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EXHIBIT 10.4.d
MODIFICATION AGREEMENT
This Modification Agreement (herein so called), is entered into
effective as of the 28th day of May, 1998, 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, and April 2, 1998, respectively, among the Borrower, Guarantor
and Lender ("Credit Agreement").
Section 1. Recitals. Borrowers, Guarantor, and Lender desire to amend
certain 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, at the time of any
determination, the lesser of (a) the Legal Loan Limit or (b)
$23,000,000.00."
(b) Section 2.16 Discretionary Advances. of the Credit
Agreement is hereby deleted in its entirety from the Credit Agreement
for all purposes.
(c) Section 7.17 Limitation of Liability. of the Credit
Agreement is hereby deleted in its entirety from the Credit Agreement
for all purposes. The Borrowers are and shall be jointly and severally
liable for the payment and performance of all Obligations of Borrowers.
(d) The Revolving Credit Note ("Credit Note") dated May 28,
1998, in the original principal sum of $23,000,000.00 executed by
Borrowers payable to the order of Lender is given in renewal and
extension of the Revolving Credit Note dated April 2, 1998, in the
original principal sum of $20,900,000.00 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.
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(e) The definition of "Net Worth" in Section 1.2 of the Credit
Agreement is hereby deleted in its entirety therefrom and the following
is substituted in lieu thereof:
""Net Worth" means, with respect to any Person at any
date, the sum of the total shareholders' equity in such Person
(including capital stock, additional paid-in capital, and
retained earnings, but excluding treasury stock, if any), on a
consolidated basis; less the aggregate book value of all
intangible assets of such Person (as determined in accordance
with GAAP), including without limitation, goodwill,
trademarks, trade names, service marks, copyrights, patents,
licenses, franchises, and servicing rights, each to be
determined in accordance with GAAP; provided that, for
purposes of this Agreement, there shall be excluded from total
assets, advances or loans to shareholders, officers or
Affiliates, investments in Affiliates, assets pledged to
secure any liabilities not included in the debt of such Person
and those other assets which would be deemed by HUD to be
non-acceptable in calculating adjusted net worth in accordance
with its requirements in the Audit Guide for Audit of Approved
Non-Supervised Mortgagees", as in effect as of such date."
(f) The following definition of "Legal Loan Limit" is hereby
added to Section 1.2 of the Credit Agreement for all purposes:
""Legal Loan Limit", for any day, means the maximum
amount the Lender is permitted to lend to the Borrowers on
that day under applicable Governmental Requirements."
(g) The following Section 4.13 Year 2000 Compliance. is hereby
added to the end of Article 4: Covenants of the Credit Agreement for
all purposes:
"Section 4.13. Year 2000 Compliance. Borrowers shall
ensure that the following are Year 2000 Compliant in a timely
manner, but in no event later than December 31, 1999: (a) the
Collateral; (b) each Borrower itself; and (c) any other major
commercial properties and entities in which any Borrower holds
a controlling interest. Borrowers shall further make
reasonable inquiries of and request reasonable validation that
each of the following are similarly Year 2000 Compliant: (i)
all major entities from which any Borrower receives payments;
and (y) all major contractors, suppliers, service providers,
and vendors of any Borrower. As used in this paragraph,
"major" shall mean properties or entities the failure of which
to be Year 2000 Compliant would have a material adverse
economic impact upon any Borrower. The term "Year 2000
Compliant" shall mean, in regard to any property or entity,
that all software, hardware, equipment, goods or systems
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utilized by or material to the physical operations, business
operations, or financial reporting of such property or entity
(collectively, the "Systems") will properly perform date
sensitive functions before, during, and after the year 2000,
In furtherance of this covenant, Borrowers shall, in addition
to any other necessary actions perform a comprehensive review
and assessment of all Systems of each Borrower and the
Collateral, and shall adopt a detailed plan, with itemized
budget, for the testing, remediation, and monitoring of such
Systems. Borrowers shall, within twenty (20) calendar days
after the end of each calendar quarter, provide to Lender such
certifications or other evidence of Borrowers' compliance with
the terms of this paragraph as Lender may from time to time
reasonably require."
(h) Section 5.14 Warehouse Borrowings to Net Worth Ratio of
the Credit Agreement is hereby deleted in is entirety therefrom and the
following is substituted in lieu thereof:
"Section 5.14 Warehouse Borrowings to Net Worth
Ratio. Borrowers shall not permit at any time the ratio of
their combined Warehouse Borrowings to their combined Net
Worth to exceed 20.0 to 1.0, computed as of the end of each
calendar month."
(i) 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)
$1,150,000.00 from the date hereof through and including
August 31, 1998 and (b) $1,200,000.00 from September 1, 1998
and thereafter."
(j) The definition of "Termination Date" in Section 1.2 of the
Credit Agreement is hereby deleted in its entirety therefrom and the
following is substituted in lieu thereof:
"'Termination Date' means the earlier to occur of (i)
May 31, 1999 or (ii) the date that the Commitment is canceled
or terminated in accordance with this Agreement."
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 of this 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
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same meanings as set out in the Credit Agreement, unless amended hereby 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 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,
respectively, first, prior, valid and subsisting liens, security interests and
assignments against the Collateral and secure all indebtedness 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 OR
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 ANY 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
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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 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.
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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.
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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XXX X. XXXXX, Vice President
GUARANTOR:
/s/ XXX X. XXXXX
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XXX X. XXXXX
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LENDER:
COASTAL BANC ssb
By: /s/ XXX XXXX
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XXX XXXX, Vice President
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[COASTAL BANC ssb LETTERHEAD]
June 16, 1998
Xx. Xxx Xxxxx
Allied Mortgage Corporation
00000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Dear Xxx:
Coastal Banc, ssb has approved a temporary increase in the Subprime sublimit
under the existing $23MM warehouse line of credit. The modification will
increase the Subprime sublimit from $6MM to $7MM effective immediately. However,
please keep in mind that the increase is only temporary and will expire
September 30, 1998. At that time the Subprime sublimit will go back to $6MM.
We are pleased to be able to provide additional funding to Allied under the
Subprime sublimit. Our decision is based upon the proactive approach you are
taking in providing additional training and tracking tools for the closing and
shipping departments. We wish you continued success and look forward to
assisting you with another record year.
Best Regards,
/s/ XXX XXXX
Xxx Xxxx
Vice President
