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EXHIBIT 10.2
SETTLEMENT AND DEFICIENCY AGREEMENT
This Settlement and Deficiency Agreement (the "Agreement"), dated as of
March 28, 2000 by and between TOTAL BUILDING SYSTEMS, INC., a Texas Corporation
("Total"), JOYVER INVESTMENTS, LLC., a Texas Limited Liability Company
("Joyver") and CHARLES D. McPHAIL ("McPHAIL") hereinafter Total, Joyver and
McPhail are collectively referred to as the "Borrower", CHARLES D. McPHAIL ( the
"Guarantor"), MEGA WORLD, INC., a Delaware corporation ("Mega World"), TEXAS
TBS, INC., a Texas corporation ("TBS") and COMPASS BANK, a bank organized and
existing under the laws of the state of Alabama, ("Lender").
RECITALS
SECTION 1. THE LOAN PAPERS. Total and Lender entered into that certain
Loan Agreement dated March 12, 1998 (such Loan Agreement, as the same has been
amended, supplemented, or otherwise modified from time to time, the "Loan
Agreement") pursuant to which Lender agreed, subject to the terms and provisions
in the Loan Agreement, to extend credit to Total as more fully specified in the
Loan Agreement. Total's indebtedness to Lender is evidenced by that certain
Revolving Credit Promissory Notes dated March 12, 1998 executed by Total and
payable to the order of Lender in the maximum principal amount of $1,000,000.00.
Joyver and McPhail's indebtedness to the Lender is evidenced by that certain
Promissory Note dated August 10, 1998 in the original principal sum of
$3,765,000.00. Both notes are hereinafter collectively referred to as the
"Notes". The Notes, Loan Agreement, and any and all documents or instruments
executed in connection therewith or related thereto including, without
limitation, security agreements, assignments, consents, guaranties, pledges
(including the Pledge Agreement dated January 3, 2000 from Joyver in favor of
Lender), corporate resolutions, financing statements, or any other agreement,
and all renewals, extensions, amendments, modifications and restatements
thereof, shall be referred to herein as the "Loan Papers." The indebtedness and
obligations of Borrower and the Guarantors evidenced by the Loan Papers (the
"Indebtedness") are secured by security interests and liens in certain personal
property, wherever located, of the Borrower including, without limitation, all
accounts, inventory, equipment, general intangibles, fixtures, instruments,
chattel paper contract rights, documents, insurance proceeds, and all funds in
the accounts of Borrower at Lender (collectively, the "Collateral").
SECTION 2. FORECLOSURE. As a result of certain defaults, on March 7,
2000 the Lender conducted a foreclosure of the deed of trust lien granted to the
Lender pursuant to that certain Deed of Trust dated August 10, 1998 executed by
Joyver and covering, among other Collateral the real property described on
Exhibit "A," herein the "Premises." The successful bidder at the foreclosure was
P.I. Holdings No. I, Inc. P.I. Holdings No. I, Inc. paid $3,500,000.00 for that
portion of the Collateral described in the Deed of Trust.
SETTLEMENT AND DEFICIENCY AGREEMENT PAGE 1
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SECTION 3. FIXTURES AND EQUIPMENT. Total and TBS agree to cause the
personal property owned by them to be sold, in a manner and method acceptable
to the Lender and cause such sale to be completed not later than July 31, 2000.
The Lender will not unreasonably withhold its consent to the manner and method
of such sale.
SECTION 4. RESOLUTIONS OF ISSUES CONCERNING FIXTURES AND PERSONAL
PROPERTY. The Borrower has offered to convey personal property and fixtures, all
as more fully described herein, in return for receiving a partial credit on the
Indebtedness.
SECTION 5. RESULTING DEFICIENCY. The Borrower and the Guarantor have
offered to agree to an amount of deficiency owing by both of the Borrowers in
connection with the foreclosure upon the Premises all in the manner hereinafter
provided. The Borrower and the Guarantor have also offered to have Mega World
and TBS to join as additional guarantors.
SECTION 6. MEGA WORLD STOCK. Joyver owns 5,250,00 of Mega World, Inc.
It previously provided to the Lender a security interest in 2,000,000 shares by
delivering to the Lender a certificate in that amount. It holds a second
certificate covering 3,250,000 shares. Contemporaneous herewith Joyver has
delivered that 3,250,000 shares certificate to the Lender to be pledged as
additional collateral for the hereinafter described Deficiency with the
understanding that the Lender will, subject to the terms of that certain First
Amendment to Previously Executed Pledge Agreement hereafter cause to be
delivered to Tejas Securities Group, Inc. be held pursuant to the terms of the
Bailment Agreement dated of even date herewith the 2,000,000 shares certificate
of Mega World, Inc. all as more fully provided in the First Amendment to
Previously Executed Pledge Agreement.
