AMENDED AND RESTATED INVESTMENT ADVISORY AGREEMENT
BETWEEN
TECHNOLOGY INVESTMENT CAPITAL CORP.
AND
TECHNOLOGY INVESTMENT MANAGEMENT, LLC
Agreement made this __ day of ________, 200_, by and between Technology
Investment Capital Corp., a Maryland corporation (the "Corporation"), and
Technology Investment MANAGEMENT, LLC, a Delaware limited liability company (the
"Adviser").
WHEREAS, the Corporation is a newly organized specialty finance company
that has elected to become a business development company under the Investment
Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Adviser is a newly organized investment adviser that has
registered under the Investment Advisers Act of 1940 (the "Advisers Act"); and
WHEREAS, the Corporation desires to retain the Adviser to furnish
investment advisory services to the Corporation on the terms and conditions
hereinafter set forth, and the Adviser wishes to be retained to provide such
services.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the parties hereby agree as follows:
1. Duties of the Adviser.
(a) The Corporation hereby employs the Adviser to act as the investment
adviser to the Corporation and to manage the investment and reinvestment of the
assets of the Corporation, subject to the supervision of the Board of Directors
of the Corporation, for the period and upon the terms herein set forth, (i) in
accordance with the investment objective, policies and restrictions that are set
forth in the Corporation's Registration Statement on Form N-2, dated September
23, 2003, as the same shall be amended from time to time (as amended, the
"Registration Statement"), (ii) in accordance with the Investment Company Act,
subsequent to the time that the Corporation becomes a business development
company, and (iii) during the term of this Agreement in accordance with all
other applicable federal and state laws, rules and regulations, and the
Corporation's charter and by-laws. Without limiting the generality of the
foregoing, the Adviser shall, during the term and subject to the provisions of
this Agreement, (i) determine the composition of the portfolio of the
Corporation, the nature and timing of the changes therein and the manner of
implementing such changes; (ii) identify, evaluate and negotiate the structure
of the investments made by the Corporation; (iii) close, monitor and service the
Corporation's investments; (iv) determine the securities and other assets that
the Corporation will purchase, retain, or sell; and (v) provide the Corporation
with such other investment advisory, research and related services as the
Corporation may, from time to time,
reasonably require for the investment of its funds. The Adviser shall have the
power and authority on behalf of the Corporation to effectuate its investment
decisions for the Corporation, including the execution and delivery of all
documents relating to the Corporation's investments and the placing of orders
for other purchase or sale transactions on behalf of the Corporation. In the
event that the Corporation determines to acquire debt financing, the Adviser
will arrange for such financing on the Corporation's behalf, subject to the
oversight and approval of the Corporation's Board of Directors.
(b) The Adviser hereby accepts such employment and agrees during the
term hereof to render the services described herein for the compensation
provided herein.
(c) The Adviser is hereby authorized to enter into one or more
sub-advisory agreements with other investment advisers (each, a "Sub-Adviser")
pursuant to which the Adviser may obtain the services of the Sub-Adviser(s) to
assist the Adviser in fulfilling its responsibilities hereunder. Specifically,
the Adviser may retain a Sub-Adviser to recommend specific securities or other
investments based upon the Corporation's investment objective and policies, and
work, along with the Adviser, in structuring, negotiating, arranging or
effecting the acquisition or disposition of such investments and monitoring
investments on behalf of the Corporation, subject to the oversight of the
Adviser and the Corporation. The Adviser or BDC Partners, LLC, the managing
member of the Adviser, and not the Corporation, shall be responsible for any
compensation payable to any Sub-Adviser. Any sub-advisory agreement entered into
by the Adviser shall be in accordance with the requirements of the Investment
Company Act and other applicable federal and state law.
(d) The Adviser shall for all purposes herein provided be deemed to be
an independent contractor and, except as expressly provided or authorized
herein, shall have no authority to act for or represent the Corporation in any
way or otherwise be deemed an agent of the Corporation.
