ADMINISTRATIVE SERVICES AGREEMENT
ADMINISTRATIVE SERVICES AGREEMENT
THIS AGREEMENT is made this 10th day of February, 2022 by and between Ministry Partners Investment Company, LLC, (“MPIC”) and Ministry Partners Securities, LLC, (“MP Securities”). For purposes of this Agreement, MPIC and MP Securities shall hereinafter and collectively be referred to as the “Parties”.
Recitals
NOW THEREFORE, in consideration of the mutual covenants, terms, and conditions and other good and valuable consideration set forth below, the Parties agree as follows:
a. | FINRA registration, assessment and member fees; |
b. | filing and reporting fees for the registered principals and registered representatives of the broker dealer firm; |
c. | audit, legal and compliance fees incurred for professional services; |
d. | fidelity bond and insurance premiums for the broker dealer firm; |
e. | business licenses and taxes; |
f. | internet service, information technology services, maintenance and communications equipment; |
g. | utilities for its office; |
h. | salaries, wages and employment costs for its support staff; |
i. | securities commissions paid to its registered representatives and principals; and |
j. | any costs, judgments, payments for claims or arbitration awards rendered against the broker dealer firm. |
MPIC has further agreed to pay for certain management and overhead expenses related to the operation of MP Securities under reasonable allocation procedures applied consistently and will not seek or request reimbursement from MP Securities for such expenses. For purposes of this Agreement, the allocation of such expenses is more particularly described in Exhibit “A” hereto, as supplemented from time to time.
a. | Services Rendered. During the term of this Agreement, MP Securities agrees to deliver payment for such services or authorize the release of such funds to pay for services rendered by MPIC under this Agreement within ten (15) days of the invoice date. MPIC reserves the right to terminate this Agreement at any time if full payment is not made when due. Should MP Securities require additional administrative services from MPIC that are not included in this Agreement, the fee for any such additional services shall be negotiated and paid separately. |
b. | Fee Adjustment. The fees for services provided by MPIC are subject to adjustment by MPIC based upon changes in local, state, and federal laws, changes in insurance requirements or costs, or changes in costs incurred by MPIC in providing such services under this Agreement. MPIC agrees to provide MP Securities with at least a thirty (30) day advance notice of a fee adjustment. Within thirty (30) days of the effectiveness of a fee increase, MP Securities shall be entitled to terminate this Agreement upon written notice to MPIC, such termination to be effective thirty (30) days from the date of such termination notice. |
c. | Investor Relations Related Duties. MP Securities has agreed to provide ministerial, compliance, marketing, operational and investor relations related services regarding MPIC’s investor note program, as more particularly described in Exhibit “A” hereto, and administer MPIC’s transition to a flat fee compensation model for the MPIC investor note program. In exchange for providing those services, MPIC will compensate MP Securities with a fixed fee of $250,000 per calendar year. MP Securities will be responsible for all out of pocket expenses incurred for travel, marketing and information materials and related expenses incurred when conducting MPIC’s ministerial, compliance and administrative duties for MPIC’s investor note program. MPIC will make payment to MP Securities for the investor notes administrative fee in monthly payments within ten (15) days after each month during the term of the Agreement. MP Securities and MPIC reserve the right to adjust the investor note administrative fee at any time upon thirty (30) days written notice. |
d. | Change in Scope of Services. If during the term of this Agreement, MP Securities’ need for administrative services hereunder is increased or reduced |
by a significant change in the scope of MP Securities’ business or operations, as a result of dispositions or otherwise, MP Securities may request, and MPIC may provide, an appropriate change in the level of services provided hereunder and such parties shall in good faith redetermine the fee payable for such services for the remainder of the term of this Agreement on the basis of the change in level of such administrative services. |
a. | By MPIC and MP Securities mutually agreeing to terminate this Agreement prior to expiration of the term. |
b. | At the nondefaulting party’s option, upon the occurrence of a default, as defined in Section 14 below, by the nondefaulting party giving written notice to the defaulting party specifying such default. Upon receipt of such notice, the defaulting party shall have thirty (30) days to cure or begin in good faith to cure the default and if the default is cured, or good faith efforts are begun to cure the default, then this Agreement shall continue as if no notice was sent; |
otherwise, the termination date shall be thirty (30) days from the date the defaulting party receives notice from the nondefaulting party of termination due to a default. |
Except where termination is the result of a default by MP Securities, in which case MP Securities shall be liable for all amounts owing by it under this Agreement through the expiration of the term, any amounts payable to MPIC hereunder shall be prorated through the termination date of this Agreement.
