FORM OF ADMINISTRATION AGREEMENT
Exhibit (k)(2)
FORM OF ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 19 day of October, 2010, by and
between XXXXX XXXXXXXX MIDSTREAM/ENERGY FUND, INC., a Maryland corporation (the “Fund”), and
ULTIMUS FUND SOLUTIONS, LLC (“Ultimus”), a limited liability company organized under the laws of
the State of Ohio.
WHEREAS, the Fund is a closed-end, non-diversified, management investment company registered
under the Investment Company Act of 1940, as amended (the “1940 Act”); and
WHEREAS, the Fund desires that Ultimus provide certain administrative services for the Fund;
and
WHEREAS, Ultimus is willing to perform such services on the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and covenants herein set forth, the
parties agree as follows:
1. RETENTION OF ULTIMUS.
The Fund hereby retains Ultimus to act as the administrator of the Fund and to furnish the
Fund with the services as set forth below. Ultimus hereby accepts such employment to perform such
duties.
Ultimus shall provide the Fund with regulatory reporting services; shall provide all necessary
office space, equipment, personnel, compensation and facilities for handling the affairs of the
Fund; and shall provide such other services as the Fund may request that Ultimus perform consistent
with its obligations under this Agreement. Without limiting the generality of the foregoing,
Ultimus shall:
| (a) | Consult with the Fund’s officers, registered independent public accounting firm, legal counsel, custodian, accounting agent and transfer agent in establishing and maintaining the accounting policies of the Fund; | ||
| (b) | Oversee the maintenance by the Fund’s custodian of certain books and records of the Fund as required under the 1940 Act and maintain (or oversee maintenance by such other persons as approved by the Board) such other books and records (other than those maintained by the investment adviser and other Fund service providers) required by law or for the proper operation of the Fund; | ||
| (c) | Review the appropriateness of and arrange for the payment of the Fund’s expenses; | ||
| (d) | Oversee and review calculations of fees paid to the Administrator, the Fund’s investment adviser, its custodian, and any other service providers of the Fund as determined and recorded by the Fund’s accounting agent; | ||
| (e) | Prepare, maintain and disseminate total return performance calculations on at least a quarterly basis; |
| (f) | Prepare for review and approval by officers of the Fund, financial information for the Fund’s quarterly, semi-annual, annual and other periodic reports, proxy statements and other communications with shareholders required or otherwise to be sent to the Fund’s shareholders, and arrange for the printing and dissemination of such reports and communications to shareholders; | ||
| (g) | Prepare for review by an officer of the Fund, the Fund’s periodic financial reports required to be incorporated into and filed with the Securities and Exchange Commission (“SEC”) on Form N-Q, Form N-CSR. Form N-SAR and Form N-2 and such other reports, forms or filings, as may be mutually agreed upon; | ||
| (h) | Prepare the financial information for certain SEC filings (e.g., proxy statements), review such filings as prepared by the Fund’s counsel in their entirety and provide comments to the Fund’s management and other appropriate parties (e.g., legal counsel); | ||
| (i) | Assist in the preparation and the filing of the Fund’s federal, state and local income tax returns and any other required tax return; | ||
| (j) | Prepare, distribute and file with the Internal Revenue Service, Form 1099-MISC for payments made to the Fund’s directors, legal counsel and independent registered public accounting firm, as applicable; | ||
| (k) | Compute the amount of dividends and distributions to be paid by the Fund; ensure proper notification accompanying payment(s), if applicable, and year-end reporting of such dividends and distributions; | ||
| (l) | Develop and implement procedures to assist the investment adviser in monitoring, on a periodic basis, compliance with regulatory requirements and the Fund’s investment objectives, policies and restrictions as set forth in the Fund’s prospectus and as amended by the Board and by the Fund’s shareholders; | ||
| (m) | Review implementation of any stock purchase or dividend reinvestment programs authorized by the Board; | ||
| (n) | Review of dividend and distribution notifications sent to Fund shareholders; | ||
| (o) | Assist the Fund in obtaining any required insurance; | ||
| (p) | File with the SEC the fidelity bond and arrange for the preparation of a memorandum or other appropriate correspondence that outlines the terms and conditions of such policy; | ||
| (q) | Prepare such financial information reports as may be required by any stock exchange or exchanges on which the Fund’s shares are listed; | ||
| (r) | Monitor any share repurchase program the Fund may engage in, including the timely reporting of such information to any stock exchange or exchanges on which the Fund’s shares are listed; |
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| (s) | Review the notice and agenda for any regularly scheduled board meetings, audit committee meeting or other meetings of committees of the board, as drafted by Fund counsel or other competent parties. Such notices and agendas will be subject to the approval of Fund counsel prior to the distribution to the Board or any committee members thereof; | ||
