This Stock Purchase Agreement involves
Title: INTERIM INVESTMENT ADVISORY AGREEMENT
MORAMERICA CAPITAL CORPORATION,
Governing Law: Delaware Date: 5/3/2005
Industry: Misc. Financial Services Sector: Financial
INTERIM INVESTMENT ADVISORY AGREEMENT
MORAMERICA CAPITAL CORPORATION,
An Iowa Corporation
This INTERIM INVESTMENT ADVISORY AGREEMENT dated as of April 30, 2005
(the "Agreement") by MorAmerica Capital Corporation, a corporation organized
under the laws of the State of Iowa ("MACC"), and InvestAmerica Investment
Advisors, Inc., a corporation organized under the laws of the State of Delaware
WHEREAS, MACC is licensed as a small business investment company
("SBIC") under the Small Business Investment Act of 1958, as amended, and
operates as a business development company under the Investment Company Act of
1940, as amended (the "ICA");
WHEREAS, InvestAmerica is qualified to provide investment advisory
services to MACC, and is registered as an investment advisor under the
Investment Advisers 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 MACC
assets Managed by InvestAmerica under this Agreement.
1.3 "InvestAmerica" shall mean InvestAmerica Investment
Advisors, Inc., a Delaware corporation.
1.4 "Capital Losses" are those which are placed, consistent with
generally accepted accounting principles, on the books of MACC 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 MACC determines that a loss or
depreciation in value from the value on the date of this Agreement should be
taken by MACC 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; 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 MACC writes down the value of any investment in MACC'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 of such investment shall thereafter be used in
the determination of any Realized Capital Gains or Capital Losses in MACC'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).
1.5 "Capital Under Management" shall mean MACC's (i) fiscal year
end Private Capital as defined in the SBA regulations as of the date hereof
(which regulations define Private Capital to exclude unrealized capital gains
and losses) ("Private Capital"); plus (ii) fiscal year end SBA leverage as
defined by SBA regulations as of the date hereof, including participating
securities as defined in Section 303(g) of the Small Business Investment Act of
1958, as amended; plus (iii) fiscal year end Undistributed Realized Earnings.
1.6 "Combined Capital" shall mean MACC's Combined Capital as
defined in SBA regulations as of the date hereof.
1.7 "ICA" has the meaning set forth in the first recital hereof.
1.8 "MACC" shall mean MorAmerica Capital Corporation, an Iowa
corporation that is a wholly owned subsidiary of the Company.
1.9 "Net Capital Gains" shall mean Realized Capital Gains minus
the sum of (i) Capital Losses determined in accordance with generally accepted
accounting principles; and (ii) net investment losses, if any, as reported on
Line 32 of SBA Form 468.
1.10 "Other Venture Capital Funds" has the meaning set forth in
1.11 "Portfolio Company" or "Portfolio Companies" shall mean any
entity in which MACC 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 the sale of assets acquired in liquidation and assets
acquired in liquidation of any Portfolio Company.
1.12 "Private Capital" has the meaning set forth in the
definition of Capital Under Management in Section 1.5 above.
1.13 "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:
(a) 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 Subsection 1.12(b) below; and
(b) 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 MACC.
1.14 "SBA" shall mean the United States Small Business
Administration or any successor thereto, which has regulatory authority over
1.15 "SBIC" has the meaning set forth in the first recital
1.16 "SEC" shall mean the United States Securities and Exchange
1.17 "The Company" shall mean MACC Private Equities Inc. and "the
Companies" shall mean MACC Private Equities Inc. and MACC.
Section 2. Investment Advisory Engagement . MACC hereby engages
InvestAmerica as its investment
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 MACC'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 MACC'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, the SBA and its auditors and outside
auditors, and the provision of other services appropriate to the management of
an SBIC operating as a business development company;
(b) Make available and, if requested by Portfolio Companies or
entities in which MACC is proposing to invest, render managerial assistance to,
and exercise management rights in, such Portfolio Companies and entities as
appropriate to maximize return for MACC and to comply with regulations;
(c) Maintain office space and facilities to the extent required
by InvestAmerica to provide adequate management services to MACC;
(d) Maintain the books of account and other records and files
for MACC, but not to include auditing services; and
(e) Report to MACC'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
MACC 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 MACC shall at all times be
subject to applicable law and any directives of MACC's Board of Directors or any
duly constituted committee or officer acting pursuant to the authority of MACC's
Board of Directors.
2.2 InvestAmerica will be responsible for the following
expenses: its staff salaries and fringe benefits, 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, expenses
related to developing, investigating and monitoring investments, business
development, insurance premiums and fees (including premiums for the fidelity
bond, if any, maintained by InvestAmerica pursuant to ICA Section 17 but
excluding premiums for directors and officers insurance) and minor miscellaneous
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 MACC.
2.3 In connection with the services provided, InvestAmerica will
not be responsible for the following expenses which shall be the sole
responsibility of MACC and will be paid promptly by MACC: 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 MACC directors and board fees; any fees
owed or paid to MACC, its Affiliates or fund managers; any and all expenses
associated with property of a Portfolio Company taken or received by MACC or on
its behalf as a result of its investment in any Portfolio company; all
reorganization and registration expenses of MACC; the fees and disbursements of
MACC'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 MACC'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 directors and officers insurance maintained by MACC; and all transaction
costs incident to the acquisition, management, protection and disposition of
securities by MACC; and any other expenses incurred by or on behalf of MACC that
are not expressly payable by InvestAmerica under Section 2.2 above.
2.4 Neither InvestAmerica nor MACC will enter into any
subadvisory agreements without SBA approval, which agreements shall also be
subject to approval requirements of the ICA.
Section 3. Nonexclusive Obligations; Co-investments .
3.1 The obligations of InvestAmerica to MACC are not exclusive.
InvestAmerica and its Affiliates may, in their discretion, manage other venture
capital funds and render the same or similar services to any other person or
persons who may be making the same or similar investments. The parties
acknowledge that InvestAmerica may offer the same investment opportunities as
may be off