MANAGEMENT AGREEMENT

 
                                            MANAGEMENT AGREEMENT
   

     THIS MANAGEMENT AGREEMENT is made as of the 1st day of August, 1996 (the
"Effective Date"), by and between AMERICAN EQUITIES INCOME FUND, INC., a
Delaware corporation with an address of East 80 Route 4, Paramus, NJ 07652 ("Owner"),
and AMERICAN EQUITIES GROUP, INC., a New York corporation, with an address of
East 80 Route 4, Paramus, NJ 07652 ("Manager").

                                BACKGROUND

     WHEREAS, Owner was formed to acquire, sell and/or finance commercial accounts
receivable (the "Finance Business"); and

     WHEREAS, Manager has particular expertise, knowledge and experience in
connection with the operation of the Finance Business.

     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)  market accounts receivable, purchase services to third party
           companies, including generating new Customers and retaining existing
           customers;

               (ii) review the financial viability of the entity desiring to finance
          receivables or borrow funds based upon its receivables (the "Customer"). 
          Manager will utilize TRW, Dun & Bradstreet or other services to determine
          whether or not the Customer is in a position to factor or finance its
          receivables.  In addition to the standard underwriting practice, UCC searches
          will be conducted to determine whether or not the Customer had previously
          pledged its receivables.  Assuming the Customer meets Manager's and the
          Owner's standards, the Owner will acquire, factor or lend against the
          receivables.  The Owner will enter into a purchase or factoring agreement with
          the Customer which will typically provide that all of the Customer's
          receivables would be pledged or sold to the Owner for a cash payment of 65%
          to 80% of their face amount with the balance (the "Deferred Portion") being
          due to the Customer upon collection.  The Owner will typically charge 7% to
          10% of the face amount of the receivables as a fee.  The Owner will have the
          right to offset against the Deferred Portion for any receivables paid for and not
          collected including the Owner's fees;  

               (iii)     provide financial, and operational advice in connection with the
          operation of the Finance Business, including, but not limited to, advice relating
          to maintenance, and development of advertising and marketing sales programs
          in order to attempt to achieve the operating goals established from time to time
          by Owner, and upon approval of Owner, put such advice and programs into
          effect;

               (iv) 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;

               (v)  obtain insurance for liability or otherwise as may be necessary
          or prudent, if any;

               (vi) review, approve and carry out operating, personnel and other
          management policies and procedures as shall be necessary in the operation of
          the Finance Business;

               (vii)     maintain sufficient personnel to operate the Finance Business; 

               (viii)    perform all duties set forth in the Registration Statement
          of Owner; 

               (ix) advise and consult with Owner in connection with any and all
          aspects of the Finance Business and the operation thereof, and assist Owner in
          selection of and consultation with attorneys, accountants and consultants hired
          by Owner;

               (x)  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
          Owner or its representatives with access to inspect and examine same at any
          reasonable time;

               (xi)      provide customer service to Customers; and

               (xii)     enforce the rights of the Owner with respect to the Finance Business,
          including, but not limited to, collecting on the accounts receivables of its Customers.

     (c)  It is hereby understood and acknowledged that Manager is the manager of
other affiliated entities, each of which is in the Finance Business.  Manager has developed a
system for placing Receivables with its different pools of capital which it will apply to the
funds of Owner.  Each pool managed by Manager acquires definitive receivables on a
rotating basis based upon each pool's availability of funds.  In this manner, pools which have
sufficient funds available for the purchase of Receivables receive the first opportunity to
purchase new Receivables.  This ensures that no one pool receives preferential treatment in
the purchase of Receivables.     

     2.   Compensation of Manager

     Owner and Manager will share the fees charged, 50% to the Owner and 50% to
Manager.  Manager will pay all overhead, expenses, and salaries from its portion of the fees
except for legal, accounting, filing fees, taxes and other administrative expenses related to
the Owner.  Manager will defer its fees if funds are insufficient to pay interest and/or
principal as it comes due.  The portion of the Owner's net revenues not paid to the Note
Holders shall be retained by the Owner and utilized to acquire additional accounts receivable. 
Dividends to the parent company, Manager, may only be paid to the extent of such retained
amounts; provided, that after the payment of any dividends the Owner's cost of its purchased
receivables plus cash on hand (less any liabilities) exceeds the face amount of all Notes
outstanding.     
 
