UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
------------------
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________________ to _______________________
Commission file number 0-18945
WESTMARK GROUP HOLDINGS, INC.
(name of small business issuer in its charter)
DELAWARE 84-1055077
(State or other jurisdiction (IRS Employe
of incorporation or organization) Identification No.)
8000 No. FEDERAL HIGHWAY
BOCA RATON, FLORIDA 33487
(Address of principal executive offices)(Zip Code)
(561) 526-3300
(Issuer's telephone number, including area code)
---------------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports) and (2) has been subject to such filing requirements for the past 90
days. Yes [XX] No [ ]
The number of shares outstanding of each of the registrant's classes of common
stock, as of July 30, 1999: 3,324,214 (one class).
Transitional Small Business Disclosure Format: Yes [ ] No [XX]
1
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WESTMARK GROUP HOLDINGS, INC.
FORM 10-QSB REPORT INDEX
<TABLE>
<CAPTION>
10-QSB Part and Item No.
<S> <C>
Part I-Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated balance sheets as of
June 30, 1999 and December 31, 1998..........................3
Consolidated statements of operations
for the three months and six months ended June 30, 1999
and 1998.....................................................4
Consolidated statements of cash flows for the six
months ended June 30, 1999 and 1998..........................5
Condensed notes to consolidated financial statements..................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................7 - 11
Part II-Other Information
Item 1. Legal Proceedings.....................................................11
Item 2. Changes in Securities.................................................11-12
Item 3. Defaults Upon Senior Securities.......................................12
Item 4. Submission of Matters to a Vote of Security Holders...................12
Item 5. Other Information.....................................................12
Item 6. Exhibits and Reports on Form 8-K......................................12-13
Signatures..............................................................................13
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2
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ITEM 1. Financial Statements
Westmark Group Holdings, Inc. and Subsidiary
Consolidated Balance Sheets
June 30, 1999 with comparative figures for December 31, 1998
<TABLE>
<CAPTION>
UNAUDITED
ASSETS
------ 1999 1998
------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 677,216 $ 7,111,373
Accounts receivable 2,727,250 1,259,252
Mortgage loans held for sale 28,388,080 21,741,557
Deferred tax asset 1,275,000 1,275,000
-----------------------------
Total current assets 33,067,546 31,387,182
-----------------------------
Property and equipment 798,347 578,382
Investments in preferred stock 349,028 349,028
Investments in real estate and mortgage loans 778,670 511,500
Other assets 522,180 315,982
=============================
Total assets $35,515,771 $33,142,074
=============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Warehouse lines of credit $30,678,477 $29,006,951
Notes payable and capital leases 414,026 304,525
Settlements payable 221,264 309,746
Accounts payable 293,873 723,765
Accrued liabilities 372,514 221,775
Income taxes payable 32,000 32,000
Dividends payable 45,000 17,500
-----------------------------
Total current liabilities 32,057,154 30,616,262
-----------------------------
Long-term portion of debt and capital lease obligations - 39,749
Stockholders' Equity:
Preferred stock, $0.001 par value, 10,000,000 shares authorized, 413,991
(150,005 At December 31, 1998) shares issued and outstanding;
stated at liquidation value 1,431,510 600,010
Common stock, $0.005 par value, 15,000,000 shares authorized,
3,318,332 (3,315,824 at December 31, 1998) shares issued and outstanding 16,592 16,579
Additional paid-in capital 29,189,141 29,293,091
Deficit (26,928,626) (27,173,617)
Stock subscription receivable (250,000) (250,000)
-----------------------------
Total stockholders' equity 3,458,617 2,486,063
-----------------------------
=============================
Total liabilities and stockholders' equity $35,515,771 $33,142,074
=============================
See accompanying condensed notes to consolidated financial statements.
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3
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Westmark Group Holdings, Inc. and Subsidiary
Consolidated Statements of Operations
For the three months and six months ended June 30, 1999 and 1998
UNAUDITED
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
1999 1998 1999 1998
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Gain on sale of loans $ 3,845,917 $ 3,276,186 $ 7,349,446 $ 5,594,006
Loan origination fees 672,782 472,037 1,197,563 956,822
Interest income 682,585 348,511 1,310,309 586,298
Other income 162,514 17,748 244,977 33,498
----------------------------------------------------------------------
5,363,798 4,114,482 10,102,295 7,170,624
----------------------------------------------------------------------
Costs and Expenses:
Direct loan fees 784,844 583,981 1,668,498 1,024,176
Interest expense 466,722 445,522 1,095,932 750,093
General and administrative 3,908,320 2,326,849 7,002,241 4,195,546
Common stock issued for services - 237,500 - 237,500
Depreciation 22,397 18,847 63,134 36,178
Amortization - 24,729 - 49,458
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5,182,283 3,637,428 9,829,805 6,292,951
----------------------------------------------------------------------
Income from operations 181,515 477,054 272,490 877,673
----------------------------------------------------------------------
Other Income (Expense) - 35,000 - 70,000
----------------------------------------------------------------------
Income before taxes 181,515 512,054 272,490 947,673
Income tax expense 77,960 163,469 117,171 315,936
Tax benefit of net operating loss carryforward (77,960) (163,469) (117,171) (315,936)
----------------------------------------------------------------------
Net income $ 181,515 $ 512,054 $ 272,490 $ 947,673
======================================================================
Earnings Per Common Share: ----------------------------------------------------------------------
Basic $ 0.05 $ 0.18 $ 0.07 $ 0.35
======================================================================
Diluted $ 0.05 $ 0.10 $ 0.07 $ 0.20
======================================================================
Weighted Average Shares Outstanding:
Basic 3,318,332 2,859,189 3,317,496 2,717,267
Diluted 3,631,618 5,168,418 3,630,782 4,838,844
See accompanying condensed notes to consolidated financial statements.
</TABLE>
4
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Westmark Group Holdings, Inc. and Subsidiary
Consolidated Statements of Cash Flows
For the six months ended June 30, 1999 and 1998
UNAUDITED
<TABLE>
<CAPTION>
1999 1998
-----------------------------
<S> <C> <C>
Cash Flows from Operating Activites:
Net income $ 272,490 $ 947,673
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation 63,134 36,178
Amortization - 49,458
Common stock issued for services - 237,500
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (1,467,998) -
Mortgage loans held for sale (6,646,523) (12,315,531)
Other assets (206,198) (235,735)
Increase (decrease) in:
Accounts payable (429,892) 13,683
Accrued liabilities 150,739 (224,091)
Settlements payable (88,482) (340,011)
Warehouse lines of credit 1,671,526 11,940,935
-----------------------------
Net cash provided (used) by operating activities (6,681,204) 110,059
-----------------------------
Cash Flows from Investing Activities:
Purchases of property and equipment (283,099) (138,831)
Investment in real estate and mortgage loans (267,170) -
-----------------------------
Net cash used by investing activities (550,269) (138,831)
-----------------------------
Cash Flows from Financing Activities:
Proceeds from sale of preferred stock 727,563 330,995
Proceeds from sale of common stock - 600,000
Dividends received - 35,000
Increase in debt 69,753 (728,000)
-----------------------------
Net cash provided (used) by financing activities 797,316 237,995
-----------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (6,434,157) 209,223
Cash and Cash Equivalents, Beginning 7,111,373 100,010
-----------------------------
Cash and Cash Equivalents, Ending $ 677,216 $ 309,233
=============================
Supplemental Disclosures:
Cash paid for interest $ 1,129,577 $ 750,093
=============================
Capital leases $ 33,845 $ 53,858
=============================
See accompanying condensed notes to consolidated financial statements.
</TABLE>
5
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Westmark Group Holdings, Inc. and subsidiary
Condensed Consolidated Notes to Financial Statements
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310b of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six and three month periods ended June
30, 1999 are not necessarily indicative of the results that may be expected for
the year ended December 31, 1999. For further information, refer to the
consolidated financial statements and footnotes related thereto included in the
Company's audited annual report on Form 10-KSB for the year ended December 31,
1998.
NOTE 2: FINANCING ACTIVITY
The Company has secured warehouse lines of credit on favorable terms
from the following institutions:
First Union National Bank $15 million
Household Financial Services, Inc. $20 million
Princap Mortgage Warehouse, Inc. $10 million
Republic Bank $7.5 million
Great Eastern Funding $10 million
All warehouse lines of credit are one year renewable contracts and
there can be no assurance that they will renew or renew on similar terms. $9
million, which is not included in the above table, did not renew in the first
quarter of 1999 due to the lenders no longer existing.
NOTE 3: EARNINGS PER SHARE
The Company provides for the calculation of basic and diluted earnings
per share. Basic earnings per share include only common stock outstanding during
the period. Diluted earnings per share assumes exercising warrants and options
granted that are "In the Money" and convertible preferred stock and debt.
Earnings per share is computed by dividing income available to common
stockholders by the basic weighted average number of common shares and income
available to all stockholders by the diluted weighted average number of common
shares. For the six months ended June 30, 1999, diluted earnings per share have
not been adjusted for the anti-dilutive effect of preferred stock dividends,
warrants, options, convertible debt and convertible preferred stock.
NOTE 4: RELATED PARTY CONTINGENCY
Medical Industries of America, Inc. (MIOA) has the right, through
November 30, 1999, to require the Company to repurchase $333,333 of the
Company's common stock at $5.73 per share because diluted earnings per share did
not equal or exceed $.45 per diluted share, as defined in the settlement
agreement, for the six months ended June 30, 1999. The Company can use $272,500
of MIOA preferred stock that it owns as consideration in the transaction.
Additionally, the Company has agreed to repurchase $333,333 of its common stock
owned by MIOA at $5.73 per share if diluted earnings per share do not equal or
exceed $0.55 per diluted share for the six months ending December 31, 1999.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Quarterly Report on Form 10-QSB contains forward-looking
statements. For this purpose, any statements contained in it that are not
statements of historical fact should be regarded as forward-looking statements.
For example, the words "believes," "anticipates," "plans," and "expects" are
intended to identify forward-looking statements. There are a number of important
factors that could cause the Company's actual results to differ materially from
those indicated by such forward-looking statements. These factors include those
shown in the company's 1998 Annual Report on Form 10-KSB under the caption
"Certain Factors That May Affect Future Results."
The following discussion of the Company's results of operations and
financial condition should be read together with the Company's condensed
consolidated unaudited Financial Statements contained in Part I, Item 1 and the
related Notes in this Form 10-QSB, and the company's audited Financial
Statements and the related Notes contained in the Company's audited Financial
Statements contained in the Company's 1998 Annual Report on Form 10-KSB.
General
- -------
Westmark Mortgage Corporation, the Company's wholly-owned subsidiary,
is a mortgage banking company engaged in the business of funding, purchasing and
selling mortgage loans secured primarily by one-to-four family residences. The
Company operates in 34 states and has operating offices in Boca Raton, Florida;
Santa Ana, California; Chicago, Illinois area; and, Atlanta, Georgia area. In
1999, the Company began a "Retail Operation" which has three South Florida
locations and deals directly with borrowers, to compliment its "Wholesale
Operation", which deals through mortgage brokers. The Company primarily
generates income from (i) gains recognized from premiums on loans sold to
institutional purchasers, (ii) investment income earned on loans held for sale,
and (iii) origination fees and related revenue received as part of loan
closings. Gain on sale of loans, which represents the sales price in excess of
loan acquisition costs from whole loan sales, constituted 73% and 78%; 72% and
80% of total revenues for the six months and quarter ended June 30, 1999 and
1998, respectively. Investment income earned on loans held for sale constituted
13% and 8%, 13% and 8% of total revenues for the six months and three months
ended June 30, 1999 and 1998, respectively. Loan origination fees and related
revenue represented 12% and 13%; 13% and 11% of total revenues for the six
months and three months ended June 30, 1999 and 1998, respectively.
The Company sells most of the loans it funds, generally within 30 to 45
days of origination. The loans are sold through purchase agreements with
Household Financial Services, Green Tree Mortgage Services, Bay Financial, Conti
Mortgage Corp., Associates Home Equity Services, Inc., First City Capital
Corporation, BancOne Financial Services, Inc., GMAC/Residential Funding
Corporation, and various other non-conforming mortgage conduits. These
agreements are for specific terms or are open ended, and require the loans to
satisfy the underwriting criteria described therein. During the six months and
three months ended June 30, 1999 and 1998, the Company sold loans totaling
$186.6 million and $109.7 million; $101.8 million and $63.7 million
respectively. The Company does not retain the servicing rights for any of the
loans it sells, and sells all loans primarily in whole loan sales. The gain on
sale of loans was $7,349,446 and $5,594,006; $3,845,917 and $3,276,186 for the
six months and three months ended June 30, 1999 and 1998, respectively.
Loans held for sale were comprised of all sub-prime loans at June 30,
1999 and 1998. At the time the Company commits to fund a loan, the interest rate
is locked for the individual loan transaction. Until the Company obtains a
commitment to sell the loan to an investor, the Company is subject to
interest-rate fluctuations.
7
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Investment income earned on loans held for sale is derived primarily
from interest payments on loans in inventory. Loans generally carry a note rate
in excess of the Company's borrowing cost. This results in a positive revenue
differential between cost to borrow (at the time the loan funds) and the loan
sale. However, management's strategy is to sell those loans in whole loan sales
and in bulk sales as quickly as practicable in order to optimize cash flow from
the sale of the loans. In addition, the Company realizes revenue from loan
origination fees and certain loan discount fees.
The Company assigns credit grades to its sub-prime loans during the
underwriting process. These grades range from "A+" to "D". At June 30, 1999, the
credit grades assigned to mortgage loans held for sale was approximately 75%
"A+", "A" and "A-", 16% "B", 8% "C", and 1% "D". About 65% of these loans were
adjustable rate mortgages and 35% were fixed rate. The weighted average interest
rate of these loans was approximately 10.45%.
Underwriting
All home equity loans are underwritten to the Company's mortgage
underwriting guidelines. The underwriting process is intended to assess both the
prospective borrower's ability to repay the loan and the adequacy of the real
property security as collateral for the loan. In the origination process,
typically, the loan application is taken by the approved broker/correspondent
using the basic application (FNMA Form 1003) and the credit report ordered by
the originating office. The 1003 and credit report are forwarded via Toll Free
fax to the Boca Raton, Florida, Santa Ana, California, the Downers Grove,
Illinois office or the Atlanta office. Westmark underwriters grade the credit
report and determine acceptability within program guidelines and a preliminary
approval/pre-qualification is faxed back to the originator. Approvals are
generally generated within a 24-hour period and closing occurs within days.
Account executives rely on pagers, fax machines, cellular phones and overnight
delivery to be in contact with corporate headquarters at all times. The
underwriting standards involve the following:
o the borrower's ability to repay is analyzed by verifying income
via traditional methods, i.e., self-employed borrowers are asked
to supply copies of Federal Income Tax Returns and waged borrowers
supply copies of W-2 forms and paystubs. In instances where
"stated income" is used, lower loan to value ratios are offered,
and verification of the source of the income is obtained (copies
of business license, phone verification of employment, and/or bank
statements);
o loan to value ratios are adjusted to reflect the condition of the
borrower's recent credit history. The greater and more recent the
derogatory items are, the more equity the borrower is required to
maintain in the property;
o the property being offered as security for the loan is appraised
by a state licensed appraiser. The appraisal report is carefully
reviewed by Westmark's staff underwriter to ensure that the loan
is sufficiently secured. If there is a question about the quality
of the appraisal, a review from another appraiser is obtained.
Larger loan sizes require two full independent appraisal reports;
o on purchase transactions, the borrower's cash down payment is
verified as to amount and source to ensure that they have
legitimate equity in the property and on refinances, the length of
time of ownership is verified, using FNMA guidelines in this area;
o and, on a case-by-case basis, after review and approval by the
Company's underwriters, home equity loans may be made which vary
from the underwriting guidelines and any variations must be
approved by a senior underwriter or by an executive officer of the
Company.
In summary, Westmark carefully analyzes each borrower's income, credit
and equity. The loan to value ratio reflects the risk associated with each
borrower's situation. These steps are taken to ensure each loan's quality and
performance.
8
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See Condensed Notes to Consolidated Financial Statements of the Company
(included in Item 1) for further discussion of accounting policies and other
significant items.
Results of Operations
- ---------------------
Six months and three months ended June 30, 1999 Compared to six months and three
months ended June 30, 1998:
Total revenues increased 41% and 30% to $10,102,295 and $5,363,798 in
the six months and three months ended June 30, 1999 compared with $7,170,624 and
$4,114,482 in the six months and three months ended June 30, 1998. This increase
was primarily due to the Company's increased ability to acquire and sell
non-conforming mortgages, offset by a reduction in the premium spread received
as described below.
Gain on sale of loans, all of which was derived from premiums on whole
loan sales, increased 31% and 17% to $7,349,446 and $3,845,917 compared with
$5,594,006 and $3,276,186 for the six months and three months ended June 30,
1999 and 1998, respectfully. The volume of non-conforming loans sold was
approximately $186.6 and $109.7 million compared with $101.8 and $63.7 million
for the six months and three months ended June 30, 1999 and 1998, respectively.
This is an increase of 83% and 72% for the six and three months ended June 30,
1999 as compared to the six and three months ended June 30, 1998, respectively.
This increase was the result of increased sales volume due to the implementation
of management's strategy to increase the volume of originating and selling
loans, offset by a reduction in the premium spread received, discussed below.
In October and November 1998 industry-wide margins on the sale of loans
and the rate of growth in whole loan sales were both reduced. This resulted in
an industry-wide reduction of premiums on whole loan sales of approximately 25%
due to many investors deciding to invest in more liquid securities with higher
yields. At the same time several investors who historically had acquired
mortgage loans for resale in credit enhanced and non-enhanced packages went out
of business or lost their funding sources. Since this October correction,
margins have begun to stabilize and the Company has been able to continue
growing. This is due primarily to investors who purchase a significant majority
of the Company's mortgages, buying mortgages to hold for investment rather than
resale. As a result of this investment approach the investors are less concerned
with liquidity and are again purchasing the Company's loans in the same or
greater quantities as during 1998, although at reduced premiums of 24% and 25%
for the six months and three months ended June 30, 1999 compared to 1998.
Loan origination fees increased 25% and 43% to $1,197,563 and $672,782
compared to $956,822 and $472,037 for the six months and three months ended June
30, 1999 and 1998, respectively. This increase is primarily due to increased
loan volume and management adjusting the loan origination pricing structure to
provide for an increase in per loan origination fees.
Investment income, comprised primarily of interest earned on loans held
for sale, increased 123% and 96% to $1,310,309 and $682,585 compared to $586,298
and $348,511 for the six and three months ended June 30, 1999 and 1998,
respectively. This increase is due primarily to more loan sales in 1999 as
compared to 1998.
Total expenses increased 56% and 42% to $9,829,805 and $5,182,283
compared to $6,292,951 and $3,637,428 for the six months and three months ended
June 30, 1999 and 1998, respectively. This increase is primarily due to (i) an
increase in direct loan fees, (ii) an increase in interest expense and, (iii) an
increase in general and administrative expenses.
9
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Direct loan fee expenses increased 63% and 34% to $1,668,498 and
$784,844 compared to $1,024,176 and $583,981 for the six months and three months
ended June 30, 1999 and 1998, respectively, due primarily to the increase in
loan volume, fees paid to brokers and loan processing fees charged by the
Company's warehouse lenders.
Interest expense increased 46% and 5% to $1,095,932 and $466,722
compared to $750,093 and $445,522 for the six months and three months ended June
30, 1999 and 1998, respectively, due primarily to the increased volume of whole
loan originations and acquisitions, offset by the reduced borrowing cost
associated with the Company's Warehouse Facilities.
General and administrative expense increased 67% and 68% to $7,002,241
and $3,908,320 compared to $4,195,546 and $2,326,849 for the six months and
three months ended June 30, 1999 and 1998, respectively, due primarily to
increased personnel costs necessary to implement management's strategy to
increase loan volumes and provide additional staff for future growth. Personnel
cost increased 60% to $5,007,080 for the six months ended June 30, 1999 compared
to $3,120,601 for the six months ended June 30, 1998. The balance of the
increase in general and administrative expense was primarily attributable to
increases in rent, office supplies, telephones, and overnights, due to
relocation and expansion of the Company's primary operating facility in August
1998.
Depreciation expenses increased to $63,134 and $22,397 compared to
$36,178 and $18,847 for the six and three months ended June 30, 1999 and 1998,
respectively, primarily due to increased purchases of computer hardware and
software, and leasehold improvements.
The Company had net income of $272,490 and $181,515, compared to a net
income of $947,673 and $512,054 for the six months and three months ended June
30, 1999 and 1998, respectively. The decrease in net income in 1999 compared to
1998 was the result of the Company staffing up for higher production to offset
an approximate 25% reduction in the premium spread received and provide
additional staff for future growth.
Liquidity and Capital Resources
- -------------------------------
The Company uses its cash flow from whole loan sales, loan origination
fees, net interest income and borrowings under its warehouse lines of credit to
meet its working capital needs. The Company's cash requirements include the
funding of loan originations, purchases, payment of interest expenses,
operations expenses, taxes and capital expenditures.
On June 30, 1999, total stockholders equity was $3,458,617 working
capital was $1,010,392 and net income was $272,490. Adequate credit facilities
and other sources of funding, including the ability of the Company to sell
loans, are essential to the continuation of the Company's ability to originate
and purchase loans. The Company borrows funds on a short- term basis to support
the accumulation of loans prior to sale. These short-term borrowings are made
under warehouse lines of credit with various lenders as described in note 2 to
the condensed consolidated financial statements (collectively the "Warehouse
Facilities"). Pursuant to the Warehouse Facilities, the Company has available
total secured revolving credit lines of $62.5 million to finance the Company's
origination or purchase of loans, pending sale to investors. The lines of credit
pursuant to the Warehouse Facilities are collateralized by the assignment and
pledge of eligible mortgage loans. The various lines making up the Warehouse
Facilities bear interest at annual rates ranging from LIBOR plus 1 1/8 to prime
plus 2%, payable at the time of purchase by the permanent investor. The
Warehouse Facilities provide for a transaction charge from $100 per loan to as
low as $25 per loan and require the Company to possess a minimum net worth of
$2.5 million, a current ratio of 1.1 and a compensating cash balance on deposit
in the amount of $5,000 under the more restrictive covenants. On June 30, 1999,
the balance outstanding, pursuant to the Warehouse Facilities, totaled
$30,678,477. In April 1999, the Company obtained a working capital line of
credit for $150,000 with Northern Trust Bank.
10
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Year 2000 Compliance
- --------------------
Computer-based systems that utilize two digits rather than four digits
to define the applicable year may fail to properly recognize date sensitive
information when the year changes to 2000. The Company has completed a
comprehensive review of its computer-based systems to determine if they will be
affected by resulting Year 2000 related compliance issues, that is whether those
systems have Year 2000 related "computer bugs." This review has revealed no
material Year 2000 related compliance issues primarily because the Company has
developed or purchased most of its computer hardware and software systems within
the last four years. Therefore, it does not expect to be affected by Year 2000
issues because very few of the Company's computer-based systems were installed
before the Y2K problem was recognized. We do not expect to incur Year 2000
compliance related costs that would be material to us. The Company is asking for
confirmation from outside vendors, financial institutions and others that they
are Year 2000 compliant or that they are developing and implementing plans to
become Year 2000 compliant. However, there is no assurance that these outside
vendors, financial institutions and others will timely resolve their own Year
2000 compliance issues or that any such failure would not have an adverse effect
on the Company. The Company has completed contingency plans to assure the
continuation of its operations if these outside vendors, financial institutions
or others fail to timely resolve their own Year 2000 compliance issues. The
Company believes it is devoting the necessary resources to timely address all
Year 2000 compliance issues over which we have control.
PART II-OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-------------------------
The Company is named as a respondent in Ted BRISTOW and GARY PHILLIPPE
VS. GREEN WORLD TECHNOLGIES, INC., MEDICAL INDUSTRIES OF AMERICA, INC. and
WESTMARK GROUP HOLDINGS, INC., Case #74-160-00629-99, filed with the American
Arbitration Association on May 10, 1999. The claimants were employed by Green
World Technologies, Inc., a former affiliate of the Company. The claimants were
terminated by Green World in August of 1997. The claimants allege that they are
entitled to severance compensation as a result of their employment termination.
The Company filed a complaint in the Circuit Court of Palm Beach County, Florida
on June 24, 1999, Case #CL 99-6201 AO, seeking a judicial determination that the
Company is not bound to arbitrate this matter. The Company's motion to stay the
arbitration proceedings was granted on August 2, 1999. The Company expects that
a hearing on the merits within the next sixty (60) days will determine whether
or not the claimants are entitled to proceed against the Company in the
arbitration. The matter is in the initial stages of discovery. The Company is
unable to predict the outcome of this matter at this time.
The Company does not believe that any of the pending legal proceedings and
those reported in its 1998 Annual Report on Form 10-KSB, individually or in the
aggregate, would materially impact the company's financial condition or results
of operations. From time to time, the company is a defendant (actual or
threatened), in certain lawsuits encountered in the ordinary course of its
business, the resolution of which, in the opinion of the company, should not
have a material adverse effect on the company's financial position.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
-------------------------------------------------
On March 1, 1999 the Company issued 2,508 shares of its common stock to a
creditor of the Company in satisfaction of $5,000 in debt. In June 1999, the
Company completed an initial closing of a private placement in which it sold
263,977 shares of Series H Preferred Stock and warrants to purchase 263,977
shares of the Company's common stock. Each share of preferred stock has a
liquidation preference of $3.15 per share, is convertible into one share of
common stock, and is entitled to a cumulative dividend of 10% per year. Each
warrant is exercisable at $3.75 per share into one share of common stock at the
11
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election of the holder. The warrants expire on May 31, 2004. The securities were
sold to "accredited investors" as that term is defined in Regulation D of the
Securities Act of 1933. The Company received net proceeds of approximately
$727,563 from the initial closing of the Private Placement. The net proceeds
will be used for working capital and general corporate purposes. The exemption
the Company relied upon for the above transactions is Section 4(2) of the
Securities Act of 1933.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
---------------------------------------
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------
The Company held its Annual Meeting of Stockholders on June 22, 1999.
At the Annual Meeting, Mark D. Schaftlein, Payton Story, III, Irving H. Bowen,
Louis Resweber, John O. Hopkins and Allan C. Sorensen were elected as directors
to serve until the next Annual Meeting of Stockholders.
At the Annual Meeting, the stockholders also voted to ratify the
appointment of Rachlin Cohen & Holtz as the Company's independent accountants
for the fiscal year ending December 31, 1999. The following table shows the
votes cast for and against, and abstentions, with respect to the above matter
and with respect to each nominee for director:
Proposal 1 - Election of Directors:
For Against Abstentions
-------------------------------------------
Mark D. Schaftlein 2,774,824 0 18,219
Payton Story, III 2,775,136 0 17,907
Irving H. Bowen 2,775,136 0 17,907
Louis Resweber 2,775,196 0 17,847
Allan C. Sorensen 2,775,196 0 17,847
John O. Hopkins 2,775,196 0 17,847
Proposal 2 - Ratification of Appointment of Rachlin Cohen & Holtz as the
Company's Independent Accountants:
For Against Abstentions
---------------------------------------------------
1,821,174 14,354 5,668
ITEM 5. OTHER INFORMATION
--------------------------
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------
(a) EXHIBITS
Exhibit Description
- ------- -----------
10.1 $150,000 Line of Credit Agreement between the Company and Northern
Trust Bank dated April 29, 1999.
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10.2 Promissory Note between the Company and Northern Trust Bank dated April
29, 1999.
10.3 Guaranty between the Company and Northern Trust Bank dated April 29,
1999.
10.4 Security Agreement between the Company and Northern Trust Bank Dated
April 29, 1999.
10.5 Wholesale Loan Agreement between the Company's wholly-owned subsidiary,
Westmark Mortgage Corporation, and Great Eastern Funding, LLC dated May
28, 1999.
10.6 Client Contract between the Company's wholly-owned subsidiary, Westmark
Mortgage Corporation, and Residential Funding Corporation dated June 8,
1999.
10.7 Master Mortgage Loan Purchase Agreement between the Company's
wholly-owned subsidiary, Westmark Mortgage Corporation and Banc One
Financial Services, Inc. dated December 22, 1998.
27.1 Financial Data Schedule (for SEC use only).
(b) REPORTS ON FORM 8-K
None
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 hereunto duly authorized.
WESTMARK GROUP HOLDINGS, INC.
By: /c/ Irving H. Bowen
--------------------------------------------------------------
Irving H. Bowen, Executive Vice President, Treasurer
& Chief Financial Officer, Director (Principal Accounting
Officer & Duly Authorized Director & Officer of the Registrant)
By: /c/ Mark D. Schaftlein
--------------------------------------------------------------
Mark D. Schaftlein, President & Chief Executive
Officer, Director (Duly Authorized Director & Officer
of the Registrant)
Dated: August 10, 1999
13
April 29, 1999
Mr. Irving H. Bowen
Westmark Group Holdings, Inc.
8000 N. Federal Highway
Boca Raton, FL 33487
Re: $150,000 Line of Credit to Westmark Group Holdings, Inc.
Dear Mr. Bowen:
We are pleased to advise you that Northern Trust Bank of Florida, N.A., a
national lending association (the "Lender") agrees to make to the Borrower, and
by acceptance of this letter, the Borrower agrees to accept, a loan (the "Loan")
in the amount and upon and subject to the terms and conditions set forth below.
1. The Borrower. The Borrower shall be Westmark Group Holdings, Inc.
2. The Guarantor. The Loan shall require the unconditional guaranty of
Westmark Mortgage Corporation for the performance and payment of all
obligations of the Borrower to the Lender.
3. Amount of the Loan. The maximum amount of the revolving line of credit
shall be one Hundred and Fifty Thousand and no/100 Dollars ($150,000).
4. Use of the Proceeds. Proceeds of the Line of Credit shall be used
solely for the purpose of providing short terms working capital needs
of the Borrower.
5. Repayment of the Loan.
5.1 Borrower shall make monthly interest only payments on principal
amounts outstanding from time to time. The principal balance of the line of
credit is due at maturity (one year from the date of the loan documents) unless
the Lender agrees to renew the line of credit.
5.2 Borrower is required to have a clean up period of thirty (30)
consecutive days sometime prior to the maturity of the line of credit.
5.3 Prepayment of amounts outstanding under the Loan shall be permitted
without premium or penalty.
6. Interest. Except in the event of default, interest on principal amounts
outstanding from time to time shall accrue at the Prime Rate plus 1% of
the Lender. For purposes of this letter-and the Loan, the Prime Rate
shall be the annual rate of interest as announced and established by
the Lender from time to time as it's prime rate. Such rate is used as a
reference rate for the information and use of the Lender in
1
<PAGE>
establishing actual rates to be charged to its borrowers. The Prime
Rate does not constitute the rate of interest actually charged by the
Lender to borrowers of any particular degree of credit-worthiness.
6.1 The Interest Rate shall be computed on a 360 day year basis and
calculated on the actual number of days elapsed (i.e., interest for each day
during which any of the principal amount is outstanding shall be computed at the
annual interest rate divided by 360).
7. Security for the Loan. All amounts outstanding under the Loan shall be
secured by a priority security interest in favor of the Lender in all
of the corporate assets owned by the Borrower (collectively, the
"Collateral"). The Loan will also be secured by a priority security
interest in favor of the Lender in all of the corporate assets owned by
the corporate Guarantor which is Westmark Mortgage Corporation. The
Loan shall also be secured by such additional security documents, as
are required by the Lender in its sole and absolute discretion.
8. Other Liens, Encumbrances, Mortgages and Debt. The Borrower shall not
permit the existence of any lien, encumbrance, or mortgage, upon the
collateral, except in favor of the Lender. The Loan documents shall
provide that the granting or occurrence of any such lien, encumbrance
or mortgage upon any part of the collateral or the sale, transfer or
conveyance of all or any portion of the collateral (except as to
inventory, in the ordinary course of business), or any interest
therein, shall constitute a default under the Loan.
9. Insurance. At least 14 days prior to closing, the Borrower shall
deliver to the Lender an original paid-up commercial property insurance
policy with full replacement cost coverage (before co-insurance) as to
the Collateral, and a general liability insurance policy, both in such
a form and in amounts as shall be satisfactory to the Lender in its
sole and absolute discretion. The Lender reserves the right to approve
the insurance company or companies furnishing any policies. The Lender
shall be named as the loss payee on all such policies, to the extent
that its interest may appear, and additionally, the Lender shall be
entitled to receive 30 days prior written notice of the cancellation,
amendment or failure to renew any such policy.
10. Opinion of Borrower's Counsel. Prior to or at the closing of the Loan, the
Borrower and Guarantor(s) certifies, without limitation that:
10.1 the Borrower and Guarantor(s) are duly organized and a valid
existing entity in good standing under the laws of its respective state of
incorporation or formation and have the legal capacity to own, mortgage, lease
and operate real property and to otherwise transact business under the laws of
the State of Florida.