SECTION 7. CONVEYANCE OF CERTAIN PERSONAL PROPERTY. In an effort to
induce the Lender to enter into this Agreement, and to facilitate the Lender's
marketing of certain real property previously owned by Joyver which has been
foreclosed upon by the Lender, Total, contemporaneous with the execution hereof,
has delivered to the Lender a Bill of Sale covering certain personal property
and/or fixtures. That Bill of Sale is executed and delivered in conjunction with
the calculation of the hereinafter described Deficiency.
AGREEMENTS:
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, representations, warranties and agreements contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used and not otherwise defined herein
shall have the same meanings as set forth in the Loan Agreement. In addition,
the following terms, for the purposes of this Agreement, shall have the
following meanings:
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(a) AVERAGE STOCK VALUE shall mean any time the Lender holds a
perfected security interest (which shall require, at a minimum,
physical possession of, and a duly executed pledge agreement in the
form executed by Joyver covering Mega World, Inc. stock) in Mega World,
Inc. stock which either (i) is not Restricted or (ii) if Restricted has
been owned by the pledgor for at least a year, the aggregate market
value (calculated off the low for the day as reported on CNBC.com) of
which over the last five (5) trading days at all times equaled or
exceeded $2,000,000.00 and if the aggregate market value fails to so
equal or exceed $2,000,000.00, within five (5) business days thereafter
the Borrower fails to pledge or cause to be pledged, in the manner set
forth in this subsection sufficient additional shares of Mega World,
Inc. to cause the then aggregate market value to exceed $2,000,000.00.
(b) "BAILMENT AGREEMENT" shall mean the Agreement described in
Section 11 hereof.
(c) "DEFICIENCY" shall have the meaning ascribed to it in
Section 5 hereof.
(d) "NEW GUARANTORS" shall mean Mega World, and TBS and "NEW
GUARANTY" shall mean the guaranty agreement of even date executed and
delivered to the Lender by the New Guarantor.
(e) "PREMISES" shall mean the property leased by P.I. Holdings
No. 1, Inc. to Total.
(f) "SPECIFIED DEFAULTS" shall mean each of the following
events of default of the Borrower under the Loan Papers as more
specifically described in Exhibit "B" attached hereto.
(g) "TEJAS" shall mean Tejas Securities Group, Inc.
(h) "TERMINATION DATE" shall mean November 10, 2000.
(i) "TERMINATION EVENT" shall mean the occurrence of any of
the following: any representation or warranty made or deemed made by
either of the Borrower, or Guarantor, Mega World or TBS in this
Agreement shall be false, misleading or erroneous in any material
respect when made or deemed to have been made, Borrower, or Guarantor,
Mega World or TBS shall fail to perform, observe or comply with any
covenant, agreement or term contained in this Agreement, any default or
event of default, other than the Specified Defaults, shall occur under
this Agreement or the Loan Papers, either of the Borrower, or
Guarantor, Mega World or TBS shall commence a voluntary proceeding
seeking liquidation, reorganization, or other relief with respect to
itself or its debts under any bankruptcy,
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insolvency, or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian, or other
similar official of it or a substantial part of its property or shall
consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it or shall make a general assignment for
the benefit of creditors or shall generally fail to pay its debts as
they become due or shall take any corporate action to authorize any of
the foregoing, an involuntary proceeding shall be commenced against
either of the Borrowers, or Guarantor, Mega World or TBS seeking
liquidation, reorganization, or other relief with respect to it or its
debts under any bankruptcy, insolvency, or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian, or other similar official for it or a
substantial part of its property, (vi) failure to deliver to Lender, by
Noon on two (2) business days after the execution hereof by the last
party hereto, the property described in the Bailment Agreement, (vii)
should any event of default occur under the Pledge Agreement or (viii)
at any time there is a failure of the requirement that the Average
Stock Value equals or exceeds $2,000,000.00.
2. CREDIT FOR FIXTURES AND PERSONAL PROPERTY. Attached hereto as
Exhibit "C" is a list of fixtures and personal property which is owned by TBS or
Total. Contemporaneous herewith, a Bill of Sale has been executed by TES and
Total by which they convey this personal property to the Lender in return for a
credit upon the Indebtedness. That credit is in the amount of $23,300.00 and is
reflected in the Deficiency described in Section 5 below. TBS and Total also
intend to convey to the Lender a telephone system located upon the Premises and,
provided, it can be conveyed to the Lender not later than August 1, 2000, and
provided that the phone system is delivered to the Lender free and clear of any
claims and in its current working order the Lender agrees to acquire the same in
return for a credit against the hereinafter described Deficiency in the amount
of $51,700.00. In the event that the Lender's title in and to either the
Personal Property described on Exhibit "C" or the telephone system is ever
challenged, the Lender may increase the amount of the Deficiency by its cost in
any Property which the Lender determines it does not have free and clear title
to. Prior to determining that it does not have free and clear title to any such
Property, it will advise the Borrowers in writing and give them a thirty (30)
day opportunity to cure its current defect titles before the Lender actually
increases the amount of Deficiency.
