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INTERIM INVESTMENT ADVISORY AGREEMENT

Stock Purchase Agreement

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MACC PRIVATE EQUITIES INC

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Title: INTERIM INVESTMENT ADVISORY AGREEMENT
Governing Law: Delaware     Date: 5/3/2005
Industry: Misc. Financial Services     Sector: Financial

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Exhibit 10.1

 
 
                      
INTERIM INVESTMENT ADVISORY AGREEMENT
 
                           
MACC PRIVATE EQUITIES INC.
                             
A Delaware Corporation
 
  
   
This INTERIM INVESTMENT
  
ADVISORY AGREEMENT dated as of April 30, 2005 (the
"Agreement") by MACC Private
  
Equities Inc., a company
  
organized under the laws
of the State of Delaware ("the Company"), and InvestAmerica
Investment Advisors,
Inc.,
  
a
  
corporation
  
organized
  
under
  
the
  
laws
  
of
  
the
  
State
  
of
  
Delaware
("InvestAmerica").
 
     
WHEREAS,
  
the
  
Company
  
is a
  
closed-end
  
investment
  
company
  
that
  
may be
operated and regulated as a business development company ("Business
  
Development
Company")
  
as defined in the
  
Investment
  
Company Act of 1940,
  
as amended
  
(the
"ICA");
 
     
WHEREAS, InvestAmerica is qualified to provide investment advisory
services
to the Company and is registered as an investment
  
advisor under the
  
Investment
Advisors Act of 1940, as amended.
 
     
NOW,
  
THEREFORE,
  
in
  
consideration
  
of the
  
foregoing
  
and other
  
good and
valuable consideration, the parties hereto agree as follows:
 
     
Section 1. 
Definitions
.
 
     
1.1
  
"Affiliate"
  
shall
  
have
  
the
  
meaning
  
given
  
under
  
Rule
  
144 of the
Securities Act of 1933, as amended.
 
     
1.2
  
"Assets Under
  
Management" shall mean the total value of the Company's
assets managed by InvestAmerica under this Agreement.
 
     
1.3
  
"Capital Losses" are those which are placed, consistent with
generally
accepted
  
accounting
  
principles,
  
on the books of the
  
Company
  
and which occur
when:
 
          
(a) An actual or realized loss is sustained owing to Portfolio
Company
or
  
investment
  
events
  
including,
  
but not
  
limited
  
to,
  
liquidation,
  
sale or
bankruptcy;
 
          
(b) The Board of
  
Directors of the Company
  
determines
  
that a loss or
depreciation
  
in value
  
from the value on the date of this
  
Agreement
  
should be
taken by the Company in accordance with generally accepted
accounting principles
and SBA
  
accounting
  
regulations
  
and is
  
shown
  
on its
  
books
  
as a part of the
periodic
  
valuation
  
of the
  
Portfolio
  
Companies
  
by
  
the
  
Board
  
of
  
Directors
("Unrealized Depreciation"); or
 
          
(c) Capital Losses are adjusted for reverses of depreciation
  
when the
Board of Directors
  
determines
  
that a value
  
should be adjusted
  
upward and the
investment value remains at or below original cost.
 
 
                                       
1
 
 

 
 
 
For purposes of this definition, in any case where the Board of
Directors of the
Company writes down the value of any
  
investment in the Company's
  
portfolio (in
accordance
  
with the standards set forth in subsection
  
1.3(b) above),
  
(i) such
reduction in value shall result in a new cost basis for such
investment and (ii)
the most recent cost basis for such investment
  
shall
  
thereafter be used in the
determination
  
of any Realized
  
Capital Gains or Capital Losses in the Company's
portfolio
  
(i.e.,
  
there shall be no
  
double-counting
  
of losses when a security
(whose value has declined in a prior period) is ultimately sold at
a price below
its historical cost.)
 
     
1.4
  
"The
  
Company"
  
shall
  
mean MACC
  
Private
  
Equities
  
Inc.,
  
a Delaware
corporation.
 
     
1.5
  
"ICA" has the meaning set forth in the first recital hereof.
 
     
1.6
  
"Net Capital
  
Gains" shall mean Realized
  
Capital Gains net of Capital
Losses determined in accordance with generally accepted accounting
principles.
 
     
1.7
  
"Other Venture
  
Capital Funds" has the meaning set forth in subsection
3.2.
 
     
1.8
  
"Portfolio Company" or "Portfolio
  
Companies" shall mean any entity in
which the Company may make an investment and with respect to which
InvestAmerica
will be
  
providing
  
services
  
pursuant
  
hereto,
  
which
  
investments
  
may include
ownership of capital stock,
  
loans,
  
receivables due from a Portfolio Company or
other debtor on sale of assets
  
acquired in liquidation
  
and assets
  
acquired in
liquidation of any Portfolio Company.
 
     
1.9
  
"Private
  
Capital"
  
has the
  
meaning
  
ascribed to that term in the SBA
regulations
  
in effect as of the date hereof (which
  
regulations
  
define Private
Capital to exclude unrealized gains and losses).
 
     
1.10 "Realized
  
Capital Gains" shall mean capital gains after deducting the
cost and 
 
expenses
  
necessary
  
to achieve the gain (e.g.,
  
broker's
  
fees).
  
For
purposes of this
  
Agreement,
  
capital gains are Realized
  
Capital Gains upon the
cash sale of the
  
capital
  
stock or assets of a
  
Portfolio
  
Company or any other
asset or item of property managed by InvestAmerica
  
pursuant to the terms hereof
or any Realized
  
Capital Gain has occurred in accordance
  
with GAAP which is not
cash as described in the following
  
sentence.
  
