Exhibit 34
MASTER PARTICIPATION AGREEMENT
This Master Participation Agreement, (this "Agreement"), is dated the
13th day of June, 2002, is to be effective the 14h day of, March 2002, and is
between ▇▇▇▇▇▇ Mortgage Corporation ("GMC") and BF Enterprises, Inc.
("Purchaser" or "Investor"):
GMC and Purchaser hereby agree as follows:
1. Purchase and Sale of Individual Loan Participations. This Agreement shall set
forth the rights and duties of GMC and Purchaser as to each other and govern
their relationship with regard to the subsequent Individual Loan Participations
(defined hereinbelow) that they may enter into. While this Agreement shall set
forth such rights and duties, the specific terms of each such Individual Loan
Participation shall be set forth in a separately executed Addendum to Master
Participation Agreement, a form of which is attached hereto as Exhibit A and
incorporated herein for all purposes (the "Addendum"). Individual Addenda shall
set forth the information indicated in Exhibit A, although the format may
differ. With regard to each Individual Loan Participation entered into by GMC
and Purchaser, this Agreement and the Addendum specific to the particular
Individual Loan Participation shall be deemed to be the single and entire
agreement between GMC and Purchaser governing that Individual Loan
Participation. For the consideration set forth in such Addendum, the receipt and
adequacy of which is hereby acknowledged, GMC shall sell, assign and transfer to
Purchaser and Purchaser shall purchase and accept from GMC an undivided
fractional participating ownership interest (the "Individual Loan
Participation"), in an amount set forth in the Addendum, in the loan (the
"Loan") described in such Addendum and the loan documents pertaining thereto
(the "Loan Papers"), evidencing such Loan made to that certain borrower (the
"Borrower") described in such Addendum. In exchange for such consideration,
Purchaser shall be entitled to receive from GMC (a) a percentage share as set
forth in the Addendum (as determined prior to any participation in, or sale and
transfer of, GMC's rights in the Loan Papers and such percentage at such time is
referred to herein as its "Pro Rata Part" and sometimes referred to in the
Addendum as the "Percent Investment") of any and all principal payments owed by
the Borrower to GMC under the Loan Papers, and (b) its Pro Rata Part of any and
all interest payments owed by the Borrower to GMC under the Loan Papers accruing
from and after the effective date set forth in the Addendum at the rates
specified therein, except that a servicing fee, as set forth in the Addendum,
shall be earned by GMC as compensation for administration of this loan. Except
for the obligation of GMC to account for payments received by it or as otherwise
specifically provided herein, the sale and purchase of each Individual Loan
Participation shall be without recourse against, or representation or warranty
(except as set forth herein in Paragraph 16) by GMC. Notwithstanding any
Individual Loan Participation sold to Purchaser, GMC shall remain liable to
perform all of its obligations under the Loan Papers.
2. Consideration. In consideration for the purchase of each Individual Loan
Participation, Purchaser agrees to pay to GMC in immediately available funds, on
the effective date of the Addendum applicable to such Individual Loan
Participation, Purchaser's Pro Rata Part of the Loan as described in such
Addendum, for a total funded amount as set forth in the Addendum (the "Pro Rata
Amount", sometimes referred to in the Addendum as the "Original Investment").
The payments required of Purchaser as set forth in this Paragraph must be made,
with good funds (i.e., cashier's check, money order or wired funds), prior to
2:00 p.m. Dallas, Texas time, on the date due. Upon making such payment,
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Purchaser shall immediately become vested with a beneficial interest in the Loan
and the Loan Papers corresponding to such Individual Loan Participation. GMC
shall hold the Loan Papers in trust for the benefit of Purchaser and the holders
of other interests in such Loan.
3. Partial Payments. If the Borrower makes only a partial principal, interest or
fee payment to GMC under the Loan Papers, Purchaser shall be entitled to receive
an amount equal to Purchaser's Pro Rata part of such payment.
4. Payments to Purchaser. Purchaser's share of each interest, principal,
reimbursement, or fee payment shall be received by GMC in trust on behalf of
Purchaser and shall be paid to Purchaser by check within ten (10) days after
receiving the applicable payment from Borrower.
