (including any and all Post Petition Interest).




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(5)           Each
Guarantor shall not, without the prior written consent of the Secured
Party:




a.           accelerate,
make demand, or otherwise make due and payable prior to the original due date
thereof any Subordinated Obligations or bring suit or institute any other
actions or proceedings to enforce its rights or interests in respect of any
indebtedness, liabilities or obligations of any other Loan Party owing to such
Guarantor;




b.           exercise
any rights or remedies under or with respect to the Subordinated
Obligations;




c.           exercise
any right of set-off, recoupment or counterclaim in respect of any indebtedness,
liabilities, or obligations of such Guarantor to any other Loan Party or against
any of the Subordinated Obligations; or




d.           commence,
or cause to be commenced, or join with any creditor other than the Secured
Party, in commencing, any bankruptcy, insolvency, or receivership proceeding
against any other Loan Party.




(c)




GRANT
OF SECURITY INTEREST




(i)
           Grant of
Security.  Each Grantor hereby pledges, assigns and transfers
to the Secured Party, and hereby grants to the Secured Party a continuing
security interest in and lien on, all right, title and interest in or to any and
all of the following assets and properties now owned or at any time hereafter
arising or acquired by such Grantor or in which such Grantor now has or at any
time in the future may acquire any right, title or interest (collectively, the
"Collateral"):




(1)           all
Accounts;




(2)           all
chattel paper;




(3)           all
commercial tort claims described on Schedule 7;




(4)           all
deposit accounts;




(5)           all
documents;




(6)           all
Equipment;




(7)           all
fixtures;




(8)           all
General Intangibles;


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(9)           all
goods;




(10)           all
instruments;




(11)           all
Intellectual Property;




(12)           all
Inventory;




(13)           all
Investment Property;




(14)           all
money;




(15)           all
supporting obligations;




(16)           all
other personal property of any kind or character, whether tangible or
intangible;




(17)           all
books and records pertaining to the Collateral; and




(18)           to
the extent not otherwise included, all Proceeds and products of any and all of
the foregoing and all collateral security and guarantees given by any Person
with respect to any of the foregoing.




Notwithstanding
anything to the contrary contained in this Agreement, none of the Excluded
Assets shall constitute Collateral.




(ii)           Security for
Obligations.  This Agreement and the Liens created hereunder
secure, in the case of each Grantor, the prompt and complete payment and
performance when due (whether at stated maturity, by acceleration or otherwise)
of all of the Obligations.  Without limiting the foregoing, this
Agreement secures, as to each Grantor, the payment of all amounts that
constitute part of the Obligations and would be owed by such Grantor to the
Secured Party but for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar proceeding involving
a Loan Party.




(iii)           Continuing Liability Under
Collateral.  Notwithstanding anything herein to the contrary,
(a) each Grantor shall remain liable for all obligations under the Collateral
and nothing contained herein is intended or shall be a delegation of duties to
the Secured Party, (b) each Grantor shall remain liable under each of the
agreements included in the Collateral, including, without limitation, any
Receivables and any agreements relating to Pledged Securities, to perform all of
the obligations undertaken by it thereunder all in accordance with and pursuant
to the terms and provisions thereof and the Secured Party shall have no
obligation or liability under any of such agreements by reason of or arising out
of this Agreement or any other Loan Document nor shall the Secured Party have
any obligation to make any inquiry as to the nature or sufficiency of any
payment received by it or have any obligation to take any action to collect or
enforce any rights under any agreement included in the Collateral, including,
without limitation, any agreements relating to any Receivables or any Pledged
Securities and (c) the exercise by the Secured Party of any of its rights
hereunder shall not release any Grantor from any of its duties or obligations
under the contracts and agreements included in the Collateral.


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(d)




REPRESENTATIONS
AND WARRANTIES




To induce
the Secured Party to enter into the Credit Agreement and to make the Loan
thereunder, each Grantor hereby represents and warrants to the Secured Party
that:




(i)           Title; No Other
Liens.  Except for the security interest granted to the Secured
Party pursuant to this Agreement and the other Liens expressly permitted to
exist on the Collateral by the Credit Agreement, such Grantor is the legal and
beneficial owner of each item of the Collateral free and clear of any and all
Liens, claims, or other encumbrances.  No financing statement, fixture
filing or other public notice with respect to all or any part of the Collateral
is on file or of record in any filing or recording office, except such as have
been filed in favor of the Secured Party pursuant to this Agreement or as are
otherwise expressly permitted under the Credit Agreement.




(ii)           Perfected First Priority
Liens.




(1)           The
security interests granted pursuant to this Agreement(i)
constitute valid perfected security interests in all of the Collateral in favor
of the Secured Party, as collateral security for the Obligations, enforceable in
accordance with the terms hereof against all creditors of such Grantor and any
Persons purporting to purchase any Collateral from such Grantor and(ii)are
prior to all other Liens on the Collateral except for (A) unrecorded Liens
expressly permitted by the Credit Agreement which have priority over the Liens
on the Collateral by operation of law and (B) existing Liens described on Schedule
10.




(2)           Without
limiting the foregoing, and except as provided in Section 5.01, each
Grantor has taken all actions specified in Section 5.01
to:  (i) establish the Secured Party's "control" (within the meanings
of Sections 8.106 and 9.106 of the UCC) over any portion of the Investment
Property of such Grantor constituting certificated securities, uncertificated
securities, securities accounts, security entitlements, or commodity accounts or
commodity contracts, (ii) establish the Secured Party's "control" (within the
meaning of Section 9.104 of the UCC) over all deposit accounts of such Grantor,
(iii) establish the Secured Party's "control" (within the meaning of Section
9.107 of the UCC) over all letter-of-credit rights of such Grantor, (iv)
establish the Secured Party's "control" (within the meaning of Section 9.105 of
the UCC) over all electronic chattel paper of such Grantor and (v) establish the
Secured Party's "control" within the meaning of Section 16 of the UETA over all
"transferable records" (as defined in UETA) of such Grantor.




(3)           All
tangible chattel paper, instruments and negotiable documents of each Grantor
have been delivered to the Secured Party.


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(iii)          Chief Executive Office,
Etc.




(1)           Such
Grantor's type of organization, jurisdiction of organization, organizational
identification number, taxpayer identification number and the location of such
Grantor's chief executive office or sole place of business, as the case may be,
are specified on Schedule
4.




(2)           Such
Grantor's exact legal name is set forth on Schedule 4 and such
Grantor has not conducted business in the last five (5) years, and does not
conduct business, under any other name (including any trade-name or fictitious
business name) except for those names listed on Schedule
4.




(3)           Except
as provided in Schedule 4, such
Grantor has not changed its name, jurisdiction of organization, organizational
identification number, type of organization, taxpayer identification number,
chief executive office or sole place of business or its organizational structure
in any way (e.g., by
merger, consolidation, change in organizational form or otherwise) within the
past five (5) years.




(4)           Such
Grantor has not within the last five (5) years become bound (whether by merger
or otherwise) as a debtor under a security agreement entered into by another
Person, which has not been terminated other than security agreements identified
on Schedule
4.




(5)           With
respect to each security agreement identified on Schedule 4 pursuant
to clause (d) of this Section, such Grantor has set forth on Schedule 4 the
information required pursuant to clauses (a), (b) and (c) of this Section for
the debtor under each such security agreement.




(6)           All
actions and consents, filings, notices, registrations, and recordings necessary
or desirable for the exercise by the Secured Party of the voting or other rights
provided for in this Agreement or the exercise of remedies in respect of the
Collateral have been taken, made or obtained or, in the case of filings or
recordings, authorized.




(7)           The
information on Schedule 4 with
respect to such Grantor is true and correct in all respects.




(8)           All
information supplied by such Grantor to the Secured Party with respect to the
Collateral is accurate and complete.




(iv)          Inventory and
Equipment.




(1)           All
of the Inventory and the Equipment of such Grantor is kept at the locations
listed on Schedule
5.




(2)           None
of the Inventory or Equipment of such Grantor is in the possession of an issuer
of a negotiable document therefore or otherwise in the possession of a bailee or
warehouseman.


A-16




(3)           All
Equipment of such Grantor that is subject to a certificate of title statute is
described on Schedule
8.




(v)           Investment
Property.




(1)           Schedule 2 hereto
sets forth under the headings "Pledged Stock," "Pledged LLC Interests," "Pledged
Partnership Interests" and "Pledged Trust Interests," respectively, all of the
Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and Pledged
Trust Interests owned by such Grantor and such Pledged Equity Interests
constitute the percentage of issued and outstanding shares of stock, percentage
of membership interests, percentage of partnership interests or percentage of
beneficial or ownership interests, respectively, of the respective Issuers
thereof indicated on such Schedule.




(2)           Schedule 2 hereto
sets forth under the heading "Pledged Debt Securities" or "Pledged Notes" all of
the Pledged Debt Securities and Pledged Notes owned by such Grantor and (i) each
such Pledged Debt Security and Pledged Note (or, with respect to any such
Pledged Debt Security or Pledged Note issued by any Person other than a Loan
Party, to such Grantor's knowledge) has been duly authorized, authenticated or
issued, and delivered and is the legal, valid and binding obligation of the
Issuer thereof enforceable against such Issuer in accordance with its terms, and
(ii) each Issuer of each such Pledged Debt Security and each such Pledged Note
(or, with respect to any such Pledged Debt Security or Pledged Note issued by
any Person other than a Loan Party, to such Grantor's knowledge) is not in
default of any of its obligations thereunder, and each such Pledged Debt
Security and Pledged Note constitutes all of the issued and outstanding
indebtedness evidenced by an instrument or a certificated security of the
respective Issuer thereof owing to such Grantor.




(3)           Each
of the Pledged Equity Interests owned by such Grantor (or, with respect to any
such Pledged Equity Interests issued by any Person other than a Loan Party, to
such Grantor's knowledge) has been duly authorized and validly issued and is
fully paid and nonassessable.




(4)           Such
Grantor is the record and beneficial owner of, and has good and marketable title
to, the Pledged Equity Interests pledged by it hereunder, free and clear of any
and all Liens or options in favor of, or claims of, any other Person, except the
security interest created by this Agreement and except for any Liens expressly
permitted under the Credit Agreement, and except as set forth on Schedule 2 hereto, to
such Grantor's knowledge there are no outstanding preemptive rights, warrants,
options or other rights to purchase, or shareholder, voting trust or similar
agreements outstanding with respect to, or property that is convertible into, or
that requires the issuance or sale of, any such Pledged Equity
Interests.




(5)           Except
to the extent expressly required by any Investment Agreement, no consent of any
Person, including any other general or limited partner, any other member of a
limited liability company, any other shareholder or any other trust beneficiary
is necessary in connection with the creation, perfection or first priority
status of the security interest of the Secured Party hereunder in any Pledged
Equity Interests or the exercise by the Secured Party of the voting or other
rights provided for in this Agreement or the exercise of rights and remedies
hereunder.


A-17




(6)           None
of the Pledged LLC Interests or Pledged Partnership Interests are or represent
interests in issuers that: (i) are registered as investment companies or (ii)
are dealt in or traded on securities exchanges or markets.




(7)           Except
as described in Schedule 2 or Schedule 11 hereto,
the terms of each Pledged Partnership Interest and each Pledged LLC Interest
expressly provide that they are securities governed by Article 8 of the Uniform
Commercial Code.




(8)           Each
Issuer which is an Affiliate of the Borrower that is not a Grantor hereunder has
executed and delivered to the Secured Party an Acknowledgement and Consent, in
substantially the form of Annex 9, to the
pledge of the Pledged Notes, the Pledged Debt Securities and the Pledged Equity
Interests pursuant to the Agreement.




(vi)           Receivables.




(1)           Each
Receivable (i) is and will be the legal, valid and binding obligation of the
account debtor in respect thereof, (ii) is and will be enforceable in accordance
with its terms, (iii) is and will not be subject to any setoffs, defenses, taxes
or counterclaims (except with respect to disputes, refunds, returns, discounts
and allowances in the ordinary course of business) and (iv) is and will be in
compliance in all material respects with all Requirements of Law.




(2)           No
amount payable to such Grantor under or in connection with any Receivable is
evidenced by any certificated security, instrument or tangible chattel paper
that has not been delivered to the Secured Party or constitutes electronic
chattel paper that has not been subjected to the control (within the meaning of
Section 9.105 of the UCC) of the Secured Party.




(3)           None
of the obligors on any of the Receivables is a Governmental
Authority.




(4)           No
Receivable in excess of $100,000 requires the consent of the account debtor to
the attachment of the security interest hereunder to such Receivable and the
Proceeds thereof.




(5)           The
amounts represented by such Grantor to the Secured Party from time to time as
owing to such Grantor in respect of the Receivables will at such times be
accurate.




(vii)         Intellectual
Property.




(1)           The
operation of such Grantor's business as currently conducted or as contemplated
to be conducted and the use of such Grantor's material Intellectual Property in
connection therewith do not conflict with, infringe, misappropriate, dilute,
misuse or otherwise violate the intellectual property rights of any third
party.


A-18




(2)           Such
Grantor is the exclusive owner of all right, title and interest in and to such
Grantor's material Intellectual Property, and is entitled to use all such
Intellectual Property subject only to the terms of the IP
Agreements.




(3)           The
Intellectual Property of such Grantor described on Schedule 6 hereto
includes all of the patents, patent applications, domain names, trademark
registrations and applications, copyright registrations and applications and IP
Agreements owned by such Grantor.




(4)           Such
Grantor's material Intellectual Property of such Grantor is subsisting and has
not been adjudged invalid or unenforceable in whole or part, and to the best of
such Grantor's knowledge, is valid and enforceable.  Such Grantor is
not aware of any uses of any item of any such Intellectual Property that could
be expected to lead to such item becoming invalid or unenforceable.




(5)           Such
Grantor has made or performed all filings, recordings and other acts and has
paid all required fees and taxes to maintain and protect its interest in each
and every item of its material Intellectual Property in full force and effect
throughout the world, and to protect and maintain its interest therein
including.




(6)           No
claim, action, suit, investigation, litigation or proceeding has been asserted
or is pending or threatened against such Grantor (i) based upon or challenging
or seeking to deny or restrict the Grantor's rights in or use of any of its
material Intellectual Property, (ii) alleging that the Grantor's rights in or
use of any such Intellectual Property infringe, misappropriate, dilute, misuse
or otherwise violate any patent, trademark, copyright or any other proprietary
right of any third party, or (iii) alleging that any such Intellectual Property
is being licensed or sublicensed in violation or contravention of the terms of
any license or other agreement.  No Person is engaging in any activity
that infringes, misappropriates, dilutes, misuses or otherwise violates such
Grantor's material Intellectual Property or such Grantor's rights therein or use
thereof.  Except as set forth on Schedule 6 hereto,
such Grantor has not granted any license, release, covenant not to sue,
non-assertion assurance, or other right to any Person with respect to any part
of such Grantor's Intellectual Property.  The consummation of the
transactions contemplated by the Loan Documents will not result in the
termination or impairment of any of such Grantor's material Intellectual
Property.




(7)           With
respect to each IP Agreement to which such Grantor is a party: (i) such IP
Agreement is valid and binding and in full force and effect and represents the
entire agreement between the respective parties thereto with respect to the
subject matter thereof; (ii) such IP Agreement will not cease to be valid and
binding and in full force and effect on terms identical to those currently in
effect as a result of the rights and interest granted herein, nor will the grant
of such rights and interest constitute a breach or default under such IP
Agreement or otherwise give any party thereto a right to terminate such IP
Agreement; (iii) such Grantor has not received any notice of termination or
cancellation under such IP Agreement; (iv) such Grantor has not received any
notice of a breach or default under such IP Agreement, which breach or default
has not been cured; (v) such Grantor has not granted to any other third party
any rights, adverse or otherwise, under such IP Agreement; and (vi) neither such
Grantor nor any other party to such IP Agreement is in breach or default thereof
in any material respect, and no event has occurred that, with notice or lapse of
time or both, would constitute such a breach or default or permit termination,
modification or acceleration under such IP Agreement.


A-19




(8)           To
the best of such Grantor's knowledge, (i) none of the material Trade Secrets of
such Grantor has been used, divulged, disclosed or appropriated to the detriment
of such Grantor for the benefit of any other Person other than such Grantor;
(ii) no employee, independent contractor or agent of such Grantor has
misappropriated any trade secrets of any other Person in the course of the
performance of his or her duties as an employee, independent contractor or agent
of such Grantor; and (iii) no employee, independent contractor or agent of such
Grantor is in default or breach of any term of any employment agreement,
non-disclosure agreement, assignment of inventions agreement or similar
agreement or contract relating in any way to the protection, ownership,
development, use or transfer of such Grantor's material Intellectual
Property.




(9)           Neither
such Grantor nor any of its material Intellectual Property is subject to any
outstanding consent, settlement, decree, order, injunction, judgment or ruling
restricting the use of any Intellectual Property or that would impair the
validity or enforceability of such Intellectual Property.




(viii)        Securities Accounts,
Commodities Accounts and Deposit Accounts.




(1)           Schedule 2 sets forth
under the headings "Securities Accounts" and "Commodities Accounts,"
respectively, all of the securities accounts and commodities accounts in which
such Grantor has an interest.  Such Grantor is the sole entitlement
holder of each such securities account and commodity account, and no Person
(other than the Secured Party pursuant hereto) has or will have "control"
(within the meanings of Sections 8.106 and 9.106 of the UCC) over, or any other
interest in or claim against, any such securities account or commodity account
or any money or other property deposited therein or credited thereto (other than
the Clearing Accounts).




(2)           Schedule 2 sets forth
under the heading "Deposit Accounts" all of the deposit accounts in which such
Grantor has an interest.  Such Grantor is the sole account holder of
each such deposit account and no Person (other than the Secured Party pursuant
hereto) has or will have "control" (within the meaning of Section 9.104 of the
UCC) over, or any other interest in or claim against, any such deposit account
or any money or other property deposited therein or credited thereto (other than
the Clearing Accounts).




(ix)          Commercial Tort
Claims.  Such Grantor has no commercial tort claims other than
(a) those listed on Schedule 7, or (b) as
to which the actions required by Section 5.11 have
been taken.




(x)           Letters of
Credit.  Such Grantor is not a beneficiary or assignee under
any letter of credit, other than the letters of credit described in Schedule 9, and
legal, binding and enforceable consents, in substantially the form of the
Consent to Assignment of Letter of Credit Rights, are in effect for each letter
of credit in which such Grantor has rights.  Such Grantor has
instructed all issuers and nominated Persons under letters of credit in which
such Grantor is the beneficiary or assignee to make all payments thereunder to a
Collateral Account.


A-20




(xi)          
Independent
Investigation.Such Grantor has,
independently and without reliance upon the Secured Party and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement.  Such Grantor will
benefit directly and indirectly from its execution and delivery of this
Agreement and from the Loan made by the Secured Party to the Borrower under the
Credit Agreement.  There are no conditions precedent to the
effectiveness of this Agreement that have not been satisfied or
waived.




(xii)         
Specified
Agreements.




(1)           Schedule 11 sets
forth a true and complete description of all Investment Agreements to which such
Grantor is a party or in which such Grantor has any right, title or
interest.




(2)           No
consent, authorization or other approval or agreement of (i) any Investment
Party or (ii) to such Grantor's knowledge, any Person that has made loans or
other extensions of credit to any Issuer or any Investment Control Affiliate
pursuant to any Investment Financing Document is required (or is purported to be
required) pursuant to or with respect to any Investment Agreement for or in
connection with the execution, delivery and performance by such Grantor of its
obligations under this Agreement or any other Loan Document, the validity or
enforceability of this Agreement or any other Loan Document or the exercise by
the Secured Party of any of its rights and remedies hereunder or thereunder,
other than (x) those which have been duly obtained made or performed, are in
full force and effect and are evidenced by an executed consent and agreement
substantially in the form of Annex 10 hereto or in
such other form which is acceptable to the Secured Party which has been
delivered to the Secured Party (each, an "Investment Consent and
Agreement") or (y) are described on Schedule 11
hereto.




(3)           No
consent, authorization or approval of any Person (other than such Grantor) to
any Assigned Agreement to which such Grantor is a party is required (or is
purported to be required) for or in connection with the execution, delivery, and
performance by such Grantor of its obligations under this Agreement, the
validity or enforceability of this Agreement or any other Loan Document or the
exercise by the Secured Party of any of its rights and remedies hereunder or
thereunder, other than those which have been duly obtained, made or performed,
are in full force and effect and are evidenced by a Consent and Agreement or an
Investment Consent and Agreement (as applicable).




(4)           Each
Specified Agreement to which such Grantor is a party has been duly authorized,
executed and delivered by such Grantor and, to such Grantor's knowledge, each of
the other parties thereto, is in full force and effect, and constitutes a valid
and legally enforceable obligation of the parties thereto, subject to the
effects of bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at
law).


A-21




(5)           None
of such Grantor nor to such Grantor’s knowledge any of the other parties to any
Specified Agreement to which such Grantor is a party is in default in the
performance or observance of any of the material terms or provisions thereof
(including any such term or provision requiring any such other party to make
payments to such Grantor).




(6)           The
rights, titles and interests of such Grantor in, to and under each Specified
Agreement to which such Grantor is a party are not to such Grantor's knowledge
subject to any defenses, offsets, recoupments, counterclaims or claims, except
to the extent expressly provided in such Specified Agreement, any Consent and
Agreement or any Investment Consent and Agreement.




(7)           Such
Grantor has delivered to the Secured Party a complete and correct copy of each
Assigned Agreement and each Material Investment Agreement, including all
amendments, supplements and other modifications thereto.




(8)           Except
to the extent expressly provided in any Consent and Agreement or in any
Investment Consent and Agreement, no amount payable to such Grantor under or in
connection with any Specified Agreement is (i) subject to any right of setoff,
offset or reduction or (ii) evidenced by any instrument or chattel paper that
has not been delivered to the Secured Party.




(9)           None
of the parties to any Specified Agreement is a Governmental
Authority.




(e)




COVENANTS




Each
Grantor covenants and agrees with the Secured Party that, from and after the
date of this Agreement until the Obligations shall have been paid and performed
in full:




(i)          
 Delivery and
Control of Instruments, Investment Property, Negotiable Documents, Chattel
Paper, Letter-of-Credit Rights, and Transferable Records.




(1)           If
any of the Collateral (other than Collateral held in Clearing Accounts or
securities accounts which are subject to a Securities Account Control Agreement
in favor of the Secured Party) is or shall become evidenced by any instrument,
certificated security, negotiable document or tangible chattel paper, such
Grantor shall promptly notify the Secured Party in writing and in reasonable
detail of same and, upon the request of the Secured Party, immediately deliver
such instrument, certificated security, negotiable document or tangible chattel
paper to the Secured Party, duly indorsed in a manner satisfactory to the
Secured Party, to be held as Collateral pursuant to this Agreement.




(2)           If
any of the Collateral is or shall become electronic chattel paper, such Grantor
shall ensure that (i) a single authoritative copy exists which is unique,
identifiable, and unalterable (except as provided in clauses (iii), (iv) and (v)
of this paragraph), (ii) such authoritative copy identifies the Secured Party as
the assignee and is communicated to and maintained by the Secured Party or its
designee, (iii) copies or revisions that add or change the assignee of the
authoritative copy can only be made with the participation of the Secured Party,
(iv) each copy of the authoritative copy and any copy of a copy is readily
identifiable as a copy and not the authoritative copy and (v) any revision of
the authoritative copy is readily identifiable as an authorized or unauthorized
revision.


A-22




(3)           If
any of the Collateral consisting of any Equity Interests in a Subsidiary of the
Borrower is or shall become evidenced or represented by an uncertificated
security, such Grantor shall promptly notify the Secured Party in writing and in
reasonable detail of same and, upon the request of the Secured Party,
immediately cause the Issuer thereof either to (i) register the Secured Party as
the registered owner of such uncertificated security, upon original issue or
registration of transfer or (ii) agree in writing with such Grantor and the
Secured Party that such Issuer will comply with instructions with respect to
such uncertificated security originated by the Secured Party without further
consent of such Grantor, such agreement to be in substantially the form of Annex 4 or otherwise
satisfactory in form and substance to the Secured Party (each such agreement
being referred to herein as an "Uncertificated Security
Control Agreement").




(4)           With
respect to any Investment Property of such Grantor consisting of a securities
account (other than the Clearing Accounts) or security entitlement, such Grantor
shall enter into, and shall cause the securities intermediary maintaining such
securities account or security entitlement to enter into, a control agreement
with the Secured Party in substantially the form of Annex 5 or otherwise
satisfactory in form and substance to the Secured Party, in each case on or
prior to the date described in Section 5.01(h),
pursuant to which such securities intermediary shall agree to comply with the
entitlement orders and other instructions originated by the Secured Party
without further consent of such Grantor (each such agreement being referred to
herein as a "Securities Account Control
Agreement").




(5)           With
respect to any Investment Property of such Grantor consisting of a commodity
account (other than the Clearing Accounts) or commodity contract, such Grantor
shall enter into, and shall cause the commodity intermediary maintaining such
commodity account or commodity contract to enter into, a control agreement with
the Secured Party in substantially the form of Annex 6 or otherwise
satisfactory in form and substance to the Secured Party, in each case on or
prior to the date described in Section 5.01(h),
pursuant to which such commodity intermediary shall agree to comply with the
Secured Party's instructions to apply any value distributed on account of any
commodity contract carried in the commodity account or other directions
concerning the commodity account originated by the Secured Party, in each case
without further consent by such Grantor (each such agreement being referred to
herein as a "Commodity
Account Control Agreement").




(6)           With
respect to each deposit account of such Grantor (other than the Clearing
Accounts), such Grantor shall either (i) maintain such account with the Secured
Party, or (ii) enter into, and shall cause the bank maintaining such deposit
account to enter into, a control agreement with the Secured Party in
substantially the form of Annex 7 or otherwise
satisfactory in form and substance to the Secured Party, in each case on or
prior to the date described in Section 5.01(h),
pursuant to which such bank shall agree to comply with instructions originated
by the Secured Party directing the disposition of funds in such deposit account
without further consent by such Grantor (each such agreement being referred to
herein as a "Deposit
Account Control Agreement").


A-23




(7)           With
respect to any letter-of-credit rights of such Grantor, such Grantor shall
obtain the consent of the issuer thereof and any nominated Person thereon to the
assignment of the proceeds of the related letter of credit to the Secured Party
in accordance with Section 5.114(c) of the UCC, such consent to be in
substantially the form of Annex 8 or otherwise
satisfactory in form and substance to the Secured Party (each such consent being
referred to herein as a "Consent to Assignment of
Letter of Credit Rights").




(8)           Such
Grantor shall have entered into Control Agreements with respect to: (i) any
securities accounts, security entitlements, commodity contracts, commodity
accounts, and deposit accounts of such Grantor that exist on the Closing Date
(other than the Clearing Accounts[, the Existing Accounts] and the L/C
Collateral Account), as of or prior to the Closing Date (except that such
Grantor is not required to enter into any Control Agreement until the date which
is ten (10) Business Days after the Closing Date), and (ii) any other securities
accounts, security entitlements, commodity contracts, commodity accounts, and
deposit accounts of such Grantor that are created or acquired after the Closing
Date, as of or prior to the date of deposit or transfer of any such security
entitlements, commodity contracts or funds into such securities accounts,
commodity accounts or deposit accounts.




(9)           Such
Grantor will maintain all transferable records (as such term is defined in the
UETA) so that the Secured Party has control of the transferable records in the
manner specified in Section 16 of the UETA.




(10)           Upon
the request of the Secured Party, such Grantor will notify each Issuer of
Investment Property that such Investment Property is subject to the security
interest granted hereunder.




(11)           In
addition to and not in lieu of the foregoing, if any Issuer of any Investment
Property is organized under the law of, or has its chief executive office in, a
jurisdiction outside of the United States, each Grantor shall take such
additional actions, including, without limitation, causing the issuer to
register the pledge on its books and records, as may be necessary or as may be
requested by the Secured Party, under the laws of such jurisdiction to insure
the validity, perfection and priority of the security interest of the Secured
Party.




(ii)           Maintenance of
Insurance.




(1)           Such
Grantor will maintain (or cause to be maintained), with financially sound and
reputable companies, insurance policies (i) insuring its assets and property
against loss by fire, explosion, theft and such other casualties as may be
reasonably satisfactory to the Secured Party and (ii) insuring such Grantor, the
Secured Party and the other Secured Parties against liability for personal
injury and property damage relating to any Inventory and Equipment, such
policies to be in such form and amounts and having such coverage as may be
reasonably satisfactory to the Secured Party.  Such Grantor shall, if
so requested by the Secured Party, deliver to the Secured Party original or
duplicate copies of such policies of insurance.


A-24




(2)           Each
such policy of insurance shall (i) provide that no cancellation, lapse,
expiration, reduction in amount or change in coverage thereof shall be effective
until at least thirty (30) days after receipt by the Secured Party of written
notice thereof, (ii) in the case of liability insurance, provide for all losses
to be paid to such Grantor and the Secured Party as their interests may appear,
(iii) in the case of property insurance, provide for all losses (except for
losses less than $100,000 per occurrence) to be adjusted with, and paid to, the
Secured Party, (iv) contain an agreement by the insurer that any loss thereunder
shall be payable notwithstanding any action, inaction or breach of
representation or warranty by any Grantor, (v) be reasonably satisfactory in all
other respects to the Secured Party, and (vi) provide that there will be no
recourse against the Secured Party or any other Secured Party for payment of
premiums or other amounts in respect thereof.




(3)           If
an Event of Default shall have occurred and be continuing, the Secured Party
shall have the sole right, in the name of the Grantor or in its own name, to
file claims under any insurance policies, to receive, receipt and give
acquitance for any payments that may be payable thereunder, and to execute any
and all endorsements, receipts, releases, assignments, reassignments or other
documents may be necessary to effect the collection, compromise or settlement of
any claims under any such insurance policies.




(4)           The
Borrower shall deliver to the Secured Party a report describing such insurance
concurrently with each delivery of the Borrower's audited annual financial
statements and such supplemental reports with respect thereto as the Secured
Party may from time to time reasonably request.




(iii)          Payment of
Obligations.  Such Grantor will pay and discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all Taxes imposed upon the Collateral or in respect of income or profits
therefrom, as well as all claims of any kind (including, without limitation,
claims for labor, materials and supplies) against or with respect to the
Collateral, except that no such Tax or claim need be paid if (a) the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings, reserves in conformity with GAAP with respect thereto have been
provided on the books of such Grantor, (b) such contest suspends the enforcement
of any Lien securing such Tax or claim or any other collection of such Tax or
claim, and (c) such proceedings could not reasonably be expected to result in
the sale, forfeiture or loss of any portion of the Collateral or any interest
therein.




(iv)          Maintenance of Perfected
Security Interest; Limitation on Dispositions; Further Documentation;
Inspection.




(1)           Such
Grantor shall, at its sole cost and expense, maintain the security interest
created under this Agreement as a perfected security interest having at least
the priority described in Section 4.02 and
shall defend such security interest against the claims and demands of all
Persons whomsoever.




(2)           Such
Grantor shall not sell, assign, transfer, lease, or otherwise dispose of, or
abandon or permit a lapse of, or grant or permit any Lien on, any of the
Collateral or any interest therein, except in each case as and to the extent
expressly permitted by the Credit Agreement.


A-25




(3)           Such
Grantor will furnish to the Secured Party from time to time statements and
schedules further identifying and describing the Collateral and other assets and
property of such Grantor and such other reports in connection therewith as the
Secured Party may request, all in such detail as the Secured Party may
specify.




(4)           At
any time and from time to time, upon the written request of the Secured Party,
and at the sole cost and expense of such Grantor, such Grantor will promptly and
duly authorize, execute and deliver, and have recorded, all further instruments
and documents and take all further actions as may be necessary or desirable or
that the Secured Party may request for the purpose of perfecting or protecting
the assignments and security interests granted hereunder and obtaining or
preserving the full benefits of this Agreement and of the rights and powers
herein granted, including, without limitation, (i) executing and filing any
financing or continuation statements under the UCC (or other similar laws) in
effect in any jurisdiction with respect to the security interests created
hereby, (ii) delivering and pledging to the Secured Party certificates
representing the Pledged Equity Interests that constitute certificated
securities, accompanied by undated stock powers executed in blank,
(iii) complying with any Requirement of Law (including the Federal
Assignment of Claims Act) as to any Collateral if such compliance is deemed
necessary or advisable by the Secured Party for the attachment, perfection or
priority of, or the ability of the Secured Party to enforce, the Secured Party's
security interest in such Collateral, (iv) obtaining consents and approvals
from any Governmental Authority or other Person, including without limitation
any consent of any licensor, lessor or other Person obligated on Collateral, and
(v) obtaining waivers from mortgagees, lessors, landlords, warehousemen,
and any Governmental Authority or other Person in form and substance
satisfactory to the Secured Party.




(5)           Such
Grantor shall permit the Secured Party, or its designee, to inspect and audit
the Collateral at any reasonable time or times, wherever
located.  Such Grantor shall reimburse the Secured Party on demand for
all costs and expenses incurred by the Secured Party in connection with
inspections and audits of Collateral.




(6)           Such
Grantor shall not take or permit any action that could impair the Secured
Party's rights in the Collateral or the perfection or priority of the security
interests created hereunder.




(v)           Changes in Locations; Name;
Jurisdiction of Incorporation.  Such Grantor will not, except
upon thirty (30) days' prior written notice to the Secured Party and (a) taking
all action required by the Secured Party to maintain the validity, perfection
and priority of the security interests provided for herein and (b) if
applicable, delivery to the Secured Party of a written supplement to Schedule 5 showing
any additional location at which Inventory or Equipment shall be kept (which
supplement may be attached to Schedule 5 by the
Secured Party):




a.           permit
any of the Inventory or Equipment to be kept at a location other than those
listed on Schedule
5; or


A-26




b.           change
its name, type of organization, jurisdiction of organization, organizational
identification number, federal taxpayer identification number, or the location
of its chief executive office or sole place of business from that referred to in
Schedule
4.




(vi)           Notices.  Such
Grantor will advise the Secured Party immediately, in reasonable detail,
of:




(1)           any
Lien (other than security interests created hereby or Liens expressly permitted
under the Credit Agreement) on any of the Collateral; and




(2)           the
occurrence of any other event which could reasonably be expected to have a
material adverse effect on the aggregate value of the Collateral or on the
security interests created hereunder.




(vii)         Investment
Property.




(1)           If
such Grantor shall become entitled to receive or shall receive any stock or
other ownership certificate (including, without limitation, any warrant, option
or other right or any certificate representing a dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization) evidencing any of the
Pledged Equity Interests of any Issuer (including, without limitation, any
Subsidiary of such Grantor), whether in addition to, in substitution of, as a
conversion of, or in exchange for, any of the Investment Property, or otherwise,
such Grantor shall notify the Secured Party and shall accept such certificate as
the agent of the Secured Party, hold the same in trust for the Secured Party and
shall, upon the request of the Secured Party, immediately deliver such
certificate forthwith to the Secured Party in the exact form received, duly
indorsed by such Grantor to the Secured Party, if required, together with an
undated stock power (or other instrument of transfer satisfactory to the Secured
Party) covering such certificate duly executed in blank by such Grantor and
with, if the Secured Party so requests, signature guaranteed, to be held by the
Secured Party, subject to the terms hereof, as additional collateral security
for the Obligations.




(2)           Any
sums of money or property paid upon or in respect of Investment Property upon
the liquidation, dissolution or other winding-up of any Issuer (except for sums
paid upon or in respect of any liquidation, dissolution or winding up of the
Issuer of any Investment Property is permitted under Section 6.04 or Section 6.05 of the
Credit Agreement) shall be paid over to the Secured Party to be held by it
hereunder as additional collateral security for the Obligations, and in case any
distribution of capital shall be made on or in respect of the Investment
Property or any property shall be distributed upon or with respect to the
Investment Property pursuant to the recapitalization or reclassification of the
capital of any Issuer or pursuant to the reorganization thereof, the property so
distributed shall, unless otherwise subject to a perfected security interest in
favor of the Secured Party, be delivered to the Secured Party to be held by it
hereunder as additional collateral security for the Obligations.  If
any sums of money or property so paid or distributed in respect of the
Investment Property shall be received by such Grantor, such Grantor shall, until
such money or property is paid or delivered to the Secured Party, hold such
money or property in trust for the Secured Party, segregated from other funds of
such Grantor, as additional collateral security for the
Obligations.


