LOAN SERVICING AGREEMENT
This Loan Servicing Agreement dated December 31, 2002 (this
"Agreement") between HomeGold, Inc. (the "Servicer") and EMMCO, LLC, a limited
liability company organized under the laws of the State of South Carolina (the
"Customer").
WHEREAS, the Servicer desires to provide and the Customer desires to
receive certain services (the "Services") including, but not limited to, the
following:
A. residential mortgage loan servicing as described in Exhibit A
annexed hereto;
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions set forth herein, the parties hereto agree as follows:
1. The Servicer shall provide the Services described in Exhibit A annexed
hereto for the Customer at the rates set forth in Exhibit B annexed hereto. The
rates set forth in Exhibit B represent an arm's-length price that the Servicer
would charge and the Customer would pay an independent third party for providing
said Services.
2. This Agreement shall expire December 31, 2003 (the "Initial Term"). Upon
expiration of the Initial Term, this Agreement shall renew annually for the
following calendar year (the "Renewal Term") unless the Customer or the Servicer
notifies the other in writing within 60 days before the expiration of the
current term that the Agreement shall not be renewed.
3. The Servicer shall revise Exhibit B to modify the rates set forth on
Exhibit B once per year after the Initial Term to reflect changes in the actual
costs incurred or estimated costs to be incurred by the Servicer in providing
the Services to the Customer. Customer may either accept such revised Exhibit B
or terminate this Agreement upon 30 days' written notice to Servicer. If
accepted by Customer, such revised Exhibit B shall be substituted for the
Exhibit B then in effect and shall become effective upon the date set forth in
such revised Exhibit B.
4. (a) The Servicer and the Customer represent that Exhibit A contains a
general description of the Services to be provided by the Servicer to the
Customer. In performing these Services, the scope of the work undertaken and the
manner of its performance shall be substantially the ▇▇▇ e as for similar work
performed by the Servicer for transactions on its own behalf, with such
modifications as may be appropriate in order to accomplish the purposes of this
Agreement. The Servicer shall give the Customer reasonable notice of all system
changes affecting the Customer's procedures or reports as these changes pertain
to the Services.
(b) If the changes referred to in paragraph (a) above are not
acceptable to the Customer, the Customer may terminate this Agreement on thirty
(30) days' written notice to Servicer, provided such notice is given within ten
(10) days after the Customer has received notice of such change.
5. (a) The Customer shall furnish all data, records and materials in the
manner, at the place and within the time limits determined by the Servicer to be
necessary to perform the Services. The Customer shall prepare all data submitted
for processing with reasonable care and in a manner acceptable to the Servicer.
(b) If the Servicer's messenger picks up the data from the Customer,
the risk of loss shall pass to the Servicer upon the Customer's submission of
the data to the messenger. The risk of loss shall be on the Customer, if it
utilizes its own messenger, until the data have been received by the Servicer at
its loan operations center.
(c) The Customer hereby agrees that any additional costs incurred by
the Servicer because data, records or materials sent by or for the Customer are
not in the form required by this Agreement or are not received by the Servicer
in accordance with the time schedule established to permit the Servicer to meet
its required delivery schedule are the responsibility of the Customer.
(d) The Servicer shall not be responsible for errors resulting from
any incorrect data submitted for processing by the Customer. The Servicer may,
however, make minor corrections to the data if the original source documents are
in error or make other minor adjustments, without charge, unless the volume of
such items becomes unreasonable in the judgment of the Servicer, at which time
the Servicer may notify the Customer of its intention to impose charges for such
additional work at its then prevailing rates.
6. It is understood and agreed that the performance of the Services is or
might be subject to regulation and examination by authorized representatives of
the Secretary of State, the Securities and Exchange Commission, or other
appropriate federal or state regulatory agencies, and that each party is and
shall be authorized to submit or furnish to any such regulatory agency
reports, information, assurances and other data as may be required by, or
reasonably requested of it, under applicable laws and regulations, including,
without limitation, any appropriate notifications concerning the initiation or
termination of this Agreement or any of the Services provided to the Customer.
7. The Servicer shall, with appropriate charge, promptly make any and all
modifications to forms, documents and reporting methods as may be required to
comply with any statutory, regulatory, or administrative rules or other legal
requirements. The Servicer, subject to Customer providing reasonable notice as
established by Servicer, shall make and implement any modification to forms,
documents and reporting methods required in response to such statutory,
regulatory, or administrative rules or other legal requirements by such time as
the modifications may be necessary.
