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MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is made this ___ day of ________, 1997, by and
between COMMUNITY INVESTMENT PARTNERS III L.P., LLLP, a Missouri limited
liability limited partnership (the "Partnership"), and CIP MANAGEMENT L.P.,
LLLP, a Missouri limited liability limited partnership (the "Management
Company").
RECITALS:
1. The Partnership is a limited partnership organized on July 23, 1997
under the Missouri Revised Uniform Limited Partnership Act pursuant to a
Certificate of Limited Partnership and subsequently registered on July 23, 1997
as a limited liability limited partnership under the Missouri Uniform
Partnership Law and the Missouri Revised Uniform Limited Partnership Act, with
CIP Management L.P., LLLP, a Missouri limited liability limited partnership,
acting as Managing General Partner (the "Managing General Partner"), and is
engaged in business as a business development company under the Investment
Company Act of 1940, as amended and the Rules and Regulations thereunder (the
"1940 Act").
2. The Management Company is engaged in rendering management,
administrative and investment advisory services.
3. The Partnership desires to retain the Management Company to render
management, administrative and certain investment advisory services to the
Partnership in the manner and on the terms set forth herein.
4. The Management Company is willing to provide management, administrative
and investment advisory services to the Partnership on the terms and conditions
set forth herein.
In consideration of the premises and the covenants set forth below, the
Partnership and the Management Company hereby agree as follows:
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ARTICLE I
DUTIES OF THE MANAGEMENT COMPANY
Section 1.1 General Terms. The Partnership hereby employs the Management
Company to act as the management company for the Partnership and to furnish, or
arrange for affiliates to furnish, the management, administrative and
investment advisory services described below, subject to the supervision of the
general partners of the Partnership who are individuals ("Individual General
Partners"), for the period and on the terms and conditions set forth in this
Agreement. The Management Company hereby accepts such employment and agrees to
render, or arrange for the rendering of, the services described below for the
consideration and the period set forth in this Agreement. The Management
Company and its affiliates shall for all purposes herein be deemed an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Partnership in any
way or otherwise be deemed an agent of the Partnership.
Section 1.2 Management Services. The Management Company shall perform
(or arrange for the performance of) the management and administrative services
necessary for the operation of the Partnership, including providing managerial
assistance to portfolio companies of the Partnership and such other services
related to venture capital investments as shall be requested by the Managing
General Partner. The Management Company shall also perform (or arrange for the
performance of) services related to administering limited partners' accounts
and handling relations with limited partners. The Management Company shall
provide (or cause to be provided) the Partnership with office space, equipment
and facilities and such other services as the Management Company, subject to
review by the Individual General Partners, shall from time to time determine to
be necessary or useful to perform its obligations under this Agreement. The
Management Company shall also, on behalf of the Partnership, conduct relations
with custodians, depositories, transfer agents, other investor service agents,
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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 Management Company shall make reports
to the Individual General Partners of its performance of obligations hereunder
and shall furnish advice and recommendations with respect to such other aspects
of the business and affairs of the Partnership as it shall determine to be
desirable.
Section 1.3 Investment Advisory Services. Pursuant to the Amended and
Restated Agreement of Limited Partnership of the Partnership (the
"Partnership Agreement"), the Managing General Partner, subject to the
supervision of the Individual General Partners, is responsible for managing and
controlling the Partnership's venture capital investments. The Management
Company shall be responsible for providing (or arranging for the provision of)
investment advisory services in connection with the money market securities
held by the Partnership ("Other Investments"). The Management Company shall
provide (or cause to be provided) the Partnership with such investment
research, advice and supervision as the latter may from time to time consider
necessary for the proper supervision of the Other Investments, and shall
furnish continuously an investment program for the Other Investments and shall
determine from time to time which securities shall be purchased, sold or
exchanged and what portion of the assets shall be held in the various money
market securities or cash, subject always to any restrictions of the
Partnership Agreement as amended from time to time, the provisions of the 1940
Act and the statements relating to the Partnership's investment objectives,
investment policies and investment restrictions as the same are set forth in
the reports filed by the Partnership under the Securities Exchange Act of 1934,
as amended. The Management Company shall also make determinations with respect
to the manner in which voting rights, rights to consent to corporate action and
any other rights pertaining to the Partnership's Other Investments shall be
exercised. Should the Individual General Partners at any time, however, make
any determinations with respect to a fixed investment policy and notify the
Management Company thereof in writing, the Management Company shall be bound by
such determination for the period, if any, specified
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in such notice or until similarly notified that such determination has been
revoked. The Management Company shall take, on behalf of the Partnership, all
actions which it deems necessary to implement the investment policies
determined as provided above, and in particular to place all orders for the
purchase or sale of portfolio securities with respect to the Other Investments
for the Partnership's account with brokers or dealers selected by it, and to
that end, the Management Company is authorized as the agent of the Partnership
to give instructions to Commerce Bank, N.A., the Custodian of the Partnership as
to deliveries of securities and payments of cash for the account of the
Partnership. In connection with the selection of such brokers or dealers and
the placing of such orders with respect to the Other Investments of the
Partnership, the Management Company is directed at all times to seek to obtain
execution and price within the policy guidelines determined by the Individual
General Partners. Subject to this requirement and the provisions of the 1940
Act, the Securities Exchange Act of 1934, as amended, and other applicable
provisions of law, the Management Company may select brokers or dealers with
which it or the Partnership is affiliated.