A-27




(3)           Without
the prior written consent of the Secured Party, such Grantor will not (except,
in each case, pursuant to a transaction that is expressly permitted under the
Credit Agreement) (i) vote to enable, consent to or take any other action to
permit, any Issuer which is a Loan Party to issue any Equity Interests of any
nature or to issue any securities, obligations, rights, or other interests
convertible into or granting the right to purchase or exchange for any Equity
Interests of any nature of any Issuer, (ii) sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with respect to, any of the Investment
Property owned by such Grantor or any Proceeds thereof, or any interest therein,
(iii) create, incur or permit to exist any Lien or option in favor of, or any
claim of any Person with respect to, any of the Investment Property owned by
such Grantor or any Proceeds thereof, or any interest therein, except for the
security interests created by this Agreement or any other Lien which is
expressly permitted by the Credit Agreement or (iv) vote to enable, enter into
or consent to any agreement or undertaking (including any Investment Agreement
or any Investment Financing Document) restricting the right or ability of such
Grantor or the Secured Party to sell, assign or transfer any right, title or
interest in and to any Investment Property, any Investment Agreement or any
Proceeds thereof, except in each case to the extent expressly permitted under
Section
5.13.




(4)           In
the case of each Grantor which is an Issuer, such Grantor agrees that (i) it
will be bound by the terms of this Agreement relating to all Investment Property
issued by it and will comply with such terms insofar as such terms are
applicable to it, (ii) it will notify the Secured Party promptly in writing of
the occurrence of any of the events described in Section 5.07(a) with
respect to the Investment Property issued by it and (iii) the terms of Sections 6.03(c) and
6.06 shall
apply to it, mutatis mutandis, with
respect to all actions that may be required of it pursuant to Section 6.03(c) or
6.06 with
respect to the Investment Property issued by it.  In addition, each
Grantor which is either an Issuer or an owner of any Investment Property hereby
consents to the grant by each other Grantor of the security interest hereunder
in favor of the Secured Party and to the transfer of any Investment Property to
the Secured Party or its nominee upon the occurrence or during the continuation
of an Event of Default and to the substitution of the Secured Party or its
nominee as a partner, member or shareholder of the Issuer of the related
Investment Property.




(5)           Such
Grantor shall comply with all of its obligations under each Investment Agreement
relating to any Investment Property of such Grantor and shall enforce all of its
material rights and remedies with respect to all such Investment
Property.




(6)           Except
as and to the extent expressly permitted under the Credit Agreement, without the
prior written consent of the Secured Party, such Grantor shall not vote to
enable, consent to or take any other action to:  (i) amend or
terminate any Investment Agreement or any Investment Financing Document in any
way that adversely affects the rights or interests of such Grantor with respect
to or in and to any Investment Property or the value of such Investment Property
to such Grantor or adversely affects the validity, enforceability, perfection or
priority of the Secured Party's security interest hereunder in and to such
Investment Property or the ability of the Secured Party to exercise its rights
and remedies with respect to such Investment Property, (ii) waive any
default under or breach of any terms of any Investment Agreement of any Issuer
of any Investment Property of such Grantor, or (iii) cause any Issuer of any
Pledged Partnership Interests or Pledged LLC Interests that are securities (for
purposes of Article 8 of the UCC) on the date hereof to elect or otherwise take
any action that would cause any of such Pledged Partnership Interests or Pledged
LLC Interests to not be treated as securities for purposes of the
UCC.


A-28




(viii)        Inventory and
Equipment.




(1)           Such
Grantor shall maintain all of its Inventory in good saleable and usable
condition.




(2)           Such
Grantor will cause all of its Equipment to be maintained and preserved in the
same condition, repair and working order as when new, ordinary wear and tear
excepted, and in accordance with any manufacturer's manual relating thereto, and
will forthwith, or in the case of any material loss or material damage to any of
such Equipment as soon as practicable after the occurrence thereof, make or
cause to be made all repairs, replacements and other improvements in connection
therewith that are necessary or desirable to such end.




(3)           Such
Grantor shall not deliver any document evidencing any Equipment or Inventory to
any Person other than the issuer of such document to claim the goods evidenced
thereby or the Secured Party.




(4)           With
respect to any item of Equipment that is covered by a certificate of title or
ownership under a statute of any jurisdiction under the law of which indication
of a security interest on such certificate is required as a condition of
perfection thereof, such Grantor shall promptly (i) provide to the Secured Party
information with respect to any such Equipment having a value in excess of
$50,000 individually or $100,000 in the aggregate, (ii) execute and file with
the registrar of motor vehicles or other appropriate authority in such
jurisdiction an application or other document requesting the notation or other
indication of the security interest created hereunder on each such certificate
of title, and (iii) deliver to the Secured Party copies of all such applications
or other documents so filed and copies of all such certificates of title issued
indicating the security interests created hereunder in the items of Equipment
covered thereby.




(ix)           Receivables.




(1)           Other
than in the ordinary course of business consistent with its past practice, such
Grantor will not (i) grant any extension of the time of payment of any material
Receivable, (ii) adjust, compromise or settle any material Receivable for less
than the full amount thereof, (iii) release, wholly or partially, any Person
liable for the payment of any material Receivable, (iv) allow any credit or
discount whatsoever on any material Receivable or (v) amend, supplement or
modify any material Receivable in any manner that would adversely affect the
value thereof; provided, however, that no
Grantor shall take any action specified in clauses (i) through (v) above if any
Default or Event of Default shall have occurred and be continuing.




(2)           Such
Grantor shall keep and maintain at its own cost and expense satisfactory and
complete records of its Receivables, including, but not limited to, the
originals of all documentation with respect to all Receivables and records of
all payments received and all credits granted on the Receivables, all
merchandise returned and all other dealings therewith.


A-29




(3)           Such
Grantor shall perform in all material respects all of its obligations with
respect to its Receivables.




(4)           Such
Grantor shall use its best efforts to keep in full force and effect any
supporting obligation relating to any of its Receivable.




(x)           Intellectual
Property.




(1)           With
respect to each item of such Grantor's material Intellectual Property, such
Grantor shall take, at its sole cost and expense, all necessary steps,
including, without limitation, in the United States Patent and Trademark Office,
the United States Copyright Office and any other Governmental Authority, to (i)
maintain the validity and enforceability of such Intellectual Property and
maintain such material Intellectual Property in full force and effect, and (ii)
pursue the registration and maintenance of each material Patent, Trademark, or
Copyright registration or application, now or hereafter included in such
Intellectual Property of such Grantor.  No Grantor shall, without the
written consent of the Secured Party, discontinue use of or otherwise abandon
any of its material Intellectual Property, or abandon any right to file an
application for patent, trademark, or copyright, unless such Grantor shall have
reasonably determined that such use or the pursuit or maintenance of such
Intellectual Property is no longer desirable in the conduct of such Grantor's
business and that the loss thereof would not be reasonably likely to have a
Material Adverse Effect, in which case, such Grantor will give prompt notice of
any such abandonment to the Secured Party.




(2)           Such
Grantor agrees to promptly notify the Secured Party if such Grantor becomes
aware (i) that any of its material Intellectual Property may have become
abandoned, placed in the public domain, invalid or unenforceable, or of any
adverse determination or development regarding such Grantor's ownership of any
such Intellectual Property or its right to register the same or to keep and
maintain and enforce any of the same, or (ii) of any adverse determination or
the institution of any litigation or other proceeding regarding any item of such
Intellectual Property.




(3)           In
the event that such Grantor becomes aware that any item of its material
Intellectual Property is being infringed or misappropriated by a third party,
such Grantor shall promptly notify the Secured Party and shall take such
actions, at its sole cost and expense, as such Grantor or the Secured Party
deems reasonable and appropriate under the circumstances to protect or enforce
such Intellectual Property, including, without limitation, suing for
infringement or misappropriation and for an injunction against such infringement
or misappropriation.




(4)           Grantor
shall not permit any act or knowingly omit to do any act whereby any such
Intellectual Property may lapse or become invalid or unenforceable or placed in
the public domain.




(5)           Such
Grantor shall take all steps which it or the Secured Party deems reasonable and
appropriate under the circumstances to preserve and protect each item of its
Intellectual Property.


A-30




(6)           With
respect to its material Intellectual Property, such Grantor agrees upon the
request of the Secured Party to promptly execute and deliver to the Secured
Party an agreement, in substantially the form set forth in Annex 2 hereto or
otherwise in form and substance satisfactory to the Secured Party (each, an
"Intellectual Property
Security Agreement"), for recording the security interest granted
hereunder to the Secured Party in such Intellectual Property with the United
States Patent and Trademark Office, the United States Copyright Office and any
other domestic or foreign Governmental Authorities requested by the Secured
Party to perfect the security interest hereunder in such Intellectual
Property.




(7)           Such
Grantor agrees that should it obtain an ownership interest in any of its
material Intellectual Property that is not on the date hereof listed on Schedule 6 ("After-Acquired Intellectual
Property") (i) the provisions of this Agreement shall automatically apply
thereto, and (ii) any such After-Acquired Intellectual Property and, in the case
of Trademarks, the goodwill symbolized thereby, shall automatically become part
of the Collateral subject to the terms and conditions of this Agreement with
respect thereto.  Within five (5) days after the end of each Fiscal
Quarter of the Borrower, each Grantor shall give written notice to the Secured
Party identifying the After-Acquired Intellectual Property acquired during such
Fiscal Quarter, and such Grantor shall upon the request of the Secured Party to
promptly execute and deliver to the Secured Party with such written notice, an
agreement substantially in the form of Annex 3 hereto or
otherwise in form and substance satisfactory to the Secured Party (each, an
"IP Security Agreement
Supplement") covering such After-Acquired Intellectual Property which IP
Security Agreement Supplement shall be recorded with the United States Patent
and Trademark Office, the United States Copyright Office and any other
Governmental Authorities as may be requested by the Secured Party to evidence
and  perfect the security interest hereunder in such After-Acquired
Intellectual Property.  Upon the execution and delivery to the Secured
Party of an IP Security Agreement Supplement in accordance with this Section,
Schedule 6
shall automatically be deemed amended to include the After-Acquired Intellectual
Property covered by such IP Security Agreement Supplement.




(8)           Such
Grantor shall take all steps reasonably necessary to protect the secrecy of all
of its material Trade Secrets, including, without limitation, entering into
confidentiality agreements with employees and labeling and restricting access to
secret information and documents.




(xi)           Commercial Tort
Claims.  If such Grantor shall at any time hold or acquire an
interest in any commercial tort claim, then such Grantor shall within fifteen
(15) days of obtaining such interest sign and deliver documentation acceptable
to the Secured Party granting a security interest to the Secured Party in and to
such commercial tort claim under the terms and provisions of this
Agreement.




(xii)          Covenants in Credit
Agreement.  In the case of each Guarantor, such Guarantor shall
take, or shall refrain from taking, as the case may be, each action that is
necessary to be taken or not taken, as the case may be, so that no Default or
Event of Default is caused by the failure to take such action or to refrain from
taking such action by such Guarantor or any of its Subsidiaries.




(xiii)         Specified
Agreements.


A-31




(1)           Such
Grantor shall at its sole cost and expense:




a.           perform
and observe all the terms and provisions of the Specified Agreements to which
such Grantor is a party to be performed or observed by it, maintain such
Specified Agreements in full force and effect, enforce such Specified Agreements
in accordance with their respective terms, and take all such action to such end
as may be from time to time reasonably requested by the Secured
Party;




b.           furnish
to the Secured Party promptly (and in any event within two (2) Business Days)
following receipt thereof, copies of (A) each Material Investment Agreement
entered into by such Grantor from time to time and (B) all amendments,
restatements, supplements or modifications to, all waivers, consents and
approvals provided by such Grantor under or pursuant to, and all material
notices, requests and other documents received by such Grantor under or pursuant
to, any Assigned Agreement to which such Grantor is a party or any Material
Investment Agreement to which such Grantor is a party; and




c.           (A)
promptly furnish to the Secured Party such other information and reports
regarding any such Specified Agreements and the other Collateral of such Grantor
as the Secured Party may reasonably request from time to time and (B) upon
request of the Secured Party from time to time, make to each other party to any
such Specified Agreement such demands and requests for information and reports
or for action as such Grantor or the Secured Party is entitled to make
thereunder or under any Consent and Agreement or any Investment Consent and
Agreement (as applicable).




(2)           Such
Grantor shall not, except in each case as and to the extent otherwise expressly
permitted under the Credit Agreement:




a.           cancel
or terminate any Specified Agreement to which it is a party or consent to or
accept any cancellation or termination thereof;




b.           amend,
restate, supplement or otherwise modify any Specified Agreement or give any
consent, waiver or approval thereunder, except (x) to the
extent expressly permitted under any Consent and Agreement or in any Investment
Consent and Agreement or (y) if not so expressly permitted, only if such
amendment, restatement, supplement, modification, consent, waiver or approval
(A) will not violate any other term or provision of this Agreement, any other
Loan Document, any Consent and Agreement or any Investment Consent and Agreement
or (B) could not reasonably be expected to have an adverse effect on (1) such
Grantor's rights, titles or interests in, to or under such Specified Agreement
or any of the other Collateral created thereunder or evidenced thereby, (2) the
amount or value of any of the Collateral created thereunder or evidenced
thereby, (3) the validity, enforceability, perfection or priority of the Secured
Party's Liens in and to any of such Grantor's rights, titles and interests in
and to any such Specified Agreement or any such Collateral or (4) any of the
Secured Party's rights or remedies under this Agreement, any other Loan
Document, any Consent and Agreement, any Investment Consent and Agreement, or
any applicable law with respect to any of the foregoing (any of the rights,
interests and other items described in any of clauses (1) - (4) above,
inclusive, being referred to herein as a "Specified
Right");


A-32




c.           waive
any default, event of default, termination event, violation or breach under any
such Specified Agreement, except (x) to the
extent expressly permitted under any Consent and Agreement or any Investment
Consent and Agreement or (y) if not so expressly permitted, only if such waiver
(A) will not violate any other term or provision of this Agreement, any other
Loan Document, any Consent and Agreement or any Investment Consent and Agreement
or (B) could not reasonably be expected to have an adverse effect on any
Specified Rights;




d.           consent
to or permit or accept any prepayment by such Grantor of amounts to become due
under or in connection with any such Specified Agreement or waive or reduce (or
consent to any reduction of or permit to be reduced) the amount of any payment
made (or to be made) to such Grantor under or in connection with any such
Specified Agreement, except in each case as expressly provided therein;
or




e.           fail
to comply with any obligation under or take (or fail to take) any other action
under or in connection with any such Specified Agreement that could reasonably
be expected to materially impair any Specified Rights.




(3)           Such
Grantor shall, promptly upon the request of the Secured Party with respect to
any Material Investment Agreement, enter into (and cause each other Investment
Party thereto requested by the Secured Party to enter into) with the Secured
Party, an Investment Consent and Agreement with respect to such Material
Investment Agreement, substantially in the form of Annex 10 hereto or
otherwise in form satisfactory to the Secured Party.




(4)           Such
Grantor shall, promptly upon entering into any Investment Agreement, deliver a
supplement to Schedule
11 hereto reflecting such new Investment Agreement.




(5)           Such
Grantor shall use its best efforts acting in good faith to cause each new
Investment Agreement to permit (i) the granting by such Grantor of Liens to the
Secured Party in and to all of such Grantor's rights, titles and interests in
and to such new Investment Agreement and the Investment Property and other
rights and interests created, governed or evidenced thereunder, or (ii) the
exercise by the Secured Party of its rights and remedies under this Agreement
and applicable law on or with respect to any such Liens with respect to such
Investment Agreement, Investment Property and other rights and interests, all in
consultation with and in form and substance satisfactory to the Secured
Party.




(6)           If
such Grantor becomes aware of any breach, violation, default or event of default
(or similar event or circumstance) by any Person under any Assigned Agreement to
which such Grantor is a party or any Material Investment Agreement to which such
Grantor is a party or any claim or dispute between such Grantor and any other
Person under, with respect to or in connection with any such Assigned Agreement
or any such Material Investment Agreement (any of the foregoing, a "Specified Matter")
which in each or any such case could reasonably be expected to adversely affect
any Specified Rights, then in each case such Grantor shall promptly notify the
Secured Party of such Specified Matter and shall follow all [reasonable]
instructions of the Secured Party with respect to such Specified Matter and any
Specified Rights relating to or affected by such Specified Matter (as
applicable).


A-33




(f)




REMEDIAL
PROVISIONS




(i)       
    Certain Matters Relating to
Receivables.




(1)           Except
as otherwise provided in this Section 6.01(a), each
Grantor shall collect, at its sole cost and expense, all amounts due or to
become due to such Grantor under such Grantor's Receivables.  In
connection with such collections, each Grantor may take (and, at the Secured
Party's direction, shall take) such action as such Grantor or the Secured Party
may deem necessary or advisable to enforce collection of the Receivables; provided, however, that the
Secured Party shall have the right at any time, upon the occurrence and during
the continuance of any Event of Default, (i) to notify, or require such Grantor
to notify, the account debtors or counterparties under any Receivables of the
Secured Party's security interest in such Receivables and (ii) to direct, or
cause such Grantor to direct, such account debtors or counterparties to make
payment of all amounts due or to become due to such Grantor under any of the
Receivables directly to the Secured Party, for deposit in a Collateral
Account.  If an Event of Default shall have occurred and be
continuing, all amounts and Proceeds (including instruments) received by any
Grantor in respect of the Receivables shall be received in trust for the benefit
of the Secured Party hereunder, shall be segregated from other funds of such
Grantor and shall be forthwith (and, in any event, within one (1) Business Day)
paid over to the Secured Party in the same form as so received (with any
necessary endorsement) and deposited in a Collateral Account and, at the
discretion of the Secured Party, be held as additional collateral security for
the Obligations or applied in payment of the Obligations as provided in Section 6.05(b).




(2)           No
Grantor will permit or consent to the subordination of its right to payment
under any of the Receivables to any other indebtedness, liabilities or
obligations of the obligor thereunder.




(3)           At
the Secured Party's request, each Grantor shall deliver to the Secured Party all
original and other documents evidencing, and relating to, the agreements and
transactions which gave rise to the Receivables.




(ii)           Communications with
Obligors; Grantors Remain Liable.




(1)           The
Secured Party in its own name or in the name of others may at any time and from
time to time communicate with obligors under the Receivables to verify with them
to the Secured Party's satisfaction the existence, amount and terms of any
Receivables.




(2)           Each
Grantor shall remain liable under each of the Receivables and the Assigned
Agreements to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of any
agreement giving rise thereto.  The Secured Party shall have no
obligation or liability under any Receivable (or any agreement giving rise
thereto) or Assigned Agreement by reason of or arising out of this Agreement or
the receipt by the Secured Party of any payment relating thereto, nor shall the
Secured Party be obligated in any manner to perform any of the obligations of
any Grantor under or pursuant to any Receivable (or any agreement giving rise
thereto) or Assigned Agreement, to make any payment, to make any inquiry as to
the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party thereunder, to present or file any
claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to it or to which it may be entitled
at any time or times.


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(iii)          Investment
Property.




(1)           Unless
an Event of Default shall have occurred and be continuing and the Secured Party
shall have given notice to the relevant Grantor of the Secured Party's intent to
exercise its corresponding rights pursuant to Section 6.03(b),
each Grantor shall be permitted to receive all cash dividends and distributions
paid in respect of the Pledged Equity Interests and all payments made in respect
of the Pledged Notes and the Pledged Debt Securities, in each case paid in the
normal course of business of the relevant Issuer and consistent with past
practice, as and to the extent permitted by the Credit Agreement, and to
exercise all voting, corporate, partnership, limited liability company, and
other rights with respect to such Grantor's Investment Property; provided, however, that no vote
shall be cast or corporate, partnership, limited liability company, or other
right exercised or other action taken which, in the Secured Party's reasonable
judgment, would impair the value of such Collateral or the Secured Party's
rights or interests in and to such Collateral which would violate any provision
of the Credit Agreement, this Agreement or any other Loan Document.




(2)           If
an Event of Default shall occur and be continuing and the Secured Party shall
give notice of its intent to invoke the provisions of this Section 6.03(b) to
the relevant Grantor(s): (i) all rights of each Grantor to exercise or
refrain from exercising the voting and other consensual rights that it would
otherwise be entitled to exercise pursuant hereto with respect to such Grantor's
Investment Property shall cease and all such rights shall thereupon become
vested in the Secured Party who shall have the sole right, but shall be under no
obligation, to exercise or refrain from exercising such voting and other
consensual rights and (ii) the Secured Party shall have the right to
transfer all or any portion of any such Investment Property to its name or the
name of its nominee or agent, and the Secured Party shall have the right at any
time to exchange any certificates or instruments representing any such
Investment Property for certificates or instruments of smaller or larger
denominations.  In order to permit the Secured Party to exercise the
voting and other consensual rights which it may be entitled to exercise pursuant
hereto and to receive all dividends and other distributions which it may be
entitled to receive hereunder, each Grantor shall promptly execute and deliver
(or cause to be executed and delivered) to the Secured Party all proxies,
dividend payment orders and other instruments as the Secured Party may from time
to time reasonably request and each Grantor acknowledges that the Secured Party
may utilize the power of attorney set forth herein.




(3)           Each
Grantor hereby authorizes and instructs each Issuer of any Investment Property
pledged by such Grantor hereunder to (i) comply with any instruction received by
it from the Secured Party in writing that (x) states that an Event of Default
has occurred and is continuing and (y) is otherwise in accordance with the terms
of this Agreement, without any other or further instructions from such Grantor,
and each Grantor agrees that each Issuer shall be fully protected in so
complying, and (ii) unless otherwise expressly permitted hereby, pay any
dividends, distributions or other payments with respect to the Investment
Property directly to the Secured Party.


A-35




(4)           If
an Event of Default shall have occurred and be continuing, the Secured Party
shall be authorized to send to each securities intermediary, commodity
intermediary or bank that is party to a Control Agreement, a Notice of Exclusive
Control as defined in and under such Control Agreement (or any comparable notice
permitted under such Control Agreement).




(iv)          Proceeds to be Turned Over
to Secured Party.  In addition to the rights of the Secured
Party specified in Section 6.01, if an
Event of Default shall occur and be continuing, all Proceeds received by any
Grantor consisting of cash, checks and other near-cash items shall be held by
such Grantor in trust for the Secured Party, segregated from other funds of such
Grantor, and shall, immediately upon receipt by such Grantor, be turned over to
the Secured Party in the exact form received by such Grantor (duly indorsed by
such Grantor to the Secured Party, if required).  All Proceeds
received by the Secured Party hereunder shall be held by the Secured Party in a
Collateral Account and shall not constitute payment thereof until applied as
provided in Section
6.05(b).




(v)           Remedies.  If
any Event of Default shall have occurred and be continuing:




(1)           The
Secured Party, may exercise, in addition to all other rights and remedies
granted to it in this Agreement and in any other instrument or agreement
securing, evidencing or relating to the Obligations, all rights and remedies of
a secured party under the UCC (whether or not the UCC applies to the affected
Collateral) or any other applicable law or in equity.  Without
limiting the generality of the foregoing, the Secured Party, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon any
Grantor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, license, assign, give an option
or options to purchase, or otherwise dispose of and deliver the Collateral or
any part thereof (or contract to do any of the foregoing), in one or more
parcels at public or private sale or sales, at any exchange, broker's board or
office of the Secured Party or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit risk.  The
Secured Party shall have the right upon any such public sale or sales, and, to
the extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or equity of
redemption in any Grantor, which right or equity is hereby waived and
released.  Each Grantor further agrees, at the Secured Party's
request, to assemble the Collateral and make it available to the Secured Party
at places which the Secured Party shall reasonably select, whether at such
Grantor's premises or elsewhere.  The Secured Party shall have no
obligation to clean-up or otherwise prepare the Collateral for
sale.  If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least ten (10) days before any public sale of Collateral or
of the time after which any private sale or other disposition of Collateral is
intended to be made.  The Secured Party shall not be obligated to make
any sale of Collateral regardless of notice of sale having been
given.  The Secured Party may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefore, and any such
sale may, without further notice, be made at the time and place to which it was
adjourned.  Each Grantor agrees that it would not be commercially
unreasonable for the Secured Party to dispose of the Collateral or any portion
thereof by using Internet sites that provide for the auction of assets of the
types included in the Collateral or that have the reasonable capability of doing
so, or that match buyers and sellers of assets.  Each Grantor hereby
waives any claims against the Secured Party arising by reason of the fact that
the price at which any Collateral may have been sold at a private sale was less
than the price which might have been obtained at a public sale, even if the
Secured Party accepts the first offer received and does not offer such
Collateral to more than one offeree.  To the extent permitted by
applicable law, each Grantor waives all claims, damages and demands it may
acquire against the Secured Party arising out of the exercise by them of any
rights or remedies hereunder.




A-36




(2)           Any
cash held by or on behalf of the Secured Party and all cash proceeds received by
or on behalf of the Secured Party in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral may, in the discretion
of the Secured Party, be held by the Secured Party in a Collateral Account as
collateral for, and/or then or at any time or from time to time thereafter
applied (after payment or deduction of any amounts payable to the Secured Party
pursuant to Section 8.05 of the Credit Agreement) in whole or in part by the
Secured Party against, all or any part of the Obligations, in such order and
manner as the Secured Party may elect.  Any surplus of such cash or
cash proceeds held by or on the behalf of the Secured Party and remaining after
payment in full of all the Obligations shall be paid over to the applicable
Grantor or to whomsoever may be lawfully entitled to receive such
surplus.




(3)           The
Secured Party may sell the Collateral without giving any warranties as to the
Collateral.  The Secured Party may disclaim or modify any warranties
of title or the like.  This procedure will not be considered to
adversely affect the commercial reasonableness of any sale of the
Collateral.




(4)           The
Secured Party and its agents may enter upon and occupy any real property owned
or leased by any Grantor in order to exercise any of the Secured Party's rights
and remedies under this Agreement, without any obligation to such Grantor in
respect of such entry or occupation.




(5)           For
the purpose of enabling the Secured Party to exercise its rights and remedies
hereunder, each Grantor hereby grants to the Secured Party an irrevocable,
non-exclusive worldwide license (exercisable without payment of royalty or other
compensation to such Grantor) to use, operate under, assign, license or
sublicense any of the Intellectual Property now owned or hereafter acquired by
such Grantor, and wherever the same may be located, and including in such
license reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer programs used for the compilation or
printout thereof.




(6)           The
Secured Party may comply with any applicable Requirement of Law in connection
with a disposition of the Collateral or any part thereof and such compliance
will not be considered adversely to affect any sale of the Collateral or any
part thereof.


A-37




(7)           In
the event of any sale or other disposition of any of the Intellectual Property
of any Grantor, the goodwill symbolized by any Trademarks subject to such sale
or other disposition shall be included therein, and such Grantor shall supply to
the Secured Party or its designee such Grantor's know-how and expertise, and
documents and things relating to any Intellectual Property subject to such sale
or other disposition, and such Grantor's customer lists and other records and
documents relating to such Intellectual Property and to the manufacture,
distribution, advertising and sale of products and services of such
Grantor.




(8)           The
Secured Party may apply the balance from any deposit account or instruct the
bank at which any deposit account is maintained to pay the balance of any
deposit account to or for the benefit of the Secured Party.




(9)           The
Secured Party shall have no duty to marshal any of the Collateral.




(vi)          Registration
Rights.




(1)           If
the Secured Party shall determine to exercise its right to sell any or all of
the Pledged Equity Interests or Pledged Debt Securities pursuant to Section 6.05, and if
in the opinion of the Secured Party it is necessary or advisable to have the
Pledged Equity Interests or Pledged Debt Securities, or that portion thereof to
be sold, registered under the provisions of the Securities Act, the relevant
Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the
directors and officers (or equivalent managers) of such Issuer to execute and
deliver, all such instruments and documents, and do or cause to be done all such
other acts as may be, in the opinion of the Secured Party, necessary or
advisable to register the Pledged Equity Interests or Pledged Debt Securities,
or that portion thereof to be sold, under the provisions of the Securities Act,
(ii) use its best efforts to cause the registration statement relating thereto
to become effective and to remain effective for a period of one year from the
date of the first public offering of the Pledged Equity Interests or Pledged
Debt Securities, or that portion thereof to be sold, and (iii) make all
amendments thereto and/or to the related prospectus which, in the opinion of the
Secured Party, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto.  Each Grantor
agrees to cause such Issuer to comply with the provisions of the securities or
"Blue Sky" laws of any and all jurisdictions which the Secured Party shall
designate and to make available to its security holders, as soon as practicable,
an earnings statement (which need not be audited) which will satisfy the
provisions of Section 11(a) of the Securities Act.




(2)           Each
Grantor recognizes that the Secured Party may be unable to effect a public sale
of any or all the Pledged Equity Interests or Pledged Debt Securities, by reason
of certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale
thereof.  Each Grantor acknowledges and agrees that any such private
sale may result in prices and other terms less favorable than if such sale were
a public sale and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner.  The Secured Party shall be under no obligation to delay a
sale of any of the Pledged Equity Interests or Pledged Debt Securities for the
period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.


A-38




(3)           Each
Grantor agrees to use its best efforts to do or cause to be done all such other
acts as may be necessary to make such sale or sales of all or any portion of the
Pledged Equity Interests or Pledged Debt Securities pursuant to this Section
valid and binding and in compliance with any and all other applicable
Requirements of Law.  Each Grantor further agrees that a breach of any
of the covenants contained in this Section will cause irreparable injury to the
Secured Party, that the Secured Party has no adequate remedy at law in respect
of such breach and, as a consequence, that each and every covenant contained in
this Section shall be specifically enforceable against such Grantor, and such
Grantor hereby waives and agrees not to assert any defenses against an action
for specific performance of such covenants except for a defense that no Event of
Default has occurred under the Credit Agreement.




(vii)         Deficiency.  Each
Grantor shall remain fully and unconditionally liable for any deficiency if the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay in full its Obligations and the fees and disbursements of any attorneys
employed by the Secured Party to collect such deficiency.




(viii)        Sales on
Credit.  If the Secured Party sells any of the Collateral on
credit, the applicable Grantor will be credited only with cash payments actually
made by the purchaser and received by the Secured Party and applied to the
indebtedness of the purchaser.  In the event the purchaser fails to
pay for the Collateral, the Secured Party may resell the Collateral and the
applicable Grantor shall be credited with the proceeds of the sale.




(g)




THE
SECURED PARTY




(i)         
  Secured
Party's Appointment as Attorney-in-Fact; Etc.




(1)           Each
Grantor hereby irrevocably constitutes and appoints the Secured Party and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of such Grantor and in the name of such Grantor or in its own name,
for the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
the Secured Party may deem necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Secured Party the power and right, on behalf of such
Grantor, without notice to or assent by such Grantor, to do any or all of the
following:




A-39


a.           in
the name of such Grantor or its own name, or otherwise, take possession of and
indorse and collect any checks, drafts, notes, acceptances or other instruments
or chattel paper for the payment of moneys due under any Receivable or with
respect to any other Collateral and file any claim or take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by the
Secured Party for the purpose of collecting any and all such moneys due under
any Receivable or with respect to any other Collateral whenever
payable;




b.           in
the case of any Intellectual Property, prepare, sign, deliver, and file for
recordation in any Intellectual Property registry any and all agreements,
instruments, documents and papers as the Secured Party may request to evidence
and perfect the Secured Party's security interest in such Intellectual Property
and the goodwill and general intangibles of such Grantor relating thereto or
represented thereby;




c.           pay
or discharge taxes and Liens levied or placed on or threatened against the
Collateral, effect any repairs or obtain any insurance called for by the terms
of this Agreement and pay all or any part of the premiums therefore and the
costs thereof;




d.           execute,
in connection with any sale provided for in Article VI, any endorsements,
assignments or other instruments of conveyance or transfer with respect to the
Collateral; and




e.           (A)
direct any party liable for any payment under any of the Collateral to make
payment of any and all moneys due or to become due thereunder directly to the
Secured Party or as the Secured Party shall direct;(B)
ask or demand for, collect, recover and receive payment of and receipt for, any
and all moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral;(C)
commence and prosecute any suits, actions or proceedings at law or in equity in
any court of competent jurisdiction to collect the Collateral or any portion
thereof and to enforce any other right in respect of any Collateral;(D)
defend any suit, action or proceeding brought against such Grantor with respect
to any Collateral;(E)
settle, compromise or adjust any such suit, action or proceeding and, in
connection therewith, give such discharges or releases as the Secured Party may
deem appropriate;(F)
assign any Intellectual Property (along with the goodwill of the business to
which any such Intellectual Property pertains), throughout the world for such
term or terms, on such conditions, and in such manner, as the Secured Party
shall in its sole discretion determine; (G) exercise any and all rights, powers,
privileges and remedies of such Grantor under or with respect to the Collateral
(including all rights of performance, termination, and enforcement); (H)
operate, maintain, and repair the Collateral; (I) receive, open and dispose
of any and all mail addressed to any Grantor and notify postal authorities to
change the address for delivery thereof to such address as the Secured Party may
designate; and(J)
generally, sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though the
Secured Party were the absolute owner thereof for all purposes, and do, at the
Secured Party's option and such Grantor's expense, at any time, or from time to
time, all acts and things which the Secured Party deems necessary to protect,
preserve or realize upon the Collateral and the Secured Party's security
interests therein and to effect the intent of this Agreement, all as fully and
effectively as such Grantor might do.




Anything
in this Section
7.01(a) to the contrary notwithstanding, the Secured Party agrees that it
will not exercise any rights under the power of attorney provided for in this
Section 7.01(a)
unless an Event of Default shall have occurred and be
continuing.


A-40




(2)           If
any Grantor fails to perform or comply with any of its agreements contained
herein or in any other Loan Document, the Secured Party may, but without any
obligation so to do, perform or comply, or otherwise cause performance or
compliance, with such agreement.




(3)           The
fees, costs and expenses of the Secured Party incurred in connection with
actions undertaken as provided in this Section 7.01,
together with interest thereon at a rate per annum equal to the Default Rate
under the Credit Agreement (which rate shall not exceed the maximum non-usurious
rate permitted by applicable law), from the date of payment by the Secured Party
to the date reimbursed by the relevant Grantor, shall be payable on demand by
such Grantor to the Secured Party.




(4)           Each
Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof.  All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable
until this Agreement is terminated and the security interests created hereby are
released.




(ii)           Duty of Secured
Party.  The Secured Party's sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral in its
possession, under the UCC or otherwise, shall be to deal with such Collateral in
a manner substantially similar to that which the Secured Party deals with
similar property for its own account.  Neither the Secured Party nor
any of its officers, directors, partners, employees, agents, advisors,
attorneys, attorneys-in-fact or affiliates shall be liable for failure to
demand, collect or realize upon any of the Collateral or for any delay in doing
so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Grantor or any other Person or to take any
other action whatsoever with regard to the Collateral or any part
thereof.  The powers conferred on the Secured Party pursuant to this
Agreement are solely to protect the Secured Party's interests in the Collateral
and shall not impose any duty upon the Secured Party to exercise any such
powers.  The Secured Party shall be accountable only for amounts that
it actually receives as a result of the exercise of such powers, and neither the
Secured Party nor any of its officers, directors, employees, agents, advisors,
attorneys, attorneys-in-fact or affiliates shall be responsible to any Grantor
for any act or failure to act hereunder, except for its or their own gross
negligence or willful misconduct.




(iii)           Financing
Statements.  Each Grantor hereby authorizes the Secured Party
to file or record financing or continuation statements, and assignments and
amendments thereto, and other filing or recording documents or instruments with
respect to the Collateral without the signature of such Grantor in such form and
in such offices as the Secured Party determines appropriate to perfect or
maintain the perfection of the security interests of the Secured Party under
this Agreement.  Each Grantor agrees that such financing statements
may describe the collateral in the same manner as described in the Security
Documents or as "all assets" or "all personal property" of such Grantor, whether
now owned or hereafter existing or acquired by such Grantor, or contain such
other description as the Secured Party, in its sole judgment, determines is
necessary or advisable.  Each Grantor hereby ratifies each such
financing statement and any and all other financing statements filed prior to
the date hereof by the Secured Party.  A photographic or other
reproduction of this Agreement shall be sufficient as a financing statement or
other filing or recording document or instrument for filing or recording in any
jurisdiction.




A-41




(h)




MISCELLANEOUS




(i)         
  Amendments
in Writing.  None of the terms or provisions of this Agreement
may be waived, amended, supplemented or otherwise modified except in accordance
with Section
8.01 of the Credit Agreement.




(ii)           Notices.  All
notices, requests and demands and other communications to or upon the Secured
Party or any Grantor hereunder shall be effected in the manner provided for in
Section 8.02 of
the Credit Agreement; provided that any
such notice, request, demand or other communication to or upon any Grantor shall
be addressed to such Guarantor at its notice address set forth on Schedule 1.




