MASTER SERVICE AGREEMENT
Master Service Agreement dated as of March 31, 1998 (the "Agreement")
between Atlantic Bank and Trust Company (the "Servicer") and Atlantic Preferred
Capital Corporation, a corporation organized under the laws of the Commonwealth
of Massachusetts (the "Customer").
WHEREAS, the Servicer desires to provide and the Customer desires to
receive certain services (the "Services" or individually a "Service") including,
but not limited to, the following:
1. data processing services as described in Exhibit A annexed hereto,
including the preparation of reports and other back office operations
support services as necessary to provide said data processing
services;
2. loan servicing for all mortgage loans held by the Customer as
described in Exhibit B annexed hereto; and
3. nonperforming loan servicing and foreclosure services as described in
Exhibit C annexed hereto;
In addition, the Customer and Servicer desire to establish an intercompany
financing arrangement as described in Exhibit D annexed hereto, to facilitate
performance of all of their duties, obligations and responsibilities pursuant to
the terms of this Agreement, to provide for working capital and for any other
purpose deemed necessary by the Customer and Servicer in a manner consistent
with the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions set forth herein, the parties hereto agree as follows:
1. The Servicer shall provide the Services described in Exhibits A through D
annexed hereto for the Customer at the rates set forth in Exhibit E annexed
hereto. The rates set forth in Exhibit E represent an arm's-length price that
the Servicer would charge an independent third party in providing said Services
and the Customer would pay an independent third party to perform said Services.
2. The Servicer and Customer shall enter into an intercompany financing
arrangement, as described in Exhibit D annexed hereto. Interest shall be due on
balance at the rate set forth in Exhibit E annexed hereto.
3. This Agreement shall be for the term expiring December 31, 1998 (the "Initial
Term"). Upon expiration of the Initial Term, this Agreement shall renew
annually, for the following calendar year, (the "Renewal Term") unless the
Customer or the Servicer notifies the other at least 30 days prior to the
expiration of the term. For each Renewal Term, the Customer shall pay the
Servicer for the Services the rates set forth on a revised Exhibit E sent to the
Customer by the Servicer at least 45 days prior to the expiration of the then
current term. Such revised Exhibit E shall be substituted for the Exhibit E then
in effect and such revised Exhibit E shall be considered incorporated into this
Agreement for the applicable Renewal Term.
4. The Servicer shall revise Exhibit E to modify the rates set forth on Exhibit
E from time to time during the Initial Term and each Renewal Term to reflect
changes in the actual costs incurred or estimated costs to be incurred by the
Servicer in providing the Services to the Customer. Such revised Exhibit E shall
be substituted for the Exhibit E then in effect and shall become effective upon
the date set forth in such a revised Exhibit E.
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5. (a) The Customer represents that Exhibits A through D contain a general
description of the Services to be provided by the Servicer to the Customer. In
performing these Services, the scope of the work undertaken and the manner of
its performance shall be substantially the same as for similar work performed by
the Servicer for transactions on its own behalf, with such modifications as may
be appropriate in order to accomplish the purposes of this Agreement. The
Servicer shall give the Customer reasonable notice of all system changes
affecting the Customer's procedures or reports as these changes pertain to the
Services.
(b) The Servicer reserves the right to alter the contents of reports,
eliminate reports, add reports or change the frequency of delivery of reports
described in Exhibits A through D.
(c) If the changes referred to in paragraph (a) or (b) above are not
acceptable to the Customer, the Customer may terminate this Agreement on thirty
(30) days' notice, provided such notice is given within ten (10) days after the
Customer has received notice of such change.
6. (a) The Customer shall furnish all data, records and materials in the manner,
at the place and within the time limits determined by the Servicer to be
necessary to perform the Services. The Customer shall prepare all data submitted
for processing with reasonable care and in a manner acceptable to the Servicer.
(b) The Customer hereby agrees that the costs incurred by the Servicer
because data, records or materials sent by or for the Customer are not in the
form required by this Agreement or are not received by the Servicer in
accordance with the time schedule established to permit the Servicer to meet its
required delivery schedule are the responsibility of the Customer.
