GENERAL MANAGEMENT AGREEMENT
CONTENTS
CLAUSE
1. Introduction
2. Contract for Services
3. Term of Agreement
4. Payment to Contractor
5. Closing and Escrow Fees
6. Custom Servicing Agreement
7. Contractor's Duties
8. Office Space and Administrative Support
9. Reimbursement of Expenses
10. Termination of Agreement on Sale or Termination of Company's
Business
11. Arbitration of Controversies
12. Waiver of Breach of Agreement
13. Company May Not Assign Agreement
14. Marketing Agreement
15. Entire Agreement
1. Introduction. This agreement is dated July 15, 1997, between
RMX REIT, INC., ("Company"), with principal offices at 000 Xxxx
Xxxxxx Xxxxxx #000, Xxxxxxx, Xxxxxxxxxx, 00000 and CLS Financial
Services, Inc. ("Contractor"), with principal offices at 0000
000xx Xxxxxx XX, Xxxxx #000, in Xxxxxxxx, Xxxxxxxxxx, 00000, and
intended to be effective by the parties on July 15, 1997,
provided this agreement is ratified and adopted by resolution by
the Board of Directors at a regularly scheduled meeting.
2. Contract for Services. Company contracts for services and
overhead expenses with Contractor, subject to and in accordance
with the terms and conditions of this agreement.
3. Term of Agreement. This management contract will begin on
June 19, 1997 and end on December 31, 1998. Company has the
right to contract for an additional term of one (1) year, on
written notice to Contractor given not less than thirty (30)
days prior to the end of the term.
4. Payment to Contractor. Company will pay Contractor an annual
fee to manage the operations and cover the overhead costs of the
Company. This annual fee will be based on 2% of the total
balance of all loans, contracts and deposits outstanding and
payable on a monthly basis not later than the 5th day of the
following month at the rate of 1/12 of 2% of the total balance
of the loans, contracts and deposits outstanding at the end of
each month. (For example, assuming a balance of $500,000.00 in
loans and contracts on January 31, 1998, the yearly expense for
the management contract of the Company would be $10,000.00
(500,000 x .02) and the monthly fee would be $833.33 for the
month of January in 1998, which will be due and payable on the
5th day of the subsequent month. In this example, $833.33 would
be due on February 5, 1998, for services rendered in January of
1998.)
5. Closing and Escrow Fees. Contractor or the closing agent, is
paid a closing fee by the borrower to close the loan. Loan
closing costs are not part of the management fee. During the
term of the loan, the Contractor through its affiliate, Puget
Sound Real Estate Services Group, Inc. ("PSRESG"), administers
the funds and services the loan in the escrow account over its
term. In the event a collection action becomes necessary,
Contractor through its affiliate PSRESG, agrees to initiate the
collection action on the defaulted loans, in which case it is
entitled to retain the default interest, the late payment fees
and costs of collection as its compensation for this service to
the Company. The Contractor agrees to advance all costs of
collection, until the account is either current or the
foreclosure is complete and the property is sold. The Company
remains liable for all Contractor advanced costs of collection.
6. Custom Servicing Agreement. Contractor may retain a portion
of the interest rate, commonly referred to as the "rate split"
as part of its custom servicing agreement with the Company. In
an event of default, CLS or an affiliated company agrees to make
the payment due the Company in a timely manner, to the extent
the Contractor has available funds to do so. The Contractor is
entitled to retain all default interest, penalties, costs of
collection and proceeds in excess of the loan amount from the
foreclosure action. In the event that the Contractor fails to
make the payments when due, then the Contractor shall refund to
the Company all rate split interest income that was or has been
collected on the loan(s) in default, within thirty (30) days.
7. Contractor's Duties. Company contracts with Contractor who
will provide the following services to the Company:
Contractor will provide the following general and
administrative support to include: dues and subscriptions,
vehicle expense, rent, telephone, supplies, utilities,
advertising, repairs and maintenance of Company equipment,
property insurance and computerized month to month bookkeeping
support. The Contractor will provide the necessary personnel to
answer telephone inquiries and provide initial contacts with
potential customers. The Contractor may perform other duties or
provide other services for the Company on a reimbursable basis.