(e) The Adviser shall keep and preserve for the period required by the
Investment Company Act any books and records relevant to the provision of its
investment advisory services to the Corporation and shall specifically maintain
all books and records with respect to the Corporation's portfolio transactions
and shall render to the Corporation's Board of Directors such periodic and
special reports as the Board may reasonably request. The Adviser agrees that all
records that it maintains for the Corporation are the property of the
Corporation and will surrender promptly to the Corporation any such records upon
the Corporation's request, provided that the Adviser may retain a copy of such
records.
2. Corporation's Responsibilities and Expenses Payable by the
Corporation. All personnel of the Adviser, when and to the extent engaged in
providing investment advisory services hereunder, and the compensation and
expenses of such personnel allocable to such services, will be provided and paid
for by the Adviser or by BDC Partners, LLC, as managing member of the Adviser,
and not by the Corporation. The Corporation shall be responsible for all other
costs and expenses of its operations and transactions, including (without
limitation) those relating to: organization and offering; calculating the
Corporation's net asset value; effecting sales and repurchases of shares of the
Corporation's common stock and other securities; investment advisory fees; fees
payable to third parties relating to, or associated with, making
investments (in each case subject to approval of the Corporation's Board of
Directors); transfer agent and custodial fees; federal and state registration
fees; all costs of registration and listing the Corporation's shares on any
securities exchange; federal, state and local taxes; independent Directors' fees
and expenses; costs of proxy statements, stockholders' reports and notices;
fidelity bond, directors and officers/errors and omissions liability insurance,
and any other insurance premiums; direct costs such as printing, mailing, long
distance telephone, staff, independent auditors and outside legal costs; and all
other expenses incurred by the Corporation or BDC Partners, LLC in connection
with administering the Corporation's business, including payments under the
Administration Agreement between the Corporation and BDC Partners, LLC based
upon the Corporation's allocable portion of BDC Partners, LLC's overhead in
performing its obligations under the Administration Agreement, including rent.
3. Compensation of the Adviser. The Corporation agrees to pay to the
Adviser, and the Adviser agrees to accept as compensation for the services
provided by the Adviser hereunder, a base management fee ("Base Management Fee")
and an incentive fee ("Incentive Fee") as hereinafter set forth. The Adviser may
agree to temporarily or permanently waive, in whole or in part, the Base
Management Fee and/or the Incentive Fee.
(a) The Base Management Fee shall be calculated at an annual rate of
2.00%. For services rendered during the period commencing from the closing of
the Corporation's offering of its common stock, pursuant to the Registration
Statement, through and including March 31, 2004, the Base Management Fee will be
payable monthly in arrears, and will be calculated based on the initial value of
the Corporation's net assets upon closing of such offering. For services
rendered after such time, the Base Management Fee will be payable quarterly in
arrears, and will be calculated based on the average value of the Corporation's
net assets at the end of the two most recently completed calendar quarters, and
appropriately adjusted for any share issuances, repurchases or redemptions
during the current calendar quarter. Base Management Fees for any partial month
or quarter will be appropriately pro rated. The liquidation preference of any
issued and outstanding preferred stock will be included in the calculation of
the Corporation's net assets for purposes of determining the Base Management
Fee, with such liquidation preference appropriately adjusted for any share
issuances, repurchases or redemptions during the current calendar quarter.
(b) The Incentive Fee shall consist of two parts, as follows:
(i) One part will be calculated and payable quarterly in arrears
based on the pre-Incentive Fee net investment income for the
immediately preceding calendar quarter. For this purpose,
pre-Incentive Fee net investment income means interest
income, dividend income and any other income earned by the
Corporation during the calendar quarter, minus the
Corporation's operating expenses for the quarter (including
the Base Management Fee and any interest expense and
dividends paid on any issued and outstanding preferred
stock, but excluding the Incentive Fee). Pre-Incentive Fee
net investment income includes any consulting or other fees
that the Corporation receives from portfolio companies, but
does not include any net realized capital gains.
