NGPC (MM)

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

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FORM 8-K

 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported) October 2, 2014 (September 30, 2014)

 

OHA INVESTMENT CORPORATION

(Exact Name of Registrant as Specified in Charter)

 

Maryland		814-00672		20-1371499
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

1114 Avenue of the Americas, 27th Floor New York, NY		10036
(Address of Principal Executive Offices)		(Zip Code)

 

Registrant’s telephone number, including area code (212) 326-1500

 

NGP Capital Resources Company

909 Fannin, Suite 3800

Houston, TX 77010

 (Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 Item 1.01. Entry into a Material Definitive Agreement.

 

New Investment Advisory Agreement and Administration Agreement

 

On September 30, 2014, we completed the private sale of $1 million in aggregate purchase price of our common stock at an offering price of $8.53 per share to OHA BDC Investor, LLC, an affiliate of Oak Hill Advisors, L.P. (“OHA”), pursuant to a stock purchase and transaction agreement dated July 21, 2014, by and among us, OHA and OHA BDC Investor, LLC. The price per share paid by OHA BDC Investor, LLC represents the net asset value per share established by our board of directors as of a date within 48 hours prior to the purchase, but this amount does not reflect the impact of certain transaction and closing expenses estimated at approximately $5 million in the aggregate. OHA BDC Investor, LLC has also executed a stock purchase plan pursuant to which it has committed to purchase, from time to time during the 12-month period immediately following September 30, 2014, through open market purchases, additional shares of our common stock having an aggregate purchase price of $4 million. If after such 12-month period OHA BDC Investor, LLC has not purchased shares of our common stock under the stock purchase plan for an aggregate purchase price of $4 million, it has agreed to purchase from us, and we have agreed to issue and sell, the remaining balance at a price per share equal to the net asset value per share of our common stock.

 

In connection with the above-described private sale, we entered into the following agreements:

 

	•		Investment Advisory Agreement. On September 30, 2014, we entered into an investment advisory agreement with OHA pursuant to which OHA has replaced NGP Investment Advisor, LP as our external investment adviser. The initial term of the investment advisory agreement is for two years, with automatic, one-year renewals, subject to approval by our board of directors, a majority of whom are not “interested” directors (as defined in the Investment Company Act of 1940) of us, and/or our stockholders.  Pursuant to the investment advisory agreement, OHA implements our business strategy on a day-to-day basis and performs certain services for us, subject to the supervision of our board of directors. Under the investment advisory agreement, we pay OHA a fee consisting of two components — a base management fee and an incentive fee. The base management fee is calculated based on our total assets (excluding cash, cash equivalents and U.S. treasury bills that are purchased with borrowed funds solely for the purpose of satisfying quarter-end diversification requirements related to our election to be taxed as a regulated investment company under the Internal Revenue Code) at an annual rate of 1.75%, with a 0.25% reduction in this 1.75% annual rate for the first year following September 30, 2014.
			The incentive fee consists of two parts:
			·      The first part will be calculated and payable quarterly in arrears based on our pre-incentive fee net investment income for the fiscal quarter for which the fee is being calculated. Pre-incentive fee net investment income means interest income, dividend income, royalty payments, net profits interest payments, and any other income (including any other fees, such as commitment, origination, syndication, structuring, diligence, monitoring and consulting fees or other fees that the Company receives from portfolio companies) accrued during the fiscal quarter, minus our operating expenses for the quarter (including the base management fee, expenses payable under the administration agreement, and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets (defined as total assets less liabilities at the end of the immediately preceding fiscal quarter) will be compared to a “hurdle rate” of 1.75% per quarter (7% annualized). OHA will receive no incentive fee for any fiscal quarter in which our pre-incentive fee net investment income does not exceed the hurdle rate. OHA will receive an incentive fee equal to 100% of our pre-incentive fee net investment income for any fiscal quarter in which our pre-incentive fee net investment income exceeds the hurdle rate but is less than 2.1875% (8.75% annualized) of net assets (also referred to as the “catch up” provision) plus 20% of our pre-incentive fee net investment income for such fiscal quarter greater than 2.1875% (8.75% annualized) of net assets.   ·      The second part of the incentive fee, the capital gains fee, will be determined and payable in arrears as of the end of each fiscal year (or, upon termination of the investment advisory agreement, as of the termination date). The capital gains fee is equal to 20% of our cumulative aggregate realized capital gains from the date of the investment advisory agreement through the end of that fiscal year, computed net of our cumulative aggregate realized capital losses and cumulative aggregate unrealized depreciation on investments for the same time period. The aggregate amount of any previously paid capital gains incentive fees to OHA will be subtracted from the capital gains incentive fee calculated. If such amount is negative, then there is no capital gains fee for such year. For the purposes of the capital gains fee, any gains and losses associated with our investment portfolio as of the effective date of the investment advisory agreement shall be excluded from the capital gains fee calculation.

 

 

	•		Administration Agreement. On September 30, 2014, we entered into an administration agreement with OHA pursuant to which OHA replaces NGP Administration, LLC as our administrator and furnishes us with certain administrative services, personnel and facilities. The administration agreement has an initial term of two years. Payments under the administration agreement will be equal to our allocable portion of OHA’s overhead in performing its obligations under the administration agreement, including rent and the allocable portion of the cost of our officers and their respective staffs relating to the performance of services under the administration agreement. Certain expenses payable by us under the investment advisory agreement described above will be subject to a cap of $2.5 million for the period from October 1, 2014 to September 30, 2015, generally excluding legal and professional fees, insurance expenses, interest and borrowing costs, management fees and incentive fees.

 

On September 30, 2014, we issued a press release announcing the completion of the private sale and the other matters described herein. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

The foregoing description of the investment advisory agreement and the administration agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the investment advisory agreement and the administration agreement, attached hereto as Exhibits 10.1 and 10.2, respectively.

 

Amendment to Revolving Credit Agreement

 

On September 29, 2014, we entered into a First Amendment to the Third Amended and Restated Revolving Credit Agreement, (the “First Amendment”) with the lenders party thereto and SunTrust Bank, as administrative agent for the lenders.

 

Pursuant to the First Amendment, we added a provision to permit the proposed appointment of OHA as our new investment adviser.

 

Item 1.02 Termination of a Material Definitive Agreement

 

On September 30, 2014, our investment advisory and management agreement with NGP Investment Advisor, LP and administration agreement with NGP Administration, LLC, which previously served as our external investment advisor and administrator, respectively, were terminated.

 

Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

 

The information regarding the First Amendment set forth under Item 1.01 above is incorporated herein by reference.

 

Item 5.02.  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Resignation of Officers and Directors

 

On September 30, 2014, Stephen K. Gardner resigned as our President and Chief Executive Officer. In addition, on September 30, 2014, Kenneth A. Hersh and David R. Albin, each of whom are affiliates of our former external investment adviser and administrator, and Edward W. Blessing, William K. White and Lon C. Kile, resigned as members of our board of directors. The above-described resignations were made in connection with the appointment of OHA as our new investment advisor and administrator, and were not due to any disagreement between us and the above-referenced executive officers and directors.

 

Appointment of Officers and Directors

 

Immediately prior to the above-described resignations, our board of directors appointed Glenn R. August and Robert B. Okun, both of whom are affiliates of OHA, and Stuart I. Oran, James A. Stern and Frank V. Tannura each as members of the board of directors. In addition, our board of directors appointed Robert W. Long as our President and Chief Executive Officer. L. Scott Biar will remain as our Chief Financial Officer, Secretary, Treasurer and Chief Compliance Officer on an interim basis. Information regarding Messrs. August, Okun, Oran, Stern, Tannura and Long is as follows:

 

 

Glenn R. August, Chairman, age 52, is the Founder of OHA and serves as its Chief Executive Officer. He has overall management responsibility for the firm and serves as global head of the firm’s distressed investment activities. Mr. August co-founded the predecessor investment firm to OHA in 1987 and took over responsibility for the firm’s credit and distressed investment activities in 1990. He co-founded each of OHA’s funds, where he currently serves as the managing partner of each of their management entities. Mr. August has played leadership roles in numerous restructurings and, since 1987, has served on nine corporate boards. He currently serves on the Board of Directors of the 92^nd St. Y. Mr. August also serves on the Board of Trustees of Horace Mann School and The Mount Sinai Medical Center. He previously worked in the mergers and acquisitions department at Morgan Stanley in New York and London. Mr. August earned an M.B.A. from Harvard Business School, where he was a Baker Scholar, and a B.S. from Cornell University.

 

  Robert B. Okun, Director, age 52, serves as the Chief Investment Officer of U.S. Credit and a Senior Partner of OHA. He shares responsibility for OHA’s portfolio management activities and is responsible for trading activities. Prior to joining OHA in 2001, Mr. Okun was Executive Vice President and Member of the Executive Committee at USBancorp Libra, in charge of High Yield Sales, Trading and Research. Previously, he was a Managing Director at UBS Securities, LLC where he was responsible for all High Yield Sales and Trading activities. Mr. Okun began his career at Salomon Brothers Inc., where he worked for ten years. He earned an A.B. from Stanford University. Mr. Okun currently serves on the Board of Directors and Executive Committee of Lighthouse Guild International as well as the Chair of the Finance Committee.

 

Stuart I. Oran, Director, age 64, has served as a Partner of Liberty Hall Capital, a private equity firm focused on businesses serving the aerospace and defense industry, since 2011. Mr. Oran also co-founded FCB Financial Holdings, Inc. (NYSE: FCB), a bank holding company formed to acquire failed banks in FDIC-assisted transactions, in 2010, and he serves on the Boards of Directors of FCB Financial and its banking subsidiary, Florida Community Bank, NA. Mr. Oran also serves on the Boards of Directors of Spirit Airlines (NASDAQ: SAVE) (since 2004) and Red Robin Gourmet Burgers (NASDAQ: RRGB) (since 2010), and he has previously served on the Boards of Deerfield Capital, a financial services firm, and Wendy’s International.   Prior to co-founding FCB Financial, Mr. Oran was a senior executive of United Airlines (from 1994 to 2002) where he served on the Management Committee and led its International Division.  Mr. Oran began his career in 1974 with Paul, Weiss, Rifkind, Wharton & Garrison where he was a Corporate Partner focused on financial services and private equity transactions. Mr. Oran earned a B.S. from Cornell University and a J.D. from the University of Chicago Law School.

 

  James A. Stern, Director, age 63, is the Founder and Chairman of The Cypress Group, a New York based private equity firm that manages funds in excess of $3.5 billion, a role he has held since 1994. He currently serves on the board of directors of a number of corporations including Affinia Group Intermediate Holdings, Inc. (since 2004) and as Chief Executive Officer and Chairman of CYS Investments (NYSE: CYS) (since 2006), and he has served on the boards of directors of Infinity Broadcasting, WESCO International, Inc., Lear Corporation, and Cinemark USA, Inc. Prior to founding The Cypress Group in 1994, Mr. Stern had a twenty-year career with Lehman Brothers. He joined the firm in 1974 and was named Managing Director. In 1988, he joined the firm’s management committee and became co-head of investment banking. He was named head of merchant banking in 1989. Mr. Stern is Chairman Emeritus of The Board of Trustees of Tufts University and has been a board member of several charitable organizations including The Jewish Museum, the Cystic Fibrosis Foundation and the Cancer Research Foundation. Mr. Stern earned a BSCE from Tufts University and an MBA from Harvard University.

