Exhibit
      10.10

     

    CONTRIBUTION
      AGREEMENT

     

    This
      CONTRIBUTION AGREEMENT (this “Agreement”)
      is
      entered into as of April 28, 2003, by and between Salient Partners, L.P., a
      Texas limited partnership (“Salient
      Partners”),
      Salient Advisors, L.P., a Texas limited partnership (“Advisors”),
      Salient Capital, L.P., a Texas limited partnership (“Capital”),
      Salient Partners GP, LLC, a Texas limited liability company (the “General
      Partner”),
      John
      A. Blaisdell, Andrew B. Linbeck, J. Matthew Newtown, Jeremy L. Radcliffe, A
      Haag
      Sherman, and Adam L. Thomas, (each a “Principal”
and,
      collectively, the “Principals”),
      and
      Sanders Morris Harris Group, Inc., a Texas corporation (“SMHG”).

     

    RECITALS:

     

    A. Immediately
      prior to the closing of the transactions contemplated herein, the parties desire
      to form (i) a Delaware limited partnership under the name Salient Partners
      Acquisition, L.P. (or such similar name as may be available) (“Newco”),
      and
      (ii) a Delaware limited liability company under the name Salient Capital
      Management, LLC (or such similar name as may be available) (“Newco
      GP”);

     

    B. Salient
      Partners, being the sole limited partner of Advisors and Capital, desires to
      contribute to Newco all of its limited partner interests in Advisors and
      Capital, respectively, in consideration for (i) 50% of the Class A limited
      partner units of Newco, and (ii) certain cash consideration as set forth
      herein;

     

    C. The
      General Partner desires to contribute to Newco GP all of its general partner
      interests in each of Advisors and Capital in consideration for a 50% member
      interest in Newco GP;

     

    D. SMHG
      being the owner of all the capital stock of Pinnacle Management & Trust
      Company, a state trust company organized under Chapter 181 of the Texas Finance
      Code (“PMT”)
      desires to convert PMT from a trust association organized as a Texas corporation
      to a limited trust association organized as a Texas limited liability company
      (“New
      PMT”)
      and
      thereafter to contribute to Newco, subject to approval of the Texas Department
      of Banking (the “Department
      of Banking”)
      all of
      the member interests of New PMT and cash, in consideration for (i) 50% of the
      Class A limited partners units of Newco, (ii) the Class B limited partner units
      (as defined in Section
      3.4)
      of
      Newco, which shall have a liquidation preference equal to the members’ equity,
      of PMT as of the Closing Date (as determined in accordance with generally
      accepted accounting principles (“GAAP”)),
      but
      shall not participate in the net profits of Newco, and (iii) a 50% member
      interest in Newco GP;

     

    E. Each
      of
      Salient Partners and the General Partner and SMHG desires to grant to the other
      or its designee an option to purchase such party’s 50% limited partner interest
      in Newco and member interest in Newco GP on the terms and conditions set forth
      herein; and

     

    
      
        
        

      

      
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    F. Each
      of
      Advisors and Capital is governed by an Agreement of Limited Partnership dated
      as
      of March 15, 2002, as the same may be amended from time to time (collectively,
      the “Partnership
      Agreement”).

     

    NOW,
      THEREFORE, in consideration of the mutual covenants and agreements contained
      in
      this Agreement, and other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, the parties agree as follows:
      

    


    SECTION
      1. Contribution
      of Interests; Purchase Option. 

    


    1.1 SMHG
      and PMT.
      Subject
      to the terms and conditions of this Agreement, at the Closing: 

    


    (a) SMHG
      will
      form Newco and Newco GP and will contribute an amount equal to $1,485,000 in
      cash to Newco and $15,000 in cash to Newco GP, 

    


    (b) subject
      only to the approval of the Department of Banking, SMHG will convert PMT from
      a
      corporation to a limited liability company to form New PMT) and will contribute
      all of the member interest of New PMT to Newco, 

    


    (c) Newco
      will issue to SMHG 50% of the Class A limited partner units in Newco and all
      of
      the Class B limited partner units in Newco, and 

    


    (d) Newco
      GP
      will issue to SMHG a 50% member interest in Newco GP. 

    


    For
      the
      avoidance of doubt, the parties agree that, as among the parties, the
      contribution of New PMT to Newco shall be effective as of the Closing Date
      (as
      defined in Section
      2.1),
      notwithstanding that approval of the Department of Banking for the transfer
      of
      the member interests of New PMT to Newco shall occur at a later
      date.

    


    1.2
       Advisors
      and Capital LP Interests.
      Subject
      to the terms and conditions of this Agreement, at the Closing: 

    


    (a) Salient
      Partners will convey to Newco all right, title and interest in its limited
      partner interests in Advisors and Capital, which shall constitute a 99.0%
      Percentage Interest and Allocation Ratio (as such terms are defined in the
      Partnership Agreement) in each of Advisors and Capital, respectively (such
      limited partnership interests being referred to collectively herein as the
“LP
      Interests”), and 

    


    (b) Newco
      will pay over and deliver to Salient Partners $1,485,000 in cash and will issue
      to Salient Partners 50% of the Class A limited partner units of
      Newco.

    


    1.3 Advisors
      and Capital GP Interests.
      Subject
      to the terms and conditions of this Agreement, at the Closing: 

    


    (a) the
      General Partner will contribute to Newco GP all right, title and interest in
      its
      general partner interest in Advisors and Capital, which shall constitute a
      1%
      Percentage Interest and Allocation Ratio of each of Advisors and Capital, as
      such terms are defined in the Partnership Agreement, respectively, and


     

    
      
        
        

      

      
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    (b) Newco
      GP
      will pay over and deliver to the General Partner $15,000 in cash and shall
      issue
      to the General Partner a 50% member interest in Newco GP. 

    


    The
      general partner interests of each of Advisors and Capital so contributed are
      collectively referred to herein as the “GP Interests” and the GP Interests
      together with the LP Interests are collectively referred to herein as the
“Interests”
or
      the
“Transferred
      Interests.”
The
      Interests have the rights, preferences, powers, qualifications, limitations,
      and
      restrictions set forth in the Partnership Agreement of each of Advisors and
      Capital.

    


    1.4 Operation
      of Newco and Newco GP.
      Newco’s
      and Newco GP’s agreement of limited partnership and regulations, respectively,
      shall provide the following:

    


    (a) Management
      Committee Composition.
      Newco,
      through Newco GP, shall be governed by a management committee (the “Management
      Committee”), which shall be comprised of seven members. Three of the seven
      members shall be selected by Salient Partners and shall be the three Principals
      with the highest percentage ownership of Newco (initially, Messrs. Blaisdell,
      Linbeck. and Sherman), with such persons being referred to herein as the
“Salient
      Designees”).
      Three
      of the seven members shall be selected by SMHG (initially, George L. Ball,
      Robert E. Garrison II, and Ben T. Morris, with such persons being referred
      to
      herein as the “SMHG
      Designees”).
      The
      seventh member shall be mutually agreed by the Salient Partners Designees and
      the SMHG Designees (the “Independent Director”). The Independent Director shall
      serve a one-year term and shall be selected or re-elected (as the case may
      be)
      annually by a majority vote of the Management Committee. The Independent
      Director may be removed at any time by a majority vote of the SMHG Designees
      and
      Salient Partners Designees, at which time the SMHG Designees and Salient
      Partners Designees shall mutually agree to a new Independent Director. The
      Management Committee shall have the rights, powers and duties as set forth
      in
      Newco’s Limited Partnership Agreement and Newco GP’s Operating Agreement (as
      hereinafter defined).

    


    (b) Executive
      Committee.
      Newco,
      through Newco GP, shall be operated pursuant to the directives of an executive
      committee (the “Executive
      Committee”).
      The
      Executive Committee shall be comprised of not less than 3 members or more than
      5
      members. The initial Executive Committee shall be comprised of Messrs.
      Blaisdell, Linbeck, Radcliffe, and Sherman and Stephen D. Strake. The Executive
      Committee shall be selected from time to time by the Management Committee,
      but
      shall always include the Salient Designees and any Principal that is responsible
      for a line of business within Newco. Subject to the overall supervision and
      guidance of the Management Committee, the Executive Committee shall have all
      rights, duties and obligations to conduct the affairs of Newco not specifically
      delegated to the Management Committee. The Executive Committee will keep a
      written record of all material actions taken by it and of any and all formal
      meetings thereof and will report such actions to the Management Committee at
      the
      regular meeting of the Management Committee next following the meeting of the
      Executive Committee at which such action is taken.

     

    
      
        
        

      

      
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    1.5 Purchase
      Option.
      Within
      30 days following the occurrence of a Change in Control (as hereinafter
      defined), (a) SMHG, at its sole and absolute option (the “Purchase
      Option”),
      may
      purchase all remaining Class A limited partner interests of Newco and all
      remaining Class A member interests of Newco GP not then owned by it (the
“Option
      Interests”)
      from
      Salient Partners, the General Partner, or the Principals (the “Salient
      Parties”),
      and
      the Salient Parties shall be obligated to sell the Option Interest to SMHG,
      for
      the Option Purchase Price (as hereinafter defined) and (b) if SMHG does not
      exercise the Purchase Option, the Salient Parties, at their sole and absolute
      option (the “Put
      Option”),
      may
      sell the Option Interests to SMHG, and SMHG shall be obligated to purchase
      the
      Option Interests, for the Option Purchase Price.

    


    For
      purposes of this Section 1.6, a “Change
      in Control”
shall
      be deemed to have occurred if and when, with or without the approval of the
      board of directors of the SMHG incumbent prior to the occurrence, 

    


    (a) any
      “person” (as such term is defined in Section 13(d) and 14(d of the Securities
      Exchange Act of 1934 (the “Exchange
      Act”)),
      other than any person who currently is an employee of the SMHG, is or becomes
      the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
      directly or indirectly, of securities of the SMHG representing 51% or more
      of
      the combined voting power of SMHG’s then outstanding securities computed on a
      fully diluted basis, 

    


    (b) the
      stockholders of SMHG approve (i) a merger or consolidation of SMHG with any
      other corporation, other than a merger or consolidation that would result in
      the
      voting securities of SMHG outstanding immediately prior thereto continuing
      to
      represent (either by remaining outstanding or by being converted into voting
      securities of the surviving entity) at least 50.1% of the combined voting power
      of the voting securities of SMHG or such surviving entity outstanding
      immediately after such merger or consolidation or (ii) an agreement for the
      sale
      or disposition by SMHG of all or substantially all of the assets of SMHG, or
      

    


    (c) as
      the
      result of a tender offer, merger, consolidation, sale of assets, or contested
      election, or any combination of such transactions, the persons who were
      directors immediately before the transaction or whose election was approved
      by a
      majority of the persons who were directors immediately before the transaction
      shall cease to constitute a majority of the board of directors of SMHG or of
      any
      successor to SMHG.

    


    1.7 Loans.
      Subject
      to the terms and conditions of this Agreement, at the Closing, SMHG shall make
      a
      loan to Salient Partners in the amount of $250,000 (the “Loan”).
      The
      Loan shall be evidenced by a promissory note issued by Salient Partners (the
      “Notes”)
      that
      is due and payable one-year following the Closing Date (the “Maturity
      Date”),
      is
      secured by a pledge of Salient Partner’s 50% Class A limited partner units in
      Newco, and provides for the right of offset by SMHG for any amounts due and
      owing to it by Salient Partners on or before the Maturity Date and an interest
      rate at the lowest short-term applicable federal rate published by the Internal
      Revenue Service. 

     

    
      
        
        

      

      
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    SECTION
      2. Closings.

    


    2.1. Closing.
      The
      closing of the transactions contemplated hereby (the “Closing”)
      shall
      occur at 10:00 a.m. (Houston time) on a Business Day mutually agreeable to
      Salient Partners and SMHG that is not more than 10 Business Days after the
      date
      hereof (the “Closing
      Date”).
      In
      the event that Salient Partners and SMHG cannot agree on a Closing Date, then
      the Closing Date shall occur on the tenth Business Day after the date hereof
      at
      the offices of SMHG. At the Closing:

    


    (a) the
      respective parties transferring the Transferred Interests will deliver to the
      transferees thereof, in accordance with Section 1, the certificates, if any,
      representing the applicable interests so transferred, duly endorsed for
      transfer, and an Assignment in the form attached hereto as Exhibit
      A (an
      “Assignment
      of Interests”),
      

    


    (b) each
      of
      Advisors and Capital shall mark its records to admit Newco as a limited partner
      of Advisors and Capital, respectively, with a 99% Percentage Interest and
      Allocation Ratio as of the Closing Date and to admit Newco GP as the general
      partner of each with a 1% Percentage Interest and Allocation Ratio as of the
      Closing Date, 

    


    (c) Newco
      will issue the Class A and Class B limited partner interests, and Newco GP
      will
      issue Class A and Class B member interests, to the parties in accordance with
      Section
      1,
      and


    


    (d) SMHG,
      Newco, and Newco GP will deliver the Cash Consideration (as defined in
Section
      3),
      in
      accordance with Section
      1.

    


    Salient
      Partners’ obligation to consummate the transactions contemplated hereby and to
      deliver the Transferred Interests at the Closing, shall be subject to the
      following conditions: 

    


    (a) receipt
      by Salient Partners of the Cash Consideration; 

    


    (b) the
      accuracy in all material respects of the representations and warranties made
      by
      SMHG and PMT and the fulfillment of those undertakings of SMHG and PMT to be
      fulfilled prior to or at the Closing; 

    


    (c) the
      fulfillment of those undertakings of SMHG and PMT to be fulfilled prior to
      or at
      the Closing; 

    


    (d) receipt
      by Salient Partners of any certificate or certificates of the officers of SMHG,
      or public officials of any state, in each case as may be reasonably requested
      by
      Salient Partners; 

    


    (e) receipt
      by Salient Partners of the Loan; and

     

    
      
        
        

      

      
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    (f) the
      execution of an Agreement of Limited Partnership for Newco (the “Newco
      Partnership Agreement”)
      and
      Regulations for Newco GP (the “Newco
      GP Regulations”)
      containing such terms, provisions, and conditions as are acceptable to Salient
      Partners and the General Partner.

    


    SMHG’s
      and PMT’s obligations to consummate the transactions contemplated hereby and to
      deliver the Purchase Price shall be subject to the following
      conditions:

    


    (a) the
      accuracy in all material respects of the representations and warranties made
      by
      the Salient Parties, the General Partner, Advisors, and Capital herein;


    


    (b) the
      fulfillment of those undertakings of the Salient Parties (as hereinafter
      defined), the General Partner, Advisors, and Capital to be fulfilled prior
      to or
      at the Closing; 

    


    (c) receipt
      by SMHG of any certificate or certificates of the officers of the Salient
      Parties, the General Partner, Advisors, and Capital, or public officials of
      any
      state, in each case as may be reasonably requested by SMHG; 

    


    (d) execution
      by Salient Partners of the Promissory Notes;

    


    (e) the
      execution of the Newco Partnership Agreement and the Newco GP Regulations
      containing such terms, provisions, and conditions as are acceptable to SMHG;
      and

    


    (f) the
      execution and delivery of the Option and Contribution Agreement (the
“TEF
      Agreement”)
      dated
      of even date herewith, by and among The Endowment Fund GP, L.P., a Delaware
      limited partnership (“TEF
      GP”),
      The
      Endowment Fund Management LLC, a Delaware limited liability company
      (“TEF
      LLC”
and
      together with TEF GP, “TEF”),
      certain Principals, Salient Endowment Enterprises, LLC, MWY Consulting, LLC,
      and
      SMHG, pursuant to which SMHG will acquire a 23.15% profits interest in each
      of
      TEF GP and TEF LLC and an option to purchase a 23.15% limited partner interest
      in each of TEF GP and TEF LLC.

     

    
      
         

      

      
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    2.2 Option
      Closing.
      The
      closing of the purchase and sale of the Option Interests (the “Option Closing”)
      shall
      occur at any time agreed upon by the Salient Parties, on the one hand, and
      SMHG,
      on the other hand, but no later than 30 days after the date SMHG notifies the
      Salient Parties or the Salient Parties notify SMHG of its or their intention
      to
      exercise the Purchase Option or Put Option, respectively (in each case, the
      “Option
      Closing Date”).
      At
      the Option Closing, the Salient Parties will deliver to SMHG, the certificates,
      if any, representing the Option Interests sold by the Salient Parties, duly
      endorsed for transfer and an Assignment of Interests. The Salient Parties’
obligation to complete the sale and purchase of the Option Interests being
      sold
      by the Salient Parties hereunder and to deliver such certificates and the
      Assignment of Interests to SMHG at the Option Closing shall be subject to the
      receipt by each Salient Party of his or its allocable share of the Option
      Purchase Price (as hereinafter defined) for the Option Interests.

