Exhibit g.
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of this 13th day of June, 2007, by and between
Tortoise Gas and Oil Corporation, a Maryland corporation having its principal
place of business in Overland Park, Kansas (the "Company"), and Tortoise Capital
Advisors, L.L.C., a Delaware limited liability company having its principal
place of business in Overland Park, Kansas (the "Advisor").
WHEREAS, the Advisor is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment advisor and engages in
the business of acting as an investment advisor;
WHEREAS, the Company and the Advisor desire to enter into an agreement
to provide for investment advisory services to the Company upon the terms and
conditions hereinafter set forth; and
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. Appointment of Advisor.
The Company appoints the Advisor to act as manager and investment
advisor to the Company for the period and on the terms herein set forth. The
Advisor accepts such appointment and agrees to render the services herein set
forth, for the compensation herein provided.
2. Duties of the Advisor.
Subject to the overall supervision and review of the Board of Directors
of the Company ("Board"), the Advisor will regularly provide the Company with
investment research, advice and supervision and will furnish continuously an
investment program for the Company, consistent with the investment objective and
policies of the Company. The Advisor will determine from time to time what
securities shall be purchased for the Company, what securities shall be held or
sold by the Company and what portion of the Company's assets shall be held
uninvested as cash or in other liquid assets, subject always to the provisions
of the Company's Articles of Incorporation, Bylaws, Confidential Private
Placement Memorandum for the initial private offering of its common shares (the
"Memorandum"), its registration statement under the Investment Company Act of
1940, as amended (the "1940 Act"), as filed with the Securities and Exchange
Commission (the "Commission"), and any subsequent registration statement filed
with the Commission under the Securities Act of 1933 covering the Company's
shares, as any of the same may be amended from time to time, and to the
investment objectives of the Company, as each of the same shall be from time to
time in effect, and subject, further, to such policies and instructions as the
Board may from time to time establish. To carry out such determinations, the
Advisor will exercise full discretion and act for the Company in the same manner
and with the same force and effect as the Company itself might or could do with
respect to purchases, sales or other transactions, as well as with respect to
all other things necessary or incidental to the furtherance or conduct of such
purchases, sales or other transactions. Without limiting the generality of the
foregoing, the Advisor shall, during the term and subject to the provisions of
this Agreement, (i) determine the composition of the portfolio of the Company,
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nature and timing of the changes therein and the manner of implementing such
changes; (ii) identify, evaluate and negotiate the structure of the investments
made by the Company; (iii) perform due diligence on prospective portfolio
companies; (iv) close and monitor the Company's investments; (v) provide the
Company with such other investment advisory, research and related services as
the Company may, from time to time, reasonably require for the investment of its
funds.
3. Administrative Duties of the Advisor.
The Advisor agrees to furnish office facilities and clerical and
administrative services necessary to the operation of the Company (other than
services provided by the Company's custodian, accounting agent, administrator,
dividend and interest paying agent and other service providers). The Advisor is
authorized to conduct relations with custodians, depositaries, underwriters,
brokers, dealers, placement agents, banks, insurers, accountants, attorneys,
pricing agents, and other persons as may be deemed necessary or desirable. To
the extent requested by the Company, the Advisor shall (i) oversee the
performance of, and payment of the fees to, the Company's service providers, and
make such reports and recommendations to the Board concerning such matters as
the parties deem desirable; (ii) respond to inquiries and otherwise assist such
service providers in the preparation and filing of regulatory reports, proxy
statements, shareholder communications and the preparation of Board materials
and reports; (iii) establish and oversee the implementation of borrowing
facilities or other forms of leverage authorized by the Board; and (iv)
supervise any other aspect of the Company's administration as may be agreed upon
by the Company and the Advisor. The Company shall reimburse the Advisor or its
affiliates for all out-of-pocket expenses incurred in providing the services set
forth in this Section 3. To the extent the Advisor expects to provide services
that this paragraph anticipates will be provided by a separate service provider,
the Advisor may propose to the Board a separate Administrative Agreement
pursuant to which one or more of such services is provided by, and separate
compensation is paid to, the Advisor.
