Ex-10.29
AMENDED AND RESTATED
OPERATING AGREEMENT
for the
NORTHERN CALIFORNIA DIVISION
TABLE OF CONTENTS
Page
ARTICLE 1
Selected Definitions
--------------------
ARTICLE 2
Management of the Division
Section 2.1 Management..................................................................... 3
Section 2.2 Board Information Rights....................................................... 3
ARTICLE 3
Accounting and Financial Matters
Section 3.1 Capital Contributions.......................................................... 4
Section 3.2 Interest on Capital Contributions.............................................. 4
Section 3.3 Books, Records and Accounts.................................................... 4
Section 3.4 Budgets and Reports............................................................ 4
Section 3.5 Taxes.......................................................................... 5
Section 3.6 Acquisition of Additional Division Assets...................................... 5
Section 3.7 Cash Distributions............................................................. 5
Section 3.8 Priority in Distributions...................................................... 5
ARTICLE 4
Covenants
Section 4.1 Covenants of FMN............................................................... 5
Section 4.2 Consent of ▇▇▇▇▇-▇▇▇▇▇▇▇▇ to Amendments to Preferred
Stock.......................................................................... 7
ARTICLE 5
Non-Competition
Section 5.1 Non-Competition................................................................ 7
Section 5.2 Confidential and Proprietary Information....................................... 7
Section 5.3 Enforceability................................................................. 8
ARTICLE 6
Restriction on Assignment of Preferred Stock
Section 6.1 Prohibition.................................................................... 8
Section 6.2 Remedy for Violation........................................................... 9
ARTICLE 7
Conversion Rights
Section 7.1 Upon Initial Public Offering................................................... 9
Section 7.2 Upon Change of Control......................................................... 9
ARTICLE 8
Term and Termination
Section 8.1 Term of Agreement.............................................................. 9
Section 8.2 Termination of Agreement....................................................... 9
Section 8.3 Assignment of Pipeline; Return of Capital Contributions........................ 11
ARTICLE 9
Arbitration
Section 9.1 Arbitration.................................................................... 12
ARTICLE 10
Miscellaneous
Section 10.1 Specific Performance........................................................... 12
Section 10.2 Notices........................................................................ 12
Section 10.3 Successors..................................................................... 13
Section 10.4 Assignment..................................................................... 13
Section 10.5 Effect and Interpretation...................................................... 13
Section 10.6 Amendment...................................................................... 13
Section 10.7 Severability................................................................... 14
ii
Section 10.8 No Third-Party Rights.......................................................... 14
Section 10.9 Counterparts................................................................... 14
Appendix A Form of Monthly Statements of Net Profits
Appendix B Map of the Territory
Appendix C Amended Designation of Relative Rights, Preferences and
Limitations of Special Preferred Stock (Northern California Division)
iii
AMENDED AND RESTATED OPERATING AGREEMENT
for the
NORTHERN CALIFORNIA DIVISION
THIS AGREEMENT (the "Agreement") is entered into by and between:
FIRST MORTGAGE NETWORK, INC.,
a Florida corporation ("FMN")
and
▇▇▇▇▇-▇▇▇▇▇▇▇▇ REAL ESTATE, INC.,
a California corporation ("▇▇▇▇▇-▇▇▇▇▇▇▇▇")
(collectively, the "Parties")
Background
----------
A. FMN is a mortgage banking company, headquartered in Plantation,
Florida, which originates, processes, and funds residential mortgage loans
through its membership network and retail loan officers. FMN uses its
proprietary CLOser(R) software to track loans from application to closing and to
offer online access to information about loan rates and FMN's line of loan
products. FMN currently conducts its mortgage banking business in Florida,
Georgia and California.
B. FMN has created a division known as the First Mortgage Network
Northern California Division (the "Division") which it operates with
▇▇▇▇▇-▇▇▇▇▇▇▇▇ pursuant to an Operating Agreement for the Northern California
Division dated July 1, 1997, among FMN, ▇▇▇▇▇-▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ (the
"Prior Operating Agreement").
C. The Parties wish to set forth the manner in which the Division will
be operated and the methodology for the distribution of net profits of the
Division, effective as of July 1, 1998.
D. This Agreement is intended to supersede in its entirety the Prior
Operating Agreement.
