EXHIBIT 10.2
SERVICES AGREEMENT
This Services Agreement (this “
Agreement ”), dated as of February 22, 2008 (the
“ Effective Date ”), is by and between American
Processing Company, LLC, a Michigan limited liability company (the
“ Service Provider ”), Wilford & Geske, a
Minnesota professional corporation (the “ Firm
”), and, solely for purposes of making the commitments set
forth in Article VIII (Restrictive Covenants), Lawrence A.
Wilford and James A. Geske (each a “ Restricted Party
,” and collectively, the “ Restricted Parties
”). The Firm and the Service Provider are hereinafter
collectively referred to as the “ Parties ”.
Unless otherwise indicated, capitalized terms used but not
otherwise defined herein have the meanings set forth in
Section 1.1 below.
RECITALS
A. The Firm is a general service
law firm engaged in the Practice of Law, including, without
limitation, providing foreclosure, bankruptcy, eviction and related
legal services to its Clients out of the Firm’s principal
office located in Woodbury, Minnesota. Prior to the date hereof, in
addition to the Practice of Law, the Firm provided certain
non-legal services to its Clients, including the Mortgage Default
Support Services.
B. Immediately prior to, and in
connection with the transactions contemplated by this Agreement,
the Firm has sold to the Service Provider substantially all of the
assets (the “ Purchased Assets ”) used by the
Firm in the business of providing Mortgage Default Support Services
and the Service Provider has assumed certain liabilities of the
Firm associated therewith (the “ Assumed Liabilities
”) pursuant to that certain Asset Purchase Agreement,
executed concurrently with this Agreement (the “ Purchase
Agreement ”), by and among the Firm, the Service Provider
and the Restricted Parties.
C. The Firm now desires, subject
to the terms and conditions described herein, to engage the Service
Provider to provide Mortgage Default Support Services to the Firm
for the benefit of its Clients; provided , however ,
that the performance of any Legal Services in connection with the
business of the Firm shall continue to be performed by the
Firm.
D. Each Restricted Party has
agreed to become a party to this Agreement for the limited purpose
of agreeing to certain covenants applicable to him as set forth in
Article VIII (Restrictive Covenants).
AGREEMENTS
In consideration of the foregoing,
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definition of Certain
Terms . The terms defined in this Section 1.1 ,
whenever used in this Agreement (including in the schedules and
exhibits), shall have the respective meanings indicated below for
all purposes of this Agreement:
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE
SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.
“ Affiliate ” as
applied to any Person, means any other Person, directly or
indirectly, controlling, controlled by, or under common control
with, that Person. The term “control” (including, with
correlative meanings, the terms “controlling,
“controlled by” and” under common control
with”), as applied to any Persons, includes the possession,
directly or indirectly, of ten percent (10%) or more of the voting
power (or in the case of a Person which is not a corporation, ten
percent (10%) or more of the ownership interest, beneficial or
otherwise) of such Person or the power otherwise to direct or cause
the direction of the management and policies of that Person,
whether through voting, by contract or otherwise.
“ Agencies ” shall
mean, individually or collectively, Fannie Mae, Freddie Mac, FHA,
VA and GNMA and any other governmental agencies or
quasi-governmental agencies that are residential mortgage lenders
or residential mortgage loan servicing companies that are or become
Clients of the Firm.
“ Agreement ” has
the meaning set forth in the Preamble of this Agreement.
“ Amended Fee
Schedule Date ” means January 1, 2009 and each
anniversary thereof.
“ Amended Fee Schedule
” has the meaning set forth in Section 3.1(c) of
this Agreement.
“ Applicable Law(s)
” means any statute, law, ordinance, regulation, requirement,
order or rule of any federal, state, local government or other
governmental agency or body or of any other type of regulatory
body, or any governmental or administrative interpretation of any
thereof, including, but not limited to, any and all federal, state
and local laws governing the legal profession generally, including,
but not limited to, the State of Minnesota’s Rules of
Professional Conduct, the Fair Debt Collection Practices Act and
the Graham-Leach-Bliley Act.
