EXHIBIT (k)(3)
FUND ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this ___ day of January,
2005, by and between TORTOISE NORTH AMERICAN ENERGY CORPORATION, a Maryland
corporation (the "Company") and U.S. BANCORP FUND SERVICES, LLC, a Wisconsin
limited liability company ("USBFS").
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as a closed-end management investment
company, and is authorized to issue shares of common stock;
WHEREAS, USBFS is, among other things, in the business of providing mutual
fund accounting services to investment companies; and
WHEREAS, the Company desires to retain USBFS to provide accounting
services to the Company.
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto, intending to be legally bound,
do hereby agree as follows:
1. APPOINTMENT OF USBFS AS FUND ACCOUNTANT
The Company hereby appoints USBFS as fund accountant of the Company on the
terms and conditions set forth in this Agreement, and USBFS hereby accepts
such appointment and agrees to perform the services and duties set forth
in this Agreement. The services and duties of USBFS shall be confined to
those matters expressly set forth herein, and no implied duties are
assumed by or may be asserted against USBFS hereunder.
2. SERVICES AND DUTIES OF USBFS
USBFS shall provide the following accounting services to the Company:
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date+1 basis using
security trade information communicated from the Company's
investment adviser.
(2) For each valuation date, obtain prices from a pricing source
approved by the board of directors of the Company (the "Board
of Directors") and apply those prices to the portfolio
positions. For those securities where market quotations are
not readily available, the Board of Directors shall approve,
in good faith, procedures for determining the fair value for
such securities.
(3) Identify interest and dividend accrual balances as of each
valuation date and calculate gross earnings on investments for
each accounting period.
(4) Determine gain/loss on security sales and identify them as
short-term or long-term; account for periodic distributions of
gains or losses to shareholders and maintain undistributed
gain or loss balances as of each valuation date.
(5) On a daily basis, reconcile cash and investment balances of
the Company with the Company's custodian and provide the
Company's investment adviser with the beginning cash balance
available for investment purposes.
(6) Transmit a copy of the portfolio valuation to the Company's
investment adviser daily.
(7) Review the impact of current day's activity on a per share
basis, and review changes in market value.
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the expense accrual amounts
as directed by the Company as to methodology, rate or dollar
amount.
(2) Process and record payments for Company expenses upon receipt
of written authorization from the Company.
(3) Account for Company expenditures and maintain expense accrual
balances at the level of accounting detail, as agreed upon by
USBFS and the Company.
(4) Provide expense accrual and payment reporting.
C. Fund Valuation and Financial Reporting Services:
(1) Account for Company share purchases, sales, exchanges,
transfers, dividend reinvestments, and other Company share
activity as reported by the Company's transfer agent on a
timely basis.
(2) Determine net investment income (earnings) for the Company as
of each valuation date. Account for periodic distributions of
earnings to shareholders and maintain undistributed net
investment income balances as of each valuation date.
(3) Maintain a general ledger and other accounts, books, and
financial records for the Company in the form as agreed upon.
(4) Determine the net asset value of the Company according to the
accounting policies and procedures set forth in the Company's
current prospectus.
(5) Calculate per share net asset value, per share net earnings,
and other per share amounts reflective of Company operations
at such time as required by the nature and characteristics of
the Company.
(6) Communicate to the Company, at an agreed upon time, the per
share net asset value for each valuation date.
(7) Prepare monthly reports that document the adequacy of
accounting detail to support month-end ledger balances.
(8) Prepare monthly security transactions listings.
D. Tax Accounting Services:
(1) Maintain accounting records for the investment portfolio of
the Company to support the tax reporting required for
"regulated investment companies" under the Internal Revenue
Code of 1986, as amended (the "Code").
(2) Maintain tax lot detail for the Company's investment
portfolio.
(3) Calculate taxable gain/loss on security sales using the tax
lot relief method designated by the Company.
(4) Provide the necessary financial information to calculate the
taxable components of income and capital gains distributions
to support tax reporting to the shareholders.
E. Compliance Control Services:
(1) Support reporting to regulatory bodies and support financial
statement preparation by making the Company's accounting
records available to the Company, the Securities and Exchange
Commission (the "SEC"), and the independent accountants.
(2) Maintain accounting records according to the 1940 Act and
regulations provided thereunder.