10.2 all of the Loan documents are valid, binding and enforceable in
accordance with their terms and legally convey to the Lender all of the rights
as stated in the Loan documents and purported to be conveyed by the Loan
documents;
10.3 the Borrower and the Guarantors have the full right and legal
authority to carry out the terms of this letter and any Loan document required
or contemplated by this letter;
10.4 no material litigation or material claim is pending against the
Borrower or the Guarantor(s) which would affect the title or value of the
Collateral;
2
<PAGE>
10.5 the Borrower has complied with all applicable federal, state and
local laws and regulations;
10.6 neither the Loan nor repayment of the Loan violates in any manner
the usury laws of the State of Florida, and the manner and payment of interest
and all charges required to be paid under the Loan (which charges may include,
without limitation, any prepaid interest, service charges, participation,
payments, profit percentages, equity participation, additional interest,
commitment fees, brokerage fees, interest and other reserves, loan management
fees, and all other charges contemplated under this letter, if any) are neither
illegal nor usurious in any manner under the laws of the State of Florida.
11. Affirmative Covenants. So long as this Note or any other liabilities of
any Borrower hereunder shall remain unpaid, the Borrower and
Guarantor(s) agree that they will:
11.1 Reporting Requirements. Furnish to the Lender:
a. As soon as available, but in any event not later than one hundred
twenty (120) days after the close of each fiscal year, Lender shall be provided
with a copy of the balance sheet of the corporate Borrowers and Guarantors, for
such fiscal year as at the end of such fiscal year, and related statements of
income and retained earnings and changes in financial position of Borrowers and
Guarantors, setting forth in comparative form, the corresponding figures for the
preceding fiscal year, all in reasonable detail, prepared in accordance with
generally accepted accounting principles applied on a basis consistently
maintained throughout the period involved and with the prior year, such
financial statements to be audited financial statements by independent certified
public accountants of recognized standing acceptable to the Lender.
b. As soon as available, but in any event not later than forty-five
(45) days after the close of each quarterly period, Lender shall be provided
with balance sheets of the corporate Borrowers and Guarantors for such quarterly
period; related financial statements, including related statements of income and
retained earnings; all in reasonable detail, prepared in accordance with
generally accepted accounting principles applied on a basis consistently
maintained throughout the period involved and with prior periods all to be in
form and substance acceptable to Lender, such financial statements to be
prepared by Borrower and certified by the chief financial officer of Borrower
and Guarantors as true and correct. Such statements shall be accompanied in each
case by a Covenant Compliance Certificate executed by the Chief Executive
officer of the Borrower and Guarantor.
c. The corporate Borrower and Guarantor shall at all reasonable times
and from time to time allow the Lender, by or through any of its officers,
agents, attorneys, or accountants, to audit, examine, or inspect or make
extracts from the Borrower's and Guarantors books and records and those of any
related company; and shall do, make, execute and deliver all such additional and
further acts, things, deeds, assurance and instruments as the Lender may require
more completely to vest in and assure to the Lender its rights hereunder or in
any collateral and to carry into effect the provisions and intent of this
Commitment Letter.
d. Promptly, such additional financial and other information,
including, without limitation, financial statements of the Borrower and
Guarantor and information regarding the Collateral, as the Lender may from time
to time reasonably request.
3
<PAGE>
11.2 Maintenance of Existence and Properties. Maintain its corporate
existence and obtain and maintain all rights, privileges, licenses, approvals,
franchises, properties and assets necessary or desirable in the normal conduct
of its business, and comply with all Contractual obligations and Requirements of
law (including, without limitation, any Requirements of Law under or in
connection with ERISA), except where the failure to so comply is not likely to
have a material adverse effect on the business, operations, assets or financial
or other condition of the Borrower or on the Collateral or the Collateral Value
of the Borrowing Base.
11.3 Notices. Promptly give written notice to the Lender of:
a. The occurrence of any potential defaults or event of default known
to responsible management personnel of the Borrower and/or Guarantor and the
proposed method of cure thereof.
b. Any litigation or proceeding affecting the Borrower, the Guarantor
or the Collateral which could have a material adverse effect on the Collateral,
the Collateral Value of the Borrowing Base of the business, operations,
property, or financial or other condition of the Borrower or the Guarantor.
c. A material adverse change known to responsible management personnel
of the Borrower and/or Guarantor in the business, operations, property or
financial or other condition of the Borrower or the Guarantor.
d. Any changes in the following senior management positions of the
Company: President, Chief Financial officer or operations Manager.
e. Any acquisition, purchase, redemption, retirement, transfer or
issuance of any shares of the Borrower's capital stock (including without
limitation any options or warrants relating thereto).
12. Negative Covenants. So long as this Note or any other liabilities of
any Borrower hereunder shall remain unpaid, the Borrowers and corporate
Guarantors agree that they will not, without the prior written consent
of the Lender:
12.1 Other Indebtedness. Incur, permit to remain outstanding, assume or
in any way become committed for indebtedness with respect to borrowed money,
except (i) indebtedness incurred hereunder or to the Lender.
12.2 Liens. Create, suffer or permit to exist any lien or encumbrance
of any kind or nature upon any of its assets now or hereafter owned or acquired,
or acquire or agree to acquire any property or assets of any character under any
conditional sale agreement or other title retention agreement; but this
subparagraph shall not be deemed to apply to (i) liens of contractors, laborers,
or supplymen, tax liens, or liens securing performance or appeal bonds or other
similar liens or charges arising out of the Borrower's or corporate Guarantors
business, provided that tax liens are removed before related taxes become
delinquent and other liens are promptly removed, in either case unless contested
in good faith and by appropriate proceedings.
12.3 Consolidation and Merger; Change of Business. Liquidate or
dissolve, or enter into any consolidation, merger, partnership, joint venture,
syndicate or other combination, or make any change in the nature of its business
4
<PAGE>
as a mortgage banker as presently conducted (except, in the case of activities
covered previously, with the prior consent of the Lender, which consent shall
not be unreasonably withheld).
12.4 Acquisitions. Without the prior consent of the Lender (which
consent shall not be unreasonable withheld), purchase or acquire or incur
liability for the purchase or acquisition of any or all of the assets or
business of any person, other than in the normal course of business as currently
conducted (it being expressly agreed and understood that the acquisition of
non-recourse servicing is a normal course of business activity and that the
acquisition of recourse servicing is not a normal course of business activity).
12.5 Leverage Ratio. Permit the ratio at any date of Total Liabilities
to Adjusted Tangible Net Worth to be more than 15.0:1.0.
12.6 Minimum Book Net Worth Permit Book Net Worth to be less than
$1,000,000.
12.7 Current Ratio. Permit the ratio at any date of total current
assets of the Borrower, Guarantor and its consolidated Subsidiaries (including
without limitation the Company) to total current liabilities of the Borrower,
Guarantor and its consolidated Subsidiaries (including without limitation the
Borrower), each as determined in accordance with GAAP, to be less than 0.85:1.0.
12.8 Dividends. During any fiscal year, declare and pay any dividends,
or return any capital, to its shareholders or authorize or make any other
distribution, payment or delivery of property or cash to its shareholders as
such, or redeem, retire, purchase or otherwise acquire, directly or indirectly,
for a consideration, any shares of any class of its capital stock now or
hereafter outstanding (or any option or warrants issued by it for or with
respect to its capital stock), or set aside any funds for any of the foregoing
purposes, in an aggregate amount in excess of fifty percent (50%) of the income
of the Borrower available to shareholders for such fiscal year as determined in
accordance with GAAP.
13. Loan Documents. The Borrower and/or Guarantor(s) shall be required to
execute and deliver to the Lender at the closing a promissory note and
a security agreement or a loan and security agreement. Additionally,
the Borrower and/or Guarantor(s) shall execute and deliver or cause to
be executed and delivered to the Lender at the closing all of such
other documents as the Lender shall deem appropriate, in its sole and
absolute discretion, including, without limitation, promissory notes,
guarantees, security agreements, loan and security agreements, UCC- 1
Financing Statements, consents, opinions of counsel for Borrower and/or
Guarantor(s) and subordination agreements. Each and every of the
documents required by the Lender shall contain such provisions as the
Lender in its sole and absolute discretion shall deem appropriate
(including, without limitation, provisions concerning events of
default, default rates of interest, changes in control, remedies of the
Lender, financial information to be provided to the Lender, warranties
and representations and affirmative and negative covenants).
14. Closing Costs. The Borrower shall be responsible for the payments of
all costs incurred in connection with making and securing the Loan,
including, but not limited to, all recording Lender's fees and costs,
and all other expenses incurred by the Lender in connection with the
issuance of this letter or the closing of the Loan. The Borrower
recognizes and accepts its responsibility for payment of all such
costs, whether or not the Loan is actually closed or funded.
15. Waiver. No waiver of any provisions of this letter by the Lender shall
constitute a waiver of any future matter of similar import or any other
matter at any time in the future. This letter constitutes the entire
understanding of the parties with respect to the matters referred to in
this letter, and no modification hereof shall be binding unless written
and signed by the party against whom said modification is sought to be
enforced. Wherever applicable, the terms of this letter shall be
applicable to the Loan, except to the extent that a particular
provision is in conflict with any subsequent documents signed or
required by the Lender.
5
<PAGE>
16. Closing Date. The parties agree that the closing of the Loan shall
occur no later than May 7, 1999.
17. Time is of the Essence. Time is of the essence with respect to the
Borrower's obligations under this letter.
18. Survival Provisions. The obligations of the Borrower contained in this
letter shall survive the closing of the Loan, unless otherwise provided
in the Loan documents.
19. Brokerage. The Lender shall not be obligated to pay any fee, charges or
commissions in connection with the Loan, and the Borrower agrees by the
acceptable of this letter to indemnify and hold the Lender harmless
from any and all claims, including, but not necessarily limited to,
brokerage claims arising out of or in connection with this transaction.
20. Assignment. This letter shall not be transferred, assigned or sold by
the Borrower.
21. Applicable Law. This letter and the Loan documents, and the enforcement
thereof shall be governed by the laws of the State of Florida without
regards to principles of conflicts of laws.
22. Entire Agreement. The parties confirm that this letter contains their
complete understanding concerning this transaction as of the effective
date of this letter and that it supersedes all prior agreements between
the parties on this matter.
23. Time of Acceptance. This letter shall become null and void unless
accepted by you by signing a copy of this letter and returning the same
to the undersigned representative of the Lender not later than 5:00
P.M. on May 7, 1999.
24. Termination. The Lender may terminate its obligations under this letter
at any time prior to closing of the Loan upon:
24.1 the Borrowers and/or Guarantors failure to comply with the terms
of this letter or any reasonable requirements imposed upon the Borrower and/or
Guarantor by the Lender;
24.2 the Borrower and/or Guarantor making any statement or providing
any information to the Lender (whether oral or written) to obtain the Loan or in
connection with the Loan which is false or misleading;
24.3 the occurrence of any adverse change in the Borrowers and/or
Guarantors respective financial condition, as determined in the sole and
absolute discretion of the Lender;
6
<PAGE>
25. Waiver of Jury Trial. BY THE EXECUTION OF THIS COMMITMENT, THE LENDER
AND THE BORROWER AGREE TO WAIVE THE RIGHT TO JURY TRIAL IN ANY SUIT,
ACTION OR PROCEEDING BROUGHT DIRECTLY OR INDIRECTLY IN CONNECTION WITH
THIS LETTER AND ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS LETTER, OR
IN ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER WRITTEN
OR ORAL) OR ACTIONS OR OMISSIONS OF ANY PARTY TO THIS LETTER. BY THE
EXECUTION OF THIS LETTER, THEY ACKNOWLEDGE AND AGREE THAT (A) EACH
AGREEMENT, INSTRUMENT OR OTHER DOCUMENT TO BE EXECUTED AND DELIVERED BY
THE BORROWER, ANY GUARANTOR OR THE LENDER IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS LETTER SHALL CONTAIN PROVISIONS UNDER
WHICH THE PARTIES SHALL WAIVE THE RIGHT TO JURY TRIAL, (B) THAT THE
WAIVER OF JURY TRIAL IS A MATERIAL INDUCEMENT TO THE LENDER ISSUING
THIS LETTER, (C) THAT THE LENDER'S POLICIES REQUIRE THE WAIVER OF JURY
TRIAL PROVISIONS, AND (D) THAT NO OFFICER OF THE LENDER HAS THE
AUTHORITY TO MODIFY THE TERMS OF THE WAIVER.
Sincerely,
NORTHERN TRUST BANK OF FLORIDA, N.A.
By:_________________________________________
Steven L. Arbogast; Vice President
Agreed and Accepted the 30th day of April, 1999.
As to the Borrower:
Westmark Group Holdings, Inc.
By:________________________________________
Irving H. Bowen; Treasurer
As to the Guarantor:
Westmark Mortgage Corporation, Inc.
By:________________________________________
Irving H. Bowen; Treasurer
7
NORTHERN TRUST BANK OF FLORIDA, N.A.
PROMISSORY NOTE
50562853-01 Note Number
MASTER Boca Raton, Florida
$150,000.00 April 29, 1999
Maturity: April 28, 2000
FOR VALUE RECEIVED, the undersigned, and if more than one, each of them
jointly and severally (hereinafter individually and collectively called
"MAKER"), promises to pay to the order of Northern Trust Bank of Florida, N.A.
(hereinafter, together with any subsequent holder hereof, called the "BANK" or
"HOLDER"), at its office at 301 Yamato Road, Boca Raton, Florida 33431 or at
such other place as HOLDER may from time to time designate, the principal sum of
One Hundred Fifty Thousand Dollars and no/100 ($150,000.00) DOLLARS with
interest thereon from the date hereof at:
|X| An annual rate of interest equal to the Bank's Prime Rate (as
hereinafter defined) plus _______________ (____%) percent per annum.. "Prime
Rate" means the interest rate (but not necessarily the best or lowest rate
charged borrowing customers of BANK), published or announced by BANK from time
to time as its Prime Rate. The interest rate charged shall change with each
change in the BANK's Prime Rate, such interest rate to be adjusted on any day of
the month on which any change in said Prime Rate becomes effective; or
[ ] A fixed simple interest rate of ____________________ (____%)
percent per annum.
Principal shall be due and payable as follows (check one):
[ ] In _____ consecutive _________________ installments, commencing
_________________________________, 19____, each in the amount of
$_____________________, with a final principal payment in the amount of
$_____________________________________ being due and payable in full on
______________________, 19____.
[ ] ON DEMAND
[ ] ON DEMAND; however, if demand is not sooner made, then all
outstanding principal hereunder shall be due and payable in full on
______________________________________________, 19_____.
|X| On April 28, 2000.
[ ] Pursuant to the terms and conditions of that certain
_____________________________ dated _______________________,
executed by and between MAKER and BANK.
[ ] Other (describe)
Interest shall be due and payable as follows (check one):
|X| Monthly, commencing on May 29, 1999, computed on the outstanding
principal balance from time to time remaining, with all accrued and unpaid
interest being due and payable in full with the final principal payment due
hereunder.
[ ] Quarterly, commencing on ___________________________________,
19____, computed on the outstanding principal balance from time to time
remaining, with all accrued and unpaid interest being due and payable in full
with the final principal payment due hereunder.
[ ] On ________________________________________, 19_____.
[ ] Pursuant to the terms and conditions of that certain
___________________________________, dated _______________, executed by and
between MAKER and BANK.
[ ] Other (describe) _________________________________________________
_________________________________________________
If this Note is captioned "MASTER PROMISSORY NOTE" then, so long as no
Event of Default has occurred hereunder, MAKER may borrow, repay and reborrow up
to the principal amount of this Note.
Interest hereunder shall be calculated on the basis of a 360 day year
and shall be charged only on the sums advanced from the date of advance to the
date of repayment. MAKER hereof does not intend or expect to pay, nor does BANK
intend or expect to charge, accept or collect any interest which, when added to
any commitment fee or any other charge upon the principal, shall be in excess of
the highest lawful rate. Should acceleration, prepayment or any other charges
upon the principal or any portion thereof result in the computation or earning
of interest in excess of the highest lawful rate allowable under the law, then
any and all such excess is hereby waived and shall be applied against the
remaining principal balance. Without limiting the generality of the foregoing,
and notwithstanding anything to the contrary contained herein or otherwise, no
deposit of funds shall be required in connection with this loan in an amount
which will, when deducted from the principal amount outstanding hereunder, cause
the rate of interest hereunder to exceed the highest rate permitted by
applicable law. All payments received hereunder shall be applied first to
accrued interest and then to principal; however, in the event of any default
hereunder, the BANK may, in its sole discretion, and in such order as it may
choose, apply any payment to interest, principal, and/or lawful charges and
expenses then accrued.
Maker acknowledges that all accrued interest not paid when due shall be
deemed to be an addition to the principal balance of this Note and such amount,
together with any principal payment then due and unpaid, shall bear interest at
the contract rate of this Note from such due date to the earlier of the date
paid or to maturity of this Note, whether by its terms or acceleration and
thereafter at the Default Rate (as hereinafter defined). MAKER further agrees
that if any installment of principal or interest is not made within fifteen (15)
calendar days of its due date, BANK shall have the right to charge and collect
from MAKER a late charge equal to five (5%) percent of the amount of such
payment.
BANK's failure to collect or decision to waive delinquent interest or
any late charge shall not constitute a waiver of any subsequent right to collect
such delinquent interest and late charge.
If any payment of principal or interest or other sum due hereunder is
not made in full when due or if there occurs an Event of Default (as hereinafter
defined), the entire unpaid principal balance, together with, accrued interest
and all other sums due hereunder, shall at the option of the BANK become
immediately due and payable without notice. Failure or exercise the option shall
not constitute a waiver of the BANK's right to exercise such option. AFTER
MATURITY OF THIS NOTE, WHETHER BY THE TERMS HEREOF OR BY THE BANK EXERCISING ITS
RIGHTS TO ACCELERATE THIS NOTE, INTEREST SHALL ACCRUE ON THE PRINCIPAL BALANCE
OUTSTANDING AT THE HIGHEST LAWFUL RATE OF INTEREST BUT NOT IN EXCESS OF
TWENTY-FIVE PERCENT (25%) PER ANNUM (the "DEFAULT RATE").
As security, for the payment of this Note, and any renewals, extensions
or modifications hereof, and any other liabilities of the MAKER to the BANK,
however or whenever created, MAKER hereby grants to the BANK a security interest
in the following:
Blanket lien on business assets.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
including, all proceeds thereof and rights arising in connection therewith.
If "NONE" is inserted in this space, then this Note is secured only by the
property described in the next succeeding paragraph.
Additionally, as security for the payment of this Note, including any
renewals, extensions or modifications hereof as well as any other liabilities of
MAKER to BANK, however or whenever created, MAKER hereby pledges to BANK and
grants to BANK a security interest in any and all property of MAKER now or
hereafter delivered to or left in or coming into the possession, control or
custody of BANK, in any capacity whatsoever, including, without limitation,
cash, stock and other dividends, any balance or share of any deposit, trust or
agency account and all rights to subscribed for securities incident to,
declared, or granted in connection with such property, and property described in
collateral receipts or other documents signed or furnished by the MAKER, and any
and all replacements of any of the foregoing, whether or not in the possession
of BANK. All of the property securing MAKER's liabilities to the BANK will
hereafter be referred to as the "Collateral."
1
<PAGE>
The Collateral shall serve as security for all liabilities, whether
primary, secondary, direct, contingent, absolute, sole, joint or several, due or
to become due, now existing or hereafter acquired or created, of each MAKER
(including each MAKER and any other person executing this Note) to BANK, whether
such liabilities arise in the ordinary course of business or not. It is
expressly agreed that if the Collateral for this Note or any portion thereof is
real estate, all covenants, conditions and agreements contained in the mortgage
encumbering the real estate are hereby incorporated herein by reference and a
default thereunder is a default under this Note. It is further agreed that if a
separate security agreement is executed by MAKER in conjunction with this Note,
all covenants, conditions and agreements contained in the security agreement are
incorporated herein by reference and a default thereunder is a default under
this Note. The BANK may continue to hold any pledged property deposited
hereunder after the payment of this Note, if at the time of the payment and
discharge hereof any of the parties liable for the payment hereof shall be then
directly or contingently liable to the BANK as maker, endorser, surety or
guarantor of any other note, draft, bill of exchange, or other instrument, or
otherwise, and the BANK may thereafter exercise the rights with respect to said
pledged property granted herein even though this Note shall have been
surrendered to the MAKER.
Each MAKER jointly and severally covenants and agrees with BANK as
follows:
1. At any time and from time to time BANK may accept additions to,
releases, reductions, exchanges of or substitutions for the Collateral, as well
as payments on account of the loan evidenced by this Note or increases of such
loan or other loans which are secured in whole or in part by the Collateral,
without in any way altering, impairing, diminishing or affecting the provisions
of this Note or BANK's rights hereunder and with respect to the Collateral and
without in any way altering, impairing, diminishing or affecting the liabilities
of MAKER. BANK shall have no responsibility for ascertaining any maturities,
calls, conversions, exchanges, offers, tenders or similar matters relating to
any of the Collateral nor for informing the undersigned with respect to any
thereof. BANK shall not be bound to take any steps necessary to preserve any
rights in the Collateral against prior parties, and MAKER shall take all
necessary steps for such purposes. Neither BANK nor its nominee shall be
obligated to collect dividends or interest on or principal of any Collateral or
give any notice with respect to it.
2. BANK shall have, but shall not be limited to, the following rights,
each of which may be exercised at any time and from time to time whether or not
this Note is due: (a) to pledge or transfer this Note and the Collateral, and
thereafter be relieved of all duties and responsibilities and relieved from any
and all liability with respect to any pledged or transferred Collateral and any
pledgee or transferee shall for all purposes stand in the place of BANK
hereunder and have all the rights of BANK hereunder; (b) to transfer the whole
or any part of the pledged Collateral into the name of itself or its nominee;
(c) to notify the MAKER to make payment to BANK of any amounts due or to become
due on any Collateral and hold all payments received as additional Collateral
and upon an occurrence of an Event of Default apply it on the principal or
interest hereon or on any liabilities secured hereby; (d) to demand, sue for,
collect, or make any compromise or settlement it deems desirable with reference
to the Collateral; and (e) to take possession or control of any proceeds of the
Collateral.
3. If any one or more of the following Events of Default ("Events of
Default") shall occur for any reason whatsoever (and whether such occurrences
shall be voluntary or involuntary, or come about or be effected by operation of
law or pursuant to or in compliance with any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental
body), that is to say: (a) failure of MAKER to perform any agreement hereunder
or to pay in full, when due, any liability whatsoever to BANK or any installment
of principal or interest on this Note; (b) the death of MAKER; (c) the
Collateral or any portion thereof shall at any time decline in value or
otherwise become unsatisfactory to BANK; (d) BANK shall at any time deem itself
insecure; (e) MAKER shall (i) apply for or consent to the appointment of a
receiver; trustee in bankruptcy for benefit of creditors, or liquidator of it or
of any of its property; (ii) admit in writing its inability to pay its debts as
they mature or generally fail to pay its debts as they mature; (iii) make a
general assignment for the benefit of creditors; (iv) be adjudicated a bankrupt
or insolvent; (v) file a voluntary petition in bankruptcy, or a petition or an
answer seeking reorganization or an arrangement with creditors, or seeking to
take advantage of any bankruptcy, reorganization, insolvency, readjustment of
debt, dissolution or liquidation law or statute or an answer admitting an act of
bankruptcy alleged in a petition filed against it in any proceeding under any
such law; (vi) take any action for the purpose of affecting any of the
foregoing; or (vii) if any order, judgment or decree shall be entered against
MAKER by any court of competent jurisdiction, approving a petition seeking its
reorganization or appointing a receiver, trustee or liquidator of MAKER, or of
all or a substantial part of the assets of MAKER, and such order, judgment or
decree shall continue unstayed and in effect for a period of thirty (30)
calendar days from the date of entry thereof; (f) the entry of any judgment
against MAKER not otherwise provided for in (e)(vii) above; (g) the issuing of
any attachments or garnishment, or the filing of any lien, against the
Collateral or any property of MAKER; (h) the taking of possession of any
substantial part of the Collateral or property of MAKER at the instance of any
governmental authority; (i) the dissolution, merger, consolidation or
reorganization of MAKER; (j) failure of MAKER to remain in good standing under
the laws of its state of organization or failure to remain authorized to do
business in each jurisdiction where such authorization is required; (k) the
determination by BANK that a material adverse change has occurred in the
financial condition of MAKER from the conditions set forth in the most recent
financial statement of MAKER heretofore furnished to BANK, or from the condition
of MAKER as heretofore most recently disclosed to BANK in any manner; or that
any warranty, representation, certificate or statement of MAKER to BANK (whether
contained in this Note or not) proves untrue; (1) the further granting by MAKER
of a security interest in any of the Collateral without the written consent of
BANK or determination of a security interest in the Collateral or any portion
thereof which is not otherwise acceptable to BANK or which is superior to that
of BANK's; (m) failure to do all things necessary to preserve and maintain the
value and collectibility of the Collateral, including, but not limited to, the
payment of taxes and premiums on policies of insurance on the due date thereof
without the benefit of the grace period; (n) failure of MAKER, after request by
BANK, to furnish financial information or to permit inspection of the MAKER's
books and records, which failure shall continue uncured for ten (10) calendar
days after notice of such default from BANK to MAKER; (o) any guarantor shall
default upon its guaranty of this Note or if such guaranty ceases to be in full
force and effect or shall be declared to be null and void or the validity
thereof shall be contested by any guarantor of this Note; (p) the occurrence of
any default or event of default, or any event which might become such with
notice or the passage of time or both, or any similar event which requires the
prepayment by MAKER of borrowed money or the acceleration of the maturity
thereof; (q) any material adverse change in the financial condition of MAKER;
(r) the suspension or revocation of any permit or license, the absence of which
would have a material adverse effect on the business of MAKER; or (s) any
default under any mortgage, security agreement or any other document or
instrument executed by MAKER in connection with this Note or the Collateral.
Then, in every such Event of Default, BANK shall have all the remedies
of a creditor, mortgagee and secured party under the Uniform Commercial Code and
other laws of the State of Florida, and without limiting the generally of the
foregoing, BANK shall have the right, at its option, and without notice or
demand, to declare the entire amount of this Note remaining unpaid, and all
other liabilities of MAKER or any of such liabilities selected by BANK,
immediately due and payable. Additionally, upon the occurrence of an Event of
Default, BANK shall be entitled to setoff against this Note all money owed by
BANK in any capacity to MAKER, whether or not due, and also to setoff against
all other liabilities of MAKER to BANK all money owed by BANK in any capacity to
MAKER. Unless the Collateral is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market, BANK will give
MAKER reasonable notice of the time and place of any public sale thereof or of
the time after which a private sale will be held. The requirement of reasonable
notice shall be met if such notice is mailed, postage prepaid, to MAKER at the
address shown on the records of the BANK, at least seven (7) calendar days
before the time of the sale. Upon disposition of any Collateral after the
occurrence of any default hereunder, MAKER shall be and remain jointly and
severally liable for any deficiency, and BANK shall account to MAKER for any
surplus, but BANK shall have the right to apply all or any part of such surplus
(or to hold the same as a reserve) against any and all other liabilities of
MAKER to BANK.
4. No delay or omission on the part of BANK in exercising any right
hereunder shall operate as a waiver of such right or any right under this Note.
No waiver shall be binding on BANK, unless in a writing signed by an authorized
BANK officer, and then only to the extent specifically set forth therein.
5. MAKER hereby expressly consents to any and all extensions and
renewals, in whole or in part, and all delays in time or payment or other
performance which the BANK may grant or permit at any time and from time to time
without limitation, and without any notice to or further consent of MAKER. MAKER
gives the BANK full authority, without notice or consent, in BANK's sole
discretion to: (a) grant time, waivers and other indulgences in respect hereto;
(b) vary, exchange, release or discharge, wholly or partially, or delay in or
abstain from perfecting its security interest in and enforcing its rights
against any of the Collateral which the BANK now has or acquires after the date
hereof; (c) accept partial payments from MAKER; (d) release or discharge, wholly
or partially, MAKER, any guarantor or any person or entity liable for repayment
of the indebtedness evidenced by this Note (hereinafter individually and
collectively called OBLIGOR); and (e) make a settlement with any OBLIGOR for
less than the aggregate amount of this Note and thereafter release such OBLIGOR
from liability hereunder without releasing any other OBLIGOR. No action or
inaction by BANK shall discharge any party liable for the payment hereof, and
the liability of all such parties shall continue until actual payment is
received by the BANK. The release or discharge of any OBLIGOR shall not
discharge any other OBLIGOR, and the release or impairment of Collateral, the
taking of a renewal note for part or all of the indebtedness hereunder or a
change in the interest rate shall not discharge any OBLIGOR. MAKER further
waives any defense to enforcement of this Note because of BANK's failure to
preserve, perfect or continue perfection of any security interest now or
hereafter held by BANK, or BANK's failure to claim or make any claim in any
insolvency proceeding involving MAKER or any OBLIGOR.
6. The BANK is hereby authorized by MAKER without notice to any of them
to date this Note as of the day when the first disbursement of the loan
evidenced hereby is made and to fill in any blank spaces herein to conform to
the terms upon which the loan evidenced hereby is made.
7. All payments of principal and interest on this Note are payable in
lawful money of the United States of America in immediately available funds
without deduction for or on account of any present or future taxes, duties or
other charges levied or imposed on this Note or the proceeds, BANK or MAKER
hereof by any government, or any instrumentality, authority or political
subdivision thereof. MAKER shall receive immediate credit on payments received
during BANK's normal business hours if made in immediately available funds;
otherwise said payments shall be credited after clearance through normal banking
channels. If any payment required to be made pursuant to this Note is not
received on the due date, BANK shall have the right, at its election, to charge
any of MAKER's accounts at the BANK, with the amount of such payment subject to
availability of collected balances. MAKER agrees upon the request of BANK to pay
all such taxes, duties and other charges in addition to principal and interest
on this Note including all documentary stamp taxes and intangible taxes as are
from time to time payable or assessed on this Note, but exclusive of United
States income taxes and Florida income taxes.
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8. The BANK's rights hereunder and under nay other security agreement,
mortgage or other writing or under applicable law shall be cumulative. BANK at
its option may make subsequent advances evidenced by this Note, in which event
this Note shall remain valid and enforceable notwithstanding partial or total
payment, re-borrowing, or repayment of sums hereunder.
9. Each MAKER shall furnish BANK such financial information as BANK may
from time to time reasonably request and shall permit reasonable inspection of
it's books and records during regular business hours.
10. MAKER hereby waives any plea of jurisdiction or revenue as not
being a resident of the County, Florida, where suit is instituted and hereby
specifically authorizes any action brought upon the enforcement of this Note by
BANK to be instituted and prosecuted in either the Circuit Court of any County,
in the State of Florida, or any United States District Court situated in the
State of Florida, at the election of BANK. Except as otherwise specifically
provided with respect to the calculation of interest, this Note shall be
governed as to validity, interpretation, construction, effect and all other
respects by the laws and decisions of the State of Florida. Presentment, demand,
protest and notice of dishonor, are hereby waived by MAKER. MAKER, jointly and
severally, promises and agrees to pay all costs of collection of this Note
including attorneys' fees and costs of the greater of (a) ten (10%) percent of
the principal and accrued interest due under this Note if the BANK proceeds to
collect this Note through the services of an attorney at law or by legal action,
plus reasonable attorneys' fees incurred in appellate proceedings, or (b)
reasonable attorneys' fees plus costs incurred in enforcing this Note and
recovery of all amounts owing by MAKER to BANK, whether or not suit is
instituted including in trial, on appeal, in bankruptcy proceedings or
otherwise.
11. All nouns and pronouns contained in this instrument shall mean and
include the plural as well as the singular, and the masculine, feminine, and
neuter gender whenever and wherever the contest so admits or requires.
12. BANK AND MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE AND ANY
AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
EITHER PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK MAKING THE
LOAN OR EXTENSION OF CREDIT EVIDENCED BY THIS NOTE.
13. ADDITIONAL PROVISIONS:
WESTMARK GROUP HOLDINGS, INC.
Address: 8000 North Federal Highway
---------------------------
Boca Raton, FL 33487
---------------------------
__________________________________
---------------------------
By: Irving H. Bowen, its Treasurer
Amount of Documentary Stamps
Required on this Note: $ 525.00
3
Guaranty
THIS GUARANTY ("Guaranty"), dated 04/29/99, is made by Westmark Mortgage
Corporation, Florida, a ________________________ (hereinafter referred to as
"Guarantor"), in favor of Northern Trust Bank of Florida, N.A., a national
banking association (hereinafter referred to as "Bank").
Witnesseth
WHEREAS, Bank has agreed to make certain loans and advances (collectively and
individually, the "Loan") to Westmark Group Holdings, Inc. (the "Borrower"),
pursuant to the terms of certain loan documents of even date herewith
(collectively, the "Agreement") between the Borrower and Bank. Unless otherwise
stated, all terms defined in or referenced by the Agreement have the same
meaning herein. WHEREAS, in order to induce Bank to enter into the aforesaid
Agreement and grant Borrower the Loan on the terms set forth in the Agreement,
Guarantor has agreed to make this Guaranty.
