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STRATEGIC AGREEMENT
THIS STRATEGIC AGREEMENT (this "Agreement") is made and entered into
effective as of September 29, 2003, by and among Bridgewater International
Group, LLC, a Utah limited liability company ("BIG"), Xxxx X. Xxxxxx ("Xxxxxx"),
Xxxxxx X. Xxxxxx ("X. Xxxxxx") and Atlas Management Partners, LLC, a Utah
limited liability company ("Atlas"). BIG, Xxxxxx, X. Xxxxxx and Atlas are
sometimes referred to as the "Parties."
RECITALS
A. Each of the Parties except Atlas owns voting capital stock in MACC
Private Equities, Inc. ("MACC"), a Delaware corporation whose stock is listed
for trading on the Nasdaq SmallCap market.
B. Atlas is a Utah limited liability company of which Xxxxxx is the
sole manager and Xxxxxx and BIG are the only members. BIG, Xxxxxx and Atlas have
entered into a Shareholder and Voting Agreement pursuant to which BIG has
granted to Atlas a proxy, irrevocable during the term of that agreement, to vote
its capital shares in MACC.
C. It is the intention of the Parties that Atlas will, at some time
estimated to be no later than May 2004, be appointed to act as investment
manager of MACC and MorAmerica Capital Corp., an investment fund that is a
wholly owned subsidiary of MACC.
D. At such time as Atlas becomes the investment manager of MACC and
MorAmerica Capital Corp., the Parties intend that the Articles of Organization
of Atlas and the Operating Agreement of Atlas will be amended and restated to
name all of the Parties as Members of Atlas and to name Xxxxxx, BIG and Xxxxxxxx
X. Xxxxxxx ("Xxxxxxx") as Managers of Atlas.
E. It is the intent of the Parties that BIG will loan Atlas up to
$300,000.00 pursuant to a Promissory Note of even date herewith (the "BIG
Note").
F. The Parties desire to set forth their agreements in writing.
AGREEMENT
In consideration of the foregoing recitals, the mutual promises and
obligations set forth hereafter, and for other good and valuable consideration
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Amendment of Atlas Articles of Organization and Operating Agreement.
The parties agree that concurrently with the execution of investment management
agreements between Atlas and both MACC and MorAmerica Capital Corp. (the
"Commencement"), the Articles of Organization of Atlas shall be amended and
restated substantially in the form attached hereto as Exhibit "A-1" and the
Operating Agreement of Atlas shall be amended and restated substantially in the
form attached hereto as Exhibit "A-2."
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2. BIG Management Agreement. Simultaneously with the Commencement, BIG
and Atlas shall enter into a Management Agreement pursuant to which BIG shall
agree to serve as a Manager of Atlas, which Management Agreement shall be
substantially in the form attached as Exhibit "B."
3. Xxxxxxx Capital Commitment. Subject to occurrence of the
Commencement, Xxxxxxx has committed to make capital available to MACC or Atlas
substantially in accordance with the terms generally outlined on the term sheet
attached as Exhibit "C." It is the intent of the Parties that the BIG Note and
Xxxxxxx'x capital commitment will be on substantially similar terms and will be
drawn down at the same time and the proceeds invested for the same purposes, and
the BIG Note may be amended accordingly when the final terms of Xxxxxxx'x
capital commitment are determined.
4. Failure of Commencement. If the Commencement has not occurred by the
date one year from the date of this Agreement, then (i) this Agreement shall
automatically terminate and all Parties shall be released from all obligations
hereunder, other than the obligation of Atlas under Paragraph 9, (ii) the Voting
Agreement shall automatically terminate and all parties thereto shall be
released from all obligations thereunder, and (iii) the BIG Note shall become
immediately due and payable.
5. Vote for BIG Nominee to MACC Board. In each election of directors of
MACC beginning on the first election of directors following the Commencement,
and continuing until the termination of the Shareholder and Voting Agreement
among BIG, Xxxxxx and Atlas (the "Voting Agreement"), Atlas agrees that it shall
cast all of the votes of the MACC Shares (as defined in the Voting Agreement)
for at least one (1) board of director candidate nominated or recommended by
BIG; provided that such nominee is approved by Atlas, which approval shall not
be withheld if the candidate is legally qualified to so serve. If the candidate
nominated or recommended by BIG and approved by Atlas has not been nominated by
the management of MACC, Atlas shall take such reasonable steps as may be
necessary to have such person nominated and included in MACC's proxy statement
in accordance with MACC's by-laws. BIG hereby recommends, and Atlas approves and
agrees to cast all of the votes of the MACC Shares for the election of, Xxx
Xxxxxxxxxx as BIG's initial nominee for the board of directors of MACC. BIG may
change such recommendation at any time prior to the next election for the board
of directors of MACC.