(3) Perform its duties hereunder in compliance with all applicable
laws and regulations and provide any sub-certifications
reasonably requested by the Company in connection with any
certification required of the Company pursuant to the
Xxxxxxxx-Xxxxx Act of 2002 (the "SOX Act") or any rules
or regulations promulgated by the SEC thereunder, provided the
same shall not be deemed to change USBFS's standard of care as
set forth herein.
(4) Cooperate with the Company's independent accountants and take
all reasonable action in the performance of its obligations
under this Agreement to ensure that the necessary information
is made available to such accountants for the expression of
their opinion on the Company's financial statements without
any qualification as to the scope of their examination.
3. PRICING OF SECURITIES
For each valuation date, USBFS shall obtain prices from a pricing source
recommended by USBFS and approved by the Board of Directors and apply
those prices to the portfolio positions of the Company. For those
securities where market quotations are not readily available, the Board of
Directors shall approve, in good faith, procedures for determining the
fair value for such securities.
If the Company desires to provide a price that varies from the price
provided by the pricing source, the Company shall promptly notify and
supply USBFS with the price of any such security on each valuation date.
All pricing changes made by the Company will be in writing and must
specifically identify the securities to be changed by CUSIP, name of
security, new price or rate to be applied, and, if applicable, the time
period for which the new price(s) is/are effective.
4. CHANGES IN ACCOUNTING PROCEDURES
Any resolution passed by the Board of Directors that affects accounting
practices and procedures under this Agreement shall be effective upon
written receipt of notice and acceptance by USBFS.
5. CHANGES IN EQUIPMENT, SYSTEMS, ETC.
USBFS reserves the right to make changes from time to time, as it deems
advisable, relating to its systems, programs, rules, operating schedules
and equipment, so long as such changes do not adversely affect the
services provided to the Company under this Agreement.
6. COMPENSATION
USBFS shall be compensated for providing the services set forth in this
Agreement in accordance with the fee schedule set forth on Exhibit A
hereto (as amended from time to time). USBFS shall also be compensated for
such out-of-pocket expenses (e.g., telecommunication charges, postage and
delivery charges, and reproduction charges) as are reasonably incurred by
USBFS in performing its duties hereunder. The Company
shall pay all such fees and reimbursable expenses within 30 calendar days
following receipt of the billing notice, except for any fee or expense
subject to a good faith dispute. The Company shall notify USBFS in writing
within 30 calendar days following receipt of each invoice if the Company
is disputing any amounts in good faith. The Company shall pay such
disputed amounts within 10 calendar days of the day on which the parties
agree to the amount to be paid. With the exception of any fee or expense
the Company is disputing in good faith as set forth above, unpaid invoices
shall accrue a finance charge of 1-1/2% per month after the due date.
7. REPRESENTATIONS AND WARRANTIES
A. The Company hereby represents and warrants to USBFS, which
representations and warranties shall be deemed to be continuing
throughout the term of this Agreement, that:
(1) It is duly organized and existing under the laws of the
jurisdiction of its organization, with full power to carry on
its business as now conducted, to enter into this Agreement
and to perform its obligations hereunder;
(2) This Agreement has been duly authorized, executed and
delivered by the Company in accordance with all requisite
action and constitutes a valid and legally binding obligation
of the Company, enforceable 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; and
(3) It is conducting its business in compliance in all material
respects with all applicable laws and regulations, both state
and federal, and has obtained all regulatory approvals
necessary to carry on its business as now conducted; there is
no statute, rule, regulation, order or judgment binding on it
and no provision of its charter, bylaws or any contract
binding it or affecting its property which would prohibit its
execution or performance of this Agreement.
B. USBFS hereby represents and warrants to the Company, which
representations and warranties shall be deemed to be continuing
throughout the term of this Agreement, that:
(1) It is duly organized and existing under the laws of the
jurisdiction of its organization, with full power to carry on
its business as now conducted, to enter into this Agreement
and to perform its obligations hereunder;
(2) This Agreement has been duly authorized, executed and
delivered by the Company in accordance with all requisite
action and constitutes a valid and legally binding obligation
of the Company, enforceable 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; and
(3) It is conducting its business in compliance in all material
respects with all applicable laws and regulations, both state
and federal, and has obtained all regulatory approvals
necessary to carry on its business as now conducted; there is
no statute, rule, regulation, order or judgment binding on it
and no provision of its charter, bylaws or any contract
binding it or affecting its property which would prohibit its
execution or performance of this Agreement.