5. Required Repayments to the Borrower. Purchaser shall repay to GMC any sums
paid to GMC by the Borrower and distributed by GMC to Purchaser which GMC shall
be required to return to the Borrower or to any receiver, trustee, or custodian
for the Borrower. In the event Purchaser fails or refuses to make any such
payment or fails or refuses to pay its Pro Rata Part of the Loan (as required in
Paragraph 2) to GMC directly, GMC shall be entitled to fund Purchaser's portion
of such payment and offset against Purchaser's portion of all sums received by
GMC under Paragraph 1 until reimbursed therefor by Purchaser. Furthermore, any
such amount paid by GMC on behalf of Purchaser shall be payable to GMC on demand
and shall bear interest for each day from the date of such payment until it is
repaid by Purchaser at the highest rate allowed by law.
6. Fees and Expenses. Purchaser shall pay its Pro Rata Part of all reasonable
attorneys' fees and other expenses incurred by GMC in connection with the
enforcement of the obligations of the Borrower under any Loan Paper, and
Purchaser shall be entitled to its Pro Rata Part of any payment subsequently
received by GMC with respect to such fees and expenses.
7. No Ability of Purchaser to Enforce the Loan Papers. Purchaser hereby agrees
that it shall not have any right or responsibility to enforce the obligations of
the Borrower or any other participation in the Loan Papers, and except as
expressly provided herein to the contrary, all rights pursuant to the Loan
Papers (or otherwise) of GMC to secure payment of the obligations of the
Borrower under the Loan Papers shall be so held and such rights shall be
exercised solely by and at the option of GMC for the ratable benefit of GMC,
Purchaser, and any other participants in such Loan (collectively, "Lenders").
Purchaser hereby acknowledges and agrees that this Agreement and any such
Individual Loan Participation as may be created hereafter do not confer on
Purchaser any right to vote on, approve or sign amendments or waivers, or to
exercise any legal or equitable right, remedy or other claim under the Loan
Papers, except as may be otherwise provided herein.
8. Other Financing. Without limiting rights to which Purchaser otherwise is or
may become entitled, Purchaser shall have no interest, by virtue of this
Agreement and Purchaser's rights hereunder, in (a) any present or future loans
from, letters of credit issued by, or leasing or other financing transactions by
GMC to, on behalf of, or with any borrower (collectively referred to herein as
the, "Other Financing") other than the loans in which Purchaser participates as
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described in an Addendum executed by GMC and Purchaser; (b) any present or
future guaranties by or for the account of the Borrower which are not
contemplated by the Loan Papers; (c) any present or future offset exercised by
GMC in respect of such Other Financing; (d) any present or future property taken
as security for any such Other Financing; or (e) any property now or hereafter
in the possession or control of GMC which may be or become security for the
obligations of the Borrower arising under any Loan Paper by reason of the
general description of indebtedness secured of or property contained in any
other agreements, documents, or instruments related to any such Other Financing;
provided that, if payments in respect of such guaranties or such property or the
proceeds thereof shall be applied to the obligation of the Borrower arising in
respect of a Loan in which Purchaser participates pursuant to an executed
Addendum, then Purchaser shall be entitled to share in such application as set
forth in Paragraph 1.
9. Bankruptcy, etc. In the event of: (a) the filing by or against GMC of a
petition under any provision of the U.S. Bankruptcy Code, or of an assignment by
GMC for the benefit of creditors; (b) the appointment by any public or
supervisory authority of any person or firm in charge of GMC or its assets; or
(c) the involuntary sale of the Loan, the person or firm having the greatest
participation ownership interest in the Loan as reflected on GMC's books and
records (the "Largest Participant") shall have the right and option, in its
discretion, to succeed to all rights, titles, status, and responsibilities which
GMC may have regarding the holding and servicing of the Loan, including the
right to receive payment of the servicing fee in compensation therefor. If the
Largest Participant declines to succeed to the interest of GMC with regard to
the holding and servicing of the Loan, it shall have the right to designate the
successor to GMC's interest with regard to the holding and servicing of the Loan
or to permit GMC to continue to service and manage the Loan. If the Largest
Participant designates a successor to GMC, it shall give written notice thereof
promptly to Participant. Upon the designation of a successor to GMC, the Loan
Papers and all other records pertaining to the Loan shall be delivered to such
successor, together with the necessary assignments, transfers, and documents of
authority.
