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EXHIBIT 10.1
SERVICING AGREEMENT
THIS AGREEMENT is made as of the 1st day of January, 1997, by and
between STERLING FINANCIAL SERVICES, INC., a Florida corporation (the
"Servicing Company") and STERLING FINANCIAL SERVICES OF FLORIDA - I, INC., a
Florida corporation ("Sterling").
RECITALS:
WHEREAS, Sterling is engaged in the business of providing financial
services to the sub-prime mobile home industry, including, among other things,
originating, purchasing and refinancing for its own account retail mobile home
installment sale contracts (the "Contracts") created in connection with the
financing of primarily used as well as some new mobile homes (the "Homes");
WHEREAS, the Servicing Company is engaged in the business of, among
other things, originating, acquiring and servicing loans and accounts; and
WHEREAS, Sterling desires to retain the Servicing Company to provide
all services in connection with Contract origination or acquisition and
servicing (the "Services"), and the Servicing Company agrees to provide such
Services in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. DUTIES AND SERVICES. Sterling hereby retains the Servicing Company
and the Servicing Company hereby agrees to render the Services upon the terms
and conditions hereinafter set forth:
a. The Servicing Company hereby agrees to provide to Sterling
the Services set forth on Schedule A attached hereto.
b. The Servicing Company agrees to operate within the
guidelines established by Sterling from time to time.
c. No funds of Sterling shall be deposited or kept in any
account commingled with funds of the Servicing Company or any other person or
entity.
2. RIGHTS. Nothing herein shall grant any direct or indirect ownership
rights to any aspect of the Services to the Servicing Company.
3. TERM. The initial term of this Agreement shall be January 1, 1997,
through June 30, 2002 (the "Term"). This Agreement
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shall be extended thereafter in the sole and absolute discretion of Sterling,
upon such terms and conditions as shall be mutually agreed. Either Sterling or
the Servicing Company may voluntarily elect to terminate this Agreement without
cause, for any reason; provided that the terminating party must deliver to the
other party written notice of such intention to terminate not less than fifteen
(15) days prior to the date of such termination.
4. COMPENSATION. So long as the Servicing Company is in full
compliance with all terms and conditions of this Agreement, Sterling will pay
the Servicing Company for services hereunder, as follows:
a. Sterling will pay the Servicing Company an amount equal to
all cash expenses of the Servicing Company ("Actual Cost") plus twenty percent
(20%) of Actual Cost for services rendered. If the Servicing Company provides
similar services to future Affiliated Entities, Sterling will pay the Servicing
Company as follows: (i) any acquisition or disposition of cash expenditures,
such as attorneys' fees and court costs, will be paid by the entity which owns
the Contract to which such expenses relate (the "Direct Expenses"); and (ii) an
amount equal to Actual Cost less Direct Expenses will be paid directly by each
entity based upon the ratio of the total number of Contracts held by each
entity to the total number of Contracts held by all entities.
x. Xxxxxxxx shall reimburse the Servicing Company for
reasonable travel expenses actually incurred by the Servicing Company in the
furtherance of Sterling's business, provided said expenses have been approved
in advance by Sterling and proper itemization of said expenses is furnished to
Sterling by the Servicing Company. All such expenditures shall be subject to
the reasonable control of Sterling.
5. RELATIONSHIP. The Servicing Company is an independent contractor
with respect to this Agreement. This Agreement is not intended to, and shall
not be construed to, create a joint venture or partnership between the said
parties or constitute either of them as agents of the other. Except as
otherwise expressed and provided for in this Agreement or otherwise expressly
agreed in writing by the parties, neither party shall have any power or
authority to bind or commit the other party. The Servicing Company assumes full
responsibility for the actions of any of its employees, officers, directors,
independent contractors or agents including negligence, malfeasance,
nonfeasance or other misconduct by such persons or entities. The Servicing
Company shall pay timely and in full all taxes, federal, state, or local, due
in connection with any compensation payable hereunder.
