FORM OF ADMINISTRATION AGREEMENT
Exhibit (k)(1)
FORM OF
ADMINISTRATION AGREEMENT
ADMINISTRATION AGREEMENT
This Agreement (“Agreement”) is made as of by and between HORIZON
TECHNOLOGY FINANCE CORPORATION a Delaware Corporation (the “Company”), and HORIZON
TECHNOLOGY FINANCE MANAGEMENT LLC, a Delaware limited liability company (the
“Administrator”).
W I T N E S S E T H:
WHEREAS, the Company is a newly organized finance company that may elect to be treated as a
business development company (“BDC”) under the Investment Company Act of 1940 (the
“Investment Company Act”);
WHEREAS, the Company desires to retain the Administrator to provide administrative services to
the Company in the manner and on the terms hereinafter set forth;
WHEREAS, the Company’s investment adviser (the “Advisor”) is also the Administrator;
and
WHEREAS, the Administrator is willing to provide administrative services to the Company on the
terms and conditions hereafter set forth.
NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained and
for other good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Company and the Administrator hereby agree as follows:
1. Duties of the Administrator
(a) Employment of Administrator. The Company hereby employs the Administrator to act
as administrator of the Company, and to furnish, or arrange for others to furnish, the
administrative services, personnel and facilities described below, subject to review by and the
overall control of the Board of Directors of the Company, for the period and on the terms and
conditions set forth in this Agreement. The Administrator hereby accepts such employment and agrees
during such period to render, or arrange for the rendering of, such services and to assume the
obligations herein set forth subject to the reimbursement of costs and expenses provided for below.
The Administrator and such others shall for all purposes herein be deemed to be independent
contractors and shall, unless otherwise expressly provided or authorized herein, have no authority
to act for or represent the Company in any way or otherwise be deemed agents of the Company.
(b) Services. The Administrator shall perform (or oversee, or arrange for, the
performance of) the administrative services necessary for the operation of the Company. Without
limiting the generality of the foregoing, the Administrator shall provide the Company with office
facilities, equipment, clerical, bookkeeping and record keeping services at such facilities and
such other services as the Administrator, subject to review by the Board of Directors of the
Company, shall from time to time determine to be necessary or useful to perform its obligations
under this Agreement. The Administrator shall also, on behalf of the Company, conduct relations
with custodians, depositories, transfer agents, dividend disbursing agents, other stockholder
servicing agents, accountants, attorneys, underwriters, brokers and dealers, corporate fiduciaries,
insurers, banks and such other persons in any such other capacity deemed to be necessary or
desirable. The Administrator shall make reports to the Board of Directors of the Company of its
performance of obligations hereunder and furnish advice and recommendations with respect to such
other aspects of the business and affairs of the Company as it shall determine to be desirable;
provided that nothing herein shall be construed to require the Administrator to, and the
Administrator shall not, provide any advice or recommendation relating to the securities and other
assets that the Company should purchase, retain or sell or any other investment advisory services
to the Company. The Administrator shall be responsible for the financial and other records that the
Company is required to maintain and, to the extent that the Company elects to be treated as a BDC
under the Investment Company Act, shall prepare, print and disseminate reports to stockholders, and
reports and other materials filed with the Securities and Exchange Commission (the “SEC”).
The Administrator will provide on the Company’s behalf significant managerial assistance to those
portfolio companies to which the Company is required to provide such assistance. In addition, the
Administrator will assist the Company in determining and
publishing the Company’s net asset value, overseeing the preparation and filing of the
Company’s tax returns, and generally overseeing the payment of the Company’s expenses and the
performance of administrative and professional services rendered to the Company by others.