NOW THEREFORE, in consideration of the mutual benefits to be derived
herefrom, the parties agree as follows:
ARTICLE 1
Selected Definitions
--------------------
The following terms, as used in this Agreement, have the following
meanings:
"Affiliate" -- A person or entity which, directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the person or entity specified; provided, however, that
franchisees and trademark licensees of ▇▇▇▇▇-▇▇▇▇▇▇▇▇ will not be considered
"Affiliates" of ▇▇▇▇▇-▇▇▇▇▇▇▇▇.
"Affinity Business" -- Origination, processing and funding of mortgage
loans, the source of which are members of an organization that has contracted
with FMN to provide FMN products to such organization's members.
"Board" -- The board of directors of FMN, as it may be constituted from
time to time.
"Division Business" -- All revenues and expenses (including without
limitation, servicing revenues and expenses and revenues and expenses resulting
from the sale of servicing rights), derived from (a) Retail Business where the
majority of the underlying mortgaged real estate is situated in the Territory,
(b) Member Business where the majority of the underlying mortgaged real estate
is situated in the Territory, (c) Affinity Business where the majority of the
underlying mortgaged real estate is situated in the Territory and (d) all other
business of any kind generated or referred by FMN or ▇▇▇▇▇-▇▇▇▇▇▇▇▇, so long as
approved by the Board and so long as handled by Division Employees, even if such
business would be deemed to be outside of the Territory. Notwithstanding the
foregoing, the operations of FMN or its Affiliates with respect to Intuit, Inc.,
Anytime Access, ▇▇▇▇▇▇▇▇▇.▇▇▇, SMART, Realeads U.S.A., Inc., RESULTS, Superior
Bank, F.S.B., or First Realty Network, or any of their Affiliates, shall not be
included as "Division Business."
"Division Employees" -- FMN employees or individual independent
contractors whose salaries and commissions are paid by the Division.
"Expenses" -- The expenses of the Division, determined in accordance
with generally accepted accounting principles consistently applied.
"Member Business" -- Origination, processing and funding of mortgage
loans referred to FMN by companies (typically mortgage brokers, home builders,
realtors, banks and credit unions) that have executed a membership agreement or
net branch agreement with FMN.
"Net Profits" -- The excess of Revenues over Expenses, determined in
accordance with generally accepted accounting principles consistently applied,
with adjustments to Revenues as described herein.
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"Pipeline" -- As of any date, mortgage loans that have been originated
and processed, but not closed, and which, if closed, would have appeared in the
column designated "Center 51 - WAM" on the monthly statements of Net Profits
required to be delivered by FMN to ▇▇▇▇▇-▇▇▇▇▇▇▇▇ pursuant to Section 4.1(a)(2)
hereof.
"Preferred Stock" -- FMN's Special Preferred Stock (Northern California
Division).
"Retail Business" -- Origination, processing and funding of mortgage
loans originated by a Division Employee or by non-Division Employees.
"Revenues" -- The revenues of the Division (excluding the "technology
fee" identified as "Interco Technology Charge" on Appendix A hereto), determined
in accordance with generally accepted accounting principles consistently
applied.
"Territory" -- That area of California lying north of Bakersfield as
set forth in the map attached hereto as Appendix B, and such other places as the
Board may designate from time to time with the consent of ▇▇▇▇▇-▇▇▇▇▇▇▇▇. FMN
may not reduce the Territory without the consent of ▇▇▇▇▇-▇▇▇▇▇▇▇▇.
ARTICLE 2
Management of the Division
Section 2.1 Management. The Division Business will be carried out under
the overall management and direction of the Board and such officers, employees
and consultants as are appointed by the Board to operate the Division on a
day-to-day basis.
Section 2.2 Board Information Rights. So long as ▇▇▇▇▇-▇▇▇▇▇▇▇▇ is the
beneficial owner of more than 34% of the current number of issued and
outstanding shares of the Preferred Stock, FMN shall provide a representative of
▇▇▇▇▇-▇▇▇▇▇▇▇▇ (the "Representative"), which Representative shall be reasonably
acceptable to FMN, a copy of all notices, minutes, consents and other Board of
Directors' materials that it provides to all of its directors; provided,
however, that (i) FMN reserves the right to withhold any information, or any
portion thereof, as is reasonably determined by the Chairman of the Board of
Directors or a majority of the members of the Board of Directors to be necessary
for purposes of confidentiality, competitive factors, attorney-client privilege
or other reasonable purposes and (ii) in no event shall the failure to provide
the materials described above invalidate in any way any action taken at a
meeting of the Board of Directors or by written consent.