8. STANDARD OF CARE; INDEMNIFICATION; LIMITATION OF LIABILITY
A. USBFS shall exercise reasonable care in the performance of its
duties under this Agreement. USBFS shall not be liable for any error
of judgment or mistake of law or for any loss suffered by the
Company in connection with its duties under this Agreement,
including losses resulting from mechanical breakdowns or the failure
of communication or power supplies beyond USBFS's control, except a
loss arising out of or relating to USBFS's refusal or failure to
comply with the terms of this Agreement or from its bad faith,
negligence, or willful misconduct in the performance of its duties
under this Agreement. Notwithstanding any other provision of this
Agreement, if USBFS has exercised reasonable care in the performance
of its duties under this Agreement, the Company shall indemnify and
hold harmless USBFS from and against any and all claims, demands,
losses, expenses, and liabilities of any and every nature (including
reasonable attorneys' fees) that USBFS may sustain or incur or that
may be asserted against USBFS by any person arising out of any
action taken or omitted to be taken by it in performing the services
hereunder (i) in accordance with the foregoing standards, or (ii) in
reliance upon any written or oral instruction provided to USBFS by
any duly authorized officer of the Company, such duly authorized
officer to be included in a list of authorized officers approved by
the Board of Directors of the Company and set forth on Exhibit B
hereto (as amended from time to time), except for any and all
claims, demands, losses, expenses, and liabilities arising out
of or relating to USBFS's refusal or failure to comply with the
terms of this Agreement or from its bad faith, negligence or willful
misconduct in the performance of its duties under this Agreement.
This indemnity shall be a continuing obligation of the Company, its
successors and assigns, notwithstanding the termination of this
Agreement. As used in this paragraph, the term "USBFS" shall include
USBFS's directors, officers and employees.
USBFS shall indemnify and hold the Company harmless from and against
any and all claims, demands, losses, expenses, and liabilities of
any and every nature (including reasonable attorneys' fees) that the
Company may sustain or incur or that may be asserted against the
Company by any person arising out of any action taken or omitted to
be taken by USBFS as a result of USBFS's refusal or failure to
comply with the terms of this Agreement, or from its bad faith,
negligence, or
willful misconduct in the performance of its duties under this
Agreement. This indemnity shall be a continuing obligation of USBFS,
its successors and assigns, notwithstanding the termination of this
Agreement. As used in this paragraph, the term "Company" shall
include the Company's directors, officers and employees.
Neither party to this Agreement shall be liable to the other party
for consequential, special or punitive damages under any provision
of this Agreement.
In the event of a mechanical breakdown or failure of communication
or power supplies beyond its control, USBFS shall take all
reasonable steps to minimize service interruptions for any period
that such interruption continues. USBFS will make every reasonable
effort to restore any lost or damaged data and correct any errors
resulting from such a breakdown at the expense of USBFS. USBFS
agrees that it shall, at all times, have reasonable contingency
plans with appropriate parties, making reasonable provision for
emergency use of electrical data processing equipment to the extent
appropriate equipment is available. Representatives of the Company
shall be entitled to inspect USBFS's premises and operating
capabilities at any time during regular business hours of USBFS,
upon reasonable notice to USBFS. Moreover, USBFS shall provide the
Company, at such times as the Company may reasonably require, copies
of reports rendered by independent accountants on the internal
controls and procedures of USBFS relating to the services provided
by USBFS under this Agreement.
Notwithstanding the above, USBFS reserves the right to reprocess and
correct administrative errors at its own expense.
B. In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the
indemnitor may be asked to indemnify or hold the indemnitee
harmless, the indemnitor shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is
further understood that the indemnitee will use all reasonable care
to notify the indemnitor promptly concerning any situation that
presents or appears likely to present the probability of a claim for
indemnification. The indemnitor shall have the option to defend the
indemnitee against any claim that may be the subject of this
indemnification. In the event that the indemnitor so elects, it will
so notify the indemnitee and thereupon the indemnitor shall take
over complete defense of the claim, and the indemnitee shall in such
situation initiate no further legal or other expenses for which it
shall seek indemnification under this section. The indemnitee shall
in no case confess any claim or make any compromise in any case in
which the indemnitor will be asked to indemnify the indemnitee
except with the indemnitor's prior written consent.
