EXHIBIT 10.9
RETAIL INSTALLMENT CONTRACT
ORIGINATION AND INDEMNIFICATION AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into effective as of
October 2, 2001, by and among First Savings Bank, FSB, a federal savings bank
located in Arlington, Texas ("FSB"), First Consumer Credit, Inc., a Texas
corporation located in Dallas, Texas ("FCC") and US Home Systems, Inc., a
Delaware corporation with its principal offices located in Lewisville, Texas
("US Home"), and provides as follows:
RECITALS
WHEREAS, pursuant to the Agreement and Plan of Merger, dated September 28,
2001, FCC became a wholly owned subsidiary of US Home (the "Merger");
WHEREAS, prior to the Merger, FSB purchased retail installment contracts
(the "Contracts") for home improvement loans in the State of New York and
subsequently assigned the Contracts to FCC (the "Business Arrangement"); and
WHEREAS, FCC and US Home have requested that FSB continue the Business
Arrangement and FSB is willing to continue the Business Arrangement upon and
subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein, the parties agree as follows:
1. Origination and Assignment of Loans. At the written request of FCC, FSB
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shall purchase, as lender, Contracts in the State of New York. FCC shall process
the purchase of the Contracts as agent for FSB. Subsequent to such purchase, FSB
shall assign such Contracts to FCC and FCC shall purchase at face value such
Contracts from FSB in accordance with the arrangement between FSB and FCC prior
to the Merger.
2. Application for License. FCC shall apply for a license to purchase
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Contracts directly in New York within sixty (60) days of the date of this
Agreement. If such license application is denied and all appeals are exhausted
so that it is finally determined that FCC cannot obtain such a license in the
State of New York, then FSB may terminate this Agreement upon written notice to
FCC and US Home.
3. Continued Employment of Borschow. FSB may terminate the Agreement if
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for any reason whatsoever, Xxxxx X. Xxxxxxxx is not the officer of FCC with sole
authority to oversee the Business Arrangement. FSB may exercise this right to
terminate by giving written notice to FCC and US Home.
4. Indemnification. FCC and US Home, jointly and severally, shall
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indemnify and hold FSB, its officers, directors, shareholders, employees and
agents (an "Indemnitee") harmless at all times following the date of this
Agreement against and in respect of all out-of-pocket damages, costs,
liabilities, losses, judgments, penalties, fines, expenses or other costs,
including reasonable attorneys fees, disbursements and court costs and costs of
investigation
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("Losses") incurred by an Indemnitee arising from or related to this Agreement
and the Business Arrangement described herein.
(a) If a claim or demand is made against an Indemnitee, or an
Indemnitee shall otherwise learn of an assertion, (a "Third-Party Claim")
as to which FCC and US Home (the "Indemnifying Party") may be obligated to
provide indemnification pursuant to this Agreement, such Indemnitee will
notify the Indemnifying Party in writing, and in reasonable detail, of the
Third-Party Claim reasonably promptly after becoming aware of such
Third-party Claim; provided, however, that failure to give such
notification will not affect the indemnification provided hereunder except
to the extent the Indemnifying Party shall have been actually prejudiced as
a result of such failure.
(b) If a Third-Party Claim is made against an Indemnitee and the
Indemnifying Party unconditionally and irrevocably acknowledges in writing
its obligation to indemnify the Indemnitee therefor, the Indemnifying Party
will be entitled to assume the defense thereof (at the expense of the
Indemnifying Party) with counsel selected by the Indemnifying Party and
reasonably satisfactory to the Indemnitee. Should the Indemnifying Party so
elect to assume the defense of a Third-Party Claim, the Indemnifying Party
shall take all steps necessary in the defense or settlement thereof and
shall at all times diligently and promptly pursue the resolution thereof.