(iii)           Security Interest
Absolute.  All rights of the Secured Party hereunder, each
grant of a security interest in the Collateral and all obligations of each
Grantor hereunder shall be absolute and unconditional irrespective of (a) any
lack of validity or enforceability of the Credit Agreement, any other Loan
Document, any agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any change in the
time, manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Credit Agreement, any other Loan Document or any other agreement or
instrument, (c) any exchange, release or non-perfection of any Lien on other
collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Obligations, or (d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, any Grantor in respect of the
Obligations or this Agreement.




(iv)           Survival of
Agreement.  All covenants, agreements, representations and
warranties made by any Grantor and in the certificates or other instruments
prepared or delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the Secured Party and shall survive the
execution and delivery of the Loan Documents and the making of any Credit
Extensions, regardless of any investigation made by any such other party or on
its behalf and notwithstanding that the Secured Party may have had notice or
knowledge of any Default or Event of Default or incorrect representation or
warranty at any time under the Credit Agreement, and shall continue in full
force and effect as long as the principal of or any accrued interest on the Loan
or any fee or any other amount payable under any Loan Document is outstanding
and unpaid.


A-42


(v)           No Waiver by Course of
Conduct; Cumulative Remedies.  The Secured Party shall not by
any act (except by a written instrument pursuant to Section 8.01), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of
Default.  No failure to exercise, nor any delay in exercising, on the
part of the Secured Party, any right, power or privilege hereunder shall operate
as a waiver thereof.  No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.  A
waiver by the Secured Party of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the Secured Party
would otherwise have on any future occasion.  The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any other rights or remedies provided by law.




(vi)           EXPENSES AND
INDEMNIFICATION.




(1)           EACH
GRANTOR SHALL UPON DEMAND PAY TO THE SECURED PARTY THE AMOUNT OF ANY AND ALL
COSTS AND EXPENSES, INCLUDING THE REASONABLE FEES AND EXPENSES OF COUNSEL AND OF
ANY EXPERTS, ADVISORS, AND AGENTS, THAT THE SECURED PARTY MAY INCUR IN
CONNECTION WITH (I) THE ADMINISTRATION OF THIS AGREEMENT, (II) THE
CUSTODY, INSPECTION, AUDITING, PRESERVATION, USE OR OPERATION OF, OR THE SALE
OF, COLLECTION FROM, OR OTHER REALIZATION UPON, ANY OF THE COLLATERAL,
(III) THE EXERCISE OR ENFORCEMENT OF ANY OF THE RIGHTS OR REMEDIES OF THE
SECURED PARTY HEREUNDER OR (IV) THE FAILURE BY ANY GRANTOR TO PERFORM OR OBSERVE
ANY OF THE PROVISIONS OF THIS AGREEMENT.




(2)           EACH
GUARANTOR SHALL UPON DEMAND PAY TO THE SECURED PARTY ANY AND ALL COSTS AND
EXPENSES, INCLUDING THE REASONABLE FEES AND EXPENSES OF COUNSEL AND OF ANY
EXPERTS, ADVISORS OR AGENTS, THAT THE SECURED PARTY MAY INCUR IN CONNECTION WITH
THE COLLECTION OR ENFORCEMENT OF THE OBLIGATIONS OR THE EXERCISE OR ENFORCEMENT
OF ANY OTHER RIGHTS OR REMEDIES UNDER THIS AGREEMENT.




(3)           EACH
GRANTOR AGREES TO PAY, AND TO HOLD THE SECURED PARTY HARMLESS FROM AND AGAINST,
ANY AND ALL LIABILITIES WITH RESPECT TO, OR RESULTING FROM ANY DELAY IN PAYING,
ANY AND ALL STAMP, EXCISE, SALES OR OTHER TAXES WHICH MAY BE PAYABLE OR
DETERMINED TO BE PAYABLE WITH RESPECT TO ANY OF THE COLLATERAL OR IN CONNECTION
WITH ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.


A-43


(4)           WITHOUT
LIMITING ANY OF ITS OTHER INDEMNIFICATION OBLIGATIONS UNDER ANY OTHER LOAN
DOCUMENT, EACH GRANTOR AGREES TO INDEMNIFY, DEFEND AND SAVE AND HOLD HARMLESS
THE SECURED PARTY AND EACH OF ITS RELATED PARTIES (EACH, AN "INDEMNIFIED PARTY")
FROM AND AGAINST, AND SHALL PAY ON DEMAND, ANY AND ALL CLAIMS, DAMAGES, LOSSES,
LIABILITIES, PENALTIES, JUDGMENTS, DISBURSEMENTS AND EXPENSES (INCLUDING,
WITHOUT LIMITATION, FEES AND EXPENSES OF COUNSEL) THAT MAY BE INCURRED BY OR
ASSERTED OR AWARDED AGAINST ANY INDEMNIFIED PARTY, IN EACH CASE DIRECTLY OR
INDIRECTLY ARISING OUT OF OR IN CONNECTION WITH OR RESULTING FROM THE
NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION OR ENFORCEMENT OF
THIS AGREEMENT, EXCEPT TO THE EXTENT SUCH CLAIM, DAMAGE, LOSS, LIABILITY,
PENALTY, JUDGMENT, DISBURSEMENT, OR EXPENSE IS FOUND IN A FINAL, NON-APPEALABLE
JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED SOLELY FROM SUCH
INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.  WITHOUT
LIMITING ANY PROVISION OF THIS AGREEMENT, IT IS THE EXPRESS INTENTION OF THE
PARTIES HERETO THAT EACH INDEMNIFIED PARTY SHALL BE INDEMNIFIED FROM AND HELD
HARMLESS AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES, LIABILITIES, PENALTIES,
JUDGMENTS, DISBURSEMENTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION, FEES AND
EXPENSES OF COUNSEL) ARISING OUT OF OR CAUSED IN WHOLE OR PART BY THE ORDINARY
NEGLIGENCE OF SUCH INDEMNIFIED PARTY.




i.           THE
AGREEMENTS IN THIS SECTION 8.06 SHALL
SURVIVE REPAYMENT OF THE OBLIGATIONS AND ALL OTHER AMOUNTS PAYABLE UNDER THE
CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS.




(vii)         Successors and
Assigns.  This Agreement shall be binding upon the successors
and assigns of each Grantor from time to time party hereto and shall inure to
the benefit of the Secured Party and its successors and assigns; provided that no
Grantor may assign, transfer or delegate any of its rights or obligations under
this Agreement without the prior written consent of the Secured
Party.




(viii)        Set-Off.  Each
Grantor hereby irrevocably authorizes the Secured Party at any time and from
time to time while an Event of Default shall have occurred and be continuing,
without notice to such Grantor or any other Grantor, any such notice being
expressly waived by each Grantor, to set-off and appropriate and apply any and
all deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Secured Party to or for the credit
or the account of such Grantor, or any part thereof in such amounts as the
Secured Party may elect, against and on account of the obligations and
liabilities of such Grantor to the Secured Party hereunder and claims of every
nature and description of the Secured Party against such Grantor, in any
currency, whether arising hereunder, under the Credit Agreement, any other Loan
Document or otherwise, as the Secured Party may elect, whether or not the
Secured Party has made any demand for payment and although such obligations,
liabilities and claims may be contingent or unmatured.  The Secured
Party shall notify such Grantor promptly of any such set-off and the application
made by the Secured Party of the proceeds thereof, provided that the
failure to give such notice shall not affect the validity of such set-off and
application.  The rights of the Secured Party under this Section are
in addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Secured Party may have.


A-44




(ix)           Counterparts.  This
Agreement may be executed by one or more of the parties to this Agreement on any
number of separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall be deemed to constitute
one and the same instrument.  Delivery of an executed counterpart of a
signature page to this Agreement by facsimile shall be effective as delivery of
an original executed counterpart of this Agreement.




(x)          
 Severability.  Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.




(xi)           Headings.  The
Article and Section headings used in this Agreement are for convenience of
reference only and are not to affect the construction hereof or be taken into
consideration in the interpretation hereof.




(xii)          Governing
Law.  This Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Texas, without regard
to the principles of conflicts of laws thereof.  This Agreement is
performable in Harris County, Texas.




(xiii)         Submission to
Jurisdiction.  Each Grantor hereby irrevocably and
unconditionally:




(1)           submits
for itself and its property in any legal action or proceeding relating to this
Agreement and the other Loan Documents to which it is a party, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of Texas, the
courts of the United States of America for the Southern District of Texas,
and appellate courts from any thereof;




(2)           consents
that any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;




(3)           agrees
that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to such Grantor at its address referred
to in Section
8.02 or at such other address of which the Secured Party shall have been
notified pursuant thereto; and




(4)           agrees
that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to sue in any other
jurisdiction.




(xiv)         Acknowledgments.  Each
Grantor hereby acknowledges and agrees that:


A-45




(1)           it
has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents to which it is a party, and this
Agreement shall be construed as if jointly drafted by the parties
hereto;




(2)           the
Secured Party has no fiduciary relationship with or duty to any Grantor arising
out of or in connection with this Agreement or any of the other Loan Documents,
and the relationship between the Grantors, on the one hand, and the Secured
Party, on the other hand, in connection herewith or therewith is solely that of
debtor and creditor; and




(3)           no
joint venture is created hereby or by the other Loan Documents or otherwise
exists by virtue of the transactions contemplated hereby among the Secured
Parties or among the Grantors and the Secured Party.




(xv)           Additional
Grantors.  Each Subsidiary of the Borrower that is required to
become a party to this Agreement pursuant to the Credit Agreement shall become
and be a Grantor in all respects and for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex 1
hereto.  The supplemental schedules attached to each Assumption
Agreement shall be incorporated into and become a part of and supplement,
respectively, the Schedules hereto, and the Secured Party may attach such
supplemental schedules to the Schedules hereto; and each reference to such
Schedules shall mean and be a reference to such Schedules as supplemented
pursuant to each Assumption Agreement.




(xvi)        Releases. At such time as the Loan
and the other Obligations shall have been paid and performed in full, the
Collateral shall be released from the Liens created hereby, and this Agreement
and all obligations (other than those expressly stated to survive such
termination) of the Secured Party and each Grantor hereunder shall terminate,
all without delivery of any instrument or performance of any act by any party,
and all rights to the Collateral shall revert to the Grantors.  At the
request and sole expense of any Grantor following any such termination, the
Secured Party shall deliver to such Grantor any Collateral held by the Secured
Party hereunder, and execute and deliver to such Grantor such documents as such
Grantor shall reasonably request to evidence such termination.




(1)           If
any of the Collateral shall be Disposed of by any Grantor in a transaction
expressly permitted by the Credit Agreement and no Default or Event of Default
shall have occurred and be continuing, then the Secured Party, at the request
and sole cost and expense of such Grantor, shall execute and deliver to such
Grantor all releases or other documents reasonably necessary for the release of
the Liens created hereunder on such Collateral.  At the request and
sole cost and expense of the Borrower, a Subsidiary Guarantor shall be released
from its obligations hereunder in the event that all of the Equity Interests of
such Subsidiary Guarantor shall be Disposed of in a transaction expressly
permitted by the Credit Agreement and no Default or Event of Default shall have
occurred and be continuing; provided that the
Borrower shall have delivered to the Secured Party, at least ten (10) Business
Days prior to the date of the proposed release, a written request for release
identifying the relevant Subsidiary Guarantor and the terms of the Disposition
in reasonable detail, including the price thereof and any expenses in connection
therewith, together with a certification by the Borrower stating that such
transaction is permitted under the Credit Agreement and the other Loan Documents
and that the Proceeds of such Disposition will be applied in accordance
therewith.


A-46




(2)           Each
Grantor acknowledges that it is not authorized to file any financing statement
or amendment or termination statement with respect to any financing statement
originally filed in connection herewith without the prior written consent of the
Secured Party subject to such Grantor's rights under Section 9.509(d)(2) of the
UCC.




(xvii)       WAIVER OF JURY
TRIAL.  EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE SECURED PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE SECURED PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT THE SECURED PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.




(xviii)      WAIVER OF CONSEQUENTIAL
DAMAGES; ETC.  TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
REQUIREMENTS OF LAW, EACH GRANTOR AGREES THAT IT WILL NOT ASSERT, AND HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES, ANY CLAIM AGAINST ANY INDEMNIFIED PARTY
ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE
DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION
WITH, OR AS A RESULT OF, THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY
AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY, THE LOAN OR THE USE OF THE PROCEEDS
THEREOF.  NO INDEMNIFIED PARTY SHALL BE LIABLE FOR ANY DAMAGES ARISING
FROM THE USE BY UNINTENDED RECIPIENTS OF ANY INFORMATION OR OTHER MATERIALS
DISTRIBUTED BY IT THROUGH ANY TELECOMMUNICATIONS, ELECTRONIC OR OTHER
INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.




SECTION
8.19.   INTEGRATION.   
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT OF THE GRANTORS AND
THE SECURED PARTY WITH RESPECT TO THE SUBJECT MATTER HEREOF, AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES.  THERE ARE NO PROMISES, UNDERTAKINGS, REPRESENTATIONS
OR WARRANTIES BY THE SECURED PARTY RELATIVE TO THE SUBJECT MATTER HEREOF NOT
EXPRESSLY SET FORTH OR REFERRED TO HEREIN.  THERE ARE NO UNWRITTEN
ORAL AGREEMENTS AMONG THE PARTIES.




A-47




Section
8.20.  Independence of
Covenants.  All covenants and agreements hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants or agreements, the fact that it would be
permitted by an exception to, or would otherwise be within the limitations of,
another covenant or agreement, shall not avoid the occurrence of a Default or
Event of Default if such action is taken or such condition exists.




Section
8.21.   Time is of the
Essence.  Time is of the essence of this
Agreement.




[Signature Page
Follows]


A-48


IN
WITNESS WHEREOF, each of the undersigned has caused this Guarantee and Security
Agreement to be duly executed and delivered as of the date first above
written.




GRANTORS:SANDERS
      MORRIS HARRIS GROUP INC.By:Name:Title:SMH
      CAPITAL INC.By:Name:Title:SMH
      CAPITAL ADVISORS, INC.By:Name:Title:MILLER-GREEN
      FINANCIAL SERVICES, INC.By:Name:Title:


A-49




THE
      EDELMAN FINANCIAL CENTER, LLCBy:Name:Title:EDELMAN
      BUSINESS SERVICES, LLCBy:Name:Title:EDELMAN
      FINANCIAL SERVICES, LLCBy:Name:Title:EDELMAN
      FINANCIAL ADVISORS, LLCBy:Name:Title:SOF
      MANAGEMENT, LLCBy:Name:Title:




A-50




SMH
      GP LPBy:Name:Title:SMH
      MLS, LLCBy:Name:Title:SMH
      SPEADV, LLCBy:Name:Title:SECURED
      PARTY:PROSPERITY
      BANKBy:Name:Title:


A-51


EXHIBIT B
TO


CREDIT
AGREEMENT







FORM OF
CLOSING CERTIFICATE





[INSERT LEGAL NAME OF
COMPANY]




CLOSING
CERTIFICATE




I, the
undersigned, [President/Executive Vice President/Chief Financial Officer] of
[Name of Borrower/Subsidiary], a [corporation/limited liability company] duly
organized and validly existing under the laws of the State of _____________ (the
"Company"), do
hereby certify on behalf of the Company that:




1.           This
Certificate is furnished pursuant to Section 3.01(c) of the Credit
Agreement, dated as of March [] , 2009, among
Sanders Morris Harris Group, Inc., a Texas corporation and Prosperity Bank as
Lender (such Credit Agreement, as in effect on the date of this Certificate,
being herein called the "Credit
Agreement").  Unless otherwise defined herein, capitalized
terms used in this Certificate shall have the meanings set forth in the Credit
Agreement.




2.           The
following named individuals are elected or appointed officers of the Company,
each of which holds the office of the Company set forth opposite his name as of
the date hereof.  The signature written opposite the name and title of
each such officer is his genuine signature.





Name
      1
                                
                                Office
                                
                                Signature





3.           Attached
hereto as Exhibit A is a certified copy of the [Certificate of
Incorporation] [Articles of Incorporation] [Certificate of Formation] of the
Company, as filed in the Office of the Secretary of State of the State of
_____________ on ____________, ___, together with all amendments and other
modifications thereto adopted through the date
hereof.




4.           Attached
hereto as Exhibit B is a true and correct copy of the [By-Laws] [Limited
Liability Company Agreement] [Partnership Agreement] of the Company which [were]
[was] duly adopted, [are] [is] in full force and effect on the date hereof, and
[have] [has] been in effect since ________________,
____.





1 Include
name, office and signature of each officer who will sign any Loan Document,
including the officer who will sign the certification at the end of this
Certificate or related documentation.





5.           Attached
hereto as Exhibit C is a Certificate issued by the Secretary of State of the
State of [_________], certifying that the Company is duly formed under the laws
of the State of [__________], is in good standing, has a legal corporate
existence, is duly authorized to transact business, and the Company's annual
reports have been filed to date; and




6.           Attached
hereto as Exhibit D is a Certificate issued by the Secretary of State in each
State where the nature of business in which the Company is engaged requires the
Company to be qualified as a foreign corporation, certifying that the company is
in good standing and duly qualified to do business in each such State as a
foreign corporation.




7.           [Attached
hereto as Exhibit E is a Certificate of Account Status issued by the Texas
Comptroller of Public Accounts, certifying that the Company is in good standing
and the Company's franchise tax reports have been filed to date.] 2




8.           Attached
hereto as Exhibit [E][F] is a true and correct copy of resolutions which were
duly adopted on ____________, ____ [by unanimous written consent of the Board of
Directors of the Company] [by a meeting of the Board of Directors of the Company
at which a quorum was present and acting throughout], and said resolutions have
not been rescinded, amended or modified.  Except as attached hereto as
Exhibit C, no resolutions have been adopted by the Board of Directors of the
Company which deal with the execution, delivery or performance of any of the
Loan Documents to which the Company is
party.




9.           On
the date hereof, all of the conditions set forth in Section 3.01 of the Credit
Agreement have been
satisfied.




10.         On
the date hereof, the representations and warranties of the Borrower and each
Subsidiary set forth in the Credit Agreement and in the other Loan Documents are
true and correct with the same effect as though such representations and
warranties had been made on the date
hereof.




11.         On
the date hereof, no Default or Event of Default has occurred and is continuing
or would result from the Loan being made on the date hereof or the application
of the proceeds thereof.




12.         There
is no proceeding for the dissolution or liquidation of the Company or
threatening its
existence.




[Signature
Page Follows]







2NOTE:  Please include if the Company is a Texas
corporation.


2


IN
WITNESS WHEREOF, I have hereunto set my hand this ___ day of March,
2009.




[NAME
      OF BORROWER/SUBSIDIARY]By:Name:Title:





I, the
undersigned, [Secretary/Assistant Secretary] of the Company, do hereby certify
that:




1.           [Name
of Person making above certifications] is the duly elected and qualified
[President/Executive Vice President/Chief Financial Officer] of the Company and
the signature above is his genuine signature.




2.           The
certifications made by [name of Person making above certifications] in Items 2
through [12] above are true and correct.




IN
WITNESS WHEREOF, I have hereunto set my hand this ___ day of March,
2009.




[NAME
      OF BORROWER/SUBSIDIARY]By:Name:Title:


3


EXHIBIT A TO CLOSING
CERTIFICATE




[ARTICLES OF INCORPORATION]
[CERTIFICATE OF FORMATION] OF THE


COMPANY





EXHIBIT B TO CLOSING
CERTIFICATE




[BY-LAWS] [LIMITED LIABILITY
COMPANY AGREEMENT]




[PARTNERSHIP AGREEMENT]
[OTHER] OF THE COMPANY





EXHIBIT C TO CLOSING
CERTIFICATE




CERTIFICATE OF GOOD STANDING
OF THE COMPANY ISSUED


BY THE SECRETARY OF
STATE OF THE STATE OF [__________]





[EXHIBIT      ]


CERTIFICATE OF ACCOUNT
STATUS OF THE COMPANY


ISSUED BY THE TEXAS
COMPTROLLER OF PUBLIC ACCOUNTS





[EXHIBIT      ]


CERTIFICATE ISSUED BY EACH
STATE IN WHICH


THE COMPANY IS
QUALIFIED AS A FOREIGN CORPORATION





exhibit
[d][E][F] TO THE CLOSING CERTIFICATE


RESOLUTIONS OF THE
COMPANY




[see
attached]





EXHIBIT C
TO


CREDIT
AGREEMENT





FORM OF
MORTGAGE





PREPARED
BY AND UPON


RECORDATION
RETURN TO:




Bracewell
& Giuliani LLP


1445 Ross
Avenue, Suite 3800


Dallas,
Texas  75202




Attention:  [______],
Esq.







DEED
OF TRUST, ASSIGNMENT OF RENTS AND LEASES,


SECURITY
AGREEMENT, FIXTURE FILING AND FINANCING STATEMENT




made by
and from




[______________________],


as the
Grantor




to




[______________________],


as the
Trustee







for the
benefit of




PROSPERITY
BANK,


as the
Beneficiary







DATED AS
OF [______], 200[__]







THIS DEED
OF TRUST IS ALSO TO BE FILED FOR RECORD IN THE REAL ESTATE RECORDS [OF ________________ COUNTY,
TEXAS] AS A FIXTURE FILING IN ACCORDANCE WITH THE TEXAS UNIFORM
COMMERCIAL CODE.




THIS DEED
OF TRUST SECURES FUTURE ADVANCES AND CONTAINS AFTER-ACQUIRED PROPERTY
PROVISIONS.








TABLE OF CONTENTS





PageARTICLE
      I
                                  
                                  DEFINITIONS
      AND INTERPRETATION
                                  
                                  1Section
      1.01.
                                  
                                  Definitions
                                  
                                  1Section
      1.02.
                                  
                                  Terminology
                                  
                                  4Section
      1.03.
                                  
                                  Resolution
      of Drafting Ambiguities
                                  
                                  5ARTICLE
      II
                                  
                                  GRANTING
      CLAUSES
                                  
                                  5Section
      2.01.
                                  
                                  Grant
      of Lien
                                  
                                  5Section
      2.02.
                                  
                                  Future
      Advances
                                  
                                  8ARTICLE
      III
                                  
                                  REPRESENTATIONS
      AND WARRANTIES
                                  
                                  8Section
      3.01.
                                  
                                  Title
      to Property; No Liens
                                  
                                  8Section
      3.02.
                                  
                                  Existence;
      Compliance with Requirements of Law; Permits
                                  
                                  9Section
      3.03.
                                  
                                  Power
      and Authority; Enforceability; No Conflicts
                                  
                                  9Section
      3.04.
                                  
                                  Impositions
      and Other Charges
                                  
                                  9Section
      3.05.
                                  
                                  No
      Default
                                  
                                  9Section
      3.06.
                                  
                                  Requirements
      of Law; Land Use Requirements
                                  
                                  10Section
      3.07.
                                  
                                  Utilities;
      Access
                                  
                                  10Section
      3.08.
                                  
                                  No
      Casualty or Condemnation; No Litigation
                                  
                                  10Section
      3.09.
                                  
                                  Disclosure
                                  
                                  11Section
      3.10.
                                  
                                  Tax
      Status
                                  
                                  11ARTICLE
      IV
                                  
                                  COVENANTS
                                  
                                  11Section
      4.01.
                                  
                                  Payment
      and Performance of Obligations
                                  
                                  11Section
      4.02.
                                  
                                  Good
      Standing
                                  
                                  11Section
      4.03.
                                  
                                  Care
      of Property
                                  
                                  11Section
      4.04.
                                  
                                  Requirements
      of Law; Insurance Requirements; Claims; Etc
                                  
                                  12Section
      4.05.
                                  
                                  Impositions
                                  
                                  12Section
      4.06.
                                  
                                  Insurance
                                  
                                  12Section
      4.07.
                                  
                                  Books
      and Records; Inspection; Information
                                  
                                  14Section
      4.08.
                                  
                                  Condemnation
                                  
                                  15Section
      4.09.
                                  
                                  Liens
                                  
                                  15Section
      4.10.
                                  
                                  Protection
      of Liens; Defense of Action
                                  
                                  15Section
      4.11.
                                  
                                  Transfer
                                  
                                  16Section
      4.12.
                                  
                                  Increased
      Costs
                                  
                                  16Section
      4.13.
                                  
                                  Further
      Assurances
                                  
                                  16Section
      4.14.
                                  
                                  Filing
      and Recording
                                  
                                  16Section
      4.15.
                                  
                                  [Permitted
      Contests
                                  
                                  17ARTICLE
      V
                                  
                                  ASSIGNMENT
      OF RENTS AND LEASES
                                  
                                  17Section
      5.01.
                                  
                                  Assignment
      of Rents and Leases
                                  
                                  17ARTICLE
      VI
                                  
                                  RIGHTS
      AND REMEDIES
                                  
                                  19Section
      6.01.
                                  
                                  Events
      of Default
                                  
                                  19Section
      6.02.
                                  
                                  Events
      of Default; Remedies
                                  
                                  19


i-


TABLE OF CONTENTS





(continued)





PageSection
      6.03.
                            
                            Rights
      Pertaining to Sales
                            
                            21Section
      6.04.
                            
                            Additional
      Provisions as to Remedies
                            
                            23Section
      6.05.
                            
                            Application
      of Proceeds
                            
                            24Section
      6.06.
                            
                            Waivers
      by the Grantor
                            
                            25ARTICLE
      VII
                            
                            SECURITY
      AGREEMENT
                            
                            26Section
      7.01.
                            
                            Security
      Agreement under UCC
                            
                            26Section
      7.02.
                            
                            Fixture
      Filing
                            
                            26Section
      7.03.
                            
                            Financing
      Statements
                            
                            27ARTICLE
      VIII
                            
                            ENVIRONMENTAL
      MATTERS
                            
                            27Section
      8.01.
                            
                            Environmental
      Representations and Warranties
                            
                            27Section
      8.02.
                            
                            Environmental
      Covenants
                            
                            28Section
      8.03.
                            
                            Beneficiary's
      Rights
                            
                            28Section
      8.04.
                            
                            Operation
      and Maintenance Programs
                            
                            28Section
      8.05.
                            
                            Environmental
      Definitions
                            
                            29Section
      8.06.
                            
                            ENVIRONMENTAL
      INDEMNIFICATION
                            
                            30ARTICLE
      IX
                            
                            MISCELLANEOUS
                            
                            31Section
      9.01.
                            
                            Right
      to Perform Obligations; Protective Advances
                            
                            31Section
      9.02.
                            
                            Notices
                            
                            31Section
      9.03.
                            
                            Covenants
      Running with the Land
                            
                            32Section
      9.04.
                            
                            EXPENSES
      AND GENERAL INDEMNIFICATION
                            
                            32Section
      9.05.
                            
                            ENTIRE
      AGREEMENT
                            
                            34Section
      9.06.
                            
                            Amendments
      in Writing
                            
                            34Section
      9.07.
                            
                            Severability
                            
                            34Section
      9.08.
                            
                            Compliance
      with Usury Laws
                            
                            35Section
      9.09.
                            
                            Successors
      and Assigns
                            
                            35Section
      9.10.
                            
                            GOVERNING
      LAW, ETC
                            
                            35Section
      9.11.
                            
                            WAIVER
      OF TRIAL BY JURY
                            
                            35Section
      9.12.
                            
                            Submission
      To Jurisdiction
                            
                            36Section
      9.13.
                            
                            Acknowledgements
                            
                            36Section
      9.14.
                            
                            Independence
      of Covenants
                            
                            36Section
      9.15.
                            
                            Sole
      Discretion
                            
                            37Section
      9.16.
                            
                            Subrogation
                            
                            37Section
      9.17.
                            
                            Co-Agents
                            
                            37Section
      9.18.
                            
                            Right
      to Deal
                            
                            37Section
      9.19.
                            
                            No
      Merger
                            
                            37Section
      9.20.
                            
                            Duplicate
      Originals; Counterparts
                            
                            38Section
      9.21.
                            
                            Termination
                            
                            38Section
      9.22.
                            
                            Waiver
      of Setoff
                            
                            38Section
      9.23.
                            
                            Dealing
      with the Property
                            
                            38Section
      9.24.
                            
                            Lien
      Absolute
                            
                            38





ii-




TABLE
OF CONTENTS







PageSection
      9.25.
                          
                          [Multistate
      Transaction
                          
                          38ARTICLE
      X
                          
                          ADDITIONAL
      TEXAS LAW PROVISIONS
                          
                          39Section
      10.01.
                          
                          Foreclosure
      Pursuant to Power of Sale
                          
                          39Section
      10.02.
                          
                          Deficiency
      Statute
                          
                          39ARTICLE
      XI
                          
                          TRUSTEE
                          
                          40Section
      11.01.
                          
                          Concerning
      the Trustee
                          
                          40Section
      11.02.
                          
                          Trustee's
      Fees
                          
                          40Section
      11.03.
                          
                          Certain
      Rights
                          
                          40Section
      11.04.
                          
                          Retention
      of Money
                          
                          41Section
      11.05.
                          
                          Perfection
      of Appointment
                          
                          41Section
      11.06.
                          
                          Succession
      Instruments
                          
                          41





EXHIBITS





EXHIBIT
A           Land


EXHIBIT
B           Permitted
Exceptions


iii-


DEED OF TRUST, ASSIGNMENT OF
RENTS AND LEASES,


SECURITY AGREEMENT, FIXTURE
FILING AND FINANCING STATEMENT




THIS DEED
OF TRUST, ASSIGNMENT OF RENTS AND LEASES, SECURITY AGREEMENT, FIXTURE FILING AND
FINANCING STATEMENT (this "Deed of Trust"),
dated as of [______________] 20[__], is made by [___________________________],
a _______________ (the "Grantor"), having its
principal office at [___________________________],
to [_______________], an individual, as trustee (the "Trustee") having an
address at [______________________________], for the benefit of [___________________________],
as lender (the "Lender") (Lender,
together with its successors and assigns, the "Beneficiary"), having
an address at [___________________________________].  All references
to this Deed of Trust shall mean this instrument and any and all renewals,
modifications, amendments, supplements, extensions, consolidations,
substitutions, and restructurings of this instrument.




RECITALS:




A.           The
Grantor is party to that certain Credit Agreement dated as of the date hereof
(as the same may be amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement")
between the Grantor and the Lender, pursuant to which the Lender has agreed to
make the Loan to the Grantor.




B.           It
is a condition precedent to the effectiveness of the Credit Agreement and the
obligations of the Lender to make the Loan thereunder that the Grantor execute
and deliver this Deed of Trust to the Beneficiary.




NOW
THEREFORE, in consideration of the Loan and the foregoing recitals, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Grantor hereby agrees as follows:




ARTICLE
I




DEFINITIONS
AND INTERPRETATION




Section
1.01.     Definitions.




Capitalized
terms used but not defined in this Deed of Trust shall have the meanings
specified in the Credit Agreement.




All terms
used but not capitalized in this Deed of Trust that are defined in the UCC shall
have the meanings ascribed to such terms in the UCC.




As used
herein, the following terms shall have the following meanings:




"Casualty" means any
damage to, or destruction of, the Property or any part thereof.





"Condemnation" means
any condemnation or other taking or temporary or permanent requisition of any
Property, any interest therein or right appurtenant thereto, or any change of
grade affecting any Property, as the result of the exercise of any right of
condemnation or eminent domain.  A Transfer in lieu or anticipation of
Condemnation shall be deemed to be a Condemnation.




"Condemnation Awards"
means, at any time, all awards paid or payable by reason of any Condemnation or
in connection with any agreement with any condemning authority that has been
made in settlement of any proceeding relating to a Condemnation.




"Default Rate" means
the rate of interest per annum that is or would be payable on overdue payments
of principal under the Credit Agreement.




"Equipment" has the
meaning specified in Section
2.01(c).




"Impositions" means
all taxes (including real estate taxes and transfer taxes), assessments
(including all assessments for public improvements or benefits, whether or not
commenced or completed prior to the date hereof), gas, electricity, steam,
water, sewer or other rents, rates and charges, excises, levies, license fees,
permit fees, inspection fees and other authorization fees and other charges, in
each case whether general or special, ordinary or extraordinary, foreseen or
unforeseen, of every kind or character (including all interest and penalties
thereon), which at any time may be assessed, levied, confirmed or imposed on or
in respect of, or be a Lien upon, (i) the Premises, any other Property or any
interest therein, (ii) any ownership, occupancy, operation, use or possession
of, or activity conducted on, the Premises, (iii) the Rents, or (iv) the
Obligations or the Loan Documents.




"Improvements" means
has the meaning specified in Section
2.01(b).




"Indemnified Party"
means the collective reference to the Beneficiary, and the Trustee, and each
Related Party of each of the foregoing Persons.




"Insurance Policies"
means all insurance policies and coverages of any kind or character required to
be maintained by the Grantor pursuant to this Deed of Trust with respect to the
Premises and the use, management, ownership, occupancy, enjoyment or operation
thereof, including, without limitation, all property insurance ("all risk" or
"special perils form"), liability insurance, builder's risk insurance, flood
insurance, terrorist risk insurance, earthquake insurance, title insurance,
reinsurance, business interruption insurance and environmental
insurance.




"Insurance Proceeds"
means, at any time, all insurance proceeds or payments to which the Grantor is
or may be or become entitled under any or all Insurance Policies by reason of a
Casualty plus all insurance proceeds and payments to which the Grantor is or may
be or become entitled under any and all other insurance or coverage maintained
with respect to the Premises or the use, ownership, occupancy, enjoyment or
operation thereof.




"Insurance
Requirements" means all provisions of the Insurance Policies, all
requirements of the issuer of any of the Insurance Policies and all orders,
rules, regulations and any other requirements of the National Board of Fire
Underwriters (or any other body exercising similar functions) binding upon the
Grantor or applicable to the Property, any adjoining vaults, sidewalks, parking
areas or driveways or any use, operation or condition thereof.


-2-




"Land" has the meaning
specified in Section
2.01(a).




"Leases" has the
meaning specified in Section
2.01(f).




"Minerals" has the
meaning specified in Section
2.01(e).




"Obligations" means
the collective reference to the following, whether now existing or hereafter
arising:




(i)
            all
      Obligations (as such term is defined in the Credit Agreement) all
      obligations of the Grantor under the Loan Documents[, including all
      obligations of the Grantor under its guaranty made pursuant to Article II
      of the Guaranty and Security
Agreement];3




(ii)
            all
      obligations, indebtedness and liabilities of the Grantor under this Deed
      of Trust (including the obligation of the Grantor to repay all advances
      made by the Beneficiary to preserve or protect the Property and the Liens
      created hereby) and the other Loan Documents;
  and




(iii)
            any
      and all amendments, restatements, renewals, extensions, modifications,
      increases, and restructurings of any or all of the
    foregoing.




"Permits" has the
meaning specified in Section
2.01(j).




"Permitted Exceptions"
has the meaning specified in Section
3.01.




"Premises" means the
Land, Improvements and Equipment.




"Property" has the
meaning specified in Section
2.01.




"Related Agreements"
has the meaning specified in Section
2.01(h).




"Rents" has the
meaning specified in Section
2.01(g).




"Requirements of Law"
means (i) all provisions of Permitted Exceptions and Permits, and (ii) with
respect to any Person or the Property, all provisions of the Organizational
Documents of such Person, and any law, statute, treaty, rule, regulation, order,
ordinance, code, judgment, decree, injunction, requirement of any Governmental
Authority or quasi-Governmental Authority applicable to or binding upon such
Person or the Property or to which such Person or the Property is
subject.




"Restoration" means
the restoration, repair, replacement or rebuilding of the Property after a
Casualty or Condemnation and "Restore" means to
restore, repair, replace or rebuild the Property after a Casualty or
Condemnation, in each case as nearly as possible to its value and condition
immediately prior to such Casualty or Condemnation.





3 Include
bracketed text if the Grantor is a guarantor.


-3-




"Transfer" means, when
used as a noun, any sale, conveyance, assignment, lease or other transfer and,
when used as a verb, to sell, convey, assign, lease or otherwise transfer, in
each case (i) whether voluntary or involuntary, (ii) whether direct or indirect
and (iii) including any agreement providing for a Transfer or granting any right
or option providing for a Transfer.




"UCC" means the
Uniform Commercial Code as in effect in the State in which the Land and
Improvements are located provided that if by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of the Lien on
any Property is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State in which the Land and Improvements are
located, UCC means the Uniform Commercial Code as in effect in such
jurisdictions for purposes of the provisions hereof relating to such perfection
or effect of perfection or non-perfection.




