HOMEGOLD, INC.
THIRD AMENDMENT TO CREDIT AGREEMENT
AND FORBEARANCE AGREEMENT
Household Commercial Financial Services, Inc.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
Reference is hereby made to that certain Credit Agreement dated as of May 2,
2000 as heretofore amended (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 make certain amendments to the
Credit Agreement and forbear from exercising its rights on account of existing
Events of Defaults and the Lender is willing to do so under the terms and
conditions set forth in this Agreement.
1. AMENDMENTS.
Upon your acceptance hereof in the space provided for that purpose below,
the Credit Agreement shall be and hereby is amended as follows:
1.1 Section 1.1 of the Credit Agreement shall be amended by adding the
following new definitions thereto:
"Corporate Guaranty" shall mean a Guaranty satisfactory to the Lender
from the Corporate Guarantors.
"Corporate Guarantors" shall mean the Parent, the Affiliates of the
Borrower signatories to the Corporate Guaranty and all Subsidiaries of the
Borrower other than special purpose Subsidiaries formed in connection with
loan securitizations.
"▇▇▇▇▇▇▇▇ Guaranty" shall mean a Guaranty satisfactory to the Lender
from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
1.2 The definition of Eligible Mortgage Loan contained in Section 1.1 of the
Credit Agreement shall be amended by replacing the period at the end of clause
(xxii) with a semi-colon and adding the following clause at the end thereof:
(xxiii) New City Fraud Prevention Service shall have performed its
customary services and inspections with respect to such Mortgage Loan.
1.3. Section 1.1 of the Credit Agreement shall be amending the definitions
of "Applicable Advance Rate" , "Closing Agent", "Guaranty" and "Guarantors"
contained therein in their entirety to read as follows:
"Applicable Advance Rate" means, initially, 100% with respect to all
Loans made hereunder prior to October 23, 2000 and 97% with respect to all
Loans made hereunder on and after October 23, 2000, in each case as such
percentages may from time to time be reduced by the Lender in its sole
discretion upon written notice to the Borrower, it being understood and
agreed that such initial Applicable Advance Rate has been determined by the
Lender in part based upon current returns for sales of mortgage loans in the
secondary market and in the event the Lender determines in its sole
discretion that there has been an adverse change in such market it intends
to reduce the Applicable Advance Rate hereunder.
"Closing Agent" means Integrated Real Estate Solutions.
"Guaranty" means collectively, the Corporate Guaranty and the ▇▇▇▇▇▇▇▇
Guaranty and also each of them individually.
"Guarantors" means, collectively, the Corporate Guarantors and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and also each of them individually.
1.4. The definition of "Termination Date" contained in Section 1.1 of the
Credit Agreement shall be amended by deleting "December 31, 2000" appearing
therein and by substituting "January 25, 2001" therefor.
1.5. Section 2.4(b) shall be amended by deleting the second sentence
thereof.
1.6. Section 2.9 of the Credit Agreement shall be deleted in its entirety.
1.7. Section 8.1(f) of the Credit Agreement shall be amended in its entirety
and as so amended shall read as follows:
"(f) either (i) default shall occur under any evidence of Indebtedness
for Borrowed Money issued, assumed or guaranteed by the Borrower or any
Guarantor or under any indenture, agreement or other instrument under which
the same may be issued, and such default shall continued for a period of
time sufficient to permit the acceleration of the maturity of any such
Indebtedness for Borrowed Money (whether or not such maturity is in fact
accelerated) or any such Indebtedness for Borrowed Money shall not be paid
when due (whether by lapse of time, acceleration or otherwise) or (ii)
Borrower or any Guarantor shall fail to pay or perform when due any
repurchase obligation or any other outstanding obligation owing by it to
Household Financial Services, Inc. or any of its Affiliates; or "
2. FORBEARANCE.
Events of Default have occurred and are continuing under Sections 8.1(a) and
8.1(b) of the Credit Agreement as a result of the Borrower's failure to make
certain prepayments required
under Section 2.5(b)(ii) of the Credit Agreement and the non-compliance with the
covenants contained in Sections 7.14, 7.15 and 7.16 of the Credit Agreement. As
a result of such 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.