    


    (a) SMHG’s
      obligation to accept delivery of such certificates and each Assignment of
      Interests, and to deliver the Option Purchase Price for the Option Interests
      shall be subject to: 

    


    (i) the
      receipt by SMHG of a certificate executed by the Salient Parties reaffirming
      the
      accuracy in all material respects of the representations and warranties made
      by
      the Salient Parties and Advisors and Capital herein as of the Option Closing
      Date; provided, however, for purposes of the representations and warranties
      set
      forth in (A) Sections
      4.3
      and
4.4,
      the
      term “Transferred
      Interests”
shall
      mean the Option Interests and (B) Section
      4.9,
      the
      term “Financial
      Statements”
shall
      refer to (x) the audited balance sheet of Newco as of December 31 of the
      year ended immediately prior to the Option Closing Date, and the related audited
      statements of income, changes in partner’s capital, and cash flows for the year
      then ended, and the notes and schedules thereto and (y) the unaudited
      balance sheet of Newco as of the last day of the calendar quarter ended
      immediately prior to the Option Closing Date, and the related unaudited
      statements of income, partner’s capital, and cash flows for the three, six, or
      nine-month period then ended;

    


    (ii) the
      fulfillment of those undertakings of the Salient Parties, the General Partner,
      Advisors and Capital to be fulfilled prior to or at the Option Closing; and
      

    


    (iii) receipt
      by SMHG of any certificate or certificates of the officers of the Salient
      Parties, the General Partner, Advisors and Capital or public officials of any
      state as may be reasonably requested by SMHG.

    


    (b) The
      Salient Parties’ obligations to consummate the transactions contemplated to
      occur at the Option Closing are subject to the following conditions:


    


    (i) the
      fulfillment of those undertakings of SMHG to be fulfilled prior to or at the
      Option Closing;

    


    (ii) receipt
      by the Salient Parties of any certificate or certificates of the officers of
      SMHG or public officials of any state as may be reasonably requested by the
      Salient Parties; and

    


    (iii) immediate
      full vesting of any restricted stock purchased by Principals pursuant to
Section
      10.6
      hereof.


    


    In
      addition, on the Option Closing, each Principal agrees to enter into employment
      agreements with SMHG (or its successor) providing for the employment of each
      such person by Newco for a term of two years following the closing date relating
      to the Change of Control, with compensation and upon such terms and conditions,
      including a coterminous covenant not to compete, that are mutually acceptable
      to
      SMHG or its successor and each such person (but in no event shall such person’s
      compensation be less than the compensation received by such person prior to
      such
      Change of Control).

     

    
      
        
        

      

      
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    SECTION
      3. Consideration.

    


    3.1. Cash
      Consideration.
      The
      aggregate cash consideration (the “Cash
      Consideration”)
      for
      the Interests contributed by Salient Partners pursuant to Section
      1
      shall be
      $1,500,000, which shall be allocated among the Interests as set forth on
Schedule
      3.1
      and paid
      in cash by wire transfer of immediately available funds to an account or
      accounts designated by Salient Partners.

    


    3.2 Additional
      Consideration.
      In
      addition to the Cash Consideration, SMHG shall issue to Salient Partners and
      the
      General Partner on March 31, 2005, a number of shares of common stock, $0.01
      par
      value per share, of SMHG (the “SMHG
      Stock”),
      not
      to exceed 1,200,000 shares (as adjusted for stock splits, stock dividends,
      or
      recapitalizations), based on the pre-tax income of Newco, Newco GP, and their
      subsidiaries and attributable to SMHG’s and the Principals’ (or successors
      thereto) direct or indirect ownership interests in TEF and any new business
      line
      established by the owners thereof but held outside of Newco, Newco GP, or any
      subsidiary thereof (“New Business Lines”) (collectively, the “Newco
      Group”)
      for
      the calendar year 2004 (which shall include all of New PMT’s pre-tax income in
      2004, even if it has not been consolidated with Newco by January 1, 2004)
      (“Combined
      Pre-tax Income”)
      in
      excess of $500,000. The number of shares of SMHG Stock to be issued shall be
      equal to the product of such pre-tax income of the Newco Group for 2004
      multiplied by 0.15 (the “Allocable
      Share Amount”
and,
      together with the Cash Consideration, the “Purchase
      Price”).
      By
      way of example, if New PMT had not been combined with the Newco Group until
      June
      30, 2004 for regulatory reasons and earned $500,000 in pre-tax income during
      that period and $250,000 thereafter ($750,000 for the entire year) and the
      Newco
      Group otherwise earned $500,000 in pre-tax income in 2004, then Combined Pre-tax
      Income would be $1,250,000 and the Allocable Share Amount would be 187,500
      shares. In the event that the Combined Pre-tax Income for the Newco Group was
      $750,000, then the Allocable Share Amount would be 112,500. In the event that
      the Combined-Pre-tax Income is equal to or less than $500,000, no shares would
      be issued and if Combined-Pre-tax Income is equal to or greater than $500,000,
      the first $500,000 of pre-tax income would be included in determining Combined
      Pre-tax Income. For purposes of this Section
      3.2,
      Combined Pre-tax Income shall be determined in accordance with GAAP consistently
      applied, subject to any adjustment required by Section
      10.9.
      

    


    3.3 Option
      Purchase Price.
      The
      aggregate purchase price (the “Option
      Purchase Price”)
      (which
      shall be paid to the Salient Parties or the then current owners of the Option
      Interests pro rata in accordance with the number of Option Interests being
      sold
      by such person) for the Option Interests purchased by SMHG pursuant to
Section
      1.2
      shall be


    


    (a) if
      the
      Purchase Option is exercised and the Option Closing Date is on or prior to
      December 31, 2004, an amount equal to ten percent of the total consideration
      received by SMHG or its shareholders in the form in which it is received in
      connection with any Change in Control transaction,or 

     

    
      
        
        

      

      
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    (b) if
      (i)
      the Put Option is exercised or (ii) the Purchase Option is exercised and the
      Option Closing Date is subsequent to December 31, 2004, an amount equal to
      the
      earnings of the Newco Group (for purposes of this Section 3.3, Newco Group
      shall
      not include any interest in TEF GP or TEF LLC) allocable (directly or
      indirectly) to the Salient Parties or the then-current owners of the Option
      Interests for the twelve-month period ending prior to the Option Closing Date
      multiplied by the Option Multiple (as hereinafter defined), less the Liquidation
      Preference as provided in Section 3.4 in the case of the exercise of the
      Purchase Option subsequent to December 31, 2004. 

    


    For
      purposes of this Section
      3.3,
      the
      earnings of Newco shall mean the trailing twelve months net income of the Newco
      Group, in each case determined in accordance with GAAP consistently applied
      (as
      adjusted pursuant to Section
      10.9,
      if
      any), but using the effective tax rate of SMHG for the purposes of determining
      federal income tax; provided, however, that the Option Purchase Price shall
      be
      reduced on a dollar for dollar basis by any amount paid by SMHG to the
      Principals (or, in the case of Messrs. Linbeck, Sherman and Radcliffe, Salient
      Endowment Enterprises, LLC (“SEE”))
      pursuant to the TEF Agreement as a result of such Change in Control transaction
      to purchase any interests in TEF GP or TEF LLC therefrom that SMHG does not
      already own; and provided further, however, that in determining the “net income”
of the Newco Group, general and administrative expenses (salary, travel and
      entertainment, technology and occupancy expenses only (“G&A Expenses”)) of
      the Newco Group, on the one hand, and G&A Expenses of TEF GP and TEF LLC, on
      the other hand, shall be allocated to each proportionately based on their
      respective revenues. By way of example, if the Newco Group, on the one hand,
      and
      TEF GP and TEF LLC, on the other hand taken as one enterprise, had G&A
      Expenses of $1,000,000 and $100,000, respectively, and revenues of $3,000,000
      and $3,000,000, respectively, such G&A Expenses would be allocated $550,000
      to the Newco Group and $550,000 to TEF GP and TEF LLC (taken as one enterprise)
      for purposes of determining the net income of the Newco Group. Notwithstanding
      anything to the contrary herein, in no event shall SMHG pay more aggregate
      consideration in respect of the Option Purchase Price and the corresponding
      price applicable to TEF GP and TEF LLC as a result of the aforestated allocation
      of G&A Expenses. 

    


    The
      Option Multiple means the greater of: 

    


    (a) six
      or


    


    (b) 0.70
      times the result of dividing 

    


    (i) an
      amount
      equal to the greater of (x) 5% of the sum of the closing prices for shares
      of
      SMHG Stock as reported by The Nasdaq Stock Market for the 20 trading days prior
      to the Option Closing Date or (y) the price per share of SMHG stock being
      offered to SMHG shareholders as a result of the Change of Control by


     

    
      
        
        

      

      
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    (ii) the
      net
      income per fully diluted share of SMHG determined in accordance with GAAP for
      the twelve-month period ending on the last day of the month ending immediately
      preceding the Option Closing Date. 

    


    The
      Option Purchase Price shall be paid in the form in which it is received by
      SMHG.
      The Purchase Option and the Change In Control Option (as defined in the TEF
      Agreement) must be exercised simultaneously, if at all. The Option Purchase
      Price shall be paid in cash by wire transfer of immediately available funds
      to
      an account designated by the Salient Parties or, in the event a Change in
      Control transaction includes some or all consideration other than cash, by
      delivery to the Salient Parties of consideration in the form received by SMHG
      in
      the Change of Control transaction. 

    


    3.4 Class
      B Units in Newco.
      At
      Closing, Newco shall issue to SMHG preference units equal (“Class
      B Units”).
      The
      Preference Units shall have a liquidation preference equal to the members’
equity of New PMT as of March 31, 2003, as determined in accordance with GAAP
      (the “Liquidation
      Preference”)
      and
      shall be manditorily redeemable by Newco upon the earlier to occur of:


    


    (a) a
      Change
      in Control, provided that such Change in Control is not coupled with an exercise
      of the Purchase Option or the Put Option on or before December 31, 2004,


    


    (b) the
      tenth
      anniversary after Closing or 

    


    (c) in
      the
      event that either the Salient Parties or SMHG exercises their right in Article
      8
      to purchase the other’s interest in Newco and Newco GP (in which case, the
      redemption of the Class B Units shall be subject to Article 8). 

    


    Class
      B
      Units shall not be allocated any profit or loss, have any voting rights, or
      be
      entitled to any distributions other than the Liquidation Preference, and shall
      not be transferable by SMHG without the prior written consent of Salient
      Partners. The remaining terms of the Class B Units shall be set forth in the
      Newco Limited Partnership Agreement. By way of example, in the event that there
      is a Change of Control occurring after December 31, 2004, and the net income
      of
      the Newco Group is $2 million and SMHG’s adjusted multiple is 21 (0.7 times 30,
      assumed multiple), then the total consideration for the Newco Group would be
      $42
      million, which would be adjusted by Class B Units (assumed to be $4.5 million).
      Accordingly, in such an example, SMHG would have a $4.5 million Liquidation
      Preference and the remaining consideration of $37.5 million would be split
      50% -
      50% between the Salient Parties and SMHG; provided, however, that in no event
      shall the Liquidation Preference apply in the event that SMHG exercises its
      Purchase Option on or before December 31, 2004.

    


    SECTION
      4. Representations
      and Warranties of Salient Partners, the General Partner, Advisors, Capital
      and
      the Principals.
      The
      Principals severally, and Salient Partners, the General Partner, Advisors and
      Capital jointly and severally, represent and warrant to SMHG as follows:


    


    4.1. Organization,
      Existence, and Qualification.
      Each of
      Salient Partners, Advisors and Capital is a limited partnership duly organized
      and validly existing under the laws of the State of Texas. The General Partner
      is a limited liability company duly organized, validly existing and in good
      standing under the laws of the State of Texas. Each of Salient Partners,
      Advisors, Capital and the General Partner has the power and authority to carry
      on its business as it is now being conducted and to own, lease, and operate
      all
      of its properties and assets. Each of Salient Partners, Advisors, Capital,
      and
      the General Partner is duly qualified to do business in each other jurisdiction
      in which qualification is required, except where the failure to be so qualified
      will not have a Material Adverse Effect (as hereinafter defined). The General
      Partner has delivered to SMHG a true and correct copy of the Partnership
      Agreement of each of Advisors and Capital, together with all amendments thereto,
      as in effect on the date hereof. 

     

    
      
        
        

      

      
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    4.2. Outstanding
      Partnership Interests and Member Interests.
      The
      Principals constitute all of the members of the General Partner and all of
      the
      limited partners of Salient Partners. The General Partner is the sole general
      partner of each of Advisors and Capital and has a 1% Percentage Interest and
      Allocation Ratio in Advisors and Capital. Salient Partners is the sole limited
      partner of each of Advisors and Capital and holds a 99% Percentage Interest
      and
      Allocation Ratio in each of Advisors and Capital. No subscription, warrant,
      option, convertible security, or other right (contingent or other) to purchase
      or otherwise acquire limited partner or other equity interests of Advisors
      or
      Capital is outstanding on the Closing Date. The outstanding partnership
      interests of each of Advisors and Capital, have been duly authorized and have
      been issued in compliance with the applicable Partnership Agreement and all
      applicable securities laws, and were not issued in violation of or subject
      to
      any preemptive rights or other rights to subscribe for or purchase such
      partnership interests. 

    


    4.3. Sale
      and Delivery of the Transferred Interests.
      Except
      as set forth on Schedule
      4.3,
      Salient
      Partners and the General Partner represents and warrants to SMHG that each
      of
      Salient Partners and the General Partner (i) has not pledged, sold, or
      encumbered the Transferred Interests to be contributed by Salient Partners
      or
      the General Partner pursuant to this Agreement and the Transferred Interests
      are
      free and clear of all liens and encumbrances, (ii) is the owner of the
      Transferred Interests and has full authority and power to transfer the
      Transferred Interests contributed or sold by Salient Partners or the General
      Partner pursuant to this Agreement, (iii) has paid in full all capital
      contributions of Salient Partners or the General Partner required by the
      applicable Partnership Agreement with respect to the Transferred Interests,
      (iv)
      has no outstanding obligations to Advisors or Capital with respect to the
      Transferred Interests contributed by Salient Partners or the General Partner
      under the Partnership Agreement, and (v) has full power and authority to enter
      into this Agreement and perform the transactions contemplated by this Agreement.
      Each of Salient Partners and the General Partner waives any right of first
      refusal or similar rights with respect to the purchase of the Transferred
      Interests. No approval or authority of any person will be required for the
      sale
      of the Transferred Interests to be sold by Salient Partners and the General
      Partner as contemplated herein. Such sale of the Transferred Interests shall
      be
      in compliance with all applicable securities laws. 

    


    4.4. Authority,
      Due Execution, Delivery, and Performance of the Agreement.
      Except
      as set forth on Schedule
      4.4,
      

    


    (a) Each
      of
      Advisors and Capital has full limited partnership power and authority to enter
      into this Agreement and perform the transactions contemplated by this Agreement.
      This Agreement has been duly authorized, and at the Closing will have been
      duly
      executed and delivered by each of Advisors and Capital. The execution, delivery,
      and performance of this Agreement by Advisors and Capital and the consummation
      by Advisors and Capital of the transactions contemplated herein will not violate
      any provision of their respective Certificate of Limited Partnership or the
      Partnership Agreement. 

     

    
      
        
        

      

      
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    (b)
       Salient
      Partners has full limited partnership power and authority to enter into this
      Agreement and perform the transactions contemplated by this Agreement. This
      Agreement has been duly authorized, and at the Closing will have been duly
      executed and delivered by Salient Partners. The execution, delivery, and
      performance of this Agreement by Salient Partners and the consummation by
      Salient Partners of the transactions contemplated herein will not violate any
      provision of the Certificate of Limited Partnership or the Agreement of Limited
      Partnership of Salient Partners.

    


    (c)
       The
      General Partner has full limited liability company power and authority to enter
      into this Agreement and perform the transactions contemplated by this Agreement.
      This Agreement has been duly authorized, and at the Closing will have been
      duly
      executed and delivered by the General Partner. The execution, delivery, and
      performance of this Agreement by the General Partner and the consummation by
      the
      General Partner of the transactions contemplated herein will not violate any
      provision of the Articles of Organization or the Regulations of the General
      Partner.