NOW, THEREFORE, in consideration of the foregoing, Guarantor hereby agrees
as follows:
1. Guaranty.
Guarantor hereby absolutely and unconditionally guarantees the
punctual payment when due, whether at stated maturity, by acceleration
or otherwise, of the agreement unpaid principal amount of the Loan
outstanding from time to time, together with all accrued and unpaid
interest on the Loan, and all other amounts due Bank under the
Agreement and the other ancillary documents provided for therein, and
any and all extensions, renewals or modifications of any of them,
together with any and all other indebtedness of Borrower to Bank,
howsoever or whenever incurred, up to principal sum of One Hundred**
Dollars ($150,000) [unlimited if left blank] at any one time
outstanding, together with accrued and unpaid interest thereon. In
addition, Guarantor shall pay any and all reasonable fees, costs and
expenses incurred by Bank (including attorneys' fees incurred by Bank,
at any time prior or subsequent to default, whether litigation is
involved or not and, if involved, whether at the trial or appellate
levels or in pre or post-judgment or bankruptcy proceedings), in
enforcing or realizing upon the obligations of Guarantor hereunder.
Such principal, interest and other amounts are hereinafter referred to
collectively as the "Obligations." The Obligations, Agreement, and
any instrument, document or agreement, express or implied, which has
been or may hereafter be made or entered into by Borrower in reference
to the Obligations, and any instrument, document or agreement, express
or implied, including this Guaranty, which has been or may hereafter
be made or entered into by Guarantor in reference to the Obligations,
shall all be hereinafter collectively referred to as the "Loan Terms."
2. Guaranty Absolute.
Guarantor guarantees that the Obligations will be paid strictly in
accordance with the Loan Terms, regardless of any law, regulation,
order or judgment now or hereafter in effect in any jurisdiction
affecting any of the Loan Terms or the rights of Bank with respect
thereto. The liability of Guarantor under this Guaranty shall
continue and be absolute and unconditional irrespective of:
(a) Any lack of validity or enforceability of any of the Loan
Terms;
(b) Any change in the time, manner or place of payment, or in any
other term, including the applicable rate of interest, of the
Loan, all or any of the Loan Terms, or any other renewal,
extension, amendment, modification or waiver of or any consent to
departure form any of the Loan Terms;
(c) Any act or omission of Bank of any nature whatsoever,
excluding any willful or wanton misconduct or gross negligence on
the part of Bank;
(d) With respect to the Guarantor, Borrower, or any other person
or entity liable in respect of the Loan, any failure to obtain
required authorization by all necessary corporate or other action
relating to the execution, delivery, or performance of any of the
Loan Terms, or to any violation of any provision of any of the
articles of incorporation, by-laws or any other document,
instrument or agreement occasioned by the execution, delivery, or
performance of any of the Loan Terms;
(e) Any release, amendment, waiver, modification, extension or
renewal of or consent to departure from or forbearance or any
other action or inaction under or in respect of this Guaranty or
any other guaranty of the Loan;
(f) Any exchange, release, forbearance or surrender of or any
other action or inaction with respect to any collateral at any
time and from time to time now or hereafter securing the Loan or
the liability to Bank of the Borrower, the Guarantor of any other
person or entity in respect of the Loan or any failure to perfect
or continue as perfected any security interest or other lien with
respect to any such collateral, or any loss or destruction of any
such collateral, or any matter impairing the value of such
collateral as security for the Loan, the liability to Bank of the
Guarantor, or any other person or entity, in respect of all or
any of the Obligations or Loan Terms; or
(g) Any other circumstance or matter of any nature whatsoever
that might otherwise constitute a defense available to, or a
discharge of, Borrower, Guarantor or any other person or entity
liable to Bank in respect of the Loan. This Guaranty shall
continue to be effective or shall be reinstated, as the case may
be, if any payment of the Loan is rescinded or must otherwise be
returned by Bank upon the insolvency, bankruptcy, or
reorganization of any person or entity or for any reason
whatsoever, all as though such payment had not been made. The
obligations of Guarantor hereunder shall be absolute and primary,
shall be complete and binding as to Guarantor upon its execution
of this Guaranty, shall be subject to no conditions precedent,
and shall be independent of and cumulative to any other of the
Loan Terms, and Bank may exercise any of its rights and remedies
under this Guaranty, any other of the Loan Terms or otherwise
singly or concurrently.
3. Waiver; No Duties
Guarantor hereby waives promptness, diligence, notice of acceptance and any
other notice of any nature whatsoever with respect to any of the Loan Terms.
Bank shall not be obligated to exhaust any right or take any action against
Borrower, or any other person or entity, or any collateral for the Loan, prior
to the enforcement of its rights hereunder. Bank shall not be required to obtain
the consent of Guarantor with respect to any matter.
(b) To pay and discharge promptly, all taxes, assessments and
governmental charges or levies imposed upon it or in respect of
its property, before the same shall become in default as well as
all lawful claims for labor, materials and supplies or other
which, if unpaid, might become a lien or charge upon such
properties or any part thereof; provided, however, that any such
tax, assessment, charge, levy or claim shall not be required to
be paid or discharged so long as the validity thereof shall be
contested in good faith by appropriate proceedings diligently
pursued;
(c) To give prompt written notice to Bank of all Events of
Default under any of the terms and provisions of this Guaranty,
litigation and of any other matter which has resulted in, or
might result in, a material adverse change in the financial
condition of Guarantor;
(d) To furnish to Bank, as and when requested by Bank, such
financial statements, reports and information as Bank may from
time to time require, such financial statements, reports and
information to be in form acceptable to Bank; and
(e) To comply with the requirements of all applicable laws,
rules, regulations, and orders of governmental authorities except
to the extent that the validity thereof shall be contested in
good faith by appropriate proceedings diligently pursued.
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4. Waiver of Subrogation.
Guarantor hereby waives any claims, right or remedy which Guarantor
may now have or hereafter acquire against Borrower that arises
hereunder or from the performance by Guarantor hereunder including,
without limitation, any claim, remedy or right of subrogation,
reimbursement, exoneration, contribution, indemnification or
participation in any claim, right or remedy of Bank against Borrower
or any security which Bank has or hereafter acquires whether or not
such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise.
5. Warranties.
Guarantor makes the following representations and warranties to Bank:
(a) Guarantor has the right, power, legal capacity and
authority to own its assets and properties, and to carry on its
business as now being conducted in every jurisdiction where it
is conducting its business, and has power and authority to
execute and perform this Guaranty;
(b) The execution and performance by Guarantor of this Guaranty
has been duly authorized by all requisite actions and does not
require any consent or approval of any other person, including,
without limitation, the creditors of the Guarantor;
(c) Neither the execution and delivery of this Guaranty nor
fulfillment of or compliance with the terms and conditions
hereof will violate or be in conflict with, result in a breach
of, or constitute a default under, any indenture, agreement or
other instrument to which Guarantor is a party or by which
Guarantor or any of its assets or properties are bound, or any
order, writ, injunction or decree of any court or governmental
institution;
(d) There are no actions, suits or proceedings pending or, to
the knowledge of Guarantor, threatened against or adversely
affecting it at law or in equity or before or by a governmental
agency or instrumentality, domestic or foreign, which involve
any of the transactions herein contemplated, or the possibility
of any judgment or liability which may result in any material
and adverse change in the business, operations, prospects,
properties or assets, or in the condition, financial or
otherwise, of Guarantor. Guarantor is not in default with
respect to any judgment, order, writ, injunction, decree, rule
or regulation of any court, or federal, state, municipal or
other governmental department;
(e) Guarantor has heretofore furnished to Bank financial
statements and other financial information which, taken as a
whole, are correct and complete, and fairly present the
financial condition and the results of the operation of
Guarantor as of the dates and for the periods indicated, and
said financial statements show all known liabilities and all
contingent material liabilities as of the dates thereof, and
have been prepared in accordance with generally accepted
accounting principles consistently applied. Since the date of
the furnishing of the most recent financial statements, there
has been no material adverse change in the financial condition
of Guarantor;
(f) Guarantor has filed, or caused to be filed, all federal and
state tax returns which are required to be filed, and has paid
or caused to be paid, all taxes as shown on said returns or on
any assessment received by it and not being contested in good
faith, to the extent that such taxes have become due;
(g) Except as are reflected on the most recent financial
statements, Guarantor is not a party to any agreement or
instrument materially and adversely affecting its business,
properties or assets, operations or condition, financial or
otherwise;
(h) Guarantor has good and marketable title to all the property
and assets reflected on its most recent financial statement
furnished to Bank, except such as have been disposed of in the
ordinary course of business since the date of said financial
statement, and all such property and assets are free and clear
of any liens, except liens for taxes not yet due, liens on
personal or real property as reflected in the most recent
audited financial statement and those liens, if any, on
properties acquired subsequent to said statement until the date
of this Guaranty;
(i) This Guaranty is a legal, valid and binding obligation of
Guarantor, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting the rights of creditors
generally; and
(j) Guarantor is not in default in any material respect under,
or with respect to, any contract, agreement or other instrument
to which it is a party or by which its assets or properties may
be bound, and no default or Event of Default has occurred and
is continuing.
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<PAGE>
6. Affirmative Covenants.
Guarantor covenants and agrees as follows:
(a) To maintain adequate insurance for its insurable assets and or properties at
all times with financially sound and reputable insurers, in amounts insurable
value thereof, and such other insurance to such extent and against such risks,
including flood, hazard, liability, comprehensive, and property damage
insurance, and other risks in amounts satisfactory to Bank. Upon request, copies
of all insurance policies shall be delivered to Bank; or any other person or
entity. The remedies provided herein and in the other documents executed
contemporaneously herewith and referred to herein shall be cumulative, may be
exercised from time to time, singularly or concurrently or in any combination,
without Bank being obligated to exercise any such right in any other
circumstance, and are not exclusive of any remedies provided by law.
7. Negative Covenant.
Guarantor covenants and agrees with Bank that ,from date hereof and so
long as the Obligations shall remain unpaid ,unless Bank shall
otherwise consent in writing, it will not commit or do, or fail to
commit or do, any act or thing which would constitute a material event
of default under any of the terms of provisions of any other
agreement, contract, indenture, document or instrument executed, or to
be executed by it including, without limitation, agreements,
contracts, indentures, documents or instruments by and between
Guarantor and Bank, except those that may be contested in good faith
or are covered by insurance, and would not, if settled unfavorably,
materially and adversely affect is financial condition.
8. Events of Default.
Default in the due and punctual observance or performance of any of
the terms, covenants, or agreements contained in this Guaranty and the
happening of any of the Events of Default set forth in the Loan Terms
shall constitute Events of Default under this Guaranty.
9. Notices.
All notices, requests and other communications pursuant to this
Guaranty, shall be sent by registered or certified first class mail,
postage prepaid, addressed as follows:
As to Bank: Northern Trust Bank of Florida, N.A.
301 Yamato Road
Boca Raton, Florida 33431
Attention: S. Arbogast
As to Guarantor: Westmark Mortgage Corporation
8000 N. Federal Highway
Boca Raton, Florida 33487
Attention: Irving H. Bowen
or to any such other address as any party hereto shall designate in a
written notice to the other party hereto. Any notice addressed and
mailed shall be deemed to have been given upon mailing by certified or
registered mail, return receipt requested to the respective parties as
set forth above.
10. No Waiver; Cumulative Remedies.
Bank may, at any time and from time to time, waive or not insist on
strict compliance with any one or more of the provisions contained in
any document relating to this Guaranty, but any such waiver or
non-insistence shall be deemed to be made pursuant to the terms of
said document and not in modification thereof. Any waiver or
non-insistence in any instance or under any particular circumstance
shall not be considered a waiver or non-insistence of such provision
in any other instance or any other circumstance, or as creating a
requirement that Bank must, as a result of a previous waiver or
non-insistence, thereafter give notice to Borrower, Guarantor, or any
other person or entity that it does not intend to give a further
waiver or not insist upon strict performance of a previously waived or
not insisted upon provision before Bank can exercise any right or
remedies under any document or before any events of default can occur,
whether occasioned by the provision previously waived or not insisted
upon or otherwise, or as establishing a course of dealing for
interpreting the expressions and other conduct between Bank and
Borrower, Guarantor
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11. Continuing Guaranty; Transfer.
This Guaranty is a continuing guaranty and shall:
(a) Remain in full force and effect until the Loan has been
paid in full and written notice of discharge has been sent by
Bank to Guarantor stating that the Guarantor shall no longer be
liable hereunder.
(b) Be binding upon Guarantor, its successors and assigns, each
of whom shall be jointly and severally liable hereunder;
provided, however, Guarantor may not assign any of its rights
and obligations hereunder without the written consent of Bank;
and
(c) Inure to the benefit of and be enforceable by Bank and its
successors, transferees, participants, and assigns. Without
limiting the generality of this clause, Bank may assign or
otherwise transfer the Loan and/or any of the Bank's rights and
benefits under the Loan Terms to any other person or entity, and
such other person or entity shall thereupon become vested with
all the rights in respect thereof granted to Bank herein or
otherwise.
12. Set-Off.
After an Event of Default, Bank shall have the right, at any time
and from time to time, without notice to the Guarantor (any such
notice being expressly waived by the Guarantor), to set-off and
apply any funds of Guarantor held in any accounts maintained with
Bank by Guarantor in any capacity including, without limitation, any
and all deposits (general or special, time or demand, investment,
provisional or final) at any time held and any other indebtedness at
any time owing by Bank to or for the credit or account of Guarantor
against the Loan which then shall be due and payable (by
acceleration or otherwise), whether or not Bank shall have made any
demand under the Agreement. Bank agrees promptly to notify the
Guarantor after any such set-off and application. The rights of
Bank under this paragraph are in addition to any other rights and
remedies which Bank may have under this Guaranty or otherwise.
13. Governing Law
This Guaranty shall be governed by, and construed in accordance
with, the laws of the State of Florida without regard to principles
of conflict of laws. Guarantor hereby waives any plea of
jurisdiction or venue as not having its principal residence in Palm
Beach County, Florida and hereby specifically authorizes any action
brought by Bank upon this Guaranty to be instituted and prosecuted
in either the Circuit Court of Palm Beach County, Florida or in the
United States District Court for the Southern District of Florida,
at the election of Bank.
14. Headings.
Paragraph headings in this Guaranty are included herein for
convenience of reference only and shall not constitute a part of
this Guaranty for any other purpose.
15. Guarantor.
If more than one party shall execute this Guaranty the term
"Guarantor" shall mean all parties signing this Agreement, and each
of them, and all such parties shall be jointly and severally
obligated and liable hereunder. The singular pronoun, when used
herein, shall include the plural and the neuter shall include the
plural and the neuter shall include masculine and feminine. If this
Guaranty is not dated when executed by the Guarantor, the Bank is
authorized, without notice to the Guarantor, to date this Guaranty.
This Guaranty shall become effective as of the date of this
Guaranty.
16. Jury Waiver
GUARANTOR BY ITS EXECUTION OF THIS GUARANTY AND BANK BY ITS
ACCEPTANCE OF THIS GUARANTY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT EITHER OR ANY OF THEM MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTY, THE LOAN TERMS,
ANY DOCUMENT OR INSTRUMENT CONTEMPLATED TO BE EXECUTED IN
CONJUNCTION HEREWITH OR THEREWITH, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR BANK
ENTERING INTO THE LOAN TERMS REFERENCED HEREIN.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed and
delivered on the date and in the year first above written.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Irving H. Bowen
STATE OF FLORIDA )
) ss.:
COUNTY OF PALM BEACH )
BEFORE ME, the undersigned authority, personally appeared
_____________________________________, as ________________________ of
_____________, who first being duly sworn, acknowledged before me that he/she
executed the foregoing instrument for the purposes therein expressed on behalf
of said ____________________________. He/She is personally known to me or has
presented _______________________________ as identification. WITNESS my hand and
official seal in the county and state aforesaid this _____ day of
______________________, 19_____.
NOTARY PUBLIC, State of Florida
at Large
Print Name:____________________
Commission No.:________________
My Commission Expires:
[Seal]
</TABLE>
SECURITY AGREEMENT
(Corporate, Partnership, or Business Purpose)
This Agreement, dated as of April 29, 1999, is made by Westmark Group Holdings,
Inc., [a corporation organized or formed under the laws of Florida] (hereafter,
whether one or more, "Debtor") in favor of Northern Trust Bank of Florida, N.A.,
a national banking association ("Secured Party") with its main banking office at
700 Brickell Avenue, Miami, Florida 33131.
For valuable consideration, Debtor agrees as follows:
1. Definitions. As used in this Agreement:
(a) Unless otherwise defined herein, all terms that are defined in the
Uniform Commercial Code of Florida shall have the same meanings herein as
in such Code.
(b) "Collateral" means any and all property of Debtor in which Secured
Party now has, by this Agreement acquires, or hereafter acquires a security
interest, including without limitation the property described in Section 2
hereof.
(c) "Guarantor" means any person or entity, or any persons or entities
severally, now or hereafter guarantying payment or collection of all or any
part of the Liabilities (as hereinafter defined).
(d) "Prime Rate" means that floating rate of interest per year announced
from time to time by Secured Party called its prime rate, which at any time
may not be the lowest rate charged by Secured Party.
2. Security Interest. Debtor hereby grants to Secured Party a continuing
security interest in, and assigns and transfers to Secured Party, the
following property or types of property now owned by Debtor or hereafter
created or acquired by Debtor, wherever located:
(a) Accounts (including without limitation all rights to payment for
services or the Inventory, however arising), leases, chattel paper,
contract rights, instruments, life insurance policies, and documents;
(b) General intangibles (including without limitation inventions, designs,
patents, patent applications, trademarks, trade names, copyrights,
licenses, leasehold interests, tax refund claims, guaranty claims, and
security interests or other security held by Debtor to secure accounts);
(c) Inventory, including without limitation returned and repossessed goods,
raw materials, and work in progress (the "Inventory");
(d) Goods (other than Inventory), equipment, vehicles, and fixtures,
together with accessions thereto and replacement parts therefor, but
excluding property used exclusively for personal, household, or family use;
(e) All monies, accounts, deposits, and property now or at any time
hereafter in the possession or under the control of Secured Party or its
bailee;
(f) All books and records, including without limitation customer lists,
credit files, computer programs, printouts, and other materials and
records, pertaining to any of the foregoing;
(g) All documents of title evidencing or issued with respect to any of the
foregoing; and
(h) All proceeds and products of all of the foregoing, including without
limitation proceeds of insurance policies insuring the foregoing.
3. Liabilities. The Collateral shall secure the payment and performance of the
following, which are acknowledged by Debtor to be the obligations of Debtor
(the "Liabilities"):
(a) All obligations and liabilities of Debtor (excluding those incurred
solely for personal, household, or family use or with respect to credit
cards) whether now existing or hereafter arising and whether or not
contemplated on the date of this Agreement (i) evidenced by and under all
promissory notes (including all renewals, replacements, and extensions
thereof and interest thereon) executed and delivered by Debtor to Secured
Party, and (ii) under any loan or other agreements (including without
limitation this Agreement) between Debtor and Secured Party; and
(b) All other obligations and liabilities of Debtor to Secured Party,
howsoever created, whether direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising, including without
limitation all liabilities and obligations arising in connection with
future advances by Secured Party and any letters of credit issued by
Secured Party for the account of Debtor.
4. Warranties of Debtor. Debtor warrants and represents that:
(a) Debtor has the legal capacity and corporate or partnership power (if
applicable) to execute, deliver, and perform this Agreement and any other
documents executed or to be executed in connection herewith; such actions
have been duly authorized (if applicable) and do not and will not
contravene or conflict with any provisions of law or any agreement or
instrument affecting Debtor or its property; Debtor does not do business
under any name except as shown above.
(b) No financing statement, mortgage, notice of judgment, or any similar
instrument (unless filed on behalf of Secured Party) covering any of the
Collateral is on file in any public office.
(c) Debtor is the lawful owner of all Collateral, free and clear of all
liens, pledges, charges, mortgages, and claims other than the security
interest hereunder, except liens for current taxes not delinquent.
(d) All Inventory is located at Debtor's primary place of business set
forth under Debtor's signature hereto, and is not in transit, except for
goods covered by negotiable warehouse receipts that have been delivered to
Secured Party or as promptly disclosed to Secured Party from time to time
in writing. All Inventory is of good and merchantable quality and free from
any defects that would affect the market value of such Inventory.
(e) All accounts receivable of Debtor are genuine, are in all respects what
they purport to be, are not evidenced by a judgment, and represent
undisputed, bona fide transactions completed or to be completed in
accordance with the terms and conditions of any document related thereto;
none of the Collateral has been sold or pledged to any other person or
entity; and Debtor has no knowledge of any fact or circumstance which would
impair the validity or collectibility of the Collateral listed in Section
2(a), (b), and (e) of this Agreement.
(f) Debtor (and each general partner of Debtor) has filed or caused to be
filed all federal, state, and local tax returns that are required to be
filed, and has paid or has caused to be paid all taxes including any taxes
shown on such returns or on any assessment received by them to the extent
that such taxes have become due.
5. Covenants of Debtor. Debtor agrees that until payment in full of the
Liabilities, it will:
(a) Provide and maintain insurance with respect to the Collateral, the
operation of Debtor's business, and certain partners, employees, or
officers of Debtor as required by Secured Party from time to time; all such
insurance shall be in such amounts and against such risks as shall be
satisfactory in all respects to Secured Party, with Secured Party named as
additional insured and loss payee;
(b) Defend the Collateral against the claims and demands of all persons
other than Secured Party and promptly pay all taxes, assessments, and
charges upon the Collateral, and not sign (or permit to be signed) any
financing statements or other documents creating or perfecting a lien upon
or security interest in any of the Collateral except in favor of Secured
Party, or otherwise create, suffer, or permit to exist any liens or
security interests upon any Collateral other than in favor of Secured
Party, except tax liens, provided that such liens are removed before
related taxes become delinquent;
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<PAGE>
(c) Execute such financing statements and other documents (and pay the cost
of filing and recording the same in all public offices deemed necessary by
Secured Party) and do such other acts as Secured Party may request to
establish and maintain a valid and perfected security interest in the
Collateral free and clear of all other liens and claims;
(d) Deliver to Secured Party any certificate or other documents of title
representing or issued with respect to any of the Collateral, with Secured
Party's security interest and lien endorsed thereon, and record such
certificates or documents with all appropriate regulatory agencies;
(e) Furnish to Secured Party, immediately upon the request of Secured
Party, any evidence of ownership of the Collateral, including without
limitation bills of sale, paid invoices, certificates of title, or
applications for title;
(f) Keep at its office at the address set forth under its signature hereto
its records concerning the Collateral, which records shall be of such
character as will enable Secured Party to determine at any time the status
of the Collateral; furnish to Secured Party such information concerning
Debtor, the Collateral, and the account debtors as Secured Party may from
time to time reasonably request; and permit Secured Party form time to time
to inspect the Collateral and to inspect, audit, and make copies of, and
extracts from, all records and all other papers in the possession of Debtor
pertaining to the Collateral and the account debtors. Secured Party shall
have the right at any time or times to make direct verification with the
account debtors of any and all of the accounts;
(g) Keep and maintain in good operating condition and repair and make all
necessary replacements and renewals to, the Collateral listed in Section
2(d) of this Agreement so that the value and operating efficiency thereof
shall at all times be maintained and preserved, and keep such Collateral
only at the address set forth under its signature hereto;
(h) Make appropriate entries upon its financial statements and its books
and records disclosing Secured Party's security interest in the Collateral;
(i) Provide to Secured Party such financial statements of Debtor and any
general partner of Debtor (audited, if requested by Secured Party) and
information from time to time as Secured Party shall reasonably request;
(j) If at any time any of the Collateral shall be or become evidenced by
any instrument, note, or other document, immediately deliver such
instrument, note, or document to Secured Party, endorsed as requested by
Secured Party;
(k) Immediately notify Secured Party of any material loss or depreciation
in the value of the Collateral; and
(l) Except as permitted by Section 6, not sell, transfer, or otherwise
dispose of any Collateral without Secured Party's prior written consent.
6. Use of the Inventory. Until notice to the contrary is given by Secured
Party, Debtor may use, consume, and sell Inventory in carrying on its
business in the ordinary course of business substantially in the same
manner as now conducted, but a sale in the ordinary course of business
shall not include any transfer or sale in satisfaction, partial or
complete, of a debt owed by Debtor or any general partner of Debtor.
7. Collections.
(a) Until notice to the contrary is given by Secured Party, Debtor (i)
shall collect the accounts for Secured Party at Debtor's own expense, and
(ii) may grant, in the ordinary course of business, to any party obligated
on any of the Collateral, any rebate, refund, or allowance to which such
party may be lawfully entitled and accept in connection therewith the
return of any goods the sale or lease of which shall have given rise to
such accounts.
(b) At any time and from time to time, whether before or after the
occurrence of an Event of Default, Secured Party, at Debtor's expense, may
or, upon request of Secured Party, Debtor shall, notify any account debtors
of the existence of this Agreement and direct such account debtors to pay
directly to Secured Party the amounts due or to become due from such
account debtors. Each account debtor so notified and directed may accept
the receipt of Secured Party for any such payment as a full release of any
amounts so paid.
(c) Secured Party may enforce collection of any or all of the Collateral by
suit or otherwise, and surrender, release, or exchange all or any part
thereof, or compromise or extend or renew for any period (whether or not
longer than the original period) any indebtedness thereunder.
(d) Secured Party at any time may, and upon director of Debtor or upon the
happening of an Event of Default shall, apply all payments received from
account debtors to the Liabilities when due (whether by acceleration or
otherwise) and may credit any balance after such payment to the account of
Debtor.
8. Warranty--Future. The request or application by Debtor for any loan or
extension of credit by Secured Party shall be a representation and warranty
as of the date of such request or application that: (a) no Event of
Default, and no event that would become an Event of Default upon the giving
of notice or passage of time or both has occurred or is continuing as of
such date; and (b) its representations and warranties herein are true and
correct as of such date as though made on such date.
9. Events of Default. The occurrence of any of the following shall constitute
an "Event of Default" under this Agreement.
(a) Failure to pay, when and as due or demanded, any of the Liabilities, or
failure to comply with or perform any agreement or covenant of Debtor
contained herein; or
(b) Any default, event of default, or similar event shall occur or continue
under any instrument, document, note, agreement, or guaranty delivered to
Secured Party in connection with the Liabilities, or any such instrument,
document, note, agreement, or guaranty shall not be, or shall cease to be,
enforceable in accordance with its terms; or
(c) There shall occur any default or event of default, or any event that
might become such with notice or the passage of time or both, or any
similar event, or any event that requires the prepayment of borrowed money
or the acceleration of the maturity thereof, under the terms of any
evidence of indebtedness or other agreement issued or assumed or entered
into by Debtor, any subsidiary, any general partner of Debtor, or any
Guarantor, or under the terms of any indenture, agreement, or instrument
under which any such evidence of indebtedness or other agreement is issued,
assumed, secured, or guaranteed, and such event shall continue beyond any
applicable period of grace; or
(d) Any representation, warranty, schedule, certificate, financial
statement, report, notice, or other writing furnished by or on behalf of
Debtor or any general partner of Debtor to Secured Party is false or
misleading in any material respect on the date as of which the facts
therein set forth are stated or certified; or
2
<PAGE>
(e) Any reportable event shall occur under the Employee Retirement Income
Security Act of 1974, as amended, in respect of any benefit plan maintained
for employees of Debtor, any subsidiary, any partner of Debtor, or any
Guarantor; or
(f) Any guarantee of or pledge of collateral security for any of the
Liabilities shall be repudiated or become unenforceable or incapable of
performance; or
(g) Debtor or any corporate general partner of Debtor shall fail to
maintain its existence in good standing in its state of inassociation or
formation or shall fail to be authorized, licensed, or qualified to do
business in each jurisdiction where necessary because of the nature of its
business or properties; or
(h) Debtor, any general partner of Debtor, or any Guarantor shall die,
become incompetent, dissolve, liquidate, merge, consolidate, or cease to be
in existence for any reason, or any general partner of Debtor shall
withdraw or notify any partner of Debtor of its or his intention to
withdraw as a partner (or to become a limited partner) of Debtor; or any
general or limited partner of Debtor shall fail to make any contribution
required by the partnership agreement of Debtor as and when due under such
agreement; or
(i) Any person or entity presently not in control of Debtor or any
corporate general partner of Debtor shall obtain control directly or
indirectly of Debtor, whether by purchase or gift of stock or assets, by
contract, or otherwise; or
(j) Any proceeding (judicial or administrative) shall be commenced against
Debtor, any subsidiary, any general partner of Debtor, or any Guarantor, or
with respect to any assets of Debtor, any subsidiary, any general partner
of Debtor, or any Guarantor which shall threaten to have a material and
adverse effect on the future operations of Debtor, any subsidiary, any
general partner of Debtor, or any Guarantor, or a final judgment in excess
of $5,000 shall be entered in any suit or action commenced against Debtor,
any subsidiary, any general partner of Debtor, or any Guarantor; or
(k) Debtor shall grant or any person shall obtain a security interest in
any of the Collateral; Debtor or any other person shall perfect (or attempt
to perfect) such a security interest; a court shall determine that Secured
Party does not have a first-priority security interest in any of the
Collateral enforceable in accordance with the terms hereof; or any notice
of a federal tax lien against Debtor or any general partner of Debtor shall
be filed with any public recorder; or
(l) There shall be any material loss or depreciation in the value of the
Collateral for any reason, or Secured Party shall otherwise reasonably deem
itself insecure; or
(m) Any bankruptcy, insolvency, reorganization, arrangement, readjustment,
liquidation, dissolution, or similar proceeding, domestic or foreign, is
instituted by or against Debtor, any subsidiary, any general partner of
Debtor, or any Guarantor; or Debtor, any subsidiary, any general partner of
Debtor, or any Guarantor shall take any steps toward, or to authorize, such
a proceeding; or
(n) Debtor, any subsidiary, any general partner of Debtor, or any Guarantor
shall become insolvent, generally shall fail or be unable to pay its debts
as they mature, shall admit in writing its inability to pay its debts as
they mature, shall make a general assignment for the benefit of its
creditors, shall enter into any composition or similar agreement, or shall
suspend the transaction of all or a substantial portion of its usual
business.
10. Remedies on Default. Notwithstanding any provision of any document or
instrument evidencing or relating to any Liability, (i) upon the occurrence
of any Event of Default specified in Section 9(a)-(l), Secured Party at its
option may declare all of the Liabilities immediately due and payable
without notice or demand of any kind, and (ii) upon the occurrence of an
Event of Default specified in Section 9(m)-(n), all of the Liabilities
shall be immediately and automatically due and payable without action of
any kind on the part of Secured Party. Debtor expressly waives protest,
notice, presentment, dishonor, and demand of any kind. Secured Party may
exercise from time to time any rights and remedies available under the
Uniform Commercial Code of Florida, including the right to have Debtor
assemble the Collateral and deliver it to a place designated by Secured
Party. Debtor shall pay all related expenses, including attorneys' fees and
reasonable time charges of attorneys who may be employees of Secured Party
or any affiliate or parent of Secured Party. If any notification of
intended disposition of any of the Collateral is required by law, such
notification, if mailed, shall be deemed reasonably and properly given if
mailed at least 10 days before such disposition, postage prepaid, addressed
to Debtor at the address of Debtor shown below. Secured Party shall, in
addition to and not in limitation of all rights of offset under applicable
law; have the right to appropriate and apply all of the Collateral in its
possession to payment of the Liabilities. Secured Party may proceed to sell
or otherwise dispose of the Collateral at public or private sale for cash
or credit, provided, however, that Debtor shall be credited with proceeds
of such sale only when the proceeds are actually received by Secured Party.
Any proceeds of the Collateral may be applied by Secured Party to the
payment of expenses and costs to exercise of Secured Party's rights
hereunder, and any balance of such proceeds shall be applied toward the
Liabilities in such order as Secured Party shall determine in its sole
discretion. Any balance remaining shall be returned to the Debtor.
11. Rights of Secured Party. Secured Party may, from time to time, at its
option (but shall have no duty to):
(a) Perform any agreement of Debtor hereunder that Debtor shall have failed
to perform; and
(b) Take any other action which Secured Party deems necessary or desirable
for the preservation of the Collateral or Secured Party's interest herein,
including without limiting the generality of the foregoing: (i) any action
to collect or realize upon the Collateral; (ii) the discharge of taxes,
liens, security interests, or other encumbrances at any time levied or
placed on the Collateral; or (iii) the discharge or keeping current of any
obligation of Debtor having effect on the Collateral.
(c) File, or cause to be filed, photocopies or carbon copies of any
financing statement respecting any right of Secured Party in the
Collateral, and any such photocopy of carbon copy of the signature of
Debtor on such photocopy or carbon copy shall be deemed an original for
purposes of such filing. Debtor hereby authorizes Secured Party to sign
financing statements on Debtor's behalf to be filed in all jurisdictions in
which such authorization is permitted. Debtor hereby appoints Secured Party
as its attorney in fact, which appointment is irrevocable and coupled with
an interest, for purposes of performing acts and signing and delivering any
agreement, document, or instrument, on behalf of Debtor in accordance with
this Section. Debtor immediately will reimburse Secured Party for all
expenses so incurred by Secured Party, together with interest thereon at 3%
in addition to the Prime Rate.
