April 30, 2000
Rampart Capital Corporation, ET AL.
700 Louisiana, Suite 2540
Houston, Texas 77002
Re: EIGHTH AMENDMENT TO LOAN AGREEMENT (Eighth Amendment) dated as of
April 30, 2000, by and between Southwest Bank of Texas N.A. and
Rampart Capital Corporation, ET. AL.
Gentlemen:
This Eighth Amendment is made and entered into as of the date above
between SOUTHWEST BANK OF TEXAS N.A. ("BANK") and Borrower (hereinafter
defined) to evidence the parties' agreement to modify and amend the existing
Loan Agreement, as last amended by Seventh Amendment to Loan Agreement dated
effective as of September 1, 1998 (all capitalized terms which are defined in
the Loan Agreement shall have the same meaning herein, unless expressly
modified hereby).
Borrower has requested that the Loan Agreement be modified and the
Bank has agreed to such modifications upon the terms set forth herein. For
sufficient consideration, the parties hereby agree that the Loan Agreement is
modified to the extent required to accomplish the intent of the specific
modifications of this Eighth Amendment.
The term "Borrower" is hereby defined to include the following
entities, jointly and severally, Rampart Capital Corporation, a Texas
corporation ("RCC"); Rampart Facilities Corporation, a Texas corporation;
Rampart Ventures Corporation, L.L.C., a Texas limited liability company; Rampart
Acquisition Corporation, L.L.C., a Texas limited liability company; Rampart
Properties Corporation, a Nevada corporation; IGBAF, Inc., a Texas corporation;
IGBF, Inc., a Texas corporation; Newport Fund Corporation (formerly Ag Capital
Corporation), an Oklahoma corporation; Leissner's, Inc., a Texas corporation;
Rampart Newport Corporation (formerly BCL Enterprises, Inc.), a Texas
corporation; and SourceOne Capital Group, L.L.C., a Nevada limited liability
company; provided, however, (i) as to filings with the Bank and compliance
issues under the Loan Agreement, RCC shall remain the entity primarily
responsible for all such matters unless otherwise agreed to in writing by the
Bank, and (ii) without further approval by the Bank, IGBF, Inc. and Ag Capital
Corporation may be consolidated into IGBAF, Inc. Other subsidiaries of RCC may
be converted into limited liability companies without further approval from the
Bank, as along as the transaction does not affect the Bank's lien position on
the collateral.
Rampart Capital Corporation
April 30, 2000
Page 2
This Eighth Amendment modifies the Loan Agreement to accomplish the
following:
1. The term "Note" shall be that certain promissory note of even
date herewith from Borrower to the Bank in the face amount of
$5,000,000 due and payable on or before December 31, 2000.
2. As used herein, the term "BORROWING BASE" shall mean an amount
at any time equal to the sum of the following less any
property of Borrower excluded from the Borrowing Base by the
Bank in its sole discretion:
(a) 50% of the outstanding principal balances on the existing
portfolio of performing real estate secured loans; and
(b) 65% of the lower of the Bank's assessed value or the
appraised value for selected commercial and investment real
estate assets, subject to a valid first security interest of
the Bank; provided, however, without an approved Bank
appraisal, all allocations will be limited to 65% of the lower
of actual cost or the Bank's assessed value not to exceed the
amount of $250,000.
(c) 50% of the cost for remaining existing assets, subject to
a valid first security interest of the Bank; and
(d) 50% of the purchase cost of all future loan pools and real
estate asset acquisitions. subject to a valid first security
interest of the Bank; provided, however, acquisition
allocation within a pool or group of assets will not exceed
the amount of $250,000 without the support of an approved Bank
appraisal; and
(e) Allocations for future real estate secured loans under
Borrower's asset based lending program will be limited to 75%
of the principal balance, subject to a valid first security
interest of the Bank; provided, however, the principal balance
must be no more than 80% of the appraised value of the
underlying real estate and for any new asset based loan backed
by real estate without an approved Bank appraisal, allocations
will be capped at $250,000. Each such new asset based lending
transaction must be internally approved by the Bank for
inclusion into the Borrowing base formula in the Bank's sole
discretion.
