Exhibit 10.1

 

INVESTMENT ADVISORY AGREEMENT

 

Agreement dated as of November 9, 2004 (the “Agreement”), by and between NGP
Capital Resources Company, a Maryland corporation (the “Company”), and NGP
Investment Advisor, LP a Delaware limited partnership (the “Adviser”).

 

WHEREAS, the Company is a newly organized closed-end, non-diversified management
investment company that intends to elected to be treated as a business
development company under the Investment Company Act of 1940 (the “Investment
Company Act”), and is in the business of making investments in securities issued
in private placements, primarily in connection with structured finance
investments consisting of a subordinate debt instrument or a combination of
senior and subordinate debt instruments with some equity component;

 

WHEREAS, the Adviser is an investment adviser 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 with respect
to companies participating in structured finance transactions and making
temporary short-term investments; and

 

WHEREAS, the Company deems it advisable to retain the Adviser to furnish certain
management and investment advisory services to the Company, and the Adviser
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 herein contained, it is agreed by and between the parties hereto as
follows:

 

SECTION 1

 

DUTIES OF THE ADVISER

 

1.1 Engagement. Commencing on the date hereof, the Company hereby engages and
retains the Adviser to act as the investment adviser 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 prospectus dated November 9, 2004 (the “Prospectus”), 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 Adviser shall,
during the term and subject to the provisions of this Agreement provide, or
arrange for suitable third parties to provide, any and all management and
investment advisory services necessary for the operation of the Company and the
conduct of its business. Such management and investment advisory services shall
include, but not be limited to, 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;

 

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

 

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

 

  (d) 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;

 

  (e) arranging for the disposition of investments for the Company;

 

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

 

  (g) voting proxies in accordance with the proxy voting policies and procedures
adopted by the Adviser; and

 

  (h) 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 Adviser 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 acquire debt financing, the Adviser will
arrange for such financing on the Company’s behalf, subject to the oversight and
approval of the Board. If it is necessary for the Adviser to make investments or
arrange financing on behalf of the Company through a special purpose vehicle,
the Adviser 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 Adviser 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 adviser to a
business development company and shall maintain all books and records with
respect to the Company’s portfolio transactions. The Adviser 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
Adviser may retain a copy of such records and (ii) nothing contained herein
shall prevent the Adviser from using the performance track record of the Company
following any termination of this Agreement.

 

1.4 Control and Supervision. The performance by the Adviser of its duties and
obligations hereunder shall be subject to the control and supervision of the
Board and the

 

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Adviser’s determination of what services are necessary or required for operation
or to reasonably conduct the business of the Company shall be subject to review
by the Board. The Adviser 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 Adviser hereby accepts such engagement and agrees during the
term hereof, at its expense, to provide the services described herein and to
assume the obligations herein set forth for the compensation provided herein.

 

1.6 Independent Contractor. The Adviser 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 Adviser represents that it is registered with the Securities
and Exchange Commission (the “SEC”) as an investment adviser under the Advisers
Act. The Adviser 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 Adviser shall adopt and implement prior to October 5, 2004, 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 Adviser. The Adviser shall provide the Company, at such times as the Company
may reasonably request, with a copy of such policies and procedures and 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
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 Adviser 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 for effecting a securities 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 Adviser 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, that such amount of commission 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 ADVISER

 

The Adviser may, subject to requirements of the Investment Company Act, employ
one or more sub-investment advisers (each, a “Sub-Adviser”) to assist the
Adviser in the

 

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performance of its duties under this Agreement. Specifically, the Adviser may
retain a Sub-Adviser to recommend specific securities or other investments based
upon the Company’s investment objectives and policies, and work, along with the
Adviser, 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 Adviser and the Company. Such use of a
Sub-Adviser does not relieve the Adviser of any duty or liability it would
otherwise have under this Agreement. Compensation of any such Sub-Adviser for
services provided and expenses assumed under any agreement between the Adviser
and such Sub-Adviser permitted under this paragraph is the sole responsibility
of the Adviser. Any sub-advisory agreement entered into by the Adviser 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-Adviser to comply with Sections 1.3 and 1.7.