12. General.
(a) Nonwaiver; Cumulative Remedies. No delay or omission on the part of
Secured Party in the exercise of any right or remedy shall operate as a
waiver thereof, and no single or partial exercise by Secured Party of any
right or remedy shall preclude other or further exercise thereof or the
exercise of any other right or remedy. The rights and remedies herein
provided to Secured Party are cumulative and not exclusive of any rights or
remedies provided by law.
(b) Notices. All notices, requests, and demands to or upon Secured Party or
Debtor shall be deemed to have been given or made when deposited in the
mail, postage prepaid, addressed to Debtor at the address set forth under
its signature or to Secured Party at its main banking office listed in the
heading of this Agreement.
(c) Successors. This Agreement shall, upon execution and delivery by the
Debtor, become effective and shall be binding upon and inure to the benefit
of Debtor, Secured Party, and their respective personal representatives,
executors, heirs, successors, and assigns, except that the Debtor may not
transfer or assign any of its rights or interest hereunder without the
consent of Secured Party.
3
<PAGE>
(d) Singular and Plural; Joint and Several. Unless the
context otherwise requires, wherever used herein the singular shall include
the plural and the plural shall include the singular, and the use of one
gender shall denote the others where appropriate. If more than one person
or entity has signed this Agreement, all obligations and liabilities in
this Agreement shall be the joint and several obligations and liabilities
of each of such persons or entities.
(e) Counterparts. This Agreement may be executed by Debtor on any number of
counterparts, and each of said counterparts shall be deemed to be an
original.
(f) Enforcement Costs. Debtor agrees to pay or reimburse Secured Party upon
demand for all documentary stamp taxes, costs, expenses, and fees
(including legal costs and fees and reasonable time charges of attorneys
who may be employees of Secured Party or any affiliate or parent of Secured
Party) incurred by Secured Party in preparing, negotiating, enforcing, or
preserving its rights under, this Agreement or any note, document, or other
instrument executed in connection herewith.
(g) Provisions Severable. If any term or provision of this Agreement shall
be unenforceable or invalid, such unenforceability or invalidity shall not
render any other term or provision hereof unenforceable or invalid, and all
other terms and provisions of this Agreement shall be enforceable and
valid.
(h) Construction. This Agreement and the rights and obligations of the
parties hereunder and thereunder shall be governed by, and construed and
interpreted in accordance with, the laws of Florida. Debtor hereby
irrevocably consents to the jurisdiction and venue of courts having
jurisdiction over Dade County, Florida, and agrees that any litigation
involving this Agreement (including without limitation ancillary claims)
may be conducted in such courts at the sole option of Secured Party. Debtor
hereby waives any right or claim it may have to transfer or change the
venue of any suit, action, or other proceeding brought against Debtor by
Secured Party in accordance with this Section.
(i) Interest Limitation. Notwithstanding any note or other document
evidencing any of the Liabilities, the total liability for interest and all
other sums at any time deemed to be interest on any of the Liabilities
shall not exceed the highest rate permitted by law. If for any reason such
total liability shall result in an effective rate of interest that exceeds
the highest rate permitted by law, all sums in excess of those lawfully
collectible for the interest payment period in question shall, without
further agreement by or notice to Debtor, be applied to outstanding
principal immediately upon receipt of such sums by Secured Party, with the
same effect as if Debtor had directed such excess sums to be so applied and
Secured Party had agreed to accept such sums as a principal prepayment;
provided, however, that Secured Party may, at any time and from time to
time, waive, reduce, or limit the collection of any sums (or refund to
Debtor any sums collected) in excess of those lawfully collectible as
interest rather than accept such sums as prepayment of principal.
DEBTOR: Westmark Group Holdings, Inc.
By:_______________________________
Its:______________________________
Address:__________________________
__________________________
County:___________________________
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<PAGE>
STATEMENT OF ANTI-COERCION
The following statement is required under rule 4-3.02 of the rules and
regulations promulgated by the Florida Insurance Commissioner relative to
anti-coercion:
To: Northern Trust Bank of Florida, N.A. (lender)
Re: Westmark Group Holdings, Inc. (borrower)
The Insurance Laws of this state provide that the lender may not require the
borrower to take insurance through any particular insurance agent or company to
protect the mortgaged property.
The borrower, subject to the rules adopted by the Florida Insurance
Commissioner, has the right to have the insurance placed with an insurance agent
or company of his choice, provided the company meets the requirements of the
lender. The lender has the rights to designate reasonable financial requirements
as to the company and the adequacy of the coverage.
I have read the foregoing statement, or the rules of the Florida Insurance
Commissioner relative thereto, and understand my rights and privileges and those
of the lender relative to the placing of such insurance.
I/We have selected the:
____________________________ Insurance Agency, OR
____________________________ Insurance Company
to write the hazard insurance covering property located at:
All Business assets.
________________________________________________________________________________
Under Section 9(a) of Procedures Act of 1974 - I/We have selected the:
____________________________ Insurance Agency, OR
____________________________ Insurance Company
to write the title insurance covering the property noted above:
ACKNOWLEDGED BY: Westmark Group Holdings, Inc.
______________________________________
Borrower By: Irving H. Bowen
Its: Treasurer
______________________________________
Borrower
5
<PAGE>
INSURANCE REQUIREMENTS
----------------------
As a mortgage lender it is necessary for us to set forth various requirements
for insurance being written on the property concerned. In order not to have any
misunderstanding between us, our mortgagors, as well as insurance agent, we are
itemizing below these requirements which are based on the State Insurance
Commissioner's Rules and Regulations on Anti-Coercion. These requirements are
subject to modification without prior notification.
1. Policy to be written with an insurance company with a Class 6 or higher
rating in the latest edition of Best's Insurance Guide.
2. Minimum coverage: Fire, Extended Coverage and optional Perils for not
less than the amount of the mortgage. A deductible Cause in the maximum
amount of $250 is permitted.
3. The insurance agent must be properly licensed and maintain a policy
issuing and servicing office located within the trade area of the
property unless the insurance company has been previously approved by
our company.
4. The anti-coercion form required for new loans must be completed and
signed by the applicant designating an insurance agent or company at
the time application is made
5. Names on the policy must agree with names on the mortgage. Legal
description of the property, as well as correct street address, must
appear in policy. A mortgagee clause is to be drawn in favor of the
mortgagee as specified by the bank.
6. Policies are to be made available 24 hours prior to closing of loans,
unless other arrangements have been made by us. Binders are not
acceptable.
7. Policy is to be written for a one-year term or continuous, with one
year or longer premium payment plans.
8. We are to be furnished with the original and one copy of the policy. We
also will need a paid receipt for at least the first year's premium. If
policies are paid up for a term in excess of one year, a sufficient
amount will be collected with the monthly payment order to have the
full policy premium in escrow at the end of the policy term.
9. Should the mortgage not require monthly deposits to escrow, the insured
will be required to pay the premium for hazard insurance and a paid
receipt must be received by us each year when payment is made.
10. Agents should forward premium due statements to arrive at our office
prior to the first day of the month. Statements received after the
first may not be paid until the following month.
11. At times other than anniversary or expiration broader coverage form
policy or change of agent or insurance company will be accepted
provided that:
6
<PAGE>
INSURANCE REQUIREMENTS
- -continued-
page -2-
a. A letter of authorization, signed by both insureds, is submitted
with the new policy, and
b. The agent submits a receipted statement showing payment of any
additional premium has been paid by the insured.
12. In case of change of title the new owner shall not be bound by any
commitment of previous owner with respect to placement of insurance.
***
7
<PAGE>
<TABLE>
<CAPTION>
STATE OF FLORIDA
<S> <C> <C>
UNIFORM COMMERCIAL CODE FINANCING STATEMENT FORM UCC-1 (REV. 1993)
This Financing Statement is presented to a filing officer for filing pursuant to the Uniform Commercial Code.
----------------------------------------------------------------------------------------------------------------------------------
1. Debtor (Last Name First if an Individual 1a. Date of Birth or FEI#
Westmark Group Holdings, Inc.
----------------------------------------------------------------------------------------------------------------------------------
1b. Mailing Address 1c. City, State 1.d Zip Code
8000 North Federal Highway Boca Raton FL 33487
----------------------------------------------------------------------------------------------------------------------------------
2. Additional Debtor or Trade Name (Last Name First if an Individual) 2a. Date of Birth or FEI#
----------------------------------------------------------------------------------------------------------------------------------
2b. Mailing Address 2c. City, State 2.d Zip Code
----------------------------------------------------------------------------------------------------------------------------------
3. Secured Party (Last Name First if an Individual) Northern Trust Bank of
Florida, N.A.
----------------------------------------------------------------------------------------------------------------------------------
3b. Mailing Address 3c. City, State 3.d Zip Code
301 Yamato Road Boca Raton FL 33431
----------------------------------------------------------------------------------------------------------------------------------
4. Assignee of Secured Party (Last Name First if an Individual)
----------------------------------------------------------------------------------------------------------------------------------
4b. Mailing Address 4c. City, State 4.d Zip Code
----------------------------------------------------------------------------------------------------------------------------------
5. This Financing Statement covers the following types or items of property
[include description of real property on which located and owner of record
when required. If more space is required, attach additional sheet(s)].
See Attached
----------------------------------------------------------------------------------------------------------------------------------
6. Check only if [ ] Products of collateral are also [ ] Proceeds of collateral are [ ] Debtor is
Applicable: covered also covered transmitting utility.
----------------------------------------------------------------------------------------------------------------------------------
7. Check appropriate box: [X] All documentary stamp taxes due and payable or to become due and payable pursuant to s. 201.22
(One box must be marked) F.S., have been paid
[ ] Florida Documentary Stamp Tax is not required.
----------------------------------------------------------------------------------------------------------------------------------
8. In accordance with s. 679.402(2), F.S., this statement is filed without
the 9. Number of additional sheets presented: Debtor's signature to
perfect a security interest in collateral: ________
[ ] already subject to a security interest in another jurisdiction when it was
brought into this state or debtor's location changed to this state. ----------------------------------------
[ ] which is proceeds of the original collateral described above in which a This Space for Use of Filing Officer
security interest was perfected.
[ ] as to which the filing has lapsed. Date filed __________________________ and
previous UCC-1 file number ___________________________________.
[ ] acquired after a change of name, identity, or corporate structure of the
debtor.
----------------------------------------------------------------------------------------
10. Signature(s) of Debtor(s) Westmark Group Holdings, Inc.
Irving H. Bowen, its Treasurer
-----------------------------------------------------------------------------------------
11. Signature(s) of Secured Party or if Assigned, by Assignee(s)
Steven L. Arbogast
-----------------------------------------------------------------------------------------
12. Return Copy to:
Name Carla Salcito
Northern Trust Bank of Florida, N.A.
Address 301 Yamato Rd.
Boca Raton, FL 33431
Address
City, State, Zip
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
STANDARD FORM - FORM UCC-1
<PAGE>
EXHIBIT A
to
Financing Statement
of
Westmark Group Holdings, Inc.
-----------------------------
in favor of Northern Trust Bank of Florida, N.A.
(Consisting of 1 page)
All of Debtor's right, title and interest in the following property or types of
property whether now existing or hereafter arising or acquired, wherever
located:
(a) Accounts (including without limitation all rights to payment for
services or the Inventory, however arising), leases, chattel paper, contract
rights, instruments, life insurance policies, and documents;
(b) General intangibles (including without limitation inventions, designs,
patents, patent applications, trademarks, trade names, copyrights, licenses,
leasehold interests, tax refund claims, guaranty claims, and security interests
or other security held by Debtor to secure accounts);
(c) Inventory, including without limitation returned and repossessed goods;
(d) Goods (other than Inventory), equipment, vehicles, and fixtures,
together with accessions thereto and replacement parts therefor, but excluding
property used exclusively for personal, household, or family use;
(e) All monies, accounts, deposits, and property now or at any time
hereafter in the possession or under the control of Secured Party or its
bailee; (f) All books and records, including without limitation customer
lists, credit files, computer programs, printouts, and other materials and
records,
pertaining to any of the foregoing;
(g) All documents of title evidencing or issued with respect to any of the
foregoing; and
(h) All proceeds and products of all of the foregoing, including without
limitation proceeds of insurance policies insuring the foregoing.
Westmark Group Holdings, Inc.
By: Irving H. Bowen
Its: Treasurer
<PAGE>
<TABLE>
<CAPTION>
STATE OF FLORIDA
<S> <C> <C>
UNIFORM COMMERCIAL CODE FINANCING STATEMENT FORM UCC-1 (REV. 1993)
This Financing Statement is presented to a filing officer for filing pursuant to the Uniform Commercial Code.
----------------------------------------------------------------------------------------------------------------------------------
1. Debtor (Last Name First if an Individual 1a. Date of Birth or FEI#
Westmark Group Holdings, Inc.
----------------------------------------------------------------------------------------------------------------------------------
1b. Mailing Address 1c. City, State 1.d Zip Code
8000 North Federal Highway Boca Raton FL 33487
----------------------------------------------------------------------------------------------------------------------------------
2. Additional Debtor or Trade Name (Last Name First if an Individual) 2a. Date of Birth or FEI#
----------------------------------------------------------------------------------------------------------------------------------
2b. Mailing Address 2c. City, State 2.d Zip Code
----------------------------------------------------------------------------------------------------------------------------------
3. Secured Party (Last Name First if an Individual) Northern Trust Bank of
Florida, N.A.
----------------------------------------------------------------------------------------------------------------------------------
3b. Mailing Address 3c. City, State 3.d Zip Code
301 Yamato Road Boca Raton FL 33431
----------------------------------------------------------------------------------------------------------------------------------
4. Assignee of Secured Party (Last Name First if an Individual)
----------------------------------------------------------------------------------------------------------------------------------
4b. Mailing Address 4c. City, State 4.d Zip Code
----------------------------------------------------------------------------------------------------------------------------------
5. This Financing Statement covers the following types or items of property
[include description of real property on which located and owner of record
when required. If more space is required, attach additional sheet(s)].
See Attached
----------------------------------------------------------------------------------------------------------------------------------
6. Check only if [ ] Products of collateral are also [ ] Proceeds of collateral are [ ] Debtor is
Applicable: covered also covered transmitting utility.
----------------------------------------------------------------------------------------------------------------------------------
7. Check appropriate box: [X] All documentary stamp taxes due and payable or to become due and payable pursuant to s. 201.22
(One box must be marked) F.S., have been paid
[ ] Florida Documentary Stamp Tax is not required.
----------------------------------------------------------------------------------------------------------------------------------
8. In accordance with s. 679.402(2), F.S., this statement is filed without
the 9. Number of additional sheets presented: Debtor's signature to
perfect a security interest in collateral: ________
[ ] already subject to a security interest in another jurisdiction when it was
brought into this state or debtor's location changed to this state. ----------------------------------------
[ ] which is proceeds of the original collateral described above in which a This Space for Use of Filing Officer
security interest was perfected.
[ ] as to which the filing has lapsed. Date filed __________________________ and
previous UCC-1 file number ___________________________________.
[ ] acquired after a change of name, identity, or corporate structure of the
debtor.
----------------------------------------------------------------------------------------
10. Signature(s) of Debtor(s) Westmark Group Holdings, Inc.
Irving H. Bowen, its Treasurer
-----------------------------------------------------------------------------------------
11. Signature(s) of Secured Party or if Assigned, by Assignee(s)
Steven L. Arbogast
-----------------------------------------------------------------------------------------
12. Return Copy to:
Name Carla Salcito
Northern Trust Bank of Florida, N.A.
Address 301 Yamato Rd.
Boca Raton, FL 33431
Address
City, State, Zip
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
STANDARD FORM - FORM UCC-1
<PAGE>
EXHIBIT A
to
Financing Statement
of
Westmark Group Holdings, Inc.
-----------------------------
in favor of Northern Trust Bank of Florida, N.A.
(Consisting of 1 page)
All of Debtor's right, title and interest in the following property or types of
property whether now existing or hereafter arising or acquired, wherever
located:
(a) Accounts (including without limitation all rights to payment for
services or the Inventory, however arising), leases, chattel paper, contract
rights, instruments, life insurance policies, and documents;
(b) General intangibles (including without limitation inventions, designs,
patents, patent applications, trademarks, trade names, copyrights, licenses,
leasehold interests, tax refund claims, guaranty claims, and security interests
or other security held by Debtor to secure accounts);
(c) Inventory, including without limitation returned and repossessed goods;
(d) Goods (other than Inventory), equipment, vehicles, and fixtures,
together with accessions thereto and replacement parts therefor, but excluding
property used exclusively for personal, household, or family use;
(e) All monies, accounts, deposits, and property now or at any time
hereafter in the possession or under the control of Secured Party or its
bailee; (f) All books and records, including without limitation customer
lists, credit files, computer programs, printouts, and other materials and
records,
pertaining to any of the foregoing;
(g) All documents of title evidencing or issued with respect to any of the
foregoing; and
(h) All proceeds and products of all of the foregoing, including without
limitation proceeds of insurance policies insuring the foregoing.
Westmark Group Holdings, Inc.
By: Irving H. Bowen
Its: Treasurer
<PAGE>
<TABLE>
<CAPTION>
STATE OF FLORIDA
<S> <C> <C>
UNIFORM COMMERCIAL CODE FINANCING STATEMENT FORM UCC-1 (REV. 1993)
This Financing Statement is presented to a filing officer for filing pursuant to the Uniform Commercial Code.
----------------------------------------------------------------------------------------------------------------------------------
1. Debtor (Last Name First if an Individual 1a. Date of Birth or FEI#
Westmark Mortgage Corporation
----------------------------------------------------------------------------------------------------------------------------------
1b. Mailing Address 1c. City, State 1.d Zip Code
8000 North Federal Highway Boca Raton FL 33487
----------------------------------------------------------------------------------------------------------------------------------
2. Additional Debtor or Trade Name (Last Name First if an Individual) 2a. Date of Birth or FEI#
----------------------------------------------------------------------------------------------------------------------------------
2b. Mailing Address 2c. City, State 2.d Zip Code
----------------------------------------------------------------------------------------------------------------------------------
3. Secured Party (Last Name First if an Individual) Northern Trust Bank of
Florida, N.A.
----------------------------------------------------------------------------------------------------------------------------------
3b. Mailing Address 3c. City, State 3.d Zip Code
301 Yamato Road Boca Raton FL 33431
----------------------------------------------------------------------------------------------------------------------------------
4. Assignee of Secured Party (Last Name First if an Individual)
----------------------------------------------------------------------------------------------------------------------------------
4b. Mailing Address 4c. City, State 4.d Zip Code
----------------------------------------------------------------------------------------------------------------------------------
5. This Financing Statement covers the following types or items of property
[include description of real property on which located and owner of record
when required. If more space is required, attach additional sheet(s)].
See Attached
----------------------------------------------------------------------------------------------------------------------------------
6. Check only if [ ] Products of collateral are also [ ] Proceeds of collateral are [ ] Debtor is
Applicable: covered also covered transmitting utility.
----------------------------------------------------------------------------------------------------------------------------------
7. Check appropriate box: [ ] All documentary stamp taxes due and payable or to become due and payable pursuant to s. 201.22
(One box must be marked) F.S., have been paid
|X| Florida Documentary Stamp Tax is not required.
----------------------------------------------------------------------------------------------------------------------------------
8. In accordance with s. 679.402(2), F.S., this statement is filed without
the 9. Number of additional sheets presented: Debtor's signature to
perfect a security interest in collateral: ________
[ ] already subject to a security interest in another jurisdiction when it was
brought into this state or debtor's location changed to this state. ----------------------------------------
[ ] which is proceeds of the original collateral described above in which a This Space for Use of Filing Officer
security interest was perfected.
[ ] as to which the filing has lapsed. Date filed __________________________ and
previous UCC-1 file number ___________________________________.
[ ] acquired after a change of name, identity, or corporate structure of the
debtor.
----------------------------------------------------------------------------------------
10. Signature(s) of Debtor(s) Westmark Mortgage Corporation
Irving H. Bowen, its Treasurer
-----------------------------------------------------------------------------------------
11. Signature(s) of Secured Party or if Assigned, by Assignee(s)
Steven L. Arbogast
-----------------------------------------------------------------------------------------
12. Return Copy to:
Name Carla Salcito
Northern Trust Bank of Florida, N.A.
Address 301 Yamato Rd.
Boca Raton, FL 33431
Address
City, State, Zip
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
STANDARD FORM - FORM UCC-1
<PAGE>
EXHIBIT A
to
Financing Statement
of
Westmark Mortgage Corporation
-----------------------------
in favor of Northern Trust Bank of Florida, N.A.
(Consisting of 1 page)
All of Debtor's right, title and interest in the following property or types of
property whether now existing or hereafter arising or acquired, wherever
located:
(a) Accounts (including without limitation all rights to payment for
services or the Inventory, however arising), leases, chattel paper, contract
rights, instruments, life insurance policies, and documents;
(b) General intangibles (including without limitation inventions, designs,
patents, patent applications, trademarks, trade names, copyrights, licenses,
leasehold interests, tax refund claims, guaranty claims, and security interests
or other security held by Debtor to secure accounts);
(c) Inventory, including without limitation returned and repossessed goods;
(d) Goods (other than Inventory), equipment, vehicles, and fixtures,
together with accessions thereto and replacement parts therefor, but excluding
property used exclusively for personal, household, or family use;
(e) All monies, accounts, deposits, and property now or at any time
hereafter in the possession or under the control of Secured Party or its
bailee; (f) All books and records, including without limitation customer
lists, credit files, computer programs, printouts, and other materials and
records,
pertaining to any of the foregoing;
(g) All documents of title evidencing or issued with respect to any of the
foregoing; and
(h) All proceeds and products of all of the foregoing, including without
limitation proceeds of insurance policies insuring the foregoing.
Westmark Mortgage Corporation
By: Irving H. Bowen
Its: Treasurer
<PAGE>
<TABLE>
<CAPTION>
STATE OF FLORIDA
<S> <C> <C>
UNIFORM COMMERCIAL CODE FINANCING STATEMENT FORM UCC-1 (REV. 1993)
This Financing Statement is presented to a filing officer for filing pursuant to the Uniform Commercial Code.
----------------------------------------------------------------------------------------------------------------------------------
1. Debtor (Last Name First if an Individual 1a. Date of Birth or FEI#
Westmark Mortgage Corporation
----------------------------------------------------------------------------------------------------------------------------------
1b. Mailing Address 1c. City, State 1.d Zip Code
8000 North Federal Highway Boca Raton FL 33487
----------------------------------------------------------------------------------------------------------------------------------
2. Additional Debtor or Trade Name (Last Name First if an Individual) 2a. Date of Birth or FEI#
----------------------------------------------------------------------------------------------------------------------------------
2b. Mailing Address 2c. City, State 2.d Zip Code
----------------------------------------------------------------------------------------------------------------------------------
3. Secured Party (Last Name First if an Individual) Northern Trust Bank of
Florida, N.A.
----------------------------------------------------------------------------------------------------------------------------------
3b. Mailing Address 3c. City, State 3.d Zip Code
301 Yamato Road Boca Raton FL 33431
----------------------------------------------------------------------------------------------------------------------------------
4. Assignee of Secured Party (Last Name First if an Individual)
----------------------------------------------------------------------------------------------------------------------------------
4b. Mailing Address 4c. City, State 4.d Zip Code
----------------------------------------------------------------------------------------------------------------------------------
5. This Financing Statement covers the following types or items of property
[include description of real property on which located and owner of record
when required. If more space is required, attach additional sheet(s)].
See Attached
----------------------------------------------------------------------------------------------------------------------------------
6. Check only if [ ] Products of collateral are also [ ] Proceeds of collateral are [ ] Debtor is
Applicable: covered also covered transmitting utility.
----------------------------------------------------------------------------------------------------------------------------------
7. Check appropriate box: [ ] All documentary stamp taxes due and payable or to become due and payable pursuant to s. 201.22
(One box must be marked) F.S., have been paid
[X] Florida Documentary Stamp Tax is not required.
----------------------------------------------------------------------------------------------------------------------------------
8. In accordance with s. 679.402(2), F.S., this statement is filed without
the 9. Number of additional sheets presented: Debtor's signature to
perfect a security interest in collateral: ________
[ ] already subject to a security interest in another jurisdiction when it was
brought into this state or debtor's location changed to this state. ----------------------------------------
[ ] which is proceeds of the original collateral described above in which a This Space for Use of Filing Officer
security interest was perfected.
[ ] as to which the filing has lapsed. Date filed __________________________ and
previous UCC-1 file number ___________________________________.
[ ] acquired after a change of name, identity, or corporate structure of the
debtor.
----------------------------------------------------------------------------------------
10. Signature(s) of Debtor(s) Westmark Mortgage Corporation
Irving H. Bowen, its Treasurer
-----------------------------------------------------------------------------------------
11. Signature(s) of Secured Party or if Assigned, by Assignee(s)
Steven L. Arbogast
-----------------------------------------------------------------------------------------
12. Return Copy to:
Name Carla Salcito
Northern Trust Bank of Florida, N.A.
Address 301 Yamato Rd.
Boca Raton, FL 33431
Address
City, State, Zip
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
STANDARD FORM - FORM UCC-1
<PAGE>
EXHIBIT A
to
Financing Statement
of
Westmark Mortgage Corporation
-----------------------------
in favor of Northern Trust Bank of Florida, N.A.
(Consisting of 1 page)
All of Debtor's right, title and interest in the following property or types of
property whether now existing or hereafter arising or acquired, wherever
located:
(a) Accounts (including without limitation all rights to payment for
services or the Inventory, however arising), leases, chattel paper, contract
rights, instruments, life insurance policies, and documents;
(b) General intangibles (including without limitation inventions, designs,
patents, patent applications, trademarks, trade names, copyrights, licenses,
leasehold interests, tax refund claims, guaranty claims, and security interests
or other security held by Debtor to secure accounts);
(c) Inventory, including without limitation returned and repossessed goods;
(d) Goods (other than Inventory), equipment, vehicles, and fixtures,
together with accessions thereto and replacement parts therefor, but excluding
property used exclusively for personal, household, or family use;
(e) All monies, accounts, deposits, and property now or at any time
hereafter in the possession or under the control of Secured Party or its
bailee; (f) All books and records, including without limitation customer
lists, credit files, computer programs, printouts, and other materials and
records,
pertaining to any of the foregoing;
(g) All documents of title evidencing or issued with respect to any of the
foregoing; and
(h) All proceeds and products of all of the foregoing, including without
limitation proceeds of insurance policies insuring the foregoing.
Westmark Mortgage Corporation
By: Irving H. Bowen
Its: Treasurer
<PAGE>
NORTHERN TRUST BANK
CLOSING STATEMENT
Borrower: Westmark Group Holdings, Inc.
Lender: Northern Trust Bank of Florida, N.A.
Date: April 30, 1999
Loan Amount: $150,000.00
Deductions: Documentary Stamps 525.00
UCC Filings 77.00
Credit reports 65.24
Net Proceeds available: $149,332.76
Approved
Westmark Group Holdings, Inc.
______________________________
Irving H. Bowen, its Treasurer
NORTHERN TRUST BANK OF FLORIDA, N.A.
By: _______________________________________
Steven L. Arbogast, Vice President
WHOLE SALE LOAN AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into as of in the
State of Georgia, by and between WESTMARK MORTGAGE CORPORATION, a corporation
organized and existing under the laws of the State of California, (herein called
"Client"), and Great Eastern Funding, LLC, a limited liability company organized
and existing under the laws of the State of Georgia (herein called "Buyer") for
and in consideration of Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged.
This Agreement establishes terms of a Line of Credit not to exceed the
amount described in Schedule A, Facility Amount, at any one time in total
principal amount outstanding. The obligation of the Buyer to make advances
hereunder up to such limit is hereinafter referred to as the "Commitment."
Within the Commitment, the Client may borrow, repay and re-borrow. All Advances
under this Agreement shall constitute a single indebtedness, and all Collateral
shall be security for the Facility Amount as described in schedule A and for the
performance of all obligations of the Client to the Buyer. Advances under this
Agreement shall be used by the Client solely for the purpose of purchasing
Mortgage Loans and in no circumstances shall closed loans be purchased by Client
to be sold to Buyer. Funding shall be made in the manner hereinafter defined.
This Agreement expires one (1) year from the date listed above. Upon expiration,
all terms and conditions are subject to re-negotiation, with no guarantee of
renewal.
RECITALS
A. From time to time, Client may offer to sell and Buyer may
agree to buy from Client certain loans evidenced by promissory
notes and secured by deeds to secure debt, mortgages or other
appropriate security instruments conveying interests in real
estate (hereinafter "Mortgage Loans").
B. Each Mortgage Loan will be evidenced, among other documents,
by a promissory note under which Client is the payee
("Mortgage Note"), and a first priority deed to secure debt,
mortgage or similar security instrument securing payment of
the Mortgage Note ("Mortgage Deed" or "Mortgage").
C. Client and Buyer wish to set forth the terms and conditions
under which each Mortgage Loan will be acquired by Buyer from
Client.
I. Client represents and warrants to Buyer, and covenants and agrees with
Buyer, as follows:
A. Client is a corporation duly organized, validly existing and
in good standing under the laws of the State of California ,
and it possesses the requisite corporate authority to enter
into this Agreement and to consummate all the transactions
contemplated hereby.
B. The execution, delivery and performance of this Agreement has
been duly authorized by Client and all corporate proceedings
necessary to consummate all the transactions contemplated by
this Agreement have been taken by Client.
<PAGE>
C. Client is fully licensed, qualified to do business and in good
standing in each state in which it does business and in which
the real property securing any Mortgage offered by Client to
Buyer hereunder is located.
D. The execution and delivery of this Agreement and sale of any
and all Mortgages hereunder are not and will not be 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 judgement, decree, note, agreement, indenture or
other instrument to which Client is a party or otherwise
subject.
E. Neither the making of each Mortgage Loan nor the consummation
of the transactions contemplated by this Agreement will result
in a violation of any applicable federal, state or local law,
rule or regulation.
F. This Agreement and every instrument provided for herein to be
executed by Client are and will be the legal, valid and
binding obligations of Client enforceable by Buyer in
accordance with their respective terms.
G. As of the date of this Agreement, there is no pending or
threatened litigation, adverse claim, action or proceeding of
any kind or nature against client which, if adversely
determined would reasonably be expected to result in any
material and adverse change in the business, operations,
assets or financial conditions of client.
H. Each Mortgage sold to Buyer hereunder shall constitute a
valid, genuine and enforceable first or second lien against
the real property conveyed thereunder, subject only to
exceptions which are acceptable to the Buyer and Third Party
Investor, if applicable (each such Investor shall herein be
called a "Third Party Investor") for such Mortgage and which
do not materially impair the priority of the lien thereof or
the quality of title, will have been duly executed,
acknowledged and filed for recording or recorded prior to the
date of sale to Buyer, and is and will continue to be free
from claims, defenses, set-offs, and counterclaims.
I. At the time of the transfer of each Mortgage to Buyer, the
property covered by each Mortgage (the "Mortgaged Property")
shall consist of land and one or more buildings thereon which
are completed and ready for occupancy.
J. Client shall have, at the time of the transfer of each
Mortgage to Buyer, the sole, full and complete title to each
Mortgage and each instrument and document relating thereto,
which Mortgage and any other interest conveyed by Client to
Buyer shall be free and clear of all claims of any other
person or entity, and Client has and shall have full power and
authority to sell, transfer and assign the same on the terms
herein set forth, there having been no prior assignment, sale
or hypothecation thereof by Client.
K. With respect to each Mortgage and the Mortgage Loan evidenced
and secured thereby: (i) each Mortgage will have been duly and
validly executed, issued and delivered by the mortgagor
thereunder and will constitute the valid and legally binding
obligation of such mortgagor, enforceable in accordance with
its terms; (ii) compliance by the mortgagor with such Mortgage
will not violate any law, or any other instrument or agreement
binding upon the mortgagor; and (iii) all requirements of all
2
<PAGE>
laws, rules, orders and regulations of any governmental
authority having jurisdiction over such Mortgage and mortgagor
will have been fully satisfied and complied with.
L. The full principal amount of each Mortgage sold hereunder will
have been advanced to the mortgagor, either by payment made
directly to mortgagor or by payment made on mortgagor's
request or approval; the original unpaid principal balance
outstanding under each Mortgage shall be as stated in the
applicable loan documents; all costs, fees, and expenses
incurred in making, closing and recording the Mortgage shall
have been paid; neither the Mortgaged Property, nor any
portion thereof, shall have been released from the Mortgage;
the terms of the Mortgage shall have in no way been changed,
amended or modified; and the Mortgage shall be current and not
in default.
M. All signatures, names and addresses, amounts and other
statements of fact, including descriptions of property,
appearing on the credit application and other documents
relating to each Mortgage shall be true and correct and each
mortgagor named thereon shall be, as of the date of each such
document upon which signatures appear, of majority age, and
have the legal capacity to enter into the Mortgage.