As an accommodation to Borrower while not waiving any such Events of
Default, but subject to compliance by Borrower with the terms and conditions
hereinafter set forth, Lender agrees to (i) forebear through January 25, 2001
from accelerating the Loans or exercising any rights and remedies to which it is
entitled as a result of the occurrence thereof except as provided herein and
(ii) continue to extend Loans to the Borrower on the terms and conditions set
forth in the Credit Agreement as amended hereby. This forbearance agreement is
conditioned upon compliance by the Borrower with the following:
(a) On or before October 27, 2000, Borrower shall prepay the Loans in a
minimum amount sufficient to reduce the principal amount of Loans made against
all Mortgage Loans to an amount not in excess of the Borrowing Base as then
determined and computed;
(b) On or before October 27, 2000, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall execute and
deliver a Guaranty of Borrower's obligations to Lender satisfactory to the
Lender.
(c) On or before October 27, 2000, Borrower shall have satisfied all
repurchase obligations owing by it to Household Financial Services, Inc.
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 3
hereof have been satisfied. This agreement shall expire on January 25, 2001 at
which time all terms and conditions of the Credit Agreement shall apply without
giving effect to the forebearance 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 or otherwise.
3. CONDITIONS PRECEDENT.
The effectiveness of this Agreement is subject to the satisfaction of all of
the following conditions precedent on or before October 27, 2000:
3.1. The Borrower and the Lender shall have executed and delivered this
Agreement.
3.2. The Corporate Guarantors shall have consented hereto in the space
provided for such purpose below.
3.3 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall have executed and delivered the ▇▇▇▇▇▇▇▇
Guaranty.
3.3. Legal matters incident to the execution and delivery of this Agreement
shall be satisfactory to the Lender and its counsel.
3.4. 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.
4. 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 as set forth in
Section 2 hereof, 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.
5. 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.
5.2. Except as specifically amended herein, the Credit Agreement shall
continue in full force and effect in accordance with its original terms.
Reference to this specific Agreement need not be made in the Credit Agreement or
any other instrument or document executed in connection therewith, or in any
certificate, letter or communication issued or made pursuant to or with respect
to the Credit Agreement, any reference in any of such items to the Credit
Agreement being sufficient to refer to the Credit Agreement as amended hereby.
5.3. 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.
5.4. 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.
5.5 The Borrower hereby directs the Lender to apply all sums on deposit as
of the date hereof in the Remittance Account (as defined in the Security
Agreement) as follows:
(a) first to all Obligations owing to Lender as of the date hereof;
(b) second, to Household Financial Services, Inc. ("HFS") in
satisfaction of all repurchase obligations of Borrower owing to HFS; and
(c) third, with the balance, if any, to the Borrower or, in Lender's
discretion, to be held in the Remittance Account as cash collateral for
future Obligations of the Borrower.
Dated as of October 25, 2000.
HOMEGOLD, INC.
By:________________________________________
Name:______________________________________
Its:_______________________________________
Accepted and agreed to in Wood Dale, Illinois as of the date and year last
above written.
HOUSEHOLD COMMERCIAL FINANCIAL
SERVICES, INC.
By:________________________________________
Name:______________________________________
Its:_______________________________________
CONSENT
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 amendments 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:________________________________________
Name:______________________________________
Its:_______________________________________
CAROLINA INVESTORS, INC.
By:________________________________________
Name:______________________________________
Its:_______________________________________
PREMIER FINANCIAL SERVICES INC.
By:________________________________________
Name:______________________________________
Its:_______________________________________
LOAN PRO$, INC.
By:________________________________________
Name:______________________________________
Its:_______________________________________
EMERGENT BUSINESS CAPITAL ASSET
BASED LENDING, INC.
By:________________________________________
Name:______________________________________
Its:_______________________________________
▇▇▇▇▇ RIVER VENTURES, L.P.
By:________________________________________
Name:______________________________________
Its:_______________________________________
EMERGENT SBIC, INC.
By:________________________________________
Name:______________________________________
Its:_______________________________________
EMERGENT COMMERCIAL MORTGAGE,
INC.
By:________________________________________
Name:______________________________________
Its:_______________________________________
EMERGENT BUSINESS CAPITAL, INC.
By:________________________________________
Name:______________________________________
Its:_______________________________________
EMERGENT INSURANCE AGENCY CORP.
By:________________________________________
Name:______________________________________
Its:_______________________________________
EMERGENT MORTGAGE CORP. OF
TENNESSEE
By:________________________________________
Name:______________________________________
Its:_______________________________________
HOMEGOLD REALTY, INC.
By:________________________________________
Name:______________________________________
Its:_______________________________________