“ Assumed Liabilities
” has the meaning set forth in the Recitals of this
Agreement.
“ BLS ” has the
meaning set forth in Section 3.1(b) of this
Agreement
“ Breaching Party
” has the meaning set forth in Section 9.3 of
this Agreement.
“ Business ” means
the business of providing Mortgage Default Support Services.
“ Business Day ”
means a day of the year on which banks are not required or
authorized by law to close in Minneapolis, Minnesota.
“ Change ” and
“ Changes ” have the meaning set forth in
Article X of this Agreement.
“ Claim ” has the
meaning set forth in Section 12.6 of this
Agreement.
“ Clients ” shall
mean residential mortgage lenders or residential mortgage loan
servicing companies that have engaged the Firm, or may engage the
Firm in the future, as well as any other Person who receives Legal
Services from the Firm.
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE
SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.
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“ Computer System
” shall have the meaning set forth for such term in the
Purchase Agreement, together will all enhancements and additions
thereto and replacements for any component parts thereof.
“ CPI ” has the
meaning set forth in Section 3.1(b) of this
Agreement.
“ CPI Percentage ”
has the meaning set forth in Section 3.1(b) of this
Agreement.
“ Effective Date ”
has the meaning set forth in the Preamble to this Agreement.
“ Employee Expenses
” means any and all employee costs of the Service Provider
Workforce, including, but not limited to, personnel salaries,
overtime, bonuses, commissions, fringe benefits, accrued vacations,
sick leave time, profit sharing, pension, and any insurance
benefits.
“ Encumbrances ”
means any liens, hypothecations, mortgages, charges, security
interests, pledges and other encumbrances and claims of any
nature.
“ Engagement Letter
” means any engagement letter, contract, agreement or other
arrangement between the Firm and a Client.
“ Extended Term ”
has the meaning set forth in Section 9.2 of this
Agreement.
“ Fannie Mae ”
shall mean the Federal National Mortgage Association.
“ Fee Schedule ”
has the meaning set forth in Section 3.1(a) of this
Agreement.
“ Firm Confidential
Information ” has the meaning set forth in
Section 7.2(a) of this Agreement.
“ Firm Damages ”
has the meaning set forth in Section 12.4 of this
Agreement.
“ Firm ” has the
meaning set forth in the Preamble of this Agreement.
“ First Invoice ”
has the meaning set forth in Section 3.2(a) of this
Agreement.
“ FHA ” shall mean
the Federal Housing Administration.
“ Force Majeure
Condition ” shall mean any condition or event beyond the
control of the Party affected thereby, including, but not limited
to, fire, explosion, or other casualty, act of God, war or civil
disturbance, acts of public enemies, embargo, the performance or
non-performance of third parties, acts of city, state, local or
federal governments in their sovereign, regulatory, or contractual
capacity, labor difficulties and strikes.
“ Freddie Mac ”
shall mean the Federal Home Loan Mortgage Corporation.
“ GAAP ” means
United States generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE
SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.
3
Standards Board (or any successor authority) that are applicable as
the date of determination, consistently applied in accordance with
past practices.
“ Governmental Body
” means any:
(a) foreign,
federal, state, county, municipal, city, town village, district, or
other jurisdiction or government of any nature;
(b) governmental
or quasi-governmental authority of any nature (including any
governmental agency, branch, department, official, or other entity
and any court or other tribunal); or
(c) body
exercising, or entitled or purporting to exercise, any
administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature.
“ GNMA ” shall
mean the Government National Mortgage Association.
“ Indemnified Party
” has the meaning set forth in Section 12.6 of
this Agreement.
“ Indemnifying Party
” has the meaning set forth in Section 12.6 of
this Agreement.