Section
1.02.     Terminology.  Unless
the context clearly indicates a contrary intent or unless otherwise specifically
provided in this Deed of Trust, (a) the word "Grantor" means "each
Grantor or any subsequent owner or owners of the Property or any part thereof or
interest therein," the word "Beneficiary" means
the "Beneficiary or any successor agent for the Secured Parties," the word
"Trustee" means
the "Trustee and any substitute or successor trustee hereunder"; (b) words that
include a number of constituent parts, things or elements, including the terms
Land, Improvements, Equipment, Minerals, Obligations, Premises and Property
shall be construed as referring to each constituent part, thing or element
thereof, as well as to all of such constituent parts, things or elements taken
as a whole; (c) whenever the context may require, any pronouns used herein shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns and pronouns shall include the plural and vice versa; (d)
references to any Person shall include such Person's successors and assigns and
in the case of an individual, the word "successors" includes such Person's
heirs, devisees, legatees, executors, administrators and personal
representatives; (e) references to any statute or other law shall include all
applicable rules, regulations and orders adopted or made thereunder and all
statutes or other laws amending, consolidating or replacing the statute or law
referred to; (f) the words "include" and "including", and words of similar
import, shall be deemed to be followed by the words "without limitation"; (g)
the words "hereto", "herein", "hereof" and "hereunder", and words of similar
import, refer to this Deed of Trust in its entirety; (h) references to Articles,
Sections, Schedules, Exhibits, subsections, paragraphs and clauses are to the
Articles, Sections, Schedules, Exhibits, subsections, paragraphs and clauses of
this Deed of Trust; (i) the titles and headings of Articles, Sections,
Schedules, Exhibits, subsections, paragraphs and clauses are inserted as a
matter of reference only and shall not in any way alter, modify or define, or
affect the construction of, this Deed of Trust; (j) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, restated, supplemented, extended, renewed or otherwise
modified (subject to any restrictions on such amendments, restatements,
supplements, extensions, renewals or modifications set forth herein or in the
Credit Agreement); (j) all obligations of the Grantor hereunder shall be
satisfied by the Grantor at the Grantor's sole cost and expense; (k) the
expressions "payment in full," "paid in full" and any other similar terms or
phrases when used herein with respect to the Obligations shall mean the
unconditional, final, indefeasible and irrevocable payment in full, in
immediately available funds, of all of the Obligations; and (l) all rights and
powers granted to or for the benefit of the Beneficiary shall be deemed to be
coupled with an interest and be irrevocable.


-4-




Section
1.03.    Resolution of Drafting
Ambiguities.  The Grantor acknowledges that it was represented
by counsel in connection with this Deed of Trust, that it and its counsel
reviewed and participated in the preparation and negotiation of this Deed of
Trust and that any rule of construction to the effect that ambiguities are to be
resolved against the drafting party or the Grantor shall not be employed in the
interpretation of this Deed of Trust.




ARTICLE
II




GRANTING
CLAUSES




Section
2.01.     Grant of
Lien.  To secure the due and punctual payment, performance and
observance of the Obligations, the Grantor by these presents does hereby GRANT,
BARGAIN, SELL, ASSIGN, TRANSFER, WARRANT AND CONVEY, unto the Trustee and the
Trustee's successors, assigns and substitutes, in trust, WITH POWER OF SALE and
right of entry and possession, for the use and benefit of the Beneficiary, and
(to the extent covered by the UCC) does hereby GRANT to the Beneficiary a
continuing security interest in, all of the Grantor's right, title, interest and
estate in, to and under any and all of the following property, rights, interests
and estates, whether now owned or existing or hereafter arising or acquired
(collectively, the "Property"):




(a)           the
lots, pieces, tracts or parcels of land located in [______] County, Texas, more
particularly described in Exhibit A (the "Land");




(b)           all
buildings, structures, foundations, facilities and other improvements of every
kind and description now or hereafter located on or affixed or attached to the
Land or any part thereof, including all parking areas, roads, driveways, walks,
fences, walls, berms, recreation facilities, drainage facilities, lighting
facilities and other site improvements; all water, sanitary and storm sewer,
drainage, electricity, steam, gas, telephone, telecommunications and other
utility equipment and facilities; all plumbing, lighting, heating, ventilating,
air-conditioning, refrigerating, incinerating, compacting, fire protection and
sprinkler, surveillance and security, vacuum cleaning, public address and
communications equipment and systems; all screens, awnings, floor coverings,
partitions, elevators, escalators, motors, machinery, pipes, fittings and other
items of equipment and personal property of every kind and description now or
hereafter located on or affixed or attached to the Land or attached or affixed
to or located in or on the Improvements which by the nature of their location
thereon or attachment thereto are real property under applicable law; and
including all materials intended for the construction, reconstruction, repair,
replacement, alteration, addition or improvement of or to such buildings,
structures, equipment, fixtures, and improvements, all of which materials shall
be deemed to be part of the Property immediately upon delivery thereof on the
Land and to be part of the improvements immediately upon their incorporation
therein (the foregoing being collectively called the "Improvements");


-5-


(c)           all
equipment, machinery, fixtures, chattels and other property now or hereafter
located on, or in, or affixed to, the Land or the Improvements, whether or not
affixed thereto and which are not real property under applicable law, including
all partitions, screens, awnings, shades, blinds, curtains, draperies, carpets,
rugs, furniture and furnishings; all heating, lighting, plumbing, ventilating,
air conditioning, refrigerating, gas, steam, electrical, incinerating,
compacting, water treatment, pollution control, and communications systems,
fixtures and equipment; all elevators, ovens, stoves, ranges, other kitchen and
laundry appliances, vacuum and other cleaning systems, call systems,
switchboards, sprinkler systems and other fire prevention, alarm and
extinguishing apparatus; and all materials, motors, machinery, pipes, conduits,
dynamos, engines, compressors, generators, boilers, stokers, furnaces, pumps,
trunks, ducts, pipes, appliances, equipment, utensils, tools, implements,
fittings and fixtures and including any of the foregoing that is temporarily
removed from the Land or the Improvements to be repaired and later reinstalled
thereon or therein (all of the foregoing being collectively called the "Equipment";




(d)           all
tenements, hereditaments and appurtenances now or hereafter relating to the
Premises; all streets, roads, sidewalks and alleys abutting the Premises; all
strips and gores within or adjoining the Land; all land in the bed of any body
of water adjacent to the Land; all land adjoining the Land created by artificial
means or by accretion; all air space and rights to use air space above the Land;
all development or similar rights now or hereafter appurtenant to the Land; all
rights of ingress and egress now or hereafter appertaining to the Premises; all
easements, servitudes, privileges and rights of way now or hereafter
appertaining to the Premises; and all royalties and other rights now or
hereafter appertaining to the use and enjoyment of the Premises, including
alley, party walls, support, drainage, crop, timber, agricultural,
horticultural, oil, gas and other mineral, water stock, riparian and other water
rights now or hereafter appertaining to the use and enjoyment of the
Premises;




(e)           all
substances in, on, under, or above the Land or any part thereof which are now,
or may become in the future, intrinsically valuable and which now or may in the
future be enjoyed through extraction or removal from the Land or any part
thereof, including, without limitation, all oil, gas, and all other
hydrocarbons, coal, lignite, carbon dioxide and all other nonhydrocarbon gas,
uranium and all other radioactive substances, and gold, silver, copper, iron and
all other metallic substances or ores (the foregoing being collectively called
the "Minerals");




(f)           all
leases, master leases, subleases, underlettings, concession agreements,
management agreements, occupancy agreements, licenses and other agreements,
whether written or oral and whether or not of record, now existing or hereafter
entered into, granting a possessory interest in and to, or relating to or
affecting, the enjoyment, occupancy, operation, possession or use of the
Premises or any part thereof (including, without limitation, all leases
involving Minerals), together with all guarantees and other supporting
obligations of the obligations of any Person thereunder and all security,
deposits and payments, security interests and contractual Liens made or existing
in connection therewith (the foregoing being collectively called the "Leases");




(g)           all
rents, royalties, issues, profits, receipts, revenue, income and other benefits
now or hereafter accruing or payable with respect to the Premises or any part
thereof, including all rents and other sums now or hereafter payable pursuant to
the Leases; all other sums now or hereafter payable with respect to the use,
occupancy, management, operation or control of the Premises or any part thereof;
and all other claims, rights and remedies now or hereafter belonging or accruing
or payable with respect to the Premises or any part thereof or the Leases,
including fixed, additional and percentage rents, occupancy charges, security
deposits, parking, maintenance, common area, tax, insurance, utility and service
charges and contributions (whether collected under the Leases or otherwise),
proceeds of sale of electricity, gas, heating, air-conditioning and other
utilities and services (whether collected under the Leases or otherwise), and
deficiency rents and liquidated damages following default or cancellation (all
of the foregoing being collectively called the "Rents");


-6-




(h)           all
Insurance Policies (including all unearned premiums and dividends
thereunder);




(i)           
all guarantees, indemnities, and warranties relating to the Premises; all supply
and service contracts for water, sanitary and storm sewer, drainage,
electricity, steam, gas, telephone and other utilities now or hereafter relating
to the Premises; and all other contracts and agreements (other than Leases)
affecting or relating to the construction, use, maintenance, management,
ownership, operation, repair, servicing, enjoyment or occupancy of the Premises
(the foregoing being collectively called the "Related
Agreements");




(j)           
all licenses, permits, certificates, variances, consents, approvals and other
authorizations now or hereafter required for or relating to the Premises or the
construction, use, maintenance, management, ownership, operation, enjoyment or
occupancy thereof (the foregoing being collectively called the "Permits");




(k)           all
books and records, including tenant files, credit files, customer files,
drawings, designs, plans, specifications, computer print outs, files, programs
and other computer and electronic materials and records, now or hereafter
relating to the construction, use, maintenance, management, ownership,
operation, enjoyment or occupancy of the Premises;




(l)           all
money now or subsequently on deposit for the payment of real estate taxes or
assessments against the Premises or for the payment of premiums on Insurance
Policies and all tax refunds, rebates or credits payable with respect to or
arising in connection with any of the Property;




(m)          all
trade names, trademarks, logos, symbols, copyrights, patents, goodwill and other
intellectual property relating to or existing or arising from or in connection
with the Premises or any part thereof;




(n)           all
accounts, chattel paper, commercial tort claims, deposit accounts, documents,
general intangibles, goods, instruments, inventory, investment property, letters
of credit, letter-of-credit rights, supporting obligations and all other
personal property of any kind or character, located on, relating to, derived
from or arising in connection with the use, ownership, management, operation,
enjoyment or occupancy of the Premises;




(o)           all
reserves, deposits, escrows or impounds required hereunder or under the Credit
Agreement or any other Loan Document;




(p)           all
extensions, improvements, betterments, renewals, substitutions and replacements
of, and additions and appurtenances to, any of the Property hereafter acquired
by or released to the Grantor or constructed or located on, or attached to, the
Property, in each case, immediately upon such acquisition, release,
construction, location or attachment, without any further conveyance, mortgage,
assignment or other act by the Grantor; and all property and rights which are,
by the provisions of the Loan Documents, required to be subjected to the Lien
hereof; and all other property and rights which are by any instrument or
otherwise subjected to the Lien hereof by the Grantor or by anyone acting on its
behalf; and




-7-




(q)           all
products and proceeds, both cash and noncash, of any and all of the
foregoing.




TO HAVE
AND TO HOLD the Property, whether now owned or leased or hereafter acquired and
whether now or hereafter existing, together with all the rights, privileges and
appurtenances thereunto belonging, unto Trustee for the benefit of the
Beneficiary, forever, for the uses and purposes herein set forth.




Section
2.02.     Future
Advances.  It is the intention of the Grantor and the
Beneficiary that this Deed of Trust shall secure any and all future advances,
which may or will be advanced from time to time after the date hereof by one or
more of the Secured Parties and may include readvances of sums repaid, and this
Deed of Trust shall attach upon execution and have priority from the time of
recording as to all advances, whether obligatory or discretionary, until this
Deed of Trust is released of record.




ARTICLE
III




REPRESENTATIONS
AND WARRANTIES




The
Grantor hereby represents and warrants to the Beneficiary as
follows:




Section
3.01.     Title to Property; No Liens




(a)           The
Grantor has and will have good, [indefeasible]
[marketable]4 and insurable
title to the Land and the Improvements in fee simple, free and clear of all
Liens, claims, encumbrances and charges of every kind and character, except for
those exceptions set forth in Exhibit B hereto
(collectively, the "Permitted
Exceptions").  The Grantor owns and will own all of the other
Property free and clear of all Liens, claims, encumbrances and charges of every
kind and character.




(b)           This
Deed of Trust creates valid, enforceable first priority Lien on the Property in
favor of the Beneficiary, for the benefit of the Secured Parties, as security
for the Obligations, subject only to Permitted Exceptions.




(c)           The
Grantor shall forever warrant and defend (i) its estate, right, title and
interest in and to the Property, (ii) the validity, enforceability and priority
of the Lien of this Deed of Trust on the Property, and (iii) the right, title
and interest of the Beneficiary and any purchaser at any sale of the Property
hereunder or relating hereto, in each case, against all other Liens, subject
only to the Permitted Exceptions.


4 NOTE:  use
"marketable title" standard for Property outside of
Texas.


-8-




(d)           Nothing
herein shall be construed to subordinate the Lien of this Deed of Trust to any
Permitted Exception.




Section
3.02.     Existence; Compliance with
Requirements of Law; Permits.  The Grantor (a) is duly
organized, validly existing and in good standing under the laws of the Grantor's
jurisdiction of organization, and is duly qualified and in good standing to do
business in the State where the Property is located, (b) is in compliance with
all conditions prerequisite to the Grantor's lawfully conducting business in the
State of Texas, (c) has the power and authority to own its properties (including
the Property) and to carry out is business as presently conducted and as
proposed to be conducted, and (d) is in compliance with all Requirements of
Law.  No authorization of, filing with, notice to or other act by or
in respect of, any Governmental Authority or any other Person is necessary or
required in connection with the execution, delivery, performance, validity or
enforceability of this Deed of Trust.




Section
3.03.     Power and Authority;
Enforceability; No Conflicts.  The Grantor has the power and
authority, and the legal right, to execute and deliver this Deed of Trust and
perform its obligations hereunder.  The Grantor has taken all
necessary action to authorize the execution, delivery and performance of this
Deed of Trust.  This Deed of Trust constitutes, and each other Loan
Document to which the Grantor is a party upon execution and delivery by the
Grantor will constitute, a legal, valid and binding obligation of the Grantor,
enforceable against the Grantor in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).  The
execution, delivery and performance of this Deed of Trust do not and will not
violate, contravene, conflict with or create or constitute a breach of or
default under any applicable Requirement of Law or any Contractual Obligation
(including, without limitation, any Insurance Requirement) binding upon the
Grantor or relating to the Property and will not result in, or require, the
creation or imposition of any Lien on any of the Grantor's properties or assets
pursuant to any Requirement of Law or any such Contractual Obligation (other
than the Lien created by this Deed of Trust and any other Security
Document).




Section
3.04.      Impositions and Other Charges.




(a)           The
Grantor has filed all federal, state, county, municipal and city income and
other tax returns required to have been filed by it with any Governmental
Authority as of the date hereof and has paid all Impositions that have become
due and payable pursuant to such returns or pursuant to any assessments or
charges received by it.  The Grantor has no knowledge of any basis for
any additional assessment or charge for Impositions for prior
years.




(b)           The
Grantor has paid in full all amounts owing or claimed for labor, material,
supplies, personal property (whether or not constituting Equipment hereunder)
and services of every kind and character used, provided or installed in or
affixed or attached to the Property or any part thereof, and no claim for any of
the foregoing exists.




Section
3.05.     No
Default.  No Default or Event of Default has occurred and is
continuing.  No violation, default or event of default has occurred
under any Related Agreement, Permit or Insurance Requirement that could
reasonably be expected to have a Material Adverse Effect on any of the
Property.


-9-




Section
3.06.     Requirements of Law; Land
Use Requirements.




(a)           The
Property and the present and contemplated use, ownership, occupancy and
operation thereof comply with all Requirements of Law, Related Agreements and
Insurance Requirements.




(b)           The
Grantor has obtained all Permits required for the use, ownership, operation,
enjoyment, or occupation of the Property.




(c)           All
of the Improvements lie wholly within the boundaries and building restriction
lines of the Land.  No improvements on adjoining properties encroach
upon the Land.




(d)           The
Premises are taxed separately without regard to any other real estate, and the
Premises constitute a legally subdivided lot under and in compliance with all
subdivision laws and similar Requirements of Law (or, if not subdivided, no
subdivision or platting of the Premises is required under any Requirements of
Law), and for all purposes may be mortgaged, conveyed or dealt with as an
independent lot.




(e)           The
Premises are not located in any area identified by the Federal Emergency
Management Agency as having special flood hazards.




Section
3.07.     Utilities;
Access.




(a)           The
Property is served by all necessary water, sanitary and storm sewer, drainage,
electric, steam, gas, telephone, cable and other utility services and facilities
which services and facilities are sufficient to serve the current and
anticipated future use and occupancy of the Property.




(b)           The
Property has legal access to all streets or roads necessary for the operation of
the Property, which have been fully completed and properly dedicated, accepted
or otherwise legally constructed as a public street or road (including, as
appropriate, access over properly-granted, perpetual, private rights of way or
easements) sufficient to serve the current and anticipated future use, occupancy
and operation of the Property.




Section
3.08.     No Casualty or Condemnation;
No Litigation.




(a)           No
Casualty has occurred with respect to any of the Property and no Condemnation is
pending, proposed or threatened against any of the Property.




(b)           No
suit, action or other legal proceeding, whether judicial, administrative or
otherwise, is pending or threatened or, to the best of the Grantor's knowledge,
contemplated against or affecting the Grantor or any of the
Property.


-10-


Section
3.09.     Disclosure.  All
reports, statements, certificates and other information furnished by or on
behalf of the Grantor to the Beneficiary or the Trustee in connection with this
Deed of Trust or the other Loan Documents, or the transactions contemplated
thereunder or hereunder, are true and correct in all material respects and do
not omit to state any fact or circumstance necessary to make the statements
contained therein not misleading.




Section
3.10.      Tax
Status.  The Grantor is not a "foreign person" within the
meaning of Section 1445(f)(3) of the Code.




ARTICLE
IV




COVENANTS




The
Grantor hereby covenants and agrees with the Beneficiary that:




Section
4.01.     Payment and Performance of
Obligations.  The Grantor shall duly pay and perform its
Obligations at the times and places and in the manner specified in this Deed of
Trust and the other Loan Documents.




Section
4.02.     Good
Standing.  The Grantor shall maintain in good standing its
organizational existence, franchises, rights and privileges under the law of the
jurisdiction of its formation and its right to transact business in the State of
Texas, and will not dissolve, liquidate or terminate its legal
existence.




Section
4.03.     Care of
Property.  The Grantor (a) shall cause the representations and
warranties contained in Article III to at all
times be true and correct in each and every respect; (b) shall not cause or
permit the Property to be misused, wasted, altered, disfigured, or damaged in
any material manner or (except, subject to the provisions of this Section, for
reasonable wear and tear) to deteriorate in any material manner; (c) shall
operate and maintain the Property, or cause the same to be operated and
maintained, in good order, repair and condition; (d) shall promptly make, or
cause to be made, all repairs, replacements, renewals, restorations,
alterations, additions and improvements of and to the Property, whether interior
or exterior, structural or nonstructural, foreseen or unforeseen, that are
necessary or appropriate to keep the Property in good order, repair and
condition, all of which repairs, replacements, renewals, restorations,
alterations, additions and improvements shall be equal in quality to or better
than the Property as of the date hereof; (e) shall do or cause others to do all
shoring of the Property, including the foundations and walls thereof, and to
take all other actions necessary or appropriate for the preservation and safety
thereof by reason of or in connection with any excavation or other construction
operation on the Property, whether or not the Grantor shall be required by any
Requirement of Law to take such action or be liable for failure to do so; (f)
shall not initiate, support or acquiesce in any change in the applicable zoning
adversely affecting the Property, seek any variance (or any change in any
variance) under the zoning adversely affecting the Property, execute or file any
easement, subdivision or other plat or map or any other public or private
restriction adversely affecting the Property or consent to any of the foregoing;
(g) shall, promptly after receiving notice or obtaining knowledge of any
proposed or threatened change in the zoning adversely affecting the Property
which would result in the current use of such Property being a non-conforming
use, notify the Beneficiary thereof and diligently contest the same by any
action or proceeding deemed reasonably appropriate by the Grantor or reasonably
requested by the Beneficiary; (h) shall not abandon the Property; (i) shall
continuously use the Property as [____________]; (j) shall not
modify, amend or supplement any Permitted Exception; (k) shall not permit any
Property to be removed at any time from the Premises unless it is (A) removed
temporarily for maintenance, repair or restoration, or (B) replaced by other
property of equivalent suitability, use and value that is owned by the Grantor
free and clear of any Liens, and (l) shall not permit any drilling or
exploration for extraction, removal, or production of any Minerals from the
surface or the subsurface of the Land, regardless of the depth thereof or the
method of mining or extraction.




-11-




Section
4.04.     Requirements of Law;
Insurance Requirements; Claims; Etc.  The Grantor shall (a)
duly and punctually comply in all respects with all Related Agreements,
Requirements of Law, and Insurance Requirements; (b) pay, bond, or otherwise
discharge, from time to time when the same become due, all claims and demands of
mechanics, materialmen, suppliers, laborers and others which, if unpaid, might
result in, or permit the creation of, a Lien on the Property; (c) procure,
maintain and duly and punctually comply in all respects with all Permits
required for any construction, reconstruction, repair, alteration, addition,
improvement, maintenance, management, use, ownership, occupancy or operation of
the Property; (d) promptly notify the Beneficiary of the receipt by the Grantor
of any notice of a default under or violation of any Related Agreement,
Requirement of Law, or Insurance Requirement or any likely or actual termination
of any Related Agreement, Permit or Insurance Policy and furnish to the
Beneficiary a copy of such notice of default or termination; (e) promptly after
obtaining knowledge thereof notify the Beneficiary of any event or condition
that, with or without the giving of notice or the passage of time or both, would
constitute a default or violation under any Related Agreement, Requirement of
Law, or Insurance Requirement or a termination of any Related Agreement, Permit
or Insurance Policy and the action being taken to remedy such condition; and (f)
upon request, promptly furnish to the Beneficiary a copy of any Permit obtained
by the Grantor with respect to the Property.




Section
4.05.     Impositions.  The
Grantor shall (a) duly and punctually pay (or cause to be paid) all Impositions
prior to the delinquency date thereof; (b) duly and punctually file all returns
and other statements required to be filed with respect to any Imposition; (c)
promptly notify the Beneficiary of the receipt by the Grantor of any notice of
default in the payment of any Imposition or in the filing of any return or other
statement relating to any Imposition and simultaneously furnish to the
Beneficiary a copy of such notice of default; (d) not make any deduction from or
claim any credit on any Obligation by reason of any Imposition and, to the
extent permitted by applicable law, hereby waives any right to do so; and (e)
upon reasonable request, promptly deliver to the Beneficiary (A) a certificate
of the Grantor evidencing that the Grantor has complied with the provisions of
this Section
4.05, accompanied to the extent required by copies of official receipts
evidencing the payment of the Impositions, and (B) such other information and
documents with respect to the matters referred to in this Section as the Grantor
shall reasonably request.




Section
4.06.     Insurance.




(a)           The
Grantor shall maintain (or cause to be maintained) in full force and effect all
Insurance Policies with respect to the Property as required by Section 4.22 of the
Credit Agreement.




-12-




(b)           All
Insurance Policies required under this Section shall be fully paid for,
nonassessable and shall contain such provisions, endorsements and expiration
dates, as the Beneficiary shall from time to time request, and shall be in such
form and amounts, and be issued by such insurance companies as shall be approved
by the Beneficiary.  Without limiting the generality of the foregoing,
with respect to each Insurance Policy, the Grantor shall cause (i) the
Beneficiary to be named as "lender loss payee" on a standard noncontributory
mortgagee endorsement (or its equivalent) naming the Beneficiary or its designee
as the party to receive Insurance Proceeds, (ii) the insurance carrier to issue
a waiver of subrogation endorsement.  All liability Insurance Policies
shall name the Beneficiary as an additional insured by
endorsement.  Each Insurance Policy shall by its terms remain valid
and insure the Beneficiary's interest regardless of any (i) named, insured's
act, failure to act, negligence, or violation of warranties, declarations or
conditions, (ii) occupancy or use of the Premises for purposes more hazardous
than those permitted, or (iii) the exercise by the Beneficiary of any remedies
under any of the Loan Documents or applicable law.  Each Insurance
Policy shall provide that (i) it will not be cancelled, terminated, not renewed,
amended or materially altered (including by reduction in the scope or limits of
coverage) without at least thirty (30) days prior notice by the insurance
carrier to the Beneficiary, (ii) the insurance carrier waives any right to claim
any premiums and commissions against the Beneficiary, provided that the policy
need not waive the requirement that the premium be paid in order for a claim to
be paid to the insured, and (iii) the Beneficiary shall be allowed to pay
premiums to continue such Insurance Policy upon notice of cancellation for
nonpayment.




(c)           Duplicate
original policies evidencing the insurance required under this Section and any
additional insurance taken out on the Property by or on behalf of the Grantor
shall be deposited with and held by the Beneficiary and, in addition, the
Grantor shall deliver to the Beneficiary (i) upon the request of the Beneficiary
receipts evidencing payment of all premiums thereon and (ii) duplicate original
renewal policies with evidence satisfactory to the Beneficiary of payment of all
premiums thereon, at least fifteen (15) days prior to the expiration of each
such policy.  In lieu of the duplicate original policies provided
herein to be delivered to the Beneficiary, the Grantor may deliver original
certificates from the issuing insurance company, evidencing that such policies
are in full force and effect and containing information which, in the
Beneficiary's judgment, is sufficient to allow the Beneficiary to determine
whether such policies comply with the requirements of this Section.




(d)           The
Grantor shall not maintain separate or additional insurance concurrent in form
or contributing in the event of loss with that required under this Section
unless endorsed in favor of Beneficiary in accordance with the requirements of
this Section and otherwise approved by the Beneficiary in all
respects.




-13-


(e)           In
the event of a Casualty [involving an amount in excess of
$_____________], (i) the Grantor shall promptly give notice thereof to
the Beneficiary describing in detail reasonably satisfactory to the Beneficiary
the nature and extent of such Casualty, the work required to Restore the
Property affected thereby, and an estimate of the cost of Restoration, itemized
in detail reasonably satisfactory to the Beneficiary, (ii) the Grantor shall
promptly make proof of loss under the applicable Insurance Policies and
diligently pursue to conclusion its claim for Insurance Proceeds payable
thereunder and any suit, action or other proceeding necessary or appropriate to
obtain payment of such Insurance Proceeds, and (iii) if an Event of Default
shall have occurred and be continuing, (A) the Grantor shall have no right to
settle, and shall not settle, any such claim or proceeding without the prior
written consent of the Beneficiary, (B) the Grantor shall, upon receipt, turn
over to the Beneficiary any and all Insurance Proceeds received by the Grantor
under any Insurance Policies in the exact form received (duly indorsed by the
Grantor to the Administrative Agent) for application against the Obligations in
accordance with Section 6.05, and (C)
the Grantor authorizes and empowers the Beneficiary to enforce, settle or
compromise any claim in connection with such insurance and to all Insurance
Proceeds thereof and apply such Insurance Proceeds against the Obligations in
accordance with Section
6.05.  If no Event of Default shall have occurred and be
continuing, all Insurance Proceeds with respect to a Casualty shall constitute
Net Cash Proceeds governed by Section 2.05(d) of
the Credit Agreement.




(f)           In
the event of any foreclosure of this Deed of Trust or other transfer of title to
the Property in extinguishment in whole or in part of the Obligations, all
right, title and interest of the Grantor in and to any Insurance Policies then
in effect with respect to the Property and all Insurance Proceeds payable
thereunder shall thereupon vest in the Beneficiary or the purchaser or other
transferee and the Grantor hereby appoints the Beneficiary its attorney-in-fact,
in the Grantor's name, to assign and transfer all such policies and proceeds to
such purchaser or grantee.




(g)           The
Grantor irrevocably authorizes the Beneficiary, at any time and from time to
time, to communicate directly with the Grantor's insurance carrier(s), broker(s)
and tenant(s) about any Insurance Policies required hereunder.  Any
determination or request that the Beneficiary makes about any Insurance Policy
shall impose no liability or obligation on the Beneficiary.  The
Grantor shall not rely on any such determination or request (or its absence) as
an implied or express representation about the adequacy of the Grantor's
insurance.  The Grantor acknowledges that any such determination or
request would be made solely for the Beneficiary's own benefit and not for the
Grantor's.  The Grantor retains sole responsibility for the adequacy
and prudence of its insurance program.




Section
4.07.     Books and Records;
Inspection; Information.




(a)           The
Grantor shall keep and maintain complete and accurate books and records in
accordance with GAAP with respect to all operations of or transactions involving
the Property.




(b)           The
Grantor shall permit the Beneficiary and the Trustee, and each of their
respective agents, representatives and employees, at any time and from time to
time, upon reasonable prior written notice to the Grantor and at the Grantor's
sole cost and expense, to inspect the Property or any part thereof and any of
the Grantor's books and records relating thereto.




(c)           Upon
request by the Beneficiary, the Grantor shall deliver to the Beneficiary
promptly after such request or, if requested by the Beneficiary, on a continuing
or periodic basis, any information, certificates and documents with respect to
the matters referred to in this Deed of Trust as the Beneficiary shall
reasonably request in order to protect its rights under this Deed of Trust or
with respect to the Property.




-14-




Section
4.08.     Condemnation.  In
the event of a Condemnation, or the commencement of any negotiation or
proceeding that might result in a Condemnation, or in the event of any proposed
or threatened Condemnation, (i) the Grantor shall promptly give notice thereof
to the Beneficiary describing in detail reasonably satisfactory to the
Beneficiary the nature and extent of such Condemnation, negotiation or
proceeding, the work required to Restore the Property affected by such
Condemnation and an estimate of the cost of such Restoration, itemized in detail
reasonably satisfactory to the Beneficiary, (ii) the Grantor shall do all things
deemed necessary or appropriate by the Grantor or requested by the Beneficiary
to preserve the Beneficiary's interest in the Property and promptly make claim
for Condemnation Awards payable with respect thereto and diligently pursue to
conclusion such claim for such Condemnation Awards and any suit, action or other
proceeding necessary or appropriate to obtain payment thereof, and (iii) if an
Event of Default shall have occurred and be continuing, (A) the Grantor shall
have no right to settle, and shall not settle, any such negotiation, claim or
proceeding without the prior written consent of the Beneficiary, (B) the Grantor
shall turn over to the Beneficiary any and all payments received by the Grantor
in respect of Condemnation Awards in the exact form received (duly indorsed by
the Grantor to the Administrative Agent) for application against the Obligations
in accordance with Section 6.05, and (C)
the Grantor authorizes and empowers the Beneficiary to enforce, settle or
compromise any claim in connection with such Condemnation, negotiation, or
proceeding and to collect and receive all Condemnation Awards in respect thereof
and apply such Condemnation Awards against the Obligations in accordance with
Section
6.05.  If no Event of Default shall have occurred and be
continuing, all proceeds of Condemnation Awards shall constitute Net Cash
Proceeds governed by Section 2.05(d) of
the Credit Agreement.




Section
4.09.     Liens.  The
Grantor shall not create or permit to be created or to remain, and shall
immediately discharge or cause to be discharged, any Lien on the Property, in
each case (a) whether voluntarily or involuntarily created, and (b) whether
directly or indirectly a Lien thereon, and (c) whether or not subordinated
hereto, except Permitted Exceptions and the Lien of this Deed of
Trust.  The provisions of this Section 4.09 shall
apply to each and every Lien (other than Permitted Exceptions) on the Property,
regardless of whether or not a consent to, or waiver of a right to consent to,
any other Lien thereon has been previously obtained in accordance with the terms
of the Loan Documents.




Section
4.10.     Protection of Liens; Defense
of Action.  If the Lien, security interest, validity,
perfection or priority of this Deed of Trust, or if title or any of the rights
of the Grantor, the Trustee or the Beneficiary in or to any of the Property,
shall be endangered or questioned, or shall be challenged directly or
indirectly, or if any action, suit or other proceeding is instituted against the
Grantor, the Trustee or the Beneficiary with respect thereto, the Grantor shall
promptly notify the Trustee and the Beneficiary in writing thereof and will
immediately cure any defect which may be developed or claimed, and will take all
necessary and proper steps for the defense of such action, suit or other
proceeding, including the employment of counsel, the prosecution or defense of
litigation and, subject to the Beneficiary's approval, the compromise, release
or discharge of any and all adverse claims.  The Trustee and the
Beneficiary, or either of them (whether or not named as a party to such actions
or proceedings), are hereby authorized and empowered (but shall not be
obligated) to take such additional action as they may deem necessary or proper
for the defense of any such action or proceeding or the perfection or protection
of the Lien, security interest, validity, perfection or priority of this Deed of
Trust or of such title or rights, including the employment of counsel, the
prosecution or defense of litigation, the compromise, release or discharge of
such adverse claims, the purchase of any tax title and the removal of prior
Liens and security interests.  The Grantor shall, on demand, reimburse
the Trustee and the Beneficiary for all expenses (including attorneys' fees and
disbursements) incurred by either of them in connection with the foregoing
matters, and the party incurring such expenses shall be subrogated to all rights
of the Person receiving such payment.


-15-




Section
4.11.     Transfer.  The
Grantor shall not Transfer, or suffer or permit any Transfer of, the Property or
any part thereof or interest therein, except as expressly permitted by Section 6.05 of
the Credit Agreement.  The provisions of this Section shall apply to
each and every Transfer of the Property or any interest therein, regardless of
whether or not a consent to, or waiver of a right to consent to, any other
Transfer thereof has been previously obtained in accordance with the provisions
of the Loan Documents.




Section
4.12.     Increased
Costs.  In the event of the enactment after the date hereof of
any applicable law deducting from the value of the Property for the purpose of
taxation any Lien thereon, or changing in any way the laws for the taxation of
mortgages, deeds of trust or other Liens or obligations secured thereby, or the
manner of collection of such taxes, so as to affect this Deed of Trust, the
Obligations secured thereby, the manner of collection of such taxes, the
Beneficiary or any other Secured Party, then, and in such event, to the extent
permitted by applicable law, the Grantor shall, on demand, pay to the
Beneficiary or such Secured Party, or reimburse the Beneficiary or such Secured
Party for the payment of, all taxes, assessments, or other charges for which the
Beneficiary or such other Secured Party is or may be liable as a result thereof,
provided that if any such payment or reimbursement shall be unlawful, then the
Beneficiary may, at its option, declare the Obligations immediately due and
payable or require the Grantor to pay or reimburse the Beneficiary for payment
of the lawful portion thereof.




Section
4.13.     Further
Assurances.  The Grantor shall, at the request of the Trustee
or the Beneficiary, (a) promptly correct any defect, error or omission which may
be discovered in the contents of this Deed of Trust or any other Loan Document
to which the Grantor is a party, or in the execution, acknowledgment or
recordation thereof or hereof, and (b) promptly do, execute, acknowledge and
deliver any and all such further acts, deeds, conveyances, mortgages, deeds of
trust, assignments, estoppel certificates, financing statements and
continuations thereof, notices of assignment, transfers, certificates,
assurances and other instruments as the Trustee or the Beneficiary may require
from time to time in order to effectuate the purposes of this Deed of Trust, to
subject to the Lien and security interest hereby created any of the Grantor's
properties, rights or interests covered or now or hereafter intended to be
covered hereby, to perfect and maintain said Lien and security interest, and to
convey, grant, assign, transfer and confirm unto the Trustee and the Beneficiary
the rights granted or now or hereafter intended to be granted to the Trustee or
the Beneficiary hereunder or under any other instrument executed in connection
with this Deed of Trust or which the Grantor may be or become bound to convey,
mortgage or assign to the Trustee or the Beneficiary in order to carry out the
intention or facilitate the performance of the provisions of this Deed of
Trust.