ARTICLE II
EXPENSES AND COMPENSATION
Section 2.1 Expenses. The Partnership assumes and shall pay all expenses
of the Management Company incident to the performance of its obligations under
this Agreement (to the extent not incurred directly by the Partnership).
Reimbursements for such expenses shall be limited to the actual cost of goods
and materials used for or by the Partnership and obtained from entities
unaffiliated with the Management Company. Administrative expenses shall be
reimbursed to the Management Company at the lower of (i) the Management
Company's actual cost or (ii) the amount the Partnership would be required to
pay independent parties for comparable services in the same geographic
location. The Partnership will also pay, or reimburse the Management Company
for, expenses relating to the
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operations of the Partnership, including fees and expenses of the Individual
General Partners (including annual fees of $6,000 and a fee of $1,000 for each
meeting attended, per individual), legal and accounting expenses, auditing and
consulting expenses, expenses of portfolio transactions, costs of printing and
mailing any proxies and reports to Limited Partners, custodian fees, taxes,
interest, litigation and other extraordinary or nonrecurring expenses, and any
and all other out-of-pocket expenses properly payable by the Partnership; any
such reimbursement shall be limited to the actual cost of goods and materials
used for or by the Partnership and obtained from entities unaffiliated with the
General Partners. Administrative expenses shall be reimbursed to the General
Partners at the lower of (i) the General Partner's or Affiliate's actual cost
or (ii) the amount the Partnership would be required to pay independent parties
for comparable services in the same geographic location. The expenses under
this Section 2.1 shall not include any rent or depreciation, utilities, capital
equipment, salaries, fringe benefits, or other administrative items incurred or
allocated to any "controlling person" (as defined in paragraph 5.6.1 of the
Partnership Agreement) of the Partnership or its affiliates. Such expenses
shall be billed directly to the Partnership. Such expenses shall be paid on a
quarterly basis, unless the parties shall otherwise agree.
Section 2.2 Compensation. The Partnership shall pay the Management
Company a management fee in cash for its services under this Agreement at an
annual rate of 1.5% of the total assets of the Partnership as of each March 31,
June 30, September 30 and December 31 (based on the Partnership's financial
statements as of such dates) while this Agreement remains in effect; such fee
shall be payable in arrears on or before each May 15, August 15, November 15
and February 15, respectively.
Section 2.3 Missouri Compensation Restrictions. The Partnership and the
Management Company are aware of the compensation restrictions of Section
409.102(b)(1) ▇.▇.▇▇., which prohibits investment advisory contracts in which
the investment advisor is compensated on the basis of a share of capital gains
upon or capital appreciation of the funds or any portion of the funds of the
client. Each
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party hereby agrees that execution hereof precludes such party from bringing
any suit based upon the compensation arrangement of this Agreement or the
Partnership Agreement pursuant to Section 409.411(f) ▇.▇.▇▇.
