Exhibit K.2
FUND ADMINISTRATION SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this 12 day of December,
2003, by and between TORTOISE ENERGY INFRASTRUCTURE CORPORATION, a Maryland
corporation (the "Company" or "Fund") 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
fund administration services for the benefit of its customers; and
WHEREAS, the Company desires to retain USBFS to provide fund
administration services for 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 ADMINISTRATOR
The Company hereby appoints USBFS as administrator 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.
2. SERVICES AND DUTIES OF USBFS
USBFS shall provide the following fund administration services for the
Fund, including but not limited to:
A. General Fund Management:
(1) Act as liaison among all Fund service providers.
(2) Supply:
a. Corporate secretarial services.
b. Office facilities (which may be in USBFS's
or its affiliate's own offices).
c. Non-investment-related statistical and
research data as needed.
1
(3) Coordinate the Company's Board of Directors' (the
"Board of Directors" or the "Directors")
communications, such as:
a. Establish meeting agendas.
b. Prepare reports for the Board of Directors
based on financial and administrative data.
c. Evaluate independent auditor.
d. Secure and monitor fidelity bond and
director and officer liability coverage, and
make the necessary Securities and Exchange
Commission (the "SEC") filings relating
thereto.
e. Prepare minutes of meetings of the Board of
Directors and Fund shareholders.
f. Recommend dividend declarations to the Board
of Directors, prepare and distribute to
appropriate parties notices announcing
declaration of dividend distributions to
shareholders.
g. Provide personnel to serve as officers of
the Company if so elected by the Board of
Directors, attend Board of Directors
meetings and present materials for
Directors' review at such meetings.
(4) Audits:
a. Prepare appropriate schedules and assist
independent auditors.
b. Provide information to the SEC and
facilitate audit process.
c. Provide office facilities.
(5) Assist in overall operations of the Fund.
(6) Pay Fund expenses upon written authorization from the
Company.
B. Compliance:
(1) Regulatory Compliance:
a. Monitor compliance with the 1940 Act
requirements, including:
(i) Total return, SEC yield
calculations and leverage limits.
(ii) Maintenance of books and records
under Rule 31a-3.
(iii) Code of Ethics requirements for the
disinterested Directors of the
Fund.
b. Monitor Fund's compliance with the policies
and investment limitations of the Company as
set forth in its prospectus (the
"Prospectus") and statement of additional
information (the "SAI") or as amended as
notified by the Company.
c. Maintain awareness of applicable regulatory
and operational service issues and recommend
dispositions.
d. Draft and disseminate to the New York Stock
Exchange quarterly earnings statements,
annual written affirmation atatements,
record
2
date notification for annual neeting of fund
shareholders, proxy voting updates and final
results and miscellaneous press releases as
periodically required with respect to
material changes within the Fund.
(2) SEC Registration and Reporting:
a. Assist Fund counsel in updating the
Prospectus and SAI and in preparing proxy
statements.
b. Prepare and file annual and semiannual
reports, Forms N-SAR, N-CSR and N-PX
filings.
c. Coordinate the printing and mailing of
publicly disseminated reports.
d. File fidelity bond under Rule 17g-1.
e. File shareholder reports under Rule 30b2-1.
f. Monitor sales of the Fund's shares and
ensure that such shares are properly
registered or qualified, as applicable, with
the SEC and the appropriate state
authorities.
(3) IRS Compliance:
a. Monitor the Company's status as a C
corporation.
b. Calculate required distributions (including
excise tax distributions, if any).
C. Financial Reporting:
(1) Prepare financial reports for officers, shareholders,
tax authorities, performance reporting companies, the
Board of Directors, the SEC, and independent
auditors.
(2) Supervise the Company's custodian and fund
accountants in the maintenance of the Company's
general ledger and in the preparation of the Fund's
financial statements, including oversight of expense
accruals and payments, of the determination of net
asset value of the Company's shares, and of the
declaration and payment of dividends and other
distributions to shareholders.
(3) Compute the yield, total return and expense ratio of
the Fund, and the Fund's portfolio turnover rate.
(4) Monitor the expense accruals and notify the Company's
management of any proposed adjustments.
(5) Prepare monthly financial statements, which include
without limitation the following items:
a. Schedule of Investments.
b. Statement of Assets and Liabilities.
c. Statement of Operations.
d. Statement of Changes in Net Assets.
e. Cash Statement.
3
f. Schedule of Capital Gains and Losses.
(7) Prepare quarterly broker security transaction
summaries.