-16-


Section
4.14.     Filing and
Recording.  The Grantor shall, at the request of the Trustee or
the Beneficiary, promptly record and re-record, file and refile and register and
re-register this Deed of Trust, any financing or continuation statements and
every other instrument in addition or supplemental to any thereof that shall be
required by law in order to perfect and maintain the validity, effectiveness and
priority of this Deed of Trust and the Lien and security interest intended to be
created hereby, or to subject after-acquired property of the Grantor or proceeds
to such Lien and security interest, in such manner and places and within such
times as may be necessary to accomplish such purposes and to preserve and
protect the rights and remedies of the Trustee or the
Beneficiary.  The Grantor will furnish to the Trustee and the
Beneficiary evidence satisfactory to them of every such recording, filing or
registration.




Section
4.15.     Permitted
Contests.  The Grantor may contest, by appropriate proceedings
conducted in good faith and with due diligence, any Requirement of Law, any
Insurance Requirement, any Imposition or Lien therefor on the Property or any
interest therein, or any Lien of any laborer, mechanic, materialman, supplier or
vendor on the Property or any interest therein, provided (a) prior written
notice of the contest is given to the Beneficiary, (b) none of the Property is
in danger of being sold, forfeited or lost while such proceedings are pending;
(c) the Beneficiary and the other Secured Parties are not in danger of any
criminal or civil penalty or any other liability for failure to comply therewith
and none of the Property is subject to the imposition of any Lien as a result of
such failure which is not properly contested pursuant to this Section 4.15; (d) in
the case of any Insurance Requirement, no Insurance Policy or coverage is in
danger of being forfeited or lost while such proceedings are pending; and (e) in
the case of (A) any Lien of a laborer, mechanic, materialman, supplier or
vendor, or (B) any Imposition or Lien therefor, such proceedings suspend the
foreclosure of such Lien or any other collection thereof from the Property and
all interests therein and Grantor shall bond such Lien to the satisfaction of
the Beneficiary.  Upon request, the Grantor shall promptly deliver to
the Beneficiary (x) a certificate of the Grantor describing in detail
satisfactory to the Beneficiary the contests pending as of the date thereof and
evidencing that the Grantor has complied with the provisions of this Section
with respect thereto and (y) such other information and documents with respect
to the contests conducted pursuant to this Section as the Beneficiary shall
request.




ARTICLE
V




ASSIGNMENT
OF RENTS AND LEASES




Section
5.01.     Assignment of Rents and
Leases.




(a)           The
Grantor hereby irrevocably, absolutely and unconditionally assigns to the
Beneficiary all of the Grantor's right, title and interest in and to all Leases
and Rents.  Subject to the terms of Section 5.02, it is
intended by the Grantor that the assignments of Leases and Rents contained in
Sections
2.01(f) and 2.01(g) and this
Section 5.01
are and shall be present, irrevocable, absolute and unconditional assignments of
the Leases and Rents.  Subject to the terms of this Article V, the
Beneficiary grants to the Grantor a license to collect and receive all Rents
upon, but not prior to thirty (30) days before, the due date thereof and to
exercise all other rights of the Grantor under the Leases.  If an
Event of Default shall occur and be continuing, the foregoing license shall
automatically terminate and the Beneficiary shall have the absolute, immediate
and continuing right to collect and receive all Rents and exercise all of its
rights and remedies under this Deed of Trust, the other Loan Documents, and
applicable law.




-17-




(b)           At
the request of the Beneficiary, the Grantor shall promptly execute, acknowledge,
deliver, record, register and file any additional general assignment of the
Rents and Leases or specific assignment of any Lease which the Beneficiary may
require from time to time (all in form and substance satisfactory to the
Beneficiary) to effectuate, complete, perfect, continue or preserve the
assignments of the Leases and Rents under Section 2.01(f),
Section 2.01(g)
and Section
5.01(a).




(c)           If
an Event of Default shall occur and be continuing, (i) the Grantor shall
promptly pay to the Beneficiary all Rents, all Rent prepayments and all security
or other deposits paid to or held by the Grantor pursuant to any of the Leases,
(ii) Rents received by the Beneficiary shall be applied by the Beneficiary in
accordance with Section 6.05, and
(iii) any security or other deposits actually received by the Beneficiary shall
be held, applied and disbursed by the Beneficiary as provided in the applicable
Leases and applicable law.  Without impairing any of its rights
hereunder or under any of the other Loan Documents, the Beneficiary may, at its
option, at any time and from time to time, release to the Grantor any Rents
received by the Beneficiary.




(d)           Neither
the assignments of Rents and Leases contained in Section 2.01(f),
Section 2.01(g)
and this Section
5.01 nor the receipt of Rents by the Beneficiary shall effect or
constitute a payment of the Obligations.  No credit against the
Obligations shall be given for any Rents received by the Beneficiary unless and
until such Rents are received by the Beneficiary in the form of cash or
immediately available funds and applied by the Beneficiary in accordance with
Section
6.05.




(e)           No Assumption of Leases;
Etc.  Neither the acceptance hereof nor the exercise of the
rights and remedies hereunder nor any other action on the part of the
Beneficiary or any Person exercising the rights of the Beneficiary hereunder
shall be construed to be an assumption by the Beneficiary or any such Person of,
or to otherwise make the Beneficiary or such Person liable or responsible for,
any of the obligations of the Grantor under or with respect to the Leases or for
any Rent, security deposit or other amount delivered to the Grantor, provided
that the Beneficiary or any such Person exercising the rights of the Beneficiary
hereunder shall be accountable for any Rents, security deposits or other amounts
actually received by the Beneficiary or such Person, as the case may
be.  Neither the acceptance hereof nor the exercise of the rights and
remedies hereunder nor any other action on the part of the Beneficiary or any
Person exercising the rights of the Beneficiary hereunder shall be construed to
obligate the Beneficiary or any such Person to take any action under or with
respect to the Leases or with respect to the Property, to incur any expense or
perform or discharge any duty or obligation under or with respect to the Leases
or with respect to the Property, to appear in or defend any action or proceeding
relating to the Leases or the Property, to constitute the Beneficiary as a
mortgagee in possession, or to be liable in any way for any injury or damage to
person or property sustained by any Person in or about the
Property.




(f)           Leases.  The
Grantor represents and warrants that none of the Property is subject to a
Lease.  The Grantor shall not enter into any Lease with respect to all
or any part of the Property without the prior written consent of the
Beneficiary.


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ARTICLE
VI




RIGHTS
AND REMEDIES




Section
6.01.     Events of Default.




(a)           Any
Event of Default under the Credit Agreement shall constitute an Event of Default
hereunder.




(b)           All
notice and cure periods provided in the Credit Agreement and the other Loan
Documents shall run concurrently with any notice of cure periods provided under
applicable law.




Section
6.02.     Events of Default;
Remedies.  If any Event of Default shall occur and be
continuing, the Beneficiary may (or, to the extent permitted or required by
applicable law, acting by and through the Trustee, may), in addition to and
without impairing or otherwise affecting any other rights, remedies, powers and
privileges of or available to the Beneficiary (or the Trustee, if required by
applicable law or requested by the Beneficiary) under this Deed of Trust, any
other Loan Document or other agreement, any applicable laws now or hereafter in
effect, in equity or otherwise, immediately exercise any and all rights, powers
and remedies under this Deed of Trust, the other Loan Documents, and applicable
law, and take any other action personally or by or through its representatives,
attorneys and agents, without any notice or demand (all of which are hereby
waived), as it deems necessary or advisable to protect and enforce its rights
and remedies against the Grantor and in, to and under the Property, including,
without limitation, any of the following actions, each of which shall be
cumulative and may be pursued concurrently, successively, separately or
otherwise, at such time and in such order and manner as the Beneficiary (or the
Trustee, if required by applicable law or requested by the Beneficiary) may
determine in its or their sole discretion, without impairing or otherwise
affecting any other rights, remedies, powers and privileges of or available to
the Beneficiary, any other Secured Party or the Trustee under this Deed of
Trust, any other Loan Document, any other agreement, any applicable laws now or
hereafter in effect, in equity or otherwise:




(a)           Subject
to Section 7.01
of the Credit Agreement, declare all of the Obligations (including the entire
principal balance thereof, all accrued and unpaid interest and any premium
thereon and all other such sums secured hereby) to be immediately due and
payable, and upon any such declaration all of the Obligations shall become and
be immediately due and payable, without presentment, demand, protest, notice of
acceleration, notice of intent to accelerate, or further notice of any kind, all
of which are hereby expressly waived by the Grantor; or




(b)           Institute
a proceeding or proceedings for the complete or partial foreclosure of this Deed
of Trust under the power of sale hereunder or under any applicable law;
or


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(c)           To
the extent permitted by applicable law, sell the Property, and all estate,
right, title, interest, claim and demand of the Grantor therein, and all rights
of redemption thereof, at one or more sales, as an entirety or in parcels, with
such elements of real and/or personal property (and, to the extent permitted by
applicable law, may elect to deem all of the Property to be real property for
purposes thereof), and at such time and place and upon such terms as it may deem
expedient, or as may be required by applicable law, and in the event of a sale,
by foreclosure or otherwise, of less than all of the Property, this Deed of
Trust shall continue as a Lien and security interest on the remaining portion of
the Property; or




(d)           Institute
an action, suit or proceeding for the specific performance of any of the
provisions contained in this Deed of Trust or any other Loan Document;
or




(e)           Sue
and recover a judgment on the Obligations or any part thereof; or




(f)           Apply
for the appointment of a receiver, custodian, trustee, liquidator or conservator
of the Property, to be invested with the fullest powers permitted under
applicable law, as a matter of right and without regard to or the necessity to
disprove the adequacy of the security for the Obligations or the solvency of the
Grantor or any other Person liable for the payment of the Obligations, and the
Grantor and each other Person so liable waives or shall be deemed to have waived
such necessity and consents or shall be deemed to have consented to such
appointment; or




(g)           Enter
upon the Property, and exclude the Grantor and its managers, employees,
contractors, agents and other representatives therefrom, without liability for
trespass, damages or otherwise, and take possession of all other Property and
all books, records and accounts relating thereto, and the Grantor agrees to
surrender possession of the Property and of such books, records and accounts to
the Trustee or the Beneficiary on demand after the occurrence of any Event of
Default; and having and holding the same, the Person exercising the rights under
this clause may use, operate, manage, preserve, control and otherwise deal
therewith and conduct the business thereof, either personally or by its
managers, employees, contractors, agents and other representatives, without
interference from the Grantor or any of its managers, employees, contractors,
agents and other representatives; and upon each such entry and from time to time
thereafter may, at the expense of the Grantor and the Property, without
interference by the Grantor or any of its managers, employees, contractors,
agents and other representatives, the Person exercising the rights under this
clause may, as such Person deems appropriate and without any obligation to so
act, (i) either by purchase, repair or construction, maintain and restore the
Property, (ii) insure or reinsure the same, (iii) make all necessary or proper
repairs, renewals, replacements, alterations, additions, betterments and
improvements thereto and thereon, (iv) complete the construction of any of the
Improvements and, in the course of such completion, make such changes in the
contemplated or completed Improvements as it may deem advisable, and (v)
exercise all rights and powers of the Grantor with respect to the Property,
either in the Grantor's name or otherwise, including the right to make, cancel,
enforce or modify Leases, obtain and evict tenants and subtenants on such terms
as it shall deem advisable; and the Person exercising the rights under this
clause shall not be liable to account for any action taken hereunder and shall
not be liable for any loss sustained by the Grantor resulting from any failure
to let the Property or from any other act or omission of such Person;
or




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(h)           With
or without entry upon or taking possession of the Property, in the name of the
Beneficiary or the Trustee (as required by law and whichever Person is
exercising rights under this clause) or, at such Persons' option, in the name of
the Grantor, collect and receive all earnings, revenues, royalties, Rents,
issues, profits, income, proceeds and cash collateral arising or derived from or
in connection with any of the Property, and after deducting therefrom all fees,
costs and expenses of every kind or character incurred by the Trustee or the
Beneficiary (or Trustee) in collecting and receiving the same and in using,
operating, managing, repairing, preserving and controlling the Property, and
otherwise in exercising the Trustee's or the Beneficiary's rights under this
Section, including, without limitation, all amounts necessary to pay
Impositions, insurance premiums and other charges in connection with the
Property, as well as compensation for the services of the Trustee, the
Beneficiary and their respective managers, employees, attorneys, contractors,
agents or other representatives, apply the remainder as provided in Section 6.05;
or




(i)           Release
any portion of the Property for such consideration as the Trustee or the
Beneficiary may require without, as to the remainder of the Property, in any way
impairing or affecting the Lien or priority of this Deed of Trust, or improving
the position of any subordinate lienholder with respect thereto, except to the
extent that the Obligations shall have been reduced by the actual monetary
consideration, if any, received by the Trustee or the Beneficiary for such
release, and may accept by assignment, pledge or otherwise any other property in
place thereof as the Trustee or the Beneficiary may require without being
accountable for so doing to any other Lien; or




(j)           Take
any actions permitted under the UCC; or




(k)           Exercise
any statutory or common law power of sale; or




(l)           Take
any other action, or pursue any other right or remedy, as the Trustee, the
Beneficiary and/or the Secured Parties may have under applicable
law.




Section
6.03.     Rights Pertaining to
Sales.  The following provisions shall apply, at the election
of the Beneficiary, to any sale or sales of all or any portion of the Property
hereunder, whether made under the power of sale granted hereunder or by virtue
of any judicial proceeding or any judgment or decree of foreclosure or sale or
otherwise:




(a)           The
Beneficiary (or an agent appointed to act on behalf of the Beneficiary), the
Trustee or the court officer (whichever is the Person conducting any sale) may
conduct any number of sales from time to time.  The power of sale set
forth in Section
2.01 and Section 6.02 hereof
shall not be exhausted by any one or more such sales as to any part of the
Property which shall not have been sold, nor by any sale which is not completed
or is defective in the Trustee's or the Beneficiary's opinion, until the
Obligations shall have been paid in full.




(b)           Any
sale may be postponed or adjourned by public announcement at the time and place
appointed for such sale or for such postponed or adjourned sale without further
notice.




-21-


(c)           After
each sale, the Beneficiary, the Trustee or an officer of any court empowered to
do so, shall execute and deliver to the purchaser or purchasers at such sale a
good and sufficient instrument or instruments granting, conveying, assigning and
transferring all right, title and interest of the Grantor in and to the Property
sold and shall receive the proceeds of said sale or sales and apply the same as
provided in Section
6.05.  Each of the Beneficiary and the Trustee is hereby
appointed the true and lawful attorney-in-fact of the Grantor, which appointment
is irrevocable and shall be deemed to be coupled with an interest, in the
Grantor's name and stead, to make all necessary conveyances, assignments,
transfers and deliveries of the property and rights so sold, and for that
purpose the Beneficiary or the Trustee may execute all necessary instruments of
conveyance, assignment, transfer and delivery, and may substitute one or more
Persons with like power, the Grantor hereby ratifying and confirming all that
said attorney or such substitute or substitutes shall lawfully do by virtue
thereof.  Nevertheless, the Grantor, if requested by the Trustee or
the Beneficiary, shall ratify and confirm any such sale or sales by executing
and delivering to the Trustee or such purchaser or purchasers all such
instruments as may be advisable, in the Trustee's or the Beneficiary's judgment,
for the purposes designated in such request.




(d)           Any
and all statements of fact or other recitals made in any of the instruments
referred to in subsection (c) of this Section given by the Beneficiary or the
Trustee as to nonpayment of the Obligations, or as to the occurrence of any
Event of Default, or as to the Beneficiary having declared all or any of the
Obligations to be due and payable, or as to the amount of the Obligations or as
to the request to sell, or as to notice of time, place and terms of sale and of
the property or rights to be sold having been duly given, or as to the refusal,
failure or inability to act of the Trustee, or as to the appointment of any
substitute or successor the Trustee, or as to any other act or thing having been
duly done by the Beneficiary or by such the Trustee, shall be taken as
conclusive and binding as against all other Persons as evidence of the truth of
the facts so stated and recited.  The Beneficiary or the Trustee may
appoint or delegate any one or more Persons as agent to perform any act or acts
necessary or incident to any sale so held, including the posting of notices and
the conduct of sale, but in the name and on behalf of the Trustee.




(e)           The
receipt of the Beneficiary or the Trustee for the purchase money paid at any
such sale, or the receipt of any other Person authorized to give same, shall be
sufficient discharge therefor to any purchaser of any property or rights sold as
aforesaid, and no such purchaser, or its representatives, grantees or assigns,
after paying such purchase price and receiving such receipt, shall be bound to
see to the application of such purchase price or any part thereof upon or for
any trust or purpose of this Deed of Trust or, in any manner whatsoever, be
answerable for any loss, misapplication or nonapplication of any such purchase
money, or part thereof, or be bound to inquire as to the authorization,
necessity, expediency or regularity of any such sale.




(f)           Any
such sale or sales shall operate to divest all of the estate, right, title,
interest, claim and demand whatsoever, whether at law or in equity, of the
Grantor in and to the properties and rights so sold, and shall be a perpetual
bar both at law and in equity against the Grantor and any and all Persons
claiming or who may claim the same, or any part thereof, by, through or under
the Grantor to the fullest extent permitted by applicable law.




(g)           At
any sale, the Beneficiary may bid for and acquire the Property sold and, in lieu
of paying cash therefor, may make settlement for the purchase price by causing
the Secured Parties to credit against the Obligations, including the expenses of
the sale and the cost of any enforcement proceeding hereunder, the amount of the
bid made therefor to the extent necessary to satisfy such bid.




-22-




(h)           If
the Grantor or any Person claiming by, through or under the Grantor shall
transfer or fail to surrender possession of the Property, after the exercise by
the Beneficiary or the Trustee of the remedies under Article VI or after
any sale of the Property pursuant hereto, then the Grantor or such Person shall
be deemed a tenant at sufferance of the purchaser at such sale, subject to
eviction by means of summary process for possession of land, or subject to any
other right or remedy available hereunder or under applicable law.




(i)           Upon
any sale hereunder, it shall not be necessary for the Trustee, the Beneficiary
or any public officer acting under execution or order of court to have present
or constructively in its possession any or all of the Property.




(j)           In
the event a foreclosure hereunder shall be commenced by the Trustee, the Trustee
or the Beneficiary may, at any time before the sale of the Property, abandon or
direct the Trustee to abandon the sale, and may institute suit for the
collection of the Obligations and for the foreclosure of this Deed of Trust, or
in the event that the Trustee or the Beneficiary should institute a suit for
collection of the Obligations, or for the foreclosure of this Deed of Trust, the
Beneficiary may at any time before the entry of final judgment in said suit
dismiss the same and sell the Property in accordance with the provisions of this
Deed of Trust.




(k)           The
Beneficiary shall have no obligation to clean-up or otherwise prepare the
Property for sale.




(l)           The
Beneficiary may sell the Property without giving any warranties as to the
Property.  The Beneficiary may disclaim or modify any warranties of
title or the like.




Section
6.04.     Additional Provisions as to
Remedies.




(a)           No
right or remedy herein conferred upon or reserved to the Trustee, the
Beneficiary or the Secured Parties is intended to be exclusive of any other
right or remedy, and each and every such right or remedy shall be cumulative and
continuing, shall be in addition to every other right or remedy given under this
Deed of Trust or any other Loan Document or now or hereafter existing at law or
in equity, and may be exercised from time to time and as often as may be deemed
appropriate by the Trustee, the Beneficiary, or the Secured
Parties.




(b)           No
failure to exercise or delay in exercising any remedy or right hereunder, under
any other Loan Document or under applicable law shall be construed as a waiver
of any Default or Event of Default hereunder or under any other Loan
Document.




(c)           No
waiver of, failure to exercise or delay in exercising any remedy or right
hereunder, under any other Loan Document or under applicable law upon any
Default or Event of Default hereunder or under any other Loan Document shall be
construed as a waiver of, or otherwise limit the exercise of, such remedy or
right upon any other or subsequent Default hereunder or under any other Loan
Document.




(d)           No
single or partial exercise of any remedy or right hereunder, under any other
Loan Document or under applicable law upon the occurrence of any Default or
Event of Default hereunder or under any other Loan Document shall preclude or
otherwise limit the exercise of any other remedy or right hereunder, under any
other Loan Document or under applicable law upon such Default or Event of
Default or upon any other or subsequent Default or Event of Default thereunder
or under any other Loan Document.




-23-




(e)           Neither
the Trustee, the Beneficiary nor any Secured Party shall have any obligation to
pursue any rights or remedies it may have under any other agreement prior to
pursuing its rights or remedies under this Deed of Trust or any other Loan
Document.




(f)           No
recovery of any judgment by the Trustee, the Beneficiary or any Secured Party
and no levy of an execution upon the Property or any other property of the
Grantor shall affect, in any manner or to any extent, the Lien and security
interest of this Deed of Trust upon the Property, or any Liens, rights, powers
or remedies of the Trustee or the Beneficiary hereunder, and such Liens, rights,
powers and remedies shall continue unimpaired as before.




(g)           The
Trustee and the Beneficiary may resort to any security given by this Deed of
Trust or any other security now given or hereafter existing to secure the
Obligations, in whole or in part, in such portions and in such order and manner
as the Trustee or the Beneficiary may deem advisable, and no such action shall
be construed as a waiver of any of the Liens, rights or benefits granted
hereunder.




(h)           The
acceptance by the Beneficiary or any other Secured Party of any payment after
the occurrence of a Default or Event of Default shall not be deemed a waiver or
a cure of such Default, and acceptance of any payment less than any amount then
due shall be deemed an acceptance on account only and shall not be construed as
a waiver of any Default or Event of Default hereunder or under any other Loan
Document with respect thereto.




(i)           Nothing
in this Deed of Trust or any other Loan Document shall affect the obligations of
the Grantor to pay and perform the Obligations in the manner and at the time and
place herein or therein respectively expressed.




(j)           In
the event that the Beneficiary or the Trustee has proceeded to enforce any
remedy or right hereunder or with respect hereto by foreclosure, sale, entry or
otherwise, it may compromise, discontinue or abandon such proceeding for any
reason without notice to the Grantor or any other Person; and, in the event that
any such proceeding shall be discontinued, abandoned or determined adversely for
any reason, the Grantor, the Beneficiary and the Trustee shall retain and be
restored to their former positions and rights hereunder with respect to the
Property, subject to the Lien hereof.




Section
6.05.     Application of
Proceeds.  Except as otherwise provided herein or required
under applicable law, the proceeds of any sale of, or other realization upon,
the Property hereunder, whether made pursuant to the power of sale hereunder,
any judicial proceeding or any judgment or decree of foreclosure or sale or
otherwise shall be applied and paid as follows:




First:  To
the payment of all costs and expenses of any such sale, including compensation
to the Trustee, the Beneficiary, their agents and counsel, and of any judicial
proceeding wherein the same may be made, and of all expenses, liabilities and
advances made or incurred by the Trustee or the Beneficiary hereunder (including
reasonable attorneys' fees and expenses), together with interest thereon as
provided herein;


-24-




Second:  To
the payment in full of the Obligations in accordance with such order and manner
as the Beneficiary may elect;




Third:  To
the payment of any other sums secured hereunder or required to be paid by
Grantor pursuant to any provision of this Deed of Trust, the Credit Agreement,
or any other Loan Document;




Fourth:  To
the extent permitted by applicable law, to be set aside by the Trustee or the
Beneficiary as adequate security in its judgment for the payment of sums which
would have been paid by application under clauses First through Third above to
the Trustee or the Beneficiary, arising out of an obligation or liability with
respect to which the Grantor has agreed to indemnify it, but which sums are not
yet due and payable or liquidated; and




Fifth:  To
the payment of the surplus, if any, to whomsoever may be lawfully entitled to
receive the same.




Section
6.06.     Waivers by the
Grantor.  To the fullest extent permitted under applicable law,
the Grantor shall not assert, and hereby irrevocably waives, any right or
defense the Grantor may have under any statute or rule of law or equity now or
hereafter in effect relating to (a) appraisement, valuation, homestead
exemption, extension, moratorium, stay, statute of limitations, redemption,
marshalling of the Property or the other assets of the Grantor, sale of the
Property in any order or notice of deficiency or intention to accelerate any
Obligation; (b) impairment of any right of contribution, subrogation or
reimbursement; (c) any requirement that at any time any action must be taken
against any other Person, any portion of the Property or any other asset of the
Grantor or any other Person; (d) any provision barring or limiting the right of
the Beneficiary or the Trustee to sell any Property after any other sale of any
other Property or any other action against the Grantor or any other Person; (e)
any provision barring, limiting or otherwise affecting the recovery by the
Beneficiary of a deficiency after any sale of the Property; (f) any other
provision of applicable law which might defeat, limit or adversely affect any
right or remedy of the Beneficiary, the Trustee (as applicable) or the Secured
Parties under or with respect to this Deed of Trust or any other Loan Document
as it relates to any Property; or (g) the right of the Beneficiary or the
Trustee to foreclose this Deed of Trust in its own name on behalf of all of the
Secured Parties by judicial actions as the real party in interest without the
necessity of joining any other Secured Party.




-25-


ARTICLE
VII




SECURITY
AGREEMENT




Section
7.01.     Security Agreement under
UCC.  To the extent that the Property includes or constitutes
personal property to which Article 9 of the UCC applies, this Deed of Trust
shall also be construed as a security agreement under the UCC.  To
this end, as security for the Obligations, the Grantor hereby grants to the
Beneficiary, for the benefit of the Secured Parties, a security interest in all
of the Property, whether now owned or existing or hereafter arising or acquired,
that constitutes personal property to which Article 9 of the UCC
applies.  The Beneficiary shall have all of the rights and remedies of
a secured party under the UCC with respect to such personal property (including,
without limitation, the right to proceed against all or any portion of such
property in accordance with the rights and remedies available under Section
9.604 of the UCC) and all other rights and remedies available with respect to
personal property under applicable law.  If an Event of Default shall
have occurred, then in addition to having any other right or remedy available at
law or in equity, the Beneficiary shall have the option of either (a) proceeding
under the UCC and exercising such rights and remedies as may be provided to a
secured party by the UCC with respect to all or any portion of the Property
which is personal property (including, without limitation, taking possession of
and selling such property and exercising any other  right or remedy
described in Section
6.02(g)) or (b) treating such property as real property and proceeding
with respect to both the real and personal property constituting the Property in
accordance with the Beneficiary's rights, powers and remedies with respect to
the real property (in which event the default provisions of the UCC shall not
apply).  If any notice of a proposed sale or other disposition of
personal property separately from the real property shall be required by law,
such notice shall be deemed reasonable and proper if given at least ten (10)
days before any public sale of personal property or of the time after which any
private sale or other disposition of personal property is intended to be
made.




Section
7.02.     Fixture
Filing.  Without limiting in any manner the generality of any
other terms and provisions in this Deed of Trust, to the extent that the
Property includes items of personal property that are or are to become fixtures
under applicable law, this Deed of Trust shall constitute a "fixture filing"
within the meaning of the UCC against and with respect to all Property which is
or is to become fixtures and shall be filed in the real property records of
[________ County,
Texas].  The information provided in this Section 7.02 is
provided so that this Deed of Trust shall comply with the requirements of the
UCC for a mortgage instrument to be filed as a "fixture filing" and financing
statement.




(a)           The
Grantor is the "Debtor" and its exact legal name and mailing address are set
forth in the introductory paragraph to this Deed of Trust immediately preceding
Article
I.




(b)           The
Beneficiary is the "Secured Party" and its name and mailing address from which
information concerning the security interest granted herein may be obtained are
also set forth in the preamble of this Deed of Trust immediately preceding Article
I.




(c)           The
Grantor represents and warrants to the Beneficiary that (i) the Grantor is the
record owner of the Land and the Improvements and the Property constituting
fixtures, (ii) the Grantor is a [corporation] [limited partnership]
[limited liability company] [other] and is duly [incorporated] [formed]
[organized] and validly existing under the laws of [Delaware] [Texas] [specify
jurisdiction of incorporation, formation or organization], (iii) the
Grantor's employer identification number is [_____________], and (iv) the
Grantor's organizational identification number is [____________].




(d)           The
Grantor will not change (i) its name, (ii) type of organization, (iii)
jurisdiction of organization, (iv) organizational identification number, federal
taxpayer identification number or (v) the location of its chief executive office
or principal place of business without the prior written consent of the
Beneficiary.




(e)           The
Grantor will not change the location of any of the Property if such change would
cause the Beneficiary's Lien on such Property to lapse or cease to be
perfected.




-26-




Section
7.03.     Financing
Statements.  The Grantor hereby authorizes the Beneficiary to
file or record financing or continuation statements, and assignments and
amendments thereto, and other filing or recording documents or instruments with
respect to the Property without the signature of the Grantor in such form and in
such offices as the Beneficiary determines appropriate to perfect or maintain
the perfection of the Liens of the Beneficiary under this Deed of
Trust.  The Grantor agrees that such financing statements may describe
the Property in the same manner as described in this Deed of Trust or as "all
assets" or "all personal property" of the Grantor, whether now owned or
hereafter existing or acquired by the Grantor, or such other description as the
Beneficiary, in its sole judgment, determines is necessary or
advisable.  The Grantor hereby ratifies each such financing statement
and any and all other financing statements filed prior to the date hereof by the
Beneficiary.  A photographic or other reproduction of this Deed of
Trust shall be sufficient as a financing statement or other filing or recording
document or instrument for filing or recording in any jurisdiction.




ARTICLE
VIII




ENVIRONMENTAL
MATTERS




Section
8.01.     Environmental
Representations and Warranties.  The Grantor represents and
warrants that:  (a) there are no Hazardous Materials or underground
storage tanks in, on, or under the Property, except those that are both (i) in
compliance with Environmental Laws and with all Permits issued pursuant thereto,
if any, and (ii) either (A) in amounts not in excess of that necessary to
operate the Property or (B) fully disclosed to and approved by the Beneficiary
in writing pursuant to an Environmental Report; (b) there are no past, present
or threatened Releases of Hazardous Materials in violation of any Environmental
Law and that would require remediation by a Governmental Authority in, on, under
or from the Property except as described in the Environmental Report; (c) there
is no threat of any Release of Hazardous Materials migrating to the Property
except as described in the Environmental Report; (d) there is no past or present
actual or alleged non-compliance with Environmental Laws, or with Permits issued
pursuant thereto, in connection with the Property except as described in the
Environmental Report; (e) the Grantor does not know of, and has not received,
any written or oral notice or other communication from any Person relating to
Hazardous Materials in, on, under or from the Property; and (f) the Grantor has
truthfully and fully provided to the Beneficiary, in writing, any and all
information relating to environmental conditions in, on, under or from the
Property known to the Grantor or contained in the Grantor's files and records,
including but not limited to any reports relating to Hazardous Materials in, on,
under or migrating to or from the Property and/or to the environmental condition
of the Property.


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Section
8.02.     Environmental
Covenants.  The Grantor covenants and agrees that so long as
the Grantor owns, manages, is in possession of, or otherwise controls the
operation of the Property:  (a) all uses and operations on or of the
Property, whether by the Grantor or any other Person, shall be in compliance
with all Environmental Laws and Permits issued pursuant thereto; (b) there shall
be no Release of Hazardous Materials in, on, under or from the Property; (c)
there shall be no Hazardous Materials in, on, or under the Property, except
those that are both (i) in compliance with all Environmental Laws and with
Permits issued pursuant thereto, if and to the extent required, and (ii) (A) in
amounts not in excess of that necessary to operate the Property or (B) fully
disclosed to and approved by the Beneficiary in writing; (d) the Grantor shall
keep the Property free and clear of all Environmental Liens; (e) the Grantor
shall, at its sole cost and expense, fully and expeditiously cooperate in all
activities pursuant to Section 8.04below,
including but not limited to providing all relevant information and making
knowledgeable persons available for interviews; (f) the Grantor shall, at its
sole cost and expense, perform any environmental site assessment or other
investigation of environmental conditions in connection with the Property,
pursuant to the written request of the Beneficiary, upon Beneficiary's
reasonable belief that the Property is not in full compliance with all
Environmental Laws, and share with the Beneficiary the reports and other results
thereof, and the Beneficiary and other Indemnified Parties shall be entitled to
rely on such reports and other results thereof; (g) the Grantor shall, at its
sole cost and expense, comply with all reasonable written requests of the
Beneficiary to (i) reasonably effectuate remediation of any Hazardous Materials
in, on, under or from the Property; and (ii) comply with any Environmental Law;
(h) the Grantor shall not allow any tenant, operator or other user of the
Property to violate any Environmental Law; and (i) the Grantor shall immediately
notify the Beneficiary in writing after it has become aware of (A) any presence
or Release or threatened Release of Hazardous Materials in, on, under, from or
migrating towards the Property; (B) any actual or alleged non-compliance with
any Environmental Laws related in any way to the Property; (C) any actual or
potential Environmental Lien against the Property; (D) any required or proposed
remediation of environmental conditions on, under or otherwise relating to the
Property; and (E) any written or oral notice or other communication from any
Person of which the Grantor becomes aware from any source whatsoever (including
but not limited to a Governmental Authority) relating in any way to Hazardous
Materials on, in, under, about, migrating toward, or otherwise relating to the
Property.




Section
8.03.     Beneficiary's
Rights.  The Beneficiary and any other Person designated by the
Beneficiary, including but not limited to any representative of a Governmental
Authority, and any environmental consultant, and any receiver appointed by any
court of competent jurisdiction, shall have the right, but not the obligation,
to enter upon the Property at all reasonable times to assess any and all aspects
of the environmental condition of the Property and its use, including but not
limited to conducting any environmental assessment or audit (the scope of which
shall be determined in the Beneficiary's sole discretion) and taking samples of
soil, groundwater or other water, air, or building materials, and conducting
other invasive testing.  The Grantor shall cooperate with and provide
access to the Beneficiary and any such Person designated by the
Beneficiary.




Section
8.04.     Operation and Maintenance
Programs.  If recommended by the Environmental Report or any
other environmental assessment or audit of the Property,  the Grantor
shall establish and comply with an operations and maintenance program with
respect to the Property, in form and substance reasonably acceptable to the
Beneficiary, prepared by an environmental consultant reasonably acceptable to
the Beneficiary, which program shall address any asbestos-containing material or
lead based paint that may now or in the future be detected at or on the
Property.  Without limiting the generality of the preceding sentence,
the Beneficiary may require (a) periodic notices or reports to the Beneficiary
in form, substance and at such intervals as the Beneficiary may specify, (b) an
amendment to such operations and maintenance program to address changing
circumstances, laws or other matters, (c) at the Grantor's sole expense,
supplemental examination of the Property by consultants specified by the
Beneficiary, (d) access to the Property by the Beneficiary, its agents or
servicer, to review and assess the environmental condition of the Property and
the Grantor's compliance with any operations and maintenance program, and (e)
variation of the operations and maintenance program in response to the reports
provided by any such consultants.


-28-




Section
8.05.     Environmental
Definitions.  "Environmental Law" means any present and future
federal, state and local laws, statutes, ordinances, rules, regulations,
standards, policies and other government directives or requirements, as well as
common law, including but not limited to the Comprehensive Environmental
Response, Compensation and Liability Act and the Resource Conservation and
Recovery Act, that apply to the Grantor or the Property and relate to Hazardous
Materials or protection of human health or the
environment.  "Environmental Liens" means all Liens and other
encumbrances imposed pursuant to any Environmental Law, whether due to any act
or omission of the Grantor or any other Person.  "Environmental
Report" means the written reports resulting from  the environmental
site assessments of the Property delivered to the
Beneficiary.  "Hazardous Materials" shall mean petroleum and petroleum
products and compounds containing them, including gasoline, diesel fuel and oil;
explosives, flammable materials; radioactive materials; polychlorinated
biphenyls ("PCBs") and compounds containing them; lead and lead-based paint;
toxic mold; asbestos or asbestos-containing materials in any form that is or
could become friable; underground or above-ground storage tanks, whether empty
or containing any substance; any substance the presence of which on the Property
is prohibited by any federal, state or local authority; any substance that
requires special handling; and any other material or substance now or in the
future defined as a "hazardous substance," "hazardous material", "hazardous
waste", "toxic substance", "toxic pollutant", "contaminant", or "pollutant"
within the meaning of any Environmental Law.  "Release" of any
Hazardous Materials includes but is not limited to any release, deposit,
discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping,
pouring, emptying, escaping, dumping, disposing or other movement of Hazardous
Materials.




-29-


Section
8.06.      ENVIRONMENTAL
INDEMNIFICATION.




