UNITED STATES
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, 2000
[ ] Transition report under Section 13 OR 15(d) of the Exchange Act for the
transition period from to
Commission File Number:
Mirador Diversified Services, Inc.
- --------------------------------------------------------------------------------
Name of Registrant as Specified in its Charter)
Nevada 88-0431561
------------------------ ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
675 Lynnhaven Parkway 2nd Floor, Virginia Beach VA
- --------------------------------------------------------------------------------
of Principal Executive Offices)
(757) 463-3303 fax (914) 412-2564
- --------------------------------------------------------------------------------
Telephone Number, Including Area Code)
TCT Financial Group B, Inc.
- --------------------------------------------------------------------------------
(Former Name)
Mirador Diversified Services, Inc. (1) has filed all reports required by Section
13 or 15(d) of the Securities exchange Act of 1934 during the preceding 12
months has been subject to such filing requirements for the past 90 days.
[X] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 subsequent to the distribution of securities under a plan confirmed
by a court.
[ ] Yes [X] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Number of shares outstanding of each classes of common stock, as of the latest
practicable date:
COMMON STOCK, $0.001 PAR VALUE PER SHARE: 25,000,000 (AS OF JANUARY 1, 2000).
- --------------------------------------------------------------------------------
Transition Small Business Disclosure Format (check one) :
[ ] Yes [X] No
<PAGE>
MIRADOR DIVERSFIED SERVICES, Inc.
QUARTERLY REPORT ON FORM 10-QSB
FOR THE QUARTER ENDED March 31, 2000
TABLE OF CONTENTS
Item
- ----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements. (See attached)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Overview
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
The following describes certain factors which produced changes in the
results of operations of The Mirador Diversified Services, Inc. (the "Company")
during the three months ended March 31, 2000 and as compared with the three and
ended December 31, 1999 as indicated in the Company's Consolidated Financial
Statements. The following should be read in conjunction with the Consolidated
Financial Statements and related notes. Historical results of operations are not
necessarily indicative of results for any future period. All material
inter-company transactions have been eliminated in the results presented in this
Quarterly Report.
Certain matters discussed in this Quarterly Report constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act") and involve risks and
uncertainties. These forward-looking statements relate to, among other things,
expectations of the business environment in which the Company operates,
projections of future performance, perceived opportunities in the market and
statements regarding the Company's mission and vision. The Company's actual
results, performance or achievements may differ significantly from the results,
performance, or achievements expressed or implied in these forward-looking
statements. See "-- Forward-Looking Statements."
1
<PAGE>
OVERVIEW
THE COMPANY
The Company was organized to acquire and develop companies with financial
related products and services in various markets throughout the United States.
In late 1999, the Company established a new strategic objective of refocusing
the Company's mission to pursue new complimentary Internet-related and
e-commerce opportunities in the mortgage banking markets. In The first quarter
of 2000, the Company actively implemented its new mission by purchasing a
company whose business thrust is in line with the new strategy. See "The
Company's Business Case for New Electronic Commerce and Internet Business
Directions."
On February 10, 2000, the Company executed an agreement to acquire all
outstanding common stock of Mirador Diversified Services, Inc., ("Mirador"), a
privately held provider of Internet-based information and electronic commerce
services servicing the Mortgage Banking market. The acquisition was finalized on
March 15, 2000 and is consistent with the Company's new business objectives of
pursuing Internet-based, business-to-business e-commerce opportunities. The
Company is now operating MIRADOR as a wholly-owned subsidiary and plans to
significantly expand MIRADOR's operations to offer new enhanced information
services in the financial market, targeting existing and new corporate clients,
property management groups, real estate agencies and worldwide strategic
partners.
Upon closing the Mirador acquisition, the Company established itself as a
provider of Internet-based, electronic commerce services in a rapidly growing
market for financial information services, serving an expanding base of
households offering financial services via both E-commerce and conventional
delivery methods.
MIRADOR'S principal service integrates a user-friendly, Internet-based interface
with a sophisticated data-warehousing system to deliver automated solutions for
the financial services market typically involving hundreds or, in some cases,
thousands of properties and activities worldwide. By automating the users search
process, and also providing user-friendly Internet access to a sophisticated
data warehousing system, MIRADOR can provide dramatic cost savings to users,
typically 25% or more compared to costs for manual processes. The
Internet-based, electronic commerce and operational platforms developed to
support MIRADOR can be used to address similar needs in other vertical markets.
Since closing the MIRADOR transaction on March 15, 2000, the Company has
provided new funding and achieved more than 5% percent growth of its corporate
loan closings.
2
<PAGE>
THE MIRADOR DIVERSFIED SERVICES, INC.
Quarterly Report on Form 10-QSB
For the Quarter Ended March 31, 2000
- --------------------------------------------------------------------------------
The growth of loan clients attests to the Company's increasing market visibility
and acceptance within the global mortgage banking community. The Company's
Internet-based, e-commerce services are now being used by more than 35,000 hits
per month producing an average of 700 mortgage loan applications per month.
Additionally individual users of our mortgage loan service by homebuilders and
real estate agencies are on the rise due to the expanded product line and the
inclusion of E-commerce delivery methods. While there are no assurances such
growth can be sustained or the Company will have sufficient funding to meet
future needs, management believes the Company's growth and performance to date
is consistent with the Company's objective of attaining a leadership position in
the market for Internet-based, mortgage loan applications and expanding into
other e-commerce services.
The integration of operations was consistent with the Company's planned strategy
of refocusing its business objectives to pursue new e-commerce and
Internet-based business opportunities to create significant shareholder value.
The Company's principal executive offices are located at 675 Lynnhaven
Parkway 2nd Floor, Virginia Beach Virginia, 23452 and its telephone number is
(757) 463-3303.
THE COMPANY'S BUSINESS CASE FOR NEW ELECTRONIC COMMERCE AND INTERNET BUSINESS
DIRECTIONS
Since inception, the Company has primarily pursued opportunities in the
conventional financial services market. Recognizing the explosive growth of the
Internet, and the long-term prospects for integrating Internet-based services
with conventional delivery methods, in late 1999 the Company established a new
business objective to pursue new opportunities on the Internet To User, ("I2U"),
electronic commerce markets in conjunction with its consumer-based operations.
In 1998, the consumer segment of electronic commerce consumer retailing revenues
totaled $7.8 billion, with business-to-business e-commerce service revenues
estimated at $43 billion, according to a recent study by Forrester Research, a
leading information industry-consulting firm. By the year 2003, I2U e-commerce
is expected to increase to $1.3 trillion, representing about 9% of all projected
US trade in the year 2003. The recently closed acquisition of MIRADOR; the
Company's initial step in entering the market for e-commerce, Internet-based
electronic commerce services which management believes is the optimum strategy
to deliver substantial value to the Company's shareholders.
Another key element in the Company's new growth strategy is to focus on
next generation, "pro-active" I2U electronic commerce solutions which employ
e-commerce solutions to address labor-intensive processes, rather than to solely
displace paper-based solutions. Management believes such pro-active e-commerce
solutions, which go well beyond today's basic electronic cataloging, web portals
and web-based ordering services, will change users' business processes, create
significant operating efficiencies and dramatically reduce users' costs. More
importantly, management believes such pro-active e-commerce services will play a
key role in the future market for I2U e-commerce services described above.
MIRADOR represents a pro-active e-commerce service, which in management's view,
is ideally positioned to meet the needs of the financial services market.
Mirador's expanding corporate user base demonstrates strong, growing market
acceptance for the Company's e-commerce services. Since acquiring the new United
Mortgagee subsidiary, the total base of users has increased to more than 700
clients per month as of May 2, 2000, further attesting to the growing acceptance
of the Company's service.
The Company is expanding its management team and plans to secure new
financing to support both expansion of the MIRADOR revenue base, as well as
development of new enhancements and related Internet-based services targeting
the middle-income consumers.
See "Recent Events - Management Additions."
While the outlook for Internet-based, electronic commerce services is
impressive, there can be no assurances that the Company will secure the
additional investment capital needed to succeed in this highly competitive,
rapidly changing and technology driven market, nor are there any assurances that
the Company's initial acquisition of MIRADOR will be successful. Investors
should carefully review the risk factors described in this document and other
documents filed by the Company with the Securities and Exchange Commission. See
"Management Discussion and Analysis of Financial Condition and Results of
Operations - Forward Looking Statements."
3
<PAGE>
PRODUCTS AND CUSTOMERS
MIRADOR is the Company's current flagship service provider and is the first
of a family of new Internet-based e-commerce services developed to meet the
needs of the Company's customers and strategic partners. MIRADOR offers an
Internet-based system that automates the process for providing consumers a
financial check up. MIRADOR integrates a user-friendly Internet interface,
sophisticated data-warehousing system and a powerful relational database system
to deliver automated solutions for the referral process to assist its sales
staff in crosses selling its services. MIRADOR is a retail provider of proven
financial products via electronic commerce solutions that automate user
application processes, dramatically reduces costs, eliminates paper-based
communications, improves operations and enhances management control of labor and
capital.
The Company offers or expects to soon offer e-commerce solutions to its
sales staff including:
- On-site credit approval
- Financial Needs Analysis
- Data Management and Mining Companies
- Real Estate-Agencies.
RECENT EVENTS
NONE
ISSUANCE OF SECURITIES
MANAGEMENT ADDITIONS
In April of 2000, the Company appointed Elroy Eugene Gravely, Chief
Executive Officer of the Company. Mr. John Jones, one of the co-founders of
Mirador Diversified Services, Inc., was appointed Acquisitions Officer of the
Company on April 13, 2000.
List all Officers and Directors
JOHN JONES, CEO/PRESIDENT, AGE: 50
Mr. Jones has more than twenty-seven years success as manager, administrator
with several of the country's premiere fortune 500 companies as well as
President and owner of several acquisitions including Mirador Diversified
Services, Inc. As a licensed insurance agent of Jones Financial Services, Mr.
Jones became a Regional Account Manager. For more than five years Mr. Jones
coordinated implementation and servicing of new and existing accounts,
introduced new products as well as product updates; he trained over 250 agents
to utilize computer generated financial needs analysis and all fields of sales
and marketing of Life, Health, Disability, HMO, Home and Auto Insurance
Products. Through the computer generated financial needs analysis, he developed
a system to generate mortgage sales using creative refinancing strategies
involving debt consolidation.
ELROY "GENE" GRAVELY, CHAIRMAN, AGE: 55
Co-Founder of California Finance Express, with 27 years mortgage and marketing
experience. Former Western Vice President for Empire of America retail division.
Second Vice President of Gill Mortgage Los Angeles Division. Responsible for
development and implementation of marketing and origination strategies in
specialized areas as FHA/VA Fannie Mae and HUD.
Located: Virginia Beach, VA
Linda Raynell, CORPORATE SECRETARY AND VICE PRESIDENT, AGE: 51
With over twenty years managing corporate recruitment with a major fortune 500
company Ms. Raynell has placed top corporate executives throughout the world.
Ms. Raynell's experience includes extensive interface with foreign consulates
involving visas, immigration and relocation of management and their families. As
manager of over 500 employees Ms. Raynell implemented and obtained the
corporation's ISO 9002 Quality Program for the employment services division. Her
knowledge of corporate building and mass recruiting service infrastructure
brings together MDSI's executive management team .
Located: Virginia Beach, VA
GARY DAUGHTREY, VICE PRESIDENT, AGE: 50
With more than 20 years financial services experience, co-founder has enjoyed
double digit growth since inception of the company. Vice President comes with
extensive experience as a Savings and Loan Workout specialist through locating
and working investors from offshore to hard moneylenders. Rocky Mountain
division is projecting more than $100,000,000 in gross mortgage loan production
over the next twelve months.
Located: Denver, CO
CHARLES JAMES, OUTSIDE DIRECTOR, AGE: 60
Over 30 years of experience in sales, sales management and aDMINISTRATION of
life and health insurance products. Major strengths in problem solving,
communication, motivation, organization, operations, recruiting, and training.
4
<PAGE>
Professional employment history:
Direct sales and marketing activities. Supervise a sales force of over 500
employees. Develop marketing plans, sales strategies, and campaigns to achieve
premium income and profit objectives. Manage an annual operating budget of over
$2 million. Recruit, select, and provide management development manpower
development, review procedures, and product development.
Successfully managed company marketing and sales forces through conversion from
debit sales force to ordinary sales force Established a company record for now
sales. Improved productivity reduced stiff and sales expenses.
Located: Los Angeles, CA
DAVID ALEXANDER, VICE PRESIDENT AGE: 33
Summary of Experience, as co-founder of Mirador Diversified Services, Inc. and
Principle Engineer, Mr. Alexander brings to the organization 15 years of
experience in the high tech industry in the development and testing of
communications technology. He is currently involved with a leading developer and
supplier of LIGHT PULSE FIBRE CHANNEL TECHNOLOGY, an ANSI standard
communications interface that delivers unprecedented bandwith, connectivity and
reliability to both I/O and networking applications offering full duplex fiber
channel 1,065 Gb/s transfers with full support for FC services Class 2, 3 and
intermixed, while extending connectivity distances up to 10 kilometers. His
broad knowledge of networking capabilities will bring Mirador to the high
performance levels to communicate and eliminate the bottlenecks that degrade
performance.
Located: Mission Viejo, CA
T.L. BYRD, OUTSIDE DIRECTOR AGE: 39
Summary of Experience, eighteen years of in-depth, diverse experience and proven
ability in the management of services activities in the financial industry.
Fourteen years experience at the management level. Effective in liaison with
secondary marketing, underwriters, legal counsel, consultants, realtors, board
members, investors and government agencies. Multi-disciplined background in the
financial industry with direct experience in personnel administration, training
and organizational goal setting. Education includes management and accounting
training at the American Institute of Banking, and Jones Real Estate College Law
Practice.
Located: Denver, CO
KENT D. STUCKI, COO AGE: 38
As Executive Account Manager at NCR/ATT, Mr. Stucki increased sales 300% through
client development strategic planning. His operations expertise is valuable in
both recruitment, cost assessment and quality control efficiency. As former
owner and president of American Capital Mortgage Group, LLC.
Located: Denver, CO
RESULTS OF OPERATIONS
FIRST QUARTER OF 2000 COMPARED TO FOURTH QUARTER OF 2000
REVENUES
The Company obtained the operations of its Internet-based information and
electronic commerce services servicing the Mortgage Services market in the first
quarter of 2000. E-commerce revenues for the first quarter of 2000 are expected
to increase to $50,000 from $0 in the first quarter of 2000. The Company expects
that revenues from MIRADOR will continue to grow at an accelerated rate on a
long-term basis.
COST OF GOODS SOLD
Total cost of money for the first quarter of 2000 increased primarily due
to the Company's growing use of warehouse borrowing to fuel its loan volume.
GROSS PROFIT/MARGIN
The gross profit margin for the first quarter of 2000 will increase in the
future as the company's strategic partners initiate volume discount pricing to
the Company for warehouse borrowing. The Company does not expect the variable
portion of cost of loans sold to increase for 2000 due to the fact that costs
are decreasing as we gain experience in the e-commerce marketplace.
5
<PAGE>
OPERATING EXPENSES
Selling, general and administrative expenses increased in the first quarter
of 2000 from $0 in the fourth quarter of 1999 due to establishing a corporate
structure for the holding company. The increase in selling, general and
administrative expenses was due to the hiring and development of an experienced
management and operations team. Wages and associated taxes increased in the
first quarter of 2000 from $0 in the fourth quarter of 1999 those developing a
corporate administrative staff. An increase in expenses related to consultants
required while the Company was building its internal capabilities rose in the
first quarter of 2000 from $0 in the fourth quarter of 1999. The Company expects
to reduce its expenditures for external consultants in the future. Legal and
professional fees increased in the first quarter of 2000 from $0 in the fourth
quarter of 1999 the company's unusual high number of corporate strategic
acquisitions. There are no comparisons for past performance due to the recent
formation of the existing business.
Operating expenses increased in the first quarter of 2000 from $0 in the
fourth quarter of 1999. In addition to the increase in selling, general and
administrative expenses discussed above, the increase in operating expenses was
due to amortization of goodwill in association with the MIRADOR purchase.
According to generally accepted accounting principles, the amortization expense
of was recorded in the first quarter of 2000.
OTHER EXPENSES
Interest expense increased in the first quarter of 2000 from $0 in the
fourth quarter of 1999 due to the Company's obligations to lenders as the
Company experienced more rapid growth.
LIQUIDITY AND CAPITAL RESOURCES
** The Company has incurred significant operating and net losses as a result
of the development and operation of its service platform and supporting
networks. The Company does not expect such losses would continue to increase as
the Company focus on the development, construction and expansion of its service
platform and underlying networks and expands its customer base. Cash provided by
operations would be sufficient to fund the regulated growth internally but would
require additional funding for the planned expansion of the product offerings
and resultant client base. The Company is continually reviewing various sources
of additional financing to fund its growth. As of May1, 2000, the Company had
received advances from private investors.
At December 31, 1999, the Company consolidated the operations of six
mortgage brokerages and one mortgage bank. The consolidated companies had cash
and cash equivalents of $14,143,247 from the sale of the Company's e-commerce
services and conventional lending. Net cash used by operating activities were
$11,810,230 for that same period compared to $0 in the last three quarters of
1999.
** Net cash provided by financing activities in the first three quarters of
2000 totaled will be determined at the completion of the first quarter audit.
Cash, which consisted primarily of proceeds from, notes payable to the Company
from private investors as compared to $0 in the last quarter of 1999.
RELATED PARTY TRANSACTIONS
NONE
6
<PAGE>
FORWARD-LOOKING STATEMENTS
MARKET OPPORTUNITY -- The market for Mirador is virtually unbounded. While stock
brokers and banks/insurance companies go after the top tier of the market and
home finance companies go after the bottom of the market, no one has
successfully defined a strategy for the bulk of the market -- homeowners making
between $50-$100,000 per year.
The market opportunity as seen through Mirador's strategy is to capture the
financial needs of mid-market homeowners. These homeowners are most often
married with children with both parents working. These homeowners need all of
the elements of financial assistance starting with a financial plan. From the
financial plan the next steps are most often disability and/or life insurance
followed by a savings and investing plan.
This market today is very poorly served and very fragmented. The mid-market
homeowner has to deal with a mortgage company, insurance agent or two, a local
bank, a stock broker, a tax preparation service, a home loan company, etc., etc.
As a result, most of this market does not have even a basic financial plan or
adequate life insurance. And the mid-market homeowner pays too much for
financial products that are not well matched to their needs. For example, whole
life and annuities are very high margin products for insurance agents, but are
not usually good products for the middle-income market.
Mirador intends to rapidly become the dominant provider of financial products
and service to the middle-income market by offering a bundle of offerings
tailored to the needs of this market.
OFFERING OVERVIEW -- Mirador intends to enter the market with its mortgage
products as currently structured and quickly add free financial planning based
on its use of the data gathered in the mortgage application process. The free
financial plan will be the platform for all of the other financial products.
In summary, Mirador has developed a phased approach to market entry and growth
and has identified the key success factors at every step.
KEY PARTNERS -- Mirador will develop a network of key partners in technology,
products and services, and distribution/sales. The first key partner is Info
Well, based in Blue Bell, Pennsylvania.
Info Well has three products:
WWW.INFOWELL.COM provides an automated interface to transmit the broker's
loans to correspondent wholesale lenders for approval, plus order required
vendor services (credit reporting agencies, appraisers, etc.) Wholesaler
lenders and vendors pay transaction fees for broker business.
WWW.E-REFERRAL.NET is the network of marketers that pay user fees for
access to the extremely detailed consumer database. For example, insurance
companies or credit card companies. Each broker "owns" their consumers'
data that resides in secure Info Well "data vaults". Fees paid by the
referred marketers are shared between the originating broker and InfoWell;
WWW.WHEREAREMYPAPERS.COM is the consumer access portal. This allows
consumers, each with their own secure web page, to view loan status and
always have a place to find important papers such as their deed, title
search, credit history, or mortgage information. Consumers will also find
individually tailored offers from e-Referral.net participants. Brokers
provide their customers a unique service and InfoWell will earn "click
through" fees.
7
<PAGE>
Mirador has strong development ties to InfoWell and intends on using the
InfoWell products to process loans, to use the customer database for financial
products, and to build a one-to-one relationship with the Mirador customers.
Mirador is in the development stage of an alliance with a national financial
Services Company to cross sell mortgages, insurance and investments (mutual
funds).
Statements that are not historical facts, including statements about the
Company's confidence in its prospects and strategies and its expectations about
expansion into new markets, growth in existing markets, and the Company's
ability to attract new sources of financing, are forward-looking statements that
involve risks and uncertainties. These risks and uncertainties include, but are
not limited to:
- - - THE COMPANY HAS A SHORT OPERATING HISTORY UPON WHICH TO BASE AN INVESTMENT
DECISION. The Company established a new strategic objective of refocusing the
Company's mission to pursue Internet-related and e-commerce opportunities in the
financial services markets in late 1999. As a result, its business plan is
currently in the early stage and, accordingly, the Company has a limited
operating history on which to base an evaluation of its business and prospects.
The Company's prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in their early stage of
development. To address these risks, the Company must, among other things,
attract a number of major corporate clients/customers and strategic alliance
partners, implement and successfully execute its marketing and sales strategy,
and successfully recruit and motivate qualified sales and technical personnel.
There can be no assurance that the Company will be successful in addressing such
risks, and the failure to do so could have a material adverse effect on the
Company. The likelihood of success of the Company must be considered in light of
the problems, expenses, complications and delays frequently encountered in
connection with the development of an early stage business. It is impossible to
predict the degree of success the Company will have in achieving its objectives.
THE COMPANY REQUIRES SIGNIFICANT ADDITIONAL CAPITAL, WHICH IT MAY NOT BE
ABLE TO OBTAIN. As the Company continues to implement its business plan, present
sources of financing will not be adequate to support the Company's increased
cash needs. Furthermore, the Company's entry into new Internet and electronic
commerce business areas will create additional demands for investment capital.
The Company may not be able to obtain future equity or debt financing on
satisfactory terms or at all. If the Company fails to obtain necessary
short-term financing, it will not be able to continue operations. Long-term
liquidity will depend on the Company's ability to obtain long-term financing and
attain profitable operations. The Company's auditors issued an opinion with its
most recent audit of the Company's financial statements raising doubt about the
Company's ability to continue as a going concern if it does not obtain
additional debt or equity financing.
- - - THE COMPANY'S FAILURE TO PROTECT OR MAINTAIN ITS INTELLECTUAL PROPERTY
RIGHTS COULD PLACE IT AT A COMPETITIVE DISADVANTAGE AND RESULT IN LOSS OF
REVENUE AND HIGHER EXPENSES. The Company's performance and ability to compete
are dependent to a significant degree on its proprietary electronic commerce
services. The steps the Company has taken to protect its proprietary
intellectual property rights may not prevent or deter someone else from using or
claiming rights to its intellectual property.
Third party infringement or misappropriation of trade secrets, copyrights,
trademarks or other proprietary information could seriously harm the Company's
business. The Company also cannot assure that it will be able to prevent the
unauthorized disclosure or use of its proprietary knowledge, practices and
procedures if its senior managers or other key personnel leave it. In addition,
although the Company believes that its proprietary rights do not infringe on the
intellectual property rights of others, other parties may claim that it has
violated their intellectual property rights. These claims even if not true,
could result in significant legal and other costs and may distract management.
- - - THE COMPANY'S BUSINESS PROSPECTS DEPEND ON DEMAND FOR AND MARKET ACCEPTANCE
OF THE INTERNET. The Company is currently dependent on the Internet as an access
and transmission medium to provide its services. Although the Company believes
that the acceptability and usability of the Internet will increase over time,
any increase in the rates charged by Internet service providers resulting in a
decreased usage of the Internet or decreased use of the Internet for electronic
commerce transactions, would have a materially adverse effect on the Company's
operating margins. Failure to promote Internet access as the preferred means of
accessing the Company's service could also have a materially adverse effect on
the Company, including the possibility that the Company may need to
significantly curtail or cease its Internet based e-commerce operations or to
develop its own capabilities at a cost in excess of the Company's ability to
fund such undertakings.
- - - IF THE COMPANY'S MARKET DOES NOT GROW AS EXPECTED, ITS REVENUES WILL BE
BELOW ITS EXPECTATIONS AND ITS BUSINESS AND FINANCIAL RESULTS WILL SUFFER.
8
<PAGE>
The Company is engaging in a developing business with an unproven market.
Accordingly, it cannot accurately estimate the size of its market or the
potential demand for its services. If its customer base does not expand or if
there is not widespread acceptance of its products and services, its business
and prospects will be harmed. The Company believes that its potential to grow
and increase its market acceptance depends principally on the following factors,
some of which are beyond its control:
(a) The effectiveness of its marketing strategy and efforts;
(b) Its product and service quality;
(c) Its ability to provide timely, effective customer support;
(d) Its distribution and pricing strategies as compared to its
competitors;
(e) Its industry reputation; and
(f) General economic conditions.
- - - ANY FAILURE OF THE COMPANY'S INTERNET AND E-COMMERCE INFRASTRUCTURE COULD
LEAD TO SIGNIFICANT COSTS AND DISRUPTIONS WHICH COULD REDUCE REVENUES AND HARM
BUSINESS AND FINANCIAL RESULTS. The Company's success,
PART II --OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There are no legal proceedings at this time and Management is not aware of any
pending legal actions.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
On ,April 13, 2000, the Company issued 25,000,000 shares of common stock in
exchange for all of the stock outstanding of MIRADOR, Inc. The Company believes
the issuance to be exempt under Section 4(2) of the Securities Act.
John Jones, acquired on APRIL 13, 2000, 5,000,000 shares pursuant to the terms
and conditions of a merger agreement consummated on April 13, 2000 at the
regular meeting of the shareholders of TCT Financial Group B, Inc. Said shares
represent 20% percent of the voting shares of the Company. The source of the
consideration was equity in Mirador Diversified Services Inc.