    


    (d) Each
      Principal has full power and authority to enter into this Agreement and perform
      the transactions contemplated by this Agreement. This Agreement has been duly
      authorized, and at the Closing will have been duly executed and delivered by
      each Principal. 

    


    (e)
       The
      execution, delivery, and performance of this Agreement by each of the Salient
      Parties, Advisors, and Capital and the consummation by each of them of the
      transactions contemplated herein will not (i) result in the creation of any
      lien, charge, security interest, or encumbrance upon any of their respective
      assets pursuant to the terms or provisions of, or conflict with, result in
      the
      breach or violation of, or constitute, either by itself or upon notice or the
      passage of time or both, a default under any material agreement, mortgage,
      deed
      of trust, lease, franchise, license, indenture, permit or other instrument
      to it
      is a party or by which it or any of its properties may be bound or affected
      and
      in each case which individually or in the aggregate would have a material
      adverse effect on the condition (financial or otherwise), properties, business,
      prospects, or results of operations of the Salient Parties, Advisors, or Capital
      (a “Material
      Adverse Effect”),
      or
      (ii) violate any statute or any authorization, judgment, decree, order, rule
      or
      regulation of any court or any regulatory body, administrative agency or other
      governmental body applicable to the Salient Parties, Advisors, or Capital or
      any
      of their respective properties. No consent, approval, authorization, or other
      order of any court, regulatory body, administrative agency or other governmental
      body is required for the execution and delivery of this Agreement or the
      consummation of the transactions contemplated by this Agreement, except for
      compliance with all securities laws applicable to the sale of the Transferred
      Interests.

     

    
      
        
        

      

      
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    (f) Upon
      the
      Salient Parties’, Advisors’, and Capital’s execution and delivery of this
      Agreement, and assuming the valid execution and delivery hereof by SMHG, this
      Agreement will constitute a valid and binding obligation of each of the Salient
      Parties, Advisors, and Capital, enforceable against each of them in accordance
      with its terms, except as enforceability may be limited by applicable
      bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
      creditors’ and contracting parties’ rights generally and except as
      enforceability may be subject to general principles of equity (regardless of
      whether such enforceability is considered in a proceeding in equity or at
      law).

    


    4.5. Subsidiaries;
      Other Interests.
      Neither
      Advisors nor Capital
      has any
      investments or ownership interests in any corporations, partnerships, joint
      ventures, or other business enterprises.

    


    4.6. No
      Defaults.
      Neither
      Advisors nor Capital is in violation of or default under any provision of its
      respective Certificate of Limited Partnership, the Partnership Agreement, or
      other organizational documents. The General Partner is not in violation of
      or
      default under any provisions of its Articles of Organization, Regulations,
      or
      other organizational documents. Neither Advisors, Capital nor, to the best
      knowledge of the Salient Parties, any other party thereto, is in breach of
      or
      default with respect to any provision of any agreement, judgment, decree, order,
      mortgage, deed of trust, lease, franchise, license, indenture, permit, or other
      instrument to which any of them is a party or by which any of their respective
      properties are bound; and there does not exist any state of facts which, with
      notice or lapse of time or both, would constitute an event of default as defined
      in such documents on the part of Advisors or Capital, except for such breaches
      and defaults that individually or in the aggregate would not have a Material
      Adverse Effect. Neither Advisors nor Capital is in violation of (a) any
      judgment, order, or decree by which any of them or their respective properties
      is bound or (b) any statute, rule, or regulation of any governmental authority,
      except for such violations that individually or in the aggregate would not
      have
      a Material Adverse Effect.

    


    4.7. No
      Actions.
      There
      are no legal, administrative, or governmental actions, suits or proceedings,
      disciplinary proceedings, or investigations of any nature pending or, to the
      best knowledge of the Salient Parties, threatened to which Advisors, Capital,
      or
      any partner, officer, manager, or employee of any of them is or may be a party
      or of which property owned or leased by any of them is or may be subject (except
      for litigation that individually or in the aggregate would not have a Material
      Adverse Effect); and no material labor problem or labor disturbance by the
      employees of Advisors or Capital, exists, or, to the best knowledge of the
      Salient Parties, is imminent. Neither Advisors nor Capital is a party to or
      subject to the provisions of any injunction, judgment, decree, memorandum of
      understanding or similar arrangement, or order of any court, regulatory body,
      administrative agency or other governmental body charged with supervision or
      regulation of Advisors or Capital, including the supervision or regulation
      of
      investment Advisors.

     

    
      
        
        

      

      
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    4.8. Compliance.
      Advisors is duly registered as an investment Advisor under the Investment
      Adviser’s Act of 1940, as amended (the “Advisers
      Act”)
      with
      the Securities and Exchange Commission (the “Commission”).
      Advisors has furnished to SMHG a true, correct, and complete copy of Advisor’s
      currently effective Form ADV (parts I and II), as filed with the Commission,
      and
      has made available to SMHG all state registration forms, all prior Form ADV
      filings, and all reports filed by Advisors with the Commission under the
      Advisers Act and the rules promulgated thereunder and under similar state
      statutes since its formation. Advisors is in possession of all permits,
      licenses, and other authorizations material to the conduct of its business
      as
      currently conducted or as proposed to be conducted. Advisors has timely filed
      all material reports, forms, schedules, statements, documents, and other
      filings, together with any amendments required to be made with respect thereto,
      with the Commission, any applicable federal, state, or local governmental
      authorities, or any non-governmental self-regulatory agency, commission, or
      authority, including all material reports, statements, and filings required
      under the Advisers Act and any applicable state securities laws, and has paid
      all fees and assessments due and payable in connection therewith. The
      information contained in such forms and reports was true and complete as of
      the
      time of filing and, except as indicated in a subsequent form or report filed
      before the Closing Date, continues to be true and complete. As of their
      respective dates each of such forms and reports complied in all material
      respects with the requirements of the applicable statutes, rules, and
      regulations pursuant to which they were filed, and did not contain any untrue
      statement of a material fact or omit to state any material fact required to
      be
      stated therein or necessary to make the statements therein, in light of the
      circumstances under which they were made, not misleading. Schedule
      4.8
      lists
      the states in which Advisors has made all notice filings required in connection
      with its status as an investment Advisor. Except as set forth on Schedule
      4.8,
      neither
      Advisors nor, to the knowledge of Advisors and the Salient Parties, any
“associated person” (as defined in the Exchange Act) of Advisors is required to
      be registered as a broker-dealer or as an associated person to a registered
      broker-dealer. Advisors has not been advised, and has no reason to believe,
      that
      Advisors is not conducting business in compliance with all licenses, permits,
      and other authorizations material to the conduct of its business and with all
      applicable laws, rules, and regulations of the jurisdictions in which it is
      conducting business, except where failure to be in compliance would not have
      a
      Material Adverse Effect. No governmental authority has initiated any
      administrative proceeding or, to the knowledge of Advisors or the Salient
      Parties, investigation into or related to the business or operations of
      Advisors. Except as set forth on Schedule
      4.8, there
      is
      no unresolved violation, criticism, or exception made in writing by any
      governmental agency with respect to any report or statement by any governmental
      agency relating to any examination of Advisors. Advisors has never been subject
      to an examination by the Commission. 

    


    4.9. Financial
      Statements.
      Salient
      Partners has delivered to SMHG accurate and complete copies of the
      unaudited balance sheet of each of Advisors and Capital as of March 31, 2003,
      and the related unaudited statements of income and partner’s capital for the
      three-month period then ended (collectively, the “Financial
      Statements”).
      The
      Financial Statements have been prepared in accordance with the books of account
      and records of each of Advisors and Capital and generally accepted accounting
      principles consistently applied except as otherwise indicated in such
      statements. The Financial Statements fairly present the respective financial
      positions of Advisors and Capital and the income, partners’ equity, and cash
      flows of such parties’ business at the dates and for the periods indicated
      (subject to normal year-end adjustments in the case of unaudited interim
      financial statements), in accordance with GAAP consistently applied except
      as
      otherwise indicated in such statements, and do not omit to state any information
      necessary in order to make such financial statements not materially
      misleading.

     

    
      
        
        

      

      
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    4.10. Absence
      of Undisclosed Liabilities.
      Except
      as set forth in the Financial Statements or Schedule
      4.10,
      or in
      this Agreement or in any Schedule attached to this Agreement or delivered
      pursuant hereto, neither Advisors nor Capital has any, and none of its
      respective assets or properties are subject to any, liabilities or obligations
      (accrued, absolute, contingent or otherwise), other than unsecured expenses
      and
      trade accounts payable arising in the ordinary course of business since December
      31, 2002, and state income and franchise taxes accrued in respect of their
      respective operations since December 31, 2002. Except as disclosed to SMHG,
      neither Advisors nor Capital is in default in respect of any term or condition
      of any indebtedness or liability. There are no facts in existence on the date
      hereof and known to the Salient Parties which might reasonably serve as the
      basis for any material liabilities or obligations of Advisors or Capital that
      are not disclosed in this Agreement or in the Schedules attached to this
      Agreement and delivered pursuant hereto.

    


    4.11. Taxes.
      Each of
      Advisors and Capital has elected to be taxed as a partnership for federal income
      tax purposes. Each of such parties has filed all federal, state, county and
      local tax and informational returns required to be filed by it and each of
      Advisors and Capital has paid all taxes, assessments, and governmental charges
      that have become due or payable, including, without limitation, all taxes that
      either Advisors or Capital is obligated to withhold from amounts owing to
      employees. No audit, action, suit, proceeding, claim, examination, deficiency,
      or assessment is currently pending or, to the best of the knowledge of the
      Salient Parties, threatened against any of such parties. There is no tax lien
      (other than for current taxes not yet due and payable), whether imposed by
      a
      federal, state, county, or local taxing authority, outstanding against the
      assets, properties or business of Advisors or Capital. No
      federal income tax returns of Advisors or Capital are presently being audited
      by
      the Internal Revenue Service and none of the Salient Parties has received any
      notice that any examination is being conducted by the Internal Revenue Service
      of the federal income tax returns of such parties for any taxable year. Copies
      of all federal and state income tax returns heretofore filed by such parties
      have been furnished to SMHG.

    


    4.12. Properties.
      Each of
      Advisors and Capital, as of the applicable dates referred to therein, had good
      and marketable title to all the properties and assets reflected as owned by
      it
      in the Financial Statements, subject to no lien, mortgage, pledge, charge or
      encumbrance of any kind except (i) those, if any, reflected in the Financial
      Statements or listed in Schedule
      4.12,
      or (ii)
      those that are not material in amount and do not adversely affect the use made
      and currently proposed to be made of such property by such parties. Each of
      Advisors and Capital holds its respective leased properties under valid and
      binding leases. Each of Advisors and Capital owns or leases all such properties
      as are necessary to its operations as now conducted. Neither Advisors nor
      Capital owns any real property. Any real property and facilities held under
      lease by Advisors or Capital are held by it under valid, subsisting, and
      enforceable leases of which each of them is in compliance.

     

    
      
        
        

      

      
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    4.13.
       Intellectual
      Property.

    


    (a) Each
      of
      Advisors and Capital owns or has the right to use all Intellectual Property
      Rights (as hereinafter defined) used by them for the conduct of their respective
      business, which Intellectual Property Rights are the only Intellectual Property
      Rights necessary or required for the conduct of their respective businesses
      as
      they are currently being conducted.

    


    (b) Neither
      Advisors nor Capital is in default of its obligations to pay royalties or other
      amounts to other persons by reason of the ownership or use of any Intellectual
      Property Rights used by such party for the conduct of its respective
      business.

    


    (c) No
      Intellectual Property Right owned by any of Advisors or Capital violates or
      will
      violate any license or infringes or will infringe any Intellectual Property
      Rights of another. To the best knowledge of such parties, no Intellectual
      Property Right, product or service marketed, sold or licensed (as licensor
      or as
      licensee) by such parties violates or will violate any license or infringes
      or
      will infringe any Intellectual Property Rights of another, nor has any such
      party received any notice that any of the Intellectual Property Rights used
      by
      such party for the conduct of its respective business, conflicts or will
      conflict with the rights of others.

    


    (d) There
      are
      no claims pending or, to the best of such party’s knowledge, threatened with
      respect to any Intellectual Property Rights necessary or required for the
      conduct of the respective businesses of such parties as currently conducted,
      nor, to the best knowledge of such parties, does there exist any basis
      therefor.

    


    As
      used
      herein, the term “Intellectual
      Property Rights”
means
      all patents, trademarks, service marks, trade names, copyrights, inventions,
      trade secrets, know-how, licenses, proprietary processes and formulae and
      applications for patents, trademarks, service marks, and copyrights.
Schedule
      4.13 sets
      forth all Intellectual Property Rights of Advisors and Capital.

    


    4.14. Ineligible
      Persons.
      Neither
      Advisors nor, to the knowledge of any of the Salient Parties and Advisors,
      any
“associated person” (as defined in the Advisers Act) of Advisors, has been
      convicted of any crime or has been subject to any disqualification that would
      be
      a basis for denial, suspension, or evocation of registration of an investment
      advisor under Section 203(e) of the Advisers Act or Rule 206(4)-4(b) thereunder
      or is otherwise ineligible pursuant to Section 203 of the Advisers Act to serve
      as an investment Advisor or associated person to a registered investment
      Advisor. 

    


    4.15. Absence
      of Certain Changes of Events.
      Except
      as set forth in Schedule
      4.15 or in the Financial Statements,
      since
      December 31, 2002: 

    


    (a) there
      has
      been no material change in the condition, financial or otherwise, or operations
      of any of Advisors or Capital;

     

    
      
        
        

      

      
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    (b) neither
      Advisors nor Capital has incurred any indebtedness for money borrowed or any
      material liability or obligation, contingent or otherwise, except in the
      ordinary course of business, or entered into any material commitment or other
      transaction not in the ordinary course of business;

    


    (c) there
      has
      been no event, occurrence, or development that has resulted or that could result
      in a Material Adverse Effect with respect to any of Advisors or
      Capital;

     

    (d) neither
      Advisors nor Capital has declared or made any payment or distribution of cash
      or
      other property to its partners or officers (other than in compliance with
      existing compensation agreements or incentive option plans), or purchased,
      redeemed (or made any agreements to purchase or redeem) any limited partner
      interest;

     

    (e) neither
      Advisors nor Capital has altered its method of accounting;

    


    (f) neither
      Advisors nor Capital has incurred or become subject to any material claim or
      material liability for any damages or alleged damages for any actual or alleged
      negligence or other tort or breach of contract;

    


    (g) except
      in
      the ordinary course of business and consistent with past practices, neither
      Advisors nor Capital has sold, transferred, or otherwise disposed of, or agreed
      to sell, transfer or otherwise dispose of any of its assets, property or rights
      or canceled or otherwise terminated, or agreed to cancel or otherwise terminate,
      any debts or claims;

    


    (h) neither
      Advisors nor Capital has entered or agreed to enter into any agreement or
      arrangement granting any preferential rights to purchase any of its assets,
      property or rights, or requiring the consent of any party to the transfer and
      assignment of any of such assets, property or rights;

    


    (i) neither
      Advisors nor Capital has made any change in its authorized capital or
      outstanding securities;

    


    (j) neither
      Advisors nor Capital has issued, sold, delivered or agreed to issue, sell or
      deliver any member interests, bonds or other securities, or granted or agreed
      to
      grant any options, warrants or other rights calling for the issue, sale or
      delivery thereof;

    


    (k) neither
      Advisors nor Capital has adopted any new, or made any increase in, any profit
      sharing, bonus, deferred compensation, savings, insurance, pension, retirement
      or other employee benefit plan, payment or arrangement made to, for or with
      any
      of such officers, directors or salaried employees;

    


    (l) neither
      Advisors nor any employee of Advisors has been cited for any violations of
      the
      Advisers Act or the rules and regulations of the Commission promulgated
      thereunder; and

     

    
      
        
        

      

      
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    (m) neither
      Advisors nor Capital has entered into any material oral or written agreement
      or
      other transaction that is not in the ordinary course of business.

    


    4.16. Furniture
      and Equipment.
      Attached hereto as Schedule
      4.16
      is a
      list setting forth a description of all major items of furniture and equipment
      owned or leased by any of Advisors or Capital at March 31, 2003. All items
      of
      furniture and equipment reflected on the Financial Statements or Schedule
      4.16
      are in
      good operating condition and in a state of reasonable maintenance and repair,
      ordinary wear and tear excepted, and are free from any known defects except
      such
      as require routine maintenance and such minor defects as do not substantially
      interfere with the continued use thereof in the conduct of normal
      operations.