3. INCREASED CREDIT ON FORECLOSURE OF PREMISES. While the Lender
foreclosed upon the Premises and received $3,500,000.00, the Borrower, Guarantor
and Lender hereby agree that, effective as of the date hereof, the Lender shall
credit an additional $476,200.00 against the Indebtedness resulting in the
Deficiency.
4. LEASE OF A PORTION OF THE PREMISES. Contemporaneous herewith, Total
and the Lender have entered into a short term lease of a portion of the Premises
which will allow Total, so long as no Termination Event occurs, to occupy that
portion of the Premises which they have leased. Each dollar of rent actually
paid under the lease shall be credited against the Deficiency. The Parties
hereto acknowledge that the portion of the
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Premises being leased by Total is less than the portion of the Property Total
previously leased from Joyver. Accordingly, the parties hereto acknowledge that
portions of Total's and TBS' personal property may be located on property which
they are not leasing. Each of the Borrowers and the New Guarantors hereto
jointly and severally hereby indemnify and agree to hold harmless the Lender and
its affiliates, including, but not limited to, P.I. Holdings No. 1, Inc. from
any and all claims arising from any damage, loss, theft, vandalism or any other
act, including the acts of invitees of the Lender or its affiliate P.I. Holdings
No. 1, Inc. , which any of the Borrowers or either of the New Guarantors ever
contend occur to any of Total's or TBS' personal property and/or fixtures
located on or about either the Premises or that portion of the adjoining
property now owned by P.I. Holdings No. 1, Inc.
5. DEFICIENCY/GUARANTY BY NEW GUARANTORS. The Borrower, Guarantor, New
Guarantors and Lender hereby agree that, as of the date hereof, and taking into
account the various credit described herein, all as more fully set forth on
Exhibit "D" attached hereto and incorporated by reference for all purposes, the
indebtedness owing is $784,615.18 (the "Deficiency"). Given the various manners
in which the credit could be applied to the individual indebtedness owing by
each of the Borrowers, the Borrowers hereby agree that they are jointly and
severally liable for the Deficiency. As further consideration for the Lender to
enter into the terms of this Agreement, the Borrowers shall cause Mega World and
TBS to guaranty the repayment of the Deficiency, in the manner described in the
New Guaranty. By joining herein the Guarantor and New Guarantors acknowledge and
agree to the amount of the Deficiency.
6. MANNER OF REPAYMENT OF THE DEFICIENCY. The interest to accrue on the
Deficiency shall be repaid in monthly installments the first of which shall
become due and payable on the execution hereof, with a like installment becoming
due and payable on the 10th day of each succeeding month until the Termination
Date. Interest shall accrue on the Deficiency in the amount equal to 9.5% per
annum until the earlier to occur of a Termination Event or the Termination Date.
From and after the occurrence of a Termination Event or the Termination Date,
interest may accrue on the Deficiency on the maximum rate allowed by applicable
law. All principal and interest not sooner paid shall be due and payable on the
Termination Date.
7. CONTINUING LIENS. The Borrowers, Guarantor and TBS hereby
acknowledge and agree that the liens previously granted, or in the case of TBS
and Total granted contemporaneous herewith, remain in full force and effect.
8. TOTAL SECURITY INTEREST IN EQUIPMENT. To additionally secure the
repayment of the Deficiency, the Borrowers, Guarantor, Mega World and TBS
acknowledge that Total has executed and delivered to the Lender, contemporaneous
herewith, a Security Agreement covering all of its personal property and
equipment.
9. TBS SECURITY INTEREST IN ALL ASSETS. To additionally secure the
repayment of the Deficiency, the Borrowers, Guarantor, and Mega World
acknowledge that TBS has
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executed and delivered to the Lender, contemporaneous herewith, a Security
Agreement covering all of its assets.
10. MEGA WORLD STOCK. Joyver owns 5,250,000 shares of Mega World, Inc.
It previously pledged to the Lender 2,000,000 represented by stock certificate
number 3583. In addition, Joyver owns 3,250,000 shares of stock in Mega World,
Inc. represented by one certificate. Contemporaneous herewith Joyver will
deliver to the Lender the stock certificate representing the 3,250,000 shares.
