EXHIBIT 10.2
SECONDARY MARKETING AND SERVICES AGREEMENT
This Secondary Marketing and Services Agreement ("Agreement") is made as of
April 19th, 2006 (the "Effective Date") by and between ebank Mortgage, LLC, a
Georgia limited liability company ("EBM") that is a subsidiary of ebank, a
federally chartered thrift, and Sunshine Mortgage Corporation, a Georgia
corporation ("SMC").
WHEREAS, EBM is in the business of originating loans secured by residential
real estate ("Loans") for resale in the secondary market;
WHEREAS, SMC is engaged in the business of originating mortgages,
warehousing mortgages pending sale and in performing related mortgage services
and desires to assist EBM;
WHEREAS, EBM wishes to retain the services of SMC to perform various
services related to the origination of mortgage loans (the "Operations
Services") and to assist EBM in the sale of its mortgage loans in the secondary
market (the "Secondary Marketing Services");
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby expressly
acknowledged, the parties, intending to be legally bound, agree as follows:
1. Summary of Services
a. SMC's secondary marketing will make pricing available to the
internet via pre-approved spreads to EBM. It will lock loans to
various pre-approved investors such as Xxxxx Fargo, Chase, Bear
Xxxxxxx, Wachovia, HSBC, Xxxxxxxxx, etc.
b. SMC's warehouse department will manage the flow of documents from
the closing back to EBM, then to the warehouse lender. The SMC
shipping department will oversee the subsequent funding by the
warehouse lender to the investor. SMC will also provide EBM with
a loan by loan accounting of the gain/loss on each loan as well
as a summary of activity. SMC will also arrange for the temporary
servicing of each loan with Dovenmuehle Mortgage, Inc. ("DMI")
under a servicing agreement between DMI and EBM.
c. EBM will utilize the service of SMC's Document Control and Audit
departments. The Document Control department will track the final
Recorded Documents and Title Policy and their delivery to the
investor. The Quality Control Department will perform those post
closing quality control audit functions required by Xxxxxx Xxx
and Xxxxxxx Mac that promote the soundness and safety of the
loans that EBM originates.
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d. EBM will pay SMC a fee for each closed loan, which shall
initially be $450 per loan, as determined through arms-length
negotiations and based on market rates for such services.
2. Operations Services
SMC will perform the following Operations Services consistent with
EBM's policies and directions:
a. SMC will provide EBM an on-line pricing and product software
system ("Mortgage Lock System"), via SMC's loan origination
system ("Empower"), and an interest rate lock desk ("Lock Desk")
which will accept, decline, hedge, sell and otherwise monitor
forward loan locks on behalf of EBM, consistent with EBM's
policies and directions and its systems of internal controls and
such systems will be integrated with EBM's systems and controls.
All duties required to "ship" loans to investors consistent with
the terms of agreements between EBM and investors.
b. SMC, via Empower, will provide real time accounting of EBM's
pipeline and hedge position and will inform EBM of pending rate
lock expirations.
c. Perform due diligence reviews of closed loan packages and work
with the closing agent to promptly correct any errors.
d. SMC shall make its loan origination system (Empower) available to
EBM for use by EBM employees.
e. EBM's records in Empower shall not be available to any SMC
employee except those employees and records required to perform
the services specified in this agreement, and only for purposes
of providing services to EBM hereunder.
f. SMC will perform "Quality Control" services on behalf of EBM as
outlined in Exhibit B.
g. SMC will deliver the Quality Control report described in Exhibit
B to EBM, with a copy to ebank.
h. SMC will collect Home Mortgage Disclosure Act ("HMDA") data on
each loan entered into Empower and provide a monthly report to
EBM and ebank consistent with the requirements of applicable
regulatory authorities.
i. SMC will coordinate the correction of loan file deficiencies so
that Loans are saleable in the secondary market.
j. SMC will track the receipt of each title policy and deed on each
loan.