    


    4.17. Material
      Contracts.
      Attached hereto as Schedule
      4.17
      is a
      list as of the date of this Agreement of certain written or oral leases,
      contracts, commitments, agreements, guarantees, and other documents to which
      any
      of Advisors or Capital is a party or by which it is bound. Except for contracts
      and documents listed in Schedule
      4.17,
      neither
      Advisors nor Capital is a party to or bound by any written or oral (a) contract
      not made in the ordinary course of business; (b) employment contract; (c) bonus,
      pension, profit sharing, retirement, hospitalization, insurance or other plan
      providing employee benefits; (d) lease with respect to any property, real or
      personal, whether as lessor or lessee; (e) continuing contract for the future
      purchase of materials, supplies or equipment in excess of the requirements
      of
      its business now booked; (f) contract or commitment for capital expenditures;
      (g) contract continuing over a period of more than six months from its date;
      (h)
      contract providing for annual payments in excess of $25,000 or aggregate
      payments in excess of $50,000, or (i) contract between any member or employee
      of
      any of Advisors or Capital and such party, (j) promissory note, loan agreement,
      guarantee or other contract or commitment for the borrowing of money by any
      of
      Advisors or Capital, or (k) contract material or necessary to conduct the
      operations and business of any of Advisors or Capital. A true copy of each
      lease, contract, commitment and agreement listed in Schedule
      4.17
      has been
      furnished to SMHG or made available for review by SMHG, and, except as otherwise
      disclosed on Schedule
      4.17,
      each
      such lease, contract, commitment and agreement is in full force and effect
      and
      neither Advisors nor Capital and, to the knowledge of the Salient Parties and
      the General Partner, none of the other parties thereto are in default
      thereunder.

    


    4.18. Employees.
      Attached hereto as Schedule
      4.18
      is a
      schedule listing the names and annual rates of compensation of all the present
      officers, salaried employees and agents of each of Advisors and Capital.
Schedule
      4.18
      summarizes the bonuses, profit sharing, incentive, percentage compensation
      and
      other like benefits, if any, paid or payable to such officers, directors,
      employees and agents on an annual basis (i.e., for calendar year 2003).
Schedule
      4.18
      also
      sets forth all loans and advances (other than routine travel advances to be
      repaid or formally accounted for within 60 days) made by any of Advisors or
      Capital since December 31, 2002, to any Principal or to any director, officer
      or
      employee of any of Advisors or Capital, and the current status thereof, whether
      or not such loan or advance is presently outstanding. Each employee of Advisors
      who is required to be registered as an investment Advisor representative or
      solicitor (or in a similar capacity) with the securities commission of any
      state
      are duly registered as such and such registrations are in full force and effect.
      

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    


    4.19. Investment
      Company, Etc.
      Neither
      Advisors nor Capital is regulated or required to be registered as an investment
      company, commodity trading advisor, commodity pool operator, futures commission
      merchant, introducing broker, or transfer agent under and federal, state, or
      local statute, laws, rule, or regulation; provided, however, that Capital is
      undergoing registration with the Commission and the National Association of
      Securities Dealers as a “broker-dealer.” 

     

    4.20. Insurance.
      Each of
      Advisors and Capital maintains the insurance policies summarized on Schedule
      4.20.
      To the
      knowledge of the Salient Parties and the General Partner, all such insurance
      policies are in full force and effect.

    


    4.21. Employee
      Benefit Plans.
      There
      are no employee “pension benefit” or “welfare” plans (as such terms are defined
      in the Employee Retirement Income Security Act of 1974, as amended) maintained
      by any of Advisors or Capital or to which any of them contributes or is required
      to contribute. Since December 31, 2002, there has been no termination or partial
      termination, or commencement of proceedings seeking termination, with respect
      to
      any employee pension benefit plan previously maintained by any of Advisors
      or
      Capital or any employee pension benefit plan to which such party previously
      contributed or was required to contribute.

    


    4.22 Customer
      Relationships.
      Advisors is in compliance with the terms of each contract with any customer
      to
      whom Advisors provides services (a “Client”),
      and
      each such contract is in full force and effect. There are no disputes pending
      or, to the knowledge of the Salient Parties, threatened with any Client under
      the terms of such contract or with any former Client. Advisors has provided
      or
      made available to SMHG true and complete copies of the standard form of all
      advisory and similar agreement with Clients. To the knowledge of the Salient
      Parties, there have been no complaints or disputes with customers that have
      not
      been resolved that are expected to result in a Material Adverse
      Effect.

    


    4.23. Brokers.
      None of
      Advisors, Capital or the Salient Parties is a party to or in any way obligated
      under any contract or other agreement and there are no outstanding claims
      against any such party for the payment of any broker’s or finder’s fee in
      connection with the origin, negotiation, execution or performance of this
      Agreement.

    


    4.24. Questionable
      Payments.
      Neither
      Advisors nor Capital has made, and none of the Salient Parties has any knowledge
      or information that any member, manager, officer, employee, agent or other
      representative of Advisors or Capital or any person acting on behalf of any
      of
      them has made, directly or indirectly, any bribes, kickbacks, political
      contributions with corporate funds, payments from corporate funds not recorded
      on the books and records of Advisors or Capital, payments from corporate funds
      that were knowingly and falsely recorded on the books and records of Advisors
      or
      Capital, payments from corporate funds to governmental officials in their
      individual capacities or illegal payments from corporate funds to obtain or
      retain business.

    


    4.25. Transactions
      with Affiliated Parties.
      Except
      as set forth on Schedule
      4.25,
      neither
      Advisors nor Capital has engaged in any transactions with any Affiliated Party
      (other than transactions inherent in the normal capacities of partners,
      managers, officers, or employees). Except as set forth in Schedule
      4.25,
      no
      Affiliated Party has any ownership interest, directly or beneficially, in any
      competitor or customer of any of Advisors or Capital (except with respect to
      no
      more than 1% of the issued stock of any company the securities of which are
      publicly traded on a national stock exchange or in the over-the counter market
      or accounts of the Principals or family members thereof). For purposes of this
      Section
      4.25,
      “Affiliated Party” means the
      Principals, employees, officers, managers, and partners of any of Advisors
      or
      Capital; any spouse or child of the Principals or an employee, officer, manager,
      or partner of any of Advisors or Capital; any trust of which a Principal or
      any
      employee, officer, manager, or partner of any of Advisors or Capital is a
      grantor, trustee or beneficiary; any corporation of which a Principal or any
      employee, officer, manager, or partner of any of Advisors or Capital, or any
      spouse or child of a Principal or such employee, officer, manager or partner,
      is
      an officer, director or shareholder; or any partnership of which the any
      Principal, or any employee, officer, manager, or partner of any of Advisors
      or
      Capital, is a partner.

     

    
      
        
        

      

      
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    4.26. Books
      and Records.
      The
      books and records of each of Advisors and Capital are in all material respects
      complete and correct and have been maintained in accordance with good business
      practice and reflect a true record of all meetings or proceedings of its
      managers and members.

    


    4.27. Discretionary
      Accounts.
      Advisors has operated its investment accounts for which it has investment
      discretion in accordance with the investment objectives and guidelines in effect
      for each such investment account, except when lack of compliance would not
      be
      reasonably likely, individually or in the aggregate, to have a Material Adverse
      Effect on Advisors.

    


    4.28. Environmental
      and Safety Laws.
      Neither
      Advisors nor Capital is in violation of any applicable statute, law, or
      regulation relating to the environment or occupational health and safety, and
      to
      its knowledge, no material expenditures are or will be required in order to
      comply with any such existing statute, law, or regulation.

    


    4.29. Accredited
      Investors; Acquisition for Investment.
      Except
      as set forth on Schedule
      4.29,
      Salient
      Partners is an “accredited investor” as defined in Rule 501 of Regulation D
      under the Securities Act of 1933, as amended (the “Securities
      Act”),
      is
      knowledgeable, sophisticated, and experienced in making, and is qualified to
      make, decisions with respect to investments in securities representing an
      investment decision like that involved in the acceptance of SMHG Stock as part
      of the Purchase Price, and has requested, received, reviewed, and understood
      all
      information he deems relevant in making and informed decision to accept SMHG
      Stock as part of the Purchase Price. The SMHG Stock to be issued to Salient
      Partners pursuant to this Agreement will be acquired for Salient Partners’ own
      account for investment only. Salient Partners agrees that it will not, directly
      or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
      any offers to buy, purchase or otherwise acquire or take a pledge of) any of
      the
      shares of SMHG Stock except in compliance with the Securities Act, rules and
      regulations promulgated under the Securities Act, and any applicable state
      securities or blue sky laws. 

    


    SECTION
      5. Representations
      and Warranties of SMHG.
      SMHG
      hereby represents and warrants to the Salient Parties, Advisors and Capital
      as
      follows:

    


    5.1 Accredited
      Investor.
      SMHG:
      (a) is an “accredited investor” as defined in Rule 501 of Regulation D under the
      Securities act and is knowledgeable, sophisticated, and experienced in making,
      and is qualified to make, decisions with respect to investments in securities
      representing an investment decision like that involved in the acquisition of
      a
      beneficial interest in the Transferred Interests (through its ownership of
      Newco
      and Newco GP), and has requested, received, reviewed, and understood all
      information it deems relevant in making an informed decision regarding such
      acquisition; (b) acknowledges that the transfer of the Transferred Interests
      pursuant to this Agreement has not been reviewed by the Commission or any state
      regulatory authority; (c) is acquiring the common equity in Newco and Newco
      GP
      and the Preference Units for its own account for investment only and with no
      present intention of reselling or distributing any of such securities in a
      manner that would require registration under the Securities Act and has no
      arrangement or understanding with any other persons regarding the distribution
      of such securities; and (d) will not, directly or indirectly, offer, sell,
      pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
      or otherwise acquire or take a pledge of) any of such securities except in
      compliance with the Securities Act, rules and regulations promulgated under
      the
      Securities Act and any applicable state securities or blue sky laws. SMHG
      recognizes that an investment in such securities is speculative and involves
      a
      high degree of risk, including a risk of total loss of SMHG’s investment.


     

    
      
        
        

      

      
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    5.2. Authority,
      Due Execution, Delivery, and Performance of the Agreement.
      SMHG
      has full right, power, authority and capacity to enter into this Agreement
      and
      to consummate the transactions contemplated hereby and has taken all necessary
      action to authorize the execution, delivery and performance of this Agreement.
      No consent, approval, authorization, or other order of any court, regulatory
      body, administrative agency or other governmental body that has not been
      obtained is required on the part of SMHG for the execution and delivery of
      this
      Agreement or the consummation of the transactions contemplated by this
      Agreement. Upon the execution and delivery of this Agreement, this Agreement
      shall constitute a valid and binding obligation of SMHG enforceable in
      accordance with its terms, except as enforceability may be limited by applicable
      bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
      creditors’ and contracting parties’ rights generally and except as
      enforceability may be subject to general principles of equity (regardless of
      whether such enforceability is considered in a proceeding in equity or at law).
      There is not in effect any order enjoining or restraining SMHG from entering
      into or engaging in any of the transactions contemplated by this
      Agreement.

    


    5.3.
       Organization
      and Existence.
      SMHG is
      a corporation duly organized, validly existing, and in good standing under
      the
      laws of the State of Texas and has all requisite corporate power and authority
      to carry on its business as now conducted. SMHG has delivered to Salient
      Partners and the Principals a true and correct copy of its Articles of
      Incorporation and By-laws.

    


    5.4.
       Capitalization.
      The
      authorized capital stock of SMHG consists of (a) 100 million shares of SMHG
      Stock, of which 16,908,377 shares were validly issued and outstanding and fully
      paid and nonassessable as of March 31, 2003, and (b) 10 million shares of
      Preferred Stock, $0.10 par value, of SMHG, none of which are issued and
      outstanding. 1,533,340 shares of SMHG Stock are reserved as of March 31, 2003,
      for issuance upon exercise of outstanding employee and director stock options
      granted under SMHG’s stock option plans and stock purchase program. Except for
      the foregoing stock options and plans, no subscription, warrant, option,
      convertible security, stock appreciation, or other right to purchase or acquire
      shares of any class of capital stock of SMHG is authorized or outstanding,
      and
      there is not outstanding any commitment of SMHG or any of its subsidiaries
      to
      issue any shares, warrants, options, pr other such rights or to distribute
      to
      holders of any class of its capital stock any evidences of indebtedness or
      assets.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    


    5.5.
       Brokers.
      SMHG is
      not a party to or in any way obligated under any contract or other agreement
      and
      there are no outstanding claims against it for the payment of any broker’s or
      finder’s fee in connection with the origin, negotiation, execution or
      performance of this Agreement.

    


    5.6.
       Stock
      to be Issued.
      The
      shares of SMHG Stock to be issued to Salient Partners and the Principals will,
      when issued, have been duly and validly authorized and issued by SMHG and will
      be fully paid and nonassessable.

    


    5.7.
       SEC
      Filings.
      SMHG
      has filed all forms, reports, and documents required to be filed by it with
      the
      Commission since January 1, 2000, and SMHG has made available to Salient
      Partners and the Principals true and complete copies of (a) the Annual Report
      on
      Form 10-K of SMHG for the years ended December 31, 2002 and 2001, (b) all other
      reports (including Current Reports on Form 8-K), statements, and registration
      statements filed by SMHG with the Commission since December 31, 2001, and (iii)
      all Form ADVs, and all amendments thereto, filed by each subsidiary of SMHG
      that
      is registered as an investment Advisor (“SEC Filings”). The SEC Filings (a)
      complied when filed in all material respects with the requirements of the
      Securities Act and the Exchange Act, as the case may be, and (b) did not at
      the
      time of their filing (or if amended, supplemented, or superseded by a later
      filing, on the date of the later filing) contain any untrue statement of a
      material fact or omit to state a material fact required to be stated therein
      or
      necessary in order to make the statements therein, in light of the circumstances
      under which they were made, not misleading.

    


    5.8.
       Financial
      Statements.
      The
      consolidated balance sheets and consolidated statements of operations,
      stockholders’ equity, and cash flows of SMHG and its subsidiaries included in
      the SEC Filings (the “SMHG
      Financial Statements”)
      fairly
      present in all material respects the consolidated financial position of SMHG
      and
      its subsidiaries at their respective dates and the consolidated results of
      operations of SMHG and its subsidiaries for the respective periods then ended,
      in accordance with GAAP, subject, in the case of unaudited interim financial
      statements, to (a) year-end adjustments (which consist of normal recurring
      accruals) and (b) the absence of explanatory footnote disclosure required by
      GAAP.

    


    5.9. Litigation.
      Except
      as disclosed in Schedule
      5.9,
      there
      is no material action, suit, litigation, proceeding or governmental
      investigation pending or threatened against SMHG or its subsidiaries or the
      property or business of SMHG or its subsidiaries, or the transactions
      contemplated by this Agreement, nor to the knowledge of SMHG is there any basis
      for any such action or for any such claim, and SMHG is not subject to the
      provisions of any material decree or judgment of any court or of any
      governmental agency.

     

    
      
        
        

      

      
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    5.10. Absence
      of Undisclosed Liabilities.
      Except
      as set forth in SMHG Financial Statements, or in this Agreement or in any
      Schedule attached to this Agreement or delivered pursuant hereto, SMHG has
      no,
      and none of its assets or properties are subject to any, liabilities or
      obligations (accrued, absolute, contingent or otherwise), other than unsecured
      expenses and trade accounts payable arising in the ordinary course of business
      since December 31, 2002, and federal and state income and franchise taxes
      accrued in respect of the operations of the Principal since December 31, 2002.
      Except as disclosed to SMHG, SMHG is not in default in respect of any term
      or
      condition of any material indebtedness or liability.

    


    5.11. Other
      Information.
      All of
      the information provided to the Salient Parties, Advisors or Capital or their
      respective agents or representatives concerning SMHG’s suitability to invest in
      Newco and Newco GP, and the representations and warranties contained herein,
      are
      complete, true, and correct as of the date hereof, and understands that such
      parties are relying on the statements contained herein to establish an exemption
      from registration under federal and state securities laws. 