Linda Raynell acquired on April 13, 2000, 5,000,000 shares pursuant to the terms
and conditions of a merger agreement consummated on April 13, 2000 at the
regular meeting of the shareholders of TCT Financial Group B, Inc. Said shares
represent 20% percent of the voting shares of the Company. The source of the
consideration was equity in Mirador Diversified Services Inc.
T.L. Byrd, acquired on April 13, 2000, 250,000 shares pursuant to the terms and
conditions of a merger agreement consummated on April 13, 2000 at the regular
meeting of the shareholders of TCT Financial Group B, Inc. Said shares represent
.01% percent of the voting shares of the Company. The source of the
consideration was equity in Mirador Diversified Services Inc.
9
<PAGE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
No defaults upon senior securities occurred during the first quarter of
2000.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the regular meeting of the security holders held in Las Vegas NV on April 13,
2000 the Security Holders approved the merger of TCT Financial Group B, Inc and
Mirador Diversified Services Inc.. The Name of the Company was changed to
reflect the merger.
ITEM 5. OTHER INFORMATION.
On April 26, 2000 Mirador Diversified Services, Inc. (the Company) filed
Articles of Merger with the Nevada Secretary of State changing the name of the
Company from TCT Financial Group B, Inc. to Mirador Diversified Services, Inc.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits being filed with this Quarterly Report:
27 Financial Data Schedule
(b) The Company filed a Report on Form 8-K dated May 15, 2000 on May 15,
2000, relating to the Company's acquisition of MIRADOR DIVERSIFIED
SERVICES, INC.
- --------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Mirador Diversified Services, Inc.
Date: May 15, 2000 /s/
--------------------------------------------------
By John Edward Jones,
Chief Executive Officer
10
<PAGE>
INDEX
ARTICLE I -- SALE AND TRANSFER OF STOCK
1.1 TCT Stock......................................................13
1.2 Purchase Price.................................................13
1.3 Spin-off of Operating Divisions................................13
1.4 TCT Distribution...............................................13
ARTICLE II -- REPRESENTATIONS AND WARRANTIES OF Mirador Diversified Services
2.1 Valid Corporate Existences; Qualification......................14
2.2 Capitalization.................................................14
2.3 Subsidiaries...................................................14
2.4 Consents.......................................................14
2.5 Title to Mirador Diversified Services Stock, etc...............15
2.6 Financial Statements, etc......................................15
2.7 Liabilities....................................................15
2.8 Actions Since Mirador Diversified Services Balance Sheet Date..15
2.9 Adverse Developments...........................................16
2.10 Taxes..........................................................16
2.11 Ownership of Assets; Trademarks, etc...........................16
2.12 Litigation; Compliance with Law................................16
2.13 Real Property..................................................16
2.14 Agreements and Obligations; Performance........................16
2.15 Permits and Licenses...........................................17
2.16 Salary Information.............................................17
2.17 Employee Benefit Plans.........................................17
2.18 No Breach......................................................18
2.19 Brokers........................................................18
2.20 Untrue or Omitted Facts........................................18
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF TCT
3.1 Valid Corporate Existence; Qualification.......................18
3.2 Capitalization.................................................19
3.3 Subsidiaries...................................................19
3.4 Consents.......................................................19
3.5 Corporate Authority............................................19
3.6 Financial Statements, etc......................................19
3.7 Liabilities... ................................................19
3.8 Actions Since TCT Balance Sheet Date...........................19
3.9 Adverse Developments...........................................20
3.10 Taxes..........................................................20
3.11 Ownership of Assets............................................20
3.12 Litigation; Compliance with Law ...............................20
3.13 Insurance......................................................20
3.14 Permits and Licenses...........................................20
3.15 Real Property..................................................21
3.16 Agreements and Obligations; Performance........................21
3.17 Banking Arrangements...........................................21
3.18 Salary Information.............................................21
3.19 Employment Benefit Plans.......................................21
3.20 No Breach......................................................22
3.21 Brokers........................................................22
3.22 Untrue or Omitted Facts........................................22
11
<PAGE>
ARTICLE IV -- PRE-CLOSING COVENANTS
4.1 TCT and Mirador Diversified Services Covenants.................22
ARTICLE V -- CONDITIONS PRECEDENT TO THE OBLIGATION OF TCT TO CLOSE
5.1 Representations and Warranties.................................23
5.2 Covenants......................................................23
5.3 Employee Contracts.............................................23
5.4 No Actions.....................................................23
5.5 Consents; Licenses and Permits.................................23
5.6 Certificate....................................................23
5.7 Additional Documents...........................................24
5.8 Approval of Counsel............................................24
ARTICLE VI -- CONDITIONS PRECEDENT TO THE OBLIGATION OF
Mirador Diversified Services AND THE STOCKHOLDERS TO CLOSE
6.1 Representations and Warranties.................................24
6.2 Covenants......................................................24
6.3 No Actions.....................................................24
6.4 Consents; Licenses and Permits.................................24
6.5 Certificate....................................................24
6.6 Additional Documents...........................................24
6.7 Approval of Counsel............................................24
ARTICLE VII -- CLOSING
7.1 Location.......................................................25
7.2 Items to be delivered by Mirador Diversified Services
and its Stockholders...........................................25
7.3 Items to be delivered by TCT...................................25
7.4 Other Items to be delivered by TCT.............................25
ARTICLE VIII -- SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
8.1 Survival. .....................................................25
8.2 Indemnification................................................25
8.3 Defense of Claims .............................................25
8.4 Rights Without Prejudice.......................................25
ARTICLE IX -- TERMINATION AND WAIVER
9.1 Termination....................................................26
9.2 Waiver.........................................................26
ARTICLE X -- MISCELLANEOUS PROVISIONS
10.1 Expenses.......................................................26
10.2 Confidential Information.......................................26
10.3 Modification, Termination or Waiver............................26
10.4 Publicity......................................................27
10.5 Notices........................................................27
10.6 Binding Effect and Assignment..................................27
10.7 Entire Agreement...............................................27
10.8 Exhibits.......................................................27
10.9 Governing Law..................................................27
10.10 Counterparts...................................................27
10.11 Section Headings...............................................28
Schedule of Exhibits
12
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated March 7, 2000 (The Agreement) by and
among TCT Financial Group B, Inc a Nevada Corporation (TCT) and Mirador
Diversified Services, Inc, a Nevada Corporation ("Mirador"). The TCT
stockholders desire to acquire 100% of the issued and outstanding shares of
capital stock of Mirador Diversified Services, Inc. ("Mirador Diversified
Services") in a tax-free reorganization within the meaning of Section 368
(a)(1)(B) of the Internal Revenue Code of 1986 (the "Reorganization"). Upon
completion of such tax free reorganization Mirador Diversified Services shall,
subject to the terms and conditions of this Agreement and Plan of
Reorganization, effect a change of the domicile reflecting the merger of Mirador
Diversified Services and TCT may effect a name change a further change of the
symbol used to identify the corporation for the purpose of trading the
corporation's securities.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
hereby and the representations, warranties, covenants and agreements herein
contained, and in certain of the schedules attached hereto TCT, Mirador
Diversified Services and the Mirador Diversified Services Stockholders agree as
follows:
ARTICLE I--Sale and Transfer of Stock.
1.1 TCT Stock. Upon the terms and subject to the conditions hereinafter
set forth, at the Closing (as hereinafter defined in Section 7.1), TCT shall
sell, transfer and deliver to Mirador Diversified Services and Mirador
Diversified Services shall acquire all of the shares of Common Stock of TCT
Financial Group B, Inc., (the "TCT Stock"), free and clear of all liens,
pledges, encumbrances, charges and claims thereon, as follows: at Closing Twenty
Five Million TCT shares shall be delivered to the Mirador Diversified Services
Inc, shareholders and certificates for the TCT shares shall be delivered to
Scott N. Alperin Attorney at Law 5th Floor, Pembroke One Building, Virginia
Beach, VA 23462 as Escrow Agent, to be delivered to the Mirador Diversified
Services shareholders upon satisfaction of the conditions precedent to the
closing.. The capitalization of TCT is set forth and described in Schedule 1
hereto. Certificates evidencing the TCT Stock and or other evidence of ownership
where stock certificates have not been formally issued, will be delivered to
Mirador Diversified Services duly endorsed in blank or accompanied by
appropriate stock powers and/or transmittal forms, endorsed in blank. Such
certificates and or other evidence of ownership shall also be accompanied by
evidence satisfactory to Mirador Diversified Services of TCT's payment of any
applicable transfer taxes.
1.2 Purchase Price. Upon the sale, transfer and delivery to Mirador
Diversified Services by TCT of the TCT Stock as set forth in Section 1.1, and in
consideration therefore, Mirador Diversified Services shall deliver to TCT
certificates evidencing an aggregate of Twenty Five Million shares of Common
Stock, par value one tenth of a mil, of Mirador Diversified Services (the
"Mirador Stock") in the names and denominations as set forth on Schedule 2
hereto.
1.3 Shareholder Voting. Upon receipt of written notice that Mirador
Diversified Services wishes to either spin-off or reclaim its securities under
1.3 and until TCT distributes the capital stock of Mirador Diversified Services
as provided in Section 1.3, John Edward Jones shall have the sole and exclusive
right to vote the shares of capital stock issued to the shareholders of the
Mirador Diversified Services.
1.4 Restrictions on Mirador Diversified Services Shareholders. Until the
commitments of Section 1.3(c) are satisfied in full, Mirador Diversified
Services shareholders agree not to sell or otherwise dispose of any of the TCT
Shares.
13
<PAGE>
ARTICLE II --Representations and Warranties of Mirador Diversified Services.
Mirador Diversified Services and John Edward Jones as President of Mirador
Diversified Services, make the following representations and warranties to TCT
each of which shall be deemed material. (TCT in executing, delivering and
consummating this Agreement, has relied and will rely upon the correctness and
completeness of each of such representations and warranties):
2.1 Valid Corporate Existences; Qualification. Mirador Diversified
Services is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada. Mirador Diversified Services has the
corporate power to carry on its business as now conducted and to own its assets.
Mirador Diversified Services is qualified to conduct business in any other
jurisdiction, there being no jurisdiction in which failure to qualify would have
a material adverse effect on Mirador Diversified Services, and its assets,
properties or business, and there has not been any claim by any other
jurisdiction to the effect that Mirador Diversified Services is required to
qualify or otherwise be authorized to do business as a foreign corporation
therein. A copy of Mirador Diversified Services's Certificate of Incorporation
(certified by the appropriate official of the State of Nevada) and By-laws
(certified by Mirador Diversified Service's Secretary), as amended to date,
which will be delivered to TCT at or prior to the Closing, are true and complete
copies of those documents as now in effect. The minute books of Mirador
Diversified Services contain accurate records of all meetings of its Board of
Directors, and stockholders since its incorporation, and accurately reflect all
transactions referred to therein.
2.2 Capitalization. The authorized capital stock of Mirador Diversified
Services consists of Twenty Fifty Million shares of Common Stock, par value, one
tenth of a mill , of which Twenty Five Million shares are issued and
outstanding. All of such shares of Common Stock are duly authorized and validly
issued and outstanding, fully paid and non-assessable. There are no
subscriptions, options, warrants, rights or calls or other commitments or
agreements to which Mirador Diversified Services is a party or by which it is
bound, calling for the issuance, transfer, sale or other disposition of any
class of securities of Mirador Diversified Services. There are no outstanding
securities of Mirador Diversified Services convertible or exchangeable, actually
or continently, into shares of Common Stock or any other securities of Mirador
Diversified Services.
2.3 Subsidiaries. Mirador Diversified Services has no subsidiaries,
except for United Mortgagee, Inc..
2.4 Consents. There are no consents of governmental and other regulatory
agencies, foreign or domestic, and of other parties required to be received by
or on the part of Mirador Diversified Services, or the Mirador Diversified
Services Stockholders to enable each of such persons to enter into and carry out
this Agreement in all material respects.
14
<PAGE>
2.5 Title to Mirador Diversified Services Stock, etc. Mirador Diversified
Services has the power to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of Mirador Diversified Services and no other corporate
proceedings on the part of Mirador Diversified Services are necessary to
authorize the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby. This Agreement constitutes the valid and
binding obligation of Mirador Diversified Services and the Mirador Diversified
Services Stockholders and is enforceable in accordance with its terms. The
Mirador Diversified Services Stockholders are, and at the Closing will be the
sole record and beneficial owners of the respective shares of Mirador
Diversified Services Stock held by them, free and clear of all liens, charges,
encumbrances and claims. The Mirador Diversified Services Stockholders have, and
at the Closing will have, good and marketable title to their respective shares
of Mirador Diversified Services Stock and subject to pertinent federal and state
rules and regulations, pertaining to the sale of unregistered securities, the
absolute and unqualified right to sell, transfer and deliver the Mirador
Diversified Services Stock to TCT. The delivery of the Mirador Diversified
Services Stock to TCT at the Closing pursuant to the provisions of this
Agreement will transfer valid title thereto, free and clear of all manner of
liens, pledges, encumbrances, charges and claims.
2.6 Financial Statements. Etc. The balance sheet for Mirador Diversified
Services for 12 months ended December, 1999, a copy of which shall delivered to
TCT within 15 days of the date hereof shall fairly present the financial
position of Mirador Diversified Services as of said date.
2.7 Liabilities. As at December 31, 1999 (the Mirador Diversified
Services Balance Sheet Date) and as of the date hereof, Mirador Diversified
Services had no material debts, liabilities or obligations, contingent or
absolute, in excess of $1,000, other than those debts, liabilities and
obligations reflected or reserved against in Mirador Diversified Service's
Balance Sheet at the Mirador Diversified Services Balance Sheet Date, except
those arising in the ordinary and usual course of its business.
2.8 Actions Since Mirador Diversified Services Balance Sheet Date. Except
as otherwise expressly provided or set forth in, or required by, this Agreement,
since the Mirador Diversified Services Balance Sheet Date, Mirador Diversified
Services has not: (i) issued or sold, or agreed to issue or sell any of its
capital stock or options, warrants, rights or calls to purchase such stock, any
securities convertible or exchangeable into such capital stock or other
corporate securities, or effected any subdivision or other re-capitalization
affecting its capital stock; (ii) incurred any material obligation or liability,
absolute or contingent, except those arising in the ordinary and usual course of
its business; (iii) discharged or satisfied any lien or encumbrance, except in
the ordinary and usual course of business, or paid or satisfied any liability,
absolute or contingent, other than liabilities as at the Mirador Diversified
Services Balance Sheet Date and current liabilities incurred since the Mirador
Diversified Services Balance Sheet Date in the ordinary and usual course of
business; (iv) made any wage or salary increases or granted any bonuses other
than wage and salary increases and bonuses granted in accordance with its normal
salary increase and bonus policies; (v) mortgaged, pledged or subjected to any
lien, pledge, charge or other encumbrance any of its properties or assets, or
permitted any of its property or assets to be subjected to any lien or other
encumbrance, except in the ordinary and usual course of business; (vi) sold,
assigned or transferred any of its properties or assets, except in the ordinary
and usual course of business; (vii) entered into any transaction or course of
conduct not in the ordinary and usual course of business; (viii) waived any
rights of substantial value, or canceled, modified or waived any indebtedness
for borrowed money held by it, except in the ordinary and usual course of
business; (ix) declared, paid or set aside any dividends or other distributions
or payments on its capital stock, or redeemed or repurchased, or agreed to
redeem or repurchase, any shares of its capital stock; (x) made any loans or
advances to any person, or assumed, guaranteed, endorsed or otherwise became
responsible for the obligations of any person; or (xi) incurred any indebtedness
for borrowed money (except for endorsement, for collection or deposit of
negotiable instruments received in the ordinary and usual course of business).
15
<PAGE>
2.9 Adverse Developments. Since the Mirador Diversified Services Balance
Sheet Date, there have been no material adverse changes in the assets,
properties, operations or financial condition of Mirador Diversified Services,
and no event has occurred which could be reasonably expected to have a
materially adverse effect upon the business of Mirador Diversified Services and
the Mirador Diversified Services Stockholders, after reasonable inquiry, do not
know of any development of a nature that is, or which could be reasonably
expected to have a materially adverse effect upon the respective business of
Mirador Diversified Services or upon any of its assets, properties, operations
or financial condition, including, without limitation, the loss of any licenses
or permits, suppliers, customers or employees, which loss would be of a
materially adverse nature.
2.10 Taxes. All taxes, including without limitation, income property,
sales, use, franchise, capital stock, excise, employees income, withholding,
social security and unemployment taxes imposed by the United States, or any
state, have been paid or Otherwise provided for.
2.11 Ownership of Assets; Trademarks. Etc. Mirador Diversified Services
owns outright, and has good and marketable title to all of its assets,
properties and businesses (including all assets reflected in the Mirador
Diversified Services Balance Sheets, except as the same may have been disposed
of in the ordinary course of business since the Mirador Diversified Services
Balance Sheet Date), free and clear of all liens, mortgages, pledges,
conditional sales agreements, restrictions on transfer or other encumbrances or
changes.
2.12 Litigation; Compliance with Law. There are no actions, suits,
proceedings or governmental investigations relating to Mirador Diversified
Services or its properties, assets or business pending or, to the knowledge of
Mirador Diversified Services and the Mirador Diversified Services Stockholders
after reasonable inquiry, threatened, or any order, injunction, award or decree
outstanding, against Mirador Diversified Services or against or relating to its
properties assets or business; and neither Mirador Diversified Services, nor the
Mirador Diversified Services Stockholders, after reasonable inquiry, knows of
any basis for any such actions, suits or proceedings within the past two (2)
years or any such governmental investigations, orders, injunctions or decrees at
any time in the past. To the best of Mirador Diversified Services's knowledge,
as it relates to compliance with laws, it is not in violation of any law,
regulation, ordinance, order, injunction, decree, award, or other requirement of
any governmental body, court or arbitrator relating to its properties, assets or
business, the violation of which would have a material adverse effect on Mirador
Diversified Services.
2.13 Real Property. Exhibit 2.13 sets forth a copy of Mirador Diversified
Service's lease. Mirador Diversified Services does not own outright the fee
simple title in and to any real property. The lease is now in full force and
effect, and all amounts payable thereunder have been paid. All uses of the
leased real property by Mirador Diversified Services conform, in all material
respects, to all the terms of the lease relating thereto.
2.14 Agreements and Obligations; Performance. Exhibit 2.14 sets forth a
list of agreements Mirador Diversified Services is a party. (The "Listed
Agreements"). Other than the Listed Agreements, Mirador Diversified Services is
not party to, or bound by any: (i) written or oral agreement or other
contractual commitment, understanding or obligation which involved aggregate
payments or receipts in excess of $1,000 (except for open purchase and sales
orders in the ordinary course of business); (ii) contract, arrangement,
commitment or understanding which involves aggregate payments or receipts in
excess of $1,000 that cannot be canceled on thirty (30) days or less notice
without penalty or premium or any continuing obligation or liability (except for
16
<PAGE>
open purchase and sales orders in the ordinary course of business); (iii)
contractual obligation or contractual liability of any kind to any of the
Mirador Diversified Services Stockholders; (iv) contract, arrangement,
commitment or understanding with its customers or any officer, employee,
stockholder, director, representative or agent thereof for the repurchase of
products, sharing of fees, the rebating of charges to such customers, bribes,
kickbacks from such customers or other similar arrangements; (v) contract for
the purchase or sale of any materials, products or supplies which contain, or
which commits or will commit it for a fixed term; (vi) contract of employment
with any officer or employee not terminable at will without penalty or premium
or any continuing obligation or liability; (vii) deferred compensation, bonus or
incentive plan or agreement not cancelable at will without penalty or premium or
any continuing obligation or liability; (viii) management or consulting
agreement not terminable at will without penalty or premium or any continuing
obligation or liability; (ix) lease for real or personal property (including
borrowings thereon), license or royalty agreement; (x) union or other collective
bargaining agreement; (xi) agreement, commitment or understanding relating to
indebtedness for borrowed money; (xii) contract which, by its terms, requires
the consent of any party thereto to the consummation of the transactions
contemplated hereby; (xiii) contract containing covenants limiting the freedom
of Mirador Diversified Services to engage or compete in any line or business or
with any person in any geographical area; (xiv) contract or option relating to
the acquisition or sale of any business; (xv) voting trust agreement or similar
stockholders' agreement; (xvi) option for the purchase of any asset, tangible or
intangible; or (xvii) other contract, agreement, commitment or understanding
which materially affects any of its properties, assets or business, whether
directly or indirectly, or which was entered into other than in the ordinary
course of business. A true and correct copy of each of the written Listed
Agreements has been delivered to TCT. Mirador Diversified Services has in all
material respects performed all obligations required to be performed by it to
date under all of the Listed Agreements, is not in default in any material
respect under any of the Listed Agreements and has received no notice of any
default or alleged default thereunder which has not heretofore been cured or
which notice has not heretofore been withdrawn.
2.15 Permits and Licenses. Mirador Diversified Services and the Mirador
Diversified Services Shareholders, to the best of their knowledge, believe that
Mirador Diversified Services has all permits, licenses, orders and approvals of
all federal, state, local and foreign governmental or regulatory bodies required
of it to carry on its business as presently conducted; all such other permits,
licenses, orders, franchises and approvals are in full force and effect, and,
after reasonable inquiry, no suspension or cancellation of any of such other
permits, licenses, etc. is threatened; and Mirador Diversified Services is in
compliance in all material respects with all requirements, standards and
procedures of the federal, state, local and foreign governmental bodies which
have issued such permits, licenses, orders, franchises and approvals.
2.16 Salary Information. Mirador Diversified Services has not paid
salaries or made bonus commitments to any of its present officers or other
employees or agents except as setforth in schedule 2.16.
2.17 Employee Benefit Plans. Mirador Diversified Services does not
maintain or make any employer contributions under any pension" or o o welfare o
o Benefit it plans, as such the Employee Retirement Income Security Act of 1974,
as amended, defines term.
17
<PAGE>
2.18 No Breach. Neither the execution and delivery of this Agreement nor
compliance by Mirador Diversified Services and the Mirador Diversified Services
Stockholders with any of the provisions hereof, nor the consummation of the
transactions contemplated hereby, will: (a) violate or conflict with any
provision of the Certificate of Incorporation or By-laws of Mirador Diversified
Services; (b) violate or, alone or with notice or the passage of time, result in
the material breach or termination of, or otherwise give any contracting party
the right to terminate, or declare a default under, the terms of any agreement
or other document or undertaking, oral or written to which Mirador Diversified
Services or any of the Mirador Diversified Services Stockholders is a party or
by which any of them or any of their respective properties or assets may be
bound (except for such violations, conflicts, breaches or defaults as to which
required waivers or consents by other parties have been, or will, prior to the
Closing, be obtained); (c) result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of Mirador
Diversified Services pursuant to the terms of any such agreement or instrument;
(d) violate any judgment, order, injunction, decree or award against, or binding
upon, Mirador Diversified Services, or upon their respective properties or
assets; or (e) violate any law or regulation of any jurisdiction relating to
Mirador Diversified Services, its securities, assets or properties.
2.19 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on directly with TCT without
the intervention of any broker, finder, investment banker or other third party.
Mirador Diversified Services has not engaged, consented to, or authorized any
broker, finder, investment banker or other third party to act on its behalf,
directly or indirectly, as a broker or finder in connection with the
transactions contemplated by this Agreement, and Mirador Diversified Services
agrees to indemnify TCT against, and to hold it harmless from any claim for
brokerage or similar commissions or other compensation which may be made against
TCT by any third party in connection with any of the transactions contemplated
hereby which claim is based upon any action by Mirador Diversified Services.
2.20 Untrue or Omitted Facts. No representation, warranty or statement by
Mirador Diversified Services or any of the Mirador Diversified Services
Stockholders in this Agreement contains any untrue statement of a material fact,
or omits or will omit to state a fact necessary in order to make such
representations, warranties or statements not materially misleading. Without
limitation of the foregoing, there is no fact known to Mirador Diversified
Services, after reasonable inquiry, that has had, or which may be reasonably
expected to have, a materially adverse effect on Mirador Diversified Services or
any of its assets, properties, operations or businesses that has not been
disclosed in writing to TCT.
ARTICLE III-- Representations and Warranties of TCT.
TCT makes the following representations and warranties to Mirador
Diversified Services, each of which shall be deemed material (and Mirador
Diversified Services and the Mirador Diversified Services Stockholders, in
executing, delivering and consummating this Agreement, have relied and will rely
upon the correctness and completeness of each of such representations and
warranties):
3.1 Valid Corporate Existences; Qualification. TCT is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and has the corporate power to carry on its business as now conducted and
to own its assets. TCT is not qualified to conduct business as a foreign
corporation in any jurisdiction, there being no jurisdiction in which failure to
qualify would have a material adverse effect on TCT and its assets, properties
or business, and there has not been any claim by any jurisdiction to the effect
TCT is required to qualify or otherwise be authorized to do business as a
foreign corporation therein. The copies of the Certificate of Incorporation (as
certified by the Secretary of the State of Nevada) and By-laws (as certified by
the Secretary of TCT, as the case may be) of TCT, as amended to date, which will
be delivered to Mirador Diversified Services prior to the Closing, are true and
complete copies of those documents as now in effect.
18
<PAGE>
3.2 Capitalization. The capitalization of TCT is fully set forth
described in Schedule 1 hereto including all shares of capital; stock issuable
upon exercise of warrants and other options. At the Closing there shall be no
more than 8,000,000 million shares of TCT common stock outstanding on a fully
diluted basis.
3.3 Acquisition of Subsidiaries. TCT will, upon Closing of each proposed
transaction, own in excess of 70% of the capital stock of each company acquired.
The capitalization of these proposed transactions are fully set forth and
described in Schedule 2 hereto including all shares of capital stock issuable
upon exercise of warrants and other options. Schedule 3 hereto is a list
identifying all record and beneficial owners of capital stock.
3.4 Consents. No consents of governmental and other regulatory agencies,
foreign or domestic, and of other third parties is required to be received by or
on the part of TCT to enable it to enter into and carry out this Agreement in
all material respects.