6. BIG Designee as Atlas Voting Managing Director. Concurrently with
the Commencement, and continuing until the termination of the BIG Management
Agreement, BIG shall be entitled to designate one (1) Voting Managing Director
of Atlas, and the Parties each agree that they shall do all things necessary or
desirable to cause BIG's designee to be named as a Voting Managing Director,
including, if necessary, casting an affirmative vote in the Party's capacity as
a member or manager of Atlas. BIG hereby designates Xxx Xxxxxxxxxxx as BIG's
initial designee as a Voting Managing Director of Atlas. BIG may replace its
designated Voting Managing Director at any time
7. Participation in MACC Equity. Commencing with the Commencement, and
continuing until the termination of the Voting Agreement, Atlas shall use its
best efforts to support the ability of BIG to participate as an investor in any
sale or issuance of equity securities by MACC, on terms as favorable as those
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being offered to any other investor, so that BIG will have the opportunity to
maintain BIG's proportional ownership in MACC similar to preemptive rights.
BIG's participation in any offering will be conditioned on BIG being legally
entitled to participate therein without MACC incurring material additional
effort or expense.
8. Conversion of MACC to Registered Investment Company. The Parties
agree that Atlas should generally support the goal of converting MACC to a
Registered Investment Company within approximately 3 to 5 years after the
Commencement, if it is the best interest of MACC. Any decision to become a
Registered Investment Company will be made by the board of directors of MACC if
they consider it to be in the best interests of MACC, and subject to favorable
economic conditions.
9. Transaction Expenses. The Parties agree that Atlas shall reimburse
BIG and Xxxxxx for reasonable costs and expenses incurred by BIG and Xxxxxx in
connection with the creation of Atlas and BIG, the negotiation and preparation
of the definitive agreements between the Parties, the negotiation and
documentation of the purchase of MACC stock by both BIG and Xxxxxx, and the
negotiation and preparation of agreements whereby Atlas will become investment
manager of MACC and MorAmerica.
10. Agreements Prior to Commencement.
10.1 During the period prior to Commencement, Atlas will
provide BIG with monthly financial reports reflecting
Atlas's activities, assets and liabilities.
10.2 During the period prior to Commencement no membership
interest in Atlas shall be transferred nor shall Atlas
issue any additional membership interests; provided
that in the event of the death or disability of Xxxxxx
his interest in Atlas may be transferred to Xxxx
Xxxxxxx.
10.3 During the period prior to Commencement Atlas will not
pay or accrue any salary management fee or similar
expenses to related parties; provided that Atlas may
reimburse such parties for actual out of pocket costs
reasonably incurred.
11. Tag-Along Rights. In the event that one or more of the Parties
other than Atlas elect to sell all or part of their membership interest in Atlas
(the "Selling Members") and have received a bona fide offer therefor, the
Selling Members shall notify the other Parties (the "Sale Notice"), including in
such notice the details of the proposed sale including price, quantity (i.e. the
Profit Participating Percentage to be sold), other terms of sale and the
identity of the proposed purchaser. If the Selling Members receive consent to
sell membership interests as provided in the Second Amended and Restated
Operating Agreement, then all of the Parties other than Atlas shall have
"Tag-Along Rights" to participate in the sale of such interests to the extent
provided herein. The Tag-Along Rights shall be exercised by making an
affirmative election to exercise such rights to be sent in writing to the
Selling Members within 45 days after receipt of the Selling Members' notice (the
"Election Notice"). The Election Notice shall state the amount of interests
which such Party desires to sell at the price stated in the Sale Notice, which
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shall be equal to (or less than) the Profit Participating Percentage held by
such participating Party multiplied by the same percentage as the percentage of
Profit Participating Percentage to be sold by the Selling Members bears to the
total number of Profit Participating Percentage then outstanding. The amount of
Profit Participating Percentage specified in the Election Notice shall then be
purchased by the purchaser or purchasers of Profit Participating Percentage of
the Selling Members at the same price and at the same time as the purchase of
the Profit Participating Percentage of the Selling Members Member and as a
condition to approval of such transfer.
12. Termination. This Agreement shall terminate as provided in
Paragraph 4 above or upon termination of the Voting Agreement, whichever occurs
first.
