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EXHIBIT 10.2. MODIFICATION AND EXTENSION
AGREEMENT
THE STATE OF TEXAS )
)
COUNTY OF BRAZORIA )
This MODIFICATION AND EXTENSION AGREEMENT ("AGREEMENT") is executed
effective the 20th day of February, 1998, by and between TEAM, INC., A TEXAS
CORPORATION ("BORROWER"), whose address for notice hereunder is P. O. Box 123,
Alvin, Texas 77512, and STERLING BANK, A TEXAS BANKING CORPORATION ("LENDER"),
whose address for notice hereunder is P. O. Box 40333, Houston, Texas
77240-0333;
W I T N E S S E T H:
WHEREAS, Lender has loaned to Borrower, and Borrower has borrowed from
Lender $1,700,000.00 ("Loan") such Loan being evidenced, in part, by the
following instruments:
(a) Promissory Note (the "NOTE") dated November 15, 1993, executed
by Borrower, payable to the order of Lender, in the original principal amount
of $1,700,000.00, upon which there remains unpaid a principal balance of
$1,180,109.21, and upon which interest has been paid to the effective date of
this Agreement;
(b) Deed of Trust and Security Agreement (the "DEED OF TRUST") of
even date with the Note, executed by Borrower in favor of Daryl D. Bohls,
Trustee, and Lender, as "Beneficiary," and being recorded under Clerk's File
No. 93-041770 in the Real Property Records of Brazoria County, Texas, covering
the property described on Exhibit "A" attached hereto and made a part hereof
for all purposes (the "PROPERTY"); and
(c) Assignment of Rents and Leases (the "ASSIGNMENT OF RENTS") of
even date with the Note, executed by Borrower in favor of Lender, as Assignee,
and being recorded under Clerk's File No. 93-041771 in the Real Property
Records of Brazoria County, Texas, covering the Property;
WHEREAS, the Note, the Deed of Trust, the Assignment of Rents, and
each and every other agreement, document and instrument executed or to be
executed for the benefit of Lender in connection with the Loan (collectively,
the "LOAN DOCUMENTS") are hereby incorporated by this reference for all
purposes to the same extent as if set out herein verbatim; and
WHEREAS, Borrower and Lender desire to amend and modify the Loan
Documents and to renew, extend and carry forward all liens and security
interests securing the Note.
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NOW, THEREFORE, in consideration of the sum of TEN and NO/100 DOLLARS
($10.00) and other good and valuable considerations, the receipt and legal
sufficiency of which are hereby acknowledged, and in further consideration of
the terms, covenants and agreements contained in the Loan Documents and this
Agreement:
(1) Modification of Note. Lender and Borrower hereby agree that
the Note is hereby renewed, rearranged, extended, amended and modified as
follows:
(a) The outstanding, unpaid principal balance of the Note
is $1,180,109.21, and Borrower hereby promises and agrees to pay said
amount to Lender, together with interest thereon, all in accordance
with the terms and provisions of the Note, as renewed, rearranged,
extended, amended and modified by this Agreement.
(b) The outstanding, unpaid balance of the Note, as
renewed, rearranged, extended, amended and modified by this Agreement,
is due and payable in one hundred eight (108) consecutive monthly
installments, the first one hundred seven (107) of which being in the
amount of Sixteen Thousand Two Hundred Twenty-two and No/100 Dollars
($16,222.00), including accrued interest each, and the one hundred
eighth (108th) and final installment being in the amount of the
balance of principal and accrued interest then due on the Note, as
renewed, rearranged, extended, amended and modified by this Agreement.
The first such installment is due and payable March 15, 1998, and the
remaining installments are due and payable in consecutive order on the
same day of each and every succeeding calendar month thereafter until
all sums called for under the Note, as renewed, rearranged, extended,
amended and modified by this Agreement, have been paid in full.
(c) Notwithstanding the payment schedule specified above,
Lender may, at its sole discretion and from time to time increase or
decrease the payment amounts specified above to a level sufficient to
amortize the Note, as renewed, rearranged, extended, amended and
modified by this Agreement, at not more than its original rate of
amortization for the remaining term of the Note, as renewed,
rearranged, extended, amended and modified by this Agreement, at the
interest rate then in effect by giving prior written notice to
Borrower, with such notice to be considered as given when deposited in
the United States mail, postage prepaid, addressed to Borrower at the
address specified above.