▇▇▇▇▇-▇▇▇▇▇▇▇▇ agrees, and will cause the Representative to agree, to
hold in confidence all non-public information provided pursuant to
▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ rights under this
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Section 2.2, and ▇▇▇▇▇-▇▇▇▇▇▇▇▇ will not use or disclose any such information
provided to or learned by it in connection with the rights described herein,
other than for purposes of ▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ interest as a shareholder of FMN.
The confidentiality provisions in this paragraph shall survive any termination
of this Agreement.
ARTICLE 3
Accounting and Financial Matters
Section 3.1 Capital Contributions. As of July 1, 1998, the books of the
Division reflect capital contributions from each of FMN and ▇▇▇▇▇-▇▇▇▇▇▇▇▇ of
$50,000. Upon execution of this Agreement, ▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall receive a return
of $30,000 of its capital and FMN shall contribute an additional $30,000 to the
capital of the Division, so that FMN and ▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ respective percentages
of the total capital contributions are 80% and 20%, respectively. Upon the
mutual agreement of FMN and ▇▇▇▇▇-▇▇▇▇▇▇▇▇, additional capital contributions to
the Division may be made from time to time, and any such additional capital
contributions shall be made by FMN and ▇▇▇▇▇-▇▇▇▇▇▇▇▇ in accordance with the
percentages set forth in the preceding sentence.
Section 3.2 Interest on Capital Contributions. The Parties are not
entitled to receive any interest on capital contributions made to the Division.
Section 3.3 Books, Records and Accounts. FMN will cause true and
correct books of account for the Division to be kept on the accrual basis of
accounting, upon which will be entered all matters relating to the Division,
including, but not limited to, all receipts, expenditures, profits, losses,
assets, liabilities and payroll matters. The books and records of the Division
will be kept in accordance with generally accepted accounting principles
consistently applied and the Division shall be treated as nearly as practicable
as if it operated on a stand-alone basis. The Division may, but will not be
required to, maintain bank accounts and assets separately from FMN. No corporate
overhead charges incurred outside the Territory will be allocated to the
Division, other than Secondary Marketing Charges, the technology fee identified
as "Interco Technology Charge" on Appendix A hereto, and other overhead charges
directly related to Division Business. All books and records of the Division
will be open to examination and copying by FMN, ▇▇▇▇▇-▇▇▇▇▇▇▇▇ and their
respective authorized representatives at all times during normal business hours.
Section 3.4 Budgets and Reports. The Board will develop and adopt prior
to each fiscal year of FMN an overall operating and capital budget for each year
with the approval of ▇▇▇▇▇-▇▇▇▇▇▇▇▇. FMN will prepare periodic reports in
accordance with generally accepted accounting principles consistently applied
(including a profit and loss statement, a cash flow statement and a balance
sheet) no less frequently than monthly on actual operations of the Division as
compared with operating plans and budgets. Within 90 days after the end of each
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fiscal year, FMN will prepare an annual report in accordance with generally
accepted accounting principles consistently applied (including a profit and loss
statement, a cash flow statement and a balance sheet) of the Division. FMN will
provide such reports to ▇▇▇▇▇- ▇▇▇▇▇▇▇▇ at no cost to ▇▇▇▇▇-▇▇▇▇▇▇▇▇ or the
Division. Such reports will be prepared by management and will be subject to
review by an independent accounting firm.
Section 3.5 Taxes. Federal, state and local taxes will be calculated as
if the Division operated on a stand-alone basis.
Section 3.6 Acquisition of Additional Division Assets. To the extent
the Division requires additional real or personal property, it will lease such
assets for a term of three (3) years or more, with all costs for the leases
allocated to the Division.
Section 3.7 Cash Distributions. Subject to the existence of legally
available funds therefor, cash distributions of Net Profits from the Division
will be paid quarterly, commencing September 30, 1998, as follows:
(a) twenty percent (20%) to ▇▇▇▇▇-▇▇▇▇▇▇▇▇ in the form of
dividends on the Preferred Stock, as set forth in the Amended Designation of
Relative Rights, Preferences and Limitations attached hereto as Appendix C (the
"Designation"). The Board shall vote in favor of paying dividends on the
Preferred Stock not less than on a quarterly basis, so long as funds are legally
available therefor; and
(b) eighty percent (80%) to FMN, pursuant to appropriate
transfers from the separate books of the Division to the books of FMN.
Section 3.8 Priority in Distributions. The rights of each Party to
receive cash distributions under Section shall be pari passu with respect to the
rights of the other Party to receive distributions under Section .
