HOMEGOLD, INC.
AMENDED AND RESTATED FORBEARANCE AGREEMENT
Household Commercial Financial Services, Inc.
Wood Xxxx, Xxxxxxxx 00000
Gentlemen:
Reference is hereby made to that certain Amended and Restated Credit
Agreement dated as of June 11, 2001, as heretofore amended pursuant to that
certain letter agreement (the "Original Forbearance Agreement") (such Credit
Agreement as so amended being hereinafter referred to as the "Credit Agreement")
between the undersigned, Homegold, Inc., a South Carolina corporation (the
"Borrower"), and you (the "Lender"). All capitalized terms used herein without
definition shall have the same meanings herein as such terms have in the Credit
Agreement.
The Borrower has requested that the Lender (i) terminate its Commitment
to make additional Loans under the Credit Agreement but consider, on a
discretionary basis, extending additional Loans thereunder, (ii) extend its
agreement to forbear from accelerating the Loans pursuant to the Original
Forbearance Agreement on account of existing Events of Defaults and (iii) for
the sake of convenience and clarity, amend and restate the Original Forbearance
Agreement in its entirety, and the Lender is willing to do so under the terms
and conditions set forth in this Agreement. Borrower and Lender hereby agree to
amend and restate the Original Forbearance Agreement in its entirety to read as
follows:
1. FORBEARANCE.
Events of Default have occurred and are continuing under Section 8.1(b)
of the Credit Agreement as a result of the Borrower's non-compliance with the
covenants contained in Sections 7.5(a), 7.5(b) and 7.16 of the Credit Agreement
(the "Existing Events of Default").
As a result of the Existing Events of Default, Lender is no longer
obligated to make Loans to Borrower and is also entitled to accelerate payment
of all Loans and to exercise certain other rights and remedies specified in the
Credit Agreement and the other Loan Documents.
As an accommodation to Borrower, while not waiving any Existing Events
of Default, but subject to compliance by Borrower with the terms and conditions
hereinafter set forth, Lender hereby agrees to forbear from exercising its
rights to accelerate the outstanding Loans through the date occurring 30 days
following receipt by Borrower from Lender of a notice of termination of the
forbearance period (the "Forbearance Expiry Date") subject to compliance by the
Borrower with the terms and conditions of the Credit Agreement and this
Forbearance Agreement.
As a result of the Existing Events of Default, Lender hereby terminates
its Commitment to extend additional Loans to the Borrower effective immediately.
Lender may, in its sole and absolute discretion, on a case-by-case basis,
consider extending additional Loans to Borrower which, if made at all, will be
subject to the terms and conditions of the Credit Agreement and this Forbearance
Agreement and such other terms as Lender may from time to time establish. In no
event will such discretionary Loans exceed $15,000,000 at any one time
outstanding. All Loans, whether outstanding as of the date hereof or
constituting discretionary Loans made pursuant hereto shall be due and payable
in full, together with interest and fees owing in connection therewith, on the
Forbearance Expiry Date.
Additionally, Borrower and Lender hereby agree:
a. Borrower agrees to at all times maintain cash collateral in
the amount of not less than $1,500,000 (such amount to be held
in the Remittance Account or otherwise in a manner acceptable
to Lender), it being understood and agreed that Lender may, at
any time, apply such cash collateral in payment of the
Obligations whether or not the Borrower is in compliance with
the terms hereof or of the Loan Documents;
b. Borrower agrees to immediately pay off any Loan(s) if
(i) Any Loan made against a Mortgage Loan that has been
included in the Borrowing Base for more than forty five (45)
days or has otherwise ceased to constitute Eligible Mortgage
Loan. Lender will first use all amounts on deposit in the
Remittance Account in excess of $1,500,000 (unless other cash
collateral in such amount has been acceptably provided to
Lender), and if sufficient funds are not available, require
the Borrower to wire funds to payoff such Loans.
(ii) The Loan is supported by a Mortgage Loan which does
not otherwise constitute an Eligible Mortgage Loan as defined
in the Credit Agreement, including, without limitation, the
failure to provide the instruments and documents required by
clause (xxi) of the definition of such term.
c. Subject to Borrower's compliance of all of the above terms
and conditions, Lender will settle the warehouse line and send
any excess amounts on deposit in the Remittance Account (i.e.
over and above the $1,500,000 cash collateral balance unless
other arrangements for cash collateral are in place) on or
about the 5th business day of each month.
d. Following a complete and ordinary liquidation of the
warehouse line including payment in full of all obligations
owing to Lender, Lender will release its mortgage on the
Greeenville property.
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Notwithstanding anything contained herein to the contrary, in the event any
Event of Default (other than the Existing Events of Default) shall occur or
exist or otherwise shall become known to Lender, whether occurring prior to, on
or after the date hereof, Lender shall be entitled to exercise all or any of its
rights and remedies under the Credit Agreement, the Loan Documents and
applicable law.
This agreement shall not establish a custom or course of dealing and
does not waive, limit or postpone any of Borrower's obligations under the Credit
Agreement, any of the Loan Documents or otherwise, and any discussions (written
or oral) which have occurred or which may hereafter occur are not, and shall not
be deemed to be, a waiver, limitation or postponement of any of Lender's rights
and remedies under the Credit Agreement, any of the Loan Documents or applicable
law, all of which rights and remedies are expressly reserved. This agreement
shall not become effective until the conditions precedent set forth in Section 2
hereof have been satisfied. This agreement shall expire on the Forbearance
Expiry Date at which time all terms and conditions of the Credit Agreement shall
apply without giving effect to the forbearance provided for herein and Lender
shall be entitled to exercise all rights and remedies available to it on account
of any Event of Default, whether existing as of the date hereof, the date of the
Forbearance Agreement or otherwise.
