MANAGEMENT SERVICES AGREEMENT
AGREEMENT by and between The Sloane Organization, LLC, a New York limited
liability company (together with its successors and permitted assigns,
"Sloane"), 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 Sloane, has developed expertise in and
facilities to provide certain management services; and
WHEREAS, the Sloane and its owners desires to take advantage of the
experience and facilities of Whitestone in order to improve the functioning of
Sloane, 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 Sloane,
including:
(a) investment and management of cash on hand of Sloane pending investment, in
accordance with policies established by Sloane;
(b) monitoring safekeeping and custody services provided by other parties with
respect to Sloane's assets;
(c) cooperating fully with Sloane and its outside auditors with respect to
Sloane's audit function;
(d) administration of benefit plans that may be implemented by Sloane for its
officers;
(e) administration of payroll and payroll taxes, if any;
(f) all other management or administrative functions necessary for the
operations of Sloane and
(g) all other services incident to the foregoing.
In providing such services, Whitestone will comply with all written
policies and procedures established by Sloane.
2. LENDING AND LOAN AND INVESTMENT MANAGEMENT SERVICES
Whitestone agrees to provide investing, lending and loan management services
to Sloane, including:
(a) providing credit analysis and underwriting services and advice regarding
investments and loans proposed to be extended by Sloane;
(b) preparation of investment and loan contracts and other documents in
connection with transactions managed by Sloane;
(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 Sloane policies;
(e) reviewing credit files and loan documentation at loan origination, and
acting to correct exceptions to Sloane loan policies;
(f) collecting and remitting payments as directed by Sloane;
(g) preparing and mailing borrower bills and notices;
(h) conducting collection activities in connection with delinquent accounts, and
providing to Sloane 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 Sloane;
(j) monitoring the insurance coverage of property securing loans for compliance
with requirements of the loan terms and Sloane'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 Sloane regarding investing,
lending and related policies; and
(m) providing any other services incident to the foregoing.
Sloane 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 Sloane 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 Sloane that
are assigned responsibility for such activities.
3. REGULATORY COMPLIANCE SERVICES
Whitestone agrees to provide regulatory compliance services to Sloane,
including:
(a) preparing any and all applications for permits necessary for Sloane to
conduct its business;
(b) preparing all regulatory reports or information required to be filed by
Sloane with any applicable regulatory authority;
(c) maintaining all records and data required by applicable law to be maintained
by Sloane with respect to its operations;
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(d) cooperating fully with Sloane with respect to examinations of Sloane'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 Sloane 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 Sloane. However, in no way
does this Agreement provide any incidence of control, either directly or
indirectly, of any investment decisions of Sloane.
5. PAYMENT; REIMBURSEMENT OF EXPENSES
In consideration of the services to be performed by Whitestone pursuant to
this Agreement, Sloane will pay an annual fee, in four equal quarterly
installments. Such annual fee shall be an amount equal to Sloane's annual gross
receipts less (a) the amount of $70,000.00, (b) any fees received which total no
more than $300,000 from an advisory relationship with Claridge Hotel and Casino
Corp., and (c) any securities received in respect of the advisory relationships
with said Claridge Hotel and Casino Corp or Inntraport International Corp. The
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.
Sloane will reimburse Whitestone for all direct, out-of-pocket expenses
incurred by Whitestone in connection with the services provided pursuant to this
Agreement. Sloane 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.
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8. INDEMNIFICATION
Sloane 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 of the
performance by Whitestone of services rendered pursuant to this Agreement. In
addition, Sloane 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
Sloane 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, Sloane 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 Sloane or its designee in
connection with Sloane's audit functions or with regard to examinations by
regulatory authorities. Sloane acknowledges that Whitestone is not responsible
under this Agreement for providing audit services or for auditing Sloane's
records or data.
Whitestone will permit Sloane 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 Sloane and/or Whitestone. Whitestone
will keep satisfactory books and records pertaining to the services, and will
permit Sloane or its representatives, at Sloane'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 Sloane, 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.
THE SLOANE ORGANIZATION, LLC
Attest:
------------------------------ By: ----------------------------------
Title: Managing Member
WHITESTONE GROUP, LLC
Attest:
------------------------------ By: ----------------------------------
Title: Managing Member
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