| (t) | Assist Fund management and Fund counsel in the coordination of the production and distribution of the board materials to the directors, officers and other directly-interested parties (e.g., legal counsel, independent registered public accounting firm) and provide meeting facilities, if necessary; | ||
| (u) | Review drafts of the minutes of meetings of the Board (including committees thereof) and shareholder meetings as prepared by Fund counsel or other competent parties, incorporating comments and revisions received from Fund management, Fund counsel and other interested parities; | ||
| (v) | Manage the process with respect to the shareholder meetings. Specifically, arrange for the solicitation of proxies (including engaging a proxy solicitor), oversee the tabulation of votes, and provide the meeting facilities, if necessary; | ||
| (w) | Gather news and market updates on the Fund; | ||
| (x) | Respond to or refer to the Fund’s officers or its transfer agent, shareholder inquiries relating to the Fund; | ||
| (y) | Prepare reports relating to the business and affairs of the Fund as may be mutually agreed upon and not otherwise appropriately prepared by the Fund’s investment adviser, its custodian, transfer agent, legal counsel or independent registered public accounting firm; | ||
| (z) | Make such reports and recommendations to the Board concerning the performance and fees’ of the Fund’s other service providers as the Board may reasonably request or deem appropriate; | ||
| (aa) | Provide communication and coordination services with regard to the Fund’s investment adviser, its transfer agent, custodian and other service providers that render recordkeeping or shareholder communication services to the Fund; and | ||
| (bb)Provide such assistance to the Fund’s investment adviser, its custodian, transfer agent, legal counsel and independent registered public accounting firm as generally may be required to properly carry on the business and operations of the Fund. |
2. ALLOCATION OF CHARGES AND EXPENSES.
Ultimus shall furnish at its own expense the executive, supervisory and clerical personnel and
office space and equipment necessary to perform its obligations under this Agreement.
The Fund assumes and shall pay or cause to be paid all other expenses of the Fund other than
as stated in the preceding paragraph, including, without limitation, taxes, expenses for legal and
auditing services, accounting expenses, transfer agency expenses, the expenses of preparing
(including typesetting), printing and mailing reports, prospectuses, statements of additional
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information, proxy solicitation material and notices to existing shareholders, the costs of
custodial services, stock exchange listing fees, fees and out-of-pocket expenses of Directors who
are not affiliated persons of Ultimus or the investment adviser to the Fund, insurance premiums,
interest, brokerage costs, litigation and other extraordinary or nonrecurring expenses, and all
fees and charges of investment advisers to the Fund.
3. COMPENSATION OF ULTIMUS.
For the services to be rendered, the facilities furnished and the expenses assumed by Ultimus
pursuant to this Agreement, the Fund shall pay to Ultimus compensation at an annual rate specified
in Schedule A attached hereto. Such compensation shall be calculated and accrued daily, and paid to
Ultimus monthly. The Fund shall also reimburse Ultimus for its reasonable out-of-pocket expenses,
including but not limited to the travel and lodging expenses incurred by officers and employees of
Ultimus in connection with attendance at Board meetings.
If this Agreement becomes effective subsequent to the first day of a month or terminates
before the last day of a month, Ultimus’ compensation for that part of the month in which this
Agreement is in effect shall be prorated in a manner consistent with the calculation of the fees as
set forth above. Payment of Ultimus’ compensation for the preceding month shall be made promptly.
4. EFFECTIVE DATE.
This Agreement shall become effective with respect to the Fund as of the date first written
above (the “Effective Date”).
5. TERM OF THIS AGREEMENT.
The term of this Agreement shall continue in effect, unless earlier terminated by either party
hereto as provided hereunder, for a period of one year. Thereafter, unless otherwise terminated as
provided herein, this Agreement shall be renewed automatically for successive one-year periods.
Should the Fund desire to move any of its services provided by Ultimus hereunder to a
successor service provider prior to the expiration of one year from the Effective Date, Ultimus
shall make a good faith effort to facilitate the conversion on such prior date. In connection with
the foregoing, should services be converted to a successor service provider, prior to the
expiration of one year from the Effective Date, the fees payable to Ultimus shall be the monthly
average of the fees paid for the three months prior to receipt of notice of termination multiplied
by the number of months remaining under the initial one year term of this Agreement. The payment
of all fees to Ultimus as set forth herein shall be accelerated to the business day immediately
prior to the conversion of services.