“ Initial Term ”
has the meaning set forth in Section 9.1 of this
Agreement.
“ Initial Year ”
has the meaning set forth in Section 3.1(b) of this
Agreement.
“ Insolvent ”
means a party who makes an assignment for the benefit of its
creditors, or voluntarily commences proceedings in bankruptcy,
reorganization or liquidation under the United States Bankruptcy
Code, 11 U.S.C. §§ 101, et seq ., as
amended, or under any other state, federal or Applicable Law for
the relief of debtors (or an action under any such laws is
commenced against such party and is not discharged within
60 days); or (c) has a receiver, trustee or custodian
appointed to operate its business who is not discharged within
60 days of his, her or its appointment.
“ Investors ”
shall mean Fannie Mae, Freddie Mac and the Private Investors,
collectively.
“ Invoice ” means
any Monthly Invoice or the First Invoice.
“ Legal Services ”
means the practice of law, including counseling or assisting others
in matters that require the use of legal discretion and profound
legal knowledge, the giving of advice or the rendering of any
service requiring the use of legal skill or knowledge or any other
such service, the provision of which by an individual whom is not a
licensed attorney, would constitute the unauthorized practice of
law in the State of Minnesota.
“ Malpractice Insurance
Policies ” has the meaning set forth in
Section 4.6 of this Agreement.
“ Material Breach
” means any breach of this Agreement by one Party that:
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE
SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.
4
(a) significantly deprives the
Non-breaching Party of the material benefits afforded to it under
this Agreement;
(b) causes the Non-breaching Party to
suffer losses or damages that cannot be properly redressed by the
payment of money; or
(c) constitutes gross negligence or
willful misconduct on the part of the Breaching Party.
“ Measuring Month
” has the meaning set forth in Section 3.1(b) of
this Agreement.
“ Monetary Default Event
” has the meaning set forth in Section 9.3 of
this Agreement.
“ Monthly Invoice
” has the meaning set forth in Section 3.2(a) of
this Agreement.
“ Mortgage Default Support
Services ” means the mortgage default support and
processing services summarized on Exhibit A , which are
undertaken in connection with residential mortgage defaults
including, but not limited to, the processing and support of
foreclosures, foreclosure sales, evictions, torrens action, reduced
redemption and bankruptcy filings, but excluding in each instance
any Legal Services; provided , however , the Mortgage
Default Support Services shall not include the direct provision by
Service Provider of any service of process, auction services, title
services, and posting and newspaper publication services.
“ New Fee Amount ”
has the meaning set forth in Section 3.1(b) of this
Agreement.
“ Non-breaching Party
” has the meaning set forth in Section 9.3 of
this Agreement.
“ Objection Notice
” has the meaning set forth in Section 3.1(c) of
this Agreement.
“ Office Products
” has the meaning set forth in Section 4.4 of
this Agreement.
“ Parties ” has
the meaning set forth in the Preamble of this Agreement.
“ Person ” means
an individual, partnership, corporation (including a business
trust), joint stock company, trust, unincorporated association,
joint venture, limited liability company or other entity, or a
government or any political subdivision or agency thereof.
“ Practice of Law
” means any activities that constitute providing Legal
Services.
“ Prevailing Party
” has the meaning set forth in Section 12.2 of
this Agreement.
“ Private Investors
” shall mean individual private investors who make or invest
in residential mortgage loans.
“ Purchase Agreement
” has the meaning set forth in the Recitals to this
Agreement.
“ Purchased Assets
” has the meaning set forth in the Recitals of this
Agreement.
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE
SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.
5
“ Reasonable
Attorneys’ Fees ” shall mean those attorney’s
fees actually incurred in obtaining specific performance,
injunctive relief or a judgment in favor of the Prevailing
Party.
“ Restricted Period
” has the meaning set forth in Section 8.1(a) of
this Agreement.
