MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") is made and entered into
as of August ___, 2001 by and between Delta Funding Residual Management, Inc. a
Delaware corporation ("DFRM") and Delta Funding Residual Exchange Company, LLC,
a Delaware limited liability company (the "Company"), with reference to the
following facts:
A. Delta Financial Corporation ("DFC") and DFRM, together with the
former holders of DFC's Senior Notes due 2004 and Senior Secured Notes due 2004
who tendered such notes in the Company's exchange offer therefore, are parties
to that certain Amended and Restated Limited Liability Company Operating
Agreement of the Company, dates as of the date hereof (the "Operating
Agreement").
B. Pursuant to the Operating Agreement, DFRM has become the Managing
Member (as such term is defined in the Operating Agreement) of the Company.
C. Subject to the terms of this Agreement, the Company desires to
engage DFRM to become the Managing Member of the Company and manage the assets
of the Company as described in the Operating Agreement, and DFRM desires to
become the Managing Member of the Company and manage such assets.
NOW THEREFORE, in consideration of the above stated premises, the
mutual covenants and agreements contained herein and other valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, DFRM
and the Company agree as follows:
1. APPOINTMENT TERM. The Company hereby engages DFRM as the Managing
Member of the Company during the "Term" (as defined below and subject to early
termination as hereinafter provided) in accordance with the terms and conditions
set forth in this Agreement, and DFRM hereby accept such engagement. The initial
term of this Agreement (the "Initial Term") shall commence on the date hereof
and shall continue thereafter through and including August __, 2004. After the
expiration of the Initial Term, this Agreement shall automatically renew and
continue in full force and effect for successive three (3) year periods (the
"Successive Terms"); provided, however, that this Agreement shall terminate
automatically if DFC shall cease to [be a member of the Company] [own a
non-voting membership interest in DFRM]. The Initial Term and all Successive
Terms are hereinafter referred to collectively as the "Term."
2. POWERS OF MANAGEMENT.
2.1 Grant and Delegation. The Company hereby grants and delegates to
DFRM the authority, powers and duties that are granted to or to be performed by
the Managing Member of the Company pursuant to the Operating Agreement as now or
hereafter in effect. Without limiting the generality of the foregoing, the
Company hereby grants and delegates to DFRM the following authority, powers and
duties, subject, in each case, to any limitations contained in the Operating
Agreement:
(a) Distributions; Expenses. To make all of the distributions
set forth in the Operating Agreement, and to pay all expenses of the Company;
(b) Professional Advisors. To engage, and work with, legal and
accounting advisors to make all tax filings for the Company, including those
required to be made by it as a holder of any excess cashflow certificates;
provided, however, that in no event shall either party have any obligation for
the payment of income and/or estate or other similar taxes of the other party;
(c) Administration. To handle all administrative functions,
including processing of information and requests and handling of all inquiries
from related parties;
(d) Portfolio Retention. To manage the assets of the Company,
including the mortgage loans in the securitization trusts underlying the excess
cashflow certificates;
(e) Loss Mitigation. To handle all loss mitigation efforts
with respect to the mortgage loans in the securitization trusts underlying the
excess cashflow certificates;
(f) Employees. To provide personnel, in such reasonable
numbers as shall be required for the management of the Company's assets and to
supervise, direct and discharge all such personnel; provided, however, that all
such personnel shall be deemed the employees of DFRM and not of the Company and
that DFRM shall have the right to establish all compensation and other policies
with respect to such employees, and to modify the same from time to time;
(g) Licenses and Permits. To acquire and keep in force all
licenses and permits required for the management of the assets; provided,
however, that the Company shall take such actions as DFRM may reasonably request
for the purpose of assisting DFRM in acquiring and keeping in force all such
licenses and permits;
(h) Insurance. To obtain such insurance as may be reasonably
agreed upon by the Company and DFRM from time to time providing such coverage as
is then customary for companies with assets such as the Company's assets and
then available to DFRM and the Company on a commercially reasonable basis, and
to cooperate with the insurance carriers under such policies to make, administer
and settle any claims thereunder. At DFRM's option, all such insurance shall
either be obtained in the name of the Company with DFRM named as an additional
insured or shall be obtained in the name of DFRM with the Company named as an
additional insured. Without limiting the generality of the foregoing, DFRM shall
obtain (in its own name) worker's compensation coverage required by applicable
law;
(i) Payment of Operating Expenses. To incur and pay or cause
to be paid, out of the "Bank Account" (as defined below), all operating expenses
of the Company. All such expenses incurred by DFRM, including, without
limitation, (i) the direct cost of labor (including, without limitation, the
prorated cost of fringe benefits (including health, disability, pension plan and
401k plan costs and contributions), withholdings and payroll taxes, in
connection with such labor) employed by DFRM; and (ii) the cost of the items and
services described in subparts (a) through (h) above shall be charged as
expenses of the Company and shall be paid out of the Bank Account.
