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EXHIBIT 10.1
ALLIED CAPITAL LENDING CORPORATION
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, dated as of the last date set forth below, is made by and
between Allied Capital Lending Corporation, a Maryland corporation (together
with its investment company subsidiaries, the "Company"), and Allied Capital
Advisers, Inc., a Maryland corporation (the "Adviser").
1. PURPOSE OF THE COMPANY.
The Company is organized under the laws of the State of Maryland as a
closed-end investment company registered as such under Investment Company Act
of 1940 (the "ICA") and has elected under the ICA to be regulated as a business
development company. The Company also is a small business lending company
approved by the U.S. Small Business Administration ("SBA").
2. THE INVESTMENT ADVISER.
The Adviser is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended, and has entered into this Agreement with the
Company to act as its investment adviser. The terms of this Agreement are as
follows:
3. OBLIGATIONS OF THE ADVISER.
The Company hereby engages the Adviser's services as the Company's
investment adviser. As such, the Adviser will:
(a) advise the Company as to the acquisition and disposition of
investments in accordance with the Company's investment policies;
(b) make available and, if requested by entities in the securities of
which the Company has invested or is proposing to invest, render
managerial assistance to, and exercise management rights in, such
entities;
(c) provide to the Company office space and facilities and the services to
the extent required of the Adviser's officers and employees;
(d) maintain the Company's books of account and other records and files;
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(e) report to the Company's Board of Directors, or to any committee or
officer of the Company acting pursuant to the authority of the Board, at
such times and in such detail as the Board deems appropriate in order to
enable the Company to determine that its investment policies are being
observed and implemented and that the Adviser's obligations hereunder are
being fulfilled. Any investment program undertaken by the Adviser pursuant
hereto and any other activities undertaken by the Adviser on the Company's
behalf shall at all times be subject to any directives of the Company's
Board of Directors or any duly constituted committee or officer of the
Company acting pursuant to authority of the Company's Board of Directors;
(f) subject to the Company's investment policies and any specific
directives from the Company's Board of Directors, effect acquisitions and
dispositions for the Company's account in Adviser's discretion and to
arrange for the documents representing investments acquired to be
delivered to a custodian of the Company; and
(g) on a continuing basis, monitor, manage and service the Company's loan
and/or investment portfolio.
4. EXPENSES TO BE PAID BY THE ADVISER.
The Adviser will pay for its own account all expenses incurred by the
Adviser in rendering the services to be rendered by the Adviser hereunder.
Without limiting the generality of the foregoing, the Adviser will pay the
salaries and other employee benefits of the persons in its organization whom
the Adviser may engage to render such services, including without limitation
persons who may from time to time act as the Company's officers.
Notwithstanding the foregoing, the Board of Directors of the Company may, in
its sole discretion, award to such officers options to acquire shares of the
Company's common stock, which shall not be deemed part of their salaries or
other employee benefits for the purpose of this paragraph.
5. EXPENSES TO BE PAID BY THE COMPANY.
The Company will reimburse the Adviser promptly, against the Adviser's
voucher, for any expenses incurred by the Adviser for the Company's account.
Without limitation, such expenses shall include all expenses of any offering
and sale by the Company of its shares and, except as otherwise specifically
provided above, all expenses of the Company's operations; 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 the Company's
periodic reports to and other communications with the Company's shareholders;
costs of promoting the Company's stock; fees and expenses of members of the
Company's Board of Directors who are not directors, officers or employees of
the Adviser or of any entity affiliated with the Adviser, and fees of directors
who are such officers, directors or employees; premiums for the fidelity bond
maintained by the Company pursuant to ICA Section 17; and all transaction costs
incident to the acquisition and disposition of securities by the Company,
including, without limitation, legal and accounting fees and other professional
or technical fees and expenses (e.g., credit report,
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title search and delivery charges, costs of specialized consultants such as
accountants or industry- specific technical experts, and deal-specific travel
expenses) incurred in monitoring, negotiating and working-out such investments,
as well as responding to any litigation arising therefrom. If the Company for
its corporate purposes uses the services of attorneys or paraprofessionals on
the staff of the Adviser in lieu of outside counsel, the Company will reimburse
the Adviser for such services at hourly rates calculated to cover the cost of
such services, as well as for incidental disbursements. The Company will
reimburse the Adviser promptly, against the Adviser's voucher, for (a) any
origination fee with respect to any loan or investment made by the Company that
was identified or referred to the Company by any third party with which the
Company or the Adviser then has a written agreement or arrangement that
specifies the amount or rate of such fee or (b) any origination fee with
respect to any loan or investment made by the Company that was identified or
referred to the Company by any third party with which the Company or the
Adviser then does not have a written agreement or arrangement. All such
origination fees reimbursed to the Adviser will be reviewed as of the end of
each calendar quarter by the Company's Board of Directors.
6. RECEIPT OF FEES.
To the extent permitted under SBA regulations, all fees that may be paid
by or for the account of an entity in which the Company has invested or is
proposing to invest in connection with an investment transaction in which the
Company participates or provides follow-on managerial assistance will be
treated as commitment fees or management fees and will be received by the
Company, pro rata to the Company's participation in such transaction.
