EXHIBIT 10.6
MARKETING AGREEMENT
BY AND BETWEEN
NRT INCORPORATED
AND
PHH MORTGAGE SERVICES CORPORATION
MARKETING AGREEMENT
This Marketing Agreement ("Agreement") is entered into on this 11th day
of August, 1997, and effective as of the first day of the month following the
month in which, NRT Incorporated acquires the assets of National Realty Trust
("Effective Date"), between PHH Mortgage Services Corporation ("PHH"), a New
Jersey corporation having an office at 0000 Xxxxxx Xxx, Xx. Xxxxxx, Xxx Xxxxxx
00000 and NRT Incorporated, a Delaware corporation, having an office at 0 Xxxxxx
Xxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 ("NRT") (the "Parties").
WHEREAS, PHH is engaged in providing mortgage services that include
counseling, efficient processing, origination, and servicing of mortgage loans
on homes located in the United States; and
WHEREAS, NRT provides residential real estate brokerage services through
real estate brokers and agents ("Agents") in approximately 400 real estate
brokerage offices in the United States ("Existing NRT Offices")and intends to
acquire additional real estate brokerage operations from time to time during the
term of this Agreement ("Future NRT Offices") ("Existing NRT Offices" and
"Future NRT Offices" are collectively referred to herein as "NRT Offices"); and
WHEREAS, PHH and NRT wish to develop a marketing program ("Program"),
the purpose of which will be to market PHH's mortgage services to the NRT
Offices and Agents.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the Parties hereby agree as follows:
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1. The Program.
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(a) NRT shall provide access to PHH and market PHH and its various mortgage
programs and products to the NRT Offices and Agents. The Program shall
include posting of PHH signs and banners throughout the NRT Offices, mail
inserts, brochures and advertisements. In addition, the NRT Offices shall
be encouraged to provide access to PHH in its company newsletters and to
all of its Agents during the periodic sales meetings. NRT shall also
provide access to the NRT Offices and Agents to a PHH loan originator.
The marketing of PHH's programs and products shall direct all interested
customers to contact PHH directly to obtain a mortgage loan.
Before the Effective Date the parties shall make final, and semiannually
or more frequently thereafter will confer and amend, as appropriate,
their marketing plan to implement the Program and their respective
obligations thereunder. Such marketing plan will include, but is not
limited to, as applicable: (i) the newspapers or other media in which NRT
Offices will place advertisements, (ii) the types, format, content,
quantity and distribution channels for brochures and other materials to
be produced and distributed by the NRT Offices; (iii) the size, format,
content, quantity and location of signs, banners and related materials,
to be displayed; (iv) the types, content, frequency and distribution of
mailings; and (v) the opportunities to be provided to PHH loan
originators to address Agents in the NRT Offices.
(b) Although NRT through its NRT Offices shall market PHH to its Agents as
required by the Program, neither the NRT Offices nor Agents shall be
required to, and they shall not as part of the Program, provide advice,
counseling or assistance to consumers in connection with any particular
mortgage loan for which they have applied or may apply to PHH.
(c) The NRT Offices shall encourage Agents and relocation directors to
inform all customers of the mortgage loan products and services
offered by PHH. As mutually agreed upon by PHH and NRT, from time to
time, PHH will provide one or more dedicated toll free telephone
numbers for the Program.
(d) PHH covenants and agrees that the terms and conditions of the Program
shall be no less favorable than the material terms and conditions of
any other PHH program offered where the same services and relationship
are being provided by a real estate corporation of the size and scope
of NRT, and failure of PHH to comply with this covenant shall be
deemed to be a material breach of the Agreement. NRT may terminate
this Agreement without penalty in the event a nationwide third party
provider of mortgage services, of similar reputation and quality as
PHH, offers NRT a marketing arrangement comparable in all material
respects to the Program, on economic terms more favorable to NRT than
those set forth in this Agreement, provided that such offer is in
writing and binding upon such third party if accepted by NRT, and is
consistent with all applicable requirements of law. In such event, NRT
shall promptly notify PHH of such offer in writing and PHH shall have
ninety (90) days in which to agree or decline to match it. In the
event PHH agrees to match it, the new terms shall apply to the Program
beginning the first day of the calendar quarter immediately following
such ninety (90) day period. If PHH declines, NRT may terminate the
Agreement upon the expiration of ninety (90) days following receipt of
written notice of termination thereof.