Pre-Incentive Fee net investment income, expressed as a rate
of return on the value of the Corporation's net assets at
the end of the immediately preceding
calendar quarter, will be compared to one-fourth of an
applicable annual "hurdle rate." The Adviser will be
entitled to 20% of the excess (if any) of the Corporation's
pre-Incentive Fee net investment income for the quarter over
one-fourth of the applicable annual hurdle rate. The annual
hurdle rate will initially be [ ]%. For each calendar year,
commencing on or after January 1, 2005, the annual hurdle
rate will be determined as of the immediately preceding
December 31st by adding 5% to the interest rate then payable
on the most recently issued five-year U.S. Treasury Notes,
up to a maximum annual hurdle rate of 10%. The calculations
will be appropriately pro rated for any period of less than
three months and adjusted for any share issuances,
redemptions or repurchases during the current quarter.
(ii) The second part of the Incentive Fee (the "Capital Gains
Fee") will be determined and payable in arrears as of the
end of each calendar year (or upon termination of this
Agreement as set forth below), commencing on December 31,
2004, and will equal 20.0% of the Corporation's net realized
capital gains for the calendar year less any net unrealized
capital losses at the end of such year; provided that the
Capital Gains Fee determined as of December 31, 2004 will
take into account any capital gains and losses for the
period ending December 31, 2003, if any. In the event that
this Agreement shall terminate as of a date that is not a
calendar year end, the termination date shall be treated as
though it were a calendar year end for purposes of
calculating and paying a Capital Gains Fee.
4. Covenants of the Adviser. The Adviser covenants that it will
register as an investment adviser under the Advisers Act prior to the
Corporation's election to become a business development company. The Adviser
agrees that its activities will at all times be in compliance in all material
respects with all applicable federal and state laws governing its operations and
investments.
5. Excess Brokerage Commissions. The Adviser is hereby authorized, to
the fullest extent now or hereafter permitted by law, to cause the Corporation
to pay a member of a national securities exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of such exchange, broker or dealer would have charged
for effecting that transaction, if the Adviser determines in good faith, taking
into account such factors as price (including the applicable brokerage
commission or dealer spread), size of order, difficulty of execution, and
operational facilities of the firm and the firm's risk and skill in positioning
blocks of securities, that such amount of commission is reasonable in relation
to the value of the brokerage and/or research services provided by such member,
broker or dealer, viewed in terms of either that particular transaction or its
overall responsibilities with respect to the Corporation's portfolio, and
constitutes the best net results for the Corporation.
6. Limitations on the Employment of the Adviser. The services of the
Adviser to the Corporation are not exclusive, and the Adviser may engage in any
other business or render similar or different services to others so long as its
services to the Corporation hereunder are not impaired thereby, and nothing in
this Agreement shall limit or restrict the right of any manager,
officer or employee of the Adviser to engage in any other business or to devote
his or her time and attention in part to any other business, whether of a
similar or dissimilar nature; provided, that during the term of this Agreement,
the Adviser will not serve as investment adviser to any other public or private
entity that utilizes a principal investment strategy of providing debt financing
to "target technology-related companies." For purposes of this Agreement,
"target technology-related companies" are companies having annual revenues of
less than $100 million and/or a market capitalization of less than $200 million,
that create products or provide services requiring advanced technology, and that
compete in industries characterized by such products or services, including
companies in the following businesses: computer software and hardware,
networking systems, semiconductors, semiconductor capital equipment, diversified
technology, medical device technology, information technology infrastructure or
services, Internet, telecommunications and telecommunications equipment and
media. So long as this Agreement or any extension, renewal or amendment remains
in effect, the Adviser shall be the only investment adviser for the Corporation,
subject to the Adviser's right to enter into sub-advisory agreements. The
Adviser assumes no responsibility under this Agreement other than to render the
services called for hereunder. It is understood that directors, officers,
employees and stockholders of the Corporation are or may become interested in
the Adviser and its affiliates, as directors, officers, employees, partners,
stockholders, members, managers or otherwise, and that the Adviser and
directors, officers, employees, partners, stockholders, members and managers of
the Adviser and its affiliates are or may become similarly interested in the
Corporation as stockholders or otherwise.
