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Exhibit 10.7
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT (the "Amendment") executed as
of the 25th day of August, 1997 by and among First Union National Bank, a
national banking association ("First Union")(f/k/a First Union National Bank of
South Carolina), HomeAdd Financial Corporation, a South Carolina corporation
(f/k/a CambridgeBanc, Inc.) ("Borrower"), and RSI Holdings, Inc., a North
Carolina corporation ("RSI").
FACTUAL BACKGROUND:
First Union has previously extended a revolving line of credit to
Borrower in the original principal amount up to Five Hundred Thousand and
No/100 Dollars ($500,000.00)("Loan") as set forth in that certain Loan
Agreement dated to be effective as of December 12, 1996 (the "Loan Agreement").
Amounts outstanding under the Loan Agreement are evidenced by a certain
promissory note also dated December 12, 1997. Advances made to Borrower
pursuant to the terms of the Loan Agreement have been or will be used to
finance FHA Title I and conventional loans and are secured by the mortgages and
promissory notes evidencing such loans. The Loan Agreement anticipates the sale
of the loans financed by the Loan by the Borrower to various Purchasers (as
defined in the Loan Agreement) as well as the bailment of the collateral to the
same Purchasers on behalf of First Union pursuant to a Bailee Agreement (as
defined in the Loan Agreement).
Borrower has requested and First Union has agreed (i) to allow bulk
purchases of loans by Purchasers and, therefore, to delete the requirement that
each Purchaser execute a Purchase Commitment prior to purchasing a loan from
Borrower and (ii) to extend the time for repayment of an Advance from fifteen
(15) days to twenty-five (25) days. The parties have agreed to amend the Loan
Agreement accordingly. Additionally, each of Borrower and First Union has
changed its name and desire to recognize the change in this Amendment.
Any terms used and not otherwise defined herein shall have the meaning
set forth in the Loan Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained
hereinbelow and of the premises recited hereinabove (which are hereby averred
by the parties to be true and correct) and other good and valuable
consideration, the receipt, sufficiency and adequacy of which the parties do
hereby acknowledge, the parties do hereby agree as follows:
1. Each reference to "CambridgeBanc, Inc." in the Loan Agreement
and any other Loan Document (as defined in the Loan
Agreement) shall be deleted in its entirety and replaced with
"HomeAdd Financial Corporation". The term "Borrower" as used
therein shall hereafter mean "HomeAdd Financial Corporation".
2. Each reference to "First Union National Bank of South
Carolina" in the Loan Agreement and any other Loan Document
shall be deleted in its entirety and replaced with "First
Union National Bank". The term "First Union" as used therein
shall hereafter mean "First Union National Bank".
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3. Section 1.19 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
"SECTION 1.19 "MORTGAGE LOAN" means any mortgage loan to
finance an FHA Mortgage or a Conventional Loan Mortgage which
First Union has determined in its reasonable sole discretion
to be acceptable as security for the Note which has been made
to a Mortgagor by Borrower."
4. Section 1.25 of the Loan Agreement is hereby deleted in its
entirety.
5. Section 1.26 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
"SECTION 1.26 "PURCHASE PRICE" means the amount to be paid by
a Purchaser to Borrower for the purchase of any specified
Mortgage Note(s) and related Mortgage(s)."
6. Section 1.27 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
"SECTION 1.27 "PURCHASER" means any person or entity
reasonably acceptable to First Union with respect to the
purchase of a Mortgage Note(s) and related Mortgage(s). First
Union's entering into of a Bailee Agreement with a potential
Purchaser shall be deemed to constitute approval of such
entity as a Purchaser."
7. Section 2.3.3 of the Loan Agreement is hereby amended to
delete the requirement that a Purchase Commitment be
delivered to First Union before an Advance is made for a
Mortgage Loan.
8. Section 5.1 of the Loan Agreement is hereby deleted in its
entirety.