N. Client will have paid or caused to be paid when due any and
all applicable taxes or fees to any governmental entity
arising out of the making, acquisition, collection, holding or
assignment of such Mortgage or the underlying property (except
taxes measured by Buyer's net income).
O. Each Mortgage which Client represents as being insured by a
private mortgage insurance company shall be so insured.
P. Each Mortgage classified as an "F.H.A. Mortgage" will be a
Mortgage fully insured by or for which a Commitment to Insure
has been issued by, the Federal Housing Administration under
the National Housing Act, as amended, and the Mortgage and all
other instruments and documents evidencing the Mortgage Loan
and the transactions from which it arose will comply with all
applicable requirements of the F.H.A.
Q. Each Mortgage classified as a "V.A. Mortgage" will be either
guaranteed or entitled to be guaranteed immediately by the
Veteran's Administration (V.A.) Under the Service Men's
Readjustment Act of 1944, as amended, or other applicable
statute, or will be entitled to be immediately so guaranteed
pursuant to a V.A. Commitment to Guarantee; each such
Guarantee or Commitment to Guarantee will be in the maximum
amount permitted by law; and the Mortgage and all other
instruments and documents evidencing the Mortgage Loan and the
transactions from which it arose will comply with all
applicable requirements of the V.A.
R. In connection with each Mortgage sold hereunder and the
Mortgage Loan evidenced or secured thereby, all applicable
federal and state laws statutes and regulations including, but
not limited to the Equal Credit opportunity Act, Real Estate
Settlement Procedures Act, Truth-In-Lending Act, Fair Credit
Reporting Act, and any other federal or state consumer
protection act, rule or regulation will have been fully
satisfied and complied with.
3
<PAGE>
S. Each Mortgage sold hereunder shall be accompanied by all
documentation required. under all applicable federal and state
laws and regulations regarding loans purchased by insured
financial institutions.
T. Each Mortgage Loan evidenced by a Mortgage and Mortgage Note
conveyed hereunder shall have been closed by an attorney who
is an approved attorney of an American Land Title Association
("ALTA") Company or by an authorized and insured Title
Company.
U. The building or buildings on the Mortgaged Property will be
kept continuously insured at all times by insurance companies
with a Class V or better rating as determined by A.M. Best's
key rating guide for property casualty companies against fire
and extended coverage hazards under policies, binders,
letters, or certificates of insurance with a standard
mortgagee clause in favor of Client and its assigns, and
providing coverage under each such policy in an amount at
least equal to the lesser of (i) the maximum insurable value
of the improvements, or (ii) the original principal amount of
the Mortgage, without reduction by reason of any co-insurance,
reduced rate contribution, or similar clause.
V. Client has previously furnished Buyer with copies of its
financial statements for the previous fiscal year (the
"Financial Statements"). Client represents and warrants that
the Financial Statements were prepared in accordance with
generally accepted accounting principles and accurately
portray its financial condition as of the date thereof and of
this Agreement. Client will, within sixty (60) days of the
conclusion of each of its fiscal year end furnish Buyer with a
copy of its annual financial statements, each in form and
substance satisfactory to Buyer. The annual financial
statements will be audited by independent public accountants
if required by the State where Client is organized, twill
conform to generally accepted accounting standards and will be
furnished directly to Buyer by Client's independent public
accountants.
W. There is not now an event of default hereunder, or any
circumstances which, with notice or lapse of time or both,
could become an event of default hereunder, and each future
request by the Client to sell a Mortgage hereunder shall
constitute a reaffirmation of the foregoing representation and
warranty.
All these warranties, representations and covenants shall survive the term of
this Agreement and shall continue until the final pay-off of the last Mortgage
Loan purchased hereunder remaining outstanding.
II. Client shall do all acts necessary to perfect title to each Mortgage
sold hereunder, and shall sell, assign, and deliver to Buyer with
respect to the purchase of each such Mortgage, the following documents,
all subject to the approval of Buyer as to proper form and execution:
A. The original Mortgage Note properly and satisfactorily
endorsed in blank by Client to Buyer.
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B. A photocopy of the Mortgage Deed, together with the original
of a transfer and assignment in blank of such Mortgage Deed in
recordable form, accompanied by those documents and
instruments necessary to record and perfect ownership.
C. Mortgagee title insurance commitment and policy satisfying the
requirements of Section I.H. hereof, with any and all
exceptions set forth therein being subject to the approval of
Buyer, and a satisfactory assignment or endorsement of such
commitment or policy in the event a mortgage assignment is
being placed on record.
D. Copy of a survey of the Mortgaged Property identifying such
property by address and legal description.
E. Copies of hazard insurance policies meeting the requirements
set forth in Section I.U. hereof.
F. If the Mortgage is a V.A. Mortgage: The Certificate of
Reasonable Value, the V.A. Commitment to Guarantee, or the
V.A. Loan Guaranty Certificate, and the V.A. Certification of
Loan Disbursement, or the future substantial equivalents of
the same.
G. If the Mortgage is an F.H.A. Mortgage: F.H.A. Commitment to
Insure or Insurance Certificate, or the future substantial
equivalents of the same.
H. A complete copy of the loan application package for each
Mortgage meeting normal current market/investor conditions
together with all disclosure statements and all settlement
statements executed in connection with the Mortgage
transaction.
I. Copy of an appraisal of the real estate securing each Mortgage
Note, which appraisal shall meet requirements established by
the Federal Deposit Insurance Corporation, the office of
Thrift Supervision, the Department of Banking and Finance of
the State in which subject real property is located.
J. Insured closing letter issued by an ALTA company insuring the
attorney(s) selected and approved in accordance with Section
I.T. hereof.
K. Copy of Mortgage payment notification or transfer of
servicing.
L. Any other document required by Buyer.
The documents identified in Schedule A, Funding Request Documents, shall be
delivered to Buyer for review and approval by Client not less Than forty eight
(48) hours prior to the anticipated date of funding disbursement of the Mortgage
Loan to which such documents pertain. The documents identified in Schedule A,
Closing Documents, shall be delivered to Buyer within two (2) business day(s)
after closing of the Mortgage Loan by the closing agent.
III. Advances
All Mortgage Loans shall be secured by 1-4 family residential real
property, subject to terms specified by Section I. above. These Mortgage Loans
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shall be rated as "A", "B", "C" or "D", consistent with traditional standards
imposed by Third Party Investors, relevant to rating agencies and insurers for
classification as "A", "B", "C" or "D" Mortgage Loans. Loans will be accepted
either as "Flow" (defined as individual loans to be sold separately) or "Pool"
(defined as several loans to be sold together). All Mortgage Loans accepted by
Buyer will be funded at the percentage as defined in Schedule A., Funding
Percentages, of the Collateral Value-defined above, subject to the following:
A. All "A" Mortgage Loans must have a purchase commitment from a
Third Party Investor.
B. Mortgage Loans rated as "B", "C" or "D" with a purchase
commitment from a Third Party Investor or Underwriter/officer
employed by Client and delegated by Investor shall have no
additional constraints unless otherwise stated in Schedule "A"
of this Agreement.
IV. The procedures for the handling and funding of each Mortgage shall be
as follows:
A. Upon the funding of each Mortgage by Buyer, as described in
Section III above, Buyer shall retain a fee as defined in
Schedule A, Fees and Charges or such other amount as may
hereafter be agreed upon in writing by Buyer and Client (the
"Handling Fee"). From and after the date of such funding
through the date the appropriate Third Party Investor delivers
all funds to Buyer, Client shall pay Buyer interest on the
amount so funded by Buyer at a per annum rate as defined in
Schedule A, Fees and Charges. Unless otherwise agreed in
writing by and between the parties hereto, Client shall pay
all accrued interest on the amount so funded on those dates
which the respective mortgagor is required, under said
mortgagor's loan documents, to pay interest to the holder
thereof.
B. Buyer shall conduct an independent evaluation of the
creditworthiness of the borrower prior to committing to
purchase the mortgage note. The note will be purchased at face
value by Buyer, and is made in anticipation of Client's
commitment to make the loan to the mortgagor. After approval
by Buyer and the respective Third Party Investor, if
applicable, of each Mortgage submitted for funding, each such
Mortgage Loan shall be closed by an attorney at law who is an
approved attorney of an American Land Title Association
("ALTA") company, or an authorized and insured Title Company
selected by Client and approved by Buyer, which approval shall
not be unreasonably withheld or denied, in the name of Client.
Subsequent to such approvals being obtained by Client, and
after Client provides notice of such closing to Buyer, which
notice shall be given no less than forty eight (48) hours
prior to such closing, Buyer shall provide closing funds (the
"Closing Funds") upon receipt of the documents required under
Section II. hereof, as defined in Schedule A, Funds
Disbursement.
C. At closing and contemporaneously with the funding of each
Mortgage hereunder, Client shall endorse the Mortgage Note to
Buyer in blank and execute the transfers and assignments in
blank described in Section II. hereof.
D. Buyer, upon receipt of notice from Client and Client's
satisfaction of its obligations under this Agreement, and
provided that Client is not in default under the terms of this
Agreement or under the terms of any other agreement with
Buyer, shall endorse or leave blank each Mortgage Note, to the
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appropriate Third Party Investor. Buyer shall deliver the
original Mortgage Note to the Third Party Investor with a
Bailee Letter instructing that such investor is to hold such
Note and assignment in trust for Buyer until full payment for
such Mortgage has been received by Buyer. Buyer reserves the
option, at its sole and absolute discretion, to require a
master trust agreement from each Third Party Investor whereby
such investors agree to hold all Notes, assignments and
Mortgage documents presented thereto in trust for Buyer until
full payment is made therefor, and Client hereby agrees to
assist Buyer in obtaining such trust agreements from such
Third Party Investors. Funding by the Third Party Investor
which has pre-approved each such Mortgage shall be made to
Buyer by wire transfer to an account established by Buyer and
described to Third Party Investor in above described Bailee
Letter, at the time the Third Party Investor purchases each
such Mortgage. Upon receipt of funds, and the satisfaction of
all Client's obligations to Buyer, Buyer shall remit any
surplus to Client.
V. Promptly upon demand of Buyer, Client shall repurchase at the
Repurchase Price (as hereinafter defined), without recourse, any
Mortgage with respect to which:
A. Any representation or warranty of Client contained in this
Agreement shall prove at any time to be incorrect in any
material respect; or,
B. Any contention shall have been raised by mortgagor, or on
behalf of mortgagor or a Third Party Investor, that there has
been a violation of, or failure to comply with, any federal or
state law or regulation which would give rise to a right of a
mortgagor to refuse to make further payments under the
Mortgage and/or seek a refund of amounts previously paid
and/or claim penalty of any kind or nature; or,
C. The expiration of forty-eight (48) hours from the date a Wet
Settlement Advance was made without receipt of all Collateral
Documents relating to such Mortgage Loan, or such Collateral
Documents, upon examination by Buyer are found not to be in
compliance with the requirements of this Agreement.
D. The expiration of ten (1O) Business Days from the date a
Collateral Document in connection with such Mortgage Loan was
delivered to Client for correction or completion without being
resumed to Buyer corrected or completed.
E. The expiration of the allowed number of days outstanding as
described in Schedule A, Loan Term.
F. The expiration of ten (1O) Business Days from the date a
Collateral Document in connection with such Mortgage Loan was
delivered to the Third Party Investor for purchase without the
purchase money received by Buyer, or the Collateral Document
returned to Buyer with all appropriate endorsement and
assignment corrections.
VI. Client agrees to fulfill its obligation to repurchase any Mortgage Loan
described above in Section V. hereof by paying to Buyer the Repurchase
Price, which shall equal the total principal of the Mortgage Note less
any pay down credits toward mortgage loan to Buyer, including earned
interest and fees as described in Schedule A, Fees and Charges, and
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other accrued charges, and penalties plus all costs and expenses,
including without limitation, reasonable attorney's fees and expenses,
and collection, foreclosure and resale expenses, if any, theretofore
incurred by Buyer in enforcing its rights in such Mortgage or in
enforcing its rights pursuant to this Agreement ("Repurchase Price").
Buyer's prior knowledge of any relevant fact, prior to or at the time
of purchase of the Mortgage, or at any time thereafter, or any delay by
Buyer in making demand hereunder, shall not constitute a waiver of
Buyer's rights hereunder.
VII. Upon receipt of the Repurchase Price from Client pursuant to Section
VI. hereof, Buyer shall transfer to Client the Mortgage and Buyer's
right, title and interest in the Mortgaged Property by separate written
endorsements and assignments, which shall be without recourse to Client
and without any representations or warranties, expressed or implied.
Until such time as Buyer has received such payment in full, Buyer may
continue to liquidate the Mortgage, and Client shall remain liable for
any deficiency, including all of Buyer's expenses.
VIII. Client agrees, as trustee for Buyer and without compensation by Buyer,
to service all Mortgages and to use its best efforts to effect
collection of all amounts payable thereunder as they become due. Upon
demand by Buyer, Client shall notify each Mortgagor of the transfer and
assignment to Buyer of the Mortgage under which he is obligated,
including in such notice instructions that the Mortgagor shall make all
payments on the Mortgage to Client as trustee for Buyer until further
notice, or directly to Buyer, as Buyer shall direct. In the event
Client so notifies any Mortgagor of the transfer and assignment to
Buyer of the Mortgage under which he is obligated, upon request by
Client, Buyer shall notify any such Mortgagor of any reassignment of
such Mortgage to Client made pursuant to the terms of this Agreement by
Buyer.
IX. The following shall constitute events of default hereunder:
A. If Client should violate or breach, or should fail fully and
completely to observe, perform, satisfy or comply with, any of
the terms, covenants or conditions set forth in this Agreement
or in any other instrument, document, agreement, letter other
writing now or hereafter evidencing or securing, or
heretofore, concurrently herewith or in the future executed by
Client in favor of Buyer in connection with any transaction
consummated hereunder.
B. If any certificate, representation or warranty, or any
statement or other writing made herein or furnished to Buyer
by or on behalf of Client in connection with this Agreement or
any transaction consummated hereunder should be false, untrue,
incomplete or misleading in any respect as of the date made.
C. If Client becomes insolvent as defined in the Georgia Uniform
Commercial Code or makes an assignment for the benefit of
creditors; or if any action is brought by Client seeking its
dissolution or liquidation of its assets or seeking the
appointment of a trustee, interim trustee, receiver or other
custodian for any of its property; or if Client commences a
voluntary case under the Federal Bankruptcy Code; or if any
reorganization or arrangement proceeding is instituted by
Client for the settlement, readjustment, composition or
extension of any of its debts upon any terms; or if any action
for similar relief is commenced alleging that Client is
insolvent or unable to pay its debts as they mature; or if any
action is brought against Client seeking its dissolution or
liquidation of any of its assets, or seeking the appointment
of a trustee, interim trustee, receiver or other custodian for
any of its property, and such action is consented to or
acquiesced in by Client and is not dismissed within thirty
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(30) days after the date upon which it was instituted; or if
any proceeding under the Federal Bankruptcy Code is instituted
against Client and (i) order for relief is entered in such
proceeding or (ii) such proceeding is consented to or
acquiesced in by Client is not dismissed within thirty (30)
days after the date upon which it was instituted; or if any
reorganization or arrangement proceeding is instituted against
Client for the settlement, readjustment, composition or
extension of any of its debts upon any terms, and such
proceeding is consented to or acquiesced in by Client and is
not dismissed within thirty (30) days after the date upon
which it was instituted; or if any action or petition is
other-wise brought against Client seeking similar relief or
alleging that it is insolvent, unable to pay its debts as they
mature or generally not paying its debts as they become due,
and such action or petition is consented to or acquiesced in
by Client or is not dismissed within thirty (30) days after
the date upon which it was brought.
D. If any judgment should be rendered against Client and such
judgement should not be paid in full and satisfied, or
appealed from within the time allowed for appeals and be paid
in full and satisfied whets it becomes final
E. Should Client be liquidated or dissolved or its articles of
incorporation expire or be revoked.
F. Should Client default under any other agreement or other
document entered into with Buyer.
G. Should Client default under any other agreement with any
person or company and such default by Client results in any
acceleration of the debt evidenced thereby. Upon the
occurrence of any event of default hereunder, Buyer may
exercise all rights and remedies contained in this Agreement
or in any other instrument, document, agreement or other
writing executed in connection with this Agreement or any
transaction consummated hereunder, or otherwise available to
it in law or in equity.
X. Buyer may, by notice to Client by return receipt to Great Eastern
Funding, LLC., terminate this Agreement as to Mortgages being purchased
if:
A. Client shall be in default hereunder as described in Section
IX. above; or,
B. Client assigns or attempts to assign its rights and
obligations hereunder, without written consent of Buyer; or,
C. Buyer, in its sole discretion, determines that because of
regulatory considerations, due to business practices of
Client, or for any other reason. that it is in the Buyer's
best interest to terminate this Agreement.
XI. Buyer may, at its option, suspend the Commitment from further use by
Client, if, at any time any of the terms of this Agreement are
violated, or if Buyer, in its sole discretion, determines that it is in
the Buyer's best interest to suspend the Commitment. In addition, the
following penalties may apply:
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61st Day The Handling Fee, as stated in the
attached Schedule A, will be paid, in full,
by Client. Buyer may request a written
explanation from the Third Party Investor,
as to why the loan has not been purchased.
76th Day Interest rate, as described in Schedule A,
Fees and Charges, shall be adjusted to a per
annum rate equal to five (5%) percentage
points over Prime, plus an additional
handling fee of $250 per loan will be paid,
in full, by Client.
91st Day Buyer may request a Purchase Commitment
Letter, clear of all slips and conditions,
unless otherwise agreed to in writing by
Buyer, from the appropriate Third Party
Investor. An additional handling fee equal
to the original handling fee as stated in
Fees and Charges in the attached Schedule A
of this Agreement will be charged. In
addition, Client shall make prepayments of
the principal in an amount equal to five
percent (5%) of the original principal
advanced for such Mortgage Loan, and all
accrued interest will immediately be paid by
Client to Buyer.
Unless otherwise agreed to in writing by and between the parties
hereto, on the ninety-first (91st) day after the original disbursement
of any Mortgage by Buyer and at the end of each thirty (30) day period
thereafter until such Mortgage has been purchased by a Third Party
Investor or repurchased by Client from Buyer in accordance with this
Agreement, Client shall pay to Buyer, in addition to all accrued
interest on the amount so funded by Buyer, such additional Handling Fee
and principal prepayments as specified above. Buyer may also invoke the
right to sell the loan to any Investor as to recover any funds and
costs associated with the loan transaction at any time during which the
loan exceeds the allowed number of days outstanding on the line, as
stated in Loan Term in the attached Schedule A of this Agreement.
XII. Client agrees to indemnify and hold Buyer harmless from, and on demand
by Buyer, pay Buyer for, any damages, losses, costs and expenses
resulting from any and all actions, suits, proceedings, demands,
assessments, judgments, or claims, including reasonable legal and other
expenses actually incurred and paid incident to any claim by any third
party or parties in connection with Mortgages purchased by the Buyer
hereunder, including, without limitation, (i) any claim for taxes
(other than income taxes payable by Buyer), by any state of the United
States, territory or political subdivision thereof or (ii) any claim
arising out of the noncompliance of any Mortgage with all applicable
laws, rules and regulations and any governmental authority, including,
but not limited to, usury laws, Regulation Z of the Board of Governors
of the Federal Reserve System and any similar state statute or
regulation, the Real Estate Settlement Procedures Act of 1974, as
amended (and Regulation X promulgated thereunder), and any other
federal or state consumer protection act, rule or regulation.
XIII. This Agreement may be terminated as to the future acceptance of
Mortgages by either party at any time upon giving thirty (30) days
written notice of termination to the other party, and such termination
shall not in any respect change or modify the obligation of Client with
respect to the Mortgages already purchased hereunder.
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XIV. This Agreement shall be liberally, not restrictively, construed so as
to give the greatest latitude to Buyer.
XV. This Agreement shall be construed in accordance with the laws of the
State of Georgia except that the provisions of this Agreement with
respect to remedies regarding the Mortgages are intended to comply with
the laws of the jurisdiction where such Mortgages are recorded, and any
provisions hereof, or of the Mortgages, not so complying shall be
deemed to be modified accordingly in the manner and to the extent which
shall best effect the intentions and purposes reflected in and
contemplated by this Agreement. The validity or enforceability of any
provision or provisions of the Mortgages or this Agreement shall not
affect the validity or enforceability of any other provision thereof or
hereof.
XVI. This Agreement shall bind and benefit the respective successors and
assigns of Client and Buyer. No other person or entity is intended to
be benefited hereby. Notwithstanding the foregoing, Client shall have
no power or right to assign this Agreement or any of its rights or
obligations hereunder and any attempt to do so, without the prior
written consent of Buyer, shall be voidable by Buyer at its option.
XVII. Buyer's omission or delay in the exercise of any of its optional or
absolute rights to remedy under this Agreement shall not constitute a
waiver by Buyer, nor operate to bar Buyer from the exercise of any such
rights. Any waiver by Buyer and any default shall not operate as a
waiver of any other subsequent default. All rights and remedies
provided to Buyer herein are not exclusive of any other remedies at law
or equity, are cumulative and not alternative, and may be exercised by
Buyer simultaneously or in such order as Buyer deems to be in its best
interest.
XVIII. Client hereby irrevocably appoints Buyer as its attorney in fact, with
all power of substitution, for and on behalf and in the name of Client
to take any or all of the following actions in the event Client shall
fail or refuse to no so; to endorse and deliver to Buyer or any other
person any checks, instruments or other papers coming into Buyer's
possession representing payments made on Mortgages or in respect of the
Mortgages; to prepare, complete, execute and deliver and recover in the
name of Client an assignment of any Mortgage Deed to Buyer or to any
other person; to endorse ahead deliver in the name of Client any
Mortgage Note; to do every other thing necessary or desirable to effect
transfer of a Mortgage to Buyer or to any other person; to take all
necessary and appropriate action in the name of Client with respect to
Mortgage Loans and the servicing of Mortgages, to commence, prosecute,
settle, discontinue, defend, or otherwise dispose of any claim relating
to any Mortgage or Third Party Investor commitment; and to sign
Client's name whenever appropriate to effect the performance of this
Agreement. This Section shall be liberally, not restrictively,
construed so as to give the greatest latitude to Buyer's power, as
attorney, to collect, sell, and deliver Mortgages and all documents
relating thereto.
XIX. This document contains the entire agreement between the parties hereto
and cannot be modified in any respect except by an amendment in writing
signed by both parties.
IN WITNESS WHEREOF, each party has caused its corporate seal to be
affixed hereto and this instrument to be signed in its corporate name on its
behalf by its proper officials duly authorized.
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This ______28th_________ day of MAY, 1999.
CLIENT: WESTMARK MORTGAGE CORPORATION
By: ______________________________________
Its: PAYTON STORY, III PRESIDENT
Attest: ______________________________________
By:
Its: BETH MCKEON, VICE PRESIDENT
BUYER: GREAT EASTERN FUNDING, L.L.C.
By: ______________________________________
Its: ______________________________________
Attest: ______________________________________
By: ______________________________________
Its: ______________________________________
12
Client Contract
- --------------------------------------------------------------------------------
This Client Contract (as may be amended, supplemented or otherwise
modified from time to time, this "Contract") is made this ____ day of
____________,19___, by and between Residential Funding Corporation, its
successors and assigns ("Residential Funding"), and Westmark Mortgage
Corporation (the "Customer," and, together with Residential Funding, the
"parties" and each, individually, a "party").
WHEREAS, the Customer desires to sell Loans to, and/or service Loans
for, Residential Funding, and Residential Funding desires to purchase Loans
from, and/or have the Customer service Loans for, Residential Funding, pursuant
to the terms of this Contract and the Guides (as that term is defined below).
NOW, THEREFORE, in consideration of the premises, and the terms,
conditions and agreements set forth below, the parties agree as follows:
1. Incorporation of Guides by Reference.
Residential Funding has approved the Customer to sell Loans
to, and/or service Loans for, Residential Funding under the Guide(s) checked
below. Each Guide that is checked below (as each may be amended, supplemented or
otherwise modified from time to time, together, the "Guides"), is hereby
incorporated into this Contract by reference and for all purposes made a part
hereof.
The Customer has been approved by Residential Funding to sell
Loans to and/or service Loans for Residential Funding, as indicated below, under
the following Guide(s):
STATUS APPLICABLE GUIDES
[ ] Seller Only [ ] Client Guide
[ ] Servicer Only [ ] AlterNet Seller Guide
[ ] Seller and Servicer [ ] Servicer Guide
If a box next to a Guide shown above has not been checked, the
Customer has not been approved by Residential Funding to sell Loans to, or, as
appropriate, service Loans for, Residential Funding, under that Guide(s) at this
time; but, Residential Funding may in the exercise of its sole discretion
approve the Customer to sell Loans to, or, as appropriate, service Loans for,
Residential Funding under that Guide(s) at some time in the future and the
Customer will be authorized to do so upon the execution and delivery by both
Residential Funding and the Customer of an addendum to this Contract in a form
provided to the Customer by Residential Funding containing that approval and
incorporating that Guide(s) into this Contract by reference.
The Customer acknowledges that it has received and read the
Guides. All provisions of the Guides are incorporated by reference into and made
a part of this Contract, and shall be binding upon the parties; provided,
however, that the Customer shall be entitled to sell Loans to and/or service
Loans for Residential Funding only if and for so long as it shall have been
authorized to do so by Residential Funding in writing. Specific reference in
this Contract to particular provisions of the Guides and not to other provisions
does not mean that those provisions of the Guides not specifically cited in this
Contract are not applicable., All terms used herein shall have the same meanings
as such terms have in the Guides, unless the context clearly requires otherwise.
<PAGE>
2. Amendments.
This Contract may not be amended or modified orally, and no
provision of this Contract may be waived or amended except in writing signed by
the party against whom enforcement is sought. Such a written waiver or amendment
must expressly reference this Contract. However, by their terms, the Guides may
be amended, modified or supplemented by Residential Funding from time to time.
Any such amendment(s) to the Guides shall be binding upon the parties hereto.
3. Representations and Warranties.
a. Reciprocal Representations and Warranties.
The Customer and Residential Funding each represents
and warrants to the other that as of the date of this Contract:
(1) Each party is duly organized, validly
existing, and in good standing under the
laws of its jurisdiction of organization, is
qualified, if necessary, to do business and
in good standing in each jurisdiction in
which it is required to be so qualified, and
has the requisite power and authority to
enter into this Contract and all other
agreements which are contemplated by this
Contract and to carry out its obligations
hereunder and under the Guides and under
such other agreements.
(2) This Contract has been duly authorized,
executed and delivered by each party and
constitutes a valid and legally binding
agreement of each party enforceable in
accordance with its terms.
(3) There is no action proceeding or
investigation pending or threatened, and no
basis therefor is known to either party,
that could affect the validity or
prospective validity of this Contract.
(4) Insofar as its capacity to carry out any
obligation under this Contract is concerned,
neither party is in violation of any
charter, articles of incorporation, bylaws,
mortgage, indenture, indebtedness,
agreement, instrument, judgment, decree,
order, statute, rule or regulation and none
of the foregoing adversely affects its
capacity to fulfill any of its obligations
under this Contract. Its execution of, and
performance pursuant to, this Contract will
not result in a violation of any of the
foregoing.
b. Customer's Representations, Warranties and Covenants.
In addition to the representations, warranties and
covenants made by the Customer pursuant to subparagraph (a) of this paragraph 3,
the Customer makes the representations, warranties and covenants set forth in
the Guides and agrees to deliver to Residential Funding the certified Resolution
of Board of Directors which authorizes the execution and delivery of this
Contract.
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<PAGE>
4. Remedies of Residential Funding.
If an Event of Client Default or Event of Servicer Default
shall occur, Residential Funding may, at its option, exercise one or more of the
remedies set forth in the Guides.
5. Customer's Status as Independent Contractor.
At no time shall the Customer represent that it is acting as
an agent of Residential Funding. The Customer shall, at all times, act as an
independent contractor.
6. Prior Agreements Superseded.
This Contract restates, amends and supersedes any and all
prior Client Contracts or Servicer Contracts between the parties except that any
subservicing agreement executed by the Customer in connection with any
loan-security exchange transaction shall not be affected.
7. Assignment.
This Contract may not be assigned or transferred, in whole or
in part, by the Customer without the prior written consent of Residential
Funding. Residential Funding may sell, assign, convey, hypothecate, pledge or in
any other way transfer, in whole or in part, without restriction, its rights
under this Contract and the Guides with respect to any Commitment or Loan.
8. Notices.
All notices, requests, demands or other communications that
are to be given under this Contract shall be in writing, addressed to the
appropriate parties and sent by telefacsimile, by overnight courier or by first
class United States mail, postage prepaid, to the addresses and telefacsimile
numbers specified below. However, another name, address and/or telefacsimile
number mat be substituted by the Customer pursuant to the requirements of this
paragraph 8, or by Residential Funding pursuant to an amendment to the Guides.
If to Residential Funding, notices must be sent to the
appropriate address or telefacsimile number specified in the Guides.
If to the Customer, notices must be sent to:
Mr. Peyton Story, III
Westmark Mortgage Corporation
355 N. E. 5th Avenue, Suite 4
Delray Beach, Florida 33483
Attention: Above
Telefacsimile Number ( 561 ) 279-1821
9. Jurisdiction and Venue.
Each of the parties irrevocably submits to the jurisdiction of
any state or federal court located in Hennepin County, Minnesota, over any
action, suit or proceeding to enforce or defend any right under this Contract or
otherwise arising from any loan sale or servicing relationship existing in
connection with this Contract, and each of the parties irrevocably agrees that
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<PAGE>
all claims in respect of any such action or proceeding may be heard or
determined in such state or federal court. Each of the parties irrevocably
waives the defense of an inconvenient forum to the maintenance of any such
action or proceeding and any other substantive or procedural rights or remedies
it may have with respect to the maintenance of any such action or proceeding in
any such forum. Each of the parties agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in any other
jurisdiction by suit on the judgment or in any other manner provided by law.
Each of the parties further agrees not to institute any legal actions or
proceedings against the other party or any director, officer, employee,
attorney, agent or property of the other party, arising out of or relating to
this Contract in any court other than as hereinabove specified in this paragraph
9.
10. Miscellaneous.
This Contract, including all documents incorporated by
reference herein, constitutes the entire understanding between the parties
hereto and supersedes all other agreements, covenants, representations,
warranties, understandings and communications between the parties, whether
written or oral, with respect to the transactions contemplated by this Contract.
All paragraph headings contained herein are for convenience only and shall not
be construed as part of this Contract. Any provision of this Contract that 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 portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction, and, to this end,
the provisions hereof are severable. This Contract shall be governed by, and
construed and enforced in accordance with, applicable federal laws and the laws
of the State of Minnesota.
This Contract shall be of no force and effect unless and until
it has been executed by both parties.
IN WITNESS WHEREOF, the duly authorized of ricers of the Customer and
Residential Funding have executed this Contract as of the date first above
written.
<TABLE>
<CAPTION>
<S> <C>
[Corporate Seal] CUSTOMER
(if none, so state) ____________________________________
ATTEST: (Name of Customer)
By:___________________________ By:_________________________________
(Signature)
Name:_________________________ Name:_______________________________
(Typed or Printed) (Typed or Printed)
Title:________________________ Title:______________________________
____________________________
[Signatures continued on next page]
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ATTEST: RESIDENTIAL FUNDING CORPORATION
By:__________________________________ By:________________________________
(Signature) (Signature)
Name:________________________________ Name:______________________________
(Typed or Printed) (Typed or Printed)
Title:_______________________________ Title:_____________________________
</TABLE>
5
Banc1One(R)
MASTER MORTGAGE LOAN PURCHASE AGREEMENT
Dated as of December 22, 1998
WESTMARK MORTGAGE CORPORATION
AND
BANCONE FINANCIAL SERVICES, INC.
<PAGE>
MASTER MORTGAGE LOAN PURCHASE AGREEMENT
THIS MASTER MORTGAGE LOAN PURCHASE AGREEMENT (this "Agreement"), dated
as of December 22, 1998, is by and between BANC ONE FINANCIAL SERVICES, INC., an
Indiana corporation, with offices at 8604 Allisonville Road, Indianapolis,
Indiana 46250 ("Banc One") and Westmark Mortgage Corporation, a California
corporation, with offices in 8000 North Federal Highway, Boca Raton, Florida
33487 ("Seller").
RECITALS
1. From time to time, Seller desires to offer for sale to Banc One, and
Banc One may from time to time purchase from Seller, on the terms and subject to
the conditions set forth herein and in Delivery Instructions (as defined below)
certain non-conforming or subprime residential mortgage loans owned by Seller
and secured by first or second lien priority mortgages on residential property
owned by the borrowers; and
2. Seller and Banc One desire to enter into this Agreement to govern
the sale and purchase of the Loans (as defined below).