3.5 Corporate Authority. TCT has the corporate power to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by the Board of Directors of TCT prior to the Closing.
No other corporate proceedings on the part of TCT are necessary to authorize the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. This Agreement constitutes the valid and
binding obligation of TCT and is enforceable in accordance with its terms.
3.6 Financial Statements, etc. The audited financial statements of TCT
for the year 1999 ended December 31, 1999, copies of which have been delivered
to Mirador Diversified Services, fairly represent in all material respects the
financial position of TCT, including its income, expenses, assets and
liabilities as of said dates and the results of its operations for such periods
and were prepared in conformity with generally accepted accounting principles
consistently applied throughout the periods covered thereby. An independent
certified public accountant, whose report thereon is included therein, has
prepared the reviewed financial statements for the year ended December 31, 1999.
3.7 Liabilities. Except as set forth in Exhibit 3.7, as of December 31,
1999 (the TCT Balance Sheet Date), TCT had no material debts, liabilities or
obligations, contingent or absolute, in excess of $1,000, other than those
debts, liabilities and obligations reflected or reserved against in TCT's
Balance Sheet at the Balance Sheet Date except those arising in the ordinary
course of business.
3.8 Actions since TCT's Balance sheet date. Except as set forth and
reflected in this Agreement, TCT has not: (i) issued or sold, or agreed to issue
or sell any of its capital stock, options, warrants, rights or calls to purchase
such stock, any securities convertible or exchangeable into such capital stock
or other corporate securities, or effected any subdivision or other
re-capitalization affecting its capital stock; (ii) incurred any material
obligation or liability, absolute or contingent, except those arising in the
ordinary and usual course of its business; (iii) discharged or satisfied any
lien or encumbrance, except in the ordinary and usual course of business, or
paid or satisfied any liability, absolute or contingent, other than liabilities
as at the TCT Balance Sheet Date and current liabilities incurred since the TCT
Balance Sheet Date in the ordinary and usual course of business; (iv) made any
wage or salary increases or granted any bonuses other than wage and salary
increases and bonuses granted in accordance with its normal salary increase and
bonus policies; (v) mortgaged, pledged or subjected to any lien, pledge, charge
or other encumbrance any of its properties or assets, or permitted any of its
19
<PAGE>
property or assets to be subjected to any lien or other encumbrance, except in
the ordinary and usual course of business; (vi) sold, assigned or transferred
any of its properties or assets, except in the ordinary and usual course of
business; (vii) entered into any transaction or course of conduct not in the
ordinary and usual course of business; (viii) waived any rights of substantial
value, or canceled, modified or waived any indebtedness for borrowed money held
by it, except in the ordinary and usual course of business; (ix) declared, paid
or set aside any dividends or other distributions or payments on its capital
stock, or redeemed or repurchased, or agreed to redeem or repurchase, any shares
of its capital stock; (x) made any loans or advances to any person, or assumed,
guaranteed, endorsed or otherwise became responsible for the obligations of any
person; or (xi) incurred any indebtedness for borrowed money (except for
endorsement, for collection or deposit of negotiable instruments received in the
ordinary and usual course of business).
3.9 Adverse Developments. Since the TCT Balance Sheet Date, there have
been no material adverse changes in the assets, properties, operations or
financial condition of TCT, and no event has occurred other than in the ordinary
and usual course of business which could be reasonably expected to have a
materially adverse effect upon the business of TCT, and TCT, after reasonable
inquiry, knows of no development or threatened development of a nature that is,
or which could be reasonably expected to have a materially adverse effect upon
the business of TCT, or upon any of its assets, properties, operations or
financial condition.
3.10 Taxes. All taxes, including without limitation, income property,
sales, use, franchise, capital stock, excise, employees income, withholding,
social security and unemployment taxes imposed by the United States, or any
state, have been paid or otherwise provided for except, for Federal income tax
returns which have not been filed but with respect to which no taxes will be
due.
3.11 Ownership of Assets. TCT owns outright, and has good and marketable
title to all of its assets and properties reflected in the TCT Balance Sheet set
forth on Exhibit, except as the same may have been disposed of in the ordinary
course of business since the TCT Balance Sheet Date, free and clear of all
liens, mortgages, pledges, conditional sales agreements, restrictions on
transfer or other encumbrances or charges whatsoever. TCT does not own any
patents, copyrights, trademarks, trade names or other similar intangible assets
except as set forth on Exhibit 3.11
3.12 Litigation; Compliance with Law. Except as set forth in Exhibit 3.12
there are no pending or threatened actions, suits, proceedings or governmental
investigations relating to TCT or any of its properties, assets or business or,
to the knowledge of TCT, or any order, injunction, award or decree outstanding,
against TCT or against or relating to any of its properties, assets or business;
and TCT, after reasonable inquiry, knows of no basis for any such action, suits
or proceedings or any such governmental investigations, orders, injunctions or
decrees. To the knowledge of TCT, after reasonable inquiry, TCT is not in
violation of any material law, regulation, ordinance, order, injunction, decree,
award, or other requirement of any governmental body, court or arbitrator
relating to its properties, assets or business.
3.13 Insurance TCT does not maintain any insurance due to the nature of
its business.
3.14 Permits and Licenses. TCT has all material permits, licenses, orders
and approvals of all federal, state, local and foreign governmental or
regulatory bodies required of it to carry on its business as presently
conducted; all such permits, licenses, orders, franchises and approvals are in
full force and effect, and to the knowledge of TCT, after reasonable inquiry, no
suspension or cancellation of any of such permits, licenses, etc., is
threatened; and TCT is in compliance in all material respects with all
requirements, standards and procedures of the federal, state, local and foreign
governmental bodies which have issued such permits, licenses, orders, franchises
and approvals.
20
<PAGE>
3.15 Real Property. TCT owns no real property.
3.16 Agreements and Obligations; Performance. Exhibit 3.16 sets forth a
list of agreements TCT is a party (the "Listed agreement's). Other than the
Listed Agreements, TCT is not party to or bound by any: (i) written or oral
agreement or other contractual commitment, understanding or obligation which
involved aggregate payments or receipts in excess of $1,000 (except for purchase
and sale orders in the ordinary course of business); (ii) contract, arrangement,
commitment or understanding which involves aggregate payments or receipts in
excess of $1,000 that cannot be canceled on thirty (30) days or less notice
without penalty or premium or any continuing obligation or liability (except for
purchase and sale orders in the ordinary course of business) ; (iii) contractual
obligation or contractual liability of any kind to any of TCT's stockholders;
(iv) contract, arrangement, commitment or understanding with its customers or
any officer, employee, stockholder, director, representative or agent thereof
for the repurchase of products, sharing of fees, the rebating of charges to such
customers, bribes, kickbacks from such customers or other similar arrangements;
(v) contract for the purchase or sale of any materials, products or supplies
which contain, or which commits or will commit it for a fixed term; (vi)
contract of employment with any officer or employee not terminable at will
without penalty or premium or any continuing obligation or liability; (vii)
deferred compensation, bonus or incentive plan or agreement not cancelable at
will without penalty or premium or any continuing obligation or liability;
(viii) management or consulting agreement not terminable at will without penalty
or premium or any continuing obligation or liability; ( ix) lease for real or
personal property (including borrowings thereon), license or royalty agreement;
(x) union or other collective bargaining agreement; (xi) agreement, commitment
or understanding relating to indebtedness for borrowed money; (xii) contract
which, by its terms, requires the consent of any party thereto to the
consummation of the transactions contemplated hereby; (xiii) contract containing
covenants limiting the freedom of TCT to engage or compete in any line or
business or with any person in any geographical area; (xiv) contract or option
relating to the acquisition or sale of any business; (xv) voting trust agreement
or similar stockholders agreement; (xvi) option for the purchase of any asset,
tangible or intangible; or (xvii) other contract, agreement, commitment or
understanding which materially affects any of its properties, assets or
business, whether directly or indirectly, or which was entered into other than
in the ordinary course of business. A true and correct copy of each of the
Listed Agreements has been delivered to Mirador Diversified Services. TCT has in
all material respects performed all obligations required to be performed by it
to date under all agreements to which it is a party and is not in default in any
material respect under any of the Listed Agreements and has received no notice
of any default or alleged default which has not heretofore been cured or which
notice has not heretofore been withdrawn.
3.17 Banking Arrangements. All bank accounts in the name of TCT, as of the
Closing shall terminate set forth in Exhibit 3.17.
3.18 Salary Information. TCT is not party to any employment agreements.
3.19 Employment Benefit Plans. TCT does not maintain or make any employer
contributions under any "pension " or "welfare's benefit plans", as defined by
the respective meanings of Sections 3(2) and 3(1) of the Employee Retirement
Income Security Act of 1974, as amended.
21
<PAGE>
3.20 No Breach. Neither the execution and delivery of this Agreement nor
compliance by TCT with any of the provisions hereof nor the consummation of the
transactions contemplated hereby, will: (a) violate or conflict with any
provision of the Articles of Incorporation or By-laws of TCT; (b) violate or,
alone or with notice or the passage of time, result in the material breach or
termination of, or otherwise give any contracting party the right to terminate,
or declare a default under, the terms of any agreement or other document or
undertaking, oral or written to which TCT or any of the TCT stockholders is a
party or by which any of them or any of their respective properties or assets
may be bound (except for such violations, conflicts, breaches or defaults as to
which required waivers or consents by other parties have been, or will, prior to
the Closing, be obtained); (c) result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of TCT
pursuant to the terms of any such agreement or instrument; (d) violate any
judgment, order, injunction, decree or award against, or binding upon, TCT or
upon their respective properties or assets; or (e) violate any law or regulation
of any jurisdiction relating to TCT, its securities, assets or properties.
3.21 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on directly by TCT with
Mirador Diversified Services and the Mirador Diversified Services Stockholders,
without the intervention of any broker, finder, investment banker or other third
party. TCT and Dennis M. Vigouret have not engaged, consented to, or authorized
any broker, finder, investment banker or other third party to act on its behalf,
directly or indirectly, as a broker or finder in connection with the merger and
the transactions contemplated by this Agreement, and TCT agrees to indemnify and
to hold harmless Mirador Diversified Services and the Mirador Diversified
Services Stockholders from and against any claim for brokerage or similar
commission or other compensation which may be made against Mirador Diversified
Services or the Mirador Diversified Services Stockholders by any third party in
connection with any of the transactions contemplated hereby, which claim is
based upon any action by TCT.
3.22 Untrue or Omitted Facts. To the knowledge of TCT, after reasonable
inquiry, no representation, warranty or statement by TCT in this Agreement
contains any untrue statement of a material fact, or omits or will omit to state
a fact necessary in order to make such representations, warranties or statements
not materially misleading. Without limitation of the foregoing, there is no fact
known to TCT and or Dennis M Vigouret as President of TCT, after reasonable
inquiry, that has had, or which may be reasonably expected to have, a materially
adverse effect on TCT or any of its assets, properties, operations or businesses
and that has not been disclosed in writing to Mirador Diversified Services.
ARTICLE IV--Pre-Closing Covenants
4.1 TCT and Mirador Diversified Services, hereby covenant to each other
that, from and after the date hereof and until the Closing or earlier
termination of this Agreement (the "Pre-Closing Period"):
(a) Access. To afford to the officers, attorneys, accountants and other
authorized representatives of the other free and full access, during regular
business hours and upon reasonable notice, to all of its books, records,
personnel and properties so that each party at its own expense, may have full
opportunity to make such review, examination and investigation may desire of the
others business and affairs. Each party will cause its employees, accountants
and attorneys to cooperate fully with said review, Examination and investigation
and to make full disclosure to the other party of all material facts affecting
its financial condition and business operations.
(b) Conduct of Business. Each party shall conduct its business only in
the ordinary and usual course and make no material change in any of its business
practices and policies without the prior written consent of the other, which
shall not be unreasonably withheld or delayed.
22
<PAGE>
(c) Liabilities. Neither party shall incur any obligation or liability,
absolute or contingent, except for those incurred in the ordinary and usual
course of its business.
(d) Preservation of Business. Each party will use its best efforts to
preserve its business organization intact, to keep available the services of its
present off officers, employees and consultants and to preserve its good will.
(e) No Breach. Each party will (i) use its best efforts to assure that
all of its representations and warranties contained herein are true in all
material respects as of the Closing as if repeated at and as of such time, and
that no material breach or default shall occur with respect to any of its
covenants, representations or warranties contained herein that has not been
cured by the Closing; (ii) not voluntarily take any action or do anything which
will cause a breach of or default respecting such covenants, representations or
warranties; and (iii) promptly notify the other of any event or fact which
represents or is likely to cause such a breach or default.
(f) Legal Fees and Other Expenses. Each party shall bear their own costs
and expenses if the transaction is abandoned at any time.
ARTICLE V-- Conditions Precedent to the Obligation of TCT to Close
The obligation of TCT to enter into and complete the Closing is subject to
the fulfillment, prior to or on the Closing Date, of each of the following
conditions, any one or more of which may be waived by TCT (except when the
fulfillment of such condition is a requirement of law).
5.1 Representations and Warranties. All representations and warranties of
each of Mirador Diversified Services and each of the Mirador Diversified
Services Stockholders contained in this Agreement and in any written statement
(except financial statements), exhibit, certificate, schedule or other document
delivered pursuant hereto or in connection with the transactions contemplated
hereby shall be true and correct in all material respects as at the Closing
Date, as if made at the Closing and as of the Closing Date.
5.2 Covenants. Mirador Diversified Services, Mirador Diversified Services
Pres., shall have performed and complied in all material respects with all
covenants and agreements required by this Agreement to be performed or complied
with by each of them prior to or at the Closing.
5.3 Employee Contracts. All key employee's existing contracts with
Mirador Diversified Services shall be in full force and effect.
5.4 No Actions. No action, suit, proceeding or investigation shall have
been instituted, and be continuing before a court or before or by a governmental
body or agency, or shall have been threatened and be unresolved, to restrain or
to prevent or to obtain damages in respect of, the carrying out of the
transactions contemplated hereby, or which might materially affect the right of
TCT to own the Mirador Diversified Services Stock or to operate or control the
assets, properties and business of Mirador Diversified Services after the
Closing Date, or which might have a materially adverse effect thereon.
5.5 Consents; Licenses and Permits. Mirador Diversified Services and TCT
shall have each obtained all consents, licenses and permits of third parties
necessary for the performance by each of them of all of their respective
obligations under this Agreement.
5.6 Certificate. TCT shall have received a certificate dated the Closing
Date, signed by the President and Secretary of Mirador Diversified Services as
to the satisfaction of the conditions contained in Sections 5.1, 5.2, and the
conditions contained in Section 5.3 required prior to the Closing.
23
<PAGE>
5.7 Additional Documents. Mirador Diversified Services and TCT shall have
delivered all such other certificates and documents as TCT or its counsel may
have reasonably requested.
5.8 Approval of Counsel. All actions, proceedings, instruments and
documents required to carry out this Agreement, or incidental thereto, and all
other related legal matters shall have been approved as to the form and
substance by counsel to TCT, which approval shall not be unreasonably withheld
or delayed.
ARTICLE VI--Conditions Precedent to the Obligations of Mirador Diversified
Services and the Stockholders to Close.
The obligation of Mirador Diversified Services, Mirador Diversified
Services Pres., to enter into and complete the Closing is subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions, any one or more of which may be waived by Mirador Diversified
Services and the Mirador Diversified Services Stockholders (except when the
fulfillment of such condition is a requirement of law).
6.1 Representations and Warranties. All representations and warranties of
TCT and contained in this Agreement and in any written statement, schedule or
other document delivered pursuant hereto or in connection with the transactions
contemplated hereby shall be true and correct in all material respects as at the
Closing Date, as if made at the Closing and as of the Closing Date.
6.2 Covenants. TCT shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement to be
performed or complied with by each of them prior to or at the Closing.
6.3 No Actions. No action, suit, proceeding, or investigation shall have
been instituted, and be continuing, before a court or by a governmental body or
agency, or have been threatened, and be unresolved, by any governmental body or
agency to restrain or prevent, or obtain damages in respect of, the carrying out
of the transactions contemplated hereby.
6.4 Consents; Licenses and Permits. Mirador Diversified Services, and
TCT, shall have each obtained all consents, licenses and permits of third
parties necessary for the performance by each of them of all of their respective
obligations under this Agreement.
6.5 Certificate. Mirador Diversified Services and the Mirador Diversified
Services Stockholders shall have received a certificate dated the Closing Date,
signed by the President and Secretary of TCT as to the satisfaction of the
conditions contained in Sections 6.1 and 6.2.
6.6 Additional Documents. TCT shall have delivered all such certified
resolutions, certificates and documents with respect to TCT as Mirador
Diversified Services, the Mirador Diversified Services Stockholders or their
counsel may have reasonably requested.
6.7 Approval of Counsel. All actions, proceedings, instruments and
documents required to carry out this Agreement or incidental thereto, and all
other related legal matters, shall have been approved as to form and substance
by counsel to Mirador Diversified Services, which approval shall not be
unreasonably withheld or delayed.
ARTICLE VII--Closing
7.1 Location. The Closing provided for herein shall take place at the
offices of Mirador or other such time and place as may be mutually agreed to by
the parties hereto. Such date is referred to in this Agreement as the "Closing
Date or the o o Closing. o o
24
<PAGE>
7.2 Items to be Delivered By Mirador Diversified Services and the Mirador
Diversified Services Stockholders. At the Closing, Mirador Diversified Services
will deliver or cause to be delivered to TCT: (a) Certificates representing the
Mirador Diversified Services Stock in accordance with Section 1.1 hereof,
accompanied by all instruments and documents as in the opinion of TCT's counsel
shall be necessary to effect the transfer of and to vest title in and to the
Mirador Diversified Services Stock in TCT, free and clear of all liens, pledges,
encumbrances, charges and claims thereon; (b) The certificates required by
Section 5.5; and (c) Such other certified resolutions, documents and
certificates as are required to be delivered by Mirador Diversified Services and
the Mirador Diversified Services Stockholders pursuant to the provisions of the
Agreement.
7.3 Items to be Delivered By TCT. At the Closing, TCT will deliver or
cause to be delivered to Mirador Diversified Services: (a) Certificates
evidencing the TCT Stock in accordance with Section 1.2 hereof; (b) The
certificate required by Section 6.5; (c) Resignations of TCT's executive
officers and Directors; and (d) Such other certified resolutions, documents and
certificates as are required to be delivered by TCT pursuant to the provisions
of this Agreement.
7.4 Other Items to be Delivered By TCT. At the Closing, TCT will deliver
or cause to be delivered, the Certificates evidencing TCT Stock in accordance
with Section 1.1 hereof.
ARTICLE VIII--Survival of Representations
8.1 Survival. The parties hereto agree that their respective
representations, warranties, covenants and agreements contained in this
Agreement shall survive the Closing for a term of twenty-four (24) months with
the exception of those regarding taxes set forth in Sections 2.10 and 3.10 which
shall survive until the expiration of the respective periods within which such
taxes may be assessed.
8.2 Indemnification. TCT agrees to indemnify and hold harmless Mirador
Diversified Services and each of the Mirador Diversified Services Stockholders
from and against any and all obligations or liabilities, of every kind, nature
and description, fixed or contingent (including, without limitation, counsel
fees and expenses in connection with any action, claim or proceeding relating to
such liabilities) arising out of any transaction or event commencing or
occurring on or prior to the Closing Date, which is not fully disclosed or
provided for in the TCT Balance Sheet, this Agreement or the several exhibits
hereto, including, without limitation, any tax liabilities to the extent not so
reflected or reserved against in the TCT Balance Sheet and for any liability
arising out of Federal and State securities laws.
8.3 Defense of Claims. A party entitled to Indemnification hereunder (an
Indemnified Party) agrees to notify each party required to indemnify hereunder
(an Indemnifying Party) with reasonable promptness of any claim asserted against
it in respect of which any Indemnifying Party may be liable under this
Agreement, which notification shall be accompanied by a written statement
setting forth the basis of such claim and the manner of calculation thereof. An
Indemnifying Party shall have the right to defend any such claim at its or his
own expense and with counsel of its or his choice; provided, however, that such
counsel shall have been approved by the Indemnified Party prior to engagement,
which approval shall not be unreasonably withheld or delayed; and provided
further, that the Indemnified Party may participate in such defense, if it so
chooses, with its own counsel and at its own expense.
8.4 Rights Without Prejudice. The rights of the parties under Article
VIII are without prejudice to any other rights or remedies that it may have by
reason of this Agreement or as otherwise provided by law.
25
<PAGE>
ARTICLE IX--Termination and Waiver
9.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the transactions provided
for herein abandoned at any time prior to the Closing Date: (a) By mutual
consent of the Board of Directors of TCT and Mirador Diversified Services; (b)
By TCT if any of the conditions set forth in Article V hereof shall not have
been fulfilled on or prior to June 3, 2000, or shall become incapable of
fulfillment, and shall not have been waived; (c) By Mirador Diversified
Services, Mirador Diversified Services Pres., if any of the conditions set forth
in Article VI hereof shall not have been fulfilled on or prior to June 3, 2000,
or shall have become incapable of fulfillment, and shall not have been waived;
(d) By either party if any legal action or proceeding shall have been instituted
or threatened seeking to restrain, prohibit, invalidate or otherwise affect the
consummation of the transactions contemplated by this Agreement which makes it
inadvisable, in the judgment of the terminating party to consummate same. In the
event that this Agreement is terminated as described above, this Agreement shall
be void and of no force and effect, without any liability or obligation on the
part of any of the parties hereto except for any liability which may arise
pursuant to Section 10.2
9.2 Waiver. Any condition to the performance of Mirador Diversified
Services and TCT, which legally may be waived on or prior to the Closing Date,
may be waived at any time by the party entitled to the benefit thereof by action
taken or authorized by an instrument in writing executed by the relevant party
or parties. The failure of any party at any time or times to require performance
of any provision hereof shall in no manner affect the right of such party as a
later time to enforce the same. No waiver by any party of the breach of any
term, covenant, representation or warranty contained in this Agreement as a
condition to such party's obligations hereunder shall release or affect any
liability resulting from such breach, and no waiver of any nature, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such condition or of any
breach of any other term, covenant, representation or warranty of this
Agreement.
ARTICLE X--Miscellaneous Provisions
10.1 Expenses. Each of the parties hereto shall bear his or its own
expenses in connection herewith.
10.2 Confidential Information. Each party agrees that such party and its
representatives will hold in strict confidence all information and documents
received from the other parties and, if the transactions herein contemplated
shall not be consummated, each party will continue to hold such information and
documents in strict confidence and will return to such other parties all such
documents (including the exhibits attached to this Agreement) then in such
receiving party's possession without retaining copies thereof; provided,
however, that each party's obligations under this Section 10.2 to maintain such
confidentiality shall not apply to any information or documents that are in the
public domain at the time furnished by the others or that become in the public
domain thereafter through any means other than as a result of any act of the
receiving party or of its agents, officers, directors or stockholders which
constitutes a breach of this Agreement, or that are required by applicable law
to be disclosed. The parties agree that the remedy at law for any breach of this
Section 10.2 will be inadequate and a non-breaching party will be entitled to
injunctive relief to compel the breaching party to perform or refrain from
action required or prohibited hereunder.
10.3 Modification, Termination or Waiver. This Agreement may be amended,
modified, superseded or terminated, and any of the terms, covenants,
representations, warranties or conditions hereof may be waived, but only by a
written instrument executed by the party waiving compliance. The failure of any
party at any time or times to require performance of any provision hereof shall
in no manner affect the right of such party at a later time to enforce the same.
26
<PAGE>
10.4 Publicity. The parties agree that no publicity, release or other
public announcement concerning the transactions contemplated by this Agreement
shall be issued by either party without the advance approval of both the form
and substance of the same by the other party and its counsel, which approval, in
the case of any publicity, release or other public announcement required by
applicable law, shall not be unreasonably withheld or delayed.
10.5 Notices. Any notice or other communication required or which may be
given hereunder shall be in writing and either be delivered personally or be
mailed, certified or registered mail, postage prepaid, and shall be deemed given
when so delivered personally, or if mailed, two days after the date of mailing,
as follows:
If to TCT to:
Dennis M. Vigouret
TCT Financial Group B, Inc.
5424 Comchec Way, Unit 105
Las Vegas, NV 891085
And if to Mirador Diversified Services, Inc. at:
John Edward Jones
Mirador Diversified Services, Inc.
675 Lynnhaven Parkway 2nd Floor
Virginia Beach, VA 23452
The parties may change the persons and addresses to which the notices or
other communications are to be sent by giving written notice of any such change
in the manner provided herein for giving notice.
10.6 Binding Effect and Assignment. This Agreement shall be binding upon
and inure to the benefit of the successors and assigns of the parties hereto;
provided, however, that no assignment of any rights or delegation of any
obligations provided for herein may be made by any party without the express
written consent of the other parties.
10.7 Entire Agreement. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof.
10.8 Exhibits. All schedules and exhibits annexed hereto and the
documents and instruments referred to herein or required to be delivered
simultaneously herewith or at the Closing are expressly made a part of this
Agreement as fully as though completely set forth herein, and all references to
this Agreement herein or in any of such exhibits, documents, or instruments
shall be deemed to refer to and include all such exhibits, documents and
instruments.
10.9 Governing Law. This Agreement shall be governed by, and construed in
accordance with the laws of the State of Nevada applicable to agreements made
and to be performed entirely within that State, excluding the choice of law
rules thereof.
10.10 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but which together shall constitute
one and the same instrument.
27
<PAGE>
10.11 Section Headings. The section headings contained in this Agreement
are inserted for conveniences of reference only and shall not affect the meaning
or interpretation of this Agreement.
10.12 Governmental Approvals. This agreement is subject to approval by the
Securities and Exchange Commission and all such other governmental agencies that
may have jurisdiction over this transaction. The parties agree to modify this
agreement, providing such modification does not affect the business terms of
this agreement, to conform to any such approvals.