9. Section 5.2 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
"SECTION 5.2 SALE OF MORTGAGE NOTES; PLEDGE OF BORROWER'S
ACCOUNT; ACKNOWLEDGEMENT OF Bailment. With respect to each
Mortgage Loan, Borrower agrees that the Mortgage Note and
Collateral Documents shall be sold to a Purchaser within
twenty-five (25) days of the date of the Advance funding the
respective Mortgage Loan. Purchaser shall be instructed to
pay the Purchase Price thereof directly to Borrower who shall
then pay such amounts to First Union in the manner required
by First Union herein. Borrower agrees to deliver the
originals of the Mortgage, the Mortgage Note, the Collateral
Documents and any and all other documents required herein for
each Mortgage Loan directly to the Purchaser under cover of a
bailee letter in form and content acceptable to First Union
(substantially in the form of the Bailee Agreement attached
hereto as Exhibit A), and, upon First Union's request, to
provide copies of all such documents, along with any other
documents requested by First Union, to First Union. Borrower
acknowledges that failure of Purchaser to comply with the
terms of such bailee letter shall result in Borrower being
required to repay the Loan, or a portion thereof, in
accordance with the terms of Section 2.2."
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10. Section 5.4 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
"SECTION 5.4 REMOVAL OF MORTGAGE NOTES. In the event that
Borrower does not sell a Mortgage Note to a Purchaser or
First Union has not received the full Purchase Price from the
Purchaser with (a) twenty-five (25) days from the date First
Union advances funds to Borrower to finance the Mortgage Loan
as evidenced by such Mortgage Note, then Borrower, promptly
following the request of First Union, shall remove such
Mortgage Note and Mortgage from the Collateral and repay the
outstanding principal balance of the Loan, in accordance with
Section 2.2 by an amount equal to the amount advanced by
First Union for any Mortgage Loan evidenced by such removed
Mortgage Note and Mortgage."
11. Section 7.1.18 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
"SECTION 7.1.18 FUTURE PURCHASERS. Before selling Mortgage
Loans to Purchasers who are not Purchasers as of the closing
date of the Loan, Borrower will submit the names of such
potential Purchasers and any other information reasonably
required by First Union to First Union for approval, in its
sole reasonable discretion, and upon receipt of approval of
the potential Purchasers by First Union, shall require each
such Purchaser to execute a Bailee Agreement prior to the
sale of any Mortgage Loan to such potential Purchaser."
12. Section 9.1(a) is hereby deleted in its entirety and replaced
with the following:
"(a) if Borrower fails to pay any amount due to First Union
on its due date under the Note or this Agreement or otherwise
be in default under the Note, except that if failure to pay a
principal payment when due in accordance with Article V is
caused by a Purchaser's failure to purchase a Mortgage Loan
(which failure to purchase is not directly or indirectly the
fault of Borrower or a result of Borrower's actions),
Borrower shall not be in default unless such principal
payment is not made within fifteen (15) days from the date on
which such principal payment is due.
13. Section 13.2 is hereby deleted in its entirety and replaced
with the following:
"SECTION 13.2 RELEASE. Borrower acknowledges and agrees that
First Union shall have no liability to Borrower or any other
person for failure of a Purchaser to purchase a Mortgage
Note."
14. Exhibit A to the Loan Agreement, the "Bailee Agreement", is
hereby amended as set forth on Exhibit A attached hereto. Any
bailments made following the date hereof shall be subject to
such amended Bailee Agreement.
15. All Loan Documents are hereby modified to the extent
necessary such that any reference to the "Loan Agreement"
shall refer to the Loan Agreement as modified hereby.
16. Borrower and RSI hereby represent and warrant that, at the
time of the execution and delivery of this Agreement,
Borrower and RSI are in compliance with their respective
covenants set forth in
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the Loan Agreement and Borrower hereby confirms that the
representations and warranties set forth therein continue to
be true and accurate, except that Borrower owns all of the
issued and outstanding stock of HomeAdd Financial Services
Corp., a North Carolina corporation.
17. Borrower agrees to hold First Union harmless and indemnify
First Union and its successors and assigns from any and all
claims or causes of action arising in connection with this
Amendment or otherwise related to the Loan (including without
limitation, court costs and reasonable attorneys fees), other
than those resulting from or caused by First Union's gross
negligence or recklessness. Borrower also acknowledges that
the Indemnity and Release language set forth in Article XIII
of the Loan Agreement shall remain in full force and effect
following the date hereof, except as modified hereby.
18. Borrower agrees to execute and deliver to First Union,
promptly upon request from First Union, such other and
further documents as may be reasonably necessary or
appropriate to consummate the transactions contemplated
herein.
19. This Amendment may be executed in two (2) or more
counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same
instrument, and in making proof of this Amendment, it shall
not be necessary to produce or account for more than one such
counterpart.