2. CONDITIONS PRECEDENT.
The effectiveness of this Agreement is subject to the satisfaction of
all of the following conditions precedent:
2.1 The Borrower and the Lender shall have executed and delivered
this Agreement.
2.2 The Corporate Guarantors and Xxxxxx X. Xxxxxxxx shall have
consented hereto in the space provided for such purpose below.
2.3 Legal matters incident to the execution and delivery of this
Agreement shall be satisfactory to the Lender and its counsel.
2.4 The Lender shall have received copies (executed or certified,
as may be appropriate) of all legal documents or proceedings taken in connection
with the execution and delivery of this Agreement to the extent the Lender or
its counsel may reasonably request.
3. REPRESENTATIONS.
In order to induce the Lender to execute and deliver this Agreement,
the Borrower hereby represents to the Lender that as of the date hereof, the
representations and warranties set forth in Section 5 of the Credit Agreement
are and shall be and remain true and correct (except that the representations
contained in Section 5.5 shall be deemed to refer to the most recent financial
statements of the Borrower delivered to the Lender) and except for the Existing
Events of Default, the Borrower is in full compliance with all of the terms and
conditions of the Credit Agreement and no Default or Event of Default has
occurred and is continuing under the Credit Agreement or shall result after
giving effect hereof.
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4. MISCELLANEOUS.
4.1 The Borrower and the Corporate Guarantors have heretofore
executed and delivered to the Lender that certain Security Agreement dated as of
May 2, 2000 (the "Security Agreement"). The Borrower hereby, and the Corporate
Guarantors by their consent hereto in the space provided for that purpose
below, each acknowledges and agrees that, notwithstanding the execution and
delivery of this Agreement, the Security Agreement remains in full force and
effect and the rights and remedies of the Lender thereunder, the obligations of
the Borrower and Corporate Guarantors thereunder and the liens and security
interests created and provided for thereunder remain in full force and effect
and shall not be affected, impaired or discharged hereby. Nothing herein
contained shall in any manner affect or impair the priority of the liens and
security interests created and provided for by the Security Agreement as to the
indebtedness which would be secured thereby prior to giving effect to this
Agreement.
4.2 The Credit Agreement shall continue in full force and effect
in accordance with its original terms.
4.3 The Borrower agrees to pay on demand all costs and expenses of
or incurred by the Lender in connection with the negotiation, preparation,
execution and delivery of this Agreement, including the fees and expenses of
counsel for the Lender.
4.4 This Agreement may be executed in any number of counterparts,
and by the different parties on different counterpart signature pages, all of
which taken together shall constitute one and the same agreement. Any of the
parties hereto may execute this Agreement by signing any such counterpart and
each of such counterparts shall for all purposes be deemed to be an original.
This Agreement shall be governed by the internal laws of the State of Illinois.
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Dated as of November 30, 2001.
HOMEGOLD, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Its: President
Accepted and agreed to in Wood Dale, Illinois as of the date and year
last above written.
HOUSEHOLD COMMERCIAL FINANCIAL SERVICES, INC.
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxx
Its: Vice President
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CONSENT
A. CORPORATE GUARANTORS. The undersigned have heretofore executed and
delivered to the Lender (i) a Guaranty dated May 2, 2000 (the "Guaranty") and
(ii) a Security Agreement dated May 2, 2000 (the "Security Agreement"). Each of
the undersigned hereby consents to the Agreement set forth above and confirms
that the Guaranty and the Security Agreement remain in full force and effect in
accordance with the terms thereof. Each of the undersigned further agrees that
the consent of the undersigned to any further modifications to the Forbearance
Agreement or to the Credit Agreement shall not be required as a result of this
consent having been obtained, except to the extent, if any, required by the
Guaranty or Security Agreement.
HOMEGOLD FINANCIAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Its: President
CAROLINA INVESTORS, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxx
Its: Secretary
PREMIER FINANCIAL SERVICES INC.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Its: President
LOAN PROS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Its: President
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EMERGENT BUSINESS CAPITAL ASSET BASED LENDING, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Its: President
XXXXX RIVER VENTURES, LP.
By: HomeGold Financial, Inc.
its Corporate General Partner
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Its: President
EMERGENT SBIC, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Its: President
EMERGENT COMMERCIAL MORTGAGE, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Its: President
EMERGENT BUSINESS CAPITAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Its: President
EMERGENT INSURANCE AGENCY CORP.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Its: President
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EMERGENT MORTGAGE CORP. OF TENNESSEE
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Its: President
HOMEGOLD REALTY, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Its: President
B. INDIVIDUAL GUARANTOR. The undersigned has heretofore executed and
delivered to the Lender a Guaranty dated October 25, 2001 (the "Guaranty"). The
undersigned hereby consents to the Agreement set forth above and confirms that
the Guaranty remains in full force and effect in accordance with the terms
thereof. The undersigned further agrees that at the consent of the undersigned
to any further modifications to the Forbearance Agreement or to the Credit
Agreement shall not be required as a result of this consent having been
obtained, except to the extent, if any, required by the Guaranty.
/s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
XXXXXX X. XXXXXXXX
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