AMENDMENT 0F MORTGAGE AND OTHER LOAN DOCUMENTS
THIS AMENDMENT is made this 10th day of November, 1999 by and among
First Chesapeake Financial Corporation ("Borrower"), and CRUSADER BANK, a
federally-chartered savings bank (the "Bank"),
On February 5, 1999, Borrower and Bank consummated a loan transaction
pursuant to the terms of which Bank lent to Borrower the sum of $1,500,000 (the
"Loan") for the acquisition of Mortgage One Concepts Inc. The Loan is evidenced
by a promissory note dated February 5, 1999 (the "Note") executed by Borrower
and made to the order of the Bank in the stated principal sum of $1,500,000 and
is secured by, inter alia, (a) an open-end mortgage and security agreement dated
February 5, 1999 ("Mortgage") executed by Borrower in favor of Bank and covering
certain real property and improvements located at 0000 Xxxxxx Xxxx Xxxx,
Xxxxxxxxx, XX, as more particularly described on Exhibit A attached hereto (the
"Property"), which Mortgage was recorded with the Xxxxxxxxxx County Recorder of
Deeds in Mortgage Book _____ page ______ (b) Guaranty and Suretyship Agreements
executed by Xxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxxx, Xxxx Xxxxx, Xxxx Xxxxxxxx, Xxx
Xxxxxxx and Xxxxxx Xxxxxxx and Xxxxxxxx Xxxxxxx. ("Guaranties").
The Note, Guarantees, Business Loan Agreement, Mortgage and any other
document executed and delivered in connection with the Loan are sometimes
collectively referred to herein as the "Loan Documents'.
Borrower has requested that Bank further amend the Loan in order to,
inter alia, (a) increase the loan amount to $2,108,566 and Bank has agreed to do
so pursuant to the terms hereof.
Agreement
NOW THEREFORE, in consideration of the extension and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows
1. Note - The Note is amended, modified and supplemented as follows:
(a) The principal balance of the loan outstanding at November 5,1999 shall be
increased to $2,108,566 plus accrued interest or other loan charges. All
references in the Note to the principal amount thereof shall be deemed to refer
to $2,108,566 plus accrued interest or other loan charges. The maturity date
shall be extended to November 4, 2000. The $2,108,566 balance includes (1)
$78,566 of fail fees incurred by Borrower through October 31, 1999 pursuant to
the section of the Business Loan Agreement entitled Requirement to Sell
Mortgages to Bank and (ii) the $30,000 fee earned by the Bank pursuant to the
section of the Business Loan Agreement entitled Equity Option.
2. Guaranties.
(a) Xxxx Xxxxxxxxx shall agree to guarantee and become surety for the loan
balance up to $1,800,000 plus accrued but unpaid interest or other loan charges.
The guarantee and surety of Xxxxxx and Xxxxxxxx Xxxxxxx shall remain at $300,000
and the guarantee and Surety of the Guarantors other than Xxxx Xxxxxxxxx and
Xxxxxx and Xxxxxxxx Xxxxxxx shall remain at $1,200,000.
(b) In connection with the increase in the amount guaranteed by each Guarantor,
the Guarantor expressly reaffirms his or her Confession of Judgment and all
other provisions of the Commercial Guaranty Agreement. In the event of a default
by the Borrower, it is understood that the Bank may proceed against any
collateral posted in connection with this loan or any other extension of credit
between the Bank and the Guarantor.
(c) Each of the Guarantors agrees that he or she is acting in the capacity as
guarantor and surety with respect to the Loan.
3. Mortgage
(a) The Property shall remain subject to the liens, operation and effect of the
Mortgage, as amended hereby, and nothing contained herein or done pursuant
hereto shall impair or adversely affect the liens, operation or effect of the
same on the Property. Borrower hereby confirms, acknowledges and agrees that (i)
he has no defenses, charges, claims, demands, pleas or offsets whatsoever in law
or equity against the Mortgage, as amended hereby, or to his obligations
thereunder and (ii) the Mortgage, as amended hereby, constitutes a valid and
enforceable lien against the Property. The mortgage amount shall be increased to
$1,800,000.
4. Continuing Validity of Loan Documents; No Defense or Offsets; Acknowledgment
of Outstanding Amount.
(a) By execution of this Amendment, the parties hereby confirm and ratify all of
the Loan Documents in their entirety and agree that the Loan Documents shall
remain in full force and effect in accordance with their respective terms, as
the same may have been amended hereby. All of the Loan Documents are hereby
amended, where necessary, to reflect the provisions of this Amendment.
(b) Borrower confirms. acknowledges and agrees that he has no defenses, charges,
claims, demands, pleas or offsets whatsoever in law or equity to the
indebtedness evidenced and secured by the Loan Documents, as amended, or to his
obligations thereunder.
5. Conditions Precedent. The obligations of the Bank to amend the Loan (section
illegible)...
(a) This Amendment shall have been executed in recordable form by Borrower and
delivered to the Bank.
(b) Borrower shall have paid to Bark a legal and modification fee of $12,500 and
agrees to pay the Bank an extension fee of $15,000 by November 30, 1999.
