Management Agreement

AGREEMENT, dated as of December 1, 1996, between Casull Arms Corporation, a Delaware corporation with offices at Casull Arms Corporation, c/o Mr. Allan R. Tessler, Chairman of the Board, 3490 North Clubhouse Drive, Jackson, Wyoming 83001 (the "Company"), and FH Capital Advisors, Inc., a New York corporation with offices at 477 Madison Avenue, New York, New York 10022 ("Advisor").


1. (a) Advisor agrees that throughout the term of this Agreement as specified in Section 7 (the "Term") it shall provide to the Company such reasonable advice, service, consultation, and assistance as the Company shall seek from Advisor with respect to the Company's business affairs and shall perform such other services related to the business affairs of the Company as the Board of Directors of the Company shall reasonably request. Such advice, service, consultation, and assistance may be, with limitation, in the areas listed under the heading "Areas(s)" on Schedule A hereto.


(b) The parties hereto agree that services to be provided by Advisor for the Company hereunder are to be performed by the person listed on Schedule A hereto or such other or additional persons as shall be designated by Advisor from time to time and approved by the Board of Directors of the Company (all of such persons are hereinafter collectively referred to as the "Principals"). Each Principal may, without limitation, provide services in the area(s) listed on Schedule A hereto. The


Principals shall be required by Advisor to devote to the providing of services to the Company hereunder that amount of time which is reasonably necessary in order for Advisor to meet its obligations hereunder. In the case of those Principals who are also members of the Board of Directors of the Company or any committee of the Board of Directors of the Company, such time shall be in addition to time spent at meetings of these entities.


2. Advisor agrees that the service which it is to provide to the Company hereunder shall be performed at the reasonable direction of the Board of Directors of the Company as implemented by the Company's senior management consistent with the other applicable provisions of this Agreement. Advisor agrees that it shall function in an advisory and consultative capacity and that the Board of Directors of the Company and the duly appointed officers of the Company shall be responsible for the management of the Company and the implementation of any advice or other services rendered by Advisor hereunder. Advisor assumes no responsibility under this Agreement other than to render the services called for hereunder in good faith, and shall not be responsible for any action of the Board of Directors of the Company or any of the duly appointed officers of the Company in following or declining to follow any advice or recommendations of Advisor. Neither Advisor nor any of the Principals shall be liable to the Company except by reason of acts constituting bad faith, willful misconduct or gross negligence of their duties.


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3. (a) During the Term, the Company agrees to pay to Advisor a management fee (the "Fee") for the services to be performed by Advisor, as provided herein, compensation at the rate of $5,000 per month. Any portion of the Fee which is not paid on a current basis shall accrue and become payable at such time as the Company has sufficient funds to do so.


(b) Advisor shall bear the expense for rent, telephone, utilities, office furniture, equipment and machinery and other office expenses o ...