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DOCUMENT TITLE: Business Management Agreement [between Estate and ASI]
SUBJECT: Ageement between Norman F. Starkey as Executor of the Estate of L. Ron Hubbard and Trustee of Author's Family Trust, and the for-profit corporation Author Services, Inc. (ASI)
PARTIES: Norman F. Starkey, Executor of the Estate of L. Ron Hubbard and Trustee of Author's Family Trust; John Alcock, ASI Treasurer; Meade Emory and Sherman Lenske, drafters of the Agreement; Sherman Lenske as counsel to Starkey during probate of the Will; Sherman Lenske, Stephen Lenske, and Lawrence E. Heller, Special Directors of CST at the time of the Agreement, as "consultants" to Starkey (Trustee of both Author's Family Trust-A and Author's Family Trust-B), and as "Trust Protectors."


Executed on 1 March 1986, this Business Management Agreement cancels an earlier Business Management Agreement that had been executed on 10 May 1982 purportedly between L. Ron Hubbard and a person or persons unknown representing ASI.

As one wag put it, this agreement is actually between Norman F. Starkey and Norman F. Starkey, since Starkey was also the President of ASI when this agreement was executed. For appearances it is signed, though, by ASI's Treasurer, John Alcock.

Later, by order of IRS, Norman F. Starkey will transfer the entirety of ASI, a for-profit corporation, to the ownership of Church of Spiritual Technology (CST), a non-profit corporation, as part of the terms of IRS's Closing Agreement.

The document stands as otherwise self-explanatory, except to point out that Norman F. Starkey refers herein to "Author's Family Trust," with no other qualifying letter designation. He can only be referring to the aggregate of the active trusts, Author's Family Trust-A and Author's Family Trust-B. For a full explanation see the related documents: Author's Family Trust, Author's Family Trust-A, and Author's Family Trust-B.

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THIS AGREEMENT, made as of the 1st day of March, 186 [sic: 1986],
by and between the Estate of L. Ron Hubbard, NORMAN F.
STARKEY, Executor("estate") and NORMAN F. STARKEY, Trustee
of Author's Family Trust("Trust"), collectively referred to
as the "client", and AUTHOR SERVICES, INC., a California
Corporation("ASI") with reference to the following:

     A. L. Ron Hubbard passed away on January 24,
1986. Subsequently, on February 18, 1986, NORMAN F. STARKEY
was appointed Executor of the Estate

     B. Mr. Hubbard established the Author's Family
Trust by agreement with Norman F. Starkey on January 23,
1986. On the same date, by Grant and Assignment,
Mr. Hubbard transferred to Mr. Starkey, as Trustee, all of
his assets except copyrights and licenses pertaining

     C. ASI has performed business and management
services for L. Ron Hubbard under agreement since May 10,
1982. The services performed include, without limitation,
collection of income paid to Mr. Hubbard from any source,
the payment of services incurred by Mr. Hubbard, advice
to Mr. Hubbard in connection with business and investment
programs, advice to Mr. Hubbard concerning the sale or other
commercial exploitations of his literary properties, the

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maintenance of Mr. Hubbard's books and records, and the
preparation and filing of Mr. Hubbard's state and federal
income tax returns.

     D. Because of ASI's experience" with
Mr. Hubbard's business affairs, it is well suited to manage
the assets of the Client.

     E. The parties desire to terminate the Business
Management Agreement, dated May 10, 1982, by and between
L. Ron Hubbard and ASI
covering assets now held by the
Client and to enter into a new agreement regarding the
management of such assets.

