-P-

THE CLEAN-UP DOCUMENTS

Transferring Business Interests, Movables, Deposits, Real Estate, etc.....

Michael P. GearyGeary, Porter & Donovan

A Professional Corporation16475 Dallas Parkway

Suite 550Dallas, Texas 75248

(214) 931-9901

University of Houston Law CenterFamily Law Under The New Rules

February, 1996

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TABLE OF CONTENTS

I. INTRODUCTION.. . . . . . . . . . . . . . . . . . . . . . P-1

II. TRANSFERS OF PROPERTY BETWEEN SPOUSES INCIDENT TO DIVORCE.. . . . . . . . . . . . . . . . . . . . . . . . . . . . P-1A. Internal Revenue Code § 1041 Provisions.. . . . . . P-1B. Internal Revenue Service... . . . . . . . . . . . . P-2

1. Request for Supporting Information toDetermine Tax Basis of Property... . . . . . . P-2

2. Request for Copy of Tax Form.. . . . . . . . . P-2C. Drafting Considerations.. . . . . . . . . . . . . . P-2D. Specific Provisions.. . . . . . . . . . . . . . . . P-3

1. Equalization Payments. . . . . . . . . . . . . P-32. No Alimony.. . . . . . . . . . . . . . . . . . P-33. Non-Assignability Provisions.. . . . . . . . . P-44. Acceleration Provisions... . . . . . . . . . . P-45. Assignment of Life Insurance Policies... . . . P-66. Alimony Payments: Family Code v. the Internal

Revenue Code.. . . . . . . . . . . . . . . . . P-87. Qualified Medical Child Support Order... . . P-10

III. TRANSFER OF REAL PROPERTY. . . . . . . . . . . . . . . P-11A. Requirements... . . . . . . . . . . . . . . . . . P-11

1. Written and Subscribed Instrument... . . . . P-112. Description of Property... . . . . . . . . . P-123. Control of Grantee.. . . . . . . . . . . . . P-124. Consideration... . . . . . . . . . . . . . . P-12

B. General Warranty Deed.. . . . . . . . . . . . . . P-12C. Special Warranty Deed.. . . . . . . . . . . . . . P-13D. Quitclaim Deed... . . . . . . . . . . . . . . . . P-13E. Real Estate Lien Note (Promissory Note).. . . . . P-13

1. Requirements for Negotiable Instrument.. . . P-132. Transferee's Rights in Negotiable Instrument.

.. . . . . . . . . . . . . . . . . . . . . . P-14F. Deed of Trust.. . . . . . . . . . . . . . . . . . P-15G. Recordation.. . . . . . . . . . . . . . . . . . . P-15H. Homestead Exemption and Equitable Liens.. . . . . P-16I. Once-In-A-Life-Time Exclusion.. . . . . . . . . . P-16

IV. PERSONAL PROPERTY... . . . . . . . . . . . . . . . . . P-17A. Aircraft... . . . . . . . . . . . . . . . . . . . P-17

1. Requirements for Registration... . . . . . . P-172. Recording Requirements.. . . . . . . . . . . P-173. Applicable Agency... . . . . . . . . . . . . P-17

B. Motorboats and Outboard Motors... . . . . . . . . P-181. Registration with the State of Texas.. . . . P-182. U.S. Coast Guard Documented Vessels... . . . P-19

C. Motor Vehicles... . . . . . . . . . . . . . . . . P-201. Transfer with a Certificate of Title.. . . . P-20

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2. Transfer By Power of Attorney... . . . . . . P-203. Transfer By Decree of Divorce... . . . . . . P-204. Transfer Without a Certificate of Title... . P-205. Odometer Disclosure Statement... . . . . . . P-206. Lost Title Affidavit.. . . . . . . . . . . . P-207. Not a Taxable Event... . . . . . . . . . . . P-21

D. ART.. . . . . . . . . . . . . . . . . . . . . . . P-21E. GUNS... . . . . . . . . . . . . . . . . . . . . . P-21

1. Rifles and Handguns. . . . . . . . . . . . . P-212. Automatic Weapons... . . . . . . . . . . . . P-21

V. BILLS OF SALE AND OTHER FORMS OF ASSIGNMENTS.. . . . . P-22A. Bills of Sale.. . . . . . . . . . . . . . . . . . P-22B. Assignment of Interest... . . . . . . . . . . . . P-22

1. Miscellaneous Application... . . . . . . . . P-222. Informal Letter... . . . . . . . . . . . . . P-23

VI. OIL, GAS AND OTHER MINERAL INTERESTS.. . . . . . . . . P-23

VII. COVENANTS NOT TO COMPETE, EMPLOYMENT AGREEMENTS ANDCONSULTING AGREEMENTS... . . . . . . . . . . . . . . . P-25A. Covenants Not to Compete... . . . . . . . . . . . P-25B. Employment Agreements and Consulting Agreements.. P-32

VIII. TRANSFERRING SECURITIES.. . . . . . . . . . . . . P-32A. Stocks and Bonds.. . . . . . . . . . . . . . . . P-32

1. Held in Brokerage Accounts.. . . . . . . . . P-322. Actual Stock Certificate Held by Spouse... . P-33

IX. STOCK OPTIONS AND WARRANTS.. . . . . . . . . . . . . . P-34

X. CORPORATE REDEMPTIONS... . . . . . . . . . . . . . . . P-34A. TBCA Provisions.. . . . . . . . . . . . . . . . . P-34B. Redeemable v. Unredeemable Stock... . . . . . . . P-35C. TBCA Limitations on the Purchase and Redemption of

Corporate Stock.. . . . . . . . . . . . . . . . . P-35D. Procedure for Redemption... . . . . . . . . . . . P-36

XI. DIVISION OF CLOSELY-HELD STOCK.. . . . . . . . . . . . P-37A. Resignation as Officer and Director.. . . . . . . P-37B. Unanimous Consents of Board of Directors and

Shareholders... . . . . . . . . . . . . . . . . . P-37C. Promissory Note.. . . . . . . . . . . . . . . . . P-37D. Stock Power.. . . . . . . . . . . . . . . . . . . P-37E. Representation Letter.. . . . . . . . . . . . . . P-38F. Collateral Pledge Agreement.. . . . . . . . . . . P-38G. Escrow Agreement... . . . . . . . . . . . . . . . P-39H. Receipt Letter from Escrow Agent... . . . . . . . P-39

XII. OTHER SECURITY INTERESTS.. . . . . . . . . . . . . . . P-39A. Financing Statements. . . . . . . . . . . . . . . P-39B. Guaranty Agreements.. . . . . . . . . . . . . . . P-40

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XIII. BIBLIOGRAPHY. . . . . . . . . . . . . . . . . . . P-40

XIV. APPENDICES.. . . . . . . . . . . . . . . . . . . . . . P-421. IRS Form 4506.. . . . . . . . . . . . . . . . . . P-432. Collateral Assignment of Life Insurance.. . . . . P-453. Special Warranty Deed.. . . . . . . . . . . . . . P-504. Promissory Note.. . . . . . . . . . . . . . . . . P-555. Bill of Sale and Assignment.. . . . . . . . . . . P-616. Bill of Sale. . . . . . . . . . . . . . . . . . . P-657. Assignment of Interest (State Bar Form).. . . . . P-678. Assignment of Interest. . . . . . . . . . . . . . P-709. Assignment of Oil & Gas Leases. . . . . . . . . . P-7610. Assignment of Mineral Interest. . . . . . . . . . P-8211. Oil and Gas Assignment - Spouse to Spouse.. . . . P-8612. Non-Competition Agreement.. . . . . . . . . . . . P-9014. Consulting Agreement. . . . . . . . . . . . . . . P-10115. Resignation Letter. . . . . . . . . . . . . . . . P-10616. Unanimous Consent of Shareholders.. . . . . . . . P-10717. Unanimous Consent of Board of Directors.. . . . . P-10918. Stock Power.. . . . . . . . . . . . . . . . . . . P-11119. Representation Letter.. . . . . . . . . . . . . . P-11220. Collateral Pledge Agreement.. . . . . . . . . . . P-11422. Receipt From Escrow Agent.. . . . . . . . . . . . P-12823. Form UCC-1 Financing Statement. . . . . . . . . . P-12924. Financing Statement - County Filing.. . . . . . . P-13125. Financing Statement - State Filing. . . . . . . . P-13426. Guaranty Agreement. . . . . . . . . . . . . . . . P-137

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I. INTRODUCTION. This article is designed to provide the readerwith basic authorities and forms suitable for the transfer ofassets at the time of divorce. It is meant to be used as apractical tool for the attorney and the secretaries in providingquick access to necessary forms and information that may beutilized when transferring certain types of assets at the time ofdivorce. There is also a discussion, with forms, for the use ofemployment agreements and covenants not to compete, as well asvarious methods of securing payment obligations which result froma divorce. This paper is not intended to be an exhaustive analysisof existing case law and the various statutory provisions that mayeffect the subject matter. Therefore, if the reader does not havea working knowledge of the applicable statutes which govern theenforceability of some of the forms attached to this article,caution should be used before utilizing those forms.

II. TRANSFERS OF PROPERTY BETWEEN SPOUSES INCIDENT TO DIVORCE.

A. Internal Revenue Code § 1041 Provisions. Section 1041 ofthe Internal Revenue Code, ("IRC") provides that no gain or loss isrecognized on a transfer of property between spouses or betweenformer spouses incident to divorce, nor is the value of theproperty received included in the gross income of the transfereespouse. The transferee's basis is equal to the transferor's basisimmediately before the transfer. In such cases, the basis of thetransferred property in the hands of the transferee is the adjustedbasis of the transferor. Such transfers are treated as gifts withrespect to basis, and the transferor's basis for the transferredproperty is carried over to the transferee.

A transfer of property "incident to the divorce" occurs ineither of the following circumstances:

(a) the transfer occurs not more than one (1) year afterthe date on which the marriage ceases; or

(b) the transfer is related to the cessation of themarriage.

Therefore, a transfer of property occurring not more than one (1)year after the date on which the marriage ceases need not berelated to the cessation of the marriage to qualify for Section1041 treatment.

A transfer of property is treated as "related to the cessationof the marriage" if the transfer is pursuant to a divorce orseparation instrument and the transfer occurs not more than six (6)years after the date on which the marriage ceases. A divorce orseparation instrument includes a modification or amendment to suchdecree or instrument. Any transfer not pursuant to a divorce orseparation instrument and any transfer occurring more than six (6)

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years after the cessation of the marriage is presumed not to berelated to the cessation of the marriage. However, thispresumption may be rebutted by showing that the transfer was madeto effect the division of property owned by the former spouses atthe time of the cessation of the marriage. For an example ofovercoming this rebuttable presumption, see IRS Private LetterRuling No. 9123053.

B. Internal Revenue Service.

1. Request for Supporting Information to Determine TaxBasis of Property. The Internal Revenue Code requiresdetermination of the tax basis in assets sold subsequent to adivorce. All personal property has a tax basis which becomesimportant at the time of sale. Oil properties, stocks, bonds, art,and horses are some of the items which could conceivably be soldafter divorce. This would require information relating to the costand/or adjusted tax basis of the property at the time of purchase,in order to determine the tax basis later upon sale.

Because some of these items purchased during marriage andreceived at the time of divorce may not have been business itemswhich were depreciated on the parties' tax returns, it is importantto obtain documentation necessary to compute the tax basis in theevent of sale.

A review of the client's asset schedule in the decree ofdivorce and a discussion with him as to purchase price of the assetand persons possessing the documents or information relating to theprice should be held. A decision can then be made as to whether anyimportant documents are in the possession of the other spouse orC.P.A. which are necessary for the calculation.

In the event any of the items your client is to receivehave been depreciated on the tax return, such as a personal vehiclewhich has been depreciated partially for business use, a letter tothe C.P.A. can be sent. This letter should request copies of anysupporting documentation relating to the tax basis computation ordepreciation schedules which were used but not attached to the taxreturn.

2. Request for Copy of Tax Form. IRS Form 4506 allowsone spouse to request copies of joint tax returns from previousyears [see Appendix 1].

This form can be an important closing document in theevent prior year returns are necessary to review the depreciationhistory of an asset awarded to the spouse which is depreciated onprior returns.

C. Drafting Considerations. Typically, payments which areto be made to a spouse will be in the form of alimony payments or

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equalization payments. However, such payments could be classifiedas payments towards a spouse's interests in real property orpayments associated with a spouse's ownership interest in aclosely-held business, including a redemption. Regardless of theclassification of the payment to a spouse, it is important toidentify all property that is to be used as collateral for paymentobligations as well as specify all ancillary documents that thedebtor spouse and the secured party (i.e. the receiving spouse) areto execute to create and perfect a security interest in thecollateral. This would include a specific itemization, in theDecree of Divorce, of all ancillary settlement documents that areto be executed as part of any settlement. Therefore, and unlessall settlement documents will be executed prior to the finalizationof the divorce, you should identify in the Divorce Decree not onlywhat documents are to be executed, but also when and where they areto be executed. Additionally, it is better practice to attach tothe Divorce Decree, as exhibits, all ancillary settlement documentsto be signed by the parties. By preparing the Decree of Divorce inthis fashion, a party enhances his or her chances of enforcing theexecution of all settlement documents in order to effectuate theterms of the settlement.

D. Specific Provisions.

1. Equalization Payments. When drafting settlementdocuments that involve equalization payments by one spouse to theother, it is important to expressly provide that such payments are:(1) related to the division of the community property estate; (2)intended to constitute a form of payment in connection with thedivorce with respect to interests of the spouse in the communityestate, and (3) not intended to represent any form of alimonypayments. Suggested language would be the following:

The Parties have provided herein that Wife shall receivecertain payments from Husband following the Parties'divorce as a means of equalizing the values of propertytaken by each pursuant to this Agreement. The paymentobligations of Husband embodied in this Section ____ arerelated to the division of the community property estate,are intended to constitute a form of payment inconnection with the divorce for rights or interests ofWife in the community estate and are not intended torepresent any form of alimony payments.

2. No Alimony. The final element identified in thesuggested language above is important, otherwise, one mightsubject the receiving spouse to the alimony provisions set forth inthe Internal Revenue Code (IRC). One of the IRC requirementsnecessary for a payment to qualify as alimony is that thesettlement agreement must not designate the payments not to beincluded in gross income of the recipient and not allowable as adeduction under the provisions of Section 215. Therefore, one

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should always include a provision specifically providing that theequalization payments do not and are not intended to qualify asalimony. Some suggested language would be:

The payments set forth in this Section ____ are notintended by the Parties to be construed as alimony orseparate maintenance payments; therefore, Wife shall notinclude these amounts in computing her gross income forfederal income tax purposes under Section 71 of theInternal Revenue Code ("Code"), and Husband shall take nodeduction or reduction in his gross income for federalincome tax purposes as a result of such payment underSection 215 of the Code.

3. Non-Assignability Provisions. Another draftingconsideration that might be considered is to provide for the non-assignability of any equalization and/or alimony payments. Thistype of provision would be similar to the typical spendthriftprovisions that are normally in testamentary or other types oftrust agreements. Some suggested language would be the following:

Unless otherwise provided in this Agreement, Wife shallhave no right or power whatsoever to anticipate, byassignment or otherwise, any such payment or a portionthereof, nor in advance of actually receiving the same,shall Wife have the power to sell, transfer, encumber,mortgage or in any manner charge or burden any suchpayments, or any portion thereof, nor should any payment,in advance of actual receipt, be subject to anyexecution, garnishment, attachment, insolvency,bankruptcy, or other legal proceeding of any character,or legal sequestration, levy or sale, or in any manner beapplicable or subject to the payment of Wife's debts.Any purported transfer, assignment, encumbrance or otherattempted act in violation of this paragraph shall bevoid.

4. Acceleration Provisions. If you are representingthe party receiving alimony, equalization or any other types ofpayments and, if the payment obligation will not be evidenced by apromissory note or if the promissory note does not provide for theacceleration of the obligation, you should consider language whichallows for the acceleration of all remaining payments in the eventof default. One of the main reasons for the inclusion of this typeof provision is to enable a party to immediately accelerate allremaining payments due instead of requiring a party to prove theelements of anticipatory breach. The case of Taylor PublishingCo. v. Systems Marketing, Inc., 686 S.W. 2d 213 (Tex. App. - Dallas1984, writ ref'd n.r.e.) set out the elements of anticipatorybreach as follows:

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(a) The defendant absolutely repudiated hisobligations;

(b) without just excuse; and

(c) Plaintiff was damaged thereby.

The Court in Taylor went on to state that:

When a party who is obligated to make fixedpayments of money to another absolutelyrepudiates the obligation without just excuse,the obligor is entitled to maintain his actionat once for the entire breach and is entitledin one suit to receive in damages the presentvalue of the future payments payable to him byvirtue of the contract.

In the case of Builders Sand, Inc. v. Turter, 678 S.W.2d 115,120 (Tex. App. - Houston [14th Dist.] 1984, no writ) the courtstated that "Anticipatory repudiation may consist of either wordsor actions by a party to a contract indicating that a party doesnot intend to perform the contract in accordance with its terms inthe future."

Because the elements of anticipatory breach will in most casesbe a fact issue and not an issue to be decided as a matter of law,it would be better practice to eliminate this issue entirely, tothe extent possible. Some suggested language would be thefollowing:

Husband and Wife agree that, in the event Paying Partybecomes in default with respect to the payment of anymonthly alimony/equalization obligations pursuant to theterms of this Section ____, then Receiving Party shallgive Paying Party written notice of such default anddemand to cure same. Such notice shall be furnished toPaying Party by certified mail, return receipt requested,at the address set forth in subsection _____ hereinbelow,or at such other address as may subsequently be providedby Receiving Party to Paying Party. Receiving Partyshall also provide a copy of all such default notices toPaying Party's attorney, _____________________, at_______________________. If Paying Party has not curedthe default within ____________ (___) days of his receiptof such written notice, then Receiving Party shall havethe option, by subsequent written notice/without furthernotice to Paying Party and Paying Party's attorney, toaccelerate all remaining alimony/equalization due toReceiving Party.

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In the event of an acceleration as provided above, thetotal sum of alimony/equalization payments then due toReceiving Party by Paying Party shall immediately becomedue and payable [for alimony: ,together with an amountsufficient to reimburse Receiving Party for anyadditional income tax which Receiving Party would nototherwise have had to pay for the year in which sheactually receives the accelerated amount of alimonyresulting from such default by the Paying Party].

Should the Receiving Party, at any time, waive PayingParty's timely payment of the monthlyalimony/equalization payments, such waiver will notaffect his/her subsequent right to enforce the provisionsof this subsection _____.

5. Assignment of Life Insurance Policies. A method forsecuring payment obligations would be the utilization of lifeinsurance policies and any cash values which may be part of suchpolicies. When drafting this kind of security interest, you maywant to consider the following:

(a) Should your client be named a primarybeneficiary or the irrevocable beneficiary;

(b) Provide for notification to the insurancecompany of the collateral assignment of the policy and set forthlanguage requiring that proof of the beneficiary designation beprovided within a specified timeframe;

(c) Set forth language which provides for therelease of the payor's estate upon the beneficiary's receipt of theinsurance proceeds to the extent of the amount equalling theremaining obligations due to the beneficiary;

(d) As the obligations to the beneficiary havedecreased due to payments made by the payor during his or herlifetime, you may want to allow the obligor to reduce the amount ofthe insurance proceeds payable to the beneficiary on an annualbasis;

(e) Prohibit the obligor from borrowing against thecash value of the policy and preclude the obligor from assigning,pledging or in any other manner alienating the policy;

(f) Include language which not only requires theobligor to pay all premiums, principal and interest on existingpolicy loans as they become due and payable, but also provide thatall such payments will not be construed as alimony;

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(g) Include language which requires the beneficiaryto release all rights in the policy upon the full satisfaction ofall payment obligations by the payor; and

(h) Specifically require the beneficiary to remit tothe obligor's estate all amounts that the beneficiary receiveswhich are in excess of the then remaining amounts due to thebeneficiary.

Some suggested language that incorporates these provisionswould be the following:

__.01 Life Insurance Security. Husband covenants andagrees, as further security for his obligations to makealimony payments and equalization payments to Wifepursuant to the provisions of Sections __ and __ of thisAgreement, to name and maintain Wife as theprimary/irrevocable beneficiary on the following lifeinsurance policies insuring his life payable at hisdeath:

1.2.

Husband agrees to pay and shall pay all premiumsnecessary to maintain the above-listed life insurancepolicies in full force and effect so long as he isobligated to make payments to Wife pursuant to Sections__ and __ of this Agreement.

Husband further agrees to take all steps necessaryto cause Wife to be named the primary/irrevocablebeneficiary of the life insurance policies describedabove within _______ (___) days of the date of hisexecution of this Agreement and will, within ______ (___)days of his receipt of same, furnish to Wife proof ofsaid beneficiary designations.

Wife agrees that, to the extent Wife receives lifeinsurance proceeds paid to her at Husband's death in anamount equal to the then remaining total of alimonypayments and equalization payments owing to Wife,Husband's estate will be relieved of said obligations.

The Parties recognize that the alimony payments andequalization payments being paid to Wife pursuant to thisAgreement will be reduced as such payments are made byHusband to Wife. Therefore, beginning in January of theyear in which Husband's total alimony obligation andequalization payment obligation to Wife has been reducedto an amount less than the face value of the above-listedinsurance policies, and each January of every yearthereafter, Husband shall have the option of reducing theamount of life insurance proceeds which Wife would be thebeneficiary of to an amount equaling the then remaining

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unpaid alimony payments and equalization payments due toWife.

Husband agrees that, so long as he is obligated tomake alimony and equalization payments to Wife pursuantto this Agreement, he shall not borrow from, assign orpledge the cash value(s), if any, of the life insurancepolicies on which Wife is the primary beneficiary.

Husband and Wife agree that extracts of this Section___ shall be provided to the insurance companies issuingthe policies on which Wife is to be named theprimary/irrevocable beneficiary. Said insurancecompanies shall be authorized and requested to:

(1) make said extract a part of its policyfile to the end that no loan or change ofbeneficiary designation can be made toHusband in violation of this Section ___;and

(2) notify Wife of any threatened or actuallapse of coverage.

The Parties agree that the payment of all principaland interest on existing policy loans and the premiumspaid by Husband to meet his obligations under thisSection ___ shall not be construed as alimony.Therefore, the premiums and the repayment of existingpolicy loans are not income to Wife and shall not bedeductible from or an adjustment to the gross income ofHusband.

Husband's obligations under this Section ___ shallterminate when his obligations to make alimony paymentsand equalization payments to Wife have been paid in full.At that point in time, to the extent required by theinsurance companies, Wife agrees to sign any releaserequired by the insurance companies to release allpolicies and remove Wife as the designatedprimary/irrevocable beneficiary.

In the event of Husband's death, and to the extentthat Wife receives payment of insurance proceeds from theinsurance policies securing Husband's obligations in anamount which is greater than the then remaining totalamounts of alimony and equalization payments due to Wifeby Husband pursuant to the terms of this Agreement, thenWife covenants and agrees to remit all such excessamounts, within _____ (___) days of her receipt of same,to the independent executor or other court appointedadministrator of Husband's estate.

An example of a form Collateral Assignment of Life InsurancePolicy is attached hereto as Appendix 2.

6. Alimony Payments: Family Code v. the InternalRevenue Code.

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In 1995 the Texas Legislature enacted new legislation which,for the first time in Texas history, provides for court ordered"spousal maintenance" (alimony) payments. However, the courts'authority to order spousal maintenance is limited to a period ofthree (3) years from the date of the court's orders, and thepayment amounts cannot exceed $2,500.00 per month or 20% of thepayor's gross monthly income, whichever is less.

The parties to a divorce have always had the ability to enterinto an agreement for the payment by one spouse to the other ofspousal maintenance or alimony. In that case, generally, there areno legal limits or restrictions as to the maximum length of timesuch payments are made, nor as to the amounts of such payments,except for the requirement that any transaction being takenincident to a divorce should occur within six years of the date ofthe divorce.

When structuring spousal maintenance payments in settlementdocuments, it is important to weigh the pros and cons of opting for"court ordered" maintenance or voluntary payments.

The Texas Family Code subsection 3.9602 and 3.9603 set outvery strict requirements for a spouse to receive maintenancepayments and the factors which the court can use in determining theamount of such payments.

Both court ordered and voluntary spousal maintenance paymentsare subject to the provisions of the Internal Revenue Code ("IRC").

The IRC "recapture rule" provides that, if the total annualalimony to be paid during any of the first three years followingdivorce exceeds $15,000.00 per year, then the alimony payments mustcontinue for at least three calendar years, and that payments whichexceed $15,000.00 per year during the first three calendar yearscan be disqualified by the IRS as alimony.

Therefore, it is important to structure alimony provisions sothat they conform with the requirements of both the Family Code andthe IRC. Specifically:

1. Payments must be made in cash or its equivalent;

2. Payments must be designated as being includable in thegross income of the payee and deductible from the grossincome of the payor (up to $15,000.00 per year for thefirst three years); and

3. The parties cannot have lived together or filed a jointtax return during any year in which alimony is paid.

The IRC and the Family Code differ slightly as to events uponwhich alimony or maintenance payments must cease. The IRC requires

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that such payments cease upon the death of the payee, and that nosubstitute payments of any kind can be made after the payee'sdeath. The Family Code, however, provides that such payments cancease upon the death of either party. Under the Family Code, youcan draft alimony or maintenance provisions to provide that, in theevent of the death of the payee, the payor must pay a lump sum ofalimony to pay off the deceased payee's bills. However, theInternal Revenue Service would disallow such payments as beingalimony inasmuch as they were made after the payee's death. In anopposite example, if you draft spousal maintenance language whichrequires that the payor's estate would be obligated to continuesuch payments after the payor's death, that provision would beenforceable under both the Family Code and the IRC.