    


    5.12. Address.
      The
      address set forth in the signature page hereto is SMHG’s true and correct
      domicile.

    


    SECTION
      5A. Representations
      and Warranties of SMH with respect to PMT.
      SMHG
      hereby represents and warrants to the Salient Parties as follows:

    


    5A.1. Organization,
      Existence, and Qualification.
      PMT is
      a state trust company within the meaning of, and chartered under the Texas
      Finance Code, and is duly organized, validly existing, and in good standing
      under the laws of the State of Texas. PMT has full authority and trust company
      power to carry on its business as it is now being conducted and to own, lease,
      and operate all of its properties and assets. PMT is duly qualified to do
      business in each other jurisdiction in which qualification is required, except
      where the failure to be so qualified will not have a Material Adverse Effect
      (as
      hereinafter defined). SMHG has delivered to the Purchaser a true and correct
      copy of the Articles of Incorporation and Bylaws of PMT together with all
      amendments thereto, as in effect on the date hereof. PMT has taken (and at
      the
      Closing New PMT will have taken) all necessary action (including, without
      limitation, all necessary corporate or limited liability company action, as
      the
      case may be, of the board of directors, board of managers, shareholders and/or
      members, as the case may be) to authorize the consummation of the transactions
      contemplated by this Agreement. Other than the approval of the Department of
      Banking, no consent, approval, authorization, or other order of any court,
      regulatory body, administrative agency or other governmental body that has
      not
      been obtained is required on the part of PMT or New PMT for the consummation
      of
      the transactions contemplated by the Agreement.

     

    5A.2. Outstanding
      Capital Stock.
      SMHG
      owns all of the issued and outstanding common stock, $1.00 par value (the
“PMT
      Shares”),
      of
      PMT. No subscription, warrant, option, convertible security, or other right
      (contingent or other) to purchase or otherwise acquire common stock or other
      equity interests of PMT is outstanding on the Closing Date. The outstanding
      shares of common stock of PMT have been duly authorized and are validly issued,
      fully paid, and nonasessable and have been issued in compliance all applicable
      securities laws, and were not issued in violation of or subject to any
      preemptive rights or other rights to subscribe for or purchase such partner
      interests.

     

    
      
        
        

      

      
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    5A.3. Contribution
      of PMT Shares.
      SMHG
      (i) has not pledged, sold, or encumbered the PMT Shares to be contributed by
      SMHG pursuant to this Agreement and the PMT Shares are free and clear of all
      liens and encumbrances, (ii) is the owner of the PMT Shares and has full
      authority and power to transfer the PMT Shares to be contributed pursuant to
      this Agreement to Newco, (iii) has paid in full the purchase price of the PMT
      Shares, (iv) has no outstanding obligations to PMT with respect to PMT Shares,
      and (v) has full power and authority to enter into this Agreement and perform
      the transactions contemplated by this Agreement. No approval or authority of
      any
      person other than the Department of Banking will be required for the
      contribution of the PMT Shares as contemplated herein. Such contribution of
      the
      PMT Shares shall be in compliance with all applicable securities laws.


    


    5A.4. Subsidiaries.
      PMT
has
      no
      investments or ownership interests in any corporations, partnerships, joint
      ventures, or other business enterprises. 

    


    5A.5. No
      Defaults.
      PMT is
      not in violation of or default under any provision of its Articles of
      Incorporation, Bylaws, or other organizational documents. To the best of SMHG’s
      knowledge, PMT is not in breach of or default with respect to any provision
      of
      any agreement, judgment, decree, order, mortgage, deed of trust, lease,
      franchise, license, indenture, permit, or other instrument to which PMT is
      a
      party or by which PMT, or any of its properties are bound; and there does not
      exist any state of facts which, with notice or lapse of time or both, would
      constitute an event of default as defined in such documents on the part of
      PMT,
      except for such breaches and defaults that individually or in the aggregate
      would not have a Material Adverse Effect. PMT is not in violation of (a) any
      judgment, order, or decree by which PMT or its properties is bound or (b) any
      statute, rule, or regulation of any governmental authority, except for such
      violations that individually or in the aggregate would not have a Material
      Adverse Effect.

    


    5A.6. No
      Actions.
      There
      are no legal, administrative, or governmental actions, suits or proceedings,
      disciplinary proceedings, or investigations of any nature pending or, to the
      best knowledge of SMHG, threatened to which PMT is or may be a party or of
      which
      property owned or leased by PMT is or may be subject (except for litigation
      that
      individually or in the aggregate would not have a Material Adverse Effect);
      and
      no material labor problem or labor disturbance by the employees of PMT exist,
      or, to the best knowledge of SMHG, is imminent. PMT is not a party to or subject
      to the provisions of any injunction, judgment, decree, memorandum of
      understanding or similar arrangement, or order of any court, regulatory body,
      administrative agency or other governmental body charged with supervision or
      regulation of PMT including Department of Banking. 

    


    5A.7. Compliance.
      PMT has
      not been advised, and has no reason to believe, that PMT is not conducting
      business in compliance with all licenses, permits, and other authorizations
      material to the conduct of their business and with all applicable laws, rules,
      and regulations of the jurisdictions in which it is conducting business, except
      where failure to be in compliance would not have a Material Adverse Effect.
      No
      governmental authority has initiated any administrative proceeding or, to the
      knowledge of SMHG, investigation into or related to the business or operations
      of PMT. There is no unresolved violation, criticism, or exception made in
      writing by any governmental agency with respect to any report or statement
      by
      any governmental agency relating to any examination of PMT. 

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    


    5A.8. Financial
      Statements.
      SMHG
      has delivered to Salient Partners accurate and complete copies of (a) the
      audited balance sheet of PMT as of December 31, 2002, and the related
      audited statements of income, changes in partner’s capital, and cash flows for
      the year then ended, and the notes and schedules thereto and (b) the
      unaudited balance sheet of PMT as of March 31, 2003, and the related unaudited
      statements of income and stockholders’ equity for the three-month period then
      ended ((a) and (b) collectively, the “PMT
      Financial Statements”).
      The
      PMT
      Financial Statements have been prepared in accordance with the books of account
      and records of Salient and generally accepted accounting principles consistently
      applied except as otherwise indicated in such statements. The PMT Financial
      Statements fairly present the financial position of PMT and the income, members’
equity, and cash flows of PMT’s business at the dates and for the periods
      indicated (subject to normal year-end adjustments in the case of unaudited
      interim financial statements), in accordance with GAAP consistently applied
      except as otherwise indicated in such statements, and do not omit to state
      any
      information necessary in order to make such financial statements not materially
      misleading.

    


    5A.9. Absence
      of Undisclosed Liabilities.
      Except
      as set forth in the PMT Financial Statements, or in this Agreement or in any
      Schedule attached to this Agreement or delivered pursuant hereto, PMT has no,
      and none of its assets or properties are subject to any, liabilities or
      obligations (accrued, absolute, contingent or otherwise), other than unsecured
      expenses and trade accounts payable arising in the ordinary course of business
      since December 31, 2002, and state income and franchise taxes accrued in respect
      of the operations of Salient since December 31, 2002. Except as disclosed to
      the
      Salient Partners, PMT is not in default in respect of any term or condition
      of
      any indebtedness or liability. There are no facts in existence on the date
      hereof and known to the SMHG that might reasonably serve as the basis for any
      material liabilities or obligations of PMT not disclosed in this Agreement
      or in
      the Schedules attached to this Agreement or delivered pursuant
      hereto. 

    


    5A.10. Taxes.
      PMT
      filed all federal, state, county and local tax and informational returns,
      required to be filed by it, and PMT has paid all taxes shown to be due by such
      returns as well as all other taxes, assessments and governmental charges that
      have become due or payable, including, without limitation, all taxes that PMT
      is
      obligated to withhold from amounts owing to employees, creditors and third
      parties. PMT has established adequate reserves for all taxes accrued but not
      yet
      payable. No audit, action, suit, proceeding, claim, examination, deficiency,
      or
      assessment is currently pending or, to the best of SMHG’s knowledge, threatened
      against PMT. There is no tax lien (other than for current taxes not yet due
      and
      payable), whether imposed by a federal, state, county, or local taxing
      authority, outstanding against the assets, properties or business of PMT.
No
      federal income tax returns of PMT are presently being audited by the Internal
      Revenue Service and PMT have not received any notice that any examination is
      being conducted by the Internal Revenue Service of the federal income tax
      returns of PMT for any taxable year. 

     

    
      
        
        

      

      
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    5A.11. Properties.
      PMT, as
      of the applicable dates referred to therein, good and marketable title to all
      the properties and assets reflected as owned by it in the PMT Financial
      Statements, subject to no lien, mortgage, pledge, charge or encumbrance of
      any
      kind except (i) those, if any, reflected in the PMT Financial Statements or
      listed in Schedule
      5A.11,
      or (ii)
      those that are not material in amount and do not adversely affect the use made
      and currently proposed to be made of such property by PMT. PMT holds its leased
      properties under valid and binding leases. PMT owns or leases all such
      properties as are necessary to its operations as now conducted. PMT does not
      own
      any real property. Any real property and facilities held under lease by PMT
      are
      held by it under valid, subsisting, and enforceable leases of which PMT is
      in
      compliance.

    


    5A.12.
       Intellectual
      Property.

    


    (a) PMT
      owns
      or has the right to use all Intellectual Property Rights used by PMT for the
      conduct of its business, which Intellectual Property Rights are the only
      Intellectual Property Rights necessary or required for the conduct of their
      respective businesses as they are currently being conducted.

    


    (b) PMT
      is
      not in default of its obligations to pay royalties or other amounts to other
      persons by reason of the ownership or use of any Intellectual Property Rights
      used by PMT for the conduct of its business.

    


    (c) No
      Intellectual Property Right owned by PMT violates or will violate any license
      or
      infringes or will infringe any Intellectual Property Rights of another. To
      the
      best of SMHG’s knowledge, no Intellectual Property Right, product or service
      marketed, sold or licensed (as licensor or as licensee) by PMT, violates or
      will
      violate any license or infringes or will infringe any Intellectual Property
      Rights of another, nor has PMT received any notice that any of the Intellectual
      Property Rights used by PMT for the conduct of its business, conflicts or will
      conflict with the rights of others.

    


    (d) There
      are
      no claims pending or, to the best of SMHG’s knowledge, threatened with respect
      to any Intellectual Property Rights necessary or required for the conduct of
      the
      business of PMT as currently conducted, nor, to the best of PMT’s knowledge,
      does there exist any basis therefor.

    


    5A.13. Absence
      of Certain Changes of Events.
      Except
      as set forth in Schedule
      5A.13,
      since
      December 31, 2002, 

    


    (a) there
      has
      been no material change in the condition, financial or otherwise, or operations
      of PMT,

    


    (b) PMT
      has
      not incurred any indebtedness for money borrowed or any material liability
      or
      obligation, contingent or otherwise, except in the ordinary course of business
      or entered into any material commitment or other transaction not in the ordinary
      course of business,

     

    
      
        
        

      

      
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    (c) there
      has
      been no event, occurrence, or development that has resulted or that could result
      in a Material Adverse Effect, 

    


    (d) PMT
      has
      not declared or made any payment or distribution of cash or other property
      to
      its directors or officers (other than in compliance with existing compensation
      agreements or incentive option plans), or purchased, redeemed (or made any
      agreements to purchase or redeem) any limited partner interest,

    


    
      	 	
              (e)

            	
              PMT
                has not altered its method of
                accounting,

            


    

    


    (f) PMT
      has
      not incurred or become subject to any material claim or material liability
      for
      any damages or alleged damages for any actual or alleged negligence or other
      tort or breach of contract,

    


    (g) except
      in
      the ordinary course of business and consistent with the past practice of PMT,
      PMT has not sold, transferred, or otherwise disposed of, or agreed to sell,
      transfer or otherwise dispose of any of its assets, property or rights or
      canceled or otherwise terminated, or agreed to cancel or otherwise terminate,
      any debts or claims,

    


    (h) PMT
      has
      not entered or agreed to enter into any agreement or arrangement granting any
      preferential rights to purchase any of its assets, property or rights, or
      requiring the consent of any party to the transfer and assignment of any of
      such
      assets, property or rights,

    


    (i) PMT
      has
      not made any change in its authorized capital or outstanding
      securities,

    


    (j) PMT
      has
      not issued, sold, delivered or agreed to issue, sell or deliver any member
      interests, bonds or other securities, or granted or agreed to grant any options,
      warrants or other rights calling for the issue, sale or delivery
      thereof,

    


    (k) PMT
      has
      not adopted any new, or made any increase in, any profit sharing, bonus,
      deferred compensation, savings, insurance, pension, retirement or other employee
      benefit plan, payment or arrangement made to, for or with any of such officers,
      directors or salaried employees;

    


    (l) neither
      PMT nor any employee of PMT has been cited for any violations of the Texas
      Finance Code or regulations of the Department of Banking promulgated thereunder,
      and

    


    (m) PMT
      has
      not entered into any material verbal or written agreement or other transaction
      that is not in the ordinary course of business.

    


    5A.14. Furniture
      and Equipment.
      Attached hereto as Schedule
      5A.14
      is a
      list setting forth a description of all major items of furniture and equipment
      owned or leased by PMT at February 28, 2003. All items of furniture and
      equipment reflected on the PMT Financial Statements or Schedule
      5A.14
      are in
      good operating condition and in a state of reasonable maintenance and repair,
      ordinary wear and tear excepted, and are free from any known defects except
      such
      as require routine maintenance and such minor defects as do not substantially
      interfere with the continued use thereof in the conduct of normal
      operations.

     

    
      
        
        

      

      
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    5A.15. Material
      Contracts.
      Attached hereto as Schedule
      5A.15
      is a
      list and brief description as of the date of this Agreement of certain written
      or oral leases, contracts, commitments, agreements, guarantees, and other
      documents to which PMT is a party or by which it is bound. Except for contracts
      and documents listed in Schedule
      5A.15,
      PMT is
      not a party to or bound by any written or oral (a) contract not made in the
      ordinary course of business; (b) employment contract; (c) bonus, pension, profit
      sharing, retirement, hospitalization, insurance or other plan providing employee
      benefits; (d) lease with respect to any property, real or personal, whether
      as
      lessor or lessee; (e) continuing contract for the future purchase of materials,
      supplies or equipment in excess of the requirements of its business now booked;
      (f) contract or commitment for capital expenditures; (g) contract continuing
      over a period of more than six months from its date; (h) contract providing
      for
      annual payments in excess of $25,000 or aggregate payments in excess of $50,000,
      or (i) contract between any member or employee of PMT and PMT, (j) promissory
      note, loan agreement, guarantee or other contract or commitment for the
      borrowing of money by PMT, or (k) contract material or necessary to conduct
      the
      operations and business of PMT. A true copy of each lease, contract, commitment
      and agreement listed in Schedule
      5A.15
      has been
      furnished to the Salient Parties or made available for review by the Salient
      Parties, and, except as otherwise disclosed on Schedule
      5A.15,
      each
      such lease, contract, commitment and agreement is in full force and effect
      and
      the parties thereto are not in default thereunder.

    


    5A.16. Employees.
      Attached hereto as Schedule
      5A.16
      is a
      schedule listing the names and annual rates of compensation of all the present
      officers, salaried employees and agents of PMT. Schedule
      5a.16
      summarizes the bonuses, profit sharing, incentive, percentage compensation
      and
      other like benefits, if any, paid or payable to such officers, directors,
      employees and agents for the year ended December 31, 2002, and for the period
      from December 31, 2002, to February 28, 2003. Schedule
      5a.16
      also
      sets forth all loans and advances (other than routine travel advances to be
      repaid or formally accounted for within 60 days) made by PMT since December
      31,
      2002, to any director, officer or employee of PMT, and the current status
      thereof, whether or not such loan or advance is presently outstanding.


    


    5A.17. Investment
      Company, Etc..
      PMT is
      not regulated or required to be registered as an investment company, commodity
      trading advisor, commodity pool operator, futures commission merchant,
      introducing broker, or transfer agent under and federal, state, or local
      statute, laws, rule, or regulation. 

    


    5A.18. Insurance.
      PMT
      maintains the insurance policies summarized on Schedule
      5A.18.
      To the
      knowledge of SMHG, all such insurance policies are in full force and
      effect.

    


    5A.19. Customer
      Relationships.
      PMT is
      in compliance with the terms of each contract with any customer to whom PMT
      provides services (a “Client”),
      and
      each such contract is in full force and effect. There are no disputes pending
      or, to SMHG’s knowledge, threatened with any Client under the terms of such
      contract or with any former Client. PMT has provided or made available to
      Salient Partners true and complete copies of the standard form of all advisory
      and similar agreement with Clients. To PMT’s knowledge, except as set forth on
Schedule
      5A.20,
      there
      have been no complaints or disputes with customers that have not been resolved
      that are expected to result in a Material Adverse Effect

     

    
      
        
        

      

      
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    5A.20. Questionable
      Payments.
      PMT has
      not made, and SMHG has no knowledge or information that any director, officer,
      employee, agent, or other representative of PMT or any person acting on behalf
      of any of them has made, directly or indirectly, any bribes, kickbacks,
      political contributions with corporate funds, payments from corporate funds
      not
      recorded on the books and records of PMT, payments from corporate funds that
      were knowingly and falsely recorded on the books and records of PMT, payments
      from corporate funds to governmental officials in their individual capacities
      or
      illegal payments from corporate funds to obtain or retain business.

