1-1  By:  Pitts (Senate Sponsor - Lucio)                   H.B. No. 3101
    1-2        (In the Senate - Received from the House May 11, 1995;
    1-3  May 12, 1995, read first time and referred to Committee on Economic
    1-4  Development; May 23, 1995, reported adversely, with favorable
    1-5  Committee Substitute by the following vote:  Yeas 8, Nays 0;
    1-6  May 23, 1995, sent to printer.)
    1-7  COMMITTEE SUBSTITUTE FOR H.B. No. 3101                   By:  Ellis
    1-8                         A BILL TO BE ENTITLED
    1-9                                AN ACT
   1-10  relating to the amounts that may be charged and collected in
   1-11  connection with a loan or other extension of credit for accounts
   1-12  and notes receivable.
   1-13        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
   1-14        SECTION 1.  Chapter 1, Title 79, Revised Statutes (Article
   1-15  5069-1.01 et seq., Vernon's Texas Civil Statutes), is amended by
   1-16  adding Article 1.14 to read as follows:
   1-17        Art. 1.14.  PURCHASES OF ACCOUNTS RECEIVABLE.  (a)  In this
   1-18  article:
   1-19              (1)  "Account purchase transaction" means an agreement
   1-20  or agreements under which a person or entity engaged in a
   1-21  commercial enterprise sells accounts, instruments, documents and/or
   1-22  chattel paper subject to this chapter at a discount, whether or not
   1-23  the person or entity has a related repurchase obligation.
   1-24        (b)  For the purposes of this chapter, the amount of any
   1-25  discount in, or charged under, an account purchase transaction is
   1-26  not compensation contracted for, charged, or received with respect
   1-27  to that account purchase transaction.
   1-28        (c)  For the purposes of this chapter, the parties;
   1-29  characterization of an account purchase transaction as a purchase
   1-30  shall be conclusive that the account purchase transaction is not a
   1-31  transaction for the use, forbearance or detention of money.
   1-32        (d)  This Article applies to an account purchase transaction
   1-33  entered before, on, or after the effective date of this Act.
   1-34        SECTION 2.  Article 1.01, Title 79, Revised Statutes (Article
   1-35  5069-1.01, Vernon's Texas Civil Statutes), is amended to read as
   1-36  follows:
   1-37        Art. 1.01.  Definitions.  In this Subtitle:
   1-38              (a)  "Interest" means <is the> compensation <allowed by
   1-39  law> for the use, <or> forbearance, or detention of money;
   1-40  provided, however, that this definition is subject to Articles
   1-41  1.13, 1.14 and 1.15 of this Subtitle <this term shall not include
   1-42  any time price differential however denominated arising out of a
   1-43  credit sale>.
   1-44              (b)  "Legal interest <Interest>" means <is that>
   1-45  interest <which is allowed by law> when an obligor has not agreed
   1-46  to pay the creditor any compensation that constitutes <the parties
   1-47  to a contract have not agreed on any particular rate of> interest.
   1-48  The term does not include judgment interest.
   1-49              (c)  "Conventional interest <Interest>" means <is that>
   1-50  interest when an obligor has agreed to pay to a creditor any
   1-51  compensation that constitutes interest, regardless of whether the
   1-52  agreement is unenforceable by the creditor.  The term does not
   1-53  include judgment interest <which is agreed upon and fixed by the
   1-54  parties to a written contract>.  If an obligor has agreed to pay to
   1-55  a creditor any compensation that constitutes interest, the obligor
   1-56  is considered to have agreed on the rate produced by the amount of
   1-57  that interest, regardless of whether that rate is stated in the
   1-58  agreement.
   1-59        (d)  "Creditor" means a person that loans money or otherwise
   1-60  extends credit.  <"Usury" is interest in excess of the amount
   1-61  allowed by law.>
   1-62        (e)  "Person" means an individual, partnership, corporation,
   1-63  joint venture, limited liability company, trust, association, or
   1-64  other <any> legal entity, however organized.