The Family Code also provides that court ordered alimony canbe terminated if, upon hearing, the payee is found to becohabitating on a "continuing, conjugal basis". (Tx. Fam. Code§4.9607)

Also remember that the recapture rule does not apply undercertain conditions. If alimony is terminated during the first 3-year period of payments because either party dies or the payeespouse remarries, such payments are not subject to the recapturerule. Additionally, the recapture rule does not apply "...wherethe payments fluctuate because of a continuing liability to pay -for at least three years - a fixed portion of income from theearnings of a business or property or from compensation fromemployment or self-employment." (i.e. a percentage of the payor'ssalary, business profits or rental income, etc.) IRS Code Sec.71(f)(5).

Lastly, the IRC provides that, while certain payments may bedesignated as alimony, such payments, in all or in part, could bedisallowed as alimony if they are tied in any manner to an eventinvolving a child, i.e. the child's marriage, death, etc. Such as,if a divorce decree provides alimony will decrease by $100 permonth after a child turns 18, that $100 per month will be treatedby the IRS as child support and not alimony.

7. Qualified Medical Child Support Order.

In the 1995 Legislation's massive reform of the Texas FamilyCode, and in order to comply with Federal law, it was provided thatin a divorce action or other suit affecting the parent-childrelationship "the court shall render an order for the medicalsupport of the child." This order is called a Qualified MedicalChild Support Order ("QMSCO"). (Tx. Fam. Code §154.181, et. seq.)As a result of this new legislation, the courts of Texas can noworder the employers of divorced parents to maintain medicalinsurance on behalf of a child, and allows the employer to deductthe cost of such insurance coverage directly from the employee'spay check. This procedure is similar to the wage withholding

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provisions which have been in effect in Texas for a number ofyears. The provisions of the Texas Family Code setting out therequirements for such medical child support orders are contained insubsections 154.182 through 154.192. Additionally, the TexasFamily Law Practice Manual published by the State Bar is beingtotally revised and should be available by July or August, 1996.Practice notes and forms pertaining to qualified medical childsupport orders will be included in that revised publication.

III. TRANSFER OF REAL PROPERTY.

A. Requirements.

1. Written and Subscribed Instrument. A writteninstrument, subscribed and delivered by the conveyer or theconveyer's agent, is required for a conveyance of real estate. Tex.Prop. Code Ann. § 5.021 (Vernon 1984); see Truitt v. Wilkinson, 379S.W.2d 400 (Tex. Civ. App.--Texarkana 1964, no writ); Gillman v.Martin, 366 S.W.2d 89, 90 (Tex. Civ. App.--San Antonio 1963, writref'd). It may not be recorded unless it is signed andacknowledged or sworn to by the grantor in the presence of two ormore credible subscribing witnesses or acknowledged or sworn tobefore and certified by an officer authorized to takeacknowledgments or oaths, as applicable. Tex. Prop. Code Ann. §12.001(b) (Vernon Supp. 1991).

Section 5.022(a) of the Property Code provides a form for aconveyance of fee simple title to real estate, but use of the formis not required to effect a valid conveyance. The parties may useany form not in contravention of law. Id. § 5.022(c). Technicalwords are not necessary as long as there are operative words ofgrant demonstrating the grantor's intention to convey title to theland, the land is sufficiently described, and the deed is signed bythe grantor. See Harris v. Strawbridqe, 330 S.W.2d 911, 914-15(Tex. Civ. App.--Houston 1959, writ ref'd n.r.e.). It should benoted, however, that the use of the word grant or convey in a deedgives rise to the following implied covenants, unless the deedexpressly provides otherwise:

(a) that before the execution of the conveyance thegrantor has not conveyed the estate or any interestin the estate to any person other than the grantee,and

(b) that at the time of the execution of the conveyancethe estate is free from encumbrances.

These implied covenants may be the basis for a lawsuit as if theyhad been expressed in the conveyance. Tex. Prop. Code Ann. § 5.023(Vernon 1984).

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2. Description of Property. A deed must accuratelydescribe the land being conveyed. If the deed fails to furnish ameans of determining with reasonable certainty the land intended tobe covered by the deed, the deed is void. Rubiolo v. Lytle, 370S.W.2d 202, 205 (Tex. Civ. App---San Antonio 1963, writ ref'dn.r.e.). If the description in the deed, by extrinsic evidence,such as parol testimony, can be made to apply to a definite pieceof property, the description is sufficient. American SpiritualistAss'n v. City of Dallas, 366 S.W.2d 97, 102 (Tex. Civ. App.--Dallas1963, no writ); Ehlers v. Delhi- Taylor Oil Corp., 350 S.W.2d 567,573 (Tex. Civ. App.--San Antonio 1961, no writ). If the descriptionis sufficient for a party familiar with the locality to identifythe premises with reasonable certainty, or if there is enough inthe instrument to enable one, by pursuing an inquiry based on theinformation contained in the deed, to identify the particularproperty, the description will also be sufficient. Oswald v.Staton, 421 S.W.2d 174, 176 (Tex. Civ. App.--Waco 1967, writ ref'dn.r.e.).

3. Control of Grantee. Unless the deed has been placedwithin the control of the grantee by the grantor with the intentionthat it become operative as a conveyance and has been accepted bythe grantee, it will not be effective to pass title. Estes v.Reding, 398 S.W.2d 148 (Tex. Civ. App.--El Paso 1965, writ ref'dn.r.e.); Young v. Jewish Welfare Federation, 371 S.W.2d 767, 771(Tex. Civ. App.--Dallas 1963, writ ref'd n.r.e.); Wilson v. Olsen,336 S.W.2d 899, 901 (Tex. Civ. App.--El Paso 1960, no writ).

4. Consideration. Consideration is not necessary fora duly executed and delivered deed. Cannon v. Wingard, 355 S.W.2d776, 781 (Tex. Civ. App.--Dallas 1962, writ ref'd n.r.e.).

B. General Warranty Deed. A general warranty deed containsan express covenant of warranty that the grantor and his heirs,executors, and administrators will "WARRANT AND FOREVER DEFEND alland singular the said premises unto the said grantee, his heirs,and assigns, against every person whomsoever lawfully claiming orto claim the same or any part thereof." Its purpose is to indemnifythe grantee against any loss or injury he may sustain by a defectin the grantor's title, with the grantor warranting that he willrestore the purchase price to the grantee if the land is entirelylost, that he will discharge any liens or encumbrances incurredbefore the conveyance that are not assumed by the grantee, and thatin the event of partial loss he will repay the proportionate amountof the consideration that the amount of loss bears to the entireconsideration paid. City of Beaumont v. Moore, 202 S.W.2d 448, 453(Tex. 1947). The liability of the warrantor extends to all casesinvolving a failure of title to land purported to be conveyed bythe terms of the deed. Peavy-Moore Lumber Co. v. Duhig, 119 S.W.2d688, 690 (Tex. Civ. App.--Beaumont 1938), aff'd, 144 S.W.2d 878(Tex. 1940).

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C. Special Warranty Deed. A special warranty deed is usedif the grantor wishes to limit his liability to persons claimingthrough him alone, rather than warranting the entire chain of titleof the property from its inception to his grantee. By adding thephrase "by, through, or under me, but not otherwise" to the generalwarranty clause, the general warranty deed is changed into aspecial warranty deed. Owen v. Yocum, 341 S.W.2d 709, 710 (Tex.Civ. App.--Fort Worth 1960, no writ). By limiting the generalwarranty clause in this manner, the grantor restricts his liabilityonly to claims of title or right asserted through or under him andhas no liability for any defects in title that arose before histitle. Garrett v. Houston Land & Trust Co., 33 S.W.2d 775, 777(Tex. Civ. App.--Galveston 1930, writ ref'd). A form SpecialWarranty Deed is attached as Appendix 3.

D. Quitclaim Deed. A quitclaim deed conveys only thegrantor's right, title, and interest in the land described in thedeed and not the land itself. Cook v. Smith, 174 S.W. 1094, 1095(Tex. 1915); Baldwin v. Drew, 180 S.W. 614, 616 (Tex. Civ. App.--Beaumont 1915, no writ). If the grantor owns the property at thetime of the execution and delivery of the quitclaim deed, the deedwill pass title to the property to the grantee, but a quitclaimdeed will not pass after-acquired title. Halbert v. Green, 293S.W.2d 848, 851 (Tex. 1956); Breen v. Morehead, 126 S.W. 650, 656(Tex. Civ. App. 1910), aff'd, 136 S.W. 1047 (Tex. 1911). A granteeunder a quitclaim deed is charged with notice of outstanding claimsagainst the property and is not protected as an innocent purchaserfor value. Cook v. Smith, 174 S.W. 1094, 1095 (Tex-1915);Threadgill v. Bickerstaff, 29 S.W. 757, 758-59 (Tex-1895). Theforegoing is true even if the quitclaim deed is from a remotegrantor in the grantee's chain of title and not from the grantee'sgrantor. Houston Oil Co. v. Niles, 255 S.W. 604, 610 (Tex. Comm'nApp. 1923, judgm't adopted).

E. Real Estate Lien Note (Promissory Note).

1. Requirements for Negotiable Instrument. There is nostatutory form for a real estate lien note. There are certainadvantages, however, in having the note qualify as a negotiableinstrument. To be a negotiable instrument, a note must--

(a) be signed by the maker,

(b) contain an unconditional promise to pay a sumcertain in money (and no other promises),

(c) be payable on demand or at a definite time,and

(d) be payable to order or to bearer. Tex. Bus. &Com. Code Ann. § 3.104(a) (Tex. UCC) (Vernon1968).

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A "promise" is an undertaking to pay and must be more than amere acknowledgment of an obligation. Id. § 3.102(a)(3). A writingcomplying with the requirements of section 3.104 is a "note" if itis a promise other than a certificate of deposit. The sum payablein the note will qualify as a sum certain even though the noterequires it to be paid--

(a) with stated interest or by statedinstallments;

(b) with different rates of interest before andafter default or a specified date;

(c) with a stated discount or addition if paidbefore or after the date fixed for payment;

(d) with exchange or less exchange, whether at afixed rate or at the current rate; or

(e) with cost of collection or attorney's fees orboth on default. Id. § 3.106(a).

The note is payable at a definite time if by its terms it ispayable on or before a stated date or at a fixed period after astated date, at a fixed period after sight, at a definite timesubject to any acceleration, or at a definite time subject toextension at the option of the holder or to extension to a furtherdefinite time at the option of the maker or acceptor orautomatically on or after a specified act or event. Id. § 3.109(a).An instrument otherwise payable by the terms only upon an act orevent uncertain as to time of occurrence is not payable at adefinite time even though the act or event has occurred. Id. §3.109(b).

2. Transferee's Rights in Negotiable Instrument. It isdesirable to have the note qualify as a negotiable instrumentbecause a transferee who acquires the note for value, in goodfaith, and without notice that it is overdue or has been dishonoredor of any defense against or claim to it on the part of any person,takes the note as a holder in due course. Id. § 3.302; see Id.§§ 3.303, .304. If the transferee in the note qualifies as a holderin due course, he takes the note free from all claims to it on thepart of any person and to all defenses of any party to the notewith whom he has not dealt, except--

(a) infancy, to the extent it is a defense to asimple contract;

(b) such other incapacity, duress, or illegality ofthe transaction as renders the obligation a nullity;

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(c) such misrepresentation as has induced the partyto sign the note with neither knowledge nor opportunity toobtain knowledge of its character or essential terms;

(d) discharge in insolvency proceedings; and

(e) any other discharge of which the holder hasnotice when he takes the instrument. Id. § 3.305.

A form Promissory Note is attached as Appendix 4.

F. Deed of Trust. A deed of trust is merely a securityinstrument and does not convey title to land, although words ofconveyance are usually used. Fleming v. Adams, 392 S.W.2d 491, 495(Tex. Civ. App.--Houston 1965, writ ref'd n.r.e.).

The deed of trust must contain a description that willallow the land to be identified with reasonable certainty. Jones v.Mid-State Homes, Inc., 356 S.W.2d 923, 925 (Tex. 1962). Ambiguitiesin the deed of trust may be explained by parol evidence as long asthe parol evidence does not contradict the language in the deed oftrust. Jasper State Bank v. Goodrich, 107 S.W.2d 600, 603 (Tex.Civ. App.--Beaumont 1937, writ dism'd).

The existence of a debt is essential to the validity ofa deed of trust or mortgage, the deed of trust or mortgage beingincident to the note. West v. First Baptist Church, 71 S.W.2d 1090,1098 (Tex. 1934). Additionally, to be effective, the deed of trustmust be delivered. West, 71 S.W.2d at 1099.

G. Recordation. A conveyance of real property is void as toa creditor or to a subsequent purchaser for a valuableconsideration without notice unless the instrument has beenacknowledged, sworn to, or proved and filed for record. Tex. Prop.Code Ann. § 13.001(a) (Vernon Supp. 1991). Therefore, a purchaserof land for value and without notice acquires title to the propertyas against a person claiming under a deed that has not been filedfor record as required by law. See Reserve Petroleum Co. v.Hutcheson, 254 S.W.2d 802, 805 (Tex. Civ. App.--Amarillo 1952, writref'd n.r.e.). The same rule applies to a judgment creditor as toa perfected judgment lien against the grantor of an unrecordeddeed--the lien will prevail over the unrecorded deed as long as thelien creditor did not have notice of the deed. Paris Grocer Co. v.Burks, 105 S.W. 174, 175 (Tex. 1907). An unrecorded instrument isbinding, however, on a party to the instrument, the party's heirs,and a subsequent purchaser who does not pay a valuableconsideration or who has notice of the instrument. Tex. Prop. CodeAnn. § 13.001(b) (Vernon 1984).

All deeds of trust and mortgages are void as to creditors andsubsequent purchasers for valuable consideration without notice,

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unless they have been acknowledged, sworn to, or proved and filedfor record as required by law. Id. Accordingly, the holder of asubsequent lien who does not have actual notice of a priorunrecorded lien has priority over the prior unrecorded lien.Gordon-Sewall & Co. v. Walker, 258 S.W. 233, 237 (Tex. Civ. App.--Beaumont 1924, writ dism'd).

H. Homestead Exemption and Equitable Liens. The only validliens that may be placed on the homestead are those liens for allor part of the purchase money for the homestead, taxes due on thehomestead, or work or material used in constructing improvements onthe homestead contracted for in writing with the proper consent ofboth spouses. Tex. Const. art. XVI, § 50; Tex. Prop. Code Ann. §41.001(b) (Vernon Supp. 1991). A homestead is, however, subject todivision in a divorce case, and the court has the authority toaward one party the homestead and the other a judgment for a sum ofmoney found by the court to represent the fair value of his or herinterest in the homestead and to grant a lien to secure thejudgment. Brunell v. Brunell, 494 S.W.2d 621, 623 (Tex. Civ. App.--Dallas 1973, no writ). The court may order one spouse to execute ageneral warranty deed to the spouse who will receive the homesteadand order the spouse receiving the homestead to execute a noteevidencing the deferred payments and a deed of trust securingpayment of the note. Ex parte McKinley, 578 S.W.2d 437 (Tex. Civ.App.--Houston [lst Dist.] 1979, no writ).

Even if the property in question is the separate property ofone spouse, the court may award a judgment for reimbursement forcommunity funds spent on the property and secure the judgment withan equitable lien. Day v. Day, 610 S.W.2d 195, 198 (Tex. Civ. App.--Tyler 1980, writ ref'd n.r.e.); Smith v. Smith, 187 S.W.2d 116,120 (Tex. Civ. App.--Fort Worth 1945, no writ).

Care must be taken in perfecting a lien that may be foreclosedagainst the homestead. The instruments creating the lien mustestablish that it falls within one of the constitutional andstatutory exceptions discussed above (purchase money, taxes, workor material for improvements) and how much of the property fallswithin the exception. See McGoodwin v. McGoodwin, 671 S.W.2d 880(Tex. 1984); Sayers v. Pyland, 161 S.W.2d 769 (Tex. 1942).

I. Once-In-A-Life-Time Exclusion. In some cases, the saleof the principal or marital residence will be a part of theproperty division between the parties. If this is the case, andone or both parties are over the age of 55, then one or bothparties have the option to exclude up to $125,000 of the gainrealized from the sale of the property. In order to qualify forthis one-time exclusion, the taxpayer must (i) be age 55 or over;and (ii) must have owned and used the residence as his or herprincipal residence for a total of at least three (3) years duringthe five (5) year period ending on the date of the sale of theresidence. The period of ownership and use need not run

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simultaneously to meet the requirements for the exclusion. Inother words, it is not necessary to own and dwell in the home forthe same three (3) years during the five (5) year period precedingthe date of sale.

Additionally, spouses who hold their residence as jointtenants, tenants by the entirety, or community property and file ajoint tax return in the year of sale are treated as a single personfor purposes of the exclusion. Therefore, if one spouse meets theage, holding and use requirements for the exclusion, both spousesare treated as meeting the requirements.

Only one $125,000 lifetime election is available to ataxpayer, and married taxpayers are limited to only one electionper couple, not one for each spouse. In addition, if spouses makean election during marriage and they subsequently divorce, nofurther election is available to either of them.

Therefore, if two people are in the process of a divorce, withonly one of the parties being over the age of 55, the parties'principal residence is sold, the proceeds divided prior to divorce,and the parties are thereafter divorced, the party who is over 55years of age shall be entitled to take the one-time exclusion whilethe party who is under 55 years of age, from that point forward,will have permanently lost the exclusion.

IV. PERSONAL PROPERTY.

A. Aircraft.

1. Requirements for Registration. In order to legallyoperate an aircraft, it must be registered with the F.A.A. AircraftRegistry. In order to register the aircraft, an AircraftRegistration Application (AC Form 8050-94), together with evidenceof ownership, must be submitted to the Aircraft Registry office inOklahoma City. This form contains detailed instructions foraccomplishing registration. A certified copy of the decree ofdivorce that specifically describes the aircraft will suffice asevidence of ownership for this purpose, if the owner of record wasa party to the action.

2. Recording Requirements. AC Form 8050-93, "Recordingof Aircraft Ownership and Security Documents" provides for therecording of any conveyance affecting title to or any interest inaircraft [see Appendix 2(a)-(b)].

3. Applicable Agency. Copies of all appropriate formsmay be obtained from:

F.A.A. Aircraft RegistryP.O. Box 25082 Oklahoma City, Oklahoma 73125

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(405) 680-3116

B. Motorboats and Outboard Motors.

1. Registration with the State of Texas. The governingsections for motorboats and outboard motors are Sections 31.021through 31.055 of the Water Safety Act, Title 4, Chapter 31,Subchapter B (V.T.C.A., Parks & Wildlife Code). These provisionsrequire numbering of motorboats and outboard motors and prescribethe requirements for ownership and transfer of said ownership.

(a) Ownership Evidenced By a Certificate of Title.Ownership of motorboats or outboard motors is evidenced by acertificate of title. Separate certificates are required formotorboats and outboard motors. Certain boats and motors are exemptas set out in the Act.

(b) Requirements for Transfer of Ownership. Thepurchaser of a motorboat or an outboard motor is required to applyto the Texas Department of Parks and Wildlife for a certificate oftitle not later than twenty days from the date of sale (V.T.C.A.,Parks & Wildlife Code, Title 4, Sec. 31.047).

The application form must contain the name andaddress of the owner and purchaser, date of purchase, descriptionof the motorboat or outboard motor, including manufacturer, make,model, year, length, hull identification number or motor number,horsepower, and other information as required by the Act.

The application must be accompanied by otherevidence reasonably required by the department to establishentitlement of ownership. A judgment of a court of competentjurisdiction or affidavit evidencing ownership is acceptable.

A good practice is to describe the motorboat oroutboard motor sufficiently in the decree of divorce and includethe make, model, and hull or motor number.

(c) Notification of Transfer of Motorboat. Theowner of a numbered motorboat is required to notify the TexasDepartment of Parks and Wildlife "within a reasonable time" of thetransfer any part of his interest in the motorboat.

The purchaser of the motorboat is required topresent evidence of ownership to the department "within areasonable time," together with the purchaser's name, address andthe number of the motorboat. Thereafter, the department transfersthe certificate of number issued for the motorboat to the newowner.

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Caveat: Unless the application for a new number ismade and the fee paid "within a reasonable time," operation of themotorboat is unlawful until the certificate is issued.

(d) Not a Taxable Event. Transfer of ownershipbetween parties pursuant to a divorce is not a taxable event solong as the motorboat or outboard motor is used (not new).

2. U.S. Coast Guard Documented Vessels. Vessels thatare U.S. Coast Guard documented vessels (frequently required bylenders for boats about 27' or larger) are "documented" with theapplicable home port office of the Coast Guard. The boat isassigned an official number and the owner is given a Certificate ofDocumentation.

(a) Home Port. The Port of Houston is the "homeport" for all of Texas and New Mexico. This information isrequested on most Coast Guard forms.

(b) Requirements for Subsequent Documentation. TheCoast Guard requires an "Application for Redocumentation", Form CG-1258, the surrender of the old "Certificate of Documentation", FormCG-1270, the "Certificate of Marking", Form CG-1322, and thecertified copy of the decree of divorce if the transfer is pursuantto a divorce or a "Bill of Sale", Form CG-1340. Also a "Declarationof Citizenship" is required, being Form MA-899.

To insure the vessel is sufficiently described forredocumentation, supply the make, model, hull number and name ofthe vessel in the decree of divorce to prevent transfer problems ata later date.

(c) Appropriate Agency. The acquiring partyapplies to the Coast Guard to redocument the vessel in his or hername and to acquire all of the appropriate forms may contact andsubmit the application to:

U.S. Coast Guard Vessel Documentation Center8876 Gulf Freeway, Suite 230Houston, Texas 77017(713) 947-0314

(d) Lien Against Vessel. In the event debt is owedon the vessel, a document entitled "Application, Consent, andApproval for Surrender of Certificate of Documentation of VesselCovered by Preferred Mortgage" is required, being Form CG-4593. In the event the mortgage has been paid, a "Satisfaction ofMortgage" is required which acknowledges that indebtedness on thevessel has been paid in full. This form should be submitted induplicate.

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C. Motor Vehicles.

1. Transfer with a Certificate of Title. An owner ofa used vehicle designated in the Certificate of Title is requiredby the Certificate of Title Act to use the form located on the backof the title to transfer ownership. The person, by signing thetitle, swears that he is the owner of the vehicle and that no liensexist, other than those specified on the certificate or describedin the affidavit. The affidavit must state the cumulative mileagetraveled by the motor vehicle, to the best of the transferor'sknowledge. This is the easiest method to transfer title from onespouse to the other.

2. Transfer By Power of Attorney. An alternate methodwhich is commonly employed, is to prepare a Power of Attorney whichthe owner spouse executes and designates the transferee spouse asthe attorney in fact with the power to transfer the vehicle [seeAppendix 7].

3. Transfer By Decree of Divorce. In the event thevehicle is specifically described in the decree of divorce with themake, year and vehicle identification number (V.I.N.), thecertified copy of the decree of divorce can generally be presentedto the county tax assessor-collector, who will transfer the title.It is important to note that the V.I.N. is usually required totransfer title in this manner and the local county tax assessor-collector should be called to verify transfer in this manner.

4. Transfer Without a Certificate of Title. In theevent the Certificate of Title is unavailable to the transferorspouse, he should execute an Application for Texas Certificate ofTitle Seller, Donor, or Trader's Affidavit. This form is availableat the county tax assessor-collector's office and is similar to theaffidavit on the reverse side of the certificate of title. It isimportant to note that this form no longer needs to be notarized.However, the transferor, by signing, verifies the accuracy of theinformation and now can be charged with a third degree felonyoffense for falsifying information on the title transfer.

5. Odometer Disclosure Statement. In most instances,an Odometer Disclosure Statement is also required and should beattached to the Certificate of Title unless the vehicle has acarrying capacity of 2 tons or more, is not self-propelled or is 10years or older.

6. Lost Title Affidavit. Where the non-owner spousehas been awarded the motor vehicle in the divorce but title remainsin the opposing spouse's name and cannot be found, Form 34 entitledLost Title Affidavit can be used to transfer title. Advise yourclient to present the county tax assessor-collector with acertified copy of the decree of divorce which awards him thevehicle along with Form 34.

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7. Not a Taxable Event. Transfers pursuant to adivorce are not considered taxable events and, thus, the usualmotor vehicle tax should not be assessed against your client.

To avoid the problem of locating the missing spouse inwhom title to the vehicle still remains, always make it yourpractice to describe the motor vehicle by make, model, and V.I.N.in the decree of divorce, especially when title is held in the nameof the non-client. Request that your client provide you withphotocopies of the motor vehicle titles so that you can include thecorrect information in the decree of divorce. Insist on photocopiesof the titles to avoid incorrect information from preventingtransfer of the vehicle at a later date.

D. ART. There does not appear to be any mandated procedurefor accomplishing the transfer of title to fine art and otherunregistered, unique personal property items.

Describe the object in the decree of divorce with as muchdetail as possible, including a description of the scene portrayed.Fine paintings or prints generally come with a certificate ofauthenticity which details the artist's name, the title of thework, the medium employed, such as lithograph, the print number andthe gallery where the print was purchased. This certificate isgenerally taped to the back of the painting [see Appendix 19].

It is recommended that you prepare and execute an assignmentof interest in which the items are again set out in specific andaccurate detail.

E. GUNS.

1. Rifles and Handguns

(a) ATF Form 4473. Ordinary rifles and handgunsare not subject to registration as a general rule. When a rifle orhandgun is initially purchased from a Federal Firearms Dealer, whois licensed by the U.S. government, the store is required to havethe buyer complete an "ATF Form 4473." The store must retain thiscopy until it ceases business, at which time the forms are thenforwarded to the Federal Bureau of Alcohol, Tobacco & Firearms,which is a branch of the Treasury Department.