6. AUTHORITY. Each party represents and warrants that it has the full
right, power and authority to enter into this Agreement on the terms and
conditions hereof and that the parties executing this Agreement on behalf of
each party have been duly authorized to do so.
7. INDEMNIFICATION. The Servicing Company agrees to indemnify, defend
and hold Sterling harmless from any liabilities, claims, losses, damages,
demands or expenses, including
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reasonable attorneys' fees, that may be made by anyone due to a breach of any
representation, warranty or agreement of the Servicing Company contained in or
made pursuant to this Agreement. Sterling agrees to indemnify, defend and hold
the Servicing Company harmless from any liabilities, claims, losses, damages,
demands or expenses, including reasonable attorneys' fees, that may be made by
anyone due to a breach of any representation, warranty or agreement of Sterling
contained in or made pursuant to this Agreement.
8. NOTICES. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be deemed to have been
delivered on the date personally delivered or the date mailed, postage prepaid
by certified mail, return receipt requested, or faxed and confirmed, if
addressed to the respective parties as follows:
If to the Servicing Company: Sterling Financial Services, Inc.
00000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx, XX 00000
If to Sterling: Sterling Financial Services of Florida- I, Inc.
00000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx, XX 00000
Either party may change its address for the purpose of receiving notices,
demands and other communications by giving written notice to the other party of
the change.
9. SUCCESSORS AND ASSIGNS. All of the terms and conditions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
and their respective successors and assigns. Neither party may assign this
Agreement without the prior written consent of the other.
10. NO WAIVER. The failure of either party to object to a breach of
any term or condition of this Agreement shall not be deemed a waiver of any
right or remedy the non-breaching party may have arising out of the breach, nor
shall it be deemed a waiver of its right to subsequently enforce the term or
condition. Each remedy under this Agreement is cumulative and shall be in
addition to all other rights or remedies existing in this Agreement or in law,
equity or bankruptcy.
11. SEVERABILITY. If any clause of this Agreement is determined to be
invalid or unenforceable, the validity or enforceability of any other
provisions hereof will not be affected thereby.
12. NUMBER AND GENDER. In this Agreement whenever the context so
requires, the masculine gender includes the feminine and/or neuter, and vice
versa, and the singular number includes the plural.
13. COUNTERPARTS. This Agreement may be executed in counterparts, and
any number of counterparts signed in the aggregate by the parties hereto shall
constitute but one single original Agreement.
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14. THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND ALL PAST, PRESENT AND
FUTURE AGREEMENTS INVOLVING THE PARTIES. THIS WAIVER OF TRIAL BY JURY PROVISION
IS A MATERIAL INDUCEMENT FOR THE PARTIES TO ENTER INTO THIS AGREEMENT.
15. COMPLIANCE WITH LAWS. The Servicing Company will comply with all
federal and state laws, rules and regulations relating to any of its
responsibilities and duties with Sterling and will not violate any such laws,
rules and regulations.
16. VOLUNTARY AGREEMENT. The Servicing Company represents that it has
not been pressured, misled or induced to enter this Agreement based upon any
representation by Sterling not contained herein.
17. PROVISIONS TO SURVIVE. The parties hereto acknowledge that many of
the terms and conditions of this Agreement are intended to survive the term of
this Agreement. Therefore, any terms and conditions that are intended by the
nature of the promises or representations to survive the term of this Agreement
shall survive the term of this Agreement regardless of whether such provision
is expressly stated as so surviving.
18. MERGER. This Agreement represents the entire Agreement between the
parties and shall not be subject to modification or amendment by any oral
representation, or any written statement by either party, except for a dated
written amendment to this Agreement signed by an authorized officer of the
Servicing Company and an authorized officer of Sterling.