3. The proceeds of the Loan will be used (i) to acquire and
finance assets and/or to improve existing or acquired
assets and (ii) for working capital up to the aggregate
amount of $1,000,000 at any one time outstanding.
Rampart Capital Corporation
April 30, 2000
Page 3
4. Borrower shall pay to the Bank a facilities availability
fee of TWENTY THOUSAND AND NO/100 DOLLARS ($20,000.00).
5. Borrower shall provide the Bank with instruments reasonably
required by the Bank to evidence the extension of all liens
and security interests in favor of the Bank securing the
Loan.
To the extent that the terms and provisions of the Loan Agreement
require modification to accomplish the specific terms set forth above, the
parties agree that they shall cooperate to permit advances upon the terms set
forth above. To the extent that the Bank, in its reasonable opinion, does not
have adequate information to make an Advance based upon this Eighth
Amendment, the Bank shall not be required to make an advance as to that item
or items until such information is provided to the Bank in form required by
the Bank. To further update and consolidate the reporting and covenants of
Borrower set forth in paragraphs 13 and 14 of the Loan Agreement, such
paragraphs, as amended, are attached hereto as Schedule 1 and made a part
hereof for all purposes.
The representations and warranties of Borrower contained in the Loan
Agreement and the other Security Instruments and otherwise made in writing by
or on behalf of the Borrower pursuant to the Loan Agreement and the other
Security Instruments were true and correct when made, and are true and
correct in all material respects at and as of the time of delivery of this
Eighth Amendment, except for such changes in the facts represented and
warranted which are not in violation of the Loan Agreement, this Eighth
Amendment or the other Security Instruments and those matters which were not
in compliance and the Bank was notified of same and as to those exceptions
(but not to any future exceptions) which the Bank approved as exceptions to
the Loan Agreement requirements. Previous items of non-compliance were
approved and accepted by the Bank.
Borrower has performed and complied with all Loan Agreements and
conditions contained in the Loan Agreement and the Security Instruments
required to be performed or complied with by Borrower prior to or at the time
of delivery of this Eighth Amendment.
There exists, and after giving effect to this Eighth Amendment will
exist, no default or Event of Default, or any condition, or act which
constitutes, or with notice or lapse of time (or both) would constitute an
Event of Default under any loan agreement, note agreement, or trust indenture
to which the Borrower is a party, including without limitation, the Loan
Agreement, the Note and the Security Instruments, to the knowledge of the
parties hereto.
Nothing in this Eighth Amendment is intended to amend any of the
representations or warranties contained in the Loan Agreement.
Rampart Capital Corporation
April 30, 2000
Page 4
Borrower represents that this is a commercial, business and/or
investment transaction and that the proceeds of the Note have not and will
not be used for personal, family, household or residential purposes; that all
disclosures, if any, required by law have been received by Borrower prior to
the execution hereof; and requests that Bank rely upon this representation,
and the Bank has relied upon the representations and warranties contained in
this Eighth Amendment in agreeing to the amendments and supplements to the
Loan Agreement set forth herein.
Except as otherwise expressly provided herein, the Loan Agreement,
the Security Instruments, the Note and the other instruments and agreements
referred to therein are not amended, modified or affected by this Eighth
Amendment. Except as expressly set forth herein, all of the terms,
conditions, covenants, representations, warranties and all other provisions
of the Loan Agreement are herein ratified and confirmed and shall remain in
full force and effect.
On and after the date on which this Eighth Amendment becomes
effective, the terms, "this Loan Agreement," "hereof," "herein," "hereunder"
and terms of like import, when used herein or in the Loan Agreement shall,
except where the context otherwise requires, refer to the Loan Agreement, as
amended by this Eighth Amendment.
This Eighth Amendment 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.
It is understood between the parties hereto that Borrower shall
provide Bank, at Borrower's expense, all other reports, further agreements
and instruments, title policies, surveys, and other documentation as
reasonably requested during the term of the Note, so as to preserve, protect
and perfect, or maintain the perfection, of all liens created by the
instruments securing payment of the Note or other required documentation so
that Bank shall have all documentation necessary to comply with Bank's
internal lending policies and that documentation required by any applicable
regulatory agency/authority.