(b) Proof of Ownership. The only ownershipdocument would generally be a bill of sale which contains theserial number of the gun. In the divorce decree, handguns andrifles can be identified by the serial number. Guns can be assignedas can any item of personal property, and an assignment can beprepared which specifically identifies the weapon.

2. Automatic Weapons.

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(a) Purchase. Automatic weapons may be purchasedonly through an authorized dealer. A request to purchase must besent to Washington, D.C. at which time the purchaser isinvestigated and approved for purchase. The purchaser is requiredto keep the Department of Alcohol, Tobacco & Firearms notified ofany change of address.

(b) Transfer. Ownership of these weapons cannot betransferred except through authorized dealers. In the event ofdeath, the heirs usually go through an authorized dealer to disposeof automatic weapons. It is recommended that you contact your localATF office or the ATF office in Washington at the followingaddress:

Federal Bureau of Alcohol, Tobacco & Firearms 1200 Pennsylvania Avenue Washington, D.C. 20226

V. BILLS OF SALE AND OTHER FORMS OF ASSIGNMENTS.

A. Bills of Sale. The bill of sale is generally used whentransferring title to personal property. Traditional in nature, abill of sale is basically a deed for personal property. When asale or transfer is to be consummated by immediate transfer, theparties may use a bill of sale to evidence the transfer. This issimply a contract of sale reflecting an immediate transfer oftitle. Barton v. Lary, 238 S.W. 920 (Civ. App. - El Paso 1926, nowrit). Additionally, if the transfer of title under the bill ofsale is expressly made conditional on a certain event, title willnot pass until the condition occurs.

There are no requirements that a bill of sale be recorded.However, if it is properly notarized, it may be recorded.

Generally, it is advisable to use a written bill of salebecause it may contain an express warranty of title and is signedby the seller. It may also be desirable to have the bill of salecontain additional express warranties by the seller. Finally, fromthe seller's perspective, the bill of sale may also containprovisions which specifically exclude certain types of warranties,both express and implied.

Two examples of bills of sale are attached as Appendices 5 and6.

B. Assignment of Interest.

1. Miscellaneous Application. The Texas Family LawPractice Manual has a catchall form entitled Assignment of Interestwhich covers the assignment of a club membership, cemetery lot,automobile lease agreement, and renewable subscription for season

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tickets for sporting and fine art events. This form could also beused for the assignment of pieces of art, guns, or practically anyitems of personal property.

Attached as Appendices 7 and 8 are two forms of assignments.Appendix 7 is the Texas Family Law Practice Manual form andAppendix 8 is a form assignment involving partnerships, limitedpartnerships and joint ventures. The latter assignment can easilybe modified to fit a number of different situations.

2. Informal Letter. Some establishments will accept aless formal written letter from the assignor assigning his interestto the assignee. It is best to call and verify the procedure forthe particular club or establishment in order to avoid problemsafter the divorce decree is entered. Prepare the pre-approvedletter in advance and secure the transferor spouse's signature onthe letter transferring his interest to your client.

VI. OIL, GAS AND OTHER MINERAL INTERESTS. The division of oil,gas and other mineral interests at the time of divorce can becomplex, depending upon the type of interest being divided. Forexample, one may be confronted with the transfer of a royaltyinterest or working interest in a single well, a number of wells ora lease. Other types of interests which might be encountered wouldbe pooling agreements, unitization agreements, and oil and gassales, purchase, exchange and processing contracts. Additionally,when dividing mineral interests, it is important to include thetransfer of the proportionate share of all personal property andequipment associated with the mineral interest being conveyed.Finally, if the mineral interests are on federally owned or leasedproperty, then these interests will probably be controlled by theUnited States Department of the Interior Bureau of Land Management(the "BLM"). Therefore, in addition to the assignment that theparties will execute to be filed in the county where the mineralinterests are located, a separate form, printed by the BLM, willalso have to be completed as a part of the transfer documents.

There is a clear legal distinction between the mineral estateand a royalty interest. The mineral estate has been defined toinclude the following:

(a) The power to develop or mine the oil, gasand mineral estate either individually or by authorizingothers to do so through the execution of an oil, gas andmineral lease; and

(b) The right to receive bonus monies, annualdelay rentals, royalties, shut-in gas well payments andall other payments arising under a lease with theexception of surface damage payments should there be aseverance of the surface and mineral estate.

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A royalty interest has been defined as follows:

A royalty interest is distinguished from a mineral estatein that a royalty interest owner is entitled to receivea proportionate part of the oil, gas and mineral estateor the proceeds derived from the sale thereof if and whenproduced, saved or sold.

In the case of Schlittler v. Smith, 101 S.W.2d 543 (Tex.Comm'n. App. 1937, opinion adopted), the court stated the followingdifferences between the mineral estate and the royalty interest:

The words "royalty," "bonus," and "rentals" have awell-understood meaning in the oil and gas business.Likewise, "minerals" and "mineral rights" have a wellrecognized meaning. Broadly speaking, a reservation ofminerals or mineral rights without limitation wouldinclude royalties, bonuses, and rentals. A conveyanceof land without reservations would include all mineralsand mineral rights. However, it is well settled that agrantor may reserve minerals or mineral rights and he mayalso reserve royalties, bonuses, and rentals, either one,or more or all. Here we have a reservation of only"royalty rights." It is obvious, it seems to us, thatthis does not include a reservation of bonuses orrentals, but only of an interest in oil, gas or mineralspaid, received, or realized as "royalty" under any leaseexisting on the land at the time of the reservation, orthereafter executed by the grantee, his heirs or assigns.

When preparing assignments for the transfer of mineralinterests, it may be necessary to include a date in which theassignment is to become effective ("Effective Date"). Generally,the Effective Date should be a prospective date rather than aretrospective date. This is particularly true if you are dealingwith the transfer of working interests rather than royaltyinterests. Generally, income produced from working interests isreceived net of operating costs. As a result, most operators willnot reallocate income and expenses between the parties that havealready been expended or paid out to the working interest owner.To an extent, the same problem exists with royalty interests,except that there are no operating costs associated with royaltyinterests.

Another issue that may arise relating to mineral interests isthe holding "in suspense" of all income to be derived from suchmineral interests. In some cases, if you communicate with theoperators of the wells and advise them of a divorce proceeding,some operators will make a unilateral decision to hold all royaltyincome or net working interest income in suspense and, therefore,not disperse any proceeds due to the record title owner. In this

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event, the Effective Date to be included in your assignment mayneed to be a retrospective date.

With respect to warranties, unless a party is willing to payfor the costs associated with obtaining a title policy, allassignments should be made without warranty of title. Finally, itis probably wise that the assignments be made without anywarranties, either express or implied.

Several examples for the assignment of oil, gas and othermineral interests are attached as Appendices 9, 10 and 11.

VII. COVENANTS NOT TO COMPETE, EMPLOYMENT AGREEMENTS AND CONSULTINGAGREEMENTS.

A. Covenants Not to Compete. A substantial number ofdivorce cases involve the purchase or sale of a closely-heldbusiness, even though the transaction is between spouses and not apurchase or sale involving one or both spouses and a third party.However, in those matters where both spouses have been an integralpart of the business, the practitioner might consider the use of acovenant not to compete as a part of or in conjunction with theproperty settlement.

Covenants not to compete have been a part of Texasjurisprudence for a number of years and the validity of these typesof agreements has been developed through numerous court decisions.However, on August 28, 1989, Section 15.50 et seq. of the TexasBusiness and Commerce Code became effective. These provisions setforth the criteria for the enforceability of covenants not tocompete. In 1993, the Legislature amended Section 15.50 andSection 15.51 and added a new provision which made the criteria forthe enforceability of covenants not to compete, as provided inSection 15.50, and the procedures and remedies in an action toenforce a covenant not to compete, set forth in Section 15.51, theexclusive means for determining the validity of these types ofagreements. These new amendments became effective September 1,1993. The provisions regarding covenants not to compete are asfollows:

Section 15.50 Criteria for Enforceability of Covenants Not toCompete.

Notwithstanding Section 15.05 of this code, a covenantnot to compete is enforceable if it is ancillary to orpart of an otherwise enforceable agreement at the timethe agreement is made to the extent that it containslimitations as to time, geographical area, and scope ofactivity to be restrained that are reasonable and do notimpose a greater restraint than is necessary to protectthe goodwill or other business interest of the promisee.

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§15.51. Procedures and Remedies in Actions to EnforceCovenants not to Compete

(a) Except as provided in Subsection (c) ofthis section, a court may award the promisee under acovenant not to compete damages, injunctive relief, orboth damages and injunctive relief for a breach by thepromisor of the covenant.

(b) If the primary purpose of the agreement towhich the covenant is ancillary is to obligate thepromisor to render personal services, for a term or atwill, the promisee has the burden of establishing thatthe covenant meets the criteria specified by Section15.50 of this code. If the agreement has a differentprimary purpose, the promisor has the burden ofestablishing that the covenant does not meet thosecriteria. For the purposes of this subsection, the"burden of establishing" a fact means the burden ofpersuading the triers of fact that the existence of thefact is more probable than its nonexistence.

(c) If the covenant is found to be ancillaryto or part of an otherwise enforceable agreement butcontains limitations as to time, geographical area, orscope of activity to be restrained that are notreasonable and impose a greater restraint than isnecessary to protect the goodwill or other businessinterest of the promisee the court shall reform thecovenant to the extent necessary to cause the limitationscontained in the covenant as to time, geographical area,and scope of activity to be restrained to be reasonableand to impose a restraint that is not greater thannecessary to protect the goodwill or other businessinterest of the promisee and enforce the covenant asreformed, except that the court may not award thepromisee damages for a breach of the covenant before itsreformation and the relief granted to the promisee shallbe limited to injunctive relief. If the primary purposeof the agreement to which the covenant is ancillary is toobligate the promisor to render personal services, thepromisor establishes that the promisee knew at the timeof the execution of the agreement that the covenant didnot contain limitations as to time, geographical area,and scope of activity to be restrained that werereasonable and the limitations imposed a greaterrestraint than necessary to protect the goodwill or otherbusiness interest of the promisee, and the promiseesought to enforce the covenant to a greater extent thanwas necessary to protect the goodwill or other businessinterest of the promisee, the court may award thepromisor the costs, including reasonable attorney's fees,

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actually and reasonably incurred by the promisor indefending the action to enforce the covenant.

Sec. 15.52 PREEMPTION OF OTHER LAW. The criteriafor enforceability of a covenant not to compete providedby Section 15.50 of this code and the procedures andremedies in an action to enforce a covenant not tocompete provided by Section 15.51 of this code areexclusive and preempt any other criteria forenforceability of a covenant not to compete or proceduresand remedies in an action to enforce a covenant not tocompete under common law or otherwise.

In addition to the above statutory provisions, there isadditional language which clearly provides that the provisions inthe Act apply to covenants not to compete which were entered intobefore the effective date of the amendments unless the covenant notto compete has been previously adjudicated by a court before theeffective date of the Act.

As can be seen from a review of the statutory provisions andthe applicable case law, covenants not to compete are authorized inconnection with the sale of a business. DeSantis v. WackenhutCorporation, 793 S.W.2d 670 (Tex. 1990). However, an agreement notto compete is viewed as being in restraint of trade and aretherefore unenforceable on grounds of public policy unless theagreement is reasonable. DeSantis, supra; Philip H. Hunki, D.D.S.v. Wilcox, 815 S.W.2d 855 (Tex. App. -- Corpus Christi 1991, writdenied); Frankiewicz v. National Comp Assocs., 633 S.W.2d 505 (Tex.1982).

Based upon the statutory provisions, an agreement not tocompete, in order for it to be reasonable, must meet the followingthree criteria:

(a) the agreement not to compete must be ancillary to anotherwise valid transaction or relationship. DeSantis, supra;Justin Belt Co. v. Yost, 502 S.W.2d 681 (Tex. 1973);

(b) the restraint created by the agreement not tocompete must not be greater than necessary to protect thepromisee's legitimate interest. DeSantis, supra; Henshaw v.Kroenecki, 656 S.W.2d 416 (Tex. 1983); and

(c) the promisee's need for the protection afforded bythe agreement not to compete must not be outweighed by eitherthe hardship to the promisor or any injury likely to thepublic. DeSantis, supra; Henshaw, supra.

The Supreme Court, in the DeSantis decision, stated withrespect to the first element the following:

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Such a restraint on competition is unreasonable unless itis part of and subsidiary to an otherwise validtransaction or relationship which gives rise to aninterest worthy of protection. Such transactions orrelationships include the purchase and sale of a businessand employment relationships. (emphasis added)

With respect to the second element, the court stated:

Elements of legitimate, protectable interests includebusiness goodwill, trade secrets, and other confidentialor proprietary information. The extent of the agreementnot to compete must accordingly be limited appropriatelyas to time, territory, and type of activity. DeSantis,supra at 682.

Finally, with respect to the third element, the court stated:

Before an agreement not to compete will be enforced, itsbenefits must be balanced against its burdens, both tothe promisor and the public. Thus, such an agreementmay, in a particular case, accomplish the salutarypurpose of encouraging an employer to share confidential,proprietary information with an employee in furtheranceof their common purpose, but must not also take unfairadvantage of the disparity of bargaining power betweenthem or too severely impair the employee's personalfreedom and economic mobility. Whether an agreement notto compete is a reasonable restraint of trade is aquestion of law for the court.

The issue in the DeSantis, supra, case did not involve thevalidity of a covenant not to compete which was ancillary to anotherwise valid relationship, but instead, whether the covenant notto compete was necessary to protect some legitimate interest ofWackenhut and whether that necessity was outweighed by the hardshipof enforcement. Wackenhut, in one of its arguments on appealclaimed that the business goodwill developed by DeSantis whileDeSantis was employed with Wackenhut was an interest protectable byan agreement not to compete.

Based upon the record on appeal, the appellate court indicatedthat assuming that DeSantis did develop business goodwill forWackenhut while employed, there was no showing that DeSantis did orcould even divert that goodwill to himself for his own benefitafter leaving the employ of Wackenhut. The appellate court alsostated that there was no finding and almost no evidence thatDeSantis was able to appropriate for his own use any businessgoodwill that he had previously developed.

Wackenhut also claimed that it has possessed confidentialinformation which is protectable by an agreement not to compete.

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Specifically, Wackenhut contended that during DeSantis employment,DeSantis learned the identify of Wackenhut's customers, theirspecial needs and requirements as well as Wackenhut's pricingpolicies, cost factors and bidding strategies.

The appellate court stated that, while confidentialinformation may be protected by an agreement no to compete, underthe facts of this particular case Wackenhut failed to show that itneeded such protection. Wackenhut failed to show that itscustomers could not readily be identified by someone outside itsemploy, that such knowledge carried some competitive advantage, orthat its customers needs could not be ascertained simply by inquiryaddressed to these customers themselves. Furthermore, Wackenhutfailed to show that its pricing policies and bidding strategieswere uniquely developed, or that information about its prices andbids could not, again, be obtained from the customers themselves.There is no evidence that DeSantis ever took advantage of anyknowledge he had of Wackenhut's cost factors in trying to outbidWackenhut or woo away its customers. Based upon the above, theSupreme Court in DeSantis ruled that the covenant not to competeagreement between the Appellant and the Appellee was unreasonableand as a result unenforceable.

Other cases which deal with the validity of covenants not tocompete are Peat, Marwick, Main & Co. v. Hass, 818 S.W.2d 331(Texas 1991) which held that a covenant not to compete whichattempted to prohibit a former partner from soliciting orfurnishing accounting or related services to clients which becameclients of the prior partnership following the departure of theprior partner and which also dealt with clients that the departingpartner had no contact with while the partnership was intact wasoverbroard and was an unreasonable restraint of trade. In the caseof Hunki, supra, the Appellant sued on a covenant not to compete onthe basis that after the Appellee left the employ of the Appellant,the Appellant lost professional contacts to the Appellee for dentalservices that the Appellee would not otherwise have been madeavailable to him except for his prior employment with theAppellant. The court, in this case, indicated that the formationof professional contacts is in the realm of general experience thatthe Appellee may freely use and over which the Appellant can assertno proprietary interest in a covenant not to compete. The courtalso stated "a former employee is entitled to freely use generalknowledge, skills and experience acquired during his employment tocompete with his former employer."

It is important to understand that there is not only acovenant not to compete, which, if it meets the statutoryrequirements, is valid, but there is also a non-disclosurecovenant. In the case of Zep Manufacturing Company v. Harthcock,824 S.W.2d 654 (Tex. App.--Dallas, 1992 no writ) Justice AnnetteStewart ruled that the covenant not to compete was unenforceablebecause the covenant agreement did not limit its scope as to

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geographical location. As a result, to enforce the covenant not tocompete would have prohibited the Appellee from working as anindustrial chemist anywhere regardless of whether he soughtemployment in an area not serviced by the Appellant or not servicedby the Appellee during the Appellee's employment with theAppellant.

With respect to the enforceability of the nondisclosurecovenant, the court stated the following:

The nondisclosure covenant seeks to protect trade secretsor confidential information learned by the Appelleeduring his employment with the Appellant. Unlike thenoncompete covenant, it does not necessarily restrain theAppellee's choice of employment and does not completelyprevent the Appellee from competing with the Appellant.The promises not to compete and not to disclose areseparable, and the unenforceability of the noncompetecovenant does not render void the nondisclosure covenant.

The Appellant contended that the trial court erred in grantinga summary judgment because nondisclosure covenants are not againstpublic policy and are not required to contain reasonable time orgeographic limitations. The nondisclosure covenant as contained inthe original covenant not to compete stated the following:

(a) Employee agrees that during the term of employee'semployment with Zep (the Appellant) and at alltimes following the termination of employee'semployment with Zep, whether such termination isvoluntary or involuntary, employee will not, for oron behalf of employee or any person, persons,partnership or corporation (except Appellant),directly or indirectly, use for employee's ownbenefit or disclose to any other party any tradesecrets of Zep disclosed or made known to employeeat any time during employee's employment with Zep.'Trade secrets as used herein means the whole orany portion or phrase of any scientific ortechnological information, design, process,procedure, formula or improvement that is valuableand not generally known to competitors of Zep.

The nondisclosure covenant also contained the following:

...'Confidential information' as used herein means anydata or information, other than trade secrets that ismaterial to Zep and not generally known by the public,including, without limitation, customer lists, pricingpolicies, prices, product development plans, and marketstrategies."

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The Appellant Court in ruling that the nondisclosure covenantswere valid stated the following:

Noncompete covenants are different than nondisclosurecovenants. Noncompete covenants restrain trade and areenforceable only if their terms are reasonable.Nondisclosure covenants, on the other hand, are notrestraints on trade. They do not necessarily restrict aformer employee's ability to compete with the formeremployer. Nondisclosure covenants do not prohibit theformer employee from using, in competition with theformer employer, the general knowledge, skill, andexperience acquired in former employment. Thenondisclosure covenant prevents only the disclosure oftrade secrets and confidential information acquired bythe former employee. Because of these differences,noncompete covenants are against public policy unlessthey are reasonable, but nondisclosure covenants are notagainst public policy. We find no Texas case requiringthat enforceable nondisclosure covenants contain time,geographical, or scope-of-activity limitations. As aresult, if a former employee was permitted to disclosesuch information in some geographical areas or after aperiod of time, businesses such as Zep would be unable toprotect their trade secrets or confidential information.We conclude that, because nondisclosure covenants are notrestraints on trade, reasonable time, geographical, andscope-of-activity limitations are not prerequisites toenforceability. [Emphasis added]

As indicated, although covenants not to compete are valid inconnection with the sale of a business, they must containreasonable restraints involving geographical location, time and adescription of the scope of activity to be restrained. If acovenant not to compete contains these limitations, then theutilization of such agreements in the context of a divorcesettlement may be one way to protect the business followingdivorce.

In a majority of cases, covenants not to compete involve acorporation's or partnership's intangible assets which are thesubject of such agreements. Intangible assets include, but are notnecessarily limited to, patents, patent application, a process,trade secrets, a training course, distributorships, sales routes,copyrights, customer lists, trademark and trade names and goodwill.Therefore, to the extent that both spouses have been activelyengaged in the same business and some of the protectable interestsof the business would include an intangible asset, the use of acovenant not to compete, if it meets the statutory requirements,would be an effective tool to prohibit the spouse who will nolonger be involved in the business from attempting to compete withhis or her former spouse following the entry of a divorce decree.

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A form Non-Competition Agreement is attached as Appendix 12.

B. Employment Agreements and Consulting Agreements. If youare involved in a rare circumstance where both spouses willcontinue to be involved in the business following divorce, theutilization of an employment agreement or a consulting agreementalong with the inclusion of a covenant not to compete in the eventone of the parties leaves the business would also be a validagreement, assuming the statutory requirements are met. However,a thorough review of the case law is important in the area ofcovenants not to compete and employment agreements because anemployment agreement which is essentially an employment at willsituation is not a "otherwise valid agreement" which would enableone party to uphold the covenant not to compete. In other words,employment at will contracts and covenants not to compete are bothunenforceable. However, employment agreements which include astated period of time of employment or which even provide for theemployee to continue to perform his or her duties in a satisfactorymanner is "an otherwise valid agreement" which would allow theenforceability of a covenant not to compete in the future.

A form Employment Agreement and Consulting Agreement areattached as Appendices 13 and 14.

VIII. TRANSFERRING SECURITIES.

A. Stocks and Bonds.

1. Held in Brokerage Accounts. The various brokeragehouses generally use their own forms to implement transfers ofstocks and bonds from one party to another. Therefore, it isadvisable to call the particular brokerage firm involved and securethe required forms in advance of the entry of the decree of divorceso as to avoid later difficulties.

(a) Accounts in the Name of Owner. If the accountwith stocks, bonds or other negotiable securities is held in thename of your client, no action is necessary.

(b) Accounts Held in the Transferor Spouse's NameBut Awarded in Part or Whole to Transferee Spouse.

(1) Determine if the stock certificate is heldin safekeeping, or if it is held in "street name." If the actualcertificate is being held in the firm's vault, in safekeeping, havethe transferor spouse execute a stock assignment and stock power.Caution your client to sign his name on the Stock Power exactly asit appears on the account or actual stock certificate, or the stockpower will be refused due to the variance.

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(2) If the stock is merely held in "streetname" and the actual certificate is not available, transfer can beaccomplished by a simple accounting procedure upon written requestfrom the transferor to the broker.

(c) Letter of Authorization. Most brokerage housesadditionally require a letter of authorization from the transferor,commonly referred to as an L.O.A., which authorizes the transfer ofthe securities, bonds, etc. to the transferee spouse. Again, eachbrokerage firm has their own preprinted forms.

(d) Delivery. Verify that the transferee spouseactually receives the stock, either by actual delivery or bytransfer to a new account at the brokerage firm held solely in thetransferee spouse's name .

2. Actual Stock Certificate Held by Spouse. It is rarewhere the client or his spouse actually possesses the stockcertificate of a publicly traded company. In the event theoriginal certificate is held by the owner, several steps arerequired.

(a) Endorsement. To transfer stock, endorsementoccurs when the titled spouse signs the back of the stockcertificate, transferring ownership to your client or executes aseparate "stock power" indicating a transfer of the stock. A"stock power" is a separate instrument referencing the transfer forthe records of the corporation involved and is utilized where thetransferor does not have a stock certificate in his possession. Itis important to note that a separate stock power must be used foreach certificate that is being transferred. The transferor spouseendorses the back of the stock certificate and transfers ownershipof the certificate to the transferee spouse. It is advisable tocomplete a stock power in addition to the endorsement of the actualcertificate. It is imperative that both signatures are exactduplicates.

(b) Delivery. To complete the transfer, there mustbe a "delivery" of the stock certificate or other evidence oftransfer to your client.

(c) Send to Transfer Agent. A stock certificate,or stock power is then forwarded to a transfer agent for completionof the transfer. Call your local brokerage firm to determine theappropriate transfer agent for the particular stock you aretransferring. Some brokerage firms will handle the transfer as acourtesy to the client. Verify that a stock power plus thecertificate is required for transfer. The transferring agent willnot accept documents with signatures which vary from the signatureon the stock certificate.

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(d) Signature Guarantee or Medallion. One otherimportant item to know is that when transferring stock in apublicly traded company the transferor must have his or hersignature "guaranteed". Generally, any bank or authorizedsecurities company will guarantee the transferor's signature.Failure to have the signature of the transferor's signatureguaranteed will result in the delay of the actual completion of thetransfer. In lieu of having your signature guaranteed, allnational banks are becoming a part of the "Medallion StampProgram." This program eventually will replace the necessity ofhaving an individual's signature guaranteed.

IX. STOCK OPTIONS AND WARRANTS. Generally, stock options andstock warrants give a person the right to buy a specified number ofshares at a specified price for a certain period of time.

If you are dealing with either stock options or stock warrantsof a publicly traded company, it is important to ascertain whetherthe stock which would be acquired as a result of the exercise ofthe option or warrant is registered or unregistered stock. If thestock is not registered, then the party who gets the stock wouldnot be allowed to sell the stock in the open market until it isregistered. Therefore, one should carefully review the optionsand/or warrants themselves to determine if they contain a procedureto register the stock that is issued pursuant to the exercising ofthe options or warrants.

If the stock to be received is unregistered, the two typicalmethods available to register the stock are by way of "DemandRights" or by "Piggy Back Rights." A Demand Right is where theindividual exercising the option or warrant can demand the companyto have the stock registered. A Piggy Back Right is where theindividual can have the stock registered as a part of aregistration of stock that company may do in the future.

X. CORPORATE REDEMPTIONS. When dealing with redemptions ofcorporate stock, one should be aware of the distinction between atrue redemption by the corporation of its stock versus a purchaseby a corporation of its stock.

