EXHIBIT 10.1
FUNDING COMMITMENT AGREEMENT
This Funding Commitment Agreement (the "Agreement"), dated as of October
__, 2007 (the "Effective Date"), is being made and entered into by and between
Mortgage Assistance Center Corporation, a Florida corporation (hereinafter
referred to as the "Company"), and Bob Mangold, an individual ("Mangold").
FAX/MACC, L.P. and W. C. Payne Investments (collectively, the "Investors") are
also party to this Amendment for the limited purpose of Section 3.2. Each of the
Company, the Investors and Mangold are sometimes referred to in this Agreement
as a "Party," and collectively, as the "Parties."
BACKGROUND:
A. Mangold either directly or through an entity owned or controlled in
whole or in part by him ("Lender") has previously provided to the Company in
excess of $9 million in debt financing for the Company's operations and real
estate portfolio acquisition activities and desires to continue to provide such
debt financing.
B. The Company, due to a variety of circumstances, is in need of short-term
capital to fund its operating activities.
C. Lender is willing to provide the Company with short-term capital for
operations and willing to continue to provide debt and equity financing for the
Company's portfolio acquisition activities, subject to the terms and conditions
set forth in this Agreement.
AGREEMENTS
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows.
ARTICLE I
FUNDING COMMITMENT
1.1 Short Term Financing. In contemplation of this Agreement, but prior to
the Effective Date, Lender loaned the Company an aggregate of $300,000, of which
$100,000 was evidenced by a demand promissory note in the form attached hereto
as Exhibit A, and $200,000 was evidenced by a sixty (60) day promissory note in
the form attached hereto as Exhibit B.
1.2 Debt Financing Commitment. In addition to the short-term financing
contemplated under Section 1.1 above, Mangold shall use his best efforts to
provide or otherwise source to the Company up to $30,000,000 in financing, if
and when requested in writing by the Company, during the period beginning on the
Effective Date and ending 12 months later on the first anniversary of the
Effective Date (the "Term"). Notwithstanding the foregoing, Mangold shall have
no liability to the Company in the event he is unable to provide financing to
the Company, if and when so requested; provided that, until Mangold has
fulfilled his commitment to the Company under this Section 1.2, neither Mangold,
nor any entity that is owned in whole or part or controlled in whole or part by
Mangold shall provide any debt, equity or other financing to any other party (a)
whose primary business is to acquire and/or rehabilitate distressed residential
real estate or loans secured by residential real estate (collectively
"Distressed Properties"), or (b) for the purpose of acquiring, managing or
reselling Distressed Properties.
1.3 Equity Investments. In the event equity Lender provides or otherwise
sources equity to the Company, the parties shall ensure that such equity shall
not be invested so as to create a "security" as defined under the applicable
State and Federal securities laws.
1.4 Compliance with Laws. Lender represents and warrants to the Company
that Lender is not in violation of, and the performance of its services and
provision or sourcing of financing to the Company hereunder will not violate,
any applicable law, decree, order or regulation (including, without limitation,
those relating to any state or federal securities laws), applicable to Lender or
its business. Lender represents and warrants that it is not a party to any
consent decree issued by any governmental agency, authority or body that would
prohibit or prevent the consummation of the transactions contemplated under this
Agreement. Lender agrees to cooperate with the Company and to execute such
further instruments, documents and agreements and to give such further written
assurances, as may be reasonably requested by the Company, including, but not
limited to the delivery of a legal opinion reasonably satisfactory to the
Company's counsel, to better evidence Lender's compliance with this Section 1.4.
