EXHIBIT 6.1
MANAGEMENT AGREEMENT WITH CAPITAL MANAGEMENT GROUP, INC.
MANAGEMENT AGREEMENT
AGREEMENT made September 21, 1998, between SFG MORTGAGE AND INVESTMENT
COMPANY, INC., a Washington corporation with offices located at 923 Powell
Avenue SW, Suite 101, Renton, WA, 98055 ("SFG MORTGAGE"), and CAPITAL MANAGEMENT
GROUP, INC., a Washington corporation with offices located at 923 Powell Avenue
SW, Suite 101, Renton, WA, 98055 ("CMGI").
Whereas SFG MORTGAGE has been formed to engage in non-conventional mortgage
lending and real estate investment activities, and
Whereas SFG MORTGAGE has agreed to retain CMGI in the capacity of
supervisory managing agent upon the terms and conditions hereinafter set forth,
Now, therefore, in consideration of the foregoing and the covenants
hereinafter contained, it is mutually agreed as follows:
1. EMPLOYMENT OF AGENT. SFG MORTGAGE hereby employs CMGI to act in the
capacity of supervisory managing agent to perform the administrative and
ministerial functions with respect to the conduct of SFG MORTGAGE's mortgage
lending business as set forth herein. Provided that, CMGI shall at all times
serve in its capacity as supervisory managing agent at the direction of SFG
MORTGAGE's managers who shall set all policies for SFG MORTGAGE.
2. UNDERTAKING OF AGENT. CMGI shall devote such time and attention as it
considers proper and necessary to act in the capacity of supervisory managing
agent, to conduct the mortgage lending and real estate investment activities of
SFG MORTGAGE, including but not limited the following: to prepare for execution
such contracts, deeds, assignments, releases, and other instruments as are
necessary to conduct SFG MORTGAGE's mortgage lending and real estate investment
business; to maintain all records of the interest of SFG MORTGAGE's Debenture
holders; to arrange for the preparation and execution of all Debentures and
assignments of Debentures issued by SFG MORTGAGE and to record the issuance and
assignments of such Debentures; to maintain SFG MORTGAGE's financial books and
records; and to calculate and make all payments due under the Debentures; and
to calculate and pay all expenses from its own account incurred in the ordinary
course of the business of SFG MORTGAGE. In addition, CMGI will supervise the
maintenance of SFG MORTGAGE's books and records, prepare all necessary tax and
information returns of SFG MORTGAGE, and prepare and distribute to SFG
MORTGAGE's various partners an annual profit and loss statement and balance
sheet of SFG MORTGAGE. All costs related thereto shall be borne by CMGI.
CMGI shall also pay all expenses incurred by SFG MORTGAGE related to the
offer and sale of the Debentures by SFG MORTGAGE, in an amount estimated at One
Hundred Thousand Dollars ($100,000). CMGI may borrow up to Sixty Thousand
Dollars ($60,000) from SFG MORTGAGE to pay these expenses. The terms of such
loans shall require that payments of principal and interest
due to SFG MORTGAGE be made from the amounts due to CMGI under paragraph 3 of
this agreement as its management fee and/or overhead allowance and shall be paid
to SFG MORTGAGE in the form of an offset equal to fifty percent (50%) of all
amounts to be paid to CMGI under paragraph 3, until any such loan is paid in
full. Such loans shall be interest at the rate of thirteen percent (13%) per
annum.
3. COMPENSATION AND REIMBURSEMENT OF AGENT. SFG MORTGAGE shall pay to CMGI
as full compensation for all services rendered by CMGI a yearly sum in an amount
equal to one and one-half percent (1.5%) of the then outstanding total principal
balance due under all Debentures issued by SFG MORTGAGE, payable in equal
quarterly installments at the end of each and every calendar quarter during the
term of this agreement, commencing with the end of the first quarter from the
date hereof. SFG MORTGAGE shall pay to CMGI as full reimbursement for all
expenses incurred and paid by CMGI on SFG MORTGAGE's behalf, a yearly sum of in
amount equal to one percent (1%) of the then outstanding principal balance due
under all Debentures issued by SFG MORTGAGE, payable in equal quarterly
installments at the end of each and every calendar quarter during the term of
this agreement, commencing with the end of the first quarter from the date
hereof. Payment of all such amounts due hereunder shall be subordinated to
payment of the Company's payment of all amounts currently due under the
Debentures.
4. TERMINATION OF AGREEMENT. This agreement shall terminate if any of the
following events shall occur:
(a) Termination and dissolution of SFG MORTGAGE.
(b) Misconduct on the part of CMGII.
5. TERM. This agreement shall continue for a period of five (5) years
from the date hereof, and shall be automatically renewed for additional two (2)
year periods thereafter, unless terminated by either party upon written notice
sent to the other party not less than sixty (60) days before any expiration
date.
6. ARBITRATION. The parties shall submit any dispute as to the
application or interpretation of any term of this agreement to arbitration under
the governing rules and regulations of the American Arbitration Association in
the City of Seattle. Any arbitration hereunder shall be by three arbitrators.
The parties shall bear equally the cost of such arbitrators unless the
arbitrators determine that either party is acting in bad faith, in which event
the arbitrators may require such party to bear the entire cost of the
arbitration.
7. MODIFICATION. This agreement may not be modified, altered, or amended
in any manner except by a written agreement executed by both parties.
8. ASSIGNMENT. This agreement is not assignable by either party without
the express written consent of the other.
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9. ENTIRE AGREEMENT. This Agreement supersedes all agreements previously
made between the parties relating to its subject matter. There are no other
understandings or agreements between them.
10. NOTICES. All notices under this Agreement shall be in writing and
delivered personally or mailed by certified mail, postage prepaid, addressed to
the parties at their last known addresses.
11. NON-WAIVER. No delay or failure by either party to exercise any right
under this Agreement, and no partial or single exercise of that right, shall
constitute a waiver of that or any other right, unless otherwise expressly
provided herein.
12. HEADINGS. Headings in this Agreement are for convenience only and
shall not be used to interpret or construe its provisions.
13. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of Washington.
14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
15. BINDING EFFECT. The provisions of this Agreement shall be binding
upon and inure to the benefit of both parties and their respective legal
representatives, successors, and assigns.
In witness whereof the parties hereto have hereunto set their hands and
seals the day and year first above written.
SFG MORTGAGE AND INVESTMENT
COMPANY, INC.
By /s/John Odegard
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John Odegard, President
CAPITAL MANAGEMENT GROUP, INC.
By /s/Gregory B. Elderkin
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Gregory B. Elderkin, Vice-President
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