A. TBCA Provisions. Article 2.02 of the TBCA sets forth theGeneral Powers of the Corporation. Section A(8) specifically givesa corporation the power:

To purchase or otherwise acquire its own bonds,debentures, or other evidences of its indebtedness orobligations; to purchase or otherwise acquire its ownunredeemable shares and hold those acquired shares astreasury shares or cancel or otherwise dispose of thoseacquired shares; and to redeem or purchase shares maderedeemable by the provisions of its articles ofincorporation" (emphasis added)

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Article 2.12 of the TBCA discusses a corporation's authorityto issue shares of stock in the corporation. Section B(1) statesthe following:

Without being limited to the authority herein contained,a corporation, when so provided in its articles ofincorporation, may issue shares of one or more classes orseries:

(1) Redeemable, subject to compliance by the corporationwith Articles 2.38 and 4.08 of this Act, at the option ofthe corporation, the shareholder or another person orupon the occurrence of a designated event." (emphasisadded)

B. Redeemable v. Unredeemable Stock. As a result of theseprovisions, a corporation may issue shares which constituteredeemable shares and shares which constitute unredeemable sharesin the corporation.

Redeemable shares are usually preferred shares or otherspecial classes of shares issued by the corporation. They aresubject to redemption by the corporation pursuant to specific termsand conditions in place at the time of the issuance of such shares.

On the other hand, unredeemable shares are generally commonshares of stock which the corporation has the right to purchase.Therefore, pursuant to the provisions of the TBCA, a trueredemption by a corporation constitutes the repurchase by acorporation of redeemable shares. In contrast, the purchase by acorporation of its stock is merely a purchase by the corporation ofits unredeemable stock.

C. TBCA Limitations on the Purchase and Redemption ofCorporate Stock. Both a purchase and redemption by the corporationof its own shares are subject to the provisions of Article 2.38 ofthe TBCA which provides that a "distribution" (which includes apurchase or redemption of its own shares) may not be made by acorporation if: (1) after giving effect to the distribution, thecorporation would be insolvent; or (2) the distribution exceeds thesurplus of the corporation. Pursuant to Article 2.41 of the TBCA,Directors of a corporation who vote for or assent to a distributionby the corporation that is not permitted by Article 2.38 arejointly and severally liable to the corporation for the amount bywhich the distributed amount exceeds the amount permitted byArticle 2.38. A director is not liable if in voting for orassenting to the distribution the director relied in good faith andwith ordinary care upon financial statements of the corporation orupon other information, opinions, reports, statements or otherfinancial data concerning the corporation that were prepared orpresented by one or more officers or employees of the corporation,legal counsel, public accountants, investment bankers, or other

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persons as to matters the director reasonably believes are withinthe person's professional expert competence. Additionally, adirector will not be personally liable if the information,opinions, reports, or statements, including financial statementsconcerning the corporation, were prepared or presented by acommittee of the board of directors of which the director was nota member, or the director, by acting in good faith and withordinary care, considered the assets of the corporation to be atleast their book value.

D. Procedure for Redemption. Article 4.08 of the TBCA setsforth the procedures a corporation must follow in order for thecorporation to redeem its shares of outstanding stock which aresubject to redemption. Specifically, Article 4.08 provides thefollowing:

A corporation may at any time, subject to Article 2.38 ofthis Act and to the provisions of its articles ofincorporation, proceed, by resolution of its board ofdirectors, to redeem any or all outstanding sharessubject to redemption. If less than all such shares areto be redeemed, the shares to be redeemed shall beselected for redemption in accordance with the provisionsin the articles of incorporation, or, in the absence ofsuch provisions therein, may be selected ratably or bylot in such manner as may be prescribed by resolution ofthe board of directors. Such redemption shall beeffected by call and written or printed notice in thefollowing manner:

(1) The notice of redemption of such shares shall setforth:

(a) The class or series of shares or part of anyclass or series of shares to be redeemed.

(b) The date fixed for redemption.

(c) The redemptive price.

(d) The place at which the shareholders may obtainpayment of the redemptive price and, in the case ofholders of certificated shares, upon surrender of theirrespective share certificates.

(2) The notice shall be given to each holder ofredeemable shares being called, either personally or bymail, not less than twenty (20) nor more than sixty (60)days before the date fixed for redemption. If mailed,such notice shall be deemed to be delivered whendeposited in the United States mail addressed to theshareholder at his address as it appears on the stock

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transfer book of the corporation, with postage thereonprepaid.

XI. DIVISION OF CLOSELY-HELD STOCK. For purposes of this article,the Husband, as part of the divorce settlement, will be awarded allof the issued and outstanding shares of stock in the closely-heldcorporation (the "Corporation"). In exchange, the Wife is toreceive an equalization payment from the Husband which will besecured by all of the stock in the Corporation.

A. Resignation as Officer and Director. Wife, who is anofficer and director of the Corporation, will tender herresignation. A form resignation letter is attached as Appendix 15.

B. Unanimous Consents of Board of Directors andShareholders. Subject to contrary provisions in the Corporation'sby-laws, the shareholders of the Corporation should consent to theresignation of the Wife and elect a new director and the board ofdirectors should elect new officers with respect to the officesthat are being resigned. Forms for these consents are attached asAppendices 16 and 17.

C. Promissory Note. In order to properly document theobligation to the Wife, the Husband will need to execute apromissory note made payable to the Wife for the amount of theequalization payment that Wife is to receive. Depending upon thefacts of each particular case, the terms of payment may be in theform of a lump sum or in the form of installment payments.Furthermore, if there are other obligations to the Wife in additionto the equalization payments, one may also want the promissory noteto contain cross-default language so that a default under thepromissory note or a default under the terms of any other securityinstruments, such as a deed of trust, assignment or mortgageobligation, will also constitute a default and acceleration of allof the Husband's other obligations under the terms of thesettlement. A form promissory note is attached as Appendix 4.

D. Stock Power. As previously discussed, in order toprotect the Wife's security interest in the stock which is beingused as collateral for Husband's obligation, the Husband mustexecute a stock power for each certificate issued by theCorporation for all shares of stock in the Corporation issued andheld in the Husband's name. However, in the event both partiesowned stock in the closely held corporation, then it would benecessary for the Wife to transfer her stock to the Husband. Oncethe stock owned by the Wife has been transferred to the Husband,the Husband will in turn need to execute the appropriate stockpowers for each certificate issued by the Corporation evidencingthe pledge of the shares to Wife. In this particular instance, theCorporation, once the Wife has transferred her stock back to theHusband, may wish to cancel both stock certificates and issue a newcertificate representing all of the shares issued and outstanding

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shares of the Corporation in the name of the Husband. If thisoccurs, then the Husband will only need to execute one stock powerfor the one certificate evidencing the pledge of the shares toWife. If the Corporation does not cancel both stock certificatesand re-issue a third stock certificate representing all of theissued and outstanding shares of stock in the Corporation, then theHusband will need to execute two stock powers, one for each issuedand outstanding certificate representing shares in the Corporationevidencing the pledge of the shares to Wife. A form stock power isattached as Appendix 18.

E. Representation Letter. Since the Wife will be receivingthe stock of the Corporation as collateral for Husband's obligationto make the equalization payments, it is also important to obtaina representation letter, in this case, from the Husband, settingforth that: (a) the representation letter is in connection withthe party's divorce settlement; (b) the percentage of the Stock ofthe Corporation that is being used as or is being pledged ascollateral for the equalization payment; (c) there are nooutstanding options, warrants or other rights to purchase anyshares of capital stock of the company; and (d) that the Husbandowns and has good and valid title to the stock and that the stockis free and clear of any and all liens, claims, voting trusts,voting agreements, mortgages, proxies, encumbrances, charges,assessments, restriction on transfer, puts, calls, purchase rightsor options or other similar rights.

It is also important to have the representation letter providethat the pledge of the stock will not conflict with or result inthe breach of any terms, conditions or provisions of any judgmentor injunction, decree or agreement and that as a result of thepledge, it will not constitute a default or result in the creationor imposition of any lien, charge, encumbrance or restriction ofany nature with respect to the stock that is being pledged.

The representation letter should also provide either the dateon which the stock will have been held by the Husband for a periodof three years or more or that the stock has in fact been held bythe Husband for a period of three (3) years or more in order tosatisfy Rule 144(d) of the Securities Act of 1933. A formrepresentation letter is attached as Appendix 19.

F. Collateral Pledge Agreement. In order to attach andperfect a security interest in closely held stock, it is necessaryto have a written agreement setting forth the actual pledge of thestock in the Corporation which also will evidence the securityinterest held by the Wife in the stock of the Corporation. Thecollateral pledge agreement will also provide variousrepresentations and warranties of the debtor, events of default,the rights of the secured party in the event of a default, theapplication of the proceeds received from the collateral in theevent of a default, provisions dealing with the voting and dividend

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rights with respect to the collateral stock and provisions for theappointment of an escrow agent to hold the collateral. Theagreement may also contain provisions allowing for the substitutionof the collateral. A form of a collateral pledge agreement isattached as Appendix 20.

G. Escrow Agreement. While the collateral pledge agreementattached as Appendix 20 has provisions dealing with the appointmentof the escrow agent and the various rights, and obligations of theescrow agent, it may be preferable, depending upon your situation,to have a separate escrow agreement. The escrow agreement againwill generally appoint an escrow agent to hold the closely heldstock until such time as the satisfaction of the payment to theWife of the equalization payment or until such time as there is anactual default under the terms and provisions of the promissorynote and/or the collateral pledge agreement. The escrow agreementwill also contain provisions requiring the debtor and secured partyto indemnify, defend and hold the escrow agent harmless from anyand all loss, damage, tax, liability and expense that may beincurred by the escrow agent, except generally in the case of hisor her willful misconduct or gross negligence or in the event ofacts or omissions that the escrow agent does which are not in goodfaith. A form escrow agreement is attached as Appendix 21.

H. Receipt Letter from Escrow Agent. Because it is requiredunder the UCC for either the secured party or his or her bailee toactually obtain possession of the stock being used as collateral toperfect such security interest, it is generally advisable, once thestock has been delivered to the escrow agent that the escrow agentforward to the debtor a letter acknowledging receipt of the stockcertificate(s) and the executed stock power(s). A form receiptletter is attached as Appendix 22.

XII. OTHER SECURITY INTERESTS.

A. Financing Statements. In addition to having actualphysical possession of the collateral in order to protect asecurity interest, the filing of a Financing Statement or UCC-1 isanother method that could be utilized. Except for the provisionsset forth in Section 9.302 of the UCC, a financing statement mustbe filed in order to perfect all security interests. Section9.402(a) sets forth the general requirements which must be met inorder to have a valid Financing Statement. These requirements are:

(a) The Financing Statement gives the name of thedebtor and the secured party;

(b) is signed by the debtor;

(c) gives an address of the secured party fromwhich information regarding the security interest may beobtained; and

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(d) gives a mailing address of the debtor andcontains a statement indicating the types, or describingthe items, of collateral.

Section 9.402 also sets out the requirements involvingamendments to previously recorded financing statements, therequirements for protecting a security interest in oil, gas andother minerals and the requirements for potential problems whichmay be encountered when using the debtors trade names, assumednames on the financing statements. Three examples of FinancingStatements are attached as Appendixes 23, 24 and 25.

B. Guaranty Agreements. Another method for securing apayment obligation arising out of a divorce would be the use of aGuaranty Agreement. However, the utilization of a guarantyagreement would probably be limited to the following situations:

(a) where the closely-held business is the primaryobligor in which case the individual would be theguarantor;

(b) where the individual is the primary obligorwith the closely-held business being the guarantor; or

(c) where the individual and the closely-heldbusiness are co-makers in which case you may wantguaranty agreements from both the individual and theclosely-held business which guarantees the payment orcollection of the other's obligation.

As a reminder, Guaranty Agreements are generally in two forms.There can be a Absolute Guaranty, also referred to as a "Guarantyof Payment" or you can have a Conditional Guaranty, also referredto as a "Guaranty of Collection." In the former situation, theSecured Party, upon default may pursue either or both the primaryobligor and the guarantor. In the latter situation, the SecuredParty must first pursue all claims and causes of action against thePrimary Obligor before pursuing any claims against the Guarantor.Examples of Guaranty Agreement is attached as Appendix 26.

XIII. BIBLIOGRAPHY

Special thanks to Mary Ann Oakley for permission to useportions of her excellent article titled Transfers and OtherMiscellaneous Documents Relating to Personal Property prepared forthe 1991 Advanced Family Law Seminar and to Brenda Keen for twoexcellent articles on this topic entitled Documents Relating toPersonal Property Other Miscellaneous Documents prepared for the1990 Advanced Family Law Drafting Course, and Wrapping Up the Caseprepared for the 1990 Marriage Dissolution Course.

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Texas Transaction Guide, Vol. 6A, Chapter 62, Kendrick &Kendrick, 1994.

Sampson's & Tindall's Texas Family Code Annotated, November1995 Edition, Lawyers Cooperative Publishing.

1996 U. S. Master Tax Guide, CCH Incorporated, 79th Edition,November 1995.

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XIV. APPENDICES

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APPENDIX

1. IRS Form 4506

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PP--4455

APPENDIX

2. Collateral Assignment of Life Insurance

ASSIGNMENT OF LIFE INSURANCE POLICY AS COLLATERAL

A. For Value Received, and pursuant to the terms of the AgreementIncident to Divorce/Decree of Divorce in Cause No. ___________ andstyled "In the Matter of the Marriage of _____________ and_____________" in the ________ District Court of ___________County, Texas, the undersigned hereby assigns, transfers and setovers to ________________________________ of ______________,______________, his/her heirs, successors, representatives andassigns, (herein called the "Assignee") Policy No. ________________issued by the ____________________________________ (herein calledthe "Insurer") and any supplementary contracts issued in connectiontherewith (said policy and contracts being herein called the"Policy"), upon the life of ___________________ (herein called the"Assignor") of _________________, ____________, and all claims,options, privileges, rights, title and interest therein andthereunder, subject to all the terms and conditions of the Policyand to all superior liens, if any, which the Insurer may haveagainst the Policy. Assignor by this instrument agrees and theAssignee by the acceptance of this assignment agrees to theconditions and provisions herein set forth.

B. It is expressly agreed that, without detracting from thegenerality of the foregoing, the following specific rights areincluded in this assignment and pass by virtue hereof:

1. The sole right to collect from the Insurer the netproceeds of the Policy when it becomes a claim by deathor maturity;

2. The sole right to surrender the Policy and receive thesurrender value thereof at any time provided by the termsof the Policy and at such other times as the Insurer mayallow, subject to the provisions of paragraph D below;

3. The sole right to obtain one or more loans or advances onthe Policy, either from the Insurer or, at any time, fromother persons, and to pledge or assign the Policy assecurity for such loans or advances, subject to theprovisions of paragraph D below;

4. The sole right to collect and receive all distributionsor shares of surplus, dividend deposits or additions tothe Policy now or hereafter made or apportioned thereto,and to exercise any and all options contained in thePolicy with respect thereto; provided, that unless anduntil the Assignee shall notify the Insurer in writing tothe contrary, the distributions or shares of surplus,dividend deposits and additions shall continue on theplan in force at the time of this assignment;

PP--4466

5. The sole right to exercise all nonforfeiture rightspermitted by the terms of the Policy or allowed by theInsurer and to receive all benefits and advantagesderived therefrom;

6. The right to collect from the Insurer any disabilitybenefit payable;

7. The right to designate and change the beneficiary;8. The right to elect any optional mode of settlement

permitted by the Policy or allowed by the Insurer.

C. This assignment is made, and the Policy is to be held ascollateral security for all liabilities of Assignor to theAssignee, either now existing or that may hereafter arise (all ofwhich liabilities secured or to become secured are herein called"Liabilities").

D. The Assignee covenants and agrees with the Assignor asfollows:

1. That any balance of sums received hereunder from theInsurer remaining after payment of the then existingLiabilities, matured or unmatured, shall be paid by theAssignee to the persons entitled thereto under the termsof the Policy had this assignment not been executed; and

2. That the Assignee will not exercise the right tosurrender the Policy or receive any distributions, sharesof surplus or dividend deposits or (except for thepurpose of paying premiums) the right to obtain policyloans from the Insurer, until there has been default inany of the Liabilities or a failure to pay any premiumwhen due. Assignor shall, within _______ (___) days,mail, by first-class mail, to Assignor at the addresslast supplied in writing to the Assignee specificallyreferring to this assignment, notice of intention byAssignee to exercise such rights.

E. The Insurer is hereby authorized to recognize the Assignee'sclaims to rights hereunder without investigating the reason for anyaction taken by the Assignee, or the validity or the amount of theLiabilities or the existence of any default therein, or the givingof any notice under Paragraph D(2) above or otherwise, or theapplication to be made by the Assignee of any amounts to be paid tothe Assignee. The sole signature of the Assignee shall besufficient for the exercise of any rights under the Policy assignedhereby and the sole receipt of the Assignee for any sums receivedshall be a full discharge and release therefor to the Insurer.Checks for all or any part of the sums payable under the Policy andassigned herein, shall be drawn to the exclusive order of theAssignee if, when, and in such amounts as may be, requested by theAssignee.

F. The Assignee shall be under no obligation to pay any premium,or the principal of or interest on any loans or advances on thePolicy whether or not obtained by the Assignee, or any othercharges on the Policy, but any such amounts so paid by the Assignee

PP--4477

from his/her own funds, shall become a part of the Liabilitieshereby secured, shall be due immediately, and shall draw interestat a rate provided in the promissory note referred to herein. TheAssignor shall pay all premiums, assessments and loans when due andshall maintain the Policy for so long as the Liabilities due andowing to Assignee are outstanding. The Assignor shall not borrowagainst, assign, pledge or in any other manner alienate the Policyso long as the Liabilities due and owing to Assignee areoutstanding.

G. The exercise of any right, option, privilege or power givenherein to the Assignee shall be at the option of the Assignee, butthe Assignee may exercise any such right, option, privilege orpower without notice to, or assent by, or affecting the liabilityof, or releasing any interest hereby assigned by the Assignor.

H. The Assignee may take or release other security, may releaseany party primarily or secondarily liable for any of theLiabilities, may grant extensions, renewals or indulgences withrespect to the Liabilities, or may apply to the Liabilities in suchorder as the Assignee shall determine, the proceeds of the Policyhereby assigned or any amount received on account of the Policy bythe exercise of any right permitted under this assignment, withoutresorting or regard to other security.

I. In the event of any conflict between the provisions of thisassignment and provisions of the note or other evidence of anyLiability, with respect to the Policy or rights of collateralsecurity therein, the provisions of this assignment shall prevail.

J. Assignor and Assignee declare that no proceeding in bankruptcyare pending against him/her and that his/her property is notsubject to any assignment for the benefit of creditors.

K. Any default under the terms and conditions of this assignmentshall constitute a default under the promissory note and deed oftrust referred to herein, as well as, any other Liabilities.

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Signed and sealed this _____ day of _________________, 199__.

__________________________Insured or Owner/Assignor

___________________________Address

____________________________Beneficiary/Assignee

____________________________ Address

STATE OF TEXAS §§

COUNTY OF ______ §

BEFORE ME, the undersigned authority, a Notary Public in andfor the State of Texas, on this day personally appeared_______________________, known to me to be the person whose name issubscribed to the foregoing instrument, and acknowledged to me thathe/she executed the same for the purposes and considerationexpressed therein.

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____ day of_____________, 19___.

_____________________________NOTARY PUBLIC IN AND FORTHE STATE OF TEXAS

My Commission Expires:

_______________________________________________________ (Typed/Printed Name of Notary)

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STATE OF TEXAS §§

COUNTY OF ______ §

BEFORE ME, the undersigned authority, a Notary Public in andfor the State of Texas, on this day personally appeared_______________________, known to me to be the person whose name issubscribed to the foregoing instrument, and acknowledged to me thathe/she executed the same for the purposes and considerationexpressed therein.

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____ day of_____________, 19___.

_____________________________NOTARY PUBLIC IN AND FORTHE STATE OF TEXAS

My Commission Expires:

_______________________________________________________ (Typed/Printed Name of Notary)

Duplicate received and filed at the home office of the Insurer in_______________, ____________, this ____ day of __________________,1993.

______________________________

By:___________________________

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APPENDIX3. Special Warranty Deed

SPECIAL WARRANTY DEED[WITH VENDOR'S LIEN]

THE STATE OF TEXAS §§ KNOW ALL MEN BY THESE PRESENTS:

COUNTY OF ________ §

THAT _______________________________ ("Grantor"), for and in

consideration of the sum of TEN AND NO/100 DOLLARS ($10.00) and

other good and valuable consideration to it/him/her in hand paid by

__________________________ ("Grantee"), whose mailing address is

_______________________________, the receipt and sufficiency of

which is hereby acknowledged, and for the purpose of complying with

that certain Decree of Divorce in Cause Number ________ in the

_____ Judicial District Court of _________ County, Texas and styled

"In the Matter of the Marriage of ______________________ and

______________________," and for further consideration of Grantee's

assumption of and promise to pay according to the terms thereof,

all principal and interest now remaining unpaid on that certain

promissory note in the original principal amount of

_______________________________ DOLLARS ($_____________), dated

______________________ executed by ______________________ and

_______________________, payable to the order of

_________________________________________, and secured by a

Vendor's Lien retained in Warranty Deed of even date therewith,

recorded in Volume ____, Page ____ et seq., Deed Records, _______

County, Texas has [GRANTED, TRANSFERRED AND CONVEYED] [PARTITIONED,

TRANSFERRED AND ASSIGNED], and by these presents does [GRANT,

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TRANSFER, AND CONVEY] [PARTITION, TRANSFER AND ASSIGN] unto

Grantee, all of its/his/her undivided community property interest

in and to that certain real property which is currently commonly

known as ___________________________________, _____________,

____________ County, Texas and more particularly described as:

Lot ___, Block ___, of the _____________ Addition, anaddition in the City of _________, Texas according to theplat thereof recorded in Volume _____, Page _____, MapRecords, ________ County, Texas,

together with all buildings and improvements located thereon and

all rights and appurtenances thereto in anywise belonging to

Grantor, including, but not limited to, all interest, if any, of

Grantor in (a) any easements, rights-of-way, rights of ingress or

egress or other interests in, on or to any land, highway, avenue,

street, or alley, open or proposed, in, on, across, in front of,

abutting or adjoining the property described herein, (b) strips or

gores of land, if any, adjoining the property described herein and

abutting properties, whether owned or claimed by deed, limitations

or otherwise, and whether or not located inside or outside the

property described herein, and (c) any land lying in or under the

bed of any highway, avenue, street, road, alley, easement or

right-of-way, open or proposed, in, on, across, abutting or

adjacent to the property described herein, and all rights, titles

and interests of Grantor, if any, in and to any awards made, or to

be made in lieu thereof, for damage by reason of change in grade of

any such highway, avenue, street, road or alley (all of said

property and interests being collectively referred to herein as the

"Property").

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The interests conveyed pursuant to this SPECIAL WARRANTY DEED

include all of Grantor's right, title and interest in and to all

existing insurance policies relating to the Property, including,

but not limited to, all homeowners, casualty and fire insurance, as

well as any umbrella policies that are in effect as of the date the

Decree of Divorce referred to hereinabove is signed by the Court.

This SPECIAL WARRANTY DEED is additionally made and accepted

expressly subject only to the matters affecting title to the

Property set forth herein and on Exhibit "A" attached hereto and

incorporated herein by reference for all purposes.

TO HAVE AND TO HOLD the Property and all improvements located

thereon together with all and singular the rights and appurtenances

thereto in anywise belonging unto said Grantee, its/his/her [If

business entity: successors] heirs, representatives and assigns

forever; and Grantor does hereby bind itself/himself/herself and

its/his/her [successors] heirs, representatives and assigns to

WARRANT AND FOREVER DEFEND all and singular the Property unto said

Grantees, its/his/her [successors] heirs, representatives and

assigns, against any person whomsoever lawfully claiming or to

claim the same or any part thereof by, through or under Grantor,

but not otherwise.

[OPTION: It is expressly agreed that a vendor's lien, as well

as superior title in and to the Property, is retained against the

Property in favor of Grantor in this Special Warranty Deed to

secure payment of the above-referenced Promissory Note and all

interest thereon and performance of all obligations thereunder and

under the above-referenced Deed of Trust.]

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GRANTEE UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY

PROVIDED HEREIN, THE PROPERTY IS BEING CONVEYED WITH NO EXPRESS OR

IMPLIED WARRANTIES, INCLUDING WARRANTIES OF FITNESS FOR USE FOR A

PARTICULAR PURPOSE, OR MERCHANTABILITY, OR HABITABILITY.

EXECUTED this the ______ day of _______________, 19___.

GRANTOR:

___________________________________

THE STATE OF TEXAS §§

COUNTY OF ________ §

BEFORE ME, the undersigned authority, on this day personallyappeared ______________________, known to me to be the person andofficer whose name is subscribed to the foregoing instrument andacknowledged to me that he/she executed the same for the purposesand consideration therein expressed.

GIVEN UNDER MY HAND AND SEAL OF OFFICE this ______ day of_______________, 19__.

___________________________________NOTARY PUBLIC IN AND FORTHE STATE OF TEXAS

My Commission Expires:

_________________________ __________________________________(Printed Name of Notary)

AFTER RECORDING RETURN TO:

MICHAEL P. GEARYGeary, Porter & West, P.C.16475 Dallas Parkway, Suite 550Dallas, Texas 75248

EXHIBIT "A" - Page Solo P-54

EXHIBIT "A"

EXCEPTIONS AND RESTRICTIONS

1. All restrictive covenants and other matters of recordaffecting title.

2. Taxes for the year 19__, and subsequent years not yet due andpayable, and subsequent assessments for prior years due tochange in land usage or ownership.

3. Rights of parties in possession.

[Option to be included if client is Grantor and not if client isGrantee:4. Any discrepancies, conflicts, or shortages in area or boundary

lines, or any encroachments, or any overlapping ofimprovements.]

