<PAGE>
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the period from _________ to ____________
Commission File Number 000-22681
FINANTRA CAPITAL, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 13-3571419
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(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification Number
150 South Pine Island Road, Suite 500, Plantation, Florida 33324
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(Address of Principal Executive Offices)
(954) 577-9225
---------------------------
(Issuer's Telephone Number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No ___
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
Number of Shares Outstanding
Class on May 13, 1999
----- ----------------------------
Common Stock, par value $.01 per share 6,904,328 shares
Transitional Small Business Disclosure Format Yes ___ No X
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FINANTRA CAPITAL, INC.
INDEX
PART I FINANCIAL INFORMATION PAGE
Item 1 Condensed Consolidated Financial Statements (Unaudited) 3
Condensed Consolidated Balance Sheet at March 31, 1999 3
Condensed Consolidated Statements of Income for the
Three Months ended March 31, 1999 and 1998 5
Condensed Consolidated Statements of Cash Flows for the
Three Months ended March 31, 1999 and 1998 6
Notes to Condensed Consolidated Financial Statements 7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II OTHER INFORMATION 15
Item 6 Exhibits 15
SIGNATURES 16
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FINANTRA CAPITAL, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
(UNAUDITED)
ASSETS
Current assets:
Cash $ 1,241,404
Accounts receivable, net 2,705,660
Finance receivables, net 3,514,860
Subscription receivable 1,032,408
Accrued interest receivable 5,627
Other receivables 14,463
Prepaid expenses 417,960
-----------
Total current assets 8,932,382
-----------
Property and equipment, net 407,082
-----------
Other assets:
Certificate of deposit - restricted 1,475,000
Finance receivable, net 412,000
Due from related parties 525,800
Deposits 33,083
Goodwill, net 3,259,685
Other intangibles, net 31,432
Other 96,514
-----------
Total other assets 5,833,514
-----------
Total assets $15,172,978
===========
See accompanying notes to condensed consolidated financial statements.
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FINANTRA CAPITAL, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S> <C>
Current liabilities:
Accounts payable $ 1,630,446
Accrued expenses 194,890
Recission payable 100,000
Line-of-credit 1,292,354
Current portion of long-term debt 264,762
Obligation under capital lease 6,518
Notes payable - related parties 250,000
Due to factoring clients 747,094
Dividends payable - preferred stock 91,281
-----------
Total current liabilities 4,577,345
-----------
Other liabilities:
Deferred income 12,933
Obligations under capital lease 4,040
Notes payable, net of current portion 67,526
-----------
Total long-term debt 84,499
-----------
Total liabilities 4,661,844
-----------
Minority interest 24,289
Stockholders' equity:
Preferred stock, 5,000,000 shares authorized, 3,458,817 issued:
Series A 10% redeemable convertible preferred stock,
$.01 par value, 2,958,817 shares issued and outstanding
(liquidation value of $2,958,817 plus accumulated dividends) 29,588
Series B convertible preferred stock, $.01 par value, 500,000 shares
authorized, 500,000 shares issued and outstanding 5,000
Common stock, $.01 par value, 10,000,000 shares authorized,
5,515,127 shares issued and outstanding 55,151
Treasury stock, 14,600 shares at cost (34,644)
Additional paid-in capital 14,918,919
Accumulated deficit (4,487,169)
-----------
Total stockholders' equity 10,486,845
-----------
Total liabilities and stockholders' equity $15,172,978
===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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FINANTRA CAPITAL, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
--------------------------
1999 1998
------ -----
<S> <C> <C>
Revenues:
Financial services $ 557,396 $ 568,340
Medical billing 149,964 708,777
Leasing and equipment sales income 872,321 -
Factoring income 577,090 -
Interest income 50,242 -
---------- ----------
Total revenues 2,207,013 1,277,117
---------- ----------
Costs and expenses:
Leasing and equipment cost 878,570 -
Depreciation and amortization 68,249 46,256
Bad debts - -
General and administrative expense 1,615,186 1,196,803
---------- ----------
Total costs and expenses 2,562,005 1,243,059
---------- ----------
Loss from operations (354,992) 34,058
Other (expenses):
Interest expense 83,647 -
Loss on disposal of asset - -
Loss on sale of securities available for sale - -
---------- ----------
Total other expenses 83,647 -
---------- ----------
(Loss) before provision for income taxes and minority interest (438,639) 34,058
---------- ----------
Minority interest in net (loss) of subsidiaries 11,800 -
Net loss $ (426,839) $ 34,058
========== ==========
Net loss applicable to common shareholders $ (495,039) $ (34,142)
========== ==========
Net loss per common share (basic and diluted) $ (.11) $ (.01)
========== ==========
Weighted average number of shares outstanding 4,627,727 3,354,661
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
FINANTRA CAPITAL, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
--------------------------
1999 1998
------ -----
<S> <C> <C>
Cash flows from operating activities:
Net cash (used) provided by operating activities $(1,907,775) $ (267,108)
Cash flows from investing activities:
Cash acquired in acquisitions 102,500 78,584
Net advances (to)/from affiliates - (15,933)
Note receivable - stockholders (292,577) (260,000)
Purchase of equipment (233,450) (9,741)
Decrease in factored accounts receivables
net of reserve payable 829,979
Notes acquired for cash - (1,055,670)
----------- ----------
Net cash used by investing activities 406,452 (1,262,760)
----------- ----------
Cash flows from financing activities:
Repayment of line of credit, net (1,351,217) -
Repayments of long-term debt (46,041) (18,771)
Payments of preferred dividends (68,200) (68,200)
Issuance of common stock 3,236,425 249,718
----------- ----------
Net cash provided by financing activities 1,770,967 162,747
----------- ----------
Net (decrease) increase in cash 269,644 (1,367,121)
Cash - beginning 971,760 2,406,803
----------- ----------
Cash - end $ 1,241,404 $1,039,682
=========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the period:
Interest $ - $ -
=========== ==========
Supplemental noncash investing and financial activities:
Issuance of common stock for acquisition of subsidiaries $ 712,500 $2,631,862
=========== ==========
Issuance of common stock for services $ 41,250 $ -
=========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
FINANTRA CAPITAL, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
NOTE 1 - PRINCIPLES OF CONSOLIDATION
The accompanying financial statements include the accounts of the Company and
its subsidiaries. All significant intercompany accounts and transactions have
been eliminated in consolidation.
NOTE 2 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required for complete financial
statements. In the opinion of management, all adjustments necessary for a fair
presentation of the results for the interim periods presented have been
included.
These results have been determined on the basis of generally accepted accounting
principles and practices applied consistently with those used in the preparation
of the Company's Annual Financial Statement for the year ended December 31,
1998. Operating results for the three months ended March 31, 1999 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999.
It is recommended that the accompanying condensed consolidated financial
statements be read in conjunction with the financial statements and notes
thereto included elsewhere in this filing.
Certain items in the condensed consolidated financial statements for the interim
period ended March 31, 1998, have been reclassified to conform with the current
presentation. These reclassifications had no effect on net income.
NOTE 3 - ACQUISITIONS
The Company, through a wholly owned subsidiary, acquired approximately 80% of
the outstanding capital stock of Titan Mortgage Group, Inc. ("Titan") on March
31, 1999. In consideration, the Company issued 440,000 shares of its common
stock to Titan's stockholders. The remaining capital stock of Titan will be
exchanged for shares of the Company's common stock at annual intervals ending on
March 31, 2002, if certain earning hurdles are met. The maximum number of shares
that could be issued under this agreement over the next three (3) years is
450,000 shares.
The acquisition was accounted for using the purchase method of accounting and
approximately $560,000 of goodwill was recorded which will be amortized over 15
years. The results of operations have been included since the date of
acquisition.
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FINANTRA CAPITAL, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
NOTE 3 - ACQUISITIONS (CONTINUED)
During January 1999, the Company, through its Ameri-Cap Mortgage subsidiary,
acquired from Mr. Maynard Hellman, a director of the Company, 80% of the
outstanding capital stock of Suncoast Title Company, Inc., a Florida title
insurance company ("Suncoast"), for 50,000 share of the Company's common stock.
The Company has agreed, through 2002, to acquire the remaining 20% of the
outstanding capital stock of Suncoast from Mr. Hellman for an aggregate of
50,000 additional shares of the Company's common stock. The acquisition was
accounted for using the purchase method of accounting and approximately $15,000
of goodwill was recorded which will be amortized over 15 years. The results of
operations have been included since the date of acquisition.
NOTE 4 - DIVIDENDS PAYABLE - PREFERRED STOCK
The Company has paid $68,200 of dividends on its preferred stock at March 31,
1998.
NOTE 5 - STOCK OPTION PLAN
On January 9, 1997, the Company established an incentive compensation stock
option plan (the "Plan"). The Plan has 1,500,000 shares of Common Stock reserved
for issuance upon the exercise of options designated as either (i) incentive
stock options ("ISOs") under the Internal Revenue Code of 1986, or (ii)
non-qualified options. ISOs may be granted under the Plan to employees and
officers of the Company. Non-qualified options may be granted to consultants,
directors (whether or not they are employees), employees or officers of the
Company.
Options issued through March 31, 1998 carry exercise prices at the fair market
value on the date of the grant. The options vest over a period of up to five
years following the date of grant and the unexercised portion of the options
expires and ceases to be exercisable on the earlier of the stated exercise
period of the grant or specified date following termination of employment. In
certain circumstances, the exercise of stock options may have an adverse effect
on the market price of the Company's common stock and/or warrants.
The Company has elected to measure compensation cost using the intrinsic value
based method of accounting prescribed in Accounting Principles Board Opinion 25,
"Accounting for Stock Issued to Employees." Compensation cost recognized for the
stock option plan amounted to $0 for the quarters ended March 31, 1999 and 1998.
Disclosures about the fair value of options and pro forma disclosures of the
effect of measuring compensation based on the fair value method of accounting
have not been presented because management believes such values do not have a
material effect.
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<PAGE>
FINANTRA CAPITAL, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
NOTE 5 - STOCK OPTION PLAN (CONTINUED)
Had compensation expense for the stock option plan been determined based on the
fair value of the options at the grant date consistent with the methodology
prescribed under Statement of Financial Standards No. 123, "Accounting for Stock
Based Compensation," the Company's loss would have been increased by $326,376.
The fair value of each option is estimated on the date of grant using the fair
market option pricing model with the assumption:
Risk-free interest rate 5.50%
Expected life (years) 2 - 5 years
Expected volatility n/a
Expected dividends None
Information related to options is summarized below:
WEIGHTED
AVERAGE
NUMBER OF EXERCISE PRICE
OPTIONS PER OPTION
--------- --------------
Outstanding at December 31, 1997 565,000 $ 1.96
Granted 377,500 3.05
Exercised 0 0
Forfeited 0 0
---------- ----------
Outstanding at March 31, 1999 942,500 $ 2.40
========== ==========
Information related to options outstanding at March 31, 1999:
Exercise price range $1.20 - 5.50
Number of options:
Outstanding 942,500
Exercisable 157,000
Weighted average exercise price:
Outstanding $ 2.40
Exercisable $ 1.60
Weighted average remaining contractual life 4 years
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
Finantra Capital, Inc. (f/k/a Medley Credit Acceptance Corp.) (the
"Company") is a specialty finance company engaged, principally, in accounts
receivable financing (factoring), equipment leasing, mortgage banking and
traditional financing business lines. Since the consummation, during late 1997
and early 1998, of the Company's initial public offering of securities (the
"IPO"), the Company's operations have focused primarily on growing an operation
base and establishing a market presence in each of the aforementioned
businesses. The Company's primary strategy for achieving its necessary growth
and market presence has been, among other things, to pursue acquisitions of
existing enterprises which, in the Company's opinion, have management experience
and earnings potential and long-term growth possibilities, and obtaining
institutional lines of credit for each financing business line.
While the Company has only a limited operating history in the accounts
receivable financing, mortgage banking and traditional financing business lines,
the Company has more seasoned experience in the equipment leasing business.
Prior to the consummation of the Company's IPO, the Company's business and
affairs focused on the financing of dry cleaning equipment to small dry cleaning
businesses throughout the eastern United States and refrigeration equipment sold
or leased by an affiliate. The Company has made a business decision to orderly
wind down its dry cleaning and refrigeration equipment financing operations.
In an effort to grow its accounts receivable financing, equipment
leasing, mortgage banking and traditional financing business lines, while
establishing a market presence for the same, the Company, during 1998,
consummated several significant transactions. Principal among these were (i) the
Company's formation of its American Factors Group, Inc. subsidiary ("AFG"), an
entity specializing in accounts receivable financing, (ii) the Company's
acquisition of a majority interest in Americal Investment Management ("AIM"), a
marketer and manager of a variety of financial and insurance related services,
(iii) the Company's acquisition of Medical Billing Service Systems, Inc.
("Medical Billing) and Premier Provider Services, Inc. ("Premier"; Medical
Billing and Premier are sometimes hereinafter collectively referred to as the
"Medical Billing Subsidiaries"), companies engaged, generally, in providing back
office accounting and other financial administrative services principally to the
medical industry, (iv) the Company's acquisition, through its wholly-owned
Ameri-Cap Leasing Corp. subsidiary ("Ameri-Cap"), of a majority interest in MFC
Financial Corp. ("MFC"), an entity engaged, generally, in the equipment leasing
industry and, principally, medical equipment financing, and (v) the Company's
acquisition of approximately 91% of the outstanding capital stock of Ameritrust
Holdings, Inc. ("Ameritrust"), a licensed mortgage lender engaged in both
residential and commercial lending.
In an effort to expand further the Company's mortgage lending
operations, the Company, during the quarter ended March 31, 1999 ("First Quarter
1999"), acquired approximately 80% of the outstanding capital stock of Titan
Mortgage Group, Inc. ("Titan"), a Florida - based originator and processor of
mortgage loans. In consideration for its acquisition of its approximate 80%
interest in Titan, the Company issued 400,000 shares of its common stock, $.01
par value per share (the "Common Stock"), to Titan's then sole stockholder. The
Company has covenanted to use its best efforts to file a registration statement
under the Securities Act of 1933, as amended, with respect to 200,000 of these
shares. The remaining capital stock of Titan not originally acquired by the
Company shall be acquired in exchange for shares of the Company's Common Stock
at annual intervals ending on March 31, 2002, at exchange rates based upon
Titan's financial performance during such period. The maximum number of
additional shares of Common Stock that the
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<PAGE>
Company could issue in consideration for the balance of Titan's outstanding
capital stock is 450,000 shares.
In connection with the Titan acquisition, the Company and Titan's
minority stockholder have agreed that the Company will be paid an annual special
management fee equal to 35% of Titan's pre-tax net profits, if any, for the year
ended December 31, 1998, increasing incrementally to 70% of such pre-tax net
profits, if any, for the year ending December 31, 2002. In addition, the Company
has the option to "put" its ownership interest in Titan back to Titan's other
stockholder in consideration for 200,000 shares of the Company's Common Stock at
any time prior to June 30, 1999 or if Titan incurs a net loss in excess of
$150,000 for calendar year 1999.