10. Prior Loans to the Borrower. If the Addendum with respect to any Loan in
which Participant has an Individual Loan Participation hereunder indicates that
the interest created thereby is not an interest in a first lien mortgage or Deed
of Trust, Purchaser acknowledges that such Loan shall be junior to any loan
identified as senior therein.
11. Performance Through Representatives. GMC may perform any of its duties
hereunder by or through officers, directors, employees. attorneys, or agents
(collectively "Representatives") and GMC and its Representatives shall be
entitled to rely, and shall be fully protected by relying, upon any
communication or document believed by it or them to be genuine and correct and
to have been signed or made by the proper person, and with respect to legal
matters, upon the opinion of counsel selected by GMC.
"Person" means any individual, firm, corporation, association, partnership,
joint venture, trust, other entity, or Tribunal. "Tribunal" means any state,
federal, foreign, or other court or governmental department, commission, board,
bureau, agency, or instrumentality.
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12. Duty of Care. Neither GMC nor any of its Representatives shall be liable for
any action taken or omitted to be taken by it or them under this Agreement, as
it may be amended or made subject to any Addenda, or any Loan Paper in good
faith and believed by it or them to be within the, discretion or power conferred
upon it or them by this Agreement, as it may be amended or made subject to any
Addenda, or any Loan Paper, or be responsible for the consequences of any error
or judgment. GMC will exercise the same care in administering the Loan Papers as
it exercises with respect to similar transactions entered into solely for its
own account and shall otherwise have no liability or responsibility to Purchaser
except for actions taken or omitted to be taken by GMC which constitute willful
misconduct or negligence. Unless indemnified to the satisfaction of GMC against
loss, cost, liability, and expenses, GMC shall be under no duty to enforce any
rights, remedies, or privileges with respect to any of the obligations of the
Borrower under any Loan Paper and shall not be compelled to do any act hereunder
or thereunder or to take any action toward the exercise or enforcement of the
powers created by this agreement in respect hereof or thereof. GMC shall not be
responsible in any manner to Purchaser for (a) the effectiveness,
enforceability, genuineness, validity, or due execution of the instruments, (b)
any representation, warranty, document, certificate, report or statement therein
made or furnished under or in connection with any Loan Paper, (c) the adequacy
of collateral, if any, for the obligations of the Borrower under any Loan Paper,
(d) the existence, priority, or perfection of any lien or security interest, if
any, granted or purported to be granted in connection with my Loan Paper, or (e)
observation of or compliance with any of the terms, covenants or conditions of
any Loan Paper an the part of the Borrower. GMC shall notify Purchaser of any
material failure to perform any obligation under the Loan and pursue appropriate
remedies in the event of such default, including foreclosure of the mortgage or
Deed of Trust.
13. Not a Loan: No Duty to Repurchase any Individual Loan Participation. No
amount paid by Purchaser to purchase any Individual Loan Participation shall be
considered a loan by Purchaser to GMC. GMC shall have no obligation to
repurchase any Individual Loan Participation upon any default by the Borrower
under any Loan Paper.
14. Amendment, Waivers, etc. GMC will at all times retain the absolute,
unfettered and exclusive right to vote or take any other actions with respect to
the Loan Papers, both prior to and after the occurrence of any default, without
the consent of Purchaser; provided that GMC will consult with Purchaser and
secure Purchaser's consent (which consent shall not be unreasonably withheld or
delayed) before GMC agrees to any amendment or modification of, or waiver of
compliance with, any Loan Paper, which would (a) reduce the principal of, or
rate of interest on, any Loan; (b) postpone the date fixed for any payment of
principal of, or interest on, any Loan; (c) increase the commitment of any
Lender or subject any Lender to any additional obligations; or (d) reduce the
amount of any commitment or similar fee. If the Purchaser is unwilling to
consent to any amendment or modification of, or waiver of compliance with, any
Loan Paper with regard to an Individual Loan Participation, GMC shall have the
right, but not the obligation, to repurchase such Individual Loan Participation
at such time for a purchase price equal to (i) Purchaser's Pro Rata Part of all
unpaid principal of the Loan, and (ii) any and all unpaid interest thereon in
accordance with Paragraph 1. Except as otherwise provided herein, GMC shall be
entitled, at its own option, and without the consent of Purchaser from time to
time and at any time, to take any action or exercise any rights or remedies
under or in respect of any Loan Paper, or refrain from taking any such action,
right or remedy, upon the occurrence of a default or at any other time.