3. Secondary Marketing Services.
SMC shall perform the following Secondary Marketing Services on behalf
of EBM.
a. All duties required to "ship" loans to investors consistent with
the terms of agreements between EBM and investors.
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b. SMC will assist in the development of products and investor
relationships for EBM.
c. All duties required of EBM to "warehouse" loans prior to the sale
in the secondary market consistent with EBM's agreements with its
lenders.
d. SMC will assist EBM in executing loan sales on EBM's behalf and
according to EBM's policies.
e. On each business day, SMC will provide EBM with a written report
of mortgage loan commitments entered into on each day, including
the following information on each loan:
- mortgage loan amount;
- interest rate;
- type of proposed mortgage loan;
- mortgage investor;
- commitment expiration date, if applicable; and
- any other relevant information.
f. SMC will provide a reconciliation of each Loan Sale to ensure
that funds are accounted for properly and will provide a loan by
loan and a consolidated report of sold loans to EBM daily.
g. SMC will track the receipt of each title policy and deed on each
loan and deliver the same to the investor to which the loan was
sold.
h. SMC will propose investor incentives deals for EBM's
consideration.
4. Services Generally
In providing services to EBM, SMC shall use the same care and skill as
it uses in providing such services for SMC's own account. SMC will,
during the Term of this Agreement, devote so much of its working time
to the benefit of EBM as is commercially reasonable to fulfill its
duties hereunder and to accomplish the intended purposes of this
Agreement.
5. Duties of EBM
During the Term of this Agreement, EBM will perform the following
duties:
a. EBM will promptly inform SMC of any communication received from
mortgage investors, regulatory agencies, or other relevant
organizations that adversely affects SMC's or EBM's ability to
perform their respective duties hereunder or which adversely
affects EBM's or ebank's business, financial condition, results
of operations or compliance with laws or regulations or
agreements with third parties referred to herein, including,
without limitation, borrowers and lenders.
b. EBM will determine and provide to SMC the interest rate lock,
extension and renegotiation policies by which SMC's Lock Desk
will abide in the management of EBM's mortgage loan pipeline.
c. EBM will provide SMC a written report which details all of EBM's
mortgage investor relationships and contracts; and provide to SMC
in writing any additional or subsequent investor relationships or
contracts.
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d. EBM will execute and grant to SMC a Limited Power of Attorney to
perform certain of the services that SMC provides hereunder as
contemplated in this agreement.
e. EBM will provide SMC with EBM's Secondary Marketing and
Procedures and Policy, attached hereto as Exhibit A and as the
same may be changed by EBM from time to time and in effect, the
terms of which shall be followed by SMC.
f. EBM will notify SMC of any changes in its Secondary Marketing
Procedures and Policy prior to implementation.
6. Service Standards of SMC. The service standards for SMC are set forth
in Exhibit B hereto.
7. Compensation.The parties have agreed, after a review of comparable
market costs and through arms-length negotiations, that EBM shall
compensate SMC in the amount of $450 for each closed loan. EBM shall
pay SMC by the 30th of each month on loans closed the prior month.
8. Term and Termination. This Agreement shall commence on the Effective
Date and shall continue for a term ("Term") of twelve (12) months.
This Agreement shall automatically renew for subsequent twelve month
periods unless and until one party gives notice to the other sixty
(60) days before the end of the Term of its election to terminate this
agreement. Notwithstanding the foregoing, either party may terminate
this Agreement with ninety (90) days written notice to the other
party. In any event, upon request of the Office of Thrift Supervision
("OTS") or ebank, this Agreement may be terminated immediately upon
reasonable notice and without penalty to EBM should ebank become a
"troubled" institution or is otherwise required by the OTS to
terminate the Agreement, or upon receipt of notice of a change in
control of SMC. In the event of termination or non-renewal, the
parties shall cooperate to provide for an orderly transition or
winding down of the services provided by SMC and to transfer all
documents, records, and information to SMC's successor or as directed
by EBM.