8. After the end of each calendar month that this Agreement is in effect,
the Servicer shall invoice the Customer for all fees and charges due the
Servicer, and the Customer shall pay each such invoice upon receipt thereof. The
rates set forth in Exhibit B are exclusive of all taxes, however designated,
imposed on any amount payable hereunder for the Services or their provision to
the Customer. Any sales and use taxes, however designated, and if applicable,
shall be the responsibility of and shall be paid by the Customer. If at the end
of any month, there are amounts "due from" the Servicer to the Customer which
are not paid, such "due from" amounts will be deemed to be an account payable
to the Customer at the Servicer.
9. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED HEREIN, THE SERVICER MAKES NO
WARRANTIES OR REPRESENTATIONS AS TO THE SERVICES, EXPRESS OR IMPLIED, IN FACT OR
IN LAW, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.
10. The liability of the Servicer to the Customer for any loss due to the
Servicer's performing, or failing to perform, the Services shall be contingent
upon the Customer's compliance with its obligations herein and shall be limited
to those losses sustained by the Customer which are a direct result of the
Servicer's gross negligence or willful misconduct; provided, however, that the
Servicer's only liability to the Customer arising from any interruptions in, or
delay or unavailability of, the Services or any errors or omissions in the
Services or any loss of data, shall be to restore any Service which is
interrupted or is delayed or becomes unavailable, as promptly as reasonably
practicable and, in the case of any error or omission in a Service or loss of
data, to correct such error or omission or regenerate any lost data; provided,
further, that the Servicer shall not be obligated hereunder to correct any error
or omission in the Services if it would not ordinarily correct such error or
omission. The Customer shall retain records provided to it by the Servicer to
permit reconstruction of data, records and materials provided by the Customer to
the Servicer pursuant to this Agreement.
11. The Servicer shall not be responsible or liable for its failure or
delay in performance of the Services when such failure or delay arises out of,
results from, or is caused by any act or omission of the Customer or by any
event beyond the control of the Servicer, including, but not limited to fire,
flood or other catastrophe, legal acts of a public authority, strikes, riots,
or failure of communications or power supply.
12. Notwithstanding anything contained herein to the contrary, the
aggregate amount of any money damages to which the Customer and any and all
other parties claiming by, through or under the Customer may be entitled as the
result of any claim against the Servicer (regardless of whether such claims
are based on contract, tort (including negligence and strict liability),
warranty or other legal or equitable grounds) shall be limited to an amount
equal to the lesser of (a) the actual amount of such losses, damages,
injuries, claims, costs or expenses or (b) the aggregate annual amount
payable by the Customer to the Servicer for the Service affected, as stated on
Exhibit B.
13. The Servicer shall not incur any liability or obligation under this
Agreement by reason of any loss or damage to the Customer caused by an error or
omission of the Servicer unless the Customer shall have informed the Servicer of
such error or omission within two Servicer business days after the discovery
thereof. The Customer agrees to use diligent efforts to reconstruct any lost
data, records or materials, and if appropriate, to charge back to the Customer's
depositors' accounts and the forwarding banks' accounts, and to obtain refunds
from its depositors' forwarding banks and endorsers' banks. If the Servicer
carries insurance against the type of loss incurred, the Customer agrees to
cooperate in furnishing proof of loss in a form satisfactory to the Servicer's
insurance company and to assist the Servicer and its insurance company in
settlement of the claim.
14. In the event of a material breach of a party's obligations under this
Agreement (an "Event of Default"), the other party shall provide a written
notice of such Event of Default and a demand that such Event of Default be
cured. In the event the breaching party fails in good faith to cure such Event
of Default within ten (10) days following receipt of such notice and demand, the
non-defaulting party may terminate this Agreement and/or take legal action to
obtain specific performance, injunctive and other equitable relief as well as
any other remedies as may be available at law or equity subject to the
limitations set forth in this Agreement.
15. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, IT IS HEREBY AGREED
THAT IN NO EVENT WILL THE SERVICER BE LIABLE FOR ANY LOST PROFITS OR OTHER
INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES WHICH THE CUSTOMER MAY
INCUR OR EXPERIENCE BY REASON OF HAVING ENTERED INTO OR HAVING RELIED ON THIS
AGREEMENT OR ARISING OUT OF OR IN CONNECTION WITH THE SERVICES, EVEN IF THE
SERVICER HAS BEEN ADVISED OR IS OTHERWISE AWARE OF THE POSSIBILITY OF SUCH
DAMAGES; NOR SHALL THE SERVICER BE LIABLE FOR ACTS OF GOD, MACHINE OR
COMPUTER BREAKDOWN OR MALFUNCTION, INTERRUPTION OR MALFUNCTION OF
COMMUNICATIONS OR POWER SUPPLY, LABOR DIFFICULTIES OR ANY OTHER SIMILAR CAUSE
OR CATASTROPHE BEYOND THE SERVICER'S CONTROL.
16. In performing the Services, the Servicer shall be deemed to have an
independent contractual relationship with the Customer. Servicer shall not be
deemed to have any relationship with the Customer's customers by reason of this
Agreement, and in no event shall any of the Customer's customers be considered a
third party beneficiary of this Agreement. To the extent that third parties may
make claims against the Servicer arising out of the Services, the Customer
agrees to indemnify and hold the Servicer harmless from and against all loss,
liability, claim, action, demand or suits, including any claims for attorneys'
fees arising therefrom.
17. All files, documentation and programs (whether standard Servicer
programs or programs developed specifically for the Customer) shall remain the
property of the Servicer, unless otherwise specified in this Agreement. Upon
termination of the Services, the Servicer will make available to the Customer
all data contained in all master files and transaction files then available
relevant to the Services. Any expense incurred by the Servicer in providing such
information shall be paid for by the Customer at the Servicer's then prevailing
rates.
18. The Customer agrees to indemnify and hold the Servicer harmless against
any loss, liability, claim, damage, suit or other legal action which the
Servicer may suffer or be liable for by reason of any errors or omissions made,
permitted to be made, caused to be made or omitted by the Customer.
19. The Customer may not assign this Agreement or any of its rights or
obligations hereunder without the written consent of the Servicer. The Servicer
may assign this Agreement, or subcontract any one or more of the services to be
provided under this Agreement, in whole or in part, and any of its rights and
obligations (including, without limitation, its obligation to provide the
Services) to any affiliate of the Servicer. Any such assignment shall not act as
a release of Servicer from liability for performance under this Agreement.
20. This Agreement shall be governed by, construed and enforced in
accordance with the laws of the State of South Carolina without regard to
conflict of laws principles subjecting the Agreement to the laws of another
state.
21. The Servicer will regard and preserve as confidential all data of a
confidential nature related to the business of the Customer and provided by the
Customer to the Servicer. The Servicer will take the same precautions to
preserve such confidential information as the Servicer takes with respect to its
own confidential information.
22. The Servicer agrees that it will indemnify the Customer for any
settlement payments or any costs or damages that a court awards against the
Customer as a result of any claim that any software or computer programs used in
providing the Services infringed a patent, copyright or other third party
intellectual property right; provided, however, it is an express condition to
this Agreement to indemnify Customer as set forth in this paragraph, that the
Customer provide prompt written notice of such claim to the Servicer and tenders
to the Servicer or, at the Servicer's request, to the owner or vendor of such
software, the defense and all related settlement negotiations; and provided,
further that if any such claim arises from software which the Servicer licenses
from a third party, the Servicer's obligation to indemnify the Customer is
limited to the amount such third party pays to the Servicer with respect to such
claim for the purpose of indemnifying the Customer.
23. No waiver of any of the terms or conditions of this Agreement shall be
effective or binding unless such waiver is in writing and is signed by both of
the parties hereto, nor shall this Agreement be changed, modified, discharged or
terminated other than in accordance with its terms, in whole or in part, except
by a writing signed by both parties.
(A) All communications and notices relating to this Agreement are to be sent:
If to the Servicer:
HomeGold, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to the Customer:
EMMCO, LLC
▇▇▇ ▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
(B) or to such other address as a party may designate to the other and
such notices shall be deemed duly given three (3) days after mailed or upon
delivery by hand or upon receipt of confirmed answer back if telephoned.
24. Whenever possible, each provision of this Agreement will be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or invalid under
applicable law, such provision will be in effect only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement. Alternatively, the parties may
agree to amend this Agreement to bring it into conformity with applicable laws.
25. This Agreement embodies the entire understanding of the parties with
respect to the subject matter hereof, and there are no further or other
agreements or understandings, written or oral, in effect between the parties
relating to the subject matter of this Agreement.
26. This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement.
End of Page - Next Page is Signature Page
SIGNATURE PAGE FOR LOAN SERVICING AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first written above.
SERVICER: HomeGold, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CEO
CUSTOMER: EMMCO, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, CEO
EXHIBIT A
RESIDENTIAL LOAN SERVICING
Residential and commercial loan servicing to be provided pursuant to this
Agreement shall include, but not necessarily be limited to, the following
specific services:
1. Collect all sums due and payable from borrowers under the terms of each
loan;
2. Deposit all payments, including late charges and other ancillary fees,
made by a borrower pursuant to the terms of a loan;
3. Remittance to the Customer of principal and interest payments on loans
collected. Each remittance should be net of all fees due pursuant to
Exhibit B of this Agreement;
4. Reconcile account balances for any accounts established pursuant to
this Agreement;
5. As used in this Agreement, the term "Escrow Payments" means all
payments for whatever purpose except for principal and interest
payments, late charges or other ancillary fees required by the terms of
each loan or otherwise to be made under the terms of the loans. The
Servicer shall apply amounts received by it that are applicable to
Escrow Payments in accordance with the terms of each loan, any
applicable contract of insurance, and any relevant service agreements
including this Agreement. The Servicer shall keep funds received as
Escrow Payments in its possession segregated from its general corporate
funds pursuant to the terms of this Agreement;
6. Take all reasonable and necessary steps to cause any premises secured
by a mortgage securing a loan or a mortgage or any other security
interest or agreement securing a loan to be kept insured against loss
or damage by fire or other hazards and for such amounts required by any
servicing agreements in effect;
7. Maintain a detailed record of each loan and collection thereon. The
Customer or its authorized representative may examine such records at
such time or times as it may elect during the Servicer's normal
business hours. Additionally, the Servicer shall maintain copies of
appraisals, credit reports and other materials assessing and monitoring
the continuing credit worthiness of the borrower;
8. Take all reasonable and necessary steps to comply with and use best
efforts to cause the Customer to comply with any and all applicable
federal and state statutes or regulations or private mortgage insurance
company requirements while servicing all loans pursuant to the terms of
this Agreement;
9. The Servicer shall enter all new loans and information which may be
required from time to time onto the data processing software used by
the Servicer to service loans for the Customer;
10. The Servicer shall, upon receipt of instructions from the Customer,
cause to be recorded in the applicable county offices individual
assignments of mortgages from the Servicer to the Customer;
11. The Servicer shall, upon receipt of instructions from the Customer,
cause to be recorded in the applicable county offices mortgage
instruments in the name of the Customer securing loans owned by the
Customer;
12. The Servicer shall not subcontract the obligations set forth in this
Exhibit A without Customer approval;
13. The Servicer shall ensure the maintenance of perfected collateral
positions securing loans serviced pursuant to the terms of the
Agreement; and
14. The Servicer shall receive fees from the Customer as consideration for
the performance of services pursuant to the terms of the Agreement in
accordance with Exhibit B annexed hereto.
EXHIBIT B
SCHEDULE OF FEES FOR SERVICES
PERFORMED PURSUANT TO SERVICE AGREEMENT
For consideration of services provided by the Servicer on behalf of the Customer
pursuant to the terms and conditions of the Agreement, the Customer shall pay
the Servicer the following fees:
Residential Mortgage Loan Servicing as set forth in Exhibit A of the
Agreement:
The servicing fee rate shall be .50% per annum. The monthly servicing fee
shall be one-twelfth (1/12) of the product of the servicing fee rate and
the principal balance of residential mortgage loans funded during the month
plus one-twelfth (1/12) of the product of the servicing fee rate and the
outstanding principal balance at the end of the month that is greater than
the principal balance of residential mortgage loans funded during the
month.
The Servicer shall be entitled to retain any ancillary income. Ancillary
income shall include, but not be limited to late charges, NSF fees,
satisfaction fees, assumption and modification fees, interest on custodial
accounts and any prepayment penalties.