20. This Agreement is not a novation and except as otherwise
modified hereby, the terms and provisions of the Loan
Agreement and all Loan Documents shall remain in full force
and effect and shall continue to be secured by the Collateral
with the same force, effect and priority.
21. RSI hereby reaffirms its obligations arising under the
Capital Contribution Agreement and acknowledges that the
Capital Contribution Agreement shall continue in full force
and effect following the execution of this Amendment.
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IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first written above.
HomeAdd Financial Corporation
/s/ Xxxxxxx X. Xxxxxx, Xx.
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By: Xxxxxxx X. Xxxxxx, Xx.
Its: President
RSI Holdings, Inc.
/s/ Xxxx X. Xxxxxx
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By: Xxxx X. Xxxxxx
Its: Vice President
First Union National Bank
/s/ Xxxxxxx X. Xxxxx
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By: Xxxxxxx X. Xxxxx
Its: Senior Vice President
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DRAFT DOCUMENT 11/12/97
Exhibit A
BAILEE AGREEMENT
THIS BAILEE AGREEMENT is entered into by and among First Union
National Bank ("Lender"), HomeAdd Financial Corporation (f/k/a CambridgeBanc,
Inc.) ("Seller"), and , ("Buyer").
WHEREAS, Seller may, from time to time, originate and close
residential mortgage loans (each, a "Mortgage Loan"); and
WHEREAS, each Mortgage Loan will be evidenced by a promissory note
(each, a "Mortgage Note") and secured by a mortgage or certain other documents
(collectively, together with each Mortgage Note, the "Collateral"); and
WHEREAS, Seller may obtain monies from Lender to fund such Mortgage
Loans pursuant to a Loan Agreement dated December 12, 1996, among Lender,
Seller and RSI Holdings, Inc., as the same may be amended from time to time
("Loan Agreement"), and will grant Lender a security interest in the Collateral
securing such Mortgage Loans; and
WHEREAS, Seller intends to sell certain closed Mortgage Loans to
Buyer and
WHEREAS, Lender has requested that Buyer act as Lender's bailee with
respect to such Collateral until the related Mortgage Loan is purchased by
Buyer.
NOW, THEREFORE, in consideration of the agreements set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Lender, Seller, and Buyer agree as follows:
Section 1. Notification and Acknowledgment of Security Interest.
Seller shall attach to each shipment to Buyer of one or more Mortgage Notes a
cover letter, substantially in the form of Exhibit A attached hereto, that: (a)
references this Bailee Agreement, and (b) acknowledges that each related
Mortgage Loan is subject to Lender's security interest. Seller, shall promptly
forward such cover letter and Mortgage Note(s) and other Collateral related
thereto to Buyer at the following address (or such other address as may be sent
in writing by Buyer to Seller and Lender):
Attn:
Immediately upon receipt, and not later than seventy-two (72) hours following
receipt of a Bulk Purchase, Buyer shall sign and date such cover letter and
shall mail and telefax it to Lender at the following address or number (or such
other address or number as may be sent in writing by Lender to Buyer and
Seller):
Lender: First Union National Bank
0 Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Telefax: (000) 000-0000
Telephone: (000) 000-0000
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For the purposes hereof, a "Bulk Purchase" shall mean the purchase by Buyer of
more than one (1) Mortgage Loan on the same date from Seller. The Mortgage Loan
file shall not be deemed complete until the receipt by Buyer of the original
executed Mortgage Note endorsed in blank or to Buyer, together with the other
documents required by the Loan Agreement. Such cover letter, when executed by
Buyer, shall constitute acknowledgment by Buyer of Lender's security interest
in the related Collateral, provided, however, that the failure of Buyer to
acknowledge such cover letter shall not impair or affect the enforceability of
this Bailee Agreement or of Lender's lien on the related Collateral evidenced
hereby. Borrower shall not be required to return a cover letter to Lender for a
non Bulk Purchase.
Section 2. Buyer as Bailee. Effective upon Buyer's receipt of the
Collateral and the cover letter described in Section 1 above, Buyer will hold
the Collateral, in which Lender holds a security interest, as bailee for the
benefit of Lender, pursuant to the provisions of the Uniform Commercial Code,
as adopted in the State of South Carolina, until Buyer's status as bailee is
terminated as set forth in Section 3 hereof. Prior to such termination, Buyer
shall not deliver the Collateral to Seller or any third party. Buyer shall act
only as a bailee for Lender and shall not be deemed to be a representative,
trustee, or fiduciary or otherwise an agent of or for Lender or Seller with
respect to the Collateral. The standard of care to be exercised by Buyer in
holding the Collateral shall be the same degree of care and skill as Buyer
exercises when it holds Mortgage Loan documents on its own behalf.