19. VENUE AND APPLICABLE LAW. This Agreement shall be enforced and
construed in accordance with the laws of the State of Florida, and venue for
any action or arbitration under this Agreement shall be Hillsborough County,
Florida.
20. ASSIGNMENT. This Agreement shall not be assignable by either party
without the written consent of the other party. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors and assigns.
21. ARBITRATION. Any controversy or claim arising out of or relating
to this Agreement or any provision thereof shall be settled by binding
arbitration in a manner agreed upon by the parties, or if not otherwise agreed
upon, then in accordance with the rules of the American Arbitration Association
in effect at that time. Judgment upon the award so rendered may be entered in
any court having competent jurisdiction thereover. The costs of the arbitration
shall be borne by the non-prevailing party, including the cost of experts,
evidence and legal counsel (and all employees and assistants) of the prevailing
party.
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22. DEFAULT AND REMEDIES.
a. It shall be an event of default under this Agreement upon the
happening of any of the following events (an "Event of Default"):
i. If the Corporation fails to timely remit to Servicing
Company any Compensation or other amounts due under this Agreement which are
due and payable and such failure to pay continues for a period of ten days form
the date of the mailing or delivery of an invoice from Servicing Company.
ii. If any representation or warranty of the Corporation in
this Agreement is false, incorrect or misleading in any material respect, or if
any representation or warranty contained in any reports, documents,
certificates or other papers delivered to Servicing Company from time to time
is false, incorrect or misleading in any material respect, and is not cured
within 30 days of written notice thereof to the Corporation.
iii. If the Corporation breaches or fails to perform or
observe any obligation or condition to be performed or observed by it under
this Agreement in any material respect and such breach or default is not cured
within 30 days after Servicing Company has given the Corporation written notice
demanding that such breach or default be cured.
iv. If any representation or warranty of Servicing Company in
this Agreement is false, incorrect or misleading in any material respect, or if
any representation or warranty contained in any reports, documents,
certificates or other papers delivered to the Corporation from time to time is
false, incorrect or misleading in any material respect and is not cured within
30 days of written notice thereof to Servicing Company;
v. If Servicing Company breaches or fails to perform or
observe any obligation or condition to be performed or observed by it under
this Agreement in any material respect and such breach or default is not cured
within 30 days after the Corporation has given Servicing Company written notice
demanding that such breach or default be cured.
vi. If Servicing Company fails, in any material respect, to
perform its obligations under this Agreement in conformance with industry
standards applicable to servicing of similar Accounts and such failure is not
cured within 30 days after the Corporation has given Servicing Company written
notice demanding such failure be cured.
b. Upon the happening of an Event of Default, after the expiration of
any opportunity to cure such Default, the non-defaulting party may terminate
this Agreement by notice in writing to the defaulting party sent by facsimile
or certified mail, postage prepaid, or by hand delivery. In the event of
termination, Servicing Company agrees to make available to the Corporation such
computer records as are reasonably required to effect an orderly conversion to
another computer system.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
"Servicing Corporation"
STERLING FINANCIAL SERVICES, INC.,
a Florida corporation
By:
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Xxxxxxx X. Xxxxxx
President
"Sterling"
STERLING FINANCIAL SERVICES OF
FLORIDA - I, INC., a Florida corporation
By:
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Xxxxxxx X. Xxxxxx
President
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SCHEDULE A
ORIGINATION
The Corporation intends to originate Contracts, as opposed to
purchasing Contracts at a discount from Dealers or others. The Corporation will
contact borrowers as well as Park owners and Dealers directly or by telephone
or mailing to advise them of the Corporation's program for Contract
origination. It is not anticipated that the Corporation will be dependent upon
one or a few Park owners or Dealers for identifying potential borrowers under
Contracts originated by the Corporation. In addition, the Corporation may use
print advertising directed at individual borrowers. It is anticipated that a
Park owner, Dealer or potential borrower will contact the Corporation regarding
the availability of financing, and the Corporation will make a credit
application available directly to the borrower.