(d) Interest on the outstanding balance of the Note, as
renewed, rearranged, extended, amended and modified by this Agreement,
shall accrue from and after the effective date of this Agreement until
maturity as above stated at a varying rate per annum which is one-half
of one percent (.5%) per annum (hereinafter called the "MARGIN
PERCENTAGE"),
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above the Prime Rate (hereinafter defined) as published in the
Southwest Edition of the Wall Street Journal from time to time (but in
no event to be less than seven percent (7.0%) per annum nor to exceed
the lesser of eleven percent (11.0%) per annum or the Maximum Rate
(hereinafter defined), with adjustments in such varying rate to be
made on the same date as any change in the Prime Rate and adjustments
due to changes in the Maximum Rate to be made on the effective date of
any change in the Maximum Rate. For the purposes of the Note, as
renewed, rearranged, extended, amended and modified by this Agreement,
"Prime Rate" means that variable rate of interest per annum published
in the Southwest Edition of the Wall Street Journal from time to time
as the "prime rate". This rate is a composite or the highest of any
range of rates set by financial institutions selected by the Wall
Street Journal. These financial institutions set their respective
"prime rates" as a general reference rate of interest, taking into
account such factors as they may deem appropriate, it being understood
that many of their commercial or other loans are priced in relation to
such rate, that it is not necessarily the lowest or best rate actually
charged to any customer and that they and Lender may make various
commercial or other loans at rates of interest having no relationship
to such rate. If for any reason the Prime Rate, as defined above,
ceases to exist or to be readily available, then Lender may replace
and substitute the Prime Rate and the Margin Percentage, as defined
above, with a different index and margin percentage that historically
has yielded or that Lender believes prospectively will yield an
interest rate on the Note, as renewed, rearranged, extended, amended
and modified by this Agreement, comparable to the Prime Rate plus the
Margin Percentage, as defined above. Notwithstanding the foregoing,
if at any time the sum of the Margin Percentage plus the Prime Rate
exceeds the Maximum Rate, the rate of interest to accrue on the Note,
as renewed, rearranged, extended, amended and modified by this
Agreement, will be limited to the Maximum Rate, but any subsequent
reductions in the Prime Rate will not reduce the rate of interest
accruing on the Note, as renewed, rearranged, extended, amended and
modified by this Agreement, below the Maximum Rate until the total
amount of interest accrued on the Note, as renewed, rearranged,
extended, amended and modified by this Agreement, equals the amount of
interest which would have accrued if a varying rate per annum equal to
the sum of the Margin Percentage plus the Prime Rate had at all times
been in effect. If at maturity or final payment of the Note, as
renewed, rearranged, extended, amended and modified by this Agreement,
the total amount of interest paid or accrued under the foregoing
provisions is less than the total amount of interest that would have
accrued if a varying rate per annum equal to the sum of the Margin
Percentage plus the Prime Rate had at all times been in effect, then
Borrower agrees to pay to Lender an amount equal to the difference
between (a) the lesser of (i) the amount of interest which would have
accrued on the Note, as renewed, rearranged, extended, amended and
modified by this Agreement, if the Maximum Rate had at all times been
in effect or (ii) the amount of interest which would have accrued if a
varying rate per annum equal to the sum of the Margin Percentage plus
the Prime Rate had at all times been in effect, and (b)
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the amount of interest accrued in accordance with the other provisions
of the Note, as renewed, rearranged, extended, amended and modified by
this Agreement. All payments of interest shall be computed on the per
annum basis of a year of 360 days and for the actual number of days
elapsed unless such calculation would result in a usurious rate, in
which case interest shall be calculated on the per annum basis of a
year of 365 or 366 days, as the case may be.
(e) Notwithstanding the interest rate or the floor or
ceiling on said interest rate, all as specified above, Lender may, at
its sole discretion, on February 15, 2005, increase or decrease the
interest rate payable under the Note, as renewed, rearranged,
extended, amended and modified by this Agreement (with a corresponding
increase or decrease in remaining monthly payments) to a rate not in
excess of the lesser of (i) three percent (3.0%) per annum above the
Prime Rate or (ii) the Maximum Rate by giving written notice to
Borrower, with such notice to be considered as given when deposited in
the United States mail, postage prepaid, addressed to Borrower at the
address specified above.
(f) All past due principal and interest will bear
interest from the date due until paid at the Maximum Rate. The
MAXIMUM RATE" means the maximum nonusurious rate of interest per annum
permitted by whichever of applicable laws of the United States of
America or Texas permit the higher interest rate, including to the
extent permitted by applicable laws, any future amendments of such
laws or any new laws coming into effect in the future to the extent a
higher rate of interest is permitted by any such amendment or new law;
provided, however, that if applicable laws do not provide for a
maximum nonusurious rate of interest (for example, a loan secured by a
first lien on residential real estate), then the Maximum Rate means
twenty-four percent (24%) per annum. The Maximum Rate will be applied
by taking into account all amounts characterized by applicable law as
interest on the debt evidenced by the Note, as renewed, rearranged,
extended, amended and modified by this Agreement, so that the
aggregate of all interest does not exceed the maximum nonusurious
amount permitted by applicable law. Alternatively, Lender may charge
and collect a late fee of five percent (5%) of any scheduled
installment that is more than ten (10) days past due.