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and agreements contained in this Agreement, the Parties agree
as follows:
WITNESSETH
IN CONSIDERATION of the mutual covenants and agreements contained in
this Agreement, the parties hereto agree as follows:
Article 1 DEFINITIONS
Section 1.1 Defined Terms. Capitalized terms used in this Agreement
shall have the meanings given to such terms in this Section 1.1. The following
words and phrases, unless the context otherwise requires, shall have the
meanings specified in this Article:
Accepted Servicing Practices: As to any Loan, those mortgage servicing
practices of prudent mortgage lending institutions that service mortgage loans
of the same type as the Loan in the jurisdiction where the related Mortgaged
Property is located.
Accrued Interest: With respect to each Loan, interest on the
Outstanding Loan Amount at the Loan Interest Rate calculated in the same manner
and fashion as interest is calculated on the Loan for the period commencing on
the date following the day through which interest has last been paid and ending
the day immediately prior to the Funding Date or the date of payment of the
Repurchase Price for such Loan, as applicable.
Agreement: This Master Mortgage Loan Purchase Agreement, including all
Schedules and Exhibits hereto, as the same may be amended or supplemented from
time to time.
Appraisal: A documented evaluation of the market value of the Mortgaged
Property related to a Loan and included in the Loan File, which conformed to the
minimum requirements of FNMA and FHLMC as of the time of such evaluation and was
performed by a qualified appraiser who had no direct or indirect interest,
financial or otherwise, in the Mortgaged Property or in the Loan or any other
loan made to Mortgagor or secured by the Mortgaged Property and whose
compensation was not related to approval or disapproval of the Loan.
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Appraised Value: With respect to each Loan, the value of the related
Mortgaged Property established by an Appraisal.
Assignment: With respect to each Loan, an assignment of the related
Mortgage, notice of transfer or equivalent instrument, in form acceptable for
recording and sufficient under the laws of the jurisdiction in which the related
Mortgaged Property is located to reflect of record the sale and transfer of the
Loan to the assignee named therein or to Banc One.
Best Efforts Flow Delivery: The agreement by Seller and Banc One, as
described in Section 2.2 hereof, pursuant to which, from time to time, Seller
offers, but is not obligated, to sell, and Banc One commits, and is thereby
obligated to purchase, a Loan on the terms and conditions set forth herein and
in the applicable Stipulation Schedule.
Bid Confirmation Letter: As to any Bulk Delivery, the related bid
confirmation letter or similar document, agreement or writing delivered to
Seller by Banc One setting forth the terms and conditions of such Bulk Delivery.
Bulk Delivery: The agreement by Seller and Banc One, as described in
Section 2.3 hereof, pursuant to which, from time, on the terms set forth herein
and in the applicable Bid Confirmation Letter, Banc One agrees to purchase and
Seller agrees to sell, on a committed basis, one or more pools of Loans.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a
day on which the Federal Reserve Bank for the district covering Indianapolis,
Indiana is closed.
Combined Loan-to-Value Ratio at Origination: With respect to each Loan,
the Outstanding Loan Amount plus the maximum principal balance of any mortgage,
deed of trust or similar lien instrument prior in lien priority to the lien of
the related Mortgage, divided by the Appraised Value of the related Mortgaged
Property as of the origination date of the Loan.
Credit Documents: As to any Loan, each of the documents set forth on
Exhibit C hereto.
Delivery: Any Best Efforts Flow Delivery, Bulk Delivery, or Forward
Commitment Delivery as the context may require.
Delivery Instructions: As to any Loan or pool of Loans and the related
delivery, the applicable Bid Confirmation Letter, Stipulation Schedule or
Forward Delivery Stipulation Schedule and any other document, agreement or
writing delivered by Banc One to Seller in respect of such Loan and Delivery.
Escrow Payments: As to any Loan, any amounts constituting grounds
rents, taxes, assessments, water rates, sewer rents, municipal charges, mortgage
insurance premiums, fire and hazard insurance premiums, condominium charges and
any other payments required to be paid into escrow by the Mortgagor with the
mortgagee or its designee in respect of such Loan and Delivery.
Federal Funds Rate: For any day, the rate of interest per annum
(rounded upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published by the Federal Reserve Bank of New York
of the Business Day next succeeding such day, provided that if no such rate is
published on such next succeeding Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Banc One on such day on overnight
Federal funds transactions, as determined by Banc One; each change in the
Federal Funds Rate to be effective on the date of each such change.
Forward Commitment Delivery: The agreement by Seller and Banc One, as
described in Section 2.4 hereof, pursuant to which, from time to time, Banc One
commits, and is thereby obligated to purchase, Loans on the terms and conditions
set forth herein and in the applicable Forward Delivery Stipulation Schedule.
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<PAGE>
Funding Date: With respect to any purchase of any Loan by Banc One
hereunder, the date on which the purchase price for such Loan is paid to Seller,
which date shall occur no earlier than the date on which all Loan Documents
related to such Loan and all other deliveries required by the related Delivery
Instructions have been made and shall occur no later than the last day on which
Banc One agrees, pursuant to the related Delivery Instructions, to purchase such
Loan.
Intervening Assignment: For any Loan Seller did not originate, an
assignment of the Note and Mortgage for the mortgagee named therein acceptable
for recording, which is appropriate and sufficient under the laws of the
jurisdiction in which the Mortgaged Property is located to establish a complete
chain of title to the Mortgage in Seller.
Loan: For each Loan, the Loan Documents and any and all rights,
benefits, collateral, payments, recoveries, proceeds and obligations arising
therefrom or in connection therewith, and which is the subject of this
Agreement.
Loan Documents: For each Loan, the documents and instruments specified
in Exhibit D.
Loan File: For each Loan, the Loan Documents, Credit Documents, and all
other memorandums, correspondence, reports and compilations.
Loan Interest Rate: The annual rate at which interest accrues on each
Loan as changed from time to time in accordance with the provisions of the Loan
Documents.
Mortgage: For each Loan, the document creating a lien on the Mortgaged
Property, with blanks appropriately completed, duly executed by Mortgagor and
recorded in the appropriate recording office to perfect such a lien in the
jurisdiction where the Mortgaged Property is located, including any
modifications thereof.
Mortgaged Property: For each Loan, the real property, together with the
improvements thereon, subject to the Mortgage and securing Mortgagor's
indebtedness under the Loan.
Mortgagor: Any Person who is obligated under a Mortgage or Note.
Note: For each Loan, the credit instrument or instruments, with all
modifications thereto, evidencing the indebtedness of Mortgagor, which are
secured by a Mortgage duly executed by Mortgagor.
Officer's Certificate of Seller: A certificate signed by the
appropriately authorized officers of Seller and delivered to Banc One as
required by this Agreement.
Outstanding Loan Amount: The unpaid principal amount of a Loan as of
the date of the Funding Date.
Party: Seller or Banc One.
Person: Any individual, corporation, limited liability company,
partnership, limited partnership, limited liability partnership, joint venture,
association, joint-stock company, trust, any other type of business
organization, unincorporated organization or governmental unit or any agency or
political subdivision thereof.
Purchase Price: An amount equal to the sum of: (i) 100% of the
Outstanding Loan Amount of any Loan to be sold to Banc One any Funding Date,
(ii) the purchase price premium as set forth in any Bid Confirmation Letter,
Stipulation Schedule, or Forward Delivery Stipulation Schedule as may be
provided from time to time between Seller and Banc One and (iii) 100% of the
Accrued Interest for such Loan up to but not including the Funding Date.
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<PAGE>
Repurchase Price: For each Loan, an amount equal to the sum of: (i) the
Outstanding Loan Amount as of the date of payment of the Repurchase Price; (ii)
Accrued Interest; (iii) all advances made by Banc One and all charges due from
the Mortgagor; (iv) the total amount, including Accrued Interest and other
expenses paid by Banc One to any senior lienholders, if any, to secure a
priority lien position; (v) all expenses, losses and damages paid or incurred by
Banc One in connection with the Loan or an investigation of said Loan and/or
related collateral, including, but not limited to, property taxes, maintenance
costs, interest expense, environmental assessments, environmental reports,
environmental remediation, insurance, appraisals, advertising, sales
commissions, reasonable attorneys fees, expenses and costs, fines and penalties
and (vi) the premium rebate that Seller is required to pay Banc One pursuant to
Section 3.4 of this Agreement.
Service Transfer Date: As to any Delivery, the date agreed by the
parties and specified in the related Delivery Instructions.
Stipulation Schedule: As to a Best Efforts Flow Delivery, all
preapproval stipulation schedules, postclosing stipulation schedules or similar
documents, agreements, certificates and writings delivered to Seller by Banc One
with respect to any Loan and related to such Delivery.
Underwriting Guidelines: All underwriting guidelines of Banc One
relating to mortgage loans similar to the Loans, as such guidelines may be
changed, amended, modified or supplemented from time to time, as communicated to
Seller by Banc One.
Wire Transfer Authorization: The written authorization of Seller, in
the form of Exhibit B.
Section 1.2 Number and Gender of Words. Whenever the singular number is
used, the same shall include the plural where appropriate, and vice versa; and
the words of any gender shall include each other gender where appropriate. The
words "herein", "hereof" and "hereunder," and other words of similar import
refer to the relevant document as a whole, and not to any particular part or
subdivision hereof.
Article 2 OFFERS TO SELL
Section 2.1 Offers. From time to time, Seller may offer to Banc One one
or more Loans for purchase by Banc One pursuant to one or more Delivery types,
which Loans and the right to service such Loans, Seller desires to sell to Banc
One. Seller shall comply with all provisions of the related Delivery
Instructions applicable to any such offer. Any and all such sales and transfers
shall be subject to the provisions of this Agreement and the related Delivery
Instructions. Except as may be set forth in the Delivery Instructions for a
specific Delivery, Banc One shall have no obligation to purchase any Loan
offered by Seller.
Section 2.2 Best Efforts Flow Delivery.
(a) Seller may from time to time offer a Loan to Banc One for purchase
by Banc One. Banc One may, in response to such an offer, issue to Seller a
Stipulation Schedule, thereby obligating Banc One to purchase a Loan meeting the
criteria set forth herein and in such Stipulation Schedule. The obligation by
Banc One to make any such purchase shall be subject to (i) Banc One's prior
receipt, and satisfactory review, of the Credit Documents relating to such Loan
and (ii) the terms and conditions set forth in the Stipulation Schedule. A
delivery of the Loan pursuant to a Stipulation Schedule is referred to herein as
a "Best Efforts Flow Delivery." Banc One shall, as set forth in the related
Stipulation Schedules, be obligated to purchase any Loan offered by Seller
pursuant to a Best Efforts Flow Delivery. To the extent any Stipulation Schedule
conflicts with any provision of this Agreement, the terms of the Schedule shall
control over this Agreement.
(b) With respect to any offer of Loans that is a Best Efforts Flow
Delivery, Banc One shall have no obligation to purchase any Loan so offered
unless (i) delivery of the Loan and all related Loan Documents and Credit
5
<PAGE>
Document are made on or before the Expiration Date set forth in the Stipulation
Schedule, (ii) the Loan conforms to the Underwriting Guidelines and (iii) all
other conditions to purchase set forth in the applicable Stipulation Schedule
have been satisfied on or before the Funding Date for such Loan.
Section 2.3 Bulk Delivery.
(a) Seller may request Banc One to purchase a pool of Loans on a bulk
basis, on the terms and conditions set forth in the related Bid Confirmation
Letter. If Banc One issues its Bid Confirmation Letter, Banc One shall, subject
to Banc One's prior receipt, and satisfactory review, of the Loan Documents and
Credit Documents relating to each specific Loan in the pool of Loans to be
purchased, be obligated to purchase the Loans described in a Bid Confirmation
Letter on the terms and conditions set forth in such Bid Confirmation Letter,
provided that delivery of all of the Loans and the related Loan Documents and
Credit Documents are made no later than the Funding Date set forth in the
applicable Bid Confirmation Letter. Seller shall be obligated to sell to Banc
One each pool of Loans described in the Bid Confirmation Letter. To the extent
any Bid Confirmation Letter conflicts with any provision of this Agreement, the
terms of the Bid Confirmation Letter shall control over this Agreement.
(b) With respect to any offer of Loans that is a Bulk Delivery, Banc
One shall have no obligation to purchase any pool of Loans so offered unless:
(i) Banc One has delivered to Seller a Bid Confirmation Letter in respect of
such Delivery; (ii) Seller has paid to Banc One any fee required to be paid
under such Bid Confirmation Letter, (iii) the pool of Loans conforms to the
requirements of such Bid Confirmation Letter, (iv) delivery of all of the Loans
and all related Loan Documents and Credit Documents are made before the Funding
Date set forth in such Bid Confirmation Letter and (v) all conditions to
purchase (including without limitation completion by Banc One of any required
due diligence of the pool of Loans) set forth herein and in the applicable Bid
Confirmation Letter have been satisfied on or prior to the Funding Date for such
Loan.
(c) Prior to each Funding Date for any Bulk Delivery, Banc One shall
have the right to review the Loan Documents and Credit Documents and the
Mortgaged Property securing each Loan. Banc One may reject any Loan that does
not conform to such underwriting assumptions or Banc One's documentation, credit
or collateral requirements, or as to which a representation or warranty
contained in Section 4.2 hereof will not be correct on such Funding Date. Each
such unacceptable Loan shall be deleted from this Agreement and the related Bid
Confirmation Letter on or before such Funding Date. Seller shall cause its
officers, servicers and employees to provide such assistance and to furnish such
reasonably available information in respect to the Loans as Banc One may from
time to time request.
Section 2.4 Forward Commitment Delivery.
(a) Banc One may, from time to time, issue to Seller a Forward Delivery
Stipulation Schedule, thereby obligating Banc One to purchase Loans meeting the
criteria set forth herein and in such Forward Delivery Stipulation Schedule. The
obligation by Banc One to make any such purchase shall be subject to (i) Banc
One's prior receipt, and satisfactory review, of the Credit Documents relating
to such Loan and (ii) the terms and conditions set forth in the Forward Delivery
Stipulation Schedule. A delivery of the Loans pursuant to a Forward Delivery
Stipulation Schedule is referred to herein as a "Forward Commitment Delivery."
Banc One shall, as set forth in the related Forward Delivery Stipulation
Schedules, be obligated to purchase any Loan offered by Seller pursuant to a
Forward Commitment Delivery. To the extent that any Forward Delivery Stipulation
Schedule conflicts with any provision of this Agreement, the terms of the
Forward Delivery Schedule shall control over this Agreement, provided that in no
event will Banc One be obligated to perform under any Forward Commitment
Delivery if: (i) there shall occur a breach by Seller of any of its
representations, warranties, or covenants hereunder; (ii) Banc One shall have
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given Seller forty-five (45) days prior written notice that the Forward
Commitment Delivery will terminate; or (iii) ninety (90) days shall have elapsed
since the date of the Forward Delivery Stipulation Schedule.
(b) With respect to any offer of Loans that is a Forward Commitment
Delivery, Banc One shall have no obligation to purchase any Loan so offered
unless (i) delivery of the Loan and all related Loan Documents and Credit
Documents are made on or before the Expiration Date set forth in the Forward
Delivery Stipulation Schedule, (ii) the Loan conforms to the Underwriting
Guidelines and (iii) all other conditions to purchase set forth in the
applicable Forward Delivery Stipulation Schedule have been satisfied on or
before the Funding Date for such Loan. ARTICLE 3 PURCHASE AND SALE OF LOANS.
Section 3.1 Delivery of Loans.
(a) Delivery to Banc One of Loan Documents, Credit Documents, and all
other documents or items of the Loan File for each Loan purchased by Banc One
hereunder shall be made by Seller, at Seller's sole expense, in compliance with
the requirements of this Agreement, and shall occur no later than the date or
dates and time required by the related Delivery Instructions and any other
document delivered to Seller by Banc One pursuant thereto and relating to the
Loans for which such Loan Documents and Credit Documents are being delivered.
The Note for each Loan shall be endorsed "Pay to the Order of Banc One Financial
Servcies, Inc. Without Recourse" and executed, either by original signature or
authorized facsimile by an authorized signer of Seller.
(b) No later than five Business Days after the Funding Date, Seller, at
its sole cost and expense, shall prepare, execute and deliver to Banc One for
recording in the appropriate public recording office, an Assignment, in proper
form for recording, for each Loan purchased by Banc One as assignee. Banc One
may request, where permitted by local law, that the Assignments be combined into
one or more documents, each referring to more than one Mortgage.
(c) Seller agrees to use its best efforts to obtain the originals of
all recorded Loan Documents required to be delivered to Banc One,
notwithstanding any delays by the recording offices and shall delivery each such
original recorded Loan Document to Banc One promptly following receipt by Seller
thereof; provided, however, that in any event Seller shall deliver to Banc One
each such original recorded Loan Document within 180 days following the
applicable Funding Date. If Seller is unable due to recording office delays to
deliver to Banc One any original recorded Loan Document within the 180-day
period following the applicable Funding Date, Seller shall, within 180 days
following the applicable Funding Date, deliver to Banc One evidence from the
applicable recording office to the effect that (i) the applicable Loan Document
was delivered to such recording agency within the time period required hereby
for such delivery and (ii) recording of such Loan Document is pending. Seller
agrees at any time, and from time to time, upon the request and at the expense
of Seller to use its best efforts to execute and deliver or cause to be executed
and delivered such further instruments and documents of conveyance as shall be
necessary to vest in Banc One legal or equitable title in and to the Loans.
Section 3.2 Purchase and Sale.
On each Funding Date, subject to the terms and conditions set forth in
this Agreement and the applicable Delivery Instructions:
(i) Seller shall sell, transfer, assign and convey to Banc
One, without recourse, and Banc One shall purchase and take on the Funding Date,
all of Seller's right, title and interest in and to the Loans that Banc One has
agreed to purchase on such date;
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(ii) Seller shall transfer, assign and convey to Banc One, and
Banc One shall purchase and take on the Funding Date, all of Seller's right,
title and interest in and to all escrow deposit held in connection with the
Loans that Banc One has agreed to purchase on such date; and
(iii) unless otherwise agreed to in writing by Seller and Banc
One, Seller shall irrevocably assign to Banc One, and Banc One shall assume, on
the Funding Date, Seller's right to service each Loan and to collect any
servicing fee in connection with such Loan, all to be effective as of the
related Service Transfer Date.
Upon payment of the Purchase Price on the Funding Date, title to the
Loans shall vest in Banc One. All rights arising out of the Loans including but
not limited to, all funds received on or in connection with the Loans and all
records or documents with respect to the Loans prepared by or which come into
the possession of Seller on or after the Funding Date shall be received and held
by Seller in trust for the benefit of Banc One as the owner of the Loans.
Section 3.3 Purchase Price. On each Funding Date in accordance with the
terms and conditions hereof and of the applicable Delivery Instructions, Banc
One shall pay to Seller the Purchase Price by wire to Seller's bank as set forth
on the Wire Transfer Authorization.
Section 3.4 Refunds and Rebates.
(a) If a premium is paid by Banc One to Seller on a Loan that does not
have a valid and enforceable prepayment charge provision, and such Loan is
prepaid in full by Mortgagor, other than by a refinancing by Banc One or any of
its subsidiaries or affiliates, within the 12 moth period following the Funding
Date related to such Loan, Seller shall, upon demand by Banc One, refund to Banc
One the premium paid by Banc One to Seller as follows: if prepayment in full is
within one (1) month of the Funding Date, 12/12ths of the premium shall be
refunded; if prepayment in full is within two (2) months of the Funding Date,
11/12ths of the premium shall be refunded; if prepayment in full is within three
(3) months of the Funding Date, 10/12ths of the premium shall be refunded; if
prepayment in full is within four (4) months of the Funding Date, 9/12ths of the
premium shall be refunded; if prepayment in full is within five (5) months of
the Funding Date, 8/12ths of the premium shall be refunded; if prepayment in
full is within six (6) months of the Funding Date, 7/12ths of the premium shall
be refunded; if prepayment in full is within seven (7) months of the Funding
Date, 6/12ths of the premium shall be refunded; if prepayment in full is within
eight (8) months of the Funding Date, 5/12ths of the premium shall be refunded;
if prepayment in full is within nine (9) months of the Funding Date, 4/12ths of
the premium shall be refunded; if prepayment in full is within ten (10) months
of the Funding Date, 3/12ths of the premium shall be refunded; if prepayment in
full is within eleven (11) months of the Funding Date, 2/12ths of the premium
shall be refunded; if prepayment in full is within twelve (12) months of the
Funding Date, 1/12th of the premium shall be refunded. In the event the Loan is
prepaid in full later than twelve (12) months from the Funding Date, no refund
shall be due. If (a) the Note carries an unenforceable prepayment charge or (b)
the prepayment charge is less than the pro rated recapture premium, and
Mortgagor pays the applicable prepayment charge to Banc One, Banc One agrees to
recapture the premium rebate, (i) first, from the proceeds of the prepayment
charge and (ii) second, from Seller, if there is any deficient balance according
to the refund calculation specified above.
(b) In the event Banc One is required to provide a refund or rebate to
any Mortgagor of any points, prepaid finance charges, or similar item, which was
not collected by Banc One, Seller shall immediately reimburse Banc One for the
rebate or refund upon demand.
(c) Insurance refunds or credits of any kind whatsoever shall be the
sole responsibility of Seller in the event of prepayment of any Loan,
cancellation of insurance or any other event requiring refunding or crediting of
unearned insurance premiums. Upon Banc One's demand, Seller shall pay to Banc
One, from 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, Banc One shall assign in writing any rights it
had to require that the insurer reimburse Banc One for any rebate made to
Mortgagor.
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Section 3.5 Bailee Letters. Banc One agrees to enter into such bailee
letters as may be reasonably required from time to time by Seller's warehouse
lenders. All costs and expenses incurred by Banc One in connection therewith
shall be paid promptly by Seller upon receipt by Seller of an invoice therefor.
Section 3.6 Post Closing Accounting and Payments.
(a) Within ninety (90) days after the Funding Date for each Loan, the
parties to this Agreement shall notify the other in writing of any
miscalculations, misapplied payments, unapplied payment or other accounting
errors (each, a "Discrepancy") which said party has discovered and which affects
the accounting of any of the Loans purchased on such Funding Date or the
Purchase Price for the Loans purchased on such Funding Date. Notice under this
Section 3.6 shall include copies of documents sufficient to describe each
Discrepancy. Buyer shall pay Seller or Seller shall pay Buyer, as the case may
be, an amount sufficient to correct such Discrepancy, with all such adjustment
calculated using the applicable purchase price premium. Any amounts due
hereunder shall be paid within ten (10) days of notice by the first party to the
other party.
(b) Seller will immediately deliver to Banc One all payments received
for any Loan as of or after the Funding Date, with a record of the date such
payment was received by Seller.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER.
Section 4.1 Representations and Warranties of Seller - General. It is
understood and agreed by Seller and Banc One that, as a material inducement to
Banc One to enter into this Agreement, Seller hereby represents and warrants to
Banc One on the date hereof and on each Funding Date:
(a) Seller is a duly organized and validly existing Corporation and is
in good standing under the laws of California and has all corporate powers and
all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted. Seller is licensed and
qualified to transact the mortgage origination business in and is in good
standing under the laws of each state where a Mortgaged Property is located or
is otherwise exempt under applicable law from such licensing and qualification
or is otherwise not required under applicable law to effect such licensing and
qualification and no demand for such licensing and qualification has been made
upon Seller by any state having jurisdiction and in such even Seller is or will
be in compliance with the laws of any state to the extent necessary to insure
the enforceability of each Loan. Seller shall deliver to Banc One no later than
the date this Agreement is executed, a certificate of good standing for each
state in which Seller is licensed to do business, if required and not exempt.
(b) The execution and delivery of this Agreement by Seller and the
performance by Seller of the obligations to be performed by it hereunder have
been duly authorized by all necessary corporate or other similar action. Seller
will deliver to Banc One within ten (10) days after the date this Agreement is
executed by Seller, and in no event later than the first Funding Date, copies of
relevant corporate or similar resolutions, certified by the Secretary or an
Assistant Secretary of Seller, authorizing the execution and delivery of this
Agreement and the performance by Seller of the obligations under this Agreement.
(c) Seller has the full power and authority to hold each Loan, to sell
each Loan and to execute, deliver and perform, and to enter into and consummate
all transactions contemplated by this Agreement; including without limitation,
the ability to effect a valid and enforceable assignment of all of Seller's
rights, title and interest under the Notes, Mortgages, and the other Loan
Documents.
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(d) This Agreement, when duly executed and delivered by Seller,
constitutes a legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms, except as such enforcement may be limited
by bankruptcy, insolvency, reorganization, receivership, moratorium or other
laws relating to or affecting the rights of creditors generally, and by general
equity principles.
(e) Neither the execution and delivery of this Agreement, the
acquisition or origination of the Loans by Seller, the sale of the Loans to Banc
One, the consummation of the transactions contemplated by this Agreement, nor
the fulfillment of or compliance with the terms and conditions of this
Agreement, will violate Seller's articles of incorporation, articles of
association, charter or by-laws, or other governing or constituent documents, or
conflict with, or constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) which may be applicable to Seller
or any of its assets. As of the date of this Agreement, Seller has delivered to
Banc One an Officers' Certificate of Seller substantially in the form attached
hereto as Exhibit A.
(f) The execution and delivery of this Agreement by Seller and the
performance by Seller of the obligations to be performed by it hereunder do not,
and will not, violate any provision of law, rule, regulation, order, writ,
judgment, decree, determination or award present in effect having applicability
to Seller. All parties that have had any interest in the Loans, whether as
mortgagee, assignee or pledgee are (or during the period in which they held and
disposed of such interest, were) in compliance with all applicable licensing
requirements of the federal, state, and local government wherein the Mortgaged
Property is located.
(g) There are no actions, suits or proceedings pending or, to Seller's
knowledge, threatened against or affecting Seller or the properties of Seller
before any court or governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, which, if determined adversely to
Seller, would materially and adversely affect the sale of the Loans to Banc One,
the execution, delivery or enforceability of this Agreement, or have a material
adverse effect on the financial condition, properties or operations of Seller.
(h) No consent, approval, authorization, exemption or order of, or
notice to or registration or filing with, any governmental agency, authority or
administrative or regulatory body is required for the execution, delivery and
performance by Seller of or compliance by Seller with this Agreement, the
delivery of the Loan Files to Banc One, the sale of the Loans to Banc One or the
consummation of the transactions contemplated by this Agreement.
(i) Seller has no liability or obligation of any nature, secured or
unsecured (whether accrued, absolute, contingent or otherwise) which will have a
material adverse effect on the Loans or the performance of Seller's obligations
under this Agremeent.
(j) The execution and delivery of this Agreement by Seller and the
performance by Seller of the obligations to be performed by it hereunder do not
and will not result in a breach of or constitute a default under any indenture
or loan or credit agreement or any other agreement, lease or instrument to which
Seller is a party or by which it or its properties may be bound or affected.
(k) All information provided by Seller to Banc One in any document,
schedule, certificate or other written information delivered pursuant to, or
contemplated by, this Agreement is true, correct and complete in all respects as
of the date of such document or certificate, or if not true, correct or complete
in any material respect, has been corrected by Seller and, as corrected all such
information is true, correct and complete as of the date of such correction.
(l) Seller has not, in connection with each Loan purchased by Banc One,
incurred any obligation, made any commitment or taken any action that might
result in a claim against Banc One or an obligation by Banc One to pay a sales
brokerage commission, finder's fee or similar fee in respect to the transactions
between Banc One and Seller as described in this Agreement. Seller agrees to
indemnify and hold Banc One harmless from and against any claims, liabilities,
damages or costs (including reasonable attorney fees) relating to any broker,
agent or finder or other person, who shall claim to have dealt on behalf of
Seller in connection with the transactions contemplated by this Agreement.
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(m) Seller has not transferred any Loan to Banc One with any intent to
hinder, delay or defraud any of Seller's creditors.
(n) Except with the prior written approval of Banc One, Seller shall
not materially amend its policies or practices with respect to account terms and
conditions, including marketing, customer services, origination, underwriting,
collection of, or accounting for the Loans to be sold to Banc One pursuant to
this Agreement.
(o) The consummation of the transactions contemplated by this Agreement
and the Delivery Instructions are in the ordinary course of business of Seller.
(p) Seller used no adverse selection procedures in selecting the Loans
from among the outstanding loans in Seller's portfolio as to which the
representations and warranties set forth in Section 4.2 hereof could be made as
of the Funding Date.
(q) Seller does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant contained in this
Agreement.
(r) Seller is not insolvent, the sale of the Loans will not cause
Seller to become insolvent and Seller is not aware of any pending insolvency.
The consideration received by Seller upon the sale of the Loans under this
Agreement constitutes fair consideration and reasonably equivalent value for the
Loans.
(s) Each of the Loan Documents and Credit Documents for the Loans to be
purchased hereunder are on forms previously given to Banc One for review. Seller
has given Banc One copies of all allegations of violations of state or federal
law (including but not limited to all statutes, regulations, official staff
commentaries or case law) with respect to any such form of the Loan Documents or
Credit Documents, or the practices of Seller, any services for Seller, or any
predecessor of Seller with respect to such forms, whether by letter, complaint,
legal proceeding, arbitration, administrative proceeding, audit, examination, or
any other manner that would put Seller on notice of any such alleged violation
("Violation Information"). At any time that there remains pending a Best Efforts
Flow Delivery, Bulk Delivery, or a Forward Commitment Delivery Seller shall
promptly delivery to Banc One hereafter, copies of all future Violation
Information.
(t) The origination practices used by Seller with respect to the Loans
have been, in all material respects, legal, proper, prudent and customary in the
mortgage lending business.
Section 4.2 Representations and Warranties of Seller as to Each Loan.
It is understood and agreed by Seller and Banc One that, as a material
inducement to Banc One to enter into this Agreement and purchase Loans from
Seller hereunder, Seller hereby represents and warrants to Banc One as of the
related Funding Date for each Loan purchased on such Funding Date that:
(a) Seller is a holder-in-due-course of each Note within the meaning of
the Uniform Commercial Code in effect for the jurisdiction where the Mortgaged
Property is located and where the Mortgagor is domiciled, and is the sole owner
of the Loan and has the right to assign and transfer the Loan to Banc One.
Seller has not sold, assigned or otherwise transferred any right or interest in
or to the Loan and has not, unless disclosed to Banc One in writing, pledged the
Loan as collateral for any loan or obligation of Seller or other purpose. The
assignment of the Loan by Seller to Banc One validly transfers such Loan to Banc
One free and clear of any pledges, liens, claims, encumbrance, mortgages,
charges, exceptions or security interests.
(b) Seller has transferred to Banc One all of its right, title and
interest in the Note, the related Mortgage and the Loan Documents and Loan
Files, and Banc One has purchased such Loan and the related Note, Mortgage, Loan
Documents and Loan Files, with an individual current hazard insurance policy
(including fire and extended coverage and other mattes as are customary in the
area of the Mortgage Property), or a blanket policy in lieu thereof, or a
certificate if Banc One agrees in writing to accept a certificate, insuring the
Mortgaged Property, with a loss payable clause in favor of Seller, its
successors and assigns in an amount equal to at least ninety percent (90%) of
the replacement value of the Mortgaged Property.
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(c) Immediately prior to transfer of such Loan to Banc One, Seller had
good, marketable and indefeasable title to, and was the sole owner and holder
of, the Loan subject to no liens, charges, mortgages, claims, participation
interests, equities, pledges or security interests of any nature, encumbrances
or rights of others (collectively, a "Lien"). Seller shall have transferred all
of its right, title and interest in and to the Loan to Banc One and Banc One
will hold good, marketable and indefeasible title to, and be the sole owner of,
such Loan subject to no liens.
(d) The Outstanding Principal Balance of any Loan on the Funding Date
does not exceed the original principal balance of the Note.
(e) All information relating to the Loan that has been provided by
Seller to Banc One in any document, schedule or certificate, and any other
written information delivered pursuant to, or contemplated by, this Agreement or
the related Delivery Instructions is true, correct and complete in all respects
as of the date of such document or certificate, or if not true, correct or
complete in any material respect, has been corrected by Seller and as corrected
all such information is true, correct and complete as of the date of such
correction.
(f) No loan was made to facilitate the sale of other real estate owned.
(g) No instruments, other than those delivered herewith or with the
Loans on the related Funding Date are required under applicable law to evidence
the indebtedness represented by the Loan or to perfect the lien of the related
Mortgage.
(h) Except as has been disclosed and agreed to by Banc One in writing,
there is no agreement with the Mortgagor regarding any variation of the interest
rate and schedules of payment (except as described in Note and Mortgage) or
other terms and conditions of the Loan, no Mortgagor has been released from
liability on the Note, and no property has been released from the Mortgage. If
the Loan is a variable rate loan, Seller represents and warrants as of each
subsequent Funding Date that all applicable notices required by law or
regulation have been provided to the Mortgagor and that the right to future
changes in the interest rate and payment schedules has not been waived by Seller
or any previous holder of the Loan.
(i) The Loan is secured by a valid Mortgage, of the agreed-up priority,
on residential property, and such Mortgage has been properly received by the
appropriate public recording official to be filed, recorded or otherwise
perfected in due-course in accordance with applicable law in the appropriate
jurisdiction.