2. Records
To the extent that the Company elects to be treated as a BDC under the Investment Company Act,
the Administrator agrees to maintain and keep all books, accounts and other records of the Company
that relate to activities performed by the Administrator hereunder and will maintain and keep such
books, accounts and records in accordance with the Investment Company Act. In compliance with the
requirements of Rule 31a-3 under the Investment Company Act, the Administrator agrees that all
records which it maintains for the Company shall at all times remain the property of the Company,
shall be readily accessible during normal business hours, and shall be promptly surrendered upon
the termination of the Agreement or otherwise on written request. The Administrator further agrees
that all records which it maintains for the Company pursuant to Rule 31a-1 under the Investment
Company Act will be preserved for the periods prescribed by Rule 31a-2 under the Investment Company
Act unless any such records are earlier surrendered as provided above. Records shall be surrendered
in usable machine-readable form. The Administrator shall have the right to retain copies of such
records subject to observance of its confidentiality obligations under this Agreement.
3. Confidentiality
The parties hereto agree that each shall treat confidentially the terms and conditions of this
Agreement and all information provided by each party to the other regarding its business and
operations. All confidential information provided by a party hereto, including nonpublic personal
information (regulated pursuant to Regulation S-P of the SEC, if and to the extent that the Company
elects to be treated as a BDC under the Investment Company Act), shall be used by any other party
hereto solely for the purpose of rendering services pursuant to this Agreement and, except as may
be required in carrying out this Agreement, shall not be disclosed to any third party, without the
prior consent of such providing party. The foregoing shall not be applicable to any information
that is publicly available when provided or thereafter becomes publicly available other than
through a breach of this Agreement, or that is required to be disclosed by any regulatory
authority, any authority or legal counsel of the parties hereto, by judicial or administrative
process or otherwise by applicable law or regulation.
4. Compensation; Allocation of Costs and Expenses
In full consideration of the provision of the services of the Administrator, the Company shall
reimburse the Administrator for the costs and expenses incurred by the Administrator in performing
its obligations and providing personnel and facilities hereunder. The Company will bear all costs
and expenses that are incurred in its operation, administration and transactions and not
specifically assumed by the Advisor, pursuant to that certain Investment Management Agreement,
dated as of by and between the Company and the Advisor. Costs and expenses to be
borne by the Company include, but are not limited to, those relating to: organization and offering;
calculating the Company’s net asset value (including the cost and expenses of any independent
valuation firm); expenses (including travel expense) incurred by the Advisor or payable to third
parties, including agents, consultants or other advisors, in monitoring financial and legal affairs
for the Company and in providing administrative services, monitoring the Company’s investments,
and, if necessary enforcing the Company’s rights, and performing due diligence on its prospective
portfolio companies; indemnification payments; providing managerial assistance to those portfolio
companies that request it; marketing efforts; interest payable on debt, if any, incurred to finance
the Company’s investments; sales and purchases of the Company’s common stock and other securities;
investment advisory and management fees; administration fees, if any, payable under this Agreement;
fees payable to third parties, including agents, consultants or other advisors, relating to, or
associated with, evaluating and making investments; transfer agent and custodial fees; federal and
state registration fees; all costs of registration and listing the Company’s shares on any
securities exchange; federal, state and local taxes; independent Directors’ fees and expenses;
costs of preparing and filing reports or other documents required by the Securities and Exchange
Commission; costs of any reports, proxy statements or other notices to stockholders, including
printing costs; the Company’s allocable portion of the fidelity bond, directors and officers/errors
and omissions liability insurance, and any other insurance premiums; direct costs and expenses of
administration, including printing, mailing, long distance telephone, copying, secretarial and
other staff, independent auditors and outside legal costs; and all other
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expenses incurred by the Company or the Administrator in connection with administering the
Company’s business, including payments under this Agreement based upon the Company’s allocable
portion of the Administrator’s overhead in performing its obligations under this Agreement,
including rent and the allocable portion of the cost of the Company’s chief compliance officer and
chief financial officer and their respective staffs.