   1-65        (f)  "Open-end account <Account>" means any account created
   1-66  pursuant to<, under> a written contract under which a <the>
   1-67  creditor may permit an <the> obligor to make purchases or borrow
   1-68  money from time to time, and under which interest or time price
    2-1  differential may from time to time be computed on an outstanding
    2-2  unpaid balance.  The term includes, but is not limited to, accounts
    2-3  under agreements described by Section (4), Article 3.15; Section
    2-4  (4), Article 4.01; and Chapters 6 and 15 of this Title.
    2-5        (g)  "Credit card transaction <Card Transaction>" means a
    2-6  transaction in which a card is or may be used to debit an open-end
    2-7  account in connection with the purchase or lease of goods or
    2-8  services or the lending of money, which card is or may be used for
    2-9  personal, family, or household use.
   2-10        (h)  "Merchant discount <Discount>" means any charge, fee,
   2-11  discount, compensating balance, or other consideration imposed by a
   2-12  creditor on or received directly or indirectly by the creditor from
   2-13  any seller or lessor of goods or services in connection with a
   2-14  credit card transaction under a lender credit card agreement
   2-15  between an obligor <the customer> and the creditor.  The term
   2-16  includes any consideration whatsoever received by the <a> creditor
   2-17  from any person other than the obligor in connection with a credit
   2-18  card transaction under a lender credit card agreement between the
   2-19  obligor and the creditor.  Any such consideration received by a
   2-20  subsidiary of the creditor or parent company of the creditor or any
   2-21  subsidiary of the creditor's parent company shall be deemed to have
   2-22  been received by the creditor <in determining if any such
   2-23  consideration has been received by the creditor>.
   2-24        (i)  "Lender credit card agreement <Credit Card Agreement>"
   2-25  means an agreement between a creditor (other than the seller or
   2-26  lessor) and an obligor under which credit is or may be extended for
   2-27  personal, family, or household use and under which:  (1) by means
   2-28  of a credit card the obligor may obtain loans from the creditor,
   2-29  which may be advanced by other participating persons, and may lease
   2-30  or purchase goods or services from more than one participating
   2-31  lessor or seller who honor the creditor's card, and the creditor or
   2-32  some other person acting in cooperation with the creditor will
   2-33  reimburse the other participating persons, lessors, or sellers for
   2-34  the goods or services purchased or leased, and the obligor is
   2-35  obligated under his or her agreement with the creditor to pay the
   2-36  creditor the amount of such loans or the costs of such leases or
   2-37  purchases; (2) the unpaid balance of such loans, leases, and
   2-38  purchases and any interest thereon are debited to the obligor's
   2-39  account with the creditor under the obligor's agreement with the
   2-40  creditor; (3) interest is not precomputed but may be computed on
   2-41  the balances of the obligor's account outstanding with the creditor
   2-42  from time to time; and (4) the obligor may defer payment of any
   2-43  part of the balance.  The term includes all agreements for open-end
   2-44  accounts authorized or defined under Articles 3.15(4), 4.01(4),
   2-45  15.01(k), and 15.01(l) of this Title pursuant to which credit card
   2-46  transactions <as defined in Article 1.01(g) of this Title> may be
   2-47  made or in connection with which a merchant discount <as defined in
   2-48  Article 1.01(h) of this Title> is imposed or received by the
   2-49  creditor.  The term does not include an open-end account credit
   2-50  agreement between a seller or lessor and its own buyer or lessee.
   2-51  The term does not include agreements under which the entire balance
   2-52  is due and payable in full each month and no interest is charged
   2-53  when the obligor pays in accordance with such terms.
   2-54        (j)  "Affiliate of an obligor" means a person that directly
   2-55  or indirectly, through one or more intermediaries, controls, is
   2-56  controlled by, or is under common control with the obligor.
   2-57  "Control" means the possession, directly or indirectly, of the
   2-58  power to direct or cause the direction of the management and
   2-59  policies of a person, whether through the ownership of voting
   2-60  securities, by contract, or otherwise.
   2-61        (k)  "Business entity" means a partnership, corporation,
   2-62  joint venture, limited liability company, or other business
   2-63  organization or association, however organized.