The Company has formed wholly-owned subsidiaries to act as holding
companies for certain of its current and future operating entities based upon
business lines. Ameri-Cap Factors Group ("Ameri-Cap Factors") controls AFG,
Ameri-Cap Leasing Corp. ("Ameri-Cap Leasing") controls the equipment leasing
operations, Ameri-Cap Mortgage Group ("Ameri-Cap Mortgage") controls Ameritrust
and Ameri-Cap Finance Group, to the extent the Company elects to enter the
sub-prime automobile finance industry (the "Sub-Prime Auto Business"), will
control the Sub-Prime Auto Business.
RESULTS OF OPERATIONS
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998
For First Quarter 1999, the Company generated revenues of $2,207,013, an
increase of $929,896 from revenues of $1,277,117 for the three months ended
March 31, 1998 ("First Quarter 1998"). This increase in revenues was primarily
the result of the Company's operations of its AFG factoring and ACL equipment
leasing subsidiaries. These two entities did not generate revenue during First
Quarter 1998 and their First Quarter 1999 revenues helped offset the significant
reduction in revenues incurred by the Medical Billing Subsidiaries. The revenues
generated during First Quarter 1999 by the Medical Billing Subsidiaries reflects
the large decrease in customer base being experienced by medical billing
providers generally as a result of the current consolidation and general
economic downturn in the medical billing industry.
During First Quarter 1999, the Company incurred an increase of
$1,318,946 in total costs and expenses over First Quarter 1998 figures,
principally as a result of the Company's commencement of its AFG factoring and
ACL equipment leasing operations and general business expansion, including the
start-up of Ameritrust's mortgage lending business. The Company's mortgage
lending operations anticipate first recording meaningful revenues during the
second quarter of 1999. Principally as a consequence thereof, the Company
recorded a net loss from operations of $354,992 for First Quarter 1999, as
compared to net income from operations of $34,058 for First Quarter 1998. When
combined with the provision for dividends with respect to shares of the
Company's Series A 10% Convertible Preferred Stock and interest expense for
borrowed funds, the Company incurred a net loss applicable to common
shareholders for First Quarter 1999 of $495,039, or approximately $.11 per
share, as compared to a net loss applicable to common shareholders for First
Quarter 1998 of $34,142, or approximately $.01 per share.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1999, the Company had total assets of $15,172,978, as
compared to total assets of $13,618,188 at December 31, 1998. This increase in
total assets is primarily the result of the increased number of equipment leases
and related financial instruments originated or underwritten by the Company
during First Quarter 1999, the receipt by the Company of approximately $2.7
million in net proceeds generated from a private placement of the Company's
securities and the Company's acquisition of Titan. The $3,259,685 of goodwill,
net, recorded on the Company's balance sheet at March 31, 1999 represents the
premium over net equity paid by the Company in connection with its acquisitions
of its operating divisions. The Company anticipates that its future earnings
(assuming its acquired subsidiaries continue to generate earnings) will offset
the amortization associated with the recording of this goodwill.
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At March 31, 1999, the Company had total liabilities of $4,661,844, as
compared to total liabilities of $6,102,015 at December 31, 1998. This decrease
in total liabilities was primarily the result of the Company's financing
internally out of its working capital, rather than through borrowings under its
interest bearing credit facilities, amounts necessary to purchase factored
accounts receivable and originate or underwrite equipment leases and other
financial instruments.
At, March 31, 1999, the Company had total stockholders' equity of
$10,486,845, as compared to total stockholders' equity of $7,499,084 at December
31, 1998. The significant increase in stockholders' equity is attributable
directly to the earnings generated by the Company from operations, values
associated with the Company's acquisition of Titan utilizing solely shares of
the Company's Common Stock and the Company's receipt of approximately $2.7
million in net proceeds generated from a private placement of its securities
during First Quarter 1999.
For the primary purpose of providing the Company's mortgage banking
subsidiaries with the financial capacity to originate and purchase mortgage
loans, the Company (through its Ameri-Cap Mortgage subsidiary) and Suntrust
Bank, during First Quarter 1999, consummated a $10 million revolving mortgage
loan warehouse facility. Interest under this credit facility will accrue and be
payable monthly at the rate, generally, which is 2.25% above the then applicable
London Interbank Offering Rate (LIBOR). The entire unpaid balance under this
facility is due and payable on demand or upon the occurrence of an Event of
Default (as defined in the warehouse facility), whichever first occurs. The
Company has guaranteed all of Ameri-Cap Mortgage's obligations under this credit
facility. Ameri-Cap Mortgage has further granted Suntrust Bank a security
interest in each asset and instrument underlying an advance or mortgage made
under this credit facility.
The Company anticipates, based on its current proposed plans and
assumptions relating to its operations and expansion, that it will be able to
satisfy its currently contemplated cash requirements for approximately the next
12 months from working capital and cash flow. In the event that the Company's
plans change or its assumptions prove to be inaccurate, or working capital and
cash flow prove to be insufficient to fund the Company's operations and
expansion (due to unanticipated expenses, delays, problems or otherwise), the
Company would be required to seek additional funding. Depending upon the
Company's financial strength and the state of the capital markets, the Company
may also determine that it is advisable to raise additional equity capital.
Except as set forth above, the Company has no current arrangements with respect
to, or sources of, any additional capital, and there can be no assurance that
such additional capital will be available to the Company, if needed, on
commercial reasonable terms, or at all. The inability of the Company to obtain
additional capital would have a material adverse effect on the Company and could
cause the Company to be unable to implement its business strategy or proposed
expansion or to otherwise significantly curtail or cease operations.
YEAR 2000 COMPLIANCE
The inability of business processes to continue to function correctly
after the beginning of the Year 2000 could have serious adverse effects on
companies and entities throughout the world. In order to minimize the
possibility that the Company will suffer any adverse effects resulting from
system failures on January 1, 2000, the Company, over the last 18 months, has
purchased new software and hardware systems for itself and its subsidiaries.
These new systems all come with manufacturers' representations and warranties
concerning Year 2000 compliance. No assurance can be given, however, that the
Company's software and hardware systems will not fail after the beginning of the
Year 2000. In such event, the Company will be forced to expend such amounts of
its working capital as may be necessary to correct its software and hardware
systems and implement contingency plans. The Company continues to attempt to
assess the Year 2000 compliance and readiness of its lenders and material
customers. Such attempts include written inquiries as to their Year 2000
certification of compliance.
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<PAGE>
PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
During First Quarter 1999, the Company consummated a private
placement of 150 units (the "Units") which raised net proceeds to the Company
(after giving effect to the payment of all offering commissions and expenses) of
approximately $2,773,125. Each Unit was comprised of 10,000 shares of the
Company's Common Stock and 10,000 warrants (the "Private Placement Warrants").
Each Private Placement Warrant entitles the holder to purchase one shares of
Common Stock for $3.25 at any time through November 9, 2001. The Private
Placement Warrants are redeemable by the Company upon notice of not less than 30
days at a price of $0.25 per Private Placement Warrant, provided that the
closing bid quotation for shares of the Company's Common Stock on all 20 of the
trading days ending on the third day prior to the day on which the Company gives
notice of redemption has been at least 150% of the exercise price of the Private
Placement Warrants (currently $4.875, subject to adjustment). The Company
utilized the net proceeds from this private placement to, among other things,
expand Ameri-Cap Leasing's marketing base, provide working capital for Ameri-Cap
Factors' operations, augment capital committed to Ameri-Cap Mortgage's
operations and fund, generally, the Company's business and operations.
Following the close of First Quarter 1999, the Company consummated an
"offshore offering" in accordance with the procedures enumerated in Regulation S
promulgated order the Securities Act of 1933, as amended (the "Reg S Offering").
Pursuant to the Reg S Offering, the Company issued and sold to 13 investors, 63
Units identical to the Units described in the aforementioned private placement.
The Company also issued five Units as compensation to those persons abroad who
assisted in consummating the Reg S Offering. Net proceeds to the Company from
the Reg S Offering were $1,338,750, and such proceeds were applied substantially
in the same manner as the net proceeds from the aforementioned private
placement.
ITEM 6. EXHIBITS
No. Description
--- -----------
10.1 Stock Exchange Agreement, dated March 31, 1999, among Ameri-Cap
Mortgage, the Company, Bristol Investment Group L.L.C. and Titan
Mortgage Group, Inc.
10.2 Mortgage Loan Warehousing and Security Agreement, dated March 26,
1999, among Suntrust Bank, Miami, National Association, Ameri-Cap
Mortgage, Ameri-Cap Lending Corp. and Ameri-Cap Mortgage
Services, Inc.
27 Financial Data Schedule
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<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this Report to be signed on its behalf of the undersigned, thereunto duly
authorized.
FINANTRA CAPITAL, INC.
Dated: May 14, 1999 By: /s/ Robert D. Press
----------------------------------------------
Robert D. Press, Chairman of the Board,
President, Chief Executive Officer and
Chief Financial Officer
(Principal Executive and Financial Officer)
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<PAGE>
EXHIBIT INDEX
No. Description
--- -----------
10.1 Stock Exchange Agreement, dated March 31, 1999, among Ameri-Cap
Mortgage, the Company, Bristol Investment Group L.L.C. and
Titan Mortgage Group, Inc.
10.2 Mortgage Loan Warehousing and Security Agreement, dated
March 26, 1999, among Suntrust Bank, Miami, National
Association, Amer-Cap Mortgage, Ameri- Cap Mortgage Lending
Corp. and Ameri-Cap Mortgage Services, Inc.
27 Financial Data Schedule
<PAGE>
Exhibit 10.1
STOCK EXCHANGE AGREEMENT
This Stock Exchange Agreement dated this 31st day of March, 1999, is made
and entered into by and between AMERI-CAP MORTGAGE GROUP, INC., a Florida
corporation ("Ameri-Cap"), FINANTRA CAPITAL, INC., a Delaware corporation
("Finantra"), BRISTOL INVESTMENT GROUP L.L.C., a Florida limited liability
company ("Bristol") and TITAN MORTGAGE GROUP, INC., a Florida corporation
("Titan").
W I T N E S S E T H :
WHEREAS, Titan is a corporation organized and existing under the laws of
the state of Florida and is capitalized with one million shares of common stock
having a par value of $.01 per share, and
WHEREAS, Titan as of the date of executing this agreement has a net
tangible net worth in the sum of $100,000.00 as represented on its Statement of
Financial Condition attached hereto as Exhibit "A", and
WHEREAS, Bristol has agreed to invest up to an additional $50,000.00 in
capital as may be needed or required by Titan in the future for working capital,
and
WHEREAS, Titan will be engaged in the origination and processing of
mortgage loans in furtherance of its Branch Office Agreement to be executed with
Ameri-Cap Mortgage Group, Inc., a copy of said agreement being attached hereto
and made a part hereof as Exhibit "B", and
WHEREAS, Bristol is the owner of 100% of the authorized, issued and
outstanding common shares of Titan, and
WHEREAS, Ameri-Cap is desirous of acquiring on the closing date 80% of
the authorized, issued and outstanding common shares of Titan (the "Shares")
upon the terms and
<PAGE>
conditions set forth in this agreement together with the right to acquire the
balance of Bristol's common shares of Titan in the future, and
WHEREAS, the parties desire to document their representations,
warranties, covenants, agreements and conditions in a written instrument.
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained and for such other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties agree as follows:
1. RECITALS: The above and foregoing recitals are true and correct and
are incorporated herein.
2. EXCHANGE OF SHARES: Finantra shall exchange, transfer and convey to
Bristol 400,000 shares of Finantra common stock in exchange for 800,000 shares
of the authorized, issued and outstanding common shares of Titan on the closing
date. Finantra agrees to use its best efforts to file a registration statement
to register 209,000 shares of the Finantra exchange shares as soon as
practicable but no later than 45 days from the date hereof.
3. FINANTRA'S ACQUISITION OF BALANCE OF TITAN SHARES: The balance of
Bristol's shares in Titan not conveyed on the closing date shall be acquired by
Finantra annually commencing one year from the closing date and on the same day
each year ("Exchange Date") thereafter over the next three (3) years by Bristol
exchanging 5% of the authorized, issued and outstanding common shares of Titan
for an amount of Finantra's shares equal to the prorate after tax net profit of
Titan during the previous calendar year based upon Bristol's percentage of
common stock being exchanged multiplied by 15 and divided by the fair market
value of Finantra's common shares as determined by the average closing share
price for
- 2 -
<PAGE>
the 20 previous trading days prior to the exchange date. For example, if the net
profit after taxes were one million dollars and the percentage of common stock
being exchanged is 5%; 5% produces $50,000.00 which times 15 equals $750,000.00.
If the stock price of Finantra were $5.00 per share, then Bristol would be
entitled to 150,000 shares in exchange for the 5% of its original amount of
common shares being exchanged. Expressed as a fraction this calculation would
appear as follows:
<TABLE>
<CAPTION>
<S> <C>
Net profit after taxes x percentage of common stock being exchanged x 15 = Number of Exchanged Shares
------------------------------------------------------------------------
Average Share Sales Price
</TABLE>
In the event the common shares of Finantra are not publicly traded on the
exchange date and the Branch Office Agreement is still in full force and effect,
Bristol shall be entitle to 150,000 common shares of Finantra for the common
shares of Titan being exchanged on the Exchange Date. Notwithstanding the
foregoing formula, the maximum number of shares that can be exchanged in any one
year shall not exceed 150,000 common shares of Finantra.
4. CLOSING DATE: The closing date of this agreement shall take place on
or before March_, 1999 or at such other time as shall be set forth in a writing
signed by the parties hereto.
5. REPRESENTATIONS AND WARRANTIES OF BRISTOL:
5.1 Titan is a corporation organized and existing under the laws
of the state of Florida.
5.2 Bristol has the power to enter into and carry out its
obligations under this agreement.
5.3 The shares being exchanged in Titan are fully paid and
non-assessable.
5.4 The aggregate number of common shares that Titan is authorized
to have
- 3 -
<PAGE>
outstanding as of the date hereof is one million shares of common stock having a
par value of $.01 per share. Titan has no other class of common shares
authorized nor are there any shares of preferred stock authorized.
5.5 Bristol is and will be on the closing date the sole owner of
all of the authorized, issued and outstanding shares of common stock of Titan,
free and clear of any and all liens and encumbrances.
5.6 As of the date of executing this agreement as well as on the
date of closing, Titan shall have no debts, liabilities or obligations which are
not reflected on the Statement of Condition attached hereto as Exhibit "A" or as
otherwise set forth on Exhibit "C" attached hereto.
5.7 Titan is not a party to any long term contract or commitment
except for the Branch Office Agreement attached as Exhibit "B" and such other
agreements as may be itemized on Exhibit "D" attached hereto.
5.8 Bristol represents that there are no liabilities, including
but not limited to liabilities for federal, state and local taxes, penalties,
assessments, lawsuits or claims against Titan or Bristol which in any way could
effect the assets of Titan or the fulfillment of this agreement by Bristol.
6. REPRESENTATIONS AND WARRANTIES OF FINANTRA AND/OR AMERI-CAP: Finantra
and/or Ameri-Cap represent and warrant to Bristol as follows:
6.1 Finantra is a duly organized and existing corporation under
the laws of the state of Delaware and is authorized to conduct business in the
state of Florida.
- 4 -
<PAGE>
6.2 Finantra has the power and authority to enter into this
agreement and the execution, delivery and performance of this agreement has been
duly approved or will be duly approved by all requisite corporate actions by the
closing date.
6.3 Finantra is a publicly traded company, whose registered shares
trade in the over-the-counter market.
