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INTERIM INVESTMENT ADVISORY AGREEMENT MORAMERICA CAPITAL CORPORATION,

Stock Purchase Agreement

INTERIM INVESTMENT ADVISORY AGREEMENT
 
                         MORAMERICA CAPITAL CORPORATION, | Document Parties: MACC PRIVATE EQUITIES INC You are currently viewing:
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MACC PRIVATE EQUITIES INC

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

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Exhibit 10.2

 
 
                      
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
("InvestAmerica").
 
          
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
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 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
 
 
                                       
1
 
 

 
 
 
          
(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
subsection 3.2(b).
 
          
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:
 
 
                                       
2
 
 

 
 
 
          
(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
SBICs.
 
   
       
1.15
      
"SBIC"
  
has the
  
meaning
  
set
  
forth
  
in the
  
first
  
recital
hereof.
 
          
1.16
      
"SEC" shall mean the United States
  
Securities
  
and Exchange
Commission.
 
          
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
 
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 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
 
 
       
                                
3
 
 

 
 
 
          
(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
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 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 f

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