WITNESS the execution of this Agreement as of the date first above written.
TCT Financial Group B, Inc.
BY: /s/ ATTEST:_____________________
-------------------------------------------
Dennis M. Vigouret, Chairman
BY: /s/ ATTEST:_____________________
-------------------------------------------
Dawna Blyleven, Corporate Secretary
Mirador Diversified Services, Inc.:
BY: /s/ ATTEST:_____________________
-------------------------------------------
John Edward Jones
Mirador Diversified Services, President
BY: /s/ ATTEST:_____________________
-------------------------------------------
Linda Raynell
Mirador Diversified Services, Secretary
28
<PAGE>
SCHEDULE OF EXHIBITS
Exhibit
2.1 Mirador Corporate Documents
2.6 1999 Mirador financial Statements
2.13 Mirador Lease
2.14 List of Mirador Agreements
2.16 Salaries/employment
3.7 TCT Liabilities
3.11 TCT intellectual property
3.12 Pending Litigation
3.16 TCT Agreements
3.17 TCT Bank Accounts
Schedule
1 TCT Capitalization
2 Capitalization of Mirador Acquisitions
3 TCT beneficial owners
- --------------------
29
Exhibit
2.1 Mirador Corporate Documents
================================================================================
SECRETARY OF STATE
[GRAPHIC OMITTED] THE GREAT SEAL OF THE STATE OF NEVADA [GRAPHIC OMITTED]
STATE OF NEVADA
CERTIFICATE OF EXISTENCE
WITH STATUS IN GOOD STANDING
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do
hereby certify that I am, by the laws of said State, the custodian of the
records relating to filings by corporations, limited-liability companies,
limited partnerships, limited-liability partnerships and business trusts
pursuant to Title 7 of the Nevada Revised Statutes which are either presently in
a status of good standing or were in good standing for a time period subsequent
of 1976 and am the proper officer to execute this certificate.
I further certify that the records of the Nevada Secretary of State, at the date
of this certificate, evidence, MIRADOR DIVERSIFIED SERVICES, INC., as a
corporation duly organized under the laws of Nevada and existing under and by
virtue of the laws of the State of Nevada since February 27, 1997, and is in
good standing in this state.
IN WITNESS WHEREOF, I have hereunto set my hand
and affixed the Great Seal of State, at my office, in
Carson City, Nevada, on November 29, 1999.
/s/ DEAN HELLER
-----------------------
Dean Heller
Secretary of State
By /s/
-----------------------
Certification Clerk
[GRAPHIC OMITTED] THE GREAT SEAL OF THE STATE OF NEVADA [GRAPHIC OMITTED]
================================================================================
<PAGE>
================================================================================
SECRETARY OF STATE
[GRAPHIC OMITTED] THE GREAT SEAL OF THE STATE OF NEVADA [GRAPHIC OMITTED]
STATE OF NEVADA
CERTIFICATE OF EXISTENCE
WITH STATUS IN GOOD STANDING
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do
hereby certify that I am, by the laws of said State, the custodian of the
records relating to filings by corporations, limited-liability companies,
limited partnerships, limited-liability partnerships and business trusts
pursuant to Title 7 of the Nevada Revised Statutes which are either presently in
a status of good standing or were in good standing for a time period subsequent
of 1976 and am the proper officer to execute this certificate.
I further certify that the records of the Nevada Secretary of State, at the date
of this certificate, evidence, TCT FINANCIAL GROUP B, INC., as a corporation
duly organized under the laws of Nevada and existing under and by virtue of the
laws of the State of Nevada since June 11, 1999, and is in good standing in this
state.
IN WITNESS WHEREOF, I have hereunto set my hand
and affixed the Great Seal of State, at my
office, in Carson City, Nevada, on November 29,
1999.
/s/ DEAN HELLER
---------------------------------
Secretary of State
By /s/
---------------------------------
Certification Clerk
[GRAPHIC OMITTED] THE GREAT SEAL OF THE STATE OF NEVADA [GRAPHIC OMITTED]
================================================================================
<PAGE>
STATE OF NEVADA
Secretary of State
I hereby certify that this is a true and
complete copy of this document as filed in
this office.
MAR 1 '00
/s/ DEAN HELLER
----------------------
DEAN HELLER
Secretary of State
By /s/
----------------------
<PAGE>
Mirador Diversified Services, Inc. Prelim 1999 Performa
Balance Sheet
As of December 31, 1999
December 31, 1999
-----------------
ASSETS
Current Assets
Other Current Assets
Current Assets 14,143,247
------------
Total Other Current Assets 14,143,247
------------
Total Current Assets 14,143,247
Fixed Assets
Fixed Assets 658,054
------------
Total Fixed Assets 658,054
Other Assets
Other Assets 105,626
------------
Total Other Assets 105,626
------------
TOTAL ASSETS 14,906,927
============
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Other Current Liabilities
Current Liabilities 9,949,577
------------
Total Other Current Liabilities 9,949,577
------------
Total Current Liabilities 9,949,577
Long Term Liabilities
Long Term Liabilities 41,407
------------
Total Long Term Liabilities 41,407
------------
Total Liabilities 9,990,984
Equity
Opening Balance Equity 1,649,576
Net Income 3,266,367
------------
Total Equity 4,915,943
------------
TOTAL LIABILITIES & EQUITY 14,906,927
============
<PAGE>
Mirador Diversified Services, Inc. Prelim Proforma
Profit and Loss
January through December 1999
Ordinary Income Expenses
Income
Gross 1999 Income
ACM Total Income 422,446
Allstate Total Income 1,150,748
AMM Total Income
Aaction Total Income 369,503
AMM Total Income-Other 626,307
----------
Total AMM Total Income 955,810
MAM Annualized Income 643,062
MLA Annualized Income 7,596,213
MRA Total Income 555,489
UM Total Income 1,044,183
UMI Total Income
UMI Banker Gain 1,640,975
UMI Total Income-Other 1,027,682
----------
Total UMI Income 2,668,657
----------
Total Gross 1999 Income 15,076,608
----------
Total Income 15,076,608
----------
Expense
1999 Operating Expenses
ACM Total Expenses
ACM Payroll Adjustment -75,000
ACM Total Expenses-Other 429,028
----------
Total ACM Total Expense 354,028
Allstate Total Operating Expense 1,172,507
AMM Total Operating Expense
Aaction Total Expense 354,801
AMM Total Operating Expense-Other 671,505
----------
Total AMM Operating Expense 1,026,306
MAM Annualized Expense
MAM Payroll Adjustment -75,000
MAM Annualized Expense-Other 611,926
----------
Total MAM Annualized Expense 536,926
MLA Annualized Operating Expense 6,571,204
MRA Total Operating Expense
MRA Payroll Adjustment -150,000
MRA Total Operating Expense-Other 524,022
----------
Total MRA Operating Expense 374,022
UM Total Operating Expense 911,067
UMI Total Operating Expense
UMI Colorado Efficiencies -135,000
UMI Payroll Adjustment -250,000
UMI Total Operating Expense-Other 1,248,181
----------
Total UMI Operating Expense 863,181
----------
Total 1999 Operating Expense 11,810,240
----------
Total Expense 11,810,240
----------
Net Ordinary Income 3,266,367
----------
Net Income 3,266,367
----------
<PAGE>
MIRADOR DIVERSIFIED SERVICES, INC. 1999 PRELIMINARY PROFORMA
PROFIT AND LOSS
BALANCE SHEET
AS OF DECEMBER 31, 1999
NOTES:
1. All Balance Sheet and Income & Expense information is based on
PRELIMINARY information provided by the individual companies. This
information is compiled for management use only, and does not contain
adjustments that would normally be included in any presentation to
readers not part of the respective management groups. Adjustments for
accruals, non-cash items, asset and/or liability allocations, etc.
are rarely included in this form of management presentation, and the
use of this information by non-management is highly cautioned.
2. The source for the information presented is as follows:
ACM=American Capital Mortgage: full year Income/Expense Statement ending
12/31/99.
Balance Sheet as of 12/31/99
Allstate=Allstate Mortgage: full year Income/Expense Statement ending 12/31/99.
Balance Sheet as of 12/31/99
AMM=American Mortgage Mart: full year Income/Expesne Statement ending 12/31/99,
including revenue from Aaction Mortgage which was acquired December 1999.
Balance Sheet as of 12/31/99
MAM=Mid-America Mortgage: ANNUALIZED 12 month statement Balance Sheet and
Income/Expense based on 10 month statement from February 1 to November 30, 1999.
MLA=Mortgage Lending of America: ANNUALIZED 12 month statement Balance Sheet and
Income/Expense based on 9 months statement from January 1 to September 30, 1999.
MRA=Mortgage Resource Associates: full year Income/Expense Statement ending
12/31/99.
Balance Sheet as of 12/31/99
NATCAP-NATCAP Mortgage: Balance Sheet as of 10/31/98
Income/Expense NOT included since only the assets of this operation
are being acquired.
UM=University Mortgage: full year Income/Expense Statement ending 12/31/99.
Balance Sheet NOT included since the assets of this operation are not
being acquired.
UMI=United Mortgage: Balance Sheet ending December 31, 1999
Income/Expense Statement for June 1 to December 31, 1999 ANNUALIZED
Note: Income/Expense Statement contains extraordinary expenses related
to the prior management and subsequent write-off of non-performing
income and non-continuing expense items. Payroll expense has been
adjusted downwards by $250,000 but other items also require adjustment
and as such the actual accounting basis considerably exaggerates the
expenses while minimizing the income.
3. Expenses have been reduced for anticipated savings within the Colorado
operations, which we estimate rent to be reduced by $60,000 annually and
Administrative efficiencies to produce another $75,000 in expense reductions.
<PAGE>
4. Payroll at American Capital Mortgage, Mid America Mortgage, and Mortgage
Resource Associates can be reduced by $75,000, $75,000, and $150,000,
respectively, to reflect conversion to prior management salaries to new salary
structure.
5. Income includes estimated net gain to UMI as a Mortgage Banker, to include
gains from Service Release and Yield Spread Premiums, and additional fees
charged to customer at closing which can be retained by UMI. We calculate this
revenue gain to be $1,640,975 to which we have added the $125,000 in saving
outlined in #3 and the $300,000 savings in #4. Note that Banker gain is based on
combined net revenues for all companies EXCEPT Mortgage Lending of America,
since they currently operate as a Mortgage Banker.
Printed April 7, 2000
2.13 Mirador Lease
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT (the "Sublease") is made and entered into as of
the 28th day of January 2000, by and between FIRST UNION NATIONAL BANK, a
national banking association, of Charlotte, North Carolina, successor by merger
to Signet Bank/Virginia (hereinafter called "Sublandlord"), a tenant under an
original Lease Agreement with 65 ACRE ASSOCIATES, LP (collectively, the
"Landlord"), dated April 15, 1987, as amended, and attached hereto as EXHIBIT A
and incorporated herein by reference (the "Master Lease"), and UNITED MORTGAGEE,
INC., a _________ corporation, of ____________ (hereinafter called "Subtenant").
W I T N E S S E T H:
In consideration of the rents hereinafter agreed to be paid and in
consideration of the mutual covenants and agreements hereinafter recited,
Sublandlord does hereby sublease unto Subtenant those certain premises (the
"Premises") having an area of approximately 2,300 rentable square feet of space
on the second floor in the office building known as the First Union National
Bank Building, 675 Lynnhaven Parkway (at the corner of Lynnhaven Parkway and
Sabre Drive), Virginia Beach, Virginia, as more particularly described in the
Master Lease.
TO HAVE AND TO HOLD the said premises upon the following terms and
conditions:
1. TERMS AND CONDITIONS. Except as set forth herein, this Sublease is
made upon, and shall be subject to, all of the terms, covenants and
conditions of the Master Lease. Subtenant hereby covenants and agrees
to perform and observe and be bound by all of the terms, covenants,
and conditions by or on the part of Sublandlord under the Master Lease
and to hold Sublandlord harmless from and against any liabilities
under or pursuant to the Master Lease by reason of Subtenant's failure
to fully comply with any and all of such duties, covenants and
obligations of Sublandlord under and pursuant thereto.
Subtenant acknowledges that Sublandlord does not pursuant to this
Sublease covenant or agree to do or perform any obligations
undertaken or assumed by the Landlord under the Master Lease and
agrees that any default by Landlord shall not affect this Sublease
or waive or defer the performance of any of Subtenant's obligations
hereunder; provided, however, that Subtenant may use reasonable
efforts to obtain performance by Landlord under the Master Lease.
2. SUBLEASE TERM. The term of this Sublease (the "Sublease Term") shall
begin on the earlier of: (i) March 1, 2000, or (ii) Subtenant's
occupancy of the Premises (the "Sublease Commencement Date") and
shall continue until February 28, 2003.
3. RENT. Subtenant shall pay Sublandlord annual rent, payable in equal
monthly installments in advance on the first day of each month,
<PAGE>
commencing on the Sublease Commencement Date and continuing through
the Sublease Term, in amounts as follows:
March 1, 2000 to February 28, 2001: $29,900.00/year; or $2491.67/month
March 1, 2001 to February 28, 2002: $30,797.00/year; or $2566.42/month
March 1, 2002 to February 28, 2003: $31,720.91/year; or $2643.41/month
This Sublease shall be deemed a full service lease, i.e., Sublandlord
shall provide to Subtenant electricity and water in an amount normally
used for office purposes, and no additional rent shall be charged to
Subtenant for such services.
Subtenant shall pay a security deposit of one month's rent, or
$2491.67, to Sublandlord upon Sublease execution, to be held by
Sublandlord as security for Subtenant's performance hereunder.
4. INSURANCE. Subtenant shall, at its sole cost and expense, maintain
throughout the term of this Sublease, including any extensions, any
insurance coverage required to be maintained by Sublandlord under the
Master Lease with a company authorized to transact business in the
jurisdiction where the Premises is located. Sublandlord and Landlord
shall be named as additional insureds under such insurance. Subtenant
agrees to indemnify and save harmless the Sublandlord and Landlord
from any claim or loss by reason of an accident or damage to any
person or property happening in the Premises unless caused by
structural failure. Subtenant shall provide Sublandlord and Landlord
with certificates of insurance evidencing the insurance herein before
required to be maintained by it, and Subtenant further agrees to give
thirty (30) days advance written notice by registered or certified
mail of any cancellation or reduction of insurance under any such
policy.
5. USE AND COMPLIANCE WITH LAWS. Subtenant shall not conduct on the
Premises nor permit to be conducted on the Premises any business which
is in violation of federal law, the laws of the State in which the
Premises is located or any law or ordinance of any political
subdivision having jurisdiction over the Premises. Subtenant shall
not, without compliance with applicable rules, regulations and
ordinances, generate, store, treat or dispose of any Hazardous
Materials (as defined in the Master Lease) or otherwise breach any of
the representations regarding Hazardous Materials set forth in the
Master Lease and shall promptly notify Sublandlord of any written
allegation of non-compliance.
Without limiting any other indemnification set forth in this Sublease,
Subtenant shall indemnify, protect, defend and hold Landlord and
Sublandlord harmless from and against any and all damages,
liabilities, judgments, costs, claims, liens, expenses, penalties,
permits and attorneys' and consultants' fees arising out of or
involving any Hazardous Materials introduced to the Premises by
Subtenant or at Subtenant's direction or any other violation of any
applicable environmental laws by Subtenant or its agents. This
2
<PAGE>
provision shall survive the expiration or earlier termination of this
Sublease. No termination, cancellation or release agreement entered
into by Landlord or Sublandlord and Subtenant shall release Subtenant
from its obligations under this Lease with respect to all applicable
environmental laws unless specifically so agreed by Landlord and
Sublandlord in writing at the time of such agreement.
6. ALTERATIONS. Subtenant accepts the premises in an "as is" condition,
except for the condition described in the following paragraph, and
Subtenant shall not make any alterations to the Premises without
Sublandlord's and Landlord's written consent. Any alterations made,
other than the installation of Subtenant's personal property, shall
remain on and be surrendered with the Premises on the expiration or
earlier termination of the term of this Sublease.
Sublandlord acknowledges the existence of a water problem with
resultant damage in an area above where Subtenant's computer server
will be located. Sublandlord agrees to repair both the source of the
water problem and the damage caused by the water problem prior to
Subtenant's occupancy of the Premises.
7. INDEMNIFICATION. Subtenant shall indemnify and save Landlord and
Sublandlord harmless against any and all claims, suits, demands,
actions, fines, damages, and liabilities, and all costs and expenses
thereof (including without limitation reasonable attorneys' fees)
arising out of the use or occupancy of the Premises by Subtenant, its
agents, contractors, employees, invitees, licensees, servants,
subcontractors or subtenants, except to the extent caused by the
willful misconduct of Sublandlord.
8. MASTER LEASE. Sublandlord covenants and agrees it will make payment of
the rentals reserved under the Master Lease base rent and additional
rent, as applicable, as and when due and, to the extent within
Sublandlord's control, to otherwise fully and faithfully perform the
terms and conditions of the Master Lease. Subtenant shall not do or
cause to be done or suffer or permit any act to be done which would or
might cause the Master Lease, or the rights of Sublandlord as tenant
under the Master Lease to be endangered, canceled, terminated,
forfeited or surrendered, or which would or might cause Sublandlord to
be in default thereunder or liable for any damage, claim or penalty.
Subtenant agrees, as an express inducement for Sublandlord's execution
of this Sublease, that if there is any conflict between the provisions
of this Sublease and the provisions of the Master Lease which would
permit Subtenant to do or cause to be done or suffer or permit
anything to be done which is prohibited by the Master Lease, then the
provisions of the Master Lease shall prevail. Sublandlord hereby
warrants and represents that it is now leasing the Premises pursuant
to the terms and provisions set forth in the Master Lease, that the
Master Lease is in full force and effect, and that Sublandlord has a
valid leasehold interest in the Premises under the Master Lease; that
neither the Master Lease nor any of the obligations, duties, and
responsibilities of the Sublandlord or of the Landlord under the
Master Lease have been amended, modified, or altered; and that there
3
<PAGE>
exists no circumstance, condition, or act of default which would
entitle or permit the Landlord to terminate the Master Lease or to
abridge any rights of Sublandlord as Lessee thereunder.
9. DEFAULT. The occurrence of one or more of the following events (herein
"Events of Default") shall constitute a default by Subtenant and a
breach of this Sublease:
(a) The filing of a petition by Subtenant for adjudication as
bankrupt, the involuntarily adjudication of Subtenant as
bankrupt or the voluntary reorganization of Subtenant pursuant
to the United States Bankruptcy Code;
(b) The appointment of a receiver for Subtenant;
(c) The making by Subtenant of any assignment for the benefit of
creditors;
(d) The failure to pay rent within five (5) days after same becomes
due or the failure to maintain the required insurance coverages
to be maintained by Subtenant hereunder;
(e) A default in the performance of any other covenant or condition
of this Sublease on the part of Subtenant; and
(f) Any other act or omission which would constitute a default under
the terms of the Master Lease.
10. SUBLANDLORD'S REMEDIES ON DEFAULT BY SUBTENANT. Upon the occurrence of
an Event of Default, Sublandlord shall have the right to terminate
this Sublease and Subtenant's right to possession of the Premises at
any time and reenter the Premises. In such event, Sublandlord shall
have the right to pursue all remedies available at law and in equity
to recover from Subtenant all amounts then due or thereafter accruing
and such other damages as are caused by Subtenant's default. No course
of dealing between Sublandlord and Subtenant or any delay on the part
of Sublandlord in exercising any rights it may have under this
Sublease shall operate as a waiver of any of the rights of Sublandlord
hereunder nor shall any waiver or prior default operate as a waiver of
any subsequent default. In exercising its rights and remedies under
the Sublease, Sublandlord shall be entitled to recover from Subtenant
all costs incurred including without limitation reasonable attorneys'
fees and expenses.
11. BROKERS. Sublandlord agrees to pay Advantis Commercial Real Estate
Services ("Broker") any commission or other fee earned in connection
with this Sublease, which payment shall be governed by a separate
agreement between Sublandlord and Broker. Sublandlord and Subtenant
warrant that they have not used any other broker and each party agrees
to indemnify and save each other harmless from and against any and all
4
<PAGE>
claims, suits, liabilities, costs, judgments and expenses, including
reasonable attorneys' fees, for brokerage commissions resulting from
or arising out of each other's actions in connection with this
Sublease, including the payment of any commission or any other fee or
charge due to the Broker.
12. ASSIGNMENT AND SUBLETTING. Subtenant may not further sublet all or any
portion of the Premises to others without the written consent of
Sublandlord, whose consent shall not be unreasonably withheld, and
Landlord, whose obligation to consent shall be governed by the terms
of the Master Lease. Consent by Sublandlord to one assignment or
subletting shall not destroy or operate as a waiver of the
prohibitions contained in this paragraph or in the Master Lease as to
future assignments or subleases, and all such later assignments or
subleases shall be made only with the prior written consent of
Sublandlord and Landlord.
In the event an assignment of this Sublease or subletting of the
Premises or any part thereof is made by Subtenant, whether or not the
same is consented to by Sublandlord, Subtenant shall remain liable to
Sublandlord for payment of all rent herein provided for and for the
faithful performance of all covenants and conditions contained herein
to the same extent as if this Sublease had not been assigned or the
Premises sublet. Subtenant agrees to reimburse Sublandlord for any
costs and expenses (including reasonable attorneys' fees) incurred by
Sublandlord in connection with Subtenant's assignment or subletting.
If the Premises is sublet by Subtenant at a rental that exceeds all
rentals to be paid to Sublandlord hereunder, any such excess shall be
paid over to Sublandlord by Subtenant.
13. NOTICE. Any notice that either party desires or is required to give to
the other party shall be in writing and shall be deemed to have been
sufficiently given if either served personally or sent by overnight
mail or prepaid, registered or certified mail, addressed to the other
party at the addresses set forth below:
Sublandlord: For all other notices pursuant to this Lease:
First Union National Bank
Corporate Real Estate
1420 Two First Union Center
301 S. Tryon Street
Charlotte, North Carolina 28288-0340
Attn: Tenant Management - Patrice Cosgrove
For payment of rent:
FUNB 601317
First Union National Bank
P.O. Box 601317
Charlotte, North Carolina 28260-1317
5
<PAGE>
With Copies to:
First Union Legal Division
301 S. College Street, 30th Floor
Charlotte, North Carolina 28288-0630
Attn: Corporate Real Estate Support
Subtenant: United Mortgagee, Inc.
2620 Southern Blvd.
Virginia Beach, VA
With copies to Landlord:
Arthur H. Stein, Barbara S. Fischer,
Robert M. Stein, & Edward S. Stein
-----------------------------------
-----------------------------------
14. JURISDICTION. The parties hereto agree that this Sublease and the
enforcement hereof shall be construed in accordance with and governed
by the laws of the State in which the Premises is located and that any
action brought under this Sublease shall be brought in the state
courts.
15. INTEGRATION AND BINDING EFFECT. The entire agreement between
Sublandlord and Subtenant is contained in the provisions of this
Sublease and any stipulations, representations, promises or
agreements, written or oral made prior to or contemporaneous with this
Sublease shall have no legal effect unless contained herein. In the
event Sublandlord retains an attorney to enforce provisions of this
Sublease, Sublandlord shall be entitled to recover, in addition to all
other remedies available at law or in equity, its reasonable
attorneys' fees from the Subtenant. Titles to the paragraphs of this
Sublease shall be ignored when interpreting this Sublease. This
Sublease shall be binding upon and inure to the benefit of the parties
hereto, their respective heirs, successors and assigns. Any amendments
to this Sublease must be made in writing and executed by the party to
be charged with such amendment.
16. W-9 FORM. Subtenant acknowledges that in order to process rent
payments, Sublandlord must receive a complete W-9 Form from Subtenant.
Therefore, the effectiveness of this Sublease is expressly contingent
upon receipt of an executed, complete W-9 Form from Subtenant
simultaneously with execution hereof or within five (5) business days
thereafter.
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Sublease Agreement to be
executed and sealed in their names, the day and year first above written.
Landlord hereby executes this Sublease for the purpose of consenting to the
terms hereof.
LANDLORD 65 Acre Associates, L.P.
/s/ ROBERT M. STEIN
-----------------------------------
By Robert M. Stein, General Partner
SUBLANDLORD:
FIRST UNION NATIONAL BANK
By: /s/ VON W. MOODY
-------------------------
Print Name: Von W. Moody
Title: Vice President
SUBTENANT:
UNITED MORTGAGEE, INC.
By: /s/ JOHN JONES
-------------------------
Print Name: John Jones
Title: President
7
2.15 List of Mirador Agreements
(Contracts, Agreements and Appointments)
Regional Office 210 Franklin Road SW
Roanoke VA 24011
[Graphic DEPARTMENT OF
Omitted] VETERANS AFFAIRS
June 14, 1990
In Reply Refer To:
United Mortgagee, Inc. 314-264
2910 West Clay Street, Suite 205
Richmond, VA 23230
Gentlemen:
We welcome you to our area and recognize your firm to process VA loan
applications. We look forward to future associations with you and we will
afford you every assistance possible.
Your VA identification number is 68528100001.
This regional office serves the State of Virginia, except for certain
northern Virginia cities and counties which are under the jurisdiction of
the VA Regional Office, Washington, D.C. (See list enclosed.)
You are now on our mailing list to receive current publications. Please
inform us of any change in your address.
The enclosed VA poster 26-77-2 must be displayed in your office in an area
accessible to the public.
Please refer to the enclosed information for ordering forms and incoming
mail routing.
Sincerely yours,
/s/ S. H. JACOBS
------------------------------
S.H. JACOBS
Chief, Loan Processing Section
Enclosure
264/165/03198 SHJ:shj
<PAGE>
U.S. Department of Housing and Urban Development
[Graphic Omitted]
Virginia State Office
Office of Housing
The 3600 Centre
3800 W. Broad Street, Suite 300
Richmond, VA 23230-4920
October 30, 1997
Mr. Leo Thomas, Jr.
President
United Mortgagee, Inc.