C. The indemnity and defense provisions set forth in this Section 8
shall indefinitely survive the termination and/or assignment of this
Agreement.
D. If USBFS is acting in another capacity for the Company pursuant to a
separate agreement, nothing herein shall be deemed to relieve USBFS
of any of its obligations in such other capacity.
9. NOTIFICATION OF ERROR
The Company will notify USBFS of any discrepancy between USBFS and the
Company, including, but not limited to, failing to account for a security
position in the Company's portfolio, upon the later to occur of: (i) three
business days after receipt of any reports rendered by USBFS to the
Company; (ii) three business days after discovery of any error or omission
not covered in the balancing or control procedure; or (iii) three business
days after receiving notice from any shareholder regarding any such
discrepancy.
10. DATA NECESSARY TO PERFORM SERVICES
The Company or its agent shall furnish to USBFS the data necessary to
perform the services described herein at such times and in such form as
mutually agreed upon.
11. PROPRIETARY AND CONFIDENTIAL INFORMATION
USBFS agrees on behalf of itself and its directors, officers, and
employees to treat confidentially and as proprietary information of the
Company, all records and other information relative to the Company and
prior, present, or potential shareholders of the Company (and clients of
said shareholders), and not to use such records and information for any
purpose other than the performance of its responsibilities and duties
hereunder, except (i) after prior notification to and approval in writing
by the Company, which approval shall not be unreasonably withheld and may
not be withheld where USBFS may be exposed to civil or criminal contempt
proceedings for failure to comply, (ii) when requested to divulge such
information by duly constituted authorities, or (iii) when so requested by
the Company. Records and other information which have become known to the
public through no wrongful act of USBFS or any of its employees, agents or
representatives, and information that was already in the possession of
USBFS prior to receipt thereof from the Company or its agent, shall not be
subject to this paragraph.
Further, USBFS will adhere to the privacy policies adopted by the Company
pursuant to Title V of the Xxxxx-Xxxxx-Xxxxxx Act, as may be modified from
time to time (the "GLB Act"). In this regard, USBFS shall have in place
and maintain physical, electronic and procedural safeguards reasonably
designed to protect the security, confidentiality and integrity of, and to
prevent unauthorized access to or use of, records and information relating
to the Company and its shareholders.
12. RECORDS
USBFS shall keep records relating to the services to be performed
hereunder in the form and manner, and for such period, as it may deem
advisable and is agreeable to the Company, but not inconsistent with the
rules and regulations of appropriate government authorities, in
particular, Section 31 of the 1940 Act and the rules thereunder. USBFS
agrees that all such records prepared or maintained by USBFS relating to
the services to be performed by USBFS hereunder are the property of the
Company and will be preserved, maintained, and made available in
accordance with such applicable sections and rules of the 1940 Act and
will be promptly surrendered to the Company or its designee on and in
accordance with its request.
13. COMPLIANCE WITH LAWS
The Company has and retains primary responsibility for all compliance
matters relating to the Company, including but not limited to compliance
with the 1940 Act, the Code, the SOX Act, the USA Patriot Act of 2002 and
the policies and limitations of the Company relating to its portfolio
investments as set forth in its current prospectus and statement of
additional information. USBFS's services hereunder shall not relieve the
Company of its responsibilities for assuring such compliance or the Board
of Directors' oversight responsibility with respect thereto.
14. TERM OF AGREEMENT; AMENDMENT
This Agreement shall become effective as of the date first written above
and will continue in effect for a period of one year. Subsequent to the
initial one-year term, this Agreement may be terminated by either party
upon giving 90 days prior written notice to the other party or such
shorter period as is mutually agreed upon by the parties. Notwithstanding
the foregoing, this Agreement may be terminated by any party upon the
breach of the other party of any material term of this Agreement if such
breach is not cured within 15 days of notice of such breach to the
breaching party. This Agreement may not be amended or modified in any
manner except by written agreement executed by USBFS and the Company, and
authorized or approved by the Board of Directors.
