Exhibit No. 7
IBF VI - Guaranteed Income Fund
Form SB-2, Amend. No. 1
File No. 333-71091
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is made as of the ____ day of
____________, 1999 (the "Effective Date"), by and between IBF VI
- PARTICIPATING INCOME FUND, a Delaware corporation with an
address of 0000 Xxxxxxxxxxx Xxxxxx, XX, Xxxxxxxxxx, X.X. 00000
("Company"), and IBF MANAGEMENT CORP., a Delaware corporation,
with an address of 0000 Xxxxxxxxxxx Xxxxxx, XX, Xxxxxxxxxx, X.X.
00000 ("Manager").
Recitals
WHEREAS, Company was formed to engage in the business of
acquiring, holding, and disposing of loan assets and equity
securities (the "Finance Business"); and
WHEREAS, Manager has particular expertise, knowledge and
experience in connection with the operation of the Finance
Business.
Agreement
NOW, THEREFORE, for the consideration herein stipulated, the
mutual covenants set forth herein, and other good and valid
consideration, the parties hereto, intending to be legally bound,
do hereby agree as follows:
1. Duties of Manager
(a) Manager shall have responsibility for the management of
the day-to-day operation of the Finance Business and the Manager
shall perform all management services necessary for the efficient
operation of the Finance Business.
(b) During the term of this Agreement, Manager shall, among
other things:
(i) Review the financial viability of each proposed
investment by the Company in loan and equity transactions
(the "Portfolio Assets"). Manager will utilize underwriting
criteria that are normal and standard in the finance
industry to evaluate each borrower or issuer (the "Portfolio
Companies") and the terms of the proposed Portofoio Asset
transaction. All information regarding the Portfolio
Company and the proposed investment in its Portfolio Assets,
including the Manager's evaluation of risk and return on
investment, will be submitted to the Company for it to
determine whether to make the investment.
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(ii) Provide financial and operational advice in
connection with the operation of the Finance Business;
(iii) Review and approve such accounting and
administrative records, procedures and reports as shall be
necessary to operate the Finance Business and develop
procedures for and carry out the collection of all revenue
generated by the Finance Business and the payment of all
operating expenses of the Finance Business;
(iv) Obtain insurance for liability or otherwise as may
be necessary or prudent, if any;
(v) Review, approve, and carry out operating,
personnel, and other management policies and procedures as
shall be necessary in the operation of the Finance Business;
(vi) Maintain sufficient personnel and independent
contractors to operate the Finance Business;
(vii) Perform all duties set forth in Company's
Registration Statement on Form SB-2, SEC File No. 333-71091
("Registration Statement");
(viii) Advise and consult with Company in connection
with any and all aspects of the Finance Business and the
operation thereof;
(ix) Keep or cause to be kept at the principal office
of Manager and/or the Finance Business all necessary books
and records of all Finance Business affairs (the books of
account shall be kept in accordance with generally accepted
accounting principles and procedures consistently applied),
in which shall be entered the transactions of the Finance
Business and provide Company or its representatives with
access to inspect and examine same at any reasonable time;
(x) Perform all loan servicing functions required for
the Portfolio Assets; and
(xi) Enforce the rights of the Company with respect to
the Finance Business, including, but not limited to,
collecting on the Portfolio Assets.
(c) Manager will pay all overhead, expenses, and salaries
required to perform the services described in Section 1 of this
Agreement, except for legal fees, accounting fees, filing fees,
appraisal fees, fees paid to the Company's Indenture Trustee,
Portfolio Asset transaction costs, taxes, officer and director
liability insurance, and similar expenses.
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2. Compensation of Manager
(a) Manager will receive an organizational fee of 5% of the
gross proceeds of the offering of the Company's Notes described
in the Registration Statement to establish the administrative
facilities and systems required for the Company's Finance
Business.
(b) Manager will receive in each calendar year a management
fee (the "Management Fee"), equal to 2% of the gross proceeds of
the offering of the Company's Notes described in the Registration
Statement. The Management Fee for each year is payable in four
equal installments on the 15th day following the end of each
calendar quarter during the year.
(c) In the event the Company has an accumulated deficit for
any period with respect to which the Management Fee is payable,
the Management Fee for that period will accrue but not be paid
until 15 days following the end of any subsequent calendar
quarter in which the Company has retained earnings and has
otherwise paid or provided for all of its current payment
obligations under the Notes described in the Registration
Statement.
3. Bank Accounts
(a) Manager shall create and maintain, in the name of and
on behalf of Company, one or more bank accounts in a bank or
banks satisfactory to Company for use in operating and
maintaining the Finance Business. Manager shall cause any and
all receipts to be promptly deposited in said account or
accounts. All funds in said account or accounts from time to
time shall be the property of Company. Manager shall cause to be
paid from said account or accounts all payments of costs,
expenses, fees and charges payable by the Company with respect to
the Finance Business, including debt service, subject to the
terms hereof. All such payments shall be made promptly when due
upon receipt of an invoice in reasonable detail as to the source
of the costs in question. In the event that at any time there
shall be insufficient funds in said account or accounts with
which to make any payment provided for hereunder, then Manager
shall immediately notify Company of such fact.