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APPENDIX

4. Promissory Note

PROMISSORY NOTE

$__________ Dallas, Texas _________ __, 199__

FOR VALUE RECEIVED, _________________________________ (hereinreferred to as the "Maker"), promises to pay to the order of____________________________________ (herein referred to as the"Payee") at _________________________________ or such other placein Dallas County, Texas, as the holder of this Note may from timeto time designate in writing, the principal sum of___________________________ ($__________) [Option: , together withinterest as the rate of _________ percent (___%) per annum.Interest payable under this Note shall be computed on the basis ofa 365-day year and actual days elapsed.]

The unpaid principal amount of this Note shall be due andpayable by Maker to Payee as follows: [Option: (i) on demand, or(ii) if no demand is made, on _____________________________.]

[Option to be used if Note calls for Balloon Payment uponmaturity: NOTWITHSTANDING THE INITIAL MONTHLY PAYMENTS HEREUNDER,THIS NOTE PROVIDES FOR A BALLOON PAYMENT AT MATURITY. MAKERACKNOWLEDGES THAT NO AGREEMENT OR COMMITMENT EXISTS FOR ANYEXTENSION OR REFINANCING OF THE BALANCE REMAINING AT THE STATEDMATURITY HEREOF, AND THAT MAKER AND/OR ANY OTHER PARTIES OBLIGATEDHEREUNDER WILL NEED TO ARRANGE OTHER FINANCING AT THE MATURITYHEREOF OR PAY THIS NOTE FROM OTHER RESOURCES.

Notwithstanding anything to the contrary in this Note, thisNote shall mature, and all amounts owing hereunder, includingwithout implied limitation, principal and accrued but unpaidinterest, shall be due on _____________, if not earlier paid.]

1. Prepayment. This Note may be prepaid, in whole or inpart, at any time, or from time to time, without penalty orpremium.

2. Security. This note is secured by the liens andprovisions of that certain Deed of Trust (herein referred to as the"Deed of Trust") of even date herewith executed by Maker to_________________, Trustee, covering certain real property situatedin Dallas County, Texas, as more fully described in the Deed ofTrust (herein referred to as the "Property").

3. Events of Default and Remedies. At the option of theholder of this Note, the entire unpaid principal balance of thisNote, together with all accrued but unpaid interest, shallimmediately become due and payable upon the occurrence at any time

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of any one or more of the following Events of Default (herein socalled):

(a) Maker shall fail to pay the principal andinterest of this Note as and when the same becomes dueand payable in accordance with the terms hereof; or

(b) Maker shall fail to perform any of thecovenants, obligations or agreements of the Deed of Trustsecuring this Note, or any other security agreement,mortgage or other agreement or assignment now orhereafter existing as security for or in connection withthis Note.

If an Event of Default shall occur, Payee may, without anynotice whatsoever, said notice being hereby waived by Maker, (a)declare the entire balance of this Note (outstanding principal andall accrued but unpaid interest) immediately due and payable (andupon such declaration, the same shall be at once due and payable);and (b) exercise any other remedy provided by law or equity. Noremedy referred to herein is intended to be exclusive, but eachshall be cumulative, and the exercise or beginning of exercise bythe holder hereof of any one or more of such remedies shall notpreclude the simultaneous or later exercise of any or all of suchremedies. From and after the maturity of this Note eitheraccording to its terms or as the result of the acceleration ofmaturity by the holder hereof, the entire principal remainingunpaid hereunder shall bear interest at the Maximum Rate(hereinafter defined). Any failure to exercise any rights theholder hereof may have in the event of any such Event of Defaultshall not constitute a waiver of the right to exercise any suchrights in the event of any subsequent Event of Default, whether ofthe same or different nature. Without limiting the generality ofthe foregoing provisions, the acceptance by the holder hereof fromtime to time of any payment under this Note which is past due orwhich is less than the payment in full of all amounts due andpayable at the time of such payment, shall, unless the holderexpressly agrees otherwise in writing, be deemed a payment onaccount only, and shall not (i) cure any Event of Default existing,or which may after notice or the passage of time, or both, so existby reason of failure to pay the full amount then due or when due,(ii) constitute a waiver of or impair, preclude or extinguish therights of the holder hereof to accelerate the maturity of this Noteor to exercise any other right, power or remedy at the time or atany subsequent time, or nullify any prior exercise of any suchright, power or remedy, or (iii) constitute a waiver of therequirement of punctual payment and performance, or a novation inany respect.

4. Past Due Interest. All past due amounts of principalhereon shall bear interest at the maximum rate of interestpermitted from time to time by applicable federal or Texas law asis now, or to the extent allowed by law, as may hereafter be, ineffect (the "Maximum Rate") (but if no such Maximum Rate beestablished, then at the rate of eighteen percent (18%) per annum).

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During the existence of any Event of Default hereunder or under theDeed of Trust or any other instrument evidencing or securing theindebtedness evidenced hereby, the entire unpaid balance ofprincipal and accrued but unpaid interest shall bear interest atthe Maximum Rate (but if no such Maximum Rate be established, thenat the rate of eighteen percent (18%) per annum).

If any payment of principal or interest hereon is not actuallyreceived by Payee within five (5) days of the date when the same isdue, there shall be due and payable, at the option of Payee, inaddition to such installment and interest thereon, a late chargeequal to four (4%) of the amount of such defaulted installment.This late charge shall not constitute interest, nor a penalty, butshall constitute liquidated damages to compensate Payee foradministrative costs and other damages other than interest sufferedby Payee by reason of delay in payment of such installment. If,however, such late charge is determined to constitute interestnotwithstanding the stipulation hereof to the contrary, then theprovisions of this Note for spreading of interest and for automaticreduction of amounts payable as interest which would otherwiseexceed the legal maximum shall apply thereto.

5. Waiver. Except as expressly otherwise provided forherein, Maker and all other parties now or hereafter liable orresponsible for the payment of this Note, whether as endorser,guarantor, surety or otherwise, severally waive demand,presentment, notice of dishonor, diligence in collecting, grace,notice (including notice of intent to accelerate and notice ofacceleration) and protest and consent to all renewals andextensions that from time to time may be granted by the holder ofthis Note and to all partial payments herein, whether before orafter maturity.

6. Attorney's Fees and Costs. If this Note is not paid whendue, [Option: whether at maturity or on demand], and the same isplaced in the hands of an attorney for collection, of if this Noteis collected by suit or through bankruptcy, probate or otherproceedings, [Option: whether before or after demand or maturity,]or if Payee shall engage an attorney in connection with anypotential or actual Event of Default, Maker agrees to pay thereasonable attorneys' fees of the holder of this Note, togetherwith all actual expenses of collection and litigation and costs ofcourt incurred by the holder of this Note.

7. Notices. Any notice or demand required or permitted tobe given hereunder shall be in writing, and, except as otherwiseprovided herein, shall be deemed to have been given and receivedwhen deposited in a post office or official depository of theUnited States Postal Service, sent by certified or registered mail,postage prepaid, return receipt requested, addressed as follows:

If to Maker: _________________________________________________________________________________

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If to Payee: ____________________________________________________________________________________________________________

The addresses for Maker and Payee set forth in this Note maybe changed by any party by giving notice of such change to theother party in the manner provided herein for giving notice;provided, however, that such notice shall not be deemed effectiveunless and until actually received by the party to whom such noticeis delivered.

8. Governing Law. This Note shall be governed by andconstrued in accordance with the laws of the State of Texas andwith respect to the rate of interest charged hereon, applicablefederal and Texas law as is now, or to the extent allowed by law asmay hereafter be, in effect.

9. Venue of Suite. All acts contemplated by this Note shallbe performed in ___________ County, Texas, and venue for alllitigation in connection with this Note shall be __________ County,Texas.

10. Interest Rate Ceiling. Unless modified in accordancewith the laws of the State of Texas, the rate ceiling applicable tothis Note shall be the indicated rate ceiling from time to time ineffect, as provided in Tex. Rev. Civ. Stat. Ann. art. 5069-1.04, asamended; provided, in the event any applicable law permits agreater interest ceiling than such Article, the highest lawfulceiling shall apply.

11. Headings. The headings of the paragraphs of this Noteare inserted for convenience only and shall not be deemed toconstitute a part hereof.

12. Usury Savings Clause. All agreements between the Makerand holder of this Note, whether now existing or hereafter arisingand whether written or oral, are hereby expressly limited so thatin no contingency or event whatsoever, whether by reason ofacceleration of the maturity of this note or otherwise, shall theamount paid, or agreed to be paid, to the holder of this Note forthe use, forbearance or detention of money hereunder or otherwiseor for the payment or performance of any covenant or obligationcontained in this Note or in the Deed of Trust or any otherdocument evidencing, securing or pertaining to the indebtednessevidenced by this Note, exceed the maximum amount permissible underthe Maximum Rate. If from any circumstances whatsoever,fulfillment of any provisions of this Note or of the Deed of Trustor other document at the time performance of such provision shallbe due, shall involve transcending the limit of validity prescribedby law, then, ipso facto, the obligation to be fulfilled shall bereduced to the limit of such validity, and if from any suchcircumstances the holder of this Note should ever receive an amountdeemed to be interest by applicable law which shall exceed theMaximum Rate, such amount which would be excessive interest shall

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be applied to the reduction of the principal amount owinghereunder, and not to the payment of interest, or if such excessiveinterest exceeds the unpaid balance of principal of this Note, theexcess shall be refunded to the Maker. All sums contracted for,changed or received hereunder for the use, forbearance or detentionof the indebtedness of the Maker to the holder of this Note shall,to the extent permitted by applicable law, be amortized, prorated,allocated and spread over the full term of such indebtedness untilpayment in full so that the actual rate of interest on account ofsuch indebtedness is uniform throughout the term of this Note. Theterms and provisions of this paragraph shall control and supersedeevery other provision of all agreements between the Maker and theholder of this Note.

13. Cumulative Rights. No delay on the part of the holder ofthis Note in the exercise of any power or right under this Note,under the Deed of Trust, or under any other instrument evidencingor securing the indebtedness evidenced hereby, shall operate as awaiver thereof, nor shall a single or partial exercise of any otherpower or right. Enforcement by the holder of this Note of anysecurity for the payment hereof shall not constitute any electionby it of remedies so as to preclude the exercise of any otherremedy available to it.

14. Successors and Assigns. This Note and all of thecovenants, promises and agreements contained herein shall bebinding upon and shall inure to the benefit of Maker and Payee andtheir respective heirs, administrators, successors and assigns.

15. Final Agreement. THIS NOTE REPRESENTS THE FINALAGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE MATTERS ADDRESSEDHEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

16. Time of Essence. Time shall be of the essence withrespect to all of Maker's obligations described in this Note.

17. Modifications. This Note may not be changed, amended ormodified except in a writing expressly intended for such purposeand executed by the party against whom enforcement of the change,amendment or modification is sought.

18. Assignment. This Note may not be assigned for anypurpose and shall be a non-negotiable Note.

[Option: To be used if Note represents payment of Payee'sinterest in Homestead: 19. Homestead. Notwithstanding anythingcontained herein to the contrary, Maker and Payee herebyacknowledge that this Note is given in partial payment of andrepresents Payee's homestead interest in the real propertydescribed in the Deed of Trust. Maker hereby further covenants andwarrants to Payee that in the event this Note is in excess of theequity amount allowed by law to be placed on Maker's homestead,Maker unconditionally agrees to substitute collateral of value

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equal to the outstanding balance on this Note which is in excess ofthe amount allowed by law to be placed on Maker's homestead.]

MAKER:

_______________________________(Name of Maker)

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APPENDIX

5. Bill of Sale and Assignment

BILL OF SALE AND ASSIGNMENT

THE STATE OF TEXAS §§ KNOW ALL MEN BY THESE PRESENTS:

COUNTY OF __________ §

THAT ______________________ ("Grantor"), for and inconsideration of the sum of Ten and No/100 Dollars ($10.00) andother good and valuable consideration to Grantor in hand paid by______________________ ("Grantee"), has Granted, Sold, Assigned,Transferred, Conveyed, and Delivered and does by these presentsGrant, Sell, Assign, Transfer, Convey, and Deliver unto the saidGrantee, all the following described properties, rights, andinterests arising or used in connection with that certain realproperty described in Exhibit "A" attached hereto and incorporatedherein by reference (the "Real Property"):

(a) All fixtures, equipment, appliances,furniture, furnishings and all other tangibleand intangible personal property owned byGrantor and attached to, appurtenant to,located in or about, and used in connectionwith the Real Property (the "PersonalProperty") (herein, the Real Property andPersonal Property are sometimes collectivelyreferred to as the "Property");

(b) All contractors' bonds, warranties,guaranties, rights of use and licenses andother contracts held by Grantor pertaining tothe buildings, improvements, fixtures,personalty and other properties comprising theProperty;

(c) All service contracts, warranties, guarantiesand bonds relating to the Personal Property orthe construction on, and operation of, theReal Property;

(d) All leases, subleases and other rentalagreements (written or verbal) that grant apossessory interest in and to the Property,and all security deposits held in connectionwith such leases;

(e) All transferable business licenses and permitsappertaining to the foregoing assets, and

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goodwill relating to the operation of theProperty, as well as all telephone exchanges,Yellow Page advertisements, and all otheradvertisement and promotional materials;

(f) All accounts of any nature whatsoever held byor for the benefit of Grantor with respect tothe Property; and

(g) All other rights, privileges and appurtenancesowned by Grantor and directly used inconnection with the Property or theconstruction or operation of the Property.

TO HAVE AND TO HOLD the assets hereby sold, transferred andassigned unto Grantee, his/her/its successors and assigns foreverand Grantor binds himself/herself/itself, and his/her/itsadministrators, executors, successors and assigns to foreverWARRANT AND DEFEND the assets hereby sold unto Grantee, his/her/itssuccessors and assigns, forever against every person whomsoeverlawfully to claim such herein described assets or any part thereof.

PROVIDED, HOWEVER, THAT IT IS AGREED AND UNDERSTOOD THAT ALLASSETS SOLD, TRANSFERRED OR ASSIGNED HEREUNDER ARE USED, ARE SOLD"AS IS" AND WITH ALL FAULTS AND "WHERE IS" AND GRANTOR EXPRESSLYDISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, WITH REGARDTO SAID ASSETS, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OFFITNESS OR MERCHANTABILITY, QUALITY, DESIGN AND SUITABILITY OF THEASSETS IN ANY RESPECT OR IN CONNECTION WITH, OR FOR THE PURPOSESAND USES OF, GRANTEE.

IN WITNESS WHEREOF, Grantor has caused this Bill of Sale andAssignment to be executed to be effective as of the _____ day of_________________, 199__.

GRANTOR:

______________________________

By:_________________________Name:__________________Title:_________________

GRANTEE:

____________________________

By:________________________Name:_________________

Title:_________________

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THE STATE OF TEXAS §§

COUNTY OF _______ §

This instrument was acknowledged before me on the _____ day of_____________, 199__, by ____________________________.

__________________________NOTARY PUBLIC IN AND FORTHE STATE OF TEXAS

My Commission Expires:

____________________________(Printed Name of Notary)

THE STATE OF TEXAS §§

COUNTY OF ________ §

This instrument was acknowledged before me on the _____ day of_____________, 199__, by ____________________________.

_____________________________NOTARY PUBLIC IN AND FORTHE STATE OF TEXAS

My Commission Expires:

______________________________(Printed Name of Notary)

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EXHIBIT "A"

PROPERTY DESCRIPTION

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APPENDIX

6. Bill of Sale

BILL OF SALE

This Bill of Sale (the "Bill of Sale") is dated as of the_____ day of _______________, 199__ but effective for all purposesas of _______________, 199___, by ___________________("Seller/Grantor") to ____________________ ("Buyer/Grantee").

For Ten and No/100 Dollars ($10.00) and other good andvaluable consideration, the receipt and sufficiency of which arehereby acknowledged, and in accordance with the express terms andprovisions of that certain Decree of Divorce and Agreement Incidentto Divorce entered into by and between Seller/Grantor andBuyer/Grantee in Cause Number _______________ filed in the _______District Court of _____________ County, Texas, and styled "In theMatter of the Marriage of ______________ and ______________,"Seller/Grantor hereby has BARGAINED, SOLD AND CONVEYED and by thesepresents does BARGAIN, SELL AND CONVEY unto the said Buyer/Granteethe following described personal property located in ____________County, Texas, to wit:

All furniture, furnishings, fixtures, equipment,appliances, and other tangible and intangible personalproperty ("Assets") owned by Seller/Grantor and attachedto, appurtenant to, located in, or about, and used inconnection with the operation of the _______________project commonly known as the _______________________,located on the tract or parcel of land in ____________County, Texas, described on exhibit "A" attached heretoand incorporated herein by reference.

TO HAVE AND TO HOLD [, subject to any security interest nowheld by ________________,] the Assets unto Buyer/Grantee,his/her/its successors and assigns to WARRANT AND FOREVER DEFENDall and singular the Assets unto Buyer/Grantee, his/her/itssuccessors and assigns, against any person whomsoever lawfullyclaiming or to claim the same or any part thereof [by, through, orunder Seller/Grantor, but not otherwise].

Seller/Grantor agrees that upon the request of Buyer/Grantee,at any time and from time to time, Seller/Grantor will do, execute,acknowledge and deliver, all such further acts, deeds, assignments,transfers, conveyances, powers of attorney and assurances as may berequired to evidence further the sale, grant, assignment,conveyance, transfer, set-over and delivery of the Assets toBuyer/Grantee, or to aid or assist Buyer/Grantee in reducing tohis/her/its possession, title to and possession of any and all ofthe Assets sold, assigned, transferred, conveyed and deliveredhereby.

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Seller/Grantor covenants, agrees, represents and hereby bindshimself/herself/itself, his/her/its successors, legalrepresentative and assigns, that Seller/Grantor is the lawful ownerof the Assets, that he/she/it has all right and title to sell theAssets and hereby warrants and agrees to defend that right andtitle unto Buyer/Grantee, his/her/its successors' legalrepresentatives and assigns against the claims and demands of allpersons, corporations and all other legal entities whomsoeverlawfully claiming or to claim the same or any part thereof, andthat the Assets are free and clear from any claims, liabilities,mortgages, liens, pledges, conditions, charges or encumbrances ofany nature or kind whatsoever. Seller/Grantor further represents,warrants, covenants and agrees that he/she/it has not heretoforesold, transferred, granted, assigned or encumbered the Assets andit has full right and authority to assign and convey the Assets.

This Bill of Sale shall be binding upon and inure to thebenefit of Seller/Grantor, Buyer/Grantee, and their respectivesuccessors and assigns.

This Bill of sale shall be governed by and in accordance withthe laws of the State of Texas and the applicable venue shall be________________ County, Texas.

ALL ASSETS SOLD, CONVEYED, TRANSFERRED, ASSIGNED OR DELIVEREDHEREUNDER ARE USED, ARE SOLD "AS IS" AND WITH ALL FAULTS [AND"WHERE IS"] AND SELLER/GRANTOR HEREBY EXPRESSLY DISCLAIMS ANY ANDALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OFFITNESS OR MERCHANTABILITY, QUALITY, DESIGN OR SUITABILITY FOR THEPURPOSES AND USES OF BUYER/GRANTEE OTHER THEN THE WARRANTY OFTITLE.

IN WITNESS WHEREOF, Seller/Grantor has executed this Bill ofsale as of the date first above written.

SELLER/GRANTOR:

______________________________

By: _________________________Its: _________________________

BUYER/GRANTEE:

_______________________________

By: __________________________Its: __________________________

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APPENDIX

7. Assignment of Interest (State Bar Form)

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P-69

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APPENDIX

8. Assignment of Interest

ASSIGNMENT OF INTEREST IN PROFITS, LOSSES, DISTRIBUTIONS ANDOBLIGATIONS OF THE

This Assignment is made and entered this the _____ day of__________, 199___, by and between ____________________("Assignor") and ____________________ ("Assignee") (and hereinaftersometimes collectively referred to as the "Parties").

WHEREAS, Assignor currently owns a _____ percent (__%)[General Partners'/Limited Partners'/Joint Venture] interest in andto that certain _______________ [Partnership/Joint Venture/LimitedPartnership] known as the _________________________ (hereinafterreferred to as the "Partnership/Joint Venture"), with ________being the [Managing/General Partner/Joint Venturer], [Option: andthose limited partners listed on Exhibit "A"] pursuant to the termsof the [Partnership/Limited Partnership/Joint Venture] Agreement(the "Partnership/Joint Venture Agreement") dated as of the _____day of _______________, 19___; and

WHEREAS, this Assignment is being entered into by and betweenAssignor and Assignee pursuant to the terms of that certainAgreement Incident to Divorce entered into by and between Assignorand Assignee in cause number __________ in the District Court of_______________ County, Texas, _______ Judicial District and styled"IN THE MATTER OF THE MARRIAGE OF ____________________ AND____________________ AND IN THE INTEREST OF _____________________,____________________, and ____________________, A CHILD/CHILDREN"(the "Divorce Action"); and

WHEREAS, Assignor, pursuant to the terms of the DivorceAction, desires to assign to Assignee, individually, a share ofAssignor's interest in the profits, losses, distributions andobligations of the [Partnership/Joint Venture], and Assigneedesires to acquire such share of Assignor's interest in theprofits, losses, distributions and obligations of the[Partnership/Joint Venture]; and

[Option: WHEREAS, _____________________ Managing [GeneralPartner/Joint Venturer] has consented to the Assignment pursuant toparagraph _______ of the [Partnership/Joint Venture] Agreement.]

NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS: That,effective as of ____________________, 19__, Assignor and Assignee,for good and valuable consideration, the receipt and sufficiency ofwhich is hereby acknowledged, hereby agree as follows:

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1. Assignor does hereby transfer, assign and set over to Assigneeand Assignee hereby accepts from Assignor an assignment of one-half(1/2) of Assignor's interest in the Partnership/LimitedPartnership/Joint Venture, together with a one-half (1/2) interestin all profits, losses, distributions and obligations of thePartnership/Limited Partnership/Joint Venture.

2. Assignee hereby agrees to share in the percentages shownin all losses and obligations, as well as all profits anddistributions from and after the effective date of this Assignment[Option: and Assignee further agrees to share in proportion to suchliabilities of whatever nature incurred by Assignor pursuant to theterms and provisions of the Partnership/Limited Partnership/JointVenture Agreement.

3. The respective shares of the Parties in the profits,losses and distributions of the [Partnership/LimitedPartnership/Joint Venture] shall henceforth be as follows:

Assignor ______%Assignee ______%

Further, that ______ percent (__%) of the [Partnership/LimitedPartnership/Joint Venture] depreciation shall be allocated toAssignor and ______ percent (__%) of the [Partnership/LimitedPartnership/Joint Venture] depreciation shall be allocated toAssignee.

4. [Optional if Assignee is receiving a net profitsinterest:

This Assignment is in no way intended to make Assignor ageneral or limited partner/joint venturer in thePartnership/Limited Partnership/Joint Venture, nor is it intendedto bind or make Assignee liable for any losses, capitalcontributions or any other obligations incurred or to be incurredby the Partnership/Limited Partnership/Joint Venture.

5. [Optional if Assignee is receiving a net profitsinterest:

Assignor and Assignee agree, in the event that, for anyreason, Assignee incurs any liabilities or losses associated withthe Partnership/Limited Partnership/Joint Venture, Assignor agreesto indemnify and hold Assignee and his/her property harmless forany such liabilities or losses.

6. Assignor and Assignee agree that, for Federal income taxpurposes, Assignee shall be treated as a partner/limitedpartner/joint venturer and shall receive a form K-1 reflectingAssignee's percentage share of the Partnership's/LimitedPartnership's/Joint Venture's distributable tax attributes.Assignee shall be given all of the management authority and votingpower attributable to his/her interest in the partnership/limitedpartnership/joint venture as set forth in the Partnership/LimitedPartnership/Joint Venture Agreement.

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7. Assignor acknowledges, by his execution of thisAssignment, and as of the effective date of this Assignment, that(i) Assignor owns a _____% interest in the Partnership/LimitedPartnership/Joint Venture; (ii) Assignor has full right and powerto make this Assignment to Assignee without the consent or joinderof any third party; and (iii) Assignor has not assigned to anythird party any portion of his original partnership/limitedpartnership/joint venture interest, nor a portion of hisdistributions due or to become due since acquiring his interest inthe Partnership/Limited Partnership/Joint Venture. Assignorfurther covenants and agrees that he shall not assign, sell orconvey to any third party any portion of the distributions due orto become due in the future to the detriment of Assignee.

8. Assignor covenants and agrees that he/she shall attemptto obtain the Managing General Partner's/Joint Venturer's approvalof this Assignment to Assignee within fourteen (14) days followingAssignor's execution of this Assignment. However, the failure ofAssignor to obtain such approval of the Managing GeneralPartner/Joint Venturer shall not render this Assignment void, butit shall continue to be valid and binding between Assignor andAssignee.

9. Assignor further covenants and agrees, to the extentthere are payments or distributions made to Assignor, some or allof which are the property of Assignee, that Assignor shall promptlydeliver to Assignee, but in no event later than five (5) businessdays after receipt by Assignor, each such payment or distribution,together with all documents and other information received byAssignor which are associated with each payment or distribution, inperson or by certified mail, return receipt requested, toAssignee's mailing address. Assignor agrees that he/she isconstructive trustee for the benefit of Assignee of all payments ordistributions received by him/her which Assignee is entitled toreceive.

10. Assignor agrees to forward all documents and informationhe/she receives in connection with the Partnership/LimitedPartnership/Joint Venture to Assignee within five (5) business daysof Assignor's receipt of same or sooner if some action or decisionis required by Assignee on or before the expiration of such five(5) business-day period. Such documents and information shallinclude, but are not necessarily limited to, form K-1's, offers tobuy or sell, correspondence, financial statements, balance sheets,income statements, expense statements and cash flow analysis.