ARTICLE 4
Covenants
Section 4.1 Covenants of FMN. FMN covenants and agrees as follows:
(a) Except as otherwise set forth herein, FMN agrees to
provide the following services at no cost to the Division:
(1) all necessary warehouse lines and underlying
equity required to support the warehouse lines.
Notwithstanding the foregoing, any (i) acquisition and
maintenance fees related to warehouse lines used by or made
available to
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the Division, (ii) transaction fees related to draws on the
warehouse lines for mortgage loans funded by the Division, and
(iii) the net interest expense or net interest income
resulting from the spread between the interest expense for the
warehouse loans and the interest income from underlying
mortgages (prior to sale to secondary market investors) shall
be charged to the Division;
(2) delivery to ▇▇▇▇▇-▇▇▇▇▇▇▇▇ of quarterly and
annual financial statements of FMN as soon as practicable
following the end of the respective period, but in no event
later than the time at which such statements are made
available to holders of FMN's common stock. FMN will deliver
to ▇▇▇▇▇- ▇▇▇▇▇▇▇▇, as soon as practicable following the end
of each calendar month, monthly and year-to-date financial
statements in the form such statements are prepared for use by
management, and monthly statements of Net Profits
substantially in the form set forth as Appendix A.
(3) technology which enhances the Division Business,
including but not limited to use of CLOser(R) for
point-of-sale, Internet access, networking and any other
operating platform for which it is available; provided,
however, expenses relating to local technical support and
training required to implement and use the systems shall be an
expense of the Division;
(4) all licensing and secondary market investor
agreements;
(5) development of programs with investors which
allow for delegated underwriting and the use of automated
underwriting tools;
(6) all central advisory services with regard to
information on insurance, benefits and other human resources
matters; and
(7) all accounting services for the Division,
including placing an FMN employee "on site" in California to
handle accounting services for the Division.
All other services provided by FMN to the Division from time to time shall be an
expense of the Division; provided, however, that all direct charges incurred by
the Division from secondary market investors shall be charged to the Division
and, in lieu of additional secondary marketing costs being passed on to the
Division, FMN will charge the Division a fee (currently budgeted at $265,
subject to fluctuations based on funded loan volume of the Division) per
mortgage loan (the "Secondary Marketing Charge") to cover FMN's secondary
marketing costs. The Parties will review the Secondary Marketing Charge from
time to time, no less frequently than annually, to determine its reasonableness
and the actual cost of all unallocated FMN secondary marketing expenses on a per
loan basis. FMN shall provide ▇▇▇▇▇-▇▇▇▇▇▇▇▇ with documentation to evidence
unallocated FMN secondary marketing expenses.
6
(b) To comply with the rules and regulations of all state and
federal regulatory authorities;
(c) To use its best efforts to maintain sufficient net worth
to maintain its relationships with government-sponsored enterprises and
financial institutions to which the Division will sell loans in the secondary
market;
(d) To inform ▇▇▇▇▇-▇▇▇▇▇▇▇▇, in a timely manner, of material
business and financial developments relating to the Division; and
(e) In the event of any claim that the use of the technology
provided pursuant to subsection (a)(3) above by the Division infringes on the
intellectual property rights of any third party, FMN shall either modify such
technology to eliminate the infringing use, obtain the right for the Division to
continue to use such technology or obtain a license for comparable technology
for use by the Division, any of the actions in this Section to be at no cost to
the Division.
Section 4.2 Consent of ▇▇▇▇▇-▇▇▇▇▇▇▇▇ to Amendments to Preferred Stock.
Upon execution of this Agreement, ▇▇▇▇▇-▇▇▇▇▇▇▇▇ approves and consents to the
Designation, substantially in the form set forth as Appendix C hereto.
ARTICLE 5
Non-Competition
Section 5.1 Non-Competition. Neither FMN, any party under FMN's
control, ▇▇▇▇▇-▇▇▇▇▇▇▇▇, nor any party under ▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ control, will
compete with the Division in the conduct of Division Business, either directly
or indirectly, alone or in conjunction with others, in the Territory prior to
termination of this Agreement. For purposes of this Article , the term "compete"
includes acting as a proprietor, owner, shareholder, partner, joint venturer or
other participant in or with a competitor of the Division or as a trustee,
director, officer, employee, agent, representative, consultant, advisor or
independent contractor to or for a competitor of the Division. Without limiting
the generality of the foregoing ▇▇▇▇▇-▇▇▇▇▇▇▇▇ will not employ loan agents
directly or indirectly, within the Territory, unless otherwise expressly
permitted by this Agreement.
