FORM OF SUB-ADMINISTRATION AGREEMENT
Exhibit (k)(4)
FORM OF SUB-ADMINISTRATION AGREEMENT
AGREEMENT (this “Agreement”) made as of [___], 2010 by and between MCC Advisors LLC, a
Delaware limited liability company (hereinafter referred to as the “Administrator”) and Medley
Capital LLC, a Delaware limited liability company (hereinafter referred to as the
“Sub-Administrator”).
W I T N E S S E T H:
WHEREAS, Administrator serves as administrator of the Medley Capital Corporation (the
“Corporation”), which is a newly organized closed-end management investment company that has
elected to be treated as a business development company under the Investment Company Act of 1940
(hereinafter referred to as the “1940 Act”);
WHEREAS, the Administrator desires to retain the Sub-Administrator to provide
sub-administrative services to the Corporation in the manner and on the terms hereinafter set
forth; and
WHEREAS, the Sub-Administrator is willing to provide sub-administrative services to the
Corporation 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 Administrator and the Sub-Administrator hereby agree as follows:
1. Duties of the Sub-Administrator
(a) Employment of Sub-Administrator. The Administrator hereby employs the
Sub-Administrator to act as sub-administrator of the Corporation, and 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 Corporation, for the period and on the terms and conditions set forth
in this Agreement. The Sub-Administrator hereby accepts such employment and agrees during such
period to render such services and to assume the obligations herein set forth subject to the
reimbursement of costs and expenses provided for below. The Sub-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 Corporation
in any way or otherwise be deemed agents of the Corporation.
(b) Services. The Sub-Administrator shall perform (or oversee, or arrange for, the
performance of) the administrative services necessary for the operation of the Corporation.
Without limiting the generality of the foregoing, the Sub-Administrator shall provide the
Corporation with office facilities, equipment, clerical, bookkeeping and record keeping services at
such facilities and such other services as the Sub-Administrator, subject to review by the
Board of Directors of the Corporation, shall from time to time determine to be necessary or
useful to perform its obligations under this Agreement. The Sub-Administrator shall also, on
behalf of the Corporation, arrange for the services of, and oversee, 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 Sub-Administrator
shall make reports to the Corporation’s Board of Directors of its performance of obligations
hereunder and furnish advice and recommendations with respect to such other aspects of the business
and affairs of the Corporation as it shall determine to be desirable; provided that nothing herein
shall be construed to require the Sub-Administrator to, and the Sub-Administrator shall not, in its
capacity as sub-administrator, provide any advice or recommendation relating to the securities and
other assets that the Corporation should purchase, retain or sell or any other investment advisory
services to the Corporation. The Sub-Administrator shall be responsible for the financial and
other records that the Corporation is required to maintain and shall prepare reports to
stockholders, and reports and other materials filed with the Securities and Exchange Commission
(the “SEC”) or any other regulatory authority, including, but not limited to, reports on
Forms 8-K, 10-Q and periodic reports to stockholders. At the Corporation’s request, the
Sub-Administrator will provide on the Corporation’s behalf significant managerial assistance to
those portfolio companies to which the Corporation is required to provide such assistance. In
addition, the Sub-Administrator will assist the Corporation in determining and publishing the
Corporation’s net asset value, overseeing the preparation and filing of the Corporation’s tax
returns, and the printing and dissemination of reports to stockholders of the Corporation, and
generally overseeing the payment of the Corporation’s expenses and the performance of
administrative and professional services rendered to the Corporation by others.
