"MISSION ASSOCIATION FINANCIAL MANAGEMENT, INC"
MISSION ASSOCIATION FINANCIAL MANAGEMENT, INC. ASSOCIATION FINANCIAL MANAGEMENT AGREEMENT This Management Agreement (“Agreement”) is made by and between Mission Association Financial Management, Inc. “(Agent”), a California corporation, having its principal place of business at 27285 Las Ramblas, Ste. 170, Mission Viejo, CA. 92691 and 17230 Newhope, Inc (“Association”), a California non-profit corporation. WITNESSETH In consideration of mutual promises herein contained, the parties agree as follows: ARTICLE I General Conditions 1.1 Appointment of Agent The Association hereby appoints Agent, and Agent hereby accepts appointment on the terms and conditions hereinafter provided, as managing agent of 17230 Newhope, Inc Homeowners Association located in the County of Orange, State of California hereinafter called “Property”. 1.2 Term of Agreement The term of this agreement shall be for a period of one (1) year beginning on the November 1, 2008 and ending on the October 31, 2009. This agreement shall continue from year to year until terminated by either party upon sixty (60) day written notice. 1.3 Status of Agent Agent shall act on behalf of the Association as a disclosed principal with respect to the matters covered by this Agreement, provided, however, Agent shall have no authority to execute or enter into contracts on behalf of the Association unless specifically directed to do so by Board resolution. 1.4 Role of Agent Agent shall assist the Board in the financial management, operation and administration of the Association. Agent shall use its best efforts to perform its duties under this Agreement in accordance with the Association’s governing documents, including its declaration, by-laws, rules and regulations and other duly enacted policies and procedures (collectively referred to as the “Project Documents”). Agent shall be available at reasonable times to confer with the Board and its representatives regarding the performance of the services set forth herein. 1.5 Delivery of Association’s Records The responsibility of obtaining all records from the previous financial management company or other custodian of records is that of the Association, however, Agent will arrange for pick up of all records which are made available to Agent by the Association from said custodian if requested to do so in writing by Association. Agent will charge a set up fee to set up Association records on Agent’s system, pursuant to the terms as outlined under the heading of “Compensation of Agent”. ARTICLE II General Administration Agent shall perform the following routine financial services: 2.1 Organization of Association Records Agent shall organize the records and documents it receives from Association in accordance with Agent’s normal procedures. Within sixty (60) days from receipt of complete records, Agent shall supply to Association either (a) a financial statement compiled from said records showing Association’s financial situation, or (b) a written recommendation that the Association’s records appear to be incomplete and need to be audited by a Certified Public Accountant. Agent shall not be obligated to issue financial statements on incomplete or inaccurate financial information, nor undertake any investigation; search or discovery as to location of said records, the duplication thereof from original sources or other financial analysis without additional compensation therefore. 2.2 Maintenance of Association’s Financial Records Agent shall maintain all financial records of the Association and its members during the term of the agreement. 2.3 Maintenance of List of Association’s Property Owners Agent shall maintain a current property owner’s list in accordance with written verified information supplied to the Agent. Agent shall us its best efforts in keeping this list current with written information supplied to it. Agent shall record and maintain changes of ownership upon written receipt of change of ownership with verified supporting documentation. Such transfers of ownership shall be processed at an additional fee of $50.00 chargeable to the Association unless Agent coordinates the transfer with the Escrow Company in order to facilitate the updating of t he Association’s records. Agent shall not be obligated to discover transfers of ownership including without limitation, quit claims, foreclosures, court orders, or by other operation of law, that are not reported in a verified manner directly to Agent and there is no obligation of Agent to search Official County or court records for such transfers. Agent shall not be obligated to maintain non-owner tenant or time-share listings. 2.4 Storage and Transfer of Records All records regarding the Association are, and will remain, the property of the Association. Storage of prior year records is the responsibility of the Association. If Agent stores records there will be an additional fee. Upon termination of this Agreement, transfer of records shall occur. Records shall be signed for and picked up at the Agent’s office by any party with written authorization of two (2) members of the Association’s Board of Directors. 2.5 Preparation of Documents Agent will provide assistance to the Association in the preparation of the coming year’s annual operating budget, reserve study through an outside service, insurance renewal. 2.6 Attend Board Meetings Agent shall not attend board meetings as part of this contract. 