This Stock Purchase Agreement involves
Title: INTERIM INVESTMENT ADVISORY AGREEMENT
Governing Law: Delaware Date: 5/3/2005
Industry: Misc. Financial Services Sector: Financial
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
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
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
(a) An actual or realized loss is sustained owing to Portfolio Company
or investment events including, but not limited to, liquidation, sale or
(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.
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
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
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
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:
(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
(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
(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
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.
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 of periodic reports to,
and other communications with the Company's shareholders; fees and expenses of
members of the Company's Board of Directors who are not directors, officers,
employees or Affiliates of InvestAmerica or of any entity which is an Affiliate
of InvestAmerica; premiums for the fidelity bond, if any, maintained by
InvestAmerica pursuant to ICA Section 17; premiums for directors and officers
insurance maintained by the Company; all transaction costs incident to the
acquisition, management and protection of and disposition of securities by the
Company; and any other expenses incurred by or on behalf of the Company that are
not expressly payable by InvestAmerica under Section 2.2. above.
2.4 Subject to approval by the Board of Directors of the Company and in
accordance with the ICA, InvestAmerica may retain one or more subadvisors to
assist it in performance of its duties hereunder.
Section 3. Nonexclusive Obligations; Co-investments .
3.1 The obligations of InvestAmerica to the Company are not exclusive.
InvestAmerica and its Affiliates, may in their discretion, manage other venture
capital funds and render the same or similar servi