2. Records
To the extent that the Corporation chooses to be treated as a Business Development Company
under the 1940 Act, the Sub-Administrator agrees to maintain and keep all books, accounts and other
records of the Corporation that relate to activities performed by the Sub-Administrator hereunder
and, if required by any applicable statutes, rules and regulations, including without limitation,
the 1940 Act, will maintain and keep such books, accounts and records in accordance with such
statutes, rules and regulations. In compliance with the requirements of Rule 31a-3 under the 1940
Act, the Sub-Administrator agrees that all records which it maintains for the Corporation shall at
all times remain the property of the Corporation, 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 Sub-Administrator further agrees that all records which it
maintains for the Corporation pursuant to Rule 31a-1 under the 1940 Act will be preserved for the
periods prescribed by Rule 31a-2 under the 1940 Act unless any such records are earlier surrendered
as provided above. Records shall be surrendered in usable machine-readable form. The
Sub-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 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 of natural persons pursuant to Regulation
S-P of the SEC, 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 Sub-Administrator, the
Corporation shall reimburse the Administrator and the Administrator shall reimburse the
Sub-Administrator for the costs and expenses incurred by the Sub-Administrator in performing its
obligations and providing personnel and facilities hereunder.
The Corporation will bear all costs and expenses that are incurred in its operation and
transactions not specifically assumed by the Corporation’s investment adviser (the
“Adviser”), pursuant to that certain Investment Management Agreement, dated as of [____],
2010 by and between the Corporation and the Adviser. Costs and expenses to be borne by the
Corporation include, but are not limited to, those relating to: organization and offering; valuing
the Corporation’s assets and computing its net asset value per share (including the cost and
expenses of any independent valuation firms, consultants or appraisers); expenses incurred by the
Adviser or payable to third parties, including agents, consultants or other advisors and travel
expense, in monitoring financial and legal affairs for the Corporation and in monitoring the
Corporation’s investments and enforcing the Corporation’s rights in respect of such investments;
performing due diligence on the Corporation’s prospective portfolio companies; interest payable on
debt, if any, incurred to finance the Corporation’s investments; distributions on shares; offerings
and repurchases of the Corporation’s common stock and other securities; investment advisory and
management fees; administration fees, if any, payable under this Agreement; transfer agent and
custody fees and expenses; the allocated costs of providing managerial assistance to those
portfolio companies that require it; fees payable to third parties, including agents, consultants
or other advisors, relating to, or associated with, evaluating and making and disposing of
investments; brokerage fees and commissions; the Corporation’s dues, fees and charges of any trade
association of which the Corporation is a member as well as fees and expenses associated with
marketing efforts (including attendance at investment conferences and similar events); 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 preparing and filing reports, registration statements, prospectuses or other documents
required by the SEC, including printing costs; costs of any reports, proxy statements or other
notices to stockholders, including printing and mailing costs; the expenses of holding shareholder
meetings; the Corporation’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 and operation, including printing, mailing, long distance
telephone, copying, secretarial and other staff, independent auditors and outside legal costs;
litigation and indemnification and other extraordinary or non recurring expenses; and all other
expenses incurred by the Corporation or the Sub-Administrator in connection with administering the
Corporation’s business, including payments under this Agreement based upon the Corporation’s
allocable portion of the Sub-Administrator’s overhead in performing its obligations under this
Agreement, including rent and the allocable portion of the cost of the Corporation’s officers and
their respective staffs.
5. Limitation of Liability of the Sub-Administrator; Indemnification
The Sub-Administrator, its affiliates and their respective directors, officers, managers,
partners, agents, employees, controlling persons, members, and any other person or entity
affiliated with any of them (collectively, the “Indemnified Parties”, shall not be liable
to the Corporation for any action taken or omitted to be taken by the Sub-Administrator in
connection with the performance of any of its duties or obligations under this Agreement or
otherwise as sub-administrator for the Corporation, and the Administrator shall indemnify, defend
and protect the Sub-Administrator (and its officers, managers, partners, agents, employees,
controlling persons, members, and any other person or entity affiliated with the Sub-Administrator,
including without limitation the Indemnified Parties (each of whom shall be deemed a third party
beneficiary hereof) 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 Sub-Administrator’s duties or obligations under this Agreement or otherwise as
sub-administrator for the Corporation. Notwithstanding the preceding sentence of this Paragraph 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 Corporation or its security holders to which the Indemnified
Parties would otherwise be subject by reason of criminal conduct, willful misfeasance, bad faith
or gross negligence in the performance of the Sub-Administrator’s duties or by reason of the
reckless disregard of the Sub-Administrator’s duties and obligations under this Agreement.