   2-64        (l)  "Commercial loan" means a loan that is made primarily
   2-65  for business, commercial, investment, or other similar purposes.
   2-66  The term does not include a loan that is made primarily for
   2-67  personal, family, or household use
   2-68        (m)  "Contract interest" means conventional interest,
   2-69  regardless of whether denominated as interest, that an obligor has
   2-70  agreed to pay to a creditor.
    3-1        (n)  "Guaranty" means an agreement pursuant to which an
    3-2  obligor:
    3-3              (1)  assumes, guarantees, or otherwise becomes
    3-4  primarily or contingently liable for the payment or performance of
    3-5  an obligation of another person;
    3-6              (2)  provides security for the payment or performance
    3-7  of an obligation of another person, through the creation of a lien
    3-8  or security interest or otherwise; or
    3-9              (3)  agrees to purchase or to advance consideration to
   3-10  purchase the obligation or any property constituting security for
   3-11  the payment or performance of the obligation.
   3-12        (o)  "Judgment interest" means interest on a money judgment,
   3-13  whether the interest accrues before, on, or after the date the
   3-14  judgment is rendered.  For purposes of this Subtitle, "money
   3-15  judgment" includes legal interest or conventional interest, if any,
   3-16  that is payable to a judgment creditor pursuant to a judgment.
   3-17        (p)  "Loan" means a loan of money or other extension of
   3-18  credit if the obligor has unconditionally agreed to pay to the
   3-19  creditor the principal amount of the loan or other extension of
   3-20  credit.  The term does not include a judgment.
   3-21        (q)  "Obligor" means a person to whom money is loaned or
   3-22  credit is otherwise extended.  The term does not include a surety,
   3-23  guarantor, or similar person.
   3-24        (r)  "Qualified commercial loan" means:
   3-25              (1)  a commercial loan in the original principal amount
   3-26  of $5 million or more; or
   3-27              (2)  any renewal or extension of a commercial loan in
   3-28  the original principal amount of $5 million or more, regardless of
   3-29  whether the principal amount of the loan at the time of its renewal
   3-30  or extension is $5 million or more.
   3-31        (s)  "Time price differential" means an amount, however
   3-32  denominated, that is:
   3-33              (1)  added to the price at which a seller offers to
   3-34  sell services or real or personal property to a purchaser for cash
   3-35  payable at the time of sale; and
   3-36              (2)  paid or payable to the seller by the purchaser for
   3-37  the privilege of paying the offered sales price after the time of
   3-38  sale.
   3-39        SECTION 3.  Article 1.02, Title 79, Revised Statutes (Article
   3-40  5069-1.02, Vernon's Texas Civil Statutes), is amended to read as
   3-41  follows:
   3-42        Art. 1.02.  CONVENTIONAL INTEREST OR TIME PRICE DIFFERENTIAL
   3-43  ALLOWED; MAXIMUM RATE <MAXIMUM RATES> OF CONVENTIONAL INTEREST
   3-44  EXCEPT AS OTHERWISE FIXED BY LAW.  (a)  A creditor may contract
   3-45  for, charge, and receive from an obligor conventional interest or a
   3-46  time price differential.
   3-47        (b)  Except as otherwise fixed by law, the maximum rate of
   3-48  conventional interest shall be ten percent a year <per annum>.  <A
   3-49  greater rate of interest than ten percent per annum unless
   3-50  otherwise authorized by law shall be deemed usurious.  All
   3-51  contracts for usury are contrary to public policy and shall be
   3-52  subject to the appropriate penalties prescribed in Article 1.06 of
   3-53  this Subtitle.>
   3-54        SECTION 4.  Article 1.03, Title 79, Revised Statutes (Article
   3-55  5069-1.03, Vernon's Texas Civil Statutes), is amended to read as
   3-56  follows:
   3-57        Art. 1.03.  LEGAL INTEREST ALLOWED; MAXIMUM RATE OF LEGAL
   3-58  INTEREST <APPLICABLE>.  (a)  Unless a creditor has agreed with an
   3-59  obligor not to charge the obligor any interest, the creditor may
   3-60  charge and receive from the obligor legal interest on the principal
   3-61  amount of the credit extended by the creditor to the obligor.