During the initial one year period under this Agreement, the Fund may terminate this
Agreement, without penalty, by notice to Ultimus, effective at any time specified therein, in the
event that (a) Fund ceases to carry on its business and is being liquidated, (b) Fund is merged
into another management investment company registered under the 1940 Act, or (c) Fund alleges
“cause” (as defined herein) upon the provision of thirty (30) days’ advance written notice.
After the initial one year period under this Agreement, this Agreement may be terminated
without penalty: (i) by provision of sixty (60) days’ written notice; (ii) by mutual agreement of
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the parties; or (iii) for “cause” (as defined herein) upon the provision of thirty (30) days’
advance written notice by the party alleging cause.
For purposes of this Agreement, “cause” shall mean: (i) a material breach of this Agreement
that has not been remedied within thirty (30) days following written notice of such breach from the
non-breaching party, (ii) a series of negligent acts or omissions or breaches of this Agreement
which, in the aggregate, constitute in the reasonable judgment of the Fund, a serious failure to
perform satisfactorily Ultimus’ obligations hereunder; (iii) a final, unappealable judicial,
regulatory or administrative ruling or order in which the party to be terminated has been found
guilty of criminal or unethical behavior in the conduct of its business; or (iv) financial
difficulties on the part of the party to be terminated which are evidenced by the authorization or
commencement of, or involvement by way of pleading, answer, consent or acquiescence in, a voluntary
or involuntary case under Title 11 of the United States Code, as from time to time is in effect, or
any applicable law, other than said Title 11, of any jurisdiction relating to the liquidation or
reorganization of debtors or the modification or alteration of the rights of creditors.
Notwithstanding the foregoing, after such termination for so long as Ultimus, with the written
consent of the Fund, in fact continues to perform any one or more of the services contemplated by
this Agreement or any schedule or exhibit hereto, the provisions of this Agreement, including
without limitation the provisions dealing with indemnification, shall continue in full force and
effect. Compensation due Ultimus and unpaid by the Fund upon such termination shall be immediately
due and payable upon and notwithstanding such termination. Ultimus shall be entitled to collect
from the Fund, in addition to the compensation described in Schedule A, the amount of all of
Ultimus’ cash disbursements for services in connection with Ultimus’ activities in effecting such
termination, including without limitation, the delivery to the Fund and/or its designees of the
Fund’s property, records, instruments and documents.
6. STANDARD OF CARE.
The duties of Ultimus shall be confined to those expressly set forth herein, and no implied
duties are assumed by or may be asserted against Ultimus hereunder. Ultimus shall use its best
efforts in the performance of its duties hereunder and act in good faith in performing the services
provided for under this Agreement. Ultimus shall be liable for any damages arising directly or
indirectly out of Ultimus’ failure to perform its duties under this Agreement to the extent such
damages arise directly or indirectly out of Ultimus’ willful misfeasance, bad faith, negligence in
the performance of its duties, or reckless disregard of it obligations and duties hereunder. (As
used in this Article 6, the term “Ultimus” shall include directors, officers, employees and other
agents of Ultimus as well as Ultimus itself.)
Without limiting the generality of the foregoing or any other provision of this Agreement, (i)
Ultimus shall not be liable for losses beyond its reasonable control, provided that Ultimus has
acted in accordance with the standard of care set forth above; and (ii) Ultimus shall not be liable
for the validity or invalidity or authority or lack thereof of any instruction, notice or other
instrument that Ultimus reasonably believes to be genuine and to have been signed or presented by a
duly authorized representative of the Fund (other than an employee or other affiliated persons of
Ultimus who may otherwise be named as an authorized representative of the Fund for certain
purposes).
Ultimus may apply to the Fund at any time for instructions and may consult with counsel for
the Fund or its own counsel and with accountants and other experts with respect to any matter
arising in connection with Ultimus’ duties hereunder, and Ultimus shall not be liable or
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accountable for any action taken or omitted by it in good faith in accordance with such
instruction or with the reasonable opinion of such counsel, accountants or other experts qualified
to render such opinion.