Section 5.2 Confidential and Proprietary Information. Each of FMN,
▇▇▇▇▇- ▇▇▇▇▇▇▇▇ and their respective Affiliates will only make disclosures of
proprietary or confidential information concerning the Division Business as
shall be authorized by the Executive Committee. Following termination of this
Agreement, neither FMN, ▇▇▇▇▇- ▇▇▇▇▇▇▇▇ nor any of their respective Affiliates
will, directly or indirectly, divulge, disclose,
7
furnish, communicate or make accessible to any third party who is not authorized
by the other party to receive such information, any client or prospect list,
financial data, sales data, technological information, intellectual property or
any other confidential or proprietary information relating to the other party or
the Division. All files, records, documents, forms, plans, policy and procedures
manuals, client or prospective client lists, written memoranda or similar
materials generated in connection with, and necessary to, the conduct of
Division Business will remain the exclusive property of the Division; provided,
however, ▇▇▇▇▇- ▇▇▇▇▇▇▇▇ shall, upon termination of this Agreement, have a right
to retain copies of all records and documents related to Division Business
generated by loan agents working at ▇▇▇▇▇- ▇▇▇▇▇▇▇▇-owned offices, offices of
▇▇▇▇▇-▇▇▇▇▇▇▇▇ trademark licensees or franchisees, or other ▇▇▇▇▇-▇▇▇▇▇▇▇▇
Affiliated entities; further provided, that all records and information, whether
in paper or in electronic form, related to clients of ▇▇▇▇▇-▇▇▇▇▇▇▇▇ constitute
proprietary information and trade secrets of ▇▇▇▇▇-▇▇▇▇▇▇▇▇ and that to the
extent ▇▇▇▇▇- ▇▇▇▇▇▇▇▇ elects to allow Division employees or agents to have
access to such information, such information will be provided to the Division
under a confidentiality and proprietary information agreement.
Section 5.3 Enforceability. The parties hereto acknowledge that the
restrictions, prohibitions and other provisions of this Article are reasonable,
fair and equitable in scope, are necessary to protect the legitimate business
interests of the parties, and are a material inducement to the parties to enter
into this Agreement. In the event that the restrictions contained in this
Article are held to be too broad to allow enforcement of such restriction to its
full extent, such restriction shall be enforced to the maximum extent allowed by
law, and the parties hereby consent and agree that such scope may be judicially
modified accordingly in any proceeding brought to enforce such restriction. The
parties acknowledge and agree that the remedy at law for the breach of the
obligations under this Article may be inadequate, and agree and consent that
temporary and/or permanent or injunctive relief may be entered, enjoining a
party from breaching this Agreement.
ARTICLE 6
Restriction on Assignment of Preferred Stock
Section 6.1 Prohibition. Except as otherwise expressly provided in this
Agreement, ▇▇▇▇▇-▇▇▇▇▇▇▇▇ may not sell, transfer, assign or otherwise dispose
of, voluntarily or involuntarily, all or any part of its Preferred Stock without
prior approval of FMN. Upon a proposed disposition, ▇▇▇▇▇-▇▇▇▇▇▇▇▇ will first
provide notice of such proposed disposition to FMN, and FMN shall have the right
to approve or disapprove the disposition of Preferred Stock. This restriction
does not include any transfer by operation of law pursuant to a merger,
consolidation or liquidation of ▇▇▇▇▇-▇▇▇▇▇▇▇▇ or otherwise or any sale of
substantially all of ▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ stock or assets. For purposes hereof, a
transfer includes any transfer or
8
assignment, whether voluntary or involuntary, and whether for value or not,
whether by sale, exchange, pledge, encumbrance, gift, judicial attachment,
contribution to a trust or other entity or otherwise. The shares of Preferred
Stock bear a conspicuous legend denoting the transfer restrictions set forth in
this Section .
Section 6.2 Remedy for Violation. In the event that ▇▇▇▇▇-▇▇▇▇▇▇▇▇
disposes of any of its Preferred Stock in violation of any provisions of this
Article , such disposition will be void.