When the credit application from the borrower is received, an
investigator will review the application and obtains the applicant's credit
bureau and other information.
Contract origination guidelines include the following minimum
acceptable criteria:
- Employment history - at least six months on the job;
- Income - depends on the amount of the loan and the debt to
income ratio (see below) of the borrower;
- Time at residence - at least one year at current residence;
- Debt to income ratio - personal debt cannot exceed 50% of the
borrower's net income;
- Bankruptcy - all debts must have been fully discharged at
least one year prior to application for the loan;
- Child support - if the borrower is paying child support, it
will be treated as a personal debt and factored into the debt
to income ratio; if the borrower is receiving child support,
such income will only be considered if court mandated;
- Repossessions - must have occurred at least one year prior to
application for the loan;
- Liens/judgments - will be decided on a case-by-case basis,
depending on the type of lien or judgment, the amount
involved and the age thereof;
- Previous delinquencies, collections and charge-offs - will be
decided on a case-by-case basis with consideration taken for
mitigating circumstances, such as divorce, disability,
extended illness or layoff due to downsizing; and
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- Co-buyers and co-signers - will also be subject to the minimum
acceptable criteria set forth above.
There are no fixed criteria pursuant to which material deviation these
guidelines will be permitted. However, no Contract will be originated to a
borrower deviating from these guidelines for which there is not an increased
down payment or a co-signer meeting the guidelines, or both. The additional
down payment required will increase with the increase in deviation from the
guidelines, although there is no fixed formula for determining the amount of
increased down payment required.
In addition, the Corporation will not finance more than 130% of
National Automobile Dealers Association (NADA) manufactured home book retail
value. It will not finance Homes manufactured before 1980. Contracts under
$10,000 will have no more than a 10-year term, and Contracts between $10,000
and $25,000 will not have more than a 15-year term. The Corporation will not
finance amounts in excess of $25,000. See "Business - Consumer Finance Laws and
Regulations."
When this process is complete, an application will be approved
unconditionally or with conditions, such as adjustments to the interest rate,
down payment, maximum loan to value, co-maker or other significant conditional
criteria. It is anticipated that no more than ten percent (10%) of the
Contracts originated will deviate materially from these guidelines, although
there is no specific limitation imposed thereon.
Prior to closing the funding, the Corporation reviews the financing to
determine the following: (i) all required documentation has been included, (ii)
the math is correct, (iii) the regulatory requirements have been satisfied,
(iv) the amount financed does not exceed the maximum loan allowed, and (v) any
conditions imposed have been satisfied. The Corporation will contact the
insurance carrier to confirm insurance.
SERVICING
Billing. The Servicing Company generates bi-monthly statements which
are sent to the borrower.
Collections. The Corporation has established certain collection
guidelines, which guidelines will not necessarily be followed in all cases and
which are subject to modification at any time.
When a delinquency occurs, a Collector will make a call by the first
day of the delinquency. By the third day of delinquency, if the account has not
been brought current, the Collector will personally visit the delinquent
borrower. If the borrower is unable to make all required payments on a current
basis, the Collector may make reasonable payment arrangements to cure the
delinquency. If all of these collection processes are not successful, the
repossession process commences immediately.
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Repossessions and Resale Department. Either the borrower voluntarily
agrees to vacate the Home, or an attorney is contacted by the Corporation to
effect an involuntary repossession. All costs associated with the repossession
are an obligation of the borrower. To effect an involuntary repossession, in
general, the borrower is first given written notice of intent to repossess, and
a period of time, generally five days, to cure all defaults. If the defaults
are not cured within said time period, a complaint is filed and a judgment
obtained. After the judgment is obtained, a writ of possession is obtained and
given to the appropriate law enforcement agencies, who evict the borrower from
the Home. The Home will be renovated as necessary and sold in its then current
location, if possible, or moved to a Dealer's lot or another Park for resale
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