   3-62        (b)  The maximum rate of legal <When no specified rate of
   3-63  interest is agreed upon by the parties,> interest is fixed at <at
   3-64  the rate of> six percent a year <per annum shall be allowed on all
   3-65  accounts and contracts ascertaining the sum payable,> commencing on
   3-66  the 30th <thirtieth (30th)> day <from and> after the date the
   3-67  principal amount first became <time when the sum is> due and
   3-68  payable.
   3-69        SECTION 5.  Article 1.04, Title 79, Revised Statutes (Article
   3-70  5069-1.04, Vernon's Texas Civil Statutes), is amended by amending
    4-1  the article heading to read as follows:
    4-2        Art. 1.04.  MAXIMUM <LIMIT ON> RATE OF CONVENTIONAL INTEREST;
    4-3  MAXIMUM RATE PRODUCED BY A TIME PRICE DIFFERENTIAL PURSUANT TO
    4-4  CERTAIN AGREEMENTS.
    4-5        SECTION 6.  Articles 1.04(a), (b), (c), and (o), Title 79,
    4-6  Revised Statutes (Article 5069-1.04, Vernon's Texas Civil
    4-7  Statutes), are amended to read as follows:
    4-8        (a)  The parties to any <written> contract may agree to a
    4-9  <and stipulate for any> rate or amount of conventional interest, or
   4-10  in an agreement described in Chapter 6, 6A, or 7 of this Title, a
   4-11  <any> rate or amount of time price differential producing a rate,
   4-12  that does not exceed:
   4-13              (1)  an indicated rate ceiling that is the auction
   4-14  average rate quoted on a bank discount basis for 26-week treasury
   4-15  bills issued by the United States government, as published by the
   4-16  Federal Reserve Board, for the week preceding the week in which the
   4-17  rate is contracted for, multiplied by two, and rounded to the
   4-18  nearest one-quarter of one percent; or, as an alternative,
   4-19              (2)  an annualized or quarterly ceiling that is the
   4-20  average of the computations under Subsection (1) of this section
   4-21  and is computed pursuant to Section (d) of this Article.
   4-22        (b)(1)  If a computation under Section (a)(1), (a)(2), or (c)
   4-23  of this Article is less than 18 percent a year, the ceiling under
   4-24  that provision is 18 percent a year.  If a computation under
   4-25  Section (a)(1), (a)(2), or (c) of this Article is more than 24
   4-26  percent a year, the ceiling under that provision is 24 percent a
   4-27  year.
   4-28              (2)  Notwithstanding the provisions of Subsection (1)
   4-29  of this Section (b), in the case of any qualified commercial loan
   4-30  <on any contract under which credit in an amount in excess of
   4-31  $250,000 is or is to be extended, or any extension or renewal of
   4-32  such a contract, and under which the credit is extended for
   4-33  business, commercial, investment, or other similar purpose, but
   4-34  excluding any contract that is not for any of those purposes and is
   4-35  primarily for personal, family, household, or agricultural use>,
   4-36  the 24 percent limitation on the ceilings in Section (b)(1) above
   4-37  that is applicable to the computations under Section (a)(1),
   4-38  (a)(2), or (c) of this Article shall not apply, and the limitation
   4-39  on the ceilings determined by those computations shall be 28
   4-40  percent a year.
   4-41              (3)  References in this Article to the indicated rate
   4-42  ceiling, annualized ceiling, quarterly ceiling, or monthly ceiling
   4-43  mean such a ceiling as modified by this Section (b).
   4-44              (4)  Any credit agreement described in Section (a),
   4-45  Article 1.11, of this Title  is subject to the terms, ceilings, and
   4-46  other provisions of that Article and, except as limited by Article
   4-47  1.11, to the terms, ceilings, and other provisions of this Article.