4. Delegation of Responsibilities.
The Advisor is authorized to delegate any or all of its rights, duties
and obligations under this Agreement to one or more sub-advisors, and may enter
into agreements with sub-advisors, and may replace any such sub-advisors from
time to time in its discretion, in accordance with the 1940 Act, the Advisers
Act, and rules and regulations thereunder, as such statutes, rules and
regulations are amended from time to time or are interpreted from time to time
by the staff of the Commission, and if applicable, exemptive orders or similar
relief granted by the Commission, and upon receipt of approval of such
sub-advisors by the Board and by shareholders of the Company (unless any such
approval is not required by such statutes, rules, regulations, interpretations,
orders or similar relief).
5. Independent Contractors.
The Advisor and any sub-advisors shall for all purposes herein be
deemed to be independent contractors and shall, unless otherwise expressly
provided or authorized, have no authority to act for or represent the Company in
any way or otherwise be deemed to be an agent of the Company.
6. Compliance with Applicable Requirements.
In carrying out its obligations under this Agreement, the Advisor shall
at all times conform to:
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a. all applicable provisions of the 1940 Act and the Advisers Act and any
applicable rules and regulations adopted thereunder;
b. the provisions of the Memorandum and the subsequent registration
statement of the Company, as the same may be amended from time to time
under the 1940 Act, including without limitation, the investment
objectives set forth therein;
c. the provisions of the Company's Articles of Incorporation, as the same
may be amended from time to time;
d. the provisions of the Bylaws of the Company, as the same may be
amended from time to time;
e. all policies, procedures and directives adopted by the Board; and
f. any other applicable provisions of state, federal or foreign
law.
7. Policies and Procedures.
The Advisor has adopted and implemented written policies and procedures
reasonably designed to prevent violation of the Federal securities laws by the
Advisor. The Advisor shall provide the Company, at such times as the Company
shall reasonably request, with a copy of such policies and procedures and a
report of such policies and procedures; such report shall be of sufficient scope
and in sufficient detail as may reasonably be required to comply with Rule 38a-1
under the 1940 Act and to provide reasonable assurance that any material
inadequacies would be disclosed by such examination, and, if there are no such
inadequacies, the reports shall so state.
8. Brokerage.
The Advisor is responsible for decisions to buy and sell securities for
the Company, broker-dealer selection, and negotiation of brokerage commission
rates. The Advisor's primary consideration in effecting a security transaction
will be to obtain the best execution. In selecting a broker-dealer to execute a
particular transaction, the Advisor will take the following into consideration:
the best net price available; the reliability, integrity and financial condition
of the broker-dealer; the size of and the difficulty in executing the order; and
the value of the expected contribution of the broker-dealer to the investment
performance of the Company on a continuing basis. Accordingly, the price to the
Company in any transaction may be less favorable than that available from
another broker-dealer if the difference is reasonably justified by other aspects
of the execution services offered.
Subject to such policies as the Board may from time to time determine,
the Advisor shall not be deemed to have acted unlawfully, or to have breached
any duty created by this Agreement or otherwise, solely by reason of its having
caused the Company to pay a broker or dealer that provides brokerage and
research services to the Advisor an amount of commission for effecting a Company
investment transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction, if the Advisor
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
Advisor's overall
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responsibilities with respect to the Company and to other clients of the Advisor
as to which the Advisor exercises investment discretion. The Advisor is further
authorized to allocate the orders placed by it on behalf of the Company to such
brokers and dealers who also provide research or statistical material or other
services to the Company, the Advisor or to any sub-advisor. Such allocation
shall be in such amounts and proportions as the Advisor shall determine and the
Advisor will report on such allocations regularly to the Board indicating the
brokers to whom such allocations have been made and the basis therefor.
9. Books and Records.
The Advisor will maintain, or cause to be maintained, complete and
accurate records in respect of all transactions relating to the Company's
portfolio. The Advisor will keep or will cause to be kept records in respect of
all such portfolio transactions executed on behalf of the Company. To the extent
permitted by applicable law, the Advisor shall provide such access to its books
and records relating to the Company as the Company may reasonably request. The
Advisor shall have access at all reasonable times to books and records
maintained for the Company to the extent necessary for the Advisor to comply
with all applicable securities or other laws to which it is subject, and further
provided that the Company shall produce copies of such records and books
whenever reasonably required to do so by the Advisor for the purpose of legal
proceedings or dealings with any governmental or regulatory authorities or for
its internal compliance procedures.
