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EXHIBIT 10.4.a
MODIFICATION AGREEMENT
This Modification Agreement (herein so called), is entered into
effective as of the ___ day of September, 1999, by and among ALLIED MORTGAGE
CORPORATION, a Texas corporation (the "Company"), ALLIED MORTGAGE CAPITAL
CORPORATION, a Texas corporation ("Capital") (the Company and Capital being
called collectively the "Borrowers" and individually, a "Borrower"), XXX X.
XXXXX ("Guarantor"), and COASTAL BANC ssb ("Lender"). Capitalized terms used
but not defined herein have the meanings assigned to them in that certain Loan
Agreement dated effective as of April 30, 1996, by and among the Borrowers and
Lender, as amended by those certain Modification Agreements dated February 18,
1997, May 30, 1997, September 8, 1997, October 31, 1997, January 8, 1998,
February 1, 1998, April 2, 1998, May 28, 1998, and June 1, 1999 respectively,
among the Borrower, Guarantor and Lender ("Credit Agreement").
Section 1. Recitals. Borrowers, Guarantor, and Lender desire to
renew and extend the Commitment and amend certain other provisions of the
Credit Agreement. Therefore, Borrowers, Guarantor and Lender hereby agree as
follows, intending to be legally bound;
Section 2. Amendments. The Credit Agreement is hereby amended as
follows:
(a) The definition of "Commitment Limit" in Section 1.2 of the
Credit Agreement is hereby deleted in its entirety therefrom and the
following is substituted in lieu thereof:
"'Commitment Limit' means $16,000,000.00."
(b) The Revolving Credit Note ("Credit Note") dated
September 1, 1999, in the original principal sum of $17,600,000.00
executed by Borrowers payable to the order of Lender is given in
renewal and extension of the Revolving Credit Note dated June 1, 1999,
in the original principal sum of $30,000,000.00 executed by Borrowers
payable to the order of Lender and not in novation or discharge
thereof. The definition of the term "Note" in the Credit Agreement is
hereby amended to mean the Credit Note and all renewals, extensions,
modifications, increases, rearrangements, and replacements thereof.
(c) Section 5.13 Net Worth of the Credit Agreement is hereby
deleted in is entirety therefrom and the following is substituted in
lieu thereof:
"Section 5.13 Net Worth. Borrowers will maintain a
combined positive Net Worth of not less than (a) $1,200,000.00
from the date hereof through and including June 29, 1999, (b)
$1,500,000.00 from June 30, 1999 through and including November
29, 1999, and (c) $1,000,000.00 from November 30, 1999 and
thereafter, computed as of the end of each calendar month."
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(d) The following Section 2.16 Discretionary Advances, of
the Credit Agreement is hereby added to Article 2 of the Credit
Agreement for all purposes:
"Section 2.16 Discretionary Advances. Notwithstanding
the Commitment Limit, the Lender shall have the right, but
shall not be obligated, to make Advances requested by
Borrower, which when added to all Aggregate Advances as of the
date of any request are in excess of the Commitment Limit, in
such amounts as Borrower may request prior to the Termination
Date up to the maximum amount hereinafter stated and Borrower
may borrow, pay, prepay, in whole or in part, and reborrow in
respect thereof; provided, however, the aggregate principal
amount of all such discretionary Advances shall not exceed at
any one time outstanding the sum of $1,600,000.00
("Discretionary Advances"). Any request for an Advance
hereunder by Borrower, which when added to all Aggregate
Advances as of the date of such request is in excess of the
Commitment Limit, shall be deemed to be a request for a
Discretionary Advance. Each request for a Discretionary
Advance made by Borrower may be approved or denied, with or
without cause, by the Lender in its sole and absolute
discretion. Lender's approval of any request for a
Discretionary Advance shall not be deemed to be a waiver of
its right to deny any subsequent request for a Discretionary
Advance, with or without cause, regardless of whether or not
the same circumstances and factors which existed at the time
of Lender's approval of any previous request exist at the time
of any subsequent request. Each Discretionary Advance and all
Mortgage Loans pledged in connection therewith shall be
subject to all terms, conditions, representations, warranties,
covenants, and agreements contained in this Agreement
applicable to any Advance hereunder and any Mortgage Loan
pledged to secure the Obligations. Discretionary Advances, and
interest thereon, shall be evidenced by the Note and shall be
due and payable in accordance with the Loan Documents.