All other terms and provisions of the Note, except as expressly
renewed, rearranged, extended, amended and modified by this Agreement, remain
the same.
(2) Modification of Deed of Trust. Lender and Borrower hereby
agree that Paragraph 18 of the Deed of Trust is hereby amended and modified by
adding the following language to the end of said paragraph:
"Notwithstanding anything herein to the contrary, Grantors may
transfer the premises to a limited partnership owned directly or
indirectly 100% by Grantors, without the
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requirement of obtaining the prior approval of Beneficiary. Further,
there shall be no fees, modifications to documents, or other
conditions payable to or due to Beneficiary because of such transfer;
provided, however, that Beneficiary may require the limited
partnership to execute an agreement in which the limited partnership
assumes the indebtedness, the liabilities and the obligations
evidenced by the Note and contained in all documents, instruments and
agreements executed in connection with or as security for the Note,
and Grantors agree to pay the reasonable fees incurred in the
preparation and recordation of said agreement."
(3) Modification of Liability. Lender and Borrower hereby agree
that all references to the Note in the Deed of Trust, and all other Loan
Documents are hereby amended to refer to the Note, as renewed, rearranged,
extended, amended and modified by this Agreement.
(4) Reaffirmation of Liability. Borrower hereby reaffirms to
Lender each of the representations, warranties, covenants and agreements
contained in the Loan Documents, with the same force and effect as if each were
separately stated herein and made as of the date hereof. Borrower hereby
ratifies, affirms, reaffirms, acknowledges, confirms and agrees that the Loan
Documents, as herein modified, represent the valid, binding and enforceable
obligations of Borrower, and Borrower further acknowledges that there are no
existing claims, defenses (personal or otherwise), or rights of setoff
whatsoever with respect to any of the Loan Documents, and Borrower further
acknowledges and represents that no event has occurred and no condition exists
which would constitute a default under any of the Loan Documents, or this
Agreement, either with or without notice or lapse of time, or both. Lender and
Borrower hereby agree that this Agreement and all of the Loan Documents are in
full force and effect so that nothing herein contained shall be construed as
modifying in any manner any of the Loan Documents, except as specifically
modified by this Agreement.
(5) No Release of Liens. Lender and Borrower hereby agree that
this Agreement modifies the Loan Documents, and in no way acts as a
diminishment, impairment, release or relinquishment of the liens, powers,
titles, security interests and rights ("LIENS") securing payment of the Note,
including, without limitation, the Liens created by the Deed of Trust. The
Liens are hereby renewed, extended, ratified, confirmed and carried forward by
Borrower in all respects, except to the extent same have previously been
released of record by Lender.
(6) Borrower's Business Plan. Borrower has relied and is relying
upon Borrower's expertise and business plan in all matters in connection with
the Property, the Loan Documents and this Agreement. Borrower has not relied
and is not relying on Lender's expertise or business acumen in any matter in
connection with the Property, the Loan Documents or this Agreement. The
relationship between Borrower and Lender is solely that of borrower and lender,
and Lender has no fiduciary or other special relationship with Borrower. No
term or condition of the Loan Documents or this Agreement shall be construed so
as to deem the relationship between Borrower and Lender to be other than that
of borrower and lender.
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(7) Release of Lender. Borrower releases, acquits and forever
discharges Lender, Lender's agents, servants and employees and all persons,
natural or corporate, in privity with them or any of them, from any and all
claims or causes of action of any kind whatsoever, at common law, statutory or
otherwise, which Borrower has now or might have in the future, known or
unknown, now existing or that might arise hereafter, directly or indirectly
attributable to the Property, the Loan Documents, or from any transaction or
matter in connection with the Loan Documents, or the Property, it being
intended to release all claims of any kind or nature that Borrower might have
against those hereby released whether asserted or not.
(8) Further Assurances. Borrower agrees to perform any further
acts and to execute and deliver any further documents that may be reasonably
necessary in the opinion of Lender or Lender's counsel to carry out the
provisions of this Agreement.