15. DUTIES IN THE EVENT OF TERMINATION
In the event that, in connection with termination, a successor to any of
USBFS's duties or responsibilities hereunder is designated by the Company
by written notice to USBFS, USBFS will promptly, upon such termination and
at the expense of the Company, transfer to such successor all relevant
books, records, correspondence and other data established or maintained by
USBFS under this Agreement in a form reasonably acceptable to the Company
(if such form differs from the form in which USBFS has maintained the
same, the Company shall pay any expenses associated with transferring the
data to such form), and will cooperate in the transfer of such duties and
responsibilities, including provision for assistance from USBFS's
personnel in the
establishment of books, records and other data by such successor. If no
such successor is designated, then such books, records and other data
shall be returned to the Company.
16. ASSIGNMENT
This Agreement shall extend to and be binding upon the parties hereto and
their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Company without the written
consent of USBFS, or by USBFS without the written consent of the Company
accompanied by the authorization or approval of the Company's Board of
Directors.
17. GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State
of Wisconsin, without regard to conflicts of law principles. To the extent
that the applicable laws of the State of Wisconsin, or any of the
provisions herein, conflict with the applicable provisions of the 1940
Act, the latter shall control, and nothing herein shall be construed in a
manner inconsistent with the 1940 Act or any rule or order of the SEC
thereunder.
18. NO AGENCY RELATIONSHIP
Nothing herein contained shall be deemed to authorize or empower either
party to act as agent for the other party to this Agreement, or to conduct
business in the name, or for the account, of the other party to this
Agreement.
19. SERVICES NOT EXCLUSIVE
Nothing in this Agreement shall limit or restrict USBFS from providing
services to other parties that are similar or identical to some or all of
the services provided hereunder.
20. INVALIDITY
Any provision of this Agreement which may be determined by competent
authority to be prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. In such case, the parties shall in good faith modify or
substitute such provision consistent with the original intent of the
parties.
21. NOTICES
Any notice required or permitted to be given by either party to the other
shall be in writing and shall be deemed to have been given on the date
delivered personally or by courier service, or three days after sent by
registered or certified mail, postage prepaid, return receipt requested,
or on the date sent and confirmed received by facsimile transmission to
the other party's address set forth below:
Notice to USBFS shall be sent to:
U.S. Bancorp Fund Services, LLC
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Fund Services
Facsimile: (000) 000-0000
and notice to the Company shall be sent to:
Tortoise North American Energy Corporation
00000 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, CEO and President
Facsimile: (000) 000-0000
22. MULTIPLE ORIGINALS
This Agreement may be executed on 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
executed by a duly authorized officer on one or more counterparts as of the date
first above written.
TORTOISE NORTH AMERICAN U.S. BANCORP FUND SERVICES, LLC
ENERGY CORPORATION
By: ______________________________ By: ______________________________
Title: ___________________________ Title: ___________________________
EXHIBIT A
TO THE
FUND ACCOUNTING SERVICING AGREEMENT
FUND ACCOUNTING SERVICES
ANNUAL FEE SCHEDULE
TORTOISE NORTH AMERICAN ENERGY CORPORATION MULTIPLE CLASSES
(CLOSED-END FUND) Each class is an additional 25% of the charge of the initial class.
$39,000 for the first $100 million MASTER/FEEDER FUNDS
2 basis points on the next $200 million Each master and feeder is charged according to the schedule.
1 basis point on the balance
MULTIPLE MANAGER FUNDS
* Subject to CPI increase, Milwaukee MSA. Additional base fee:
$12,000 per manager/sub-advisor per fund
Extraordinary services - quoted separately
NOTE - All schedules subject to change depending upon the use of
derivatives - options, futures, short sales, etc.
All fees are billed monthly plus out-of-pocket expenses, including
pricing service:
$.15 Domestic and Canadian Equities
$.15 Options
$.50 Corp/Gov/Agency Bonds
$.80 CMO's
$.50 International Equities and Bonds
$.80 Municipal Bonds
$.80 Money Market Instruments
$125 Per fund per month - Mutual Funds
Corporate Action Services
$2.00 Per equity security per month
Manual Security Pricing
$125 per month - greater than 10/day
Factor Services (BondBuyer)
Per CMO - $1.50/month
Per Mortgage Backed - $0.25/month
Minimum - $300/month
A-1
EXHIBIT B
TO THE
FUND ACCOUNTING SERVICING AGREEMENT
LIST OF AUTHORIZED OFFICERS
Name Title
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