5. Limitation of Liability of the Administrator; Indemnification
The Administrator (and its officers, managers, partners, agents, employees, controlling
persons, members, and any other person or entity affiliated with the Administrator to the extent
they are providing services for or otherwise acting on behalf of the Administrator, Advisor or the
Company) shall not be liable to the Company for any action taken or omitted to be taken by the
Administrator in connection with the performance of any of its duties or obligations under this
Agreement or otherwise as administrator for the Company, and the Company shall indemnify, defend
and protect the Administrator (and its officers, managers, partners, agents, employees, controlling
persons, members, and any other person or entity affiliated with the Administrator, including
without limitation the Advisor, each of whom shall be deemed a third party beneficiary hereof)
(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 Company or its security holders) arising out of or otherwise based
upon the performance of any of the Administrator’s duties or obligations under this Agreement or
otherwise as administrator for the Company. Notwithstanding the preceding sentence of this Section
5 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 Company or its security holders to which the Indemnified Parties
would otherwise be subject by reason of willful misfeasance, bad faith or negligence in the
performance of the Administrator’s duties or by reason of the reckless disregard of the
Administrator’s duties and obligations under this Agreement (to the extent applicable, as the same
shall be determined in accordance with the Investment Company Act and any interpretations or
guidance by the SEC or its staff thereunder to the extent that the Company elects to be treated as
a business development company under the Investment Company Act).
6. Activities of the Administrator
The services of the Administrator to the Company are not to be deemed to be exclusive, and the
Administrator and each affiliate is free to render services to others. It is understood that
directors, officers, employees and stockholders of the Company are or may become interested in the
Administrator and its affiliates, as directors, officers, members, managers, employees, partners,
stockholders or otherwise, and that the Administrator and directors, officers, members, managers,
employees, partners and stockholders of the Administrator and its affiliates are or may become
similarly interested in the Company as stockholders or otherwise.
7. Duration and Termination of this Agreement
(a) This Agreement shall become effective as of the first date above written. This Agreement
shall remain in effect for an indefinite period; provided, however, that to the extent the Company
elects to be regulated as a BDC under the Investment Company Act, then this Agreement may be
terminated at any time, without the payment of any penalty, upon not more than 60 days’ written
notice, by the vote of a majority of the outstanding voting securities of the Company or by the
vote of the Company’s Directors or by the Administrator.
(b) If the Company elects to be regulated as a BDC under the Investment Company Act:
(i) This Agreement shall continue in effect for two years from the date hereof, or to the
extent consistent with the requirements of the Investment Company Act, from the date of the
Company’s election to be regulated as a BDC under the Investment Company Act, 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 Company’s Board of Directors, or by
the vote of a majority of the outstanding voting securities of the Company and (B) the vote of a
majority of the Company’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;
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(ii) The Agreement may be terminated at any time, without the payment of any penalty, upon not
more than 60 days’ written notice, by the vote of a majority of the outstanding voting securities
of the Company, or by the vote of the Company’s Directors or by the Administrator.
(c) This Agreement may not be assigned by a party without the consent of the other party;
provided, however, that the rights and obligations of the Company under this Agreement shall not be
deemed to be assigned to a newly-formed entity in the event of the merger of the Company into, or
conveyance of all of the assets of the Company to, such newly-formed entity; provided, further,
however, that the sole purpose of that merger or conveyance is to effect a mere change in the
Company’s legal form into another limited liability entity. The provisions of Section 5 of this
Agreement shall remain in full force and effect, and the Administrator shall remain entitled to the
benefits thereof, notwithstanding any termination of this Agreement.
8. Amendments of this Agreement
This Agreement may be amended pursuant to a written instrument by mutual consent of the
parties.
9. Governing Law
This Agreement shall be construed in accordance with the laws of the State of New York. If the
Company elects to be regulated as a BDC under the Investment Company Act, this Agreement shall also
be construed in accordance with the applicable provisions of the Investment Company Act. In such
case, 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.
10. Entire Agreement
This Agreement contains the entire agreement of the parties and supercedes all prior
agreements, understandings and arrangements with respect to the subject matter hereof.
11. 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.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the
date first above written.
| HORIZON TECHNOLOGY FINANCE CORPORATION |
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| By: | /s/ | |||
| Name: | ||||
| Title: | ||||
| HORIZON TECHNOLOGY FINANCE MANAGEMENT LLC |
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| By: | /s/ | |||
| Name: | ||||
| Title: | ||||
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