2. Compensation.
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(a) (i) Commencing with the Effective Date, PHH shall pay a quarterly fee
to NRT for the access and marketing services provided under the
Program ("Quarterly Marketing Fee"). The Quarterly Marketing Fee shall
be paid within 15 days of the beginning of each calendar quarter of
the term of this Agreement. The amount of
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the Quarterly Marketing Fee shall be determined in accordance with
Exhibit A (Fee Matrix) appended hereto and incorporated herein by this
reference, as further adjusted as provided in this section 2.
(ii) In the event the Effective Date is a date other than the first
day of a calendar quarter (a "Partial Quarter"), no Quarterly
Marketing Fee shall be payable until the next calendar quarter. For
example, if the Effective Date is September 1, 1997 there shall be no
compensation payable until the calendar quarter beginning October 1,
1997.
(b) (i) By the close of each calendar quarter, each NRT Office shall
report to NRT the number of home purchases and sales ("Units") it
closed that quarter, and the average home sales price for such Units,
relying therefor upon the management reports prepared by NRT Offices
for NRT, in due course. NRT shall aggregate the number of Units for
all NRT Offices; determine the average sales price for all such Units;
determine from Exhibit A the Quarterly Marketing Fee to be paid for
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the next calendar quarter, and promptly report its determination and
the basis therefor (the "Data") to PHH. NRT shall reasonably cooperate
with PHH in any further examination of the Data it reasonably may
seek.
(ii) The initial Quarterly Marketing Fee shall be established by
determining the Units closed and the average sales price for such
Units for the calendar quarter immediately preceding the first
calendar quarter in which fees are payable pursuant to section 2(a).
Subsequent Quarterly Marketing Fees shall be established in accordance
with the procedure set forth in section 2(b)(i) above.
(c) The Parties acknowledge and agree that the Quarterly Marketing Fee
reflects the reasonable and fair market value of the goods and
services to be provided by NRT and its NRT Offices under the Program,
without regard to the value or volume of mortgage loans that may be
attributable to the Program. The Parties have
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concluded that the average sales price of home purchases and sales in
which NRT Offices participate, and the aggregate number of such purchase
and sale transactions, are reasonably related during each such calendar
quarter to, among other factors; (i) the number of Agents employed by or
working with NRT Offices; (ii) the number of real estate customers
(including home buying customers) of NRT Offices; (iii) the marketing
areas served by the NRT Offices; and (iv) the effectiveness, continuity,
and coordinated nature of the Program. Not more frequently than
semiannually during the term of the Agreement, either Party may notify
the other, in writing, of its determination ("Determination"), and the
basis therefor, that the Quarterly Marketing Fee amount may fail to
reflect the reasonable and fair market value of the access, goods and
services provided by NRT and the NRT Offices under the Program. The
Parties shall promptly confer in good faith about the Determination. If
they agree, the Parties shall adjust Exhibit A in accordance with the
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Determination, or otherwise, effective at the beginning of the following
calendar quarter. If they do not agree, Exhibit A shall not be revised.
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(d) NRT intends to roll-out the Program to Existing NRT Offices during the
first four (4) consecutive calendar quarters of the term of this
Agreement (the "Initial Four Quarters") by focusing its efforts on
providing the Program in an orderly and progressive manner to Existing
NRT Offices, during each of the Initial Four Quarters, as set forth
below (the "Roll-out"). In recognition of the Roll-Out, the Parties
agree that the Quarterly Marketing Fee for each of the Initial Four
Quarters similarly shall be adjusted, so that the Quarterly Marketing
Fee paid for the first of the Initial Four Quarters shall be 25% of the
amount that otherwise would be payable under this section 2; the amount
for the second and third quarters, 50%; and the amount for the fourth
quarter, 75%. After the Initial Four Quarters, the Quarterly Marketing
Fee shall be equal to 100% of the amount payable under this section 2.
