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EXHIBIT 10.6
SAMPLE NET BRANCH AGREEMENT
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DISTRICT BRANCH MANAGER AGREEMENT
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THIS AGREEMENT is made and entered into as the _____ day of______________
1998 by and between United National Mortgage, LLC, hereinafter referred to as
"United" and ________________________________________ hereinafter referred to as
"District Branch Manager".
Whereas, United is a Licensed Mortgage Banker doing business in the State
of ________________________________ and
Whereas, United is desirous of establishing a Branch Office location for
the origination and processing of such mortgages at:
___________________________________________________; and
Whereas, District Branch Manager has demonstrated to United the
experience, knowledge, and skills necessary to manage the origination and
processing of mortgage loans; and
Whereas, both District Branch Manager and United are desirous of entering
into the Agreement to provide for their mutual understandings and for the scope
of their association,
NOW THEREFORE, in consideration of the foregoing and their mutual
covenants and Agreement herein contained, IT IS MUTUALLY AGREED AS FOLLOWS:
1. TERM OF THIS AGREEMENT:
The term of this agreement, after an initial three (3) month probation
period, will be perpetual until termination by either District Branch
Manager or by United in accordance with the provisions hereinafter stated.
2. BRANCH OFFICE DUTIES:
A. The District Branch Manager will operate the United Branch office at
___________________________in accordance with the rules and
regulations of the State of__________________________ Banking
Department.
B. District Branch Manager will be responsible for the day-to-day
management of the branch office. However. United hires and
terminates all employees. The Branch Manager will forward to United
the appropriate personnel forms for any prospective employees. After
appropriate review, United will determine the appropriate personnel
action and inform the Branch.
C. District Branch Manager shall be responsible for the development of
originations and processing. All promotional materials and
advertising must be in compliance with State and Federal Law and
must be approved by the home office prior to publication. All
Federal and State mandated disclosures to Consumers are to be
strictly complied with.
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D. District Branch Manager is to keep a log in accordance with the
State Banking requirements for all applications accepted for
processing. All monies received in accordance with said applications
from applicants shall be forwarded to the home office, including,
but not limited to: Application Fees, Appraisal Fees, Credit
Reporting Fees, Points, Origination Fees, Warehouse Fees and/or
Commitment Fees. All receipts and disbursements shall flow through
the home office.
E. District Branch Manager is expected to devote his time and effort to
furthering, promoting, and developing the business activities of
United and without limiting the foregoing, District Branch Manager
agrees that during his employment period as District Branch Manager,
and for a period of 120 days after said employment period he will
not directly or indirectly engage in any of the following
activities:
1. Solicit or accept consumers on behalf of any other business
which is in competition with United.
2. Solicit any United employee or attempt to entice any United
employee on behalf of any other business which is in
competition with United, or accept any United employee to work
for any other business which is in competition with United.
F. Under no circumstances shall Branch Manager or anyone under the
direction of Branch Manager issue pre-approval letters or commitment
letters on behalf of United. All underwriting decisions are to be
made by authorized personnel of United only.
G. Under no circumstances shall Branch Manager or anyone under the
direction of Branch Manager enter into any agreement on behalf of
United which obligates United in any way to pay for leases,
furniture) equipment, supplies and the like. See The Management
Company, Section 10.
3. COMPENSATION
A. Compensation to the management company and to personnel will be made
every two weeks for all commissions and compensation earned less all
expenses paid by United on behalf of the branch and all corporate
expenses charged to the branch, if any until five (5) business days
prior to pay day. Commissions and compensation will be deemed to be
earned only if the funds on closed loans have been collected from
the secondary market and have cleared United's bank by five (5)
business days prior to the pay day.
B. Definition of net profit is herein defined as gross income of the
branch minus expenses of the branch. Such expenses shall be in
accordance with Generally Accepted Accounting Principles.
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C. Definition of gross income shall be as follows:
Gross income is defined as 60% of the front points charged by the
branch and received by United plus 60% of the yield spread premium
and service release premium based on investor flow pricing actually
received by United reduced by the fees charged by United to the
Branch listed on Schedule A attached. The fees on Schedule A are
subject change with 30 days notice to the branch.
Notwithstanding anything to the contrary in this contract, United
imposes minimum total income on all loans (before Branch/United
split). Such minimums are included on Schedule A and are subject to
change with 30 days notice to the branch.
D. In the event that United services a loan directly or indirectly, the
branch compensation shall include 10% of the service fee.
E. The branch hereby certifies and warrants that it has the capability
and competence to fully process loans to standards generally
accepted in the industry. If such standards are not met, United, at
its sole discretion, has the right to terminate this contract or to
charge a reasonable fee to process the loans through the home
office. Processing fees are on Schedule A.