“ Restrictive Covenants
” has the meaning set forth in Section 8.1 of
this Agreement.
“ Second Invoice ”
has the meaning set forth in Section 3.2(a) of this
Agreement.
“ Service Provider
Confidential Information ” has the meaning set forth in
Section 7.1(a) of this Agreement.
“ Service Provider
Intellectual Property ” has the meaning set forth in
Section 7.6 of this Agreement.
“ Service Provider
Workforce ” has the meaning set forth in
Section 5.1 of this Agreement.
“ Service Provider
” has the meaning set forth in the Preamble of this
Agreement.
“ Standard Operating
Procedures ” or “ SOPs ” means the
operating procedures agreed to by the Parties regarding the
provision of Mortgage Default Support Services by the Service
Provider to the Firm.
“ Termination Date
” means the effective date of the termination of this
Agreement in accordance with Sections 9.3 , 9.4
or 9.5 .
“ Territory ” has
the meaning set forth in Section 8.1(a) of this
Agreement.
“ Transition ” has
the meaning set forth in Section 6.2 .
“ Transition Plan
” has the meaning set forth in Section 6.2
.
“ Veritas Software
” means that certain case management software program owned
by the Service Provider and used in the provision of Mortgage
Default Support Services whether or not such program is referred to
by the name “Veritas”.
“ Work Product ”
shall mean all work product developed by the Firm, or any of its
employees or approved subcontractors including Service Provider,
for the Firm’s Clients (tangible, recorded or otherwise, and
without regard to the form of recordation or state of completion),
whether or not the services being performed are complete and
specifically includes all work product of the Service Provider in
providing the Mortgage Default Support Services, other solely than
such materials relating to the Service Provider’s internal
administration (its employees, equipment, software and other
systems).
“ Work-in-Process
” shall mean at any time shall mean the files for which some
portion of mortgage default processing and support services have
been performed by the Firm prior to the Effective Date.
“ VA ” shall mean
the Department of Veterans Affairs.
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE
SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.
6
1.2 Additional Terms . The
terms “hereof,” “herein” and
“hereunder” and terms of similar import are references
to this Agreement as a whole and not to any particular provision of
this Agreement. The term “including” as used in this
Agreement is used to list items by way of example and shall not be
deemed to constitute a limitation of any term or provision
contained herein. As used in this Agreement, the singular or plural
number shall be deemed to include the other whenever the context so
requires. Section, paragraph, clause, Exhibit and Schedule
references contained in this Agreement are references to sections,
paragraphs, clauses, Exhibits and Schedules in or to this
Agreement, unless otherwise specified.
ARTICLE II
SERVICES TO BE PROVIDED BY THE SERVICE PROVIDER
2.1 Mortgage Default Support
Services . The Firm hereby engages the Service Provider, and
the Service Provider hereby agrees, to perform the Mortgage Default
Support Services that the Firm has determined or established as
necessary and essential for the benefit of, and on behalf of, its
Clients, including, but not limited to, those set forth on
Exhibit A .
2.2 Supervision of Service
Provider Personnel . The Parties intend that all
employees of the Service Provider who are providing Mortgage
Default Support Services pursuant to this Agreement, shall, to the
extent required by Applicable Law, work under the direct or
indirect supervision of an attorney employed by the Firm solely
with respect to any Legal Services. Such supervising attorney shall
have the ultimate authority as to all Legal Services regarding each
file, matter, or case for which the Service Provider is performing
the Mortgage Default Support Services. Notwithstanding the
foregoing, Service Provider shall be solely responsible for the
supervision of its employees as to employment-related
matters.
2.3 Standard Operating
Procedures . The Standard Operating Procedures shall be
initially formulated in compliance with all Applicable Laws. Until
the parties agree otherwise, the Standard Operating Procedures
shall be those utilized by the Firm in providing such services with
respect to its Client files prior to the Effective Time, which such
SOPs shall be communicated by the Firm to the Service Provider. The
Standard Operating Procedures shall be amended from time to time by
the Parties, in accordance with changes in Applicable Law, or for
the reasonable accommodation of reasonable requests by the Firm,
based upon the changing requirements of its Clients, Investors or
Agencies, any such amendment to be made upon the mutual agreement
of the Parties.