Discretionary Advances shall be secured by the Security
Instruments and any and all Collateral now or hereafter given
by the Borrower to secure any of the Obligations."
(e) The following section 5.6 Restrictions on Dividends
of the Credit Agreement is hereby deleted in its entirety and the
following is substituted in lieu thereof for all purposes:
"Section 5.6 Restrictions on Dividends. Borrowers
shall not directly or indirectly declare or make, or incur any
liability to make, any Dividend."
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(f) All references in any Loan Document to Chapter 1D, of the
Texas Credit Title shall be deemed to be references to Section 303 of
the Texas Finance Code. All references in any Loan Document to the
Texas Credit Title shall be deemed to be references to the Texas
Finance Code.
(g) Borrowers acknowledge and agree that they are currently in
Default ("Specified Defaults") under the Credit Agreement for failing
to comply with the provisions of Section 5.13 and 5.14 of the Credit
Agreement. Lender agrees that it will forbear from declaring an Event
of Default and exercising its remedies because of such Specified
Defaults until November 30, 1999; provided, however, that (i) the
foregoing shall not waiver of Lender's rights to declare any other
Default or Event of Default existing now or hereafter under the Credit
Agreement and exercise its rights, remedies and/or recourses under the
Loan Documents at law, in equity, or otherwise in connection therewith
and (ii) if Borrowers are not in compliance with Sections 5.13 and 5.14
of the Credit Agreement on November 30, 1999 or thereafter, Lender will
declare an Event of Default and exercise its remedies because of such
non-compliance and such Specified Defaults.
(h) The sublimit for "B", "C", and "D" Mortgage Loans
established in Section 2.1 Loan of the Credit agreement is hereby
amended to reduce the sublimit from $6,000,000.00 to $1,500,000.00.
Section 3. Representations. Borrowers represent and warrant that all of
the representations and warranties contained in the Credit Agreement and all
instruments and documents executed pursuant thereto or contemplated thereby are
true and correct in all material respects on and as the date.
Section 4. Continued Force and Effect. Except as specifically amended
herein, all of the terms and conditions of the Credit Agreement and all other
Loan Documents are and remain in full force and effect in accordance with their
respective terms. All of the terms used herein have the same meanings as set out
in the Credit Agreement unless amended here by or unless the context clearly
requires otherwise. References in the Credit Agreement to the "Agreement", the
"Loan Agreement," "hereof," "herein" and words of similar import shall be deemed
to be references to the Credit Agreement as amended through the date hereof. Any
reference in the other Loan Documents to the "Agreement", the "Line of Credit
Agreement", "Warehouse Agreement", or the "Loan Agreement" shall be deemed to be
references to the Credit Agreement as amended through the date hereof. Any
reference in the Credit Agreement, this Modification Agreement, or the other
Loan Documents to the "Note" shall be deemed references to the Credit Note.