F. In the event that United is required by an investor to refund all or
a portion of the premium earned on a loan, the branch that
originated the loan shall refund its pro-rata portion of such refund
to United within 10 days of being notified of the refund. United
shall have the right to offset the branch's pro-rata portion of such
refund against any amounts due the branch.
G. United reserves the right to reject loans in its sole discretion.
4. PROCEDURES FOR RECEIVING COMPENSATION
A. Compensation for each pay period will be calculated as provided in
paragraph 3 and as agreed to in this paragraph 4. On the day that
compensation is being calculated, the branch manager will be called
by a compensation coordinator from United. A compensation report
will be available that time. An agreement will be reached between
the branch manager and the compensation coordinator as to the total
amount due to the branch. The branch manager will inform the
compensation coordinator as to the compensation due each employee of
the branch. To the extent available in accordance with the
calculations spelled out in paragraph 3, compensation will then be
paid in the following order:
a. Reimbursement to United for any advances made and still
outstanding and any expenses including payroll costs incurred
by United on behalf of the Branch. Such expenses shall include
all direct expenses of a particular loan including, but not
limited to, excess investor fees and warehouse fees, if any.
United has the right to substitute a flat administrative fee
in lieu of direct loan expenses.
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b. The branch payroll other than the branch manager.
c. The actual overhead expenses certified to the compensation
coordinator by the Management Company.
d. The balance to be paid as wages to the branch manager.
B. In the event there are insufficient earnings by the branch to cover
the payroll or other obligations, special arrangements must be made
with United to cover such costs and United has the right to
terminate this agreement immediately if arrangements cannot be made
or are not approved by United.
5. SERVICING RIGHTS, SERVICING COMPENSATION
All servicing rights are the sole and exclusive property of United. United
reserves the right to sell, hypothecate or transfer servicing at any time.
In the event that United sells any servicing upon which District Branch
Manager has been receiving an excess servicing fee bonus, United will
distribute to District Branch Manager his share of the net servicing sale
proceeds.
6. PUBLIC OFFERING
At the present time, United is a privately owned limited liability
company. United plans to develop a program under which qualified branch
managers will be entitled to receive United stock or be offered stock
options, or if United issues different classes of stock, then said branch
managers shall be entitled to receive such class or classes of stock or
options as United shall then determine. Branch manager acknowledges that
some or all of such stock or options will be restricted in nature and will
be subject to the term or a shareholder agreement that all shareholders of
United will be required to execute. If United makes a public offering of
its stock, the stock or options offered or issued to branch managers may
or may not be available for sale in the public markets. Any offering of
securities to branch managers will be subject to such terms and conditions
as United shall then develop, including any requirements set forth by
United's underwriter or other advisors.
7. SALE
If, instead of entering into a public offering, United should decide to
sell its assets to another company, the Branch Managers shall be
compensated for their contributions by applying a formula to be determined
by United.
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8. UNDERWRITING AUTHORITY
United reserves to itself all underwriting authority.
9. LOCK-IN AGREEMENTS
All Lock-In Agreements must be signed by the District Branch Manager and
countersigned by a corporate officer of United. Each Lock-In Agreement
must be faxed immediately to the home office for signature with a
recommendation of risk by District Branch Manager. Lock-in checks are to
be forwarded to the home office upon receipt, but no later than two (2)
business days after Lock-In.
10. THE MANAGEMENT COMPANY
A. The Branch Manager shall use a separate entity for management and
overhead of the branch.
B. All leased and utility agreements shall be between the management
company corporate entity and the vendor. The Management Company will
provide to United copies of all leases. Every half-month at the time
compensation for the branch is calculated, the management company
shall provide a list of all expenses incurred in the previous half
month including rent, utilities, local advertisements, insurance
required by United and all other expenses of maintaining the branch
for the previous half month. The Management Company will make all
payments to the vendors and will be reimbursed in a manner as stated
in paragraph 3 of this agreement.
C. The Management Company will keep adequate business records, which
will be available to United for inspection during normal business
hours upon reasonable notice. The Management Company will supply
united periodic reports required by United. The Management Company
is required to conduct its business in an efficient manner. All
bills are to be paid promptly and the branch will comply with
banking department regulations.
D. The Management Company will be required to keep certain levels of
insurance in force as agreed between the parties. In some cases
group insurance will be available through United at a reduced cost
and United will xxxx each management company for its pro-rate share
of such insurance. United is covered by blanket errors and omissions
insurance policy and fidelity bond. Each branch will be required to
pay its pro-rata portion as determined by United.
E. All legal obligations such as leases and utility bills shall be in
the name of the management entity. United will assume no
responsibility for management company obligations and will not
co-sign any legal documents. All such documents must be submitted to
United for review.
F. All fees collected by the branch on behalf of United must be
immediately forwarded to United, or deposited in United's local
account.
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G. United must approve in wilting all fees, including but not limited
to application fees and points charged by the branch.