All notices to Borrower shall be sent to the address set forth above.
Borrower and Bank agree that without the written consent of Charles
W. Janke and James H. Carpenter, the Borrower may not increase the maximum
amount of the Loan.
NOTICE TO OBLIGORS: THIS DOCUMENT AND ALL OTHER DOCUMENTS RELATING TO
THIS LOAN CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES TO THIS LOAN. THE
Rampart Capital Corporation
April 30, 2000
Page 5
TERM "PARTIES" INCLUDES THE UNDERSIGNED PERSONS AND ENTITIES. THE TERM "LOAN"
INCLUDES THIS AGREEMENT AND THE DOCUMENTS REFERENCED HEREIN.
IN WITNESS WHEREOF, the parties hereto have caused this Eighth
Amendment to be executed on the date first set forth above but in all
respects effective as of December 31, 1999.
BORROWER: RAMPART CAPITAL CORPORATION
By: /S/ J. H. CARPENTER
---------------------------
J. H. Carpenter
President
RAMPART FACILITIES CORPORATION
By: /S/ J. H. CARPENTER
----------------------------
J. H. Carpenter, President
RAMPART VENTURES CORPORATION, L.L.C.
By: /S/ CHARLES W. JANKE
---------------------------
Charles W. Janke, Managing Member
RAMPART ACQUISITION CORPORATION, L.L.C.
By: /S/ CHARLES W. JANKE
---------------------------
Charles W. Janke, Managing Member
RAMPART PROPERTIES CORPORATION
By: /S/ J. H. CARPENTER
----------------------------
J. H. Carpenter, President
Rampart Capital Corporation
April 30, 2000
Page 6
IGBAF, INC.
By: /S/ J. H. CARPENTER
---------------------------
J. H. Carpenter, President
IGBF, INC.
By: /S/ J. H. CARPENTER
---------------------------
J. H. Carpenter, President
NEWPORT FUND CORPORATION
By: /S/ J. H. CARPENTER
---------------------------
J. H. Carpenter, President
LEISSNER'S INC.
By: /S/ J. H. CARPENTER
---------------------------
J. H. Carpenter, President
RAMPART NEWPORT CORPORATION
By: /S/ J. H. CARPENTER
---------------------------
J. H. Carpenter, President
SOURCEONE CAPITAL GROUP, L.L.C.
By: Rampart Properties Corporation,
its Manager
By: /S/ J. H. CARPENTER
------------------
J. H. Carpenter, President
Rampart Capital Corporation
April 30, 2000
Page 7
BANK: SOUTHWEST BANK OF TEXAS N.A.
By: /S/ ROBERT BISSEY JR.
-------------------------
Robert Bissey, Jr.
