NLC FINANCIAL SERVICES, LLC
5355 Town Center Road, Suite 802
Boca Raton, Florida 33486
561-394-0550
Mr. Mark Schaftlein May 15, 2000
Chief Executive Officer
Westmark Group Holdings, Inc.
8000 North Federal Highway
Boca Raton, Florida 33487
Dear Mark:
We are pleased to present to you this non-binding letter of intent whereby First
NLC Mortgage Lending, LLC ("First NLC"), a wholly-owned subsidiary of NLC
Financial Services, LLC ("NLC Financial"), an affiliate of Sun Capital Partners,
Inc. ("Sun Capital") will, subject to the terms and conditions set forth herein,
acquire 100% of the stock or assets of Westmark Mortgage Corporation ("Westmark"
or the "Company") from Westmark Group Holdings, Inc. ("Westmark Group" or
"Parent").
o Consideration. First NLC will provide up to $6.0 million of capital at
closing so that Westmark can satisfy its existing obligations under its
warehouse lines of credit. In addition, Westmark Group will be issued an
option exercisable for 90 days after closing to acquire 5% of First NLC for
$925,000.
o Definitive Agreement. NLC Financial and Westmark Group will use mutual best
efforts to negotiate and execute a definitive agreement, and other
ancillary documents containing terms consistent with the terms of this
letter and other customary terms for transactions of this nature.
o Closing Conditions. The closing of the transaction contemplated hereby is
conditioned upon:
o execution of definitive agreements carrying out the terms of the
transaction as set forth herein;
o receipt of any third party or governmental consents or approvals,
including the assignment of any material contracts;
o investment of $3.70 million for 20% of the common equity of
First NLC, $1.85 million of which will be provided by NLC
Financial Services, $1.0 million of which will be provided by
Household Finance and the remainder of which will be raised from
other investors yet to be identified;
o investment of $4.0 million of subordinated notes in First NLC by
The Associates; such notes will have a five year term, pay cash
interest at the Prime rate of interest quarterly, and be due and
payable in full on the fifth anniversary of the date of issuance,
or a sale or an IPO of First NLC;
o completion of NLC Financial's due diligence review to its sole
satisfaction, which diligence will include facility visits,
meetings with senior management and a review of the Company's
books, records and legal documents by NLC Financial, as well as
its legal and accounting advisors; and
o approval of the transaction by First NLC's warehouse lenders,
including appropriate terms to support the incremental volume
expected from the acquisition.
o Fees and Expenses. Each party agrees that it will pay its respective
expenses (including fees and expenses of legal counsel, accountants,
investment bankers, brokers, or other representatives or consultants) in
connection with the transaction contemplated hereby if the transaction does
not close for any reason.
<PAGE>
May 15, 2000
Page 2
o Exclusivity. Upon your execution of this letter, Westmark agrees and
covenants that until June 30, 2000 or such time that NLC Financial and
Westmark are no longer negotiating a transaction (it being agreed that
Westmark will not unilaterally terminate negotiations as long as both
parities are working in good faith), neither Westmark nor any of its
representatives will solicit offers for sale or discuss a possible merger,
sale, restructuring, refinancing or other disposition of all or any
material part of Westmark or any of its assets or issued or unissued
capital stock (a "Company Sale") with any other party or provide any
information to any other party regarding the Company in that connection.
Westmark represents that it is not a party to or bound by any agreement
with respect to a Company Sale other than under this letter. Westmark will
disclose to NLC Financial the existence or occurrence of any proposal or
contact that it may receive in respect of any Company sale.
o Binding Effect; Counterparts, Miscellaneous. Upon the execution of this
letter by you, notwithstanding the non-binding nature of this offer, the
two paragraphs directly above ("Fees and Expenses" and "Exclusivity") are
binding agreements between the parties hereto, subject only to the
conditions set forth herein, and will inure to the benefit of their
successors and assigns. This letter may be signed in two or more
counterparts, any one of which need not contain the signature of more than
one party, but all such counterparts taken together will constitute one and
the same agreement and shall be governed by the laws of the State of
Florida. This agreement may not be assigned without the other party's
written consent.
If you are in agreement with the terms of this letter, please sign in the space
provided below and return a signed copy. We will then immediately work toward
implementing our plans for consummating the transaction as expeditiously as
possible.
Very truly yours,
Agreed and
Accepted as of
May 15, 2000:
FIRST NLC FINANCIAL SERVICES, LLC WESTMARK GROUP HOLDINGS, INC.
By: By:
/s/ Marc J. Leder /s/ Mark Schaftlein
--------------------------------------- ------------------------
Mark J. Leder Name: Mark Schaftlein
Vice President Title: C.E.O.