2.7 Preparation of Annual Audit and/or Tax Returns The Board of Directors of the Association shall select a Certified Public Accountant to prepare the Annual Audit and/or Tax Returns. Agent shall relinquish all customary financial records of the Association and Auditor shall sign for said records. Said records shall be returned to Association Board of Directors or Agent as designated by the Association’s Board of Directors upon timely completion of audit or tax returns. Agent is not responsible for the preparation of audited financial statements and federal and state tax returns. Agent will be responsible for paying estimated tax payments out of Association’s account per Auditor’s request. 2.8 Preparation of 1099 Forms Agent shall prepare and distribute, at Association’s expense, annual 1099 forms as required by law at a rate of $40.00 per item. 2.9 Payments to Vendors Agent shall be responsible for any payments to Association vendors, including Agent. Payments to vendors will occur twice a month as requested by Association. Payments will be made on a timely basis as long as invoices are received as such. Agent will provide Association with a list of payments to vendors monthly with the financial statement. Any checks written outside of the normal “twice a month” schedule will incur an additional charge of $10.00 per item. 2.10 Liability for Use of Financial Statements The Association shall have sole responsibility for the content and use of financial statements, budgets, reserve studies and other financial documents prepared by or at the direction of the Association. The Association hereby agrees to indemnify and hold Agent harmless from all claims, expenses, actions, liabilities and damages (including attorney’s fees and litigation costs) arising out of the content or use of all such documents. All draft financial statements, proposed budgets, draft reserve studies and/or other financial documents prepared pursuant to Civil Code Section 1365 shall be marked “DRAFT” until approved by the Board. ARTICLE III Bank Accounts 3.1 Segregation of Accounts All Association operating checking accounts shall be set up by Agent in a federally insured bank of Agent’s choice. Association funds shall be maintained in individual Association accounts and shall not be commingled with any other Association’s funds. Assessment checks shall be mailed to an offsite lock box. Deposit of checks into Association’s bank accounts shall be made on a daily basis. Agent is not responsible for bank delays, holds or errors. 3.2 Maintenance of Reserve Funds Reserve funds will be deposited into an account as designated by the Association’s Board of Directors. If the Board does not designate an account then Agent will put funds in bank of Agent’s choice. Board of Directors will be designated signers on all reserve accounts. Association agrees to hold Agent harmless of any losses that may occur if the Association does not maintain reserve funds in a federally insured account or maintains more than $100,000.00 in any one financial institution. If regular reserve funds are maintained pursuant to Association’s request at a bank other than Agent’s choice, Association is responsible to provide to Agent every month a copy of the activity of those accounts for the previous month within 5 days of receipt by Board. 3.3 Accounts are Sole Property of Association The above referenced accounts are the sole property of the Association. The Board of Directors is the trustee of the Association’s assets, property and accounts and Agent operates only at the direction of the Board of Directors. At no time shall Agent be construed as the trustee of the Board of Directors or the Association. 3.4 Miscellaneous Banking Provisions Notwithstanding any other provisions of this Agreement, Agent shall not be required to advance any of its own funds to meet the obligations of the Association. Association also grants to Agent the right to endorse checks, drafts and other instruments in the name of, or on behalf of, Association. Agent shall not be held liable in the event of bankruptcy, failure or for any other acts, errors, omissions or defaults of any depository. ARTICLE IV Agency Acknowledgment 4.1 Agency Acknowledgment Everything done by Agent under the provisions of this Agreement shall be done as Agent of Association, and all obligations and expenses incurred thereunder shall be for the account, on behalf, and at the expense of the Association. All payments to be made by Agent under this Agreement shall be made out of the funds of the Association, and Agent shall not be obligated to make any advance to or for the account of Association, or to pay any sum except out of the funds of Association, nor shall Agent be obligated to incur any liability or expense for any account of Association without assurance that the necessary funds for the discharge thereof will be provided. ARTICLE V Duties of Agent – Financial Management 5.1 Financial and Report Preparation Agent shall maintain complete and accurate financial books and records for the Association in accordance with generally accepted accounting practices, including financial statements which consist of the following documents; a balance sheet, budget comparison, general ledger, journal entries, bank statements, income statement, reserve statement, check register, bank reconciliation of operating accounts and Accounts Receivable Reports which consist of the following documents; aging, charge/credit reports, income by date for members and late charge report. Agent shall prepare and submit to the Board, on a monthly basis, such financial reports as the Board may reasonably request. 5.2 Preparation of Owners’ Ledgers Agent shall prepare and maintain individual owners’ ledgers. Agent shall provide to each verified owner a monthly billing statement for payment of assessments to the Association, if requested. Billing errors may be corrected without liability to Agent. 