     NOW, THEREFORE, based upon the foregoing, and in
consideration of the actual covenants and conditions
contained herein, the parties agree as follows:

     1. The Business Management Agreement, dated
May 10, 1982, by and between L. Ron Hubbard and ASI, is
hereby terminated as to any assets now held by the Client.
ASI shall be paid all due sums thereunder

     2. Client hereby employs ASI as an independent
contractor, to perform the business and management services
listed below, and ASI hereby accepts this management upon
the terms set forth herein:

          a. To collect all income paid to Client
from any source and to deposit these funds in financial

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institutions of the Client's selection. Funds shall be
deposited in accounts bearing the name of the Client only;

          b. To advise the Client in connection
with general business and investment programs, including the
research and analysis necessary to furnish such advice;

          c. To advise the Client concerning the
sale or other commercial exploitation of literary properties
and related rights belonging to Client, to seek and anaylize
prospective exploitation opportunities with respectt to such
properties, to find literary agents, public relations
companies, publishers and producers and act as a liaison
between them and the Client and to negotiate sale and
exploitation agreements in its behalf.

          d. To monitor and report to the Client on
the exploitation of such literary properties in the various

          e. ASI, with the approval of the Client,
may return [sic: retain] the services of copyright and other
attorneys, accountants and other advisors (and to act as
liaison between them and the Client) in the Client's behalf
when it considers it necessary for the proper rendering of
its Services under this Agreement. (It is understood that
ASI is not licensed to practice law or accounting.) ASI,
with the approval of the Client, may also retain such other
advisors and consultants, eg as gemologists, real estate
appraisers or investment advisors, as it deems necessary to

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fully and properly perform its services under this
Agreement. All such fees incurred by ASI for outside
advisor retained for the benefit of the Client shall be
Client's responsibility and shall be reimbursed to ASI
as set forth below.

          f. To keep and maintain the Client's books and
records and to cause to be prepared periodic reports as more
particularly stated below, and

          g. To cause to be prepared the
appropriate state and federal income tax returns, including
but not limited to any information returns required by any
governmental entity.

     3. ASI's services to the Client shall not be
exclusive, and it may render similar services to others,
including persons engaged in literary activities, without
violating its obligations under this Agreement: provided
that the rendering of services to others shall not interfere
with its obligations hereunder.

     4. The Trust shall pay ASI each month that
portion of ASI's direct cost of doing business ("Overhead")
which bears to that portion of ASI's time devoted to the
peformance of services for Client specified herein. For
example, if 90% of ASI's time is devoted to services for the
Client, then the Trust shall pay 90% of ASI's overhead.
Overhead shall include, but not be limited to, the

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          a. Total payroll, including federal and
state payroll taxes and fringe benefits,

          b. Travel and entertainment expenses
relating to activities on behalf of the Client,

          c. Office and equipment rental,

          d. Utilities, including electricity and

          e. Repairs and maintenance,

          f. Local transportation, including gas,
oil and insurance on vehicles owned by ASI and used for
Client purposes,

          g. Supplies, including stationery,
photocopy and postage,

          h. Insurance, including liability, all
risk and workers compensation

          i. Miscellaneous expenses attributable to
Client purposes.

     In addition to Overhead, the Trust shall pay ASI
each month a fee equal to ten percent (10%) of the Overhead
approved by Client, as hereinafter provided.

     At least ten (10) days prior of the end of each
month, ASI will submit to the Client, for Client's approval,
a budget of overhead for the upcoming month together with
the Trust's estimated percentage of such expenses. Client
may increase, decrease or delete any proposed expenses. On
the first day of each month the Trust shall pay to ASI the

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amount set forth in the approved budget plus a fee of ten
percent (10%) of said amount. Within fifteen (15) days
after the end of each quarter, ASI shall prepare and deliver
to Client an accounting showing its Overhead for the quarter
just ended. Any overpayment of Overhead shall be returned
to the Trust or applied to future payments. The Trust shall
either pay directly or reimburse ASI for professional (i.e.
legal, accounting and advisory) expenses incurred directly
for the benefit of Client.

     To the extent that the Trust is unable to pay
either the overhead or the fee, such short fall shall be
made up by the Estate.