    


    5A.21. Transactions
      with Affiliated Parties.
      Except
      as set forth on Schedule
      5A.22,
      PMT has
      not engaged in any transactions with any Affiliated Party (other than
      transactions inherent in the normal capacities of partners, managers, officers,
      or employees). Except as set forth in Schedule
      5A.21,
      no
      Affiliated Party has any ownership interest, directly or beneficially, in any
      competitor or customer of PMT (except with respect to no more than 1% of the
      issued stock of any company the securities of which are publicly traded on
      a
      national stock exchange or in the over-the counter market). For purposes of
      this
Section
      5A.21,
      “Affiliated Party” means the
      SMHG,
      directors, employees, officers, and managers of PMT; any spouse or child of
      an
      employee, officer, manager, or director of PMT; any trust of which any employee,
      officer, manager, or director of PMT is a grantor, trustee or beneficiary;
      any
      corporation of which any employee, officer, manager, or director of PMT, or
      any
      spouse or child of such employee, officer, manager or director, is an officer,
      director or shareholder; or any partnership of which SMHG, or any employee,
      officer, manager, or director of PMT is a partner.

    


    5A.22. Books
      and Records.
      The
      books and records of PMT are in all material respects complete and correct
      and
      have been maintained in accordance with good business practice and reflect
      a
      true record of all meetings or proceedings of its managers and
      members.

    


    5A.23. Discretionary
      Accounts.
      PMT has
      operated its investment accounts for which it has investment discretion in
      accordance with the investment objectives and guidelines in effect for each
      such
      investment account, except when lack of compliance would not be reasonably
      likely, individually or in the aggregate, to have a Material Adverse Effect
      on
      PMT.

    


    5A.24. Environmental
      and Safety Laws.
      PMT is
      not in violation of any applicable statute, law, or regulation relating to
      the
      environment or occupational health and safety, and to its knowledge, no material
      expenditures are or will be required in order to comply with any such existing
      statute, law, or regulation.

    


    SECTION
      6. Survival
      of Representatives and Warranties; Indemnification.
      Notwithstanding any investigation made by any party to this Agreement, all
      representations and warranties made by the Salient Parties, Advisors, Capital,
      and SMHG herein and in any certificates or documents delivered pursuant hereto
      or in connection therewith shall survive following the Closing and shall remain
      in full force and effect until March 31, 2005, and shall, with respect to the
      Option Closing, remain in full force and effect until the date twelve months
      following the Option Closing Date. The maximum liability of each Salient Party
      for breaches of representations, warranties, or covenants hereunder shall be
      equal to the amount of Purchase Price received by such Salient
      Party.

     

    
      
        
        

      

      
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    SECTION
      6A. Indemnification.
      The
      respective indemnification obligations of the parties are: 

    


    6A.1 Indemnification
      by SMHG.
      SMHG
      agrees to pay and to indemnify and hold harmless and defend each Salient Party
      and their respective successors and assigns from and against any and all
      obligations, claims, liabilities, damages, penalties, losses, judgments, fines,
      and reasonable costs and expenses and disbursements incurred in connection
      with
      any investigation or defense of the foregoing (collectively, “Damages”)
      caused
      by or arising out of or in respect of: (i) any breach or default in the
      performance by SMHG of any covenant or agreement of SMHG contained in this
      Agreement; and (ii) any breach of warranty or inaccurate or erroneous
      representation made by an SMHG in Section 5 and 5A of this Agreement.


    


    6A.2
       Indemnification
      by Principals.
      Each
      Principal severally agrees to pay and to indemnify and hold harmless each
      Salient Party, SMHG, each other Principal, and their respective successors
      and
      assigns from and against any and all Damages caused by, arising out of or in
      respect of: (i) any breach or default in the performance by the Principal of
      any
      covenant or agreement made by the Principal in this Agreement; or (ii) any
      breach of warranty or inaccurate or erroneous representation made by the
      Principal in Section 4 of this Agreement. 

    


    6A.3
       Indemnification
      by the Salient Parties.
      The
      Salient Parties jointly and severally with respect to Salient Partners and
      the
      General Partner and severally with respect to the Principals, agree to pay
      and
      to indemnify and hold harmless and defend SMHG and its successors and assigns
      from and against any and all Damages caused by or arising out of or in respect
      of: (i) any breach or default in the performance by any Salient Party of any
      covenant or agreement of such Salient Party contained in this Agreement; and
      (ii) any breach of warranty or inaccurate or erroneous representation made
      by
      such Salient Party in Section 4 of this Agreement. 

     

    
      
        
        

      

      
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    6A.4 Requests
      for Indemnification.
      If any
      party (an “Indemnified
      Party”)
      becomes aware of a fact, circumstance, claim, situation, demand or other matter
      for which it or any other Indemnified Party has been indemnified under this
      Section 6A (any such item being herein called an “Indemnity
      Matter”),
      the
      Indemnified Party shall give prompt written notice of the Indemnity Matter
      to
      the Indemnifying Party, requesting indemnification therefor, specifying the
      nature of and specific basis for the Indemnity Matter and the amount or
      estimated amount thereof to the extent then feasible; provided, however, a
      failure to give such notice will not waive any rights of the Indemnified Party
      except to the extent the rights of the Indemnifying Party are actually
      materially prejudiced by such failure. The Indemnifying Party shall have the
      right to assume the defense or investigation of such Indemnity Matter and to
      retain counsel and other experts to represent the Indemnified Party and shall
      pay the fees and disbursements of such counsel and other experts. If within
      30
      days after receipt of the request (or five days if litigation is pending) the
      Indemnifying Party fails to give notice to the Indemnified Party that the
      Indemnifying Party assumes the defense or investigation of the Indemnity Matter,
      an Indemnified Party may retain counsel and other experts (whose fees and
      disbursements shall be at the expense of the Indemnifying Party) to file any
      motion, answer or other pleading and take such other action which the
      Indemnified Party reasonably deems necessary to protect its interests or those
      of the Indemnifying Party until the date on which the Indemnified Party receives
      such notice from the Indemnifying Party. If an Indemnifying Party retains
      counsel and other experts, any Indemnified Party shall have the right to retain
      its own counsel and other experts, but the fees and expenses of such counsel
      and
      other experts shall be at the expense of the Indemnified Party unless (i) the
      Indemnifying Party and the Indemnified Party mutually agree to the retention
      of
      such counsel and other experts or (ii) the named parties to any such proceeding
      (including any impleaded parties) include both the Indemnifying Party and the
      Indemnified Party and representation of both parties by the same counsel would,
      in the opinion of counsel retained by the Indemnifying Party, be inappropriate
      due to actual or potential differing interests between them. If requested by
      the
      Indemnifying Party, the Indemnified Party agrees to cooperate with the
      Indemnifying Party and its counsel in contesting any Indemnity Matter which
      the
      Indemnifying Party defends, or, if appropriate and related to the Indemnity
      Matter in question, in making any counterclaim against the person asserting
      the
      Indemnity Matter, or any cross-complaint against any person. No Indemnity Matter
      may be settled by the Indemnified Party without the consent of the Indemnifying
      Party, which consent will not be unreasonably withheld. Unless the Indemnifying
      Party agrees in writing that the Damages to the Indemnified Party resulting
      from
      such settlement are fully covered by the indemnities provided herein and that
      such Damages are fully compensable in money, no Indemnity Matter may be settled
      without the consent of the Indemnified Party, which consent will not be
      unreasonably withheld. Except with respect to settlements entered without the
      Indemnified Party’s consent pursuant to the immediately preceding sentence, to
      the extent it is determined that the Indemnified Party has no right under this
      Section 6A to be indemnified by the Indemnifying Party, the Indemnified Party
      shall promptly pay to the Indemnifying Party any amounts previously paid or
      advanced by the Indemnifying Party with respect to such matters pursuant to
      this
      Section 6A. After the delivery of a notice of an Indemnity Matter hereunder,
      at
      the reasonable request of the Indemnifying Party the Indemnified Party shall
      grant the Indemnifying Party and its representatives full and complete access
      to
      the books, records and properties of the Indemnified Party to the extent
      reasonably related to the matters to which the notice relates. The Indemnifying
      Party will not disclose to any third person (except its representatives) any
      information obtained pursuant to the preceding sentence which is designated
      as
      confidential by the Indemnified Party and which is not otherwise generally
      available to the public or not already within the knowledge of the Indemnifying
      Party, except as may be required by applicable law. The Indemnifying Party
      shall
      request its representatives not to disclose any such information (unless already
      within its knowledge or as may be required by applicable law). All such access
      shall be subject to the normal safety regulations of the Indemnified Party,
      and
      shall be granted under conditions that will not unreasonably interfere with
      the
      business and operations of the Indemnified Party. 

    


    6A.5 Exclusive
      Remedy.
      The
      indemnification provisions of this Section 6A shall constitute the parties’
exclusive remedy for breaches of the representations, warranties, and covenants
      herein, and shall be subject to the applicable limitations contained in Section
      6.

     

    
      
        
        

      

      
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    SECTION
      7. Operations
      of Advisors, Capital and PMT.

     

    7.1 PMT.
      Commencing on the Closing Date and continuing until the earlier to occur of:
      (a)
      a Change of Control and exercise of the Put Option or Purchase Option or (b)
      SMHG or the Salient Parties exercise their buy-sell rights pursuant to Section
      8
      hereof (a “Termination
      Event”),
      Messrs. Blaisdell, Linbeck, Sherman, and Radcliffe (“Salient
      Managers”)
      will
      be retained as the management team for PMT at salaries totaling $620,000 (which
      aggregate total may be increased or decreased upon mutual agreement of the
      Salient Managers and SMHG), which shall be allocated as salary 29% each to
      Messrs. Linbeck, Sherman, and Blaisdell and 13% for Mr. Radcliffe. In addition,
      until the earlier to occur of (a) the Contribution (as hereinafter defined)
      or
      (b) a Termination Event, the Salient Parties shall be entitled to receive,
      as a
      management fee, an amount equal to 50% of the annual net income of PMT before
      provision for taxes determined in accordance with GAAP; after such Contribution,
      PMT shall distribute its distributable cash to Newco and Newco shall distribute
      the same to its partners based on their respective ownership percentages (unless
      the Management Committee, by majority vote, determines to retain such
      distributable cash). 

     

    7.2 Combination
      of Operations.
      Following the Closing and upon receipt of the approval of the Department of
      Banking, SMHG shall deliver the shares representing all of the issued and
      outstanding capital stock of PMT or, if PMT has been converted to a limited
      liability company, shall transfer all member interests in New PMT to Newco
      (the
“Contribution”).
      The
      Contribution shall only be subject to obtaining the approval of the Department
      of Banking and shall occur as soon as practicable upon receipt of such
      regulatory approval. SMHG and each agent, officer, and/or representative thereof
      shall use its or their commercially reasonable best efforts, and shall cause
      PMT
      and New PMT and each agent, officer, and/or representative thereof to use its
      or
      their commercially reasonable best efforts (in each case including seeking
      the
      permission of the Department of Banking) to gain regulatory approval for the
      Contribution. Upon occurrence of the Contribution, the Board of Directors of
      PMT
      (or the board of managers of New PMT, as the case may be) shall be reconstituted
      to be the same individuals as the Management Committee.

    


    7.3 Excess
      Capital.
      SMHG
      agrees that cash and cash equivalents and marketable securities of PMT in excess
      of the minimum tangible capital requirement imposed on PMT (or New PMT, if
      after
      conversion) by the Department of Banking (“Excess
      Capital”)
      may be
      expended for acquisitions and expansion subject to the approval of the
      Management Committee of Newco GP. SMHG estimates such Excess Capital to be
      approximately $2.9 million as of March 31, 2003.

    


    7.4 Distributions.
      Newco
      shall make one or more distributions of Distributable Cash Flow (as defined
      in
      the Newco Partnership Agreement) during each fiscal year. In the event that
      a
      super majority of the Management Committee (5 of seven members or, if the
      Management Committee is comprised of a greater or lesser number of members,
      67%
      of the members rounded up or down to the nearest whole number) recommends
      retention of all Distributable Cash Flow, then no cash distributions shall
      be
      made; provided, that there shall be at least one distribution each year at
      least
      equal to the taxable income of Newco multiplied by the highest marginal federal
      income tax rate. 

     

    
      
        
        

      

      
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    7.5 Name
      Change.
      Immediately following the Closing, Salient Partners shall change its name and
      each of the Salient Parties shall cause each other related party to change
      its
      name so as not to include the name “Salient” and Newco shall change its name to
“Salient Partners, L.P.”

    


    7.6 Services
      Post Closing.
      From
      and after the date of Closing and continuing through and including a Termination
      Event in which the Salient Parties acquire the Newco Group, SMHG, or its
      successor in interest, shall continue to provide to the Newco Group the same
      services that it has historically provided to PMT consistent with its current
      practice and for no greater charge that SMHG’s provides such services to any
      other subsidiary or division of SMHG, which services shall include: human
      resources, accounting support (maintaining the books and records of the Newco
      Group and issuing financial statements, etc.), administrative support, and
      such
      other services that SMHG has provided to PMT in the past.

    


    7.7 Application
      to Banking Commissioner.
      As soon
      as practicable after the execution of this Agreement, all parties required
      to do
      so by the Texas Finance Code shall prepare and file with the Texas Banking
      Commissioner an application under Section 182.302 of the Texas Finance Code
      seeking approval of the Texas Banking Commissioner to convert PMT from a trust
      association organized as a Texas corporation to a limited trust association
      organized as a Texas limited liability company and an application under Section
      183.002 of the Texas Finance Code seeking approval of the Texas Banking
      Commissioner of any change of control of PMT that may occur as a result of
      the
      contribution of the member interest of New PMT to Newco, and upon being notified
      by the Texas Banking Commissioner that the application is complete, shall either
      (i) comply with the notice requirements of Section 183.002(d) of the Texas
      Finance Code or (ii) request a waiver of the notice requirements from the Texas
      Banking Commissioner under Section 183.002(f) of the Texas Finance Code.
      Thereafter, the appropriate parties shall take all such action and shall attend
      all such hearings and provide all such information to the Texas Banking
      Commissioner as the Commissioner may require in connection with the
      Commissioner’s consideration of the applications; provided, however, that
      nothing in this Section 7.7 shall require SMHG or PMT to (i) agree to the
      imposition of any material limitation on the ability of PMT to conduct its
      trust
      business after the Closing in substantially the same manner as before the
      Closing or (ii) make any undertaking relating to PMT or its assets, properties,
      business, operations or practices which, in the reasonable judgment of SMHG
      and
      Salient Partners would or could have, after the Closing, a material adverse
      effect on PMT.

    


    SECTION
      8. Buy-Sell
      Rights.
      The
      Newco Partnership Agreement and Newco GP Regulations, respectively, shall
      provide that, subsequent to May 1, 2008, either SMHG or Salient Partners shall
      have the right, at any time, exercisable by written notice (the “Offer”)
      to the
      other party to buy each other’s ownership interests in the Newco Group. The
      Offer shall constitute an offer by the offeror-party both (a) to sell its
      interests in the Newco Group and (b) to purchase the offeree-party’s interest in
      the Newco Group pursuant to the following provisions:

    


    8.1 Determination
      of Price.
      Following the giving and receipt of an Offer, SMHG and Salient Partners shall
      have a period of 30 days to arrive at a mutually agreeable price for the
      interest in the Newco Group. If SMHG and Salient Partners cannot agree on a
      price within such 30-day period, within 10 Business Days after the end of the
      30-day period SMHG and Salient Partners shall each select an independent
      appraiser nationally recognized as qualified to appraise businesses in the
      financial services industry, each of whom shall deliver its appraisal of the
      Fair Market Value (as hereinafter defined) to an independent person (to be
      agreed by SMHG and Salient Partners) within 20 Business Days of its selection
      as
      an appraiser. If the higher appraisal is more than 20% greater than the lower
      appraisal, the independent person shall notify SMHG and Salient Partners and
      each appraiser of that fact (but not of the amounts). In such a case, the two
      appraisers shall within 10 Business Days of such notification from the
      independent person agree on a third independent appraiser nationally recognized
      as qualified to appraise businesses in the financial services industry, who
      shall deliver its appraisal of Fair Market Value to the independent person
      within 20 Business Days of the selection of such third appraiser, and Fair
      Market Value shall be the median of the three appraisals. If the higher of
      the
      first two appraisals is not more than 20% greater than the lower of the first
      two appraisals, Fair Market Value shall be the arithmetic mean of the first
      two
      appraisals and there shall not be any third appraisal. The independent person
      shall promptly give written notice of Fair Market Value to SMHG and Salient
      Partners. 