 

  Frank V. Tannura, Director, age 57, currently serves as an Operating Advisor to LaSalle Capital Group and as Executive Operating Partner with Mason Wells, where he serves on the boards of several portfolio companies of each firm. Prior to joining LaSalle in 2009, he served as the Chief Executive Officer of Packaging Dynamics Corporation, a food packaging manufacturer and as a member of its board of directors. Mr. Tannura joined Packaging Dynamics from Ivex Packaging Corporation where he served as a Director, as an Executive Vice President and as the firm’s Chief Financial Officer. His civic activities include service as a director of the Western Golf Association, Loyola University of Chicago Quinlan School of Business, and St. Laurence High School. He began his career with Price Waterhouse in the Audit practice. Mr. Tannura earned his B.B.A. from Loyola University Chicago and an M.B.A. from the University of Texas at Austin.

 

  Robert W. Long, President and Chief Executive Officer, age 52, was a founder and Chief Executive Officer of Conversus Asset Management, the investment manager of Conversus Capital, from its formation in 2007 through its sale in 2012. With approximately $3 billion of assets under management, Conversus Capital (NYSE/Euronext: CCAP) was a permanent capital vehicle and the largest publicly traded portfolio of third party private equity funds. Mr. Long’s experience includes 14 years at Bank of America where he was the head of Banc of America Strategic Capital, a group managing approximately $6.5 billion in private equity funds and direct investments and the co-head of the Real Estate Mezzanine Group. Mr. Long earned his J.D. from the University of Virginia and a B.A from the University of North Carolina.

 

 

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

 

On September 30, 2014, we amended our articles of incorporation to change our name from “NGP Capital Resources Company” to “OHA Investment Corporation.”

 

A copy of the articles of amendment relating to our name change is attached hereto as Exhibit 3.1.

 

Item 5.07 Submission of Matters to a Vote of Security Holders.

 

On September 29, 2014, we adjourned our Annual Meeting of Stockholders (the “Annual Meeting”) until September 30, 2014, in order to solicit additional votes with respect to the proposal to approve the proposed investment advisory agreement, pursuant to which OHA would be appointed as our new investment advisor. As of August 20, 2014, the record date for the Annual Meeting, 20,499,188 shares of common stock were eligible to be voted. Of the shares eligible to be voted, 18,795,305 were voted in person or by proxy in connection with the proposals.

 

Each of the proposals submitted to a vote of our stockholders at the Annual Meeting was approved as follows:

 

Proposal 1: Investment Advisory Agreement

 

Our stockholders approved the proposed investment advisory agreement, pursuant to which OHA will be appointed as the new investment advisor of the Company. The following votes were taken in connection with this proposal:

 

			Votes For				Votes Against				Abstentions				Broker Non-Votes
All Stockholders			10,843,982				1,770,772				75,997				6,104,554

 

Proposal 2: Election of Director

 

Our stockholders elected Edward W. Blessing as a director to serve for a three-year term, or until his successor is duly elected and qualified. The following votes were taken in connection with this proposal:

 

Nominee			Total Votes For				Total Votes Withheld				Broker Non-Votes
			10,549,277				2,141,474				6,104,554

 

As discussed in Item 5.02 above, Mr. Blessing subsequently resigned as a member of our board of directors in connection with the appointment of OHA as our new investment advisor and administrator.

 

Proposal 3: Ratification of Ernst & Young LLP

 

The proposal to ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2014 was approved. The following votes were taken in connection with this proposal:

 

			Votes For				Votes Against				Abstentions				Broker Non-Votes
			18,469,025				248,163				78,117				6,104,554

 

Proposal 4: Adjournment

 

The proposal to approve any motion properly brought before the Annual Meeting of Stockholders to adjourn the meeting, if necessary, to solicit additional votes in favor of the Proposal 1. The following votes were taken in connection with this proposal:

 

			Votes For				Votes Against				Abstentions				Broker Non-Votes
			16,532,047				2,027,688				235,570				6,104,554

 

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit No.		Description
3.1		Articles of Amendment, dated September 30, 2014.
10.1		Investment Advisory Agreement, dated September 30, 2014, between OHA Investment Corporation and Oak Hill Advisors, L.P.
10.2		Administration Agreement, dated September 30, 2014, between OHA Investment Corporation and Oak Hill Advisors, L.P.
99.1		Press Release dated September 30, 2014.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	OHA INVESTMENT CORPORATION
Date:  October 2, 2014
	By:	/s/ Robert W. Long
	Name:	Robert W. Long
	Title:	Chief Executive Officer

 

 

 

 

 

 

 

 

Exhibit 3.1

 

NGP Capital Resources Company

ARTICLES OF AMENDMENT

 

NGP Capital Resources Company, a Maryland corporation (the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of Maryland that:

 

FIRST: The charter of the Corporation (the “Charter”) is hereby amended by deleting the existing Article I thereof in its entirety and adding a new article to read as follows:

 

“ARTICLE I

 

NAME

 

The name of the corporation (which is hereinafter called the “Corporation”) is:

 

OHA Investment Corporation”  

 

 Second: The foregoing amendment to the Charter was approved by the Board of Directors of the Corporation and was limited to a change expressly authorized by Section 2-605(a)(1) of the Maryland General Corporation Law without action by the shareholders of the Corporation.

Third: The undersigned Chief Executive Officer and President acknowledges these Articles of Amendment to be the corporate act of the Corporation and as to all matters or facts required to be verified under oath, the undersigned Chief Executive Officer and President acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties of perjury.

 

 IN WITNESS WHEREOF, said Corporation has caused these Articles of Amendment to be signed in its name and on its behalf by its Chief Executive Officer and President and attested to by its Secretary on this 30th day of September, 2014.    

 

ATTEST:

/s/ L. Scott Biar	By:		/s/ Robert W. Long
L. Scott Biar			Robert W. Long
Secretary			Chief Executive Officer and President

 

         

 

Exhibit 10.1

 

EXECUTION COPY

 

INVESTMENT ADVISORY AGREEMENT

 

THIS AGREEMENT dated as of September 30, 2014 (this “Agreement”), by and between NGP Capital Resources Company, a Maryland corporation (the “Company”), and Oak Hill Advisors, L.P. a Delaware limited partnership (the “Advisor”).

 

WHEREAS, the Company is a closed-end, non-diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940, as amended (the “Investment Company Act”), and has further elected to be treated as a regulated investment company (“RIC”) for tax purposes;

 

WHEREAS, the Advisor is an investment advisor registered as such under the Investment Advisers Act of 1940, as amended (collectively, with the rules and regulations promulgated thereunder, the “Advisers Act”) and is engaged in the business of providing management and investment advisory services; and

 

WHEREAS, the Company deems it advisable to retain the Advisor to furnish certain management and investment advisory services to the Company, and the Advisor wishes to be retained to provide such services, on the terms and conditions hereinafter set forth.

 

NOW THEREFORE, in consideration of the premises and the mutual promises and covenants hereinafter contained, it is agreed by and between the parties hereto as follows:

 

SECTION 1

 

DUTIES OF THE ADVISOR

 

1.1 Engagement. Commencing on the date hereof, the Company hereby engages and retains the Advisor to act as the investment advisor to the Company and to manage the investment and reinvestment of the assets of the Company, subject to the supervision of the Board of Directors of the Company (the “Board”), for the period and upon the terms herein set forth, in accordance with (i) the investment objectives, policies, and restrictions that are set forth in the Company’s proxy statement dated August 25, 2014, 2014, as such investment objectives, policies and restrictions may be amended from time to time, (ii) the Investment Company Act, (iii) the policies adopted by the Board to the extent such policies do not conflict with any provisions of this Agreement, (iv) all other applicable federal and state securities and commodities laws, rules, and regulations, and (v) the Company’s articles of incorporation and by-laws, as such articles of incorporation and by-laws may be amended from time to time.

 

1.2 Services. Without limiting the generality of Section 1.1, the Advisor shall, during the term and subject to the provisions of this Agreement, provide any and all management and investment advisory services necessary or appropriate for the operation of the Company and the conduct of its business. Such management and investment advisory services shall include the following:

 

(a)

determining the composition of the portfolio of the Company, the nature and timing of the changes therein, and the manner of implementing such changes;

 

(b)

identifying, evaluating, and negotiating the structure of the investments made by the Company;

 

(c)

performing due diligence on prospective portfolio companies;

 

(d)

monitoring the performance of, and managing the Company’s investments;

 

(e)

determining the securities and other assets that the Company will purchase, retain, or sell and the terms on which any such securities are purchased and sold;

 

(f)

arranging for the disposition of investments for the Company;

 

(g)

recommending to the Board the fair value of the Company’s investments that are not publicly traded debt or equity securities or other assets based upon the valuation guidelines adopted by the Board;

 

(h)

voting proxies in accordance with the proxy voting policies and procedures adopted by the Advisor; and

 

(i)

providing the Company with such other investment advice, research, and related services as the Company may, from time to time, reasonably require for the investment of the Company’s assets.

 

The Advisor shall have the power and authority on behalf of the Company to effect its investment decisions for the Company, including the execution and delivery of all documents relating to the Company’s investments and the placing of orders for purchase or sale transactions on behalf of the Company. In the event that the Company determines to refinance its existing debt financing arrangements or to obtain other financing, including any hedging or swap arrangements, the Advisor will arrange for such financing on the Company’s behalf, including, if applicable, entering into International Swaps and Derivatives Association agreements and opening bank accounts, subject to the oversight and approval of the Board. If it is necessary for the Advisor to make investments or arrange financing on behalf of the Company through a special purpose vehicle, the Advisor shall have authority to create or arrange for the creation of such special purpose vehicle in accordance with the Investment Company Act.

 

1.3 Records. The Advisor shall keep and preserve for the period required by the Investment Company Act any books and records related to the provision of investment advisory services to the Company and required to be maintained under Rule 31a-2 under the Investment Company Act for an investment advisor to a business development company and shall maintain all books and records with respect to the Company’s portfolio transactions. The Advisor agrees that any records that it maintains for the Company as required under the Investment Company Act are the property of the Company and it will surrender promptly to the Company any such records upon the Company’s request, provided that (i) the Advisor may retain a copy of such records and (ii) nothing contained herein shall prevent the Advisor from using the performance track record of the Company following any termination of this Agreement.

 

 

1.4 Control and Supervision. The performance by the Advisor of its duties and obligations hereunder shall be subject to the control and supervision of the Board and the Advisor’s determination of what services are necessary or appropriate for operation or to reasonably conduct the business of the Company shall be subject to review by the Board. The Advisor shall provide periodic and special reports to the Board of its performance of its obligations hereunder as the Board may request.

 

1.5 Acceptance. The Advisor hereby accepts such engagement and agrees during the term hereof to provide the services described herein and to assume the obligations herein set forth for the compensation provided herein.

 

1.6 Independent Contractor. The Advisor shall for all purposes herein provided be deemed to be an independent contractor and, except as expressly provided or authorized herein, shall have no authority to act for or represent the Company in any way or otherwise be deemed an agent of the Company.

 

1.7 Compliance. The Advisor represents that it is registered with the Securities and Exchange Commission (the “SEC”) as an investment advisor under the Advisers Act. The Advisor agrees that its activities with respect to the Company will at all times be in compliance in all material respects with applicable federal securities and state securities laws governing its operations and investments. The Advisor has adopted and implemented written policies and procedures reasonably designed to prevent violation of the Federal Securities Laws (as defined in Rule 38a-l under the Investment Company Act) by the Advisor, including an investment allocation policy which delineates how the Advisor will allocate investments between the Company, on the one hand, and other funds, separate accounts and investment accounts managed by the Advisor, on the other hand. The Advisor has provided the Company, and in the future shall provide the Company, at such times as the Company may reasonably request, with a copy of such policies and procedures. In addition, the Advisor shall provide to the Company, at such times as the Company may reasonably request, a written report that addresses the operation of the policies and procedures; such report shall be of sufficient scope and sufficient detail, as may reasonably be required to comply with Rule 38a-1 and to provide reasonable assurance that any material weaknesses in the design or implementation of the policies and procedures would be disclosed by such examination, and, if there are no such weaknesses, the report shall so state.