(9) Entire Agreement. This Agreement sets forth the entire
agreement of Lender and Borrower with respect to the subject matter of this
Agreement. There are no oral conditions, representations or agreements
affecting this Agreement. No extension or variation in the covenants to be
performed under this Agreement or in the terms of this Agreement and no release
or satisfaction of this Agreement shall be binding on any party unless the same
is in writing and signed by the party or an authorized officer of any corporate
party. Notwithstanding anything to the contrary contained in this Agreement or
inferred hereby or in any other instrument executed by Borrower or Lender or in
any other action or conduct undertaken by Borrower or by Lender on or before
the date hereof, the agreements, covenants and provisions contained in this
Agreement shall constitute the only evidence of Lender's consent to modify the
terms and provisions of the Loan Documents in the manner set forth in this
Agreement. Accordingly, no express or implied consent to any further
modifications of the Loan or the Loan Documents, whether any such modifications
involve any of the matters contained in this Agreement or otherwise, shall be
inferred or implied from Lender's execution of this Agreement unless evidenced
by an express written agreement executed by Lender. Further, Lender's
execution of this Agreement shall not constitute a waiver (either express or
implied) of the requirement that any further modification of the Loan or any of
the Loan Documents shall require the express written approval of Lender, no
such approval (either express or implied) having been given as of the date
hereof.
(10) Borrower's Signature. The undersigned individual signing for
and on behalf of Borrower represents and warrants that he or she is duly
authorized and empowered to execute this Agreement; that he or she has read
this Agreement and fully understands this Agreement to be a compromise,
settlement and release of all claims, known or unknown, present or future,
which Borrower has or may have against the parties released, arising out of the
matters described; that he or she is of legal age and legally competent to
execute this Agreement, and that he or she does so of his or her own free will
and accord, without threat or duress, and without reliance on any
representation of any kind or character not expressly set forth in this
Agreement.
(11) Survival. All representations, warranties, covenants and
agreements of Lender and Borrower made in this Agreement shall survive the
execution and delivery of this Agreement, until such time
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as all of the obligations of the signatories hereto shall have lapsed in
accordance with their respective terms or shall have been discharged in full.
(12) Legal Fees and Expenses. All reasonable costs and expenses
incurred by Lender as a result of or in connection with the negotiation,
preparation, performance and enforcement of this Agreement and all transactions
pursuant to this Agreement shall be paid by Borrower, including, without
limitation, Lender's attorneys fees and expenses.
(13) Parties Bound. This Agreement is binding on and inures to the
benefit of Lender, Borrower, and their respective heirs, executors,
administrators, legal representatives, successors and assigns.
(14) Governing Law. This Agreement is executed, delivered and
performable in Houston, Harris County, Texas and shall be construed under and
in accordance with the laws of the State of Texas and federal law.
(15) Conflicts. In the event of any conflict between any of the
terms and provisions of the Note or any of the other Loan Documents and the
terms and provisions of this Agreement, the terms and provisions of this
Agreement shall control.
(16) Executed Counterparts. This Agreement may be executed in two
or more counterparts, and it shall not be necessary that the signatures of all
parties hereto be contained on any one counterpart hereof; each counterpart
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
THIS AGREEMENT AND THE LOAN DOCUMENTS REFERENCED HEREIN FOR THE LOAN
OR OTHER EXTENSION OF CREDIT DESCRIBED HEREIN REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES, AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as of the dates of the acknowledgements set forth below, to be effective for
all purposes, however, as of the date first above written.
BORROWER:
TEAM, INC., A Texas corporation
By: /s/ MARGIE E. ROGERS
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Name: Margie E. Rogers
Title:
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LENDER:
STERLING BANK, a Texas banking
corporation
By: /s/ JEFFREY A. VELLIGAN
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Name: Jeffrey A. Velligan
Title: Sr. Vice President
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THE STATE OF TEXAS )
)
COUNTY OF HARRIS )
This instrument was acknowledged before me on the 20th day of
February, 1998, by Margie E. Rogers, Vice President of TEAM, INC., a Texas
corporation, for and on behalf of said corporation.
(SEAL) /s/ Kent W. Simmons
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Notary Public, State of Texas
My Commission Expires: Printed Name of Notary Public
March 21, 1998 Kent W. Simmons
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THE STATE OF TEXAS )
)
COUNTY OF HARRIS )
This instrument was acknowledged before me on the 20th day of
February, 1998, by Jeffrey A. Velligan, Sr. Vice President of STERLING BANK,
A TEXAS BANKING CORPORATION, for and on behalf of said banking corporation.
(SEAL) /s/ Lauren Blaies Blowers
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Notary Public, State of Texas
My Commission Expires: Printed Name of Notary Public
August 20, 2000 Lauren Blaies Blowers
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