Notwithstanding the foregoing, the following expenses incurred by DFRM under
this Agreement or otherwise shall not be paid out of the Bank Account,
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they being deemed expenses not properly allocable to the Company, but rather
deemed expenses of DFRM: expenses related to any other business in which DFRM
shall elect to engage (other than the business of managing the Company's
assets).
2.2 Reservation. All powers not expressly granted to DFRM by this
Agreement are reserved by the Company.
3. DUTIES OF DFRM.
3.1 Management. DFRM agrees to manage the Company's assets in
accordance with the terms of this Agreement, including, without limitation,
Section 2.1 using no less than the same degree of care and skill as DFRM would
use if it owned such assets.
3.2 Accounting. DFRM shall maintain detailed books of account at its
offices in _______________, New York, with respect to the operations of the
Company based upon United States generally accepted accounting principles,
consistently applied. Said books of account shall be available to the Company
for review at any time during all normal ;business hours upon reasonable notice.
Such books of account shall be maintained for at least ten (10) years after the
end of the period to which they relate; provided, however, that if DFRM at any
time desires to destroy or otherwise dispose of any such books of account, DFRM
shall provide the Company with at least sixty (60) days written notice of such
intention and the Company shall have the right to cause all such books of
account to be delivered to the Company by delivering a written request therefore
to DFRM within fifty-five (55) days after receipt of DFRM's notice. DFRM shall
timely furnish the Company with such financial information and reports as the
Company may be required to deliver to its members or any third part from time to
time pursuant to the terms of the Operating Agreement, applicable law or
otherwise.
3.3 Bank Account.
(a) DFRM shall cause a bank account (the "Bank Account") to be
opened in the Company's name at the branch of ________________ located at
_____________, _______________, New York [Zip Code] (or at such other bank as
may be agreed upon from time to time by DFRM and the Company) separately and
apart from all other bank accounts of DFRM and the Company for the sole purpose
of handling transactions under this Agreement. All receipts from the assets of
the Company shall be promptly deposited in the Bank Account, and all payments of
costs, expenses and charges to be made by DFRM under the Operating Agreement or
this Agreement, shall be paid out of the Bank Account in accordance with the
distribution provisions in the Operating Agreement;
(b) All withdrawals from the Bank Account shall be made by
checks signed, or by wire transfers authorized, by the authorized signatories of
DFFRM.
4. TERMINATION.
4.1 Default by DFRM. In the event of a material breach of the
provisions of the Operating Agreement or this Agreement by DFRM (including,
without limitation, a material breach of DFRM's obligations under Section 2.1 of
this Agreement), the Company shall have the right to give to DFRM thirty (30)
days' written notice to cure such breach, and in the event of the failure of
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DFRM to do so within such period, the Company shall have the right to thereafter
terminate this Agreement upon an additional thirty (30) days' written notice of
such election to terminate; provided, that if the breach is of such nature that
it cannot be cured within such thirty (30) day period, this Agreement shall not
be terminable on account of such breach so long as, within such thirty (30) day
period, DFRM shall have commenced to cure such breach and shall thereafter
diligently prosecute the cure thereof.
4.2 Delivery of Records; Final Accounting. Upon expiration of the Term
or termination of this Agreement for any reason, DFRM shall (i) deliver to the
Company all books, records and the like maintained in connection with DFRM's
services under this Agreement, including, without limitation, the management of
the Company's assets (ii) render a final accounting to the Company within ninety
(90) days after termination, reflecting the results of operations of the
Company's assets from the most recent reporting date to the date of termination;
and (iii) deliver to the Company the balance of the Bank Account.