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(e) Units attributable to Future NRT Offices ("Acquisition Units"), which
shall be established by determining the Acquisition Units closed for
the calendar quarter immediately preceding the acquisition date of
such Future NRT Offices ("Acquisition Date"), shall be added to the
number of Units for all NRT Offices for purposes of calculating the
Quarterly Marketing Fee to be paid hereunder on the first day of the
month immediately following such Acquisition Date.
(f) The fees payable under this section 2 shall be subject to mutually
agreed upon adjustments in the event the Xxx Xxxxxxx Real Estate
Services Group and Cornish & Xxxxx Residential, Inc. transactions
contemplated as of the date of this Agreement (which for purpose of
this Agreement shall be included in the definition of Existing NRT
Offices) are not consummated.
3. Exclusivity. During the term of this Agreement, neither NRT nor any NRT
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Office shall enter into any similar agreement with any other person or
entity, including, but not limited to, any agreement to provide access and
marketing services or to endorse or permit the rental of space within NRT
Offices to any mortgage loan origination entity other than PHH (except that
this prohibition shall not apply in those instances where the Future NRT
Offices had such an arrangement in place prior to the applicable
Acquisition Date, provided that NRT shall use reasonable efforts to
promptly terminate such arrangements without undue expense or hardship), it
being acknowledged that individual customers and Agents are not precluded
thereby from choosing to do business with the mortgage loan origination
entities of their choice.
4. Relationship. The relationship between PHH and NRT shall be that of
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independent contractors and neither party shall be or represent itself to
be an agent, employee, partner or joint venturer of the other, nor shall
either party have or represent itself to have any power or authority to act
for, bind or commit the other. PHH shall have sole discretion
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and authority with respect to product development, origination, processing,
underwriting and servicing of all mortgage loans and mortgage loan
applications.
5. Confidential Information. Each party recognizes that, during the term of
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this Agreement, its directors, officers or employees may obtain knowledge of
trade secrets, membership lists and other confidential information of the
other Party which are valuable, special or unique to the continued business
of that Party. Accordingly, each Party hereby agrees to hold such
information in confidence and to use its best efforts to ensure that such
information is held in confidence by its officers, directors and employees.
6. Disclaimer. Neither PHH nor NRT make any representation or warranty to the
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other regarding the effect that this Agreement and the consummation of the
transactions contemplated hereby may have upon the foreign, federal, state
or local tax or other liability of the other.
7. Severability. If any material provision of this Agreement should be invalid,
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illegal or in conflict with any applicable state or federal law or
regulation, such law or regulation shall control, to the extent of such
conflict, without affecting the remaining provision of this Agreement.
8. Term and Termination.
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(a) The term of this Agreement shall be forty (40) years commencing on its
Effective Date unless earlier terminated in accordance with the
provisions of this Section 8.
(b) PHH may terminate this Agreement, at any time, with or without cause,
by providing ninety (90) days' written notice to NRT. NRT may terminate
this Agreement by providing ninety (90) days written notice to PHH upon
any material default by PHH that is not corrected within such ninety
(90) day period; provided, however, that PHH shall be required to
provide mortgage services under the
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Program for a transition period, not to exceed 365 days from notice of
termination, as reasonably required by NRT to transition to a new
mortgage lender.
(c) NRT may terminate this Agreement in accordance with the provisions of
section 1(d) of this Agreement.
(d) Upon termination of this Agreement, as provided herein: (i) NRT shall
refrain from any and all further use of or reference to materials
utilizing PHH; (ii) PHH shall continue to process, in due course, any
mortgage loan applications submitted by the NRT Offices' customers
prior to termination of this Agreement; and (iii) PHH's obligation to
pay any then due Quarterly Marketing Fee, and the provisions of
sections 5 and 9 of this Agreement, shall survive, it being understood
and agreed that any earned portion of such Quarterly Marketing Fee
shall be paid pro rata, or any unearned portion of such Quarterly
Marketing Fee shall be refunded pro rata, as applicable, based upon
the amount that would have been payable for a full calendar quarter
and the actual number of days elapsed for the quarter at the effective
date of termination.
