EXHIBIT k.2
SUB-ADMINISTRATION SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this ___ day of February,
2004, by and among U.S. BANCORP FUND SERVICES, LLC, a Wisconsin limited
liability company ("USBFS") and XXXXXXXX MANAGEMENT COMPANY, an Ohio corporation
("Xxxxxxxx").
WHEREAS, the Xxxxxxxx Mezzanine Capital Corp. (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, USBFS is, among other things, in the business of providing
administration services for the benefit of its customers; and
WHEREAS, Xxxxxxxx and the Company desire to retain USBFS to provide
certain administration services for the Company.
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 USBFS AS SUB-ADMINISTRATOR
Xxxxxxxx hereby retains USBFS as sub-administrator of the Company on
the terms and conditions set forth in this Agreement, and USBFS hereby
accepts such position and agrees to perform the services and duties set
forth in this Agreement.
2. SERVICES AND DUTIES OF USBFS
USBFS shall provide the services described on Exhibit B
hereto, as the same may be amended from time to time by the
mutual consent of the parties hereto, and shall provide the
following sub-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 USBFS's
or its affiliate's own offices).
c. Non-investment-related statistical and
research data.
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(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. Evaluating independent auditor.
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 USBFS 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.
(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.
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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 Xxxxxxxx or 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
Xxxxxxxx or the Company.
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 or
Xxxxxxxx.
3. COMPENSATION
USBFS shall be compensated for providing the services set forth in this
Agreement in accordance with the fee schedule attached hereto on
Exhibit A and as mutually agreed upon and amended from time to time
base on the services to be performed for the Company by Xxxxxxxx as
compared to the services provided by USBFS. Xxxxxxxx shall
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pay all fees and reimbursable expenses within thirty (30) calendar days
following receipt of the billing notice. Notwithstanding anything to
the contrary, amounts owed by Xxxxxxxx to USBFS shall only be paid out
of the assets and property of Xxxxxxxx and in no event shall the
Company be liable for any amounts due under this Agreement. USBFS
expressly agrees that it will only look to Xxxxxxxx for payment of fees
and reimbursable expenses under this Agreement.
4. INDEMNIFICATION; LIMITATION OF LIABILITY
A. USBFS shall exercise reasonable care in the performance of its
duties under this Agreement. USBFS shall not be liable for any
error of judgment or mistake of law or for any loss suffered
by the Company or Xxxxxxxx in connection with matters to which
this Agreement relates, including losses resulting from
mechanical breakdowns or the failure of communication or power
supplies beyond USBFS's control, except a loss arising out of
or relating to USBFS's 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, Xxxxxxxx shall indemnify and hold
harmless USBFS from and against any and all claims, demands,
losses, expenses, and liabilities of any and every nature
(including reasonable attorneys' fees) which USBFS may sustain
or incur or which may be asserted against USBFS 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 USBFS by any duly authorized
officer of Xxxxxxxx or the Company, such duly authorized
officer to be included in a list of authorized officers
furnished to USBFS and as amended from time to time in writing
by resolution of the Board of Directors of the Company.
USBFS shall indemnify and hold Xxxxxxxx and 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 Xxxxxxxx and 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 USBFS as a result of USBFS's 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, USBFS
shall take all reasonable steps to minimize service
interruptions for any period that such interruption continues
beyond USBFS's control. USBFS 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
USBFS. USBFS 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 and Xxxxxxxx shall
be
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entitled to inspect USBFS's premises and operating
capabilities at any time during regular business hours of
USBFS, upon reasonable notice to USBFS.
Notwithstanding the above, USBFS 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.
5. PROPRIETARY AND CONFIDENTIAL INFORMATION
USBFS agrees on behalf of itself and its directors, officers, and
employees to treat confidentially and as proprietary information of the
Company and Xxxxxxxx all records and other information relative to the
Company and Xxxxxxxx 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 or Xxxxxxxx,
which approval shall not be unreasonably withheld and may not be
withheld where USBFS 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 or Xxxxxxxx.
Further, USBFS 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,
USBFS will not share any nonpublic personal information concerning any
of the Company's shareholders to any third party unless specifically
directed by the Company or allowed under one of the exceptions noted
under the Act.
6. 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)
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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 USBFS in Section 4 hereunder shall survive the termination of this
Agreement.
7. RECORDS
USBFS 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 and Xxxxxxxx, but not
inconsistent with the rules and regulations of appropriate government
authorities, in particular, Section 31 of the 1940 Act and the rules
thereunder. USBFS agrees that all such records prepared or maintained
by USBFS relating to the services to be performed by USBFS 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 or
Xxxxxxxx on and in accordance with its request. USBFS agrees to provide
Xxxxxxxx and 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, USBFS shall cooperate with
Xxxxxxxx and the Company and assist Xxxxxxxx and 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.
8. GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the
State of Wisconsin, without regard to conflicts of law principles. To
the extent that the applicable laws of the State of Wisconsin, 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.
9. DUTIES IN THE EVENT OF TERMINATION
In the event that, in connection with termination, a successor to any
of USBFS's duties or responsibilities hereunder is designated by
Xxxxxxxx by written notice to USBFS, USBFS will promptly, upon such
termination and at the expense of Xxxxxxxx or the Company, transfer to
such successor all relevant books, records, correspondence, and other
data established or maintained by USBFS 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 USBFS's personnel in the establishment of books,
records, and other data by such successor.
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10. NO AGENCY RELATIONSHIP
Nothing herein contained shall be deemed to authorize or empower USBFS
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.
11. DATA NECESSARY TO PERFORM SERVICES
The Company, Xxxxxxxx or their agents shall furnish to USBFS the data
necessary to perform the services described herein at such times and in
such form as mutually agreed upon. If USBFS is also acting in another
capacity for the Company, nothing herein shall be deemed to relieve
USBFS of any of its obligations in such capacity.
12. ASSIGNMENT
This Agreement may not be assigned by either party without the prior
written consent of the other party.
15. COMPANY THIRD PARTY BENEFICIARY
USBFS agrees that the Company is a third party beneficiary under this
Agreement.
13. 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 USBFS shall be sent to:
U.S. Bancorp Fund Services, LLC
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
and notice to Xxxxxxxx shall be sent to:
Xxxxxxxx Management Company
0000 Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxx 00000
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14. 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 U.S. BANCORP FUND SERVICES, LLC
By: ______________________________ By: ___________________________
Xxxxxx X. Xxxxxx Xxx X. Xxxxxxx
Title: Chief Executive Officer Title: President
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EXHIBIT A
SUB-ADMINISTRATION ANNUAL FEE SCHEDULE:
8 basis points on the first $100 million
6 basis points on the next $200 million
4 basis points on the balance above $300 million
Minimum annual fee: $45,000 per portfolio
Extraordinary services - quoted separately
Plus out-of-pocket expenses, including but not limited to:
Postage, Stationery
Programming /customization
Retention of records
Special reports
Federal and state regulatory filing fees
Expenses from U.S. Bancorp participation in client meetings
Auditing and legal expenses
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EXHIBIT B