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GMC will, with reasonable promptness, notify Purchaser of any material default
to the Loan of which it is actually aware and of any other matters which, in its
judgment, materially affect the interest of Purchaser in respect of such Loan,
but GMC will not in any event be liable to Purchaser for GMC's failure to do so.
15. Purchaser's Representations. Purchaser represents and warrants to GMC that:
(a) Purchaser will purchase each Individual Loan Participation hereunder for its
own account in respect of a transaction made in the ordinary course of its
business and not with a view to or in connection with any subdivision, resale or
distribution thereof; (b) Purchaser can bear the economic risk related to the
purchase of the same; and (c) Purchaser does not consider the acquisition of any
Individual Loan Participation hereunder to constitute the "purchase" or "sale"
of a "security" within the meaning of any federal or state securities statute or
law, or any rule or regulation under any of the foregoing. Notwithstanding the
above, upon written notice to GMC, Purchaser may assign its rights in an
Individual Loan Participation and in such event the assignee shall succeed to
all of Purchaser's rights hereunder.
16. GMC Representation. GMC represents and warrants to Purchaser (a) that GMC
has not received, as of the effective date set forth in an Addendum, a written
notice from any Person that a default has or will occur under any Loan Paper
pertaining to the Loan described in such Addendum; (b) that the Loan will be, to
the best of GMC's knowledge, in compliance with all applicable federal and state
laws; (c) that GMC is authorized to sell the Individual Loan Participations to
Purchaser; (d) that GMC will be in possession of all Loan Papers and will
provide copies of them to Purchaser on request; and (e) that there will be no
delinquent tax or assessment liens or mechanic's liens on the secured property;
and (f) that the Loan Papers will include a mortgagee title insurance policy
(insuring the mortgage or Deed of Trust as the first lien unless the Addendum
indicates such mortgage or Deed of Trust is not a first lien), casualty
insurance policies and satisfactory environmental assessment reports.
17. No Reliance by Others. None of the provisions of this Agreement shall inure
to the benefit of the Borrower or any Person other than Lenders; consequently,
the Borrower shall not be, and no Person other than Lenders shall be, entitled
to rely upon or raise as a defense, in any manner whatsoever, the failure of
either Lender to comply with the provisions of this Agreement. No Lender shall
incur any liability to the Borrower or any other Person for any act or omission
of any other Lender.
18. Not a Partnership, etc. Neither the execution of this Agreement or any
Addendum, the sharing in the Loan Papers, nor any agreement to share in profits
or losses arising as a result of the transactions contemplated hereby is
intended to be or to create, and the foregoing shall be construed not to be or
to create, any partnership, joint venture, or other joint enterprise between
Lenders. It is agreed that GMC is not to act as agent for Purchaser, but is to
act in all Loan administration matters for Purchaser as an independent
contractor and as Purchaser's nominee to hold its participating ownership of the
Loan, Loan Papers and payments hereunder, and to make remittances as specified
herein. Neither the execution of this Agreement or any Addendum, nor the
management and administration of the Loan Papers and the related documents by
GMC, nor any right, duty or obligation of GMC under or pursuant to this
Agreement is intended to impose any duties or obligations other than those
expressly provided for in this Agreement. This Agreement coupled with an
Addendum constitutes a sale of such Individual Loan Participation in the Loan
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and the Loan Papers described in such Addendum. Purchaser shall be the absolute
owner of its Individual Loan Participation in such Loan and the Loan Papers. The
rights and powers of Purchaser therein are ratably concurrent with the interest
of GMC and with the participation interest of any other participant therein, and
such interest shall have priority over any other such interest. Purchaser shall
be the holder of an equitable interest in such Loan and Loan Papers, and the
documentation relating thereto as contemplated by the United States Bankruptcy
Code and other applicable law. GMC shall ▇▇▇▇ its books and records to show
Purchaser's ownership interest in such Loan and Loan Papers, and shall act as
the representative of Purchaser in holding such documents and in receiving
proceeds pursuant to such documents to the extent of the Individual Loan
Participation therein; provided, however, that GMC's duty of care shall never be
greater than that set forth in Paragraph 12 despite acting in such
representative capacity.