(a)           THE GRANTOR SHALL, AT ITS SOLE COST
AND EXPENSE, INDEMNIFY, PROTECT, DEFEND (AT TRIAL AND APPELLATE LEVELS AND WITH
ATTORNEYS, CONSULTANTS AND OTHER EXPERTS SELECTED BY THE GRANTOR AND REASONABLY
ACCEPTABLE TO THE INDEMNIFIED PARTIES), RELEASE AND HOLD HARMLESS EACH
INDEMNIFIED PARTY FOR, FROM AND AGAINST ANY AND ALL CLAIMS, SUITS, LIABILITIES
(INCLUDING, WITHOUT LIMITATION, STRICT LIABILITIES), ACTIONS, PROCEEDINGS,
INVESTIGATIONS, OBLIGATIONS, DEBTS, DAMAGES, LOSSES, COSTS, EXPENSES,
DIMINUTIONS IN VALUE, FINES, PENALTIES, CHARGES, FEES, EXPENSES, JUDGMENTS,
ASSESSMENTS, CITATIONS, DIRECTIVES, LIENS, AWARDS, DEFENSES, AMOUNTS PAID IN
SETTLEMENT AND OTHER AMOUNTS OF WHATEVER KIND OR NATURE (INCLUDING, WITHOUT
LIMITATION, ATTORNEYS' FEES AND DISBURSEMENTS, EXPERT'S FEES AND DISBURSEMENTS,
COURT COSTS AND OTHER COSTS AND EXPENSES) (COLLECTIVELY, "ENVIRONMENTAL
LOSSES"), INCLUDING,
WITHOUT LIMITATION, ANY AND ALL ENVIRONMENTAL LOSSES ARISING FROM, AS A RESULT
OF OR IN CONNECTION WITH ANY INDEMNIFIED PARTY'S NEGLIGENT ACTS OR OMISSIONS,
AND ALL OTHER COSTS OF REMEDIATION (WHETHER OR NOT PERFORMED VOLUNTARILY),
ENGINEERS' FEES, ENVIRONMENTAL CONSULTANTS' FEES, AND COSTS OF ANY INVESTIGATION
(INCLUDING BUT NOT LIMITED TO SAMPLING, TESTING, AND ANALYSIS OF SOIL, WATER,
AIR, BUILDING MATERIALS AND OTHER MATERIALS AND SUBSTANCES WHETHER SOLID, LIQUID
OR GAS) WHICH MAY AT ANY TIME BE IMPOSED UPON, INCURRED BY OR ASSERTED OR
AWARDED AGAINST SUCH INDEMNIFIED PARTY, AND ARISING DIRECTLY OR INDIRECTLY FROM,
AS A RESULT OF, IN CONNECTION WITH OR IN ANY WAY RELATING TO ANY ONE OR MORE OF
THE FOLLOWING:  (i) ANY ACTUAL, THREATENED OR ALLEGED PRESENCE OF ANY
HAZARDOUS MATERIALS IN, ON, ABOVE, OR UNDER ANY OF THE PROPERTY; (ii) ANY PAST
OR PRESENT RELEASE OR THREATENED RELEASE IN, ON, ABOVE, UNDER OR FROM ANY OF THE
PROPERTY; (iii) ANY ACTIVITY BY THE GRANTOR, ANY AFFILIATE OF THE GRANTOR, OR
ANY TENANT, OPERATOR, LESSEE OR OTHER USER OF ANY OF THE PROPERTY AS A RESULT OF
OR IN CONNECTION WITH ANY ACTUAL OR THREATENED USE, TREATMENT, STORAGE, HOLDING,
EXISTENCE, DISPOSITION, RELEASE, GENERATION, PRODUCTION, MANUFACTURING,
PROCESSING, REFINING, CONTROL, MANAGEMENT, ABATEMENT, REMOVAL, HANDLING,
TRANSFER OR TRANSPORTATION TO, FROM OR OF ANY OF THE PROPERTY OF ANY HAZARDOUS
MATERIALS AT ANY TIME LOCATED IN, UNDER, ON OR ABOVE ANY OF THE PROPERTY; (iv)
ANY ACTIVITY BY THE GRANTOR, ANY AFFILIATE OF THE GRANTOR, OR ANY TENANT,
OPERATOR, LESSEE OR OTHER USER OF ANY OF THE PROPERTY IN CONNECTION WITH ANY
ACTUAL REMEDIATION OF ANY HAZARDOUS MATERIALS AT ANY TIME LOCATED IN, UNDER, ON
OR ABOVE ANY OF THE PROPERTY, WHETHER OR NOT SUCH REMEDIATION IS VOLUNTARY OR
PURSUANT TO COURT OR ADMINISTRATIVE ORDER, INCLUDING BUT NOT LIMITED TO ANY
REMOVAL, REMEDIAL OR CORRECTIVE ACTION; (v) ANY PAST, PRESENT, THREATENED OR
ALLEGED NON-COMPLIANCE OR VIOLATION OF ANY APPLICABLE ENVIRONMENTAL LAW (OR
AUTHORIZATIONS ISSUED PURSUANT TO ANY APPLICABLE ENVIRONMENTAL LAW) IN
CONNECTION WITH ANY OF THE PROPERTY OR OPERATIONS THEREON; (vi) THE IMPOSITION,
RECORDING OR FILING OR THE THREATENED IMPOSITION, RECORDING OR FILING OF ANY
ENVIRONMENTAL LIEN ENCUMBERING ANY OF THE PROPERTY; (vii) ANY ADMINISTRATIVE
CLAIMS, PROCESSES, INVESTIGATIONS OR PROCEEDINGS OR JUDICIAL PROCEEDINGS IN ANY
WAY CONNECTED WITH ANY MATTER ADDRESSED IN THISARTICLE
VIII; (viii) ANY
PERSONAL INJURY, WRONGFUL DEATH, OR PROPERTY DAMAGE ARISING UNDER ANY STATUTORY
OR COMMON LAW OR TORT LAW THEORY, INCLUDING BUT NOT LIMITED TO DAMAGES ASSESSED
FOR THE MAINTENANCE OF A PRIVATE OR PUBLIC NUISANCE OR FOR THE CONDUCTING OF A
DANGEROUS ACTIVITY ON OR NEAR ANY OF THE PROPERTY; (ix) ANY MISREPRESENTATION OR
INACCURACY IN ANY REPRESENTATION OR WARRANTY IN THISARTICLE
VIIIOR BREACH AND/OR
ANY FAILURE TO PERFORM ANY COVENANTS OR OTHER OBLIGATIONS SET FORTH IN OR
PURSUANT TO THISARTICLE
VIII; OR (x) THE
ENFORCEMENT OF ANY PROVISION OF THISARTICLE
VIII,PROVIDEDTHAT SUCH INDEMNITY SHALL NOT, AS TO
ANY INDEMNIFIED PARTY, BE AVAILABLE TO SUCH INDEMNIFIED PARTY THE EXTENT THAT
ANY SUCH ENVIRONMENTAL LOSSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NON-APPEALABLE JUDGMENT TO HAVE RESULTED SOLELY FROM
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED
PARTY.




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(b)           ALL AMOUNTS DUE UNDER THISSECTION
8.06SHALL BE PAYABLE ON
DEMAND.  THE AGREEMENTS IN THISSECTION
8.06SHALL SURVIVE
REPAYMENT OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE UNDER THE LOAN
DOCUMENTS.




ARTICLE
IX




MISCELLANEOUS




Section
9.01.     Right to Perform Obligations; Protective
Advances.




(a)           If
the Grantor fails to pay or perform any obligation of the Grantor under this
Deed of Trust, the Beneficiary, without waiving or releasing the Grantor from
any obligation or default under this Deed of Trust or any other Loan Document,
at any time and from time to time (but shall be under no obligation to) without
notice pay or perform such obligation, and the amount or cost and expense
thereof, together with interest thereon at the Default Rate commencing from the
date of payment, shall be due and payable by the Grantor to the Beneficiary upon
demand.




(b)           The
Beneficiary may (but shall have no obligation to) make advances to protect and
preserve the Property and the Liens created hereby.  Each such
advance, together with interest thereon at the Default Rate commencing from the
date of such advance, shall be payable by the Grantor to the Beneficiary upon
demand.




(c)           No
such payment, performance or advance by the Beneficiary under this Section shall
be deemed or construed to cure the Grantor's default or waive any right or
remedy of the Beneficiary.




Section
9.02.     Notices.  All
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:




(a)           if
to the Grantor:




_____________________________________________________________________________________________________________________Facsimile
      No: (__) ________________________Attention:
      _______________________________




(b)           if
to the Beneficiary:




-31-




Prosperity
Bank


777
Walker Street, Suite L140


Houston,
TX 77002


Facsimile
No: (713) 693-9259


Attention:  Randall
R. Reeves, President – Houston Area




Any party
hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto.  All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.




Section
9.03.      Covenants Running with the
Land.  All Obligations contained in this Deed of Trust are
intended by the Grantor, the Beneficiary and the Trustee to be, and shall be
construed as, covenants running with the Land.




Section
9.04.      EXPENSES
AND GENERAL INDEMNIFICATION.




(a)           THE GRANTOR SHALL UPON DEMAND PAY TO
THE BENEFICIARY THE AMOUNT OF ANY AND ALL COSTS AND EXPENSES, INCLUDING THE
REASONABLE FEES AND EXPENSES OF COUNSEL AND OF ANY EXPERTS, ADVISORS,
REPRESENTATIVES, AND AGENTS, WHICH THE BENEFICIARY, THE TRUSTEE OR ANY OF THE
OTHER SECURED PARTIES MAY INCUR IN CONNECTION WITH (I) THE PREPARATION,
NEGOTIATION, EXECUTION, DELIVERY, CLOSING AND ADMINISTRATION OF THIS DEED OF
TRUST (AND ANY AMENDMENTS, RESTATEMENTS, EXTENSIONS, RENEWALS, MODIFICATIONS OR
WAIVERS TO ANY OF THIS DEED OF TRUST), INCLUDING, WITHOUT LIMITATION, ALL
APPRAISAL FEES, RECORDING AND FILING FEES, TAXES, ABSTRACT FEES, TITLE INSURANCE
PREMIUMS AND FEES, ESCROW FEES, AND TRUSTEE'S FEES, (II) THE ENFORCEMENT AND
COLLECTION OF THE GRANTOR'S OBLIGATIONS, (III) THE CUSTODY, INSPECTION,
AUDITING, PRESERVATION, MAINTENANCE, SERVICING, USE OR OPERATION OF, OR THE SALE
OF, COLLECTION FROM, OR OTHER REALIZATION UPON, ANY OF THE PROPERTY, (IV) THE
EXERCISE OR ENFORCEMENT OF ANY OF THE RIGHTS OR REMEDIES OF THE BENEFICIARY, THE
TRUSTEE OR ANY OF THE OTHER SECURED PARTIES HEREUNDER OR (V) ANY FAILURE BY THE
GRANTOR TO PERFORM OR OBSERVE ANY OF THE TERMS OR PROVISIONS OF THIS DEED OF
TRUST.




(b)           THE GRANTOR AGREES TO PAY, AND TO
INDEMNIFY, DEFEND, AND SAVE AND HOLD HARMLESS EACH INDEMNIFIED PARTY FROM AND
AGAINST, ANY AND ALL LIABILITIES WITH RESPECT TO, OR RESULTING FROM ANY DELAY IN
PAYING, ANY AND ALL STAMP, EXCISE, SALES OR OTHER TAXES WHICH MAY BE PAYABLE OR
DETERMINED TO BE PAYABLE WITH RESPECT TO ANY OF THE PROPERTY OR IN CONNECTION
WITH ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS DEED OF TRUST (INCLUDING,
WITHOUT LIMITATION, ANY TAX ON THE MAKING AND/OR RECORDING OF THIS DEED OF TRUST
(INCLUDING, WITHOUT LIMITATION, ANY RECORDING TAX AND GENERAL INTANGIBLES
TAX).




-32-




(c)           THE GRANTOR SHALL INDEMNIFY, DEFEND
AND SAVE AND HOLD HARMLESS EACH INDEMNIFIED PARTY FROM AND AGAINST ANY AND ALL
CLAIMS, DAMAGES, LOSSES, LIABILITIES, ACTIONS, PROCEEDINGS, OBLIGATIONS,
PENALTIES, ACTIONS, JUDGMENTS, ASSESSMENTS, FINES, FEES, CHARGES, SUITS, COSTS,
EXPENSES AND DISBURSEMENTS (INCLUDING, WITHOUT LIMITATION, FEES, EXPENSES AND
DISBURSEMENTS OF COUNSEL) THAT MAY AT ANY TIME BE INCURRED BY OR ASSERTED OR
AWARDED AGAINST ANY INDEMNIFIED PARTY BY ANY PERSON DIRECTLY OR INDIRECTLY FROM,
ARISING OUT OF, IN CONNECTION WITH OR AS A RESULT OF (i) THIS DEED OF TRUST OR
ANY OF THE PROPERTY (INCLUDING, WITHOUT LIMITATION, (A) ENFORCEMENT OF THIS DEED
OF TRUST AND (B) ARTICLE V OF THIS DEED OF TRUST), OR (ii) ANY ACTION TAKEN BY
THE BENEFICIARY OR SUCH OTHER INDEMNIFIED PARTY HEREUNDER OR UNDER ANY OTHER
LOAN DOCUMENT OR BY REASON OR IN DEFENSE OF ANY AND ALL CLAIMS AND DEMANDS
WHATSOEVER WHICH MAY BE ASSERTED AGAINST THE BENEFICIARY OR SUCH OTHER
INDEMNIFIED PARTY BY REASON OF ANY ALLEGED OBLIGATIONS OR UNDERTAKINGS ON THE
PART OF THE BENEFICIARY OR SUCH OTHER INDEMNIFIED PARTY TO PERFORM OR DISCHARGE
ANY OF THE TERMS, COVENANTS OR AGREEMENTS CONTAINED IN THE LEASES, INCLUDING,
WITHOUT LIMITATION, ANY CLAIMS BY THE GRANTOR WITH RESPECT TO PAYMENTS OF RENTS
MADE DIRECTLY TO THE BENEFICIARY AFTER DEFAULT AND CLAIMS BY ANY TENANT FOR
SECURITY DEPOSITS OR FOR RENTAL PAYMENTS MORE THAN ONE (1) MONTH IN ADVANCE AND
NOT DELIVERED TO THE BENEFICIARY, EXCEPT IN EACH CASE TO THE EXTENT SUCH CLAIM,
DAMAGE, LOSS, LIABILITY, ACTION, PROCEEDING, OBLIGATIONS, PENALTY, JUDGMENT,
ASSESSMENT, FINE, CHARGE, SUIT, COST, EXPENSE OR DISBURSEMENT IS FOUND IN A
FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE
RESULTED SOLELY FROM SUCH INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.




(d)           WITHOUT LIMITING ANY PROVISION OF
THIS DEED OF TRUST, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH
INDEMNIFIED PARTY SHALL BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND
ALL CLAIMS, DAMAGES, LOSSES, LIABILITIES, PENALTIES, JUDGMENTS, DISBURSEMENTS
AND EXPENSES (INCLUDING, WITHOUT LIMITATION, FEES AND EXPENSES OF COUNSEL)
ARISING OUT OF OR CAUSED IN WHOLE OR PART BY THE ORDINARY NEGLIGENCE OF SUCH
INDEMNIFIED PARTY.




(e)           THE GRANTOR WAIVES ANY RIGHT IT MAY
NOW OR HEREAFTER HAVE TO CLAIM OR RECOVER IN ANY ACTION OR PROCEEDING UNDER OR
IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.


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(f)           ALL AMOUNTS DUE UNDER THISSECTION
9.04SHALL CONSTITUTE
OBLIGATIONS SECURED BY THIS DEED OF TRUST AND SHALL BE PAYABLE ON
DEMAND.  THE AGREEMENTS IN THISSECTION
9.04SHALL SURVIVE
REPAYMENT OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE UNDER THE LOAN
DOCUMENTS.




Section
9.05.     ENTIRE
AGREEMENT.  THIS DEED OF TRUST
REPRESENTS THE FINAL AND ENTIRE AGREEMENT BETWEEN THE PARTIES RELATING TO THE
SUBJECT MATTER HEREOF AND SUPERSEDES ALL PRIOR AGREEMENTS AND UNDERSTANDINGS
BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF.  THIS DEED
OF TRUST AND THE OTHER LOAN DOCUMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.




Section
9.06.     Amendments in
Writing.  No provision of this Deed of Trust shall be modified,
waived or terminated, and no consent to any departure by the Grantor from any
provision of this Deed of Trust shall be effective, unless the same shall be
evidenced by an instrument in writing, signed by the Grantor and the Beneficiary
in compliance with all the terms and provisions of the Credit
Agreement.  Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.




Section
9.07.     Severability.  In
the event any one or more of the provisions contained in this Deed of Trust or
the application thereof to any Person or circumstance shall for any reason be
held to be invalid, illegal or unenforceable in any respect in any jurisdiction,
or cause this Deed of Trust not to be entitled to be recorded, registered or
filed, the remaining provisions of this Deed of Trust or the application of such
provisions to other Persons or circumstances shall not be invalidated, rendered
unenforceable or otherwise affected thereby, and each provision of this Deed of
Trust shall be valid and enforced to the fullest extent permitted under
applicable law.


-34-


Section
9.08.     Compliance with Usury
Laws.  It is the intent of the Beneficiary, the other Secured
Parties, and the Grantor to conform to and contract in strict compliance with
all applicable usury laws from time to time in effect.  All agreements
(including the Loan Documents) between or among the Beneficiary, the other
Secured Parties and the Grantor (or any other party liable with respect to any
of the Obligations under the Loan Documents) are hereby limited by the
provisions of this Section which shall override and control all such agreements,
whether now existing or hereafter arising and whether written or
oral.  In no way, nor in any event or contingency (including but not
limited to prepayment, default, demand for payment, or acceleration of the
maturity of any obligation), shall the interest taken, reserved, contracted for,
charged or received under this Deed of Trust, any other Loan Document, or
otherwise, exceed the maximum nonusurious amount permissible under applicable
law.  If, from any possible construction of this Deed of Trust, any
other Loan Document, or any other document, interest would otherwise be taken,
reserved, contracted for, charged or payable in excess of the maximum
nonusurious amount, any such construction shall be subject to the provisions of
this Section and this Deed of Trust, such other Loan Document, and such other
document shall be automatically reformed and the interest taken, reserved,
contracted for, charged or payable shall be automatically reduced to the maximum
nonusurious amount permitted under applicable law, without the necessity of
execution of any amendment or new document.  If the Beneficiary shall
ever receive anything of value which is interest or characterized as interest
under applicable law and which would apart from this provision be in excess of
the maximum lawful nonusurious amount, an amount equal to the amount which would
have been excessive interest shall, without penalty, be applied to the reduction
of the principal amount owing on the Note (in accordance with Section 8.13 of the
Credit Agreement, in the case of the Term Note) and not to the payment of
interest, or refunded to the Grantor if and to the extent such amount which
would have been excessive exceeds such unpaid principal.  The right to
accelerate maturity of the Note and the other Obligations does not include the
right to accelerate any interest which has not otherwise accrued on the date of
such acceleration, and the Beneficiary does not intend to charge or receive any
unearned interest in the event of acceleration.  All interest paid or
agreed to be paid to the Lender under the Note shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
stated term (including any renewal or extension) of the Note so that the amount
of interest on account of the Note does not exceed the maximum nonusurious
amount permitted by applicable law.  As used in this Section, (i) the
term "applicable law" shall mean such laws as they now exist or may be changed
or amended or come into effect in the future and (ii) the term "interest"
includes all amounts that constitute, are deemed, or are characterized as
interest under applicable law.




Section
9.09.     Successors and
Assigns.  This Deed of Trust shall be binding upon and inure to
the benefit of the Beneficiary, the Trustee, and the Grantor and their
respective successors and assigns; provided, however, that the
Grantor shall not, without the prior written consent of the Beneficiary, assign
any rights, duties or obligations hereunder.




Section
9.10.    GOVERNING LAW,
ETC.  THIS DEED OF TRUST AND THE RIGHTS AND OTHER OBLIGATIONS
OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH
AND BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS (WITHOUT GIVING EFFECT TO THE
PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW).




Section
9.11.     WAIVER OF TRIAL BY
JURY.  EACH PARTY HERETO WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS DEED
OF TRUST OR ANY TRANSACTION CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT
OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.




-35-




Section
9.12.      Submission To
Jurisdiction.  The Grantor hereby irrevocably and
unconditionally:




(a)           submits
for itself and its property in any legal action or proceeding relating to this
Deed of Trust and the other Loan Documents to which it is a party, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of Texas, the
courts of the United States of America for the Southern District of Texas, and
appellate courts from any thereof;




(b)           consents
that any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;




(c)           agrees
that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to such Grantor at its address referred
to in Section
9.02 or at such other address of which the Beneficiary shall have been
notified pursuant thereto; and




(d)           agrees
that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to sue in any other
jurisdiction.




Section
9.13.      Acknowledgements.  The
Grantor hereby acknowledges and agrees that:




(a)           it
has been advised by counsel in the negotiation, execution and delivery of this
Deed of Trust and the other Loan Documents to which it is a party, and this Deed
of Trust shall be construed as if jointly drafted by the parties
hereto;




(b)           the
Beneficiary has no any fiduciary relationship with or duty to the Grantor
arising out of or in connection with this Deed of Trust or any other Loan
Document, and the relationship between the Grantor, on the one hand, and the
Beneficiary and the other Secured Parties, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and




(c)           no
joint venture is created hereby or by the other Loan Documents or otherwise
exists by virtue of the transactions contemplated hereby among the Beneficiary
and the other Secured Parties or among the Grantor, the Beneficiary and the
other Secured Parties.




Section
9.14.     Independence of
Covenants.  All covenants and agreements hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants or agreements, the fact that it would be
permitted by an exception to, or would otherwise be within the limitations of,
another covenant or agreement, shall not avoid the occurrence of a Default or
Event of Default if such action is taken or such condition exists.




-36-


Section
9.15.     Sole
Discretion.  Whenever the Beneficiary's or the Trustee's
judgment, consent or approval is required hereunder for any matter, or either of
them shall have an option or election hereunder, such judgment, the decision as
to whether or not to consent to or approve the same or the exercise of such
option or election shall be in the sole discretion of the Beneficiary or the
Trustee, as the case may be, unless otherwise expressly indicated herein to be
reasonably given or exercise.




Section
9.16.     Subrogation.  If
any or all of the proceeds of the extensions of credit under the Loan Documents
have been used to extinguish, extend or renew any indebtedness heretofore
existing against the Property, then, to the extent of the funds so used, the
Beneficiary shall be subrogated to all of the rights, claims, Liens, titles, and
interests existing against the Property heretofore held by, or in favor of, the
holder of such indebtedness and such former rights claims, Liens, titles and
interests, if any, are not waived but rather are continued in full force and
effect in favor of the Beneficiary and are merged with the Lien and security
interest created herein as cumulative security for the payment and performance
of the Obligations.




Section
9.17.     Co-Agents.  At
any time or times, in order to comply with any legal requirement in any
jurisdiction, the Beneficiary may appoint another bank or trust company or one
or more other Persons, either to act as co-agent or co-agents, jointly with the
Beneficiary, or to act, in accordance with the provisions of this Deed of Trust,
as separate agent or agents on behalf of the Secured Parties with such power and
authority as may be necessary for the effectual operation of the provisions
hereof and may be specified in the instrument of appointment.




Section
9.18.     Right to
Deal.  In the event that ownership of the Property becomes
vested in a Person other than the Grantor, the Trustee and the Beneficiary may,
without notice to the Grantor, deal with such successor or successors in
interest with reference to this Deed of Trust or the Obligations in the same
manner as with the Grantor, without in any way impairing or discharging the
Grantor's liability hereunder or for the payment and performance of the
Obligations or being deemed a consent to such vesting.




Section
9.19.      No Merger.




(a)           If
both the lessor's and the lessee's interest under any Lease with constitutes a
part of the Property shall at any time become vested in any one Person, this
Deed of Trust and the Lien and the security interest created hereby shall not be
destroyed or terminated by the application of the doctrine of merger and, in
such event, the Trustee and the Beneficiary shall continue to have and enjoy all
of the rights and privileges of the Trustee and the Beneficiary hereunder to
each separate estate.




(b)           Upon
the foreclosure of the Lien created hereby on the Property, as herein provided,
any Leases then existing shall not be destroyed or terminated by application of
the doctrine of merger or as a matter of law or as a result of such foreclosure
unless the Trustee or the Beneficiary or any purchaser at a foreclosure sale
shall so elect by notice to the lessee in question.




-37-


Section
9.20.     Duplicate Originals;
Counterparts.  This Deed of Trust may be executed in any number
of duplicate originals and each duplicate original shall be deemed to be an
original. This Deed of Trust may be executed in several counterparts, each of
which counterparts shall be deemed an original instrument and all of which
together shall constitute a single Deed of Trust. The failure of any party
hereto to execute this Deed of Trust, or any counterpart hereof, shall not
relieve the other signatories from their obligations hereunder.




Section
9.21.     Termination.  This
Deed of Trust shall cease, terminate and thereafter be of no further force and
effect (except for those provisions expressly stated to survive the termination
hereof) in the event all of the Obligations shall have been paid in
full.  Upon such termination and at the Grantor's request and expense,
the Beneficiary shall execute and deliver to the Grantor an instrument, in
proper form for recording, without warranty, releasing this Deed of
Trust.




Section
9.22.     Waiver of
Setoff.  All payments by the Grantor hereunder shall be made
without setoff, counterclaim, recoupment or other defense, and shall be made
free and clear of, and without deduction for, any Taxes.




Section
9.23.     Dealing with the
Property.  The Beneficiary shall have the right to release any
portion of the Property to or at the request of the Grantor, for such
consideration as the Beneficiary may require without, as to the remainder of the
Property, in any way impairing or affecting the Lien or priority of this Deed of
Trust, or improving the position of any subordinate lienholder with respect
thereto, and may accept by assignment, pledge or otherwise any other property in
place thereof as the Beneficiary may require without being accountable therefor
to any other lienholder.




Section
9.24.     Lien
Absolute.  All rights of the Beneficiary and the other Secured
Parties, all Liens and all obligations of the Grantor hereunder shall be
absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Credit Agreement or any other Loan Document, (b) any
change in the time, manner or place of payment of, or in any other term or
provision in respect of, all or any of the Obligations, or any other amendment
or waiver of or consent to any departure from the Credit Agreement or any other
Loan Document, (c) any exchange or release of, or non-perfection of any Lien on
any collateral, or any release or amendment or waiver of or consent to departure
from any guaranty, for all or any of the Obligations, or (d) any other
circumstances that might otherwise constitute a defense available to, or a
discharge of, the Grantor in respect of the Obligations.




Section
9.25.    [Multistate
Transaction.  The Grantor acknowledges
that this Deed of Trust is one of a number of mortgages, deeds of trust or
similar instruments ("Other
Mortgages") that secure
the Obligations.  The Grantor agrees that the Lien of this Deed of
Trust shall be absolute and unconditional and shall not in any manner be
affected or impaired by any acts or omissions whatsoever of the Beneficiary, and
without limiting the generality of the foregoing, the Lien hereof shall not be
impaired by any acceptance by the Beneficiary of any security for or guarantees
of the Obligations, or by any failure, neglect or omission on the part of the
Beneficiary to realize upon or protect any obligation or any collateral security
therefor including the Other Mortgages.  The Lien hereof shall not in
any manner be impaired or affected by any release (except as to the property
released), sale, pledge, surrender, compromise, settlement, renewal, extension,
indulgence, alteration, changing, modification or disposition of any of the
Obligations or of any of the collateral security therefor, including the Other
Mortgages or of any guarantee thereof, and, to the fullest extent permitted by
applicable law, the Beneficiary may at its discretion foreclose, exercise any
power of sale, or exercise any other remedy available to it under any or all of
the Other Mortgages without first exercising or enforcing any of its rights and
remedies hereunder.  Such exercise of the Beneficiary's rights and
remedies under any or all of the Other Mortgages shall not in any manner impair
the indebtedness hereby secured or by the Lien of this Deed of Trust and any
exercise of the rights or remedies of the Beneficiary hereunder shall not impair
the Lien of any of the Other Mortgages or any of the Beneficiary's rights and
remedies thereunder.  To the fullest extent permitted by applicable
law, the Grantor specifically consents and agrees the Beneficiary may exercise
its rights and remedies hereunder and under the Other Mortgages separately or
concurrently and in any order that it may deem appropriate and waives any rights
of subrogation.]




-38-




ARTICLE
X




ADDITIONAL
TEXAS LAW PROVISIONS




Section
10.01.   Foreclosure Pursuant to
Power of Sale.  Any foreclosure by power of sale permitted by
this Deed of Trust shall be conducted in accordance with Section 51.002 of the
Texas Property Code as amended or superseded from time to time.




Section
10.02.   Deficiency
Statute.  Alternative to
Waiver.  In the event the waiver in Section 6.06(e) above is
determined by a court of competent jurisdiction to be unenforceable, the
following shall be the basis for the determination of the fair market value of
the Property as of the date of the foreclosure sale in proceedings governed by
Sections 51.003, 51.004 and 51.005 of the Texas Property Code (as amended from
time to time):  (a) the Property shall be valued in an "as is"
condition as of the date of the foreclosure sale, without any assumption or
expectation that the Property will be repaired or improved in any manner before
a resale of the Property after foreclosure; (b) the valuation shall be based
upon an assumption that the foreclosure purchaser desires a resale of the
Property for cash promptly (but no later than twelve (12) months) following the
foreclosure sale; (c) all reasonable closing costs customarily borne by the
seller in commercial real estate transactions should be deducted from the gross
fair market value of the Property, including, without limitation, brokerage
commissions, title insurance, a survey of the Property, tax prorations,
attorneys' fees, and marketing costs; (d) the gross fair market value of the
Property shall be further discounted to account for any estimated holding costs
associated with maintaining the Property pending sale, including, without
limitation, utilities expenses, property management fees, taxes and assessments
(to the extent not accounted for in clause (c) above), and other maintenance,
operational and ownership expenses; and (e) any expert opinion testimony given
or considered in connection with a determination of the fair market value of the
Property must be given by persons having at least five (5) years experience in
appraising property similar to the Property and who have conducted and prepared
a complete written appraisal of the Property taking into consideration the
factor set forth above.




-39-


ARTICLE
XI




TRUSTEE




Section
11.01.   Concerning the
Trustee.  The Trustee shall be under no duty to take any action
hereunder except as expressly required hereunder or by law, or to perform any
act which would involve the Trustee in any expense or liability or to institute
or defend any suit in respect hereof, unless properly indemnified to the
Trustee's reasonable satisfaction.  The Trustee, by acceptance of this
Deed of Trust, covenants to perform and fulfill the trusts herein created, being
liable, however, only for gross negligence or willful misconduct, and hereby
waives any statutory fee and agrees to accept reasonable compensation, in lieu
thereof, for any services rendered by the Trustee in accordance with the terms
hereof.  The Trustee may resign at any time upon giving thirty (30)
days prior written notice to the Grantor and to the Beneficiary.  The
Beneficiary may remove the Trustee at any time or from time to time, with or
without cause or notice, and appoint a successor trustee.  In the
event of the death, removal, resignation, refusal to act, or inability to act of
the Trustee, or in its sole discretion for any reason whatsoever, the
Beneficiary may, without notice and without specifying any reason therefor and
without applying to any court, select and appoint a successor trustee, and all
powers, rights, duties and authority of the Trustee, as aforesaid, shall
thereupon become vested in such successor.  Such substitute trustee
shall not be required to give bond for the faithful performance of the duties of
the Trustee hereunder unless required by the Beneficiary.  The
procedure provided for in this Section for substitution of the Trustee shall be
in addition to and not in exclusion of any other provisions for substitution, by
law or otherwise.  The Trustee shall not be responsible for the
execution, acknowledgement, or validity of the Loan Documents, or for the
property action taken thereof, or for the sufficiency of the lien and security
interest created hereby, and the Trustee makes no respect of the rights and
remedies of the Beneficiary.




Section
11.02.   Trustee's
Fees.  The Grantor shall pay all reasonable costs, fees and
expenses incurred by the Trustee and the Trustee's agents and counsel in
connection with the performance by the Trustee of the Trustee's duties hereunder
and all such costs, fees and expenses shall be Obligations secured by this Deed
of Trust.




Section
11.03.   Certain
Rights.  With the approval of the Beneficiary, the Trustee
shall have the right to take any and all of the following
actions:  (a) to select, employ, and advise with counsel (who may be,
but need not be, counsel for the Beneficiary) upon any matters arising
hereunder, including the preparation, execution, and interpretation of this Deed
of Trust or the other Loan Documents, and shall be fully protected in relying as
to legal matters on the advice of counsel, (b) to execute any of the trusts and
powers hereof and to perform any duty hereunder either directly or through
his/her agents or attorneys, (c) to select and employ, in and about the
execution of his/her duties hereunder, suitable accountants, engineers and other
experts, agents and attorneys-in-fact, either corporate or individual, not
regularly in the employ of the Trustee, and the Trustee shall not be answerable
for any act, default, negligence, or misconduct of any such accountant, engineer
or other expert, agent or attorney-in-fact, if selected with reasonable care, or
for any error of judgment or act done by the Trustee in good faith, or be
otherwise responsible or accountable under any circumstances whatsoever, except
for the Trustee's gross negligence or bad faith, and (d) any and all other
lawful action as the Beneficiary may instruct the Trustee to take to protect or
enforce the Beneficiary's rights hereunder.  The Trustee shall not be
personally liable in case of entry by the Trustee, or anyone entering by virtue
of the powers herein granted to the Trustee, upon the Property for debts
contracted for or liability or damages incurred in the management or operation
of the Property.  The Trustee shall have the right to rely on any
instrument, document, or signature authorizing or supporting any action taken or
proposed to be taken by the Trustee hereunder, believed by the Trustee in good
faith to be genuine.  The Grantor shall reimburse the Trustee for all
costs and expenses incurred by the Trustee in the performance of the Trustee's
duties hereunder and for reasonable compensation for such of the Trustee's
services hereunder as shall be rendered.  Notwithstanding anything
herein to the contrary, the Trustee shall not exercise or waive the exercise of
any of its rights, powers or remedies hereunder or otherwise act or refrain from
acting hereunder unless directed to do so by the Beneficiary, and the Trustee
shall exercise or waive the exercise of any of its rights, powers or remedies
hereunder and otherwise act or refrain from acting when and in the manner
directed by the Beneficiary, provided that the Trustee shall not be required to
follow any direction of the Beneficiary if the Trustee has been advised by
counsel that such action would violate applicable law.




-40-




Section
11.04.   Retention of
Money.  All moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated in any manner from any other moneys
(except to the extent required by applicable law) and the Trustee shall be under
no liability for interest on any moneys received by the Trustee
hereunder.




Section
11.05.   Perfection of
Appointment.  Should any deed, conveyance, or instrument of any
nature be required from the Grantor by any the Trustee or substitute trustee to
more fully and certainly vest in and confirm to the Trustee or substitute
trustee such estates rights, powers, and duties, then, upon request by the
Trustee or substitute trustee, any and all such deeds, conveyances and
instruments shall be made, executed, acknowledged, and delivered and shall be
caused to be recorded and/or filed by the Grantor.




Section
11.06.   Succession
Instruments.  Any substitute trustee appointed pursuant to any
of the provisions hereof shall, without any further act, deed, or conveyance,
become vested with all the estates, properties, rights, powers, and trusts of
its or his/her predecessor in the rights hereunder with like effect as if
originally named as the Trustee herein; but nevertheless, upon the written
request of the Beneficiary or of the substitute trustee, the Trustee ceasing to
act shall execute and deliver any instrument transferring to such substitute
trustee, upon the trusts herein expressed, all the estates, properties, rights,
powers, and trusts of the Trustee so ceasing to act, and shall duly assign,
transfer and deliver any of the property and moneys held by such the Trustee to
the substitute trustee so appointed in the Trustee's place.




IN
WITNESS WHEREOF, this Deed of Trust has been duly executed and delivered by the
Grantor on [______], 20[__], and is intended to be effective as of the date
first above written.




GRANTOR:[
                                  ]By:Name:Title:


-41-





THE
      STATE OF TEXAS
              §§COUNTY
      OF __________
              §




(A)           This
instrument was acknowledged before me on the ____ day of ______________, 200__,
by _____________________________________________ of [specify the Grantor], a [specify type of entity], on
behalf of said _________________.