     

    
      
        
        

      

      
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    8.2 Right
      of Salient Partners.
      Following determination of Fair Market Value pursuant to Section 8.1, Salient
      Partners shall have the right to buy from SMHG, and SMHG shall be obligated
      to
      sell, its interests in the Newco Group at the Fair Market Value; provided,
      however, that the Fair Market Value shall be appropriately adjusted to reflect
      the net decline in pre-tax earnings that result due to the anticipated payment
      of the SMHG Residual Net Revenues (hereafter defined). Salient Partners shall
      have 10 Business Days to exercise such right by written notice to SMHG. If
      Salient Partners elects to exercise its right to purchase SMHG’s interest in the
      Newco Group, Salient Partners and SMHG shall, within 45 days after receipt
      of
      notice, execute such documents and instruments reasonable necessary by Salient
      Partners to sell and transfer SMHG’s interest in the Newco Group at the purchase
      price, and the closing of such sale shall take place on a Business Day not
      more
      than 45 calendar days after receipt of the notice. The purchase price shall
      be
      paid 50% in cash and the balance in the form of a promissory note maturing
      three
      years following its date of issuance and bearing interest at the prime rate
      of
      interest published in The
      Wall Street Journal.
      At such
      closing, SMHG shall sell and transfer its interest in Newco and Newco GP to
      Salient Partners free and clear of any liens, encumbrances, or security
      interests. In addition to payment of the Fair Market Value, Newco shall pay
      to
      SMHG on a quarterly basis a portion of the management fees received by Newco
      or
      TEF GP with respect to clients of SMHG (other than existing clients or
      affiliates of PMT) who invest in The Endowment (Domestic) Fund, L.P., The
      Endowment (Exempt) Fund I, L.P., and/or The Endowment (Exempt) Fund II, L.P.
      (collectively and taken as a group) equal to the management fees paid by such
      persons to Newco or charged by TEF GP multiplied by one (1) minus a fraction
      the
      numerator of which is the general and administrative expenses of the Newco
      Group
      in the 12 months prior to the Offer and the denominator of which is the revenues
      of the Newco Group during such time frame (“SMHG Residual Net Revenues”).


    


    8.3 Right
      of SMHG.
      If
      Salient Partners does not elect to purchase SMHG’s interests in the Newco Group
      pursuant to Section
      8.2,
      SMHG
      shall have the right to buy from Salient Partners, and Salient Partners shall
      be
      obligated to sell, its interests in the Newco Group at the Fair
      Market Value. If SMHG elects to exercise its right to purchase Salient Partner’s
      interests in the Newco Group, Salient Partners and SMHG shall, within 45 days
      after receipt of notice, execute such documents and instruments reasonable
      necessary by SMHG or its successor to sell and transfer Salient Partner’s
      interests in the Newco Group at the purchase price, and the closing of such
      sale
      shall take place as soon as practicable but in any event within 45 days after
      receipt of the notice. The purchase price shall be paid 50% in cash and the
      balance in the form of a promissory note maturing three years following its
      date
      of issuance and bearing interest at the prime rate of interest published by
      The
      Wall Street Journal.
      At such
      closing, Salient Partners shall sell and transfer its interest in the Newco
      Group to SMHG or its successor free and clear of any liens, encumbrances, or
      security interests. In addition, if SMHG or its successor exercises its right
      to
      purchase Salient Partner’s interest, each Principal, who is then employed by the
      Newco Group, Advisors, or Capital, agrees to enter into an employment agreement
      with SMHG or its successor with a minimum term of two-years (which shall contain
      a coterminous non-compete provision) with compensation and upon terms mutually
      acceptable to the parties (but in no event shall the compensation be less than
      that which was being received by a Principal prior to such date). ). The
      purchase of SMHG’s interests by the Salient Parties or the Salient Parties’
interests by SMHG shall be done simultaneously with the purchase of SMHG’s
      Interests in TEF GP and TEF LLC or the Salient Parties’ (or, in the case of
      Messrs. Linbeck, Sherman and Radcliffe, SEE’s) Interests in TEF GP or TEF LLC,
      respectively, pursuant to the terms of the TEF Agreement (with Interests, as
      used in this sentence, having the meaning set forth in the TEF
      Agreement).

     

    
      
        
        

      

      
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    8.4 Fair
      Market Value. For
      purposes of this Section 8, “Fair
      Market Value”
shall
      mean the fair market value of the Newco Group (collectively and considered
      as a
      whole) as a going concern in a sale on an arm’s length basis between an informed
      and willing buyer and an informed and willing seller under no compulsion to
      buy
      or sell, taking into account all the facts and circumstances then prevailing,
      including the Newco Group’s consolidated business at the time of valuation,
      agreements to which the Newco Group is a party, assuming consummation of the
      sale of the Newco Group to a party not affiliated with Salient Partners or
      SMHG.
      For the purposes of determining the Fair Market Value, (a) the Class B Units
      shall be valued at the Liquidation Preference, (b) the Fair Market Value shall
      be appropriately adjusted to reflect the net decline in pre-tax earnings that
      result due to the anticipated payment of the SMHG Residual Net Revenues in
      the
      event that the Salient Parties acquire the Newco Group pursuant to Section
      8.2
      above, and (c) the Fair Market Value shall be reduced on a dollar for dollar
      basis by any amount paid by SMHG pursuant to the TEF Agreement to purchase
      any
      interests in TEF GP or TEF LLC from the Principals (or, in the case of Messrs.
      Linbeck, Sherman and Radcliffe, SEE) that SMHG does not already own. Fair Market
      Value shall be allocated to the interests in the Newco Group as follows: (a)
      first, to the Class B Units and (b) the balance to the remaining interests
      in
      the Newco Group. SMHG and Salient Partners shall pay all costs of the appraisals
      performed under Section 8.1 on an equal basis.

    


    SECTION
      9.  Right
      of First Refusal With Respect to Newco Interests.
      If SMHG
      or Salient Partners (a “Selling
      Partner”)
      proposes to sell, assign, encumber, hypothecate, distribute, pledge, convey
      in
      trust, give, or otherwise transfer or dispose of (a “Transfer”)
      all or
      any portion of its interests in the Newco Group, whether voluntarily or
      involuntarily, then the Selling Partner shall promptly give written notice
      (the
“Offer
      Notice”)
      to the
      other partners at least 30 days prior to the proposed closing of such Transfer.
      The Offer Notice shall describe in reasonable detail the proposed Transfer
      including, without limitation, the Percentage Interest and Allocation
      Ratio of the interest to be transferred (the “Offered
      Interest”),
      the
      nature of such Transfer, the consideration to be paid, and the name and address
      of each prospective purchaser or transferee. For a period of 30 days following
      receipt of any Offer Notice, all partners of the Newco Group that are not the
      Selling Partner (“Offered
      Parties”)
      shall
      have the right to purchase all or a portion of the Offered Interest subject
      to
      the Offer Notice. Such purchase right shall be exercised by written notice
      signed the other partner and delivered to the Selling Partner within such 30-day
      period. The exercising partner shall effect the purchase of the Offered
      Interest, including payment of the purchase price, not more than ten days after
      delivery of the notice of exercise of the right of first refusal. In the event
      that the Selling Partner is a Salient Party, the Offered Interest shall be
      first
      offered to the other Salient Parties until they have been satisfied (if the
      other Salient Parties have oversubscribed, then they shall participate ratably)
      and, in the event that any Offered Interest remains, SMHG shall be entitled
      fulfill its subscription (if any). Upon each such exercise, the Selling Partner
      shall deliver to the exercising partner an assignment of the Offered Interest
      in
      such form as may be required to effect the Transfer of the Offered Interest.
      The
      purchase of SMHG’s interests by the Salient Parties or the Salient Parties’
interests by SMHG shall be done simultaneously with the purchase of SMHG’s
      Interests in TEF GP and TEF LLC or the Salient Parties’ Interests in TEF GP or
      TEF LLC, respectively, pursuant to the terms of the TEF Agreement (with
      Interests, as used in this sentence, having the meaning set forth in the TEF
      Agreement).

     

    
      
        
        

      

      
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    SECTION
      10. Covenants
      and Additional Agreements.
      On and
      after the Closing:

    


    10.1. Corporate
      Existence.
      Each of
      Salient Partners, the General Partner, Advisors, Capital, PMT, Newco and Newco
      GP will (and SMHG shall cause PMT to) take all steps necessary to preserve
      and
      continue the corporate, partnership or limited liability company existence
      of
      such parties. Each of such parties will comply with all applicable laws and
      regulations, decrees, orders, judgments, licenses, and permits (“Applicable
      Laws”), except where non-compliance with such Applicable Laws would not have a
      Material Adverse Effect. 

    


    10.2 Taxes.
      Each of
      Advisors, Capital, PMT, Newco and Newco GP will (and SMHG shall cause PMT to)
      promptly pay and discharge all lawful taxes, assessments, and governmental
      charges or levies imposed on it or upon its income or profits, or upon any
      of
      its properties, real or personal, before the same shall become in default,
      as
      well as all lawful claims for labor, materials, and supplies or otherwise which,
      if unpaid, might become a lien or charge upon its properties or any part
      thereof, except where the failure to do so would not have a Material Adverse
      Effect; provided, however, that neither Advisors, Capital, PMT, Newco or Newco
      GP shall be required to pay or cause to be paid any such tax, assessment,
      charge, levy or claim prior to institution of foreclosure proceedings if the
      validity thereof shall be contested in good faith by appropriate proceedings
      and
      if such party shall have established reserves deemed by such party to be
      adequate with respect to such tax, assessment, charge, levy, or
      claim.

    


    10.3 Insurance.
      The
      Newco Group will maintain liability, property damage, and insurance on its
      insurable property against fire and other hazards with responsible insurance
      carriers in the relative proportionate amounts consistent with past practice
      and
      usually carried by reasonable and prudent companies conducting businesses
      similar to that of such parties, except where the failure to do so would not
      have a Material Adverse Effect.

     

    
      
        
        

      

      
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    10.4 Financial
      Statements and Compliance Certificates.
      The
      Newco Group (including PMT) will keep true books of record and account in which
      full, true, and correct entries in accordance with generally accepted accounting
      principles will be made of all dealings or transactions in relation to its
      business and activities. After the Closing Date until such date on which SMHG
      or
      Salient Partners ceases to own any securities of the Newco Group and the Option
      Interests, the Newco Group shall furnish, by email, facsimile or overnight
      mail,
      to each of SMHG and Salient Partners:

    


    (a) commencing
      with the fiscal quarter ending March 31, 2003, within 30 days after the end
      of
      each quarter, a consolidated balance sheet of the Newco Group as of the end
      of
      such quarter and consolidated statements of operations and cash flows of the
      Newco Group for such quarter and for the expired portion of the then current
      fiscal year, setting forth comparable figures for the same quarter and expired
      portion of the previous fiscal year, and prepared and certified by the chief
      financial or accounting officer of Newco, subject to year-end audit
      adjustment;

    


    (b) commencing
      with the fiscal year ending December 31, 2003, within 60 days after the end
      of
      each fiscal year, an audited consolidated balance sheet of the Newco Group
      as of
      the end of such fiscal year and audited consolidated statements of operations,
      partner’s capital, and cash flows of the Newco Group for such fiscal year,
      setting forth comparable figures for the previous fiscal year, all reported
      upon, and certified by, the independent accountants and registered auditors
      of
      the Newco Group; and 

    


    (c)
      any
      other financial statements or reports as may reasonably be requested by SMHG
      or
      Salient Partners.

    


    10.5 Investment
      Advisory Agreement Acknowledgements.
      Upon
      being notified by SMHG that it intends to exercise the Purchase Option or its
      purchase right under Section
      8.2,
      Advisors agrees to use its commercially reasonable best efforts to obtain as
      soon as reasonable practicable (a) any consents of Clients necessary in
      connection with the “assignment” of the contracts pursuant to which Advisors
      provides investment advisory services to a Client with the meaning of the
      Advisers Act (an “Advisory Agreement”) resulting from SMHG’s exercise of the
      Purchase Option or purchase right; provided that SMHG agrees that other than
      with respect to any Advisory Agreement which by its terms expressly requires
      written consent to its assignment, effective consent to such assignment of
      an
      Advisory Agreement may be obtained for all purposes hereunder and under
      applicable law by informing such Client of (i) the intention to consummate
      the
      Purchase Option or purchase right, which may result in a deemed assignment
      of
      such Advisory Agreement, (2) Advisors’ intention to continue the advisory
      services pursuant to the existing Advisory Agreement with such Client after
      the
      Option Closing Date, and (3) that the consent of such Client will be deemed
      to
      have been granted if such Client continues to accept such advisory services
      for
      at least 40 days after receipt of such notice without termination, and the
      consent or approval of all persons party to contract with Advisors, to the
      extent such consent or approval is required in order to consummate the Purchase
      Option and for Advisors to continue to receive the benefits of such
      contract.

     

    
      
        
        

      

      
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    10.6 SMHG
      Capital Incentive Plan Participation.
      SMHG
      agrees to permit the Principals or Newco to purchase shares of SMHG Stock
      through the Sanders Morris Harris Group Inc. Capital Incentive Program or any
      similar plan adopted by SMHG. Any employee who receives a bonus from Newco
      may
      use such bonus to purchase shares of SMHG Stock at a purchase price equal to
      66.67% of an amount equal to 5% of the sum of the closing prices for shares
      of
      SMHG Stock as reported by The Nasdaq Stock Market for the 20 trading days prior
      to such purchase. In addition, Salient Partners and the Principals agree that,
      until the date five years after the Closing Date, Salient Partners and/or each
      Principal shall have the option to purchase shares of SMHG Stock pursuant to
      the
      Capital Incentive Program or otherwise from SMHG in an amount at least equal
      to
      25% of cash distributed (net of taxes actually paid by Salient Partners or
      a
      Principal) to Salient Partners by Newco or to a Principal by Salient Partners.
      Shares purchased pursuant to this Section will vest 50% at the end of the first
      year, 75% at the end of the second year, and 100% at the end of the third year.
      