H. United reserves the right to alter any arrangements herein to comply
with state banking law and regulations. Any such changes will be
presented to the branch and the branch will be required to conform
to such law or regulations as interpreted by United's counsel.
I. The Management Company will be required to purchase or lease
adequate equipment and computer software as required by United to
fulfill management company's responsibilities under this agreement.
11. TERMINATION
A. Without Cause. Either party may terminate this Agreement upon 30
days advance written notice to the other party. Upon termination of
this Agreement, all loan applications originated by the branch that
are in process at the time of the termination shall remain the
property of United and will continue to be processed by the branch
for the benefit of United. Upon closing of such loans, the branch
will receive compensation for such loans in conformity with this
Agreement's compensation clause.
B. For Cause. United may immediately terminate this Agreement for cause
without notice. In such case, the District Branch Manager shall
forfeit all rights to continue processing pending loan applications
or receive compensation on such loan applications.
Cause shall be limited to the instances wherein:
A. District Branch Manager has participated in the fraudulent
origination of branch office loans.
B. District Branch Manager has embezzled United funds or engaged in
other criminal activity affecting United or failed to remit funds to
United on a timely basis.
C. Branch Office shall incur cash flow losses amounting to $1,000.00.
D. District Branch Manager has revealed contents of this Agreement
without United's permission.
E. District Branch Manager fails to comply with specific instruction
from the management of and/or specific procedures of United
concerning conduct of business or fails to comply with requirements
of federal and state regulations in conducting business, or engages
in conduct which United determines, in its sole discretion, to be
negligent, improper or deleterious to the reputation of United.
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F. District Branch fails to originate originate _____________________
/month by _____________, or fails to originate ________________ for
_________ consecutive months.
G. District Branch fails to maintain adequate records as required by
United; fails to provide periodic reports as required by United;
fails to allow access to United to inspect the records of the
branch.
H. District Branch deals with any lending source other than United
without express written consent of United.
I. District Branch Manager fails to devote _________ hours/week in
pursuit of the business of the company or engages in any activities
inconsistent with the objectives and business of the company.
J. District Branch Manager has supplied false information to United in
this agreement or any written communications with United. United
will have sole discretion to determine whether such information is
false and will not be required in any court to prove that United
relied on such false information prior to terminating this
agreement.
In the event of cancellation for cause, all rights to continued
compensation from United shall cease immediately.
12. REPRESENTATIONS AND WARRANTIES OF THE DISTRICT BRANCH MANAGER
The District Branch Manager represents and warrants to the company that
(i) he is under no contractual or other restriction or obligation which is
inconsistent with the execution of this agreement, the performance of his
duties hereunder, or the other rights of the company hereunder or, if
presently operating as a licensed or registered mortgage broker he shall
place such license in suspense to enable him to comply with this
provision, and (ii) he is under no physical or mental disability which
would hinder the performance of his duties under this agreement, (iii) he
has been originating mortgage loans for years, (iv) he is familiar with
FNMA and FHLMC residential mortgage underwriting guidelines, (v) he has
been operating for __________ years as alicensed/registered mortgage
broker by the name of______________________________ in the state of
_______; annual closed loans for the past three (3) years, have averaged
______________/year, there are no complaints currently pending with the
Banking Department against this company, nor have there been any
complaints filed against him during the past three (3) years, nor
judgements recorded against him (either in the form in which he is now
conducting business or any predecessor company) during the previous three
(3) year period.
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13. DEATH
If the District Branch Manager dies during the employment term, the
District Branch Manager's estate shall be paid any sums earned pursuant to
paragraph 3 above through the date of his death, plus servicing fees
earned pursuant thereto for a period of 12 months.
14. DISABILITY
In the event the District Branch Manager during the employment term shall
become so physically or mentally disabled that he is not able to fully
discharge his duties under this agreement for a period of thirty (30)
continuous days or 30 days in any 45-day period (the existence of such a
disability to be determined by a qualified physician selected by United),
United shall have the right to terminate the District Branch Manager's
employment under this section 12, the District Branch Manager (or his
legal representative, as the case may be) shall be paid sums earned
pursuant to paragraph 3 above through the disability date, plus servicing
fees earned pursuant thereto for a period of 12 months.
15. CONFIDENTIAL INFORMATION
The District Branch Manager recognizes and acknowledges that there may be
made available to him confidential information relating to the company and
its affiliates, including but not limited to, customer lists, computer
programs and procedures ("confidential information"). The District Branch
Manager further recognizes and acknowledges that this confidential
information as it may exist from time to time is a valuable, special and
unique asset of the company's business. The District Branch Manager will
not, during or after the employment term, disclose any confidential
information to any person, firm, corporation, association or other entity
for any reason or purpose whatsoever. In the event of a breach or
threatened breach by the District Branch Manager of the provisions of this
section 14, the company shall be entitled to monetary damages and an
injunction restraining him from so disclosing any such confidential
information, in addition to any other remedies available in law or equity.