3500 Virginia Beach Blvd. Suite 211
Virginia Beach, VA 23452
Dear Mr. Thomas:
SUBJECT: Direct Endorsement Approval
United Mortgagee, Inc., ID# 7316-00003
We have reviewed the qualifications of your organization and have determined
that the Direct Endorsement mortgagee eligibility requirements have been met.
Accordingly, the office noted above is approved to submit mortgages in the
Direct Endorsement Program on the pre-closing review status to HUD's
Philadelphia Homeownership Center. The address to the Homeownership Center is
HUD Homeownership Center
The Wannmaker Building
100 Penn Square East
Philadelphia, PA 19107-3389
During the pre-closing review period, HUD will perform a complete technical
review of each submission. If found to be eligible, a firm commitment will be
issued. This pre-closing review will include at least 15 submissions. Should
these 15 submissions fail to demonstrate acceptable underwriting, the
pre-closing review status will be extended. We will notify you when the
pre-closing review period has been successfully completed.
HUD's receipt and review of the Quality Control Plan are solely for the purpose
of determining whether the Plan addresses the Direct Endorsement Program
requirements. HUD's review is not for the purpose of approving the adequacy of
any other provisions. Please be advised that participation in the Direct
Endorsement Program is a privilege accorded only to those mortgages who have
demonstrated the ability to originate mortgage loans in accordance with IIUD's
underwriting policies. Therefore, should the mortgage loans submitted for Direct
Endorsement indicate unsatisfactory underwriting, the privilege will be reduced
or withdrawn.
<PAGE>
WAREHOUSE LOAN AND SECURITY AGREEMENT
This Warehouse Loan and Security Agreement ("Agreement") is made and
entered into on this 28th day of APRIL 2000 between MIRADOR DIVERSIFIED
SERVICES, INC., a NEVADA with its principal place of business located at 675
Lynnhaven Partway, 2nd Floor, Virginia Beach, VA 23452 ("Borrower"), and The
Provident Bank, an Ohio banking corporation with its principal place of business
located at One East Fourth Street, Cincinnati, Ohio 45202 ("Provident").
W I T N E S S E T H:
WHEREAS, Borrower is engaged in the business of underwriting,
processing, originating, closing, funding, purchasing, servicing and selling
mortgage loans secured by first or second liens evidenced by mortgages on real
property; and
WHEREAS, Borrower has requested and Provident has agreed to finance the
funding of mortgage loans by Borrower in connection with its origination thereof
subject to the terms, conditions and limitations set forth in this Agreement.
NOW THEREFORE, in consideration of the premises, the extension of
credit by Provident to Borrower, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Provident and Borrower
agree as follows:
1. DEFINITIONS. (a) When used in this Agreement, the following
terms shall have the following meanings and the terms defined elsewhere in this
Agreement shall have the meanings assigned to them (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ADVANCE" shall mean any amount loaned by Provident to
Borrower under this Agreement.
"AFFILIATE" shall mean, in relation to any Person (in this
definition called "Affiliated Person"), any Person (i) which (directly or
indirectly) controls or is controlled by or is under common control with such
Affiliated Person; or (ii) which (directly or indirectly) owns or holds five
percent (5%) or more of any equity interest in Borrower; or (iii) five percent
(5%) or more of whose voting stock or other equity interest is directly or
indirectly owned or held by Borrower. For the purposes of this definition, the
term "control" (including, with correlative meanings, the terms "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession (directly or indirectly) of the power to direct or to cause the
direction of the management or the policies of such Person, whether through the
ownership of shares of any class in the capital or any other voting securities
of such Person or by contract or otherwise.
"ASSIGNMENT OF MORTGAGE" shall mean, with respect to any
Mortgage, an assignment of the Mortgage, notice of transfer or equivalent
instrument, in recordable form, sufficient under the laws of the jurisdiction in
which the related Mortgaged Property is located to reflect the assignment of the
Mortgage.
"BUSINESS DAY" shall mean a day other than Saturdays, Sundays,
holidays or other days on which the main office of Provident is not open for
business.
"CASH COLLATERAL ACCOUNT" shall mean the demand deposit
account comprising a portion of the Collateral and established and maintained by
Borrower with Provident pursuant to Section 5(d).
"CHANGE OF CONTROL" shall mean the time at which (i) any
Person (including a Person's Affiliates and associates) or group (as that term
is understood under Section 13(d) of the Securities Exchange Act of 1934 and the
rules and regulations thereunder), other than Management Shareholders and
Affiliates thereof (the "Control Group") or a group controlled by the Control
<PAGE>
-2-
Group, has become the beneficial owner of a percentage (based on voting power,
in the event different classes of stock shall have different voting powers) of
the voting stock of Borrower equal to at least ten percent (10%), (ii) there
shall be consummated any consolidation or merger of Borrower pursuant to which
Borrower's common stock (or other capital stock) would be converted into cash,
securities or other property, other than a merger or consolidation of Borrower
in which the holders of such common stock (or such other capital stock)
immediately prior to the merger have the same proportionate ownership, directly
or indirectly, of common stock of the surviving corporation immediately after
the merger as they had of Borrower's common stock immediately prior to such
merger, or (iii) all or substantially all of Borrower's assets shall be sold,
leased, conveyed or otherwise disposed of as an entirety or substantially as an
entirety to any Person (including an Affiliate or associate of Borrower) in one
or a series of transactions.
"CLOSING DATE" shall mean the date on which Borrower sells,
transfers or otherwise disposes of a Mortgage Loan funded and originated by
Borrower with an Advance made by Provident to Borrower under this Agreement.
"COLLATERAL" shall have the meaning set forth in Section 5(?).
"COLLECTIONS" shall mean, collectively, all Sale Proceeds, all
Payment Collections and all other collections and Proceeds on or in respect of
the Mortgage Loans.
"COST AND FEE SCHEDULE" shall have the meaning set forth in
Section 2(f).
"CREDIT FILE" shall mean, as to each Mortgage Loan, a copy of
the Mortgage and copies of all intervening assignments of mortgage, if any, with
evidence of recording thereon, showing a complete chain of title from the
originator to Borrower; the original attorney's opinion of title or the original
policy of title insurance, if not previously delivered to Provident; the
originals of all assumption, modification and extension agreements, if any; and
all applications, credit reports, salary or employment verifications,
appraisals, surveys, other underwriting and work papers, closing statements,
HUD-1 settlement statements and any addendums thereto, truth-in-lending
disclosures, right of recission notices, payment histories, and all other
closing documents and all other agreements, reports, certificates, documents and
instruments related thereto or obtained or prepared in connection therewith and
included or includable in Borrower's mortgage file relating to such Mortgage
Loan.
"DEFAULT INTEREST RATE" shall mean an annual rate of interest
which shall (to the extent permitted by applicable law) at all times be equal to
four percent (4%) above the Interest Rate.
"DEMAND FOR PAYMENT" shall have the meaning set forth in
Section 4(a).
"DOCUMENT CUSTODIAN" shall mean Borrower, as custodian and
bailee for Provident, or any successor appointed by Provident at any time.
"FEES" shall have the meaning set forth in Section 2(f).
"FUNDING DATE" shall mean the date on which an Advance is made
by Provident to Borrower under this Agreement.
"INITIAL COLLATERAL PACKAGE" shall mean, as to each Mortgage
Loan: (i) the original Mortgage Note and the originals of all intervening
endorsements, if any, showing a complete chain of title from the originator of
the Mortgage Loan to Borrower, endorsed in blank (either on the Mortgage Note or
a separate allonge attached thereto); (ii) a certified copy of the original
Mortgage and copies of all intervening assignments of the Mortgage, if any;
(iii) the original Assignment of Mortgage in favor of Provident in recordable
form for the jurisdiction in which the Mortgaged Property is located; and (iv)
the original attorney's opinion of title or the original policy of title
<PAGE>
-3-
insurance (or if such original policy of title insurance has not yet been
received by Borrower, a copy of such policy or a title insurance binder or
commitment for the issuance of such policy).
"INTEREST RATE" shall mean an annual rate of interest which
shall (to the extent permitted by applicable law) at all times be equal to the
Prime Rate plus the applicable margin determined by reference to the factors
applicable to such determination set forth in the Cost and Fee Schedule in
effect on an Interest Payment Date or Closing Date, as the case may be.
"LIEN" shall mean any lien, mortgage, pledge, security
interest, charge or other encumbrance of any kind including any conditional sale
or other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest.
"LOAN DOCUMENTS" shall mean this Agreement, the Security
Documents, the Policies and Procedures, the Cost and Fee Schedule and any other
instrument, certificate or document executed in connection with or pursuant to
this Agreement whether concurrently herewith or subsequent hereto.
"LOSSES" shall have the meaning set forth in Section 11(b).
"MANAGEMENT SHAREHOLDERS" shall mean those shareholders of
Borrowers who are senior executive officers of Borrower on the date of this
Agreement.
"MATURITY DATE" shall have the meaning set forth in Section
4(b).
"MORTGAGE" shall mean the mortgage, deed of trust or other
instrument creating a first or second Lien on an estate in fee simple interest
in the Mortgaged Property securing a Mortgage Loan.
"MORTGAGE LOAN" shall mean any mortgage loan funded and
originated by Borrower with any Advance made by Provident to Borrower under this
Agreement.
"MORTGAGE LOAN DOCUMENTS" shall mean, with respect to a
Mortgage Loan, the documents comprising the Initial Collateral Package and the
Credit File for such Mortgage Loan.
"MORTGAGE NOTE" shall mean, with respect to a Mortgage Loan,
the original note or other evidence of indebtedness pursuant to which the
related Mortgagor agrees to pay the indebtedness evidenced thereby and which is
secured by the related Mortgage.
"MORTGAGED PROPERTY" shall mean the underlying real property,
including all improvements and additions thereon, securing a Mortgage Loan.
"MORTGAGOR" shall mean the obligor or obligors under a
Mortgage Note.
"OTHER OBLIGATIONS SECURED HEREBY" shall mean all of
Borrower's debts, obligations or liabilities of every kind, nature, class and
description to Provident (other than those under this Agreement and the other
Loan Documents), now due or to become due, direct or indirect, absolute or
contingent, presently existing or hereafter arising, joint or several, secured
or unsecured, purchase money or non-purchase money, related or unrelated,
similar or dissimilar, whether for payment or performance, regardless of how the
same arise or by what instrument, agreement or book account they may be
evidenced, or whether evidenced by any instrument, agreement or book account,
including without limitation, all loans (including any loan by renewal or
extension), and all overdrafts, all guarantees, all bankers acceptances, all
agreements, all letters of credit issued by Provident for Borrower and the
applications relating thereto, all indebtedness of Borrower to Provident, all
undertakings to take or refrain from taking any action, and all indebtedness,
liabilities and obligations owing from Borrower to others which Provident may
obtain by purchase, negotiation, discount, assignment or otherwise.
<PAGE>
-4-
"PAYMENT COLLECTIONS" shall mean, collectively, all
collections on the Mortgage Loans attributed to the payment of the principal
amount thereof, accrued interest thereon or any fees, charges or other amounts
payable thereunder or in respect thereof.
"PERSON" shall mean an individual, a company, a limited
liability company, a corporation, an association, a partnership, a joint
venture, an unincorporated trade or business enterprise, a trust, an estate, or
other legal entity or a government (national, regional or local), court,
arbitrator or any agency, instrumentality or official of the foregoing.
"PRIME RATE" shall mean the rate of interest published from
time to time in the "Money Rates" column of THE WALL STREET JOURNAL (Central
Edition) as the "prime rate" or, if such rate ceases to be so published, then
such other rate as may be substituted by Provident as the prime rate, which may
be the rate of interest announced by Provident from time to time as its prime
rate. The Prime Rate shall change on each date the prime rate so published
changes.
"POLICIES AND PROCEDURES" shall mean Provident's Policies and
Procedures for its Warehouse Division as of the date of this Agreement, as
amended, modified, restated or supplemented by Provident from time to time.
"SALE PROCEEDS" shall mean (i) any proceeds received or
receivable by Borrower with respect to or in respect of any sale, transfer or
other disposition of any Mortgage Loan and (ii) any proceeds received or
receivable by Borrower with respect to or in respect of any sale, transfer,
disposition, condemnation or casualty event and all other amounts from any
disposition, taking, damage or destruction of any Mortgaged Property acquired by
Borrower upon foreclosure (or deed in lieu of foreclosure) of any Mortgage Loan.
"SECURITY DOCUMENTS" shall have the meaning set forth in
Section 5(b).
"THIRD PARTY INVESTOR" shall mean any Person with whom
Borrower has contracted to sell any Mortgage Loan that has been funded and
originated by Borrower with any Advance made by Provident to Borrower under this
Agreement. Provident may itself be a Third Party Investor.
"UCC" shall mean the Uniform Commercial Code as the same may,
from time to time, be in effect in the State of Ohio; PROVIDED, HOWEVER, that in
the event that by reason of mandatory provisions of law, any or all of the
attachment, perfection, or priority of Provident's security interest in any of
the Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of Ohio, the term "UCC" shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such attachment, perfection, or priority and for
purposes of definitions related to such provisions.
(b) All terms defined in the UCC and used in Section 5 of this
Agreement shall have the meanings assigned to such terms in the UCC.
(c) Where appropriate, words importing the singular only shall
include the plural and vice versa.
<PAGE>
-5-
2. ADVANCES.
(a) Subject to the terms and conditions hereof and the
Policies and Procedures, which are hereby incorporated herein by this reference,
Provident may elect, in its sole discretion, to make Advances to Borrower from
time to time in such amounts as Borrower may request. Nothing herein shall be
deemed or construed as a commitment by Provident to make any Advance hereunder
and it is expressly acknowledged and agreed by Borrower that the decision to
make any Advance hereunder is, and shall at all times be, wholly discretionary
on the part of Provident.
(b) In order to obtain Advances, Borrower shall comply with
the requirements set forth in this Agreement and the Policies and Procedures and
shall furnish Provident with such requests and all other documents Provident may
request or require at any time in connection with any Advance. In addition, the
following conditions precedent, unless waived in whole or in part by Provident,
shall be satisfied before Provident makes any Advance hereunder: (i) Provident,
in its sole discretion, shall have approved the underwriting of the Mortgage
Loans to be funded with any Advance; (ii) Borrower shall have provided Provident
with an insured closing letter, evidence of a current errors and omissions
insurance policy with limits of at least $1,000,000, an executed closing agent
agreement and wiring instructions for each closing agent used by Borrower to
close the Mortgage Loans funded with any Advance, each of which shall be
acceptable to Provident in its sole discretion; (iii) Borrower shall have
furnished Provident with an executed, recordable Power of Attorney covering the
items set forth in Section 5(e) hereof for each state in which Borrower does
business; and (iv) Provident, or its agent, bailee or designee, shall have
received the Initial Collateral Package for each of the Mortgage Loans funded
with any Advance. Each request for an Advance by Borrower shall constitute a
certification that each of the representations and warranties made by Borrower
to Provident in this Agreement or the other Loan Document shall be true and
correct in all material respects on and as of the date when made and shall, for
all purposes of this Agreement, be deemed to be repeated on and as of each date
an Advance is made by Provident to Borrower hereunder and shall be true and
correct in all material respects on and as of each of such date, except as
affected by the consummation of the transactions contemplated by this Agreement
and the other Loan Documents, and Borrower shall have performed, complied with
and observed all of its covenants and agreements contained in this Agreement and
the other Loan Documents on and as of each date an Advance is made by Provident
to Borrower hereunder.
(c) Advances hereunder will be made by Provident on behalf of
Borrower to third parties in connection with the funding of the Mortgage Loans
originated by Borrower. All matters relating to the funding of any Mortgage Loan
hereunder shall be acceptable to Provident in its sole discretion.
(d) Borrower represents, warrants and covenants to Provident
that all proceeds of all Advances shall be used by it solely to fund Mortgage
Loans originated by Borrower in the ordinary course of its business and for no
other use or purpose.
(e) Advances for the funding of any Mortgage Loan originated
by Borrower shall not exceed one hundred percent (100%) of the original
principal amount of such Mortgage Loan.
(f) In connection with each Advance, Borrower agrees to pay
Provident the transaction fees charged by Provident with respect to the Mortgage
Loans funded and originated with such Advance ("Fees"). The amounts of Fees
payable by Borrower in connection with any Advance shall be determined by
reference to the Cost and Fee Schedule in effect on the Funding Date of such
Advance (the "Cost and Fee Schedule"). The Cost and Fee Schedule in effect on
the date of this Agreement is attached hereto as Schedule A. Any Cost and Fee
Schedule shall remain in effect until a new Cost and Fee Schedule is delivered
to Borrower in accordance with the requirements of Section 11(f).
3. INTEREST PAYABLE ON ADVANCES. Borrower promises to pay to
Provident interest in arrears on the unpaid amount of each Advance made by
Provident to Borrower pursuant to this Agreement and on the unpaid amount of any
interest not paid when due at a variable rate of interest per annum equal at all
times to the Interest Rate. Interest shall be calculated on the daily unpaid
amount of each Advance from its Funding Date. Interest with respect to each
<PAGE>
-6-
Advance hereunder shall be payable: (i) commencing on the date that is sixty-one
(61) days after the Funding Date of the Advance and continuing on the same day
of each consecutive month thereafter; and (ii) on its Maturity Date. Payments of
interest shall be due and payable as set forth above until payment in full of
all Advances. All interest under this Agreement shall be calculated on the basis
of a year consisting of 360 days (comprised of twelve 30 day months) and paid
for actual days elapsed.
4. TERMINATION: MANDATORY REPAYMENTS OF ADVANCES PRIOR TO
TERMINATION
(a) Provident may, at any time, for any reason and without
prior notice, terminate this Agreement and demand that Borrower pay the
aggregate unpaid amount of all Advances made by Provident to Borrower pursuant
to this Agreement, all accrued and unpaid interest thereon as well as all Fees,
charges and other amounts payable hereunder and under the Loan Documents
("Demand For Payment").
Following a Demand for Payment, the aggregate unpaid
amount of all Advances made by Provident to Borrower pursuant to this Agreement,
together with all accrued and unpaid interest thereon as well as all Fees,
charges and other amounts payable hereunder and under the other Loan Documents
shall be immediately due and payable in full and no future or additional
Advances will be made by Provident to Borrower hereunder.
(b) Prior to termination of this Agreement as provided for
above, Borrower shall repay to Provident the unpaid amount of each Advance made
by Provident to Borrower hereunder, all accrued and unpaid interest thereon and
all Fees, charges and other amounts payable hereunder, on the earlier to occur
of: (i) the Closing Date on which Borrower sells or otherwise disposes of the
Mortgage Loan(s) funded and originated with the Advance whether by sale to a
Third Party Investor or otherwise; or (ii) on or before the applicable number of
days after its Funding Date set forth in the Cost and Fee Schedule under the
heading entitled "Days Allowed for Purchase by Third Party Investor" (the
earlier to occur of (i) or (ii) being referred to herein as the "Maturity
Date").
5. GRANT OF SECURITY INTEREST.
(a) To secure the prompt payment of the Advances, interest and
all other amounts payable hereunder and under the other Loan Documents and the
due and punctual performance and observance by Borrower of all of its other
covenants, obligations and liabilities under this Agreement and the other Loan
Documents and also to secure all of the Other Obligations Secured Hereby,
Borrower hereby grants to Provident a security interest in an to, and hereby
pledges and collaterally assigns to Provident, all of its rights, title,
interest and claims in, to and under all of the following property, wherever
located, whether now or hereafter owned, held or acquired, or hereafter existing
or arising (collectively, the "Collateral"):
(i) all Mortgage Loans;
(ii) all Mortgage Loan Documents including, without
limitation, all Mortgage Notes, Mortgages and Assignments of Mortgages
relating to the Mortgage Loans;
(iii) all rights to service or subservice the Mortgage
Loans;
(iv) all certificates, notes and other securities of any
kind whatsoever, residual or otherwise, issued to Borrower or now or
hereafter owned, held or acquired by Borrower in connection with or
related to any mortgage loan securitization or any asset-back
transaction involving the Mortgage Loans;
(v) all of Borrower's rights under contracts or
agreements to which Borrower is party (but none of its covenants,
obligations or liabilities thereunder) in connection with the Mortgage
Loans, including all contract or agreements with all Third Party
Investors and all attorney's opinions of title and title insurance
policies;
<PAGE>
-7-
(vi) the Cash Collateral Account and all funds in the
Cash Collateral Account; and
(vii) all Proceeds of any and all of the foregoing
Collateral in whatever form, including but not limited to, all payments
made by Mortgagors to Borrowers in connection with the Mortgage Loans
and all premiums paid to Borrower by Third Party Investors in
connection with the sales of the Mortgage Loans.
(b) Borrower shall take all actions necessary or appropriate
under all applicable laws, or as requested by Provident, to perfect, maintain
and preserve, and to continue as perfected, Provident's first lien and
security interest in the Collateral. Borrower shall pay all costs of
preparing, recording and filing UCC Financing Statements (and any continuation
or termination statements with respect thereto) and any other documents,
titles, statements, assignments or the like reasonably required to create,
maintain, preserve or perfect the liens or security interests granted under
the Loan Documents, together with costs and expenses of any lien or UCC
searches required by Provident in connection with the making of any Advance.
At Provident's request, Borrower shall execute and deliver to Provident at any
time and from time to time hereafter, all supplemental documentation that
Provident may reasonably request to perfect, maintain, preserve or continue
the security interest and liens in the Collateral granted Provident hereby and
under any of the other Loan Documents (collectively, the "Security
Documents"), in form and substance acceptable to Lender, and pay the costs of
preparing and recording or filing of the same. Borrower agrees that a carbon,
photographic, or other reproduction of this Agreement or of a financing
statement is sufficient as a financing statement. Borrower shall promptly
notify Provident concerning any changes in its name, identity or structure,
concerning any changes in the address(es) of its chief executive office or
other places of business or concerning any changes in its trade name(s) or
name(s) under which it does business.
(c) The Document Custodian shall maintain possession of each
Credit File and the Mortgage Loan Documents comprising each Credit File (other
than the Initial Collateral Package) for each Mortgage Loan. Promptly after
Provident's request therefor, Borrower, at its expense, shall cause the
Credit Files held by the Document Custodian to be delivered to Provident or
its agent, bailee or other designee.
(d) Borrower shall, at all times, maintain the Cash Collateral
Account with Provident. Borrower shall deposit or cause to be deposited all
Collections into the Cash Collateral Account when and as Collections are
received or receivable by Borrower. Withdrawals may be made from the Cash
Collateral Account by Borrower in accordance with the Policies and Procedures.
Provident is hereby authorized to withdraw funds from the Cash Collateral
Account from time to time, either before or after Provident's Demand for
Payment, and to apply such withdrawals to the payment of the Advances, accrued
and unpaid interest thereon and Fees, charges and other amounts payable
hereunder or under the other Loan Documents.
(e) Borrower hereby makes, constitutes and appoints Provident
(by any of its officers, employees or agents), its true and lawful agent and
attorney-in-fact and hereby gives and grants to Provident full power and
authority to do and perform each and every act whatsoever requisite, necessary
and proper (i) to endorse the related Mortgage Note to the Third Party
Investor that purchases any Mortgage Loan; (ii) to endorse any original
Mortgage Note to Provident or the purchaser thereof should Borrower default in
its obligations hereunder; (iii) to prepare, execute and record on behalf of
Borrower any Assignment of Mortgage; (iv) at the sole option of Provident, to
prosecute, in Borrower's or Provident's name, any and all claims or causes of
action collaterally assigned to Provident hereunder; and (v) to do and perform
every act necessary to place Provident in position to enforce the payment of
any Mortgage Loan.
6. BORROWER'S REPRESENTATIONS AND WARRANTIES. Borrower represents
and warrants to Provident as follows as of the date hereof and as of each
Funding Date:
(a) Borrower is and shall at all times be, duly organized,
validly existing and in good standing under the laws of the State set forth in
the first paragraph of this Agreement and has, and shall at all times have, full
power and authority and legal right to engage in and carry on Borrower's
business as now being conducted, to undertake the borrowings contemplated hereby
and to execute and deliver each of the Loan Documents. Borrower is qualified
<PAGE>
-8-
and licensed in each jurisdiction wherein the nature or conduct of its business
make such qualification necessary or advisable. Borrower is currently qualified
and licensed in good standing in each such jurisdiction. Borrower's name as set
forth in the caption of this Agreement and as set forth on the signature page of
this Agreement is Borrower's correct individual, partnership or corporate name,
as the case may be.
(b) Borrower has full power and authority and legal right to
enter into this Agreement and each of the other Loan Documents, and to perform,
observe and comply with all of its agreements and obligations under each of such
documents, including without limitation, the making by Borrower of the
borrowings contemplated hereby and the granting by Borrower of the security
interest in the Collateral pursuant to Section 5.
(c) The execution and delivery by Borrower of this Agreement
and the other Loan Documents, the performance by Borrower of all of its
agreements and obligations hereunder and thereunder and the making by Borrower
of the borrowings contemplated by this Agreement have been duly authorized by
all necessary corporate action on the part of Borrower and do not and will not
constitute a breach, violation or event of default (or an event which would
become an event of default with the lapse of time or notice or both) under any
judgment, decree, note, agreement, indenture or other instrument to which
Borrower is a party or otherwise subject.
(d) Borrower owns or possesses all rights, licenses, permits,
franchises and the like necessary for the conduct of its business as presently
conducted and proposed to be conducted. All of the foregoing rights, licenses,
permits and franchises are in full force and effect, and Borrower is in
compliance with all of the foregoing. No event has occurred which permits, or
after notice or lapse of time or both would permit the revocation or termination
of any such right, license, permit or franchise, or affects the rights of
Borrower thereunder.
(e) The balance sheets, statements of income and other
financial statements previously delivered to Provident present fairly the
financial condition and results of operations of Borrower as of the dates
thereof and for the fiscal periods then ended. There are no material liabilities
or obligations, secured and unsecured (whether accrued, absolute or actual,
contingent or otherwise), which were not reflected in the balance sheets of
Borrower as of the dates thereof.