10. Compensation.
Subject to limitations, the compensation formula set forth below is
intended to pay 2.0% annually for investments that are not freely tradeable on
an exchange (e.g., private companies and direct placements in publicly traded
companies subject to current transfer restrictions) and 1.0% annually for other
assets.
For the services, payments and facilities to be furnished hereunder by
the Advisor, the Advisor shall receive from the Company annual compensation in
an amount determined by reference to the average monthly value of, "Non-Exchange
Tradeable Investments", "Other Investments", "Total Investments," and "Managed
Assets" of the Company.
"Managed Assets" means the total assets of the Company (including any
assets attributable to any leverage that may be outstanding) minus the sum of
accrued liabilities (other than deferred taxes, accrued management fees, debt
representing financial leverage and the aggregate liquidation preference of any
outstanding preferred shares). Accrued liabilities are expenses incurred in the
normal course of the Company's operations.
"Non-Exchange Tradeable Investments" are those investment securities,
during any portion of the entire calendar quarter:
(a) that are not listed on an established stock exchange or an
electronic equities securities market; or
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(b) as to which the Company is subject to a contractual constraint on
its ability to resell such security on an established stock exchange or an
electronic equities securities market; or
(c) that are "restricted securities" (as such term is defined in Rule
144 promulgated under the Securities Act of 1933, as amended (the "1933 Act"))
and none of such securities contemporaneously acquired may be sold under Rule
144(d) and for which the Company does not then have a currently exercisable
contractual right to demand registration under the 1933 Act for a possible
resale.
"Other Investments" means all investments of the Company, including
temporary or defensive investments, that do not fall within the Non-Exchange
Tradeable Investments definition.
"Total Investments" means the sum of Non-Exchange Tradeable Investments
and Other Investments.
The compensation owed shall be the sum of the Non-Exchange Tradeable
Fee and the Other Assets Fee (as defined below). The Non-Exchange Tradeable Fee
is determined by multiplying the Managed Assets by the following two amounts:
(i) a fraction, the numerator of which is the value of all Non-Exchange
Tradeable Investments and the denominator of which is Total Investments; and
(ii) 0.50% (to provide an annualized fee of 2%, and which annualized fee is
referred to below as the "Standard Non-Exchange Tradeable Fee"). The Other
Assets Fee is determined by multiplying the Managed Assets by the following two
amounts: (i) a fraction, the numerator of which is the value of all Other Assets
and the denominator of which is Total Investments; and (ii) 0.25% (to provide an
annualized fee of 1%).
Such compensation shall be calculated and accrued daily and paid
quarterly within five (5) days of the end of each calendar quarter; provided,
however, that the cash amount paid to the Advisor in any calendar quarter shall
never exceed 0.375% of Managed Assets (1.5% on an annualized basis) for that
quarter. Any amount determined as payable to the Advisor during any calendar
quarter, but not actually paid, shall be an accrued liability of the Company
that is payable to the Advisor as a part of the next payment of compensation for
which the limitations set forth herein would permit all or a portion of the
deferred payment.
Additionally, although the annualized Standard Non-Exchange Tradeable
Fee is 2%, the amounts paid to the Advisor for each of the first eight calendar
quarter payments hereunder shall be calculated as though the Standard
Non-Exchange Tradeable Fee is 0.25% (to provide an annualized fee of 1%). Any
difference between the two fee calculations shall be deferred and paid to the
Advisor beginning with the ninth calendar quarter payment and continuing
thereafter until the total amount deferred has been paid to the Advisor, subject
to the limitation set forth above.
In case of initiation or termination of the Agreement during any month,
the fee for that month shall be reduced proportionately on the basis of the
number of calendar days during which the Agreement is in effect and the fee
shall be computed upon the basis of the average Managed Assets
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for the business days the Agreement is so in effect for that month. In addition,
at termination of this Agreement the Company shall pay the Advisor all
previously accrued but unpaid fees, without regard to any limitations on payment
set forth above.
The Advisor may, from time to time, waive or defer all or any part of
the compensation described in this Section 10. The parties do hereby expressly
authorize and instruct the Company's administrator, or its successors, to
calculate the fee payable hereunder and to remit all payments specified herein
to the Advisor. The value of the Company's assets shall be computed in
accordance with the Articles of Incorporation of the Company or any applicable
policies and determinations of the Board.