16. MEDICAL EXAMINATION
If requested by the company, the District Branch Manager shall submit to
such physical examinations and otherwise take such actions and execute and
deliver such documents as may be reasonably necessary to enable the
company, at its expense and for its own benefit, to verify physical
condition, or otherwise.
17. NOTICES
Any notice given pursuant to or in connection with this agreement shall be
sufficient if in writing and sent by Registered or Certified Mail, Return
Receipt Requested, to his residence in the case of the District Branch
Manager, or, in the case of the company, to its main offices.
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18. ASSIGNMENT
The District Branch Manager recognizes and acknowledges that the services
to be rendered by him hereunder are unique and personal. Accordingly, the
District Branch Manager may not assign any of his rights or delegate any
of his responsibility under this agreement. The rights and obligations of
the company under this agreement shall inure to the benefit of and shall
be binding upon its successors and assigns.
19. LIMITATION OF SCOPE
If any portion or provision of this agreement shall be deemed to be
invalid or unenforceable by reason of its being over broad in scope of
time or geographic applicability, such portion shall be deemed
automatically revised to such scope or geographic application, as the case
may be, as will render such portion or provision of this agreement valid
and enforceable under the laws in effect at that time.
20. SEVERABILITY
Subject to the provisions of section 18 hereof, in the event any provision
of this agreement or any portion thereof shall be deemed invalid or
unenforceable for any reason, that portion or provision shall be deemed
excised from its agreement and this agreement shall be governed,
interpreted and enforced in all respects as if such invalid or
unenforceable provision were originally omitted from this agreement.
21. WAIVER
The waiver of any party of a breach of any provision of this agreement
shall not operate as or be construed as a waiver of any subsequent breach.
22. GOVERNING LAW
This agreement, and the rights and obligations of the parties hereto,
shall be construed in accordance with and be governed by the laws of the
State of New York, without giving effect to any conflict of laws or choice
of law rules.
23. VENUE
The Venue for any legal proceeding will be where the main office of United
National Mortgage, LLC is located at the time of the breach of contract or
other court action instituted.
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24. COSTS OF SUIT
The Costs of any court or arbitrators action, including legal fees, costs,
disbursements and interests payable at a rate of 1.5% per annum or 18% per
year, payable from the date of award or judgement, will be paid by the
losing party in an action as is determined by the court or the arbitrator
after the cases termination.
25. STATUTE OF LIMITATIONS
The statute of limitations to bring any legal action under this contract
will be one (1) year from the date the action accrued.
26. ARBITRATION
Any controversy or claim arising out of' or relating to this contract, or
the breach thereof, shall be settled by arbitration in accordance with the
Rules of the American Arbitration Association, and judgement upon the
award rendered by the Arbitrator(s) may be entered in any New York court
having jurisdiction thereof or a court where the headquarters of United
National Mortgage, LLC exists.
27. COUNTERPARTS
This agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed to be an original, and it shall not be
necessary in making proof of this agreement to produce or account for more
than one such counterpart.
28. HEADINGS
The descriptive headings used in this agreement are for purposes of
convenience only and do not constitute a part of this agreement.
29. GENDER
The use of words such as "his" or "he" or any other similar references are
used for purposes of simplifying the writing, and are intended to apply
equally for female District Branch Managers.
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30. ENTIRE AGREEMENT
Each party hereto acknowledges that he has read this agreement and the
management company and compensation addendum's, which are made a part
hereof, understands it, and agrees to be bound by its terms, and further
acknowledges and agrees that it is the complete and exclusive statement of
the agreement and understanding of the parties regarding the subject
matter hereof, which supersedes and merges all prior proposals, agreements
and understandings, oral and written, relating to the subject matter
hereof. In the event of any conflict between this agreement and the terms
of any of employers' employment policies, manuals, or other statements
regarding employment generally, now existing or hereafter promulgated, the
terms of this agreement shall control. This agreement may not be changed
orally, but only by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification, extension or
discharge is sought.
In witness whereof, the parties have executed this agreement as of the date
first above written.
UNITED NATIONAL MORTGAGE, LLC
By: By:
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SCHEDULE A
ADDENDUM TO CONTRACT
FEES CHARGED TO BRANCH AND MINIMUM GROSS
INCOME
The following are as of July 28, 1999 and subject to change with 30 days notice
to the Branch.
Processing Fee Loans that Close $250.00
(charged on loans that are processed
by United and not processes, or
inadequately processed by the Branch)
Loans that do not Close $125.00
Minimum Total Income on Loans before Branch/United split
Conforming 1 1/2 points
Non-Conforming and Government 3 points
08/99
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