Section 5. ADDITIONAL REPRESENTATIONS. Except as otherwise specified
herein, the terms and provisions hereof shall in no manner impair, limit,
restrict or otherwise affect the obligations of Borrowers, Guarantor, or any
third party to Lender, as evidenced by the Loan Documents. Borrowers and
Guarantor hereby acknowledge, agree, and represent that (i) Borrowers are
indebted to Lender pursuant to the terms of the Note; (ii) the liens, security
interests and assignments created and evidenced by the Loan Documents are,
respectiveley, first, prior, valid and subsisting liens, security interests and
assignments against the Collateral and secure all indebtedness
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and obligations of Borrowers to Lender under the Note, the Credit Agreement, all
other Loan Documents, as modified herein; (iii) there are no claims or offsets
against, or defenses or counterclaims to, the terms or provisions of the Loan
Documents, and the other obligations created or evidenced by the Loan Documents;
(iv) neither the Borrowers nor the Guarantor have any claims, offsets, defenses
or counterclaims arising from any of the Lender's acts or omissions with respect
to the Loan Documents, or the Lender's performance under the Loan Documents; (v)
the representations and warranties contained in the Loan Documents are true and
correct representations and warranties of Borrowers, as of the date hereof; (vi)
Borrowers promise to pay to the order of Lender the indebtedness evidenced by
the Note according to the terms thereof; and (vii) Lender is not in default and
no event has occurred which, with the passage of time, giving of notice, or
both, would constitute a default by Lender of Lender's obligations under the
terms and provisions of the Loan Documents. IN CONSIDERATION OF THE MODIFICATION
OF CERTAIN PROVISIONS OF THE LOAN DOCUMENTS, ALL AS HEREIN PROVIDED, AND THE
OTHER BENEFITS RECEIVED BY BORROWERS AND GUARANTOR HEREUNDER, BORROWERS AND
GUARANTOR HEREBY RELEASE, RELINQUISH AND FOREVER DISCHARGE LENDER, ITS
PREDECESSORS, SUCCESSORS, ASSIGNS, SHAREHOLDERS, PRINCIPALS, PARENTS,
SUBSIDIARIES, AGENTS, OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS AND
REPRESENTATIVES (COLLECTIVELY, THE "LENDER RELEASED PARTIES"), OF AND FROM ANY
AND ALL CLAIMS, DEMANDS, ACTIONS AND CAUSES OF ACTION OF ANY AND EVERY KIND OF
CHARACTER, WHETHER KNOWN OR UNKNOWN, PRESENT OR FUTURE, WHICH BORROWERS AND
GUARANTOR, OR ANY ONE OR MORE OF THEM, HAVE, OR MAY HAVE AGAINST LENDER RELEASED
PARTIES, ARISING OUT OF OR WITH RESPECT TO ANY AND ALL TRANSACTIONS RELATING TO
THE CREDIT AGREEMENT, AND THE OTHER LOAN DOCUMENTS OCCURRING PRIOR TO THE DATE
HEREOF, INCLUDING ANY OTHER LOSS, EXPENSE AND/OR DETRIMENT, OF ANY KIND OR
CHARACTER, GROWING OUT OF OR IN ANY WAY CONNECTED WITH OR IN AY WAY RESULTING
FROM THE ACTS, ACTIONS OR OMISSIONS OF THE LENDER RELEASED PARTIES, AND
INCLUDING ANY LOSS, COST OR DAMAGE IN CONNECTION WITH ANY BREACH OF FIDUCIARY
DUTY, BREACH OF ANY DUTY OF FAIR DEALING, BREACH OF COMPETENCE, BREACH OF
FUNDING COMMITMENT, UNDUE INFLUENCE, DURESS, ECONOMIC COERCION, CONFLICT OF
INTEREST, NEGLIGENCE, BAD FAITH, MALPRACTICE, VIOLATIONS OF THE RACKETEER
INFLUENCE AND CORRUPT ORGANIZATIONS ACT, INTENTIONAL OR NEGLIGENT INFLICTION OF
EMOTIONAL OR MENTAL DISTRESS, TORTIOUS INTERFERENCE WITH CORPORATE GOVERNMENTS
OR PROSPECTIVE BUSINESS ADVANTAGE, TORTIOUS INTERFERENCE WITH CONTRACTUAL
RELATIONS, BREACH OF CONTRACT, DECEPTIVE TRADE PRACTICES, LIBEL, SLANDER,
CONSPIRACY, THE CHARGING, CONTRACTING FOR, TAKING, RESERVING, COLLECTING OR
RECEIVING OF INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE TO THE
LOAN DOCUMENTS (I.E., USURY), ANY VIOLATIONS OF FEDERAL OR STATE LAW, ANY
VIOLATIONS OF FEDERAL OR STATE BANKING RULES, LAWS OR REGULATIONS, INCLUDING,
BUT NOT LIMITED TO, ANY VIOLATIONS OF REGULATION B, EQUAL CREDIT OPPORTUNITY,
BANK TYING ACT CLAIMS, ANY VIOLATION OF THE TEXAS FREE ENTERPRISE ANTITRUST ACT