9. Representations and Warranties of EBM.
a. EBM is duly organized, validly existing and in good standing as a
limited liability company under the laws of the State of Georgia
and is duly qualified to transact business is or will be in
compliance with the laws of each jurisdiction in which EBM does
business, except where such qualification is not required or
where the failure to be so qualified or remain in good standing
would not have a material adverse effect on the enforceability,
collectability, value or marketability of any Mortgage Loan or on
the financial condition, results of operations or business
("Material Adverse Effect") of EBM or EBM's ability to perform
its obligations hereunder.
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b. EBM has or will have the full power and authority to execute,
deliver and perform its obligations under this Agreement and to
enter into and consummate all transactions contemplated by this
Agreement, pending regulatory approval, and has duly executed and
delivered this Agreement, and assuming the due authorization,
execution and delivery by SMC, this Agreement constitutes a
legal, valid and binding obligation of EBM, enforceable against
it in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvence, reorganization or other
similar laws affecting the enforcement of creditor's rights
generally and by general principles of equity, regardless of
whether such enforcement is considered in a proceeding in equity
or law (the "Bankruptcy and Equity Exception").
c. The transaction contemplated by this Agreement and the
performance of its obligations hereunder are in the ordinary
course of EBM's business and have been duly authorized by all
necessary corporate action.
d. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, nor the
fulfillment of or compliance with the terms and conditions of
this Agreement, will conflict with or result in a breach of any
of the terms, conditions or provisions of EBM's Articles of
Organization or Operating Agreement or any indenture, agreement
or instrument to which EBM is now a party or by which it is
bound, or constitute a default (whether with notice, lapse of
time or both) or result in an acceleration under any of the
foregoing, or result in the violation of any law to which EBM or
its property is subject.
e. EBM can perform each and every covenant and agreement of EBM
contained in this Agreement, and based upon its reasonable
inquiry and diligent investigation, EBM does not believe, nor
does it have notice, knowledge or any reason or cause to believe,
that it cannot or will not perform each and every covenant and
agreement of or by EBM in this Agreement.
f. There is no litigation or other proceedings pending against EBM,
or, to EBM's knowledge, threatened, which seeks to enjoin or
prohibit the execution, delivery, or enforceability of this
Agreement, or which questions EBM's authority to perform its
obligations hereunder in accordance with the terms hereof,or
which is likely to have a material adverse effect on the
financial condition of EBM.
g. No consent, approval, authorization or order of any Agency, other
than the Office of Thrift Supervision and the FDIC, is required
by the execution, delivery and performance by EBM of, or
compliance by EBM with, this
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Agreement or the consummation of the transactions contemplated by
this Agreement.
10. Representations and Warranties of SMC.
a. SMC is duly organized, validly existing and in good standing as a
corporation under the laws of the State of Georgia and is duly
qualified to transact business is or will be in compliance with
the laws of each jurisdiction in which SMC does business, except
where such qualification is not required or where the failure to
be so qualified or remain in good standing would not have a
Material Adverse Effect upon SMC or SMC's ability to perform its
obligations hereunder.
b. SMC has or will have the full power and authority to execute,
deliver and perform its obligations, including but not limited to
the license of Empower, under this Agreement and to enter into
and consummate all transactions contemplated by this Agreement,
pending regulatory approval, and has duly executed and delivered
this Agreement, and assuming the due authorization, execution and
delivery by EBM, this Agreement constitutes a legal, valid and
binding obligation of SMC, enforceable against it in accordance
with its terms, except as enforceability may be limited by the
Bankruptcy and Equity Exception.
c. The transaction contemplated by this Agreement and the
performance of its obligations hereunder are in the ordinary
course of SMC's business and have been duly authorized by all
necessary corporate action.
d. In the conduct of its services hereunder, SMC will comply with
all applicable laws, including but not limited to the Bank
Secrecy Act ("BSA") and Xxxxx-Xxxxx Xxxxxx Act ("GLBA") and will
not take any actions that would constitute or lead to violations
of law by EBM or ebank. SMC acknowledges its provision of
services hereunder will be subject to OTS oversight and review.
e. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, nor the
fulfillment of or compliance with the terms and conditions of
this Agreement, will conflict with or result in a breach of any
of the terms, conditions or provisions of SMC's articles or
bylaws or any indenture, agreement or instrument to which SMC is
now a party or by which it is bound, or constitute a default
(whether with notice, lapse of time or both) or result in an
acceleration under any of the foregoing, or result in the
violation of any law to which SMC or its property is subject.
f. SMC can perform each and every covenant and agreement of SMC
contained in this Agreement, and based upon its reasonable
inquiry and
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diligent investigation, SMC does not believe, nor does it have
notice, knowledge or any reason or cause to believe, that it
cannot or will not perform each and every covenant and agreement
of or by SMC in this Agreement.
g. There is no litigation or other proceedings pending against SMC,
or, to SMC's knowledge, threatened, which seeks to enjoin or
prohibit the execution, delivery, or enforceability of this
Agreement, or which questions SMC's authority to perform its
obligations hereunder in accordance with the terms hereof, or
which is likely to have a material adverse effect on the
financial condition of SMC.
h. No consent, approval, authorization or order of any Agency is
required by the execution, delivery and performance by SMC of, or
compliance by SMC with, this Agreement or the consummation of the
transactions contemplated by this Agreement.
i. SMC will maintain all books, records and other information (the
"Records") regarding the services provided by SMC pursuant to or
related to this Agreement. SMC shall, upon request, furnish EBM
all Records and all other information and materials reasonably
requested and necessary or appropriate for EBM to evaluate SMC's
performance under this Agreement. All Records and other
information regarding the services provided by SMC hereunder
shall be available for inspection and examination by EBM, ebank
and ebank's regulatory authorities during SMC's normal business
hours.
j. SMC will maintain disaster recovery and contingency plans to
protect and back-up its systems and records. SMC will immediately
notify EBM in the event of any service disruptions, security
breaches or other event that may interfere with or prohibit SMC
from providing services or otherwise complying with its
obligations hereunder.
k. SMC will conduct periodic reviews (at least once every 12 months)
of its internal controls and will provide copies of the results
of each such review to EBM, as well as copies of the results of
any external audits. In addition, EBM reserves the right to
contract for, and SMC will fully cooperate with, an independent
party's audit of SMC (e.g. an SAS 70 review).
11. Confidential Information. EBM and SMC agree as follows:
a. SMC agrees, and will require its employees, officers, agents,
contractors, subcontractors and representatives to protect and
hold strictly confidential all information which it receives from
EBM with respect to EBM's operations, its lenders, borrowers and
other counterparties (the
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"Confidential Information"). SMC will comply with EBM's privacy
policies as in effect from time to time, provided however, that
SMC may provide any such Confidential Information relating to EBM
to any broker, trader or other third party on EBM's behalf, or to
any federal, state, or other governmental agency lawfully
requesting such information.
b. Each party (the "Receiving Party") acknowledges that it, its
officers or employees, may receive from the other party (the
"Disclosing Party") confidential disclosures or trade secrets,
("Intellectual Property") rightfully belonging to the Disclosing
Party. The Receiving Party, on behalf of itself, its officers,
and its employees, agrees not to utilize the Intellectual
Property other than as contemplated by this Agreement.
12. Arbitration, Dispute Resolution. Notwithstanding the above, SMC and
EBM agree that all marketing gains and losses flow to EBM. However,
SMC agrees that financial losses caused by the negligence or poor
performance of its employees are the responsibility of SMC and EBM
agrees that financial losses caused by the negligence or poor
performance if its employees are the responsibility of EBM.
For the purpose of this Agreement, the parties agree that this
transaction involves substantial interstate commerce. Except as
otherwise specifically set forth below, and in lieu of rights to a
jury trial and the right to assert a claim for punitive damages,
attorney's fees and other matters more particularly described herein,
any action, dispute, claim, counterclaim or controversy ("Dispute or
Disputes") between the parties, including any claim based on or
arising from an alleged tort, shall be resolved by arbitration as set
forth below. The term "Disputes" shall include all actions, disputes,
claims, counterclaims or controversies arising in connection with the
terms of the Agreement, and action taken (or failure to take any
action) in connection with any of the above, any past, present and
future agreement between or among the parties, and any past, present
or future transactions between or among the parties.