Realized Capital Gains other than
cash gains, shall be recorded and calculated in the period the gain
is realized;
however in
  
determining
  
payment of any incentive fee, the payment shall be made
when the cash is received. The amount of the fee earned on gains
other than cash
shall be recorded as incentive
  
fees payable on the financial
  
statements of the
Company.
 
     
1.11 "SBA" shall mean the United States Small Business
Administration.
 
     
1.12 "SEC" shall mean the United States Securities and Exchange
Commission.
 
     
Section 2.
  
Investment
  
Advisory
  
Engagement
.
  
The Company
  
hereby
  
engages
InvestAmerica as its investment advisor.
 
     
2.1
  
As such, InvestAmerica will:
 
 
                                       
2
 
 

 
 
 
          
(a)
  
Manage,
  
render
  
advice
  
with
  
respect
  
to,
  
and
  
make
  
decisions
regarding the
  
acquisition
  
and
  
disposition
  
of
  
securities in accordance
  
with
applicable law and the Company's
  
investment policies as set forth in writing by
the Board of Directors, to include (without limitation) the search
and marketing
for
  
investment
  
leads,
  
screening
  
and
  
research of
  
investment
  
opportunities,
maintenance
  
and
  
expansion
  
of a
  
co-investor
  
network,
  
review of
  
appropriate
investment
  
legal
  
documentation,
  
presentations of investments to the Company's
Board of Directors (when and as required), 
 
closing of
  
investments,
  
monitoring
and management of investments and exits,
  
preparation of valuations,
  
management
of relationships with the SEC, shareholders, outside auditors, and
the provision
of other services
  
appropriate
  
to the management of a Business and
  
Development
Company;
 
          
(b) Make
  
available
  
and,
  
if
  
requested
  
by
  
Portfolio
  
Companies
  
or
entities
  
in which
  
the
  
Company
  
is
  
proposing
  
to
  
invest,
  
render
  
managerial
assistance to, and exercise
  
management rights in, such Portfolio
  
Companies and
entities as
  
appropriate
  
to maximize
  
return for the Company and to comply with
regulations;
 
          
(c) Maintain
  
office space and
  
facilities
  
to the extent
  
required by
InvestAmerica to provide adequate management services to the
Company;
 
          
(d) Maintain the books of account and other
  
records and files for the
Company, but not to include auditing services; and
 
          
(e) Report to the Company's Board of Directors, or to any committee
or
officers acting pursuant to the authority of the Board, at such
reasonable times
and in such reasonable
  
detail as the Board deems appropriate in order to enable
the
  
Company to
  
determine
  
that
  
investment
  
policies
  
are being
  
observed
  
and
implemented
  
and that the
  
obligations
  
of
  
InvestAmerica
  
hereunder
  
are
  
being
fulfilled.
  
Any investment program
  
undertaken by InvestAmerica
  
pursuant hereto
and any other
  
activities
  
undertaken by
  
InvestAmerica on behalf of the Company
shall at all
  
times be
  
subject
  
to
  
applicable
  
law and any
  
directives
  
of the
Company's Board of Directors or any duly constituted committee or
officer acting
pursuant to the authority of the Company's Board of Directors.
 
     
2.2
  
InvestAmerica
  
will be
  
responsible
  
for the following
  
expenses:
  
its
staff
  
salaries and fringes,
  
office
  
space,
  
office
  
equipment
  
and
  
furniture,
communications,
  
travel, meals and entertainment,
  
conventions, seminars, office
supplies,
  
dues and
  
subscriptions,
  
hiring fees,
  
moving
  
expenses,
  
repair and
maintenance,
   
employment
  
taxes,
   
in-house
   
accounting
   
expenses
  
and
  
minor
miscellaneous expenses.
 
     
InvestAmerica
  
will
  
pay for its
  
own
  
account
  
all
  
expenses
  
incurred
  
in
rendering the services to be rendered hereunder. Without limiting
the generality
of the
  
foregoing,
  
InvestAmerica
  
will
  
pay the
  
salaries
  
and
  
other
  
employee
benefits
  
of the persons in its
  
organization
  
whom it may engage to render such
services, including without limitation, persons in its organization
who may from
time to time act as officers of the Company.
 
 
                                       
3
 
 

 
 
 
     
Notwithstanding
   
the
   
foregoing,
   
InvestAmerica
   
will
  
earn
   
incentive
compensation
  
on
  
a
  
quarterly
  
basis,
   
which
  
shall
  
not
  
be
  
deemed
  
part
  
of
compensation or other employee benefits for the purpose of this
paragraph.
 
     
2.3
  
In connection with the services
  
provided,
  
InvestAmerica
  
will not be
responsible for the following expenses which shall be the sole
responsibility of
the Company and will be paid promptly by the Company:
  
auditing
  
fees; all legal
expenses; legal fees normally paid by Portfolio Companies;
  
National Association
of Small Business
  
Investment
  
Companies and other appropriate trade association
fees; brochures, advertising,
  
marketing and publicity costs; interest on SBA or
other debt;
  
fees to the Company and its directors and Board fees; any fees owed
or paid to the Company,
  
its Affiliates or fund
  
managers;
  
any and all expenses
associated with property of a Portfolio Company taken or received
by the Company
or on its behalf as a result of its
  
investment
  
in any Portfolio
  
Company;
  
all
reorganization
  
and
  
registration
   
expenses
  
of
  
the
  
Company;
   
the
  
fees
  
and
disbursements of the Company's counsel,
  
accountants,
  
custodian, transfer agent
and
  
registrar;
  
fees and expenses
  
incurred in producing and effecting
  
filings
with federal and state securities administrators;
  
costs

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