 

1.8 Excess Brokerage Commissions. The Advisor is hereby authorized, to the fullest extent now or hereafter permitted by law, to cause the Company to pay a member of a national securities exchange, broker, or dealer an amount of commission or other fees for effecting a securities (including loans) transaction in excess of the amount of commission another member of such exchange, broker, or dealer would have charged for effecting that transaction, if the Advisor determines in good faith, taking into account such factors as price (including the applicable brokerage commission or dealer spread), size of order, difficulty of execution, and operational facilities of the firm and the firm’s risk and skill in positioning blocks of securities (including loans), that such amount of commission or other fees is reasonable in relation to the value of the brokerage and/or research services provided by such member, broker or dealer, viewed in terms of either that particular transaction or its overall responsibilities with respect to the Company’s portfolio, and constitutes the best net results for the Company.

 

SECTION 2

 

USE OF SUB-INVESTMENT ADVISOR

 

The Advisor may, subject to requirements of the Investment Company Act, employ one or more sub-investment advisors (each, a “Sub-Advisor”) to assist the Advisor in the performance of its duties under this Agreement. One or more of the Advisor’s Affiliates (including Oak Hill Advisors (Europe), LLP and OHA (UK) LLP) may serve as a Sub-Advisor. Specifically, the Advisor may retain a Sub-Advisor to recommend specific securities or other investments based upon the Company’s investment objectives and policies, and work, along with the Advisor, in structuring, negotiating, arranging or effecting the acquisition or disposition of such investments and monitoring investments on behalf of the Company, subject to the oversight of the Advisor and the Company. Such use of a Sub-Advisor does not relieve the Advisor of any duty or liability it would otherwise have under this Agreement. Compensation of any such Sub-Advisor for services provided and expenses assumed under any agreement between the Advisor and such Sub-Advisor permitted under this paragraph is the sole responsibility of the Advisor. Any sub-advisory agreement entered into by the Advisor shall be in accordance with the requirements of the Investment Company Act and other applicable federal and state law and shall contain a provision requiring any Sub-Advisor to comply with Sections 1.3 and 1.7.

 

SECTION 3

 

SERVICES OF THE ADVISOR NOT EXCLUSIVE

 

3.1 Limitations on the Employment of the Advisor. The obligations of the Advisor to the Company and the services furnished by the Advisor hereunder are not exclusive. The Advisor and its Affiliates (as hereinafter defined) may engage in any other business or furnish the same or similar services to others, including businesses that may be in direct or indirect competition with the business of the Company and may be in direct competition with the Company for particular investments, so long as its services to the Company under this Agreement are not impaired thereby. It is contemplated that from time to time one or more Affiliates of the Advisor may serve as directors, officers, or employees of the Company or otherwise have an interest or affiliation with the Company or have the same or similar relationships with competitors of the Company. Nothing in this Agreement shall limit or restrict the right of the Advisor, any manager, direct or indirect partner, officer, agent, or employee of the Advisor or its Affiliates, who may also be a manager, officer, agent, or employee of the Company, to engage in any other business or to devote his or her time and attention in part to the management or other aspects of any other business, whether of a similar nature or dissimilar nature, or to receive fees or compensation in connection therewith (including fees for serving as a director of, or providing consulting services to, one or more of the Company’s portfolio companies, subject to applicable law). Neither the Advisor nor any of its Affiliates shall in any manner be liable to the Company by reason of the foregoing activities of the Advisor or such Affiliate. So long as this Agreement remains in effect, the Advisor shall be the only investment advisor for the Company, subject to the Advisor’s right to enter into sub-advisory agreements. The Advisor assumes no responsibility under this Agreement other than to provide the services called for hereunder.

 

 

3.2 Responsibility of Dual Directors, Officers, and Employees. It is understood that directors, officers, employees, and security holders of the Company are or may become interested in the Advisor and its Affiliates, as directors, officers, employees, direct or indirect partners, security holders, members, and managers or otherwise, and that the Advisor and directors, officers, employees, direct or indirect partners, security holders, members, and managers of the Advisor and its Affiliates are or may become similarly interested in the Company as security holders or otherwise. If any person who is a manager, direct or indirect partner, officer, or employee of the Advisor is or becomes a director, officer, or employee of the Company and acts as such in any business of the Company, then such manager, direct or indirect partner, officer, or employee of the Advisor shall be deemed to be acting in such capacity for the Company, and not as a manager, partner, officer, or employee of the Advisor or under the control or direction of the Advisor, even if paid by the Advisor. Nothing herein shall prevent any such director, officer, employee or security holder of the Company from recusing him- or herself with respect to any matter in which he or she is being asked to act on behalf of the Company and such recusal shall not be deemed a breach of any duty owed to the Company by such director, officer, employee or security holder.

 

SECTION 4

 

ALLOCATION OF COSTS AND EXPENSES

 

4.1 Costs and Expenses Allocated to the Company. Except as otherwise expressly provided for in Section 4.2, during the term of this Agreement the Company will bear (and to the extent paid by the Advisor will promptly reimburse the Advisor for) all costs and expenses of the Company’s business, operations, and investments including any and all fees payable pursuant to this Agreement and the following:

 

(a)

any and all fees, costs and expenses incurred in connection with the origination, evaluation, discovery, investigation, development, negotiation or monitoring of transactions (whether or not consummated), including loan fees, private placement fees, brokerage and sales commissions, oversight servicer and servicer fees (including fixed and/or performance fees), appraisal fees, research fees, dealer spreads, interest and clearing and settlement charges, commitment fees, transfer taxes and premiums, underwriting commissions and discounts, expenses relating to short sales, fees and expenses related to market data (including expenses incurred in connection with any multimedia, analytical, database, news or third-party research or information services and any computer hardware and connectivity hardware (e.g., terminals and telephone and fiber optic lines) incorporated into the cost of obtaining such research and market data), legal, accounting, auditing, investment banking, third-party industry and due diligence experts (including for credit and risk analytics, loss mitigation, real estate and real estate related matters), finders, originators, consulting (including fixed and/or performance fees), filing and other professional fees, communications (including internet access fees and cellular phone charges associated with the Advisor’s investment professionals), travel, and all other expenses (including fees, costs and expenses payable to Affiliates of the Advisor) related to the origination, evaluation, discovery, investigation, development, negotiation or monitoring of potential or actual transactions (whether or not consummated);

 

 

(b)

any and all fees, costs and expenses incurred in connection with the carrying or management of investments, including custodial, trustee, record keeping and other administration fees and expenses, operations fees and expenses and reconciliation expenses;

 

(c)

any and all fees, costs and expenses incurred in implementing or maintaining third-party or proprietary software tools, programs or other technology for the benefit of the Company (including any and all costs and expenses of any investment, books and records, portfolio compliance and reporting systems such as “Wall Street Office,” “Everest” (Black Mountain) and similar systems and services, including consultant, software licensing, data management and recovery services fees and expenses);

 

(d)

federal, state, and local taxes and fees and governmental charges, including transfer taxes, premiums and entity-level taxes and filing fees, incurred by, levied upon or payable by the Company;

 

(e)

any and all costs and expenses incurred in connection with the incurrence of indebtedness, including borrowings, dollar rolls, reverse purchase agreements, credit facilities, securitizations, margin financing and derivatives and swaps;

 

(f)

any and all costs and expenses (including fees and disbursements) of attorneys, auditors, accountants and consultants relating to Company matters, including expenses incident to the documentation for, and consummation of, transactions (including costs and expenses of in-house professionals, employees and related administrative personnel, (including personnel of the Advisor responsible for conducting reconciliation, portfolio compliance and reporting or otherwise for implementing, maintaining and supervising the procedures relating to the books and records of the Company) inclusive of their allocated overhead (including all costs and expenses on account of rent and related expenses (e.g., utilities), salaries, wages, bonuses, employee benefits, furnishings and office expenses));

 

(g)

any and all fees, costs and expenses payable to the SEC, the Financial Industry Regulatory Authority (“FINRA”) or any other regulatory bodies and any fees and expenses of state securities regulatory authorities, in each case, only with respect to matters pertaining to the Company;

 

(h)

any and all costs and expenses of preparing, printing, filing, and distributing reports and notices to investors, regulatory bodies, including the SEC and FINRA, and NASDAQ and any other securities exchange, in each case, only with respect to matters pertaining to the Company;

 

(i)

any and all costs and expenses (including accounting, legal or regulatory fees and expenses) incurred to comply with any law or regulation related to the activities of the Company (including legal or regulatory fees and expenses in connection with ongoing compliance, filing and reporting obligations under the Dodd-Frank Wall Street Reform Act, Investment Company Act, or any other applicable laws, including filing fees and expenses and expenses related to the preparation and filing of regulatory filings) or incurred in connection with any litigation or governmental inquiry, investigation or proceeding involving the Company;

 

 

(j)

any and all costs and expenses incurred in connection with proxy solicitation and any meeting of the security holders, directors or committee of the Company relating to the Company (and ancillary activities related thereto);

 

(k)

any and all administration fees payable under the Administration Agreement between the Company and the Advisor in its capacity as the administrator of the Company (the “Administrator”) dated September 30, 2014 (the “Administration Agreement”);

 

(l)

to the extent allocable for the provision of the investment advisory or investment management services required to be provided to the Company by the Advisor under this Agreement, overhead costs and expenses (including all costs and expenses on account of rent and related expenses (e.g., utilities), furnishings and office expenses but, pursuant to Section 4.2, excluding wages, salaries and benefits) of the Advisor’s investment professionals;

 

(m)

any and all charges and expenses of the Company’s custodian, paying, transfer, dividend disbursing and any similar agent;

 

(n)

compensation and expenses of the Company’s directors who are not interested persons of the Company or the Advisor, and of any of the Company’s officers who are not interested persons of the Advisor; expenses of all directors or officers in attending meetings of the Board or security holders;

 

(o)

any and all costs, fees and expenses incurred in connection with the formation, organization, operation, dissolution or winding up of any special purpose vehicle of the Company;

 

(p)

any and all costs and expenses of administration, including printing, mailing, telephone, technology systems, Internet service, copying, secretarial and other staff, stationery, supplies, rent and related expenses (e.g., utilities), and all other expenses incurred by the Company or the Administrator in connection with administering the Company’s business, such as the Company’s allocable portion of overhead under the Administration Agreement;

 

(q)

any and all costs of membership by the Company or its directors or executive officers in any trade organizations and attendance at trade or industry conferences;

 

(r)

any and all expenses associated with litigation, arbitration, proceedings, investigations, disputes, claims and governmental inquiries of the Company and the handling or negotiation thereof, including the amount of any judgments, fines or settlements, and other extraordinary or non-recurring expenses except, however, to the extent such expenses or amounts have been determined to be excluded from the indemnification provided for in Section 7;

 

 

(s)

any and all insurance premiums or expenses in connection with the activities of the Company, including errors, omissions, fidelity, general partner liability, directors’ and officers’ liability and similar coverage for any person acting on behalf of the Company, the Advisor or their respective Affiliates;

 

(t)

any and all costs and expenses of marketing or offering the Company’s common stock and other securities including registering securities under federal and state securities laws and investor and media relations;

 

(u)

any and all fees, costs and expenses incurred in connection with computing the value of the assets of the Company, including the costs and expenses associated with advisors, independent pricing services and third party evaluations or appraisals of the Company or its assets or its investments;

 

(v)

any and all costs and expenses of providing significant managerial assistance offered to the Company investments;

 

(w)

any and all fees and expenses (including expenses incurred by the Advisor) payable to third parties, including accountants, agents, attorneys, consultants, or other advisors in monitoring the financial and legal affairs of the Company and the Company’s investments; and

 

(x)

any and all other fees, costs and expenses directly allocable and identifiable to the Company or its business, investments, financing or capital raising activities.

 

Notwithstanding the foregoing, the aggregate amount of costs and expenses payable (whether paid directly by the Company or by reimbursement to the Administrator) by the Company pursuant to Section 4 of the Administration Agreement and to the Advisor pursuant to this Section 4.1 (whether paid directly by the Company or by reimbursement to the Advisor) (excluding (i) interest expense, Base Management Fees and Incentive Fees payable to the Advisor pursuant to this Agreement, insurance expense and professional fees (including consulting, legal, tax, audit and engineering fees) as the Company has historically categorized such costs and expenses, (ii) all matters covered by clauses (d), (g), (h) (but, in the case of such clause (h) only, only with respect to printing, filing and distributing the reports and notices referenced therein), (i) and (r) of this Section 4.1, (iii) any fees, costs and expenses to be borne by the Company in connection with the transactions contemplated by that certain Stock Purchase and Transaction Agreement (the “SPATA”), dated as of July 21, 2014, between the Company, the Advisor and OHA BDC Investor, LLC), and (iv) for the avoidance of doubt, any and all fees, costs and expenses accrued or incurred by, or otherwise payable by the Company to, either (1) NGP Investment Advisor, LP (“NGPIA”) pursuant to that certain investment advisory agreement, dated as of November 9, 2004, by and between the Company and NGPIA, or (2) NGP Administration, LLC (“NGPA”), pursuant to the terms of that certain administration agreement, dated as of November 9, 2004, by and between the Company and NGPA), for the period beginning on the date hereof until September 30, 2015 (the “Anniversary Date”) shall not exceed $2,500,000 (the “Cap”). The foregoing shall in no way limit the Company’s indemnification obligations hereunder.

 

 

4.2 Costs and Expenses Allocated to the Advisor. The expenses to be borne by the Advisor are limited to, to the extent allocable for the provision of the investment advisory or investment management services provided to the Company by the Advisor under this Agreement, the wages, salaries, benefits and other compensation of or relating to the Advisor’s investment professionals.

 

4.3 Payment or Assumption by the Advisor. The payment or assumption by the Advisor of any expense of the Company that the Advisor is not required by this Agreement to pay or assume shall not obligate the Advisor to pay or assume the same or any similar expense of the Company on any subsequent occasion.

 

SECTION 5

 

MANAGEMENT FEES

 

5.1 Compensation for Services. In consideration of the services to be provided by the Advisor under this Agreement, the Company agrees to pay the Advisor, and the Advisor agrees to accept as compensation for the services provided hereunder, a base management fee (“Base Management Fee”) and an incentive fee (“Incentive Fee”) as hereafter set forth. The Advisor may agree to temporarily or permanently waive or defer, in whole or in part, the Base Management Fee and/or the Incentive Fee.

 

5.2 Base Management Fee. The Base Management Fee shall be equal to: (i) the Base Management Fee Rate, multiplied by (ii) the average value of the Company’s total assets for the two most recently completed fiscal quarters prior to the fiscal quarter for which such fee is being calculated. For example, for the Base Management Fee payable for the fiscal quarter ended September 30, clause (ii) of the preceding sentence shall be calculated based on the average value of the Company’s total assets for the fiscal quarters ended June 30 and March 31.

 

The Company shall pay the Base Management Fee at the end of each fiscal quarter in arrears. The “Base Management Fee Rate” shall be equal to 1.75% per year (i.e., 0.4375% per fiscal quarter). Notwithstanding the foregoing, from the date hereof until September 30, 2015, the Base Management Fee Rate shall be reduced by 0.25% per year (i.e., 0.0625% per fiscal quarter). The Base Management Fee for any partial fiscal quarter will be prorated in accordance with Section 5.4.

 

Notwithstanding the foregoing, for purposes of this Section 5.2, with respect to any fiscal quarter, cash, cash equivalents and U.S. treasury bills, in each case that are purchased by the Company with borrowed money solely for purposes of satisfying quarter-end RIC diversification requirements with respect to such fiscal quarter shall be excluded from the calculation of the Company’s total assets with respect to such fiscal quarter.

 

 

 

5.3 Incentive Fee. The Incentive Fee shall consist of two parts, as follows:

 

(a)

One part of the Incentive Fee (the “Pre-Incentive Fee Net Investment Income Fee”) will be calculated and payable quarterly in arrears based on the Pre-Incentive Fee Net Investment Income for the fiscal quarter for which such fee is being calculated and shall be payable promptly following the filing of the Company’s Quarterly Report on Form 10-Q or Annual Report on Form 10-K, as the case may be. Pre-Incentive Fee Net Investment Income, expressed as a rate of return on the value of the Company’s Net Assets at the end of the immediately preceding fiscal quarter for which such fee is being calculated, will be compared to a “Hurdle Rate” of 1.75% per quarter (i.e., 7% annualized). For example, the Pre-Incentive Fee Net Investment Income Fee payable for the fiscal quarter ended September 30 shall be calculated based on the rate of return on the value of the Company’s Net Assets as of June 30. The Company will not pay the Advisor a Pre-Incentive Fee Net Investment Income Fee in any fiscal quarter in which the Company’s Pre-Incentive Fee Net Investment Income does not exceed the Hurdle Rate. In any fiscal quarter in which the Pre-Incentive Fee Net Investment Income exceeds the Hurdle Rate, the Company shall pay to the Advisor (i) 100% of the Company’s Pre-Incentive Fee Net Investment Income with respect to that portion of such Pre-Incentive Fee Net Investment Income that exceeds the Hurdle Rate but is less than 2.1875% in any fiscal quarter (i.e., 8.75% annualized); plus (ii) 20% of the amount of the Company’s Pre-Incentive Fee Net Investment Income, if any, that exceeds 2.1875% in any fiscal quarter. “Pre-Incentive Fee Net Investment Income” means (x) interest income, dividend income, royalty payments, net profits interest payments, and any other income (including any other fees, such as commitment, origination, syndication, structuring, diligence, monitoring, and consulting fees, or other fees that the Company receives from portfolio companies) accrued by the Company during a fiscal quarter, minus (y) the Company’s operating expenses for such fiscal quarter (including the Base Management Fee, any expenses payable by the Company under the Administration Agreement, and any interest expense, and dividends paid on any issued and outstanding preferred stock, if any, of the Company, but excluding the Incentive Fee payable under this Section 5.3 during such fiscal quarter and excluding the Excluded Fees). Pre-Incentive Fee Net Investment Income does not include any Realized Capital Gains, Realized Capital Losses, Unrealized Capital Gains or Unrealized Capital Depreciation. “Net Assets” means the total assets, less total liabilities, of the Company, determined in accordance with generally accepted accounting principles consistently applied. These calculations will be appropriately prorated for any period of less than three (3) months. “Excluded Fees” means all costs, expenses and fees paid, accrued or incurred in connection with the transactions contemplated by the SPATA but which, for accounting purposes, are amortized over the course of subsequent accounting periods following the Closing (as defined in the SPATA), including the fees, costs, expenses or payments incurred in obtaining the D&O Insurance (as defined in the SPATA) and in connection with any payments by the Company of its allocable share of any payments under the retention agreement entered into by the Company’s prior administrator.

 

 

(b)

The second part of the Incentive Fee (the “Capital Gains Fee”) will be determined and payable in arrears as of the end of each fiscal year (or upon termination of this Agreement as set forth below) commencing on September 30, 2014, and will equal (i) 20% of the sum of (A) the Company’s Net Realized Capital Gains from the date hereof to the last day of such fiscal year, if any, less, (B) the amount of Unrealized Capital Depreciation on the last day of such fiscal year, if any; less (ii) the aggregate amount of Capital Gains Fee payments to the Advisor in prior fiscal years. In the event that this Agreement shall terminate as of a date that is not a fiscal year end, the termination date shall be treated as though it were a fiscal year end for purposes of calculating and paying a Capital Gains Fee.

 

The Capital Gains Fee payable for any period shall be calculated in conjunction with the completion of the Company’s Annual Report on Form 10-K for such period. The Capital Gains Fee shall be payable on the business day after the Company files its Annual Report on Form 10-K for such year.

 

The terms used in calculating the Capital Gains Fee have the following meanings:

 

“Realized Capital Gains” means with respect to a security or other asset (i) the amount by which the net amount realized from the sale or other disposition of such security or other asset, exceeds (ii) the original cost of such security or other asset as determined by the Company in accordance with generally accepted accounting principles (“GAAP’“) and the Investment Company Act.

 

“Realized Capital Losses” means with respect to a security or other asset (i) the amount by which the net amount received from the sales or other disposition of such security or other asset is less than (ii) the original cost of such security or other asset as determined by the Company in accordance with GAAP and the Investment Company Act.

 

“Net Realized Capital Gains”, for any period, means Realized Capital Gains minus Realized Capital Losses for such period (but not less than zero).

 

“Unrealized Capital Gains” means with respect to a security or other asset the amount by which the fair value of such security or other asset at the end of a fiscal year as determined by the Company in accordance with GAAP and the Investment Company Act exceeds the original cost of such security or other asset as determined by the Company in accordance with GAAP and the Investment Company Act.

 

“Unrealized Capital Depreciation” means with respect to a security or other asset the amount by which the fair value of such security or other asset at the end of a fiscal year as determined by the Company in accordance with GAAP and the Investment Company Act is less than the original cost of such security or other asset as determined by the Company in accordance with GAAP and the Investment Company Act.

 

 

Notwithstanding the foregoing, any Realized Capital Gains, Realized Capital Losses, Unrealized Capital Gains and Unrealized Capital Depreciation with respect to any and all of the securities or other assets held by the Company (directly or indirectly) on the date hereof, in each case as set forth on Schedule A hereto (an “Existing Investment”), shall be excluded from the calculations of the Capital Gains Fee for purposes of Section 5.3(b); provided, that any Realized Capital Gains, Realized Capital Losses, Unrealized Capital Gains and Unrealized Capital Depreciation resulting directly from a follow-on investment (in the form of a distinct additional purchase of the same security or asset, or other securities or assets of the same issuer) made by the Company (directly or indirectly) following the date hereof (a “Follow-On Investment”) shall be included in the calculations of the Capital Gains Fee for purposes of Section 5.3(b).

 

5.4 Proration of Fees. If this Agreement becomes effective or terminates before the end of any fiscal quarter, the Base Management Fee and Incentive Fee for the period from the effective day to the end of the fiscal quarter or from the beginning of such quarter to the date of termination, as the case may be, shall be prorated according to the proportion which such period bears to the full fiscal quarter in which such effectiveness or termination occurs. In the event that this Agreement shall terminate as of a date that is not a fiscal year end, the termination date shall be treated as though it were a fiscal year end for purposes of calculating and paying an Incentive Fee.

 

5.5 Transaction Fees. Any transaction, loan origination, advisory or similar fees (“Transaction Fees”) received in connection with the Company’s activities or the Advisor’s activities as they relate to the Company shall be the property of the Company. The parties agree that any Transaction Fees paid to the members, managers, partners or employees of the Company, the Advisor or their respective Affiliates in connection with the Company’s activities or the Advisor’s activities as they relate specifically to the Company shall be promptly remitted to the Company; provided, however, Transaction Fees received in respect of an investment opportunity in which the Company and one or more entities (including Affiliates of the Advisor) in accordance with the Investment Company Act participate shall be allocated to each of the Company and such entities pro rata in accordance with their respective investments or proposed investments in such investment opportunity.

 

SECTION 6

 

LIMITATION OF LIABILITY OF THE ADVISOR

 

The Advisor (and its affiliates and direct or indirect partners and its and their officers, managers, agents, employees, controlling persons, members, and any other person or entity affiliated with the Advisor including its general partner (collectively, “Affiliates”)), shall not be liable to the Company, or any security holder of the Company, for any error of judgment, mistake of law, any loss or damage with respect to any investment of the Company, or any action taken or omitted to be taken by the Advisor in connection with the performance of any of its duties or obligations under this Agreement or otherwise as an investment advisor of the Company, except to the extent specified in Section 36(b) of the Investment Company Act concerning loss resulting from a breach of fiduciary duty (as the same is finally determined by judicial proceedings) with respect to the receipt of compensation for services.

 

 

SECTION 7

 

INDEMNIFICATION OF THE ADVISOR

 

The Company shall indemnify, defend and protect the Advisor (and its Affiliates, each of whom shall be deemed a third party beneficiary hereof) (collectively, the “Indemnified Parties”) and hold them harmless from and against all damages, liabilities, costs, and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred by the Indemnified Parties in or by reason of any pending, threatened, or completed action, suit, investigation, or other proceeding whether civil, criminal, administrative, or investigative (including an action or suit by or in the right of the Company or its security holders) arising out of, relating to or otherwise based upon the performance of any of the Advisor’s duties or obligations under this Agreement or serving as an investment advisor of the Company (collectively, the “Indemnified Expenses”). Notwithstanding Section 6 to the contrary, nothing contained herein shall protect or be deemed to protect the Indemnified Parties against or entitle or be deemed to entitle the Indemnified Parties to indemnification in respect of, any liability to the Company or its security holders to which the Indemnified Parties would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of the Advisor’s duties or by reason of the reckless disregard of the Advisor’s duties and obligations under this Agreement (as determined in accordance with the Investment Company Act and the interpretations and guidance of the SEC or its staff thereunder). Notwithstanding any termination of this Agreement, the provisions of this Section 7 of this Agreement shall remain in full force and effect, and the Indemnified Parties shall remain entitled to the benefits thereof. The satisfaction of any indemnification and any holding harmless hereunder shall be from and limited to assets of the Company. Notwithstanding the foregoing, absent a court determination that the person seeking indemnification was liable by reason of “disabling conduct” within the meaning of Section 17(h) of the Investment Company Act, the decision by the Company to indemnify such person shall be based upon the reasonable determination, based upon a review of the facts, that such person was not liable by reason of such disabling conduct, by (a) the vote of a majority of a quorum of directors of the Company who are neither “interested persons” of the Company as defined in Section 2(a)(19) of the Investment Company Act nor parties to such action, suit, or proceeding or (b) an independent legal counsel in a written opinion.

 

Expenses incurred by the Advisor in defending an actual or threatened civil or criminal action, suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit, or proceeding upon receipt of an undertaking by or on behalf of the Advisor to repay such amount if it shall ultimately be determined that the Advisor is not entitled to be indemnified by the Company as authorized in this Section 7, provided that at least one of the following conditions precedent has occurred in the specific case: (a) the Advisor has provided security for its undertaking; (b) the Company is insured against losses arising by reason of any lawful advances; or (c) a majority of a quorum of disinterested non-party directors of the Company or an independent legal counsel in a written opinion shall determine, based upon a review of the readily available facts, that there is reason to believe that the Advisor ultimately will be found entitled to indemnification. The advancement and indemnification provisions in this Section 7 shall apply to all threatened, pending, and completed actions, suits, or proceedings in which the Advisor is a party or is threatened to be made a party during the term of this Agreement.

 

 

For purposes of this Section 7, any provision hereof applicable to the Advisor shall also be applicable to any person serving as a direct or indirect partner of the Advisor or any of their directors, officers, employees, agents, members, committee members, controlling persons or Affiliates of the Advisor or any of the foregoing if such person is made a party or is threatened to be made a party to a threatened, pending, or completed action, suit, or proceeding in such capacity. The indemnification and advancement provisions of this Section 7 shall be independent of and in addition to any indemnification and advancement provisions that may apply to any director, officer, employee, agent or Affiliate of the Advisor because of any other position that such person may hold with the Company.

 

The Company hereby acknowledges that Indemnified Parties may have certain rights to indemnification, advancement of expenses and/or insurance provided by one or more of their Affiliates or other persons (collectively, the “Other Indemnitors”). The Company hereby agrees (i) that it is the indemnitor of first resort (i.e., its obligations to Indemnified Parties are primary and any obligation of the Other Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnified Parties are secondary), (ii) that it shall be required to advance the full amount of expenses incurred by Indemnified Parties to the extent set forth herein and shall be liable for the full amount of all Indemnified Expenses to the extent legally permitted and as required by the terms of this Agreement (or any other agreement between the Company and Indemnified Parties), without regard to any rights Indemnified Parties may have against the Other Indemnitors, and (iii) that it irrevocably waives, relinquishes and releases the Other Indemnitors from any and all claims against the Other Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Other Indemnitors on behalf of Indemnified Parties with respect to any claim for which Indemnified Parties have sought indemnification from the Company shall affect the foregoing and the Other Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnified Parties against the Company. The Company and Indemnified Parties agree that the Other Indemnitors are express third party beneficiaries of the terms of this Section 7.

 

SECTION 8

 

DURATION AND TERMINATION

 

8.1 Duration. This Agreement shall become effective as of the date hereof and shall continue in effect until September 30, 2016, and subsequently for successive periods of one year, subject to the provisions for termination and all of the other terms and conditions hereof if such continuation shall be specifically approved at least annually (a) by the vote of a majority of the directors of the Company, cast in person at a meeting called for that purpose, or by the vote of a majority of the outstanding voting securities of the Company and (b) by the vote of a majority of the Company’s directors who are not “interested persons” (as such term is defined in Section 2(a)(19) of the Investment Company Act) of the Company, in accordance with the requirements of the Investment Company Act.

 

8.2 Termination. This Agreement may be terminated at any time, without payment of any penalty, by the Board or by the shareholders of the Company acting by the vote of at least a majority of the outstanding voting securities of the Company, provided in either case that 60 days’ written notice of termination be given to the Advisor at its principal place of business. The Advisor may also terminate this Agreement at any time by giving 60 days’ written notice of termination to the Company, addressed to its principal place of business, without liability.

 

 

8.3 Effect of Termination or Expiration. The provisions of Sections 6 and 7 shall remain in full force and effect and the Advisor and its representatives shall remain entitled to the benefits thereof, notwithstanding any termination or expiration of this Agreement. Further, notwithstanding the termination or expiration of this Agreement, the Advisor shall be entitled to (a) any amounts owed under Section 5 for the period prior to the termination or expiration of this Agreement, and (b) all expenses payable under Section 4.1 for the period prior to the termination or expiration of this Agreement and expenses incurred by the Advisor as a result of the termination or expiration of this Agreement.

 

SECTION 9

 

GENERAL PROVISIONS

 

9.1 Notice. Any notice under this Agreement shall be in writing, addressed and delivered or mailed, postage prepaid, to the other party at such address as such other party may designate for the receipt of such notice.

 

9.2 Required Notice. The Advisor, or a representative thereof, shall promptly notify the Company upon changes in the direct owners of the Advisor promptly following such change, to the extent such notification is required by the Advisers Act.

 

9.3 Proprietary Rights. The Advisor shall have proprietary rights in the Company’s new name and any related logos, which new name and logos shall be selected and approved by the Advisor, in its sole and exclusive discretion, promptly following the date hereof. The Company acknowledges and agrees that the Advisor may, in its sole and exclusive discretion, (i) cause the Company to change its name or use of any logos at any time during which the Advisor is the investment advisor to the Company, and (ii) withdraw from the Company any and all right, title, grant, license, authorization, or any other permissive use of any and all proprietary rights in such names, trademarks or logos or any other names or trademarks incorporating the Advisor’s, or any of its Affiliates’, names, trademarks or logos should (A) the Advisor cease to act as the investment advisor to the Company, or (B) the Company give notice of its intent to terminate the Advisor as the investment advisor to the Company.

 

9.4 Notice of Filing of Articles of Incorporation. All parties hereto are expressly put on notice of the Company’s Articles of Incorporation and all amendments thereto, all of which are on file with the State Department of Assessments and Taxation of the State of Maryland, and the limitation of director, officer, agent, employee, and security holder liability contained therein. This Agreement has been executed by and on behalf of the Company by its representatives as such representatives and not individually, and the obligations of the Company hereunder are not binding upon any of the directors, officers, agents, employees, or security holders of the Company individually but are binding upon only the assets and property of the Company.

 

 

9.5 Amendment of this Agreement. This Agreement may be amended by the mutual consent of the parties in writing, but the consent of the Company must be obtained in accordance with the requirements of the Investment Company Act.

 

9.6 Assignment. This Agreement may not be assigned by either party hereto and shall terminate automatically in the event of any assignment (within the meaning of the Investment Company Act) of this Agreement. Notwithstanding the foregoing, the Advisor may assign this agreement, consistent with the Investment Company Act and applicable law, to any of its Affiliates without the consent of the Company.

 

9.7 Governing Law. This Agreement shall be construed in accordance with the laws of the State of New York, without giving effect to the conflicts of laws principles thereof, and in accordance with the Investment Company Act. To the extent that the applicable laws of the State of New York conflict with the applicable provisions of the Investment Company Act, the Investment Company Act shall control. Each party hereto agrees that it shall bring any action or proceeding in respect of any claim arising out of or related to this Agreement exclusively in the United States District Court for the Southern District of New York or, if such court does not have jurisdiction, the Commercial Division of the New York Supreme Court, New York County (the “Chosen Courts”), and solely in connection with claims arising under this Agreement (a) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (b) waives any objection to laying venue in any such action or proceeding in the Chosen Courts, (c) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party hereto and (d) agrees that service of process upon such party in any such action or proceeding shall be effective if notice is given in accordance with Section 9.1 of this Agreement.

 

9.8 Miscellaneous. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule, or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors. As used in this Agreement, the terms “majority of the outstanding voting securities,” “affiliated person,” “interested person, “assignment,” “investment advisor,” “security,” and “making available significant managerial assistance” shall have the same meaning as such terms have in the Investment Company Act, subject to such exemption as may be granted by the Commission by any rule, regulation, or order. Where the effect of a requirement of the Investment Company Act reflected in any provision of this Agreement is relaxed by a rule, regulation, or order of the Commission, whether of special or general application, such provision shall be deemed to incorporate the effect of such rule, regulation, or order. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. The neuter pronoun, as used herein, includes the masculine, feminine and neuter gender. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import. “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder.

 

 

 

9.9 Electronic Delivery of Information. The Advisor shall be entitled, to the extent permitted by applicable law and regulations and the Company’s policies, to transmit statements, reports, privacy notices and any other documents, information or communications (collectively, the “Investment Documents”) relating to this Agreement to the Company’s security holders (a) solely by means of granting the Company’s security holders access to an internet website designated by the Advisor (the “Reporting Site”), with such parameters regarding access and availability of information for review as the Advisor deems reasonably necessary to protect the confidentiality and proprietary nature of the information contained therein (including, without limitation, establishing password protections for access to the Reporting Site), (b) through electronic mail to the e-mail addresses provided by the Company’s security holders to the Advisor, (c) via facsimile or (d) via other electronic means. The Advisor shall notify the Company’s security holders that such Investment Documents are available on the Reporting Site for viewing, printing and downloading. The Company’s security holders shall have the right to obtain upon request to the Advisor written copies of the Investment Documents contained on the Reporting Site.

 

9.10 Entire Agreement. This Agreement is the entire contract between the parties relating to the subject matter hereof and supersedes all prior agreements between the parties relating to the subject matter hereof.

 

 

[Signature pages follow.]

 

 

 

IN WITNESS WHEREOF, the Company and the Advisor have caused this Agreement to be executed as of the day and year first above written.

 

	NGP CAPITAL RESOURCES COMPANY
	By:
		Name: Title:
	OAK HILL ADVISORS, L.P.
	By: Oak Hill Advisors GenPar, L.P.,
	its general partner
	By: Oak Hill Advisors MGP, Inc.,
	its managing general partner
	By:
		Name: Glenn R. August Title: President

 

 

 

[Signature Page to Investment Advisory Agreement]

 

Exhibit 10.2

 

EXECUTION COPY

 

ADMINISTRATION AGREEMENT

 

THIS AGREEMENT dated as of September 30, 2014 (this “Agreement”), by and between NGP Capital Resources Company, a Maryland corporation (the “Company”), and Oak Hill Advisors, L.P., a Delaware limited partnership (the “Administrator”).

 

WHEREAS, the Company is a closed-end, non-diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940, as amended (the “Investment Company Act”), and has further elected to be treated as a regulated investment company (“RIC”) for tax purposes; and

 

WHEREAS, the Company deems it advisable to retain the Administrator to furnish certain administrative services to the Company, and the Administrator wishes to be retained to provide such services, on the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants hereinafter contained and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Company and the Administrator hereby agree as follows:

 

SECTION 1

 

DUTIES OF THE ADMINISTRATOR

 

1.1 Engagement of Administrator. Commencing on the date hereof, the Company engages and retains the Administrator to act as administrator of the Company, and to provide, or arrange for suitable third parties to provide, the administrative services, personnel, and facilities described below, subject to supervision of the Board of Directors of the Company (the “Board”), for the period and on the terms and conditions set forth in this Agreement. The Administrator hereby accepts such engagement and agrees during such period to provide, or arrange for suitable third parties to provide, such services and to assume the obligations herein set forth subject to the reimbursement of costs and expenses provided for below. The Administrator and such others shall for all purposes herein be deemed to be independent contractors and shall, unless otherwise expressly provided or authorized herein, have no authority to act for or represent the Company in any way or otherwise be deemed agents of the Company.

 

1.2 Services. Except to the extent that the provision of any such service is allocated to the Administrator pursuant to the Investment Advisory Agreement dated September 30, 2014 (the “Advisory Agreement”), between the Company and the Administrator in its capacity as the investment advisor of the Company (the “Advisor”), the Administrator shall provide (or oversee, or arrange for, suitable third parties to provide) all administrative services necessary for the operation of the Company and the conduct of its business. Such administrative services shall include the following:

 

(a)

providing the Company with such office space, equipment, facilities, and supplies; the services of such clerical, bookkeeping, record keeping, and other personnel of the Administrator; and such other services as the Administrator, subject to review by the Board, shall from time to time determine to be necessary, useful, or required for the reasonable conduct of the business of the Company;

 

 

(b)

on behalf of the Company, conducting relations with custodians, depositories, transfer agents, dividend disbursing agents, other security holder servicing agents, accountants, auditors, attorneys, underwriters, brokers and dealers, regulatory bodies, corporate fiduciaries, insurers, banks, consultants, investors and prospective investors of the Company, and such other persons in any such other capacity as may be requested by the Company or may be reasonably necessary or desirable for the conduct of the business of the Company;

 

(c)

making reports to the Board of its performance of obligations hereunder and furnishing advice and recommendations with respect to such other aspects of the business and affairs of the Company as it shall determine to be desirable; provided that nothing herein shall be construed to require the Administrator to, and the Administrator shall not, pursuant to this Agreement, provide any advice or recommendation relating to the securities and other assets that the Company should purchase, retain, or sell or any other investment advisory services to the Company;

 

(d)

maintaining the financial and other books and records that the Company is required to maintain; preparing such accounting and other reports and documents as may be necessary or appropriate for the reasonable conduct of the business of the Company, and preparing reports to security holders, and reports and other materials filed with the Securities and Exchange Commission (the “SEC”), the Financial Industry Regulatory Authority (“FINRA”) or any other regulatory body;

 

(e)

providing on the Company’s behalf significant managerial assistance to those portfolio companies to which the Company is required to make available such assistance;

 

(f)

assisting the Company in determining and publishing the Company’s net asset value and the preparation and filing of the Company’s tax returns, and the printing and dissemination of reports to investors of the Company, and generally assisting in the payment of the Company’s expenses and the performance of administrative, professional and other services rendered to the Company by others; and

 

(g)

providing such other administrative services with respect to the business and affairs of the Company as the Administrator shall deem to be desirable or appropriate.

 

1.3 Legal Compliance; Workers’ Compensation Insurance. In performing its services under this Agreement, the Administrator shall comply with all applicable provisions of the Investment Company Act, federal law, and New York laws, including all laws relating to the provision of services and employment laws. The Company shall not be considered to be an employer or co-employer of the employees of the Administrator for any purpose. The Administrator shall carry workers’ compensation insurance coverage for its employees.

 

 

1.4 Sub-Administrators. The Administrator is authorized to enter into one or more sub-administration agreements with other service providers (each a “Sub-Administrator”) pursuant to which the Administrator may obtain the services of the service providers in fulfilling its responsibilities hereunder. Any such sub-administration agreement shall be in accordance with the requirements of the Investment Company Act and other applicable federal and state law and shall contain a provision requiring the Sub-Administrator to comply with Sections 2 and 3 below as if it were the Administrator.

  

SECTION 2

 

RECORDS

 

2.1 Records. The Administrator agrees to maintain and keep all books, accounts, and other records of the Company that relate to activities performed by the Administrator hereunder and, if required by the Investment Company Act, will maintain and keep such books, accounts, and records in accordance with such Act. In compliance with the requirements of Rule 31a-3 under the Investment Company Act, the Administrator agrees that all records which it maintains for the Company shall at all times remain the property of the Company, shall be readily accessible during normal business hours, and shall be promptly surrendered upon the termination of the Agreement or otherwise on written request. The Administrator further agrees that all records that it maintains for the Company pursuant to Rule 31a-1 under the Investment Company Act will be preserved for the periods prescribed by Rule 31a-2 under the Investment Company Act unless any such records are earlier surrendered as provided above. Records shall be surrendered in usable machine-readable form. The Administrator shall have the right to retain copies of such records subject to observance of its confidentiality obligations under this Agreement.

 

2.2 Compliance Program. The Administrator has adopted and implemented written policies and procedures reasonably designed to prevent violation of the Federal Securities Laws (as defined in Rule 38a-1 under the Investment Company Act) by the Administrator. The Administrator has provided the Company, and shall in the future provide the Company, at such times as the Company may reasonably request, with a copy of such policies and procedures. In addition, the Administrator shall provide to the Company, at such time as the Company may reasonably request, a written report that addresses the operation of the policies and procedures; such report shall be of sufficient scope and sufficient detail, as may reasonably be required to comply with Rule 38a-1 and to provide reasonable assurance that any material weaknesses in the design or implementation of the policies and procedures would be disclosed by such examination, and, if there are no such weaknesses, the report shall so state.

 

SECTION 3

 

CONFIDENTIALITY

 

The parties hereto agree that each shall treat confidentially all information provided by each party to the other regarding its business and operations. All confidential information provided by a party hereto, including nonpublic personal information pursuant to Regulation S-P of the SEC, shall be used by any other party hereto solely for the purpose of rendering services pursuant to this Agreement and, except as may be required in carrying out this Agreement, shall not be disclosed to any third party, without the prior written consent of such providing party. The foregoing shall not be applicable to any information that is publicly available when provided or thereafter becomes publicly available other than through a breach of this Agreement, or that is required to be disclosed by any regulatory authority, any authority or legal counsel of the parties hereto, by judicial or administrative process, or otherwise by applicable law or regulation.

 

 

SECTION 4

 

COMPENSATION; ALLOCATION OF COSTS AND EXPENSES

 

In full consideration of the provision of the services of the Administrator pursuant to this Agreement, the Company shall pay directly or promptly reimburse the Administrator for all costs and expenses incurred by the Administrator in performing its obligations and providing personnel and facilities hereunder. The Company will bear all costs and expenses that are incurred in its operation and transactions and not specifically assumed by the Advisor pursuant to the Advisory Agreement, including any and all fees payable pursuant to the Advisory Agreement and those relating to:

 

(a)

any and all fees, costs and expenses incurred in connection with the origination, evaluation, discovery, investigation, development, negotiation or monitoring of transactions (whether or not consummated), including loan fees, private placement fees, brokerage and sales commissions, oversight servicer and servicer fees (including fixed and/or performance fees), appraisal fees, research fees, dealer spreads, interest and clearing and settlement charges, commitment fees, transfer taxes and premiums, underwriting commissions and discounts, expenses relating to short sales, fees and expenses related to market data (including expenses incurred in connection with any multimedia, analytical, database, news or third-party research or information services and any computer hardware and connectivity hardware (e.g., terminals and telephone and fiber optic lines) incorporated into the cost of obtaining such research and market data), legal, accounting, auditing, investment banking, third-party industry and due diligence experts (including for credit and risk analytics, loss mitigation, real estate and real estate related matters), finders, originators, consulting (including fixed and/or performance fees), filing and other professional fees, communications (including internet access fees and cellular phone charges associated with the Advisor’s investment professionals), travel, and all other expenses (including fees, costs and expenses payable to Affiliates of the Administrator) related to the origination, evaluation, discovery, investigation, development, negotiation or monitoring of potential or actual transactions (whether or not consummated);

 

(b)

any and all fees, costs and expenses incurred in connection with the carrying or management of investments, including custodial, trustee, record keeping and other administration fees and expenses, operations fees and expenses and reconciliation expenses;

 

 

(c)

any and all fees, costs and expenses incurred in implementing or maintaining third-party or proprietary software tools, programs or other technology for the benefit of the Company (including any and all costs and expenses of any investment, books and records, portfolio compliance and reporting systems such as “Wall Street Office,” “Everest” (Black Mountain) and similar systems and services, including consultant, software licensing, data management and recovery services fees and expenses);

 

(d)

federal, state, and local taxes and fees and governmental charges, including transfer taxes, premiums and entity-level taxes and filing fees, incurred by, levied upon or payable by the Company;

 

(e)

any and all costs and expenses incurred in connection with the incurrence of indebtedness, including borrowings, dollar rolls, reverse purchase agreements, credit facilities, securitizations, margin financing and derivatives and swaps;

 

(f)

any and all costs and expenses (including fees and disbursements) of attorneys, auditors, accountants and consultants relating to Company matters, including expenses incident to the documentation for, and consummation of, transactions (including costs and expenses of in-house professionals, employees and related administrative personnel, (including personnel of the Administrator responsible for conducting reconciliation, portfolio compliance and reporting or otherwise for implementing, maintaining and supervising the procedures relating to the books and records of the Company) inclusive of their allocated overhead (including all costs and expenses on account of rent and related expenses (e.g., utilities), salaries, wages, bonuses, employee benefits, furnishings and office expenses));

 

(g)

any and all fees, costs and expenses payable to the SEC, FINRA or any other regulatory bodies and any fees and expenses of state securities regulatory authorities, in each case, only with respect to matters pertaining to the Company;

 

(h)

any and all costs and expenses of preparing, printing, filing, and distributing reports and notices to investors, regulatory bodies, including the SEC and FINRA, and NASDAQ and any other securities exchange, in each case, only with respect to matters pertaining to the Company;

 

(i)

any and all costs and expenses (including accounting, legal or regulatory fees and expenses) incurred to comply with any law or regulation related to the activities of the Company (including legal or regulatory fees and expenses in connection with ongoing compliance, filing and reporting obligations under the Dodd-Frank Wall Street Reform Act, Investment Company Act, or any other applicable laws, including filing fees and expenses and expenses related to the preparation and filing of regulatory filings) or incurred in connection with any litigation or governmental inquiry, investigation or proceeding involving the Company;

 

 

(j)

any and all costs and expenses incurred in connection with proxy solicitation and any meeting of the security holders, directors or committee of the Company relating to the Company (and ancillary activities related thereto);

 

(k)

to the extent allocable for the provision of the investment advisory or investment management services required to be provided to the Company by the Advisor under the Advisory Agreement, overhead costs and expenses (including all costs and expenses on account of rent and related expenses (e.g., utilities), furnishings and office expenses but, pursuant to Section 4.2 of the Advisory Agreement, excluding wages, salaries and benefits) of the Advisor’s investment professionals;

 

(l)

any and all charges and expenses of the Company’s custodian, paying, transfer, dividend disbursing and any similar agent;

 

(m)

compensation and expenses of the Company’s directors who are not interested persons of the Company or the Advisor, and of any of the Company’s officers who are not interested persons of the Advisor; expenses of all directors or officers in attending meetings of the Board or security holders;

 

(n)

any and all costs, fees and expenses incurred in connection with the formation, organization, operation, dissolution or winding up of any special purpose vehicle of the Company;

 

(o)

any and all costs and expenses of administration, including printing, mailing, telephone, technology systems, Internet service, copying, secretarial and other staff, stationery, supplies, rent and related expenses (e.g., utilities), and all other expenses incurred by the Company or the Administrator in connection with administering the Company’s business, such as the Company’s allocable portion of overhead under this Agreement;

 

(p)

any and all costs of membership by the Company or its directors or executive officers in any trade organizations and attendance at trade or industry conferences;

 

(q)

any and all expenses associated with litigation, arbitration, proceedings, investigations, disputes, claims and governmental inquiries of the Company and the handling or negotiation thereof, including the amount of any judgments, fines or settlements, and other extraordinary or non-recurring expenses except, however, to the extent such expenses or amounts have been determined to be excluded from the indemnification provided for in Section 6;

 

(r)

any and all insurance premiums or expenses in connection with the activities of the Company, including errors, omissions, fidelity, general partner liability, directors’ and officers’ liability and similar coverage for any person acting on behalf of the Company, the Administrator or their respective Affiliates;

 

 

(s)

any and all costs and expenses of marketing or offering the Company’s common stock and other securities including registering securities under federal and state securities laws and investor and media relations;

 

(t)

any and all fees, costs and expenses incurred in connection with computing the value of the assets of the Company, including the costs and expenses associated with advisors, independent pricing services and third party evaluations or appraisals of the Company or its assets or its investments;

 

(u)

any and all costs and expenses of providing significant managerial assistance offered to the Company investments;

 

(v)

any and all fees and expenses (including expenses incurred by the Administrator) payable to third parties, including accountants, agents, attorneys, consultants, or other advisors in monitoring the financial and legal affairs of the Company and the Company’s investments;

 

(w)

any and all other fees, costs and expenses directly allocable and identifiable to the Company or its business, investments, financing or capital raising activities; and

 

(x)

any and all other costs and expenses incurred by the Company or the Administrator in connection with the administration of the Company’s business, including payments under this Agreement, based upon the Company’s allocable portion of internal and external overhead and other expenses incurred by the Administrator in performing its obligations under this Agreement, including occupancy, utilities, technology systems, software, data services, printing, mailing, telephone, copying, secretarial and other administrative staff, and office supplies, furniture, and equipment, and the allocable portion of the cost of the Company’s chief compliance officer and chief financial officer and their respective staffs and other personnel directly involved in the investor and media relations, capital raising or general management activities of the Company.

 

Notwithstanding the foregoing, the aggregate amount of costs and expenses payable (whether paid directly by the Company or by reimbursement to the Administrator) by the Company pursuant to this Section 4 and to the Advisor pursuant to Section 4.1 of the Advisory Agreement (whether paid directly by the Company or by reimbursement to the Advisor) (excluding (i) interest expense, Base Management Fees and Incentive Fees (as those terms are defined in the Advisory Agreement) payable to the Advisor pursuant to the Advisory Agreement, insurance expense and professional fees (including consulting, legal, tax, audit and engineering fees) as the Company has historically categorized such costs and expenses, (ii) all matters covered by clauses (d), (g), (h) (but, in the case of such clause (h) only, only with respect to printing, filing and distributing the reports and notices referenced therein), (i) and (q) of this Section 4, (iii) any fees, costs and expenses to be borne by the Company in connection with the transactions contemplated by that certain Stock Purchase and Transaction Agreement (the “SPATA”), dated as of July 21, 2014, between the Company, the Administrator and OHA BDC Investor, LLC and (iv) for the avoidance of doubt, any and all fees, costs and expenses accrued or incurred by, or otherwise payable by the Company to, either (1) NGP Investment Advisor, LP (“NGPIA”) pursuant to that certain investment advisory agreement, dated as of November 9, 2004, by and between the Company and NGPIA, or (2) NGP Administration, LLC (“NGPA”), pursuant to the terms of that certain administration agreement, dated as of November 9, 2004, by and between the Company and NGPA), for the period beginning on the date hereof until September 30, 2015 (the “Anniversary Date”), shall not exceed $2,500,000 (the “Cap”). The foregoing shall in no way limit the Company’s indemnification obligations hereunder.

 

 

SECTION 5

 

LIMITATION OF LIABILITY OF THE ADMINISTRATOR

 

The Administrator (and its affiliates and direct or indirect partners and its and their officers, managers, agents, employees, controlling persons, members, and any other person or entity affiliated with the Administrator including its general partner (collectively, “Affiliates”)), shall not be liable to the Company, or any security holder of the Company, for any action taken or omitted to be taken by the Administrator in connection with the performance of any of its duties or obligations under this Agreement or otherwise as administrator for the Company.

 

SECTION 6

 

INDEMNIFICATION

 

6.1 Indemnification of the Administrator. The Company shall indemnify, defend and protect the Administrator (and its Affiliates, each of whom shall be deemed a third party beneficiary hereof) (collectively, the “Indemnified Parties”) and hold them harmless from and against all damages, liabilities, costs, and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred by the Indemnified Parties in or by reason of any pending, threatened, or completed action, suit, investigation, or other proceeding whether civil, criminal, administrative, or investigative (including an action or suit by or in the right of the Company or its security holders) arising out of, relating to or otherwise based upon the performance of any of the Administrator’s duties or obligations under this Agreement or serving as an administrator of the Company (collectively, the “Indemnified Expenses”). Notwithstanding Section 5 to the contrary, nothing contained herein shall protect or be deemed to protect the Indemnified Parties against or entitle or be deemed to entitle the Indemnified Parties to indemnification in respect of, any liability to the Company or its security holders to which the Indemnified Parties would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance of the Administrator’s duties or by reason of the reckless disregard of the Administrator’s duties and obligations under this Agreement (as determined in accordance with the Investment Company Act and the interpretations and guidance of the SEC or its staff thereunder). Notwithstanding any termination of this Agreement, the provisions of this Section 6 of this Agreement shall remain in full force and effect, and the Indemnified Parties shall remain entitled to the benefits thereof. The satisfaction of any indemnification and any holding harmless hereunder shall be from and limited to assets of the Company. Notwithstanding the foregoing, absent a court determination that the person seeking indemnification was liable by reason of “disabling conduct” within the meaning of Section 17(h) of the Investment Company Act, the decision by the Company to indemnify such person shall be based upon the reasonable determination, based upon a review of the facts, that such person was not liable by reason of such disabling conduct, by (a) the vote of a majority of a quorum of directors of the Company who are neither “interested persons” of the Company as defined in Section 2(a)(19) of the Investment Company Act nor parties to such action, suit, or proceeding or (b) an independent legal counsel in a written opinion.

 

 

Expenses incurred by the Administrator in defending an actual or threatened civil or criminal action, suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit, or proceeding upon receipt of an undertaking by or on behalf of the Administrator to repay such amount if it shall ultimately be determined that the Administrator is not entitled to be indemnified by the Company as authorized in this Section 6, provided that at least one of the following conditions precedent has occurred in the specific case: (a) the Administrator has provided security for its undertaking; (b) the Company is insured against losses arising by reason of any lawful advances; or (c) a majority of a quorum of disinterested non-party directors of the Company or an independent legal counsel in a written opinion shall determine, based upon a review of the readily available facts, that there is reason to believe that the Administrator ultimately will be found entitled to indemnification. The advancement and indemnification provisions in this Section 6 shall apply to all threatened, pending, and completed actions, suits, or proceedings in which the Administrator is a party or is threatened to be made a party during the term of this Agreement.

 

For purposes of this Section 6, any provision hereof applicable to the Administrator shall also be applicable to any person serving as a direct or indirect partner of the Administrator or any of their directors, officers, employees, agents, members, committee members, controlling persons or Affiliates of the Administrator or any of the foregoing if such person is made a party or is threatened to be made a party to a threatened, pending, or completed action, suit, or proceeding in such capacity. The indemnification and advancement provisions of this Section 6 shall be independent of and in addition to any indemnification and advancement provisions that may apply to any director, officer, employee, agent, or Affiliate of the Administrator because of any other position that such person may hold with the Company.

 

The Company hereby acknowledges that Indemnified Parties may have certain rights to indemnification, advancement of expenses and/or insurance provided by one or more of their Affiliates or other persons (collectively, the “Other Indemnitors”). The Company hereby agrees (i) that it is the indemnitor of first resort (i.e., its obligations to Indemnified Parties are primary and any obligation of the Other Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnified Parties are secondary), (ii) that it shall be required to advance the full amount of expenses incurred by Indemnified Parties to the extent set forth herein and shall be liable for the full amount of all Indemnified Expenses to the extent legally permitted and as required by the terms of this Agreement (or any other agreement between the Company and Indemnified Parties), without regard to any rights Indemnified Parties may have against the Other Indemnitors, and (iii) that it irrevocably waives, relinquishes and releases the Other Indemnitors from any and all claims against the Other Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Other Indemnitors on behalf of Indemnified Parties with respect to any claim for which Indemnified Parties have sought indemnification from the Company shall affect the foregoing and the Other Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnified Parties against the Company. The Company and Indemnified Parties agree that the Other Indemnitors are express third party beneficiaries of the terms of this Section 6.

 

 

SECTION 7

 

ACTIVITIES OF THE ADMINISTRATOR

 

The obligations of the Administrator to the Company and the services furnished by the Administrator to the Company hereunder are not exclusive. The Administrator and its Affiliates may (a) provide the same or similar services to others (including others whose business may be in direct or indirect competition with the business of the Company and serving as a manager of other investors), work for other contractors, or send helpers to work for other contractors, during the term of this Agreement and (b) hire as many helpers as the Administrator desires and determine what each helper is paid. It is contemplated that from time to time one or more Affiliates of the Administrator may serve as directors, officers, or employees of the Company or otherwise have an interest or affiliation with the Company or have the same or similar relationships with competitors of the Company. Nothing in this Agreement shall limit or restrict the right of any manager, officer, agent, or employee of the Administrator or its Affiliates, who may also be a manager, officer, agent, or employee of the Company, to engage in any other business or to devote his or her time and attention in part to the management or other aspects of any other business (including serving as a manager of other investors), whether of a similar nature or dissimilar nature. Neither the Administrator nor any of its Affiliates shall in any manner be liable to the Company by reason of the foregoing activities of the Administrator or such Affiliate.

 

SECTION 8

 

DURATION AND TERMINATION OF THE AGREEMENT

 

8.1 Duration. This Agreement shall become effective as of the date hereof, and shall continue in effect until September 30, 2016, and subsequently for successive periods of one year, subject to the provisions for termination and all of the other terms and conditions hereof if such continuation shall be specifically approved at least annually (a) by the vote of a majority of the directors of the Company and (b) by the vote of a majority of the Company’s directors who are not “interested persons” (as such term is defined in Section 2(a)(19) of the Investment Company Act) of the Company, in accordance with the requirements of the Investment Company Act.

 

8.2 Termination. This Agreement may be terminated at any time, without payment of any penalty, by the Board, provided that 60 days’ written notice of termination be given to the Administrator at its principal place of business. The Administrator may also terminate this Agreement at any time by giving 60 days’ written notice of termination to the Company, addressed to its principal place of business, without liability.

 

8.3 Effect of Termination or Expiration. The provisions of Sections 5 and 6 shall remain in full force and effect and the Administrator and its representatives shall remain entitled to the benefits thereof, notwithstanding any termination or expiration of this Agreement. Further, notwithstanding the termination or expiration of this Agreement, the Administrator shall be entitled to (a) any amounts owed under Section 4 for the period prior to the date of termination or expiration of this Agreement, and (b) all expenses payable under Section 4 for the period prior to the termination or expiration of this Agreement and expenses incurred by the Administrator as a result of the termination or expiration of this Agreement.

 

 

SECTION 9

 

GENERAL PROVISIONS

 

9.1 Governing Law. This Agreement shall be construed in accordance with the laws of the State of New York, without giving effect to the conflicts of laws principles thereof, and in accordance with the applicable provisions of the Investment Company Act, if any. To the extent that the applicable laws of the State of New York conflict with the applicable provisions of the Investment Company Act, if any, the Investment Company Act shall control. Each party hereto agrees that it shall bring any action or proceeding in respect of any claim arising out of or related to this Agreement exclusively in the United States District Court for the Southern District of New York or, if such court does not have jurisdiction, the Commercial Division of the New York Supreme Court, New York County (the “Chosen Courts”), and solely in connection with claims arising under this Agreement (a) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (b) waives any objection to laying venue in any such action or proceeding in the Chosen Courts, (c) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party hereto and (d) agrees that service of process upon such party in any such action or proceeding shall be effective if notice is given in accordance with Section 9.4 of this Agreement.

 

9.2 Entire Agreement. This Agreement is the entire contract between the parties relating to the subject matter hereof and supersedes all prior agreements between the parties relating to the subject matter hereof. In the case of any conflicts between the provisions of this Agreement and the Advisory Agreement, the provisions of the Advisory Agreement shall govern.

 

9.3 Amendment. This Agreement may be amended pursuant to a written instrument by mutual consent of the parties.

 

9.4 Notices. Any notice under this Agreement shall be given in writing, addressed and delivered or mailed, postage prepaid, to the other party at its principal office.

 

9.5 Assignment. This Agreement may not be assigned by a party without the consent of the other party. Notwithstanding the foregoing, the Administrator may assign this Agreement to any of its Affiliates without the consent of the Company.

 

9.6 Miscellaneous. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule, or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. The neuter pronoun, as used herein, includes the masculine, feminine and neuter gender. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import. “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder.

 

 

 

9.7 Electronic Delivery of Information. The Administrator shall be entitled, to the extent permitted by applicable law and regulations and the Company’s policies, to transmit statements, reports, privacy notices and any other documents, information or communications (collectively, the “Investment Documents”) relating to this Agreement to the Company’s security holders (a) solely by means of granting the Company’s security holders access to an internet website designated by the Administrator (the “Reporting Site”), with such parameters regarding access and availability of information for review as the Administrator deems reasonably necessary to protect the confidentiality and proprietary nature of the information contained therein (including, without limitation, establishing password protections for access to the Reporting Site), (b) through electronic mail to the e-mail addresses provided by the Company’s security holders to the Administrator, (c) via facsimile or (d) via other electronic means. The Administrator shall notify the Company’s security holders that such Investment Documents are available on the Reporting Site for viewing, printing and downloading. The Company’s security holders shall have the right to obtain upon request to the Administrator written copies of the Investment Documents contained on the Reporting Site.

 

[Signature pages follow.]

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written.

 

 

	NGP CAPITAL RESOURCES COMPANY
	By:
		Name: Title:
	OAK HILL ADVISORS, L.P.
	By: Oak Hill Advisors GenPar, L.P.,
	its general partner
	By: Oak Hill Advisors MGP, Inc.,
	its managing general partner
	By:
		Name: Glenn R. August Title: President

 

 

[Signature Page to Investment Advisory Agreement]

 

Exhibit 99.1

 

NGP Capital Resources Company Stockholders Approve Appointment of

Oak Hill Advisors, L.P. as New Investment Advisor

 

Company Renamed OHA Investment Corporation

 

New York, New York, September 30, 2014 (GLOBE NEWSWIRE) – NGP Capital Resources Company (the “Company”) today announced that its stockholders have approved the appointment of Oak Hill Advisors, L.P. (“OHA”) as the Company’s new investment advisor. In connection with the appointment, the Company’s name was changed to OHA Investment Corporation (NASDAQ: OHAI), effective immediately.

 

OHA is a leading independent investment firm specializing in direct lending, high yield bonds, leveraged loans, distressed investments, mortgage strategies and corporate structured products. With more than $24 billion of capital currently under management, OHA employs a fundamental value-oriented strategy focused on credit analysis, relative value and active risk management that has been in place for more than two decades.

 

The transactions and changes effective today include, among other things:

 

·

The appointment of OHA as the investment advisor and administrator for the Company under a new Investment Advisory Agreement and a new Administration Agreement, the terms of which are designed, in part, to decrease management fees and reduce expenses relative to the Company’s historical levels.

 

·

The election of a new Board of Directors composed of:

o

Glenn August (Chairman), Founder and Chief Executive Officer of OHA; Robert Okun, Chief Investment Officer of U.S. Credit and a Senior Partner of OHA; Stuart Oran, a Partner of Liberty Hall Capital; James Stern, Chairman of The Cypress Group; and Frank Tannura, former CEO of Packaging Dynamics Corporation.

 

·

The appointment of Bob Long as President and CEO, effective immediately.

o

Mr. Long is the former CEO of Conversus Asset Management, the investment manager of Conversus Capital (NYSE/Euronext: CCAP), a $3 billion permanent capital vehicle. His experience includes roles at Bank of America as head of the $6.5 billion Strategic Capital Group and co-head of the Real Estate Mezzanine Group.

 

·

The establishment of an Investment Committee comprised of Mr. August, Mr. Okun, Mr. Long, on an ex officio basis, and Steven Wayne, a Managing Director of OHA responsible for middle market and sponsor originated transactions.

 

·

The commitment by an OHA affiliate to purchase $5 million of the Company’s common stock, $1 million of which was purchased today from the Company in newly issued shares at a price equal to the Company’s net asset value per share.

 

 

o

The remaining $4 million will be purchased in open market transactions within one year after closing, or in newly issued shares at the Company’s net asset value per share if not purchased within such one-year period.

 

Mr. August said, “We are excited to become the Company’s investment advisor, and this transaction marks a meaningful step in the expansion of our middle market investment business. With OHA’s deep experience in the credit markets and success in direct lending, we believe we can create significant value for stockholders by diversifying the Company’s portfolio and improving its performance. We are enthusiastic about OHAI’s prospects.”

 

Mr. Long added, “I look forward to this opportunity to take advantage of OHA’s investment capabilities and industry expertise to expand and enhance the Company’s portfolio. As CEO, I will be focused on sharing our story with the investment community and leveraging the OHA platform for the benefit of our stockholders.”

 

Additional details regarding these matters will be provided in the Company’s Current Report on Form 8-K to be filed with the U.S. Securities and Exchange Commission (the “SEC”).

 

Keefe, Bruyette & Woods, a Stifel company, served as financial advisor to the Company in connection with these transactions.

 

About OHA Investment Corporation

OHA Investment Corporation (NASDAQ: OHAI) is a specialty finance company designed to provide its investors with current income and capital appreciation. OHAI focuses on providing creative direct lending solutions to middle market private companies across industry sectors. OHAI is externally managed by Oak Hill Advisors, L.P., a leading independent investment firm (www.oakhilladvisors.com). Oak Hill Advisors has deep experience in direct lending, having invested approximately $3 billion in nearly100 direct lending investments over the past 12 years.

 

OHAI was formerly known as NGP Capital Resources Company prior to Oak Hill Advisors assuming the external manager role for the company on September 30, 2014. OHAI has elected to be regulated as a business development company, or a BDC, under the Investment Company Act of 1940.

 

About Oak Hill Advisors, L.P.

Oak Hill Advisors, L.P. is a leading independent investment firm specializing in direct lending, high yield bonds, leveraged loans, distressed investments, mortgage strategies and corporate structured products throughout the United States and Europe. OHA manages credit hedge funds, long-only funds, distressed funds, other specialty credit funds and customized mandates. The firm employs a fundamental value-oriented strategy focused on credit analysis, relative value analysis and active risk management that has been in place for more than two decades. More information can be found at www.oakhilladvisors.com.

 

 

Forward-Looking Statements

This press release may contain forward-looking statements. We may use words such as “anticipates,” “believes,” “intends,” “plans,” “expects,” “projects,” “estimates,” “will,” “should,” “may” and similar expressions to identify forward-looking statements. These forward-looking statements are subject to various risks and uncertainties. Certain factors could cause actual results and conditions to differ materially from those projected, including the uncertainties associated with the timing or likelihood of transaction closings, changes in interest rates, availability of transactions, the future operating results of our portfolio companies, regulatory factors, changes in regional, national, or international economic conditions and their impact on the industries in which we invest, other changes in the conditions of the industries in which we invest and other factors enumerated in our filings with the SEC. You should not place undue reliance on such forward-looking statements, which speak only as of the date they are made. We undertake no obligation to update our forward-looking statements made herein, unless required by law.

 

Persons considering an investment in OHA Investment Corporation should consider the investment objectives, risks, and charges and expenses of the Company carefully before investing. Such information is available in our annual report on Form 10-K, in our quarterly reports on Form 10-Q, in our current reports on Form 8-K, and in prospectuses we issue from time to time in connection with our offering of securities. Such materials are filed with the SEC and copies are available on the SEC’s website, www.sec.gov, and in the Investor Relations section of our website at www.ohainvestmentcorporation.com. Prospective investors should read such materials carefully before investing.

 

 

Contacts:

 

For investment proposals, contact OHAI, (212) 326-1500

 

Steven Wayne - swayne@oakhilladvisors.com

Bob Long - blong@oakhilladvisors.com

 

 

For media inquiries, contact Kekst and Company, (212) 521-4800

 

Jeremy Fielding - Jeremy-Fielding@kekst.com

James David - James-David@kekst.com

 

 

 

 

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