MANAGEMENT SERVICES AGREEMENT
AGREEMENT by and between Sharp Management, LLC, , a New York limited
liability company (together with its successors and permitted assigns, "Sharp"),
and Whitestone Group, LLC, New York, New York, a New York limited liability
company (together with its successors and permitted assigns, "Whitestone"),
dated as of this __ day of November, 1999.
WHEREAS, Whitestone, an affiliate of Sharp , has developed expertise in
and facilities to provide certain management services; and
WHEREAS, the Sharp and its owners desires to take advantage of the
experience and facilities of Whitestone in order to improve the functioning of
Sharp, consolidate management functions and economic value in Whitestone and to
take advantage of efficiencies of scale;
NOW, THEREFORE, in consideration of the mutual promises set forth
herein and other good and valuable consideration the receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. GENERAL MANAGEMENT SERVICES
Whitestone agrees to provide general management services to Sharp,
including:
(a) investment and management of cash on hand of Sharp pending
investment, in accordance with policies established by
Sharp;
(b) monitoring safekeeping and custody services provided by
other parties with respect to Sharp's assets;
(c) cooperating fully with Sharp and its outside auditors with
respect to Sharp's audit function;
(d) administration of benefit plans that may be implemented by
Sharp for its officers;
(e) administration of payroll and payroll taxes, if any;
(f) all other management or administrative functions necessary
for the operations of Sharp and
(g) all other services incident to the foregoing.
In providing such services, Whitestone will comply with all written
policies and procedures established by Sharp.
2. LENDING AND LOAN AND INVESTMENT MANAGEMENT SERVICES
Whitestone agrees to provide investing, lending and loan management
services to Sharp, including:
(a) providing credit analysis and underwriting services and
advice regarding investments and loans proposed to be
extended by Sharp;
(b) preparation of investment and loan contracts and other
documents in connection with transactions managed by
Sharp;
(c) establishing and maintaining investment and loan
documentation files, including, among other things, credit
files and collateral files;
(d) collecting and maintaining current financial statements
for investee companies and borrowers and other
information, documents and reports required by loan
agreements or Sharp policies;
(e) reviewing credit files and loan documentation at loan
origination, and acting to correct exceptions to Sharp
loan policies;
(f) collecting and remitting payments as directed by Sharp;
(g) preparing and mailing borrower bills and notices;
(h) conducting collection activities in connection with
delinquent accounts, and providing to Sharp periodic
reports with respect to its collection activities as well
as recommendations regarding delinquent accounts;
(i) periodically reviewing investments, loans and loan
documentation for compliance with investment contracts,
loan terms and loan policies according to compliance
covenants and schedules established by mutual agreement,
and reporting the results of these reviews to Sharp;
(j) monitoring the insurance coverage of property securing
loans for compliance with requirements of the loan terms
and Sharp's policies, and attempting to cure any
noncompliance;
(k) providing information in response to inquiries from
borrowers and investee companies, and otherwise performing
routine customer services with respect to the investments
and loans;
(l) providing advice to the Managing Members of Sharp
regarding investing, lending and related policies; and
(m) providing any other services incident to the foregoing.
Sharp will provide such powers of attorney, evidences of authority or
other documents as are necessary and appropriate to allow Whitestone to perform
the lending, investing and loan management services pursuant to this Agreement.
In providing such services, Whitestone will comply with the written
policies and procedures established by Sharp relating to investment and loan
policies, procedures and monitoring, and other matters bearing on the investment
and loan management services to be provided by Whitestone pursuant to this
Agreement. The investing, lending and loan management services provided by
Whitestone hereunder will be subject to the direction and supervision of such
officers of Sharp that are assigned responsibility for such activities.
3. REGULATORY COMPLIANCE SERVICES
Whitestone agrees to provide regulatory compliance services to Sharp,
including:
(a) preparing any and all applications for permits necessary
for Sharp to conduct its business;
(b) preparing all regulatory reports or information required
to be filed by Sharp with any applicable regulatory
authority;
(c) maintaining all records and data required by applicable
law to be maintained by Sharp with respect to its
operations;
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(d) cooperating fully with Sharp with respect to examinations
of Sharp's operations by applicable regulatory
authorities; and
(e) providing all other services incident thereto.
4. SAME DEGREE OF CARE; BEST EFFORTS
In performing services pursuant to this Agreement, Whitestone will use
its best efforts and exercise the same degree of care and effort it would
exercise with respect to its own functions of a like nature, and at a minimum
will cause its officers and employees to devote sufficient time, attention and
resources to the affairs of Sharp as to the management and conduct of the
business in a manner consistent with the best practices of the industry and will
not give preference or priority with respect to such matters over any other
entity for which it provides the same or similar services as to Sharp. However,
in no way does this Agreement provide any incidence of control, either directly
or indirectly, of any investment decisions of Sharp.