a. | Termination by Either Party. Subject to Section 13, either party may at any time immediately terminate this Agreement in the event of a material breach by the other party of the Agreement. The term “material breach”, as used herein, includes, but is not limited to, the following: (1) failure to comply with any federal, state, or local law, (2) failure to comply fully with a directive or order from a governmental agency or regulatory authority, (3) breach of any material warranty or representation made herein, or (4) the failure to comply with the terms and obligations under this Agreement. |
b. | Termination by MP Securities. This Agreement may be terminated at any time by MP Securities in the event of any federal, state, or local legislation, regulatory action, insurance carrier action, law enforcement, or judicial decision, which, in the sole discretion of MP Securities, adversely affects its interests under this Agreement. |
c. | Termination for Non-Payment. If MP Securities fails to pay any amount due under this Agreement in full when due, or fails to pay any other fees or amounts due hereunder in full, MPIC may terminate this Agreement by providing written notice pursuant to Section 13 above. |
d. | Effect of Termination. Termination of this Agreement shall not affect the continuation of any outstanding obligation or liability incurred by either party during the term of this Agreement, including payment to MPIC. |
a. | All executed expense sharing agreements and amendments thereto, including required notifications to FINRA, and all related support documents provided by MPIC; |
b. | A separate schedule of expenses paid by MPIC that are not included in the financial reports filed by MP Securities with FINRA or SEC; |
c. | MPIC will provide MP Securities with all expense allocation methodologies used in allocation support staff salaries, misc. overhead, etc; |
d. | MPIC will provide MP Securities with a record of each expense paid by the MPIC on behalf of MP Securities; |
e. | MP Securities will invoice MPIC for all expense allocations under this agreement; |
f. | MP Securities will reduce its net capital and increase its aggregate indebtedness for any of its related expenses that MPIC has agreed to pay but remain unpaid by MPIC, unless otherwise permitted under the Rule; and |
g. | All receivables from MPIC will be treated as non allowable by MP Securities, until paid. |
a. | it will not seek reimbursement for expenses and payments it makes on behalf of MP Securities, unless otherwise billed and accounted for under the terms of this Agreement; |
b. | it files periodic and annual reports with the SEC on Forms 10-Q, 10-K and 8-K pursuant to the Exchange Act and that MP Securities shall be entitled to rely on such filings in determining whether MPIC has adequate resources apart from MP Securities to undertake its responsibilities under this Agreement; |
c. | on an annual basis, MP Securities shall be entitled to confirm that MPIC has adequate independent financial resources to the pay the costs it will incur pursuant to the terms of this Agreement; |
d. | it will provide access to its books and records to MP Securities, the SEC, FINRA and any other regulatory authorities for the purpose of ensuring compliance with the terms of this Agreement, the Letter, the SEC Financial Responsibility Rules and FINRA rules for broker dealer firms; and |
e. | acknowledge that SEC rules require broker dealer firms to notify its designated examining authority (“DEA”) when it has entered into a written |
expense sharing agreement, provide a copy of such agreement to the DEA and notify the DEA if future amendments are made to the Agreement. |
IN WITNESS WHEREOF, the Parties have executed this Agreement on the date set forth above.
“MP SECURITIES”“MPIC”
Ministry Partners Securities, LLC |
000 Xxxx Xxxxxxxx Xxxxxxx, Xxxxx 000000 Xxxx Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxx, Xxxxxxxxxx 00000Xxxx, California 92821
By:_/s/ Xxxxxx X. Xxxxxx _________By:_/s/ X. Xxxxxxx Xxx____ _______
Name: Xxxxxx X. Xxxxxx X. Xxxxxxx Xxx
Title: President and CEO Chairman of the Board of Managers
EXHIBIT A
Description of Services Provided
Item | Fee or Pricing Arrangements |
Accounting, Finance ● Accounting and finance reporting ● MPIC shall provide access to its core system processing services provided by Fiserv, including the maintenance of accounting records, processing of accounts payable, production of periodic financial reports and coordination of audit and financial reporting systems, providing reports and returns for IRS purposes | Allocation of Expenses are based on detailed billing provided by 3rd Parties when possible, otherwise as listed below |
Computer and Data Management ● MPIC will also make available to MP Securities its customer software support systems and software and network solutions provided by the following providers and allocated as follows: o Prologue o FIS (formerly ProNet) o Data access (phone and internet service) o Other shared software programs ● MPIC also agrees to provide MP Securities with management and information systems, computer and office equipment use in maintaining administrative data for the conduct of MP Securities’ operations as a broker dealer firm | 15% 15% 15% 15% or based upon actual usage when determinable Charges for services provided to MPS by any service provider will be allocated on cost of services provided |
Salaries and Employee Costs ● Salaries for management, support staff, including payroll taxes, health insurance and benefits including Worker’s Compensation. | Allocation based on actual expenses at the following %’s: President/CEO 20% CFO 10% VP Finance 20% Sales Support Mgr 80% Staff Acct/OPS 10% |
VP Strat. Initiatives 20% | |
Office Rent (Brea) ● Including rent expense, common area maintenance, leasehold improvement depreciation, and other occupancy-related expenses | 10% (Based on the usage of office space and shared space by dual employees and MPS employees) |
Insurance ● Officers and directors liability insurance ● General liability ● Professional Liability | Based on actual expenses which, if not explicitly documented, are determined through an allocation provided by the insurance broker |
Travel Expenses | Based on actual travel expenses related to MPS matters |
Office Furniture and Equipment ● Telephone, cell phones ● Data management hardware ● Office furniture, laptop computers, and desktop computers | Allocated based on actual expenses, when determinable, or allocated based on head count for common equipment/hardware Allocated based on the allocated percent related to the employee using the equipment (see “Salaries and Employee Costs” above) |
MPS Investor Note Services ● Compliance Fees and services ● Administrative Services ● Marketing ● Investor Relations and Communications | Maximum $250,000 fixed fee for 2021; subject to modification upon mutual agreement with 30 days notice |