2.4 Exclusivity . During the
term of this Agreement (including any extensions or renewals
thereof), none of the Service Provider or any of its Affiliates
shall directly or indirectly provide Mortgage Default Support
Services to any other Person with respect to Legal Services related
to real estate located in the State of Minnesota. The foregoing
shall apply to all Persons performing Legal Services related to
real estate located in Minnesota whether or not such Person is
actually located in the State of Minnesota or simply providing
Legal Services in Minnesota. For clarity, during the term of this
Agreement (including any extensions or renewals thereof), the
foregoing shall prohibit the Service Provider and its Affiliates
from directly or indirectly licensing the Veritas Software to any
other Person with respect to Legal Services related to real estate
located in the State of Minnesota. Notwithstanding the foregoing,
Service Provider shall, with the prior written consent of the Firm
(which consent will not be unreasonably withheld or
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE
SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.
7
delayed), be entitled to provide Mortgage Default Support Services
to any Person who has sold to the Service Provider substantially
all of the assets used by such Person in the business of providing
Mortgage Default Support Services. The parties acknowledge that it
would be reasonable for the Firm to withhold its consent if the
provision of Mortgage Default Support Services by the Service
Provider could reasonably be expected to lead to the material
erosion of the Firm’s market share or reduce or eliminate a
material competitive advantage of the Firm.
2.5 Employees . The Firm shall
have the right to request that any employee of Service Provider
that is providing Mortgage Default Support Services to the Firm
hereunder be removed from providing such services and the Parties
shall cooperate in good faith to accommodate any such request as
soon as reasonably practicable. The Parties shall cooperate in good
faith as to the staffing by Service Provider of the personnel
providing Mortgage Default Support Services to the Firm, including,
without limitation, the removal, replacement or other change in
such personnel.
ARTICLE III
COMPENSATION AND REIMBURSEMENT
3.1 Fees and Reimbursement
.
(a) Initial Fee Schedule
. Subject to the terms and conditions of this
Section 3.1 , in consideration for the performance of
the Mortgage Default Support Services hereunder, the Service
Provider will be compensated on a per file fee basis for each file
on which the Firm utilizes the Service Provider for Services in
accordance with the following fee schedule (the “ Fee
Schedule ”):
| |
|
|
|
Type of File |
|
Per File Fee |
|
Foreclosure
|
|
$[***] |
|
Bankruptcy
|
|
$[***] |
|
Eviction
|
|
$[***] |
|
Reduced
Redemption
|
|
$[***] (for files opened prior to
January 1, 2008) |
|
|
|
$[***] (for files opened on or
after January 1, 2008) |
|
Torrens Action
|
|
$[***] |
|
Other
|
|
$[***] |
The Fee
Schedule set forth above shall be in effect for a period starting
on the Effective Date and ending on March 31, 2009. For the
avoidance of doubt, the Parties acknowledge that the per file fee
for each file will not be less than or exceed the specified per
file fee in effect for that particular type of file at the time the
Firm directs the Service Provider to perform Mortgage Default
Support Services for a particular file, without regard to the
amount of Mortgage Default Support Services required with respect
to such file.
(b) Amended Fee
Schedule.
(i) The
parties acknowledge and agree that, for each of the calendar years
2009, 2010, 2011 2012 and 2013 (each an “ Initial Year
”), on April 1 st of each Initial
Year, each per file fee set forth on the Fee Schedule shall be
increased to equal that amount (the “ New Fee
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE
SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.