(f) No changes have occurred in the assets, liabilities or
financial condition of Borrower from those reflected on the most recent balance
sheet delivered to Provident (the "Current Balance Sheet") which, individually
or in the aggregate, have been adverse. Since the date of the Current Balance
Sheet, there has been no adverse development in the business or in the
operations or prospects of Borrower.
(g) Borrower is the sole owner of and has good and marketable
title to the Collateral, free and clear of all Liens and encumbrances
whatsoever, except for the security interest granted by Borrower pursuant to
Section 5. All information furnished to Provident concerning the Collateral is
and will be complete, accurate and correct in all respects when furnished.
7. COVENANTS REGARDING THE BORROWER. Borrower covenants and
agrees with Provident as follows:
(a) Borrower shall deliver to Provident as soon as available
and, in any event, within thirty (30) days after the end of each calendar
quarter, quarterly unaudited financial statements of Borrower and within
seventy-five (75) days after the end of each fiscal year of Borrower, annual
financial statements of Borrower which, in each case, shall include a balance
sheet, statement of income, statement of changes in financial position and notes
to financial statements. Provident reserves the right to require Borrower to
deliver audited annual financial statements.
<PAGE>
-9-
Such financial statements shall be certified by the chief
executive officer of Borrower to the effect that such financial statements
reflect, in his opinion and in the opinion of senior management of Borrower, all
adjustments necessary to present fairly the financial position of Borrower as at
the end of such quarter or year, as the case may be, and the results of its
operations for the period then ended.
(b) Borrower shall deliver to Provident all information
Provident may reasonably request at any time and from time to time concerning
its business, financial condition, results of operations, the Mortgage Loans
financed hereunder or the other Collateral.
(c) Borrower covenants to keep the Credit File for each of the
Mortgage Loans financed hereunder at all times at Borrower's business premises
or at such other location or locations as Provident may approve in writing.
Borrower further covenants to deliver the Credit File(s) to Provident upon
demand by Provident, which demand may be made in Provident's sole and absolute
discretion.
(d) Borrower shall pay or cause to be paid all taxes,
assessments and other governmental charges imposed upon its properties or assets
or in respect of any of its franchises, business, income or profits before any
penalty or interest accrues thereon, and all claims (including, without
limitation, claims for labor, services, materials and supplies) for sums which
have become due and payable and which by law have or might become due and
payable and which by law have or might become a lien or charge upon any of its
properties or assets, provided that (unless any material item of property would
be lost, forfeited or materially damaged as a result thereof) no such charge or
claim need be paid if the amount, applicability or validity thereof is currently
being contested in good faith and if such reserve or other appropriate
provision, if any, as shall be required by generally accepted accounting
principles shall have been made therefor.
(e) At any time or times during Borrower's usual business
hours, Borrower shall permit Provident (by any of its officers, employees or
agents) to enter upon Borrower's business premises for any of the following
reasons: (i) to inspect the Collateral and any books or records related thereto
(including making copies of and extracts therefrom), (ii) to verify the amount,
quality, quantity, value or condition of, or any other matter relating to, the
Collateral, (iii) to examine all of the other books and records of Borrower
(including making copies of and extracts therefrom), including those relating to
its tax records, payroll records and insurance records, and (iv) to discuss the
business, financial condition or results of operations with any of Borrower's
officers, employees, agents or accountants. Borrower covenants to pay Provident
a reasonable audit fee and reimburse Provident for its out-of-pocket expenses
for all inspections, audits and examinations conducted by Provident other than
regular monthly audits.
(f) Borrower covenants to comply with all federal, state and
local laws, rules, regulations and orders applicable to it and its business.
(g) Borrower agrees to notify Provident in writing within
fifteen (15) calendar days of any proposed Change of Control or any proposed, or
completed, change in the executive management of Borrower, including, but not
limited to, any management change in the office of president, or any change in
the management of Borrower's underwriting department. Borrower further agrees to
notify Provident in writing at least thirty (30) days in advance of any change
in the location of its principal place of business or of any proposed change in
the name of Borrower or the opening or closing of any office.
(h) Borrower shall not at any time create, assume, incur or
permit to exist, any Lien or other encumbrance in respect of any of the
Collateral.
(i) Borrower agrees to give Provident prompt notice of any
development, financial or otherwise, which would materially adversely affect its
business, properties or affairs or the ability of Borrower to perform its
obligations under this Agreement.
<PAGE>
-10-
8. COVENANTS REGARDING THE MORTGAGE LOANS: Borrower further
covenants and agrees with Provident as follows with respect to each Mortgage
Loan to be financed by Provident hereunder.
(a) As of its Funding Date, the Initial Collateral Package and
Credit File relating to the Mortgage Loan shall contain each of the documents
and instruments specified herein to be included therein.
(b) The related Mortgage shall be a valid and enforceable
first or second Lien of record on the Mortgaged Property subject, in the case of
any second Mortgage Loan, only to a first Lien on such Mortgaged Property and
subject in all cases to the exceptions to title set forth in the title insurance
policy or attorney's opinion of title with respect to the related Mortgage Loan,
which exceptions shall be acceptable to Provident.
(c) Borrower shall hold good, marketable and indefeasible
title to, and be the sole owner and holder of, the Mortgage Loan subject to no
Liens or rights of others.
(d) The Mortgage Loan shall not be subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
nor shall the operation of any of the terms of the Mortgage Note or Mortgage, or
the exercise of any right thereunder, render either the Mortgage Note or the
Mortgage unenforceable in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
and no such right of rescission, set-off, counterclaim or defense shall have
been asserted with respect thereto.
(e) The Mortgage Loan shall comply with, and shall at all
times be serviced in compliance with, in all material respects, applicable state
and federal laws and regulations, including, without limitation, usury, equal
credit opportunity, consumer credit, truth-in-lending and disclosure laws.
(f) With respect to the Mortgage Loan, either (i) a lender's
title insurance policy, issued in standard American Land Title Association or
California Land Title Association form, or other form acceptable in the
particular jurisdiction, by a title insurance company authorized to transact
business in the state in which the related Mortgaged Property is situated,
together with a condominium endorsement, if applicable, in an amount at least
equal to the original principal balance of such Mortgage Loan insuring the
mortgagee's interest under the related Mortgage Loan as the holder of a valid
first or second mortgage Lien of record on the Mortgaged Property described in
the Mortgage, subject only to the exceptions of the character referred to in
subsection (b) above, shall be valid and in full force and effect on the Funding
date of the origination of such Mortgage Loan or (ii) an attorney's opinion of
title shall be prepared in connection with the origination of such Mortgage
Loan. Such mortgage title insurance policy or attorney's opinion of title shall
be issued in favor of Borrower and its successors and assigns. Borrower shall,
by act or omission, not have done anything that would impair the coverage of
such mortgage title insurance policy or attorney's opinion of title.
(g) The Mortgage Note and the related Mortgage shall have been
duly and properly executed, constitute the legal, valid and binding obligation
of the related Mortgagor and shall be enforceable in accordance with their
respective terms, except only as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law), and all
parties to the Mortgage Loan shall have had full legal capacity to execute all
Mortgage Loan Documents and to convey the estate therein purported to be
conveyed.
(h) The terms of the Mortgage Note and the Mortgage shall not
have been or be impaired, altered or modified in any material respect, except by
a written instrument which shall have been recorded or is in the process of
being recorded, if necessary, to protect the interests of Borrower therein. The
original Mortgage shall be recorded, and all subsequent assignments of the
original Mortgage shall be recorded in the appropriate jurisdictions wherein
such recordation is necessary to perfect the Lien thereof as against creditors
of Borrower.
<PAGE>
-11-
(i) No instrument of release or waiver shall have been
executed in connection with the Mortgage Loan, and no Mortgagor shall have been
released therefrom, in whole or in part.
(j) The proceeds of the Mortgage Loan shall have been fully
disbursed, and there shall be no obligation on the part of Borrower to make any
future advances thereunder. All costs, fees and expenses incurred in making or
closing or recording of the Mortgage Loan shall have been paid in full.
(k) The Mortgage Note shall not be secured by any collateral,
pledged account or other security except the lien of the corresponding Mortgage.
(l) There shall be no obligation on the part of Borrower or
any other Person to make payments in respect of the Mortgage Loan in addition to
those to be made by the Mortgagor.
(m) All parties which have had any interest in the Mortgage
Loan, whether as originator, mortgagee, assignee, pledgee, servicer or
otherwise, are (or, during the period in which they held and disposed of such
interest, were) (1) in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property is located,
and (2)(A) organized under the laws of such state, or (B) qualified to do
business in such state, or (C) federal savings and loan associations or national
banks having principal offices in such state, or (D) not doing business in such
state so as to require qualification or licensing.
(n) The Mortgage shall contain customary and enforceable
provisions which render the rights and remedies of the holder thereof adequate
for the realization against the Mortgaged Property of the benefits of the
security, including, (i) in the case of a Mortgage designated as a deed of
trust, by trustee's sale, and (ii) otherwise by judicial or non-judicial
foreclosure.
(o) To the best of Borrower's knowledge, there shall not exist
any circumstances or conditions with respect to the Mortgage Loan, the Mortgaged
Property, the Mortgagor or the Mortgagor's credit standing that could be
reasonably expected to materially adversely affect the value or marketability of
the Mortgage Loan.
(p) Each of the documents and instruments included in the
Credit File shall have been duly executed and in due and proper form and each
such document or instrument shall be in a form generally acceptable to prudent
institutional mortgage lenders that regularly originate or purchase mortgage
loans.
(q) The Borrower shall be in possession of the complete Credit
File and there shall be no custodial agreements in effect adversely affecting
the right or ability of Borrower to make the document deliveries required
hereby.
(r) The Mortgage property shall not be damaged by fire, wind
or other cause or loss and there shall not be any condemnation proceedings
pending. To the best knowledge of Borrower, no improvement on any Mortgage
property is in violation of any applicable zoning law or regulation.
(s) All signatures, names and addresses, amounts and other
statements of fact, including descriptions of the property, appearing on the
credit application and other related documents relating to each Mortgage Loan
shall be true and correct and the Mortgagors named thereon will be, as of the
date of each such document upon which signatures appear, of majority age, and
will have the legal capacity to enter into the Mortgage.
(t) Borrower will have reviewed all of the Mortgage Loan
Documents, and all the related documents thereto, and will make such inquiries
as it deems necessary to make and confirm the accuracy of the representations
set forth herein and throughout this Agreement.
(u) Each Mortgage Loan which Borrower warrants is insured by a
private mortgage insurance company shall be so insured.
<PAGE>
-12-
9. SALES OF MORTGAGE LOANS AND OTHER COLLATERAL. Until Provident
shall have made a Demand for Payment, Borrower shall be entitled to sell the
Mortgage Loans financed hereunder and the other Collateral in the ordinary
course of Borrower's business, but nothing herein shall be deemed to waive or
release Provident's security interest in any Proceeds of any Collateral. Upon
the sale of any Mortgage Loan financed hereunder, Borrower shall pay to
Provident on its Closing Date, the unpaid amount of the Advance with respect to
such Mortgage Loan, all accrued and unpaid interest thereon through and
including such Closing Date and all Fees, charges and other amounts payable
hereunder. The sales of Mortgage Loans to Third Party Investors shall be handled
in accordance with the requirements set forth in the Policies and Procedures. In
addition, Borrower agrees that Provident shall have the right, in its sole
discretion, to (i) impose additional requirements regarding the delivery of
Mortgage Loan Documents to any Third Party Investor; and (ii) return wire
transfers received in connection with the sale of any Mortgage Loan to the
originating bank if such wire transfer does not comply with the Policies and
Procedures.
10. REMEDIES.
(a) After a Demand for Payment shall have been made by
Provident, all amounts owed to Provident hereunder shall thereupon be
immediately due and payable and no additional or future Advances will be made by
Provident to Borrower hereunder.
(b) From and after any Demand For Payment, Provident shall, in
addition to its other rights and remedies under applicable law, have the rights
and remedies of a secured party under the Uniform Commercial Code with respect
to the Collateral and all other security pursuant to any other Security
Documents between Provident and Borrower. In addition, Provident or its agents
or representatives may take possession of the Collateral and sell the same. For
such purpose, Provident may enter upon the premises where the Collateral shall
be located and remove the same to such other place as Provident shall determine.
Borrower shall immediately, upon Provident's demand, make the Credit Files
available to Provident at Provident's place of business.
(c) Any such taking of possession by Provident shall not
affect Provident's right, which hereby is confirmed, to retain all payments made
prior thereto by Borrower, and in the event of such taking of possession,
Provident may sell the Collateral at a public or private sale or any other
commercially reasonable manner permitted by law. The proceeds of any such sale
or other disposition shall be applied first to the actual and reasonable costs
of such sale, then to the actual and reasonable costs of retaking possession and
storage of such Collateral and then to the satisfaction of the unpaid balance of
the Advances. In the event the proceeds of any such sale are not sufficient to
pay such expenses and to satisfy all amounts due by acceleration or otherwise
with respect to all Advances made pursuant hereto, Borrower shall pay to
Provident any deficiency existing. Provident will give Borrower reasonable
notice of the time and place of any public sale of the Collateral or of the time
after which any private sales or other intended disposition thereof is to be
made. Borrower agrees that the requirement of reasonable notice shall be met if
such notice is mailed, postage prepaid, to the address of the Borrower listed in
Section 11(f) at least 10 days prior to the time of such sale or disposition.
Borrower further agrees and acknowledges that: (i) the Collateral is customarily
sold in a recognized market; (ii) Borrower regularly sells and Provident
regularly purchases mortgage loans similar to the Collateral; and (iii)
Provident may be the purchaser of the Collateral either in a public or private
sale.
(d) From and after any Demand For Payment, Borrower shall pay,
in addition to interest on funds actually advanced, all costs incurred by
Provident in enforcing Provident's rights hereunder, including those incurred in
bankruptcy proceedings, expenses of locating the Collateral, all costs and
expenses actually incurred by Provident in connection with examination,
preservation and protection of the Collateral, examination of the Borrower's
books and records otherwise in connection with the financing pursuant hereto and
reasonable attorney's fees and legal expenses.
(e) If any payment of interest under Section 3 or principal or
interest under Section 4 is not paid when due whether by demand or otherwise,
the unpaid amount of all Advances and all accrued and unpaid interest thereon as
well as any other charges and other amounts due Provident hereunder or under any
<PAGE>
-13-
Loan Document shall bear subject matter hereof and supersede all prior
agreements and understandings, both written and verbal, between the parties with
respect to the subject matter of this Agreement and are not intended to confer
upon any Person other than the parties any rights or remedies.
(f) All notices and other communications pursuant to this
Agreement and under any of the other Loan Documents shall be in writing, either
delivered in hand or sent by first-class mail, registered or certified, return
receipt requested, or sent by telecopier or facsimile transmission, addressed as
follows:
If to Borrower, at: MIRADOR DIVERSIFIED SERVICES, INC.
ATTN: PRESIDENT
675 LYNNHAVEN PARKWAY-2ND FLOOR
VIRGINIA BEACH, VA 23452
Fax No. (757) 463-2004
If to Provident, at: The Provident Bank
One East Fourth Street
Cincinnati, Ohio 45202
Attn: Kenneth D. Logan, Senior
Vice President
Mail Stop: 265D
Fax Number: (513) 564-7943
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section 11. Any notice or other communication pursuant to this Agreement
of any other Loan Document shall be deemed to have been duly given or made and
to have become effective when delivered in hand to the party to which it is
directed, or, if sent by first-class mail or by telecopier or facsimile
transmission, and properly addressed (i) when received by the addressee; or (ii)
if sent by first class mail, on the third (3rd) Business Day following the day
of the mailing thereof (unless actually received earlier).
<PAGE>
-14-
(g) No delay or failure or Provident in exercising any right,
power, remedy or privilege hereunder or under any of the other Loan Documents on
any occasion shall affect such right, power, remedy or privilege or be construed
as a waiver or any requirement of this Agreement; nor shall any single or
partial exercise thereof or any abandonment or discontinuance of steps to
enforce such a right, power or privilege be prejudicial to any subsequent
exercise of such right, power or privilege. Provident's acceptance or approval
of any request, payment, document or instrument pertaining to any Advance made
pursuant hereto shall not constitute any representation or warranty, express or
implied, by Provident as to the validity or sufficiency of any such request,
payment, document or instrument. The rights and remedies of Provident hereunder
are cumulative and not exclusive. All remedies herein provided shall be in
addition to and not in substitution for any remedies otherwise available to
Provident. Any waiver, permit, consent or condition hereof, must be in writing
and shall be effective only to the extent set forth in such writing.
(h) This Agreement shall be binding upon and inure to the
benefit of Borrower and Provident and their respective successors and assigns,
except that Borrower may not assign or transfer any of its rights or obligations
hereunder to any Person or Persons without the express prior written consent of
Provident. If more than one Borrower shall sign this Agreement, the liability of
each hereunder shall be joint and several.
(i) This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
(j) It is hereby stipulated and agreed the TIME IS OF THE
ESSENCE hereon and shall be of the essence as to each of the other Loan
Documents.
(k) Any provision contained in any document which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of such document or affecting the validity
or enforceability of such provision in any other jurisdiction.
(l) This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed and deliver shall be deemed to be an original and all of which
taken together shall constitute but one and the same Agreement.
12. WAIVER OF JURY TRIAL; JURISDICTION AND VENUE.
(a) AS A SPECIFICALLY BARGAINED INDUCEMENT FOR PROVIDENT TO
EXTEND CREDIT TO BORROWER, AND AFTER HAVING THE OPPORTUNITY TO CONSULT COUNSEL,
BORROWER AND, IF MORE THAN ONE, EACH OF THEM HEREBY EXPRESSLY WAIVES THE RIGHT
TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO THIS AGREEMENT OR
ARISING IN ANY WAY FROM ITS OBLIGATIONS HEREUNDER.
(b) BORROWER AND, IF MORE THAN ONE, EACH OF THEM HEREBY
DESIGNATES ALL COURTS OF RECORD SITTING IN HAMILTON COUNTY, OHIO AND HAVING
JURISDICTION OVER THE SUBJECT MATTER, STATE AND FEDERAL, AS FORUMS WHERE ANY
ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING FROM OR OUT OF THIS
AGREEMENT. ITS MAKING, VALIDITY, PERFORMANCE, INTERPRETATION OR ENFORCEMENT MAY
BE LITIGATED AS TO ALL PARTIES, THEIR SUCCESSORS AND ASSIGNS, AND BY THE
FOREGOING DESIGNATION BORROWER AND, IF MORE THAN ONE, EACH OF THEM HEREBY
CONSENTS TO THE JURISDICTION AND VENUE OF SUCH COURTS. BORROWER WAIVES ANY AND
ALL RIGHTS UNDER THE LAWS OF ANY OTHER STATE TO OBJECT TO JURISDICTION WITHIN
THE STATE OF OHIO FOR THE PURPOSES OF LITIGATION TO ENFORCE THE OBLIGATIONS
UNDER THIS AGREEMENT.
<PAGE>
-15-
IN WITNESS WHEREOF, the undersigned have caused this Warehouse Loan and
Security Agreement to be signed by their duly authorized signatories on and as
of the date first above written.
MIRADOR DIVERSIFIED SERVICES, INC.
BY: /s/ JOHN E. JONES
-----------------------------------
NAME: JOHN E. JONES
TITLE: PRESIDENT
THE PROVIDENT BANK
BY: /s/
-----------------------------------
NAME:
TITLE:
<PAGE>
[Graphic FIRST
Omitted] HORIZON.
EQUITY LENDING
March 31, 2000
John E. Jones
United Mortgagee Inc.
675 Lynnhaven Parkway 2nd Fl
Virginia Beach, VA 23452
Dear Mr. Jones:
Welcome to First Horizon Equity Lending. We are pleased to extend
our program approval to United Mortgagee Inc. Your current approval
status allows you to sell closed loans to First Horizon Equity
Lending on a servicing released basis. Your Correspondent ID number
is 2784, and is required for use on all business correspondence.
Enclosed is an executed copy of the Agreement of Purchase and Sale.
Please feel free to call your representative regarding program
policies and procedures.
We will strive to provide superior service and welcome any comments
or suggestions concerning our services and programs.
Again, welcome to First Horizon Equity Lending. We look forward to
a long and rewarding relationship with your organization.
Sincerely,
/s/ RICH GUIDA
------------------------
Rich Guida
President
RG/nmg
Enclosure
First Tennessee Bank National Association
1755 Lynnfield Road
Building D, 2nd Floor
Memphis, TN 38119
Phone: (901) 257-6700
Fax: (901) 257-6703
<PAGE>
FIRST HORIZON EQUITY LENDING
================================================================================
1755 Lynnfield Building D
Memphis, Tennessee 38119
AGREEMENT OF PURCHASE AND SALE
This Agreement is made and entered into this 14 day of FEB, 2000, between First
Horizon Equity Lending, which has its principle place of business located at
1755 Lynnfield, Building D, Memphis, Tennessee 38119, (First Horizon Equity
Lending, the Buyer, is hereinafter referred to as "FHEL").
AND
UNITED MORTGAGEE, INC., a VIRGINIA corporation with principle offices at 675
LYNNHAVEN PARKWAY, VIRGINIA BEACH, VA 23452, (hereinafter referred to as
"Seller").
I. DEFINITIONS
(A) Agreement: shall mean this Agreement as same may be amended and
supplemented from time to time. The parties agree that this Agreement shall be
used as the Purchase and Sale Agreement for those loans purchased by FHEL from
Seller in the future, unless otherwise agreed to in writing by the parties.
(B) Essential Mortgage File Documents: each Mortgage Loan file must
include: the original Note, original Mortgage or a true and certified copy of
the Mortgage, Original HUD Disclosure, Original Truth In Lending Disclosure,
ALTA insurance policy including endorsements or "marked up title commitment",
and additional documents set forth in Exhibit A which is hereinafter made a part
of this agreement.
(C) Loan: The Note, the related Mortgage and the Related Assets are
referred to as Loan and collectively as "Loans".
(D) Marked Up Title Insurance Policy, Binder or Certificate: a title
insurance policy on which all liens, mortgages, claims, assessments, defects,
encumbrances and other exceptions affecting or against the Mortgaged Property
have been removed and are insured against in favor of Seller and or Seller's
Assigns.
(E) Mortgage Loans: The Loans identified in the Purchase Schedule,
which may become subject to this agreement.
1
<PAGE>
(F) Mortgaged Property or Subject Property: The residential ? property
subject to the Mortgage which secures the Mortgage Loan.
(G) Mortgagor or Borrower(s): The obligor under a mortgage loan.
(H) Note: The original Note or bond or other evidence of indebtedness
evidencing the indebtedness of the Borrower(s) Mortgagor under a Mortgage Loan.
(I) Purchase Price: The purchase price for the Loan(s) described on
each purchase schedule shall be an amount as of the Settlement Date equal to the
sum of the: (1) unpaid principal balances of the Note(s); (2) all interest
accrued (up to but not including the Settlement Date) but unpaid on the Note(s)
(prorated on a 30 day month and a 360 day year); and (3) any premiums due
Seller, if applicable, in accordance with the Purchase Schedule; (4) less any
discount due to the Buyer, if applicable, in accordance with the Purchase
Schedule; and (5) less the fee for recordation of assignments, if applicable.
(J) Purchase Schedule: A list prepared by FHEL identifying Mortgage
Loans to be purchased.
(K) Related Assets: Any and all documents, instruments, collateral
agreements, and assignments and endorsements for all documents, instruments and
collateral agreements, referred to in the Note(s) and/or Mortgage(s) or related
documents thereto, including, without limitation, current insurance policies
(private mortgage insurance, if applicable; flood insurance, if applicable;
hazard insurance; title insurance; and other applicable insurance policies)
covering the Subject Property or relating to the Notes and all files, books,
papers, ledger cards, reports and records including, without limitation, loan
applications, Borrower(s) financial statements, separate assignments of rents,
if any, credit reports and appraisals, relating to the Loans.
(L) Settlement Date: Shall mean the date whereby FHEL agrees to
purchase certain mortgage loans from Seller.
II. OFFER TO SELL AND ACCEPTANCE OF OFFER.
(A) Offer. The Seller may offer from time to time to submit to FHEL a
list of loans, along with the Essential Mortgage File Documents, as defined
herein, for each of the Loans, in order to give FHEL an opportunity to review
them. FHEL shall then deliver a Purchase Schedule on which it has indicated
which Loans, if any, that FHEL is offering to purchase from the Seller and the
Purchase Price for the Loans FHEL is willing to Purchase.
(B) Acceptance. The Seller shall endorse the Note evidencing the Loans
on which the Seller agrees to accept the offer to purchase. Such endorsement
shall constitute the Seller's acceptance of FHEL's offer to purchase the
indicated Loans pursuant to the terms and conditions of this Agreement.
(C) Pre-Approval. On occasion, FHEL may issue to Seller a written
Pre-Approval to cover a specific loan purchase by FHEL hereunder which is
approved by FHEL in advance of Seller making specific loan. The Pre-Approval
Agreement is available to Seller upon request. To the extent of a conflict
between the Pre-Approval and this Agreement, the Pre-Approval shall govern for a
specific purchase and only that purchase.
FHEL shall have the absolute and sole discretion and option to agree to
or to decline to purchase any Loan(s) submitted by Seller for FHEL's review.
2
<PAGE>
III. PURCHASE AND SALE OF LOANS.
(A) THE DELIVERY OF LOANS.
On or before the Settlement Date the Seller shall provide FHEL with the
following for each loan purchased:
(1) The Note(s) endorsed by an authorized Officer of Seller to
FHEL, and Mortgage(s) along with an executed individual assignment to FHEL, in
recordable from and originals of all intervening assignments, if any, of the
Seller's beneficial interest in the Mortgage, showing a complete chain of title
from origination to the Seller, including warehousing assignment, with evidence
of recording thereon.
(2) Related Assets.