It shall also cause those shares to be pledged to secure the loan. Pursuant to
the terms of the First Amendment to Previously Executed Pledge Agreement, the
Lender will, upon receipt of written request from Joyver, and provided the
preconditions set forth in the First Amendment to Previously Executed Pledge
Agreement are met, cause to be delivered the 2,000,000 shares certificate to
Lender to be held pursuant to the terms of the Bailment Agreement dated of even
date herewith. The Borrowers and Guarantors hereby agrees not to sell, market,
pledge, hypothecate or otherwise transfer all or any portion of any Mega World
stock which they now or hereinafter acquire.
11. BAILMENT. Joyver hereby agrees to cause Tejas Securities Group,
Inc. to promptly deliver back to the Lender, not later than ten (10) days from
the date hereof, an executed copy of the Bailment Agreement in a form
satisfactory to Tejas.
12. REPRESENTATIONS AND WARRANTIES. To induce Lender to enter into this
Agreement, Borrower, Mega World and TBS hereby represent and warrant to Lender
that (a) each Borrower, Mega World and TBS are duly organized, validly existing
and in good standing under the laws of the state in which it was organized and
formed, whether by incorporation, partnership, limited liability company, or
otherwise, without limitation, and has the power and authority to perform its
obligations under this Agreement, and (b) the execution, delivery and
performance of this Agreement have been duly authorized by all requisite action
on the part of each Borrower, Mega World and TBS and do not and will not violate
the articles of incorporation or bylaws, partnership agreement, or other
governance document or agreement of Borrower, Mega World and TBS or any other
agreement to which Borrower, Mega World and TBS is a party, or any law, rule or
regulation, or any order of any court, governmental authority or arbitrator by
which it or any of its properties is bound.
13. COVENANTS. Notwithstanding any provisions to the contrary contained
in the Loan Agreement, each Borrower, Mega World and TBS hereby covenants and
agrees that, from and after the date hereof, it will perform, observe and comply
with each of the following covenants:
(a) COMPLIANCE WITH LOAN PAPERS AND THIS AGREEMENT. Each
Borrower, Mega World and TBS will perform, observe and comply with each
covenant, agreement and term contained in this Agreement and each of
the Loan Papers except for the Specified Defaults.
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(b) ADVANCES LIMITATIONS/INTEREST. Lender will make no further
advances under the Loan Papers.
(c) COLLATERAL DISPOSITIONS/COLLECTIONS/APPLICATIONS. Total
and TBS will exercise their best efforts consistent with sound business
practices to collect all of its accounts now or hereafter owed to Total
and to sell its inventory in the ordinary course of business and in a
commercially reasonable manner in accordance with all applicable laws
and regulations, whether state or federal. All sales of inventory shall
be for cash or its equivalent in United States currency denomination or
in accordance with ordinary and reasonable terms within Total's and
TBS' industry, unless otherwise consented to in writing by Lender.
Total will not, without the prior written consent of Lender, release in
whole or in part any account debtor of Total and TBS, grant any
extension of time for payment of any account owing to Total,
compromise, compound, or settle any account owing to Total and TBS, or
grant any discount or credit for payment with respect to any account
owing to Total and TBS, except normal trade discounts granted in the
ordinary course of Total's and TBS' business. Total and TBS will report
its collections to the Lender and deposit all funds collected in the
form received with the Lender. Total and TBS shall promptly provide to
Lender such documentation as Lender may reasonably require to evidence
that all such cash and items are proceeds of Lender's Collateral.
(d) RECEIPT OF MONIES. In the event either Borrower or TBS
shall receive any checks, drafts, acceptances, items, cash monies or
any other payment relating to and/or proceeds of the Collateral, no
later than the first business day following receipt thereof, Borrower
and TBS shall deliver the same or cause the same to be delivered to
Lender for deposit in the Collateral Account. Borrower's delivery of
any and all such items to the Collateral Account and/or to Lender shall
constitute Borrower's representation to Lender that same are proceeds
of Collateral.
(e) SEGREGATION OF COLLATERAL PROCEEDS. Borrower covenants to
keep the proceeds of Collateral segregated
from all other monies of Borrower.
(f) ELDER OFFSHORE SERVICES/ACCOUNT DEBTORS. Within
twenty-four (24) hours after the execution hereof Borrower shall
provide Lender an accounting on the Elder Offshore Services, Inc. job.
(g) UNSECURED CREDIT. From and after the date hereof neither
of the Borrowers nor TBS shall incur debt it
cannot pay in the ordinary course of business.