 

SECTION 3

 

SERVICES OF THE ADVISER NOT EXCLUSIVE

 

3.1 Limitations on the Employment of the Adviser. The obligations of the Adviser
to the Company and the services furnished by the Adviser hereunder are not
exclusive. The Adviser 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 Adviser 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, partner,
officer, agent, or employee of the Adviser 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 Adviser nor any of its Affiliates shall in any manner be liable to the
Company by reason of the foregoing activities of the Adviser or such Affiliate.
Within 60 days after the end of each calendar quarter of the Company, the
Adviser will furnish the Board with information on a confidential basis, as to
any investment within the investment objective of the Company made during such
quarter by the Adviser or any Sub-Adviser for their own account or the account
of others. So long as this Agreement remains in effect, the Adviser shall be the
only investment adviser for the Company, subject to the Adviser’s right to enter
into sub-advisory agreements. The Adviser 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 stockholders of the Company are or may
become interested in the Adviser and its Affiliates, as directors, officers,
employees, partners, stockholders, members, and managers or otherwise, and that
the Adviser and directors, officers, employees, partners, stockholders, members,
and managers of the Adviser and its Affiliates are or may become similarly
interested in the Company as stockholders or otherwise. If any person who is a

 

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manager, partner, officer, or employee of the Adviser is or becomes a director,
officer, or employee of the Company and acts as such in any business of the
Company, then such manager, partner, officer, or employee of the Adviser shall
be deemed to be acting in such capacity for the Company, and not as a manager,
partner, officer, or employee of the Adviser or under the control or direction
of the Adviser, even if paid by the Adviser.

 

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 Adviser will reimburse the Adviser for) all
of costs and expenses of the Company’s business, operations, and investments
including, but not limited to, the following:

 

  (a) accounting, legal, printing, clerical, filing, and other expenses incurred
in connection with the organization of the Company and the initial offering of
its shares of its common stock (the “Offering”);

 

  (b) expenses with respect to acquisition and disposition of investments,
including all costs and fees incident to the identification, selection, and
investigation of prospective Company investments, including associated due
diligence expenses such as travel expenses and professional fees:

 

  (c) brokerage and commission expense and other transaction costs incident to
the acquisition and dispositions of investments;

 

  (d) federal, state, and local taxes and fees, including transfer taxes and
filing fees, incurred by or levied upon the Company;

 

  (e) interest charges and other fees in connection with borrowings by the
Company;

 

  (f) fees and expenses payable to the SEC and any fees and expenses of state
securities regulatory authorities;

 

  (g) expenses of preparing, printing, filing, and distributing reports and
notices to stockholders and regulatory bodies including the SEC;

 

  (h) costs of proxy solicitation and meetings of stockholders and the Board;

 

  (i) administration fees payable under the Administration Agreement between the
Company and NGP Administration LLC (the “Administrator”) dated November 9 , 2004
(the “Administration Agreement”);

 

  (j) charges and expenses of the Company’s custodian, administrator, and
transfer and dividend disbursing agent;

 

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  (k) compensation and expenses of the Company’s directors who are not
interested persons of the Company or the Adviser, and of any of the Company’s
officers who are not interested persons of the Adviser; expenses of all
directors in attending meetings of the Board or stockholders;

 

  (l) legal and auditing fees and expenses, including expenses incident to the
documentation for, and consummation of, transactions;

 

  (m) costs of certificates representing the shares of the Company’s common
stock;

 

  (n) direct costs and expenses of administration, including printing, mailing,
long distance telephone, copying, secretarial and other staff, stationery,
supplies, 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;

 

  (o) the costs of membership by the Company or its directors or executive
officers in any trade organizations;

 

  (p) expenses associated with litigation and other extraordinary or
non-recurring expenses;

 

  (q) any insurance premiums (including fidelity bond and directors and officers
errors and omission liability insurance premiums);

 

  (r) expenses of offering the Company’s common stock and other securities
including registering securities under federal and state securities laws;

 

  (s) costs of calculating the Company’s net asset value including the costs of
third party evaluations or appraisals of the Company (or its assets) or its
investments;

 

  (t) the costs of providing significant managerial assistance offered to and
accepted by the recipient of Company investments;

 

  (u) fees payable to third parties, including agents or consultants in
monitoring financial and legal affairs of the Company and the Company’s
investments; and

 

  (v) other costs and expenses directly allocable and identifiable to the
Company or its business or investments.

 

4.2 Costs and Expenses Allocated to the Adviser. The expenses to be borne by the
Adviser are limited to the following:

 

  (a) to the extent allocable for the provision of investment advisory or
management services required to be provided to the Company by the Adviser under
this Agreement, the cost of adequate office space for the investment
professionals of the Adviser and their respective staffs, and all necessary
office equipment and services, including telephone service, heat, utilities, and
similar items, and supplies; and

 

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  (b) to the extent allocable for the provision of the investment advisory or
management services required to be provided to the Company by the Adviser under
this Agreement, the wages, salaries, and benefits of the Adviser’s investment
professionals, employees, and personnel.

 

4.3 Company’s Payment of Costs Allocated to the Adviser. The Company may pay
directly any expenses incurred by it in its normal operations and, if any such
payment is consented to by the Adviser and acknowledged as otherwise payable by
the Adviser pursuant to this Agreement, the Company may reduce the fee payable
to the Adviser pursuant to Section 5 thereof by such amount. To the extent that
such deductions exceed the fee payable to the Adviser on any quarterly payment
date, the Adviser shall reimburse the Company for the amount of such excess
within five (5) business days of such notification by the Company.

 

4.4 Payment or Assumption by the Adviser. The payment or assumption by the
Adviser of any expense of the Company that the Adviser is not required by this
Agreement to pay or assume shall not obligate the Adviser 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 Adviser under this Agreement, the Company agrees to pay the Adviser, and
the Adviser 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 Adviser 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:

 

  (a) Until November 30, 2005, for each quarter the lesser of (i) 0.375% of the
average value of the Company’s total assets on the last day of the quarter for
the two most recently completed quarters or (ii) $900,000; provided, however,
that for the first two fiscal quarters of the Company following completion of
the offering described in the Prospectus (the “Closing Date”), total assets of
the Company shall be deemed to be equal to the net proceeds to the Company from
the sale of common stock described in the Prospectus (which is gross proceeds
less the initial purchaser’s discount but before deducting any offering
expenses) and

 

  (b) Thereafter, for each quarter 0.45% of the average value of the Company’s
total assets on the last day of the quarter for the two most recently completed
fiscal quarters.

 

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The Base Management Fee shall be paid monthly in arrears until November 30,
2005, and quarterly in arrears thereafter and will be appropriately prorated for
any partial quarter.

 

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

 

  (a) The first part, which is payable quarterly in arrears, will equal 20% of
the amount, if any, by which (i) the Company’s Net Investment Income (as
hereinafter defined) for the quarter exceeds (ii) the product of (A) the Net
Assets (as hereinafter defined) of the Company at the end of the preceding
quarter multiplied by (B) 2.0% (“Hurdle Rate”). “Net Investment Income” means
(i) interest income (including accrued original issue discount and interest
payable in kind), 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 the fiscal quarter, minus (ii) the Company’s expenses for
the quarter (including, without limitation, the Base Management Fee, expenses
payable by the Company under the Administration Agreement, 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 quarter). The fee shall be payable quarterly in arrears. The Hurdle Rate
will be pro rated for any period of less than three months. “Net Assets” means
the total assets, less total liabilities, of the Company, determined in
accordance with generally accepted accounting principles consistently applied.

 

  (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 December 31,
2006, and will equal (i) 20% of (A) the Company’s cumulative Net Capital Gains
from the closing date 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;
less (ii) the aggregate amount of Capital Gains Fees payments to the Advisor in
prior fiscal years.

 

The Capital Gains Fee shall be payable on the day after the Company files its
Annual Report on Form 10-K for such year. 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 the Capital Gains Fee.

 

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

 

“Realized Capital Gains” means with respect to a security (i) the amount by
which the net amount realized from the sale or other disposition of such
security,

 

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exceeds (ii) the original cost of such security 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 (i) the amount by
which the net amount received from the sale or other disposition of such
security is less than (ii) the original cost of such security as determined by
the Company in accordance with GAAP and the Investment Company Act.

 

“Net Realized Capital Gains” means Realized Capital Gains minus Realized Capital
Losses (but not less than zero).

 

“Unrealized Capital Depreciation” means with respect to a security the amount by
which the fair value of such security 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.

 

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 Fee Reduction. If (a) the Adviser, (b) a manager, officer, agent, or
employee of the Adviser, (c) a company controlling, controlled by, or under
common control with the Adviser, or (d) a director, officer, agent, or employee
of any such company receives any compensation from a company whose securities
are held in the Company’s portfolio in connection with the provision to that
company of significant managerial assistance, the compensation due to the
Adviser hereunder shall be reduced by the amount of such fee. If such amounts
have not been fully offset at the time of termination of this Agreement, the
Adviser shall pay such excess amounts to the Company upon termination.