Vice President
ATTACHMENT:
Schedule 1 - Paragraphs 13 and 14 of the Loan Agreement
SCHEDULE 1
to Eighth Amendment to Loan Agreement
Restatement of Paragraphs 13 and 14 (supercedes and replaces all previous
paragraphs 13 and 14):
13. Without request by Bank, Borrower agrees to furnish, or cause to be
furnished, Bank with true, correct and complete copies of the
following as indicated, until the Note is paid in full and the Bank's
commitment to lend under the Note is terminated:
a. promptly after becoming available and in any event within
thirty (30) days after the end of each quarter, Borrower's
financial statements in comparable form as previously
furnished to Bank and prepared in accordance with generally
accepted accounting principals, consistently applied,
consisting of at least (i) the balance sheet of Borrower as
of the end of such quarter prepared on a cost basis, (ii)
the statement of profit and loss of Borrower for such
quarter prepared on a cash basis, and (iii) the statement of
reconciliation of capital accounts of Borrower for such
quarter; certified by the principal financial officer of
Borrower to be true and correct and fairly reflect
Borrower's financial condition and operations;
b. within thirty (30) days after the filing of same, copies of
the federal income tax return of Borrower;
c. as soon as available and in any event within thirty (30)
days after the end of each calendar month, a Borrowing Base
Certificate, substantially in the form as previously
approved by the Bank, calculating the amount of the
Borrowing Base and indicating no default by Borrower or, if
an Event of Default exists or would exist but for the
passage of time, the nature of any such default;
d. as soon as available and in any event within thirty (30)
days after the end of each calendar month, a full and
complete list of all Eligible Notes Receivable and all liens
securing same which are owned by Borrower and pledged to
Bank under any of the Collateral Assignments; such list
shall be in the form and containing information of a type
and scope as currently delivered to Bank in connection with
the Prior Collateral Assignment unless and until Bank
requests additional information from Borrower which
additional information shall be furnished within two (2)
weeks from notice of such request to Borrower;
f. such other information regarding the business and affairs
and financial condition of Borrower, as Bank may reasonably
request;
g. a monthly officer's certificate of Borrower that Borrower
has paid and discharged all taxes, assessments and
governmental charges or levies imposed on Borrower or on
its income or profits or on any of its property prior to the
date on which penalties or liens attach thereto; PROVIDED,
HOWEVER, Borrower shall not be required to pay any such tax,
assessment, charge, levy or claim the payment of which is
being contested in good faith and by proper proceedings;
PROVIDED FURTHER, HOWEVER, the parties acknowledge and agree
that it is Borrower's customary practice not to pay real
property taxes on its real estate interests unless the
failure to do so would have an immediate and material
adverse effect on Borrower's ability to continue its
operations;
h. prompt notice of all litigation and all proceedings before
any governmental or regulatory agencies against Borrower,
except litigation or proceedings not materially adversely
affecting the financial condition of Borrower;
i. access to Borrower's records for a semi-annual review by the
Bank's real estate department of Borrower's major real
estate assets and an annual field audit examination of such
records; and
j. as soon as available and in any event within one hundred
twenty (120) days after December 31, 1999, and all calendar
years thereafter, the financial statements listed in
Paragraph 13(a) as of the end of such calendar year audited
by a Certified Public Accountant or Firm approved by the
Bank.
14. Borrower will at all times comply with the covenants contained in this
paragraph from the date hereof and for so long as any indebtedness
under the Note or the Loan remains outstanding:
a. Borrower will not permit any material change to be made in
the character of its business as carried on at the date
hereof;
b. Borrower shall furnish executed Deeds of Trust on any
property covered by the Collateral Assignments to which
Borrower obtains title promptly after taking such action,
such that upon recording of such Deed of Trust, Bank will
have a first priority lien; PROVIDED, HOWEVER, this
provision shall apply only to foreclosure (or deed in lieu
thereof) against properties which secure any Eligible Note
Receivable to which Borrower has an allocated cost of over
$100,000.00;
c. Borrower agrees that 100% of the Net Purchase Price received
by Borrower from the sale, compromise or settlement of any
Eligible Note Receivable and Eligible REO shall be applied
to the payment of the Note;
d. Borrower shall maintain, or cause to be maintained, accurate
books and records pertaining to the Eligible Notes
Receivable in accordance with generally accepted practices
and procedures. Borrower will, upon Bank's request, mark
Borrower's ledger cards, books of account and other records
relating to the Eligible Notes
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Receivable with appropriate notations satisfactory to
Bank, disclosing that Borrower has granted to Bank a
security interest in the Eligible Notes Receivable or
containing such other designations as Bank may require.