     Owner will not engage in any other business other than as set forth above and
Manager, as manager, will ensure to the extent possible that the Owner incurs no liabilities. 
Manager will handle all administrative matters and employ the necessary personnel.  All
receivables acquired by the Owner will either be owned by the Owner or subject to UCC-1
Financing Statements filed against the Customer in favor of the Owner or in favor of AEG
assigned to Owner.  Although Manager may sponsor other special purpose corporations or
partnerships in the future or raise funds and acquire receivables itself, all transactions will
remain strictly segregated.   

     3.  Bank Accounts

     (a)  Manager shall create and maintain, in the name of and on behalf of Owner one
or more bank accounts in a bank or banks satisfactory to Owner 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 Owner.  Manager shall cause to be paid from said account or
accounts all payments of costs, expenses, fees and charges payable by the Owner 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 of accounts with which to make any payment provided for
hereunder, then Manager shall immediately notify Owner 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 such person or persons to have authority
to draw checks or drafts upon or make withdrawals, provided, however, that in no event
shall a check or draft for any unbudgeted expense be drawn upon, or a withdrawal made
from, either such account that exceeds $10,000 without the prior approval of Owner.  No
other accounts of Owner shall be created or maintained, by Manager without approval of
Owner.  

     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) hereinbelow.

     (b)  Subject to the provisions of clause (c) of this Section 4, this Agreement may
be terminated as follows:

               (i)  by Owner on written notice to Manager in the event of any
          default by Manager which continues for 45 days after written notice thereof
          from Owner 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 Owner or Manager immediately upon the dissolution of
          Manager or Owner.  As used herein, "dissolution" shall include voluntary or
          involuntary dissolution or liquidation and shall occur at such time as Owner 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 Owner 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 Owner, provided; however, that if Owner requests Manager to
          continue to administer the liquidation of the Finance Business, including
          paying any bills, receiving any accounts, or handling any post-closing escrow
          or proration items after the transfer of ownership of all or substantially all of
          the assets of the Finance Business, then Manager shall receive a monthly
          management fee amounting to the average monthly fee earned by Manager
          under Section 2(b) above for the three month period immediately preceding the
          transfer of ownership;
   
               (iv) by Owner or Manager on written notice to the other if a petition in
          bankruptcy or insolvency is filed by Owner 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 Owner "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 Owner.

     (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 Owner
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 Owner possession
or control of all property of Owner or its designee in an orderly manner and without
interruption of Owner'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 of the Finance Business.

     (d)  Subject to any special instruction by Owner, upon termination of this Agreement,
Manager shall immediately relinquish  to Owner, or its designee, possession and control of
all property of Owner, including, but not limited, to the physical plant and equipment and 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 Owner for any required payment to Owner 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

     Owner hereby makes, constitutes and appoints Manager as its true and lawful attorney 
for Owner, and in the name, place and stead of Owner 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 and resubstitution.     

     6.   Miscellaneous
   
     (a)  All communications permitted or required between the parties hereto shall be
effective 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 Owner.

     (c)  This Agreement shall be governed by and construed according to the laws of
the State of New York, 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.

     IN WITNESS WHEREOF, the parties have executed this Management Agreement as
of the day and year first above written.

                    OWNER:    AMERICAN EQUITIES INCOME FUND, INC.

                              By:_____________________________________
                              Title:

                    MANAGER:  AMERICAN EQUITIES GROUP, INC. 

                                        

                              By:______________________________________
                              Title:

Basic Info X:

Name: MANAGEMENT AGREEMENT
Type: Management Agreement
Date: Aug. 26, 1996
Company: AMERICAN EQUITIES INCOME FUND INC
State: Delaware

Other info:

Date:

  • 1st day of August , 1996

Organization:

  • Dun & Bradstreet
  • Manager Owner and Manager

Location:

  • Delaware
  • Paramus
  • United States
  • New York

Money:

  • $ 10,000

Percent:

  • 65 %
  • 80 %
  • 7 %
  • 10 %
  • 50 %