7. INDEMNIFICATION.
The Fund agrees to indemnify and hold harmless Ultimus from and against any and all actions,
suits, claims, losses, damages, costs, charges, reasonable counsel fees and disbursements,
payments, expenses and liabilities (including reasonable investigation expenses) (collectively,
“Losses”) arising directly or indirectly out of any action or omission to act which Ultimus takes
(i) at any request or on the direction of or in reliance on the reasonable advice of the Fund, (ii)
upon any instruction, notice or other instrument that Ultimus reasonably believes to be genuine and
to have been signed or presented by a duly authorized representative of the Fund (other than an
employee or other affiliated person of Ultimus who may otherwise be named as an authorized
representative of the Fund for certain purposes) or (iii) on its own initiative, in good faith and
in accordance with the standard of care set forth herein, in connection with the performance of its
duties or obligations hereunder; provided, however that the Fund shall have no obligation to
indemnify or reimburse Ultimus under this Article 8 to the extent that Ultimus is entitled to
reimbursement or indemnification for such Losses under any liability insurance policy described in
this Agreement or otherwise.
Ultimus shall not be indemnified against or held harmless from any Losses arising directly or
indirectly out of Ultimus’ own willful misfeasance, bad faith, negligence in the performance of its
duties, or reckless disregard of its obligations and duties hereunder. (As used in this Article 7,
the term “Ultimus” shall include directors, officers, employees and other agents of Ultimus as well
as Ultimus itself.)
The Fund and its officers, employees, shareholders and agents shall not be liable for, and
Ultimus shall indemnify and hold harmless from and against, any and all claims made by third
parties, including costs, expenses (including reasonable attorney’s fees), losses, damages,
charges, payments and liabilities of any sort or kind, which result from a negligent act, or
omission to act, or bad faith by Ultimus in the performance of its duties hereunder or
the breach by Ultimus of any representation or covenant in this Agreement.
8. RECORD RETENTION AND CONFIDENTIALITY.
Ultimus shall keep and maintain on behalf of the Fund all books and records which the Fund and
Ultimus is, or may be, required to keep and maintain pursuant to any applicable statutes, rules and
regulations, including without limitation Rules 31a-1 and 31a-2 under the 1940 Act, relating to the
maintenance of books and records in connection with the services to be provided hereunder. Ultimus
further agrees that all such books and records shall be the property of the Fund and to make such
books and records available for inspection by the Fund or by the SEC at reasonable times and
otherwise to keep confidential all books and records and other information relative to the Fund and
its shareholders; except when requested to divulge such information by duly-constituted authorities
or court process. If Ultimus is requested or required to disclose any confidential information
supplied to it by the Fund, Ultimus shall, unless prohibited by law, promptly notify the Fund of
such request(s) so that the Fund may seek an appropriate protective order.
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9. FORCE MAJEURE.
Ultimus assumes no responsibility hereunder, and shall not be liable, for any damage, loss of
data, delay or any other loss whatsoever caused by events beyond its reasonable control, including
acts of civil or military authority, national emergencies, fire, flood, catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication or power supply.
10. RIGHTS OF OWNERSHIP; RETURN OF RECORDS.
All records and other data except computer programs and procedures developed to perform
services required to be provided by Ultimus are the exclusive property of the Fund and all such
records and data will be furnished to the Fund in appropriate form as soon as practicable after
termination of this Agreement for any reason. Ultimus may at its option at any time, and shall
promptly upon the Fund’s demand, turn over to the Fund and cease to retain Ultimus’ files, records
and documents created and maintained by Ultimus pursuant to this Agreement which are no longer
needed by Ultimus in the performance of its services or for its legal protection. If not so turned
over to the Fund, such documents and records will be retained by Ultimus for six years from the
year of creation. At the end of such six-year period, such records and documents will be turned
over to the Fund unless the Fund authorizes in writing the destruction of such records and
documents.
11. REPRESENTATIONS OF THE FUND.
The Fund certifies to Ultimus that this Agreement has been duly authorized by the Fund and,
when executed and delivered by the Fund, will constitute a legal, valid and binding obligation of
the Fund, enforceable against the Fund in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general application affecting the rights
and remedies of creditors and secured parties.
12. REPRESENTATIONS OF ULTIMUS.
Ultimus represents and warrants that: (1) it will maintain a disaster recovery plan and
procedures including provisions for emergency use of electronic data processing equipment, which is
reasonable in light of the services to be provided, and it will, at no additional expense to the
Fund, take reasonable steps to minimize service interruptions ; (2) this Agreement has been duly
authorized by Ultimus and, when executed and delivered by Ultimus, will constitute a legal, valid
and binding obligation of Ultimus, enforceable against Ultimus in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties; (3) this Agreement does not
conflict with or violate any agreement to which Ultimus or its representatives is a party; and (4)
it has and will continue to have access to the necessary facilities, equipment and personnel to
perform its duties and obligations under this Agreement.