(c) The Servicer shall not be responsible for errors resulting from any
incorrect data submitted for processing by the Customer. The Servicer may,
however, make minor corrections to the data if the original source documents are
in error or make other minor adjustments, without charge, unless the volume of
such items becomes unreasonable in the judgment of the Servicer, at which time
the Servicer may notify the Customer of its intention to impose charges for such
additional work at its then prevailing rates.
7. It is understood and agreed that the performance of the Services is or might
be subject to regulation and examination by authorized representatives of the
federal or state bank regulatory agencies, and that each party is and shall be
authorized to submit or furnish to any such regulatory agency reports,
information, assurances and other data as may be required by, or reasonably
requested of it, under applicable laws and regulations, including, without
limitation, any appropriate notifications concerning the initiation or
termination of this Agreement or any of the Services provided to the Customer.
Each party shall afford the other party or any examiners or authorized
representatives of federal or state bank regulatory agencies or either parties'
independent auditors or legal counsel access to loan documentation or any other
data governed by this Agreement.
8. The Servicer shall, with appropriate charge, promptly make any and all
modifications to forms, documents and reporting methods as may be required to
comply with any statutory, regulatory, or administrative rules or other legal
requirements. The Servicer, subject to Customer providing reasonable notice as
established by Servicer, shall make and implement any modification to forms,
documents and reporting methods required in response to such statutory,
regulatory, or administrative rules or other legal requirements by such time as
the modifications may be necessary as required by law.
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9. The Servicer shall daily remit to the Customer all payments due net of all
service fees due under this Agreement. The rates set forth in Exhibit E are
exclusive of all taxes, however designated, imposed on any amount payable
hereunder for the Services or their provision to the Customer. Any sales and use
taxes, however designated, and if applicable, shall be the responsibility of and
shall be paid by the Customer.
10. In performing the Services, the Servicer shall be deemed to have an
independent contractual relationship with the Customer. It is agreed that the
Servicer and the Customer are not partners or joint venturers and that the
Servicer is not to act as agent for the Customer but is to act as an independent
contractor. The Servicer shall not be deemed to have any contractual or other
relationship with the Customer's customers. In no event shall any of the
Customer's customers be considered a third party beneficiary of this Agreement.
To the extent that third parties may make claims against the Servicer arising
out of the Services, the Customer agrees to indemnify and hold harmless the
Servicer from and against all loss, liability, claim, action, demand or suits,
including any claims for attorneys' fees arising therefrom, except as otherwise
provided herein.
11. All programs, whether standard Servicer programs or programs developed
specifically for the Customer, files and documentation, are and shall remain the
property of the Servicer, unless otherwise specified in this Agreement. Upon
termination of the Services, the Servicer will make available to the Customer
all data contained in all master files and transaction files then available
relevant to the Services. Any expense incurred by the Servicer in providing such
information shall be paid for by the Customer at the Servicer's then prevailing
rates.
12. Each party shall indemnify and hold the other party harmless against any
loss, damages, penalties, fines, forfeitures, reasonable legal fees and related
costs, judgments, and other reasonable costs and expenses resulting from any
claim, demand, defense or assertion to the extent resulting from a breach of the
covenants, representations and warranties contained in this Agreement. Upon
receipt of notice of any such claim, demand, defense or assertion, the party
seeking indemnification shall promptly give written notice thereof to the other
party. The parties agree to cooperate in defense or prosecution of any claim,
demand, defense or assertion, based on or grounded upon, or resulting from, a
breach of the covenants, representations and warranties contained in this
Agreement.
13. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED HEREIN, THE SERVICER MAKES NO
WARRANTIES OR REPRESENTATIONS AS TO THE SERVICES, EXPRESS OR IMPLIED, IN FACT OR
IN LAW, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.
14. The liability of the Servicer to the Customer for any loss due to the
Servicer's performing, or failing to perform, the Services shall be contingent
upon the Customer's compliance with its obligations herein and shall be limited
to those losses sustained by the Customer which are a direct result of the
Servicer's negligence or willful misconduct; provided, however, that the
Servicer's only liability to the Customer arising from any interruptions in, or
delay or unavailability of, the Services or any errors or omissions in the
Services or any loss of data, shall be to restore any Service which is
interrupted or is delayed or becomes unavailable, as promptly as reasonably
practicable and, in the case of any error or omission in a Service or loss of
data, to correct such error or omission or regenerate any lost data; provided,
further, that the Servicer shall not be obligated hereunder to correct any error
or omission in the Services if it would not ordinarily correct such error or
omission.
15. The Servicer shall not be responsible or liable for its failure or delay in
performance of the Services when such failure or delay arises out of, results
from, or is caused by any act or omission of the Customer or by any event beyond
the control of the Servicer, as provided in Section 19 of this Agreement.
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16. Notwithstanding anything contained herein to the contrary, the aggregate
amount of any money damages to which the Customer and any and all other parties
claiming by, through or under the Customer, may be entitled as the result of any
claim against the Servicer (regardless of whether such claims are based on
contract, tort (including negligence and strict liability, warranty or other
legal or equitable grounds) shall be limited to an amount equal to the lesser of
(a) the actual amount of such losses, damages, injuries, claims, costs or
expenses or (b) the aggregate annual amount payable by the Customer to the
Servicer for the Service affected, as stated on Exhibit E.
17. The Servicer shall not incur any liability or obligation under this
Agreement by reason of any loss or damage to the Customer caused by an error or
omission of the Servicer unless the Customer shall have informed the Servicer of
such error or omission within two Servicer business days after the discovery
thereof. The Customer agrees to use diligent efforts to reconstruct any lost
data, records or materials, and if appropriate, to charge back to the Customer's
accounts and the forwarding banks' accounts, and to obtain refunds from its
depositors' forwarding banks and endorsers' banks. If the Servicer carries
insurance against the type of loss incurred, the Customer agrees to cooperate in
furnishing proof of loss in a form satisfactory to the Servicer's insurance
company and to assist the Servicer and its insurance company in settlement of
the claim.
18. In the event of any material breach of a party's obligations under this
Agreement (an "Event of Default"), the other party shall provide a written
notice of such Event of Default and a demand that such Event of Default be
cured. In the event the breaching party fails in good faith to cure such Event
of Default within ten (10) days following receipt of such notice and demand, the
non-defaulting party may terminate this Agreement and/or take legal action to
obtain specific performance, injunctive and other equitable relief as well as
any other remedies as may be available at law or equity subject to the
limitations set forth in this Agreement.
19. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, IT IS HEREBY AGREED THAT
IN NO EVENT WILL THE SERVICER BE LIABLE FOR ANY LOST PROFITS OR OTHER INDIRECT,
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES WHICH THE CUSTOMER MAY INCUR OR
EXPERIENCE BY REASON OF HAVING ENTERED INTO OR RELIED ON THIS AGREEMENT OR
ARISING OUT OF OR IN CONNECTION WITH THE SERVICES, EVEN IF THE SERVICER HAS BEEN
ADVISED OR IS OTHERWISE AWARE OF THE POSSIBILITY OF SUCH DAMAGES; NOR SHALL THE
SERVICER BE LIABLE FOR ACTS OF GOD, MACHINE OR COMPUTER BREAKDOWN OR
MALFUNCTION, INTERRUPTION OR MALFUNCTION OF COMMUNICATIONS OR POWER SUPPLY,
LABOR DIFFICULTIES, LEGAL ACTS OF A PUBLIC AUTHORITY, OR ANY OTHER SIMILAR CAUSE
OR CATASTROPHE BEYOND THE SERVICER'S CONTROL.
20. The Customer may not assign this Agreement nor any of its rights or
obligations hereunder without the written consent of the Servicer. The Servicer
may assign this Agreement, and any of its rights and obligations (including,
without limitation, its obligation to provide the Services) to any affiliate of
the Customer. In the event the Customer is no longer an affiliate of the
Servicer (or its successors or assigns), this Agreement shall automatically
terminate.
21. This Agreement shall be governed by, construed and enforced in accordance
with the laws of the Commonwealth of Massachusetts.
22. The Servicer will regard and preserve as confidential all data of a
confidential nature related to the business of the Customer and provided by the
Customer to the Servicer. The Servicer will take the same precautions to
preserve such confidential information as the Servicer takes with respect to its
own confidential information.
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23. This Agreement may be terminated at any time by a written agreement between
the parties and at any time by either party upon thirty (30) days prior written
notice to the other party.
24. No waiver of any of the terms or conditions of this Agreement shall be
effective or binding unless such waiver is in writing and is signed by both of
the parties hereto, nor shall this Agreement be changed, modified, discharged or
terminated other than in accordance with its terms, in whole or in part, except
by a writing signed by both parties.
All communications and notices relating to this Agreement are to be sent:
If to the Servicer:
Atlantic Bank & Trust Company
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000 Attention:
If to the Customer:
Atlantic Preferred Capital Corporation
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000 Attention:
or to such other address as a party may designate to the other and such notices
shall be deemed duly given three (3) days after mailed or upon delivery by hand
or upon receipt of confirmed answer back if telephoned.
25. Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or invalid under
applicable law, such provision will be in effect only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
26. This Agreement embodies the entire understanding of the parties with respect
to the subject matter hereof, and there are no further or other agreements or
understandings, written or oral, in effect between the parties relating to the
subject matter of this Agreement.
27. This Agreement shall be binding upon and inure solely to the benefit of each
party hereto, and nothing in this Agreement, express or implied, is intended to
confer upon any person any rights or remedies of any nature whatsoever under or
by reason of this Agreement.
28. This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute but one and the same Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first written above.
SERVICER:
ATLANTIC BANK AND TRUST COMPANY
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxx
-----------------------------------
Title: Chief Financial Officer
-----------------------------------
CUSTOMER:
ATLANTIC PREFERRED CAPITAL CORPORATION
By: /s/ Xxxxxxx Xxxxx
-----------------------------------
Name: Xxxxxxx Xxxxx
-----------------------------------
Title: President
-----------------------------------
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EXHIBIT A
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DATA PROCESSING/PROCESSING SERVICES
-------------------------------------
Data processing services to be provided pursuant to this Agreement shall
include, but not necessarily be limited to, the following specific computer
services:
1. All Customer application processing, regardless of where actually processed,
that presently exists or is established in the future for the conduct of
customer transactions and management information. Included herein are host based
activities and PC-based management information systems, as well as input/output
to and from such activity.
2. All actions necessary to maintain, enhance existing or develop new data
processing services for the benefit of the Customer.
3. Transportation of documents.
4. Document encoding, capture, cash letter preparation, reject handling and bulk
filing.
The Servicer shall receive fees from the Customer as consideration for the
performance of data processing and item processing services pursuant to the
terms of the Agreement in accordance with Exhibit E annexed hereto.
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EXHIBIT B
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LOAN SERVICING
--------------
Loan servicing to be provided pursuant to this Agreement shall include, but not
necessarily be limited to, the following specific services:
1. Make diligent efforts to collect all sums due and payable from borrowers
under the terms of each loan;
2. Deposit of all payments, including late charges and other ancillary fees,
required to be made by a borrower pursuant to the terms of a loan which are
collected by Servicer as follows:
Principal and interest payments and maintenance charges shall be deposited
in a separate account at the Servicer in the name of the Customer;
3. Daily remit to the Customer principal and interest payments collected on
loans;
4. Reconcile account balances for any accounts established in connection with
the loan servicing performed pursuant to this Agreement;
5. Taking all reasonable and necessary steps to cause any premises secured by
a mortgage securing loan or a mortgage or any other security interest or
agreement securing a manufactured home loan to be kept insured against loss
or damage by fire or other hazards and for such amounts required by any
servicing agreements in effect. The Servicer shall secure and retain copies
of any insurance policies so in effect for the benefit of the Customer;
6. Maintain a detailed record of each loan and collection thereon. The
Customer or its authorized representative may examine such records at such
time or times as it may elect during the Servicer's normal business hours;
7. Take all reasonable and necessary steps to comply with and use best efforts
to cause the Customer to comply with any and all applicable federal and
state statutes or regulations or private mortgage insurance company
requirements while servicing all loans pursuant to the terms of this
Agreement;
8. In the event foreclosure proceedings are instituted, the Servicer shall
foreclose, manage and protect the mortgaged premises in the manner and to
the extent required pursuant to the terms of Exhibit C of the Agreement;
9. The Servicer shall enter all new loans and information which may be
required from time to time onto the data processing software used by the
Servicer to service loans for the Customer;
10. The Servicer shall ensure the maintenance of perfected collateral positions
securing loans serviced pursuant to the terms of the Agreement;
11. The Servicer shall compute, notify the borrowers of, and effect any
adjustments to the interest rate and payment terms of a serviced loan in
accordance with applicable law.
The Servicer shall receive fees from the Customer as consideration for the
performance of services pursuant to terms of the Agreement in accordance with
the schedule set forth below as Exhibit E.
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EXHIBIT C
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NONPERFORMING LOAN SERVICING AND FORECLOSURE SERVICES
-----------------------------------------------------
Nonperforming loan servicing and foreclosure services to be provided by the
Servicer for the Customer pursuant to the Agreement shall include, but not
necessarily be limited to, the following specific services:
1. Institution of foreclosure proceedings in the appropriate federal or state
court as deemed necessary by the Servicer;
2. Removal of nonperforming loans from the Servicer's loan processing system
at the time of foreclosure;
3. The Servicer may repurchase nonperforming loans at their fair market value
at the time of foreclosure and/or repossession; and
4. The Servicer shall, if directed by the Customer, dispose of any
nonperforming loans for such amount equal to the fair market value thereof
or as otherwise approved by the Customer.
The Servicer shall be paid a fee by the Customer as consideration for the
performance of foreclosure services pursuant to the terms of the Agreement in
accordance with Exhibit E annexed hereto.
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EXHIBIT D
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INTERCOMPANY FINANCING
----------------------
The Customer and Servicer agree to lend available funds to one another as may
be deemed necessary from time to time in order to facilitate performance of all
of their duties, obligations and responsibilities pursuant to the terms of the
Agreement, to provide for working capital and for any other purpose deemed
necessary by the Customer and Servicer in a manner consistent with the terms of
the Agreement.
The Servicer shall act to ensure that any funds advanced to it by the Customer
will not exceed an amount that would cause the Customer to violate provisions
of the Internal Revenue Code applicable to Real Estate Investment Trusts
("REIT"). Particularly, the Servicer shall exercise proper judgment and
discretion to ensure that interest paid from the Servicer to the Customer shall
not exceed an amount that would cause the Customer to violate the income and
asset limitation tests of Internal Revenue Code Section 856(c) and regulations
and rulings thereunder.
Interest shall be due on any outstanding balances at the rate set forth in
Exhibit E annexed hereto.
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EXHIBIT E
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SCHEDULE OF FEES FOR SERVICES
PERFORMED PURSUANT TO SERVICE AGREEMENT
---------------------------------------
For consideration of services provided by the Servicer on behalf of the
Customer pursuant to the terms and conditions of the Agreement, the Customer
shall pay the Servicer the following fees:
(1) 20 Basis Points (annually) of the outstanding principal balance of the loans
of the Customer as of prior month end for fixed rate mortgage loan servicing and
collection work. This fee shall be paid daily on a cash basis subtracted from
the actual payments received.
(2) For Nonperforming Loan Servicing and Foreclosure Services as set forth in
Exhibit C of the Agreement:
Out of pocket costs related to each loan anticipated for foreclosure or in
foreclosure (past due 90+ days, non-accrual, and owned real estate).
Interest due on outstanding balances shall be at the Prime Rate as
published in The Wall Street Journal from time to time, calculated on a
daily basis.
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