   4-48              (5)  Notwithstanding any other provision of law, on any
   4-49  lender credit card agreement in connection with which a merchant
   4-50  discount <as defined in Article 1.01(h) of this Title> is imposed
   4-51  or received by the creditor, the creditor may not contract for,
   4-52  charge, or receive, on any amount owed for any credit card
   4-53  transaction, a rate in excess of the ceiling allowed under Article
   4-54  15.02(d) of this Title  (which ceiling shall be adjusted in
   4-55  accordance with Article 15.02(d)) or any other fees or charges
   4-56  which are not authorized under Chapter 15 of this Title or which
   4-57  are in excess of the amounts authorized under Chapter 15.
   4-58              (6)  Notwithstanding Article 15.10 of this Title, any
   4-59  lender credit card agreement in which the creditor is a bank,
   4-60  savings and loan association, or authorized lender under Chapter 3
   4-61  of this Title  is subject to Chapter 15 of this Title and Article
   4-62  15.02(d) thereof.
   4-63              (7)  If a creditor and an obligor agree that contract
   4-64  interest in respect of any qualified commercial loan shall be
   4-65  computed on the basis of a 360-day Year of twelve 30-day months,
   4-66  each rate per year referred to in this Article, in the case of such
   4-67  a loan, means a rate per year consisting of 360 days and of twelve
   4-68  30-day months.
   4-69        (c)  A monthly ceiling is available only in variable rate
   4-70  contracts, including contracts for open-end accounts, that are not
    5-1  made for personal, family, or household use.  Subject to Section
    5-2  (b) of this Article, the monthly ceiling is the average of all the
    5-3  computations under Section (a)(1) of this Article for auctions
    5-4  occurring during the preceding calendar month and shall be computed
    5-5  by the consumer credit commissioner on the first business day of
    5-6  the calendar month in which the rate applies.  In contracts for
    5-7  which the monthly ceiling is available under this section, if the
    5-8  parties agree that the rate is subject to being adjusted on a
    5-9  monthly basis in accordance with Section (f) of this Article, they
   5-10  may further contract that the rate from time to time in effect may
   5-11  not exceed the monthly ceiling from time to time in effect under
   5-12  this section, in which event <and> the monthly ceiling from time to
   5-13  time in effect is the ceiling on those contracts, instead of any
   5-14  ceiling under Section (a) <Article 1.04(a)> of this Article
   5-15  <Title>.
   5-16        (o)(1)  <All other written contracts whatsoever, except those
   5-17  otherwise authorized by law, which may in any way, directly or
   5-18  indirectly, provide for a greater rate of interest shall be subject
   5-19  to the appropriate penalties prescribed in this Subtitle.>
   5-20              <(2)>  If, in any contract, including one for an
   5-21  open-end account, subject to Chapter 4, 5, 6, 6A, 7, or 15 of this
   5-22  Title, any person contracts for, charges, or receives a rate or
   5-23  amount of interest or time price differential that exceeds the rate
   5-24  allowed by that Chapter and the rate allowed by this Article, the
   5-25  amount of the penalty for that overcharge shall be determined under
   5-26  Chapter 8 of this Title rather than under this Subtitle, and all of
   5-27  the provisions of Articles 8.01, 8.02, 8.03, 8.04, 8.05, and 8.06
   5-28  of this Title  are in effect as to that contract and are applicable
   5-29  to this Article as if it were a part of Subtitle 2 of this Title.
   5-30  The failure to perform any duty or comply with any prohibition
   5-31  required by this Article <1.04>, in a contract entered under
   5-32  authority of this Article <1.04>, shall be subject to the penalties
   5-33  set out in Article 8.01(b) and shall be subject to such of the
   5-34  other provisions of Articles 8.01 through 8.06 which apply to
   5-35  failures to perform duties or comply with prohibitions to the same
   5-36  extent as if the duties and prohibitions in this Article <1.04>
   5-37  were contained in Subtitle 2.
   5-38              (2) <(3)>  The consumer credit commissioner, subject to
   5-39  Section (l), Article 2.01, of this Title, shall enforce Chapters 2,
   5-40  3, 4, 5, 6, 6A, 7, 8, 15, and 51 of this Title, as modified by this
   5-41  Article and Article 2.08 of this Title, and shall enforce this
   5-42  Article as applicable to contracts subject to those Chapters.
   5-43  Article 3.08 of this Title  is applicable to transactions made by
   5-44  licensees pursuant to this Article that otherwise are subject to
   5-45  Chapters 4, 5, or 15 of this Title.  The provisions of Article 3.12
   5-46  of this Title will apply to loans made under authority of this
   5-47  Article which are subject to Chapter 4 of this Title.  In any
   5-48  contracts subject to the Texas Credit Union Act, as amended
   5-49  (Article 2461-1.01 et seq., Vernon's Texas Civil Statutes), the
   5-50  credit union commissioner shall enforce this Article.
   5-51              (3) <(4)>  In any contract subject to Chapter 24 of the
   5-52  Insurance Code, the State Board of Insurance shall enforce this
   5-53  Article.
   5-54        SECTION 7.  Title 79, Revised Statutes (Article 5069-1.01) et
   5-55  seq., Vernon's Texas Civil Statutes, is amended by adding Article
   5-56  1.15 to read as follows:
   5-57        Art. 1.15.  INTEREST ON CERTAIN NOTES.  (a)  For the purposes
   5-58  of this title, in determining the amount of rate of interest
   5-59  charged on a note that was purchased from a federal agency, at a
   5-60  discount, interest includes in addition to other amounts charged,
   5-61  the amount computed by subtracting the amount for which the note
   5-62  was purchased from the total amount of the principal of the note
   5-63  paid by the maker of guarantor of the note.  Any collateral
   5-64  securing the payment of the note shall be deducted from the
   5-65  purchase price of the note before calculating the rate of interest.
   5-66  This article does not apply to a transaction if the seller or
   5-67  purchaser of a note is a financial institution.
   5-68        SECTION 8.  Article 1.13, Title 79, Revised Statutes (Article
   5-69  5069-1.13, Vernon's Texas Civil Statutes), is amended to read as
   5-70  follows:
    6-1        Art. 1.13.  CERTAIN SUMS EXCLUDED FROM DEFINITION OF INTEREST
    6-2  WITH RESPECT TO ASSET-BACKED SECURITIES.  (a)  In this Article
    6-3  <article>:
    6-4              (1)  "Asset-backed securities" means debt obligations
    6-5  or certificates of beneficial ownership that are:
    6-6                    (A)  part of a single issue or single series of
    6-7  securities aggregating $1,000,000 or more issuable in one or more
    6-8  classes;
    6-9                    (B)  secured by a pledge of or represent an
   6-10  undivided ownership interest in one or more financial assets,
   6-11  either fixed or revolving, that by their terms convert into cash
   6-12  within a finite time period plus any rights or other assets
   6-13  designed to assure the servicing or timely distribution of proceeds
   6-14  to security holders; and
   6-15                    (C)  issued by a pass-through entity for a
   6-16  business, commercial, agricultural investment, or similar purpose.
   6-17              (2)  "Pass-through entity" means a business entity
   6-18  <corporation, limited liability company>, association, <general
   6-19  partnership, registered limited liability partnership, limited
   6-20  partnership or business> grantor or common-law trust under state
   6-21  law, or segregated pool of assets under federal tax law that, on
   6-22  the date of original issuance of asset-backed securities, does not
   6-23  have significant assets other than:
   6-24                    (A)  assets pledged to or held for the benefit of
   6-25  holders of the asset-backed securities; or
   6-26                    (B)  assets pledged to or held for the benefit of
   6-27  holders of other asset-backed securities issued on an earlier date.
   6-28        (b)  The <Notwithstanding Article 1.01 of this subtitle, for
   6-29  purposes of this title the> term "interest," as used in this
   6-30  Subtitle, does not include <excludes> any sums paid or passed
   6-31  through, obligated to be paid or to be passed through, or not paid
   6-32  as a result of a discounted sale price to the holders of
   6-33  asset-backed securities by a pass-through entity, in connection
   6-34  with the original issuance or otherwise, regardless of the
   6-35  denomination of the sums under the terms of the asset-backed
   6-36  securities.  <Sums excluded from the definition of interest by this
   6-37  article are not subject to Article 1.04 of this subtitle.>
   6-38        (c)  This Article <article> does not affect or otherwise
   6-39  apply to conventional interest<, as defined by Article 1.01 of this
   6-40  subtitle,> paid, charged, or received on the ultimate underlying
   6-41  assets pledged to or held for the benefit of the holders of
   6-42  asset-backed securities.
   6-43        SECTION 9.  Subtitle 1, Title 79, Revised Statutes (Article
   6-44  5069-1.01 et seq., Vernon's Texas Civil Statutes), is amended by
   6-45  adding Articles 1.14 and 1.15 to read as follows:
   6-46        Art. 1.14.  CERTAIN ITEMS THAT DO NOT CONSTITUTE INTEREST.
   6-47  (a)  "Interest," as used in this Subtitle, does not include any
   6-48  time price differential.  The contracting for, charging, or receipt
   6-49  of a time price differential is not affected by this Title, except
   6-50  to the extent that an agreement described by Chapter 6, 6A, or 7 of
   6-51  this Title is affected by Article 1.04 of this Subtitle.
   6-52        (b)  In the case of any qualified commercial loan made to a
   6-53  business entity, "interest," as used in this Subtitle, does not
   6-54  include:
   6-55              (1)  any discount or commission  that an obligor has
   6-56  paid or agreed to pay to one or more underwriters of securities
   6-57  issued by the obligor.
   6-58              (2)  any option or other right to exchange, redeem, or
   6-59  convert all or a portion of the principal amount of the loan, or
   6-60  interest on the principal amount, for or into capital stock or
   6-61  other equity securities of an obligor or of any affiliate of the
   6-62  obligor;
   6-63              (3)  any option or other right to purchase in any other
   6-64  manner capital stock or other equity securities of an obligor or of
   6-65  any affiliate of the obligor;
   6-66              (4)  any option or other right, whether by contract,
   6-67  conveyance, or otherwise, to participate in or own a share of the
   6-68  income, revenues, production, or profits:
   6-69                    (A)  of an obligor or any affiliate of the
   6-70  obligor;
    7-1                    (B)  of any segment of the business or operations
    7-2  of an obligor or any affiliate of the obligor; or
    7-3                    (C)  derived or to be derived from any interest
    7-4  of an obligor or of any affiliate of the obligor in any real or
    7-5  personal property, including any proceeds of the sale or other
    7-6  disposition of the interest; or
    7-7              (5)  any compensation realized as a result of the
    7-8  receipt, exercise, sale, or other disposition of any option or
    7-9  other right described by Subsection (2) or (3) of this Section.
   7-10        (c)  For purposes of this Article, "security" and "equity
   7-11  security" have the meanings assigned to those terms by the
   7-12  Securities Exchange Act of 1934 (15 U.S.C. Section 78a et seq.).
   7-13        Art. 1.15.  GUARANTIES.  (a)  "Interest" as used in this
   7-14  Subtitle, does not include:
   7-15              (1)  a guaranty that a creditor requires as a condition
   7-16  to making, renewing, or extending a qualified commercial loan made
   7-17  to a business entity; or
   7-18              (2)  any compensation received by the creditor pursuant
   7-19  to the guaranty.
   7-20        (b)  This Article does not apply to any loan that is subject
   7-21  to Subtitle 2 or Chapter 15 or this Title.
   7-22        SECTION 10.  This Act takes effect September 1, 1995.
   7-23        SECTION 11.  The importance of this legislation and the
   7-24  crowded condition of the calendars in both houses create an
   7-25  emergency and an imperative public necessity that the
   7-26  constitutional rule requiring bills to be read on three several
   7-27  days in each house be suspended, and this rule is hereby suspended.
   7-28                               * * * * *