11. Expenses of the Advisor.
The compensation and allocable routine overhead expenses of all
investment professionals of the Advisor and its staff, when and to the extent
engaged in providing investment advisory services required to be provided by the
Advisor under Section 2 hereof, will be provided and paid for by the Advisor and
not by the Company. It is understood that the Company will pay all expenses
other than those expressly stated to be payable by the Advisor hereunder, which
expenses payable by the Company shall include, without limitation the following;
if applicable:
(i) other than as set forth in the first sentence of this Section 11
above, expenses of maintaining the Company and continuing its existence and
related overhead, including, to the extent such services are provided by
personnel of the Advisor or its affiliates, office space and facilities,
training and benefits,
(ii) commissions, spreads, fees and other expenses connected with the
acquisition, holding and disposition of securities and other investments
including placement and similar fees in connection with direct placements
entered into on behalf of the Company,
(iii) auditing, accounting, tax and legal expenses,
(iv) taxes and interest,
(v) governmental fees,
(vi) expenses of listing shares of the Company with a stock exchange
and expenses of issue, sale, repurchase and redemption (if any) of
interests in the Company,
(vii) expenses of registering and qualifying the Company and its
securities under federal and state securities laws and of preparing and
filing registration statements and amendments for such purposes,
(viii) expenses of communicating with shareholders, including website
expenses and the expenses of preparing, printing, and mailing press
releases, reports and other notices to shareholders and of meetings of
shareholders and proxy solicitations therefor,
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(ix) expenses of reports to governmental officers and commissions,
(x) insurance expenses,
(xi) association membership dues,
(xii) fees, expenses and disbursements of custodians and subcustodians
for all services to the Company (including without limitation safekeeping
of funds, securities and other investments, keeping of books, accounts and
records, and determination of net asset values),
(xiii) fees, expenses and disbursements of transfer agents, dividend
and interest paying agents, shareholder servicing agents and registrars for
all services to the Company,
(xiv) compensation and expenses of directors of the Company who are
not members of the Advisor's organization,
(xv) pricing, valuation, and other consulting or analytical services
employed in considering and valuing the actual or prospective investments
of the Company,
(xvi) all expenses incurred in leveraging of the Company's assets
through a line of credit or other indebtedness or issuing and maintaining
notes or preferred shares,
(xvii) all expenses incurred in connection with the organization of
the Company and any offering of common shares, and
(xviii) such non-recurring items as may arise, including expenses
incurred in litigation, proceedings and claims and the obligation of the
Company to indemnify its directors, officers and shareholders with respect
thereto.
12. Covenants of the Advisor.
The Advisor covenants that it is registered as an investment adviser
under the Investment Advisers Act of 1940. The Advisor agrees that its
activities will at all times be in compliance in all material respects with all
applicable federal and state laws governing its operations and investments.
13. Non-Exclusivity.
The Company understands that the persons employed by the Advisor to
assist in the performance of the Advisor's duties under this Agreement may not
devote their full time to such service and nothing contained in this Agreement
shall be deemed to limit or restrict the right of the Advisor or any affiliate
of the Advisor to engage in and devote time and attention to other businesses or
to render services of whatever kind or nature, so long as the Advisor's services
to the Company are not impaired by the provision of such services to others. The
Company further understands and agrees that managers of the Advisor may serve as
officers or directors of the Company, and that officers or directors of the
Company may serve as managers of the Advisor to the extent permitted by law; and
that the managers of the Advisor are not prohibited from engaging in any other
business
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activity or from rendering services to any other person, or from serving as
partners, officers or directors of any other firm or company, including other
investment advisory companies.