If the Indemnifying Party so elects to assume the defense of a Third-Party
Claim and the Indemnifying Party diligently and promptly pursues the
resolution thereof, the Indemnifying Party will not be liable to the
Indemnitee for any legal or other expenses subsequently incurred by the
Indemnitee in connection with the defense thereof. If the Indemnifying
Party assumes the defense of any Third-Party Claim, the Indemnitee shall
have the right to participate in the defense thereof and to employ counsel,
at its own expense, separate from the counsel employed by the Indemnifying
Party. The Indemnifying Party shall be liable for the fees and expenses of
counsel employed by the Indemnitee for any period during which the
Indemnifying Party has failed to assume the defense thereof or if it does
not expressly elect to assume the defense thereof (including acknowledging
its indemnification obligation as aforesaid). If the Indemnifying Party
assumes the defense of any Third-Party Claim, the Indemnifying Party will
promptly supply to the Indemnitee copies of all correspondence and
documents relating to or in connection with such Third-Party Claim and keep
the Indemnitee fully informed of all developments relating to or in
connection with such Third-Party Claim (including, without limitation,
providing to the Indemnitee on request updates and summaries as to the
status thereof). If the Indemnifying Party chooses to defend a Third-Party
Claim, all the Indemnitees shall reasonably cooperate with the Indemnifying
Party in the defense thereof (such cooperation to be at the expense,
including reasonable legal fees and expenses, of the Indemnifying Party).
(c) If the Indemnifying Party unconditionally and irrevocably
acknowledges in writing its obligation to indemnify the Indemnitee for a
Third-Party Claim, the Indemnitee will agree to any settlement, compromise
or discharge of such Third-Party Claim which the Indemnifying Party may
recommend and which by its terms obligates the Indemnifying Party to pay
the full amount of Losses in connection with such Third-Party Claim and
unconditionally and irrevocably releases the Indemnitee completely
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from all liability in connection with such Third-Party Claim, provided,
however, that, without the Indemnitee's prior written consent, the
Indemnifying Party shall not consent to any settlement, compromise or
discharge (including the consent to entry of any judgment), and the
Indemnitee may refuse to agree to any such settlement, compromise or
discharge (x) that provides for injunctive or other nonmonetary relief
affecting the Indemnitee or (y) that, in the reasonable opinion of the
Indemnitee would otherwise materially adversely affect the Indemnitee. If
the Indemnifying Party unconditionally and irrevocably acknowledges in
writing its obligation to indemnify the Indemnitee for a Third-Party Claim,
the Indemnitee shall not (unless required by law) admit any liability with
respect to, or settle, compromise or discharge, such Third-Party Claim
without the Indemnifying Party's prior written consent (which consent shall
not be unreasonably withheld). If the Indemnifying Party does not assume
the defense of any claim or proceeding resulting therefrom in accordance
with the terms of this Agreement, the Indemnitee may defend against such
claim or proceeding in such manner as it may deem appropriate including
settling such claim or proceeding after giving notice of the same to the
Indemnifying Party, on such terms as the Indemnitee may deem appropriate.
(d) The obligation of FSB and US Home to indemnify and hold the
Indemnitee harmless as provided for herein shall survive termination of
this Agreement and shall continue in full force and effect for a period of
six (6) years after the termination of this Agreement; provided, however,
any indemnification obligation arising from a claim of fraud shall survive
indefinitely.
5. Term. This Agreement shall, if not terminated earlier by FSB, terminate
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by its own terms on September 30, 2003.
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IN WITNESS HEREOF, the parties have caused this Agreement to be executed by
its duly authorized representatives effective as of the date first written
above.
FIRST CONSUMER CREDIT, INC., a
Texas corporation
By: /s/ Xxxxx X. Xxxxxxxx
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Its: President
Name: Xxxxx X. Xxxxxxxx
Address: 00000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
FIRST SAVINGS BANK, F.S.B.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Its: President
Name: Xxxxxxx X. Xxxxxxxx
Address: 000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx 00000
U.S. HOME SYSTEMS, INC., a
Delaware corporation
By: /s/ Xxxxxx X. Xxxxx
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Its: President
Name: Xxxxxx X. Xxxxx
Address: 000 Xxxxx Xxxxxxx 000 Xxxxxx,
Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000
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