(j) Seller holds a marked-up title policy or a title insurance binder
or title certificate which is in full force and effect; which has an insurance
limit at least as great as the outstanding principal balance of the Loan; which
names the Seller, its successors and assigns as the insured party; and which is
issued by a title insurer that is licensed and qualified to do business in the
jurisdiction where the Mortgaged Property is located. The policy referred to in
this Section 4.2(j) shall:
(i) insure the absence of any lien of taxes and other
assessments, other than real property taxes which are not delinquent;
(ii) disclose whether all taxes and other assessments due as
of the date of the policy have been paid in full;
(iii) disclose all other matters concerning the particular
property which are customarily disclosed in standard ALTA mortgage policies;
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(iv) permit Banc One as assignee to have and hold all rights
as the insured lender thereunder without any further charge, act or required
notice to said insurer;
(v) contain an endorsement insuring all modifications to the
Loan which are necessary in order for the policy to be effective for the
modifications; and
(vi) be a standard ALTA policy unless unavailable in that
jurisdiction, in which event the policy shall be on such form as is customary in
the jurisdiction for similar loans.
If Banc One purchases a Loan having relied on a marked-up title
insurance binder or title certificate rather than a title insurance policy,
Seller shall have 30 days to deliver to Banc One the title insurance policy.
(k) The Note and the related Mortgage contain customary, valid, legal
and enforceable provisions such as to render the rights and remedies of the
holder adequate for the realization against the Mortgaged Property of the
benefits of the security created thereby, 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. There is no homestead or other exemption
available to the Mortgagor that would materially interfere with the right to
sell the Mortgaged Property.
(l) The proceeds of the Loan have been fully disbursed and any and all
requirements as to completion of on-site and off-site improvements and
disbursement of any escrow funds therefor have been complied with and any
advances made after the date of origination of the Loan but prior to the Funding
Date have been consolidated with the outstanding principal amount secured by the
related Mortgage, and the secured principal amount, as consolidated, bears a
single interest rate and single repayment terms reflected on the respective
Mortgage and Note. The consolidated principal amount does not exceed the
original principal amount of the related Loan. The Note does not permit or
obligate the mortgagee to make future advances to the related Mortgagor at the
option of the Mortgagor; and there are no defaults in complying with the terms
of the Mortgage, and either (1) any taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges or ground rents that previously
became due and owing have been paid or (2) an Escrow Payment has been
established in an amount sufficient to pay for every such item that remains
unpaid and that has been assessed but is not due and payable. Except for
payments in the nature of Escrow Payments, including without limitation, taxes
and insurance payments, Seller has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a third party other than the
Mortgagor, directly or indirectly, for the payment of any amount required by the
Note, except for interest accruing from the date of the Note or date of
disbursement of the Mortgage proceeds, whichever is greater, to the day that
precedes by one month the due date of the first installment of principal and
interest.
(m) No instrument of release or waiver has been executed in connection
with the Loan and no Mortgagor has been released in whole or in part from the
obligations arising under the Note and Mortgage.
(n) All individual insurance policies contain a standard mortgage
clause naming Seller, its successors and assigns, as mortgagee. All premiums
thereon have been paid. The Mortgage obligates the Mortgagor thereunder to
maintain all such insurance at the Mortgagor's cost and expense, and upon the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to obtain
and maintain such insurance at the Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor.
(o) The terms of the Mortgage and Note have not been impaired, altered
or modified, except by a written instrument that has been recorded or is in the
process of being recorded, if necessary, and which has been or will be recorded,
and all subsequent assignments of the original Mortgage (other than the
assignment from Seller to Banc One) have been recorded in the appropriate
jurisdictions wherein such recordation is necessary to perfect the lien thereof
as against creditors of Seller, or, pursuant to the terms and conditions hereof,
is in the process of being recorded.
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(p) If required or permitted by applicable state law, Seller has filed
for record a request for notice of any action by a senior lienholder under a
senior lien, or by any governmental authority with respect to any tax or
assessment that can become a lien on the Mortgaged Property, and Seller has
notified any senior lienholder or governmental authority of the existence of the
Loan and requested notification of an action to be taken against the Mortgagor
by the senior lienholder or governmental authority. Seller shall, upon the
request of Banc One, cooperate in recording a new request for action in favor of
Banc One and in providing senior lienholders or any governmental authority with
written requests for notification to Banc One of action against the Mortgagor.
(q) The Note and the related Mortgage each contain a valid and
enforceable provision for the acceleration of the payment of the unpaid
principal balance of the Loan in the event the related Mortgaged Property is
sold without the prior consent of the mortgagee thereunder.
(r) The Note related to such Loan provides for a schedule of
substantially level and equal monthly payments that are sufficient to amortize
fully the principal balance of such Loan over a period of time equal to the
amortization period of such Note (assuming, with respect to any Loan as to which
interest thereon is charged to the obligor thereof on the outstanding principal
balance calculated based on the actual number of days elapsed between receipt of
the obligor's last payment through receipt of the obligor's most current payment
and all payments are made on the due dates thereof).
(s) The Loan was not originated under a buydown plan or under a limited
documentation program, unless identified in writing in the related Delivery
Instructions to Buyer.
(t) The Loan does not have a shared appreciation feature, or other
contingent interest feature.
(u) If the Loan provides for any prepayment premium or charge (a
"Prepayment Charge") to be paid by the obligor under the Note in connection with
any prepayment, Seller represents and warrants to Banc One that such Prepayment
Charge is enforceable and is in compliance with all applicable laws, rules and
regulations.
(v) The Note and the related Mortgage and the Loan Documents: genuine;
the valid instruments they purport on their face to be; the legal, valid,
binding and enforceable obligation of the Mortgagor thereunder and are not
subject to any discount, allowance, set off, counterclaim, presently pending
bankruptcy or other defenses; are neither forged nor have affixed thereto any
unauthorized signature; were entered into by persons with the required legal
capacity; and are not subject to any foreclosure (including any non-judicial
foreclosure) or any other legal action brought by Seller or any senior
lienholder.
(w) All parties to the Loan and the Mortgage had full legal capacity to
execute all documents related to such Loan and to convey the estate therein
purported to be conveyed.
(x) All matured obligations pursuant to the Note and the related
Mortgage have been paid or performed and there is no default, breach, violation
or event of acceleration existing.
(y) The Loan is not subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, nor will the operation
of any of the terms of the Note or the related Mortgage, or the exercise of any
right thereunder render either the 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 has been asserted with respect thereto.
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(z) There is no obligation on the part of the Seller or any other party
to make payments in addition to those made by Mortgagor under the Loan.
(aa) The Loan is not contractually delinquent by more than 29 days and
the Loan has not at any time been renewed for the purpose of concealing the
delinquency of any Person obligated thereon.
(bb) Except as expressly disclosed to and agreed to by Banc One in
writing, each Loan conforms to the underwriting and documentation guidelines of
Banc One in effect on such Funding Date.
(cc) There are no violations of any applicable federal or state law or
regulation, including without limitation, Fair Credit Reporting Act, the Federal
Truth-in-Lending Act and Regulation Z, the Federal Equal Credit Opportunity Act
and Regulation B, the Fair Housing Act, the Real Estate Settlement Procedures
Act and Regulation X, the Federal Debt Collection Practices Act, the Home
Mortgage Disclosure Act and Regulation C of the Community Reinvestment Act, the
Home Ownership and Equity Protection Act of 1994, any similar state or federal
law or regulation or interpretation thereof affecting or regarding the
solicitation, origination, servicing or collection of the Loans, or any federal
or state usury law or regulation. All disclosures required by law, rule,
regulation or any interpretation thereof, whether federal, state or local, were
properly made by Seller or the Lender prior to the closing of the Loan. If such
Loan refinances a prior mortgage loan, Seller provided Mortgagor with all
notices and rescission rights required by applicable law.
(dd) All Appraisals made in connection with any Loan shall have been
performed in accordance with the standards set by Fannie Mae and by the
Financial Institutions Reform, Recovery and Enforcement Act of 1989, and the
rules and regulations thereunder, as from time to time amended.
(ee) If the Loan is (i) a "high cost mortgage" as defined in Section
152(a) of the Home Ownership and Equity Protection Act of 1994 ("HOEP") or (ii)
otherwise subject to the requirements of the HOEP, Seller represents and
warrants to Banc One that such Loan was made in compliance with all applicable
laws, rules and regulations governing or pertaining to such loans.
(ff) No Loan financed debt cancellation coverage (as defined in 12
C.F.R. 226.4(d)(3)(ii)) or is subject to debt cancellation coverage, regardless
of whether the charge for such coverage was included in the finance charge for
the Loan.
(gg) There is no delinquent tax, fee or assessment, or lien resulting
therefrom, on the Mortgaged Property.
(hh) There are no mechanic's liens or similar liens or claims that have
been filed for work, labor or material affecting the Mortgaged Property that are
or may be liens prior to or equal with the lien of the related Mortgage and the
lien of any senior mortgage permitted by Banc One.
(ii) The Mortgaged Property is free and clear of material damage and
waste and is in good repair and there is no proceeding pending or threatened for
the total or partial condemnation of the Mortgaged Property.
(jj) No impediments to title exist that could adversely affect the
value, enjoyment or marketability of the Mortgaged Property.
(kk) There is no default, breach, violation or event of acceleration
existing under any mortgage whose lien is senior to that of the Mortgage which,
with notice and the expiration of any grace or cure period would constitute a
default, breach, violation or event of acceleration. No such senior lien
provides for interest thereon to be paid at a variable or changing rate of
interest.
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(ll) No hazardous or toxic materials or wastes or products regulated by
any law or ordinance or asbestos or asbestos products or materials or
polychlorinated biphenyls or urea formaldehyde insulation have been used or
employed in the construction, use or maintenance of the Mortgaged Property or
have ever been stored, treated at or disposed of on the Mortgaged Property. The
Mortgaged Property is free and clear of all hazardous materials or substances.
There has not occurred nor has any Person alleged that there has occurred upon
the Mortgaged Property any spillage, leakage, discharge or release into the air,
soil or groundwater of any hazardous material, substance or regulated wastes.
(mm) The Mortgaged Property is improved by a one to four family
residential dwelling, including without limitation, condominiums and townhouses,
but excluding manufactured homes and mobile homes and was lawfully occupied as
of the related Funding Date.
(nn) Each Loan is secured by the lien of its related Mortgage.
Section 2.1 Representations and Warranties of Banc One. Banc One hereby
represents and warrants to Seller on the date hereof as follows:
(a) It is an Indiana corporation, duly organized validly existing and
in good standing under the laws of the State of Indiana and is duly qualified
where required in all jurisdictions in which any Loans are purchased and/or
serviced.
(b) The execution and delivery of this Agreement and the performance of
the obligations to be performed hereunder have been duly authorized by all
necessary corporate or other similar action.
(c) The execution of this Agreement by Banc One and the obligations to
be performed hereunder by it do not violate any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to it or to its articles of
incorporation or bylaws.
(d) The execution of this Agreement by Banc One and the obligations to
be performed hereunder do not and will not result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which it is a party or by which it or its properties may
be bound or affected.
(e) This Agreement, when duly executed and delivered by Banc One,
constitutes a legal, valid and binding obligation of Banc One, enforceable
against Banc One in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, receivership, moratorium or
other laws relating to or affecting the rights of creditors generally, and by
general equity principles.
(f) There are no actions, suits or proceedings pending or, to Banc
One's knowledge, threatened against or affecting Banc One or the properties of
Banc One before any court or governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, which, if determined adversely
to Banc One, would materially and adversely affect the financial condition,
properties or operations of Banc One.
(g) The transactions contemplated by this Agreement are in the ordinary
course of business of Banc One.
(h) The Loans received by Banc One for the Loans purchased pursuant to
this Agreement together with Seller's obligations under this Agreement
constitutes a fair consideration and reasonably equivalent value for the payment
of the Purchase Price to the Seller.
(i) Banc One has not, in connection with each Loan purchased from
Seller, incurred any obligation, made any commitment or taken any action that
might result in a claim against Seller or an obligation by Seller to pay a sales
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brokerage commission, finder's fee or similar fee in respect to the transactions
between Seller and Banc One as described in this Agreement. Banc One agrees to
indemnify and hold Seller harmless from and against any claims, liabilities,
damages, or costs (including reasonable attorney fees) relating to any broker,
agent or finder or other person, who shall claim to have dealt on behalf of Banc
One in connection with the transactions contemplated by this Agreement.
ARTICLE 3 SERVICING TRANSFER
Section 3.1 Transfer of Servicing. As of each Funding Date, Seller
shall transfer to Banc One any and all rights to service the Loans sold on the
related Funding Date, including but not limited to Seller's right to receive all
payments and receivables with respect to the Loans, custody of the Escrow
Payments, and all servicing rights as owner and holder of the Loans.
Notwithstanding the foregoing, Seller shall continue to service the Loans as
interim service for Banc One, without charge, following the Funding Date and
until the corresponding Service Transfer Date. Banc One shall assume
responsibility for servicing the Loan on and after such Service Transfer Date.
Seller shall ensure that all Escrow Payments are received by Banc One within
five (5) Business Days after the Funding Date. If such balances are not received
by Banc One within such five day period, Seller shall remit to Banc One, in
immediately available funds, an amount equal to said balances together with
Accrued Interest thereon, from the Funding Date to the date on which Seller
transfers such Escrow Payments to Banc One, at a rate per annum equal to the sum
of the Federal Funds Rate plus 2% per annum.
Section 3.2 Interim Servicing.
(a) Unless otherwise agreed in writing by the parties, Seller shall
interim service the Loans, in conformance with applicable law and Accepted
Servicing Practices.
(b) Seller shall deliver "good-bye letters" to each Mortgagor on behalf
of Banc One, in compliance with the notice requirements of the Cranston Gonzalez
National Affordable Housing Act of 1990, as the same may be amended, and all
other applicable federal, state and local laws and regulations. Banc One shall
cooperate by providing Seller with any information necessary to complete the
notices. Banc One shall approve any such notices sent by Seller, prior to the
date mailed. Seller shall deliver to Banc One a copy of the notice sent with
respect to each Loan sold on such Funding Date.
(c) Within five (5) Business Days after the Service Transfer Date,
Seller shall remit to Banc One, by wire, all amounts received by Seller prior to
and including the Service Transfer Date (including without limitation, monies
received or held in reserve for the payment of taxes, insurance premiums or
other charges in connection with the Loan, plus interest thereon), together with
the following:
(i) A summary of remittances (including the account numbers,
amount of payments, date of payments, amount of escrow and account
reserves);
(ii) A trial balance of Loans;
(iii) A loan history; and
(iv) As appropriate, arrears reports, prepaid reports, reports
of Loans added or removed, and reports of unpaid monthly payments and
of principal prepayments.
(d) During the interim servicing period, Seller shall take no action to
compromise, renew, modify or alter the terms of a Loan or to commence any
judicial or non-judicial action to collect a Loan without the prior written
consent of Banc One. Any payments or monies received or held by Seller from or
on behalf of a Mortgagor after the Funding Date shall be held in trust by Seller
for the benefit of Banc One and shall be immediately delivered to Banc One.
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Section 3.3 Private Mortgage Insurance. If applicable, Seller shall
provide any notification to private mortgage insurance companies necessary to
ensure continuation of such insurance upon transfer of the Loans to Banc One.
Section 3.4 IRS Reporting and Examinations.
(a) Unless otherwise agreed in writing prior to the applicable Funding
Date, to the extent required by law, Seller shall report to the Internal Revenue
Service (the "IRS") and each Mortgagor the amount of interest paid (including
without limitation, the obligations with respect to Forms 1098 and 1099 and back
up withholding with respect to same if required) by such Mortgagor on the Loan
on which he or she is the Mortgagor from the date of the advance made by Seller
to such Mortgagor through and including the Service Transfer Date, and Banc One
shall thereafter report to the IRS and each Mortgagor the amount of interest
paid by such Mortgagor on the Loan on which he is the Mortgagor.
(b) Banc One and Seller shall cooperate fully with each other in
connection with any examination conducted by any tax authority after each
Funding Date, provided that nothing herein shall be construed as obligating Banc
One or Seller to disclose or furnish any tax information note related to the
transfer of the Loans. Banc One and Seller shall inform each other promptly of
any material developments in the course of any such examination, the results of
any such examination, and any proceeding related thereto.
Section 3.5 Custody of Loan Documents. To the extent any Loan Documents
are delivered by Seller to Banc One prior to the payment by Banc One to Seller
of the Purchase Price for the related Loans, such Loan Documents will be held by
Banc One in trust for Seller until such time as the Purchase Price for the same
is paid. If the related Loans are not purchased by Banc One, such Loan Documents
will be promptly returned to Seller as directed by Seller at Seller's expense.
Section 3.6 Books and Records. Seller agrees to keep and maintain such
books and records so as to meet and comply with all applicable laws and the
requirements or recommendations of the Equal Credit Opportunity Act (15 U.S.C.
ss. 1601 et seq.) and the Truth in Lending Act (15 U.S.C. ss. 1600 et seq.). The
same shall be available to Banc One at any time, upon reasonable notice, during
business hours, for examination and audit to the extent required to determine
compliance with such laws. Such records shall include a loan register
documenting all loan applications taken on Loans purchased by Seller.
ARTICLE 4 BREACH OF REPRESENTATION AND WARRANTIES
Section 4.1 Remedy for Breach. In addition to any rights or remedies
Banc One has at law or in equity, if either (i) any representation or warranty
set forth herein or in any writing delivered hereunder or in connection herewith
was not true on the date made or (ii) the Seller breaches its obligations under
Section 3.1 hereof, Seller shall upon demand of Banc One and at the sole option
and absolute discretion of Banc One: (a) repurchase the Loan affected for the
Repurchase Price within ten (10) days of notification or such other time as to
which the Seller and Banc One may agree; or (b) if the Loan(s) has been sold by
Banc One or the Mortgaged Property has been liquidated or sold by Banc One,
Seller shall, within ten (10) days of notification, pay Banc One an amount equal
to the Loss (defined below).
With respect to the representations and warranties set forth herein or
in any writing delivered hereunder or in connection herewith that are made to
the best of the Seller's knowledge or as to which the Seller has no knowledge,
if it is discovered by the Seller or Banc One that the substance of such
representation and warranty is inaccurate and such inaccuracy materially and
adversely affects the value of the related Mortgage Loan, then, notwithstanding
the Seller's lack of knowledge with respect to the substance of such
representation add warranty being inaccurate at the time the representation or
warranty was made, such inaccuracy shall be deemed a breach of the applicable
representations or warranty, and Seller shall be required to repurchase the Loan
affected as provided in this Section 6.1.
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As used herein, the term "Loss" means the negative result, if any, of
the following calculations: (x) the total of: (i) the outstanding principal
balance of the Loan, with Accrued Interest thereon from the last date payment
received through the date the Loan is sold or date the collateral is liquidated;
(ii) all advances by Banc One and all charges due from the Mortgagor; (iii) the
total amount paid by Banc One to any senior lienholders, if any, to secure a
first lien position; (iv) Accrued Interest on all mortgage loans purchased from
senior lienholders 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 Banc One in connection with the Loan or an investigation of said Loan or
the sale of 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 (y) net proceeds from the sale of the Loan or the
sale of liquidation of the Mortgaged Property or the collateral.
Section 4.2 Reassignments. Upon receipt of the Repurchase Price, in
full, in immediately available funds, Banc One shall, at Seller's sole expense,
reassign the Loan affected and any right it may have in the relevant Mortgaged
Property to Seller free and clear of all liens, encumbrances, claims, or
interest of any person or entity claiming by, through, or under Banc One,
without recourse, representation or warranty, and shall execute and deliver to
Seller, at Seller's sole expense, an assignment in recordable form of Banc One's
beneficial interest in the affected Mortgage as well as other documents
necessary to reflect the reassignment of any title protection and insurance
policies.
Section 4.3 Remedy to Insure Accuracy of Real Estate Appraisals. Within
one hundred twenty (120) days after any Loan purchase, Banc One may, at its own
expense, in order to verify the accuracy of real property appraisals prepared
for Seller, order a reappraisal of the Mortgaged Property to determine the
property value at the date of the original appraisal. If the reappraisal
obtained by Banc One indicates a fair market value which is more than fifteen
(15%) percent less than the original appraisal value, then upon receipt by
Seller from Banc One of a signed copy of the reappraisal, Seller, at its option
within thirty (30) days of the receipt of the reappraisal from Banc One, may
either (i) repurchase the Loan at the Repurchase Price and reimburse Banc One
for the cost of the reappraisal, or (ii) provide Banc One another signed
Appraisal of the property showing a fair market value as of the date of the
original appraisal which is no more than fifteen percent (15%) less than the
original appraisal value.
ARTICLE 7 INDEMNIFICATION
Section 7.1 Indemnification.
(a) Seller agrees to protect, indemnify, and hold Banc One 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 whomsoever asserted, including but not limited to, the
Mortgagors, 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, arising out of: (i) the breach or violation of any
obligation, representation, covenant, or warranty of Seller hereunder; or (ii)
any suit, action, proceeding, claim or investigation pending or threatened
against Seller or affecting any Loan from any matter or state of facts which was
not disclosed in advance in writing to Buyer prior to the purchase of any Loan
to which it relates regardless of whether the matter is ultimately successfully
concluded.
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(b) If Banc One at any time becomes subject to any legal action,
including counterclaims, wherein the claim is based upon facts that would
constitute a breach of any one of more of the warranties, covenants, and
representations made or assumed by Seller under the terms hereof, Seller shall
thereupon, at Banc One's option, repurchase without recourse, representation or
warranty such Loan at the Repurchase Price. Notwithstanding any such repurchase,
Seller will continue to indemnify Banc One in the manner provided herein.
(c) Banc One agrees to protect, indemnify, and hold Seller and its
employees, officers, and directors, harmless against, and respect of, any and
all losses, liabilities, costs and expenses (including reasonable attorney's
fees), judgments, damages, claims, counterclaims, demands, actions or
proceedings, by whomsoever asserted, including but not limited to, the
Mortgagor's, 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, arising out of any misrepresentation, or
breach of any covenant or warranty of Banc One contained in this Agreement for
any claim by a third party, regardless of whether the claimant is ultimately
successful, which if true would be such a misrepresentation or breach.
Section 7.2 Notification of Claim Right. If any party to this Agreement
(an "Indemnitee") receives written notice of the assertion of any claim or of
the commencement of any action or proceeding by any entity who is not a party to
this Agreement (a "Third Party Claim") against or affecting such Indemnity, and
if such assertion were presumed to be true (regardless of the actual outcome)
and the other party could be obligated to provide indemnification under this
Agreement (an "Indemnifying Party"), then such Indemnitee will give such
Indemnifying Party reasonably prompt written notice thereof, but in any event no
later than twenty (20) calendar days after receipt of such written notice of
such Third Party Claim.
Section 7.3 Immediate Action Required. If it is reasonably determined
by the Indemnitee that immediate action is required to address a Third Party
Claim, the Indemnitee is authorized to take immediate action without prior
notice to the Indemnifying Party, and thereafter give notice to the Indemnifying
Party as soon as practicable. In such event, the Indemnitee shall be entitled to
recover from the Indemnifying Party to the extent the Indemnifying Party is
liable for indemnification hereunder.
Section 7.4 Right to Defend. The Indemnifying Party shall have the sole
right to defend any Third Party Claim at its sole expense and by its own counsel
(which counsel must be reasonably satisfactory to the Indemnitee), by giving
written notice to the Indemnitee admitting its obligation to indemnify the
Indemnitee for the Third Party Claim (the "Notice to Defend"). The Notice to
Defend must be delivered to the Indemnitee no later than twenty (20) calendar
days after receipt of the above-described notice of such Third Party Claim. If
the Indemnifying Party does not give a Notice to Defend within that period, the
Indemnifying Party may participate in (but not control) the defense of any Third
Party Claim assisted by counsel of its own choosing; provided, however, that the
Indemnitee shall have the sole right to make any significant decisions with
respect to the defense of such Third Party Claim including the settlement or
compromise of such Third Party Claim, and the Indemnifying Party will be liable
for all costs and expenses, and all settlement amounts (subject to and in
accordance with Section 7.9 but only to the extent the Indemnifying Party is
liable for indemnification hereunder). During the period prior to receiving the
Notice to Defend, the Indemnitee can proceed to defend the claim, action or
proceeding, and the Indemnitee shall be entitled to recover from the
Indemnifying Party costs and fees (including attorneys' fees) incurred in
connection with the defense to the extent the Indemnifying Party is liable for
indemnification hereunder.
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Section 7.5 Equitable Remedies. Notwithstanding anything in this
Article to the contrary, the Indemnifying Party shall not be entitled to
participate in, and the Indemnitee shall be entitled to have sole and absolute
control over, the defense, compromise or settlement of, any claim to the extent
that the claim seeks an injunction or other similar equitable relief against the
Indemnitee.
Section 7.6 No Response. If the Indemnitee does not receive a Notice to
Defend with respect to a Third Party Claim within the twenty (20) day period
described in Section 7.4 the Indemnitee may, at its option, solely defend the
Third Party Claim assisted by counsel of its own choosing, and the Indemnifying
Party will be liable for all costs, fees and expenses (including attorneys'
fees), and all settlement amounts (subject to and in accordance with Section 7.9
but only to the extent the Indemnifying Party is liable for indemnification
hereunder).
Section 7.7 Defense Costs. If, within the twenty (20) day period set
forth in Section 7.4, an Indemnitee receives a Notice to Defend from an
Indemnifying Party with respect to any Third Party Claim, the Indemnifying Party
will not be liable for any legal expenses incurred by the Indemnitee after
receipt of the Notice to Defend in connection with the defense thereof;
provided, however, that if, after giving a Notice to Defend, the Indemnifying
Party fails to take reasonable steps necessary to diligently defend such Third
Party Claim within the earlier of: (i) twenty (20) calendar days after receiving
written notice from the Indemnitee that the Indemnitee believes, after due
inquiry, that the Indemnifying Party has failed to take such steps, or (ii)
within such period necessary in the reasonable judgment of the Indemnitee to not
prejudice the defense of such Third Party Claim, then the Indemnitee may, at its
option, solely assume the defense of the Third Party Claim, assisted by counsel
of its own choosing, and the Indemnifying Party will be liable for all
reasonable costs, fees and expenses (including attorneys' fees), and all
settlement amounts (subject to and in accordance with Section 7.9) and all other
liabilities, losses; damages and injuries paid or incurred in connection
therewith where the Indemnifying Party is liable for such other liabilities,
losses, damages and injuries pursuant to this Article 7.
Section 7.8 Additional Recoveries. In addition to other remedies
available under this Article, if (i) the Indemnitee has available defenses,
counterclaims or third party claims that are not available to the Indemnifying
Party, (ii) a claim seeks an injunction or other similar equitable relief
against the Indemnitee, or (iii) the claim seeks any remedy or relief other than
a monetary claim, then the Indemnitee shall be entitled to recover from the
Indemnifying Party its reasonable costs, fees and expenses (including attorneys'
fees) incurred in defending such Third Party Claim, and all settlement amounts
(subject to and in accordance with Section 7.9) and all other liabilities,
losses, damages and injuries paid or incurred in connection therewith to the
extent that the Indemnifying Party is liable for indemnification hereunder.
Section 7.9 Settlement. In the circumstances described in Section 7.4
where the Indemnifying Party has the sole right to defend the Third Party Claim,
the Indemnifying Party shall have the sole right to settle such claim. In all
other circumstances, if there is a dispute between the Indemnifying Party and
Indemnitee concerning whether a Third Party Claim should be contested, settled
or compromised, it shall be settled, compromised, or contested, in accordance
with Section 7.10; provided, however, that the Indemnitee, or its respective
successors or assigns, shall neither be required to refrain from paying or
satisfying any claim which the Indemnifying Party has not acknowledged in
writing its obligation to indemnify the Indemnitee, or which has matured by
court judgment or decree, unless appeal is taken thereafter and proper appeal
bond posted by the Indemnifying Party, nor shall the Indemnitee be required to
refrain from paying or satisfying any Third Party Claim after and to the extent
that such Third Party Claim has resulted in an unstayed injunction or other
similar equitable relief against the Indemnitee or in an imposition of a lien
upon any of the properties or assets then held by the Indemnitee or its
respective successors and assigns (unless such claim shall have been discharged
or enforcement thereof stayed by the filing of a legally permitted bond by the
Indemnifying Party or otherwise, at its sole expense), or result in a breach or
default in a lease or other contract by which any of them is bound, or would
materially adversely affect their respective assets, businesses or financial
condition.
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Section 7.10 Objections to Settlement. In the event that the
Indemnifying Party, on the one hand, or the Indemnitee, on the other hand, has
reached a good faith, bona fide settlement agreement or compromise, subject only
to approval hereunder, with any claimant regarding a matter which may be the
subject of indemnification hereunder and desires to settle on the basis of such
agreement or compromise, such party who desires to so settle or compromise shall
notify the other party in writing of its desire setting forth the terms of such
settlement or compromise (the "Notice of Settlement"). The Third Party Claim may
be settled or compromised on such basis unless within twenty (20) days of the
receipt of the Notice of Settlement the party who issued the Notice of
Settlement receives a notice from the other party of its desire to continue to
contest the matter (the "Notice to Contest") and, in such case:
(i) should the Indemnitee deliver a Notice to Contest, the
claim shall be so contested and the liability of the Indemnifying Party
shall be limited as provided in clause (iii) below;
(ii) if the settlement or compromise could resulting a claim
for indemnification being made against the Indemnifying Party and if
the Indemnifying Party delivers the Notice to Contest, the claim shall
be so contested and the liability of the Indemnitee shall be limited as
provided in clause (iii) below; and
(iii) if a matter is contested as provided in clauses (i) and
(ii) above and, is later adjudicated, settled, compromised or otherwise
disposed of and such adjudication, compromise, settlement or
disposition results in a liability, loss, damage or injury, in excess
of the amount for which one party desired previously to settle the
matter, then the liability of such party shall be limited to the lesser
proposed settlement amount and the party contesting the matter shall be
solely responsible for the amount in excess of the lesser proposed
settlement amount and without regard to any minimum or maximum
restriction on liability described in the Agreement.
For an Indemnifying Party's Notice to Contest to be effective, it must
also state that the Indemnifying Party acknowledges and agrees that it shall be
obligated to indemnify the Indemnitee for any amount in excess of the lesser
proposed settlement amount as described in sub-paragraph (iii) above. Except for
such obligation for the excess of the lesser proposed settlement amount
acknowledged in a Notice to Contest, the giving of or failure to give a Notice
to Contest by any party shall not be construed or implied as an acknowledgment
by such party of an obligation for indemnification under this Article 7.
Section 7.11 Waiver. The Indemnifying Party hereby expressly waives and
renounces any and all rights to make a claim against the Indemnitee or its
respective directors, officers, agents or employees based upon a right or claim
of any Third Party to which it may become subrogated as a result of making any
payment for indemnification hereunder except to the extent that such waiver
adversely affects any rights of subrogation of an insurer under an applicable
insurance policy; provided however, nothing herein is intended to constitute a
waiver by the Indemnifying Party of any rights of subrogation to which it may be
entitled against persons other than those described herein.
Section 7.12 Direct Claims. Any claim by an Indemnitee for
indemnification other than indemnification against a Third Party Claim (a
"Direct Claim") will be asserted by giving the Indemnifying Party reasonably
prompt written notice thereof, and the Indemnifying Party will have a period of
twenty (20) calendar days within which to respond in writing to such Direct
Claim. If the Indemnifying Party does not respond within the twenty (20)
calendar day period, the Indemnifying Party will be deemed to have rejected such
claim, in which event the Indemnitee will be free to pursue such remedies as may
be available to the Indemnitee under this Article 7.
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Section 7.13 Insurance. Any claim for indemnification hereunder shall
be reduced by the amount of insurance proceeds payable with respect to the
circumstances giving rise to such claim.
ARTICLE 8 Miscellaneous
Section 8.1 Relationship of the Parties. It is agreed that Seller and
Banc One are not partners or joint venturers and that Seller is not to act as an
agent for Banc Once in originating, administering or collecting any Loan, but
shall have the status of and shall act in all matters hereunder as an
independent contractor.
Section 8.2 Closing Documents. Seller shall have delivered to Banc One
an officer's certificate, in the form of Exhibit A hereto, attested to by the
Secretary of Seller, stating the names and showing the facsimile signatures of
the offices of Seller authorized to execute and deliver this Agreement; endorse
Note(s), and make and execute assignments of Mortgage(s) and Assignment(s) and
other actions to be undertaken by Seller hereunder. It is within Banc One's
discretion to periodically request good standing certificates for all states in
which Seller is registered to do business. In addition, Seller shall provide
Banc One copies of all applicable lending licenses.
Section 8.3 Additional Covenants.
(a) 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 this Agreement and the transfers
provided for herein.
(b) Any and all decisions made by Banc One in good faith to take action
or to not take action relative to a Loan, including, but not limited to, the
sale or liquidation of a Loan, Mortgaged Property or collateral shall be final
and conclusively binding upon Seller in the event Seller does not repurchase a
Loan within ten (10) days of notification by Banc One pursuant to Article 6 of
this Agreement.
(c) In order to enforce Banc One's rights under this Agreement, Seller
shall, upon the request of Banc One or its assigns, do and perform or cause to
be done and performed every reasonable act and thing necessary or advisable to
put Banc One and its assigns in position to enforce the payment of the Loans and
to carry out the intent of this Agreement, including the execution of and, if
necessary, the recordation of additional documents including separate
endorsements and assignments upon request of Banc One. In addition, Seller
hereby irrevocably appoints any officer or employee of Banc One or its assigns
its true and lawful attorney to do and perform every act necessary, requisite,
proper or advisable to be done to put Banc One or its assigns in position to
enforce the payment of the Loans, or to collect any amount, or endorse any check
or instrument in connection therewith. The foregoing appointment shall
constitute a power of attorney coupled with an interest and shall be irrevocable
for the purposes stated herein.
(d) After any Funding Date, Banc One shall hold in trust for Seller any
Notes, Mortgages and all other Loan-related documents which Banc One has in its
possession but has not purchased as provided herein, and agrees to return such
documents promptly as directed by Seller at Seller's sole expense.
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(e) Seller shall maintain one or more errors and omissions insurance
policies and fidelity bonds, each in an amount or, in the aggregate in an amount
and in all other manners, in compliance with the requirements from time to time
of Fannie Mae and Freddie Mac for persons performing services for mortgage loans
purchased by Fannie Mae and Freddie Mac.
Section 8.4 Survival of Covenants, Agreements, Representations and
Warranties; Successors and Assigns. All representations, warranties, covenants
and agreements made herein or in any other instrument or writing delivered
hereunder or in connection with any transaction contemplated hereby or thereby,
including those made by third parties for the benefit of either party, shall be
considered to have been relied upon by the recipient or beneficiary thereof
(unless otherwise agreed in writing by the parties) and hall survive the
termination of this Agreement, all Delivery Instructions, and the endorsement of
any Note or the assignment of any Mortgage hereunder. Banc One reserves the
right to proceed against third parties to enforce any representations,
warranties and covenants made by them for the benefit of Seller.
Section 8.5 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
provisions, or part thereof, will be unaffected.
Section 8.6 Fees and Expenses. Each of the parties hereto shall pay all
legal fees and expenses incurred by it in connection with the negotiation,
preparation, execution and delivery of this Agreement. Seller shall pay all
legal fees and expenses incurred by Banc One as may from time to time be
incurred by Banc One in connection with the enforcement of any obligation of the
Seller under this Agreement and/or any Delivery Instruction against Seller. All
such fees and expenses to be paid by Seller shall be promptly paid upon receipt
of an invoice therefor. Notwithstanding anything to the contrary herein
contained, in any action at law, in equity, arbitration or otherwise between the
parties in relation to this Agreement, any Delivery Instructions or any
transaction contemplated hereby or thereby or any Loan or other instrument or
agreement required or purchased or sold hereunder or thereunder, 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 fees. Unless otherwise specifically provided for herein, if one party
hereto fails to make payment of any amount due to the other party within thirty
(30) days of being required or requested to do so, the amount unpaid shall bear
interest at the Federal Funds Rate plus 2% per annum.
Section 8.7 Waivers. No waiver of any term, provision or condition of
this Agreement, 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 term, provision or condition, or of any other term, provision or condition
of this Agreement.
Section 8.8 Notices. 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 United
States 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:
BANC ONE: Banc One Financial Services, Inc.
8604 Allisonville Road
Indianapolis, Indiana 46250
Attention: General Counsel
Fax: 317-585-2260
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SELLER: Westmark Mortgage Corporation
8000 North Federal Highway
Boca Raton, Florida 33487
Payton Story, III
561-526-3309 Fax
The above addresses may be changed from time to time by written notice
from one party to the other.
Section 8.9 Assignment. Seller shall not, without the prior written
consent of Banc One, assign any of its rights or obligations hereunder.
Section 8.10 Captions. Paragraph or other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 8.11 Confidentiality. Neither Banc One nor Seller shall
disclose any confidential or proprietary information of the other party with
respect to such other party that may be in the possession of that party,
including, without limitation, (i) such information in the possession of Banc
One as to Seller's financial condition or underwriting guidelines, (ii) such
information in the possession of Seller as to the Seller Guide (including the
Seller Guide itself) and Banc One's credit and/or Underwriting Guidelines and
any information regarding pricing of any mortgage loan proposed to be purchased
by Banc One and (iii) any information designated "confidential" or "proprietary"
by either party to the other party, pursuant to a subpoena or order issued by a
court of competent jurisdiction, or by a judicial or administrative or
legislative body or committee. Confidential information shall not include
information which: (i) is in the receiving party's possession without actual or
constructive knowledge of any obligation of confidentiality with respect
thereto, prior to disclosure by the disclosing party; (ii) is or subsequently
becomes part of a public domain through no fault of receiving party; or (iii) is
disclosed to the receiving party by a third party having no obligation of
confidentiality with respect thereto, and provided the receiving party did not
have actual or constructive knowledge that such information was wrongfully
discussed by such third parties.
Section 8.12 Entire Agreement. This Agreement, the Exhibits attached
hereto and the documents referred to herein constitute the entire agreement
between the parties hereto with respect to the subject matter hereof, and there
are no prior agreements, understandings, restrictions, warranties or
representations between the parties with respect thereto. Each of the parties
hereto agrees that to the extent that any Delivery Instructions contain any term
and/or condition that is additional to, different from or in conflict with any
term or condition contained in this Agreement, such Delivery Instructions shall
control over the terms and conditions of this Agreement, but only for the
Delivery related to such Delivery Instructions.
Section 8.13 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana. The provisions of
this paragraph shall not affect the provisions of any Note, Mortgage or Loan
Documents which cause the laws of the United States or any other state thereof
to be applicable to any Mortgagor or the Mortgaged Property.
Section 8.14 Termination. This Agreement is terminable by either Banc
One or Seller upon thirty (30) days' written notice of termination to the
non-terminating party. Notwithstanding the foregoing, Banc One has the option of
terminating this Agreement immediately upon notice to Seller upon Seller's
breach of any of the representations and warranties contained herein or in any
Delivery Instruction, and Banc One shall have no obligations to honor any
commitment hereunder or under any outstanding Delivery Instruction, effective
immediately upon delivery of written notice by Banc One to Seller.
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Any consent by Banc One to purchase Loans pursuant to this Agreement
shall automatically terminate if: (a) a decree or order of a court, agency or
supervisory authority having jurisdiction for the appointment of a conservator
or receiver or liquidator in any insolvency, readjustments of debt, marshaling
of assets and liabilities, bankruptcy proceeding or any similar proceedings, or
for the winding up or liquidation of its affairs, shall have been entered
against Seller or a Mortgagor and such decree or order shall have remained in
force undischarged or unstated for a period of 60 days; or (b) Seller or a
Mortgagor shall consent to the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities, bankruptcy or similar proceedings relating to the Seller or
relating to all or substantially all of its property; or (c) Seller or Mortgagor
shall admit in writing its inability to pay its debts as they become due, file a
petition to take advantage of any applicable insolvency, reorganization or
bankruptcy statute, make an assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations.
Section 8.15 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 parties hereby consent to the exclusive jurisdiction of the courts
of the State of Indiana in Marion County or the Federal District Court for the
proper district in Indiana and waive personal service of any and all process
upon them and consent 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 parties waive
trial by jury and waive any objection to jurisdiction and venue of any action
instituted hereunder, agree not to assert any defense based on lack of
jurisdiction or venue and consent 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.
Notwithstanding anything to the contrary herein contained,
except with respect to emergency relief, upon demand of any party hereto,
whether made before or after institution of any judicial proceeding, any
dispute, claim or controversy arising out of, connected with or relating to this
Agreement and/or any Delivery Instruction ("Disputes") between or among parties
to this agreement shall be resolved by binding arbitration as provided herein.
Institution of a judicial proceeding by a party does not waive the right of that
party to demand arbitration hereunder. Disputes may include without limitation,
tort claims, counterclaims, disputes as to whether a matter is subject to
arbitration, claims brought as class actions, claims arising from documents or
certificates executed in the future, or claims arising out of or connected with
the transaction reflected by this Agreement and/or any Delivery Instruction.
Arbitration shall be conducted under and governed by the
Commercial Financial Disputes Arbitration Rules (the "Arbitration Rules") of the
American Arbitration Association (the "AAA") and Title 9 of the U.S. Code. All
arbitration hearings shall be conducted in Indianapolis, Indiana. The expedited
procedures set forth in Rule 51 et seq. of the Arbitration Rules shall be
applicable to claims of less than $1,000,000. All applicable statutes of
limitation shall apply to any Dispute. A judgment upon the award may be entered
in any court having jurisdiction. The panel from which all arbitrators are
selected shall be comprised of licensed attorneys. The single arbitrator
selected for expedited procedure shall be a retired judge from the highest court
of general jurisdiction, state or federal, of the state where the hearing will
be conducted or if such person is not available to serve, the single arbitrator
may be a licensed attorney.
Notwithstanding the preceding binding arbitration provisions,
the parties hereto agree to preserve, without diminution, certain remedies that
any party hereto may employ or exercise freely, independently or in connection
with an arbitration proceeding or after an arbitration action is brought. The
parties hereto shall have the right to proceed in any court of proper
jurisdiction or by self-help to exercise or prosecute the following remedies, as
applicable: (i) all rights to foreclose against any real or personal property or
26
<PAGE>
other security by exercising a power of sale granted hereunder or under
applicable law or by judicial foreclosure and sale, including a proceeding to
confirm the sale; (ii) all rights of self-help including peaceful occupation of
real property and collection of rents, set-off, and peaceful possession of
personal property; (iii) obtaining provisional or ancillary remedies including
injunctive relief, sequestration, garnishment, attachment, appointment of
receiver and filing an involuntary bankruptcy proceeding; and (iv) when
applicable, a judgment by confession of judgment. Preservation of these remedies
does not limit the power of an arbitrator to grant similar remedies that may be
requested by a party in a Dispute.
The parties hereto agree that they shall not have a remedy of
punitive or exemplary damages against the other in any Dispute and hereby waive
any right or claim to punitive or exemplary damages they have not or which may
arise in the future in connection with any Dispute whether the Dispute is
resolved by arbitration or judicially.
Section 8.16 No Solicitation. From and after the Funding Date, Seller
agrees that it will not take any action or permit or cause any action to be
taken by Seller, any of its agents or affiliates, or by any independent
contractors on Seller's behalf, to personally, by telephone or mail, solicit the
Mortgagor under any Mortgage Loan to refinance the Mortgage Loan, in whole or in
part, without the prior written consent of Banc One. It is understood and agreed
that all rights and benefits relating to the solicitation of any Mortgagors to
refinance any Mortgage Loans and the attendant rights, title and interest in and
to the list of such Mortgagors to refinance any Mortgage Loans and the attendant
rights, title and interest in and to the list of such Mortgagors and data
relating to their Mortgages (including insurance renewal dates) shall be
transferred to Banc One pursuant hereto on the Funding Date and Seller shall
take no action to undermine these rights and benefits Notwithstanding the
foregoing, it is understood and agrees that promotions undertaken by Seller or
any affiliate of Seller which are directed to the general public at large, or
segments thereof, provided that no segment shall consist primarily of the
Mortgage Loans, including, without limitation, mass mailing based on
commercially acquired mailing lists, newspaper, radio and television
advertisements, shall not constitute solicitation under this Section 8.16.
Section 8.17 Endorsements. In the event that the remedies or other
terms outlined in this Agreement conflict with the terms of any endorsement by
Seller of any Note evidencing a Loan purchased by Banc One from 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.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first written above:
[Seller]
BANC ONE FINANCIAL SERVICES, INC. WESTMARK MORTGAGE CORPORATION
By:_____________________________ By:__________________________
Name:___________________________ Name: Payton Story, III
Title:__________________________ Title: President
Attachments:
Form of Officer's Certificate Exhibit A
Exhibit to Seller's Officer's Certificate Exhibit 5
Form of Wire Transfer Authorization Exhibit B
Credit Documents Exhibit C
Loan Documents Exhibit D
27
<PAGE>
EXHIBIT A
[Form of
Officer's Certificate]
The undersigned Payton Story III, a President of Westmark Mortgage
Corporation, a CA Corporation ("Seller") hereby certifies in connection with
that certain Master Mortgage Loan Purchase Agreement, dated as of December 22,
1998 (the "Master Agreement") by and between Banc One and Seller as follows:
1. ATTACHED HERETO AS EXHIBIT 1 IS A TRUE, CORRECT AND COMPLETE COPY OF SELLER'S
ARTICLES OF ASSOCIATION, CHARTER OF ARTICLES OF INCORPORATION WHICH IS IN FULL
FORCE AND EFFECT ON THE DATE HEREOF AND WHICH HAS BEEN IN EFFECT WITHOUT
AMENDMENT, WAIVER, RESCISSION OR MODIFICATION SINCE 12/21/83.
2. ATTACHED HERETO AS EXHIBIT 2 IS A TRUE, CORRECT AND COMPLETE COPY OF SELLER'S
BYLAWS, WHICH ARE IN EFFECT ON THE DATE HEREOF AND WHICH HAVE BEEN IN EFFECT
WITHOUT AMENDMENT, WAIVER, RESCISSION OR MODIFICATION SINCE 4/1/92.
3. ATTACHED HERETO AS EXHIBIT 3 IS AN ORIGINAL CERTIFICATE OF GOOD STANDING OF
SELLER FOR THE JURISDICTIONS INDICATED HEREON, ISSUED WITHIN TEN DAYS OF THE
DATE HEREOF, AND NO EVENT HAS OCCURRED SINCE THE DATE THEREOF WHICH WOULD IMPAIR
SUCH STANDING.
4. ATTACHED HERETO AS EXHIBIT 4 IS A TRUE, CORRECT AND COMPLETE COPY OF THE
CORPORATE RESOLUTIONS OF THE BOARD OF DIRECTORS OF SELLER AUTHORIZING SELLER TO
EXECUTE AND DELIVER THE MASTER AGREEMENT AND SUCH RESOLUTIONS ARE IN EFFECT ON
THE DATE HEREOF AND HAVE BEEN IN EFFECT SINCE THEIR ADOPTION WITHOUT AMENDMENT,
WAIVER RESCISSION OR MODIFICATION.
5. EITHER (I) NO CONSENT, APPROVAL, AUTHORIZATION, ORDER OF, OR REGISTRATION
FILING WITH, OR NOTICE TO ANY COURT OR GOVERNMENTAL AGENCY OR BODY INCLUDING
HUD, IS REQUIRED FOR THE EXECUTION, DELIVERY AND PERFORMANCE BY SELLER OF OR
COMPLIANCE BY SELLER WITH THE MASTER AGREEMENT OR THE SALE OF THE LOANS OR THE
CONSUMMATION BY SELLER OF THE TRANSACTION CONTEMPLATED BY THE MASTER AGREEMENT;
OR (II) IF REQUIRED, SUCH APPROVAL AHS BEEN OBTAINED PRIOR TO THE DATE HEREOF.
6. NEITHER THE EXECUTION AND DELIVERY OF THE MASTER AGREEMENT, THE SALE OF ANY
LOAN TO BANC ONE OR THE TRANSACTIONS CONTEMPLATED BY, NOR THE FULFILLMENT OF OR
COMPLIANCE WITH THE TERMS AND CONDITIONS OF THE MASTER AGREEMENT WILL CONFLICT
WITH, OR RESULT IN A BREACH OF ANY OF THE TERMS, CONDITIONS OR PROVISIONS OF
SELLER'S ARTICLES OF INCORPORATION, CHARTER OR BY-LAWS OR ANY LEGAL RESTRICTION
OR ANY AGREEMENT OR INSTRUMENT TO WHICH SELLER IS NOW A PARTY OR BY WHICH IT IS
BOUND, OR CONSTITUTE A DEFAULT OR RESULT IN AN ACCELERATION UNDER ANY OF THE
FOREGOING, OR RESULT IN THE VIOLATION OF ANY LAW, RULE, REGULATIONS, ORDER,
JUDGMENT OR DECREE TO WHICH SELLER OR ITS PROPERTY IS SUBJECT, OR RESULT IN THE
CREATION OR IMPOSITION OF ANY LIEN, CHARGE OR ENCUMBRANCE THAT WOULD HAVE AN
ADVERSE EFFECT UPON ANY OF ITS PROPERTIES PURSUANT TO THE TERMS OF ANY MORTGAGE
CONTRACT, DEED OF TRUST OR OTHER INSTRUMENT, OR IMPAIR THE ABILITY OF BANC ONE
TO REALIZE ON THE LOANS, IMPAIR THE VALUE OF THE LOANS OR IMPAIR THE ABILITY OF
BANC ONE TO REALIZE ON ANY RELATED INSURANCE POLICY.
7. THERE IS NO ACTION, SUIT, PROCEEDING INVESTIGATION PENDING EXCEPT AS
DESCRIBED BY SELLER IN WRITING TO BANC ONE OR TO SELLER'S KNOWLEDGE THREATENED
AGAINST SELLER WHICH, EITHER IN ANY ONE INSTANCE OR IN THE AGGREGATE, MAY RESULT
<PAGE>
IN ANY MATERIAL ADVERSE CHANGE IN THE BUSINESS, OPERATIONS, FINANCIAL CONDITION,
PROPERTIES OR ASSETS OF SELLER, OR IN ANY MATERIAL IMPAIRMENT OF THE RIGHT OR
ABILITY OF THE SELLER TO CARRY ON ITS BUSINESS SUBSTANTIALLY AS NOW CONDUCTED,
OR IN ANY MATERIAL LIABILITY ON THE PART OF SELLER, OR WHICH WOULD DRAW INTO
QUESTION THE VALIDITY OF THE MASTER AGREEMENT OR THE LOANS OR OF ANY ACTION
TAKEN OR TO BE TAKEN IN CONNECTION WITH THE OBLIGATIONS OF SELLER CONTEMPLATED
HEREIN, OR WHICH WOULD BE LIKELY TO IMPAIR MATERIALLY THE ABILITY OF SELLER TO
PERFORM UNDER THE TERMS OF THE MASTER AGREEMENT.
8. EACH OF THE LOAN DOCUMENTS AND CREDIT DOCUMENTS FOR THE LOANS TO BE PURCHASED
BY BANC ONE ARE ON FORMS PREVIOUSLY GIVEN TO BANC ONE FOR REVIEW. SELLER HAS
GIVEN BANC ONE COPIES OF ALL ALLEGATIONS OF VIOLATIONS OF STATE OR FEDERAL LAW
(INCLUDING BUT NOT LIMITED TO ALL STATUTES, REGULATIONS, OFFICIAL STAFF
COMMENTARIES OR CASE LAW) WITH RESPECT TO ANY SUCH FORM OF THE LOAN DOCUMENTS OR
CREDIT DOCUMENTS, OR THE PRACTICES OF SELLER, ANY SERVICER FOR SELLER, OR ANY
PREDECESSOR OF SELLER WITH RESPECT TO SUCH FORMS, WHETHER BY LETTER, COMPLAINT,
LEGAL PROCEEDING, ARBITRATION, ADMINISTRATIVE PROCEEDING, AUDIT, EXAMINATION, OR
ANY OTHER MANNER THAT WOULD PUT SELLER ON NOTICE OF ANY ALLEGED VIOLATION
("VIOLATION INFORMATION"). AT ANY TIME THAT THERE REMAINS PENDING A BEST EFFORTS
FLOW DELIVERY, BULK DELIVERY, OR A FORWARD COMMITMENT DELIVERY, SELLER SHALL
PROMPTLY DELIVER TO BANC ONE HEREAFTER, COPIES OF ALL FUTURE VIOLATION
INFORMATION.
9. SELLER HAS BEEN DULY AUTHORIZED TO ALLOW CERTAIN OF ITS OFFICERS TO EXECUTE
ANY AND ALL DOCUMENTS BY ORIGINAL SIGNATURE IN ORDER TO COMPLETE THE
TRANSACTIONS CONTEMPLATED BY THE MASTER AGREEMENT AND BY ORIGINAL SIGNATURE IN
ORDER TO EXECUTE THE ENDORSEMENTS TO THE NOTES AND THE ASSIGNMENTS OF MORTGAGES,
AND THE ORIGINAL SIGNATURE OF THE OFFICER OF SELLER EXECUTING THE ENDORSEMENTS
TO THE NOTES AND THE ASSIGNMENTS OF MORTGAGES SHALL REPRESENT THE LEGAL AND
VALID SIGNATURE OF SAID OFFICER OF SELLER.
10. EACH PERSON LISTED ON EXHIBIT 5 ATTACHED HERETO WHO, AS AN OFFICER OR
REPRESENTATIVE OF SELLER, SIGNED THE MASTER AGREEMENT AND ANY OTHER DOCUMENT
DELIVERED PRIOR HERETO OR ON THE DATE HEREOF IN CONNECTION WITH THE MASTER
AGREEMENT, WAS, AT THE RESPECTIVE TIMES OF SUCH SIGNING AND DELIVERY, AND IS
NOW, A DULY ELECTED OR APPOINTED, QUALIFIED AND ACTING OFFICER OR REPRESENTATIVE
OF SELLER, WHO HOLDS THE OFFICE SET FORTH OPPOSITE HIS OR HER NAME ON EXHIBIT 5,
AND THE SIGNATURES OF SUCH PERSONS APPEARING ON SUCH DOCUMENTS ARE THEIR GENUINE
SIGNATURES.
11. SELLER IS DULY AUTHORIZED TO ENGAGE IN THE TRANSACTIONS DESCRIBED AND
CONTEMPLATED IN THE MASTER AGREEMENT.
IN WITNESS WHEREOF, WE HAVE HEREUNTO EACH SIGNED OUR NAME AND AFFIXED THE SEAL
OF SELLER.
Dated: December 22, 1998 By:___________________________
Name: Payton Story, III
Title: President
By:
Name: Irving H. Bowen
Title: EVP, Treasurer/CFO
I, STEPHEN R. ECHOLS, AN [ASSISTANT] SECRETARY OF WESTMARK, HEREBY CERTIFY THAT
PAYTON STORY, III IS THE DULY ELECTED, QUALIFIED AND ACTING PRESIDENT OF SELLER
AND THAT THE SIGNATURE APPEARING ABOVE IS HIS GENUINE SIGNATURE AND THAT IRV
BOWEN IS THE DULY ELECTED, QUALIFIED AND ACTING TREASURER OF THE SELLER AND THAT
THE SIGNATURE APPEARING ABOVE IS HIS GENUINE SIGNATURE.
2
<PAGE>
IN WITNESS WHEREOF, I HAVE HEREUNTO SIGNED MY NAME.
DATED: DECEMBER 22, 1998 BY:_____________________________
NAME: STEVEN R. ECHOLS
TITLE: [ASSISTANT] SECRETARY
3
<PAGE>
EXHIBIT 5
to
Seller's Officer's Certificate
Each of the following individuals are authorized on behalf of Seller to
execute and deliver this Agreement endorse Note(s), and assign Mortgage(s) and
Assignment(s) and authorize the bank accounts for Banc One to utilize for
funding loans.
Name Title Facsimile Signature
Payton Story, III President
Irving H. Bowen EVP, Treasurer/CFO
IN WITNESS WHEREOF, THE UNDERSIGNED HAS EXECUTED THIS CERTIFICATE, THIS 22ND DAY
OF DECEMBER, 1998.
BY:___________________________
NAME:_________________________
TITLE:________________________
ATTEST:
BY:____________________________
NAME:__________________________
TITLE:_________________________
4
<PAGE>
EXHIBIT B
[Form of]
Wire Transfer Authorization
(Date) December 22, 1998
Banc One Financial Services, Inc.
8604 Allisonville Road
Indianapolis, Indiana 46250
Ladies and Gentlemen:
Pursuant to the Master Mortgage Loan Purchase Agreement (the
"Agreement"), dated as of December 22, 1998, between Westmark Mortgage
Corporation and Banc One Financial Services, Inc., we hereby notify you to pay
any and all amounts that may be due us from time to time under or pursuant to
the Agreement to our account as follows:
Account No.: 5111011213
Northern Trust Bank of Florida
Boca Raton, Florida
ABA NO.: 066009650
ATTENTION: DORIS DEL ZIO
PLEASE MAKE ALL PAYMENTS DUE US AT ANY TIME AND FROM TIME TO TIME UNDER
OR PURSUANT TO THE AGREEMENT FROM THE DATE HEREOF UNTIL SUCH TIME A REPLACEMENT
WIRE TRANSFER AUTHORIZATION IN THE FORM HEREOF AS RECEIVED BY YOU.
SINCERELY,
_________________________________
BY:______________________________
NAME: PAYTON STORY, III
TITLE: PRESIDENT
BY:______________________________
NAME: IRVING H. BOWEN
TITLE: EVP, TREASURER/CFO
5
<PAGE>
EXHIBIT C
Credit Documents
ORIGINAL LOAN APPLICATION (FNMA FORM 1003)
ORIGINAL UNIFORM UNDERWRITING AND TRANSMITTAL FORM (FNMA FORM 1008)
ORIGINAL MERGED CREDIT REPORT FROM TWO CREDIT REPOSITORIES
INITIAL AND FINAL EXECUTED DISCLOSURE STATEMENTS AS REQUIRED BY STATE AND
FEDERAL LAW INCLUDING BUT NOT LIMITED TO:
INITIAL GOOD FAITH ESTIMATE
INITIAL TRUTH-IN-LENDING DISCLOSURE
PROVIDER OF SERVICES DISCLOSURE
RIGHT TO APPRAISAL DISCLOSURE
SERVICING DISCLOSURE NOTIFICATION
LOAN PAYMENT HISTORY IN MAGNETIC MEDIA ACCEPTABLE TO AND READABLE BY BANC ONE,
OR IF PAYMENT HISTORIES ARE MAINTAINED ONLY MANUALLY, THE LEDGER CARDS.
EVIDENCE OF INCOME VERIFICATION PURSUANT TO UNDERWRITING GUIDELINES
EVIDENCE OF ASSET VERIFICATION PURSUANT TO UNDERWRITING GUIDELINES, IF
APPLICABLE.
VERIFICATION OF FIRST MORTGAGE, IF APPLICABLE.
ORIGINAL APPRAISAL (FNMA FORM 1004), AND ALL OTHER APPRAISALS
PURCHASE CONTRACT, IF APPLICABLE.
ORIGINAL OF HUD-1 OR HUD-1A SETTLEMENT STATEMENT, EXECUTED BY OBLIGOR(S)
EVIDENCE OF HOMEOWNER'S INSURANCE
ORIGINAL OR CERTIFIED COPY OF CERTIFICATE OF IDENTIFICATION OR TITLE AFFIDAVIT
OR BORROWER'S NAME AFFIDAVIT, IF APPLICABLE
ORIGINAL W-9 CERTIFICATE
ORIGINAL IRS FORM 4506/8821, IF APPLICABLE.
THE ORIGINAL POLICY OF TITLE INSURANCE FOR SUCH LOAN, OR A COPY OF SUCH
POLICY OR A TITLE INSURANCE BINDER OR COMMITMENT FOR THE ISSUANCE OF SUCH POLICY
OR AN INSURED CLOSING AGREEMENT (OR IN THE CASE OF MORTGAGED PROPERTIES LOCATED
IN OR AS IN WHICH SUCH POLICIES ARE GENERALLY NOT AVAILABLE, AN ATTORNEY'S
CERTIFICATE OR OPINION OF TITLE OR OTHER CUSTOMARY ASSURANCE OF TITLE).
COPY OF EACH INSTRUMENT NECESSARY TO COMPLETE IDENTIFICATION OF ANY
EXCEPTION SET FORTH IN THE EXCEPTION SCHEDULE IN THE TITLE POLICY, I.E., MAP OR
PLAT, RESTRICTIONS, EASEMENTS, SEWER AGREEMENTS, HOME ASSOCIATION DECLARATIONS,
ETC.
COPY OF FLOOD CERTIFICATION AND FLOOD INSURANCE POLICY, IF APPLICABLE.
6
<PAGE>
EXHIBIT D
Loan Documents
ORIGINAL STANDARD FNMA FORM NOTE EXECUTED BY ALL OBLIGORS, WITH PROPER
ENDORSEMENTS, ADDENDUMS, OR RIDERS, ENDORSED "PAY TO THE ORDER OF BANC ONE
FINANCIAL SERVICES, INC., WITHOUT RECOURSE," AND SIGNED IN THE NAME OF SELLER BY
AN AUTHORIZED OFFICER, WITH ALL INTERVENING ENDORSEMENTS SHOWING A COMPLETE
CHAIN OF TITLE FROM THE ORIGINATOR OF SUCH LOAN TO SELLER.
ORIGINAL OR CERTIFIED COPY OF THE EXECUTED MORTGAGE WITH APPROPRIATE
ADDENDUMS OR RIDERS, WITH EVIDENCE OF RECORDING THEREON, PROVIDED, THAT IF THE
ORIGINAL MORTGAGE HAS BEEN DELIVERED FOR RECORDING TO THE APPROPRIATE PUBLIC
RECORDING OFFICE OF THE JURISDICTION IN WHICH THE MORTGAGED PROPERTY IS LOCATED
BUT HAS NOT YET BEEN RETURNED TO SELLER BY SUCH RECORDING OFFICE, SELLER MAY
TENDER TO BANC ONE A CERTIFIED TRUE COPY OF SUCH ORIGINAL MORTGAGE SO CERTIFIED
BY AN OFFICER OF SELLER, TOGETHER WITH A CERTIFICATE OF SELLER CERTIFYING THAT
SUCH ORIGINAL MORTGAGE HAS BEEN SO DELIVERED TO SUCH RECORDING OFFICE.
ORIGINAL ASSIGNMENT OF MORTGAGE, PROPERLY EXECUTED, FROM SELLER SHOWING
ASSIGNMENT TO BANC ONE AND ITS SUCCESSORS AND ASSIGNS, WITH EVIDENCE OF
RECORDING THEREON, PROVIDED, THAT IF THE ORIGINAL ASSIGNMENT OF MORTGAGE HAS
BEEN OR WILL BE DELIVERED FOR RECORDING TO THE APPROPRIATE PUBLIC RECORDING
OFFICE OF THE JURISDICTION IN WHICH THE MORTGAGED PROPERTY IS LOCATED BUT HAS
NOT YET BEEN RETURNED TO SELLER BY SUCH RECORDING OFFICE, SELLER MAY DELIVER TO
BANC ONE A CERTIFIED TRUE COPY OF SUCH ORIGINAL ASSIGNMENT OF MORTGAGE SO
CERTIFIED BY AN OFFICER OF SELLER, TOGETHER WITH A CERTIFICATE OF SELLER
CERTIFYING THAT SUCH ORIGINAL ASSIGNMENT OF MORTGAGE HAS BEEN OR WILL BE SO
DELIVERED TO SUCH RECORDING OFFICE.
ORIGINAL INTERVENING ASSIGNMENTS OF MORTGAGE, WITH EVIDENCE OF
RECORDING THEREON, SHOWING A COMPLETE CHAIN OF TITLE FROM THE ORIGINATOR TO
SELLER, PROVIDED, THAT IF ANY SUCH ORIGINAL INTERVENING ASSIGNMENT OF MORTGAGE
HAS BEEN DELIVERED FOR RECORDING TO THE APPROPRIATE PUBLIC RECORDING OFFICE OF
THE JURISDICTION IN WHICH THE MORTGAGED PROPERTY IS LOCATED BUT HAS NOT YET BEEN
RETURNED TO SELLER BY SUCH RECORDING OFFICE, SELLER MAY TENDER TO BANC ONE A
CERTIFIED TRUE COPY OF SUCH ORIGINAL ASSIGNMENT OF MORTGAGE SO CERTIFIED BY AN
OFFICER OF SELLER, TOGETHER WITH A CERTIFICATE OF SELLER CERTIFYING THAT SUCH
ORIGINAL ASSIGNMENT OF MORTGAGE HAS BEEN SO DELIVERED TO SUCH RECORDING OFFICE.
CERTIFIED COPY OF DURABLE POWER OF ATTORNEY, IF APPLICABLE.
ORIGINALS OF ALL ASSUMPTION AND MODIFICATION AGREEMENTS, IF ANY.
7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET, CONSOLIDATED STATEMENT OF OPERATIONS AND
CONSOLIDATED STATEMENT OF CASH FLOWS INCLUDED IN THE COMPANY'S FORM 10-QSB FOR
THE SIX MONTHS ENDING JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 677
<SECURITIES> 28388
<RECEIVABLES> 2727
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 33068
<PP&E> 1333
<DEPRECIATION> 535
<TOTAL-ASSETS> 35516
<CURRENT-LIABILITIES> 32057
<BONDS> 0
<COMMON> 17
0
1432
<OTHER-SE> 2010
<TOTAL-LIABILITY-AND-EQUITY> 35516
<SALES> 0
<TOTAL-REVENUES> 10102
<CGS> 0
<TOTAL-COSTS> 9830
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1096
<INCOME-PRETAX> 272
<INCOME-TAX> 0
<INCOME-CONTINUING> 272
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 272
<EPS-BASIC> .07
<EPS-DILUTED> .07
</TABLE>
