Crusader Bank
Since 1943
July 31, 1997
Xx. Xxxxxxx X.Xxxxxxx
Xx. Xxxxxxx X. Xxxxxxx
Merit Financial Services, Inc.
0000 Xxxxxxxx Xxx.
Suite 101
Wilmington, DE 19806
Dear Gentlemen:
This letter will set forth our agreement with respect to the establishment and
operation of Crusader Mortgage Corporation of Delaware (CMC):
1. CMC will operate as a retail originator of conforming and
non-conforming residential mortgages. You will each own 24.5% of the
stock of CMC and Crusader, or its assignee, will own 51%.
2. In accordance with the development of mutually agreeable underwriting
standards, Xxxxxxxx will agree to originate and fund or broker all
loans underwritten by CMC. Xxxxxxxx will not charge CMC for the
warehousing of the loans, but will retain the interest earned in
connection therewith. CMC may designate whether the loan is to be
retained by Crusader based on the pricing set forth in its current rate
schedule, or whether the loan is to be sold to a third party investor,
subject to Crusader's ability to enter into an agreement with such
investor satisfactory to Crusader. If retained by Xxxxxxxx, Crusader
will pass along any proceeds due CMC at that time. If the loan is to be
sold to an investor, Crusader will pass along any proceeds due CMC upon
receipt of such proceeds. CMC will be responsible for any losses
incurred in connection with the loans.
3. We will initially capitalize CMC in proportion to our capital stock
interests based on the projected operating shortfalls before CMC is
able to consistently generate positive cash flow. Such initial
capitalization is anticipated to total $5,000. We will also enter into
a Shareholders Agreement which, among other things, will set forth our
ongoing responsibility to fund further capital and operating needs of
CMC.
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4. CMC will operate its offices at 0000 Xxxxxxxx Xxxxxx and will be
responsible for its own operating expenses. To the extent CMC requests
Crusader to perform services on its behalf, e.g. payroll, participation
in benefit plans, accounting, Crusader will pass along its actual
direct costs associated therewith.
5. Your compensation will be payable through bi-weekly salaries.
Xxxxxxxx's compensation will be payable in the form of a management
fee. The aggregate compensation to the two of you and the compensation
to Crusader will be paid equally except that during the first 12 months
of operation, you will be entitled to a combined bonus equal to 50% of
the first $10,000 of monthly earnings (net of any prior month
losses).The initial combined level of compensation (excluding the
special first year bonus) will be set at $ 10,000 per month. This
amount may be increased in accordance with the available cash flow of
CMC by mutual agreement of the parties. In general, the intention of
CMC will be to distribute its full earnings absent what is necessary to
fund ongoing operating expenses.
Gentlemen, I believe this properly sets forth the details we discussed regarding
the formation and operation of CMC. We are excited about the opportunity to work
with you to build a successful mortgage origination operation.
Please indicate your acceptance of this agreement by signing in the space
provided below.
Very truly Yours,
/s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
President
:mtp
Accepted and Agreed to:
/s/ Xxxxxxx X. Xxxxxxx 8-21-97 /s/ Xxxxxxx X. Xxxxxxx 8-21-97
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Xxxxxxx X. Xxxxxxx Date Xxxxxxx X. Xxxxxxx Date