8
Amount ”) equal to the product of (x) the per
file fee in effect during the immediately preceding Initial Year
and (y) the CPI Percentage. In no event shall the New Fee
Amount for any per file fee be less than the per file fee for the
immediately preceding year. For each Initial Year, the New Fee
Amount for each fee per file shall be submitted to the Firm in
writing by Service Provider on a date that is no later than thirty
(30) days after the publication of the Consumer Price Index
— All Urban Consumers, U.S. City Average by the BLS (as
defined below) for the applicable Measuring Month (as defined
below). The Firm acknowledges that it shall have no right to
contest the New Fee Amounts for any Initial Year. For purposes of
this Agreement, for any Initial Year, the “ CPI
Percentage ” shall equal the product of (x) 100% and
(y) a fraction, the numerator of which is the Consumer Price
Index — All Urban Consumers, U.S. City Average (the “
CPI ”) compiled and published by the Bureau of Labor
Statistics and the Department of Labor (the “ BLS
”) for the United States of America for the month of February
immediately preceding April 1 st of such Initial
Year (the “ Measuring Month ”) and the
denominator of which is the CPI for the month twelve
(12) months prior to such Measuring Month. In the event that
the CPI Percentage is less than 100% for any Initial Year, the
Parties agree that there shall be no increase or decrease to the
per file fee in effect for such Initial Year; provided,
however , if, for a given Initial Year, the CPI percentage
is calculated to be less than 100%, the CPI Percentage for the next
Initial Year shall be computed using the Measuring Month
twenty-four (24) months prior to such Measuring Month as the
denominator. For purposes of example only, to determine the CPI
Percentage for the adjustment to be made on April 1, 2009 the
CPI Percentage would equal the product of (x) 100% and
(y) a fraction, the numerator of which would equal the
Consumer Price Index — All Urban Consumers, U.S. City Average
published by the BLS for the month of February 2009 and the
denominator of which would be the Consumer Price Index — All
Urban Consumers, U.S. City Average published by the BLS for the
month of February 2008. In addition, for purposes of example only,
if the CPI Percentage is calculated to be less than 100% in 2009,
then the CPI Percentage for the adjustment to be made on
April 1, 2010 would be equal the product of (x) 100% and
(y) a fraction, the numerator of which would equal the
Consumer Price Index — All Urban Consumers, U.S. City Average
published by the BLS for the month of February 2010 and the
denominator of which would be the Consumer Price Index — All
Urban Consumers, U.S. City Average published by the BLS for the
month of February 2008.
(c) For each year during the
term of this Agreement after the Initial Years, on or before the
forty-fifth (45th) day prior to an Amended Fee Schedule Date,
the Service Provider may propose to the Firm an amended Fee
Schedule (an “ Amended Fee Schedule ”) that will
be in effect for the one-year period commencing with the applicable
Amended Fee Schedule Date. On or before the fifteenth (15th)
day after receiving the proposed Amended Fee Schedule, the Firm may
deliver to the Service Provider a notice of objection to the
proposed Amended Fee Schedule (an “ Objection Notice
”). If no such Objection Notice is timely delivered by the
Firm to the Service Provider, then that Amended Fee Schedule shall
be binding on the Parties for the one-year period commencing on the
applicable Amended Fee Schedule Date. If the Firm does timely
deliver to the Service Provider an Objection Notice, the Firm and
the Service Provider shall thereafter negotiate with each other in
good faith to agree upon an Amended Fee Schedule. If the Firm and
the Service Provider are unable to agree upon an Amended Fee
Schedule within thirty (30) days after an Objection Notice has
been given, then the existing Fee Schedule shall remain in effect
and the Service Provider shall thereafter have the option of
terminating this Agreement in its sole discretion in accordance
with Section 9.4 hereof.
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE
SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.