(h) AUCTION OF MACHINERY AND EQUIPMENT. By not later than June
30, 2000, TBS and Total shall conduct and conclude an auction of
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their machinery and equipment to be conducted in a manner and method
satisfactory to the Lender.
14. ACCELERATION/RATIFICATION OF LOAN PAPERS/COLLATERAL. Borrower, New
Guarantors and the Guarantor each hereby acknowledges receipt from Lender of
proper notice of default, notice of intent to accelerate and opportunity to
cure, and demand for payment. Borrower, New Guarantors and Guarantor agree that
the Indebtedness is hereby accelerated. The Borrower, New Guarantors and
Guarantor hereby acknowledge, ratify, and reaffirm and agree that the Notes,
Loan Agreement, each of the other Loan Papers and the first priority, perfected
liens and security interests created thereby in favor of Lender in the
Collateral, are and shall remain in full force and effect and binding on the
Borrower, New Guarantors and Guarantor, and are enforceable in accordance with
their respective terms and applicable law. Borrower, New Guarantors and
Guarantor hereby grants Lender liens and security interests in the Collateral
and acknowledges, ratifies, and reaffirms all of the terms and provisions of the
Loan Papers, except as modified herein, which are incorporated by reference as
of the date hereof as if set forth herein including, without limitation, all
promises, agreements, warranties, representations, covenants, releases, and
indemnifications contained therein. Borrower each hereby acknowledges, ratifies
and confirms the Loan Papers and all of their respective debts and obligations
thereunder.
15. REMEDIES UPON TERMINATION EVENT. Upon the occurrence of a
Termination Event, Lender shall be entitled immediately to institute foreclosure
proceedings against the Collateral and to exercise any and all of the Lender's
rights and remedies available to it under the Loan Papers and this Agreement, at
law, in equity, or otherwise, and after a ten day written notice to cure without
further notice, demand, presentment, notice of dishonor, notice of acceleration,
notice of intent to accelerate, notice of intent to foreclose, notice of sale,
notice of protest or other formalities of any kind, all of which are hereby
expressly waived by Borrower.
16. ACKNOWLEDGMENT OF DEFAULTS. Borrower each specifically acknowledges
the existence and continuation of the Specified Defaults.
17. RELEASE AND COVENANT NOT TO SUE. EACH OF THE BORROWERS, AND NEW
GUARANTORS (IN ITS OWN RIGHT AND ON BEHALF OF ITS RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES, INDEPENDENT CONTRACTORS, ATTORNEYS AND AGENTS) AND
GUARANTOR (IN THEIR OWN RIGHT AND ON BEHALF OF THEIR RESPECTIVE ATTORNEYS AND
AGENTS) (THE "RELEASING PARTIES") JOINTLY AND SEVERALLY RELEASE, ACQUIT, AND
FOREVER DISCHARGE LENDER AND ITS DIRECTORS, OFFICERS, EMPLOYEES, INDEPENDENT
CONTRACTORS, ATTORNEYS AND AGENTS, AND ATTORNEYS (THE "RELEASED PARTIES"), TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE STATE AND FEDERAL LAW, FROM ANY AND
ALL ACTS AND OMISSIONS OF THE RELEASED PARTIES, AND FROM ANY AND ALL CLAIMS,
CAUSES OF ACTION, COUNTERCLAIMS, DEMANDS, CONTROVERSIES, COSTS, DEBTS, SUMS OF
MONEY, ACCOUNTS, RECKONINGS, BONDS, BILLS, DAMAGES,
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OBLIGATIONS, LIABILITIES, OBJECTIONS, AND EXECUTIONS OF ANY NATURE, TYPE, OR
DESCRIPTION WHICH THE RELEASING PARTIES HAVE OR MAY COME TO HAVE AGAINST THE
RELEASED PARTIES, INCLUDING, BUT NOT LIMITED TO, NEGLIGENCE, GROSS NEGLIGENCE,
USURY, FRAUD, DECEIT, MISREPRESENTATION, CONSPIRACY, UNCONSCIONABILITY, DURESS,
ECONOMIC DURESS, DEFAMATION, CONTROL, INTERFERENCE WITH CONTRACTUAL AND BUSINESS
RELATIONSHIPS, CONFLICTS OF INTEREST, MISUSE OF INSIDER INFORMATION,
CONCEALMENT, DISCLOSURE, SECRECY, MISUSE OF COLLATERAL, WRONGFUL RELEASE OF