All such records shall be kept at Borrower's address as
it appears in this Loan Agreement;
e. Borrower will, promptly upon learning thereof, report to
Bank all matters materially affecting the value,
enforceability or collectability of any of the Eligible
Notes Receivable such as claims or disputes asserted by any
maker as to the amount of principal or interest owing on
such promissory notes and/or the enforceability of the liens
securing the payment thereof;
f. Borrower will promptly provide Bank with notice of any event
which will have an immediate and material adverse effect on
the Borrower's ability to conduct its business as presently
conducted;
g. Borrower shall continue to be a corporation duly
incorporated and existing in good standing under the laws of
the State of Texas or the State of Oklahoma or the State of
Nevada, as applicable, and continue to be duly licensed or
qualified as a foreign corporation in all jurisdictions
wherein the character of the property owned or leased by it
or the nature of the business transacted by it makes
licensing or qualification necessary as a foreign
corporation;
h. Subsequent to Bank taking legal title to the Eligible Notes
Receivable by commercially reasonable means in accordance
with applicable law, Bank shall have the right to receive,
endorse, assign and/or deliver in the name of Bank or
Borrower any and all checks, drafts and other instruments
for the payment of money relating to the Eligible Notes
Receivable, and Borrower hereby waives notice or
presentment, protest and of non-payment of any instrument so
endorsed. Borrower further authorizes Bank to sign
Borrower's name on any verifications of Eligible Notes
Receivable, to send verifications of Eligible Notes
Receivable to any party and to do all other acts and things
necessary to carry out the provisions of this Loan
Agreement. Bank and its officers, directors, agents and
designees shall not be liable for any acts of omission or
commission, or for any error of judgment or mistake of act
or law by Bank after taking such legal title, unless done
maliciously or with gross negligence.
i. To the limited extent required by any regulatory authority
having jurisdiction over Bank, Borrower will furnish to Bank
appraisals of the real property held as collateral prepared
in accordance with Bank's instructions and in form and
substance satisfactory to Bank, within ninety (90) days of
each request, the cost of which is to be borne solely by
Borrower;
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j. Borrower will permit any officer, employee or agent of Bank
to visit and inspect its principal place of business, both
interior and exterior, examine Borrower's books of record
and accounts, take copies and extracts therefrom, and
discuss the affairs, finances and accounts of Borrower with
Borrower's accountants and auditors, all at such reasonable
times and as often as Bank may desire;
k. Bank shall hold the originals of all Eligible Notes
Receivable in its possession and Borrower shall take such
other and further action as may be necessary to maintain
Bank's perfected security interest in the Eligible Notes
Receivable;
l. Borrower will permit any officer, agent or employee of the
Bank's real estate department to review the Eligible Class A
Notes Receivable and Eligible Class F & I Assets to assess a
valuation of such collateral to determine the Borrowing Base
and to determine whether any such property should be
reclassified as Eligible Remaining Assets;
m. Borrower will not permit its tangible net worth (on a
consolidated basis) to be less than $9,000,000 at any time
after the date hereof As used herein, "tangible net worth"
shall mean the sum of preferred stock (if any), par value of
common stock, capital in excess of par value of common
stock, and retained earnings less treasury stock (if any),
less good will, cost in excess of net assets acquired,
deferred development costs and all other assets as are
properly classified as intangible assets; and
n. Borrower shall maintain on a consolidated basis a ratio of
Total Liabilities to Tangible Net Worth not exceeding
1.25:1.00. As used "Total Liabilities" means the sum of
current liabilities plus long term liabilities, excluding
any deferred income taxes.
o. Borrower will not create, incur, assume or suffer to exist
any lien on any of its assets (now owned or hereafter
acquired), except for the liens securing the payment of the
Note or approved by the Bank in writing.
p. In the event Borrower shall have debt payable to its
shareholders, Borrower shall have the shareholders
subordinate such debt to the debt of the Bank, and the
Borrower will not prepay any subordinated debt or make any
payment of principal thereof or interest thereon or any
other distribution in respect thereof unless prior approval
is given by the Bank.
q. Borrower will not permit any material change to be made in
the character of its business as carried on at the date
hereof or contemplated hereby.
r. Borrower will not merge or consolidate with or sell, assign,
lease or otherwise dispose of (whether in one transaction or
in a series of transactions) all or
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substantially all of its properties (whether now owned or
hereafter acquired) to, any person, except that the
Borrower may merge or consolidate with any person
provided that, immediately thereafter and giving effect
thereto, no event shall occur and be continuing which
constitutes a Default or an Event of Default and in the
case of any such merger or consolidation to which the
Borrower is a party, the Borrower is the surviving
corporation.
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