Nevertheless, the Adviser will be entitled to retain for its own account any
fees paid to the Adviser by or for the account of any entity, including an
entity in which the Company may have invested, for special investment banking
or consulting work performed for the entity which is not related to such
transaction or follow-on managerial assistance. The Adviser will report to the
Company's Board of Directors not less often than quarterly all fees received by
the Adviser from any source and whether, in its opinion, any such fee is one
that the Adviser is entitled to retain under the provisions of this paragraph.
In the event that any member of the Company's Board of Directors should
disagree, the matter shall be conclusively resolved by a majority of the
Company's Board of Directors, including a majority of its members who are not
interested persons of the Company.
7. COMPENSATION TO THE ADVISER.
As the Adviser's sole and exclusive compensation for its services to be
rendered pursuant to the terms set out above, the Company will, during the term
of this Agreement, pay to the Adviser, quarterly, an investment advisory fee
equal to (a) 0.625% per quarter of the quarter-end value of the Company's
consolidated total assets (less the company's Interim Investments and cash) and
(b) 0.125% per quarter of the quarter-end value of the Company's consolidated
Interim Investments and cash. As the Adviser's sole and exclusive compensation
for its services in identifying and referring to the Company any loan or
investment opportunity during the term hereof, the Company shall pay to the
Adviser an origination fee equal to the amount that would have been paid to an
independent
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third party with respect to any such loan or other investment originated by the
Company during the subject calendar quarter.
For this purpose "Interim Investments" are defined as short-term
securities issued or guaranteed by the U.S. government or an agency or
instrumentality thereof, or in repurchase agreements fully collateralized by
such securities.
For the purpose of calculating the investment advisory fee, the values of
the Company's assets will be determined as of the end of each calendar quarter
by the Board of Directors. For purposes of calculating the origination fee, the
aggregate principal amount of loans identified or referred to the Company by
the Adviser shall be reviewed as of the end of each calendar quarter by the
Board of Directors. The Company will pay the investment advisory fee and the
origination fee, if any, with respect to a calendar quarter as soon as
practicable after the values of the Company's assets have been determined for
such quarter and/or the aggregate principal amount of loans identified or
referred to the Company by the Adviser has been reviewed for such quarter. If
the termination of the Adviser's services hereunder does not coincide with the
last day of a calendar quarter, then any investment advisory fee determined in
accordance with this paragraph shall be multiplied by the ratio of the number
of days in such quarter during which Adviser rendered services to the total
number of days in such quarter.
8. INDEMNIFICATION OF THE ADVISER.
The Company confirms that in performing services hereunder the Adviser
will be an agent of the Company for the purpose of the indemnification
provisions of the Company's By-Laws, subject, however, to the same limitations
as though the Adviser were a director or officer of the Company. The Adviser
shall not be liable to the Company, its shareholders or its creditors except
for violations of law or for conduct which would preclude the Adviser from
being indemnified under such provisions.
9. APPROVAL OF THE AGREEMENT.
The Company represents that the Company's Board of Directors, including a
majority of its members who are not interested persons of the Company, approved
this Agreement at a meeting held on March 21, 1995 at which a quorum was
personally present, and a majority, as defined in the ICA, of the Company's
shareholders approved it at a meeting held on the date hereof. This Agreement
shall continue in effect until the annual meeting of the shareholders of the
Company to be held in 1996 and thereafter from year to year as long as such
continuance is specifically approved at least annually by the Company's Board
of Directors, including a majority of its members who are not interested
persons of the Company, or by vote of the holders of a majority, as defined in
the ICA, of the Company's outstanding voting securities.
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10. TERMINATION OF THE AGREEMENT.
The foregoing notwithstanding, this Agreement may be terminated by the
Company at any time, without payment of any penalty, on 60 days' written notice
to the Adviser if the decision to terminate has been made by the Company's Board
of Directors or by vote of the holders of a majority, as defined in the ICA, of
the Company's outstanding securities. This Agreement will terminate
automatically in the event of its assignment, as defined in the ICA. The
Adviser may also terminate this Agreement on 60 days' written notice to the
Company; provided, however, that the Adviser may not terminate this Agreement
unless another investment adviser has been approved by the vote of a majority,
as defined in the ICA, of the Company's outstanding securities and by the
Company's board of Directors, including a majority of its members who are not
parties to such agreement of interested persons of any such party.
11. JURISDICTION.
This Agreement shall be governed by the laws of the State of Maryland.
IN WITNESS WHEREOF, the parties have executed this Agreement on and as
of May 9th, 1995
ALLIED CAPITAL ADVISERS, INC. ALLIED CAPITAL LENDING
CORPORATION
By: /s/ XXXX X. XXXXXXX By: /s/ XXXXXXXXX X. XXXXXX
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Xxxx X. Xxxxxxx, President Xxxxxxxxx X. Xxxxxx, President
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