Notary
      Public in and for the State of TexasPrinted Name:





[SEAL]


My
Commission Expires:_________




-42-


EXHIBIT
A




Land





EXHIBIT
B




Permitted
Exceptions







EXHIBIT D
TO


CREDIT
AGREEMENT





FORM OF TERM
NOTE





TERM
NOTE


$25,000,000
                  March
      [__], 2009




FOR VALUE
RECEIVED, the undersigned, Sanders Morris Harris Group, Inc., a Texas
corporation (the "Borrower"), hereby
unconditionally promises to pay to the order of Prosperity Bank (the "Lender"), at the
Funding Office, in lawful money of the United States of America and in
immediately available funds, the principal amount of (a) Twenty-Five
Million Dollars ($25,000,000.00), or, if less, (b) the unpaid principal
amount of the Loan made by the Lender to the Borrower pursuant to Section 2.01 of the
Credit Agreement (as hereinafter defined).  The principal amount of
this Note shall be payable in the amounts and on the dates specified in the
Credit Agreement.  The Borrower further agrees to pay interest in like
money at such office on the unpaid principal amount hereof from time to time
outstanding at the rates and on the dates specified in the Credit
Agreement.




The
holder of this Note is authorized to endorse on the schedule annexed hereto and
made a part hereof or on a continuation thereof which shall be attached hereto
and made a part hereof the date and amount of the Loan of the Lender and the
date and amount of each payment or prepayment of principal
thereof.  Each such endorsement shall constitute prima facie evidence of the
accuracy of the information endorsed.  The failure to make any such
endorsement (or any error therein) shall not affect the obligations of the
Borrower in respect of any Loan or the Credit Agreement.




This Note
(a) is the Term Note referred to in the Credit Agreement dated as of March
[__], 2009 (as amended, restated, supplemented or otherwise modified from time
to time, the "Credit
Agreement"), between the Borrower and the Lender, (b) is subject to
the provisions of the Credit Agreement and (c) is subject to optional and
mandatory prepayment in whole or in part as provided in the Credit
Agreement.  This Note is secured and guaranteed as provided in the
Security Documents.  Reference is hereby made to the Security
Documents for a description of  the properties and assets in which a
lien or security interest has been granted,the nature and extent of
the security and the guarantees, the terms and conditions upon which the liens
and security interests and each guarantee were granted and the rights of the
holder of this Note in respect thereof.




Upon the
occurrence of any one or more Events of Default, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable, all as provided in the Credit Agreement.




All
parties now and hereafter liable with respect to this Note, whether maker,
principal, surety, guarantor, endorser or otherwise, hereby waive presentment,
demand, protest, notice of acceleration and intent to accelerate, and all other
notices of any kind.





Unless
otherwise defined herein, terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.




THIS
NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF TEXAS.




BORROWER:SANDERS MORRIS HARRIS GROUP,
      INC.,a
      Texas corporationBy:Name:Title:


-2-


Schedule
to Term Note





Date Loan
              Made
              or Paid
            
            Principal
              Amount
              of Loan
            
            Amount of
              Principal
              Paid
            
            Outstanding
              Principal
              Balance
              of Note
            
            Notation
              Made By


-3-


EXHIBIT E
TO


CREDIT
AGREEMENT




FORM OF LEGAL
OPINION




_______,
200_




____________________,
as Lender












Ladies/Gentlemen:




We have
acted as counsel to ___________, a _____________
(the "Borrower"), and its
Subsidiaries in connection with (a) the Credit Agreement, dated as of
______,  ____ (the "Credit Agreement"),
among the Borrower, Prosperity Bank, as administrative agent for the Lenders (in
such capacity, the "Lender") and (b) the
Term Note and the other Loan Documents referred to in the Credit
Agreement.




The
opinions expressed below are furnished to you pursuant to Section 3.01(h) of the
Credit Agreement.  Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement.  The State of Texas is referred to herein as the
UCC Jurisdiction.




In
arriving at the opinions expressed below,




we have
examined and relied on the originals, or copies certified or otherwise
identified to our satisfaction, of each of (1) the Credit Agreement, (2)
the Term Note dated the date hereof and (3) the other Loan Documents listed on
Schedule 1 attached hereto (the Credit Agreement, the Note and such other
documents being hereinafter referred to collectively as the "Transaction
Documents");




we have
examined time-stamped copies of the financing statements listed on Schedule 2
(collectively, the "Financing Statements") naming the relevant Loan Party as
debtor and the Lender as secured party and describing the Collateral (as defined
in the Guarantee and Security Agreement) as to which security interests may be
perfected by filing financing statements under the Uniform Commercial Code of
the State of Texas (the "UCC Filing Collateral"), which have been filed in the
filing offices listed on Schedule 2 (the "UCC Filing Offices");





we have
examined the reports listed on Schedule 3 as to UCC financing statements
(collectively, the "UCC Search Report"); and




we have
examined such corporate documents and records of the Loan Parties and such other
instruments and certificates of public officials, officers and representatives
of the Loan Parties and other Persons as we have deemed necessary or appropriate
for the purposes of this opinion.




In
arriving at the opinions expressed below, we have made such investigations of
law, in each case as we have deemed appropriate as a basis for such
opinions.




In
rendering the opinions expressed below, we have assumed, with your permission,
without independent investigation or inquiry, (a) the authenticity of all
documents submitted to us as originals, (b) the genuineness of all
signatures on all documents that we examined (other than those of the Loan
Parties and officers of the Loan Parties), and (c) the conformity to
authentic originals of documents submitted to us as certified, conformed or
photostatic copies.




When our
opinions expressed below are stated "to the best of our knowledge," we have made
reasonable and diligent investigation of the subject matter of such opinions and
have no reason to believe that there exist any facts or other information that
would render such opinions incomplete or incorrect.




Based
upon and subject to the foregoing, we are of the opinion that:




1.           Each
Loan Party (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has the corporate or other
organizational power and authority and the legal right to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged and (c) is duly qualified as a foreign
organization and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification, except to the extent that the failure to be so
qualified could not, in the aggregate, have a Material Adverse
Effect.




2.           The
Borrower has the corporate power and authority, and the legal right, to execute,
deliver and perform its obligations under the Credit Agreement and each of the
other Transaction Documents to which it is a party and to borrow under the
Credit Agreement.  Each other Loan Party has the corporate or other
organizational power and authority, and the legal right, to execute, deliver and
perform its obligations under each of the other Transaction Documents to which
it is a party.  The Borrower has taken all necessary corporate action
to authorize the borrowings on the terms and conditions of the Credit Agreement
and the other Transaction Documents, to grant the liens and security interests
contemplated by the Security Documents to which it is a party and to authorize
the execution, delivery and performance of the Credit Agreement and the other
Transaction Documents to which it is a party.  Each other Loan Party
has taken all necessary corporate or other organizational action to grant the
liens and security interests contemplated by the Security Documents to which it
is a party and to authorize the execution, delivery and performance by it of the
Transaction Documents to which it is a party.  Except for consents,
authorizations, approvals, notices and filings described on Schedule 6 attached
hereto, all of which have been obtained, made or waived and are in full force
and effect, and the filings and recordings described on Schedules 2, 4 and 8
attached hereto, no consent or authorization of, approval by, notice to, filing
with or other act by or in respect of, any Governmental Authority or any other
Person is required in connection with the borrowings under the Credit Agreement
or with the execution, delivery, performance, validity or enforceability of the
Credit Agreement and the other Transaction Documents or the perfection of the
liens and security interests created by the Security Documents.


5




3.           Each
of the Transaction Documents to which a Loan Party is a party has been duly
executed and delivered on behalf of each Loan Party that is a party thereto and
constitutes a legal, valid and binding obligation of each such Loan Party,
enforceable against each such Loan Party in accordance with its
terms.




4.           The
execution and delivery of the Transaction Documents by the Loan Parties, the
performance by the Loan Parties of their respective obligations thereunder, the
consummation of the transactions contemplated thereby, the compliance by the
Loan Parties with any of the provisions thereof, the borrowings under the Credit
Agreement and the use of proceeds thereof, all as provided therein, of any Loan
Party (a) will not violate, or constitute a default under, any Requirement of
Law or any Contractual Obligation of any Loan Party and (b) will not result in,
or require, the creation or imposition of any Lien on any of its or their
respective properties or revenues, except the liens and security interests
created pursuant to the Security Documents.




5.           To
the best of our knowledge, no litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or threatened by or
against any Loan Party or any of its Subsidiaries or against any of its or their
respective properties or revenues (a) with respect to the Credit Agreement or
any of the other Transaction Documents, or (b) which could reasonably be
expected to have a Material Adverse Effect.




6.           To
the best of our knowledge, none of the Loan Parties nor any of their respective
Subsidiaries is in default under or with respect to any Contractual Obligation
in any respect which could reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.




7.           None
of the Loan Parties is an "investment company," or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.  [None of the Loan Parties is subject to regulation under
any Federal or state statute or regulation which limits its ability to incur
Indebtedness.]




8.           Schedule 7 attached
hereto sets forth, as of the date hereof, the number of authorized, issued and
outstanding shares of each class of Equity Interests of each Subsidiary of
Holdings, the names and record owners of such shares and the number of shares
owned of record by each such owner.  There are no outstanding
subscriptions, options, warrants, calls, rights (including preemptive rights) or
any other agreements or commitments of any nature with respect to the Equity
Interests of any Subsidiary.  All of the Equity Interests described on
Schedule 7
attached hereto have been duly authorized and validly issued, and are fully paid
and nonassessable and represent the percentages of the issued and outstanding
Equity Interests of the issuers thereof specified on Schedule 7 attached
hereto.


6




9.           The
provisions of the Guarantee and Security Agreement create in favor of the
Lender, a legal, valid and enforceable security interest in the Pledged Equity
Interests, the Pledged Notes, the Pledged Debt Securities, and the Proceeds
thereof (as those terms are defined in the Guarantee and Security Agreement) as
security for the Obligations.  The actions specified in Schedule 3 of the
Guarantee and Security Agreement are all of the actions necessary to perfect the
security interest of the Lender in the Pledged Equity Interests, the Pledged
Notes, and the Pledged Debt Securities and the security interest of the Lender
in the Pledged Equity Interests, the Pledged Notes and the Pledged Debt
Securities is a perfected security interest.  Assuming the Lender
acquires its interest in the Pledged Equity Interests without notice of any
adverse claims and that each certificate evidencing shares of the Pledged Equity
Interests is either in bearer form or registered form, issued or indorsed in the
name of the Lender or in blank, the Lender will acquire its security interest in
the Pledged Equity Interests free of adverse claims.




10.           The
provisions of the Guarantee and Security Agreement create in favor of the
Lender, a legal, valid and enforceable security interest in the UCC Filing
Collateral as security for the Obligations.  The provisions of the
Guarantee and Security Agreement are sufficient to constitute authorization of
the filing of the Financing Statements for purposes of Section 9-509 of the
Uniform Commercial Code as in effect in each of the UCC
Jurisdictions.  The Financing Statements include all of the types of
information required by Section 9-516 of the Uniform Commercial Code as in
effect in each of the UCC Jurisdictions in order for the Financing Statements to
be in appropriate form for filing in the UCC Filing Offices in such
jurisdictions.  Each Loan Party is a "registered organization" within
the meaning of the Uniform Commercial Code as in effect in the UCC Jurisdiction
in which it was incorporated or otherwise
organized.  The  Lender, upon the filing of the Financing
Statements in the UCC Filing Offices, will have a perfected security interest in
the UCC Filing Collateral.  The UCC Search Report sets forth the
proper filing offices and the proper debtors necessary to identify those Persons
who have on file in the jurisdictions listed on Schedule 2
financing statements covering the UCC Filing Collateral as of the dates and
times specified on Schedule 3.  Except
for the matters listed on Schedule 3, the UCC
Search Report identifies no Person who has filed in any UCC Filing Office a
financing statement describing the UCC Filing Collateral prior to the effective
dates of the UCC Search Report.




11.           The
provisions of the Guarantee and Security Agreement create in favor of the
Lender, a legal, valid and enforceable security interest in the Intellectual
Property as security for the Obligations.  The Lender, upon the filing
of the Intellectual Property Filings in the Intellectual Property Filing
Offices, will have a perfected security interest in the Intellectual
Property.  The Intellectual Property Search Report sets forth the
proper filing offices and the proper debtors necessary to identify those Persons
who have on file in the jurisdictions listed on Schedule 4 and
in the United States Patent and Trademark Office or the United States Copyright
Office financing statements or other filings covering the Intellectual Property
as of the dates and times specified on Schedule 5.  Except
for the matters listed on Schedule 5, the
Intellectual Property Search Report identifies no Person who has filed in any
Intellectual Property Filing Office a financing statement or other Lien
instrument describing the Intellectual Property prior to the effective dates of
the Intellectual Property Search Report.


7




12.           [The
Guarantee and Security Agreement and the Deposit Account Control Agreement
identified on Schedule
1 together create in favor of the Lender as security for the Obligations,
a perfected security interest in the rights of [specify Loan Party] in the
deposit account[s] that [is] [are] subject to such Deposit Account Control
Agreement.]




13.           [The
Guarantee and Collateral Agreement and the Securities Account Control Agreement
identified on Schedule
1 together create in favor of the Administrative Agent, as security for
the Obligations, a perfected security interest in the rights of [specify the
Loan Party] in the security entitlements that constitute Investment Property (as
defined in the Guarantee and Collateral Agreement) of [specify Loan Party]
..  No security interest of any creditor of such Loan Party will be
equal to or prior to such security interest of the Administrative Agent in such
security entitlements.]




14.           The
provisions of the Loan Documents (without regard for any provisions thereof
limiting the payment of interest or any other sums thereunder to the highest
rate permitted by applicable law) do not violate any Requirement of Law of the
State of Texas or any political subdivision thereof pertaining to
usury.




15.           The
making of the Loans and the issuance of Letters of Credit and the application of
the proceeds thereof will not violate Regulation T, U, or X of the Board of
Governors of the Federal Reserve System.




Our
opinions set forth in paragraph [3] and paragraph [14(d)] above are subject to
the effects of bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally and general
equitable principles (whether considered in a proceeding in equity or at
law).




We are
members of the bar of the State[s] of _____________ and we express no opinion as
to the laws of any jurisdiction other than the laws of the State[s] of ________,
the General Corporation Law of the State of Delaware and the Federal laws of the
United States of America [and, to the extent relevant to the opinions expressed
in paragraph 10, the Uniform Commercial Code as in effect in the UCC
Jurisdictions].




This
opinion has been rendered solely for your benefit and for the benefit of the
permitted assigns of the Lenders and Participants pursuant to Section 8.06
of the Credit Agreement in connection with the Credit Agreement and the
transactions contemplated thereby and may not be used, circulated, quoted,
relied upon or otherwise referred to for any other purpose without our prior
written consent; provided, however, that this
opinion may be delivered to your regulators, accountants, attorneys and other
professional advisers and may be used in connection with any legal or regulatory
proceeding relating to the subject matter of this opinion.




Very
truly yours,


8


Schedule
1




TRANSACTION
DOCUMENTS


9




Schedule
2




FINANCING
STATEMENTS





State
              
              Filing Office


10




Schedule
3





UCC SEARCH
REPORT[S]





Search Service
            
            Search Date
            
            Effective Date
            
            State
            
            UCC Filing
              Office
            
            Name of Debtor
            
            Exceptions
              Disclosed


11


Schedule
4




FINANCING
STATEMENTS




AND OTHER
FILINGS




FOR THE INTELLECTUAL
PROPERTY COLLATERAL




UCC Financing
Statements





State
              
              Filing Office




Federal
Filings





United
      States
                  Patent and Trademark Office
                
                United
      States
                  Copyright Office




[Foreign
Filings]


12


Schedule
5





INTELLECTUAL PROPERTY SEARCH
REPORT[S]





UCC Financing
Statements





Search Service
                
                Search Date
                
                Effective Date
                
                State
                
                Filing Office
                
                Name of Debtor
                
                Exceptions
                  Disclosed





Federal
Filings





Search Service
            
            Search Date
            
            Effective Date
            
            Filing Office
            
            Name of Debtor
            
            Exceptions
              DisclosedU.S.
      Patent and Trademark OfficeU.S.
      Copyright Office


13




Schedule
6





CONSENTS, AUTHORIZATIONS,
APPROVALS,




NOTICES AND
FILINGS


14


SCHEDULE
7




EQUITY INTERESTS
OF




SUBSIDIARIES OF THE
BORROWER


15


Schedule
8




MORTGAGE RECORDING
OFFICE[S]


16


EXHIBIT F
TO


CREDIT
AGREEMENT




FORM OF SOLVENCY
CERTIFICATE




SOLVENCY
CERTIFICATE




I,
____________________, hereby certify that I am the chief financial officer of
each of the companies listed on Schedule I hereto
(the "Companies") and that
I am duly authorized to execute this Solvency Certificate, which is hereby
delivered on behalf of each of the Companies pursuant to Section 3.01 of
that certain Credit Agreement, dated as of March [__], 2009 (as amended,
restated, supplemented or otherwise modified from time to time, the "Credit Agreement";
the terms used but not defined herein having the meanings therein defined),
between Sanders Morris Harris Group, Inc., a Texas corporation, as Borrower, and
Prosperity Bank, as Lender.




I further
certify that I am generally familiar with the properties, businesses and assets
of each of the Companies and its Subsidiaries and have carefully reviewed the
Loan Documents and the contents of this Solvency Certificate and in connection
herewith, have reviewed such other documentation and information and have made
such investigations and inquiries as I have deemed necessary and prudent
therefor.  I further certify that the financial information and
assumptions that underlie and form the basis for the representations made in
this Solvency Certificate were reasonable when made and were made in good faith
and continue to be reasonable as of the date hereof.




I
understand that the Lender is relying on the truth and accuracy of this Solvency
Certificate in connection with the transactions contemplated in the Loan
Documents.




I hereby
further certify that:




·           On
the date hereof, after giving effect to the consummation of the transactions
contemplated by the Credit Agreement and the other Loan Documents, the present
fair saleable value of the assets of each of the Companies exceeds the amount
that will be required to pay the probable liabilities of such Company on its
debts as they become absolute and matured.




·           On
the date hereof, after giving effect to the consummation of the transactions
contemplated by the Credit Agreement and the other Loan Documents, each Company
does not have an unreasonably small capital with which to engage in its
anticipated businesses.  In reaching this conclusion, I understand
that "unreasonably small capital" depends upon the nature of the particular
business or businesses conducted or to be conducted, and I have reached my
conclusions based on the needs and anticipated needs for capital of the business
conducted or anticipated to be conducted by such Company.







·           Each
Company does not intend or believe that it will incur debts and liabilities that
will be beyond its ability to pay or refinance such debts or liabilities as they
mature.




·           Each
Company does not intend, in consummating the transactions contemplated by the
Credit Agreement and the other Loan Documents, to hinder, delay or defraud
either present or future creditors or any other Person to which such Company is
or will become on or after the date hereof, indebted.




·           In
reaching the conclusions set forth in this Solvency Certificate, I have
considered, among other things:




o           the
cash and other current assets of each Company reflected in the December 31, 2008
consolidated and consolidating balance sheet of such Company and its
consolidated Subsidiaries;




o           all
contingent liabilities of each Company, including without limitation, any claims
arising out of, pending or, to the best knowledge of the undersigned, threatened
litigation against such Company, and in so doing, such Company has computed the
amount of each such contingent liability as the amount that, in light of all the
facts and circumstances existing on the date hereof, represents the amount that
can reasonably be expected to become an actual or matured
liability;




o           all
obligations and liabilities of each Company, whether matured or unmatured,
liquidated or unliquidated, disputed or undisputed, secured or unsecured,
subordinated, absolute, fixed or contingent, including, among other things,
claims arising out of, pending, or to the best knowledge of the undersigned,
threatened litigation against such Company, and in so doing, such Company has
computed the amount of each such contingent liability as the amount that, in
light of all the facts and circumstances existing on the date hereof, represents
the amount that can reasonably be expected to become an actual or matured
liability;




o           historical
and anticipated growth in the sales volume of each Company and in the income
stream generated by such Company;




o           the
customary terms of the trade payables of each Company;




o           the
amount of the credit extended by and to customers of each Company;




o           the
amortization requirements of the Credit Agreement and the anticipated interest
payable on the Loans under the Credit Agreement; and




o           the
level of capital customarily maintained by each Company and other entities
engaged in the same or similar business as the business of such
Company.




Delivery
of an executed counterpart of a signature page to this Solvency Certificate by
facsimile shall be effective as delivery of a manually executed counterpart of
this Solvency Certificate.




[The remainder of this page
intentionally left blank]


-2-


IN
WITNESS WHEREOF, the Chief Financial Officer has executed this Solvency
Certificate in his corporate capacity and on behalf of each of the Companies
specified herein this ____ day of March, 2009.




By:Name:Title:  Chief
      Financial OfficerOn
      Behalf of Each of the
Companies


-3-


SCHEDULE I TO SOLVENCY
CERTIFICATE




[Companies]





EXHIBIT G
TO


CREDIT
AGREEMENT




FORM OF NOTICE OF
BORROWING




March
[_________], 2009




Prosperity
Bank, Lender


777
Walker Street, Suite L140


Houston,
TX  77002


Attention:
[____________]





Ladies
and Gentlemen:




The
undersigned, Sanders Morris Harris Group, Inc., a Texas corporation (the "Borrower"), refers to
the Credit Agreement dated as of March [], 2009 (as the same may
be amended, restated, supplemented or otherwise modified from time to time, the
"Credit
Agreement"), between the Borrower and Prosperity Bank (the "Lender").  Capitalized
terms used but not otherwise defined herein shall have the meanings assigned to
such terms in the Credit Agreement.




The
Borrower hereby gives you irrevocable notice pursuant to Section 2.02 of the
Credit Agreement that it hereby requests the Term Loan under the Credit
Agreement (the "Requested Loan"), and
in that connection sets forth below the information relating to such Requested
Loan as required by Section 2.02 of the Credit Agreement:




The
Borrowing Date of the Requested Loan is __________.




The
aggregate principal amount of the Requested Loan is $25,000,000.




The
undersigned hereby certifies that the following statements are true and correct
on the date hereof, and will be true and correct on the Borrowing Date of the
Requested Loan:




The representations and warranties of
each of the Loan Parties contained in each Loan Document are true and correct on
and as of the date hereof and will be true and correct on and as of the
Borrowing Date of the Requested Loan, both before and after giving effect to the
Requested Loan and to the application of the proceeds thereof on and as of such
earlier date)];




No
Default or Event of Default has occurred and is continuing or would result from
such Requested Loan or from the application of the proceeds thereof;
[and]







Delivery
of an executed counterpart of this Notice of Borrowing by facsimile will be
effective as delivery of an original executed counterpart of this Notice of
Borrowing.





Very
      truly yours,SANDERS
      MORRIS HARRIS GROUP, INC.ByName:Title:





EXHIBIT H
TO


CREDIT
AGREEMENT




FORM OF COMPLIANCE
CERTIFICATE




Financial
Statement Date: _________





To:           Prosperity
Bank, as Lender





Ladies
and Gentlemen:





Reference
is made to that certain Credit Agreement, dated as of March [____], 2009 (as
amended, restated, extended, supplemented or otherwise modified from time to
time, the "Credit
Agreement"; the terms defined therein being used herein as therein
defined), among Sanders Morris Harris Group, Inc., a Texas corporation (the
"Borrower") and
Prosperity Bank, as Lender.




The
undersigned Responsible Officer hereby certifies as of the date hereof that
he/she is the ___________________________________ of the Borrower, and that, as
such, he/she is authorized to execute and deliver this Certificate to the
Administrative Agent on the behalf of the Borrower, and that:




[Use
following paragraph 1 for Fiscal Year-end financial
statements]




1.           Attached
hereto as Schedule
1 are the year-end audited financial statements required by Section 5.01(a) of
the Credit Agreement for the Fiscal Year of the Borrower and its Subsidiaries
ended as of the Financial Statement Date shown above (the "Statement Date"),
together with the report and opinion of an independent certified public
accountant required by such section:




[Use
following paragraph 1 for Fiscal Quarter-end financial
statements]




1.           Attached
hereto as Schedule
1 are the unaudited financial statements required by Section 5.01(b)
of the Credit Agreement for the Fiscal Quarter of the Borrower and its
Subsidiaries ended as of the Financial Statement Date shown above (the "Statement
Date").  Such financial statements fairly present the financial
condition, results of operations and cash flows of the Borrower and its
Subsidiaries in accordance with GAAP as at such date and for such period,
subject only to normal year-end audit adjustments and the absence of
footnotes.




2.           The
undersigned has reviewed and is familiar with the terms of the Credit Agreement
and the other Loan Documents and has made, or has caused to be made under
his/her supervision, a detailed review of the transactions and condition
(financial or otherwise) of the Borrower and its Subsidiaries during the
accounting period covered by the attached financial statements.




3.           A
review of the activities of the Borrower and the other Loan Parties during such
fiscal period has been made under the supervision of the undersigned with a view
to determining whether during such fiscal period the Borrower and each of the
other Loan Parties performed and observed all their respective Obligations under
the Loan Documents, and







[to
the best knowledge of the undersigned during such fiscal period, the Borrower
and each of the other Loan Parties performed and observed each covenant and
condition of the Loan Documents applicable to it, and no Default or Event of
Default has occurred and is continuing.]




—or—




[the
following covenants or conditions have not been performed or observed and the
following is a list of each such Default or Event of Default and its nature and
status:]




4.           The
financial covenant analyses and information set forth on Schedule 2 attached
hereto are true and accurate on and as of the date of this
Certificate.




For
purposes of this Certificate, the information described on Schedule 1 and Schedule 2 attached
hereto is provided as of _______________, 20___, and pertains to the period
commencing on ___________, _____ and ending on ___________, ______ (the "Measurement
Period").




IN WITNESS WHEREOF, the
undersigned has executed this Certificate as of ___________, ____.




SANDERS
      MORRIS HARRIS GROUP,
                INC.By:Name:Title:


-2-


SCHEDULE
1




To the
Compliance Certificate


Schedule
1


SCHEDULE
2





To the
Compliance Certificate


[to be
provided]





EXHIBIT I
TO


CREDIT
AGREEMENT





FORM OF EDELMAN
SUBORDINATION AGREEMENT





SUBORDINATION
AGREEMENT




THIS
SUBORDINATION AGREEMENT, dated as of May [__], 2009 (as amended, restated,
supplemented or otherwise modified from time to time, this "Agreement"), by and
among Sanders Morris Harris Group Inc., a Texas corporation (together with its
successors and permitted assigns, the "Borrower"), Frederic
M. Edelman, an individual resident of the Commonwealth of Virginia (together
with his successors and permitted assigns, the "Subordinated
Creditor", and Prosperity Bank, a Texas corporation (together with its
successors and assigns, the "Senior Creditor";
each of the Borrower, the Subordinated Creditor and the Senior Creditor are
referred to herein from time to time individually as a "Party" and
collectively as the "Parties").  Unless
otherwise specified herein, capitalized terms used but not defined herein shall
have the meanings specified in the Senior Credit Agreement (defined
below).




WHEREAS,
the Borrower has entered into (a) that certain Reorganization and Purchase
Agreement, dated as of May 10, 2005, among the Borrower, the Subordinated
Creditor, The Edelman Financial Center, Inc. ("EFC Inc.") and The
Edelman Financial Center, LLC ("EFC LLC"), pursuant
to which the Borrower has and will from time to time purchase certain limited
liability company membership interests in EFC LLC from EFC Inc. and the
Subordinated Creditor from time to time (the "Purchase Agreement"),
(b) that certain Letter Loan Agreement and Letter Agreement, each dated December
8, 2006, between the Borrower and Edelman Financial Advisors, LLC ("EFA LLC"), pursuant
to which the Borrower agreed to make certain loans to EFA and acquired 10 units
(10%) of the limited liability company membership interests in EFA (the "Letter Agreements"),
and (c) that certain Credit Agreement, dated as of May [__], 2009, between the
Borrower and the Senior Creditor (as amended, restated, renewed, replaced,
refinanced, restructured, supplemented or otherwise modified from time to time,
the "Senior Credit
Agreement"), pursuant to which the Borrower has issued that certain Term
Note, dated May [__], 2009 (as amended, restated, renewed, replaced, refinanced,
restructured, supplemented or otherwise modified from time to time, the "Senior Note"),
payable to the order of the Senior Creditor in the original principal amount of
$25,000,000 (the "Senior Loan") (the
Senior Credit Agreement, the Senior Note, all other Loan Documents, and all
other agreements, instruments and documents from time to time made, entered
into, executed or delivered in connection therewith, as any of the foregoing may
be amended, restated, renewed, replaced, refinanced, restructured, supplemented
or otherwise modified from time to time being referred to herein individually as
a "Senior Loan
Document" and collectively as the "Senior Loan
Documents"; the Senior Loan, all accrued and unpaid interest thereon, and
any and all other loans, indebtedness, liabilities, obligations, indemnities,
costs, fees, covenants and expenses of any kind owing at any time and from time
by to time by the Borrower to the Senior Creditor arising from, out of, under or
in connection with any Senior Loan Document, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
arising (including, without limitation, all interest accruing at the then
applicable rate provided in the Senior Credit Agreement after the maturity of
the Senior Loan and interest accruing at the then applicable rate provided in
the Senior Credit Agreement after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating
to the Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) being referred to herein individually
and collectively as the "Senior
Debt");





WHEREAS,
under the Purchase Agreement, the Borrower has agreed to acquire certain
additional limited liability company membership interests in EFA LLC (the "Specified EFA
Interests") from Edward Moore, an individual, and the Subordinated
Creditor (collectively, the "Sellers") as
described further therein;




WHEREAS,
as partial consideration for the Specified EFA Interests, the Borrower has on or
about the date hereof issued that certain Unsecured Subordinated Promissory
Note, dated May [__], 2009 (as amended, restated, supplemented, or otherwise
modified from time to time in accordance with the terms and provisions of this
Agreement, the "Subordinated Note"),
payable to the order of the Subordinated Creditor in the original principal
amount of $10,000,000 (the "Subordinated Loan")
the terms of which provide that the original principal amount of and all accrued
and unpaid interest on the Subordinated Loan shall be due and payable on [____]
[__], 2010 (the "Subordinated Loan Maturity
Date") (the Subordinated Note, the Purchase Agreement, the Letter
Agreements, and all other agreements, instruments and documents at any time and
from time to time made, entered into, executed or delivered between the Borrower
and the Subordinated Creditor with respect to the Subordinated Loan or any other
Subordinated Debt (defined below) being referred to herein individually as a
"Subordinated Loan
Document" and collectively as the "Subordinated Loan
Documents"; the Subordinated Loan and all other loans, indebtedness,
liabilities, obligations, indemnities, costs, fees, covenants and expenses of
any kind owing at any time and from time to time by the Borrower to the
Subordinated Creditor arising from, out of, under or in connection with any
Subordinated Loan Document, or any other agreement, instrument or document,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising (other than the Purchase Agreement and the
Registration Rights Agreement dated May 10, 2005, among the Borrower, the
Subordinated Creditor and EFC, Inc.) are referred to herein individually and
collectively as the "Subordinated
Debt");




WHEREAS,
the Subordinated Creditor will benefit directly and indirectly from the Senior
Loan, the sale of the Specified EFA Interests, the issuance of the Subordinated
Note, the incurrence by the Borrower of the Subordinated Loan and the other
Subordinated Debt, and the execution, delivery and performance of the
Subordinated Loan Documents;




WHEREAS,
as consideration for and as an inducement to the Senior Creditor to make the
Senior Loan and to enter into the Senior Loan Documents with the Borrower, the
Subordinated Creditor has agreed to enter into this Agreement and to subordinate
all of its rights to collect, receive payment of and to enforce the Subordinated
Debt as set forth herein; and




WHEREAS,
the Parties desire to enter into this Agreement to evidence such
subordination.




NOW,
THEREFORE, in consideration of the foregoing and of the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows:


2


Section
1.     Recitals.  Each
recital to this Agreement is hereby incorporated by reference into this
Agreement.  The Parties hereby acknowledge and agree that each such
recital is true and correct in all respects.




Section
2.     Subordination.




(a)           Notwithstanding
any term or provision in any Subordinated Document to the contrary, the
Subordinated Creditor hereby covenants and agrees that the Subordinated Debt
shall be junior and subordinate in right of payment, to the extent and in the
manner set forth in this Agreement, to the indefeasible payment and performance
in full of the Senior Debt.




(b)           Except
as and to the extent expressly permitted under this Section 2 or Section 11 of this
Agreement, the Borrower shall not at any time pay, give or permit, directly or
indirectly, and the Subordinated Creditor shall not demand, accept or receive,
directly or indirectly, by set-off, prepayment, purchase, redemption or in any
other manner, any payment, distribution, dividend, prepayment or any other
assets or properties of the Borrower of any kind of, on, with respect to, or on
account of, any of the Subordinated Debt at any time (i) prior to the
Subordinated Loan Maturity Date or (ii) on or after the Subordinated Loan
Maturity Date, if (A) a Default or Event of Default has occurred and is
continuing under the Senior Credit Agreement at such time or (B) in the
determination of the Senior Creditor at such time, a Default or an Event of
Default would occur under the Senior Credit Agreement as a result of the making
of such payment (each such Default, Event of Default, and other event or
circumstance described or referred to in clause (A) and (B) above being referred
to herein as a "Senior
Default").




(c)           If
the Borrower intends to pay any portion of the Subordinated Debt at any time on
or after the Subordinated Loan Maturity Date, the Borrower shall deliver to the
Senior Creditor, at least five (5) business days prior to the date the Borrower
expects to make (and, for the avoidance of doubt, at least five (5) business
days prior to the date the Borrower actually makes) such payment (any such date
of expected or actual payment, a "Subordinated Debt Payment
Date"), a certificate, signed by the Chief Financial Officer of the
Borrower, specifying the expected Subordinated Debt Payment Date and the
proposed amount of such payment and certifying to the Senior Creditor that no
Senior Default has occurred and is continuing and no Senior Default will occur
as a result of the Borrower making such payment on such Subordinated Debt
Payment Date.  Notwithstanding the foregoing, if the Senior Creditor
delivers notice to the Borrower on any day at any time prior to the making of
such payment on such Subordinated Debt Payment Date that a Senior Default has
occurred and is continuing or that in its determination a Senior Default will
occur as a result of the making of such payment on such Subordinated Debt
Payment Date (any such notice, a "Senior Default
Notice"), then such payment shall be prohibited by this Section 2, the
Borrower shall not make and the Subordinated Creditor shall not collect, receive
or accept such payment, and the Subordinated Creditor shall not take or commence
any Enforcement Action (defined below) of any kind on or with respect to such
payment, any other Subordinated Debt or any Subordinated Loan Document, at any
time and for any reason until the earlier to occur of (i) the date on which no
Senior Default of any kind exists, as determined by the Senior Creditor and
notified to the Subordinated Creditor, and (ii) with respect to any Permitted
Enforcement Action (defined below) during the existence of a Senior Default, the
date immediately following the last day of the Standstill Period (defined
below).  [The Senior Creditor shall not deliver more than two (2)
Senior Default Notices in any consecutive twelve month period after the third
anniversary of the date of this Agreement.  If the Senior Creditor
does not deliver a Senior Default Notice to the Borrower on or prior to such
Subordinated Debt Payment Date, the Borrower may pay and the Subordinated
Creditor may receive the payment on the Subordinated Debt on the Subordinated
Debt Payment Date.]


3


Section
3.     Insolvency
Proceedings.  Without limiting any other term or provision of
this Agreement, during any Insolvency Proceeding:




(a)           the
Senior Creditor shall first be entitled to receive the indefeasible payment and
performance in full of all of the Senior Debt and the Senior Loan Documents
shall be satisfied and terminated before the Subordinated Creditor is entitled
to receive any payment from the Borrower of principal or interest, whether in
equity interests, cash, property or securities to which the Subordinated
Creditor would, in the absence of this agreement be entitled, on the
Subordinated Note or any other payment directly or indirectly arising from, out
of or in connection with any of the Subordinated Debt or the Subordinated Loan
Documents.




(b)           The
Senior Creditor is hereby irrevocably authorized and empowered by the
Subordinated Creditor (in its own name or in the name of the Subordinated
Creditor or otherwise), but shall have no obligation, to (i) file proofs of
claim and to vote claims pertaining to the Subordinated Debt in any Insolvency
Proceeding if the Subordinated Creditor fails to so file such proof of claim or
vote such claim and to take such actions as it may deem necessary or advisable
for the enforcement of the provisions of this Agreement, and (ii) demand, sue
for, collect and receive every payment or distribution on account of the
Subordinated Debt payable or deliverable in connection with such Insolvency
Proceeding to be applied toward the payment in full of the Senior Debt; provided that the
Senior Creditor shall have no obligation to execute, verify, deliver or file any
such proof of claim, to vote such claim or to demand, or to sue or collect such
payments.  In the event that the Senior Creditor votes any claim
pursuant to the authority granted hereby, the Subordinated Creditor shall not
change or withdraw such vote.