19. Waivers, etc. No delay or omission by any party to exercise any right under
this Agreement shall impair any such right, nor shall it be construed to be a
waiver thereof. No waiver of any single breach or default under this Agreement
shall be deemed a waiver of any other breach or default. Any waiver, consent, or
approval under this Agreement must be in writing to be effective.
20. Recovery of Costs, etc. In the event of any action to enforce the provisions
of this Agreement against a party hereto, the prevailing party shall be entitled
to recover all costs and expenses incurred in connection therewith including,
without limitation, reasonable attorneys' fees and expenses.
21. Illegality, Invalidity, etc. The illegality or unenforceability of any
provision of this Agreement shall not in any way affect or impair the legality
or enforceability of the remaining provisions of this Agreement.
22. Notices. Whenever this Agreement requires or permits any consents,
approvals, notice, request, or demand from one party to another, the consent,
approval, notice, request, or demand must be in writing (or by tested cable or
tested telex notice confirmed in writing) to be effective and shall be deemed to
have been given when actually received or, if mailed, on the third day after it
is enclosed in an envelope addressed to the party to be notified at the address
stated opposite their signature below (or at such other address as may have been
designated by written notice), properly stamped, scaled and deposited in the
appropriate official postal service.
23. Construction. Whenever in this Agreement the singular number is used, the
same shall include the plural where appropriate, and vice-versa; and words of
any gender in this Agreement shall include each other gender where appropriate.
Terms defined herein shall have the same meaning in any Addendum executed
hereinafter.
24. Governing Law. This Agreement is performable in Dallas County, Texas, and
the laws of the State of Texas and of the United States of America shall govern
the rights and duties of the parties hereto and the validity, construction,
enforcement and interpretation hereof.
25. Entire Agreement. As it relates to a particular Individual Loan
Participation, this Agreement together with such corresponding Addendum executed
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pursuant hereto by GMC and Participant (a) embodies the entire agreement between
the parties, supersedes all prior agreements and understandings between such
parties if any, relating to the subject matter hereof, and may be amended only
by an instrument in writing executed jointly by each party or an authorized
officer of each party hereto, and (b) is executed in a number of identical
counterparts, each of which shall be deemed an original for all purposes and all
of which constitute, collectively, one agreement; but, in making proof of this
Agreement, it shall not be necessary to produce or account for more than one
such counterpart.
26. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of GMC and the Purchaser, and their respective successors and assigns,
including any receiver ever appointed for either of the Lenders.
27. Prepayment Penalties. Purchaser shall be entitled to its Pro Rata Part of
fifty percent (50%) of any prepayment penalty paid by the Borrower for the
privilege of prepaying any Loan in which Purchaser has an Individual Loan
Participation prior to maturity and of fifty percent (50%) of any late fees or
late penalties paid by the Borrower.
28. Books or Records. GMC will maintain a complete set of books and records with
respect to the Loan and issue periodic reports to Purchaser with regard to the
status of the Loan.
IN WITNESS WHEREOF, the parties hereto have executed or have caused
this Master Participation Agreement to be executed by their respective duly
authorized officers, as of the date first above written.
▇▇▇▇▇▇ MORTGAGE CORPORATION ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
BY: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇ ▇. ▇▇▇▇▇▇, President
PURCHASER:
BF ENTERPRISES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
------------------ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Purchaser's Federal ID or Social Security No. ▇▇-▇▇▇▇▇▇▇
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Purchaser's Federal ID or Social Security No:
