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Exhibit 10.10
AGREEMENT FOR SERVICES
THIS AGREEMENT FOR SERVICES, dated as of the 5th day of October, 1999,
between HOMEBUILDERS FINANCIAL NETWORK, INC., a Florida corporation
(`HOMEBUILDERS FINANCIAL") and DOMINION HOMES, INC., an Ohio corporation
("BUILDER").
W I T N E S S E T H
WHEREAS, HOMEBUILDERS FINANCIAL is in the business of creating and
managing an in-house mortgage loan origination operation for large-volume
homebuilders in an effort to enable such homebuilders to exercise more control
over, and create income from, the process of obtaining and closing
purchase-money financing for their home buyers; and
WHEREAS, BUILDER is a large-volume homebuilder and is desirous of
employing HOMEBUILDERS FINANCIAL to establish and manage an in-house mortgage
loan origination operation, wholly-owned by BUILDER, to originate, process,
close and sell to investors permanent purchase-money first and/or second
mortgage loans made to the home buyers of BUILDER and others ("IN-HOUSE MORTGAGE
COMPANY"); and
WHEREAS, HOMEBUILDERS FINANCIAL is willing to perform services for
BUILDER necessary to establish and manage an IN-HOUSE MORTGAGE COMPANY for
BUILDER and BUILDER is willing to retain HOMEBUILDERS FINANCIAL on the terms and
conditions set forth in this Agreement for Services.
NOW, THEREFORE, HOMEBUILDERS FINANCIAL and BUILDER, for good and
valuable consideration, the receipt and adequacy of which hereby are
acknowledged, agree as follows:
1. SERVICES. HOMEBUILDERS FINANCIAL will perform all services necessary
to establish for and on behalf of BUILDER an IN-HOUSE MORTGAGE COMPANY, and will
perform such other services as may mutually be agreed upon by the parties hereto
to manage the IN-HOUSE MORTGAGE COMPANY, including without limitation, the
following:
(a) BUSINESS ESTABLISHMENT PHASE. From the date
hereof to the date on which the IN-HOUSE MORTGAGE COMPANY obtains all
requisite licenses, permits and approvals and commences operations as a
mortgage company ("Business Establishment Phase"), such services shall
include assisting in the development of PRO FORMA financial plans, cash
flows and budgets, developing job descriptions for all management and
staff positions in the IN-HOUSE MORTGAGE COMPANY and recruiting,
interviewing, recommending for employment by BUILDER all management and
staff positions; conducting intensive initial class room training for
all initial and subsequent employees of the IN-HOUSE MORTGAGE COMPANY
at HOMEBUILDERS FINANCIAL'S headquarters in Miami Lakes, Florida at no
additional charge (IN HOUSE MORTGAGE COMPANY shall be responsible to
pay for all trainer, room and board expenses of such personnel who
travel to Florida for such training); supervising and managing the
IN-HOUSE MORTGAGE COMPANY operations and staff; cooperating with the
accountants for BUILDER in establishing
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the accounting system for the IN-HOUSE MORTGAGE COMPANY; preparing the
necessary mortgage loan application and processing forms and
disclosures, programs and systems (the "Application Processing
Documents"); and identifying and recommending for purchase, lease or
license by BUILDER the necessary equipment, computers, software
programs, forms and collateral material; and
(b) BUSINESS MANAGEMENT PHASE. From and after the Business
Establishment Phase ("Business Management Phase"), such services shall
include, in addition to continuing the services described in Paragraph
1(a) above, as required by the IN-HOUSE MORTGAGE COMPANY, assisting in
the development of financial plans, cash flows and budgets;
establishing and maintaining relationships between the IN-HOUSE
MORTGAGE COMPANY and institutional mortgage loan purchasers
("Investors"), who will offer mortgage programs, loan rates and rate
locks which HOMEBUILDERS FINANCIAL reasonably believes will be
attractive to BUILDER'S home buyers; preparing monthly management
reports for BUILDER containing relevant operations and loan production
data; periodically, as necessary, revising the mortgage loan disclosure
and processing documents; overseeing the staff and managing the
operations of the IN-HOUSE MORTGAGE COMPANY; performing quality-control
reviews of a random sample of the loans produced by the IN-HOUSE
MORTGAGE COMPANY to test compliance with Investor requirements, and
applicable state and federal mortgage lending regulatory requirements,
including those promulgated by the Real Estate Settlement Procedures
Act ("RESPA"); and remaining available to consult with BUILDER
regarding the operations of the IN-HOUSE MORTGAGE COMPANY.
(c) COMPLIANCE WITH LAWS; INDEMNITY. HOMEBUILDERS FINANCIAL
shall supply IN-HOUSE MORTGAGE COMPANY with all necessary Application
Processing Documents. HOMEBUILDERS FINANCIAL hereby represents and
warrants to BUILDER and to IN-HOUSE MORTGAGE COMPANY that, provided
IN-HOUSE MORTGAGE COMPANY completes and processes the Application
Processing Documents in accordance with any written instructions that
are given to it by HOMEBUILDERS FINANCIAL, such Application Processing
Documents and IN-HOUSE MORTGAGE COMPANY'S activities in respect thereof
will comply in all material respects with all applicable federal and
state statutes and regulations, including without limitation, the Equal
Credit Opportunity Act (the "ECOA") and the Fair Credit Reporting Act
("FCRA"). In addition, HOMEBUILDERS FINANCIAL represents and warrants
to BUILDER and to IN-HOUSE MORTGAGE COMPANY that HOMEBUILDERS FINANCIAL
will coordinate with all Investors and with all closing agents and will
otherwise take such actions as are necessary to ensure that each loan
that is the subject of a loan application package processed by IN-HOUSE
MORTGAGE COMPANY (each an "In-House Mortgage Company Loan") will be
handled, processed and have closing instructions and documents provided
in accordance with all applicable federal and state statutes and
regulations, including without limitation, the ECOA, the FCRA, the
Truth in Lending Act, the Real Estate Settlement Procedures Act, the
Home Mortgage Disclosure Act, and all applicable regulations of the
Federal Housing Administration and the Veteran's Administration
(collectively the "Laws"). AS A SPECIFICALLY BARGAINED FOR INDUCEMENT
FOR BUILDER TO ENTER INTO THIS AGREEMENT, HOMEBUILDERS FINANCIAL hereby
agrees to indemnify, defend and hold harmless BUILDER, IN-HOUSE
MORTGAGE COMPANY and their respective officers, directors and employees
from any and all claims, losses, damages, costs, expenses (including
attorney fees) and liabilities arising out of the noncompliance with
any Laws applicable to any In-House Mortgage Company Loan;
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provided, however, that HOMEBUILDERS FINANCIAL'S indemnity shall not
extend to any noncompliance that results from IN-HOUSE MORTGAGE
COMPANY'S (i) willful misconduct, (ii) failure to utilize Application
Processing Documents supplied by HOMEBUILDERS FINANCIAL or to complete
and process such Application Processing Documents in accordance with
HOMEBUILDERS FINANCIAL'S written instructions, or (iii) negligent use
of Application Processing Documents supplied by HOMEBUILDERS FINANCIAL
or its negligence in failing to complete or process such Application
Processing Documents in accordance with HOMEBUILDERS FINANCIAL'S
written instructions; and PROVIDED FURTHER, that HOMEBUILDERS
FINANCIAL'S indemnity shall not extend to any claim, loss, damage,
cost, expense or liability which is covered by insurance or which
should have been covered by insurance provided for in Section 8 of the
Addendum 1 hereto.
2. TERM. This Agreement shall commence on the date hereof and shall continue for
a period ending five (5) years from the date on which the first mortgage loan is
closed by the IN-HOUSE MORTGAGE COMPANY ("Initial Term"), unless sooner
terminated as provided herein.
3. EMPLOYEES OF IN-HOUSE MORTGAGE COMPANY. The employees of the IN-HOUSE
MORTGAGE COMPANY shall not be employees or agents of HOMEBUILDERS FINANCIAL.
Such employees shall be the employees of BUILDER or its subsidiary or affiliated
company. HOMEBUILDERS FINANCIAL shall have no responsibility or liability for
salaries, payroll and withholding taxes, xxxxxxx'x compensation claims, or other
employee benefits to which such employees may be entitled or for any claims of
discrimination, sexual harassment, wrongful termination or for any other
employment-related claim. BUILDER agrees to defend, indemnify and hold
HOMEBUILDERS FINANCIAL harmless from and against any and all liability, loss,
claim, cause of action and damage relating to or arising out of the employment
relationship between the IN-HOUSE MORTGAGE COMPANY and its employees so long as
any liability, loss, claim, cause of action, and damage does not result from any
wrongful act of HOMEBUILDERS FINANCIAL or its employees.
4. LICENSING OF THE IN-HOUSE MORTGAGE COMPANY. HOMEBUILDERS FINANCIAL will mange
and monitor the process of applying for and maintaining all required local,
state, federal and regulatory licenses, permits, consents and approvals for any
location where operations of the IN-HOUSE MORTGAGE COMPANY are established.
BUILDER represents and warrants to HOMEBUILDERS FINANCIAL that it shall
cooperate with and use its best efforts to assist HOMEBUILDERS FINANCIAL in the
process of obtaining such licenses, permits, consents and approvals. BUILDER
shall be responsible for the direct payment, or reimbursement to HOMEBUILDERS
FINANCIAL, of any and all fees and out-of-pocket costs and expenses, incurred
and paid by HOMEBUILDERS FINANCIAL, related to or required for the issuance of
all such licenses, permits, consents and approvals.
5. BUILDER TO COOPERATE; BUILDER NOT TO COMPETE.
(a) As long as this Agreement shall remain in effect, BUILDER
shall not directly or indirectly, own more than a 10% interest in or
operate another residential mortgage lender unless gained through
acquisition of another builder. To the extent not violative of
applicable laws, BUILDER will use its best efforts to assure the
financial success of the IN-HOUSE MORTGAGE COMPANY by promoting its use
by its home buyers as the primary source for permanent, purchase-money
financing.
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HOMEBUILDERS FINANCIAL shall not be restricted in any way from
providing the same or similar services to other residential builders.
(b) Inasmuch as the IN-HOUSE MORTGAGE COMPANY may be
considered to be an "Affiliated Business Arrangement" under RESPA,
BUILDER shall comply with the requirements of RESPA, including, but not
limited to, providing its prospective home buyers with the applicable
disclosures and notices regarding its interest in the IN-HOUSE MORTGAGE
COMPANY, all in accordance with instruction and documents provided by
HOMEBUILDERS FINANCIAL under Section 1(c), above.
6. MANAGEMENT FEES TO HOMEBUILDERS FINANCIAL. BUILDER shall pay to
HOMEBUILDERS FINANCIAL, in consideration of the services to be performed
hereunder by HOMEBUILDERS FINANCIAL, the following fees, costs and expenses:
(a) BUSINESS ESTABLISHMENT FEE. Forty Thousand Dollars
($40,000.00), as the fee due HOMEBUILDERS FINANCIAL for the services to
be performed necessary to establish the IN-HOUSE MORTGAGE COMPANY
("Business Establishment Fee"), payable as follows:
(i) the sum of Fifteen Thousand Dollars ($15,000.00)
upon the execution and delivery of this Agreement which shall
be deemed earned when received by HOMEBUILDERS FINANCIAL and
shall not be refundable for any reason;
(ii) the sum of Five Thousand Dollars ($5,000.00)
upon the formation of the IN-HOUSE MORTGAGE COMPANY;
(iii) the sum of Five Thousand Dollars ($5,000.00)
upon the issuance of all state licenses required to be
obtained by IN-HOUSE MORTGAGE COMPANY;
(iv) the sum of Five Thousand Dollars ($5,000.00)
upon the hiring of the IN-HOUSE MORTGAGE COMPANY'S initial
staff as determined by HOMEBUILDERS FINANCIAL;
(v) the sum of Five Thousand Dollars ($5,000.00)
upon commencement of IN-HOUSE MORTGAGE COMPANY'S operations;
and
(vi) the sum of Five Thousand Dollars ($5,000.00)
upon the issuance of FHA licensing of the IN-HOUSE MORTGAGE
COMPANY.
BUILDER acknowledges and agrees that (a) the Business Establishment Fee
is deemed to have been earned by HOMEBUILDERS FINANCIAL as of the date
of this Agreement and that the monthly payments described in
subparagraph (ii) above are solely for the convenience of BUILDER and
(b) if BUILDER breaches this Agreement by failing to make any of such
monthly payments when due or by terminating this Agreement during the
Business Establishment Phase, the entire unpaid balance of the Business
Establishment Fee shall immediately become due and payable to
HOMEBUILDERS FINANCIAL.
(b) BUSINESS MANAGEMENT FEE. An amount equal to the sum of:
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(i) The Loan Administration Fee (hereinafter defined)
for the immediately preceding calendar month ("Prior Month"),
payable monthly commencing with the calendar month immediately
following the month in which the first mortgage loan is closed
by the IN-HOUSE MORTGAGE COMPANY ("First Loan Closing"), and
continuing monthly thereafter during the Initial Term (and
thereafter, with respect to the subsequent closing of those
mortgage loans which, at the expiration of the Initial Term,
were at some stage of the loan origination process, but had
not closed ["Pipeline Loans"]), on the fifteenth day of such
following calendar month and on the fifteenth day of each and
every calendar month thereafter. The "Loan Administration
Fee," payable hereunder by BUILDER to HOMEBUILDERS FINANCIAL,
shall be based upon the total aggregate original principal
amount of all mortgage loans closed by the IN-HOUSE MORTGAGE
COMPANY during the Prior Month ("Prior Month's Loan
Production") and shall be calculated by multiplying the Prior
Month's Loan Production (expressed in dollars) by twenty (20)
basis points (expressed as a percentage, whereby 1 basis point
= 1/100 of 1 percent) based upon the cumulative total
aggregate original principal amount of all loans closed by the
IN-HOUSE MORTGAGE COMPANY to and including the last day of the
Prior Month, and;
(ii) The Monthly Management Fee (hereinafter defined)
for the immediately preceding calendar month ("Prior Month"),
payable monthly commencing with the calendar month of the
First Loan Closing, and continuing monthly thereafter during
the Initial Term, an amount equal to twenty-five percent (25%)
of the pre-tax "net operating income" (as defined on Exhibit
"A" hereto) (if positive) of the IN-HOUSE MORTGAGE COMPANY.
The fee is calculated on a cumulative basis such that no fee
is due unless cumulative net operating income is positive.
Once IN HOUSE MORTGAGE COMPANY reflects inception to date
positive net operating income, the cumulative calculation will
be adjusted quarterly.
(c) REIMBURSABLE EXPENSES. During the Business Management
Phase, BUILDER shall reimburse HOMEBUILDERS FINANCIAL for the costs of
air fares, car rentals, meals and lodging for personnel of HOMEBUILDERS
FINANCIAL for on-site visits in excess of twelve (12) on-site visits
per year.
(d) MONTHLY STATEMENTS. HOMEBUILDERS FINANCIAL shall provide
BUILDER with a detailed monthly statement of the fees and reimbursable
expenses due to HOMEBUILDERS FINANCIAL for the Prior Month.
7. RELATIONSHIPS WITH INVESTORS. BUILDER and HOMEBUILDERS FINANCIAL acknowledge
that an important element in the success of the IN-HOUSE MORTGAGE COMPANY, not
only as a stand-alone business, but also as a synergistic component of the core
business of BUILDER, is the establishment and maintenance of relationships with
existing and potential Investors, whose mortgage programs, loan rates and rate
locks may be attractive to BUILDER'S home buyers. BUILDER acknowledges and
agrees that, during the term of this Agreement, HOMEBUILDERS FINANCIAL shall be
responsible to select and determine the Investors who shall provide the loan
products to be offered by the IN-HOUSE MORTGAGE COMPANY. Anything to the
contrary herein notwithstanding, nothing in this Agreement shall be deemed to be
a guarantee or a commitment by HOMEBUILDERS
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FINANCIAL that (a) any or every individual prospective buyer of BUILDER will be
eligible or qualify for purchase-money mortgage financing through the loan
programs offered at any time or from time-to-time by the IN-HOUSE MORTGAGE
COMPANY or (b) fraud or material misrepresentation on the part of a prospective
borrower or an employee of the IN-HOUSE MORTGAGE COMPANY or both will not occur
in connection with the origination of a loan, notwithstanding the efforts of
HOMEBUILDERS FINANCIAL to establish for the IN-HOUSE MORTGAGE COMPANY prudent
mortgage lending practices, procedures and controls. HOMEBUILDERS FINANCIAL
recommends that BUILDER obtain for the IN-HOUSE MORTGAGE COMPANY all appropriate
insurance policies to cover all or a portion of these potential risks.
8. HOMEBUILDERS FINANCIAL represents and warrants to BUILDER that its selection
from time to time of potential Investors for the IN-HOUSE MORTGAGE COMPANY shall
be determined by the good faith belief by HOMEBUILDERS FINANCIAL that the
products and service offered by, and the reputation and financial condition of,
such Investors are in the best interests of the IN-HOUSE MORTGAGE COMPANY, that,
during the term of this Agreement, HOMEBUILDERS FINANCIAL shall NOT receive any
origination fees or servicing release premiums from any Investor in connection
with the purchase-money loans originated by the IN-HOUSE MORTGAGE COMPANY and
funded by an Investor, but HOMEBUILDERS FINANCIAL may receive customary fees for
loan underwriting or loan closing services, or both, performed by HOMEBUILDERS
FINANCIAL on behalf of such Investor.
9. INSPECTION OF BOOKS AND RECORDS. At any time and from time to time during the
Initial Term and the Extended Term, HOMEBUILDERS FINANCIAL shall have the right,
without prior notice to or consent of the BUILDER, to inspect the books and
records of the IN-HOUSE MORTGAGE COMPANY for the purpose of verifying compliance
with the terms of this Agreement.
10. COOPERATION BY BUILDER. BUILDER acknowledges that the success of the
IN-HOUSE MORTGAGE COMPANY is, in major part, dependent upon the IN-HOUSE
MORTGAGE COMPANY processing and closing a significant share of the
purchase-money loans obtained by the home buyers of BUILDER ("Capture Rate").
BUILDER further agrees that it shall be responsible for assuring that the
employees of the IN-HOUSE MORTGAGE COMPANY adhere to and carry out the policies,
procedures and programs established by HOMEBUILDERS FINANCIAL for the IN-HOUSE
MORTGAGE COMPANY by HOMEBUILDERS FINANCIAL.
11. TERMINATION.
(a) FOR CAUSE. Either party hereto may terminate this Agreement if
it ("Notifying Party") determines that the other party ("Breaching Party")
has committed a material breach of its obligations hereunder; PROVIDED,
HOWEVER, that the Notifying Party gives the Breaching Party written notice
of such alleged breach and such breach shall be continued without remedy or
cure for a period of thirty (30) days after such notice; and PROVIDED,
FURTHER, that (except for breaches involving the failure to make timely
payment hereunder) the Breaching Party shall have such additional time
beyond such initial thirty (30) days within which to cure or remedy such
breach as may be reasonably necessary, if such breach can not reasonably be
cured or remedied within such period and the Breaching Party commences to
cure or remedy within such thirty (30) days and thereafter diligently and
continuously pursues such cure or remedy. In the event of termination for
cause, BUILDER shall pay to HOMEBUILDERS FINANCIAL any and all fees, costs
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and expenses due hereunder, including, but not limited to, the fees
described in paragraph 6(b)(i) with respect to the subsequent closing
of any and all loans, if closed by the IN-HOUSE MORTGAGE COMPANY,
which, at the time this Agreement is terminated, are Pipeline Loans.
(b) WITHOUT CAUSE. BUILDER may terminate this Agreement at any
time during the Initial term, upon ninety (90) days prior written
notice to HOMEBUILDERS FINANCIAL, PROVIDED, HOWEVER, that BUILDER shall
pay to HOMEBUILDERS FINANCIAL any and all fees, costs and expenses due
hereunder, including but not limited to, the Loan Administration Fee of
twenty (20) basis points described in paragraph 6(b)(i) with respect to
the subsequent closing of any and all loans, if closed or assigned for
closing to another lender by IN-HOUSE MORTGAGE COMPANY, which, at the
time this Agreement is terminated, are Pipeline Loans.
11. CONFIDENTIALITY. Each of the parties hereto agree to keep confidential and
not disclose to any other person or entity any non-public information which it
obtains regarding the business, operations or financial condition of the other
party.
12. PROPRIETARY MATERIALS AND INFORMATION. BUILDER acknowledges and agrees that
certain information, materials, procedures, systems, forms, manuals, programs,
as updated and enhanced from time-to-time by HOMEBUILDERS FINANCIAL, which are
provided to the IN-HOUSE MORTGAGE COMPANY ("Proprietary Materials"), are the
proprietary, non-public property of HOMEBUILDERS FINANCIAL and BUILDER agrees
(a) to treat such Proprietary Materials in strict confidence, (b) to not
disclose or disseminate such Propriety Materials to any person or entity other
than the officers, directors and employees of BUILDER and the IN-HOUSE MORTGAGE
COMPANY, (c) to not use or employ the Proprietary Materials, except pursuant to
the terms and conditions of this Agreement, without the prior written consent of
HOMEBUILDERS FINANCIAL and (d) to return all such Propriety Materials to
HOMEBUILDERS FINANCIAL upon the termination of this Agreement.
13. NOTICES. All notices, requests, demands and other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given, made and received when delivered against receipt or upon actual
receipt of facsimile telephonic transmittal or registered or certified mail,
postage pre-paid, return receipt requested, delivered or dispatched to the
addresses or facsimile telephone numbers for the parties set forth below:
(a) IF TO HOMEBUILDERS FINANCIAL:
HOMEBUILDERS FINANCIAL NETWORK, INC.
0000 Xxxxx Xxxxx Xxxxx Xxxx
Xxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
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(b) IF TO BUILDER:
DOMINION HOMES, INC.
0000 Xxxxxx Xxxx
Xxxxxx, Xxxx 00000
Attention: Xxxxx X. X'Xxxxxx
Facsimile: (000) 000-0000
Either party may amend the address or facsimile telephone number to which
communications or copies are to be sent by giving notice of such change in
conformity with the provisions of this paragraph for the giving of notice.
14. SURVIVAL. All of the covenants, obligations and agreements of the parties
hereto shall (a) survive the termination of this Agreement and inure to and be
binding upon the parties hereto and their respective successor and permitted
assigns.
15. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous written or oral agreements,
express or implied, understandings, inducements and conditions of any nature
whatsoever with respect to the establishment and management by HOMEBUILDERS
FINANCIAL of an IN-HOUSE MORTGAGE COMPANY for BUILDER. This Agreement may not be
modified or amended except by a written document executed and delivered by both
parties hereto.
16. CONTROLLING LAW; FORUM. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement shall be governed by,
construed under and enforced in accordance with the laws of the State of
Florida, exclusive of its conflicts of laws, rules. Any and all actions brought
to enforce this Agreement shall be brought in the federal or state courts
situated in Dade County, Florida.
17. ATTORNEYS' FEES. If either party hereto shall bring suit or request
arbitration against the other as a result of an alleged breach or failure by the
other party to fulfill or perform any covenants or obligations under this
Agreement, or to seek declaratory relief as to the rights or obligations of
either party hereto, then in such event, the prevailing party in such action, in
addition to other relief granted or awarded by the court, shall be entitled to
judgment against such other party for reasonable costs of suit, at both the
trial and all appellate levels, incurred by such prevailing party by reason of
such action.
18. ARBITRATION. Any claim or controversy arising in connection with this
Agreement shall be resolved by binding arbitration in Dade County, Florida
before a panel of three (3) arbitrators, one appointed by each of the parties
hereto and the third appointed by the first two arbitrators so appointed. The
arbitration shall be conducted pursuant to the rules of the American Arbitration
Association, PROVIDED, HOWEVER, that the arbitrators shall apply the substantive
law of the State of Florida and shall make and deliver to the parties hereto
findings of fact and conclusions of law prior to the issuance of the award. The
decision of the arbitrators made in accordance herewith shall be binding upon
the parties hereto and non-appealable.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement for
Services as of the day and year first above written.
(SEAL) HOMEBUILDERS FINANCIAL NETWORK,
ATTEST: INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------- ----------------------------------
Secretary Xxxxxx X. Xxxxx
President
(SEAL) DOMINION HOMES, INC.
ATTEST:
By: /s/ Xxx X. Xxxxxxx
---------------------------------- ----------------------------------
Secretary Xxx X. Xxxxxxx
President, Chief Operating Officer
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EXHIBIT "A"
"Net Operating Income" shall mean operating revenues of the IN-HOUSE MORTGAGE
COMPANY only from the sources listed below LESS operating expenses of the
IN-HOUSE MORTGAGE COMPANY only from the sources listed below:
OPERATING REVENUES:
Origination Fees
Service Release Premiums
Application Fees (For credit report and appraisal)
Courier Fees
Overnight Mail Fees
Processing Fees, etc.
OPERATING EXPENSES:
Salaries
Bonuses
Payroll Taxes/Benefits
Travel/Entertainment
Rent
Utilities
Copier/Fax Leases
Telephone/Pagers
Office Supplies
Postage
Credit Reports
Courier Fees
Overnight Mail Fees
Insurance
Appraisals & Inspections
Subscription Fees
Depreciation of office equipment
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ADDENDUM 1
TO
AGREEMENT FOR SERVICES
----------------------
This ADDENDUM 1 dated as of the 5th day of November, 1999, (this
"ADDENDUM") supplements, modifies and amends that certain Agreement for Services
(the "Agreement") of even date by and between HOMEBUILDERS FINANCIAL NETWORK,
INC. ("HFN") and DOMINION HOMES, INC. ("Builder").
RECITALS
A. HFN and Builder wish to supplement, modify and amend the Agreement
in the manner hereinafter stated.
B. Capitalized terms used but not defined herein have the meanings
specified in the Agreement.
NOW THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, HFN and Builder agree as follows:
1. In the event of conflict or inconsistency between the terms of the
Agreement and the terms of this ADDENDUM, the terms of this ADDENDUM shall
control.
2. HOMEBUILDERS FINANCIAL represents and warrants to BUILDER and to
IN-HOUSE MORTGAGE COMPANY that:
(i) any Investor's loan interest rate that is communicated to
IN-HOUSE MORTGAGE COMPANY as being available as of a particular date will apply
to any loan application taken on that date unless, on or prior to that date, HFN
advises IN-HOUSE MORTGAGE COMPANY to the contrary in writing;
(ii) until HFN advises IN-HOUSE MORTGAGE COMPANY to the
contrary in writing, each time a rate lock is established on behalf of an
applicant for an In-House Mortgage Company Loan, by giving notice prior to the
expiration of the rate lock period, IN-HOUSE MORTGAGE COMPANY or the loan
applicant can extend the rate lock period for 30 days by paying a fee of 25
basis points, or for 60 days by paying a fee of 50 basis points; and
(iii) until HFN advises IN-HOUSE MORTGAGE COMPANY to the
contrary in writing, for all Investor loan products, there will be no discount
points, closing costs or other fees of any kind that will be payable prior to
closing, unless such points, costs or fees are fully refundable in the event the
loan is cancelled prior to closing.
3. HFN acknowledges that, prior to the date hereof, it has supplied
price sheets (the "Prior Pricing Sheets") to BUILDER which contained information
with respect to fees, expenses and other potential Investor loan pricing
arrangements. HFN warrants to BUILDER and to IN-HOUSE MORTGAGE COMPANY that, so
long as BUILDER continues to make the same type of "seller contributions" that
it is currently making to its customers, the pricing arrangements for Investor
loan products that HFN makes available to IN-HOUSE MORTGAGE COMPANY
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under the Agreement will be consistent with those contained in the Prior Pricing
Sheets, subject only to fluctuating market conditions.
4. Notwithstanding anything to the contrary contained in the Agreement,
IN-HOUSE MORTGAGE COMPANY will be entitled to receive and retain all volume
discounts created by its business operations.
5. For purposes of determining Net Operating Income under the
Agreement, the term "Operating Revenues" shall include (i) amounts from volume
discounts referred to in Section 4 above, (ii) market overages and (iii) fees
earned by IN-HOUSE MORTGAGE COMPANY on loans funded by investors not provided by
HFN under the Agreement.
6. For purposes of determining Net Operating Income under the
Agreement, the term "Operating Expenses" shall include, without limitation, (i)
all of the items listed in Exhibit A to the Agreement that are incurred or
accrued with respect to any loan application processed by IN-HOUSE MORTGAGE
COMPANY, whether or not the application is approved or the loan is closed; and
(ii) all costs and expenses, if any, that IN-HOUSE MORTGAGE COMPANY is required
to incur to "buy back" from an Investor a loan that does not satisfy the
Investor's requirements for sale.
7. HFN warrants to BUILDER and IN-HOUSE MORTGAGE COMPANY that:
(i) at all times, it will provide at least one (1) full time
experienced employee as an account representative working solely with IN-HOUSE
MORTGAGE COMPANY;
(ii) at all times, it will make available to BUILDER and
IN-HOUSE MORTGAGE COMPANY no less than four (4) Investors for FHA loans;
(iii) at all times, it will be fully operational on Desktop
Underwriting or L.P.;
(iv) it will make all reasonable technological advances that
are necessary for it to remain compatible with the mortgage operations systems
of IN-HOUSE MORTGAGE COMPANY; and
(v) IN-HOUSE MORTGAGE COMPANY will be permitted to audit any
transactions that relate to its business.
8. BUILDER represents and warrants to HFN that, at all times during the
term of the Agreement, IN-HOUSE MORTGAGE COMPANY will maintain in full force and
effect errors and omissions insurance in an amount not less than One Million
Dollars ($1,000,000), with a per claim deductible not in excess of Five Thousand
Dollars ($5,000), to cover the acts and omissions of its officers and employees.
9. HFN acknowledges that IN-HOUSE MORTGAGE COMPANY is an intended
third-party beneficiary of the Agreement and this ADDENDUM and that it shall be
entitled to enforce its rights arising thereunder and hereunder to the same
extent as if it were a signatory thereof and hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this ADDENDUM as
of the day and year first above written.
Attest: HOMEBUILDERS FINANCIAL NETWORK,
INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------ ----------------------------------
Secretary Xxxxxx X. Xxxxx
President
ATTEST: DOMINION HOMES, INC.
By: /s/ Xxx X. Xxxxxxx
------------------------------------ ----------------------------------
Secretary Xxx X. Xxxxxxx
President, Chief Operating Officer
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