6.4 The Finantra shares being exchanged have not been registered
under the Securities Act of 1933, as amended (the "Act") for resale and may not
be offered or sold except pursuant to an effective registration statement under
the Act or to the extent applicable, Rule 144 under the Act or such other
exemptions from registration as may be given in an opinion of counsel acceptable
to counsel for Finantra and the terms and conditions contained in this
agreement.
6.5 Finantra is not subject to any order, judgment, decree,
stipulation or other agreements with any governmental body or agency unless
specifically set forth in this agreement.
6.6 Finantra, Ameri-Cap or any affiliate agrees that during the
term of this agreement and for a period of six (6) months following the
termination of this agreement, they will not hire or employ any person who was
employed by Titan during the term of this agreement without the written consent
of Titan.
6.7 Provided Titan complies with the terms and conditions of the
Branch Office Agreement and follows the rules and regulations of all governing
organizations having jurisdiction over the mortgage lending industry, Finantra
and Ameri-Cap will not prohibit the growth of Titan's business unless the growth
involves business which is of a type that is
- 5 -
<PAGE>
unacceptable to Ameri-Cap.
7. RESTRICTION OF TRANSFER OF SHARES: Bristol agrees that it will not
sell, transfer or otherwise dispose of its remaining shares in Titan so that
said shares will always be available to exchange as described in paragraph 3
above.
7.1 Bristol, for itself, its successors and assigns with respect
to the Finantra shares being exchanged agrees that it shall not sell. transfer
or otherwise dispose of, directly or indirectly, during any given three month
period, shares of Finantra's common stock in an amount greater than the average
weekly reported volume of trading in such common stock on all national security
exchanges and/or reported through the automatic quotation system of a registered
securities association during the four calendar weeks preceding the sale of the
common stock in question. In the event Bristol seeks to sell more than its
allotted shares set forth herein, Bristol shall give Finantra prior notice and
the opportunity to purchase such shares at a price equal to the value of the
consideration offered by a perspective transferee or the bid share price on the
day of transfer, whichever is lower. Upon receipt of any such notice, Finantra
shall have twenty-four (24) hours to exercise its first refusal right and three
(3) days thereafter to close on the purchase. Failure of Finantra to exercise
its right of first refusal within the time frame set forth herein shall
authorize the holder to sell the shares offered and Finantra's right of first
refusal as to the shares contained in the notice shall expire and be of no
further force and effect.
8. PIGGYBACK REGISTRATION: If at any time following the execution of this
agreement Finantra proposes to register any of its common shares under the Act,
it will give written notice by registered mail at lease 30 days prior to the
filing of each registration
- 6 -
<PAGE>
statement so that the holder of any Finantra shares obtained pursuant to this
agreement of its intention to do so. If the holder of any such Finantra shares
within 20 days after receipt of such notice desires to include any of its shares
in the proposed registration statement, it shall so notify Finantra in writing
and be given the opportunity to have the shares of Finantra registered.
Notwithstanding the foregoing, in the event the underwriter involved in the
registration limits the number of shares subject to piggyback rights being
registered then the holders of the shares described herein shall only be
entitled to register shares prorate with all other holders desiring to exercise
their piggyback rights. Furthermore, the maximum amount of shares from the
initial 400,000 share exchange which are subject to piggyback rights shall be
200,000 shares.
9. MANAGEMENT AGREEMENT: Simultaneously with the execution of this
agreement Titan shall enter into a Management Agreement with Bristol (the
"Manager") for the day to day management of Titan's business. The Management
Agreement shall contain such terms and conditions as are mutually acceptable to
Finantra, Titan and Bristol.
10. CONDITIONS PRECEDENT TO CLOSING: The obligations to close the
transaction contemplated by this agreement is subject to the following
conditions:
10.1. The representations and warranties of the parties contained
in this agreement are true and correct in all material respects on the closing
date.
10.2 A Branch Office Agreement with Ameri-Cap Mortgage Group, Inc.
has been entered into by Titan.
10.3 A Management Agreement between Titan and Bristol or its
assigns has been executed.
10.4 Titan has a minimum tangible net worth of $100,000.00 on the
closing
- 7 -
<PAGE>
date.
11. DISTRIBUTION OF PROFITS: Notwithstanding the ownership percentages of
the common stock of Titan, Ameri-Cap and Bristol agree that they shall be paid
special management fees consisting of a percentage of the pre-tax net profit
earned by Titan shall be distributed follows:
11.1 An amount equal to 30% shall be paid to the Manager described
in paragraph 9 above monthly during the calendar year, within fifteen days
following the end of the previous month. An estimated after tax profit shall be
calculated for disbursement purposes with a final annual accounting performed
not later than March 31st of each year.
11.2 The balance of the management fees as calculated above shall
be distributed annually on or before March 31st as follows:
YEAR AMERI-CAP BRISTOL
---- --------- -------
1999 35% 35%
2000 43.75% 26.25%
2001 52.50% 17.50%
2002 61.25% 8.75%
2003 70.00 -0-
12. TERMINATION: This agreement may be terminated upon the written notice
by either party as follows:
12.1 The failure to close this transaction on or before the
closing date unless extended by a written instrument executed by the parties
hereto.
12.2 A breach of the representations and warranties of either
party not cured by the closing date or extended closing date, if applicable.
12.3 The failure of any conditions precedent to closing not being
satisfied.
- 8 -
<PAGE>
13. OPTION OF FINANTRA TO REACQUIRE SHARES: Finantra shall have the
option upon written notice to Bristol to terminate this agreement and to
reacquire 200,000 of the unregistered Finantra common shares exchanged pursuant
to paragraph 2 above by returning to Bristol all the shares held in its name of
Titan upon the happening of any one of the following events:
13.1 Upon written notice to that effect at any time within 90 days
from the closing date.
13.2 In the event Titan has a net loss in excess of $ 150,000.00
during the calendar year 1999 by given written notice on or before 12 months
from the closing date.
13.3 In the event a demand is made by Finantra a closing on the
exchange will be held within 15 days following Bristol's receipt of the demand.
13.4 The 200,000 registered common shares of Finantra retained by
Bristol shall be subject to the restrictions set forth in Section 7.1 above
notwithstanding the termination of this agreement.
13.5 Upon the termination of this agreement as a result of the
happening of any of the events described in 13.1 or 13.2 above, Ameri-Cap shall
have the right to terminate the Branch Office Agreement upon the giving of
written notice.
14. NOTICES: Except as otherwise stated, all notices, requests, demands
and other communications required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally,
given by prepaid first class mail; registered or certified or by duly recognized
overnight carrier as follows:
To the Finantra: Attention: Robert D. Press
- 9 -
<PAGE>
Finantra Capital, Inc.
150 S. Pine Island Road, Suite 500
Plantation, FL 33324
With copies to: Maynard J. Hellman, Esq.
Finantra Capital, Inc.
150 S. Pine Island Road, Suite 500
Plantation, FL 33324
To Ameri-Cap: Ameri-Cap Mortgage Group, Inc.
Attention: Craig Bavaro
1926 10'h Avenue North, Suite 304
Lake Worth. FL 33461
To Bristol: Ashworth Transportation, Inc.
6700 N. Andrews Avenue, Suite 401
Fort Lauderdale, FL 33309
with copies to: Oceancrest Merchant Group, Inc.
6700 N. Andrews Avenue, Suite 401
Fort Lauderdale, FL 33309
To Titan: Richard Jump
6700 N. Andrews Avenue, Suite 401
Fort Lauderdale, FL 33309
15. MISCELLANEOUS PROVISIONS:
15.1 Assignment: No party may assign its obligations or rights
under this agreement without the written consent of the other parties.
15.2 Modification: There are no other agreements, promises or
undertakings between the parties except as specifically set forth herein. No
alteration, change, modification or amendment to this agreement shall be made
except in writing and signed by the parties hereto:
15.3 Severability: If any provision or paragraph of this agreement
is deemed
- 10 -
<PAGE>
to be unlawful or unenforceable by any court, administrative agency or statute,
law or ordinance, the said provision or paragraph shall be severed from this
agreement without affecting the enforceability of the remainder of this
agreement. The parties shall make a good faith effort to redraft the severed
provision or paragraph consistent with the party's original intention but in
such a way as to be lawful and enforceable.
15.4 Binding Effect: This agreement supersedes and cancels any and
all other agreements referring to the subject matter herein. This agreement
shall be binding upon and inure to the benefit of the respective parties, their
successors and assigns, if applicable as well as to the heirs and legal
representatives of the parties hereto, if applicable.
15.5 Construction: This agreement shall be construed and enforced
under the laws of the state of Florida.
15.6 Counterparts: This agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which
counterparts collectively shall constitute one instrument representing the
agreement between the parties.
15.7 Captions and Headings: The captions and headings of each
section or subsection in this agreement are for convenience of reference only
and shall in no manner or way whatsoever effect the interpretation or meaning of
such section or subsection.
15.8 Exhibits: The exhibits attached hereto together with all
documents incorporated by reference herein form an integral part of this
agreement and are hereby incorporated herein wherever reference is made to them
to the same extent as if they were set out in full at the point at which such
reference is made.
15.9 Attorney's Fees: The prevailing party in any litigation
arising out of the
- 11 -
<PAGE>
terms of this agreement shall be entitled to reimbursement of reasonable
attorney's fees and costs at the trial and appellate court level.
[SIGNATURES ON FOLLOWING PAGE.]
- 12 -
<PAGE>
IN WITNESS WHEREOF, the Parties have hereunto set their hands and seals
the date above written.
FINANTRA CAPITAL. INC.
By:
--------------------------------------
ROBERT D. PRESS, President
AMERI-CAP MORTGAGE GROUP, INC.
By:
--------------------------------------
MAYNARD J. HELLMAN
Vice Persident
BRISTOL INVESTMENT GROUP, LLC
By: ASHWORTH TRANSPORTATTON
Inc. , Member
By:
--------------------------------------
ROBERT DENTON, President
TITAN MORTGAGE GROUP, INC.
By: ______________________________
RICHARD JUMP
- 13 -
<PAGE>
Exhibit 10.2
MORTGAGE LOAN WAREHOUSING AND SECURITY AGREEMENT
THIS AGREEMENT, made this 21st day of March, 1999 by and between
SUNTRUST BANK, MIAMI, NATIONAL ASSOCIATION (hereinafter sometimes referred to as
Lender or Bank) and AMERI-CAP MORTGAGE GROUP, INC., a Florida Corporation;
AMERI-CAP MORTGAGE LENDING CORP., a Florida corporation; and AMERI-CAP MORTGAGE
SERVICES, INC., a Florida corporation (collectively hereinafter sometimes
referred to as Borrower).
WHEREAS, Borrower is in the business of originating, purchasing, and
owning loans secured by a first mortgage encumbering single-family residences;
WHEREAS, Lender is in the business of lending money;
WHEREAS, Borrower desires to borrow money from Lender secured by
Mortgage Loans owned by Borrower;
WHEREAS, Lender, on terms and conditions more particularly hereinafter
set forth, is willing to lend money to Borrower secured by Mortgage Loans.
NOW, THEREFORE, in consideration of the premises, the payments and
promises hereinafter set forth, the financial accommodations of Lender, and Ten
and No/100 Dollars ($10.00) and other good and valuable considerations, the
receipt, sufficiency, and adequacy of which are hereby acknowledged, the parties
hereto agree as follows:
1. Incorporation of Preamble. The Preamble to this Agreement and each
recitation therein are hereby made a part of this Agreement.
2. Further Assurances. Borrower agrees, without expense to Lender, to
execute, acknowledge, deliver, file, record and publish such further instruments
and documents and to do such other acts and things as may be necessary and
proper to carry out the intent(s) and purpose(s) of this Agreement, such to
include without limitation opinions of counsel (in form and substance
satisfactory to Lender) regarding Borrowers powers to act hereunder, the
Mortgage Files, or any aspect of the Loan, the note evidencing same and the
agreement securing same.
3. Definitions. The following words and terms shall have the meanings
set forth in this paragraph:
Adjustable Rate Mortgage: A Mortgage Loan that provides for periodic
adjustments to the interest rate.
Advance: A loan made by the Bank to the Borrower pursuant
to this agreement.
<PAGE>
Agreement: This agreement as executed as of the date first
above written or, if amended or supplemented as
herein provided, as so amended or supplemented.
Business Day: Any day other than Saturday, Sunday, a legal
holiday in Miami-Dade County, Florida or a day on
which banking institutions in Miami-Dade County,
Florida are authorized or obligated by law or
executive order to be closed.
Category I Collateral: A sub-category of conventional Mortgage Loan,
fully conforming to FNMA/FHLMC guidelines, or
FHA/VA insured/guaranteed, which is subject to a
Purchase Commitment and which is secured by a
first mortgage.
Category II Collateral: A sub-category of conventional Mortgage Loan,
fully conforming to FNMA/FHLMC guidelines, which
is subject to a Purchase Commitment, and which is
secured by a second mortgage. First and second
mortgage amounts combined not to exceed 80% LTV.
Category III Collateral: A sub-category of conventional Mortgage Loan fully
conforming to FNMA/FHLMC guidelines except for the
amount thereof, which amount does not exceed
$1,000,000.00, which is subject to a Purchase
Commitment and which has a LTV ratio not exceeding
the applicable percentage set forth in the
following schedule:
MORTGAGE LOAN AMOUNT MAXIMUM LTV RATIO
-------------------- -----------------
Up to $300,000 95%
$300,000 up to $750,000 80%
$750,000 up to $1,000,000 70%
Collateral Documents: The documents evidencing the mortgage collateral
including without limitation the original mortgage
notes endorsed in blank, the mortgages, assignment
of mortgages and such other documents that are
required pursuant to the terms of this Agreement
Escrow Payments: The amounts constituting ground rents, taxes,
assessments, water rates, mortgage insurance
premiums, fire and hazard insurance premiums and
other payments required to be escrowed by the
Mortgagor with the mortgagee pursuant to any
Mortgage Loan and this Agreement.
FHA: Federal Housing Administration.
FHLBB: Federal Home Loan Bank Board.
FHLMC: Federal Home Loan Mortgage Corporation.
Fidelity Bond: A fidelity bond to be obtained by the Borrower
pursuant to paragraph 8.
Fixed Rate Mortgage: A Mortgage Loan that provides for periodic equal
installments of principal and interest with no
change in the initial interest rate throughout the
term of the Mortgage Loan and complies with FHLBB
BB regulatory requirements for such loans.
FNMA: Federal National Mortgage Association.
- 2 -
<PAGE>
GNMA: Government National Mortgage Association.
Guarantor: Finantra Capital Inc. a Delaware corporation.
Liquidation Proceeds: Funds received in connection with liquidation of
defaulted Mortgage Loans trustees sale foreclosure
sale or otherwise or the sale of the Mortgaged
Property if the Mortgaged Property is acquired in
satisfaction of the Mortgage.
LTV: Loan-to-Value.
Market Value: The weighted average price (i) for conventional
Mortgage Loans based on either the FNMAs or FHLMCs
most recent thirty (30)- day commitment price and
(ii) for FHA insured and VA guaranteed Mortgage
Loans based on 90 day delivery price for GNMA
securities published daily in the Wall Street
Journal. In the event of disagreement regarding
Market Value the Lender shall determine Market
Value in its sole discretion provided such
determination is reasonable with regard to
established GNMA, FNMA and/or FHLMC MC secondary
market prices.