14. Consent to the Use of Name.
The Advisor hereby consents to the royalty free use by the Company of
the name "Tortoise" as part of the Company's name and consents to the royalty
free use of the related "Tortoise" logo; provided, however, that such consents
shall be conditioned upon the employment of the Advisor or one of its approved
affiliates as the investment advisor of the Company. The name "Tortoise" and the
related "Tortoise" logo or any variation thereof may be used from time to time
in other connections and for other purposes by the advisor and its affiliates
and other investment companies that have obtained consent to the use of the name
"Tortoise". The Advisor shall have the right to require the Company to cease
using the name "Tortoise" as part of the Company's name and the related
"Tortoise" logo if the Company ceases, for any reason, to employ the Advisor or
one of its approved affiliates as the Company's investment advisor. Future names
adopted by the Company for itself, insofar as such names include identifying
words requiring the consent of the Advisor, shall be the property of the Advisor
and shall be subject to the same terms and conditions.
15. Effective Date, Term and Approval.
This Agreement shall become effective with respect to the Company, as
of May ___, 2007, or such later date as shareholder approval of this agreement
is obtained. This Agreement shall continue in force and effect through December
31, 2008, and may be continued from year to year thereafter, provided that the
continuation of the Agreement is specifically approved at least annually:
a. (i) by the Board or (ii) by the vote of "a majority of the
outstanding voting securities" of the Company (as defined in Section
2(a)(42) of the 0000 Xxx); and
b. by the affirmative vote of a majority of the directors who are not
parties to this Agreement or "interested persons" (as defined in the 0000
Xxx) of a party to this Agreement (other than as directors of the Company),
by votes cast in person at a meeting specifically called for such purpose.
16. Termination.
This Agreement may be terminated by the Company at any time, without
the payment of any penalty by the Company, by vote of the Board or by vote of a
majority of the outstanding voting securities of the Company, on no more than
sixty (60) days' written notice to the Advisor. This Agreement may be terminated
by the Advisor at any time, without the payment of any penalty by the Advisor,
on no less than sixty (60) days' written notice to the Company. The notice
provided for herein may be waived by the party entitled to receipt thereof. This
Agreement shall automatically terminate in the event of its assignment, the term
"assignment" for purposes of this paragraph having the meaning defined in
Section 2(a)(4) of the 1940 Act. Upon termination pursuant to this Section 16,
the Advisor, at the Company's request, must deliver all copies of books and
records maintained in accordance with this Agreement and applicable law.
17. Amendment.
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No amendment of this Agreement shall be effective unless it is in
writing and signed by the party against which enforcement of the amendment is
sought. No amendment to Section 10 or Section 11 of this Agreement shall be
effective unless it is approved by the vote of a majority of the outstanding
voting securities of the Company.
18. Liability of Advisor.
The Advisor will not be liable in any way for any default, failure or
defect in any of the securities comprising the Company's portfolio if it has
satisfied the duties and the standard of care, diligence and skill set forth in
this Agreement. However, the Advisor shall be liable to the Company for any
loss, damage, claim, cost, charge, expense or liability resulting from the
Advisor's willful misconduct, bad faith or gross negligence or disregard by the
Advisor of the Advisor's duties or standard of care, diligence and skill set
forth in this Agreement or a material breach or default of the Advisor's
obligations under this Agreement.
19. Notices.
Any notices under this Agreement shall be in writing, addressed and
delivered, telecopied or mailed postage paid, to the other party entitled to
receipt thereof at such address as such party may designate for the receipt of
such notice. Until further notice to the other party, it is agreed that the
address of the Company and that of the Advisor shall be 00000 Xxxxxx Xxxxxxxxx,
Xxxxx 000, Xxxxxxxx Xxxx, Xxxxxx 00000.
20. Questions of Interpretation.
Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the 1940 Act or the Advisers Act shall be resolved by reference to such term
or provision of the 1940 Act or the Advisers Act and to interpretations thereof,
if any, by the United States courts or in the absence of any controlling
decision of any such court, by rules, regulations or orders of the Commission
issued pursuant to said Acts. In addition, where the effect of a requirement of
the 1940 Act or the Advisers Act reflected in any provision of the Agreement is
revised by rule, regulation or order of the Commission, such provision shall be
deemed to incorporate the effect of such rule, regulation or order. Subject to
the foregoing, this Agreement shall be governed by and construed in accordance
with the laws (without reference to conflicts of law provisions) of the State of
Delaware.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in duplicate by their respective duly authorized officers on the day
and year first written above.
TORTOISE GAS AND OIL CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: Chief Executive Officer and President
TORTOISE CAPITAL ADVISORS, L.L.C.
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
Title: Managing Director
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