5. PAYMENT; REIMBURSEMENT OF EXPENSES
In consideration of the services to be performed by Whitestone pursuant
to this Agreement, Sharp will pay an annual fee , in four equal quarterly
installments. Such annual fee shall be an amount equal to Sharp's annual gross
receipts less the amount of $70,000.00; quarterly installments shall be paid in
arrears and shall be based upon estimates of expected annual revenues and
adjusted within 45 days of the conclusion of each fiscal year. The annual fee
for any one-year term in which a cancellation of this Agreement is effective
will be calculated by multiplying the total annual fee set forth above, by a
fraction, the numerator of which is the number of days in the term of this
Agreement prior to the effective date of the cancellation, and the denominator
of which is 365.
Sharp will reimburse Whitestone for all direct, out-of-pocket expenses
incurred by Whitestone in connection with the services provided pursuant to this
Agreement. Sharp promptly will pay such bills, invoices, or the like, delivered
to it for payment by Whitestone or such other person who has rendered goods or
services in connection with the performance by Whitestone of services pursuant
to this Agreement and Whitestone will have no liability with respect to payment
for any such bills.
6. TERM OF AGREEMENT; CANCELLATION; RENEWALS
The term of this Agreement will be one year, and either party may
cancel this Agreement at any time, effective ten days following the delivery of
written notice to the other party.
7. AMENDMENTS, WAIVERS
All amendments or waivers of the provisions of this Agreement must be
in writing.
8. INDEMNIFICATION
Sharp and any successor agrees to indemnify and hold (a) Whitestone,
and (b) its officers, employees, and agents (to the extent serving in such
capacity, each such person an "Indemnified Party"), harmless against all losses,
claims, damages, expenses, or liabilities, joint or several, to which Whitestone
or an Indemnified Party may become subject in any way related to or arising out
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of the performance by Whitestone of services rendered pursuant to this
Agreement. In addition, Sharp agrees to reimburse Whitestone and the Indemnified
Party for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, or liability or
any action in respect thereof, including, without limitation, losses, claims,
damages, expenses, liabilities, costs, or expenses arising out of any dispute
whether or not Whitestone is a party to such dispute; provided, however, that
Sharp shall not be liable under the foregoing indemnity agreement with respect
to any loss, claim, damage, expense, or liability to the extent that a court
having jurisdiction over such matters shall have determined by a final judgement
that such loss, claim, damage, expense, or liability resulted primarily from the
willful misconduct or gross negligence of or violation of law by Whitestone or
the Indemnified Party. In regards to any legal expenses incurred by Whitestone
in connection with this indemnification, Sharp shall only be liable for the
expenses of one attorney unless such attorney determines, in his/her judgment,
that he/she cannot represent both parties under applicable law or ethical rules.
This indemnification agreement will remain in effect regardless of any
termination of this Agreement.
9. AUDIT; EXAMINATION AND COPIES
Whitestone agrees to cooperate fully with Sharp or its designee in
connection with Sharp's audit functions or with regard to examinations by
regulatory authorities. Sharp acknowledges that Whitestone is not responsible
under this Agreement for providing audit services or for auditing Sharp's
records or data.
Whitestone will permit Sharp or its authorized representatives, at
any time during Whitestone's business hours but with three days' written notice,
to examine all books and records relating to the services provided under this
Agreement and meet with any officers, employees, and independent accountants to
discuss affairs, finances and accounts of Sharp and/or Whitestone. Whitestone
will keep satisfactory books and records pertaining to the services, and will
permit Sharp or its representatives, at Sharp's expense, to make a photostatic
or other copies of such of these records as it or they may desire.
10. NO IMPERMISSIBLE TYING ARRANGEMENTS
Neither party hereto has entered this Agreement or fixed or varied the
terms of this Agreement based upon the provision of other services, goods, or
credit from either party or based upon either party's not obtaining services,
goods, or credit from another person.
11. SEVERABILITY
If any provision of the Agreement is invalid or enforceable then, to
the extent possible, all of the remaining provision of this Agreement shall
remain in full force and effect and shall be binding upon the parties hereto.
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12. CHOICE OF LAWS
This Agreement and the rights and obligations hereunder shall be
governed by and construed in accordance with the laws of the State of New York,
including the choice of law rules thereof.
13. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original.
14. ENTIRE AGREEMENT
This Agreement embodies the entire agreement of the parties in relation
to the subject matter herein and supersedes all prior understandings or
agreements, oral or written, between the parties hereto.
15. SUCCESSORS AND ASSIGNS
This Agreement may not be assigned by Whitestone without the written
consent of Sharp, the Insurer and the Certified Investors. This Agreement shall
be binding on the successors and assigns of the parties hereto.
16. TITLES; DEFINED TERMS
Titles and subtitles are for convenience of reference only. Unless
otherwise defined herein, capitalized terms have the meanings assigned to them
in the Note and Warrant Purchase Agreements dated as of September 30, 1999.
17. NOTICES
Any notice, request, demand, consent, approval or other communication
to any party hereto shall be effective when received and shall be given in
writing, and delivered in person against receipt therefor, or sent by registered
mail, postage prepaid or courier service to its address as it shall hereafter
furnish in writing to the other. All such notices and other communication shall
be deemed given on the date received by the addressee.
[Signature Page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives on the date first written
above.
SHARP MANAGEMENT, LLC
Attest:
By:
----------------------------- ------------------------------------
Title: Managing Member
WHITESTONE GROUP, LLC
Attest:
By:
----------------------------- ------------------------------------
Title: Managing Member
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