 

5.6 Calculation and Payment of Management and Incentive Fees. The Adviser and
the Company shall make a good faith estimate of the Base Management Fee payable
for each month or quarter (the “Estimated Base Management Fee”) within ten (10)
business days after the end of each month or quarter. The Company will pay the
Adviser an amount equal to such Estimated Base Management Fee promptly after
determination of the Estimated Base Management Fee. A final calculation of the
Base Management Fee (the “Final Base Management Fee”) shall be completed in
conjunction with the completion of the Company’s Quarterly Reports of Form 10-Q
or Annual Report on Form 10-K, as the case may be. To the extent the Estimated
Base Management Fee paid to the Adviser for any period exceeds the Final Base
Management Fee for such period, within five (5) business days of such
notification by the Company, the Adviser shall pay such difference to the
Company. To the extent the Estimated Base Management Fee paid to

 

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the Adviser for any period is less than the Final Base Management Fee for such
period, the Company shall pay the Adviser such difference on the day after the
Company files its Quarterly Report on Form 10-Q or Annual Report on Form 10-K,
as the case may be. The Incentive 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 Incentive Fee, if any, shall be payable by the Company on
the day after it files its Annual Report on Form 10-K.

 

SECTION 6

 

LIMITATION OF LIABILITY OF THE ADVISER

 

The Adviser (and its partners and the Adviser’s and its partners’ officers,
managers, agents, employees, controlling persons, members, and any other person
or entity affiliated with the Adviser including, without limitation, its general
partner and the Administrator (collectively, “Affiliates”)) shall not be liable
to the Company, or any stockholder 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 Adviser in connection
with the performance of any of its duties or obligations under this Agreement or
otherwise as an investment adviser 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 with respect to the receipt of
compensation for services.

 

SECTION 7

 

INDEMNIFICATION OF THE ADVISER

 

The Company shall indemnify the Adviser (and its partners and the Adviser’s and
its partners’ officers, managers, agents, employees, committee members,
controlling persons, members, and any other person or entity affiliated with the
Adviser or any of the foregoing, including its general partner and the
Administrator, 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 or otherwise based upon
the performance of any of the Adviser’s duties or obligations under this
Agreement or otherwise as an investment adviser of the Company. 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 Adviser’s duties or by reason of the reckless disregard
of the Adviser’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

 

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Company. Notwithstanding the foregoing, absent a court determination that the
person seeking indemnification was not 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 Adviser in defending a 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 as authorized by the Board in the specific
case upon receipt of an undertaking by or on behalf of the Adviser to repay such
amount unless it shall ultimately be determined that the Adviser is 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 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 the 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 Adviser 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 Adviser 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 Adviser
shall also be applicable to any person serving as a partner of the Adviser or
any of their directors, officers, employees, agents, members, committee members,
controlling persons or Affiliates of the Adviser 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
Adviser because of any other position that such person may hold with the
Company.

 

SECTION 8

 

DURATION AND TERMINATION

 

8.1 Duration. This Agreement shall become effective as of the date hereof and
shall continue in effect until October 31, 2006, 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.

 

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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 Adviser at its principal place of business. The Adviser 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.

 

8.3 Effect of Termination of Expiration. The provisions of Section 6 and 7 shall
remain in full force and effect and the Adviser 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 Adviser shall be entitled to any amounts owed
under Section 5 through the date of termination or expiration.

 

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 Proprietary Rights. The Adviser has proprietary rights in the Company’s
name. The Company acknowledges and agrees that the Adviser may withdraw the use
of such names from the Company should it cease to act as the investment adviser
to the Company.

 

9.3 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 stockholder 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 stockholders of the Company individually but are
binding upon only the assets and property of the Company.

 

9.4 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.

 

9.5 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.

 

9.6 Governing Law. This Agreement shall be construed in accordance with the laws
of the State of Maryland, 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 Maryland conflict with the
applicable provisions of the Investment Company Act, the Investment Company Act
shall control.

 

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9.7 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 adviser,” “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.

 

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

 

NGP CAPITAL RESOURCES COMPANY

By:    /s/ John H. Homier

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Name: John H. Homier

Title: President & Chief Executive Officer

NGP INVESTMENT ADVISOR, LP

By:    /s/ Richard A. Bernardy

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Name: Richard A. Bernardy

Title: Managing Director & Chief Financial Officer

 

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