11. Assignor does hereby bind Assignor, his/her heirs,representatives, successors and assigns, to forever warrant anddefend Assignee's right, title and interest in and to thePartnership/Limited Partnership/Joint Venture, as well asAssignee's right, title and interest in and to all payments anddistributions received and to be received by Assignee from thePartnership/Limited Partnership/Joint Venture, together withAssignee's heirs, representatives and assigns, against the lawfulclaim or claims of any and all persons whomsoever.

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12. No assignment of any duty or obligation of performancehereunder shall be made in whole or in part by Assignor without theprior written consent of Assignee.

13. [Optional: Notwithstanding anything herein to thecontrary, for so long as Assignor retains any interest in theprofits, losses, distributions or obligations of thePartnership/Limited Partnership/Joint venture, as aGeneral/Managing Partner/Joint Venturer, Assignor shall retain allof the management authority and voting power attributable tohis/her interest in the Partnership/Limited Partnership/JointVenture.]

14. For purposes of this Assignment, Assignor's andAssignee's current mailing addresses are as follows:

Assignor: _________________________________________________________

Assignee: _________________________________________________________

IN WITNESS WHEREOF, witness our hands as of the date firstwritten above, but effective as of the _____ day of ____________,199___.

ASSIGNOR:

____________________________________________________

ASSIGNEE:

____________________________________________________

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THE STATE OF TEXAS §§

COUNTY OF ________ §

BEFORE ME, the undersigned authority, a Notary Public in andfor the State of Texas, on this day personally appeared_________________, known to me to be the person whose name issubscribed to the foregoing instrument, and acknowledged to me thathe/she executed the same for the purposes and considerationexpressed therein.

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this _____ day of___________, 199__.

_____________________________Notary Public, State of Texas

My Commission Expires:

_________________________________________________________ (Typed/Printed Name of Notary)

THE STATE OF TEXAS §§

COUNTY OF ________ §

BEFORE ME, the undersigned authority, a Notary Public in andfor the State of Texas, on this day personally appeared_________________, known to me to be the person whose name issubscribed to the foregoing instrument, and acknowledged to me thathe/she executed the same for the purposes and considerationexpressed therein.

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this _____ day of___________, 199__.

_____________________________Notary Public, State of Texas

My Commission Expires:

_________________________________________________________ (Typed/Printed Name of Notary)

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CONSENT

I, ______________________ as [one of] the Managing/GeneralPartner/Joint Venturer in the _____________________, a TexasGeneral/Limited Partnership/Joint Venture, do hereby acknowledge,consent and ratify the above and foregoing Assignment on this the______ day of _______________, 199___.

____________________________________________________

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APPENDIX

9. Assignment of Oil & Gas Leases

ASSIGNMENT OF OIL AND GAS LEASES

This Assignment and Transfer is made the _____ day of____________, 19___, by _______________________, whose address is_____________________________, ____________, Texas _________("Assignor") to _________________________, whose address is_______________________, _____________, Texas _______ ("Assignee").

W I T N E S S E T H:

Assignor for good and valuable considerations, the fullreceipt and sufficiency of which are hereby acknowledged andconfessed, does hereby grant, bargain, sell, transfer, set over,convey, assign and deliver unto Assignee an undivided one-half (½)of the full interest and estate of Assignor in, to and under thefollowing described property, to-wit:

A. All of the oil and gas leases, and oil, gas and mineralinterests, and any and all rights appertaining thereto,which are described on Exhibit "A", covering the propertyand lands in ___________ County, ___________, said leasescovering the lands described in Exhibit "B" attachedhereto (all of which are collectively referred to as"Lease and Mineral Interests"), subject, however, to theprovisions and conditions contained in the oil, gas andmineral leases and deeds referred to on Exhibit "B"hereto, to which Lease and Mineral Interests and therecord thereof reference is made for all purposes; and

B. Rights existing in favor of Assignor under all presentlyexisting oil and gas sales, purchase, exchange andprocessing contracts, casinghead gas contracts, unitagreements, operating agreements, including any and alloperator's liens, communitization agreements, poolingagreements, and other contracts, agreements andinstruments relating to any of the Lease and MineralInterests, or to the production, sale, processing andtransportation of oil and gas from or attributable to theLease and Mineral Interests; and

C. All personal property, improvements, lease and wellequipment of Assignor, including, but not limited to, allwells, casing, tubing, tanks, buildings, fixtures andmachinery (hereinafter collectively called "PersonalProperty") situated upon or used in connection with the

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exploration, development, operation or maintenance of theLease and Mineral Interests, or in connection with theproduction, treating, storing, transportation ormarketing of oil and gas produced from the Lease andMineral Interests.

All of the rights, title and interest of Assignor in theabove-described properties, interests and rights specified inthe foregoing subparagraphs A, B and C are herein collectivelycalled the "Conveyed Interests."

TO HAVE AND TO HOLD the Conveyed Interests unto Assignee, herheirs and assigns, forever, subject to the terms and provisions ofthis Conveyance.

1. The term "oil, gas and other minerals" as used hereinshall be deemed to mean and include with respect to any particularConveyed Interests one or more of any combination of (a) oil, gas,casinghead gas, condensate, distillate, and any other liquid orvaporous hydrocarbons and other substances produced in associationwith any such substances through a common wellbore or recovered byfurther processes and (b) all other minerals of every kind anddescription in each case that are or may be produced from, orattributable to, any of the Lease and Mineral Interests.

2. This Conveyance is made without warranty, express orimplied. This Conveyance is made with full substitution andsubrogation of Assignee in and to all covenants and warranties byothers heretofore given or made with respect to the ConveyedInterests, or any part thereof, or to the condition of any personalproperty or equipment thereon.

3. Assignor agrees to execute and deliver to Assignee allsuch other and additional instruments, notices, division orders,transfer orders and other documents and to do all such other andfurther acts and things as may be reasonably necessary to fully andeffectively grant, convey and assign to Assignee the ConveyedInterests covered hereby.

4. It is the intention of Assignor to hereby vest intoAssignee only an undivided one-half (1/2) of the right, title andinterest in and to each and every oil, gas and mineral leaseinterest, oil, gas and mineral interest, royalty and overridingroyalty interest, and all attendant and appurtenant rights theretoowned by Assignor in the Conveyed Interests, as described onExhibit "B" hereto, and all of such interests are hereby granted,bargained, sold, transferred, set over, conveyed, assigned anddelivered by Assignor to Assignee.

5. It is the further intention of Assignor to hereby conveyto Assignee one-half (1/2) of any and all oil, gas and mineralinterests presently owned by the Assignor in __________ County,______________, which were acquired by Assignor from [Date ofMarriage] up to and including the date of Assignor's divorcefrom Assignee, whether or not specifically described or referred to

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herein. The Assignor hereby agrees to execute and deliver anyother instruments, division or transfer orders or other documents,and to do all such other acts as may reasonably be necessary oradvisable to carry out the intent of this Assignment and to vest inAssignee one-half (1/2) of Assignor's interest in and to anymineral interests or properties in ____________ County,______________ which were acquired by Assignor from_________________ up to and including the date of Assignor'sdivorce from Assignee. It is the further intention of thisAssignment that all oil, gas and mineral interests presently ownedby Assignor in ___________ County, _______________ which wereacquired by Assignor prior to ______________ and all oil, gas andmineral interests which may be acquired by Assignor following thedate of his divorce from Assignee are not a part of the ConveyedInterests being conveyed hereby.

All of the terms, covenants, and conditions hereto shall inureto the benefit of and be binding upon the respective heirs andassigns of Assignor and Assignee, respectively, and all referenceshereto to Assignor and Assignee shall include their respectiveheirs and assigns.

IN WITNESS WHEREOF, the parties hereto have caused thisAssignment and Transfer to be duly executed on the date set forthin the acknowledgement, effective, however, as to runs of oil anddeliveries of gas and for all other purposes, as of 7:00 a.m. localtime (at the location of the Conveyed Interests, respectively), onthe _____ day of _____________, 19____ (the "Effective Date").

ASSIGNOR:

___________________________________________________

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THE STATE OF TEXAS §§

COUNTY OF ________ §

BEFORE ME, THE UNDERSIGNED, a Notary Public in and for saidCounty and State, on this day personally appeared___________________, known to me to be the person whose name issubscribed to the foregoing instrument and acknowledged to me thathe executed the same for the purposes and consideration thereinexpressed.

GIVEN UNDER MY HAND AND SEAL OF OFFICE this the _____ day of______________, 19____.

_______________________________NOTARY PUBLIC IN AND FORTHE STATE OF TEXAS

My Commissions Expires:

_______________________ _______________________________(Printed Name of Notary)

After Recording Please Return to:

_________________________

_________________________

________________________

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EXHIBIT "A"

(Attached to and Made A Part Of That Certain Assignment of Oil and Gas Leases from ______________ to ________________)

WorkingDescription Interest

Operator

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EXHIBIT "B"

(Attached to and Made A Part Of That Certain Assignment of Oil and Gas Leases from ________________ to _______________)

LEGAL DESCRIPTION:

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APPENDIX

10. Assignment of Mineral Interest

ASSIGNMENT

STATE OF TEXAS §§ KNOW ALL MEN BY THESE PRESENTS:

COUNTY OF _______ §

WHEREAS, _____________________ (hereinafter referred to as"Assignor") desires to convey to ___________________ (hereinafterreferred to as "Assignee") a one-half (1/2) interest of Assignee'sinterest in that certain undivided mineral interest known as the______________ well (hereinafter referred to as "_______________"),and as specifically described by metes and bounds in Exhibit "A"which is attached hereto and incorporated herein by reference forall purposes, such one-half interest being a ______________ workinginterest and a ______________ net revenue interest;

WHEREAS, as used in this Assignment, the term "mineralinterests" shall be defined as oil and gas wells, oil and gasleases and leasehold interests, and the oil and gas leaseholdequipment and improvements used in connection with such leases andwells, if any;

WHEREAS, for purposes of complying with the terms of thatcertain Agreement Incident to Divorce (hereinafter referred to asthe "Agreement") to be entered in Cause Number ______________ inthe __________ Judicial District Court of ____________ County,Texas and styled "In the Matter of the Marriage of ________________and ___________________ ," Assignee is to receive a ______________working interest and a ____________ net revenue interest in_______________, such interests being one-half of the interestsowned by, standing in the name of or held for the benefit ofAssignor as of __________________ and Assignor shall retain theremaining undivided one-half (1/2) of such mineral interest asspecifically described in Exhibit "A"; and

WHEREAS, Assignor desires to formally assign unto Assignee,whose address is __________________________, _____________, Texas,her heirs and assigns, such interests in and to the ______________mineral interests as required by the Agreement;

NOW, THEREFORE, PREMISES CONSIDERED, for and in considerationof the sum of Ten and No/100 Dollars ($10.00) and other good andvaluable consideration to Assignor in hand paid by Assignee and forpurposes of complying with the Agreement, Assignor does herebyassign, transfer and convey unto Assignee, her heirs and assigns,a ____________ working interest and ____________ net revenueinterest in and to the _______________ mineral interest describedon Exhibit "A", such mineral interests having been owned byAssignor as of _____________________. This assignment is one-half

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(1/2) of all of the mineral interests owned beneficially byAssignor as of _________________ in the above-named county.

This Assignment is subject, however, to all of the terms andprovisions of such leases, prior assignments, valid and subsistingoperating agreements, gas purchase agreements and other agreements,if any, affecting the interest owned by Assignor as of____________________.

Assignee, by her acceptance of this assignment, hereby assumesall liabilities and other obligations associated with the mineralinterests being assigned to her and Assignee shall assume and beresponsible to pay for her share of all expenses associated withthe mineral interests being assigned to her that had accrued, butwere not yet payable as of ________________ and that will accrueand be payable on and after ___________________. Assignee shallalso indemnify Assignor and hold Assignor and its property harmlessfrom any such obligations.

Assignee shall also be entitled to receive her share of anyrevenues associated with her one-half (1/2) of such mineralinterest being assigned to her herein, with Assignor receiving thebalance of such mineral interests.

This assignment is made without any express or impliedwarranties, including warranties of title.

IN TESTIMONY WHEREOF WITNESS MY HAND this ____ day of________________, 19___.

ASSIGNOR:

___________________________________________

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THE STATE OF TEXAS §§

COUNTY OF ________ §

BEFORE ME, the undersigned authority, on this day personallyappeared _________________, known to me to be the person whose nameis subscribed to the foregoing instrument, and acknowledged to methat he executed the same for the purposes and considerationstherein expressed.

GIVEN UNDER MY HAND AND SEAL OF OFFICE this the ____ day of_________________, 19___.

______________________________NOTARY PUBLIC IN AND FORTHE STATE OF TEXAS

My Commission Expires:

_________________________ ______________________________(Printed Name of Notary)

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EXHIBIT A

[LEGAL DESCRIPTION]

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APPENDIX

11. Oil and Gas Assignment - Spouse to Spouse

ASSIGNMENT

STATE OF TEXAS §§ KNOW ALL MEN BY THESE PRESENTS:

COUNTY OF _______ §

WHEREAS, _____________________ (hereinafter referred to as"Assignor") desires to convey to ___________________ (hereinafterreferred to as "Assignee") a one-half (1/2) interest of___________________'s interest in that certain undivided mineralinterest known as the ______________ well (hereinafter referred toas "_______________"), and as specifically described by metes andbounds in Exhibit "A" which is attached hereto and incorporatedherein by reference for all purposes, such one-half interest beinga ______________ working interest and a ______________ net revenueinterest;

WHEREAS, as used in this Assignment, the term "mineralinterests" shall be defined as oil and gas wells, oil and gasleases and leasehold interests, and the oil and gas leaseholdequipment and improvements used in connection with such leases andwells, if any;

WHEREAS, for purposes of complying with the terms of thatcertain Agreement Incident to Divorce (hereinafter referred to asthe "Agreement") to be entered in Cause Number ______________ inthe __________ Judicial District Court of ____________ County,Texas and styled "In the Matter of the Marriage of ________________and ___________________ ," Assignee is to receive a ______________working interest and a ____________ net revenue interest in_______________, such interests being one-half of the interestsowned by, standing in the name of or held for the benefit of__________________ by Assignor as of __________________ andAssignor shall retain the remaining undivided one-half (1/2) ofsuch mineral interest as specifically described in Exhibit "A"; and

WHEREAS, Assignor desires to formally assign unto Assignee,whose address is __________________________, _____________, Texas,her heirs and assigns, such interests in and to the ______________mineral interests as required by the Agreement;

NOW, THEREFORE, PREMISES CONSIDERED, for and in considerationof the sum of Ten and No/100 Dollars ($10.00) and other good andvaluable consideration to Assignor in hand paid by Assignee and forpurposes of complying with the Agreement, Assignor does herebyassign, transfer and convey unto Assignee, her heirs and assigns,a ____________ working interest and ____________ net revenueinterest in and to the _______________ mineral interest describedon Exhibit "A", such mineral interests having been owned byAssignor as of _____________________. This assignment is one-half

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(1/2) of all of the mineral interests owned beneficially by________________ and held by Assignor as of _________________ inthe above-named county.

This Assignment is subject, however, to all of the terms andprovisions of such leases, prior assignments, valid and subsistingoperating agreements, gas purchase agreements and other agreements,if any, affecting the interest owned by Assignor as of____________________.

Assignee, by her acceptance of this assignment, hereby assumesall liabilities and other obligations associated with the mineralinterests being assigned to her and Assignee shall assume and beresponsible to pay for her share of all expenses associated withthe mineral interests being assigned to her that had accrued, butwere not yet payable as of ________________ and that will accrueand be payable on and after ___________________. Assignee shallalso indemnify Assignor and hold Assignor and its property harmlessfrom any such obligations.

Assignee, by her acceptance of this assignment, hereby assumesall tax liabilities associated with the transfer of the mineralinterest being assigned to her herein and Assignee shall indemnifyand hold Assignor and its property harmless therefrom.

Assignee shall also be entitled to receive her share of anyrevenues associated with her one-half (1/2) of such mineralinterest being assigned to her herein, with Assignor receiving thebalance of such mineral interests, including _______________'sremaining interests.

This assignment is made without any express or impliedwarranties, including warranties of title.

IN TESTIMONY WHEREOF WITNESS MY HAND this ____ day of________________, 19___.

_______________________

By: _____________________________________________Its: _________________

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THE STATE OF TEXAS §§

COUNTY OF ________ §

BEFORE ME, the undersigned authority, on this day personallyappeared _________________, known to me to be the person andofficer whose name is subscribed to the foregoing instrument, andacknowledged to me that the same was the act of said___________________, a corporation, and that he executed the samefor the purposes and considerations therein expressed.

GIVEN UNDER MY HAND AND SEAL OF OFFICE this the ____ day of_________________, 19___.

______________________________NOTARY PUBLIC IN AND FORTHE STATE OF TEXAS

My Commission Expires:

_________________________ ______________________________(Printed Name of Notary)

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EXHIBIT A

[LEGAL DESCRIPTION]

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APPENDIX

12. Non-Competition Agreement

NON-COMPETITION AGREEMENT

This Non-Competition Agreement ("Agreement") is made as of the_____ day of _________, 19___, by and among _____________________("Seller") and _________________ ("Buyer").

WHEREAS, Seller and Buyer have entered into that certainAgreement Incident to Divorce dated ___________, 19___ (the"Divorce Agreement"), pursuant to which Buyer agreed to purchaseall of Seller's interest in ________________, a Texas Corporation(the "Corporation"), including, without limitation, all stockissued to Seller in the Corporation, the goods and productsheretofore offered by the Corporation to its customers and thenames and identities of all of its customers, and (ii) certain realproperty and personal property owned by Seller and Buyer used inthe operation of the Corporation's business; and

WHEREAS, as material consideration to induce Buyer to enterinto and perform the Divorce Agreement, Seller agreed to execute,deliver and perform this Agreement as a part of the consummation ofthe transactions contemplated by the Divorce Agreement.

NOW, THEREFORE, in consideration of the foregoing, and forother good and valuable consideration, the parties hereby agree asfollows:

1. Covenant Not to Compete; Non-Solicitation. Sellercovenants and agrees that, for a period commencing on the datehereof and ending on the fifth (5th) annual anniversary hereof,Seller shall not, directly or indirectly, as an employee, employer,consultant, creditor, investor, owner, agent, principal, partner,shareholder, corporate officer, director or through any other kindof ownership (other than ownership of securities of any publiclyheld entity in which Seller, directly or indirectly, in theaggregate own less than one percent (1%) of any class ofoutstanding securities), or in any other representative orindividual capacity, do any of the following:

(a) engage in any business in the following counties inTexas: ___________ County, ___________ County and theircontiguous counties (the "Restricted Area") that is incompetition in any manner whatsoever with the business of theCorporation relating to [brief description of activitiesof the business] (as such business was conducted by theCorporation immediately prior to Closing under the DivorceAgreement);

(b) engage in any business which calls upon, solicits,diverts or takes away any customer or customers of the

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Corporation in the Restricted Area for the purpose of sellingor attempting to sell to any of said customers any products,services or business similar to any products, services orbusiness heretofore sold or provided to any of such customersby the Corporation; and

(c) engage in any business which solicits any present orfuture employee of the Corporation, or discusses with any suchemployee his or her termination or resignation from employmentwith the Corporation, so that such employee may acceptemployment with, or engagement as a partner, investor,shareholder or consultant with the Seller, directly orindirectly, as specified above.

2. Non-Disclosure. Seller covenants and agrees that allinformation concerning the Corporation's business being acquiredpursuant to the Divorce Agreement or the Buyer, including withoutlimitation information regarding prices charged for products andservices, the assets, liabilities and financial condition of thebusiness, names and identities of customers and analyses of theamount and types of products and services purchased by each suchcustomer, and the amount of compensation to employees, constitutetrade secrets and confidential, proprietary business informationwhich is the property of the Corporation and that, unless otherwiserequired by law, from and after the date of this Agreement:

(a) Seller shall use his/her best efforts and exerciseutmost diligence to protect and safeguard all of such tradesecrets and confidential, proprietary information; and

(b) Seller shall not, directly or indirectly, use, sell,license, publish, disclose or otherwise transfer or makeavailable to others any of such trade secrets or confidential,proprietary information.

3. Nondisparagement; Communications. From and after the dateof this Agreement, each party hereto hereby agrees that it shallnot make or publish any statement, written or oral, disparaging thereputation of any other party hereto or any other party's businessor products. From and after the date of this Agreement, each partyhereto hereby agrees that it will not make any press releases orother announcements with respect to the transactions contemplatedby this Agreement or the Divorce Agreement without the priorwritten approval of the other party, except where a publicannouncement is required by law in which case such party making theannouncement will give the other party not less than 48 hourswritten notice before making the announcement.

4. Consideration. This Agreement is executed and deliveredby the parties hereto at Closing under the Divorce Agreement.Seller acknowledges and agrees that he/she shall benefit, directlyor indirectly, from the transactions contemplated by the DivorceAgreement and that, but for the execution of this Agreement bySeller, Buyer would not have agreed to enter into or perform theDivorce Agreement or any of the transactions contemplated thereby.

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As more particularly described in the Divorce Agreement, a portionof the Purchase Price paid by Buyer pursuant to the DivorceAgreement was paid for this Agreement.

5. Reasonableness; Reformation. Seller acknowledges andagrees that (i) this Agreement is ancillary to the DivorceAgreement, (ii) the provisions of this Agreement contain reasonablelimitations as to time, geographical area and scope of activitiesto be restrained and do not impose a greater restraint than isnecessary to protect Buyer's and the Corporation's goodwill andother business interests, (iii) if any portion of the covenants andagreements set forth in this Agreement are held to be invalid,unreasonable, arbitrary or against public policy, then such portionof such covenants shall be considered divisible as to time, scopeof activities covered, and geographical area, (iv) if any court ofcompetent jurisdiction determines the specified time period, scopeof activities covered, or the specified geographical areaapplicable to any provision of this Agreement to be invalid,unreasonable, arbitrary or against public policy, a lesser timeperiod, scope of activities covered, and/or geographical area whichis determined to be reasonable, non-arbitrary and not againstpublic policy may be enforced against Seller.

6. Remedies for Breach. Any one or more of the followingremedies, as selected by Buyer and/or the Corporation in its solediscretion, shall be available to Buyer hereunder:

(a) Specific Performance. In the event of a breach orthreatened breach of any covenant or agreement of Seller inthis Agreement, remedies at law will not adequately compensateBuyer or the Corporation for its injuries incurred as a resultthereof. Accordingly, injunctive and/or equitable relief shallbe available to Buyer and/or the Corporation to specificallyenforce this Agreement and prevent such breach and anycontinued breach of any covenant and agreement herein.

(b) Suit for Damages. In addition to the remedies statedin Section 6(a) above, in the event of any breach of anycovenant or agreement of Seller herein, Buyer and/or theCorporation may sue for damages arising out of such breach andotherwise enforce this Agreement and obtain all remediesavailable to Buyer and/or the Corporation under applicablelaw.

7. Waivers Applicable to Covenants Not to Compete. In itssole discretion, Buyer and/or the Corporation shall have the rightat any time and from time to time to waive all or any portion ofBuyer's and/or the Corporation's rights under the covenants not tocompete contained in Section 1 of this Agreement as applicable tothe Seller, including, without limitation, reducing the scope ofcovenant not to compete applicable to the Seller or reducing thetime period or the geographical area of the covenant not to competeapplicable to the Seller; provided that as so amended by waiversuch covenant not to compete shall remain fully in effect. In order

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to be effective, any such waiver must be in writing and executed byBuyer.

8. Miscellaneous.

(a) Notices. All notices, claims, or demands required orpermitted to be given hereunder shall be delivered in themanner stated in the Asset Agreement.

(b) Entire Agreement: Amendments. This Agreement,together with the Divorce Agreement, sets forth the entireunderstanding of the parties and supersedes all prioragreements or understandings, whether written or oral, withrespect to the subject matter hereof. No terms, conditions, orwarranties, other than those contained herein, and noamendments or modifications hereto, shall be valid unless madein writing and signed by the parties intended to be boundthereby.

(c) Binding Effect/Assignability. This Agreement shallextend to and be binding upon and inure to the benefit of theparties hereto, their respective heirs, legal representatives,successors and assigns. Seller shall not have any right atany time to assign this Agreement to any person or entitywithout the prior written consent of Buyer and theCorporation.

(d) Headings/Captions. The captions to sections andsubsections of this Agreement have been inserted solely forconvenience and reference, and shall not control or effect themeaning or construction of any of the provisions of thisAgreement.

(e) Counterparts. This Agreement may be executed in twoor more counterparts, each of which shall be deemed anoriginal, but which together shall constitute one and the sameagreement.

(f) Waiver: Remedies. Waiver by any party hereto of anybreach of or exercise of any rights under this Agreement shallnot be deemed to be a waiver of similar or other breaches orrights or a future breach of the same duty. The failure of aparty to take any action by reason of any such breach or toexercise any such right shall not deprive any party of theright to take any action at any time while such breach orcondition giving rise to such right continues. The partiesshall have all remedies permitted to them by this Agreement orlaw, and all such remedies shall be cumulative.

(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BYAND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OFTEXAS.

(h) Attorney's Fees. In the event any action orproceeding is commenced by Seller, on the one hand, or Buyer,

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on the other, to (i) determine rights, duties or obligationshereunder, (ii) determine a breach hereof and obtain damagestherefor, or (iii) otherwise enforce this Agreement, theprevailing party in such action or proceeding shall beentitled to recover from the other party all costs andexpenses thereof, including reasonable attorney's fees andcosts.

(i) Joint and Several. All covenants, agreements,liabilities and obligations of Seller herein or arisinghereunder are the joint and several covenants, agreements,liabilities and obligations of the Corporation, ______________and ________________.

IN WITNESS WHEREOF, the parties hereto have executed thisAgreement as of the day and year first written above.

SELLER: BUYER:

___________________ ________________________

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APPENDIX

13. Employment Agreement

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is dated as of the ______ day of_________________, 199__, by and between _______________________,a Texas corporation (hereinafter referred to as "Employer"), and___________________, an individual (hereinafter referred to as"Employee") (and collectively sometimes referred to as the"Parties").