13. Securities Filings. Each of the Parties who is required to file
reports of ownership of the MACC Shares (including Schedule 13D and Form 3, 4
and 5) with the Securities and Exchange Agreement agrees to timely file such
reports on a timely basis. During the period that some or all of the Parties may
be considered a "group" for purposes of Schedule 13D, the members of the group
agree to promptly report to all other members of the group any acquisition or
disposition of MACC securities. Each of the Parties (an "Indemnifying Party")
agrees to indemnify the other Parties from and against any liabilities arising
from (i) the Indemnifying Party's failure to timely or accurately file a
required report with the SEC, or (ii) the Indemnifying Party's failure to report
information regarding the Indemnifying Party's ownership of MACC securities
which results in the other Party filing a misleading report with the SEC.
14. Take-over of MACC. The Parties agree that neither they nor their
affiliates shall seek to purposefully take control, directly or indirectly, of
MACC or its management other than through Atlas and the agreements among the
Parties described herein.
15. Miscellaneous Provisions.
15.1 Notices. Without precluding any other sufficient form
of notice, all notices, demands, or other
communications under this Agreement shall be deemed
given as outlined below if sent by fax or first class
mail, to the most recent address given by the party to
whom notice is given and directed to the attention of
the individual(s) specified in any communication as
contact persons or individuals authorized to receive
notice on behalf of a party. Without limiting any means
by which a Party may be able to prove that a notice has
been received by another party, a notice will be deemed
to be duly received:
15.1.1 if sent by first class mail, 5 days
(if posted within a country to an
address in the same country) or 10
days (if posted from one country to
another) after the date of posting; or
15.1.2 if sent by facsimile, upon receipt by
the sender of an acknowledgment or
transmission report generated by the
machine from which the facsimile was
sent indicating that the facsimile was
sent in its entirety to the
recipient's facsimile number.
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15.2 Assignment. This Agreement may not be assigned by any
party without the prior written consent of the other,
except that a merger, consolidation, or sale of
substantially all of the assets of any party shall not
be considered an assignment and shall not require the
other party's consent. If assignment is permitted
hereunder, this Agreement shall be binding upon the
parties' permitted successors, heirs, devisees,
divisions, subsidiaries, officers, directors,
employees, and agents and any and all persons or
entities in privity with them or having notice of this
Agreement.
15.3 Waiver. Failure of any of the parties hereto to enforce
any of the provisions of this Agreement or any rights
with respect thereto or to exercise any election
provided for herein, shall in no way be considered as a
waiver of such provisions, rights, or elections or in
any way affect the validity of this Agreement. No term
or provision hereof shall be deemed waived and no
breach excused, unless such waiver or consent shall be
in writing and signed by the party claimed to have
waived or consented. The failure by any of the parties
hereto to enforce any of said provisions, rights, or
elections shall not preclude or prejudice such party
from later enforcing or exercising the same or any
other provisions, rights, or elections which it may
have under this Agreement. Any consent by any party to,
or waiver of, a breach by the other, whether express or
implied, shall not constitute a consent to, or waiver
of, or excuse for any other, different, or subsequent
breach.
15.4 Headings. Headings used in this Agreement are for
reference purposes only and shall not be deemed a part
of this Agreement.
15.5 Choice of Law and Venue. This Agreement shall be
governed by and construed in accordance with the laws
of the State of Utah. Any action to enforce the terms
of this Agreement shall be brought and prosecuted in
the state or federal courts sitting in the State of
Utah. All parties submit to the jurisdiction of the
courts sitting in the State of Utah and agree that
venue shall be proper in Salt Lake County, State of
Utah. Nothing herein shall prevent either party from
seeking removal to federal court of an action filed in
state court to the extent permitted by law.
15.6 Entire Agreement. The parties hereto have read this
Agreement and agree to be bound by all its terms. The
parties further agree that this Agreement together with
the other agreements referenced herein shall constitute
the complete and exclusive statement of the Agreement
among them and that this Agreement supersedes all
proposals, oral or written, and all other
communications among them relating to the subject
matter of this Agreement.
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15.7 Tax Benefits. Should any Party discover that more
favorable tax treatment is allowed under U.S. tax law
by adjusting the structure of these agreements or
entities, changes will be reasonably allowed as long as
no economic changes are suffered by the other Parties.
15.8 Changes to the Documents. Any and all contractual
agreements considered under this Agreement can only be
amended by a writing signed by all of the Parties
15.9 Reliance on Facsimile Signatures, Counterparts. This
Agreement maybe executed in two counterparts, each of
which shall be deemed an original and which taken
together shall constitute a single instrument. The
delivery of a counterpart signature by facsimile shall
be effective as delivery of a manually signed original
and the receiving party may rely thereon for all
purposes.
