EXHIBIT k.1
ADMINISTRATION SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this ___ day of February,
2004, by and among XXXXXXXX MANAGEMENT COMPANY, an Ohio corporation ("Xxxxxxxx")
and XXXXXXXX MEZZANINE CAPITAL CORP., a Maryland corporation ("Company").
WHEREAS, Xxxxxxxx wishes to provide certain administration and other
services to the Company;
WHEREAS, the Company is a closed-end investment company which has
elected to be treated as a business development company under the Investment
Company Act of 1940, as amended (the "1940 Act"), and is authorized to issue
shares of common stock;
WHEREAS, the Company desires to retain Xxxxxxxx to provide certain
administration services to the Company as provided hereunder.
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto, intending to be legally bound,
do hereby agree as follows:
1. APPOINTMENT OF XXXXXXXX AS ADMINISTRATOR
The Company hereby appoints Xxxxxxxx as administrator of the Company on
the terms and conditions set forth in this Agreement, and Xxxxxxxx
hereby accepts such appointment and agrees to perform (or provide for
the performance of) the services and duties set forth in this
Agreement.
2. DELEGATION OF DUTIES
Xxxxxxxx may delegate some or all of its duties under this
Agreement. Xxxxxxxx may employ a sub-administrator to assist in the performance
of its duties under this Agreement. Such use does not relieve Xxxxxxxx of any
duty or liability it would otherwise have under this Agreement. Compensation of
any such sub-administrator for services provided and expenses incurred under any
agreement between Xxxxxxxx and any such sub-administrator permitted under this
paragraph is the sole responsibility of Xxxxxxxx. In the event Xxxxxxxx shall
retain a sub-administrator under this paragraph, Xxxxxxxx shall be responsible
for oversight over such sub-administrator and will provide such
sub-administrator with the assistance necessary for such sub-administrator to
provide the applicable services to Company. The decision to retain or terminate
a sub-administrator to provide services to the Company pursuant to this
paragraph is in the sole discretion of Xxxxxxxx.
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3. SERVICES AND DUTIES OF XXXXXXXX
Xxxxxxxx shall provide the following administration services
for the Company:
A. General Company Management:
(1) Act as liaison among all Company service providers.
(2) Supply:
a. Corporate secretarial services.
b. Office facilities (which may be in
Xxxxxxxx'x or its affiliate's own offices).
c. Non-investment-related statistical and
research data.
(3) Coordinate board communication by:
a. Assisting Company's counsel in establishing
meeting agendas.
b. Preparing board reports based on financial
and administrative data.
c. Assisting Audit Committee in evaluating
independent auditor if requested.
d. Securing and monitoring fidelity bond and
director and officer liability coverage, and
making necessary Securities and Exchange
Commission (the "SEC") filings relating
thereto.
e. Preparing minutes of meetings of the board
and Company shareholders.
f. Making available Brantley personnel to serve
as officers of the Company and if so elected
to attend board meetings and present
materials for directors' review at such
meetings.
(4) Audits:
a. Prepare appropriate schedules and assist
independent auditors.
b. Provide information to the SEC and
facilitate audit process.
c. Provide office facilities.
(5) Assist in overall operations of the Company.
(6) Pay Company expenses upon written authorization from
the Company.
B. Compliance:
(1) Regulatory Compliance:
a. Monitor compliance with applicable 1940 Act
requirements, including but not limited to:
(i) Leverage limits.
(ii) Maintenance of books and records
under Rule 31a-3.
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(iii) Code of Ethics requirements for
disinterested directors of the Company.
b. Monitor Company's compliance with certain
policies and investment limitations set
forth in its prospectus.
c. Monitor applicable regulatory and legal
developments in the industry and report the
same to the Company.
d. Prepare and file reports and other documents
required by U.S. stock exchanges on which
the Company's shares are listed.
(2) SEC Registration and Reporting:
a. Assist Company counsel in preparing proxy
statements and various other required SEC
filings.
b. Assist the Company in the preparation and
filing of periodic shareholder reports and
financial statements.
c. Coordinate the printing and mailing of
publicly disseminated reports.
d. File fidelity bond under Rule 17g-1.
e. Monitor sales of Company shares (including
through dividend reinvestment plans) and
ensure that such shares are properly
registered or qualified, as applicable, with
the SEC and the appropriate state
authorities.
(3) IRS Compliance:
a. Monitor the Company's status as a regulated
investment company under Subchapter M
through review of the following: (i) asset
diversification tests, (ii) qualifying
income requirements and (iii) distribution
requirements.
b. Calculate required distributions (including
excise tax distributions, if any).
C. Financial Reporting:
(1) Prepare financial reports for officers, shareholders,
tax authorities, the board, the SEC and the
independent auditors (and others if reasonably
requested by the Company).
(2) Supervise the Company's custodian and fund
accountants in the maintenance of the Company's
general ledger and in the preparation of the
Company's financial statements, including oversight
of expense accruals and payments, of the
determination of net asset value of the Company's
shares, and of the declaration and payment of
dividends and other distributions to shareholders.