5.3 Preparation of Aged Delinquency Report Agent shall prepare and distribute monthly to the Associations’ Board of Directors an aged delinquency report. Bank charges for non-sufficient funds, account closed uncollected funds or stop payment charges shall be billed back to the Association from Agent’s account and charged to the individual Association member for reimbursement to the Association. 5.4 Accuracy of Financial Information It is understood that the verification and accuracy of financial information submitted to Agent is the sole responsibility of the Association. Agent is not responsible for the production of inaccurate financial statements, owner’s records, billing statements or any other financial reports if the financial data submitted to Agent by the Association, or any other managing agent, is inaccurate. In the event that inaccurate financial data is supplied to Agent, the Association will be responsible for any costs, expenses, claims, obligations, attorney’s fees and accounting fees incurred in an independent financial review for the purpose of correcting inaccurate financial data submitted to Agent. ARTICLE VI Compensation 6.1 Scope of Article Unless otherwise agreed in writing, Agent shall be compensated under this Agreement as provided in this Article. 6.2 Routine Services The Association shall pay Agent a monthly fee of $325.00 per month, payable by the fifth day of each month for services to be performed that month under this Agreement. This fee will include any and all reasonable costs for postage, printing and mailing monthly billing statements, telephone costs, copying costs and supplies used on Association’s behalf. If Association wishes to have additional pages inserted besides the statement with the monthly billing statements, or any additional mailouts then a reasonable additional cost will be charged to the Association. 6.3 Set up Fee Association shall pay the Agent a one time only set up fee of $2.00 per unit to set up the books and records of the Association. 6.4 Extra Services “Addendum A” sets forth all special or extra services which may be performed by Agent at an additional, extra charge to the Association. All such services rendered by Agent on behalf of the Association shall be supported by a statement itemizing the charges. 6.5 Special Services Agent shall be paid a fee for any board meeting attendance requested and any court appearance arising from Agent’s involvement with the Association for any reason. The fee will be $40.00 per hour for Agent or any employee. ARTICLE VII Insurance 7.1 Maintenance of Insurance by Association The Association agrees to purchase and maintain a policy of comprehensive general liability insurance with a limit of no less than $3 Million per occurrence in coverage for bodily injury (including death), property damage and contractual liability, which shall name Agent as an additional insured for all loss, liability and expenses, including costs of defense, arising out of or in any connected with the maintenance or operation of the Association. Such insurance shall be primary and non-contributory to any insurance maintained by Agent. The Association shall deliver to Agent a certificate of insurance evidencing such policy within ten (10) days of execution of the Agreement, and such certificate shall provide that Agent be given thirty (30) days notice of cancellation or diminution in coverage. 7.2 Maintenance of Insurance by Agent The Agent agrees to purchase and maintain an Errors and Omissions policy and agrees to provide evidence of such policy upon request, and shall provide to Association thirty (30) days notice of cancellation or diminution in coverage. Agent shall maintain in force, during the term of this Agreement, a fidelity bond in the amount of $10,000.00 covering only those individuals with check signing authority on Association accounts. Agent shall deliver to the Association a certificate of insurance evidencing such policy within ten (10) days of execution of this Agreement, and such certificate shall provide that the Association be given thirty (30) days notice of cancellation or diminution in coverage. ARTICLE VIII Termination and Renewal 8.1 Notice of Termination Unless the Association’s governing documents provide for shorter notice, this Agreement may be terminated by either party on not less than sixty (60) days written notice, which notice must be given on the first (1st) of the month, provided that, in any event, the termination shall be effective at the end of the month following the month during which notice is given. Upon termination of this Agreement, Agent shall, within 5 working days, deliver to the President or other duly authorized Board representative, all books, papers, records, documents, funds, passbooks, checks, and other property of the Association that is in the possession or under the control of the Agent. 8.2 Renewal At the expiration of the term of this Agreement, if not renewed or terminated in writing by either party, the Agreements shall continue unless terminated as provided in paragraph 8.1 above. 8.3 Cooperation in Transition Agent shall continue to perform all duties and responsibilities under this Agreement after notice of termination until the termination date. Agent and Association agree to cooperate fully with one another to transfer Association property, to execute whatever documents, and to take whatever other action may be necessary prior to termination to cause an orderly transition of Association management to a new Agent. After the termination date, Association shall compensate Agent at the rate set forth in Paragraph 5.2 of Article V, above for special services requested by the Association in assisting in such transition. 