ARTICLE 7
Conversion Rights
Section 7.1 Upon Initial Public Offering. Upon the Initial Public
Offering and for a period ending 6 months after the closing of the Initial
Public Offering, ▇▇▇▇▇-▇▇▇▇▇▇▇▇ will have the right to convert not more than 66%
of its Preferred Stock to Common Stock of FMN in accordance with the Designation
attached hereto as Appendix C.
Section 7.2 Upon Change of Control. In the event the Board approves and
recommends to shareholders of FMN a transaction, such as a merger or share
exchange, which upon approval by such shareholders would result in a change of
control of FMN, ▇▇▇▇▇- ▇▇▇▇▇▇▇▇ will have the right to convert not more than 66%
of its Preferred Stock to Common Stock of FMN in accordance with the Designation
attached hereto as Appendix C.
ARTICLE 8
Term and Termination
Section 8.1 Term of Agreement. The term of this Agreement initially
shall be for one year, commencing on July 1, 1998, and shall automatically renew
for one year on each successive July 1 unless sooner terminated pursuant to
Section . This Agreement supersedes the Prior Operating Agreement in its
entirety.
Section 8.2 Termination of Agreement.
(a) Except as otherwise provided herein, this Agreement will
terminate and cease to be effective in the following situations (each an "Event
of Termination") at the times specified in subsections (b), (c) and (d):
(1) Mutual agreement of each of the Parties in
writing to terminate the Agreement;
9
(2) Upon the bankruptcy or insolvency of FMN;
(3) Upon written notice by ▇▇▇▇▇-▇▇▇▇▇▇▇▇ to FMN, if
the Board approves payment of a cash distribution to
▇▇▇▇▇-▇▇▇▇▇▇▇▇ but fails to actually pay such cash
distribution to ▇▇▇▇▇-▇▇▇▇▇▇▇▇, for whatever reason, within 45
days following Board approval;
(4) Upon written notice by ▇▇▇▇▇-▇▇▇▇▇▇▇▇ to FMN in
the event FMN is no longer approved by any of FNMA, FHMC or
HUD;
(5) Upon written notice by ▇▇▇▇▇-▇▇▇▇▇▇▇▇ to FMN in
the event FMN fails to meet its obligations to provide all
necessary warehouse lines and underlying equity pursuant to
Section 4.1(a)(1) hereof; or
(6) Upon the bankruptcy or insolvency of
▇▇▇▇▇-▇▇▇▇▇▇▇▇.
(b) Upon termination of this Agreement pursuant to subsections
(a)(1) or (a)(6) of this Section :
(1) For a period of 30 days (the "Initial 30 Day
Period"), the Division will continue to operate under this
Agreement. During the Initial 30 Day Period, each of the
Parties will use its best efforts to plan for an orderly
transition;
(2) ▇▇▇▇▇-▇▇▇▇▇▇▇▇ and its Affiliates will have the
right during the Initial 30 Day Period to offer employment to
any loan agents or FMN employees who are performing
origination or processing services for the Division. FMN
agrees that such offers do not constitute unlawful business
interference by ▇▇▇▇▇-▇▇▇▇▇▇▇▇ or its Affiliates. Such
employment with ▇▇▇▇▇-▇▇▇▇▇▇▇▇ or its Affiliates, if accepted,
could begin no sooner than the first day following the Initial
30 Day Period;
(3) The 60 days following the Initial 30 Day Period
(the "60 Day Period") will be used to wind down this
Agreement, during which time all Revenues and Expenses will
continue to be allocated to the Division in accordance with
this Agreement. The costs of winding down, including lease
obligations and fulfillment of executory contracts, will be an
expense of the Division;
(4) At the end of the 60 Day Period, the Division
will cease to operate under the terms of this Agreement. FMN
will redeem all of the Preferred Stock held by ▇▇▇▇▇-▇▇▇▇▇▇▇▇,
in the manner set forth in the Designation attached as
Appendix C hereto. ▇▇▇▇▇-▇▇▇▇▇▇▇▇ Affiliates have the right to
become members of the First Mortgage Network and FMN agrees to
offer ▇▇▇▇▇-
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▇▇▇▇▇▇▇▇, its Affiliates, its trademark licensees and its
franchisees such membership under the then-existing terms and
conditions of membership offered to third parties. Upon
redemption of the Preferred Stock, this Agreement shall be of
no further force and effect.
(c) Upon termination of this Agreement under subsection (a)(2)
of this Section , the Division will cease to operate under the terms of this
Agreement. ▇▇▇▇▇- ▇▇▇▇▇▇▇▇ and its Affiliates will have the right to offer
employment to any loan agents or FMN employees who are performing origination or
processing services for the Division. FMN agrees that such offers do not
constitute unlawful business interference by ▇▇▇▇▇-▇▇▇▇▇▇▇▇ or its Affiliates.