(3) In the event that Seller cannot deliver to FHEL a duly
recorded assignment of Mortgage or any other document required to be recorded
under this Agreement, on the Settlement Date solely because of a delay caused by
the public recording office when such document(s) has been delivered for
recordation, Seller shall deliver to FHEL a certified copy of each of such
document(s) with a statement thereon signed by an Officer of the Seller
certifying each to be a true and correct copy of document(s) delivered to the
appropriate public recording official for recordation. Seller shall deliver to
FHEL such recorded document(s) with evidence of recording indicated thereon no
later than 15 days after the Seller receives such document, but in any event, no
later than 120 days from the Settlement Date.
(B) PURCHASE AND SALE. On each Settlement Date hereunder, Seller shall
assign, transfer, convey and deliver to FHEL all of its right, title and
interest in and to the Loans, assets and documents as more fully enumerated and
set forth in section IV (A) through (S) inclusive, which is incorporated by
reference.
(C) PURCHASE PRICE. The Purchase Price for the Loans described on each
Purchase Schedule shall be an amount as defined in section (I) (I). The Purchase
Price shall be payable according to the requirements set forth in section (III)
(D) below.
(D) PAYMENT OF PURCHASE PRICE. On each Settlement Date, the Purchase
Price shall be paid as follows: FHEL shall deposit funds by wire transfer to the
Seller's bank.
(E) PREMIUM REBATE. In the event that a premium is paid by FHEL to the
Seller on a Loan and such Loan is prepaid in full by the Borrower(s), other than
by a refinancing by FHEL or any of its subsidiaries or affiliates, within twelve
(12) months of the Settlement Date, the Seller shall, upon demand by FHEL,
refund to FHEL the premium paid by them to the Seller as follows: If prepayment
in full is within one (1) month of the Settlement Date, 12/12ths of the premium
shall be refunded; if prepayment in full is within two (2) months of the
Settlement Date, 11/12ths of the premium shall be refunded; if prepayment in
full is within three (3) months of the Settlement Date, 10/12ths of the premium
shall be refunded; if prepayment in full is within four (4) months of the
Settlement Date, 9/12ths of the premium shall be refunded; if prepayment in full
is within five (5) months of the Settlement Date, 8/12ths of the premium shall
be refunded; if prepayment in full is within six (6) months of the Settlement
Date, 7/12ths of the premium shall be refunded; if prepayment in full is within
seven (7) months of the Settlement Date, 6/12ths of the premium shall be
refunded; if prepayment in full is within eight (8) months of the Settlement
Date, 5/12ths of the premium shall be refunded; if prepayment in full is within
nine (9) months of the Settlement Date, 4/12ths of the premium shall be
refunded; if prepayment in full is within ten (10) months of the Settlement
Date, 3/12ths of the premium shall be refunded; if prepayment in full is within
eleven (11) months of the Settlement Date, 2/12ths of the premium shall be
refunded; if prepayment in full is within twelve (12) months of the Settlement
Date, 1/12ths of the premium shall be refunded. In the event any Loan is prepaid
in full later than twelve (12) months from the Settlement Date of such Loan, no
refund shall be due.
In the event the Note carries a prepayment penalty, FHEL agrees first
to recapture the Premium Rebate from the proceeds of the prepayment penalty and
then from the Seller if there is any deficient balance according to the refund
calculation specified above.
3
<PAGE>
IV. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER
(A) REPRESENTATIONS AND WARRANTIES OF THE SELLER IN GENERAL: It is
understood and agreed by Seller and FHEL that as a material inducement to FHEL
to enter in this Agreement the Seller hereby represents and warrants to FHEL
with respect to each Loan purchased:
1. The Seller is a holder-in-due-course of each Note within
the meaning of the Uniform Commercial Code and is the sole owner of the Loan and
has the right to assign and transfer the Loan to FHEL. The Seller has not sold,
assigned or otherwise transferred any right or interest in or to the Loan and
has not pledged the Loan as collateral for any loan or obligation of Seller or
other purpose. The assignment of the Loan by the Seller to FHEL validly
transfers such Loan to FHEL free and clear of any pledges, liens, claims,
encumbrances, Mortgages, charges, exceptions and/or security interests.
2. Each Note and Mortgage and the Related Assets are in every
respect genuine, are the valid instrument they purport on their face to be, are
the legal, valid, binding and enforceable obligation of the Borrower(s)
thereunder and not subject to any discount, allowance, set off, counterclaim,
presently pending bankruptcy or other defenses; none of the Notes, Mortgages, or
Related Assets are forged or have affixed thereto any unauthorized signature or
have been entered into by any person without the required legal capacity; and no
foreclosure (including non-judicial foreclosure) or any other legal action has
been brought by the Seller or any senior lienholder in connection therewith.
3. The Mortgage has been duly recorded or has been transmitted
to the appropriate recording officer for recording in accordance with the laws
of the state where the real property covered by the Mortgage is located.
4. The Mortgage arose from a bona fide mortgage loan, complying
with the laws of the state where the loan was originated, as amended or
supplemented from time to time, and all other applicable laws and regulations,
to persons having legal capacity to contract.
5. All amounts represented to be payable on such mortgage are, in
fact, payable in accordance with the provisions of the applicable mortgage loan.
6. Upon completion of the purchase, FHEL shall have complete and
undisputed title to the mortgage loan.
7. All disclosures required by Regulation Z issued under the
Truth-In-Lending Act (TILA) of the federal Consumer Credit Protection Act and
the Notice of Right to Cancel prescribed by TILA have been properly prepared and
such loan has been made in full compliance with the Truth-In-Lending Act and
Regulation Z.
8. Seller is, and at the time of the making of a purchased
mortgage loan was, duly licensed under the appropriate governing law, based on
the collateral for the loan and the state where originated.
9. Seller is the owner, without exception, and has the
unqualified right to transfer the loans and all other documents and instruments
in connection therewith.
10. All instruments and supporting documentation evidencing,
securing or otherwise related to the mortgage loans purchased by FHEL are
genuine, valid and enforceable according to their terms, and comply with all
applicable federal and state laws and regulations including, but not limited to,
the Federal Consumer Protection Act, the Equal Credit Opportunity Act and all
other laws, statutes and regulations which may be relevant.
11. There have been no changes made on the Note, Mortgage or any
of the closing documents, and no portion of such security has been released.
12. All funds advanced on behalf of this loan came from the
borrower(s) or the proceeds of the loan. No funds have been advanced by the
Seller, broker or third party.
13. The full principal amount of the Note has been advanced to the
Obligor, either by payment directly to the Obligor or by payment made on request
or approval of the Obligor; all costs, fees and expenses incurred in making and
4
<PAGE>
closing the loan transaction represented by the Note and Mortgage have been paid
in full and the Note and Mortgage have not been modified or amended and are each
current and not in default at time of purchase.
14. There are no mortgages, prior to the mortgage being purchased
which are open-ended, credit line mortgages, or which may be increased by future
advances.
15. All Notes, Mortgages, documents and disclosures are in full
compliance with applicable state and federal law including but not limited to
all usury laws and regulations.
16. Seller has no knowledge of any zoning violations, condemnation
proceedings and/or any other violations concerning any of the properties secured
by the Mortgage(s) being sold herein at time of purchase.
17. There are no verbal representations, promised or agreements
pertaining to any borrower or document subject to this Agreement. There have
been no written representations, promises or agreements other than those
submitted to FHEL.
18. Borrower(s) is required to sign only one Note at closing. This
Note will be endorsed and forwarded to FHEL at time of purchase.
19. Each mortgage is subject to a due on sale clause.
(B) Seller shall indemnify FHEL for any costs or defense associated
with any breach of any representation or warranty made by Seller in Paragraph 4
of this Agreement and shall indemnify FHEL for any penalties assessed against
FHEL for any violation of the Truth-In-Lending Act by Seller. Any deficiencies
in the Truth-In-Lending disclosure must be cured by Seller to the satisfaction
of FHEL or the loan shall be repurchased in accordance with Paragraph 6 of the
Agreement.
(C) Under no circumstances, shall FHEL and Seller be considered agents
or employees of each other, nor shall this Agreement be construed as creating a
partnership or joint venture.
(D) This Agreement shall remain in full force and effect on all
mortgage loans purchased by FHEL from Seller, under this Agreement. In the event
FHEL sells or transfers these mortgages, this Agreement and all of Seller's
representations, warranties and obligations shall remain in full force and
effect.
(E) Seller agrees to defend, indemnify and hold harmless FHEL from and
against all liability, including attorney's fees, costs, and other expenses,
with respect to any claim made by any party against FHEL due to Seller's breach
of this Agreement.
(F) Seller further covenants, warrants and represents as to each and
every mortgage loan sold to FHEL, as of the date of each and every sale of
mortgage loan receivables, that:
1. Any ledger card or computer run relating to a purchased
mortgage loan fully and accurately reflects (i) the true outstanding unpaid
balance of such loan (ii) all receipts of payment on said loan from the obligor
thereof; (iii) all credits to which said obligor/mortgagors thereof.
2. Each mortgage loan is free from any valid defense, off-set,
counterclaims or recoupment assertable by any obligor/mortgagor thereof to the
best of Seller's knowledge, provided reasonable diligence was done by Seller.
3. No taxes or other liability of Seller shall accrue against or
be collected from FHEL out of the mortgage loan by reason of the purchase by
FHEL of such mortgage loans.
4. Seller is duly organized, existing and in good standing under
the laws of the state of its incorporation.
5. Seller has the requisite power and authority to sell, assign,
and convey the mortgage loans to FHEL and, in accordance herewith, Seller,
through its Board of Directors, will have done all acts necessary to approve the
execution and delivery of this Agreement, the sale of the mortgage loans to FHEL
according to the terms of this Agreement, and the execution and delivery to FHEL
of all instruments appropriate and necessary for the transfer and sale of the
mortgage loans to FHEL.
5
<PAGE>
Neither the execution and delivery of this Agreement, nor the consummation of
the transaction contemplated by this Agreement will conflict with or result in a
breach of, or constitute a default under any instrument or agreement to which
Seller is a party, or by which it is bound, nor be in violation of any
governmental decree, order or ruling as to which Seller may be bound.
6. None of the real property which is encumbered by a mortgage
securing a purchased mortgage loan is now being repossessed or foreclosed on,
nor is that real property the subject of any insurance claim now pending.
7. None of the purchased mortgage loans are the subject of, or in
any way affected by, any presently pending legal proceeding, including without
limitation, foreclosure, replevin, or similar other legal process. No
obligor/mortgagor on any purchased mortgage loan is now involved in bankruptcy
proceedings.
8. Seller has not in any manner whatsoever paid or agreed to pay
any fee or commission to any agent broker, finder or other person for or on
account of services rendered as a broker or finder in connection with this
Agreement or the transaction contemplated by this Agreement. All negotiations
relating to this Agreement have been conducted by Seller directly and without
the intervention of any person in such manner as to give rise to any valid claim
against FHEL for any brokerage commission, finder's fee or other like payment.
H. From and after the date of this Agreement, Seller shall:
1. Promptly deliver to FHEL payments received on any mortgage
loans purchased under this agreement by FHEL which are applicable to periods
after the Settlement Date.
2. Do and perform, or cause to be done and performed at FHEL's
request, such acts as may be reasonably necessary or desirable in order to vest
in FHEL title to all the mortgage loans sold.
3. Forward promptly to FHEL all communications, inquiries and
remittances which Seller may receive with reference to the purchased mortgage
loans.
4. Provide copies of the Charter and By-Laws of Seller, a
certificate setting forth the names of the persons authorized to execute
documents on behalf of Seller and a resolution of the board of directors of
Seller authorizing sale of the mortgages, all certified by an officer of Seller.
5. Provide such other information as FHEL may reasonably request.
I. Seller agrees that, for a period of three years following the
purchase of any mortgage loan, Seller, its agents, affiliates or assigns, will
not, directly or indirectly, solicit the contract borrowers for the purpose of
making a real estate secured loan for the purpose of refinancing, in any way the
contract indebtedness.
J. Seller agrees that it will not, at any time, give or sell a list of
the obligor(s) to any person or entity. The aforesaid prohibition shall not
prohibit Seller from showing any customer list to any auditors, regulators,
employees, attorneys, directors, accountants and other professionals associated
with Seller provided that the aforesaid parties shall not copy said list for use
by others. All information received by the purchaser shall be kept in strict
confidence.
K. FHEL hereby represents and warrants to Seller as follows:
1. FHEL is duly organized, validly existing and in good standing
under the laws of the state of its incorporation and in all states where is it
qualified to do business.
2. All corporate proceedings required to be taken by FHEL to
authorize its execution of and performance under this Agreement have been fully
and properly taken and FHEL's execution of and performance under this Agreement
does not violate any provision of FHEL's Certificate of Incorporation or By-Laws
or any contract or agreement by which FHEL is bound.
3. FHEL is and will, at all times, be duly licensed under
applicable law to purchase and acquire any mortgage loan sold to it by Seller.
6
<PAGE>
M. Seller states that there is no litigation either pending or in
progress which would adversely threaten the enforceability of the loans being
sold.
N. Seller agrees that it shall, at any time and from time to time
after the date hereof, upon request of FHEL, do, execute, acknowledge and
deliver all such further acts, assignments, transfers, conveyances, powers of
attorney and assurances as may be required for the selling, assigning,
transferring, conveying, granting, assuring and confirming to FHEL and its
successors and assigns, title to the Notes or the Mortgages and consummating the
various transactions provided for or contemplated by this Agreement.
O. This Agreement shall not be assignable by Seller without the prior
written consent of FHEL, provided that if FHEL consents, Seller shall remain
fully and completely liable for the performance required by it hereunder. This
Agreement shall run with each Note and Mortgage and shall inure to the benefit
or each successive holder thereof.
P. Even in this Agreement is terminated as to future purchases and
sales, all other provisions of this Agreement shall remain in effect so long as
there is outstanding principal or interest due FHEL or FHEL's assignee on any
Note, or until such time as FHEL's interest or assignee's interest in each and
every note has been completely liquidated.
Q. Upon request by FHEL, Seller will provide so long as this Agreement
is in effect, as soon as available, and in any event within ninety (90) days
after the end of each fiscal year of Seller, certified financial statements of
Seller, prepared by independent certified public accountants in accordance with
generally accepted accounting principals.
R. No consent, waiver or approval of any entity (public or private) is
or will be required in connection with the execution, delivery, performance,
validity or enforcement of this Agreement or any other agreement, instrument or
document to be executed or delivered in connection herewith or pursuant hereto.
S. No Mortgage Note has been secured by any collateral except for the
lien of the corresponding mortgage referred to herein.
V. BREACH OF REPRESENTATIONS AND WARRANTIES.
(A) REMEDY FOR BREACH. In addition to any rights or remedies that FHEL
has at law or in equity, if at any time there is a breach of any material
representation or warranty set forth herein by Seller, the Seller shall upon
demand by FHEL, and at the sole option and absolute discretion of FHEL
repurchase the Loan affected for the Buy-Back Price as set forth in paragraph C
below, within ten (10) days notification; or (2) if the Loan(s) has been sold by
FHEL or the Subject Property has been liquidated or sold by FHEL, the Seller,
shall, within ten (10) days of notification, pay FHEL the amount of the loss as
defined below in this section.
(B) REASSIGNMENTS. Upon receipt of the Buy-Back Price, in full, in
immediately available funds, FHEL shall reassign the Loan affected any right it
may have in the relevant Subject Property to the Seller free and clear of all
liens, encumbrances, claims, or interests of any person or entity claiming by,
through or under FHEL without recourse and shall execute and deliver to the
Seller in recordable form an assignment of FHEL's beneficial interest in the
affected Mortgage, as well as other documents necessary to reflect the
reassignment of any protection and insurance policies.
(C) BUY-BACK PRICE. The term "Buy-Back Price" shall mean the sum total
of: (1) the outstanding principal of the Loan, with accrued interest thereon
through the date the Loan is repurchased by Seller; (2) all advances made by
FHEL and all charges due from the Borrower(s); (3) the total amount, including
accrued interest and other expenses paid by FHEL to any senior lienholder, if
any, to secure a priority lien position; (4) all reasonable and necessary
expenses, losses and damages paid or incurred by FHEL in connection with the
Loan or any investigation of said Loan and/or the related collateral, including,
7
<PAGE>
but not limited to, property taxes, maintenance costs, interest expenses,
insurance, appraisals, advertising, sales commissions, reasonable attorney fees,
expenses and costs, fines and penalties; and (5) rebate of premium due FHEL, if
applicable.
(D) DEFINITION OF LOSS. The term "Loss" shall mean the negative result,
if any, of the following calculations: (a) the sum total of: (i) the outstanding
principle balance of the Loan, with accrued interest thereon through the date
the Loan is sold or date the collateral is liquidated; (ii) all advances by FHEL
and all charges due from the Borrower(s); (iii) the total amount paid by FHEL to
any senior lienholder, if any, to secure a first lien position; (iv) accrued
interest on all Mortgage Loans purchased from senior lienholder from the date
such Mortgage Loans were purchased through the date the Loan is sold or the date
the collateral is liquidated; and (v) all other reasonable and necessary
expenses, losses and damages incurred by and/or paid by FHEL in connection with
the Loan or an investigation of said Loan or the sale or liquidation of the Loan
and/or the related collateral, including, but not limited to, reasonable
attorney fees, expenses and costs, property taxes, maintenance costs, insurance,
appraisals, advertising, sales commissions, fines and penalties; less the net
proceeds from the sale of the Loan or the sale or liquidation of the Subject
Property or the collateral.
(E) REMEDY FOR NON-DELIVERY OF DOCUMENTS. Notwithstanding anything to
the contrary, in the event that the Seller is required to deliver to FHEL any
documents related to a purchased Loan and the Seller fails to deliver such
document in the proper form on the date or within the time period specified by
the controlling section of this Agreement, FHEL shall notify the Seller of the
breach, and the Seller shall have thirty (30) days from the date of notice to
cure the breach. If the Seller has not cured the breach within the thirty (30)
day cure period, the Seller shall immediately repurchase the Loan upon FHEL's
demand. The Buy-Back Price shall be determined in accordance with Section VI(C).
Any Loan returned by FHEL pursuant to this paragraph shall be without recourse
representation or warranty.
(F) REMEDY TO INSURE ACCURACY OF REAL ESTATE APPRAISAL. FHEL may, at
its own expense, in order to verify the accuracy of real property appraisals
prepared from Seller, order a reappraisal of the property secured by a Mortgage.
If the reappraisal obtained by FHEL indicates a fair market value which is more
than fifteen (15%) percent less than the original appraisal value, then upon
receipt by Seller from FHEL of a signed copy of the reappraisal, Seller shall
repurchase the Loan at the Buy-Back Price, (as defined in section (V) (C),
above) and reimburse FHEL for the cost of the appraisal subject to the
following: If Seller disputes the validity of the reappraisal prepared by FHEL's
appraiser, Seller, may, at its own expense, request FHEL to obtain a third
appraisal, and only if such third appraisal is also more than fifteen (15%)
percent less than the original appraisal value shall Seller be required to
repurchase the Loan at the Buy-Back Price. FHEL shall choose the appraiser for
the third appraisal with Seller's approval, which shall not be unreasonably
withheld. The appraisal must be performed in accordance with industry standards
for the appraising industry in the area in which the property is located, and
the appraiser must be independent with respect to both parties unless otherwise
agree to by the parties. In determining the appropriate appraisal value, the
review appraiser must determine the appraised value as of the original appraisal
date using comparable sales that were available as of the date of the original
appraisal (without requirement of home equity). Section F is not applicable as
long as Seller uses FHEL approved appraiser.
However, anything to the contrary notwithstanding, FHEL reserves the
right not to request the Seller to repurchase the Loan should be reappraisal
cause the combined loan to value not to exceed the maximum allowable combined
loan to value class under which the loan was purchased.
(G) REMEDY FOR FIRST PAYMENT DEFAULT. However, anything to the contrary
notwithstanding, in the event the Borrower fails to make the first payment due
to the Buyer within (30) days of the payment due date, regardless f whether such
payment is subsequently paid by the Borrower, the Buyer, at its sole and
absolute discretion, shall have the right to have Seller repurchase said Loan(s)
at the Buy-Back Price.
VI. INDEMNIFICATION (BY SELLER)
(A) Seller agrees to protect, indemnify, and hold FHEL and its
employees, officers, and directors, harmless against, and in respect of, any and
all losses, liabilities, costs and expenses (including reasonable attorney's
fees), judgments, damages, claims, counterclaims, demands, actions or
proceedings, by whomever asserted, including but not limited to, the Borrowers,
8
<PAGE>
against any person or persons who prosecute or defend any actions or proceedings
as representatives of or on behalf of a class or interested group, or any
governmental instrumentality, body, agency, department, or commission, or any
administrative body or agency having jurisdiction pursuant to any applicable
statute, rule, regulation, order or decree, or the settlement or compromise of
any of the foregoing, providing however, any of the foregoing arises out of, is
connected with or results from any breach of representations, covenants or
warranties made by the Seller in relation to the Loans sold to FHEL hereunder.
(B) The waiver of any breach, term, provision or condition which is
part of this Agreement shall not be construed to be a waiver of any other or
subsequent breach, term, provision or condition. All remedies afforded by this
Agreement for a breach hereof shall be cumulative; that is, in addition to all
other remedies provided for herein or at law or in equity.
(C) Provided further, in the event of any legal action, including
counterclaims, wherein the claim is based upon the alleged facts that would
constitute a breach of any one or more of the warranties, covenants, and
representations made or assumed by Seller under the terms hereof, Seller shall
thereupon, at FHEL's option, repurchase without recourse such Loan at the
Buy-Back Price.
VIII. MISCELLANEOUS
(A) ADDITIONAL COVENANTS.
1. Each party shall, from time to time, execute and deliver or
cause to be executed and delivered, such additional instruments, assignments,
endorsements, papers and documents as the other party may at any time reasonably
request for the purpose of carrying out of this Agreement and the transfers
provided for herein.
2. The Seller shall, upon the request of FHEL, sign a letter, in
the form to be approved by FHEL and in conformity with the terms and conditions
hereof, addressed to all the Borrower(s) on the Loans announcing the sale
evidenced hereby and instructing such Borrower(s) to recognize FHEL as the
Seller's successor in interest.
3. After any Settlement Date hereunder, the Seller will hold in
trust for FHEL all sums received by the Seller from Borrower(s) on any Loan
purchased pursuant to the Agreement and pay them to FHEL within three (3)
business days of the receipt of those sums.
(B) SURVIVAL OF COVENANTS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES;
SUCCESSORS AND ASSIGNS. All warranties, representations and covenants made by
either party in this Agreement or in any other instrument delivered by either
party to the other, including those made by third parties for the benefit of
either party, shall be considered to have been relied upon by the other party
(unless otherwise agreed to in writing by the parties) and shall survive the
termination of this Agreement. FHEL reserves the right to proceed against third
parties to enforce any representations, warranties, and covenants made by them
for the benefit of the Seller.
(C) SEVERABILITY. If any provision, or part thereof, of this Agreement
is invalid or unenforceable under any law, such provision, or part thereof, is
and will be totally ineffective to that extent, but the remaining provision, or
part thereof, will be unaffected.
(D) ATTORNEY'S FEES. In the event of any action at law, in equity,
arbitration or otherwise between the parties in relation to this Agreement or
any loan or other instrument or agreement required or purchased or sold
hereunder, the non-prevailing party, in addition to any other sums which such
party shall be required to pay pursuant to the terms and conditions of this
Agreement, at law, in equity, arbitration or otherwise shall also be required to
pay to the prevailing party all costs and expenses of such litigation, including
reasonable attorney's fees.
(E) WAIVERS. No waiver of any term, provision or condition of this
Agreement, whether by conduct or otherwise. In any one or more instance, shall
be deemed to be, or construed as a further or continuing waiver of any such
term, provision or condition, or of any other term, provision or condition of
this Agreement.
9
<PAGE>
(F) NOTICE. Any notice or other communication in this Agreement
provided or permitted to be given by one party to the other must be in writing
and given by personal delivery or by depositing the same in the U.S. Mail
(certified mail, return receipt requested), addressed to the other party to be
notified postage prepaid. For purposes of notice, the addresses of the parties
shall be as follows:
First Horizon Equity Lending
1755 Lynnfield Building D
Memphis, TN 38119
ATTENTION: Jackie Braddock
SELLER:
UNITED MORTGAGEE, INC.
675 LYNNHAVEN PARKWAY
VIRGINIA BEACH, VA 23452
ATTENTION: JODY WILLIAMS
The above addresses may be changed from time to time by written notice from one
party to the other.
(G) TERMINATION. This Agreement may be terminated, with or without
cause, by either party hereto upon written notice to the other party, and any
termination will be effective immediately. Any termination hereof shall not
affect Broker's liability for any alleged breach of a covenant, representation
or warranty with respect to any Packages that have been received by FHEL prior
to the respect to any Packages that have been received by FHEL prior to the
aforementioned notice of termination; provided, however, that if this Agreement
is terminated by FHEL for the breach of any covenant, representation or
warranty, then FHEL, in its sole discretion, shall have the option to promptly
return such Packages to Broker without further obligation.
(H) INSURANCE PREPAYMENT. Insurance refund or credit or any kind
whatsoever shall be the sole responsibility of the Seller in the event of
prepayment of any Loan, cancellation of insurance or any other event requiring
refunding or credit of unearned insurance premiums. Upon FHEL's demand, Seller
shall pay to FHEL, from the Seller's own funds, any required insurance premium
rebate resulting from the prepayment, cancellation, refinancing or other
termination of any mortgage Loan. Upon such payment, FHEL shall assign in
writing any rights it had to require that the insurer reimburse FHEL for any
rebate made to Borrower(s).
(I) ASSIGNMENT. The Seller shall not, without prior written consent of
FHEL, assign any of its right or obligations hereunder.
