EXHIBIT 10.4
SECOND AMENDED AND RESTATED OMNIBUS SERVICES AGREEMENT
THIS AGREEMENT is entered into by and among Gen-Net Lease Income Trust,
Inc., a Michigan corporation (the "Company") and Genesis Financial Group, Inc.,
a Michigan corporation ("Genesis").
WITNESSETH
WHEREAS, the Company is offering shares of common stock to the public
pursuant to a registered prospectus as supplemented from time to time (the
"Prospectus");
WHEREAS, the Prospectus provides that various services will be
furnished to the Company by Genesis and these services and the compensation
terms to be paid by the Company are generally described in the Prospectus;
WHEREAS, the parties have entered into this Agreement setting forth by
contract the services to be provided and the terms of compensation for such
services; and
WHEREAS, the parties have determined to amend and restate effective as
of June 2, 2003, this Agreement.
NOW THEREFORE, the parties covenant and agree as follows:
1. Property Acquisition Services.
(a) Genesis shall be the Company's primary but not
exclusive agent for identifying prospective
acquisition properties ("Property") for the Company
that meet the acquisition criteria established in the
Prospectus; investigating the purchase terms and all
material aspects and characteristics of the Property;
performing due diligence on the Property, assist the
Company in negotiating the acquisition terms for the
Property, overseeing preparation of and reviewing the
purchase documentation and monitoring the closing for
the Property to insure that all acquisition terms
approved by the Company are satisfied and that all
acquisition requirements set forth in the Prospectus
have been met in all material respects. In performing
the foregoing activities, Genesis shall be subject to
the direction of the Company and the Company shall
have final approval of all final actions and
agreements. Without limiting the foregoing, in no
event shall Genesis have any authority to (a) bind
the Company to any obligations with a third party;
(b) to draw on or commit Company funds; (c) purchase
Property in its own name, for the benefit of the
Company; or (d) organize remote entities as part of
Property acquisitions in which the controlling person
of said entity is any one other than the Company.
(b) The Compensation to be received by Genesis shall be
reasonable and shall be payable only for services
actually rendered directly or indirectly and subject
to the following conditions:
(i) The total of all such compensation paid to
everyone involved in the acquisition
transaction by the Company and/or any other
person shall be deemed to be presumptively
reasonable if it does not exceed the lesser
of such compensation customarily charged in
arm's length transactions by others
rendering similar circumstances as an
on-going public activity in the same
geographical location and for comparable
property or an amount not to exceed four
percent (4%) of the Property's purchase
price, provided that within the above cap of
four percent (4%) the fee paid by the
Company to Genesis for providing its
acquisition services pursuant to this
Agreement shall not exceed an amount equal
to one percent (1%) of the Property's
purchase price which shall be due and
payable at closing on the purchase of the
Property.
(ii) All costs incurred by Genesis in connection
with performing its acquisition services as
provided for herein shall be borne by
Genesis unless otherwise specifically agreed
by the Company in writing in advance.
(c) Within 30 days after completion of the last
acquisition, Genesis shall cause to be forwarded to
the appropriate state securities commissioners,
California being recognized as one of them, a
schedule, verified by a duly authorized officer under
penalty of perjury, reflecting:
(i) each Property acquisition made;
(ii) the purchase price paid; and
(iii) the aggregate of all acquisition fees paid
on each transaction.
(d) In the event that an investment opportunity becomes
available which is suitable for both the Company and
a public or private entity with which Genesis or its
affiliates are affiliated (collectively, "Genesis")
for which both the Company and Genesis have
sufficient uninvested funds, then the investment
opportunity will be offered first to the Company. If
a circumstance such as a delay in the closing of a
property or a delay in the construction of a
property, causes any such investment, in the opinion
of Genesis to be more appropriate for an entity other
than the Company, Genesis has the right to agree that
the other entity may be presented with the investment
opportunity ahead of the Company.
2. Property Disposition Services.
(a) Genesis shall, on a non-exclusive basis as an agent
for the Company, locate purchasers of the Company
properties pursuant to the disposition criteria
established by the Company; assist the Company in
negotiating with the purchaser the proposed sale
terms; oversee preparation of sale documentation and
monitor the closing of the transaction. In performing
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all of the foregoing activities, Genesis shall be
subject to the direction of the Company and the
Company and the Company shall have final approval of
all final actions and agreements.
(b) Genesis shall be entitled to receive, in the
aggregate, a real estate commission upon the sale of
a Company Property if it provides substantial real
estate brokerage services in connection with such
sale as described in paragraph 2(a) above, provided
the aggregate compensation does not exceed an amount
equal to a competitive real estate commission but in
any event not to exceed three percent (3%) of the
contract price for the sale of the property.
(c) The total commission paid to all persons for the sale
of a Company property shall be limited to an amount
which does not exceed a competitive real estate
commission but in any event not to exceed four
percent (4%) of the contract price for the sale of
the property.
3. Administrative Services.
(a) Genesis may provide administrative services to the
Company necessary for its prudent operation,
including transfer agent support and investor
relations communications. Administrative services may
include computer, secretarial, correspondence,
reception, copying, telecopying, similar office
functions and activities. All persons performing work
in support of the Company shall report to and be
directly responsible to the Company's officers, in
such a manner as the Company's officers shall
determine.