(8) Calculate distributable cash flow to be distributed
quarterly to shareholders.
(9) Calculate advisory fee.
D. Tax Reporting:
(1) Prepare and file on a timely basis appropriate
federal and state tax returns including, without
limitation, Forms 1120/8610 with any necessary
schedules.
(2) Prepare state income breakdowns where relevant.
(3) File Form 1099 Miscellaneous for payments to
Directors and other service providers.
(4) Monitor wash sale losses.
(5) Calculate eligible dividend income for corporate
shareholders.
(6) Calculate return of capital for shareholders.
3. 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). The Company shall pay all fees
and reimbursable expenses within thirty (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
thirty (30) calendar days following receipt of each invoice if the
Company is disputing any amounts in good faith. The Company shall
settle such disputed amounts within ten (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 one and
one-half percent (1 1/2%) per month, after the due date.
4
4. 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 matters to which this
Agreement relates, 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 bad faith, negligence, or
willful misconduct on its part 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) which USBFS may sustain or incur or which 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, 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 bad faith, negligence or from willful
misconduct on its part in performance of its duties under this
Agreement, (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 furnished to USBFS and as amended from time to time
in writing by resolution of the Board of Directors.
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, its bad faith, negligence, or willful
misconduct.
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
beyond USBFS's control. 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.
5
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.
5. 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 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, when requested to
divulge such information by duly constituted authorities, or when so
requested by the Company.
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 "Act"). Notwithstanding the foregoing,
USBFS will not share any nonpublic personal information concerning any
of the Company's shareholders to any third party unless specifically
directed by the Company or allowed under one of the exceptions noted
under the Act.
6. 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 ninety (90) days prior written notice to the
other party or such shorter period as is mutually agreed upon by the
parties. However, this Agreement may be amended by mutual written
consent of the parties.
6
7. 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 on and in accordance with
its request.
8. 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.
9. 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 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.
10. NO AGENCY RELATIONSHIP
Nothing herein contained shall be deemed to authorize or empower USBFS
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.
11. 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. If USBFS is also acting in another capacity for
the Company, nothing herein shall be deemed to relieve USBFS of any of
its obligations in such capacity.
7
12. ASSIGNMENT
This Agreement may not be assigned by either party without the prior
written consent of the other party.
13. 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 (3) 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
and notice to the Company shall be sent to:
Tortoise Capital Advisors
000 Xxxx 00xx Xxxxxx
Xxxxxx Xxxx, XX 00000
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 ENERGY INFRASTRUCTURE U.S. BANCORP FUND SERVICES, LLC
CORPORATION
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxx X. Xxxxxxx
-------------------------------- --------------------------------
Title: Treasurer Title: President
----------------------------- -----------------------------
8
EXHIBIT A
FUND ADMINISTRATION & COMPLIANCE SERVICES
ANNUAL FEE SCHEDULE
TORTOISE ENERGY INFRASTRUCTURE CORPORATION
(CLOSED-END FUND)
Annual fee based upon assets per fund*
7 basis points on the first $300 million
6 basis points on the next $500 million
4 basis points on the balance
Minimum annual fee: $45,000
Extraordinary services - quoted separately
o Multiple classes
o Legal administration
o Master feeder funds
o International funds
o File transfer (subject to requirements)
o Etc.
Plus out-of-pocket expenses, including but not limited to:
Postage, Stationery
Programming, Special Reports
Proxies, Insurance
XXXXX filing
Retention of records
Federal and state regulatory filing fees
Certain insurance premiums
Expenses from board of directors meetings
Auditing and legal expenses
Blue Sky conversion expenses (if necessary)
All other out-of-pocket expenses
Fees are billed monthly.
* Subject to CPI increase, Milwaukee MSA.
INTERNATIONAL FUNDS
Annual fee based upon assets per fund*
9 basis points on the first $200 million
8 basis points on the next $300 million
6 basis points on the next $500 million
4 basis points on the balance
Minimum annual fee: $50,000 per fund
Extraordinary services - quoted separately
o Multiple classes
o Legal administration
o Master feeder funds
o International funds
o File transfer (subject to requirements)
o Etc.
Plus out-of-pocket expenses, including but not limited to:
Postage, Stationery
Programming, Special Reports
Proxies, Insurance
XXXXX filing
Retention of records
Federal and state regulatory filing fees
Certain insurance premiums
Expenses from board of directors meetings
Auditing and legal expenses
Blue Sky conversion expenses (if necessary)
All other out-of-pocket expenses
Fees are billed monthly.
* Subject to CPI increase.