4.3 Right of Termination on Other Remedies. The right to terminate
provided under this Section 4 shall be in addition to, and not in lieu of, any
other rights or remedies which the parties may have under this Agreement, at law
or in equity, including, without limitation, the right to receive specific
performance and/or to obtain damages.
5. COMPENSATION TO DFRM.
5.1 Management Fee. DFRM shall not be entitled to any management or
other fee for the performances of its services hereunder; provided, however,
that DFRM shall be entitled to receive distributions as set forth in, and at the
times required by, the Operating Agreement.
6. GENERAL PROVISIONS.
6.1 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all or which, taken together, shall
constitute one and the same instrument.
6.2 Entire Agreement. This Agreement and the Operating Agreement
contain the entire agreement between the parties respecting the subject matter
of this Agreement and supersede all prior and contemporaneous understandings and
agreements, whether oral or in writing, between the parties respecting the
subject matter of this Agreement. In the event of any conflict between the terms
of this Agreement and the terms of the Operating Agreement, the terms of the
Operating Agreement shall control.
6.3 Relationship of Parties. The parties agree that their relationship
is that of owner and manager, and that nothing contained herein shall constitute
either party as employee of the other for any purpose whatsoever, nor shall this
Agreement be deemed to create any from of joint venture or partnership between
the parties hereto, nor is either party granted any right or authority to assume
or create any obligation or responsibility on behalf of the other party, except
as otherwise provided herein, in the Operating Agreement or under the Delaware
Limited Liability Company Act; nor shall either party be in any way liable to
third parties for any debt of the other.
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6.4 Notices. In the event either party desires or is required to give
notice to the other party in connection with this Agreement, the same shall be
in writing and shall be delivered in person or by recognized overnight air
courier service, or deposited with the United States Postal Service, postage
prepaid, or certified mail, return receipt requested , addressed to Buyer or
Seller at the appropriate address as set forth below:
If to DFRM: Delta Funding Residual Management, LLC
[Address]
[Address]
[City], New York [Zip]
Attention: Chief Executive Officer
If to the Company: Delta Funding Residual Exchange Company, LLC
[Address]
[Address]
[City], New York [Zip]
Attention: President
Any such notice shall be deemed to have been given on the date so delivered, if
delivered personally or by overnight air courier service, or, if mailed, on the
date shown on the return receipt as the date of delivery or the date on which
the post office certified that it was unable to deliver, whichever is
applicable. Either party may, by written notice to the other party, specify a
different address to which notices shall be given, by sending notice thereof in
the manner set forth above.
6.5 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law of such state.
6.6 Drafting. This Agreement has been jointly negotiated and drafted,
and shall be construed as a whole according to its fair meaning and not strictly
for or against any party.
6.7 Further Assurances. Each of the parties hereto agrees that it will,
forthwith upon any request by the other party, cooperate fully in the
preparation, execution, acknowledgment, delivery and recording of any
agreements, instruments, memoranda or documents reflecting or in furtherance of
any of the transactions contemplated by this Agreement.
6.8 Waiver. No action taken pursuant to this Agreement shall be deemed
to constitute a waiver by the party taking such action of compliance with any
representations, warranties, covenants or agreements contained in this
Agreement. The waiver by any part of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach.
6.9 Third Parties. Nothing in this Agreement, express or implied, shall
or is intended to confer upon any person other than the parties hereto, or their
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respective successors or assigns, any rights or remedies of any nature or kind
whatsoever under or by reason of this Agreement.
6.10 Assignment. Subject to the restrictions on assignment set forth
herein, this Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. DFRM may not assign
or otherwise transfer all or any of its rights, obligations or interests under
this Agreement without the prior written consent of the Company. No such
assignment shall be effective until an executed written assumption by such
assignees of DFRM's obligations under this Agreement is delivered to the Company
and no such assignment shall relieve DFRM of its obligations under this
Agreement.
6.11 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRAIL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, BETWEEN DFRM AND THE COMPANY ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR THE OPERATING AGREEMENT OR THE
TRANSACTIONS RELATED THERETO.
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IN WITHESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
DELTA FUNDING RESIDUAL MANAGEMENT, INC.
By:
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Its:
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DELTA FUNDING RESIDUAL EXCHANGE COMPANY, LLC
By:
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Its:
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