Section 3. Termination of Security Interest and Release of Bailee.
Buyer's status and obligations as bailee shall automatically terminate, without
further action by any party, upon the earliest to occur of: (i) payment of the
Purchase Price to Seller, as set forth in Section 4 hereof (the "Purchase
Date"); or (ii) return of the Collateral to Lender, as set forth in Section 5
hereof. Lender agrees that its security interest in the Collateral and that all
right, title, and interest it may have in each related Mortgage Loan purchased
by Buyer are and shall be fully released effective as of the Purchase Date,
whereupon Buyer will have no further obligations to Lender with respect to such
Collateral.
Section 4. Purchase Price. The "Purchase Price" means the price Buyer
agrees to pay to purchase a Mortgage Loan. Lender and Seller acknowledge that
the Purchase Price may be less than the full principal amount of the Mortgage
Note evidencing the Mortgage Loan, and that Seller may have paid or advanced
other funds to Buyer which funds are not included in the Purchase Price. Buyer
agrees that the Purchase Price paid to Seller with respect to a particular
Mortgage Loan shall not be reduced due to adjustments relating to another
Mortgage Loan. For purposes of the Purchase Date set forth in Section 3 hereof,
the Purchase Price shall be deemed paid in full when either: (a) Seller
collects funds in the amount of the Purchase Price pursuant to a cashiers check
mailed to Seller's address set forth in Section 7 below from Buyer and deposits
such check in its account with Lender referenced hereinbelow (or any other
account designated by Lender); (b) Seller receives a federal wire transfer in
the amount of the Purchase Price into its account with Lender referenced
hereinbelow (or any other account designated by Lender) from Buyer:
Bank: First Union National Bank of South Carolina
Address: 0 Xxxxxxx Xxxxx, Xxxxxxxxxx, XX 00000
ABA Number: 000000000
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Account: 2010000314483 (note, this account # may change as
of January 1997 contact First Union for confirmation of
account #)
Attention: Xxxxx X. Xxxxxxxxx
or (c) Seller collects funds in such other manner as requested by Lender and
such funds are deposited in the account with Lender referenced hereinabove (or
any other account designated by Lender). Seller agrees promptly to process and
submit any such cashiers check received from Buyer for payment to Lender. Buyer
shall not be liable to Lender or Seller for any additional expenses incurred by
Lender or Seller because of: (i) payments lost or delayed due to incorrect wire
transfer or mailing instructions provided by Seller; (ii) Seller's failure
promptly to process a cashiers check; or (iii) Lender's failure to promptly
submit a cashiers check for payment. Buyer shall notify Seller of the purchase
of a Mortgage Loan by sending a funding advice to Seller, and, upon Lender's
request, Seller shall promptly telecopy such funding advice to Lender.
Section 5. Return of Collateral to Lender. Buyer will deliver the Note
and other Collateral in Buyer's possession to Lender: (a) upon receipt by Buyer
of Lender's written request therefor (provided that such request is received by
Buyer prior to Buyer's payment of the Purchase Price to Seller); or (b)
promptly, in the event that Buyer elects not to purchase the Mortgage Loan, or
in the event that the Mortgage Note or other Collateral is defective and
requires correction. In the alternative, Buyer shall take such other action
with respect to the Note and other Collateral as may be agreed upon in writing
between Lender and Buyer with notice to Seller. Any delivery from Buyer to
Lender shall be made by express mail to the address of Lender set forth in
Section 1 hereof. In no event shall Buyer return any item of Collateral to
Seller prior to the termination of Lender's security interest in the
Collateral.
Section 6. Representation and Warranties.