     

    10.7 Registration
      of SMHG Stock.
      SMHG
      shall prior to March 31, 2005, file with the Commission a registration statement
      on Form S-3 relating to the issuance of SMHG Stock to Salient Partners and
      the
      Principals pursuant to Section
      3.2
      and the
      resale of such SMHG Stock by Salient Partners and the Principals and use
      commercially reasonable efforts to have such registration statement declared
      effective on or before such date. In the case of such registration, SMHG will
      keep Salient Partners and the Principal reasonably advised in writing as to
      the
      initiation of each registration and as to the completion thereof. At its expense
      with respect to any registration statement filed pursuant to this Section 10.7,
      SMHG will use its commercially reasonable best efforts to:

    


    (a) prepare
      and file with the Commission with respect to SMHG Stock, a registration
      statement on form S-3 or such other form for which SMHG then qualifies or which
      counsel for SMHG shall deem appropriate, and which form shall be available
      for
      the sale of SMHG Stock in accordance with the intended method(s) of distribution
      thereof, and use its commercial efforts to cause such registration statement
      to
      become and remain effective at least for a period ending with the first to
      occur
      of (i) the sale of all SMHG Stock covered by the registration statement or
      (ii) the availability under Rule 144(e) or 144(k) for Salient Partners and
      the Principals to immediately resell all SMHG Stock covered by the registration
      statement (in either case, the “Effectiveness
      Period”);
      provided that no later than five business days before filing with the Commission
      a registration statement or prospectus or any amendments or supplements thereto,
      including documents incorporated by reference after the initial filing of any
      registration statement, SMHG shall (i) furnish to one counsel (“Holders
      Counsel”)
      selected by Salient Partners and the Principals copies of all such documents
      proposed to be filed (excluding any exhibits other than applicable underwriting
      documents), in substantially the form proposed to be filed, which documents
      shall be subject to the review of such counsel, and (ii) notify Salient Partners
      and the Principals of any stop order issued or threatened by the Commission
      and
      take all reasonable actions required to prevent the entry of such stop order
      or
      to remove it if entered;

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

    


    (b) if
      a
      registration statement is subject to review by the Commission, promptly respond
      to all comments and diligently pursue resolution of any comments to the
      satisfaction of the Commission;

    


    (c) prepare
      and file with the Commission such amendments and supplements to such
      registration statement and the prospectus used in connection therewith as may
      be
      necessary to keep such registration statement effective during the Effectiveness
      Period (but in any event at least until expiration of the 90-day period referred
      to in Section 4(3) of the Securities Act and Rule 174 if applicable), and comply
      with the provisions of the Securities Act with respect to the disposition of
      all
      securities covered by such registration statement during such period in
      accordance with the intended method(s) of disposition by the sellers thereof
      set
      forth in such registration statement;

    


    (d) furnish,
      without charge, to Salient Partners and the Principals such number of copies
      of
      the prospectus included in such registration statement (including each
      preliminary prospectus and any other prospectus filed under Rule 424 under
      the
      Securities Act) as such Persons may request, in conformity with the requirements
      of the Securities Act;

    


    (e) use
      its
      commercially reasonable best efforts to register or qualify SMHG Stock under
      such other applicable securities or blue sky laws of such jurisdictions as
      Salient Partners and the Principals reasonably request as may be necessary
      for
      the marketability of SMHG Stock (such request to be made by the time the
      applicable registration statement is deemed effective by the Commission);
      provided that SMHG shall not be required to (i) qualify generally to do business
      in any jurisdiction where it would not otherwise be required to qualify but
      for
      this paragraph (e), (ii) subject itself to taxation in any such jurisdiction,
      or
      (iii) consent to general service of process in any such
      jurisdiction;

    


    (f) promptly
      notify Salient Partners and the Principals at any time when a prospectus
      relating thereto is required to be delivered under the Securities Act of the
      happening of any event which comes to SMHG’s attention if as a result of such
      event the prospectus included in such registration statement contains an untrue
      statement of a material fact or omits to state any material fact required to
      be
      stated therein or necessary to make the statements therein not misleading and
      SMHG shall promptly prepare and furnish to Salient Partners and the Principals
      a
      supplement or amendment to such prospectus (or prepare and file appropriate
      reports under the Exchange Act) so that, as thereafter delivered to SMHG’s of
      such SMHG Stock, such prospectus shall not contain an untrue statement of a
      material fact or omit to state any material fact required to be stated therein
      or necessary to make the statements therein not misleading; 

    


    (g) comply,
      and continue to comply during the period that such registration statement is
      effective under the Securities Act, in all material respects with the Securities
      Act and the Exchange Act and with all applicable rules and regulations of the
      Commission with respect to the disposition of all securities covered by such
      registration statement, and make available to its security holders, as soon
      as
      reasonably practicable, an earnings statement covering the period of at least
      twelve (12) months, but not more than eighteen (18) months, beginning with
      the
      first full calendar month after the effective date of such registration
      statement, which earnings statement shall satisfy the provisions of Section
      11(a) of the Securities Act;

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

    


    (h) as
      promptly as practicable after becoming aware of such event, notify Salient
      Partners and the Principals of the issuance by the Commission of any stop order
      or other suspension of effectiveness of the registration statement at the
      earliest possible time; and

    


    (i) use
      its
      best efforts to cause SMHG Stock covered by the registration statement to be
      quoted on the Nasdaq National Market or such other principal securities market
      on which securities of the same class or series issued by SMHG are then listed
      or traded.

    


    10.8 Voting
      of Shares of Newco GP.
      The
      Newco GP Regulations shall provide that until the aggregate purchase price
      of
      shares of SMHG Stock purchased by Salient Partners and the Principals subsequent
      to the Closing or the distributions of Newco and Newco GP made to its partners
      (collectively and taken as a whole) exceed the Cash Consideration, the following
      actions shall require the approval of at least two thirds (5 out of 7) of
      members of the Management Committee: (a) the sale or other disposition of all
      of
      substantially all of the assets of Newco or Newco GP, (b) the merger,
      consolidation, or conversion of Newco or Newco GP with or into another entity,
      (c) capital expenditures by Newco or Newco GP in excess of $200,000, (d)
      borrowings in excess of a working capital facility of $500,000.

    


    10.9 Relocation
      of Offices.
      The
      principal executive offices of Newco and Newco GP (or any subsidiary thereof,
      including, without limitation, Advisors, Capital, PMT (whether before or after
      Contribution)) shall be as determined by a majority vote of the Executive
      Committee, provided, however, that in the event that the Executive Committee
      determines to relocate the executive offices to 600 Travis, SMHG shall reimburse
      Newco and Newco GP for all relocation costs and absorb any costs and expenses
      of
      terminating the existing Salient Partners’ lease and PMT lease and such expenses
      shall not be considered and shall be specifically excluded for the purposes
      of
      calculating Fair Market Value, the value of the Put Option or Purchase Option,
      or the Allocable Share Amount, except to the extent such costs and expenses
      are
      included in determining SMHG’s net income.

    


    10.10 Commission
      Recapture.
      The
      parties agree that any recapture or commission rebates paid by Sanders Morris
      Harris Inc. with respect to investment funds managed by the Newco Group shall
      be
      reduced by 50% of the standard recapture of commission.

    


    SECTION
      11. Expenses.
      Each
      party hereto will pay its own expenses in connection with the transactions
      contemplated hereby, whether or not such transactions shall be
      consummated.

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

    


    SECTION
      12. Notices.
      All
      notices, requests, consents, and other communications under this Agreement
      shall
      be in writing and shall be delivered by hand, sent via overnight courier, sent
      by facsimile, or mailed by first class certified or registered mail, return
      receipt requested, postage prepaid: 

    


    if
      to the
      Salient Parties

    
      	
            	
              or
                any Principal, to:

            	
              Salient
                Partners, L.P.

            


    

    4625
      San
      Felipe, Suite 740

    Houston,
      Texas 77027

    Facsimile:
      713-629-0379

    Attn:
      A.
      Haag Sherman

     

    
      
        	
              	with a copy
                to:	Jonathan W.
                DePriest


      

    

    Chamberlain,
      Hrdlicka, White, Williams & Martin

    1200
      Smith Street, Suite 1400

    Houston,
      Texas 77002

    Facsimile:
      (713) 658-2553

     

    
      
        	
              	if to SMHG,
                to:	Sanders Morris Harris Group,
                Inc.


      

    

    600
      Travis, Suite 3100

    Houston,
      Texas 77002

    Attn:
      Robert E. Garrison II

    Facsimile:
      (713) 993-4617

     

    
      
        	
              	with a copy
                to:	John T.
                Unger


      

    

    Thompson
      & Knight LLP

    333
      Clay
      Street, Suite 3300

    Houston,
      Texas 77002

    Facsimile:
      (713) 654-1871

    


    or
      to
      such other person at such other place as such party shall designate to the
      other
      parties in writing. If Notices provided in accordance with this Section
      12
      shall be
      deemed delivered (i) upon personal delivery with signature required, (ii) one
      Business Day after they have been sent to the recipient by reputable overnight
      courier service (charges prepaid and signature required) (iii) upon
      confirmation, answer back received, of successful transmission of a facsimile
      message containing such notice if sent between 9 a.m. and 5 p.m., local time
      of
      the recipient, on any Business Day, and as of 9 a.m. local time of the recipient
      on the next Business Day if sent at any other time, or (iv) three Business
      Days
      after deposit in the mail. The term “Business
      Day”
as
      used
      in this Section
      12
      shall
      mean any day other than Saturday, Sunday or a day on which banking institutions
      are not required to be open in the State of Texas.

    


    SECTION
      13. Amendment
      and Waiver.
      This
      Agreement may be amended or modified only upon the written consent of the
      parties hereto. The rights and obligations of the of the parties under this
      Agreement may be waived only with the written consent of the party from whom
      such waiver is sought.

     

    
      
        
        

      

      
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    SECTION
      14. Headings.
      The
      headings of the various sections of this Agreement have been inserted for
      convenience of reference only and shall not be deemed to be part of this
      Agreement. 

    


    SECTION
      15. Severability.
      In case
      any provision contained in this Agreement should be invalid, illegal or
      unenforceable in any respect, the validity, legality and enforceability of
      the
      remaining provisions contained herein shall not in any way be affected or
      impaired thereby. 

    


    SECTION
      16. Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Texas, without giving effect to any choice of law provisions thereof.
      

    


    SECTION
      18. Remedies.
      In
      addition to being entitled to exercise all rights provided herein or granted
      by
      law, including recovery of damages, each party will be entitled to specific
      performance of the obligations of each other party under this Agreement. Each
      party hereby agrees that, in view of the uniqueness of the transaction
      contemplated by this Agreement, monetary damages may not be adequate
      compensation for any loss incurred by reason of any breach of the obligations
      under this Agreement and hereby agree to waive in any action for specific
      performance of any such obligation the defense that a remedy at law would be
      adequate.

    


    SECTION
      19. Dispute
      Resolution. 

    


    19.1 Negotiation.
      Any
      controversy or claim (“Dispute”)
      arising out of or relating to this Agreement shall be set forth in a written
      notice to the other party. Upon receipt of the written notice, the parties
      hereby agree to enter into a good faith negotiation to resolve the Dispute.
      If
      such good faith negotiation has not resolved the controversy or claim after
      30
      days, the parties hereby agree to enter into a formal arbitration proceeding
      pursuant to paragraph 19.2. 

    


    19.2
       Arbitration.
      Any
      and
      all Disputes by either party arising from or related to this Agreement that
      are
      not settled pursuant to paragraph 19.1, except actions arising or requesting
      equitable or injunctive relief, shall be determined solely and exclusively
      by
      arbitration (“Arbitration”)
      in
      accordance with the Federal Arbitration Act and using the Commercial Arbitration
      Rules of the American Arbitration Association (the “AAA”).
      On
      any Dispute where the matter in controversy is less than $100,000, the parties
      shall us a single arbitrator. With respect to any Disputes with matters in
      controversy exceeding $100,000, if the parties agree on a single arbitrator
      within 30 days of commencement of the proceeding, a single arbitrator shall
      be
      used. If the parties do not so agree, a panel of three (3) arbitrators shall
      be
      used. Each party shall choose one (1) arbitrator, and the third arbitrator
      shall
      be chosen by the two (2) arbitrators selected by the parties. If the first
      two
      arbitrators cannot agree within 60 days after commencement of the proceeding
      upon the appointment of the third arbitrator, the third arbitrator shall be
      appointed by the AAA in accordance with its then existing rules. For purposes
      of
      this paragraph, the “commencement of the proceeding” shall be deemed to be the
      date upon which a written demand for arbitration is received by the AAA from
      one
      of the parties. The arbitration hearing will be confidential and will be held
      in
      Houston, Texas. In any arbitration proceeding the parties shall be permitted
      to
      conduct discovery in accordance with the Federal Rules of Civil Procedure.
      The
      arbitrators shall provide the parties with a written opinion in connection
      with
      any award, and the arbitrators’ decision shall be final, binding and may be
      entered and enforced in any court judgment of competent
      jurisdiction.

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

    


    19.3 Costs. Each
      party shall bear its own expenses in connection with alternative dispute
      resolution procedures set forth in this paragraph, except that the parties
      shall
      split equally the costs associated with any Arbitration.

    


    19.4 Communications.
      All
      communications made in connection with the alternative dispute resolution
      procedure set forth in this section shall be treated as communications for
      the
      purposes of settlement and as such shall be deemed to be confidential and
      inadmissible in any subsequent litigation by virtue of Rule 408 of the Federal
      Rules of Evidence.

    


    SECTION
      20. Entire
      Agreement.
      This
      Agreement (including the attachments hereto) contains the entire agreement
      of
      the parties with respect to the subject matter hereof and supersedes and is
      in
      full substitution for any and all prior oral or written agreements and
      understandings between them related to such subject matter, and neither party
      hereto shall be liable or bound to the other party hereto in any manner with
      respect to such subject matter by any representations, indemnities, covenants
      or
      agreements except as specifically set forth herein.

    


    SECTION
      21. Binding
      Effect; Persons Benefiting; Assignment.
      This
      Agreement shall inure to the benefit of and be binding upon the parties hereto
      and their respective heirs, personal representatives, successors, and assigns.
      Nothing in this agreement is intended or shall be construed to confer upon
      any
      entity or person other than the parties hereto and their respective heirs,
      personal representatives, successors, and assigns any right, remedy, or claim
      under or by reason of this Agreement or any part thereof. This Agreement may
      not
      be assigned by any parties hereto without the prior written consent of each
      of
      the other parties hereto; provided, however, that SMHG may assign its rights
      hereunder to a subsidiary of SMHG, directly or indirectly, controlled by
      SMHG.

    


    SECTION
      22. Counterparts.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      constitute an original, but both of which, when taken together, shall constitute
      but one instrument, and shall become effective when one or more counterparts
      have been signed by each party hereto and delivered to the other
      party.


    


    [Signatures
      on following page]

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF,
      the
      parties hereto have executed this Agreement or have caused this Agreement to
      be
      executed by their duly authorized representatives shown below: 

    
      	 	 	 
	 	
              SALIENT
                ADVISORS, L.P.

            
	 	 	 
	 	By:	Salient Partners GP, LLC, general
              partner
	 
 	 
 	 
 
	
            	By:  	Haag Sherman
	 	
              
Name:
Haag
              Sherman
	 	Title:
              Manager


    

     

    
      
        	 	 	 
	 	
                
                  SALIENT
                    CAPITAL, L.P.

                

              
	 	 	 
	 	By:	Salient Partners GP, LLC, general
                partner
	 
 	 
 	 
 
	
              	By:  	Haag Sherman
	 	
                
Name:
Haag
                Sherman
	 	Title:
                Manager


      

       

      
        	 	 	 
	 	
                
                  SALIENT
                    PARTNERS, L.P.

                

              
	 	 	 
	 	By:	Salient Partners GP, LLC, general
                partner
	 
 	 
 	 
 
	
              	By:  	Haag Sherman
	 	
                
Name:
Haag
                Sherman
	 	Title:
                Manager


      

       

      
        	 	 	 
	 	SALIENT PARTNERS GP,
                LLC
	 
 	 
 	 
 
	
              	By:  	Haag Sherman
	 	
                
Name:
Haag
                Sherman
	 	Title:
                Manager


      

       

      
        	 	 	 
	 	
                THE
                  PRINCIPALS:

              
	 	 	 
	 	 	 
	
              	       	John A. Blaisdell
	 	
                
JOHN
                A.
                BLAISDELL


      

       

      
        	 	 	 
	
              	       	Andrew B. Linbeck
	 	
                
ANDREW
                B.
                LINBECK


      

      
         

        
          
            
            

          

          
            44

            
              

            

          

          
            
            

          

        

         

        
          	 	 	 
	
                	       	J. Matthew Newtown
	 	
                  
J.
                  MATTHEW
                  NEWTOWN


        

        
           

          
            	 	 	 
	
                  	       	Jeremy L. Radcliffe
	 	
                    
JEREMY
                    L.
                    RADCLIFFE


          

           

        

      

      
        
          	 	 	 
	
                	       	A. Haag Sherman
	 	
                  
A.
                  HAAG
                  SHERMAN


        

         

        
          	 	 	 
	
                	       	Adam L. Thomas
	 	
                  
ADAM
                  L.
                  THOMAS


        

      

       

    

    
      	 	 	 
	 	SANDERS
              MORRIS HARRIS GROUP, INC. 
	 
 	 
 	 
 
	
            	By:  	George
              L. Ball
	 	
              
Name:
George
              L. Ball
	 	Title:
              Chairman
              of the Board


    

    


    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

         

    EXHIBIT
      A

    ASSIGNMENT
      OF INTERESTS

    


    The
      undersigned (“Assignor”),
      the
      holder of _________________ (the “Securities”),
      representing a _____ % Sharing Ratio in ________________________ (the
“Company”),
      for
      such good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, does hereby sell, assign, transfer and convey the
      Securities to ______________(“Assignee”),
      to
      have and to hold unto Assignee and its successors and assigns
      forever.

    


    IN
      WITNESS WHEREOF, this Assignment has been executed and delivered effective
      as of
      April __, 2003.

    


    
      	 	 	 
	
            	
            	
              ASSIGNOR:

            
	 	 	 
	 	
              

            
	 	
              
 


    

     

    
      
        
        

      

      
        46