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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 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 and servicing loans and accounts; and
WHEREAS, Sterling desires to retain the Servicing Company to provide
all services in connection with Contract origination 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 shall be
extended thereafter in the sole and absolute
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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 computed on an accrual basis ("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 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
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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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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
"Servicing Company"
STERLING FINANCIAL SERVICES, INC.,
a Florida corporation
By:_______________________________________
Xxxxxxx X. Xxxxxx
President
"Sterling"
STERLING FINANCIAL SERVICES OF
FLORIDA - I, INC., a Florida corporation
By:_______________________________________
Xxxxxxx X. Xxxxxx
President
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SCHEDULE A
ORIGINATION
The Corporation will contact Park owners and Dealers directly or by
telephone or mailing to advise them of Sterling's program for Contract
origination. The Corporation has no quantitative standards in selecting
prospective Park operators or Dealers. It is not anticipated that Sterling will
be dependent upon one or a few Park owners or Dealers for Contract purchases. In
addition, Sterling may use print advertising directed at individual borrowers.
It is anticipated that a Park owner, Dealer or potential borrower will contact
Sterling regarding the availability of financing, and Sterling will make a
credit application available 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
- Co-buyers and co-signers - will also be subject to the minimum
acceptable criteria set forth above.
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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 mobile 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 - Regulation".
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.
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, Sterling 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. Sterling 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.
Repossessions and Resale Department. Either the borrower voluntarily
agrees to vacate the Home, or an attorney is contacted by Sterling 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
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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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