(3) Provide any financial data including any performance
calculations as may be requested from time to time by
the Company.
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D. Tax Reporting:
(1) Prepare and file on a timely basis appropriate
federal and state tax returns.
(2) File Form 1099 Miscellaneous for payments to
directors and other service providers.
(3) Provide such other tax reporting and calculations as
may from time to time be requested by the Company.
4. COMPENSATION
Xxxxxxxx shall be compensated for providing the services set forth in
this Agreement in accordance with the fee schedule attached hereto as
Exhibit A and as mutually agreed upon and amended from time to time.
The Company shall pay all fees and reimbursable expenses within thirty
(30) calendar days following receipt of the billing notice.
5. INDEMNIFICATION; LIMITATION OF LIABILITY
X. Xxxxxxxx shall exercise reasonable care in the performance of
its duties under this Agreement. Xxxxxxxx shall not be liable
for any error of judgment or mistake of law or for any loss
suffered by the Company in connection with matters to which
this Agreement relates, including losses resulting from
mechanical breakdowns or the failure of communication or power
supplies beyond Xxxxxxxx'x control, except a loss arising out
of or relating to Xxxxxxxx'x refusal or failure to comply with
the terms of this Agreement or from bad faith, negligence, or
willful misconduct on its part in the performance of its
duties under this Agreement. Notwithstanding any other
provision of this Agreement, the Company shall indemnify and
hold harmless Xxxxxxxx from and against any and all claims,
demands, losses, expenses, and liabilities of any and every
nature (including reasonable attorneys' fees) which Xxxxxxxx
may sustain or incur or which may be asserted against Xxxxxxxx
by any person arising out of any action taken or omitted to be
taken by it in performing the services hereunder, (i) in
accordance with the foregoing standards, or (ii) in reliance
upon any written or oral instruction provided to Xxxxxxxx by
any duly authorized officer of the Company, such duly
authorized officer to be included in a list of authorized
officers furnished to Xxxxxxxx and as amended from time to
time in writing by resolution of the Board of Directors of the
Company.
Xxxxxxxx shall indemnify and hold the Company harmless from
and against any and all claims, demands, losses, expenses, and
liabilities of any and every nature (including reasonable
attorneys' fees) that the Company may sustain or incur or that
may be asserted against the Company by any person arising out
of any action taken or omitted to be taken by Xxxxxxxx as a
result of Xxxxxxxx'x refusal or failure to comply with the
terms of this Agreement, its bad faith, negligence, or willful
misconduct.
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its control, Xxxxxxxx
shall take all reasonable steps to minimize service
interruptions for any period that such interruption continues
beyond
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Xxxxxxxx'x control. Xxxxxxxx will make every reasonable effort
to restore any lost or damaged data and correct any errors
resulting from such a breakdown at the expense of Xxxxxxxx.
Xxxxxxxx agrees that it shall, at all times, have reasonable
contingency plans with appropriate parties, making reasonable
provision for emergency use of electrical data processing
equipment to the extent appropriate equipment is available.
Representatives of the Company shall be entitled to inspect
Xxxxxxxx'x premises and operating capabilities at any time
during regular business hours of Xxxxxxxx, upon reasonable
notice to Xxxxxxxx.
Notwithstanding the above, Xxxxxxxx reserves the right to
reprocess and correct administrative errors at its own
expense.
B. In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the
indemnitor may be asked to indemnify or hold the indemnitee
harmless, the indemnitor shall be fully and promptly advised
of all pertinent facts concerning the situation in question,
and it is further understood that the indemnitee will use all
reasonable care to notify the indemnitor promptly concerning
any situation that presents or appears likely to present the
probability of a claim for indemnification. Indemnitor shall
have the option to defend the indemnitee against any claim
that may be the subject of this indemnification. In the event
that the indemnitor so elects, it will so notify the
indemnitee and thereupon the indemnitor shall take over
complete defense of the claim, and the indemnitee shall in
such situation initiate no further legal or other expenses for
which it shall seek indemnification under this section. The
indemnitee shall in no case confess any claim or make any
compromise in any case in which the indemnitor will be asked
to indemnify the indemnitee except with the indemnitor's prior
written consent.
6. PROPRIETARY AND CONFIDENTIAL INFORMATION
Xxxxxxxx agrees on behalf of itself and its directors, officers, and
employees to treat confidentially and as proprietary information of the
Company all records and other information relative to the Company and
prior, present, or potential shareholders of the Company (and clients
of said shareholders), and not to use such records and information for
any purpose other than the performance of its responsibilities and
duties hereunder, except after prior notification to and approval in
writing by the Company, which approval shall not be unreasonably
withheld and may not be withheld where Xxxxxxxx may be exposed to civil
or criminal contempt proceedings for failure to comply, when requested
to divulge such information by duly constituted authorities, or when so
requested by the Company.
