INVESTMENT ADVISORY AGREEMENT
AGREEMENT
made as of this 22nd day of May, 2009, by and between Tortoise Power and Energy
Infrastructure Fund, Inc., a Maryland corporation having its principal place of
business in Leawood, Kansas (the “Company”), and Tortoise Capital Advisors,
L.L.C., a Delaware limited liability company having its principal place of
business in Leawood, 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, and its registration
statement under the Investment Company Act of 1940, as amended (the “1940 Act”)
and under the Securities Act of 1933 covering the Company’s shares, as filed
with the Securities and Exchange Commission (the “Commission”), 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,
the 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;
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(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;
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b.
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the
provisions of the 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;
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c.
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the
provisions of the Company’s Articles of Incorporation, as the same may be
amended from time to time;
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d.
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the
provisions of the Bylaws of the Company, as the same may be amended from
time to time;
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e.
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all
policies, procedures and directives adopted by the Board;
and
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f.
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any
other applicable provisions of state, federal or foreign
law.
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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.
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 equal to
0.95% of the average monthly “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 debt representing financial
leverage and the aggregate liquidation preference of any outstanding preferred
shares). Average monthly Managed Assets is the sum of the daily
Managed Assets for the month divided by the number of days in the
month. Accrued liabilities are expenses incurred in the normal course
of the Company’s operations.
Such
compensation shall be calculated and accrued daily and paid quarterly within
five (5) days of the end of each calendar quarter,
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 for the business days the Agreement is
so in effect for that month.
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.
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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 service 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 securities of 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,
(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),
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(xiii) fees,
expenses and disbursements of transfer agents, dividend and interest paying
agents, shareholder servicing agents, registrars and administrator 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 the Company’s securities, including, without limitation, common
shares and preferred and debt securities, 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 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
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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 the close of
the initial public offering of common shares of the Company, or such later date
as shareholder approval of this agreement is obtained. This Agreement
shall continue in force and effect for two years from such effective date, and
may be continued from year to year thereafter, provided that the continuation of
the Agreement is specifically approved at least annually:
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a.
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(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
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b.
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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.
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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.
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.
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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 Xxx Xxxxxx,
Xxxxx 000, Xxxxxxx, 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]
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 POWER AND ENERGY INFRASTRUCTURE FUND, INC. | |||
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By:
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/s/ Xxxxx X. Xxxxxxx | |
| Name: Xxxxx X. Xxxxxxx | |||
| Title: Chief Executive Officer and President | |||
| TORTOISE CAPITAL ADVISORS, L.L.C. | |||
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By:
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/s/ Xxxxx Xxxxxxx | |
| Name: Xxxxx Xxxxxxx | |||
| Title: Managing Director | |||
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