Such employment with ▇▇▇▇▇-▇▇▇▇▇▇▇▇ or its Affiliates could begin immediately.
As soon as practicable after termination under subsection (a)(2), FMN will
redeem all the Preferred Stock held by ▇▇▇▇▇-▇▇▇▇▇▇▇▇, in the manner set forth
in the Designation attached as Appendix C, subject to applicable bankruptcy
laws, rules and regulations. Each Party will cooperate to wind down the Division
as quickly as practicable. Upon redemption of the Preferred Stock, this
Agreement shall be of no further force and effect.
(d) Upon termination of this Agreement under subsections
(a)(3), (a)(4) or (a)(5) of this Section , the Division will immediately cease
to operate under the terms of this Agreement. ▇▇▇▇▇-▇▇▇▇▇▇▇▇ and its Affiliates
will have the right to offer employment to any loan agents or FMN employees who
are performing origination or processing services for the Division. FMN agrees
that such offers do not constitute unlawful business interference by
▇▇▇▇▇-▇▇▇▇▇▇▇▇ or its Affiliates. Such employment with ▇▇▇▇▇-▇▇▇▇▇▇▇▇ or its
Affiliates could begin immediately. FMN and ▇▇▇▇▇-▇▇▇▇▇▇▇▇ each will cooperate
to wind down the Division as quickly as practicable. As soon as practicable
after termination, FMN will redeem all the Preferred Stock held by
▇▇▇▇▇-▇▇▇▇▇▇▇▇, in the manner set forth in the Designation attached as Appendix
▇. ▇▇▇▇▇-▇▇▇▇▇▇▇▇ Affiliates have the right to become members of the First
Mortgage Network and FMN agrees to offer ▇▇▇▇▇-▇▇▇▇▇▇▇▇, its Affiliates, its
trademark licensees and its franchisees such membership under the then-existing
terms and conditions of membership offered to third parties. The costs of
winding down, including lease obligations and fulfillment of executory contracts
and the redemption of the Preferred Stock will not be an expense of the Division
and will be borne by FMN. Upon redemption of the Preferred Stock, this Agreement
shall be of no further force and effect.
Section 8.3 Assignment of Pipeline; Return of Capital Contributions.
Upon any Event of Termination hereunder, the Company shall assign to
▇▇▇▇▇-▇▇▇▇▇▇▇▇ all of the Company's right, title and interest in and to, and the
obligations relating to, the Pipeline. The Company will cooperate with
▇▇▇▇▇-▇▇▇▇▇▇▇▇ in transferring the rights and obligations associated with the
Pipeline to any entity designated by ▇▇▇▇▇-▇▇▇▇▇▇▇▇. In addition, upon any Event
of Termination under subsections (a)(4) or (a)(6) of Section , the Company shall
return to ▇▇▇▇▇-▇▇▇▇▇▇▇▇ any unreturned capital contributions paid by
▇▇▇▇▇-▇▇▇▇▇▇▇▇ under this Agreement.
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ARTICLE 9
Arbitration
Section 9.1 Arbitration. The Parties agree that any dispute or
controversy arising out of or relating to this Agreement and the Registration
Rights Agreement dated March 15, 1996, between FMN and ▇▇▇▇▇-▇▇▇▇▇▇▇▇, but not
relating to any other agreement entered into by or made for the benefit of the
Division, will be determined and settled by binding arbitration in San
Francisco, California. Each party to the dispute will appoint one of the
arbitrators and such two arbitrators will select the third arbitrator. Prior to
the arbitration hearing, the person chosen as the third arbitrator will disclose
to all parties to the dispute any circumstances likely to affect impartiality,
including any bias or financial or personal interest in the result of the
arbitration or any past or present relationship with the parties or their
representatives. Upon the objection of any party to the dispute to said
arbitrator on the basis of such conflict, the two arbitrators will then select a
new third arbitrator who must then make the disclosures required herein. The
process will continue until a neutral third arbitrator is chosen. The procedures
to be followed at the arbitration hearing will be those set out in the
Commercial Arbitration Rules of the American Arbitration Association. The
arbitrator's award will be in writing and will be signed by a majority of the
arbitrators. In their award, the arbitrators will apportion the costs of
arbitration, including, but not limited to, their own fees and expenses, as they
deem appropriate. In addition, the prevailing party will be entitled to
attorney's fees and expenses from the losing party. The arbitrators' award will
be final and binding upon the parties thereto and judgment upon the award may be
entered into any court having jurisdiction thereof. Whenever any action is
required to be taken under this Agreement within a specified period of time and
the taking of such action is materially affected by a matter submitted to
arbitration, such period will automatically be extended by the number of days
plus ten (10) that are taken for the determination of that matter by the
arbitrators.