13. INSURANCE.
Ultimus shall furnish the Fund with pertinent information concerning the professional
liability insurance coverage that it maintains. Such information shall include the identity of the
insurance carrier(s), coverage levels and deductible amounts. Ultimus shall notify the Fund should
any of its insurance coverage be canceled or reduced. Such notification shall include the date of
change and the reasons therefor. Ultimus shall notify the Fund of any material claims
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against it with respect to services performed under this Agreement, whether or not they may be
covered by insurance, and shall notify the Fund from time to time as may be appropriate of the
total outstanding claims made by Ultimus under its insurance coverage.
14. INFORMATION TO BE FURNISHED BY THE FUND.
The Fund has furnished to Ultimus the following:
| (a) | Copies of the Articles of Incorporation and of any amendments thereto, certified by the proper official of the state in which such document has been filed. | ||
| (b) | Copies of the following documents: |
| (1) | The Fund’s By-Laws and any amendments thereto; and | ||
| (2) | Certified copies of resolutions of the Directors covering the approval of this Agreement, authorization of a specified officer of the Fund to execute and deliver this Agreement and authorization for specified officers of the Fund to instruct Ultimus thereunder. |
| (c) | A list of all the officers of the Fund, together with specimen signatures of those officers who are authorized to instruct Ultimus in all matters. | ||
| (d) | Copies of the Prospectus and Statement of Additional Information for the Fund |
15. AMENDMENTS TO AGREEMENT.
This Agreement, or any term thereof, may be changed or waived only by written amendment signed
by the party against whom enforcement of such change or waiver is sought.
For special cases, the parties hereto may amend such procedures set forth herein as may be
appropriate or practical under the circumstances, and Ultimus may conclusively assume that any
special procedure which has been approved by the Fund does not conflict with or violate any
requirements of its Articles of Incorporation or then current prospectuses, or any rule, regulation
or requirement of any regulatory body.
16. COMPLIANCE WITH LAW.
Except for the obligations of Ultimus otherwise set forth herein, the Fund assumes full
responsibility for compliance with all applicable requirements of the Securities Act of 1933, the
1940 Act and any other laws, rules and regulations of governmental authorities having jurisdiction.
17. NOTICES.
Any notice provided hereunder shall be sufficiently given when sent by registered or certified
mail to the party required to be served with such notice, at the following address: if to the Fund,
at 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, Attn: Xxxxx X. Xxxx; and if to Ultimus, at
000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxx 00000, Attn: Xxxxxx X. Xxxxxx; or at such other
address as such party may from time to time specify in writing to the other party pursuant to this
Section.
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18. ASSIGNMENT.
This Agreement and the rights and duties hereunder shall not be assignable by either of the
parties hereto except by the specific written consent of the other party. This Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their respective successors
and permitted assigns.
19. GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the State of Ohio and the
applicable provisions of the 1940 Act. To the extent that the applicable laws of the State of Ohio,
or any of the provisions herein, conflict with the applicable provisions of the 1940 Act, the
latter shall control.
20. MULTIPLE ORIGINALS.
This Agreement may be executed in two or more counterparts, each of which when so executed
shall be deemed to be an original, but such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed all as
of the day and year first above written.
| XXXXX XXXXXXXX MIDSTREAM/ENERGY FUND, INC. | ||||||
| By: | /s/ Xxxxx X. Xxxx | |||||
| Name: | ||||||
| Title: | Chief Financial Officer and Treasurer | |||||
| ULTIMUS FUND SOLUTIONS, LLC | ||||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||||
| Name: | ||||||
| Title: | President | |||||
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SCHEDULE A
TO THE ADMINISTRATION AGREEMENT BETWEEN
XXXXX XXXXXXXX MIDSTREAM/ENERGY FUND, INC.
AND
ULTIMUS FUND SOLUTIONS, LLC
XXXXX XXXXXXXX MIDSTREAM/ENERGY FUND, INC.
AND
ULTIMUS FUND SOLUTIONS, LLC
FEES
Pursuant to Article 3, in consideration of services rendered and expenses assumed pursuant to
this Agreement, the Fund will pay Ultimus on the first business day after the end of each month, or
at such time(s) as Ultimus shall request and the parties hereto agree, a fee computed with respect
to the Fund as follows:
| Average Daily Net Assets | Administration Fee | |||
Up to $1 billion |
.075 | % | ||
In excess of $1 billion |
.050 | % | ||
The fee is subject to a monthly minimum of $6,250 ($75,000 annually).
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