ARTICLE II
LOANS AND NOTES
2.1 Promissory Notes. All debt financing provided by Lender shall be in the
form of loans to the Company and will be evidenced by promissory notes in
increments of no less than $500,000 per note with the following maturities and
interest rates (a) a maturity of 24 months with an interest rate of no more than
12% per annum, and (b) a maturity of 36 months with an interest rate of no more
than 14% per annum, in each case in the form attached hereto as Exhibit C (the
"Notes"). If, during the Term, Lender offers to the Company a loan under the
terms and conditions of this Agreement, the Company will accept the loan and
execute appropriate Notes within ten (10) business days of Lender's offer;
provided, however, that in no event shall the Company be obligated to accept one
or more Notes, if and to the extent (i) the Company has provided Lender with
thirty (30) days prior written notice that the Board of Directors of the Company
has determined that the Company is not in need of additional funding at the
particular time set forth in the notice; (ii) the aggregate Notes accepted by
the Company under this Agreement would exceed $30,000,000, (iii) the Board of
Directors of the Company reasonably determines that obligating the Company under
the subject Note could be construed as a violation of its fiduciary duty to the
Company or its shareholders; or (iv) Lender is in material breach of any of its
representations or warranties at the time such Note is offered.
2.2 Interest Rate. Interest on the amounts advanced under the Notes shall
begin to accrue as of the date the subject amounts are advanced and the interest
rate shall be computed at the rate set forth in the applicable Note, for the
actual number of days elapsed and on the basis of a year consisting of 360 days,
unless the maximum legal interest rate would thereby be exceeded, in which
event, to the extent necessary to avoid exceeding such maximum rate, interest
shall be computed on the basis of the actual number of days elapsed in the
applicable calendar year in which it accrued.
2.3 Security Interest. Within twenty (20) business days of Lender providing
debt financing to the Company, the Company shall provide Lender with a security
interest with respect to such financing, in and to one or more of the Company's
real estate loan portfolios having a value (as determined by a broker's price
opinion issued by a third party real estate broker selected by the Company)
equal to at least 120% of the amount of the financing provided, or the Company
shall secure the Note with actual cash equivalent collateral.
2.4 Home Office Payment. The Company will pay all sums becoming due on
Notes for principal and interest to the Lender in cash (by check or wire
transfer to the account(s) designated in writing by such Lender) at the address
specified below for Mangold, or by such other method or at such other address as
the Lender shall have from time to time specified to the Company in writing for
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such purpose, without the presentation or surrender of such Note or the making
of any notation thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment or prepayment in full of
any Note, Lender shall surrender such Note for cancellation, reasonably promptly
after such request, to the Company at its principal executive office.
2.5 Maximum Lawful Rate. In no event, whether by reason of acceleration of
the maturity of the amounts due hereunder or otherwise, shall interest and fees
contracted for, charged, received, paid or agreed to be paid to Lender exceed
the maximum amount permissible under such applicable law. If, from any
circumstance whatsoever, interest and fees would otherwise be payable to the
Lender in excess of the maximum amount permissible under applicable law, the
interest and fees shall be reduced to the maximum amount permitted under
applicable law. If from any circumstance, the Lender shall have received
anything of value deemed interest by applicable law in excess of the maximum
lawful amount, an amount equal to any excess of interest shall be applied to the
reduction of the principal amount of the applicable Notes, as the case may be,
in such manner as may be determined by the Lender, and not to the payment of
fees or interest, or if such excessive interest exceeds the unpaid balance of
the principal amount of the Notes, as the case may be, such excess shall be
refunded to the Company. Further, Lender's obligation to provide the Company
with any financing shall be suspended when, and for so long as, the maximum
interest rate permissible under applicable law is less than twelve percent
(12%).
2.6 Origination Fees. Lender shall be entitled to a cash fee equal to five
percent (5%) of any and all amounts advanced under the Notes or joint venture
equity actually funded to the Company as originated by Lender, with such cash
fee to be due and payable to Lender immediately at funding of the Notes or joint
venture in the form of a certified or cashiers check.
2.7 Modification of Letter Agreement. The Parties agree that the previous
letter agreement granting Mangold equity in the Company in the form of warrants
to purchase common stock as compensation for arranging debt financing is hereby
amended so as to eliminate such warrant compensation, with the understanding
that all other terms and conditions of such previous letter agreement are
ratified and confirmed hereby.