8.4 Liquidated Damages In the event the Association terminates this Agreement without good cause during the first six (6) months of its term, the Association shall pay to Agent as liquidated damages one full month’s fee for routine services over and above any other compensation set forth in this Agreement. ARTICLE IX Miscellaneous 9.1 Modification and Status This writing is intended by the parties as a full expression of their Agreement, and all negotiations and representations between the parties having been incorporated herein. No variation, modification, or changes of the Agreement shall be binding unless it is made in writing and executed by both parties. This Agreement shall inure to the benefit and constitute a binding obligation upon the Board of Directors and the Association, to his or its heirs, administration, successors and assigns. If any term, provision, covenant or condition of this agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the rest of the agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 9.2 Applicable Law This Agreement shall be construed in accordance with the laws of the State of California. 9.3 Conflict of Interest Agent shall not accept from any party providing goods and services to the Association, including vendors and independent contractors, any remuneration or consideration in any manner or form, as consideration for or inducement to Agent for using party’s goods or retaining their services on behalf of the Association and all such remuneration or consideration shall be the property of the Association. 9.4 Liability of Agent The Association shall indemnify and hold Agent harmless from all claims, expenses, actions, liabilities and damages (including attorney’s fees and litigation costs) caused in whole or in part by any wrongful act or omission of the Association, any member of the Association or any party acting at the direction or under the supervision of the Association, except to the extent that the same are caused by gross negligence or intentional misconduct of Agent, its employees or agents, and shall indemnify and hold Agent harmless from all claims, actions, liabilities and damages (including attorney’s fees and litigation costs) asserted or threatened by or on behalf of any member of the Association or other party not under Agent’s direct control arising out of or related to any act committed by Agent in good faith while carrying out its duties under the Agreement or at the instruction of the Association. 9.5 Attorney’s Fees If any arbitration or legal action is necessary to enforce the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney’s fees and expenses in addition to any other relief to which it may be entitled. 9.6 Arbitration/Mediation Any controversy or claim arising out of or relating to this Agreement shall be resolved by neutral binding arbitration or mediation, and not by a court action except as provided by California law for judicial review of arbitration proceedings. The proceedings shall be conducted in accordance with the rules of the American Arbitration Association unless the parties otherwise agree to another procedural format. The parties shall agree on either a public or private arbitrator/mediator, if they cannot agree, any party may petition a court for an order to compel arbitration and/or mediation and that party may designate, subject to court approval, the arbitrator/mediator to be used. Judgment may be entered on an arbitration award in any court having jurisdiction. The parties shall have the right to discovery in accordance with Code of Civil Procedure Section 1283.05. Any party affected by a controversy or claim may initiate arbitration and/or mediation by written demand. Thereafter, arbitration and/or mediation shall be pursued to conclusion as quickly as reasonably possible and in every case shall be concluded within six (6) months from the date of the initial written demand, unless all parties agree to extend that time limit. If the time within which to conclude arbitration and/or mediation is not met, any party may petition a court of competent jurisdiction for an order compelling the controversy or claim to be arbitrated or mediated as soon thereafter as reasonably possible. The court shall award all expenses, including attorney’s fees, incurred by a party petitioning a court to compel arbitration and/or mediation as required by this section, unless it finds that the party against whom the petition is filed acted with substantial justification or that other circumstances make the imposition of such expenses unjust. The following matters are excluded from arbitration and/or mediation: (1) An action brought pursuant to the California Small Claims Act; (2) An action for bodily injury or wrongful death; and (3) An action or proceeding to compel arbitration and/or mediation including an action to impose sanctions for frivolous or bad faith activity designed to delay or frustrate arbitration and/or mediation. 9.7 Notice Requirement Any notice required under this Agreement by either party shall be given in writing, and shall be given and deemed to have been duly given if written notice is delivered by United States mail. Notice from the Association to Agent shall be addressed to: Robin Rangel, Mission Association Financial Management, Inc., 27285 Las Ramblas, Ste. 170, Mission Viejo, Ca. 92691. Notice from Agent to Association shall be addressed to the Association’s Board of Directors in care of the President of the Board at his or her Association address. IN WITNESS WHEREOF, the parties hereto have executed the Agreement as of the date set forth below. ASSOCIATION: 17168 Newhope Inc By: ________________________________________ Title: ________________________________________ Date: ________________________________________ AGENT: Mission Association Financial Management, Inc. By: __________________________________ Title: __________________________________ Date: __________________________________