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IN WITNESS WHEREOF, the parties have signed this Agreement effective as
of the date and year first above written.
BIG:
BRIDGEWATER INTERNATIONAL GROUP, LLC
By: /s/ Xxxxxxxx Xxxxxxxxxx
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Its: Manager
/s/ XXXX XXXXXX
----------------------------------------
Xxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
ATLAS MANAGEMENT PARTNERS, LLC
By /s/ XXXX XXXXXX
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Xxxx X. Xxxxxx, Its Manager
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Exhibit C
Term Sheet
Subject to the Commencement (as defined in the Agreement dated September 29,
2003 to which this Term Sheet is attached) and negotiation of final terms,
Xxxxxxxx X. Xxxxxxx commits to provide capital to Atlas Management Partners, LLC
("Atlas") on the following general terms:
Purpose: To provide working capital to MACC Private Equities, Inc. or
Atlas or to other similar purposes chosen by Atlas
Borrower: MACC Private Equities, Inc. ("MACC"), Atlas or other similar
borrower chosen by Atlas
Lender: Xxxxxxxx X. Xxxxxxx or designee
Guarantor: Atlas (non-recourse)
Amount: Up to $500,000, with an initial draw of $250,000
Term: 36 months
Interest: 9% per annum, compounded quarterly
Payments: Interest only, paid quarterly, balloon on maturity
Option: If MACC or another publicly held company is the borrower, 100%
of the drawn loan will be convertible into common shares of
the borrower at a 20% premium to the market price on the date
of the initial loan draw. The option to convert will be valid
until the end of the loan term or the earlier prepayment of
the loan.
Tag-Along Rights: In the event that one or more of the Bridgewater International
Group, LLC, a Utah limited liability Company ("BIG"), Xxxx X.
Xxxxxx ("Xxxxxx"), Xxxxxx X. Xxxxxx ("X. Xxxxxx"), Xxxxxxxx X.
Xxxxxxx ("Xxxxxxx") and Atlas Management Partners, LLC, a Utah
limited liability company ("Atlas"). BIG, Xxxxxx, X. Xxxxxx,
Xxxxxxx and Atlas are sometimes referred to as the "Parties."
Other than Atlas elect to sell all or part of their membership
interest in Atlas (the "Selling Members") and have received a
bona fide offer therefore, the Selling Members shall notify
the other Parties (the "Sale Notice"), including in such
notice the details of the proposed sale including price,
quantity (i.e. the Profit Participating Percentage to be
sold), other terms of sale and the identity of the proposed
purchaser. If the Selling Members receive consent to sell
membership interests as provided in the Second Amended and
Restated Operating Agreement, then all of the Parties other
than Atlas shall have "Tag-Along Rights" to participate in the
sale of such interests to the extent provided herein. The
Tag-Along Rights shall be exercised by making an affirmative
election to exercise such rights to be sent in writing to the
Selling Members within 45 days after receipt of the Selling
Members' notice (the "Election Notice"). The Election Notice
shall state the amount of interests which such Party desires
to sell at the price stated in the Sale Notice, which shall be
equal to (or less than) the Profit Participating Percentage
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held by such participating Party multiplied by the same
percentage as the percentage of Profit Participating
Percentage to be sold by the Selling Members bears to the
total number of Profit Participating Percentage then
outstanding. The amount of Profit Participating Percentage
specified in the Election Notice shall then be purchased by
the purchaser or purchasers of Profit Participating Percentage
of the Selling Members at the same price and at the same time
as the purchase of the Profit Participating Percentage of the
Selling Members Member and as a condition to approval of such
transfer.
Prepayment: No penalty or restriction; provided that Lender will receive
reasonable advance notice of prepayment to allow exercise of
conversion option.
Security: To be negotiated with borrower. Atlas will provide a
non-recourse guarantee to the extent of management fees
received after a loan default.
Default Provisions: Customary
Closing: Within 30 days after the Commencement
Documentation: Final documentation will be prepared which reflect the terms
described herein
Documentation and Closing Costs: Paid by borrower.
Lender agrees to the general terms outlined above in addition in con-
sideration of $10 dollars and other good and valuable
consideration receipt of which is hereby acknowledged lender
agrees to be bound by the Tag-Along Rights as written above.
/s/ Xxxxxxxx X. Xxxxxxx
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Xxxxxxxx X. Xxxxxxx