(a) As of the date of delivery of each Mortgage Loan to Buyer:
(i) Lender represents and warrants to Buyer that (A) Lender has not
assigned, hypothecated, transferred, pledged, or otherwise conveyed
the Collateral to any other party, or recorded any assignment of
mortgage or deed of trust relating to such Mortgage Loan, and (B)
during the period that Buyer holds the Collateral as bailee, unless
and until the Collateral is returned by Buyer to Lender, Lender will
not assign, hypothecate, transfer, pledge, or otherwise convey any of
Lender's right, title, or interest in such Collateral; nor will Lender
need or cause to be needed any assignment of mortgage or deed of trust
relating to such Mortgage Loan;
(ii) Seller certifies to Buyer that the documents relating to each
Mortgage Loan purchased have been delivered to Buyer by Seller or
Seller's closing agent (except for any loan and security agreement
between Lender and Seller, and any unrecorded assignment of a mortgage
or deed of trust) ; and
(iii) Lender's execution and delivery of this Bailee Agreement have
been specifically approved by Lender. This Bailee Agreement
constitutes the "written agreement" governing Lender's rights and
obligations with respect to Buyer in connection with Lender's role as
Seller's warehouse lender for the Mortgage Loans, and Lender shall
continuously maintain all components of such "written agreement" as an
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official record of Lender or any successor thereof that Lender owns or
controls.
(b) Immediately following payment of the Purchase Price for a particular
Mortgage Loan as described in Section 4 hereinabove, Lender represents
and warrants that (i) Lender has fully relinquished all right, title,
and interest it may have in and to such Mortgage Loan; (ii) all notes,
mortgages, and other original documents, instruments, and materials
that have been delivered to Buyer pursuant to subsection 6(a)(ii)
above have been released to Buyer; and (iii) any unrecorded
assignments in Lender's possession relating to such Mortgage Loan are
null and void, and Lender covenants to and agrees with Buyer that
Lender immediately will take any and all action necessary to assign
and transfer any recorded interest in such Mortgage Loan to Buyer.
Section 7. Notices. Any notices sent to Buyer or Lender pursuant to
this Agreement shall be sent to the address applicable in accordance with
Section 1 of this Agreement, and any notices sent to Seller pursuant to this
Agreement shall be sent to Seller at the following address (or such other
address as may be sent in writing by Seller to Buyer and Lender):
HomeAdd Financial Corporation
Xxxx Xxxxxx Xxx 00000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Xx.
Section 8. Counterparts. This Bailee Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute this Bailee
Agreement by signing any such counterpart.
[SEE SIGNATURE PAGE ATTACHED]
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IN WITNESS WHEREOF, each of the undersigned has caused this Bailee
Agreement to be duly executed and delivered by its duly authorized officer as
of ________________, 19_____.
LENDER: First Union National Bank
By:
Name:
Title:
SELLER: HomeAdd Financial Corporation
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
---------------------------
Name: Xxxxxxx X. Xxxxxx, Xx.
Title: President
BUYER:
By:
Name:
Title:
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Exhibit A to Bailee Agreement
WAREHOUSE LENDER'S LETTER
Date:
Attention: Residential Mortgages - Conduit
Dear______________________________:
Promissory Notes and all other documents evidencing the below-listed loans are
attached hereto and are being delivered to ("________ "), in _________ capacity
as bailee for First Union National Bank ("Lender"), pursuant to the Bailee
Agreement dated ____________ , 199___ (the "Bailee Agreement"), among Lender, as
warehouse lender, HomeAdd Financial Corporation (f/k/a CambridgeBanc, Inc.), as
Seller, and , as Buyer. Lender holds a security interest in such Promissory
Notes, Mortgage and all documents related thereto.
Loan # Name:
Loan # Name:
Loan # Name:
Loan # Name:
Loan # Name:
Loan # Name:
Loan # Name:
Loan # Name:
Loan # Name:
Loan # Name:
Loan # Name:
Loan # Name:
Loan # Name:
Loan # Name:
Loan # Name:________________
Loan # Name:
Loan # Name:
Loan # Name:
Loan # Name:
Loan # Name:
Execution of this letter shall constitute Buyer's agreement that it will; (i)
send or cause to be sent to Seller payments relating to the above-referenced
Promissory Notes as specified in Section 4 of the Bailee Agreement within
twenty-five (25) days of receipt of this letter; or (ii) in the alternative,
return such Promissory Notes and other documents to Lender as specified in
Section 5 of the Bailee Agreement within ten (10) days of receipt of this
letter.
Sincerely,
HomeAdd Financial Corporation
Name:
Title:
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The undersigned hereby acknowledges receipt of this letter and the
above-referenced Promissory Notes and other documents, and that the undersigned
will hold such Promissory Notes and other documents as bailee on behalf of the
above-referenced Lender, subject to Lender's security interest therein and the
terms and conditions of the Bailee Agreement.
By:
Name:
Title:
By:
Name:
Title:
