Exhibit 10.1





 


 










Exhibit 10.1






STIPULATION OF SETTLEMENT


            Washington
Mutual Bank, FA ("Washington Mutual") and First Preference Mortgage
Corporation ("FPMC") hereby agree and stipulate to the following:
 


Settlement
Agreement


THIS SETTLEMENT AGREEMENT
(the "Settlement") is by and between Washington Mutual, and FPMC.  The
foregoing will be collectively referred to as the "Parties."  


WHEREAS, Washington
Mutual has raised certain claims against FPMC for actual and anticipated losses
arising out of 13 loans sold to Washington Mutual by FPMC;


WHEREAS, FPMC desires
that Washington Mutual forebear its right to pursue its claims through arbitration; 




WHEREAS, FPMC represents
and warrants that it will pay Washington Mutual all of the amounts agreed to
herein under the terms set forth herein;  


WHEREAS, Washington
Mutual is relying upon FPMC's representation and warranty relating to such
payment as a material term and inducement to enter into this Settlement;


WHEREAS, the Parties
desire to provide for a complete resolution of the disputes currently existing
between the Parties;


Now therefore, in consideration of the rights and obligations
created by this Settlement, and other good and valuable consideration, the
receipt of which is hereby acknowledged by all Parties, the Parties agree as
follows:

 

 

 








































1.        
Incorporation by Reference.  The above-stated Recitals are true and correct and
are incorporated herein by this reference.


2.        
The Settlement Proceeds and
Payment. The sums to be paid under
this Settlement are as follows:


A.        FPMC shall
pay Washington Mutual $80,354.78, without interest, immediately
upon executing this Settlement and shall transmit such payment together with
its signature. This payment will be applied by Washington Mutual to satisfy the
components of the final loss debt set forth at subparagraph 2(D).   




B.        Beginning on February 15th, 2006, FPMC
shall pay Washington Mutual, without interest, the amounts set forth in the
payment schedule attached as Exhibit A on or before the fifteenth (15th)
day of the month, time being of the essence, each and every month. 
These monthly payments will be applied by Washington Mutual to satisfy the
components of the final loss debt set fourth at subparagraph 2(D) less the
components of the forgiveness set forth at subparagraph 2 (E) below. 
 




C.        FPMC shall
execute and return to Washington Mutual the agreements attached hereto as Schedule
1 and Schedule 2 immediately upon executing this Settlement.


D.        The term
"Final Loss Debt", as used in this Settlement, encompasses all loans sold by
FPMC for which Washington Mutual currently has a claim, which loans are
identified in sub-paragraphs 2(D)(1) through 2(D)(3) below, and is defined as
an amount equal to:




	
	Liquidated
(known to a sum certain) make-whole losses for all those loans for which such
losses are presently known, an amount totaling $1,016,850.13, as set
forth in Exhibit B, hereto; plus

	
	Repurchase
demands for defective loans sold by FPMC to Washington Mutual in an amount
totaling approximately $194,597.29, as set fourth in Exhibit C
hereto.






E.        Washington
Mutual shall forgive the following portions of the Final Loss Debt in
consideration of this Settlement:




	
	Total
net proceeds of SRP and Premiums on all loans listed in
Schedules 1 and 2 hereto and totaling $41,406.65; plus






   
                                                                                                                                                                                                







































	
	The
principle balances of the loans listed in sub-paragraph 2
(D)(2), totaling approximately $194,597.29.






F.         At any time
before any individual loan identified in sub-paragraph 2(D)(2) above completes
foreclosure, FPMC may repurchase such loan according to the repurchase price
set forth in the Washington Mutual Seller Guide, and in the event of such
repurchase, such loan will be deleted from the list of loans identified in
sub-paragraphs 2(D)(2).  If any loan identified in sub-paragraph 2(D)(2)
above is paid off by the borrower, or otherwise extinguished as a loss by any
third-party, Washington Mutual shall delete such loan from the list of loans
identified in sub-paragraphs 2(D)(2), and notify FPMC of the same. 




G.        All payments described
above shall be sent by wire transfer to:




	




Bank Name:              



			Washington Mutual Bank, FA
	


Bank Short Name:    


			WASH MUT BKFA
STOK
	


Bank Address:         



			400 E. Main Street, Stockton, CA 95290-0001
	


Account Name:         



			WAMU FA
	


Account #:                 



			29222-0007633
	


Bank ABA #:             



			321180748
	


REF:                          





			Attn: Regan St. Pierre/FPMC Settlement






H.        Upon payment of the
amounts set fourth in sections 2A and B above,   FPMC shall have fully
satisfied all repurchase and indemnity obligations of FPMC to Washington Mutual in
relation to the loans on the attached Exhibits,   through
the date here of and Washington  Mutual shall be deemed to
have released and discharged FPMC from any further such obligations,
save and except any obligations under the indemnity agreements
attached hereto as Schedules 1 and 2.




3.        
Effect of Default and Interest
on Default:   


   
                                                                                                                                                                                                







































A.        In the event of a default by
FPMC on any of the payments owed under subsections 2(A) or 2(B) above, which
event of default is defined as FPMC's failure to wire transfer any payment owed
on or before its due date, Washington Mutual may immediately file legal
action against FPMC at its discretion, by filing with the appropriate court, a
Motion to Enforce Settlement Agreement, a copy of this Settlement, an Affidavit
of Non-Payment, and a notice of the hearing on the same, with copies thereof
served to FPMC's counsel, unless within fifteen days after the date of default,
FPMC cures the default by wire transferring the missing payment to Washington
Mutual.  Washington Mutual is not required to give FPMC notice of any event of
default, and FPMC is required to keep itself informed of its payment due dates,
any dates of default, and any cure periods under this Settlement.




B.         In the event of a default by FPMC, which is not cured by FPMC, Washington Mutual retains the option to, at
Washington Mutual's sole and exclusive discretion, allow FPMC to cure the
default in lieu of proceeding to obtain a Judgment. Such option shall only be
exercised in a writing signed by an authorized representative of Washington
Mutual.   




C.        In the event of a default as
described herein, Washington Mutual may claim all amounts waived in accordance
with paragraph 2(E) above, and such amounts shall become immediately due and
payable.  Such amounts may be included in any ultimate Judgment or Order to
Enforce Settlement obtained by Washington Mutual.   






4.        
Forbearance:  Washington Mutual shall forbear the pursuit of an
arbitration award and any Final Judgment and post-judgment collection
activities so long as there is no payment default under this Settlement.


5.         Entire
Agreement:  The Parties state that this Settlement memorializes the
agreement made on this date and sets forth a complete and final agreement and
understanding of the Parties, and that there have been no verbal or written
promises or undertakings between the Parties with respect to this Settlement
and its Exhibits that are not fully and completely set forth herein. 
 


6.         Preparation
of Agreement:  This Settlement and the Exhibits shall not be construed more
strongly against any party, regardless of who is responsible for its
preparation.  The Parties acknowledge that all parties contributed to and are
equally responsible for its preparation.


7.         Binding
on Successors:  All the terms and provisions contained herein shall inure
to the benefit of and shall be binding upon the Parties hereto and their
respective heirs, legal representatives, successors, and assigns.


   
                                                                                                                                                                                                







































8.         Governing
Law:  This Agreement and its Exhibits will be interpreted and construed
under the laws of the State of Florida regardless of the domicile of any party,
and will be deemed for such purposes to have been made, executed and performed
in the State of Florida.


9.         Counterpart
Execution:  This Settlement may be executed in counterparts that may be
transmitted via facsimile, each of which will be deemed an original document,
but all of which will constitute a single document.


10.       Filing:  The
parties expressly agree that this Settlement shall not be filed in the record
of any potential arbitration or litigation unless and until FPMC defaults on
any of its payment obligations set forth at subparagraphs 2(A) and 2(B) above
and Washington Mutual proceeds, after the expiration of the fifteen day cure
period, to file the appropriate action as anticipated in sub-paragraph 3(A)
above.


11.       Effective Date
of Agreement:  This Settlement is effective as of the last date appearing
below.


NOW,
THEREFORE, the parties execute this Settlement as of the dates written below:


SIGNED, SEALED AND

DELIVERED IN PRESENCE OF:                                      First
Preference Mortgage Corp.

	



/s/ Cathy
Davis                                  





			 
	



/s/ Cindy Edmiston  

			 /s/  Charles LaCombe
	

 




			Sign Name
	 	 
	



 


			 Charles
LaCombe
	

 




			Print Name
	 	 
	



 


			President
	

 










			Title











   
                                                                                                                                                                                                







































The
foregoing instrument was sworn to or subscribed before me this ______ day of,
_______________,2005, by __________________, who is personally known to me or
who produced a ________________ driver's license as identification, and who
under oath averred that he is an officer of the above-named American Financial
Network, Inc, fully authorized to execute this instrument.




                                                                       


Notary Public,
My Commission Expires:  




SIGNED, SEALED AND                                         WASHINGTON
MUTUAL BANK, F.A.

DELIVERED IN PRESENCE OF:




___________________________                                  
 




___________________________                       ________________________


                                                                                    Sign
Name




                                                                                    ________________________


                                                                                    Print
Name




                                                                                    ________________________


                                                                                    Title






The
foregoing instrument was sworn to or subscribed before me this ______ day of,
_______________,2005, by ________________, who is personally known to me or who
produced a ________________ driver's license as identification, and who under
oath averred that he is an employee of the above-named Washington Mutual Bank,
F.A., fully authorized to execute this instrument.




                                                                       


Notary
Public, My Commission Expires: