EXHIBIT g.1
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of this 1st day of May, 2005 by and between Tortoise
Energy Capital 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 "Adviser").
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as a closed-end, non-diversified management
investment company;
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment adviser and engages in
the business of acting as an investment adviser;
WHEREAS, the Company and the Adviser 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 ADVISER.
The Company appoints the Adviser to act as manager and investment
adviser to the Company for the period and on the terms herein set forth. The
Adviser accepts such appointment and agrees to render the services herein set
forth, for the compensation herein provided.
2. DUTIES OF THE ADVISER.
Subject to the overall supervision and review of the Board of Directors
of the Company ("Board"), the Adviser 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 Adviser 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, subject always to the provisions of the Company's Articles
of Incorporation, Bylaws and its registration statement under 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"), and to the investment
objectives, policies and restrictions 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 Adviser 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.
3. ADMINISTRATIVE DUTIES OF THE ADVISER.
The Adviser 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 disbursing agent and other service providers). The Adviser 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 Adviser shall (i) oversee the
performance and fees of the Company's service providers and make such reports
and recommendations to the Board of Directors 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 Adviser. The Company shall reimburse the Adviser or its
affiliate for all out-of-pocket expenses incurred in providing the services set
forth in this Section 3.
4. DELEGATION OF RESPONSIBILITIES.
The Adviser is authorized to delegate any or all of its rights, duties
and obligations under this Agreement to one or more sub-advisers, and may enter
into agreements with sub-advisers, and may replace any such sub-advisers 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-advisers by the Board and by shareholders (unless any such approval is not
required by such statutes, rules, regulations, interpretations, orders or
similar relief).
5. INDEPENDENT CONTRACTORS.
The Adviser and any sub-advisers 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 Adviser shall
at all times conform to:
a. all applicable provisions of the 1940 Act and the Advisers Act
and any rules and regulations adopted thereunder;
b. the provisions of the registration statement of the Company,
as the same may beamended from time to time under the 1940
Act;
c. the provisions of the Company's Prospectus as filed with the
Commission, including without limitation, the investment
objectives;
d. the provisions of the Company's Articles of Incorporation, as
the same may be amended from time to time;
e. the provisions of the Bylaws of the Company, as the same may
be amended from time to time
f. all policies, procedures and directives adopted by the Board;
and
g. any other applicable provisions of state, federal or foreign
law.
7. BROKERAGE.
The Adviser is responsible for decisions to buy and sell securities for
the Company, broker-dealer selection, and negotiation of brokerage commission
rates. The Adviser's primary consideration in effecting a security transaction
will be to obtain the best execution. In selecting a broker-dealer to execute
each particular transaction, the Adviser 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 Adviser 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 Adviser 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 Adviser
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
Adviser's overall responsibilities with respect to the Company and to other
clients of the Adviser as to which the Adviser exercises investment discretion.
The Adviser 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 Adviser or to any
sub-adviser. Such allocation shall be in such amounts and proportions as the
Adviser shall determine and the Adviser will report on said allocations
regularly to the Board indicating the brokers to whom such allocations have been
made and the basis therefor.
8. BOOKS AND RECORDS.
The Adviser will maintain complete and accurate records in respect of
all transactions relating to the Company's portfolio. The Adviser 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 Adviser shall provide access to its books and records relating to the
Company as the Company may reasonably request. The Adviser shall have access at
all reasonable times to books and records maintained for the Company to the
extent necessary for the Adviser 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 Adviser for the purpose of legal proceedings or dealings with any
governmental or regulatory authorities or for its internal compliance
procedures.
9. COMPENSATION.
For the services, payments and facilities to be furnished hereunder by
the Adviser, the Adviser shall be entitled to receive from the Company
compensation in an amount equal to .95 % annually of the average monthly managed
assets of the Company, except that, in the first 12 months of its operations,
the compensation shall be in an amount equal to .90% annually 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 (1) deferred taxes,
(2) debt representing financial leverage and (3) the aggregate liquidation
preference of any outstanding preferred shares. Accrued liabilities are expenses
incurred in the normal course of the Company's operations.
Such compensation shall be calculated and accrued monthly and paid
quarterly within five (5) days of the end of each calendar quarter. The
Company's net assets shall be computed in accordance with the Articles of
Incorporation of the Company and any applicable policies and determinations of
the Board of Directors. The parties do hereby expressly authorize and instruct
the Company's Administrator, U.S. Bancorp Fund Services LLC, or its successors,
to calculate the fee payable hereunder and to remit all payments specified
herein to the Adviser.
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 gross assets for the business
days the Agreement is so in effect for that month.
The Adviser may, from time to time, waive all or a part of the above
compensation.
10. EXPENSES OF THE ADVISER.
It is understood that the Company will pay all expenses other than
those expressly stated to be payable by the Adviser hereunder, which expenses
payable by the Company shall include, without implied limitation, (i) expenses
of maintaining the Company and continuing its existence and related overhead,
including, to the extent services are provided by personnel of the Advisor or
its affiliates, office space and facilities and personnel compensation, training
and benefits, (ii) registration of the Company under the 1940 Act, (iii)
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, (iv) auditing, accounting and legal expenses, (v) taxes and
interest, (vi) governmental fees, (vii) 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, including expenses of
conducting tender offers for the purpose of repurchasing Company interests,
(viii) expenses of registering and qualifying the Company and its shares under
federal and state securities laws and of preparing and filing registration
statements and amendments for such purposes, (ix) 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, (x) expenses
of reports to governmental officers and commissions, (xi) insurance expenses,
(xii) association membership dues, (xiii) 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), (xiv) fees, expenses and disbursements of
transfer agents, dividend disbursing agents, shareholder servicing agents and
registrars for all services to the Company, (xv) compensation and expenses of
directors of the Company who are not members of the Adviser's organization,
(xvi) pricing and valuation services employed by the Company, (xvii) all
expenses incurred in connection with leveraging of the Company's assets through
a line of credit, or issuing and maintaining preferred shares, (xviii) all
expenses incurred in connection with the organization of the Company and the
initial pubic offering of common shares, and (xix) such non-recurring items as
may arise, including expenses incurred in connection with litigation,
proceedings and claims and the obligation of the Company to indemnify its
Directors, officers and shareholders with respect thereto.
11. NON-EXCLUSIVITY.
The Company understands that the persons employed by the Adviser to
assist in the performance of the Adviser's duties under this Agreement will 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 Adviser or any affiliate
of the Adviser to engage in and devote time and attention to other businesses or
to render services of whatever kind or nature. The Company further understands
and agrees that managers of the Adviser may serve as officers or directors of
the Company, and that officers or directors of the Company may serve as managers
of the Adviser to the extent permitted by law; and that the managers of the
Adviser 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.
12. CONSENT TO THE USE OF NAME.
The Adviser hereby consents to the use by the Company of the name
"Tortoise" as part of the Company's name; provided, however, that such consent
shall be conditioned upon the employment of the Adviser or one of its affiliates
as the investment adviser of the Company. The name "Tortoise" or any variation
thereof may be used from time to time in other connections and for other
purposes by the Adviser and its affiliates and other investment companies that
have obtained consent to the use of the name "Tortoise". The Adviser shall have
the right to require the Company to cease using the name "Tortoise" as part of
the Company's name if the Company ceases, for any reason, to employ the Adviser
or one of its affiliates as the Company's investment adviser. Future names
adopted by the Company for itself, insofar as such names include identifying
words requiring the consent of the Adviser, shall be the property of the Adviser
and shall be subject to the same terms and conditions.
13. EFFECTIVE DATE, TERM AND APPROVAL.
This Agreement shall become effective with respect to the Company, if
approved by the shareholders of the Company, as of the close of the initial
public offering of common shares of the Company. If so approved, this Agreement
shall continue in force and effect for two years from the execution date above,
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.
14. TERMINATION.
This Agreement may be terminated as to the Company at any time, without
the payment of any penalty, by vote of the Board or by vote of a majority of the
outstanding voting securities of the Company, or by the Adviser, on no more than
sixty (60) days' written notice to the other party. 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 14,
the Adviser, at the Company's request, must deliver all copies of books and
records maintained in accordance with this Agreement and applicable law.
15. 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.
16. LIABILITY OF ADVISER.
The Adviser 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 Adviser shall be liable to the Company for any
loss, damage, claim, cost, charge, expense or liability resulting from the
Adviser's willful misconduct, bad faith or gross negligence or disregard by the
Adviser of the Adviser's duties or standard of care, diligence and skill set
forth in this Agreement or a material breach or default of the Adviser's
obligations under this Agreement.
17. 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 Adviser shall be 00000 Xxxxxx Xxxxxxxxx,
Xxxxx 000, Xxxxxxxx Xxxx, Xxxxxx 00000.
18. 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 TO FOLLOW.]
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 ENERGY CAPITAL CORPORATION
By: /s/ Xxxxx Xxxxxxx
------------------------------
Xxxxx Xxxxxxx
President and CEO
TORTOISE CAPITAL ADVISORS, L.L.C.
By: /s/ H. Xxxxx Xxxxxx
-----------------------------
H. Xxxxx Xxxxxx
Managing Director