(c)           The
Subordinated Creditor shall, if and when requested by the Senior Creditor,
execute and deliver such powers of attorney, assignments or proofs of claim or
other instruments as the Senior Creditor may reasonably request to enable the
Senior Creditor or the Subordinated Creditor to enforce any and all claims in
respect of the Subordinated Debt and to collect and receive any and all payments
and distributions which may be payable or deliverable at any time upon or in
respect of any of the Subordinated Debt.




Section
4.     Turnover of Prohibited
Transfers.




(a)           If
any payment or distribution, whether in connection with any Insolvency
Proceeding or otherwise, of any kind or character, and whether in cash, equity
interests, securities or other properties, and whether through the exercise of
any set-off or otherwise, shall be (i) collected, accepted or received (actually
or constructively) by the Subordinated Creditor in violation of any of the terms
of this Agreement, such payment or distribution shall be deemed to be received
by the Subordinated Creditor in trust for the benefit of, and shall then
promptly be paid or delivered and transferred to, the Senior Creditor to be
applied against the Senior Debt, or (ii) proposed to be made by a liquidating
trustee, agent or other Person pursuant to any order or decree made by any court
of competent jurisdiction in which any Insolvency Proceeding is pending, such
payment or distribution shall be paid by such liquidating trustee, agent or
other Person directly to the Senior Creditor to be applied against the Senior
Debt, and if, notwithstanding the foregoing, any such payment or distribution is
made to or received by the Subordinated Creditor, the Subordinated Creditor
shall immediately transfer and turn over any such payment or distribution to the
Senior Creditor to be applied against the Senior Debt.


4


(b)           In
connection with any payment or distribution of cash, equity interests,
securities or other properties of the Borrower in any Insolvency Proceeding, the
Subordinated Creditor shall be entitled to rely upon any order or decree made by
any court of competent jurisdiction in which such Insolvency Proceeding is
pending, or a certificate of the liquidating trustee, agent or other Person
making such payment or distribution, delivered to the Subordinated Creditor, for
the purpose of ascertaining the Person(s) entitled to receive payment from the
Subordinated Creditor pursuant to the foregoing provisions of this Section 4, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all of the facts pertinent thereto or to this Agreement.




Section
5.     Representations, Warranties,
and Covenants of Borrower.  The Borrower hereby represents and
warrants to, and covenants and agrees with, the Senior Creditor on the date
hereof and at all times hereafter until the earlier to occur of (i) the
indefeasible payment and performance in full of all of the Senior Debt and the
termination of all of the Senior Loan Documents or (ii) the date of termination
of this Agreement pursuant to Section 32 hereof
(the "Termination
Date"), that:




(a)           the
Borrower has not relied on and will not rely on any representation or
information of any nature made by or received from the Senior Creditor relative
to the Borrower or the Senior Debt in entering into and performing its
obligations under this Agreement and any Subordinated Loan
Document;




(b)           no
consent or authorization of, filing with, or other act by or in respect of, any
Governmental Authority or any other Person is or will be required on the part of
or with respect to the Borrower in connection with the execution, delivery,
performance, validity or enforceability of this Agreement;




(c)           the
Borrower has no knowledge of, and has not authorized or consented to, any sale,
assignment or transfer by the Subordinated Creditor of any of the Subordinated
Debt or any Subordinated Loan Document, or any right, title or interest therein,
to any other Person in violation of this Agreement;




(d)           attached
hereto as Exhibits
A, B and
C are true,
correct and complete executed copies of the Subordinated Note, the Purchase
Agreement and the Letter Agreements, and none of the Subordinated Note, the
Purchase Agreement nor the Letter Agreements have been amended, restated,
replaced or modified as of the date hereof;




(e)           the
Borrower has not made, and the Subordinated Creditor has not collected, accepted
or received, any payment or distribution of any kind on, in satisfaction of or
with respect to any of the Subordinated Debt at any time prior to the
Subordinated Loan Maturity Date or otherwise in violation of this
Agreement;


5


(f)           as
of the date hereof, no default, event of default, or other similar event or
circumstance has occurred and is continuing under any Subordinated Loan
Document; and




(g)          except
to the extent expressly permitted under the Senior Credit Agreement, (i) the
Borrower shall not enter into any other agreements, instruments or documents
that cause the Borrower to make, incur, assume, or otherwise become liable for
any other Subordinated Debt (except to the extent otherwise expressly permitted
under this Agreement) that evidence, govern, document, or otherwise relate to
any Subordinated Debt, and (ii) the original principal amount specified in such
Subordinated Note, together with any accrued and unpaid interest thereon and all
other liabilities, obligations, indemnities, costs, fees, and expenses of any
kind incurred at any time and from time to time by the Borrower to the
Subordinated Creditor under the Subordinated Loan Documents as in effect on the
date hereof, shall comprise and represent all of the Subordinated Debt of any
kind now or hereafter owing by the Borrower to the Subordinated
Creditor.




Section
6.     Representations, Warranties
and Covenants of Subordinated Creditor.  The Subordinated
Creditor hereby represents and warrants to, and covenants and agrees with, the
Senior Creditor on the date hereof and at all times hereafter until the earlier
to occur of (i) the indefeasible payment and performance in full of all of the
Senior Debt and the termination of all of the Senior Loan Documents or (ii) the
Termination Date, that:




(a)           the
Subordinated Note and each other Subordinated Loan Document:




(i)           has
been issued to and executed by the Subordinated Creditor for good and valuable
consideration;




(ii)          is
owned by the Subordinated Creditor free and clear of any security interests,
liens, charges or encumbrances whatsoever arising from, through or in connection
with the Subordinated Creditor (other than the interest of the Senior Creditor
under this Agreement);




(iii)         is
payable solely and exclusively to the Subordinated Creditor and to no other
Person and is payable without deduction for any defense, offset or counterclaim;
and




(iv)         constitute
the only agreements, instruments and documents evidencing the Subordinated
Debt.




(b)          the
Subordinated Debt (i) is and shall be and remain unsecured at all times and (ii)
is not an shall not be supported by any lien or security interest in any assets
or properties of the Borrower or any guarantee, letter of credit or other credit
enhancement provided by or on behalf of the Borrower or any of its
Subsidiaries;




(c)          the
Subordinated Creditor has the capacity and the legal right to execute and
deliver and to perform his obligations under this Agreement;




(d)          no
consent or authorization of, filing with, or other act by or in respect of, any
Governmental Authority or any other Person is or will be required on the part of
or with respect to the Subordinated Creditor in connection with the execution,
delivery, performance, validity or enforceability of this
Agreement;


6


(e)          this
Agreement constitutes a legal, valid and binding obligation of the Subordinated
Creditor, and is enforceable against the Subordinated Creditor in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and by general equitable principles (whether enforcement is
sought by proceedings in equity or at law);




(f)           the
Subordinated Creditor has received, reviewed, been advised of, understands and
obtained legal and financial counsel regarding this Agreement and, in connection
with such understanding and in consideration of same, has voluntarily elected to
enter into this Agreement and to receive, as partial consideration for the
Specified EFA Interests, the Subordinated Note;




(g)          the
execution, delivery and performance of this Agreement will not violate any
provision of any requirement of law affecting or any contractual obligation of
the Subordinated Creditor or any of his affiliates or related parties and will
not result in the creation or imposition of any lien on any of the properties or
revenues of the Subordinated Creditor pursuant to any requirement of law
affecting, or any contractual obligation of, the Subordinated
Creditor;




(h)          the
Subordinated Creditor has not relied on and will not rely on any representation,
statement or other information of any kind or nature made by or received from
the Senior Creditor in entering into and performing his obligations under this
Agreement and any Subordinated Loan Document;




(i)           the
Subordinated Creditor is on the date hereof the sole lawful and beneficial owner
of all of the Subordinated Debt;




(j)           the
Subordinated Creditor has not sold, assigned or transferred and will not sell,
assign or transfer any right, title or interest in any of the Subordinated Debt
or any Subordinated Loan Document to any other Person, except to the extent
expressly permitted under this Agreement;




(k)          as
of the date hereof, no default, event of default, or other similar event or
circumstance has occurred and is continuing under any Subordinated Loan
Document;




(l)           the
Borrower has not made, and the Subordinated Creditor has not collected, accepted
or received, any payment or distribution of any kind on, in satisfaction of or
with respect to any of the Subordinated Debt at any time prior to the
Subordinated Loan Maturity Date or otherwise in violation of this
Agreement;




(m)         attached
hereto as Exhibits A, B, and C are true, correct
and complete executed copies of the Subordinated Note, the Purchase Agreement,
and the Letter Agreements, and none of the Subordinated Note, the Purchase
Agreement, nor the Letter Agreements have been amended, restated, replaced or
modified as of the date hereof;


7


(n)          except
to the extent expressly permitted under the Senior Credit Agreement, (i) the
Subordinated Note, the Purchase Agreement and the Letter Agreements are and
shall be the only Subordinated Loan Documents (other than this Agreement) that
evidence, govern, document, or otherwise relate to any Subordinated Debt, and
(ii) the original principal amount specified in the Subordinated Note, together
with any accrued and unpaid interest thereon and all other liabilities,
obligations, indemnities, costs, fees and expenses of any kind incurred at any
time and from time to time by the Borrower to the Subordinated Creditor under
the Subordinated Loan Documents as in effect on the date hereof, shall comprise
and represent all Subordinated Debt of any kind now or hereafter owing by the
Borrower to the Subordinated Creditor; and




(o)          the
Subordinated Creditor (i) has received, reviewed and analyzed the Subordinated
Note, the Letter Agreements and this Agreement and all of the terms and
provisions hereof and thereof prior to the date hereof, and (ii) is capable of
assessing and has assessed the merits and risks represented by the Subordinated
Note, the Letter Agreements and this Agreement and has voluntarily elected to
enter into the Subordinated Note, the Letter Agreements and this
Agreement.




Section
7.     Waivers and Consents of
Subordinated Creditor.




(a)          The
Subordinated Creditor hereby acknowledges, consents, covenants and agrees that
the payment and performance by the Borrower of any of the Senior Debt will not
cause or constitute a Subordinated Default (defined below) and, without the
necessity of any reservation of any rights or remedies by the Senior Creditor
against the Subordinated Creditor or any other Person, and without any notice to
or any further assent by the Subordinated Creditor, until the earlier to occur
of (i) the indefeasible payment and performance in full of the Senior Debt and
the termination of the Senior Loan Documents or (ii) the Termination
Date:




(i)           any
demand for payment of any Senior Debt made by the Senior Creditor may be
rescinded in whole or in part by the Senior Creditor for a period of up to six
(6) months following the maturity date for the Senior Loan specified in the
Senior Credit Agreement on the date hereof (the "Senior Maturity
Date"), and any Senior Debt may be continued, and any of the Senior Debt,
or the liability of the Borrower or the Subordinated Creditor or any other
Person upon or for any part thereof, or any Collateral or guarantee therefor or
right of offset with respect thereto, or any obligation or liability of the
Borrower or any other Person under any Senior Loan Document, may, from time to
time, in whole or in part, be renewed, extended, modified, accelerated,
compromised, waived, surrendered, or released by the Senior Creditor for a
period of up to six (6) months following the Senior Maturity Date;
and




(ii)           any
of the Senior Debt and any Senior Loan Document may be amended, restated,
renewed, restructured, refinanced, replaced, extended, modified, supplemented or
terminated, in whole or in part, as the Senior Creditor may deem advisable at
any time and from time to time in its sole discretion, any Collateral securing
the payment of any of the Senior Debt may be sold, exchanged, waived,
surrendered or released, in accordance with the terms of the Senior Loan
Documents, and the Senior Creditor may exercise (or refrain from exercising) any
of its rights and remedies with respect to any of the Senior Debt, any Senior
Loan Document, applicable law, or otherwise, in each case all without notice to
or further assent by the Subordinated Creditor, which will remain bound under
this Agreement, and all without impairing, abridging, releasing or otherwise
affecting in any way the subordination provided for in this
Agreement.


8


(b)           The
Subordinated Creditor hereby irrevocably and unconditionally waives any and all
notice of the creation, renewal, restatement, restructuring, replacement,
refinancing, extension or accrual of any of the Senior Debt and notice of or
proof of reliance by the Senior Creditor upon this Agreement.  The
Senior Debt shall be deemed conclusively to have been created, contracted,
continued and incurred in reliance upon this Agreement, and all dealings between
the Borrower and the Senior Creditor shall be deemed to have been consummated in
reliance upon this Agreement.  The Subordinated Creditor hereby
further irrevocably and unconditionally waives protest, demand for payment,
notice of default, and any other notice of any kind whatsoever relating to any
of the Senior Debt or any Senior Loan Document.




(c)           To
the maximum extent permitted by law, the Subordinated Creditor hereby
irrevocably and unconditionally waives any claim of any kind or character which
it now has or may at any time hereafter have against the Senior Creditor with
respect to, or arising out of, any action or omission or any error of judgment,
negligence, or mistake or oversight whatsoever on the part of the Senior
Creditor or any of its respective directors, officers, employees, attorneys or
agents with respect to any of the Senior Debt, the Collateral, any exercise (or
failure to exercise) of rights or remedies under the Senior Loan Documents or
any transaction relating to the Borrower or any of the Collateral, except to the
extent such claim arises from the gross negligence or willful misconduct of the
Senior Creditor and, without limiting the generality of the foregoing, none of
the Senior Creditor nor any of its respective directors, officers, employees,
attorneys or agents shall be (i) liable for failure to demand, collect or
realize upon any of the Senior Debt or the Collateral or for any forbearance or
delay in doing so, (ii) under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Borrower or the Subordinated Creditor or any
other Person or (iii) required to take any other action whatsoever with regard
to any of the Senior Debt or the Collateral, except to the extent such claim
arises from the gross negligence or willful misconduct of the Senior
Creditor.




Section
8.     Senior Debt
Unconditional.  All rights and interests of the Senior Creditor
hereunder, and all agreements and obligations of the Subordinated Creditor and
the Borrower hereunder, shall be absolute, irrevocable and unconditional and
shall remain in full force and effect irrespective of:




(a)           any
lack of validity, enforceability, perfection or priority of any Senior Debt or
any Senior Loan Document;




(b)           any
change in the time, amount, manner or place of payment of, or in any other term
of, all or any of the Senior Debt, or any amendment or waiver or other
modification, whether by course of conduct or otherwise, of any Senior Loan
Document;




(c)           any
exchange, release or nonperfection of any security interest in any Collateral,
or any release, amendment, waiver or other modification, pursuant to the terms
of the Guarantee and Security Agreement or any of the other Senior Loan
Documents, of all or any of the Senior Debt or any guarantees thereof or any
Senior Loan Document; or


9


(d)           any
other event or circumstance which otherwise might constitute a defense,
counterclaim or other right or remedy available to, or a discharge of, the
Borrower or any other Loan Party in respect of any of the Senior Debt or any
Senior Loan Document, or of the Subordinated Creditor or the Borrower in respect
of this Agreement.




Section
9.     Subordinated Note
Legend.  The Subordinated Creditor and the Borrower further
covenant and agree with the Senior Creditor that the Subordinated Note shall
contain the following language (or a statement substantially similar to the
following language) on the face thereof set forth conspicuously and in capital
letters:




NOTWITHSTANDING
ANY TERM OR PROVISION SET FORTH IN THIS INSTRUMENT, THE RIGHTS AND OBLIGATIONS
EVIDENCED BY THIS INSTRUMENT ARE SUBORDINATED IN THE MANNER AND TO THE EXTENT
SET FORTH A CERTAIN SUBORDINATION AGREEMENT TO WHICH THE MAKER OF THIS
INSTRUMENT IS A PARTY AND WHICH PROHIBITS CERTAIN TRANSFERS, SALES OR
ASSIGNMENTS OF THIS INSTRUMENT.  ANY SUCH TRANSFER, SALE OR ASSIGNMENT
OF THIS INSTRUMENT SHALL BE NULL AND VOID.




NOTWITHSTANDING
THE FOREGOING, ANY ASSIGNEE OR HOLDER OF THIS INSTRUMENT THAT TAKES THIS
INSTRUMENT SUBJECT TO THE TRANSFER, SALE OR ASSIGNMENT OF SAME IS BOUND BY AND
SUBJECT IN ALL RESPECTS AND FOR ALL PURPOSES TO THE TERMS AND PROVISIONS OF THE
SUBORDINATION AGREEMENT AS IF SUCH ASSIGNEE OR HOLDER WERE A PARTY TO SUCH
SUBORDINATION AGREEMENT.




Section
10.     Negative Covenants of
Subordinated Creditor.  The Subordinated Creditor hereby
covenants and agrees that it shall not, without the prior written consent of the
Senior Creditor, until the earlier to occur of (i) the indefeasible payment and
performance in full of the Senior Debt and the termination of all of the Senior
Loan Documents or (ii) the Termination Date:




(a)           sell,
assign, or transfer, directly or indirectly, in whole or in part, any of the
Subordinated Debt or any Subordinated Loan Document or any right, title or
interest therein (each, a "Subordinated
Interest") to any other Person (a "Transferee"), other
than any family member of the Subordinated Creditor or any trust created by or
on behalf of the Subordinated Creditor for estate planning or tax purposes
(each, a "Permitted
Transferee"), provided that (x) any
such Permitted Transferee shall contemporaneously with any such sale, assignment
or transfer execute a counterpart to this Agreement and thereupon become a
"Subordinated Creditor" under this Agreement in all respects and for all
purposes to the extent of the Subordinated Interest and (y) any sale, assignment
or transfer of any Subordinated Interest that is made or consummated in
violation of this Section 10(a) shall
be null and void in all respects);




(b)           permit
any Subordinated Loan Document to be directly or indirectly amended, restated,
modified, restructured, renewed, replaced or otherwise supplemented, if and to
the extent such amendment, restatement, modification, restructuring, renewal or
replacement would in any manner:


10


(i)           increase
the then outstanding amount of any of the Subordinated Debt;




(ii)          increase
the interest rate on or any of the yield provisions applicable to any of the
Subordinated Debt;




(iii)         change
or supplement any of the terms or provisions of any of the representations and
warranties, covenants, indemnities, cost and expense reimbursement provisions,
defaults or events of default thereunder in any manner that makes them more
restrictive or burdensome on the Borrower;




(iv)         increase
materially any of the other obligations or liabilities of the Borrower
thereunder;




(v)          change
to an earlier date any date on which any payment of principal, interest or other
amount of any Subordinated Debt is required to be made; or




(vi)         otherwise
be materially adverse to the rights and interests of the Senior Creditor;
or




(c)           contest,
challenge, disrupt, interfere with or otherwise impair, or support any other
Person in contesting, challenging, disrupting, interfering with or otherwise
impairing, in each case in any claim, action or proceeding (including, without
limitation, any Insolvency Proceeding), (i) any of the Senior Debt, the
validity, enforceability, perfection or priority of any Senior Loan Document or
any Liens or guarantees created thereunder, (ii) any right, title or interest of
the Senior Creditor in, to, or under any of the Collateral, or any claim, right,
remedy, motion, objection, or proceeding relating to or in respect of the
Borrower any modification or relief from automatic stay, adequate protection,
cash Collateral or post-petition interest, fees or expenses, under 11 U.S.C. §§
361, 362, 363 or 364, or any other provision of the Bankruptcy Code, applicable
law, or otherwise, or (iii) any other claim, right, remedy, power or privilege
asserted, exercised, enforced or pursued by the Senior Creditor at any time and
from time to time in respect of any of the Senior Debt or under or in connection
with the Borrower or any Insolvency Proceeding of or involving the Borrower or
any Senior Loan Document.




Section
11.     Enforcement
Actions.




(a)           Notwithstanding
any term or provision in any Subordinated Loan Document, the Subordinated
Creditor shall not, at any time and for any reason, unless and until all of the
Senior Debt shall have been indefeasibly paid and performed in full, and only
except to the extent expressly permitted in this Section 11(b), (i)
accelerate the scheduled maturity of or otherwise declare to be due and payable
any of the Subordinated Debt prior to the Subordinated Debt Maturity Date, (ii)
commence or join with any other creditor in commencing an Insolvency Proceeding
against the Borrower, or (iii) continue or take any other Enforcement Action or
other action to collect or receive, or enforce any right or remedy to collect or
receive, any payment or distribution of, on, in satisfaction of or on account of
any of the Subordinated Debt, including, without limitation, the exercise of any
right or remedy available to the Subordinated Creditor under any Subordinated
Loan Document, applicable law or otherwise, if and for so long as any Senior
Default has occurred and is continuing or if a Senior Default would in the
determination of the Senior Creditor result from the taking of any such
Enforcement Action.


11


(b)           Notwithstanding
Section
11(a) above, if an Event of Default (as defined in the Subordinated
Note) occurs and is continuing at any time as a result of any failure on the
part of the Borrower to make any payment when due on the Subordinated Debt to
the Subordinated Creditor or for any other reason (each, a "Subordinated
Default"), the Subordinated Creditor shall promptly provide written
notice of such Subordinated Default to the Senior Creditor (which notice shall
describe such Subordinated Default in reasonable detail) (each, a "Subordinated Default
Notice") and shall take no Enforcement Action or any other action in
respect of the payment or collection of any Senior Debt or with respect to any
Subordinated Loan Document until the occurrence of the date which is 180 days
after the later to occur of the date of (i) delivery by the Senior Lender to the
Subordinated Creditor of the most recent Senior Default Notice identifying any
Senior Default or (ii) delivery by the Subordinated Creditor to the Senior
Creditor of such Subordinated Default Notice (such 180-day period, the "Standstill Period")
make a written demand to the Borrower for payment of that portion of the
Subordinated Debt which is then due and payable (any such written demand, a
"Permitted Enforcement
Action"); and provided further that any such
Standstill Period (x) shall be tolled during any Insolvency Proceeding involving
the Borrower of which the Subordinated Creditor has received notice and (y)
shall be tolled for a period not to exceed 180 days during which no Insolvency
Proceeding involving the Borrower exists but due to other circumstances the
Senior Creditor reasonably believes that it is prevented by applicable law
(including, for the avoidance of doubt, judicial ruling) from exercising its
enforcement rights and remedies against all or any part of the Collateral, provided that in the
case of this clause (y) the Senior Creditor is diligently attempting in good
faith to obtain relief from such applicable law and is not so prevented by
applicable law because of action taken by the Senior Creditor in violation of
applicable law and provided that the Subordinated Creditor has received notice
of such circumstances from the Senior Creditor.




(c)           Notwithstanding
the foregoing, the Subordinated Creditor may receive and retain payments on the
Subordinated Debt as and to the extent expressly permitted under Section 2 of this
Agreement and may file a proof of claim in any Insolvency Proceeding instituted
by another Person and may vote such claim in any manner which is permitted
hereunder and is not inconsistent with the terms hereof.




(d)           If
the Subordinated Creditor takes or attempts to take any such action which the
Senior Creditor determines is in violation of or inconsistent with the terms of
this Agreement, the Senior Creditor may at any time and from time to time in its
sole discretion, in accordance with and pursuant to the terms hereof, object to,
interfere with, impose upon and take any action to prevent such action, either
in its own name, in the name of the Borrower or any other Loan Party or
otherwise.




Section
12.     Reinstatement.  The
provisions of this Agreement shall continue to be effective or be reinstated, as
the case may be, if at any time any payment in respect of the Senior Debt is
rescinded, avoided or must otherwise be returned by the Senior Creditor thereof
upon the filing by or against the Borrower or Subordinated Creditor of any
Insolvency Proceeding or otherwise, all as if such payment had never been
made.




Section
13.     Provisions Applicable After
Insolvency Proceeding.  The provisions of this Agreement shall
continue in full force and effect notwithstanding the occurrence of any event or
proceeding contemplated under the definition of "Insolvency
Proceeding".


12


Section
14.     Permitted Equity
Conversion.  Notwithstanding any other term or provision to the
contrary in this Agreement, the Subordinated Creditor and the Borrower may at
any time upon ten (10) business days' prior written notice to the Senior
Creditor, effect and consummate a Permitted Equity Conversion, provided that the
consummation of any such Permitted Equity Conversion would not in the
determination of the Senior Creditor give rise to a Default or an Event of
Default or violate or otherwise conflict with any term or provision contained in
the Senior Credit Agreement or any other Senior Loan Document.




Section
15.     Validity of Senior Debt and
Senior Loan Documents.  Each of the Borrower and Subordinated
Creditor acknowledges and agrees that (a) the Borrower is or will be indebted to
the Senior Creditor for all of the Senior Debt, without any right of rescission,
cross complaint, claim, demand, defense, counterclaim or offset of any kind or
nature whatsoever that can be asserted to reduce or eliminate all or any part of
the Senior Debt, and (b) neither the Borrower nor the Subordinated Creditor has
as of the date hereof any claim, right or cause of action of any kind or nature
against Senior Creditor as a result of or in connection with the Senior Debt,
and any of the Senior Loan Documents, or the transactions contemplated hereby or
thereby.




Section
16.     Interpretation.  If
any term or provision of this Agreement requires judicial or other
interpretation, the Parties hereby agree that any court or any other Person
interpreting or construing the same shall not apply a presumption that the terms
hereof shall be more strictly construed against any Party by reason of the rule
of construction that a document is to be construed more strictly against the
Party who itself or through its agent prepared the same.




Section
17.     Expenses;
Indemnification.




(a)           The
Borrower shall pay and reimburse to the Senior Creditor, upon demand any and all
fees, costs and expenses (including, without limitation, all attorneys' fees and
disbursements) paid or incurred by the Senior Creditor from time to time, as a
result of, or in connection with the preparation, negotiation, execution,
delivery, performance, amendment, waiver, collection or enforcement of this
Agreement.




(b)           The
Borrower shall indemnify and hold the Senior Creditor and each of its respective
partners, members, shareholders, officers, managers, directors, employees,
attorneys, agents and other representatives (each an "Indemnitee") harmless
from and against any and all claims, losses, damages, actions, causes of action,
liabilities, obligations, costs and expenses, suits and proceedings (including,
without limitation, reasonable attorneys' fees and disbursements) of any kind or
nature whatsoever, threatened or brought against or incurred by the Senior
Creditor, in any manner and for any reason, directly or indirectly arising from,
out of, as a result of, relating to or in connection with this Agreement; provided, however, that the
Borrower shall not be obligated to indemnify any Indemnitee for any acts or
omissions of the Senior Creditor in connection with matters described in this
Section 17
arising directly from the gross negligence or willful misconduct of the Senior
Creditor, as determined by a court of competent jurisdiction in a final,
non-appealable judgment.  WITHOUT LIMITING ANY PROVISION OF THIS
AGREEMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH
INDEMNITEE SHALL BE INDEMNIFIED AND HELD HARMLESS FROM AND AGAINST ANY AND ALL
CLAIMS, DAMAGES, LOSSES, ACTIONS, CAUSES OF ACTION, LIABILITIES, PENALTIES,
SUITS, PROCEEDINGS, JUDGMENTS, DISBURSEMENTS, COSTS AND EXPENSES (INCLUDING,
WITHOUT LIMITATION, FEES AND EXPENSES OF COUNSEL) ARISING OUT OF OR CAUSED IN
WHOLE OR PART BY THE ORDINARY NEGLIGENCE OF ANY SUCH INDEMNITEE.  THE
AGREEMENTS IN THIS SECTION 17 SHALL
SURVIVE REPAYMENT OF THE SENIOR DEBT.


13


(c)           All
obligations and liabilities of the Borrower under this Section 17 shall
survive the termination of the Senior Loan Documents, and shall be in addition
to and shall supplement the obligations and liabilities of the Borrower and each
other Loan Party under any of the Senior Loan Documents.




Section
18.     Term.  This
Agreement shall become effective when executed by each of Borrower, Subordinated
Creditor, and Senior Creditor, and, when so accepted, shall constitute a
continuing agreement, and shall remain in effect until the earlier to occur of
(i) the indefeasible payment and performance in full of all of the Senior Debt
and the termination of all of the Senior Loan Documents or (ii) the termination
of this Agreement pursuant to the payment and performance in full of all of the
Subordinated Debt in accordance with the terms hereof.




Section
19.     Further
Assurances.  Each of the Borrower and the Subordinated
Creditor, at its own respective cost and expense and at any time and from time
to time, shall promptly and duly execute and deliver any further agreements,
documents and instruments and to take such other actions as may be reasonably
requested, directed or instructed by Senior Creditor to effect the purpose of
obtaining or preserving the full benefits of this Agreement and the rights and
powers granted herein, all as and when requested, directed or instructed by the
Senior Creditor.




Section
20.     Powers Coupled with an
Interest.  All powers, authorizations and agencies contained in
this Agreement are coupled with an interest and are irrevocable until the Senior
Debt is indefeasibly paid and performed in full and all of the Senior Loan
Documents are terminated.




Section
21.     Notices.  All
notices, requests and other communications hereunder shall be in writing
(including facsimile transmission or similar writing) and shall be given to the
relevant Party at its address provided on the signature page hereto, or as to
each such party at such other address as such party shall designate in a written
notice to the other parties.  Each such notice, request or other
communication shall be effective (a) on the earlier of the date of receipt or
the date three (3) Business Days after deposit of such notice in the United
States mail, if sent postage prepaid, certified mail, return receipt requested
or (b) when actually received, if personally delivered.




Section
22.     No Duties of Senior
Creditor.  The rights and remedies of the Senior Creditor under
this Agreement are solely for its protection and nothing herein contained shall
create or impose on the Senior Creditor any duties of any kind with respect to
any property either of the Borrower or of the Subordinated Creditor heretofore
or hereafter received by the Senior Creditor.


14


Section
23.     Entire
Agreement.  This Agreement constitutes and expresses the entire
understanding between the Parties with respect to the subject matter hereof, and
supersedes all prior agreements and understandings, inducements or conditions,
whether express or implied, oral or written.




Section
24.     Loan
Document.  This Agreement shall constitute a Loan Document (as
defined in the Senior Credit Agreement) in all respects and for all
purposes.




Section
25.     Amendments.  Neither
this Agreement nor any portion or provision hereof may be amended, modified,
supplemented or waived in any manner other than by an agreement in writing
signed by the all of the Parties.




Section
26.     Governing
Law; Consent to Jurisdiction.




(a)           THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
TEXAS.




(b)           EACH OF THE BORROWER AND THE
SUBORDINATED CREDITOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF TEXAS
SITTING IN HARRIS COUNTY, TEXAS AND OF THE UNITED STATES DISTRICT COURT OF THE
SOUTHERN DISTRICT OF TEXAS AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
SENIOR LOAN DOCUMENT OR SUBORDINATED LOAN DOCUMENT, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH TEXAS STATE COURT OR, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL
COURT.




(c)           EACH OF THE PARTIES HERETO AGREES
THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER
SENIOR LOAN DOCUMENT OR SUBORDINATED LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT
THE SENIOR CREDITOR MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER SENIOR LOAN DOCUMENT OR SUBORDINATED
LOAN DOCUMENT AGAINST THE BORROWER OR THE SUBORDINATED CREDITOR OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.


15


(d)           EACH OF THE BORROWER AND THE
SUBORDINATED CREDITOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER SENIOR LOAN DOCUMENT IN ANY COURT
REFERRED TO IN PARAGRAPH (b) OF THISSECTION
26.  EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT.




Section
27.     Successors and
Assigns.  This Agreement shall be binding upon and inure to the
benefit of the Subordinated Creditor and the Borrower and each of their
respective successors and permitted assigns, and inure to the benefit of the
Senior Creditor and its successors and assigns; provided that (a)
neither the Borrower nor the Subordinated Creditor may assign or transfer any of
its rights, interest or obligations under this Agreement or any interest herein
or delegate any of its or his obligations or duties hereunder to any other
Person (except by the Subordinated Creditor to a Permitted Transferee in
accordance with Section 10(a) of this
Agreement) without the prior written consent of the Senior Creditor and (b) the
Senior Creditor may assign any of its rights and interests under this Agreement
to any other Person in its sole discretion.




Section
28.     Severability.  The
provisions of this Agreement are independent of and separable from each
other.  If any provision hereof shall for any reason be held invalid
or unenforceable, it is the intent of the parties that such invalidity or
unenforceability shall not affect the validity or enforceability of any other
provision hereof, and that this Agreement shall be construed as if such invalid
or unenforceable provision had never been contained herein.




Section
29.     Execution in
Counterparts.  This Agreement may be executed by different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.  Delivery of an executed counterpart of this
Agreement by telecopier or in PDF format via electronic mail shall be effective
as delivery of an original counterpart of this Agreement.




Section
30.     No Waiver; Cumulative
Remedies; Enforcement.  Except as expressly set forth herein,
no failure to exercise and no delay in exercising, on the part of the Senior
Creditor, any right, remedy, power or privilege hereunder or under the other
Senior Loan Documents shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.  The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.




Section
31.     Independence of
Covenants.  All covenants and agreements hereunder and under
the Senior Loan Documents with respect to the Borrower shall be given
independent effect so that if a particular action or condition on the part of
the Borrower is not permitted by any of such covenants or agreements, the fact
that it would be permitted by an exception to, or would otherwise be within the
limitations of, another covenant or agreement, shall not avoid the occurrence of
a Senior Default or a violation of this Agreement (as applicable) if such action
is taken or such condition exists.


16


Section
32.     Termination.  This
Agreement shall terminate with respect to the Parties upon the delivery of
written notice by the Senior Creditor to each other Party of the termination of
this Agreement.




Section
33.     Definitions. In
addition to such other terms as are elsewhere defined herein, as used in this
Agreement the following terms shall have the following meanings:




"Bankruptcy Code"
means Title 11 of the United States Code, as in effect from time to
time.




"Collateral" has the
meaning specified in the Guarantee and Security Agreement.




"Enforcement Action"
means any action, claim or proceeding of any kind or character to (i) collect,
enforce payment of or preserve or protect or accelerate any of the Subordinated
Debt or (ii) exercise any other right or remedy (including commencing,
prosecuting, or participating in any private, judicial, or administrative
action) on or in respect of payment or collection of the Subordinated Debt, or
any Subordinated Loan Document, applicable law, or otherwise, in respect of any
of the Subordinated Debt.




"Governmental
Authority" means any government, any state or other political subdivision
thereof, any agency, authority, instrumentality, regulatory body, court, central
bank or other entity exercising executive, legislative, judicial, taxing,
regulatory or administrative functions of or pertaining to
government.




"Guarantee and Security
Agreement" means that certain Guarantee and Security Agreement, dated as
of May [__], 2009, among the Senior Creditor, the Borrower and the other
signatories thereto, as amended, restated, supplemented, renewed, replaced or
otherwise modified from time to time.




"Guarantor"  means
each Guarantor (as such term is defined in the Guarantee and Security
Agreement).




"Insolvency
Proceeding" means (i) the Borrower commencing any case, proceeding or
other action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship
or relief of debtors, seeking to have an order for relief entered with respect
to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its assets, or the
Borrower making a general assignment for the benefit of its creditors; or (ii)
there being commenced against the Borrower any case, proceeding or other action
of a nature referred to in clause (i) above which (A) results in the entry
of an order for relief or any such adjudication or appointment or
(B) remains undismissed, undischarged or unbonded for a period of 60 days;
or (iii) there being commenced against the Borrower any case, proceeding or
other action seeking issuance of a warrant of attachment, execution, distraint
or similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within 60 days from the
entry thereof; or (iv) the Borrower taking any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii) or (iii) above; or (v) the Borrower generally not
paying, or being unable to pay, or admitting in writing its inability to pay,
its debts as they become due.


17


"Loan Party" means the
Subordinated Creditor and each Guarantor.




"Permitted Equity
Conversion" means the conversion at any time and from time to time by the
Subordinated Creditor and the Borrower of all or any portion of the Subordinated
Debt into equity interests of the Borrower.




"Person" means any
individual, partnership, firm, corporation, association, joint venture, limited
liability company, trust or other entity, or any governmental
authority.




[Signatures on following
page]


18


IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first above written.





FREDERIC
      M. EDELMANBy:Name:ADDRESS:[__________]Attention:
      [___________]Telephone:
      [___________]SANDERS
      MORRIS HARRIS GROUP INC.By:Name:Title:ADDRESS:600
      Travis Street, Suite 5800Houston,
      Texas  77002Attention:
           Rick Berry, Chief Financial
      OfficerTelephone:
         (713) 993-4614PROSPERITY
      BANKBy:Name:Title:ADDRESS:777
      Walker Street, L140Houston,
      Texas  77002Attention: 
          Randall R. Reeves, President
                  Houston
      AreaTelephone:
      (713) 693-9251