COLLATERAL, FAILURE TO INSPECT, ENVIRONMENTAL DUE DILIGENCE, NEGLIGENT LOAN
PROCESSING AND ADMINISTRATION, WRONGFUL SETOFF, VIOLATIONS OF STATUTES AND
REGULATIONS OF GOVERNMENTAL ENTITIES, INSTRUMENTALITIES AND AGENCIES (BOTH CIVIL
AND CRIMINAL), RACKETEERING ACTIVITIES, SECURITIES AND ANTITRUST LAWS
VIOLATIONS, TYING ARRANGEMENTS, DECEPTIVE TRADE PRACTICES, BREACH OR ABUSE OF
ANY ALLEGED FIDUCIARY DUTY, BREACH OF ANY ALLEGED SPECIAL RELATIONSHIP, COURSE
OF CONDUCT OR DEALING, ALLEGED OBLIGATION OF FAIR DEALING, ALLEGED OBLIGATION OF
GOOD FAITH, AND ALLEGED OBLIGATION OF GOOD FAITH AND FAIR DEALING, WHETHER OR
NOT IN CONNECTION WITH OR RELATED TO THE LOAN PAPERS AND THIS AGREEMENT, AT LAW
OR IN EQUITY, IN CONTRACT IN TORT, OR OTHERWISE, KNOWN OR UNKNOWN, SUSPECTED OR
UNSUSPECTED (THE "RELEASED CLAIMS"). THE RELEASING PARTIES FURTHER AGREE TO
LIMIT ANY DAMAGES THEY MAY SEEK IN CONNECTION WITH ANY CLAIM OR CAUSE OF ACTION,
IF ANY, TO EXCLUDE ALL PUNITIVE AND EXEMPLARY DAMAGES, DAMAGES ATTRIBUTABLE TO
LOST PROFITS OR OPPORTUNITY, DAMAGES ATTRIBUTABLE TO MENTAL ANGUISH, AND DAMAGES
ATTRIBUTABLE TO PAIN AND SUFFERING, AND THE RELEASING PARTIES DO HEREBY WAIVE
AND RELEASE ALL SUCH DAMAGES WITH RESPECT TO ANY AND ALL CLAIMS OR CAUSES OF
ACTION WHICH MAY ARISE AT ANY TIME AGAINST ANY OF THE RELEASED PARTIES. THE
RELEASING PARTIES REPRESENT AND WARRANT THAT NO FACTS EXIST WHICH COULD
PRESENTLY OR IN THE FUTURE COULD SUPPORT THE ASSERTION OF ANY OF THE RELEASED
CLAIMS AGAINST THE RELEASED PARTIES. THE RELEASING PARTIES FURTHER COVENANT NOT
TO SUE THE RELEASED PARTIES ON ACCOUNT OF ANY OF THE RELEASED CLAIMS, AND
EXPRESSLY WAIVE ANY AND ALL DEFENSES THEY MAY HAVE OR COME TO HAVE IN CONNECTION
WITH THEIR DEBTS AND OBLIGATIONS UNDER THE LOAN PAPERS AND THIS AGREEMENT. THIS
PARAGRAPH IS IN ADDITION TO AND SHALL NOT IN ANY WAY LIMIT ANY OTHER RELEASE,
COVENANT NOT TO SUE, OR WAIVER BY THE RELEASING PARTIES IN FAVOR OF THE RELEASED
PARTIES.
18. NO OBLIGATION OF LENDER. Borrower, New Guarantors and Guarantor
hereby acknowledge and understand that upon the Termination Date, then Lender
shall have the right to proceed to exercise any or all available rights and
remedies, which may include foreclosure on the Collateral and/or institution of
legal proceedings. Lender shall have no
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obligation whatsoever to extend the maturity of the Notes, waive any events of
default or defaults, defer any payments, or further forbear from exercising its
rights and remedies.
19. NO IMPLIED WAIVERS. No failure or delay on the part of Lender in
exercising, and no course of dealing with respect to, any right, power or
privilege under this Agreement, the Loan Agreement or any other Loan Paper shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under this Agreement, the Loan Agreement or any other
Loan Paper preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.
20. INDEMNIFICATION. This Agreement constitutes one of the transactions
and documents as to which the provisions 4.1(o) of the Loan Agreement are
applicable.
21. POWER OF ATTORNEY. Borrower, New Guarantors and Guarantor hereby
irrevocably appoints Lender and Lender's authorized agents and employees as
their attorney-in-fact jointly and severally, and on their behalf, to endorse,
deposit, collect, and negotiate all checks, drafts and instruments received by,
or which come in to the possession of Lender or otherwise. This power of
attorney is coupled with an interest and is irrevocable. Borrower, New
Guarantors and Guarantor agree and acknowledge that Lender is under no duty or
obligation to verify the amounts of such checks, drafts, or instruments, or to
collect any accounts owing to Borrower or TBS, or such checks, drafts, or
instruments. Upon receipt of any written request the Lender shall provide the
requesting party an accounting of any proceeds received from such party within
ten days of receipt.
22. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made in this Agreement or any other Loan Paper shall survive the
execution and delivery of this Agreement, and no investigation by Lender or any
closing shall affect the representations and warranties or the right of Lender
to rely upon them.
23. REVIEW AND CONSTRUCTION OF DOCUMENTS. Borrower, New Guarantors and
Guarantor hereby acknowledge, and represent and warrant to Lender, that (a)
Borrower, New Guarantors and Guarantor have had the opportunity to consult with
legal counsel of their own choice and have been afforded an opportunity to
review this Agreement with its legal counsel, (b) Borrower and Guarantor have
reviewed this Agreement and fully understand the effects thereof and all terms
and provisions contained herein, (c) Borrower, New Guarantors and Guarantor have
executed this Agreement of their own free will and volition, and (d) this
Agreement shall be construed as if jointly drafted by Borrower, New Guarantors,
Guarantor and Lender. The recitals contained in this Agreement shall be
construed to be part of the operative terms and provisions of this Agreement.
24. ENTIRE AGREEMENT; AMENDMENT. THIS AGREEMENT EMBODIES THE FINAL,
ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO REGARDING LENDER'S FORBEARANCE WITH
RESPECT TO ITS RIGHTS AND REMEDIES ARISING AS A RESULT OF THE SPECIFIED DEFAULTS
AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT
SETTLEMENT AND DEFICIENCY AGREEMENT PAGE 10
11
MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. The provisions of
this Agreement may be amended or waived only by an instrument in writing signed
by the parties hereto. The Notes, Loan Agreement and the other Loan Papers, as
modified by this Agreement, continue to evidence the agreement of the parties
with respect to the subject matter thereof.
25. NOTICES. All notices, requests, demands and other communications
under this Agreement shall be given in accordance with the provisions of the
Loan Papers. In addition as of the Effective Date, Lender shall be provided with
notice via first class mail, postage prepaid and via facsimile as set forth
below:
Any party hereto may give written notice to the other party of a change
in address. Such change in address shall become effective ten (10) days
after the receipt of a notice of change in address. Additionally, the
Lender may, at its election, but only so long as the Borrower, the
Guarantors, Mega World, TBS and Texas TBS, Inc. have the same address,
provide notice to all of them by providing notice in the form of one
letter addressed to them jointly at any common address.
TO LENDER:
Compass Bank
2200 Post Oak Blvd. LL5
Houston, Texas 77056
Attn.: Frank Heuszel
with a copy to:
James W. Doyle
Winstead Sechrest & Minick P.C.
910 Travis, Suite 2400
Houston, TX 77002-5895
Facsimile (713) 650-2400
TO BORROWER:
Total Building Systems, Inc.
6250 North Houston Rosslyn Road
Houston, Texas 77091
SETTLEMENT AND DEFICIENCY AGREEMENT PAGE 11
12
Joyver Investments LLC.
6250 North Houston Rosslyn Road
Houston, Texas 77091
Charles D. McPhail
6250 North Houston Rosslyn Road
Houston, Texas 77091
with a copy to:
Alan Gerger
5851 San Felipe, Suite 950
Houston, Texas 77057
TO GUARANTORS:
Charles D. McPhail
6250 North Houston Rosslyn Road
Houston, Texas 77091
with a copy to:
Alan Gerger
5851 San Felipe, Suite 950
Houston, Texas 77057
TO MEGA WORLD, INC.
Charles D. McPhail
6250 North Houston Rosslyn Road
Houston, Texas 77091
with a copy to:
Alan Gerger
5851 San Felipe, Suite 950
Houston, Texas 77057
TO TBS:
Charles D. McPhail
6250 North Houston Rosslyn Road
Houston, Texas 77091
SETTLEMENT AND DEFICIENCY AGREEMENT PAGE 12
13
with a copy to:
Alan Gerger
5851 San Felipe, Suite 950
Houston, Texas 77057
TO TEXAS TBS, INC.
Charles D. McPhail
6250 North Houston Rosslyn Road
Houston, Texas 77091
with a copy to:
Alan Gerger
5851 San Felipe, Suite 950
Houston, Texas 77057
26. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective heirs,
legal representatives, successors and assigns, provided that Borrower each may
not assign any rights or obligations under this Agreement without the prior
written consent of Lender.
27. TOLLING OF STATUTES OF LIMITATION. The parties hereto agree that
all applicable statutes of limitations in respect to the Loan Papers shall be
tolled and not begin running until January 1, 2001.