ARTICLE 10
Miscellaneous
Section 10.1 Specific Performance. The Parties hereby declare and agree
that it is impossible to measure in money the damages which will accrue to a
party hereto by reason of a failure by any Party to perform any of the
obligations set forth in this Agreement. Therefore, any Party may institute any
action or proceeding for specific performance of this Agreement and any person
against whom such action or proceeding is brought hereby waives the claim or
defense therein that such Party has an adequate remedy at law.
Section 10.2 Notices. All notices or other communications to a party
required or permitted by this Agreement will be in writing and will be hand
delivered by messenger or
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courier service, telecommunicated, or mailed by registered or certified mail
(postage prepaid), return receipt requested, to the Party at the address set
forth below. Notices will be effective upon receipt if delivered by hand or
telecommunication, or on the second day after a mailing; provided, however, that
if delivery of a notice is refused, the date of delivery will be the date on
which delivery is refused. Notices will be sent to the following:
If to FMN: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
First Mortgage Network, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esquire
▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Post ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
If to ▇▇▇▇▇-▇▇▇▇▇▇▇▇: Mr. A. ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇-▇▇▇▇▇▇▇▇ Real Estate, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Donahue, Gallagher, ▇▇▇▇▇ & ▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Section 10.3 Successors. This Agreement will be binding upon and will
inure to the benefit of the Parties and their respective legal representatives,
heirs, successors and assigns, except as expressly otherwise provided herein.
Section 10.4 Assignment. No Party may assign any of its rights or
obligations hereunder to any other person without the prior written consent of
the other Parties.
Section 10.5 Effect and Interpretation. This Agreement will be governed
and construed and enforced in accordance with the laws of the State of Florida
without regard to conflict of law principles thereunder. Captions contained in
this Agreement have been inserted for convenience and in no way define, limit or
extend the scope or intent of any provision of this Agreement. This Agreement
will be interpreted without regard to any presumption or rule requiring
construction against the party causing this Agreement to be drafted.
Section 10.6 Amendment. This Agreement may be amended only by a written
agreement signed by the Party or Parties against whom the enforcement is sought.
This
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Agreement together with appendices, the Registration Rights Agreement between
FMN and ▇▇▇▇▇-▇▇▇▇▇▇▇▇, the Trademark License Agreement between FMN and
▇▇▇▇▇-▇▇▇▇▇▇▇▇, and the Office Use and Services Agreement between FMN and
▇▇▇▇▇-▇▇▇▇▇▇▇▇ constitute the entire understanding between the Parties with
respect to the subject matter hereof, and there are no other agreements,
understandings, restrictions, representations or warranties between the Parties.
Section 10.7 Severability. If any provision of this Agreement, or the
application of a provision to any person or circumstance, is held invalid, the
remainder of this Agreement, or the application of such provision to persons or
circumstances other than those to which it is held invalid, will not be affected
thereby.
Section 10.8 No Third-Party Rights. The provisions of this Agreement
are for the exclusive benefit of the Parties hereto and no other person,
including without limitation, any creditor of the Division or of any Party, will
have any right or claim by reason of this Agreement or be entitled to enforce
any provision of this Agreement against the Division or any Party.
Section 10.9 Counterparts. This Agreement may be executed in more than
one counterpart, each of which will be deemed an original but all of which
together will constitute one and the same instrument. Execution and delivery
will be deemed to occur in Walnut Creek, California.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the first day of July, 1998.
FIRST MORTGAGE NETWORK, INC.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer
▇▇▇▇▇-▇▇▇▇▇▇▇▇ REAL ESTATE,
INC.
By:/s/ A. ▇▇▇▇▇ ▇▇▇▇
---------------------------------------
A. ▇▇▇▇▇ ▇▇▇▇, Chief Executive Officer
AGREED AND CONSENTED TO:
/s/ ▇▇▇▇ ▇▇▇▇▇
------------------------------
▇▇▇▇ ▇▇▇▇▇
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