9
(d) Client Related Third
Party Expenses . Notwithstanding anything to the contrary
herein, the Firm agrees that it will pay all Client related third
party expenses incurred by the Service Provider as a part of the
performance of the Mortgage Default Support Services hereunder,
including, but not limited to, fees paid for (i) publication
and posting of legal notices; (ii) title insurance;
(iii) filing of deeds and other legal documents;
(iv) sheriff services; (v) packaging services; and
(vi) court costs.
3.2 Invoice and Payments
.
(a) Invoice . Within
fifteen (15) days following the end of each calendar month
during the term of this Agreement, and any extensions or renewals
thereof, the Service Provider shall submit an invoice to the Firm
(each a “ Monthly Invoice ”) indicating
(i) the number and types of files referred by the Firm to the
Service Provider for processing during the preceding month and
(ii) the total amount due to the Service Provider for such
files referred during the preceding month. The first such Monthly
Invoice shall be delivered on February 27, 2008 (the “
First Invoice ”) and for this Invoice only, the amount
will equal the product of: (A) [***]; (B) the number of
Foreclosure, Bankruptcy, Eviction, Proceeding Subsequent and
Reduced Redemption files referred to the Firm prior to the
Effective Date but after the date that is [***] days, [***] days,
[***] days, [***] days and [***] days, respectively, prior to the
Effective Date; and (C) the applicable per file fee identified
in the Fee Schedule. For purposes of calculating the First Invoice,
the parties hereby agree that the First Invoice shall estimate the
following number of Foreclosure, Bankruptcy, Eviction, Proceeding
Subsequent and Reduced Redemption files as having been referred to
the Firm prior to the Effective Date but after the dates specified
for each file type set out in the immediately preceding sentence,
as follows: [***] files, [***] files, [***] files, [***] files, and
[***] files, respectively. The amounts set forth in the immediately
preceding sentence shall be reflected in the First Invoice;
provided , however , within ninety (90) days
after the Effective Date, the Parties shall together agree on the
actual file counts involved. To the extent the Parties determine
that the actual file count is different than the amounts set forth
above, the Service Provider shall include an adjustment for such
difference in the first Monthly Invoice for which such information
is available. The second Monthly Invoice shall be delivered on or
before March 15, 2008 (the “ Second Invoice
”) and for this Invoice only, the amount will equal the
product of: (Y) the files created by the Firm for the period
subsequent to the Effective Date through and including
February 29, 2008 and (Z) the per file fee identified in
the Fee Schedule.
(b) Objection. The Firm
shall have the right to dispute, in good faith, any Invoice, in
part or in total. The Firm will promptly notify the Service
Provider of any dispute regarding any Invoice, and the Parties
agree to use their best efforts to promptly resolve any such
dispute. If the Parties are unable to reach a resolution, then the
Parties will choose a mutually acceptable independent accounting
firm to resolve such dispute. The decision of the independent
accounting firm shall be final as to all matters relating to such
dispute, and the Parties shall split all costs associated with the
engagement of the independent accounting firm equally. When
attempting to resolve any such dispute, the Parties agree to allow
the other Party and the independent accounting firm access to all
information relevant to such issue(s) in dispute, unless such
access would violate any other provision of this Agreement, the
attorney client privilege or any client secrets.
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE
SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.
10
(c) Payment . The Firm
shall pay each Invoice within fifteen (15) days after receipt
thereof; provided, however, that the Firm is under no obligation to
make any payments for any amounts in any Invoice that is subject to
a dispute as provided in Section 3.2(b) above, until
ten (10) days after such dispute is resolved.
3.3 Reasonable Value . The
Firm and the Service Provider acknowledge and agree that the Fee
Schedule has been, and any Amended Fee Schedule shall be,
negotiated at arm’s-length and represents the reasonable
value of the Mortgage Default Support Services furnished by the
Service Provider pursuant to this Agreement, considering the nature
and volume of the services required. Payment of the fees pursuant
to Section 3.2 hereof is not intended to be and shall
not be interpreted or applied as permitting the Service Provider to
share in the Firm’s fees for Legal Services performed by the
Firm on behalf of its Clients.