OR ANY VIOLATION OF FEDERAL ANTITRUST ACTS. GUARANTOR (i) CONSENTS TO THE TERMS
AND PROVISIONS OF THIS MODIFICATION AGREEMENT, (ii) RATIFIES AND CONFIRMS HIS
GUARANTY IS IN FULL FORCE AND EFFECT IN ACCORDANCE WITH ITS TERMS, AND (iii)
ACKNOWLEDGES THAT THE GUARANTY AND ALL OTHER GUARANTY AGREEMENTS OF THE
GUARANTOR EXECUTED IN CONNECTION WITH THE CREDIT AGREEMENT ARE NOT SUBJECT TO
ANY CLAIMS, OFFSETS, DEFENSES, OR COUNTERCLAIMS OF ANY NATURE WHATSOEVER.
Section 6. Severability. In the event any one or more provisions
contained in the Credit Agreement or this Modification Agreement should be held
to be invalid, illegal or unenforceable in
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any respect, the validity, enforceability and legality of the remaining
provisions contained herein and therein shall not be affected in any way or
impaired thereby and shall be enforceable in accordance with their respective
terms.
Section 7. Expenses. Borrowers agree to pay all out-of-pocket costs and
expenses of Lender in connection with the preparation, operation, administration
and enforcement of this Modification Agreement.
Section 8. Acknowledgment. Except as amended hereby, Borrowers ratify
and confirm that the Security Instruments and all other Loan Documents are and
remain in full force and effect in accordance with their respective terms and
that all Collateral is unimpaired by this Modification Agreement and secures the
payment and performance of all indebtedness and obligations of Borrowers under
the Note, the Credit Agreement, and all other Loan Documents, as modified
hereby. Each of the undersigned officers of Borrowers executing this
Modification Agreement represents and warrants that he has full power and
authority to execute and deliver this Modification Agreement on behalf of
Borrowers that such execution and delivery has been duly authorized and that the
resolutions and affidavits previously delivered to Lender, in connection with
the execution and delivery of the Credit Agreement, are and remain in full force
and effect and have not been altered, amended or repealed in anywise.
Section 9. No Waiver. Borrowers agree that no Event of Default and no
Default has been waived or remedied by the execution of this Modification
Agreement by Lender, and any such Default or Event of Default heretofore arising
and currently continuing shall continue after the execution and delivery hereof.
Section 10. Governing Law. This Modification Agreement shall be
governed by and construed in accordance with the laws of the State of Texas and,
to the extent applicable, by federal law.
Section 11. Counterparts. This Modification Agreement may be executed
in any number of counterparts and all of such counterparts taken together shall
be deemed to constitute one and the same instrument.
SECTION 12. NO ORAL AGREEMENTS. THIS WRITTEN MODIFICATION AGREEMENT,
THE CREDIT AGREEMENT, THE NOTE, THE GUARANTY, AND THE OTHER LOAN DOCUMENTS, AS
MODIFIED HEREBY, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE
PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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EXECUTED and effective as of the dates first written above.
BORROWERS:
ALLIED MORTGAGE CORPORATION,
a Texas corporation
By: /s/ XXX X. XXXXX
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XXX X. XXXXX, President
ALLIED MORTGAGE CAPITAL CORPORATION,
a Texas corporation
By: /s/ XXX X. XXXXX
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Name: XXX X. XXXXX
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Title: President
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GUARANTOR:
/s/ XXX X. XXXXX
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XXX X. XXXXX
LENDER:
COASTAL BANC ssb
By: /s/ XXX XXXX
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XXX XXXX, Vice President
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