(c) The Section in the Business Loan Agreement entitled Requirement to Sell
Mortgages to Bank is hereby amended effective November 1, 1999 to require the
Borrower or an affiliate thereof to sell to the Bank at least $1 million per
month of nonconforming credit mortgage loans based on the Bank's standard
wholesale rate sheet as published from time to time by the Bank or its
subsidiary, Crusader Mortgage Corporation ("Flow Priced Loans"). Additionally,
the Bank or its subsidiary shall have the right to match any bid received by the
Borrower on bulk sales of mortgage loans. The requirement to sell the Bank $1
million per month of Flow Priced loans and to provide the Bank with the right to
match bulk bids shall extend for a period (the "Requirement Period") until the
later of (a) November 30, 2000 or (b) until all balances outstanding under this
Loan are repaid. In event the Borrower shall fail to sell the Bank at least $1
million of Flow Priced Loans in any month during the Requirement Period, the
borrower shall be required to pay the Bank a fail fee (which at the discretion
of the Bank may be added to the principal balance of this Loan) equal to 1 % of
the excess, if any, of $1 million over the actual Flow Priced Loans sold to the
Bank during the month. If the Borrower sells more than $1 million of Flow Priced
Loans to the Bank in any month, the $1 million requirement in the following
month shall be reduced by such excess. Notwithstanding the requirements set
forth in this paragraph, the Bank shall purchase nonconforming loans from the
Borrower at its sole and absolute discretion, and the Bank's disapproval of a
loan or series of loans shall not reduce the $1 million per month sale
requirement.
(d) Borrower shall agree to pay to the Bank in addition to monthly accrued
interest, 50% of the Cash Flow generated by Collateral One Mortgage Corporation
("Collateral One"). Cash Flow shall mean pre-tax income plus depreciation,
amortization and any other non-cash expenses. In calculating Collateral One's
Cash Flow, Borrower shall not take into account any Corporate Overhead Charges,
including but not limited to salaries, interest and data processing.
(e) Borrower hereby agrees to pledge its shares in Collateral One as collateral
for this loan and to deliver such shares, properly endorsed to the Bank, prior
to the disbursement of any funds hereunder. Borrower also agrees to fully
cooperate with the Bank in executing any documents reasonably required by the
Bank to perfect its security interest in the collateral, In connection
therewith, Borrower hereby represents and warrants to the Bank that such shares
represent 100% of the outstanding shares of Collateral One, that such shares are
owned free and clear by Borrower and there are no agreements that prevent
Borrower from pledging such shares to the Bank. Borrower and Guarantors further
represent that during the term of this Loan Agreement, they will take all steps
necessary to ensure that (i) no additional shares of Collateral One stock are
issued and (ii) that the current and future contemplated operations of
Collateral One are conducted by Collateral One and that no such operations are
conducted by the Borrower or any affiliate thereof. In the event of a default
under any of the Loan Documents that is not cured in accordance with the terms
of such document, in addition to any other remedies available to the Bank, the
Bank shall have the right to assume the operations of Collateral One, in which
case the net income, if any, generated thereby shall be applied as a repayment
of the outstanding loan balance. Not withstanding anything herein to the
contrary, nothing in this section shall in any way restrict the Bank from
proceeding against the Borrower or any of the Guarantors for full payment of the
outstanding loan balance, even if the Bank does assume the operation of
Collateral One.
(f) Prior to disbursement of any funds hereunder, Borrower shall establish a two
month interest reserve to be held in a money market account at the Bank
throughout the term of the Loan. In the event of a default under any of the Loan
Documents, the Bank shall have the right to exercise any remedies available to
it without proceeding against the interest reserve. If the Bank does elect to
apply the interest reserve, or any portion thereof, in payment of any past due
balance hereunder, is shall be an Event of Default if Borrower does not fully
replenish the interest reserve within five days after the interest reserve is
applied.
(g) The disbursement of any funds pursuant to this Amendment shall be contingent
upon the Borrower (i) receiving additional cash equity pursuant to its private
offering of at least $350,000 and (ij) entering into the Third Amendment to the
Asset Purchase Agreement among Mortgage Concepts, Inc., Xxxxxxx X. Xxxxxxxxx,
Xxxxxxx X. Xxxx, Collateral Mortgage Corporation, First Chesapeake Financial
Corporation and First Chesapeake Acquisition Corporation, a true copy of which
has been provided to the Bank. Simultaneous with the execution of this amendment
and disbursement of funds pursuant thereto, Borrower shall pay seller all funds
required at this time pursuant to the Third Amendment.
(h) Upon maturity of the Loan or payoff of the loan balance prior to maturity,
Borrower agrees to pay the Bank a payoff fee of $12,000.
(i) Xxxx Xxxxxxxxx agrees that within seven days hereof he shall deliver the
Assignment of Partnership Income and Security Agreement duly executed by all
parties in the form previously provided by the Bank. The failure of Xxxx
Xxxxxxxxx to comply with the provisions of this Paragraph shall, at the Bank's
option, constitute an Event of Default under the Loan.
6. Miscellaneous.
(a) The parties hereto acknowledge and agree that this Amendment shall not
constitute a novation of the Loan nor impair the validity or lien priority of
the Mortgage as amended hereby.
(b) The falsity of any representation made by any Borrower in this Amendment or
the breach by any Borrower of any of his or her covenants or agreements made
herein shall, at the option of the Bank, constitute an event of default under
the Loan Documents.
(c) This Amendment shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, successors and assigns. This
Amendment shall be governed by and construed in accordance with the provisions
of the laws of the Commonwealth of Pennsylvania.
(d) This Amendment may be executed in one or more counterparts with the same
effect as if all parties had signed the same document. All counterparts shall be
construed together and shall constitute one Amendment.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
the day and year first above written.