(J) ENTIRE AGREEMENT. This agreement and the Exhibits attached hereto,
and the documents referred to herein or executed concurrently herewith
constitute the entire agreement between the parties hereto with regard to the
subject matter hereof, and there are no prior agreements, understandings,
restrictions, warranties, or representations between the parties with respect
thereto.
(K) GOVERNING LAW. This agreement shall be governed by and construed in
accordance with the laws of the State of New York. The provisions of this
paragraph shall not affect the provision of any Note, Mortgage, or Related
Assets which cause the laws of the United States or any other state to be
applicable. This Agreement shall be interpreted fairly and in accordance with
its provisions and without regard to which party drafted it.
(L) ARBITRATION, JURISDICTION AND VENUE. With respect to any
controversy, argument or claim arising out of or relating to this Agreement, or
any breach thereof (including but not limited to, a request for emergency
relief) the Seller hereby consents to the exclusive jurisdiction of the Shelby
County, Tennessee Courts, or the Federal District Court for the Western
District of Tennessee and waives personal service of any and all process upon
10
<PAGE>
them and consents that all such service of process made by registered or
certified mail directed to them at the address stated herein and service so made
shall be deemed to be completed five (5) days after mailing. The Seller waives
trial by jury and waives any objection to jurisdiction and venue of any action
instituted hereunder, and agrees not to assert any defense based on lack of
jurisdiction or venue and consents to the granting of such legal or equitable
relief as is deemed appropriate by the court, including but not limited to, any
emergency relief, injunctive or otherwise.
However, anything to the contrary notwithstanding, except with respect
to emergency relief, FHEL shall have the sold and exclusive option and
discretion to have any controversy, argument or claim arising out of or relating
to this Agreement, or any breach thereof, settled in Memphis, Shelby County,
Tennessee, in accordance with the rules of the American Arbitration Association
(as modified below), and judgment upon the award may be entered in any Court
having jurisdiction thereof.
The arbitration panel shall be made up of three members which shall be
appointed: one by FHEL, one by Seller and the third (a neutral) by the first two
arbitrators. Each arbitrator shall be a lawyer experienced in matters relating
to real estate and mortgage banking. Discovery shall be permitted in connection
with the arbitration proceeding within the reasonable discretion of the
arbitration panel. The arbitration panel may not however hear or decide any
claim for punitive damages. The decision (award) shall be in writing and shall
set forth the reasoning and legal basis therefore, and such decision may be
appealed by either party if the party believes that the written decision (award)
is based on an error of law. The facts determined by the original panel will be
final and no appeal of such findings may be made. Such an appeal shall be taken
to a three-member arbitration panel, the members of which shall be selected in
accordance with the above described procedures, and the panel's review shall be
limited to the application of the statutory and decisional law of the State of
Tennessee.
In the event that the remedies or other terms outlined in this
Agreement conflict with the terms of any endorsement by the Seller of any Note
evidencing a Loan purchased by FHEL from the Seller, including, but not limited
to, an endorsement stating that the assignment of the Note is without recourse,
the remedies and terms of this Agreement shall govern and control.
11
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written:
BUYER: FIRST HORIZON EQUITY LENDING
ATTESTED TO BY: By: /s/ T. R. HOWELL
-----------------------------------
T. R. Howell
On 3-31-00, before me personally appeared T. R. Howell to me known to be the
person(s) described in and who executed the foregoing instrument and
acknowledged that he/she/they executed the same as his/her/their free act and
deed.
/s/ NANCY M. GUY
----------------------------------------
Nancy M. Guy
Notary Public
My Commission Expires: MY COMMISSION EXPIRES
AUG. 28, 2001
SELLER: UNITED MORTGAGEE, INC.
ATTESTED TO BY: By: /s/ JOHN E. JONES
-----------------------------------
John E. Jones, President
On 2-15-00, before me personally appeared John E. Jones to me known to be the
person(s) described in and who executed the foregoing instrument and
acknowledged that he/she/they executed the same as his/her/their free act and
deed.
/s/ STACY R. STEVES
----------------------------------------
Stacy R. Steves
Notary Public
My Commission Expires: 2-29-00
<PAGE>
NOTICE TO CORRESPONDENT
First Horizon Equity Lending is not offering Lines of Credit to Correspondent
Lenders at this time. First Horizon may offer Lines of Credit in the future,
which at that time, agreement of purchase and the sale signed by correspondent
will apply.
/s/ JOHN E. JONES 2/14/00
- --------------------------------------- -------------------------.
Correspondent John E. Jones, President Date
<PAGE>
FLEET [LOGO] Correspondent Lending
May 2, 2000 Fleet Mortgage Corp.
803-929-7900
Fax 803-929-7945
Mail Stop: SC CO 0355
John Jones 1333 Main Street
United Mortgagee, Inc. Columbia, SC 29201
2620 Southern Blvd.
Virginia Beach, VA 23452
Dear John:
Enclosed please find The Annual Certification of Compliance Form and the Annual
Information Update Survey.
ANNUAL CERTIFICATION OF COMPLIANCE FORM:
Fleet's Correspondent Lending division is committed to demonstrating to all
applicable regulatory agencies and investors that we effectively communicate to
our Correspondents, Fleet's requirements regarding compliance with State and
Federal regulations, particularly the Equal Credit Opportunity Act (ECOA) and
Regulation B. Both the Correspondent Manual and Purchase and Loan Sale Agreement
clearly state Fleet's position relative to the lender's obligation with regard
to compliance with such regulations. The enclosed Annual Certification of
Compliance form, referenced in the Eligibility section of our Correspondent
Manual, provides us with the written acknowledgment that our Correspondents
understand Fleet's policies and procedures.
Specifically, ECOA requires that if a transaction involves a credit decision by
more than one lender, and no acceptable credit is offered, each lender must
issue an adverse action notice unless each denying creditor is listed on a
single adverse action notice. For loans that have been contract underwritten per
the Correspondent Manual, Fleet permits its Correspondents to complete a single
adverse action notice to the borrower as long as Fleet Mortgage Corp. is
represented on the notice as a denying creditor.
Please complete and execute the attached Certification and return to Fleet no
later than June 16, 2000. In addition, please include a sample copy of the
Adverse Action Notice you send on declined contract underwriting loans
indicating Fleet as the creditor.
Please Note: If you are a lender with delegated underwriting approval, this
Certification is required in the event that a loan is contract underwritten for
you and sold to Fleet.
ANNUAL INFORMATION UPDATE SURVEY:
Please complete this form and include it when forwarding your Certification of
Compliance to Fleet. To ensure that we provide the highest level of customer
service, we must maintain current information in our Correspondent Lending
System (database).
Thank you for your cooperation.
Sincerely,
/s/ SHULAZA S. LYLES
- --------------------------------
Shulaza S. Lyles
Correspondent Operations Liaison
cc: Rusty Leitzsey
47153
<PAGE>
ANNUAL CERTIFICATION OF COMPLIANCE
for
FLEET MORTGAGE CORP.
- --------------------------------------------------------------------------------
INSTRUCTIONS FOR COMPLETION
> Print or type your name and address in the "Correspondent Information"
section.
> Sign as certification and return to the following address no later than 30
days after receipt:
Fleet Mortgage Corp.
1333 Main Street
Columbia, SC 29201
Attention: Pam Ulmer SC-CO-0355
- --------------------------------------------------------------------------------
================================================================================
CORRESPONDENT INFORMATION
- --------------------------------------------------------------------------------
Company Name:
UNITED MORTGAGEE, INC.
- --------------------------------------------------------------------------------
Address, include City State and Zip Code.
675 Lynnhaven Parkway - 2nd Floor; Virginia Beach, VA 23452
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
================================================================================
> As authorized representative for the above referenced Lender, I do hereby
certify that all loans are originated in compliance with all local, state and
federal regulatory requirements, particularly the Equal Credit Opportunity Act
(ECOA) and Regulation B.
> I have attached a sample copy of the current Adverse Action Notice* used if
Fleet (or it's approved agent) renders an adverse underwriting decision. The
attached notice must show Fleet Mortgage Corp. as a denying lender to complete
our records.
================================================================================
/s/ JOHN E. JONES 5/11/00
- --------------------------------------------------------------------------------
Authorized Signer: Date
JOHN E. JONES, PRESIDENT
- --------------------------------------------------------------------------------
Printed/Typed Name and Title of Authorized Signer
757-463-3303
- --------------------------------------------------------------------------------
Phone Number (Contact number for questions)
- --------------------------------------------------------------------------------
*ECOA requires that if the transaction involves a credit decision by more than
one lender (for example, originated by the above referenced Correspondent and
submitted to several investors for underwriting) and no acceptable credit is
offered the applicant, each lender must give the adverse action notice. To avoid
sending multiple notices, Fleet permits the Correspondent to issue a single
Adverse Action Notice, where no acceptable credit is offered by any investor, as
long as Fleet Mortgage Corp. is represented on the combined notice as a denying
"creditor."
PLEASE NOTE:
If the application is given to several investors, rejected by some but
approved by one, no adverse action notice is required.
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
INFORMATION UPDATE SURVEY
================================================================================
RE: United Mortgagee, Inc.
Fleet Mortgage Corp. maintains a database of information regarding each approved
Correspondent. In order to ensure the highest levels of customer service, it is
critically important that our information be completely accurate.
> Please complete the following information and fax it to (803) 929-7110.
COMPANY TAX ID NUMBER: 54-1563785
----------
AGENCY APPROVAL INFORMATION:
Fleet maintains these numbers for ease in certain servicing issues
electronically with the various agencies.
Agency Name Approval Seller/Servicer/Mortgagee Number
================================================================================
Fannie Mae [ ] Yes
----------------------------------------
Freddie Mac [ ] Yes
----------------------------------------
FDIC [ ] Yes
----------------------------------------
FHA (Title I) [X] Yes 70889-00001
----------------------------------------
FHA-DE [X] Yes 7316-00003
----------------------------------------
VA [X] Yes 685281-00001
----------------------------------------
VA-Automatic [ ] Yes
----------------------------------------
CONTACT NAMES
Fleet uses the contact information for various communications.
<TABLE>
<CAPTION>
CONTACT NAME PHONE FAX INTERNET
==========================================================================================
<S> <C> <C> <C> <C>
Executive John E. Jones 757-463-3303 757-463-2004 [email protected]
------------------------------------------------------------------------
Primary Shirley Corrigan 757-463-3303 757-463-2004 [email protected]
------------------------------------------------------------------------
Secondary Mktg Bob Costello 757-463-3303 757-463-2004 [email protected]
------------------------------------------------------------------------
Final Document Angela Hobbs 757-463-3303 757-463-2004 [email protected]
------------------------------------------------------------------------
Confirmations Terry Fischer 757-463-3303 757-463-2004 [email protected]
------------------------------------------------------------------------
Purchase Sched's Angela Hobbs 757-463-3303 757-463-2004 [email protected]
------------------------------------------------------------------------
Customer Service Linda Raynell 757-463-3303 757-463-2004 [email protected]
------------------------------------------------------------------------
Quality Control Terry Fischer 757-463-3303 757-463-2004 [email protected]
------------------------------------------------------------------------
Shipping Angela Hobbs 757-463-3303 757-463-2004 [email protected]
------------------------------------------------------------------------
Accounting Mia Roberson 757-463-3303 757-463-2004 [email protected]
------------------------------------------------------------------------
Underwriting Terry Fischer 757-463-3303 757-463-2004 [email protected]
------------------------------------------------------------------------
</TABLE>
Are you Loan Prospector or Desktop Underwriter approved?
Loan Prospector [ ] Yes [X] No
Desktop Underwriter [ ] Yes [X} No
<PAGE>
2.16 Salaries/employment
Salaries & Employment Contracts
John Edward Jones, President $185,000
Linda Raynell, Vice President/Secretary $85,000
3.7 TCT Liabilities
None
3.11 TCT intellectual property
None
3.12 Pending Litigation
None
3.16 TCT Agreements
None
3.17 TCT Bank Accounts
None
Schedule
1 TCT Capitalization
2 Capitalization of Mirador Acquisitions
<PAGE>
MIRADOR BUSINESS PLAN - EXECUTIVE SUMMARY
INTRODUCTION - Mirador was formed in 2000 to become the leading provider of
financial services to mid-market households in all fifty states of the US.
The company's vision is that mid-market customers need the same breadth of
services as those in higher income brackets, and they need access to those
services from a combination of on-line and in-person delivery systems. Mirador
intends to deliver a broad range of financial products and services that are
good for the mid-market consumer -- not just good for the financial institution
- -- thereby developing a long-term relationship based on results and trust.
COMPANY OVERVIEW - Mirador was formed by combining two mortgage banks with six
regional mortgage brokers and the sales force of three other brokerages, giving
the company mortgage brokerage licenses in 20 states, with another 20 state
licenses soon to follow. United Mortgagee, Inc. a mortgage bank was the first
company acquired by Mirador. United Mortgagee was the acquirer of the mortgage
brokerage companies and is the holder of the mortgage lending licenses.
The pro-forma 1999 income of United Mortgagee, Inc. and acquisitions as shown in
the attachments were $15,076,608 with a net income of $3,266,367 before taxes,
depreciation and amortization for 1999. No consideration has been made for the
four sales organizations, and the Internet web sites that were acquired. If
there were consideration for that fact the fro-forma 1999 income would have
exceeded over $24 million.
United Mortgagee operates 16 retail mortgages offices nation wide, and has a
very strong Internet business getting an average of 700 loan applications per
month.
Mirador has agreements in place to raise it's warehouse lines to $75 million and
is confident it will be able to increase that amount to exceed $100 million if
needed. We now have relationships with Countrywide, Bank United, Provident
Financial Services and Regions Funding.
The use of customer data with their permission is a key feature of Mirador's
strategy. Authorized use of customer data, called permission marketing and CRM
or Customer relationship marketing, will be used by Mirador to offer customers a
full service financial plan and all of the products and services that a customer
needs -- a one-stop financial supermarket.
MARKET OPPORTUNITY - The market for Mirador is virtually unbounded. While stock
brokers and banks/insurance companies go after the top tier of the market and
home finance companies go after the bottom of the market, no one has
successfully defined a strategy for the bulk of the market -- homeowner making
between $50-$100,000 per year.
The market opportunity as seen through Mirador's strategy is to capture the
financial needs of mid-market homeowners. These homeowners are most often
married with children and with both parents working. These homeowners need all
of the elements of financial assistance starting with a financial plan. From the
financial plan the next steps are most often disability and/or life insurance
followed by a savings and investing plan.
This market today is very poorly served and very fragmented. The mid-market
homeowner has to deal with a mortgage company, and insurance agent or two, a
local bank, a stock broker, a tax preparation service, a home loan company,
etc., etc. As a result, most of this market does not have even a basic financial
plan or adequate life insurance. And the mid-market homeowner pays too much for
financial products that are not well matched to their needs. For example, whole
life and annuities are very high margin products for insurance agents, but are
not usually good products for the middle-income market.
<PAGE>
Mirador intends to rapidly become the dominant provider of financial products
and service to the middle-income market by offering a bundle of offerings
tailored to the needs of this market.
OFFERING OVERVIEW - Mirador intends to enter the market with it's mortgage
products as currently structured and quickly add free financial planning based
on it use of the data gathered in the mortgage application process. The free
financial plan will be the platform for all of the other financial products.
A complete mortgage loan application file has the following information:
Full names, addresses, phone numbers;
Demographic data - ages, race, sex, education, etc.;
Employment, job history;
Income - all sources, W-2, 1099, investment, etc.;
Assets - real estate, bank accounts, investments, cars, etc.;
Liabilities - mortgages, car loans, installment and revolving debt,
liens, etc.;
Credit Report - with a credit score and verifications;
Dependents - ages of children;
Property Information - Appraisal, Deeds, titles, mortgages, liens,
taxes;
Insurance Information - property and life.
The application has literally HUNDREDS OF FIELDS, all of which are tracked by
Mirador and can be data mined for unlimited INDIVIDUALLY TAILORED OFFERS ON A
REFERRAL BASIS, starting with a financial plan. Few, if any, of the target
customers have any financial plan at all. This is both a problem and an
opportunity. The problem is that the mid-market segment is not comfortable with
financial planning; the opportunity is that they need one. Mirador will
capitalize on the education that the press and the stock market advertisers are
giving the mid-market, plus Mirador will make the financial plan very graphical
and easy to understand.
The financial plans will focus on the most pressing and easy to understand
issues for most of the customers - the lack of insurance and a savings plan.
With the data that is gathered in the mortgage application process, a financial
plan that is very comprehensive can easily be prepared. This data and the plan
itself will be gathered and presented on the Internet for those who are
comfortable with that as well as through local representatives. The ability of
the Mirador customers to manipulate the plan assumptions and print out the
graphs will be a key selling feature.
After the financial plan is in place, the on-line and off-line connections will
be used to keep the plan updated and to continue to offer a full plate of
financial products and to update those that are in place. The financial plan
will also be used as an entry point for those customers who do not apply for a
mortgage or who do not qualify for a mortgage - free financial planning under
the customer's control is the second selling point of the Mirador offerings.
STRATEGY AND KEYS TO SUCCESS - Mirador's market strategy can be defined in three
stages: entry, growth, and success.
Mirador is the entry phase today, as it gains critical mass through acquisitions
and begins to prepare its initial offerings of mortgages, financial plans, and
basic financial products. Once the company is established in major key markets
and has a trained staff in place, rapid growth will be experienced as more of
the market is attracted to the tailored offerings and the personal service
approach. Branding of the Mirador name will be essential to the growth stage of
the business. With growth comes additional products and partners, setting the
stage for the success stage where Mirador dominates the mid-market segments.
Keys to Success include:
o Use of local advertising and "infomercials" to generate leads for new
mortgage applications
o Use of the mortgage application as a data gathering tool
<PAGE>
o Use of computer "data mining" to use the same data as an input to
different financial planning products
o Focus on the key elements of financial plan -- typically insurance and
investments
o Focus on products that are right for the segment, not just high-margin
products
o Hiring and training and motivating the right staff, which means finding
middle management in well run companies and giving them the opportunity
to make more money in a professional atmosphere
o Adding products through internal development as well as partnerships and
acquisition, e.g. tax planning software, that give the customers all of
the products that they might need
o Use of the Internet to supplement the personal touch, a) by gathering
data, b) by giving the appearance of customized feedback to the
customers, and c) by allowing the customers to interact with the
planning tool - providing more data for use in developing products.
In summary, Mirador has developed a phased approach to market entry and growth
and has identified the key success factors at every step.
KEY PARTNERS - Mirador will develop a network of key partners in technology,
products and services, and distribution/sales. The first key partner is
InfoWell, based in Blue Bell, Pennsylvania.
InfoWell has three products:
WWW.INFOWELL.COM provides an automated interface to transmit the
broker's loans to correspondent wholesale lenders for approval, plus
order required vendor services (credit reporting agencies, appraisers,
etc.) Wholesaler lenders and vendors pay transaction fees for broker
business.
WWW.E-REFERRAL.NET is the network of marketers that pay user fees for
access to the extremely detailed consumer database. For example,
insurance companies or credit card companies. Each broker "owns" their
consumers' data that resides in secure InfoWell "data vaults". Fees
paid by the referred marketers are shared between the originating
broker and InfoWell;
WWW.WHEREAREMYPAPERS.COM is the consumer access portal. This allows
consumers, each with their own secure web page, to view loan status and
always have a place to find important papers such as their deed, title
search, credit history, or mortgage information. Consumers will also
find individually tailored offers from e-Referral.net participants.
Brokers provide their customers a unique service and InfoWell will earn
"click through" fees.
Mirador has strong development ties to InfoWell and intends on using the
InfoWell products to process loans, to use the customer database for financial
products, and to build a one-to-one relationship with the Mirador customers.
Mirador is in the development stage of an alliance with a national financial
services company to cross sell mortgages, insurance and investments (mutual
funds).
COMPETITION - Mirador does not have any direct competition for the bundle of
services for the middle-income market.
Very large competitors such as Citibank/Primerica have a very large volume of
mortgage applications and a very large sales force. However, they focus on the
main product that they are offering (and getting compensated for) as either a
mortgage or insurance. Other large firms offer financial planning, such as IDS,
but do not have strategy of starting with the mortgage application.
At the other end of the market are the sub-prime lenders, such as Beneficial,
who are focused on very high cost debt consolidation. Competitors also include
large specialists such as H&R Block and every CPA and accountant in every small
town in America. None of these competitors offer a full range of financial
products for the middle-income segment, and none of them use data gathering and
the Internet to build a long-term relationship with the customers.
<PAGE>
MANAGEMENT SUMMARY
JOHN JONES, PRESIDENT / CEO
More than twenty-seven years success as manager and administrator in some of the
country's premiere fortune 500 companies as well as President and owner of
several acquisitions including MIRADOR'S current marketing program. Through Mr.
Jones' experience in marketing, acquisitions and leverage buyouts MIRADOR will
realize its full potential and accomplish its mission. As a licensed insurance
agent of JONES FINANCIAL SERVICES, Mr. Jones became a Regional Account Manager.
Mr. Jones accomplished over five years experience with the coordination,
implementation and servicing of new and existing accounts, introducing new
products as well as product updates; has trained over 250 agents to utilize
computer generated financial needs analysis and all fields of sales and
marketing of Life, Health, Disability, HMO, Home and Auto Insurance Products.
Through the computer generated financial needs analysis developed system to
generate mortgage sales using creative refinancing strategies involving debt
consolidation.
ELROY "GENE" GRAVELY, VICE PRESIDENT
Co-Founder of California Finance Express, with 27 years mortgage and marketing
experience. Former Western Vice President for Empire of America retail division.
Second Vice President of Gill Mortgage Los Angeles Division. Responsible for
development and implementation of marketing and origination strategies in
specialized areas as FHA/VA Fannie Mae and HUD.
ANTHONY MARTINS, JR. CHIEF FINANCIAL OFFICER
Accomplished bank executive offering an impressive record of achievement with
major commercial banks. A profit oriented individual who is accustomed to
challenges and achieving results.
PROFESSIONAL EXPERIENCE
Commercial loan officer generated new loans from commercial developers, the
corporate sector market (privately held and public companies) providing domestic
and international finance products as well as private banking. Additional
responsibilities included reviewing the loan portfolio of BANKS acquired
(documentation update, rating adjustments and re-structuring loans where
applicable). Marketing and new business development officer for Palm Beach and
Broward Counties. Significantly increased branch=s loan portfolio including
business and consumer credits, commercial and residential mortgages, loans to
builders, developers, importers, exporters, manufacturers, retailers and
wholesalers. Private banking specialist focusing on structuring complex credits
to high net worth individuals and the corporate sector market as well as selling
special services including non-asset products. Established Bank's loan
administration and legal documentation departments. Streamlined turnaround time
for credit approvals from 40 to 5 working days. Created marketing program
focusing on US$10M to US$15M lines of credit to Fortune 1000 as well as U.S.
subsidiaries of German companies. Responsible for over US$200M in new lines of
credit. Corporate re-structuring, installing credit and collection programs
thereby providing better management of receivables Implemented marketing
strategies concerning customers in Latin and South America. Improved bank
relationships, maximized on balance sheet availability as well as off-balance
sheet financing. Improved cash balance investment return.
Relationship Manager for 24 U.S. multi-national corporations.
1. Co-Managed Black & Decker's US$3.8B acquisition of Emhart Corporation (CT).
2. Co-Managed Beazer PLC (U.K.) US$1.2B purchase of Cooper's Inc. (PA).
3. Consistently met ROA targets and asset sale goals.
4. Negotiated US$25M FINEX/FOMEX lines for Black & Decker's Brazilian
manufacturing facility.
5. Managed US$8M Term Loan and US$10M Operating Line to Alcoa Aluminio
(Brazil).
6. Established US$15M (total US$150M) Standby LOC for C/P back up for General
Motors de Mexico
<PAGE>
and a US$10M pre-export finance line to General Motors do Brazil.
7. Increased portfolio 33% to $1.3 billion.
8. Restructured a substantial portion of bank's loan portfolio.
9. Centralized lending activities of bank's eight branches, replacing 15
positions with 5.
10. Established training programs for 102 staff members including
credit/lending, operations and cross selling.
11. Designed and implemented marketing programs to re-establish bank's position
in the community.
12. Accomplishments resulted in shareholder's stock rising from $2.00 to $12.00
per share.
JIM CLARE, VICE PRESIDENT,
More than 25 years of mortgage and marketing experience. Co-founder of mortgage
banking consulting firm which established and managed retail and wholesale loan
origination branches in the Mid-Atlantic region for several lenders, including
units of source One, Ramsay Mortgage and University Mortgage. Responsible for
development and implementation of marketing and origination strategies in
specialized areas as FHA/VA streamlined refinancing, Title I home improvement
lending and sub-prime home equity lending.
LINDA RAYNELL, CORPORATE SECRETARY AND VICE PRESIDENT, HUMAN RESOURCES
With over twenty years managing corporate recruitment with a major fortune 500
company Ms. Raynell has placed top corporate executives throughout the world.
Ms. Raynell's experience includes extensive interface with foreign consulates
involving visas, immigration and relocation of management and their families. As
manager of over 500 employees Ms. Raynell implemented and obtained the
corporation's ISO 9002 Quality Program for the employment services division. Her
knowledge of corporate building and mass recruiting service infrastructure
brings together MIRADOR'S executive management team.
JEANNINE SPANOLIOS, VICE PRESIDENT
With more than ten years experience in mortgage services and consistency as top
producer and administrator. Currently oversees more than 30 loan officers, four
loan processors and several administrative personnel.
- ------------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001096649
<NAME> Mirador Diversified Services, Inc.
<MULTIPLIER> 1
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 143,000
<SECURITIES> 0
<RECEIVABLES> 14,000,247
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 76,680
<DEPRECIATION> 0
<TOTAL-ASSETS> 14,906,927
<CURRENT-LIABILITIES> 9,990,984
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 14,906,927
<SALES> 0
<TOTAL-REVENUES> 15,076,608
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 11,810,240
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,266,367
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,266,367
<EPS-BASIC> 0.15
<EPS-DILUTED> 0.15
</TABLE>