IN CONSIDERATION OF the mutual covenants herein contained andof other good and valuable consideration, the receipt andsufficiency of which is hereby acknowledged, the parties heretoagree as follows:

1. Employment.

Employer hereby agrees to employ Employee, and Employeeagrees to serve as an employee of Employer, during the Period ofEmployment, as defined in Section 2. Employee shall have suchauthority and shall perform such duties as may be determined fromtime to time by Employer's Board of Directors ("Duties").

2. Period of Employment.

The "Period of Employment" shall be the period commencing onthe date hereof and ending on the date that this Agreement isterminated in accordance with its terms.

3. Duties During the Period of Employment.

During the Period of Employment, Employee shall devote his/herfull business time and attention to the affairs of Employer andshall use his/her best efforts, commensurate with his/her level ofexperience and expertise, in the performances of the Duties.Provided, however, and except as specifically directed by theEmployer in writing, Employee shall have no right or power to, andshall not, bind or obligate the Employer in any way, manner orthing whatsoever. In addition, except as specifically authorizedby the Employer in writing, Employee shall have no authority topurchase equipment or to spend the Employer's funds for capitalexpenditures.

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4. Cash Compensation. Employer shall pay to Employee duringthe Period of Employment a base salary of $____________ per monthgross in two installments per month of $____________ gross each,being due and payable on the fifteenth and last day of each month,beginning on the _______ day of ________________, 199__. Employerwill be responsible for withholding all applicable income taxes,social security taxes and medicare taxes from Employee'scompensation.

5. Other Employee Benefits.

(a) Vacation and Sick Leave.

During the Period of Employment, Employee shall beentitled to __________ (___) weeks paid vacation per year and to____________ (___) weeks unpaid leave per year to be used in caseof emergencies.

(b) Business Expenses and Disbursements.

Employer shall reimburse Employee for expenses anddisbursements reasonably incurred by Employee in the performance ofhis/her Duties during the Period of Employment in accordance withEmployer's established policies.

(c) Health Insurance.

During the Period of Employment, in addition to the cashcompensation provided in Section 4 hereof but subject to meetingeligibility provisions and to the remaining provisions of thisAgreement, Employee shall be entitled to participate in theEmployer's health insurance plan, as presently in effect or as maybe modified or supplemented by Employer from time to time, at nocost to Employee. All uninsured medical expenses of Employee shallbe paid by Employee.

(d) Automobile

During the Period of Employment, Employee shall be entitled touse for company business only the ___________________ automobileowned by Employer at no cost to Employee. In addition to the useof the automobile, Employer shall pay the cost of insurance, fuel,maintenance and repairs with respect to such automobile during thePeriod of Employment. For the sole purpose of paying for gasolinefor the _________________ automobile used by Employee for companybusiness only, Employee shall have the use of the _______________credit card issued to Employer.

6. Termination.

(a) Term of Employment. The Parties acknowledge andagree that so long as the Employer is owned by _________________,Employee's employment hereunder is for a term of ____________ (___)years from the date of this Agreement, unless terminated byEmployer for Just Cause, as defined below, or terminated by

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Employee, as set forth below. If not sooner terminated pursuant tothis Agreement, the Period of Employment shall terminate uponEmployee's death or Disability (as hereinafter defined) or bychange of ownership of Employer. Notwithstanding any otherprovision contained in this Agreement, Employee may terminateEmployee's employment hereunder at any time upon not less thanthirty (30) days prior written notice (a "Termination Notice") tothe Employer. A Termination Notice shall be effective upondelivery to the Employer, and the termination shall be effective asof the date set forth in such Termination Notice.

(b) Terminations by Employer or Employee.

If Employer should terminate the Period of Employment forJust Cause (as hereinafter defined) or if the Period of Employmentis terminated because of Employee's Disability (as hereinafterdefined) or death, or change of ownership of Employer, Employershall have no obligation to make further payments under thisAgreement to Employee or his/her estate.

For purposes of this Agreement, "Just Cause" shall mean:(i) the engaging by Employee in willful, reckless or grosslynegligent misconduct, or (ii) the pleading by Employee of nocontest to, or Employee's conviction of, a felony or any crime (a)involving fraud or dishonesty or (b) that reasonably could beexpected to bring Employer into general disrepute, (iii) committingan act of fraud upon Employer; (iv) materially breaching any duty,obligation or covenant imposed upon Employee by this Agreement; or(v) Employee does not fully perform all his/her duties to thesatisfaction of the Board of Directors.

For purposes of this Agreement, "Disability" shall meanmaterial inability to perform the Duties due to physical or mentaldisability that continues for either: (i) a total of one hundredtwenty (120) days during any twelve (12) month period; or (ii)ninety (90) consecutive days. In the event that either partydisputes, after notice from the other, that Employee suffers fromDisability, such dispute shall be submitted to a physician mutuallysatisfactory to Employee and Employer. If the Parties are unableto agree on a physician each party shall select a reputablephysician, which two physicians together shall in turn select athird physician whose determination as to whether or not Employeesuffers from Disability shall be conclusive and binding on theparties. Such a determination of Disability by a mutually-agreed-upon physician or by a third physician shall be conclusivenotwithstanding that any applicable disability policy, or clause inan insurance policy covering Employee, shall contain a differentdefinition of "disability" or "permanent disability". Each partyshall bear one-half (1/2) of the aggregate costs of such Disabilitydetermination.

7. Noncompetition Agreement.

(a) During the Period of Employment and for a periodending __________ months thereafter, Employee will neither permit

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his/her name to be used by, nor engage, directly or indirectly,either individually or as a partner, stockholder, investor,officer, director, employee, agent, associate or consultant of anyperson, in any other business (so long as such business is carriedon by Employer, or a subsidiary of or other entity controlled by orunder common control with Employer) (a "Similar Business") withinany county in the United States in which the Employer, or asubsidiary or affiliate of Employer does business, except thatEmployee may perform consulting services for Employer after thePeriod of Employment. In addition, during the Period of Employmentand for a period of ______ months thereafter, Employee will notdivulge to any person or entity any trade secrets of Employer.Employee acknowledges and agrees that the limitations on his/herconduct set forth in this paragraph (a) are reasonable with respectto time period and geographic scope and that such limitations arenecessary to protect the legitimate business interests of Employer.For purposes of this Agreement, "person" shall be broadly construedto include, without limitation, any natural person, corporation,partnership, limited liability partnership, trust, association orother entity of any kind.

(b) The parties intend that the covenants contained inparagraph (a) of this Section 7 shall be deemed to be a series ofseparate covenants, one for each county in each of the states ofthe United States in which Employer or a subsidiary of Employerdoes business. Except for geographic coverage, each such separatecovenant shall be deemed identical in terms of the covenantcontained in such paragraph (a). If, in any judicial proceedings,a court shall refuse to enforce all of the separate covenantsdeemed included in such paragraph, then such unenforceable covenantshall be deemed eliminated from the provisions hereof for thepurpose of such proceedings to the extent necessary to permit theremaining separate covenants to be enforced in such proceedings.

8. Specific Performance.

Employee acknowledges and agrees that his/her performanceof the Duties hereunder is special and unique and that the remedyat law for any breach or threatened breach by him/her of thisAgreement will be inadequate. Accordingly, Employee acknowledgesand agrees that, in the event of any such breach or threatenedbreach, Employer shall be entitled to injunctive relief without thenecessity of posting bond.

9. Governing Law.

This Agreement is governed by and is to be construed andenforced in accordance with the laws of the State of Texasapplicable to contracts between Texas residents that are to bewholly performed within such state. If under such law any portionof the Agreement is at any time deemed to be in conflict with anyapplicable statute, rule, regulation or ordinance, such portionshall be deemed to be modified or altered to conform thereto or, ifthat is not possible, to be omitted from this Agreement, and the

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invalidity of any such portion shall not affect the force, effectand validity of the remaining portion hereof.

10. Notices.

All notices under this Agreement shall be in writing and shallbe deemed effective when delivered in person, or forty-eight (48)hours after deposit thereof in the U.S. mails, postage prepaid, fordelivery as registered or certified mail addressed, in the case of

(a) Employee, to:

________________________________________________________________________

(b) Employer, to:

________________________________________________________________________________________________

or to such other address as may be furnished by either party to theother in accordance with the provisions of this Section 10.

In lieu of personal notice or notice by deposit in the U.S.mail, a party may give notice by telegram, telex or facsimiletransmission, which shall be deemed to have been received upontelephonic confirmation of receipt of such transmission by arepresentative of the person to whom it is addressed.

11. Miscellaneous.

This Agreement constitutes the entire understanding betweenEmployer and Employee relating to the employment of Employee byEmployer and supersedes and cancels all prior written or oralagreements and understandings with respect to the subject matter ofthis Agreement. This Agreement may be amended but only by asubsequent written agreement of the parties. This Agreement shallbe binding upon and shall inure to the benefit of Employee and tothe benefit of Employer.

This Employment Agreement is personal to Employee only and isnon-assignable by Employee.

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IN WITNESS WHEREOF, the parties hereto have executed thisAgreement as of the year and day first above written.

EMPLOYER:

______________________________

By: __________________________Its: ___________________

EMPLOYEE:

_________________________________________________________

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APPENDIX14. Consulting Agreement

CONSULTING AGREEMENT

THIS CONSULTING AGREEMENT ("Agreement") is dated this _____day of _____________, 199___ to be effective beginning the _____day of ____________, 199__ and is by and between ________________,a _____________________ corporation (the "Company"), and______________________________, an individual resident of___________, Texas (the "Consultant"), and collectively referred toherein as the "Parties."

PRELIMINARY STATEMENTS

A. [As applicable] The Company has purchased Consultant'sinterest in the Company and Consultant has resigned as an officerand director of the Company [Option: all in connection with thatAgreement Incident to Divorce entered in Cause No. ________ in________ County, Texas by and between _________________ andConsultant dated _____________________].

B. [As applicable] The Consultant is a former employee/oneof the founders of the Company and is knowledgeable of the businessof the Company.

C. The Company desires to obtain the agreement of theConsultant to provide consulting services to the Company.

ACCORDINGLY, in consideration of the preceding preliminarystatements and the mutual covenants contained in this Agreement,the Company and the Consultant, intending to be legally bound, nowagree as follows:

STATEMENT OF AGREEMENT

1. Consulting Period. For purposes of this Agreement, theterm "Consulting Period" shall mean the _________ (month) (year)period commencing _________________________.

2. Consulting Services. During the Consulting Period, theConsultant shall provide his (her) personal services and expertiseto the Company as an independent consultant. The Consultant shalladvise and assist the Company in the operation of the Company asreasonably requested by the Company [Option: , but the Consultantshall not be required to render consulting services under thisAgreement in excess of ____ hours per week].

3. Consideration. In consideration for the consultingservices to be provided by the Consultant pursuant to thisAgreement, the Consultant shall receive payment of $___________payable ____________________________. [Option: Consultant shallalso be allowed to have coverage under the Company's group majormedical and hospitalization insurance plan, at Consultant's

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expense, provided Consultant qualifies for such coverage pursuantto the express terms and conditions of the insurance plan.]

4. Termination. The Company may terminate this Agreement atanytime, with or without cause. If this Agreement is terminatedprior to the end of the Consulting Period by the Company for causeno further consideration shall be due to Consultant. If thisAgreement is terminated prior to the end of the Consulting Periodby the Company without cause, the Company shall be liable for, andshall pay to the Consultant the remaining consideration accordingto the provisions set forth in paragraph 3 hereof. For purposes ofthis Agreement, "Cause" shall mean: (i) the engaging by Consultantin willful, reckless or grossly negligent misconduct; (ii) thepleading by Consultant of no contest to, or Consultant's convictionof, a felony or any crime (a) involving fraud or dishonesty or (b)that reasonably could be expected to bring the Company into generaldisrepute; (iii) committing an act of fraud upon the Company; (iv)materially breaching any duty, obligation or covenant imposed uponConsultant by this Agreement; or (v) Consultant does not fullyperform all his/her duties to the satisfaction of the Board ofDirectors.

Consultant may terminate this Agreement at any time upon notless than thirty (30) days prior written notice to the Company.Such notice shall be effective upon delivery to the Company, andthe termination shall be effective as of the date set froth in suchnotice. Upon termination of this Agreement by Consultant, nofurther Consideration will be due Consultant.

5. Independent Contractor. The Consultant shall be anindependent contractor. As a result, the Company shall not beresponsible for the withholding of any federal or state, ifapplicable, income taxes, social security taxes and medicare ormedicaid taxes. The Consultant shall not, except as specificallydirected by the Company, in writing, represent or hold himself(herself) out as an agent, officer, director, legal representative,partner, joint venturer or employee of the Company. Except asspecifically directed by the Company, in writing, the Consultantshall have no right or power to, shall not represent that he (she)has any right or power to, shall not attempt to, and shall not,bind or obligate the Company in any way, manner or thingwhatsoever. [Option: In addition, except as specificallyauthorized by the Company in writing, Consultant shall have noauthority to purchase equipment or to spend Company funds forcapital expenditures.]

6. Noncompetition Agreement.

(a) During the Consulting Period and for a period ending_________ months thereafter, Consultant will neither permit his/hername to be used by, nor engage, directly or indirectly, eitherindividually or as a partner, stockholder, investor, officer,director, employee, agent, associate or consultant of any person,in any other business (so long as such business is carried on bythe Company, or a subsidiary of or other entity controlled by or

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under common control with the Company) (a "Similar Business")within any county in the United States in which the Company, or asubsidiary or affiliate of the Company does business, except thatConsultant may perform consulting services for the Company afterthe Consulting Period. In addition, during the Consulting Periodand for a period of ___________ months thereafter, Consultant willnot divulge to any person or entity any trade secrets of theCompany. Consultant acknowledges and agrees that the limitationson his/her conduct set forth in this paragraph A are reasonablewith respect to time period and geographic scope and that suchlimitations are necessary to protect the legitimate businessinterests of the Company. For purposes of this Agreement, "person"shall be broadly construed to include, without limitation, anynatural person, corporation, partnership, limited liabilitypartnership, trust, association or other entity of any kind.

(b) The Parties intend that the covenants contained inparagraph A of this paragraph 6 shall be deemed to be a series ofseparate covenants, one for each county in each of the states ofthe United States in which the Company or a subsidiary of theCompany does business. Except for geographic coverage, each suchseparate covenant shall be deemed identical in terms of thecovenant contained in paragraph A. If, in any judicialproceedings, a court shall refuse to enforce all of the separatecovenants deemed included in such paragraph, then suchunenforceable covenant shall be deemed eliminated from theprovisions hereof for the purpose of such proceedings to the extentnecessary to permit the remaining separate covenants to be enforcedin such proceedings.

7. LAW GOVERNING. THIS AGREEMENT SHALL BE GOVERNED BY ANDCONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUTGIVING EFFECT TO ITS CONFLICT OF LAWS, RULES OR CHOICE OF LAWSRULES.

8. Counterparts. This Agreement may be extended in anynumber of counterparts, each of which shall be deemed to be anoriginal, and all of which together shall constitute one and thesame instrument even if all parties are not signatories to eachcounterpart.

9. Assignability and Binding Effect. This Agreement shallinure to the benefit of and be binding upon the Company and theConsultant and their respective successors and permitted assigns.This Agreement and the rights and obligations of the Consultantunder it may not be assigned by the Consultant.

10. Amendments. This Agreement may not be modified, amendedor supplemented except by an agreement in writing signed by boththe Company and the Consultant.

IN WITNESS WHEREOF, the parties to this Agreement have causedthis Agreement to be executed as of the date first above written.

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THE COMPANY:

________________________________

By: _____________________________________________, President

THE CONSULTANT:

______________________________________________________

THE STATE OF TEXAS §§

COUNTY OF ___________ §

BEFORE ME, the undersigned authority, a Notary Public in and

for the State of Texas, on this day personally appeared

_____________________, President of _______________________, a

________________ corporation, known to me to be the person and

officer whose name is subscribed to the foregoing instrument, and

acknowledged to me that he executed the same as a duly authorized

officer of such corporation, and as the act and deed of such

corporation, for the purposes and consideration therein expressed,

and in the capacity therein stated.

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ______ day of

___________, 199__.

______________________________Notary Public, State of Texas

My Commission Expires:

______________________________________________________ (Typed/Printed Name of Notary)

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THE STATE OF TEXAS §§

COUNTY OF _________ §

BEFORE ME, the undersigned authority, a Notary Public in and

for the State of Texas, on this day personally appeared

_________________, known to me to be the person whose name is

subscribed to the foregoing instrument, and acknowledged to me that

he/she executed the same for the purposes and consideration

expressed therein.

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this _____ day of

_______________, 199____.

_______________________________Notary Public, State of Texas

My Commission Expires:

_____________________________________________________ (Typed/Printed Name of Notary)

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APPENDIX

15. Resignation Letter

RESIGNATION LETTER

_____________ __, 199__

Board of Directors__________________ [company name]__________________ [address]___________, Texas __________

Gentlemen:

I hereby tender my resignation as ________________ [officetitle] and director of ________________________ effective as of_________________, 199__.

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APPENDIX

16. Unanimous Consent of Shareholders

UNANIMOUS CONSENT OF THE SHAREHOLDERS

OF

_________________________________

The undersigned, being the holders of all shares of

____________________________, a Texas corporation (the

"Corporation"), entitled to vote at all meetings of shareholders of

the Corporation, acting pursuant to the provisions of Article 9.10

of the Texas Business Corporation Act, hereby give written consent

to the adoption of, and do hereby adopt, the following resolutions,

which resolutions shall be deemed to have been approved and adopted

to the same extent and to have the same force and effect as if

adopted at a formal meeting of the directors of said Corporation:

WHEREAS, ________________ has resigned as a directorand ________________ [office title] of the Corporationeffective as of _______________, 19__; and

WHEREAS, the shareholders of the Corporation deem itto be in the best interests of the Corporation to electa new director to fill such vacancy; it is therefore,

RESOLVED, that the resignation of as director and _________________ [office title] ishereby accepted effective as of __________________, 19__.

FURTHER RESOLVED, that _________________ is herebyelected as a director of the Corporation to fill thevacancy created by the resignation of__________________________, to serve until the nextannual meeting of shareholders, or until his successor iselected and qualified, or until his earlier death,resignation, retirement, disqualification or removal fromoffice.

FURTHER RESOLVED, that _____________________ and____________________ shall continue to serve as directorsof this Corporation until the next annual meeting of the

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shareholders or until his or her respective successorshall have been elected and qualified.

DATED as of the ______ day of _______________, 19__.

_________________________,

Shareholder

_________________________,

Shareholder

_________________________,

Shareholder

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APPENDIX

17. Unanimous Consent of Board of Directors

UNANIMOUS CONSENT OF THE BOARD OF DIRECTORS

OF

_________________________________

The undersigned, being all the members of the Board of

Directors of ____________________________, a Texas corporation (the

"Corporation"), acting pursuant to the provisions of Article 9.10

of the Texas Business Corporation Act, hereby give written consent

to the adoption of, and do hereby adopt, the following resolutions,

which resolutions shall be deemed to have been approved and adopted

to the same extent and to have the same force and effect as if

adopted at a formal meeting of the directors of said Corporation:

WHEREAS, ________________ has resigned as a directorand ________________ [office title] of the Corporationeffective as of _______________, 19__; and

WHEREAS, the Board of Directors of the Corporationdeems it to be in the best interests of the Corporationto elect a new ________________ [office title]; it istherefore,

RESOLVED, that the resignation of __________________as director and _________________ [office title] ishereby accepted effective as of ______________ ____,19__.

FURTHER RESOLVED, that _________________ is herebyelected to the office of __________________ of theCorporation to fill the vacancy created by theresignation of __________________________, to serve untilthe first meeting of the Board of Directors of theCorporation following the next annual meeting ofshareholders, or until his successor is elected andqualified, or until his earlier death, resignation,retirement, disqualification or removal from office.

FURTHER RESOLVED, that _____________________ and____________________ shall continue to serve as directorsof this Corporation until the next annual meeting of the

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shareholders or until his or her respective successorshall have been elected and qualified.

DATED as of the ______ day of _______________, 19__.

____________________, Director

____________________, Director

____________________, Director

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APPENDIX

18. Stock Power

STOCK POWER

For full and adequate consideration received, and in

accordance with the provisions of that certain Collateral Pledge

Agreement and that certain Escrow Agreement, both executed of even

date herewith, ___________________________ hereby sells, assigns

and transfers to ____________ _______________ ___________ (____)

shares of the common stock of ________________________, a Texas

corporation, now registered in the name of

__________________________________ on the books of

______________________, being Stock Certificate No. ___________.

__________________________________ hereby appoints ______________

__________________ hereby appoints ____________________________

[Escrow Agent] as agent to transfer the aforesaid stock on the

books of _____________________________________.

Dated this __________ day of _____________________, 199__.

__________________________

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APPENDIX

19. Representation Letter

REPRESENTATION LETTER

__________, 199_

[Secured Party's name]_______________________________________________________________

Dear ______________:

In connection with that certain Agreement Incident to Divorceentered in Cause No. _______________, filed of record in the_______ Judicial District Court of ___________ County, Texasbetween _____________________________ (hereinafter referred to as"Husband") and _____________________________ (hereinafter referredto as "Wife") Husband has agreed to pledge (the "Pledge") to Wife____% of the capital stock of ______________________________ (the"Company"), now owned or hereafter acquired by Husband (the"Stock"), which as of the date hereof, consists of an aggregate of______ shares, as itemized below. The Pledge is further evidencedby that certain Collateral Pledge Agreement (the "Agreement") ofeven date herewith between Husband and Wife. In connection withsuch Pledge, Husband represents, warrants and covenants to Wife asfollows:

1. Husband is the legal and beneficial owner of thefollowing described Stock, all of which is validly issued, fullypaid and nonassessable:

Certificate Title No. No. of Class of Shares Date Acquired

_____ Common _________ __________________ Common _________ _____________

2. Husband acquired the Stock from the Company on thedate(s) set forth in Paragraph 1 above. The purchase price for theStock was fully paid in cash or other lawful consideration on orbefore the date of acquisition thereof.

3. The Stock constitutes (i) _____% of the shares ofcapital stock of the Company legally or beneficially owned byHusband, and (ii) _____% of the issued and outstanding shares ofcapital stock of the Company. There are no outstanding options,warrants or other rights to purchase any shares of capital stock ofthe Company.

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4. Husband owns and has good and valid title to the Stock.With the exception of (i) the Pledge to Wife and (ii) therestriction on transfer set forth on the certificates evidencingthe Stock, the Stock is free and clear of any and all liens,claims, voting trusts, voting agreements, mortgages, proxies,encumbrances, charges, assessments, restrictions on transfer, puts,calls, purchase rights or options or other similar rights.

5. The Pledge will not conflict with or result in a breachin any of the terms, conditions or provisions of any judgment,order, injunction, decree or any agreement or instruction to whichHusband is a party or by which Husband is bound, or constitute adefault thereunder, or result in the creation or imposition of anylien, charge, encumbrance or restriction of any nature whatsoeverupon or give to others any interest or rights, in or with respectto the Stock.

6. Husband represents that on (date) he will bethe beneficial owner of the Stock for more than three years asdetermined according to Rule 144(d) promulgated under theSecurities Act of 1933, as amended.

7. Husband agrees to cooperate fully with Wife and toprovide Wife with any other representations, documents orinstruments which Wife may request and which may be required inconnection with the disposition of any of the Stock by Wifepursuant to the applicable requirements of Rule 144.

8. The information set forth in this letter is true andcorrect in all respects. Husband agrees to promptly notify Wife inthe event of any changes in the information, representations,warranties and covenants set forth in this letter.

9. Husband acknowledges that Wife is relying upon theforegoing representations in order to accept the Stock ascollateral for the certain indebtedness and obligations set forthin the Agreement, and undertakes to hold Wife harmless against anyand all loss, damage, liability and expense, including, but notlimited to, reasonable attorneys' fees, arising out of or resultingfrom the breach of the representations contained herein. TheCompany and the transfer agent of the Company are also entitled torely upon this letter in connection with a disposition of any ofthe Stock by Wife.

Very truly yours,

________________________, Debtor

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APPENDIX

20. Collateral Pledge Agreement

COLLATERAL PLEDGE AGREEMENT

This Collateral Pledge Agreement ("Agreement") is made by

_________________ ("Secured Party") and _________________

("Debtor"). The parties agree as follows:

1. Obligation To Be Secured. Under the terms of the

Agreement Incident to Divorce entered in Cause No. 00-0000-0,

styled, "In The Matter Of The Marriage Of _______________________

and ____________________________," filed of record in the ________

Judicial District Court of ____________ County, Texas, Debtor is

indebted to Secured Party in the amount of ______________________

and _____/100 Dollars ($______________) as evidenced by that

certain promissory note (the "Note") in the face amount of

____________________ and ____/100 Dollars ($____________) executed

and delivered contemporaneously herewith by Debtor to Secured Party

(hereinafter "Debtor's Obligations").

2. Security. Debtor and Secured Party desire to have Debtor

grant to Secured Party a security interest in the Collateral

described in Paragraph 4 herein as security for Debtor's

performance of the terms and conditions of Debtor's Obligations.

3. Security Interest. Debtor grants to Secured Party a

security interest in the Collateral described in Paragraph 4 to

secure the payment and performance of Debtor's Obligations to

Secured Party.

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4. Collateral. The "Collateral" in which the security

interest is created is the following: _________ (____) shares of

common stock in ____________________________, a Texas corporation

(the "Company"), representing ___________ percent (___%) of all

voting shares issued and outstanding of the Company, together with

all certificates, options, rights or other distributions issued as

an addition to, in substitution or in exchange for, or on account

of, any such shares, and all proceeds of the foregoing, as further

described in Paragraph 11, or any substitute collateral pursuant to

the terms of Paragraph 12.