ARTICLE III
CONDITIONS
Simultaneously with, and as a condition to, the execution of this
Agreement:
3.1 FAX/MACC Agreement. The Company shall execute an Amendment and
Agreement (the "Amendment and Agreement") with the Investors, William G. Payne
and Rod Cain Jones providing, among other things, that the Investors shall
receive 267,347,556 shares of common stock of the Company ("Common Stock") in
exchange for (a) $1,000,000 in cash as an equity investment in the Company, and
(b) with the understanding that the Amendment and Agreement shall not affect the
outstanding shares of the Company's Series A Preferred Stock, $.001 par value
per share; however, the Parties agree that any and all warrants for Common Stock
of the Company held by the Parties shall be voided and of no further force and
effect, all in exchange for the consideration as set forth in this Agreement and
in the Amendment and Agreement.
3.2 Board Representation. The Company, Mangold and the Investors each
hereby agree that for so long as the principal balance outstanding under the
Notes is $5,000,000 or more, Mangold and the Investors shall vote all shares of
Common Stock over which Mangold and such Investor have control, in favor of (a)
one nominee for the Company's Board of Directors designated by Mangold, and (b)
two nominees for the Company's Board of Directors designated by the Investors.
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3.3 Board Approval. The Company's Board of Directors shall have approved
this Agreement.
ARTICLE IV
ISSUANCE OF COMMON STOCK; RESTRICTIONS ON TRANSFER
4.1 Shares of Common Stock. As additional consideration for Lender to enter
in to this Agreement, the Company shall:
(a) upon the issuance of shares of Common Stock to the Investors as
provided under the Amendment and Agreement (a copy of which has been provided to
Lender), issue to Lender non-assignable warrants to purchase 37,522,464 shares
of Common Stock (the Initial Shares") for a period of five (5) years at a strike
price per share equal to the closing stock price on the Effective Date per
share; and
(b) issue to Lender additional warrants for 3,752,246 additional
shares of Common Stock (the "Subsequent Shares, and together with the Initial
Shares, the "Shares"), for every $2,000,000 in amounts advanced by Lender to the
Company during the Term, up to a maximum of 56,283,696 Subsequent Shares. The
strike price per share for the additional warrants shall be equal to the closing
stock price on the day prior to the date of issuance of such warrants. Shares of
Common Stock issuable to Lender under this subsection 3.2(b) shall be issued on
a calendar quarterly basis, on twentieth (20th) day of the month following the
end of a calendar quarter, for funds advanced to the Company during such
calendar quarter.
4.2 Restricted Securities. Lender acknowledge that the Shares will not be
registered under the Securities Act of 1933, as amended, and may be resold only
if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, and that the Company is not required
to register the Shares.
4.3 Lender's Representations. Mangold hereby represents and warrants to the
Company (and each Lender will do so again with the issuance of each warrant)
that it is an "accredited investor" within the meaning of Rule 501(a) under the
Securities Act and is acquiring the Shares for investment for its own account,
with no present intention of dividing its participation with others or reselling
or otherwise distributing the same in violation of the Securities Act or any
applicable state securities laws. The Company may place an appropriate legend on
the Shares owned by Lender concerning the restrictions set forth in this Article
IV.
ARTICLE V
COVENANTS
After the Effective Date and for so long as the principal balance
outstanding under all Notes is $5,000,000 or more, unless Mangold shall
otherwise consent in writing:
5.1 Conduct of Business. The Company will carry on and conduct its business
in substantially the same manner and in substantially the same fields of
enterprise as it is presently conducted and do all things necessary to remain
duly incorporated or organized, validly existing and in good standing in its
jurisdiction of incorporation or organization and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted. Without limiting the generality of the foregoing, except as
contemplated under this Agreement or under the Amendment and Agreement, the
Company will not take any action to change the members of its board of directors
(except to the extent such change results from the election of the nominees
designated by Mangold or the Investors as contemplated under Section 3.2 above).
5.2 Insurance. The Company will maintain with financially sound and
reputable insurance companies insurance on all its respective properties whether
real, personal, tangible, intangible, or mixed (collectively "Property"), in
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such amounts and covering such risks as is consistent with sound business
practice.
5.3 Compliance with Laws. The Company will comply, in all material
respects, with all laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject.
5.4 Maintenance of Properties. The Company will do all things necessary to
maintain, preserve, protect and keep its Property in good repair, working order
and condition, and make all necessary and proper repairs, renewals and
replacements so that its business carried on in connection therewith may be
properly conducted at all times.