Monthly Payments: The Scheduled payment of principal and. interest
on a Mortgage Loan which is due on various days of
each month
Mortgage: A Mortgage or Deed of Trust or Trust Indenture
encumbering the Mortgaged Property for the purpose
of securing payment of the Mortgage Loan.
Mortgage File: All the original documents pertaining to a
particular Mortgage Loan, required by this
Agreement, such to be stored in one place, in one
file folder, together, under one indemnification
number.
Mortgage Interest Rate: The annual rate of interest borne on a Mortgage
Note.
Mortgage Loan(s): Any loan pledged, or to be pledged, to Lender by
Borrower pursuant to Lender terms of this
Agreement.
Mortgage Note: Note evidencing a Mortgage Loan or the writing
evidence of the terms of the loan owned by
Borrower.
Mortgaged Property: The real estate used as collateral to secure
payment of the Mortgage Loan.
Mortgagor: The person or persons executing the Mortgage Note,
the Mortgage and all related documents.
Second Home: A single family residence owned by Mortgagor for
use as a dwelling unit for retirement, vacation,
or home-away-from- home purposes.
Single Family Residence: A free-standing structure for occupancy by one,
two, three, or four families, a condominium unit
for occupancy by a single family, and a
townhouse unit for occupancy by a single family
excluding mobile homes and manufactured homes.
Unrestricted Liquid Assets: Cash or cash equivalents [U.S. bank accounts,
U.S. bank certificates of deposits U.S. Treasury
securities or repurchase agreements backed by
same, U.S. Agency securities, U.S. corporate
commercial (rated Al/P1 or better), U.S. money
market funds or other instruments acceptable to
Lender]
- 3 -
<PAGE>
owned by Finantra Capital, Inc. at the parent
company level (not in the name of subsidiaries
Finantra Capital, Inc.) and that are not
restricted or encumbered in any way.
VA: Veterans Administration.
Secondary Market Purchaser The person obligated to purchase Mortgage Loans
pursuant to a Purchase Commitment. Secondary
Market Purchasers must be acceptable to Lender
in its sole and absolute discretion.
4. The Loan. Lender hereby agrees to lend to Borrower and Borrower
hereby agrees to borrow from Lender up to the sum of TEN MILLION AND NO/100
DOLLARS ($10,000,000.00) said loan to be hereinafter sometimes referred to as
the Loan. from time to time, the Loan may be repaid and then re-borrowed, repaid
and re-borrowed again, in whole or in part, and so on until the Maturity Date,
at which time, all unpaid principal, together with accrued and unpaid interest,
shall be due and payable. Borrower shall not be entitled to any advances
hereunder from and after the date of an occurrence of an Event of Default. The
Loan will be evidenced by a promissory note (sometimes hereinafter referred to
as the "Note") in form acceptable to Lender, the form of which is attached
hereto as Exhibit A.
5. Interest. The Loan shall bear interest at an annual rate equal to the
following annual rate (sometimes hereinafter referred to as the "Interest
Rate"):
(a) The Loan shall bear interest (computed on the basis of the
actual number of days elapsed and a year of 360 days) on the aggregate unpaid
principal balance of the Loan outstanding from time to time, from and including
the date of advance until such principal balance is repaid in full, at a
fluctuating annual rate that (i) prior to the relevant Maturity Date, equal to
the one month London Interbank Offering Rate (1.11 OR) plus two and one quarter
percent (2.25%) per annum, adjusted on the first day of each month, and (ii)
from and after the occurrence of an Event of Default or the relevant Maturity
Date shall be the Default Rate. Interest on the Loan shall be payable in arrears
(i) prior to the relevant Maturity Date, on the first Business Day of each
calendar month; (ii) in full on the relevant Maturity Date; and (iii) on demand
after the relevant Maturity Date.
(b) The amount of interest owing each month shall- be calculated
on a daily moving basis upon the principal balance of the Loan from time to time
outstanding. Interest shall he charged to an account designated by Borrower as
of the first day of each month in an amount equal to the interest due on the
Loan for the preceding month. The interest rate charged shall in no event exceed
the maximum rate of interest allowed by law.
- 4 -
<PAGE>
Should clear funds in the account be insufficient to cover interest due, the
Borrower will be so notified and will remit any shortfall by check within five
(5) days of Lenders having given notice of the deficiency.
6. Maturity Date/Repayment Dates.
(a) The entire unpaid principal amount of the Loan, together with
accrued and unpaid interest, shall be due and payable on demand or up on the
occurrence of an Event of Default, whichever first occurs. The date on which the
entire unpaid principal and accrued and unpaid interest is due and payable shall
herein be referred to, from time to time, as the Maturity Date. From and after
notice of demand for full payment, Borrower shall not be entitled to any advance
hereunder.
(b) All proceeds realized with respect to the sale of Mortgage
Loans to Secondary market Purchasers shall be delivered directly by the
Secondary Market Purchaser and applied to the Loan.
(c) If the Lender demands payment in full of the Loan at a time
when the Loan is not in default, Borrower, shall have sixty (60) days thereafter
in which to fully repay the Loan together with accrued interest.
7. Use of Proceeds. The proceeds of the Loan shall be used by Borrower
the normal course of business of originating and buying loans secured by first
mortgages encumbering real property located in states acceptable to Lender.
8. Advances/Documentary Conditions Precedent. The following documents
(duly and properly executed and delivered) must be received by Lender, in form
and substance satisfactory to Lender, before Borrower may request an advance
hereunder:
(a) this Agreement;
(b) the Note;
(c) Opinion of Borrowers counsel;
(d) Certificate of Good standing issued by the Secretary of State
of each Slate in which Mortgage Loans are originated (or, in the alternative,
written evidence that Borrower is not required to qualify to do business in any
such State);
(e) Each errors and omissions (E&O) insurance policy and a copy
of each Fidelity Bond (the E&O insurance and Fidelity Bond covering Borrower and
each of its closing agents), which relate to Borrowers business of originating,
owing, selling and
- 5 -
<PAGE>
servicing Mortgage Loans, together with letters from each carrier issuing any
such policy stating that the carrier will give written notice to Lender (i) of
any claims and/or recoveries within thirty (30) clays after receipt and (ii) of
any cancellation.,or reduction in coverage thirty (30) days prior to the
effective date thereof. Lender shall be shown as a loss payee under all E&0
insurance policies and under each Fidelity Bond;
(f) written evidence that Borrower is a FHLMC approved seller and
servicer, if applicable;
(g) written evidence that Borrower is a FNMA approved seller and
servicer, if applicable;
(h) Certificate of Corporate Resolution adopted by Borrowers
Board of Directors authorizing the transaction evidenced by this Agreement;
(i) written evidence that Borrower is an authorized originator
and servicer of VA guaranteed Mortgage Loans, if applicable;
(j) written evidence that Borrower is an authorized originator
and servicer of FHA insured Mortgaged Loans, if applicable;
(k) any other documents reasonably required by Lender.
9. Procedure for Requesting Advances.
(a) Upon receipt (before 11:00 a.m. of the requested funding
date) by Lender of the items of described in subparagraphs (a), (b), and (c) of
paragraph 17, and satisfaction of the requirements set forth in paragraph 9(b),
provided the Loan is not then in default, Lender, shall advance to Borrower, by
adding to its account with Lender, the amount properly requested from time to
time provided the advances shall not aggregate in excess of TEN MIL LION AND
NO/100 DOLLARS ($ l 0,000,000.00). Each request by Borrower shall be in form
satisfactory to Lender.
(b) With respect to each advance requested by Borrower, Lender is
not, and shall not be, required to honor the request for advance unless and
until each of the following conditions shall have been satisfied:
(i) The delivery to Lender of an Officers Certificate
and Request for Advance in form set forth in
Exhibit B attached hereto;
(ii) The delivery to Lender of a duplicate executed
original copy of a firm and binding commitment to
purchase the Mortgage
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<PAGE>
Loans which collateralize the advance requested
from a Secondary Market Purchaser, in form and
substance satisfactory to Lender (which commitment
to purchase will sometimes herein be referred to
as the Commitment or the Purchase Commitment).
(c) By requesting an advance, Borrower shall thereby be
deemed to confirm the following:
(i) Borrower is not in default under this
Agreement or any other document or
agreement which relates to this Agreement
or the Loan;
(ii) Borrower has satisfied every condition
with respect to the request for an
advance;
(iii) all warranties and representations set
forth herein are true and correct as of
the date of each request for advance;
(iv) Borrower has not modified or rescinded or
waived any term of any document evidencing
any Mortgage Loan, except as expressly
permitted under the terms of this
Agreement;
(v) each Purchase Commitment remains in full
force and effect, (vi) if applicable, all
conditions relating to the continued
eligibility of a Mortgage Loan for FHA IA
insurance or private mortgage insurance
remain fully and completely satisfied; and
(vii) if applicable, all conditions relating to
the continued eligibility of a Mortgage
Loan for the VA guaranty remain fully and
completely satisfied.
10. Warranties and Representations/The Mortgage Loans. The
Mortgage Loans are, and shall be, security for payment of the Loan (as more
particularly set forth hereinafter). As of each loan funding date and until that
part of the Loan which was advanced against a particular Mortgage Loan is paid
in full, Borrower hereby represents and warrants to Lender that, as to each
Mortgage Loan:
(a) Closing information Complete. All information
delivered to Lender
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<PAGE>
regarding the Mortgage Loans is complete, true and correct to the best knowledge
of Borrower, and each Mortgage Loan conforms to the requirements of this
Agreement and each Mortgage File contains each of the documents and instruments
specified to be included therein duly and properly executed and in due and
proper form on the dates indicated.
(b) Ownership of the Mortgage. Borrower is the sole owner
and holder of each Mortgage Loan (which term includes the Mortgage Note
evidencing the indebtedness as well as the other documents relating to the loan
being pledged) free and clear of any and all encumbrances, liens, pledges,
charges or security interests of any nature and has full right, subject to no
interest or participation of, or agreement with, any other party, to pledge
and/or assign same to Lender. There are no custodial or "warehousing" agreements
in effect adversely affecting the ability or right of Borrower to make the
deliveries required on any funding date.
(c) Mortgage as First Lien. The Mortgage is valid and
subsisting first lien on the property therein described, and the Mortgages
Property is free and clear of all encumbrances and liens having priority over
the first lien of the Mortgage except for liens for real estate taxes and
special assessments not yet due and payable. The security agreement, chattel
mortgage or equivalent document related to the Mortgage establishes in Borrower
a valid and subsisting first lien on the property described therein and Borrower
has full right to pledge the same to Lender.
(d) No Modification. Except as previously disclosed to
Lender and evidenced by documentation thereof in the Mortgage File, neither
Borrower nor any prior holder of the Mortgage has modified the Mortgage in any
material respect; satisfied, canceled, rescinded or subordinated the Mortgage in
whole or in part; released the Mortgagor from liability or Lender Mortgaged
Property, in whole or in part, from the lien of the Mortgage; or executed any
instrument of release, cancellation, modification, satisfaction, or rescission.
(e) No Monetary Defaults. There are, and have been since
origination, no defaults in complying with the terms of the Mortgage, and all
taxes, governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing have been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains
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<PAGE>
unpaid. Borrower has not advanced funds, or induced, solicited, or knowingly
received any advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required by the Mortgage.
(f) No Condemnation or Damage. There is no proceeding of
record pending for the total or partial condemnation of the Mortgaged Property
(and Borrower has no knowledge of the threat of any such proceedings) and said
property is undamaged by fire, windstorm or other casualty.
(g) Mechanics Liens. The Mortgaged Property is free and
clear of all mechanics and materialmens liens or liens in the nature thereof
which are superior to the lien of the Mortgage, and no rights are outstanding
that under law could give use to any such lien.
(h) No Encroachments. All of the improvements which are
included for the purpose of determining the appraised value of the Mortgaged
Property lie wholly within the boundaries and building restriction lines of such
property and no improvements on adjoining properties encroach upon the Mortgaged
Properly, unless a title insurance policy is in effect which insures against
loss from any such encroachments.
(i) Acceptable Investment. Borrower has no knowledge of
any circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor or the Mortgagors credit standing that can be reasonably
expected to cause private institutional investors to regard the Mortgage as an
unacceptable investment, cause the Mortgage to become delinquent or adversely
affect the value or marketability of the Mortgage.
(j) Usury. Each Mortgage Loan meets, or is exempt from,
applicable state or federal laws, rules, regulations and other requirements
pertaining to usury, and the Mortgage Loan is not usurious.
(k) Zoning Law. Borrower has no knowledge that any
improvement located on or being part of the Mortgaged Property is in violation
of any applicable zoning, building or environmental law or regulation To the
best of knowledge of Borrower, all inspections, licenses and certificates
required to be made or issued with respect to all occupied portions of the
Mortgaged Property and with respect to the use and occupancy of the same,
including but not limited to certificates or occupancy, and fire underwriter
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<PAGE>
certificates, have been made by or obtained from the appropriate governmental
authorities, and the Mortgaged Property is lawfully occupied under applicable
law.
(l) Doing Business. Either (1) Borrower and every other
holder of the Mortgage, if any, were authorized to transact and do business in
the jurisdiction in which the Mortgaged Properly is located at all times when
such party held the Mortgage; or (2) the loan of Mortgage funds, the acquisition
of the Mortgage (if Borrower was not the original lender), the holding of the
Mortgage and tale transfer of the Mortgage did not constitute the transaction of
business or the doing of business in such jurisdiction.
(m) Made. All payments required to be made under the
semis of the Mortgage have been made and such were made by the Borrower
thereunder (Mortgagor) and not by any third party.
(n) Validity of the Note and Mortgage. The Mortgage Note
and the related Mortgage are genuine and each is the legal, valid and binding
obligation of the maker thereof, enforceable in accordance with its terms All
parties to the Mortgage Note and the Mortgage had legal capacity to execute the
Mortgage Note and the Mortgage and each Mortgage Note and Mortgage have been
duly and properly executed by the Mortgagor.
(o) Compliance with Applicable Laws. Any and all
requirements of any federal, state or local laws, rules and regulations
including, without limitation, truth-in-lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity or disclosure
laws applicable to the Mortgage Loan have been complied with, and Borrower shall
maintain in its possession, available for Lenders inspection, and shall deliver
to Lender upon demand, evidence of compliance with all such requirements.
(p) Full Funding of the Mortgage Loan. The proceeds of
the Mortgage Loan have been fully disbursed there is no requirements for future
advances thereunder and any and all requirements as to completion of any on-site
or off-site improvements and as to disbursements of any escrow funds therefore
have been complied with.
(q) Title Insurance. Each Mortgage Loan is covered by an
Al TA mortgage title insurance policy or other generally acceptable form of
policy or insurance acceptable to Lender issued by title insurer acceptable to
FNMA and FHLMC and qualified to do business in the jurisdiction where the
Mortgaged Property is located or by a valid Attorneys Certificate of Title in
form acceptable to Lender insuring Borrower or Borrowers
- 10 -
<PAGE>
FHA/VA correspondents their successors and assigns as to the first priority lien
of the Mortgage in the original principal amount of the Mortgage Loan. Borrower
or Borrowers FHA/VA correspondents are the named insured and the sole insured of
any such Mortgage title insurance policy; the assignment to Lender of Borrowers
interest in such Mortgage title insurance policy does not require the consent of
or notification to the insurer; such mortgage title insurance policy is the
valid and binding obligation of the insurance thereunder is in full force and
effect and will be in lull force and effect and inure to the benefit of Lender
if it is necessary to effectuate the assignment in favor of Lender No claims
have been made under any such mortgage title insurance policy and no prior
holder of the related Mortgage has engaged in any act or omission to act which
would impair the coverage of any suck mortgage title insurance policy or the
validity or binding effect thereof.
(r) Hazard Insurance. All buildings upon the Mortgaged
Property are insured by a generally acceptable Insurer rated 13 or better in the
current Bests Insurance Guide against loss by fire hazards of extended coverage
and such other hazards as are customary in the area in an amount which is at
least equal to the outstanding principal balance of the Mortgage Loan or the
full insurable value of improvements whichever is the lesser If as of the date
of origination of the Mortgage Loan the Mortgaged Property is located in au area
identified in the Federal Register by the Flood Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available)
a flood insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration is in effect with a generally acceptable
insurance carrier (rated 13 or better as aforesaid) in an amount representing
coverage not less than the least of (i) of the outstanding principal balance of
the Mortgage Loan (ii) the lull full insurable value of the improvements or
(iii) the maximum amount of insurance which is available under the Flood
Disaster Protection Act of 1973. Borrower shall maintain in its possession,
available for holders inspection, and will deliver to Lender on demand,
documentation as to the method used in determining the applicability of the
provisions of the Flood Disaster Protection Act of 1973, as may be amended, to
the Mortgaged Property All such insurance policies (collectively, the "hazard
insurance policy") contain a standard mortgagee clause naming Borrower, its
successors and assigns, as mortgagee and all premiums thereon have been paid
Each hazard insurance policy is the valid and binding obligation of the insurer,
is in
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<PAGE>
full force and effect, and will be in full force and effect and inure to the
benefit of Lender if Lender becomes the owner of the related Mortgage Loan
Borrower has not engaged in, and has no knowledge of the Mortgagor having
engaged in, any act or omission which would impair the coverage of any such
policy, the benefits of the endorsement provided for herein, or the validity and
binding effect of either Each Mortgage obligates the Mortgagor thereunder to
maintain all such insurance at Mortgagors cost and expense, and on the
Mortgagors failure to do so, authorizes the Mortgagee to maintain such insurance
at Mortgagors cost and expense and seek reimbursement therefor from the
Mortgagor All premiums due as of or prior to the date(s) of Borrowers request
for an advance have been paid.
(s) No Defaults. There is no default, breach, violation
or event of acceleration existing under the Mortgage or the relates Mortgage
Note and no event which, with the passage of time or with notice and expiration
of any grace or cure period, would constitute a default, breach, violation or
event of acceleration; and the Borrower has not, by action or omission to act,
waived any default, breach, violation or event of acceleration.
(t) Due-on-Sale Provisions. All Mortgage Loans contain
due-oil-sale provisions enforceable in accordance with their terms in the
jurisdiction in which the Mortgaged Property is located providing for the option
of holder to declare full acceleration of amounts due under the Mortgage Loan
upon a conveyance of title by sale, assignment or operation of law, including
the sale or assignment of a beneficial interest Borrower will use its best
efforts, at its expense, to enforce any "due-on-sale" provision contained in any
Mortgage or Mortgage Note and to deny assumption by the person to whom the
Mortgage Property has been or is about to be sold whether by absolute conveyance
or by contract of sale, and whether or not the Mortgagor remains liable thereon
As to any Mortgage Loans which do not have enforceable due-on-sale provisions,
Borrower agrees to redeem said Mortgage Loan from Lender by reducing the unpaid
principal amount of the Loan by an amount equal to the full id principal balance
of the offending Mortgage Loan, upon the assumption by a subsequent owner. If
Secondary Market Purchaser requires that mortgage loans sold to it be
"assumable" then this representation shall be deemed satisfied with respect to
any such Mortgage Loans.
(u) No Defenses. The Mortgage is not subject to any right
of rescission,
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<PAGE>
set-off, counterclaim or defense, including the defense of usury, nor will the
operation of any of the terms of the Mortgage, or the exercise of any right
thereunder, render the Mortgage unenforceable in whole or in part, or subject to
any right of rescission set-off, counterclaim or defense, including but not
limited to the defense of usury, and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto.
(v) Payment Terms. Each Mortgage Note is payable in
self-amortizing equal monthly installments of principal and interest, with
interest in arrears, providing for full amortization by contracted maturity on
the first day of each month over an original term of not more than thirty (30)
years.
(w) Security. Each Mortgaged Property consists of a
parcel of real property located within the United of America, in states
acceptable to Lender, which is improved with a Single family Residence.
(x) No Other Collateral. Each Mortgage Note is not and
has not been secured by any collateral except the lien of the corresponding
Mortgage and the security interest of any applicable security agreement or
chattel mortgage referred to in subparagraph (c) hereof.
(y) Customary Remedies. Each Mortgage contains customary
enforceable provisions such as to render the rights and remedies of the holder
adequate for the realization against the Mortgaged Property of the benefits of
the security, including but not limited to (i) in the case of a mortgage
designated as a deed of trust, by trustees sale, and (ii) otherwise by judicial
foreclosure
(z) Fees and Expenses. Except in connection with a
trustees sale after default by the Mortgagor, no fees or expenses are or will
become payable by the holder to the trustee under any Mortgage constituting a
deed of trust Prior to the first funding date, Borrower will furnish to Lender a
schedule of typical and customary foreclosure and trustees sale expenses and
fees and shall provide Lender with revised schedules from time to time as such
typical and customary fees and expenses change.
(aa) Trustee. With respect to each mortgage constituting
a deed of trust, a trustee (or trustees) duly qualified under applicable law to
serve as such, has been properly designated and currently so serves and is named
in such mortgage.
(bb) Location of Realty. Each Mortgaged Property is
located in the
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<PAGE>
United States of America, in States approved by Lender.
(cc) Loan to Value Ratios. If the 1 TV ratio for any
conventional Mortgage Loan at time of origination was greater than eighty
percent (80%), the excess over eighty percent (80%) is subject to a policy of
primary mortgage guaranty insurance (issued by a company acceptable to Lender)
until the principal balance of the mortgage loan is reduce(l below eighty
percent (80%) of such value. All provisions of such primary mortgage guaranty
insurance policy have been and are being complied with, such policy is in lull
force and effect, and all premiums due thereunder have been paid Any mortgage
subject to any such policy of primary mortgage guaranty insurance obligates the
Mortgagor thereunder to maintain such insurance and to pay all premiums and
charges in connection therewith and the interest rate set forth on the Mortgage
Note is net of any premium for such primary mortgage guaranty insurance policy
Borrower has not engaged in an act o omission which would impair the
enforceability of any such mortgage guaranty insurance policy.
(dd) All Statements True. Neither this Agreement nor any
statement, report or other document furnished or to be furnished pursuant to
this Agreement or in connection with the transaction contemplated hereby
contains or will contain any untrue statement of fact or omits or will omit to
state a fact necessary to make the statements contained therein not misleading
to the best of Borrowers knowledge.
(ee) Adverse Classification. In addition to all other
representation warranties made by Borrower herein, Borrower hereby represents
and warrants that no Mortgage Loan delivered under this Agreement has been
adversely classified or classified as a substandard asset by a supervisory or
regulatory authority having the power to make such classification.
(ff) Capitalized Loans. As to each Mortgage Note
containing a stated maturity date, said maturity date has not been extended as a
result of capitalization of real estate tax and/or insurance premium expense
Additionally, capitalization of real estate tax and/or insurance premium
expenses shall be discontinued on or before the date of delivery to Lender of
the Mortgage Loans which are the subject of this Agreement
(gg) Documentary Taxes. All excise taxes imposed by
Chapter 201, Florida Statutes, upon or in respect to the Collateral have been
paid and any and all other taxes applicable to the Collateral, the execution of
the Note and Mortgage and the filing of
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<PAGE>
the Mortgage and Financing Statements (if any) have been paid.
(hh) Condominium/PUD Warranties All Mortgage Loans
secured by units in condominiums or Planned Unit Developments (PUD) comply with
the applicable condominium or PUD warranties set forth from time to time by
Lender, by private or governmental mortgage insurers, and/or by the Secondary
Market Purchaser.
(ii) Appraisals. The appraisal of the Mortgaged Property
was made and signed (prior to approval by the underwriter) by a qualified
appraiser who had no interest, direct or indirect, in the real estate or in any
loan on the security thereof, and who does not receive compensation which is
affected by the approval or disapproval of the subject loan.
(jj) Escrow Account Deficiencies. There exist no
deficiencies in any escrow accounts for which customary arrangements for
repayment thereof have not been made and no escrow deposits or other charges or
payments clue the Borrower have been capitalized under any Mortgage or Mortgage
Note.
(kk) VA/FHA As to Mortgage Loans which are either
guaranteed (or eligible fol guarantee) by the VA (and such shall be guaranteed
to the maximum extent, but not less than twenty percent (20%) of the principal
amount, permitted by law for a veteran who has not used up any part of his
entitlement or acceptable to FNMA) or insured (or fully eligible for insurance)
to the maximum amount permitted by 171 IA, all necessary steps have been taken
to make and keep such guaranty or insurance valid, binding and enforceable and
each of such is a binding, valid and enforceable obligation of the VA and Fl IA,
as the case may be, to the full extent thereof, without surcharge, setoff, or
defense on the Closing Date . There shall be evidence in each Mortgage File of
such 11 IA insurance or VA guaranty, as the case may be, satisfactory to Lender
(it being understood that said evidence will not be received by Borrower for
sixty (60) days after the closing of the Mortgage Loan).
11. Survival of Warranties/Remedy It is understood and agreed
that the representations and warranties set forth in this Agreement are
continuing warranties and representations and shall survive the loan funding
date(s) and shall survive the termination of this Agreement Upon discovery by
either Borrower or Lender of a breach of any of the representations and
warranties set forth herein, the party discovering such breach shall promptly
give written notice to the other. Within thirty (30) days of its discovery or
its
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<PAGE>
receipt of notice of breach, Borrower shall cure such breach in all material
respects or shall redeem the offending Mortgage Loan from Lender by substitution
of Collateral acceptable to Lender or by reducing the unpaid principal amount of
the Loan by an amount equal to that portion of the unpaid principal balance of
the offending Mortgage Loan which was loaned to Borrower pursuant to this
Agreement reduced by principal repayments to Lender which were allocated to the
offending Mortgage Loan by mutual agreement of the parties.
With respect to examples of Borrowers notice obligation hereunder, the
Borrower shall promptly notify Lender, among other things, of:
(a) any thirty (30) day default under any Mortgage Loan;
(b) any non-monetary default under any Mortgage Loan;
(c) any damage, destruction, loss, or HARM to, or condemnation
of, any Mortgaged Property;
(d) the progress of repairs an( /or restoration of damaged
Mortgage Property;
(e) All threatened and/or pending actions, suits, hearings,
administrative proceedings, etcetera, effecting the Borrower of the Collateral;
(f) any default or failure lo comply with any order, Writ,
injunction or decree in favor of or any demand of any governmental agency or
authority.
This paragraph provides a thirty (30) day "cure period". It is possible
that Borrowers rights hereunder as to length-of-time might conflict with
length-of-time requirements set forth elsewhere in this Agreement In the event
of length-of-time conflicts herein, the length-of-time requirements which shall
apply to any "cure period" or similar period of time hereunder shall be
determined by Lender in its sole discretion.
12. Warranties as of Funding Date. As of each Loan advance funding date,
Borrower hereby warrants and represents as to each Mortgage Loan requirements of
Lender (including those set forth in paragraph 13 hereof) have been fully
satisfied and that all warranties and representations of Borrower are true and
correct Upon Lenders written request, Borrower shall supply satisfactory
evidence to Lender of its compliance with any and all of the lending conditions
and requirements set forth or referred to herein.
13. Other Warranties Borrower further represents, warrants and agrees
that as of the date of this Agreement:
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<PAGE>
(a) It is duly organized, validly existing and in good standing
under the laws of the jurisdiction of organization, and has the requisite power
and authority to enter into this Agreement and the other agreements contemplated
by this Agreement;
(b) This Agreement has been duly authorized, executed and
delivered to Lender and constitutes a valid and legally binding agreement of
Borrower enforceable in accordance with its terms;
(c) There is no action, proceeding or investigating pending or
threatened, nor any basis for same, known to it, that questions the validity or
prospective validity of this Agreement insofar as the Agreement relates to it,
or any essential elements upon which this Agreement depends, or any action to be
taken by it pursuant to this Agreement;
(d) Insofar as its capacity to carry out any obligation under
this Agreement is considered, it is not in violation of any provision of any
charter, certificate of incorporation, bylaw, mortgage, indenture, indebtedness,
agreement instrument, judgment, decree, order, statute, rule or regulation, and
there is no such provision that adversely affects its capacity to carry out such
obligation and its execution of, and performance pursuant to.
this Agreement will not result in such violation: and
(e) It is duly organized, validly existing and in good standing
under the laws of any jurisdiction in which it originates any Mortgage Loan
delivered to Lender, or its designee, pursuant to this Agreement, and has
obtained any license required in order to originate any such Mortgage Loans in
any such jurisdiction.
14. The Mortgage File. The Mortgage File contains each of the documents
and instruments specified to be included therein duly executed and in due and
proper form and each such document or instrument is in form acceptable, as
applicable, to FNMA, VA, GNMA, FHA, and/or FHLMC Except for Category 111
Collateral, each Mortgage Loan is in conformity with the standards of FHLMC or
FNMA under one of their respective home mortgage purchase or guaranteed mortgage
backed securities programs. Each Mortgage Note and Mortgage are on forms
approved, as applicable, by FNMA, GNMA, VA, FHA, or FHLMC with such riders as
have been approved by FNMA, GNMA, VA, FHA, or FHLMC, as the case may be.
A Mortgage File shall exist for each Mortgage Loan. The Mortgage File
shall contain at least the following instruments and documents:
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<PAGE>
(a) Original Mortgage Note endorsed to Lender or in blank;
(b) Original Mortgage;*
(c) Assignments of Mortgage in recordable from (to Lender and to
Secondary Market Purchaser or in blank);
(d) Original assumption or modification documents, if applicable;
(e) Applicable mortgage title insurance policy or commitment; (f)
copy of the VA Loan Guaranty Certificate; (for VA guaranteed Mortgage Loans)**
(g) Copy of the FHA Insurance Certificate (for Jl IA insured
Mortgage Loan);**
(h) the private mortgage insurance policy (or binder/commitment
coupled with proof of payment) for conventional Mortgage Loans with LTV ratios
in excess of eighty percent (80%);
(i) copy of purchase Commitment certified by Borrower as true and
correct;
(j) Estoppel Certificate, in form attached hereto as Exhibit C;
and
(k) Such other documents and instruments that may, from time to
lime, be required by Lender.
*(if original recorded Mortgage is not available at time of funding of
advance, Borrower may deliver a certified copy of the excluded Mortgage and The
original recording receipt for said mortgage Borrower shall deliver to Lender
the original recorded Mortgage or a copy thereof if The Mortgage is to be
included as part of mortgage-backed security on or before the forty-fifth (45th)
day following the date on which the advance was funded).
**When received from agencies (FHA or VA).
The following documents shall also constitute part of the Mortgage File
and shall be sometimes herein referred to as the "remaining Mortgage File
documents " the remaining Mortgage File documents shall be held by Borrower in
trust for Lender and shall be delivered to Lender at any time and from time to
time, in whole or ill part, immediately upon request. The remaining Mortgage
File documents are:
(i) Hazard Insurance Policy;
(ii) Flood Insurance policy (if required by law or
regulation);
(iii) Regulation 7. form;
(iv) HUD Settlement statement;
(v) current as-built survey, certified and sealed, for
Mortgaged
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<PAGE>
Property other shall a condominium unit;
(vi) Declaration of Condominium and all related
documents for Mortgaged Property which is a
condominium unit (where condominium subject to the
same Declaration of Condominium are security for
more than one Mortgage Loan, only one master copy
of the Declaration of Condominium, appropriately
identified to the satisfaction of Lender, need be
delivered to Lender);
(vii) appraisal of the Mortgaged Property;
(viii) and all statements, forms, et cetera required by
the Real Estate Settlement Procedures Act (RESPA)
and the Federal Truth-In-Lending Act not otherwise
referred to in this paragraph;
(ix) satisfactory evidence of compliance with all
applicable federal, state, and local laws and
regulations not otherwise referred to in this
paragraph;
(x) copy of sales contract for Mortgaged Property (if
Mortgage Loan is closed in connection with a
purchase-sale of the Mortgaged Property);
(xi) certificate of occupancy for newly constructed
Mortgaged Property;
(xii) copies of current credit reports, current loan
applications, current financial statements,
verification of employment, and verification of
deposits;
(xiii) copies of financing statements and security
agreements applicable to any personal property
which secures the Mortgage Loan;
(xiv) copy of private mortgage insurance affidavit
signed by seller and purchaser of the Mortgaged
Property, if applicable;
(xv) copies of FNMA or FHLMC as applicable, project
approvals for Mortgaged Property within projects
where prior approval by FNMA or FHLMC is required;
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<PAGE>
Any reference to "Mortgage File" herein shall also be a reference to the
contents of the Mortgage File.
15. Security Agreement Borrower hereby grants to Lender which Lender
hereby accepts, a security interest in the Collateral (hereinafter described) to
secure the payment in full of the Obligation (hereinafter defined). T he
security interest of Lender shall attach to the Collateral at the time of
compliance with the requirements of paragraph 9(a) or at the time the Borrower
has rights in the Collateral and Lender has advanced money (i e, "new value")
with respect to the Collateral, whichever first occurs.
16. The Obligation The following, jointly and severally, shall
constitute "the Obligation" secured by this Agreement:
(a) The Loan as well as the Note evidencing the Loan;
(b) All past, present, and future advances of whatever type, by
Lender to Borrower and extensions and renewals thereof, whether or not of the
nature contemplated as of the date hereof;
(c) All existing and future liabilities, of whatever type, of
Borrower to Lender and including (but not limited to) liability of overdrafts
and as endorser and surety;
(d) All costs incurred by Lender to obtain, preserve and enforce
this security interest, collect the Obligation, and maintain and preserve the
Collateral, and including (but not limited to) taxes, assessments, insurance
premiums, reasonable attorneys fees and legal expenses, rent, storage costs, and
expenses of sale;
(e) Interest on the above amounts, as agreed between Lender and
Borrower, or if no such agreement, at the maximum rate permitted by law
17. The Collateral The security interest is granted in the following,
hereinafter called the "Collateral", which shall be delivered to and held by
Lender:
(a) Mortgage Note(s) delivered lo Lender in connection with
requests for and advance;
(b) Mortgage(s) securing Note(s) delivered in accordance with
subparagraph (a) above;
(c) The Mortgage File for each Mortgage Note referred to in
subparagraph (a) above (which Mortgage File shall contain the items referred to
in subparagraph (a) and (b) hereof);
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<PAGE>
(d) All documents, instruments and other rights relating to any
Mortgage Loan delivered to Lender hereunder (some of which documents may not be
delivered to Lender at the of funding);
(e) All cash or non-cash proceeds of any of the foregoing,
including insurance proceeds;
(f) All actions, causes of action, foreclosure suits and
judgments, as well as the proceeds thereof, related to the Collateral;
(g) All of Borrowers rights, title and interest in and to the
Purchase Commitments are hereby assigned to Lender;
(h) All ledger sheers, files, records documents and instruments
(including, but not limited, to computer programs, tapes and related electronic
data processing software) evidencing an interest in or relating to the above
(such being retained by Borrower pending demand for delivery by Lender);
(i) All funds in the special account for transactions with
Secondary Market Purchasers referenced in Paragraph 33 hereof.
The location of the office where the records concerning rights are kept
is the address of Borrower herein set forth.
The Bank shall not be obligated to accept the Mortgage loan if; in its
Opinion, such acceptance could reasonably subject the Bank to the risk of
liability not contemplated by this agreement.
18. Events of Default Lender shall not be obligated to make additional
advances and the entire unpaid principal balance of the Loan together with all
accrued and unpaid interest, shall become immediately due and payable, at the
option of Lender upon the occurrence of one or more of the following Events of
Default:
(a) any failure by Borrower to make, when due, any payment
required to be made under the terms of this Agreement or the Note evidencing the
Loan; or
(b) failure on the part of Borrower duly to observe, satisfy or
perform, on a continuing basis, in any material respect any other of the
covenants, warranties, representations or agreements, on the part of the
Borrower set forth in this Agreement or any other agreement instrument, or
document entered into between Lender and Borrower in connection with the Loan;
or
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<PAGE>
(c) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Borrower and such decree or order
shall have remained in force undischarged for a period of thirty (30) days; or
(d) Borrower shall consent to or allow the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating to
Borrower or of or relating to all or substantial all of its property; or
(e) Borrower shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statue, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(f) the merger or consolidation of the Borrower with another
corporation, or any corporation resulting from any merger, conversion or
consolidation to which the Borrower shall be a party, or sale of a majority
ownership interest in the Borrower without prior approval of Lender provided,
however, Borrower may acquire or merge other subsidiaries into Borrower; or
(g) Borrower shall fail to observe or perform in any material
respect any covenant, term, provision, condition, warranty or representation of
any agreement between Borrower and a Secondary Market Purchaser; or
(h) Borrower shall default under the teens of any other loan
Borrower has with the Lender or any other creditor; or
(i) Borrower shall allow any final judgment or decree for the
payment of money in excess of TEN THOUSAND AND NO/100 DOLLARS ($10,000 00) to
remain unpaid or unappealed and not satisfied for a period of thirty (30) days
or more after the date of entry; or
(j) Borrower shall fail to maintain its FHA approved mortgage
status, VA approved lender status, I:NMA approved Seller/ Servicer status, or I
I IL MC approved Seller/Servicer status, as applicable
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<PAGE>
19. Rights Upon Default Upon the occurrence of an event of Default,
Lender shall have each of the rights of a secured party set forth in Florida
Statutes Chapter 679, (i e, Uniform Commercial Code-Secured Transactions), such
being deemed expressly and affirmatively set forth herein Borrower hereby
acknowledges that the Collateral is of a type customarily sold in a recognized
market and hereby agrees to pay any deficiency The recognized market for the
Collateral is what is commonly referred to as the "secondary market" for FNMA
and/or Fl ll MC and/or other types of mortgage loans Without limiting Lenders
rights, upon the occurrence of an Event of a Default, Lender is hereby granted
the right to collect all payments owing pursuant to the Mortgage Loan directly
from the Mortgagors or indirectly by a servicer designated by Lender In the
event Lender elects to sell the Collateral by a public sale, it is agreed that
notice shall be deemed satisfactorily given if trailed by United States
certified mail in an envelope addressed to Lender at its principal place of
business herein noted, not less than five (5) days nor mole than ten (10) days
prior to such public sale.
In addition, to the rights of Lender set forth in the preceding
paragraph, Lender shall have the following rights and/or remedies upon the
occurrence of an livens of Default:
(a) to assume full servicing responsibilities for the Mortgage
Loans (as if Lender were the Owner thereof);
(b) to communicate directly with the Mortgagors on all matters
relating to the Mortgage Loans;
(c) to open any mail addressed to Borrower which relates to the
Mortgage Loans;
(d) to enter the business premises of Borrower and take
possession of and remove therefrom without breach of the peace, all or any part
of the Collateral;
(e) pursuant to power of attorney granted herein, to execute
and/or endorse on behalf of Borrower receipts, checks, notes, agreements,
letters, instruments and/or documents of any kind or description relating to the
collection of sums clue pursuant to the terms of the Mortgage Loans or sale or
other liquidation of the Mortgage Loan;
(f) to purchase all or part of the Mortgage Loans at any public
or private sale, free and clear of any claim, right or equity of redemption
(Borrower hereby waiving any claim, right or equity or redemption);
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<PAGE>
(g) when liquidating the Collateral, to sell the same at a place
chosen by Lender and on such terms, as to cash or deferred payment, as Lender
deems in its best interests.
20. Expenses of Default; Sale Proceeds In the event Lender exercises its
rights hereunder as a result of the occurrence of an Event of Default:
(a) Borrower shall pay all costs and expenses paid or incurred by
Lender in exercising Lenders rights, such to include without limitation,
attorneys fees (for negotiation, consultation, correspondence, litigation and
appeal) and associated expenses;
(b) Lender shall not be liable for its action or inaction except
for conduct constituting gross negligence or willful misconduct;
(c) in the event of a Sale of Collateral involving deferred
payment of all or part of the purchase price, the Loan shall not be credited
with the uncollected portion of the net sale proceeds until actually collected;
(d) in the event Lender pays or incurs costs and expenses in
connection with servicing the Mortgage Loans, such items of cost and expense to
include without limitation repairs, collection expenses, and servicing costs and
expenses (both ordinary and extraordinary), such costs and expenses shall be
paid by Borrower (or, the absence of payment, discharged by offset against any
proceeds realized by liquidating the Collateral);
(e) the net proceeds resulting from the sale of the Collateral
(after all costs, fees and expenses of said sale) shall be allocated first to
accrued and unpaid interest. with the balance, if any, allocated to unpaid
principal
21. Loan Account Statements Once each month Lender shall furnish
Borrower with a statement of the previous months loan account activity (the Loan
Account Activity) accounting for the amount of each loan advance, daily interest
charges, Loan principal repayments, Loan principal and interest adjustments (if
any), and cumulative totals for accrued and unpaid interest and unpaid Loan
principal Any additional information regarding the Loan, to the extent available
to Lender, shall be provided by Lender at the sole cost and expense of Borrower.
T he Borrower shall notify Lender in writing within thirty (30) days of receipt
of the Loan Account Statement of any discrepancies between such statement and
the records of the Borrower If Borrower does not object to the Loan Account
Statement within thirty (30) days of receipt, such statement shall be deemed
final and conclusive with respect
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<PAGE>
to the information reported thereon, and Borrower hereby waives any objection
regarding the accuracy of such statement in any action or proceeding to enforce
the obligations of the Borrower hereunder Borrower shall be deemed to have
received any Loan Account Statement no later than the third Business Day
following the date said statement was mailed.
22. Financial Statements.
(a) Not later than ninety (90) days following the end of
Borrowers and Guarantors fiscal year during each year this Agreement is in
effect, the Borrower and Guarantor shall furnish Lender with full and complete
certified financial statements, prepared by an independent certified public
accountant, accurately reporting its operations during, and its financial
condition at the end of, the immediately preceding fiscal year
(b) Within forty-five (45) days following each month of Borrowers
and Guarantors fiscal year Borrower and Guarantor shall furnish Lender with a
profit and loss statement for such month and a balance sheet reflecting its
financial condition at the end of the month, both statements being acknowledged
as correct by Borrower and Guarantor.
(c) At Banks request, Borrower shall provide Bank on a monthly
basis a pipeline Management report and a servicing portfolio analysis.
All financial statements contemplated hereunder shall be prepared in
accordance with generally accepted accounting principals.
23. Annual Servicing and Audit Reports If FNMA, FHA, VA and/or FHLMC
require Borrower to furnish periodic servicing reports, copies of those same
reports will be mailed k, Lender at the same time such reports are furnished to
FNMA or FHLMC Borrower shall furnish copies of audit reports issued by FNMA,
FHLMC, GNMA, FHA and/or HUD within 30 days of receipt by Borrower.
24. Additional Information Borrower shall furnish to the lender, during
the term of this Agreement, such periodic, special, or other reports or
information, whether or not provided for herein, as shall be necessary,
reasonable, or appropriate with respect to the purposes of this Agreement, all
such reports or information to be as provided by and in accordance with such
applicable instructions and directions as the Lender may reasonably require and
shall include, without limitation, satisfactory monthly remittance and aging
reports on a loan-by-loan schedule. Lender is hereby granted the right, after
reasonable
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<PAGE>
notice, to inspect and copy Borrowers books and records.
In addition, Borrower shall provide lender on the first day of the month
with a Valuation Report of Assigned Collateral in the form set out in Exhibit
1), attached hereto, if requested by Lender. Lender continuously shall be given
reasonable access to inventory production, accounting and control reports of the
Borrower at the Borrowers place of business during normal business hours The
Lender shall have the right to verify reports and schedules in any reasonable
manner with the intent and purpose of assuring the Lender that the quality of
security and other requirements are continuously maintained, at the expense of
the Borrower.
25. Expenses and Fees Subject to limitations set forth in the Commitment
Letter, Borrower agrees to pay all costs and expenses in any way connected with
the Loan, including without limitation all costs and expenses in connection with
the preparation, execution, delivery, amendment, waiver and enforcement of this
Agreement and all other instruments delivered in accordance with or in
connection with this Agreement, as well as all taxes (including without
limitation documentary stamp taxes, intangible taxes, etc., but not including
tax liabilities in any way connected with the income or revenue of Lender) now
or hereafter imposed in connection with the Loan or any documents delivered
pursuant to or in connection with the Loan.
26. Servicing The Mortgage Loans shall be serviced by Borrower. at no
cost to lender, in accordance with the FNMA Selling and Servicing Guides or in
accordance with such other requirements as may be approved by lender and/or
which are required by the Secondary Market Purchaser for the Mortgage Loans
Servicing of the Mortgage Loans by Borrower shall terminate upon the occurrence
of an Event of Default
On or after the receipt by Borrower of written notice of termination,
all servicing authority and power of Borrower under this Agreement, whether with
respect to the Mortgage Loans or otherwise, shall pass to and be vested in the
successor appointed by Lender Upon written request Iron, lender, Borrower shall
prepare, execute aud deliver any and all documents and other instruments, and do
or accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans and related
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<PAGE>
documents, or otherwise at Borrowers sole expense Borrower agrees to cooperate
with Lender and such successor in effecting the termination of Borrowers
responsibilities and rights hereunder, including without limitation, the
transfer of such successor for administration by it of the amount of cash equal
to the amounts which shall at the time be held by Borrower with respect to the
Mortgage Loans such to include without limitation payments of principal and
interest, tax and insurance escrows, et cetera.