5. Obligation Secured. The security interest created

secures the timely payment and performance of Debtor's Obligations

to Secured Party.

6. Representations and Warranties Of Debtor. Debtor

represents and warrants that the Collateral is free and clear of

any security interest (other than the security interest granted in

this Agreement), liens, restrictions, or encumbrances, and that

Debtor has full right and power to transfer the Collateral to

Secured Party free and clear and to enter into and carry out this

agreement. The Debtor also represents and warrants that the

Collateral has a current fair market value that exceeds

_______________________ and No/100 Dollars ($_____________).

7. Events of Default. "Default" under this Agreement shall

be any or all of the following:

a. Debtor's failure punctually and promptly to observe,

keep, or perform any covenant, agreement, or condition required by

this Agreement to be observed, kept, or performed;

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b. Debtor's failure to pay, punctually and promptly on

the due date, any payments pursuant to the terms of the Note;

c. the making of any levy, seizure, or attachment of

the Collateral; or

d. the issuance by the Company of any additional shares

of capital stock of the Company or any options, warrants or other

rights to purchase any shares of capital stock in the Company.

8. Rights Of Secured Party On Occurrence Of An Event Of

Default. On the occurrence of an event of default, Secured Party

may at Secured Party's option, (a) proceed immediately to have any

or all of the Collateral registered in Secured Party's name or the

name of Secured Party's nominee, and Debtor hereby covenants that,

in such event and upon Secured Party's request, Debtor will cause

the issuer of the Collateral to effect such registration, (b)

exercise all voting rights with respect to the Collateral and all

other corporate rights pertaining thereto, (c) proceed immediately

to dispose of the Collateral, or any part thereof, and in

connection therewith, sell or otherwise dispose of and deliver the

Collateral, or any part thereof, in one or more parcels at public

or private sale or sales, at such prices and on such terms

(including, but without limitation, a requirement that any

purchaser of all or any part of the Collateral purchase the

Collateral for investment and without any intention to make a

distribution thereof) as it may deem best, for cash or on credit,

or for future delivery without assumption of any credit risk, with

the right of Secured Party or any purchaser to purchase at any such

sale either the whole or any part of the Collateral (in connection

with any such sale or disposition, Secured Party need not give more

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than ten (10) calendar days notice of the time and place of any

public sale or of the time after which a private sale may take

place, which notice Debtor hereby acknowledges to be reasonable),

or (d) exercise any and all rights and remedies provided by the

Texas Uniform Commercial Code as well as other rights and remedies

either at law or in equity possessed by Secured Party.

9. Collateral Proceeds. The proceeds of any disposition of

all or any part of the Collateral, as provided in Paragraph 8

above, shall be applied as follows: (i) first, to the costs and

expenses incurred in connection therewith or incidental thereto,

including reasonable attorneys' fees and legal expenses; (ii)

second, to the satisfaction of Debtor's Obligations; (iii) third,

to the payment of any other amounts required by applicable law; and

(iv) fourth, to Debtor to the extent of any surplus remaining. In

the event that there is any deficiency due to the fact that the

proceeds from the aforesaid disposition of the Collateral were

inadequate to satisfy Debtor's Obligations, Debtor shall be liable

to Secured Party for such deficiency.

10. Escrow Agent. Debtor and Secured Party hereby appoint

____________________________, as escrow agent ("Escrow Agent") for

the Collateral. Simultaneously, with the execution of this

Agreement, Debtor shall deliver to the Escrow Agent the Stock

Certificate(s) representing the Collateral, along with related

stock powers executed in blank. Escrow Agent shall deliver to

Debtor a receipt for the Collateral. When proof has been presented

to the Escrow Agent to determine in his sole discretion that the

Debtor's Obligations have been paid in full, the Escrow Agent shall

redeliver to Debtor the certificate(s) of stock representing the

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Collateral and the related stock power(s) held by the Escrow Agent

and all obligations of Secured Party, Debtor and the Escrow Agent

hereunder shall cease. In the event Debtor defaults under the

terms of Paragraph 7 herein, Secured Party shall give written

notice of such default to the Escrow Agent. After receipt of such

default notice, the Escrow Agent shall deliver the stock

certificate(s) representing the Collateral and the related stock

power(s) to Secured Party after having given the Debtor one day

written notice of Escrow Agent's receipt of the default notice from

Secured Party. Such written notice by the Escrow Agent shall be

hand delivered to the Debtor's address set forth below in

Paragraph 12.

The parties hereto agree that the following provisions shall

control with respect to the rights, duties, liabilities privileges

and immunities of the Escrow Agent:

(i) In the event the Escrow Agent becomesinvolved in any demand, claim, orlitigation in connection with thisAgreement, the parties hereto agree toindemnify and hold the Escrow Agentharmless from all losses, costs, damages,expenses and attorneys' fees suffered orincurred by the Escrow Agent, except forany arising from gross negligence, fraudor willful misconduct on the part of theEscrow Agent;

(ii) The Escrow Agent shall be protected inacting upon any written notice, request,waiver, consent, certificate, receipt,authorization, power of attorney or otherpaper document which the Escrow Agent ingood faith believes to be genuine in whatit purports to be;

(iii) The Escrow Agent shall not be liable tothe other parties hereto for anythingwhich he may do or refrain from doing inconnection herewith except his own gross

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negligence, fraud, or willful misconduct;and

(iv) In the event of any disagreement betweenany of the parties to this Agreement, orbetween them or either of them and anyother person resulting in adverse claimsor demands being made in connection withthe subject matter of the escrow, or inthe event that the Escrow Agent, in goodfaith, is in doubt as to what action heshould take under this Agreement, theEscrow Agent may, at his option, file aninterpleader action, or refuse to complywith any claims or demands on him, orrefuse to take any other action, so longas such disagreement continues or shoulddoubt exist, and in any such event, theEscrow Agent shall not be or become liablein any way or to any person for hisfailure or refusal to act, and the EscrowAgent shall be entitled to continue so torefrain from acting until (1) the rightsof all parties have been fully and finallyadjudicated by a court of competentjurisdiction, or (2) all differences shallhave been adjusted and all doubt resolvedby agreement among all of the interestedpersons, and the Escrow Agent shall havebeen notified thereof in writing signedby all such persons. The rights of theEscrow Agent under this Paragraph arecumulative of all other rights which hemay have by law or otherwise.

11. Voting and Dividend Rights. In the event Debtor shall

become entitled to receive or shall receive, in connection with any

of the Collateral, (a) any stock certificate, including any

certificate representing a stock dividend or any certificate in

connection with any increase or reduction of capital,

reclassification, merger, consolidation, sale of assets,

combination of shares, stock split or spin-off, (b) any option,

warrant or right, whether as an addition to or in substitution of

any of the Collateral, or otherwise, (c) any dividend or

distribution payable in property, including securities issued by

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other than the issuer of the Collateral, or (d) any dividends or

distributions of any kind whatsoever, Debtor shall accept same as

encumbered by the security interest created hereby, and shall

deliver same forthwith to Secured Party in the exact form received,

including as appropriate, Debtor's endorsement or appropriate stock

powers duly executed in blank, to be held by Escrow Agent as a part

of the Collateral, subject to the terms hereof; provided, however,

that for so long as no Default (as defined in Paragraph 7 above) is

in existence, Debtor shall have the right to receive cash dividends

declared and paid on account of the Collateral and shall have sole

voting rights with respect to the Collateral.

12. Substitution Of Collateral. Debtor may have the right at

any time to substitute collateral as security for Debtor's

obligations in an amount equal to the then balance of Debtor's

Obligations secured by this Agreement, together with such

assignment documents as Secured Party may reasonably request to

evidence Debtor's pledge, subject to the agreement of Secured

Party, such agreement not to be unreasonably withheld.

13. No Waiver Of Rights Or Remedies.

a. No Waiver. No failure or delay by Secured Party in

exercising any rights, power, or privilege under this Agreement

shall operate as a waiver, and no single or partial exercise of any

such power or privilege shall preclude any other or further

exercise of any other right, power, or privilege.

b. Severability. Should any of the provisions of this

Agreement be determined to be illegal or unenforceable, its other

provisions shall be given effect separately and shall not be

affected.

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c. Notices. Any notices or other communications

required or remitted pursuant to this Agreement shall be sufficient

if delivered personally or sent by certified mail, return receipt

requested, postage prepaid, as follows:

DEBTOR:

_______________________________________________________, Texas ________

With a copy to: Attorney for Debtor____________________________________________________________________________________________

SECURED PARTY:

_____________________________________________________________________

ESCROW AGENT:

_____________________________________________________________________

With a copy to: Attorney for Secured Party______________________________________________________________________________

or at such other addresses as shall be furnished in writing by

either party to the other, and notices shall be deemed to have been

given as of the date so delivered or deposited in the United States

mail.

d. Assignment Of Secured Party. This Agreement and the

security interest it creates shall not be assignable by Secured

Party but shall inure to the benefit of Secured Party's heirs,

executors, or administrators in the event of her death and shall be

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binding on Debtor and Debtor's heirs, executors, administrators,

legal representatives, and assigns.

e. Choice Of Law. The laws of the State of Texas shall

govern the validity of this Agreement, the construction of its

terms, and the interpretation of the rights and duties of the

parties.

SIGNED on this _________ day of ___________, 199__.

________________, Secured Party

________________, Debtor

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STATE OF TEXAS §§

COUNTY OF ______ §

This instrument was acknowledged before me on the ________ day

of ________________, 199__ by _________________________.

NOTARY PUBLIC IN AND FORTHE STATE OF TEXAS

My Commission Expires:

_____________________(Printed Name of Notary)

STATE OF TEXAS §§

COUNTY OF _______ §

This instrument was acknowledged before me on the ________ day

of ________________, 199__ by _________________________.

NOTARY PUBLIC IN AND FORTHE STATE OF TEXAS

My Commission Expires:

_____________________(Printed Name of Notary)

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APPENDIX

21. Escrow Agreement

ESCROW AGREEMENT

(Individual Obligation)

THIS ESCROW AGREEMENT, dated as of _______________, 199_, isentered into by and among ____________________ ("Debtor"),____________________ ("Secured Party") and ____________________, asescrow agent (the "Escrow Agent").

W I T N E S S E T H:

WHEREAS, on _____________________, 199_, Debtor and SecuredParty have entered into an Agreement Incident to Divorce (the"Divorce Agreement"); and

WHEREAS, the Debtor has pledged _______________ shares (the"Escrowed Shares") of common stock ("Common Stock") of_____________________ (the "Company") to secure Debtor's obligationto pay to Secured Party the sum of __________________ and ___/100Dollars ($___________) pursuant to the Divorce Agreement; and

WHEREAS, Debtor and Secured Party desire that the EscrowedShares be held by the Escrow Agent pursuant to this EscrowAgreement to assure the performance of the foregoing transactions;

NOW THEREFORE, in consideration of the premises and mutualpromises contained herein, the parties hereto agree as follows:

1. Concurrently with the execution of this Escrow Agreement,Debtor hereby delivers the Escrowed Shares, together with the stockpowers necessary to transfer ownership of the same ("Stock Powers")to the Escrow Agent to hold the same in accordance with the termsof this Agreement. The Escrow Agent hereby acknowledges receipt ofthe Escrowed Shares and Stock Powers and agrees to hold and actwith respect thereto as hereinafter set forth.

2. The Escrow Agent shall promptly place the Escrowed Sharesand the Stock Powers in a safe location and shall maintain theEscrowed Shares and the Stock Powers safe from loss.

3. Except as otherwise provided for in this Paragraph 3, theEscrowed Shares and the Stock Powers shall be held in safekeepingby the Escrow Agent to and for the benefit of Secured Party untilthe release of the Escrowed Shares and the Stock Powers which shallbe required as follows:

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a. Upon the full and complete satisfaction byDebtor of the terms and conditions set forth in thatcertain Promissory Note in the face amount of________________ and ___/100 Dollars ($____________)executed and delivered contemporaneously herewith byDebtor to Secured Party at which time the Escrowed Sharesand Stock Powers shall be returned to Debtor; or

b. On any date upon which there is a Default underthat certain Collateral Pledge Agreement of even dateherewith by and between Debtor and Secured Party, SecuredParty shall be entitled to notify Escrow Agent of her/hisintention to exercise her/his remedies under theCollateral Pledge Agreement and/or the Promissory Note,and the Escrow Agent shall comply only with SecuredParty's instructions from the date of such notification.

4. Any dispute which may arise under this Escrow Agreementshall be settled either by mutual agreement of the parties to suchdispute or by a final order of a court of proper jurisdiction. Inthe event the terms of a settlement of a dispute hereunder increasethe duties or liabilities of the Escrow Agent hereunder and theEscrow Agent has not participated in such settlement so as to bebound thereby, then such settlement shall be effective as to theEscrow Agent in respect of such increase in duties or liabilitiesonly upon the Escrow Agent's written consent thereto. Prior to thesettlement of this dispute as provided herein, the Escrow Agent isauthorized and directed to retain in his possession the EscrowedShares and the Stock Powers.

5. Should any controversy arise between the Debtor, on theone hand, and Secured Party, on the other hand, with respect tothis Escrow Agreement or with respect to the right to the releaseof any of the Escrowed Shares or the Stock Powers, the Escrow Agentshall have the right to institute an interpleader proceeding in acourt of proper jurisdiction to determine the rights of theparties. Should an interpleader proceeding be instituted, orshould the Escrow Agent become involved in litigation in any mannerwhatsoever on account of this Escrow Agreement or the EscrowedShares or the Stock Powers, the other parties hereto shall pay theEscrow Agent, in addition to any charge made hereunder for actingas the Escrow Agent, reasonable attorneys' fees incurred by theEscrow Agent, and any other disbursements, expenses, losses, costsand damages actually and reasonably incurred in connection with andresulting from such litigation.

6. Other than the exercise of reasonable care in the physicalcustody of the Escrowed Shares or the Stock Powers while held bythe Escrow Agent, the Escrow Agent shall have no responsibilityfor, or obligation or duty with respect to, all or any part of theEscrowed Shares or the Stock Powers or any matter or proceedingarising out of or relating thereto, including, without limitation,any obligation or duty to collect any sums due with respect theretoor to protect or preserve any rights against prior parties or anyother rights pertaining thereto, it being understood and agreed

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that the Debtor shall be responsible for preservation of all rightsin the Escrowed Shares or the Stock Powers.

7. The Escrow Agent shall not, by reason of his execution ofthis Agreement, assume any responsibility or liability for anytransactions between the other parties hereto, other than theperformance of his obligations, as Escrow Agent, with respect tothe Escrowed Shares or the Stock Powers held by him in accordancewith this Agreement, and it is agreed that his duties are purelyministerial in nature and that the Escrow Agent shall incur noliability whatsoever to the other parties hereunder except forwillful misconduct or gross negligence so long as he has acted ingood faith. The Escrow Agent shall not be bound by anymodification, amendment, termination, cancellation or rescission ofthis Escrow Agreement unless the same shall be in writing andsigned by all of the other parties hereto and, if his duties asEscrow Agent hereunder are affected thereby, unless he shall havegiven prior written consent thereto.

8. The parties agree to indemnify, defend and hold the EscrowAgent harmless from and against any and all loss, damage, tax,liability and expense that may be incurred by the Escrow Agentarising out of or in connection with his acceptance or appointmentas Escrow Agent hereunder, including the legal costs and expensesof defending himself against any claim or liability in connectionwith his performance hereunder, except in the case of fraud, hiswillful misconduct or gross negligence or acts or omissions not ingood faith.

9. This Agreement may be executed in one or more counterpartsfor the convenience of the parties hereto, all of which togethershall constitute one and the same instrument.

10. This Escrow Agreement shall be construed and interpretedaccording to and governed by the laws of the State of Texas,without regard to the principles of conflicts of law thereof.

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IN WITNESS WHEREOF, the undersigned have caused this EscrowAgreement to be executed as of the date and year first abovewritten.

DEBTOR:

__________________________________________________

SECURED PARTY:

_______________________________________________

ESCROW AGENT:

_______________________________________________

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APPENDIX

22. Receipt From Escrow Agent

RECEIPT LETTER FROM ESCROW AGENT

___________, 199__

Mr. [Debtor's name]____________________Dallas, Texas ______

Re: Collateral Pledge Agreement and Escrow Agreement datedthe _______ of _______________, 19___ between_____________________ and _____________________

Dear Mr. _______________:

This will acknowledge that I received from you today stockcertificate number(s) _________ representing ________ (____) sharesof par value common stock in __________________________,___________________________, a Texas corporation, along withrelated stock power(s) executed by you in blank. I agree to holdsuch stock certificate(s) and stock power(s) pursuant to the termsof the Collateral Pledge Agreement and Escrow Agreement referencedhereinabove.

Very truly yours,

By: Escrow Agent

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APPENDIX

23. Form UCC-1 Financing Statement

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APPENDIX

24. Financing Statement - County Filing

TO BE FILED IN THE REAL ESTATE RECORDS OF THE OFFICE OF THE COUNTYCLERK, _____________ COUNTY, TEXAS

FINANCING STATEMENT

This instrument is prepared as, and is intended to be, a FinancingStatement, complying with the formal requisite therefor, as set

forth in the Texas Business and Commerce Code, Article 9 (alsoknown as the Texas Uniform Commercial Code - Secured Transactions),and, in particular, Section 9.402 thereof.

1. The name and address of the debtor ("Debtor") is:

____________________________________________________________________________________________________________________________________________________________________________

2. The name and address of the secured party ("Secured Party")is:

____________________________________________________________________________________________________________________________________________________________________________

3. This Financing Statement covers the following types ofcollateral ("Collateral") now or hereafter erected,constructed or developed on the real property described inExhibit "A" attached hereto and incorporated herein for allpurposes:

(See attached "Schedule 1")

4. Proceeds of the Collateral are also covered.

DATED: ____________________.

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DEBTOR:

By:Its:

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SCHEDULE 1

All equipment, fixtures and articles of personal property nowor hereafter attached to or used in and about the building,buildings and other improvements (such building, buildings andother improvements being hereinafter called the "Improvements") nowor hereafter erected, constructed or developed on the real propertydescribed herein which are necessary or useful for complete andcomfortable use and occupancy of the Improvements for the purposesfor which they were or are to be erected, constructed or developed,or which are or may be used or related to the planning,development, financing or the operation thereof; all renewals orreplacements thereof or articles in substitution therefor, whether

or not the same are or shall be attached to the Improvements in anymanner; all building materials and equipment now or hereafterdelivered to the Improvements and intended to be installed therein;all plans and specifications for the Improvements, all interests ofDebtor arising under any contracts and subcontracts, including,without limitation, all rights arising under any performance andpayment bonds, as all of the aforesaid relate to the Improvements,all deposits (including tenant's security deposits), fundsaccounts, contract rights, instruments, documents, generalintangibles (including trademarks, tradename and symbols used inconnection therewith), and notes or chattel paper arising from orby virtue of any transactions related to the Improvements; allpermits, licenses, franchises, certificates, and other rights andprivileges obtained in connection with the Improvements; allproceeds arising from or by virtue of the sale, lease or otherdisposition of any of the real or personal property describedherein; all proceeds (including premium refunds) payable or to bepayable under each policy of insurance relating to theImprovements; all proceeds arising from the taking of all or a partof the real property or any rights appurtenant thereto, includingchange of grade of streets, curb cuts or other rights of access,for any public or quasi-public use under any law, or by the rightof eminent domain, or by private or other purchase in lieu thereof;and all other interest of every kind and character which Debtor nowhas or at any time hereafter acquires, in and to the real andpersonal property described herein, and all property which is usedor useful in connection therewith, including rights of ingress andegress and all reversionary rights or interest of debtor withrespect to such property.

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APPENDIX

25. Financing Statement - State Filing

TO BE FILED IN THE OFFICE OF THE SECRETARY OF STATE OF TEXAS

FINANCING STATEMENT

This instrument is prepared as, and is intended to be, a FinancingStatement, complying with the formal requisite therefor, as set

forth in the Texas Business and Commerce Code, Article 9 (alsoknown as the Texas Uniform Commercial Code - Secured Transactions),and, in particular, Section 9.402 thereof.

1. The name and address of the debtor ("Debtor") is:

____________________________________________________________________________________________________________________________________________________________________________

2. The name and address of the secured party ("Secured Party")is:

______________________________________________________________________________________

3. This Financing Statement covers the following types ofcollateral ("Collateral") now or hereafter erected,constructed or developed on the real property described inExhibit "A" attached hereto and incorporated herein for allpurposes:

(See attached "Schedule 1")

4. Proceeds of the Collateral are also covered.

DATED: ___________________.

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DEBTOR:

By:Its:

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SCHEDULE 1

All equipment, fixtures and articles of personal property nowor hereafter attached to or used in and about the building,buildings and other improvements (such building, buildings andother improvements being hereinafter called the "Improvements") nowor hereafter erected, constructed or developed on the real propertydescribed herein which are necessary or useful for complete andcomfortable use and occupancy of the Improvements for the purposesfor which they were or are to be erected, constructed or developed,or which are or may be used or related to the planning,development, financing or the operation thereof; all renewals orreplacements thereof or articles in substitution therefor, whether

or not the same are or shall be attached to the Improvements in anymanner; all building materials and equipment now or hereafterdelivered to the Improvements and intended to be installed therein;all plans and specifications for the Improvements, all interests ofDebtor arising under any contracts and subcontracts, including,without limitation, all rights arising under any performance andpayment bonds, as all of the aforesaid relate to the Improvements,all deposits (including tenant's security deposits), fundsaccounts, contract rights, instruments, documents, generalintangibles (including trademarks, tradename and symbols used inconnection therewith), and notes or chattel paper arising from orby virtue of any transactions related to the Improvements; allpermits, licenses, franchises, certificates, and other rights andprivileges obtained in connection with the Improvements; allproceeds arising from or by virtue of the sale, lease or otherdisposition of any of the real or personal property describedherein; all proceeds (including premium refunds) payable or to bepayable under each policy of insurance relating to theImprovements; all proceeds arising from the taking of all or a partof the real property or any rights appurtenant thereto, includingchange of grade of streets, curb cuts or other rights of access,for any public or quasi-public use under any law, or by the rightof eminent domain, or by private or other purchase in lieu thereof;and all other interest of every kind and character which Debtor nowhas or at any time hereafter acquires, in and to the real andpersonal property described herein, and all property which is usedor useful in connection therewith, including rights of ingress andegress and all reversionary rights or interest of debtor withrespect to such property.

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APPENDIX

26. Guaranty Agreement

GUARANTY AGREEMENT

1. FOR VALUE RECEIVED, the undersigned (hereinafter called"Guarantor") guarantees, subject to the express terms andconditions of (a) that certain Compromise Settlement Agreement andRelease (the "Compromise Agreement"), dated of even date herewith,

executed by and between _____________________, a Texas corporation(hereinafter called the "Company"), and ___________________(hereinafter called "Secured Party"), and (b) that certainCollateral Pledge Agreement (the "Pledge Agreement"), (theCompromise Agreement and the Pledge Agreement shall collectively bereferred to herein as the "Agreements"), entered into by andbetween ____________________ and Secured Party, thepayment/collection of sums due to Secured Party pursuant to theAgreements.

2. Guarantor further agrees to pay reasonable attorney'sfees and litigation costs should this Guaranty Agreement be placedin the hands of an attorney for collection, or should it becollected through any court proceedings.

3. Guarantor agrees that this is a continuing guaranty ofthe payment/collection of sums due under the Agreements, togetherwith any modifications, renewals, extensions thereof, and anyexpenses incurred in connection therewith, [If absolute or guarantyof payment: and that it may be enforced by Secured Party withoutfirst resorting to and exhausting the security and collateralreferenced in the Agreements, through foreclosure proceedings orotherwise.] [Or, if conditional or guaranty of collection: and thatthis Guaranty may be enforced by Secured Party only after SecuredParty takes all reasonable and necessary steps to exercise allrights and claims (i) against the Company's collateral; (ii) inpursuing any and all claims and causes of action against theCompany through judgment; and (iii) to collect such judgment,including the collection of all assets owned by the Company.Secured Party further agrees that the enforcement of this Guaranty

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against Guarantor, in the event Secured Party and the Companysettle any claims, can only occur if Guarantor approves of any suchsettlement, in writing, prior thereto.] [To be included only ifguaranty of payment: Pursuit by Secured Party of any of itsremedies shall not impair this Guaranty Agreement and shall not bedeemed an election of remedies.]

4. Should the status of Company change, this GuarantyAgreement shall continue and also cover the indebtedness of Companyunder the new status, according to the terms hereof, guaranteeingthe indebtedness of the original Company.

5. This Guaranty Agreement shall remain and continue in fullforce and effect notwithstanding the institution by or against the

Company of bankruptcy, reorganization, readjustment, receivershipor insolvency proceedings of any nature, or the disaffirmance ofthe said indebtedness in any such proceedings, or otherwise.

6. In the event any payment made by Company to Secured Partyis held to constitute a preference under the Bankruptcy Laws, or iffor any other reason Secured Party is required to refund suchpayment or to pay the amount thereof to any other party, such apayment shall not constitute a release of Guarantor from anyliability hereunder, but Guarantor agrees to pay such amount toSecured Party upon demand. If Secured Party has received paymentin full and is subsequently required to repay any portion thereof,this Guaranty Agreement shall be revived as to the amount so repaidnotwithstanding any release or return hereof.

7. This Guaranty Agreement is for the benefit of SecuredParty and her/his heirs, and is otherwise not assignable by SecuredParty.

8. Guarantor expressly agrees that this contract isperformable in ____________ County, Texas.

9. The invalidity or unenforceability in any particularcircumstances of any provision of this Guaranty Agreement shall notextend beyond such provision or such circumstances, and no otherprovision of this instrument shall be affected thereby.

EXECUTED to be effective as of the ______ day of ____________,19___.

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GUARANTOR:

__________________________________________________