All Disputes shall be submitted to binding arbitration in
accordance with Title 9 of the U.S. Code and the Arbitration Rules for
Commercial Arbitration (the "Rules") of the American Arbitration
Association (the "AAA"). All defenses, including those defenses based
on statutes of limitation, estoppels, waiver, laches, and similar
doctrines, that would otherwise be applicable to any action brought by
a party, shall be applicable in any such arbitration proceeding, and
the commencement of an arbitration proceeding with respect to this
Agreement shall be deemed the commencement of an action for such
purposes.
The arbitrator(s) may not award and the parties hereto waive any
right to assert a claim, for interlocutory relief (including temporary
or permanent injunctions), punitive damages, treble damages,
penalties, or attorney's fees
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and may not, without consent of the parties, consolidate the Dispute
with other claims for arbitration.
EBM and SMC shall be bound by the terms of this provision
notwithstanding the termination of this Agreement.
13. Waiver. Failure of either party to insist, in one or more instances,
on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or
relinquishment of any right granted in this Agreement or of the future
performance of any such term or condition or of any other term or
condition of this Agreement, unless such waiver is contained in a
writing signed by the party making the waiver.
14. Definitions. As used herein, defined terms shall include both the
singular and plural of each such term, any reference by gender shall
include the other gender unless the context clearly requires
otherwise, and the terms "include" or "including" shall mean without
limitation by reason of any enumeration thereof.
15. Headings. The headings of sections and subsections hereof have been
inserted for convenience of reference only and are not intended to,
and shall not affect the meaning, construction or effect of this
Agreement.
16. Amendments. Changes and/or amendments to this Agreement, other than
changes in EBM's policies, procedures and directions, which EBM may
change unilaterally, will be made only in writing and shall not be
considered effective until approved and executed by authorized
officers of EBM and SMC, and which, in the case of EBM, shall be EBM's
chief executive officer who shall be the only officer of EBM
authorized to execute such amendments or changes.
17. Assignment. SMC shall not assign this Agreement nor delegate its
duties hereunder in any manner or by operation of law without the
express written consent of EBM.
18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia.
19. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be
deemed to have been duly given if delivered, three days after mailing
if mailed first class, certified mail, postage prepaid to:
To EBM: ebank Mortgage, LLC
0000 Xxxx Xxxx Xx., Xxx.000
Xxxxxx, Xx. 00000
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Attention: President
Facsimile No 000-000-0000
with a copy to: ebank
0000 Xxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: CEO
Facsimile No. 000-000-0000
To SMC: Sunshine Mortgage Corporation
0000 Xxxx Xxxx Xx., Xxx. 000
Xxxxxx, Xx. 00000
Attention:
Facsimile No. 000-000-0000
Either party may, from time to time, change the address to which
notice is to be sent
20. Entire Agreement. This Agreement, including its Exhibit(s), sets forth
the entire Agreement and understanding between EBM and SMC as to the
subject matter of the Agreement.
21. Agreement and Counterparts. This Agreement and any amendments hereto
may be executed in several counterparts, and when executed, shall
constitute one agreement binding upon all parties hereto,
notwithstanding that all are not signatories to the original or the
same counterpart.
IN WITNESS WHEREOF, the parties to this Agreement have recorded their
signatures as of the date first written above.
ebank Mortgage, LLC Sunshine Mortgage Corporation
By: /s/ Xxxxx X. Box By: /s/ Xxxx Xxxxxxxxxx
--------------------------------- ------------------------------------
Printed Name: Xxxxx X. Box Printed Name: Xxxx Xxxxxxxxxx
Title: Chief Executive Officer Title: President
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