Contractor will not be responsible for the payment of
professional accounting, legal or property management fees. The
Contractor will not be responsible for any cost directly
relating to the management of a foreclosure or forfeiture of any
company property.
8. Office Space and Administrative Support. Contractor will
furnish Company with an office, general telephone and general
secretarial support and any other facilities and services that
are adequate for the performance of this contract at the rate
specified in paragraph 4.
9. Reimbursement of Expenses. Contractor may incur reasonable
expenses in managing the Company's business, including advancing
costs for the start up of the Company. The Company will
reimburse the Contractor for all start up expenses incurred by
the Contractor, pursuant to the terms of a promissory note,
which is incorporated herein as if fully set forth. The
Contractor agrees that initial start up expenses shall not
exceed $35,000 unless said expenses are approved by the
Company's Board of Directors. The Contractor agrees to forgive
an amount not to exceed 20% of the original promissory note each
year, so long as the Company renews this agreement. In event
the Company elects to terminate this agreement at any time prior
to five (5) years hence, then the entire promissory note, plus
all forgiven funds, is agreed to become due and payable, within
thirty (30) days after termination.
10. Termination of Agreement on Sale or Termination of Company's
Business. Despite anything contrary contained in this
agreement, Company may terminate Contractor's agreement upon 30
days notice to Contractor if any of the following events occur:
(a) Sale of Company Assets. The sale of substantially all of
the Company's assets to a single purchaser or a group of
associated purchasers;
(b) Sale of Company Shares. The sale, exchange or other
disposition, in one transaction of 80% of the company's
outstanding corporate shares after the initial sale of the
Company stock;
(c) Termination of Company's Business. Company's bona fide
decision to terminate its business;
(d) Merger on Consolidation. The merger of consolidation of
Company and a transaction which Company shareholder's receive
less than 30% of the outstanding voting shares of the new or
continuing corporation;
(e) Sixty (60) Day Written Notice. Notwithstanding any
provision above, this Agreement may be terminated upon sixty
(60) days written notice to the other party by either party.
11. Arbitration of Controversies. Any claim or controversy that
arises out of or relates to this agreement or breach of it will
be settled by arbitration in the City of Lynnwood, in the State
of Washington, in accordance with the rules then obtaining of
the American Arbitration Association. Judgment upon the award
rendered may be entered in the Snohomish County Superior Court
in the State of Washington.
12. Waiver of Breach of Agreement. If either party waives a
breach of this agreement by the other party, that waiver will
not operate or be construed as a waiver of later similar
breaches.
13. Company May Not Assign Agreement. The Company may not
assign this agreement. The Company's rights and obligations
under this agreement will not inure to the benefit of and will
not be binding upon the Company's successors and assignees.
14. Marketing Agreement. CLS Financial Services, Inc., further
agrees to provide a market for the Company's resources. This
marketing effort is in addition to those duties in paragraph 6
and nothing in this contract shall preclude Contractor from
assessing the borrower or recipient of the Company's resources,
a brokerage fee, an interest rate split, or a discount fee.
15. Entire Agreement. This agreement is the entire agreement of
the Company and the Contractor. Oral changes will have no
effect. This agreement may be altered only by a written
agreement, signed by the party against whom enforcement of any
waiver change, modification extension or discharge is sought.
IN WITNESS WHEREOF, the parties have signed the Agreement on
the 12th day of September, 1997.
CLS Financial Services, Inc., Contractor RMX REIT, Inc, Company
By: /s/Xxxxx Xxxxxxx By: /s/Xxxxxxx X. Xxxxxx
Its: President Its: President
By: /s/Xxxxxx Xxxxxxx By: /s/Xxx Xxxxxxx
Its: Secretary Its: Secretary