     5. It is understood and agreed that the Client
may from time to time request ASI to perform services not
listed in Paragraph 2 above. In such case, ASI shall render
such additional or extraordinary services for the fee
provided in Paragraph 4 above unless the client approves
additional compensation.

     6. ASI shall use its good faith best efforts
to perform its obligation under this Agreement. It shall
measure its own activities by factual statistics and make
good faith efforts to reverse any decline in

     7. ASI shall provide to Client a periodic
report of all its acts and transactions under this
Agreement. This report shall include amounts deposited to

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the various bank accounts, income from all sources received
and expenses paid, and all other information on the conduct
of ASI and its employees under this Agreement, from time to
time, requested by the Client including, but not limited to,
graphs of actual statistics. The Client shall have the
right to audit all of ASI's records relating to this
Agreement at any time during normal business hours.

     8. It is understood that ASI is not licensed
as an artist's agency, and its services with regard to the
sale or other exploitation for the Client's literary
properties shall not include any acts for which licensing is
required. It is also understood that ASI is not licensed as
an Investment Advisor under the Investment Advisor's Act of
1940, and ASI shall not perform any services, including
discretionary control of investments, for which a license is

     9. This Agreement shall be deemed to have been
entered into at the offices of ASI in the State of
California, it is primarily to be performed in the State of
California, and it shall be interpreted under the laws and
judicial decisions of the State of California.
10. Neither party shall be deemed to be the
joint venturer, employee or partner of the other, and ASI's
role as an agent of the Client shall be strictly limited to
the specific obligations listed in Paragraph 2 of this
Agreement. In particular, ASI shall have the right:

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          a. To enter into any agreement on behalf
of Client;

          b. To provide addressed for service of
process or to accept service of process on behalf of Client;

          c. To make any investment on behalf of

          d. To someth or assert ownership of any
of Client's assets; and

          e. To do any act not delegable by
NORMAN F. STARKEY, as Executor or by NORMAN F. STARKEY, as
Trustee, by virtue of the laws and judicial decision of the
State of California.

     11. The Client hereby authorizes ASI to collect
and receive all sums of money payable to the Client pursuant
to any contract, whether oral or written, existing on the
dat hereof. Whenever necessary to effect the collection of
monies, the Client shall execute a limited power of attorney
or payment authority.
     12. The term of this Agreement shall be for two
(2) years from date of execution; provided that either party
may terminate this Agreement upon thirty (30) days' written
notice for cause. Unless terminated, this Agreement shall
automatically renew for successive one-year periods.
13. The standard of behavior required by ASI
under this Agreement is that of a fiduciary. This is not to

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be construed as a delegation of NORMAN F. STARKEY's
fiduciary duties as Executor or Trustee.

          a. ASI and its employees shall maintain
the affairs of the Client in absolute confidence. In the
event of litigation by any person against ASI, ASI shall
keep the Client's assets free from any lien or seizure. ASI
hereby indemnifies and holds the Client harmless from any
cost, expense or liability of any kind, including attorneys'
fees, which arises from or relates to any violation of this
paragraph by ASI or its employees.

     14. This Agreement contains the entire
understanding between the parties and supersedes any prior
understanding and agreement between them respecting its
subject. There are no representations, agreements or
understandings, oral or written, between the parties
relating to the subject of this Agreement which are not
fully expressed here. This Agreement may amended only in

     15. Any notice, report or writing required or
permitted to be given hereunder shall be in writing and
shall be served by delivering the same personally either to
the other party, or by depositing the Notice, contained in a
sealed envelope, first class postage prepaid, in any mailbox
maintained by the United States Postal System. Any and all
such notices shall be delivered to the parties at their
respective addresses specified in this paragraph. Any such

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Notice deposited in the mail shall conclusively be deemed to
be delivered to and received by the addressee five (5) days
after the deposit in the mail if all of the foregoing
conditions of notice shall have been satisfied and if such
notice shall at the time of mailing have been contained in
an envelope addressed as follows:

     To Client:    Norman F. Starkey, Executor
                   6515 Sunset Boulevard
                   Suite 202
                   Hollywood, CA 90028

                   Norman F. Starkey, Trustee
                   6515 Sunset Boulevard
                   Suite 202
                   Hollywood, CA 90028

     To ASI:       Author Services, Inc
                   6464 Sunset Boulevard
                   Suite 900
                   Hollywood, CA 90028

Any party hereto may change its address for the purpose of
this paragraph by giving each other party notice, as
provided for herein, of the new address.