ARTICLE VI
GENERAL PROVISIONS
6.1 Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, no Lender shall be obligated to extend credit to the
Company in violation of any limitation or prohibition provided by any applicable
statute or regulation.
6.2 Headings. Section headings in this Agreement are for convenience of
reference only, and shall not govern the interpretation of any of the provisions
of this Agreement.
6.3 Entire Agreement. This Agreement and the Exhibits attached hereto
embody the entire agreement and understanding among the Parties and supersede
all prior agreements and understandings among the Parties relating to the
subject matter hereof.
6.4 Amendment. No amendment or modification to this Agreement shall be
effective, unless in writing and signed by all the Parties
6.5 Severability. Any provision in this Agreement that is held to be
inoperative, unenforceable, or invalid in any jurisdiction shall, as to that
jurisdiction, be inoperative, unenforceable, or invalid without affecting the
remaining provisions in that jurisdiction or the operation, enforceability, or
validity of that provision in any other jurisdiction, and to this end the
provisions of this Agreement are declared to be severable.
6.6 Non-liability of Lender. The relationship between the Company on the
one hand and the Lender on the other hand shall be solely that of borrower and
lender. Lender shall not have any fiduciary responsibilities to the Company, nor
shall Company have any fiduciary duties to Lender under this Agreement.
6.7 Confidentiality. Lender agrees to hold any confidential information
which it may receive from the Company pursuant to this Agreement in confidence,
except for disclosure (a) to legal counsel, accountants, and other professional
advisors to such Lender, (b) to regulatory officials, (c) to any person as
required by law, regulation, or legal process, and (d) to any person in
connection with any legal proceeding to which Lender is a party.
6.8 Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including electronic transmission, facsimile
transmission or similar writing) and shall be given to such party at (a) its
address or facsimile number set forth on the signature pages hereof or (b) such
other address or facsimile number as such party may hereafter specify. Each such
notice, request or other communication shall be effective (i) if given by
facsimile transmission, when transmitted to the facsimile number specified in
this Section and confirmation of receipt is received, (ii) if given by mail, 72
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hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid, or (iii) if given by any other means,
when delivered (or, in the case of electronic transmission, received) at the
address specified in this Section. All statements, notices, closing documents,
and requests hereunder shall be furnished to Lender.
6.9 CHOICE OF LAW. THE LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO ITS CHOICE OF LAWS
PROVISIONS.
6.10 VENUE. THE EXCLUSIVE JURISDICTION FOR ANY CLAIM OR CONTROVERSY ARISING
OUT OF OR RELATING TO ANY LOAN DOCUMENTS SHALL BE IN THE STATE AND FEDERAL
COURTS LOCATED IN DALLAS COUNTY, TEXAS AND EACH PARTY HERETO IRREVOCABLY WAIVES
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM.
6.11 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been executed by each
Party.
The Parties have executed this Agreement as of the date first above
written.
MORTGAGE ASSISTANCE CENTER
CORPORATION, a Florida corporation
By: /s/ Ron Johnson
Ron Johnson, President
Address for Notice:
1341 W. Mockingbird Lane, Suite 1200W
Dallas, Texas 75247
Facsimile: 214-670-0001
MANGOLD
By: /s/ Robert Mangold
Robert Mangold, Individually and personally
Address for Notice:
_______________________________________
_______________________________________
Facsimile: _____________________
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For the limited purpose of Section 3.2 above:
W.C PAYNE INVESTMENTS, LLC
By: /s/ W. C, Payne
W. C. Payne, Managing Member
Address for Notice:
_______________________________________
_______________________________________
Facsimile: _____________________
FAX/MACC, L.P.
By: Family Access Exchange II, L.P.
General Partner
By: FAX GenPar, L.L.C.
General Partner
By:/s/ Rod Cain Jones
Rod Cain Jones, President
Address for Notice:
100 Crescent Court
Suite 200
Dallas, Texas 75201
Facsimile: 214-720-2006
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EXHIBIT A
DEMAND NOTE
A-1
EXHIBIT B
SIXTY DAY NOTE
B-1
EXHIBIT C
FORM OF PROMISSIORY NOTE
C-1