27. Power of Attorney Borrower does hereby appoint Lender its true and
lawful attorney-in-fact for it and in its name, place and stead, for the limited
purpose of:
(a) in the event of an occurrence of an Event of Default, to
endorse checks, sign receipts, satisfy Mortgages, satisfy Mortgage Notes,
collect, deposit and disburse money owing by Mortgagors in connection with
Mortgage Loans and do such other acts and things as shall be necessary and
proper to service the Mortgage Loans and to protect, maintain and preserve the
value of the Mortgaged Property; and
(b) to execute in the name of the Borrower any financing
statements or assignments or UCC filing forms and to file the same.
(c) Borrower does further give and grant unto its said
attorney-in-fact full power and authority to do and perform every act necessary
and proper to be done in the exercise of any of the foregoing powers as fully as
it might or could do if present, with full power of substitution and revocation,
hereby ratifying and confirming all that its said attorney shall lawfully do or
cause to be done by virtue hereof.
For value received, receipt of which is hereby acknowledged, Borrower
does hereby intend that this power of attorney be coupled with an interest, and
does hereby make and declare this power of attorney to be irrevocable by it or
otherwise, renouncing all right to revoke this power or to appoint any other
person to perform any of the acts enumerated herein.
28. Miscellaneous.
(a) This Agreement contains the entire understanding of the
parties relating to the subject matter hereof and may not be waived, modified,
or changed in any way, unless such waiver, modification or change be expressly
stated as such in a written document signed by both Lender and Borrower No
failure or delay by the Lender in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor
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<PAGE>
shall any single or partial exercise by the Lender of any such right, power or
privilege preclude any other or fill -e exercise thereof by Lender or the
exercise by Lender of any other right, power or privilege.
(b) This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Florida.
(c) All notices, demands or other communications that are to be
given under this Agreement shall be in writing, addressed to the appropriate
parties and sent by regular or express nail, postage prepaid as follows, unless
another name or address is later substituted or unless otherwise required
herein:
To Lender SUNTRUST Bank, Miami, N A
777 Bracknell Avenue
Miami, Florida 33131
Attn: Robert E. Hummel
Senior Vice President
To Borrower: AMERI-CAP MORTGAGE GROUP, INC
1926 10" Avenue, Suite 304
Lake Worth, Florida 33461
Attn: Craig Bavaria,
Executive Vice President
` To Counsel: Maynard J. Hellman, Esq.
150 South Pine Island Road, Suite 500
Plantation, Florida 33324
(d) This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original but all of which counterparts together
constitute but one and the same Agreement.
(e) Wherever used, the singular number shall include the plural
and the plural the singular, and the use of any gender shall include all
genders.
(f) The rights, duties and obligations of Borrower under this
Agreement nay not be transferred or assigned without the prior written consent
of Lender.
29. Sub-Loan Limitations. Bank has agreed to advance sums from time to
time in accordance with the terms of this Agreement. Each advance is to be
secured by, among other things, Mortgage Loans which will be originated by
Borrower While all Mortgage Loans and other Collateral secure the Loan, advances
against delivery of certain types of Mortgage Loans (or Collateral) shall be
subject to certain gross dollar ceiling amounts as more particularly set forth
hereinafter:
(a) as to Category I Collateral, advances shall not exceed TEN
MILLION
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<PAGE>
AND NO/100 DOLLARS ($10 000,000 00);
(b) as to Category II Collateral, advances shall not exceed FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00);
(c) as to Category III Collateral, advances shall not exceed
THREE MILLION AND NO/100 DOLLARS ($3,000,000).
30. Funding Ratios/Time Line Limitations.
(a) Lender has agreed to advance sums from time to time in
accordance with the terms of this Agreement. Each advance is to be secured by,
among other things, Collateral (described by Category) which will he originated
by Borrower. While all Collateral secures the Loan, advances against delivery of
certain types of Collateral shall be subject to certain percentage-of-collateral
loan value ceiling amounts and length-of-time-held-as-Collateral limitations as
more particularly set forth hereinafter All advances will be sub-categorized as
to type of Collateral and Lender and Borrower will continuously monitor
Collateral by type of Collateral for the purpose, inter alia, of tracking the
amount of Loan advances, expressed as a percentage of "Collateral Loan Value",
which are secured by a particular type of Mortgage Loan (or Collateral). For
example, Lender will advance no more than a certain percentage of "Collateral
Loan Value" and this ceiling percentage may not be exceeded at any time When
Loan advances exceed the maximum ceiling percentage with respect to any
particular type of Collateral Borrower must, and shall, immediately repay Loan
principal in an amount necessary to re-establish the required not-to-exceed
ceiling percentage. Additionally, as to Collateral which has been held longer
than allowed under the length-of-time limitations, the Loan advances relating to
such Collateral shall be immediately repaid The length-of-time-held period shall
commence on the date of the Mortgage Loan proceeds are paid to or for the
benefit of Mortgagor for purposed of this paragraph only, the term "Collateral
Loan Value" shall mean whichever of the following results in the lowest gross
dollar amount for an advance;
(i) the principal balance of the Collateral;
(ii) the cash purchase price for the Collateral set
forth in the Purchase Commitment (provided a
Purchase Commitment is in existence); or
(iii) Market Value of the Collateral
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<PAGE>
Set forth in the following schedule are percentage-of-Mortgage-
Collateral Value and length-of-time-held limitations which relate to each type
of Collateral securing advances:
PERCENTAGE OF
TYPE OF COLLATERAL "MORTGAGE PERIOD OF TIME
COLLATERAL" VALUE HELD LIMITATION
------------------ ----------------- ---------------
Category I 98% 90 Days
Category II 90% 90 Days
Category III 98% 90 Days
In no event shall Lender advance a sum in excess of the "draft amount"
or purposes hereof, the "draft amount" is the amount delivered by Borrower to
the agent closing a particular mortgage loan on behalf of Borrower.
(b) Borrower shall promptly furnish substitute Collateral for
Collateral which is held by Lender beyond the applicable
period-of-time-held-limitation. Such substitute Collateral must be acceptable to
Lender. In the alternative, Borrower shall redeem the Collateral which has been
held by Lender beyond the applicable period-of-time-held-limitation by repaying
that amount of Loan principal advanced against such Collateral (which shall be
released upon such redemption or substitution).
31. Special Covenants.
(a) Borrowers total debt to Adjusted Net Worth (as hereinafter
defined) plus Guarantors Unrestricted Liquid Assets (as defined herein) ratio
shall not exceed 10:1 (ten to one) from the date first above set forth up to and
including the Maturity Date. [i.e. Total liabilities of Borrower divided by
(Adjusted Net Worth of Borrower plus Unrestricted Liquid Assets of Guarantor)
must be less than or equal to ten].
(b) Adjusted Net Worth shall be defined as Adjusted Tangible Net
Worth (as hereinafter defined) plus one percent (1%) of the outstanding unpaid
principal balance of the residential mortgage servicing rights owned by
Borrower. Adjusted Tangible Net Worth shall be defined as tangible net worth
determined under Generally accepted accounting principles (GAAP) less:
(i) deferred servicing fees or any capitalized purchased
or originated mortgage servicing rights;
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<PAGE>
(ii) loans, receivable or other advances due from
affiliates, officers, shareholders, directors,
subsidiaries or related parties of Borrower or
Guarantor;
(iii) loans, receivables or other advances due from
entities controlled by affiliates, officers,
shareholders, directors, subsidiaries or related
parties of Borrower or Guarantor;
(iv) goodwill and any other intangible assets as
defined by GAAP;
(v) investments other than investments ill marketable
securities;
(vi) loans and/or draws due from employees.
Total debt will include draft /checks issued, in the process
of collection.
(c) At no time, shall Borrowers book net worth, as defined under
GAAP, be less than ONE MILLION AND NO/100 DOLLARS ($1,000,000.00).
(d) At no time, shall Borrowers Adjusted Net Worth be less than
FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00).
(e) At no time, shall Borrowers Adjusted Net Worth plus
Unrestricted Liquid Assets (of Guarantor) be less than ONE MILLION AND NO/100
DOLLARS ($1,000,000.00).
(f) By December 31, 1999, the Adjusted Net Worth of Borrower must
increased to no less than ONE MILLION AND NO/DOLLARS ($1,000,000.00).
(g) At no time, shall Borrowers Modified Working Capital Ratio
(as hereinafter defined) be less than 1.25 to 1. Modified Working Capital Ratio
shall be defined as current assets less mortgage inventory divided current
liabilities less mortgage warehousing debt plus drafts/checks outstanding on
mortgage closings.
(h) Throughout the term of the Loan, Malcolm I,. Resnick and
Craig Bavaria must be actively involved in the management of Borrower..
(i) At no time, shall Guarantors Consolidated Tangible Net Worth
(as hereinafter defined) be less shall FIVE MILLION AND NO/100 DOLLARS
($5,000,000.00). Consolidated Tangible Net Worth shall be defined as
consolidated book net worth of Guarantor (including its subsidiaries), as
defined by GAAP, less goodwill; loans, receivables and any other advances due
from affiliates, officers, directors,
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<PAGE>
shareholders or related parties; and any other intangible assets, as defined by
GAAP, plus any loan loss reserves. I rom December 31, 1999 and thereafter loan
loss reserves will be excluded from the definition of Consolidated Tangible Net
Worth.
(j) Borrower shall provide a monthly certification to Lender
attesting to Borrowers compliance with all terms, conditions and covenants set
forth herein.
(k) Without the Lenders prior written consent, which may be
granted or withheld in the Lenders sole and absolute discretion, the Borrower
shall not directly or indirectly permit, create, incur, assume, permit to exist,
increase, renew or extend on or after the date hereof any Indebtedness on its
part, and any commitments, contingencies and credit availabilities, or apply for
or offer or agree to do any of the foregoing, except that the Borrower may incur
or permit to exist: (a) Indebtedness owed to the Lender; (b) short-term supplier
credit incurred in reasonable amounts in the ordinary course of the Borrowers
business; (c) equipment financing secured only by the equipment acquired with
such indebtedness; (d) loans, unrelated to the financing of mortgage loans or
mortgage servicing rights, for the purpose of office expansion, leasehold
improvements or new offices, etc.
(l) Without Lenders prior written consent Borrower shall not
modify, amend, change or rescind, or fail to enforce its rights under, and
Purchase Commitment.
32. Lender retains the continuing and absolute right to reject any
Mortgage File which does not conform to the requirements of this Agreement. If
Lender notifies Borrower that a Mortgage File does not satisfy the requirements
of this Agreement, Borrower shall within five (5) days from said notification
redeem such Mortgage File by paying to lender the balance advanced against the
related Mortgage Loan or, in the alternative, Borrower will correct to Lenders
satisfaction whatever deficiencies render the Mortgage File non-conforming or
replace same with a Mortgage Loan (evidenced by a Mortgage File) acceptable to
the Lender of equal or greater Market Value, all within said five (5) day period
of time.
33. lender Delivery of Mortgage Loans. At the expense of and upon
receipt of written request from Borrower, lender shall deliver Collateral (e.g.,
Mortgage Loans and/or Mortgage Files) directly to Secondary market Purchasers
provided that Lender simultaneously shall have, or prior thereto have received
the full cash price for the collateral. from time to time Secondary Market
Purchasers may be permitted by Lender to
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<PAGE>
deliver the purchase price after having received the Mortgage Loan
being purchased, such being under circumstances acceptable to Lender. Ill no
case will any advance allocated to Mortgage Loans delivered to a Secondary
Market Purchaser (on a deferred payment basis) be allowed to remain unpaid for a
period in excess of fifteen (15) Business Days. Advances allocated to Mortgage
Loans delivered to FNMA or FHLMC against future payment of the purchase price
may remain unpaid until the purchase price is funded by FNMA or FHLMC (which may
take longer than fifteen (1) Business Days). Borrower shall immediately reduce
the balance of the Loan in an amount equal to the purchase price for Mortgage
Loans where the purchase price remains unpaid for fifteen (15) Business Days
(except when the Secondary Market Purchaser is FNMA or FHLMC). In all cases
involving deferred payment by Secondary Market Purchasers, the purchase price
shall be paid only to lender and only the lender will be authorized to deliver
the applicable Mortgage Files.
The Borrower shall maintain a special account in its name with lender
for transactions involving deferred payments by Secondary Market Purchasers. The
Borrower hereby expressly authorizes and empowers the Lender to endorse its name
upon any check, draft, transfer or other instrument due to the Borrower, and to
deposit amounts due to the Borrower in such special account when deferred
payments are received. The Lender may, from time to time, at its sole
discretion, apply all or any part of such special account toward payment of the
Loan, including principal, interest accrued thereon, and other charges
outstanding in connection therewith, in such priority and upon such terms as the
Lender, in its sole discretion, may deem appropriate. Borrower hereby grants
Lender a security interest in the proceeds of the special account.
34. Loan package review fee. Each time lender examines documents
evidencing a Mortgage Loan for the purpose of approving Request for Advance
under paragraph 9 hereof, lender shall be paid a fee, for such services, in the
amount of TWENTY AND NO/I 00 ($20.00) for each Mortgage Loan reviewed..
35. Checks or Drafts. Borrower has designated various agents for the
purpose of closing Mortgage Loan transactions originated by Borrower. From time
to time a closing agent for Borrower, at the closing of a Mortgage loan
transaction, will deliver to persons entitled to receive proceeds from the
Mortgage Loan transaction checks or drafts against Borrowers account with Lender
(the Bank Drafts). From time to time the Bank Drafts will
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<PAGE>
he presented prior to Lenders receipt of the items of Collateral described in
paragraph 17(a), (b), (c) of this Agreement. As long as the Loan is not
otherwise in default, and Borrower provides a Request for Advance - (rust
Receipt acceptable to Lender, Lender will honor the Bank Drafts and will deem
the procedural conditions for an advance satisfied for a period of three (3)
Business Days. Within (3) Business Days of Lenders honoring said drafts,
Borrower shall comply with paragraph 9 (a) hereof or BORROWER shall immediately
pay to lender the amount of any draft(s) for which the requirements of paragraph
9 (a) have not been satisfied. A Bank Draft or Drafts aggregating more than 10%
of the committed amount of the Loan will not be honored absent satisfactory
compliance with the requirements of paragraph 9 (a). Any advances made by lender
in connection with any Bank Draft will be effective as of the date such draft
was presented to the Lender for payment. Borrower hereby grants to Lender a
security interest in the collateral relating to advances made under this
Paragraph 35.
36. Non-Use Fee: Quarterly in arrears, lender shall determine the
average principal balance outstanding under the Loan for the previous quarter.
In the event that the average principal balance outstanding was less shall 50%
of the committed amount of the Loan, Borrower shall pay to Lender a fee equal to
$2,500.00.
37. Year 2000 Compliance: T he Borrower has developed a comprehensive
working plan (the "Y2K Plan") to insure that the Borrowers and each Subsidiary's
software and hardware systems which impact or affect in any material way the
business operations of the Borrower and its Subsidiaries will be Year 2000
Complaint and Ready (defined below) by no later shall March 31, 1999. Upon the
request of the Lender, the Borrower will promptly deliver to the Lender a copy
of such Y2K Plan and a copy of any third party assessment of the Y2K Plan (if
available). The BORROWER and its Subsidiaries have met all previous Y2K Plan
milestones and will hereafter meet all future Y2K Plan milestones so that all
hardware and software systems will be Year 2000 Compliant and Ready in
accordance with the Y2K Plan, except where the failure to meet such milestones
has not had, or would not have, a material adverse effect on the business,
operations, assets or condition (financial or otherwise) of The Borrower and its
Subsidiaries on a consolidated basis. As used herein, "Year 2000 Compliant and
Ready" means that the Borrowers and each Subsidiary's hardware and software
systems with respect to the operation of their
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<PAGE>
business and their general business plan will: (i) handle date information
involving any and all dates before, during and/or after January 1, 2000,
including accepting input, providing output and performing date calculations in
whole or in part; (ii) operate accurately without interruption on and in respect
of any and all dates before, during and/or after January 1, 2000 and without any
change in performance; (iii) respond to any process two-digit year input without
creating any ambiguity as to the century; and (iv) store and provide date input
information without creating any ambiguity as to the century.