9. Hold Harmless.
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(a) PHH agrees to indemnify, defend and hold NRT harmless from and against
any and all claims, suits, actions, liability, losses, expenses or
damages which may hereafter arise, which NRT, its affiliates,
directors, officers, agents or employees may sustain due to or arising
out of any negligent act or omission by PHH, its affiliates, officers,
agents, representatives or employees in violation of this Agreement or
in violation of any applicable law or regulation. Provided, however,
the above indemnification shall not provide coverage for (a) any
claim, suit, action, liability, loss, expense or damage to the extent
that it resulted from an act or omission of NRT or any indemnified
party, (b) the amount by which any cost, fee, expense or loss
associated with any of the foregoing were increased as a result of
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an act or omission on the part of NRT or any indemnified party, or (c)
any claim, suit, action, liability, loss, expense or damage arising out
of, or connected to, any activity or relationship outside the scope of
this Agreement.
(b) NRT agrees to indemnify, defend and hold PHH harmless from and against
any and all claims, suits, actions, liability, losses, expenses or
damages which may hereafter arise, which PHH, its affiliates, directors,
officers, agents or employees may sustain due to or arising out of any
negligent act or omission by NRT, its affiliates, officers, agents,
representatives or employees in violation of this Agreement or in
violation of any applicable law or regulation, or out of the real estate
brokerage business of NRT, its affiliates, officers, agents,
representatives or employees. Provided, however, the above
indemnification shall not provide coverage for (a) any claim, suit,
action, liability, loss, expense or damage to the extent that it
resulted from an act or omission of PHH or any indemnified party or (b)
the amount by which any cost, fee, expense or loss associated with any
of the foregoing were increased as a result of an act or omission on the
part of PHH or any indemnified party or (c) any claim, suit, action,
liability, loss expense or damage arising out of, or connected to, any
activity or relationship outside the scope of this Agreement.
10. Notices. All notices required or permitted by this Agreement shall be
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in writing and shall be given by certified mail, return receipt
requested or by reputable overnight courier with package tracing
capability and sent to the address at the head of this Agreement or such
other address that a party specified in writing in accordance with this
paragraph.
11. Amendment. The terms and conditions of this Agreement may not be
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modified or amended other than by a writing signed by both Parties.
12. Assignment: Binding Nature. The terms of this Agreement shall be binding
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upon and shall inure to the benefit of the Parties hereto. This Agreement
shall not be assigned by any Party without the express prior written
consent of the other Party, which consent may be given or withheld in the
sole discretion of the Party whose consent is required hereby.
13. Entire Agreement. This Agreement and any Exhibits attached hereto
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constitute the entire Agreement between the parties and supersede all oral
or written negotiations of the Parties with respect to the subject matter
thereof.
14. Governing Law. This Agreement shall be subject to and construed under the
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laws of the State of New Jersey, without reference to conflicts of law
provisions thereof.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
the date and year first above written.