6. Activities of the Sub-Administrator
The services of the Sub-Administrator to the Corporation are not to be deemed to be exclusive,
and the Sub-Administrator and each other person providing services as arranged by the
Sub-Administrator is free to render services to others. It is understood that directors, officers,
employees and stockholders of the Corporation are or may become interested in the Sub-Administrator
and its affiliates, as directors, officers, members, managers, employees, partners, stockholders or
otherwise, and that the Sub-Administrator and directors, officers, members, managers, employees,
partners and stockholders of the Sub-Administrator and its affiliates are or may become similarly
interested in the Corporation as officers, directors, stockholders or otherwise.
7. Duration and Termination of this Agreement
This Agreement shall become effective as of the date hereof, and shall remain in force with
respect to the Corporation for two years thereafter, and thereafter continue from year to year, but
only so long as such continuance is specifically approved at least annually by (i) the Board of
Directors of the Corporation and (ii) a majority of those members of the Corporation’s Board of
Directors who are not parties to this Agreement or “interested persons” (as defined in the 0000
Xxx) of any such party.
This Agreement may be terminated at any time, without the payment of any penalty, by vote of
the Corporation’s Board of Directors, or by the Sub-Administrator, upon 60 days’ written notice to
the other party (which notice may be waived by such other party).
8. Amendments of this Agreement
This Agreement may not be amended or modified expect by an instrument in writing signed by all
parties hereto.
9. Assignment.
This Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Neither party may assign (as such term is defined in
the 1940 Act and the regulations thereunder), delegate or otherwise transfer this Agreement or any
of its rights or obligations hereunder without the prior written consent of the other party. Any
assignment by either party in accordance with the terms of this Agreement shall be pursuant to a
written assignment agreement in which the assignee expressly assumed the assigning party’s rights
and obligations hereunder.
10. Governing Law
This Agreement shall be governed by, and construed in accordance with, the laws of the State
of New York and the applicable provisions of the 1940 Act, if any. To the extent that the
applicable laws of the State of New York, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, if any, the latter shall control. The parties
unconditionally and irrevocably consent to the exclusive jurisdiction of the courts located in the
State of New York and waive any objection with respect thereto, for the purpose of any action, suit
or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
11. No Waiver
The failure of either party to enforce at any time for any period the provisions of or any
rights deriving from this Agreement shall not be construed to be a waver of such provisions or
rights or the right of such party thereafter to enforce such provisions, and no waiver shall be
binding unless executed in writing by all parties hereto.
12. Severability
If any term or other provision of this Agreement is invalid, illegal or incapable of being
enforced by any law or public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially adverse to any party.
Upon such determination that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to the greatest extent
possible.
13. Headings
The descriptive headings contained in this Agreement are for convenience of reference only and
shall not affect in any way the meaning or interpretation of this Agreement.
14. Counterparts
This Agreement may be executed in one or more counterparts, each of which when executed shall
be deemed to be an original instrument and all of which taken together shall constitute one and the
same agreement.
15. Notices
All notices, requests, claims, demands and other communications hereunder shall be in writing
and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by overnight courier service (with signature required), by facsimile, or by
registered or certified mail (postage prepaid, return receipt requested) to the respective parties
at their respective principal executive office addresses.
16. Entire Agreement
This Agreement contains the entire agreement of the parties with respect to the subject matter
hereof and supersedes all prior agreements and understandings, both written and oral, between the
parties with respect to such subject matter.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the
date first above written.
| MCC ADVISORS LLC |
||||
| By: | ||||
| Name: | Xxxxx Xxxxx | |||
| Title: | Managing Member | |||
| MEDLEY CAPITAL LLC |
||||
| By: | ||||
| Name: | Xxxxxx Xxxxxxxx | |||
| Title: | Managing Member | |||