7. Responsibility of Dual Directors, Officers and/or Employees. If any
person who is a manager, officer or employee of the Adviser or its managing
member is or becomes a director, officer and/or employee of the Corporation and
acts as such in any business of the Corporation, then such manager, officer
and/or employee of the Adviser or its managing member shall be deemed to be
acting in such capacity solely for the Corporation, and not as a manager,
officer or employee of the Adviser or its managing member or under the control
or direction of the Adviser or its managing member, although paid by BDC
Partners, LLC as managing member of the Adviser.
8. Limitation of Liability of the Adviser; Indemnification. The Adviser
(and its officers, managers, agents, employees, controlling persons, members and
any other person or entity affiliated with the Adviser, including without
limitation BDC Partners, LLC) shall not be liable to the Corporation for any
action taken or omitted to be taken by the Adviser in connection with the
performance of any of its duties or obligations under this Agreement or
otherwise as an investment adviser of the Corporation, except to the extent
specified in Section 36(b) of the Investment Company Act concerning loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services, and the Corporation shall indemnify the Adviser (and
its officers, managers, agents, employees, controlling persons, members and any
other person or entity affiliated with the Adviser, including without limitation
BDC Partners, LLC) (collectively, the "Indemnified Parties") and hold them
harmless from and against all damages, liabilities, costs and expenses
(including reasonable attorneys' fees and amounts reasonably paid in settlement)
incurred by the Indemnified Parties in or by reason of any pending, threatened
or completed action, suit, investigation or other proceeding (including an
action or suit by or in the right of the Corporation or its security holders)
arising out of or otherwise based upon the performance of any of the Adviser's
duties or obligations under this Agreement or otherwise as
an investment adviser of the Corporation. Notwithstanding the preceding sentence
of this Paragraph 8 to the contrary, nothing contained herein shall protect or
be deemed to protect the Indemnified Parties against or entitle or be deemed to
entitle the Indemnified Parties to indemnification in respect of, any liability
to the Corporation or its security holders to which the Indemnified Parties
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Adviser's duties or by reason of the
reckless disregard of the Adviser's duties and obligations under this Agreement.
9. Effectiveness, Duration and Termination of Agreement. This Agreement
shall become effective as of the date above written. This Agreement shall remain
in effect for two years, and thereafter shall continue automatically for
successive annual periods, provided that such continuance is specifically
approved at least annually by (a) the vote of the Corporation's Board of
Directors, or by the vote of a majority of the outstanding voting securities of
the Corporation and (b) the vote of a majority of the Corporation's Directors
who are not parties to this Agreement or "interested persons" (as such term is
defined in Section 2(a)(19) of the Investment Company Act) of any such party, in
accordance with the requirements of the Investment Company Act. This Agreement
may be terminated at any time, without the payment of any penalty, upon 60 days'
written notice, by the vote of a majority of the outstanding voting securities
of the Corporation, or by the vote of the Corporation's Directors or by the
Adviser. This Agreement will automatically terminate in the event of its
"assignment" (as such term is defined for purposes of Section 15(a)(4) of the
Investment Company Act). The provisions of Paragraph 8 of this Agreement shall
remain in full force and effect, and the Adviser shall remain entitled to the
benefits thereof, notwithstanding any termination of this Agreement.
10. Notices. Any notice under this Agreement shall be given in writing,
addressed and delivered or mailed, postage prepaid, to the other party at its
principal office.
11. Amendments. This Agreement may be amended by mutual consent, but
the consent of the Corporation must be obtained in conformity with the
requirements of the Investment Company Act.
12. Entire Agreement; Governing Law. This Agreement contains the entire
agreement of the parties and supersedes all prior agreements, understandings and
arrangements with respect to the subject matter hereof. This Agreement shall be
construed in accordance with the laws of the State of New York and the
applicable provisions of the Investment Company Act. To the extent the
applicable laws of the State of New York, or any of the provisions herein,
conflict with the provisions of the Investment Company Act, the latter shall
control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date above written.
TECHNOLOGY INVESTMENT CAPITAL CORP.
By: __________________________________
Xxxxxxxx Xxxxx, President
TECHNOLOGY INVESTMENT MANAGEMENT, LLC
By: BDC Partners, LLC, its managing member
By: __________________________________
Xxxxxxxx Xxxxx, Managing Member