PHH MORTGAGE SERVICES NRT INCORPORATED
CORPORATION
/s/ Xxxxx X. Xxxxxx /s/ Xxxxxx Xxxxxx
Signature: ___________________ Signature: _________________
Xxxxx X. Xxxxxx Xxxxxx Xxxxxx
By: __________________________ By: ________________________
SVP Vice President
Title: _______________________ Title: _____________________
Enclosures: Exhibit A (Fee Matrix)
[CAPTION]
PHH Mortgage Services Confidential Sheet1 Page 1
National Realty Trust
Marketing Fee Template
Quarterly at close units reported to franchisor
Beginning Unit Volume 1 1001 2501 5001 7501
Ending unit volume 1000 2500 5000 7500 10000
Average Sales Price
75000-90000 $ 4,455 $ 11,138 $ 22,275 $ 33,413 $ 44,550
90001-115000 $ 6,075 $ 15,188 $ 30,375 $ 45,563 $ 60,750
115001-125000 $ 6,750 $ 16,675 $ 33,750 $ 50,625 $ 67,500
125001-175000 $ 8,100 $ 20,250 $ 40,500 $ 60,750 $ 81,000
175001-250000 $ 12,083 $ 30,206 $ 60,413 $ 90,619 $ 120,825
250001-325000 $ 15,526 $ 38,813 $ 77,625 $116,438 $ 155,250
325001-400000 $ 20,250 $ 50,625 $ 101,250 $151,875 $ 202,500
400000+ $ 23,625 $ 58,053 $ 118,125 $177,188 $ 236,250
PHH Mortgage Services Confidential
PHH MORTGAGE SERVICES CONFIDENTIAL Sheet 1 Page 1
National Realty Trust
Marketing Fee Template
Quarterly at close units reported to franchisor
Beginning Unit Volume 10001 15001 20001 25001 30001
Ending unit volume 15000 20000 25000 30000 35000
Average Sales Price
75000-90000 $ 59,400 $118,800 $178,200 $ 237,600 $ 371,250
90001-115000 $ 51,000 $162,000 $243,000 $ 324,000 $ 506,250
115001-125000 $ 90,000 $100,000 $270,000 $ 360,000 $ 562,500
125001-175000 $108,000 $218,000 $324,000 $ 432,000 $ 675,000
175001-250000 $161,100 $322,200 $483,300 $ 644,400 $1,008,875
250001-375000 $207,000 $414,000 $621,000 $ 828,000 $1,293,750
325001-400000 $270,000 $540,000 $810,000 $1,080,000 $1,687,500
400000+ $315,000 $630,000 $945,000 $1,260,000 $1,968,750
PHH MORTGAGE SERVICES CONFIDENTIAL Sheet 1 Page 1
PHH Mortgage Services Confidential Sheet1 Page 1
National Realty Trust
Marketing Fee Template
Quarterly at close units reported to franchiser
Beginning Unit Volume 35001 40001 45001 50001 55001
Ending unit volume 40000 45000 50000 55000 60000
Average Sales Price
75000-90000 $ 445,500 $ 561,330 $ 712,800 $ 801,900 $ 891,000
90001-115000 $ 607,500 $ 765,450 $ 972,000 $1,093,500 $1,215,000
115001-125000 $ 675,000 $ 850,500 $1,080,000 $1,215,000 $1,350,000
125001-175000 $ 810,000 $1,020,600 $1,295,000 $1,458,000 $1,620,000
175001-250000 $1,208,250 $1,522,395 $1,933,200 $2,174,850 $2,416,500
250001-325000 $1,552,500 $1,956,150 $2,484,000 $2,794,500 $3,105,000
325001-400000 $2,025,000 $2,551,500 $3,240,000 $3,645,000 $4,050,000
400000+ $2,362,500 $2,976,750 $3,760,000 $4,252,500 $4,725,000
PHH Mortgage Services Confidential Sheet1 Page 1
PHH Mortgage Services Confidential Sheet 1 Page 1
National Realty Trust
Marketing Fee Template
Quarterly at close units reported to franchisor
Beginning Unit Volume 60001 65001 70001 75001 80001
Ending Unit Volume 65000 70000 75000 80000 85000
Average Sales Price
75000-90000 $1,143,450 $1,247,400 $1,351,350 $1,663,200 $1,782,000
90001-115000 $1,559,250 $1,701,000 $1,842,750 $2,268,000 $2,430,000
115001-125000 $1,732,500 $1,890,000 $2,047,500 $2,520,000 $2,700,000
125001-175000 $2,079,000 $2,268,000 $2,457,000 $3,024,000 $3,240,000
175001-250000 $3,101,175 $3,383,100 $3,685,025 $4,510,800 $4,833,000
250001-325000 $3,984,750 $4,347,000 $4,709,250 $5,798,000 $6,210,000
320001-400000 $5,197,500 $5,670,000 $6,142,500 $7,560,000 $8,100,000
400000+ $6,063,750 $6,615,000 $7,168,250 $8,820,000 $9,450,000
PHH Mortgage Services Confidential