(b) All checks or drafts upon or withdrawals made from the
account or accounts established hereunder shall require the
authorization of a designee of Manager, which authorization may
be in the form of a blanket authorization granted in advance of
any particular check or draft. Manager shall designate the
person or persons having authority to draw checks upon or make
withdrawals from the accounts; provided, however, that in no
event shall a check for any unbudgeted expense be drawn upon, or
a withdrawal made from, the accounts that exceeds $10,000 without
the prior approval of Company. No other accounts of Company
shall be created or maintained by Manager without approval of
Company.
4. Term and Termination
(a) This Agreement shall become effective as of the
Effective Date and shall continue in full force and effect until
terminated by mutual agreement of the parties or as otherwise
provided in Section 4(b) of this Agreement.
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(b) Subject to the provisions of clause (c) of this Section
4, this Agreement may be terminated as follows:
(i) By Company on written notice to Manager in the
event of any default by Manager which continues for 45 days
after written notice thereof from Company to Manager,
provided, however, if such default cannot be cured within
such 45-day period, then such additional period as shall be
reasonable, provided Manager commences to cure such default
within such 45-day period and proceeds diligently to
prosecute such cure to completion;
(ii) By Company or Manager immediately upon the
dissolution of Manager or Company. As used herein,
"dissolution" shall include voluntary or involuntary
dissolution or liquidation and shall occur at such time as
Company or Manager ceases operations, or intends to cease
operations, or files any statement indicating its intent to
dissolve or terminate a significant portion of its
operations, provided, however, that Company and Manager
shall not effect a voluntary dissolution or liquidation and
shall not voluntarily cease operations or a significant
portion of its operations for three years from the Effective
Date without the prior written consent of the other;
(iii) Upon a sale or other disposition of all or
substantially all of the assets of the Company;
(iv) By Company or Manager on written notice to the
other if a petition in bankruptcy or insolvency is filed by
Company or Manager, respectively, or if either shall make an
assignment for the benefit of creditors, or if either shall
file a petition for a reorganization, or for the appointment
of a receiver or trustee of all or a substantial portion of
its property, or if a petition in bankruptcy or other above-
described petition is filed against either which is not
discharged with sixty (60) days thereafter; and
(v) By Company "for cause." As used herein, the term
"for cause" shall mean (A) the gross negligence or
deliberate or willful misconduct of Manager hereunder, or
(B) misappropriation of funds held by Manager in trust for
Company.
(c) After receipt of notice of termination and before the
effective date of termination provided by the notice or this
Agreement, Manager shall continue management of the Finance
Business in accordance with the terms of this Agreement unless
instructed by Company to the contrary, in which case such
instructions shall prevail over any provisions of this Agreement.
Further, Manager shall take all actions necessary to deliver to
Company possession or control of all property of Company or its
designee in an orderly manner and without interruption of
Company's obligations to its obligees, including, but not limited
to, its subscribers, customers, advertisers, servants, employees,
agents, contractors, lenders, and all governmental authorities,
and Manager shall use its best efforts to preserve goodwill and
retain the services of employees and independent contractors of
the Finance Business.
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(d) Subject to any special instruction by Company, upon
termination of this Agreement, Manager shall immediately
relinquish to Company, or its designee, possession and control of
all property of Company, including, but not limited, to all
documents, records, and data pertaining to the Finance Business.
(e) In the event of termination of this Agreement pursuant
to the terms hereof, Manager shall remain liable to Company for
any required payment to Company or other obligations hereunder
accrued prior to the date of termination; and Manager shall be
entitled to receive the amount payable for any accrued but unpaid
services or work performed under the provisions hereof, subject
to the terms hereof as to sources of payment and adjustments of
payments.
5. Power of Attorney
Company hereby makes, constitutes and appoints Manager as
its true and lawful attorney for Company, and in the name, place
and stead of Company from time to time to make, execute, sign,
acknowledge and file any and all documents, certificates or
instruments as Manager may deem necessary or appropriate to
consummate the transactions contemplated by this Agreement. The
foregoing grant of authority is a special power of attorney
coupled with an interest, is revocable and may be exercised by
said attorney-in-fact with full power of substitution.
6. Miscellaneous
(a) All communications permitted or required between the
parties hereto shall be effective when hand delivered or mailed
by United States mail, with postage prepaid, addressed to the
addresses first set forth in this Agreement or at such other
addresses as may be designated from time to time by written
notice to the other party.
(b) This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors
and assigns; however, Manager may not assign its obligations
under this Agreement without the prior written approval of
Company.
(c) This Agreement shall be governed by and construed
according to the laws of the District of Columbia,
notwithstanding any conflict of law provision to the contrary.
This Agreement may not be modified, altered or amended in any
manner except by agreement in writing duly executed by the
parties hereto. This Agreement may be signed in any number of
counterparts, each of which shall be deemed an original; and all
of which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this
Management Agreement as of the day and year first above written.
IBF VI - Participating Income Fund
By:_________________________________
Title:______________________________
IBF Management Corp.
By:_________________________________
Title:______________________________
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