     16. Any claim or controversy arising out of or
relating to all or any part of this Agreement, including any
question of arbitratibility, or any breach or alleged breach
of this Agreement, shall be settled by binding arbitration
in Los Angeles Count in accordance with the rules of the
American Arbitration Association, and judgement upon any
award rendered by the arbitrator(s) may be entered in any
Court having jurisdiction thereof. In the event of
arbitration, each party hereto shall have the right to
conduct reasonable discover pursuant to the provisions of

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California Code of Civil Procedure Sections 2016 through
2036, inclusive, as presently or hereafter constituted,
pursuant to all Rules of Court applicable to discovery in
civil actions before the Los Angeles Superior Court, as said
rules presently are or hereafter may be constituted, and
pursuant to any and all provisions of law and court rules
not presently existing which shall in the future come to
exist in place of or in augmentation of all of any of said
Sections and/or Rules of Court. Abitration shall not be
required with respect to any matter where Injunctive relief
or specific performance is sought by all or any of the
parties hereto. The filing of any such civil action by ASI
against the Client shall be, without limitation, a cause for
termination of this Agreement, and all of Client's assets
shall be returned without delay.

     17. The following general provisions shall

          a. All parties expressly covenant to deal
with each other in good faith regarding all actions,
decisions and conduct relating to the Agreement.

          b. The failure of any party to insist, in
any one or more instances, upon strict performance of any
one or more of the provisions, terms and conditions of this
Agreement, or to exercise any right or rights thereunder,
shall be construed as a waiver thereof, and any and all

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such provision(s), term(s), condition(s) and right(s) shall
continue and remain in full effect.

          c. In the event that any party to this
Agreement institutes any action or proceeding, including,
but not limited to, litigation and arbitration, to preserve,
to protect or to enforce any right or benefit created by or
granted under this Agreement, the prevailing party in each
respective action or proceeding shall be entitled, in
addition to any and all other relief granted by a Court or
other tribunal or body, as may be appropriate, to an award
in said action or proceeding of that sum of money which
represents the attorneys' fees reasonably incurred by the
proceeding, and, additionally, the attorneys' fees
reasonably incurred by said prevailing party in negotiating
any and all matters underlying said proceeding and
in preparation for instituting said action or proceeding.

          d. Subject to the restriction on
assignment set forth in Paragraph 18 below, this Agreement
and each and every covenant, condition and other provision
herein contained shall apply to, be binding upon and inure
to the burden or benefit, as may be the case, of the
respective legal representatives, assigns, successors and
agents of the parties hereto.

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          e. Each and every provision of this
Agreement is severable from any and all other provisions of
this Agreement. Should any provision or provisions of this
Agreement be for any reason unenforcable, the balance shall
nonetheless be of full force and effect.

          f. Each party hereto agrees to execute
(with acknowledgement where necessary) and deliver all
documents and instruments and to perform such further acts
as may be necessary to carry out the agreements set forth

     18. ASI shall not assign any of its rights or
duties under this Agreement, except the right to receive
money, without the prior written consent of the Client.

     IN WITNESS WHEREOF, the parties have executed this
Agreement on the date first above written.


           NORMAN F. STARKEY, Executor of
           the Estate of L. Ron Hubbard


           NORMAN F. STARKEY, Trustee of
           Author's Family Trust


           By [Signature]
           JOHN ALLCOCK, Treasurer

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