ARTICLE IV
AFFIRMATIVE COVENANTS OF THE FIRM
4.1 Exclusive Use of the Service
Provider for Mortgage Default Support Services . During the
term of this Agreement and any extensions or renewals thereof, the
Firm shall engage only the Service Provider to provide Mortgage
Default Support Services (or services similar to the Mortgage
Default Support Services) for the Firm or on behalf of a Client,
and shall not retain, hire, employ, use or engage any other Person
to provide such services.
4.2 Notification to and Consents
from Clients . In accordance with Applicable Law and any
Engagement Letter, the Firm shall notify and, where required by the
terms or conditions of any Engagement Letter, obtain the consent of
its existing Clients and any new Clients of the Firm’s
intention to use the Service Provider to provide Mortgage Default
Support Services.
4.3 Supervision of Service
Provider Employees . The Firm agrees to cause its attorneys to
provide supervision (as to Legal Services only) of the employees of
the Service Provider that are providing Mortgage Default Support
Services in compliance with Applicable Law.
4.4 Support of the Service
Provider . The Firm shall permit employees of the Service
Provider to have access to, and the authorized use of, all software
and assets owned or licensed by the Firm needed by the Service
Provider to operate the Business and to adequately and efficiently
provide the Mortgage Default Support Services to the Firm and its
Clients; provided , however , nothing in this
Section 4.4 shall be deemed to create any affirmative
obligation on the Firm’s part to purchase or acquire any such
software or assets; provided , further , in
connection with the acquisition or use by the Service Provider of
any such software or asset, the Parties shall work together in good
faith to determine the Service Provider’s allocable share, if
any, of such expense. Notwithstanding the foregoing, to the extent
the Firm fails to provide the Service Provider with the authorized
use of all software and assets owned or licensed by the Firm
reasonably needed by the Service Provider to operate the Business
and to adequately and efficiently provide the Mortgage Default
Support Services, the Service Provider shall not be required to
provide Mortgage Default Support Services with respect to any file
that requires such authorized use or access. Except as otherwise
agreed to by the Parties in writing, all office furniture, office
equipment (including, but not limited to, telephones, computers and
copiers),
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE
SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.
11
office
supplies and all other normal and customary office products
associated with or required to perform the Mortgage Default Support
Services contemplated by this Agreement (collectively, the “
Office Products ”) shall be the responsibility of the
Service Provider. The Firm shall have no responsibility for any
Employee Expenses. The Firm shall provide to the Service Provider
in a timely manner file count reports in a form consistent with,
and using the same methodology as, the file count reports generated
by the Firm for its own account prior to the date of this
Agreement.
4.5 Compliance With Law; Adherence
to Professional Standards .
(a) Professional Ethical
Requirements . From and after the Effective Date, the Firm
shall fully inform the Service Provider of all professional ethical
responsibilities relating to the Practice of Law (and any changes
thereto), as the same may be applicable to any Mortgage Default
Support Services to be performed by the Service Provider under this
Agreement. The Parties will cooperate to protect and maintain the
confidences and secrets of Clients to the full extent required by
any professional ethics rules applicable to the Practice of Law,
however, each Party shall be responsible for any breaches by its
employees of his/her obligation to protect and maintain the
confidences and secrets of any Clients.
(b) Compliance with
Applicable Laws . The Firm shall perform Legal Services
diligently, conscientiously and in a manner consistent with
professional and ethical standards and in compliance with all
Applicable Laws, including laws and professional ethical rules and
requirements applying to the legal profession, and requirements of
the Agencies. It is expressly acknowledged by the Parties that all
Legal Services provided by the Firm shall be performed solely by
licensed attorneys or under the direct supervision and control of
licensed attorneys. Each of the attorneys working for the Firm
shall be licensed to practice law in the State of Minnesota, and
any other state or federal district in
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