ARTICLE III
LIMITATION OF LIABILITY AND INDEMNIFICATION
OF THE MANAGEMENT COMPANY
Section 3.1 Limitation of Liability. The Management Company shall not be
liable for any error of judgment or mistake of law or for any loss arising out
of any investment or for any act or omission in the management of the
Partnership, except for negligence or misconduct in the performance of its
duties, or by reason of reckless disregard of its obligations and duties
hereunder. As used in this Article, the term "Management Company" shall
include any affiliates of the Management Company performing services for the
Partnership contemplated hereby and directors, officers and employees of any
such affiliates.
Section 3.2 Indemnification. To the fullest extent permitted by law the
Partnership shall indemnify and hold harmless the Management Company and any of
its affiliates who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding whether civil,
criminal, administrative or investigative by reason of any acts or omissions or
alleged acts or omissions arising out of such person's activities as or on
behalf of the Management Company if such activities were performed in good
faith either on behalf of the Partnership or in furtherance of the interests of
the Partnership, and in a manner reasonably believed by such person to be
within the scope of the authority conferred by this Agreement or by law,
against losses, damages or expenses for which such person has not otherwise
been reimbursed (including attorneys' fees, judgments, fines and amounts paid
in settlement) actually and reasonably incurred by such person in connection
with such action, suit or proceeding, so long as such person was not guilty of
negligence or misconduct in the performance of his,
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her or its duties or of reckless disregard of his, her or its obligations and
duties hereunder with respect to such acts or omissions and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his, her
or its conduct was unlawful, and provided that the satisfaction of any
indemnification and any holding harmless shall be from and limited to
Partnership assets and no Limited Partner shall have any personal liability on
account thereof. Notwithstanding the foregoing, absent a court determination
that the Management Company was not liable on the merits or guilty of disabling
conduct within the meaning of Section 17(h) of the 1940 Act, the decision by
the Partnership to indemnify the Management Company must be based upon the
reasonable determination of independent counsel or non-party Independent
General Partners (as defined below), after review of the facts, that such
disabling conduct did not occur.
ARTICLE IV
ACTIVITIES OF THE MANAGEMENT COMPANY
The services of the Management Company of the Partnership are not to be
deemed to be exclusive, the Management Company being free to render services to
others. It is understood that General Partners and Limited Partners of the
Partnership are or may become interested in the Management Company, as
directors, officers, employees and shareholders or otherwise and that
directors, officers, employees and shareholders of the Management Company are
or may become interested in the Partnership as general partners, limited
partners or otherwise, and that the Management Company and its directors,
officers, employees and shareholders may become interested in the Partnership
as general partners, limited partners or otherwise.
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ARTICLE V
DURATION AND TERMINATION OF THIS CONTRACT
This Agreement shall become effective as of the date hereof and shall
remain in force until one year after the date hereof and thereafter will
continue in effect from year to year if approved annually by a majority of the
Individual General Partners of the Partnership who are not "interested persons"
as defined in the 1940 Act ("Independent General Partners").
This Agreement may be terminated at any time, without the payment of any
penalty, by a vote of a majority-in-interest of the Limited Partners of the
Partnership, or by the Management Company or the Partnership, on sixty (60)
days' written notice to the other party.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Amendments of this Agreement. This Agreement may be amended
by the parties only if such amendment is specifically approved by (a) the
Individual General Partners of the Partnership, or by the vote of a
majority-in-interest of the Limited Partners of the Partnership, and (b) a
majority of those General Partners who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval.
Section 6.2 Assignment. The parties hereto shall not assign any of their
rights or obligations under this Agreement, whether by operation of law or
otherwise. In the event of its assignment, this Agreement will automatically
terminate.
Section 6.3 Definitions of Certain Terms. The terms "assignment",
"affiliated person" and "interested person", when used in this Agreement, shall
have the respective meanings specified in the 1940 Act.
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Section 6.4 Governing Law. This Agreement shall be construed in
accordance with laws of the State of Missouri and the applicable provisions of
the 1940 Act. To the extent that the applicable laws of the State of Missouri,
or any of the provisions herein, conflict with the applicable provisions of the
1940 Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
COMMUNITY INVESTMENT PARTNERS III L.P., LLLP
By: CIP MANAGEMENT L.P., LLLP,
its Managing General Partner
By: CIP MANAGEMENT, INC.,
its Managing General Partner
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President
CIP MANAGEMENT L.P., LLLP
By: CIP MANAGEMENT, INC., its
Managing General Partner
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President
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