(b) For providing such services, Genesis shall be paid
monthly in an amount equal to Genesis' actual
out-of-pocket costs for providing its employees to
perform said services plus an overhead factor to
cover Genesis' heat, light, rent, taxes and other
utilities allocable to the Company for providing said
services. The Company shall reimburse Genesis based
on a monthly invoice form Genesis to the Company
which itemizes in detail the specific out-of-pocket
costs and the overhead factor. The overhead factor
shall be based on a reasonable allocation for the
Company's share of Genesis' costs for heat, light,
rent, taxes and other utilities assuming these items
are not a part of rent. Said payments may be
periodically reviewed by a majority of the Company's
directors including a majority of its Independent
Directors prior to becoming effective and said
payments are subject to revision based on the Board's
findings. In no event shall Genesis be paid for its
services which exceeds the price that would be
charged by unaffiliated persons rendering similar
services in the same geographic location. All costs
incurred by Genesis in furnishing the said services,
shall be verified according to the provisions set
forth in paragraph 3(e) below.
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(c) In connection with providing such services Genesis
represents that it has currently the key staff
personnel and can acquire supporting staff personnel
as may be necessary depending on the number of
shareholders in the Company to provide the services
referred to in paragraph 3(a) above.
(d) Genesis further represents that it has previously
engaged in the business of rendering such services
independently as an ordinary and ongoing business on
behalf of other affiliated companies or partnerships.
(e) In connection with the annual report to investors,
the Company shall cause its independent auditors to
verify on a spot-check basis that beginning in 2004,
costs incurred by Genesis which are not directly
attributable or allocable to the rendering of
services authorized by this paragraph are not being
charged to the Company. The method of review shall at
a minimum require a spot check review:
(i) of the time records of individual Genesis
employees, the cost of whose services were
reimbursed; and
(ii) of the specific nature of the work performed
by Genesis employees.
4. Property Management.
(a) The Company's properties will be managed by Genesis
as is necessary for the prudent operation of the
Company's properties pursuant to the terms of the
attached form of Property Management Agreement
(incorporated herein by reference) one or more of
which shall be executed by the parties covering each
Property. Presently, Genesis has an adequate staff to
be able to render such services to the Company which
it utilizes in the conduct of its business.
(b) Property management services will include, but not be
limited to, providing leasing services, assisting in
negotiating leases, providing monthly property
reports, collecting, depositing and accounting for
rents, periodically verifying tenant payments of real
estate taxes and insurance premiums and periodic
inspection of properties and tenants' sales receipts
records, where applicable under the leases.
(c) For providing such services, Genesis shall be paid
monthly a fee, in arrears of 3 percent of the gross
collected rental revenues of the Properties, such fee
to be reviewed and approved by a majority of the
Company's directors including a majority of its
Independent Directors prior to becoming effective. In
no event shall Genesis be paid a fee for its services
which shall exceed the price that would be charged by
unaffiliated persons rendering similar services in
the same geographic location. Genesis shall also be
entitled to be reimbursed for its actual
out-of-pocket costs and
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expenses incurred on behalf of the Company in
performing its services hereunder other than for
salaries, rent, light, heat, telephone and other
items of normal office overhead.
5. Sale of Goods.
Genesis agrees that under no circumstances will it or
any affiliate sell any goods to the Company. In the
event that Genesis or any Genesis affiliate acquires
goods for the Company for which it seeks
reimbursement, such reimbursement shall be for the
actual cost of the goods acquired and only to the
extent used by the Company.
6. Contract Term, Amendment and Termination.
(a) This Agreement shall commence on the date it is
signed by both parties and continue for a period of
12 months thereafter. It supercedes all prior Omnibus
Services Agreements between the parties. It will
automatically renew for successive 12 month periods
unless terminated pursuant to subparagraph (c) below.
(b) This Agreement shall not be amended or modified in
any material respect except by a majority vote of the
Board of Directors of the Company including a
majority of the Company's Independent Directors.
(c) This Agreement may be terminated by either party
without penalty on 60 days' prior written notice to
the other party.
7. Miscellaneous.
(a) This Agreement shall be enforced and construed in
accordance with the laws of the State of Michigan.
(b) At all times while performing its obligations under
this Agreement, Genesis shall be under the direction
of the Company, its officers and/or Directors, who
shall have final approval of authority on all of
Genesis' activities. Further, nothing in this
Agreement is intended to vest in Genesis the
responsibility for directing or performing the
day-to-day business affairs of the Company, which
shall at all times remain the obligation of the
Company's officers and Directors as the case may be.
The parties specifically intend that Genesis shall
not be an "Advisor" of the Company as that term is
defined in the NASAA Statement of Policy Regarding
Real Estate Investment Trusts.
(c) If any provision of this Agreement is in conflict
with any provision of the Company's Bylaws or
Prospectus or the blue sky rules applicable to real
estate programs, such provisions shall be null and
void and the remainder of the Agreement shall remain
in full force and effect.
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(d) This Agreement shall terminate, unless terminated
sooner by a default hereunder or by other terms of
the agreement, at such time as the Company is
liquidated and terminated pursuant to the terms of
the Company's Articles of Incorporation.
Entered into by and between the parties hereto as of June 2, 2003.
Gen-Net Lease Income Trust, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Genesis Financial Group, Inc.
By: /s/ D. ▇▇▇▇▇ ▇▇▇▇▇▇
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D. ▇▇▇▇▇ ▇▇▇▇▇▇, President
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