28. ARMS-LENGTH/GOOD FAITH. This Agreement has been negotiated at
arms-length and in good faith by the parties hereto.
29. GOVERNING LAW/VENUE. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas and applicable laws
of the United States of America. All disputes, claims, demands, actions, causes
of action, suits or proceedings by and among the parties to this Agreement shall
be adjudicated, litigated, heard or tried, if at all, exclusively in the state
courts of Harris County, Texas or the United States District Court for the
Southern District of Texas, Houston Division. Houston, Texas shall be the
mandatory, exclusive place for the adjudication, litigation, hearing or trial of
any matter by and among the parties to this Agreement. Each party to this
Agreement hereby irrevocably waives any right to have any such dispute, claim,
demand, action, cause of action, suit or proceeding adjudicated, litigated,
heard or tried in any place other than Harris County, Texas.
30. SUBROGATION. Any and all rights of any Guarantor against the
Borrower arising as a result of subrogation or otherwise shall in all respects
be subordinate and
SETTLEMENT AND DEFICIENCY AGREEMENT PAGE 13
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junior to the rights of Lender under the Loan Papers and this Agreement and
applicable state and federal law.
31. INTERPRETATION. Wherever the context hereof shall so require, the
singular shall include the plural, the masculine gender shall include the
feminine gender and the neuter and vice versa. The headings, captions and
arrangements used in this Agreement are for convenience only and shall not
affect the interpretation of this Agreement.
32. SEVERABILITY. In case any one or more of the provisions contained
in this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal, or unenforceable provision had never been
contained herein.
33. COUNTERPARTS. This Agreement may be executed and delivered in any
number of counterparts, and by different parties hereto on separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which counterparts taken together shall constitute one
and the same instrument. Execution of this Agreement via facsimile shall be
effective, and signatures received via facsimile shall be binding upon the
parties hereto and shall be effective as originals.
34. FURTHER ASSURANCES. Borrower, Mega World, TBS and Guarantor agree
to execute, acknowledge, deliver, file and record such further certificates,
instruments and documents, and to do all other acts and things, as may be
reasonably requested by Lender as necessary or advisable to carry out the
intents and purposes of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
BORROWER:
TOTAL BUILDING SYSTEMS, INC.
a Texas corporation
By: /s/ CHARLES McPHAIL
---------------------------------
Name: Charles McPhail
-------------------------------
Title: President
------------------------------
SETTLEMENT AND DEFICIENCY AGREEMENT PAGE 14
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JOYVER INVESTMENTS, LLC.
a Texas limited liability company
By: /s/ CHARLES D. McPHAIL
---------------------------------
Name: Charles D. McPhail
-------------------------------
a Member
By:
---------------------------------
Name: Lynn McPhail
-------------------------------
a Member
/s/ CHARLES D. McPHAIL
-------------------------------------
Charles D. McPhail
GUARANTOR:
/s/ CHARLES D. McPHAIL
-------------------------------------
Charles D. McPhail
TBS
TEXAS TBS, INC.,
a Texas corporation
By: /s/ CHARLES D. McPHAIL
---------------------------------
Name: Charles D. McPhail
-------------------------------
Title: President
------------------------------
MEGA WORLD
MEGA WORLD, INC.,
a Delaware corporation
By: /s/ CHARLES D. McPHAIL
---------------------------------
Name: Charles D. McPhail
-------------------------------
Title: President
------------------------------
SETTLEMENT AND DEFICIENCY AGREEMENT PAGE 15
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LENDER:
COMPASS BANK,
a bank organized and existing under
the laws of the state of Alabama
By: /s/ FRANK HEUSZEL
--------------------------------------
Frank Heuszel
Vice President
SETTLEMENT AND DEFICIENCY AGREEMENT PAGE 16
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EXHIBIT "B"
SPECIFIED DEFAULTS
1. FAILURE TO PAY REVOLVING LOAN AT MATURITY.
2. FAILURE TO PAY IN FULL THE AUGUST 10, 1998 NOTE IN THE ORIGINAL PRINCIPAL
AMOUNT OF $3,765,000.00.
SETTLEMENT AND DEFICIENCY AGREEMENT PAGE 17
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EXHIBIT "C"
1. Atlas Compressor and Tanks and Related Property
2. Gardner Denver Compressor and Tanks and Related Property
3. Upper Engineering and Administrative Offices and Related Property
4. Foremans-Office and Related Property
5. Engineering Furniture/Partitions and Related Property
SETTLEMENT AND DEFICIENCY AGREEMENT PAGE 18
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EXHIBIT "D"
DEFICIENCY
Attached here are calculation of deficiency
SETTLEMENT AND DEFICIENCY AGREEMENT PAGE 19