Further, Xxxxxxxx will adhere to the privacy policies adopted by the
Company pursuant to Title V of the Xxxxx-Xxxxx-Xxxxxx Act, as may be
modified from time to time (the "Act"). Notwithstanding the foregoing,
Xxxxxxxx will not share any nonpublic personal information concerning
any of the Company's shareholders to any third party (except as
necessary to services providers, such as a sub-administrator) unless
specifically directed by the Company or allowed under one of the
exceptions noted under the Act.
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7. TERM OF AGREEMENT; AMENDMENT
This Agreement shall become effective as of the date first written
above, and unless sooner terminated as provided herein, shall continue
automatically in effect for successive annual periods. This Agreement
may be terminated by either party upon giving sixty (60) days prior
written notice to the other party or such shorter period as is mutually
agreed upon by the parties. However, this Agreement may be amended by
mutual written consent of the parties. The representations of Xxxxxxxx
in Section 5 hereunder shall survive the termination of this Agreement.
8. RECORDS
Xxxxxxxx shall keep records relating to the services to be performed
hereunder in the form and manner, and for such period, as it may deem
advisable and is agreeable to the Company, but not inconsistent with
the rules and regulations of appropriate government authorities, in
particular, Section 31 of the 1940 Act and the rules thereunder.
Xxxxxxxx agrees that all such records prepared or maintained by
Xxxxxxxx relating to the services to be performed by Xxxxxxxx hereunder
are the property of the Company and will be preserved, maintained, and
made available in accordance with such applicable sections and rules of
the 1940 Act and will be promptly surrendered to the Company on and in
accordance with its request. Xxxxxxxx agrees to provide the Company any
records necessary for the Company to comply with its obligations under
the Xxxxxxxx-Xxxxx Act. Without limiting the generality of the
foregoing, Xxxxxxxx shall cooperate with the Company and assist the
Company as is necessary by providing information to enable the
appropriate officers of the Company to execute any required
certifications, including by providing appropriate back-up certificates
to the officers of the Company in the form reasonably requested by the
Company.
9. GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the
State of Ohio, without regard to conflicts of law principles. To the
extent that the applicable laws of the State of Ohio, or any of the
provisions herein, conflict with the applicable provisions of the 1940
Act, the latter shall control, and nothing herein shall be construed in
a manner inconsistent with the 1940 Act or any rule or order of the SEC
thereunder.
10. DUTIES IN THE EVENT OF TERMINATION
In the event that, in connection with termination, a successor to any
of Xxxxxxxx'x duties or responsibilities hereunder is designated by the
Company by written notice to Xxxxxxxx, Xxxxxxxx will promptly, upon
such termination and at the expense of the Company, transfer to such
successor all relevant books, records, correspondence, and other data
established or maintained by Xxxxxxxx under this Agreement in a form
reasonably acceptable to the Company, and will cooperate in the
transfer of such duties and responsibilities, including provision for
assistance from Xxxxxxxx'x personnel in the establishment of books,
records, and other data by such successor.
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11. NO AGENCY RELATIONSHIP
Nothing herein contained shall be deemed to authorize or empower
Xxxxxxxx to act as agent for the other party to this Agreement, or to
conduct business in the name, or for the account, of the other party to
this Agreement.
12. DATA NECESSARY TO PERFORM SERVICES
The Company or its agents shall furnish to Xxxxxxxx the data necessary
to perform the services described herein at such times and in such form
as mutually agreed upon. If Xxxxxxxx (or its affiliates) is also acting
in another capacity for the Company, nothing herein shall be deemed to
relieve Xxxxxxxx (or its affiliates) of any of its obligations in such
capacity.
13. ASSIGNMENT
This Agreement may not be assigned by either party without the prior
written consent of the other party.
14. NOTICES
Any notice required or permitted to be given by either party to the
other shall be in writing and shall be deemed to have been given on the
date delivered personally or by courier service, or three (3) days
after sent by registered or certified mail, postage prepaid, return
receipt requested, or on the date sent and confirmed received by
facsimile transmission to the other party's address set forth below:
Notice to Xxxxxxxx shall be sent to:
Xxxxxxxx Management Company
0000 Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxx 00000
and notice to Company shall be sent to:
Xxxxxxxx Mezzanine Capital Corp.
0000 Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxx 00000
15. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all prior
agreements, arrangements and understandings, whether written or oral.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by a duly authorized officer on one or more counterparts as of the date first
above written.
XXXXXXXX MANAGEMENT COMPANY XXXXXXXX MEZZANINE CAPITAL CORP.
By: ______________________________ By: _________________________________
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EXHIBIT A
ADMINISTRATION SERVICING AGREEMENT ANNUAL FEE SCHEDULE:
11 basis points on the first $100 million
9 basis points on the next $200 million
7 basis points on the balance above $300 million
Minimum annual fee: $75,000
Extraordinary services - quoted separately
Plus out-of-pocket expenses, including but not limited to:
Postage, Stationery
Programming / customization requested by Company
Retention of records
Special reports
Federal and state regulatory filing fees
Out-of-pocket expenses from participation in client meetings
Auditing and out-of-pocket legal expenses