At the end of the fiscal quarter of the Borrower or at any other time
upon the request of the Bank prior to March 31, 1999, the Borrower shall deliver
to the Bank a certificate of the chief executive officer, chief
financial/accounting officer or chief technology officer to the effect that
nothing has come to his/her attention to cause his/her to believe that the Y2K
Plan milestones have not been met in a manner such that the Borrowers and its
Subsidiaries hardware and software systems will not be Year 2000 Compliant and
Ready.
MAKER HEREBY KNOWINGLY VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER OR IN CONNECTIONS WITH THE NOTE AND ANY AGREEMENT,
DOCUMENT OR INSTRUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR ACTIONS OF ANY PARTY HERETO AND/OR TO THE MORTGAGE LOAN WAREHOUSING AND
SECURITY AGREEMENT. THIS PROVISION IS MATERIAL INDUCEMENT FOR BANK ACCEPTING THE
NOTE FROM MAKER AND FOR BANK ENTERING INTO THE MORTGAGE LOAN WAREHOUSING AND
SECURITY AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above set forth
BORROWER:
AMERICA-CAP MORTGAGE GROUP, INC.
witnesses: a Florida corporation
By:
- -----------------------------
- -----------------------------
AMERICA-CAP MORTGAGE LENDING
CORP.,
witnesses: a Florida corporation
By:
- -----------------------------
- -----------------------------
AMERICA-CAP MORTGAGE SERVICES,
INC.
witnesses: a Florida corporation
- 35 -
<PAGE>
By:
- -----------------------------
- -----------------------------
LENDER:
SUNTRUST BANK, MIAMI, N.A.
witnesses: a National Banking Association
GUARANTOR:
FINANTRA CAPITAL, INC.,
witnesses: a Delaware corporation
By:
- -----------------------------
- -----------------------------
- 36 -
<PAGE>
STATE OF FLORIDA )
) SS:
COUNTY OF PALM BEACH )
THEREBY CERTIFY that on this day personally appeared before me, an
officer duly authorized to administer oaths and take acknowledgments
_____________________, the ____________ of ____________________________, a
__________________ corporation, to me well know to be the person described in
and who executed the foregoing instrument and he duly acknowledged the execution
thereof to be his free act and deed as such officer and that he affixed thereto
the official seal of the corporation.
WITNESS MY HAND and official seal at ___________________________ this
____ day of ___________ , 1999.
----------------------------
Notary Public,
- 37 -
<PAGE>
EXHIBIT "A"
THERE IS NO DOCUMENTARY STAMP TAX
PAYABLE WITH RESPECT TO THIS PROMISSORY NOTE
PURSUANT TO TERMS OF FLORIDA STATUTES 201.21
PROMISSORY NOTE
$10,000,000.00 _________________, 1999
FOR VALUE RECEIVED, the undersigned promises to pay to SUNTRUST BANK,
MIAMI, National Association, organized and existing under the laws of the United
States of America, or order, at its principal place of business in Miami,
Florida, or at such other place as the holder of this Note may designate in
writing, the principal sum of TEN MILLION AND NO/100 DOLLARS ($ l 0,000,000.00)
with interest thereon, in lawful monies of the United States, which shall be
legal tender in payment of all debts and dues, public and private, at the time
of payment; said principal and interest to be paid on the dates and is the
manner following, to-wit:
All advances of said principal sum shall bear interest from the date of
such advance at the interest rate described in paragraph 5 of that
Certain Mortgage Loan Warehousing and Security securing this Note. Said
int rest shall be paid monthly on the first day of the month following
the first advance and on the first day of each month thereafter until
this Note shall be paid in full. The outstanding principal balance and
accrued interest shall be due and payable on demand subject to the
provisions set forth in Paragraph 6 of that certain Mortgage Loan
Warehousing and Security Agreement securing this Note. In no event shall
the rate of interest exceed the maximum rate of interest allowed by law.
Conditioned upon there being no default of any of the terms or
conditions of this Note or the Mortgage Loan Warehousing and Security Agreement
securing this Note, the maker shall have the right to borrow, repay and
re-borrow from time to time, provided, however, the principal balance
outstanding at any time shall not exceed TEN MILLION AND NO/100 DOLLARS
($10,000.00 and further, provided, that the principal balance outstanding at any
time shall be further limited in accordance with the terms and conditions of
said Mortgage Loan Warehousing and Security Agreement.
Each maker, endorser and guarantor further agree, jointly and severally,
to pay all costs of collection, including a reasonable attorneys fees, including
attorneys fees in event of appeal, in case the principal of this Note or any
payment on the principal or any interest thereon is not paid at the respective
maturity thereof, or in case it becomes necessary to protect the security
thereof, whether suit be brought or not.
This Note is secured by a Mortgage Loan Warehousing and Security
Agreement of even date herewith and is to be construed and enforced according to
the laws of the State of Florida. Upon default in the payment of principal and
/or interest due on any note secured by the said Mortgage Loan Warehousing and
Security Agreement, all notes so secured and remaining unpaid shall forthwith
become due and payable notwithstanding their tenor.
It is agreed hereby that if default be made in the payment of the
principal sum above mentioned or any installment thereof, or any interest
thereon, as above provided, or if default be made in the performance of or
compliance with any of the covenants and conditions of said Mortgage Loan
Warehousing and Security Agreement securing this Note, then, in any of all such
events, the entire amount of principal of this Note, with all interest then
accrued, shall at the option of the holder OF THIS NOTE AND without notice (the
maker hereby expressly waives notice to such default), become due and
collectible, time being of the essence of this Note. The total outstanding
indebtedness from and after the time of default shall bear interest at the
annual rate of eighteen percent (18%).
Each maker, endorser, and guarantor, if any, or any person, firm or
corporation becoming liable under this Note, hereby consents to any extensions
or renewals of this Note or any part thereof, without notice, and agrees that
they will remain liable under this
- 38 -
<PAGE>
Note (luring any extensions or renewals thereof, until the debts represented
hereby are paid in full.
Each installment due under this Note not paid at maturity, whether in
course or after acceleration, shall bear interest at the maximum rate of
interest permitted by law from the date of such maturity until paid.
Each maker now or hereafter becoming a party hereto severally waives
demand, protest and notice of maturity, non-payment or protest and all other
requirements necessary to hold each of them liable as makers, endorsers and
guarantors.
This Note may not be changed orally, but only by an arrangement in
writing, signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.
MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION THEREON, OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE AND ANY AGREEMENT, DOCUMENT OR
INSTRUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY PARTY HERETO AND/OR TO THE MORTGAGE LOAN WAREHOUSING AND SECURITY AGREEMENT.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR BANK ACCEPTING THIS NOTE FROM MAKER
AND FOR BANK ENTERING INTO THE MORTGAGE LOAN WAREHOUSING AND SECURITY AGREEMENT.
AMERI-CAP MORTGAGE GROUP, INC.
A Florida corporation
By:
------------------------------
AMERI-CAP MORTGAGE LENDING CORP.,
a Florida corporation
By:
------------------------------
AMERI-CAP MORTGAGE SERVICES, INC.
a Florida corporation
By:
------------------------------
- 39 -
<PAGE>
EXHIBIT "B"
OFFICERS CERTIFICATE
AND
REQUEST FOR ADVANCE
_________________________, 1999
SunTrust Bank Miami. N.A.
777 Brickell Avenue
Miami Florida 33131
RE: Mortgage Loan Warehousing and Security Agreement
AMERI-CAP MORTGAGE GROUP, INC., AMERI-CAP MORTGAGE
LENDING CORP., and AMERI-CAP MORTGAGE SERVICES, INC.
In accordance with the terms and conditions of that certain Mortgage
Loan Warehousing and Security Agreement dated as of the _______ day of 19__ by
and between SUNTRUST Bank Miami, N.A. (hereinafter referred to as "Lender ") and
AMERI-CAP MORTGAGE GROUP, INC. and AMERI-CAP MORTGAGE LENDING CORP. and
AMERI-CAI MORTGAGE SERVICES, INC. (hereinafter referred to as "Borrower"),
Borrower hereby applies for an advance in the amount of $________________. All
capitalized terms are as defined in the Mortgage Loan Warehousing and Security
Agreement.
Borrower hereby certifies to Lender with the knowledge that Lender is
relying on said certification that all documents including the Mortgage Files
required to be delivered and all conditions required to be satisfied pursuant to
the terms of the aforementioned Mortgage Loan Warehousing and Security Agreement
for the advance hereunder by Lender have been delivered and/or satisfied.
The limitations on the amounts which can be advanced by Lender pursuant
to the terms of the Mortgage Loan Warehousing and Security Agreement on the
Mortgage Packages delivered hereunder as follows:
1. CATEGORY I COLLATERAL
The least of:
<TABLE>
<CAPTION>
<S> <C> <C>
(a) 98% of the outstanding principal balance of the mortgage
indebtedness of such Collateral as of this date $
--------------
(b) 98% of the cash purchase price under Commitments applicable to
this Category $
(c) 98% of the Market Value of such Collateral as of this date $
--------------
2. CATEGORY II COLLATERAL:
The least of:
(a) 90% of the outstanding principal balance of the mortgage
indebtedness of such Collateral as of this date $
--------------
(b) 90% of the cash purchase price under Commitments applicable to
this Category $
(c) 90% of the Market Value of such Collateral as of this date $
3. CATEGORY III COLLATERAL:
- 40 -
<PAGE>
The least of:
(a) 98% of the outstanding principal balance of the mortgage
indebtedness of such Collateral as of this date $
--------------
(b) 98% of the cash purchase price under Commitments applicable to
this Category $
(c) 98% of the Market Value of such Collateral as of this date $
--------------
</TABLE>
Borrower hereby further certifies that there exists as of this date no
Event of Default under the Mortgage Loan Warehousing and Security Agreement and
that Borrower is in compliance with all the terms, covenants and conditions of
said Agreement. Borrower hereby further certifies that the advance hereby
requested, as said advance relates to a particular Mortgage Loan, does not
exceed the "draft amount" which relates to said Mortgage Loan.
Very truly yours,
AMERI-CAP MORTGAGE GROUP, INC.,
AMERI-CAP MORTGAGE LENDING CORP.,
AMERI-CAP MORTGAGE SERVICES, INC.
By:
----------------------------------
Authorized Officer
- 41 -
<PAGE>
EXHIBIT "C"
ESTOPPEL CERTIFICATE
_______________, 1999
SunTrust Bank, Miami. N.A.
777 Brickell Avenue
Miami, Florida 33131
RE: Mortgage Loan Warehousing and Security Agreement
AMERI-CAP MORTGAGE GROUP, INC., AMERI-CAP MORTGAGE LENDING
CORP. and AMERI-CAP MORTGAGE SERVICES, INC.
Gentlemen:
In connection with the above referenced agreement, we hereby certify to
you that the following mortgage loans have the balances outstanding as shown
hereunder and further that there exits no event of default in any of said
mortgage loans. We further certify to you that all loans constitute first
mortgage liens and otherwise fully comply with the requirements of the
referenced agreement.
LOAN OFFICIAL INTEREST PRINCIPAL
NUMBER MORTGAGOR COUNTY RECORDS BOOK PAID TO BALANCE
AND PAGE
------ --------- ------ ------------ ------- -------
Very truly yours,
AMERI-CAP MORTGAGE GROUP, INC.,
AMERI-CAP MORTGAGE LENDING CORP.,
AMERI-CAP MORTGAGE SERVICES, INC.
By:
----------------------------------
Authorized Officer
(CORPORATE SEAL)
- 42 -
<PAGE>
EXHIBIT "D"
VALUATION REPORT OF
AGGREGATE ASSIGNED COLLATERAL
AS OF______________________
RE: Mortgage Loan Warehousing and Security Agreement AMERI-CAP
MORTGAGE GROUP, INC., AMERI-CAP MORTGAGE LENDING CORP., and
AMERI-CAP MORTGAGE SERVICES, INC.
1. CATEGORY I COLLATERAL
Aggregate advances outstanding
(not to exceed $10,000,000) $
----------
the mortgage indebtedness of
Collateral $
----------
Loan to value ratio %
(not to exceed 98%)
(b) Cash purchase price under the
Commitments applicable to this
Category $ $
----------- ------------
Loan to value ratio %
(not to exceed 98%)
(c) Current Market Value of Collateral
Loan to value ratio %
(not to exceed 98%)
2. CATEGORY 11 COLLATERAL:
Aggregate advances outstanding
(not to exceed $500,000.00) $
-----------
(a) Outstanding principal balance of
the mortgage indebtedness of
Collateral $
----------
Loan to value ratio %
(not to exceed 90%)
(b) Cash purchase price under the
Commitments applicable to this
Category $
----------
Loan to value ratio %
(not to exceed 90%)
(c) Current Market Value of Collateral
Loan to value ratio %
(not to exceed 90%)
- 43 -
<PAGE>
3. CATEGORY 111 COLLATERAL
Aggregate advance outstanding
(not to exceed $3,000,000.00) $
-----------
(a) Outstanding principal balance of
the mortgage indebtedness of
Collateral $
-----------
Loan to value ratio %
(not to exceed 98%)
(b) Cash purchase price under the $
-----------
Commitments applicable to this
Category
-----------
Loan to value ratio ____%
(not to exceed 98%)
(c) Current Market Value of Collateral $
-----------
Loan to value ratio ______%
(not to exceed 98%)
5. Total Aggregate Outstanding
Advances of
Category I Collateral $
------------
Category II Collateral $
------------
Category III Collateral $
------------
------------
TOTAL (NOT TO EXCEED
$ 10,000,000.00) $
------------
AMERI-CAP MORTGAGE GROUP, INC.,
AMERI-CAP MORTGAGE LENDING CORP.,
AMERICAP MORTGAGE SERVICES, INC.
Dated:
------------------ -------------------------------------
By:
---------------------------------
Authorized Officer
(CORPORATE SEAL)
- 44 -
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,241,404
<SECURITIES> 0
<RECEIVABLES> 7,685,018
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,932,382
<PP&E> 407,082
<DEPRECIATION> 68,249
<TOTAL-ASSETS> 15,172,978
<CURRENT-LIABILITIES> 4,577,345
<BONDS> 0
0
34,588
<COMMON> 55,151
<OTHER-SE> 24,289
<TOTAL-LIABILITY-AND-EQUITY> 15,172,978
<SALES> 2,207,013
<TOTAL-REVENUES> 2,207,013
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,562,005
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 83,647
<INCOME-PRETAX> (438,639)
<INCOME-TAX> 0
<INCOME-CONTINUING> (438,639)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (495,039)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> (0.11)
</TABLE>
