KAYNE ANDERSON MIDSTREAM/ENERGY
FUND
Distribution Reinvestment Plan
We have adopted a distribution reinvestment plan (the "DRIP"),
which will become effective upon the closing of this offering, that
provides that unless you elect to receive your Distributions in
cash, they will be automatically reinvested by the Plan
Administrator, American Stock Transfer & Trust Company, in
additional shares of our common stock. If you elect to receive your
Distributions in cash, you will receive them in cash paid by check
mailed directly to you by the Plan Administrator.
No action is required on the part of a registered stockholder to
have their cash Distribution reinvested in shares of our common
stock. Unless you or your brokerage firm decides to opt out of the
DRIP, the number of shares of common stock you will receive will be
determined as follows:
(1) The number of shares to be issued to a stockholder shall be
based on share price equal to 95% of the closing price of our
common stock one day prior to the Distribution payment date.
(2) Our Board of Directors may, in its sole discretion, instruct
us to purchase shares of our common stock in the open market in
connection with the implementation of the DRIP as follows: If our
common stock is trading below net asset value at the time of
valuation, upon notice from us, the Plan Administrator will receive
the Distribution in cash and will purchase common stock in the open
market, on the NYSE or elsewhere, for the participants' accounts,
except that the Plan Administrator will endeavor to terminate
purchases in the open market and cause us to issue the remaining
shares if, following the commencement of the purchases, the market
value of the shares, including brokerage commissions, exceeds the
net asset value at the time of valuation. Provided the Plan
Administrator can terminate purchases on the open market, the
remaining shares will be issued by us at a price equal to the
greater of (i) the net asset value at the time of valuation, or
(ii) 95% of the then current market price. It is possible that the
average purchase price per share paid by the Plan Administrator may
exceed the market price at the time of valuation, resulting in the
purchase of fewer shares than if the Distribution had been paid
entirely in common stock issued by us.
You may withdraw from the DRIP at any time by giving written
notice to the Plan Administrator, or by telephone in accordance
with such reasonable requirements as we and the Plan Administrator
may agree upon. If you withdraw or the DRIP is terminated, you will
receive a certificate for each whole share in your account under
the DRIP and you will receive a cash payment for any fractional
shares in your account. If you wish, the Plan Administrator will
sell your shares and send the proceeds to you, less brokerage
commissions. The Plan Administrator is authorized to deduct a $15
transaction fee plus a $0.10 per share brokerage commission from
the proceeds.
The Plan Administrator will maintain all common stockholders'
accounts in the DRIP and will give written confirmation of all
transactions in the accounts, including information you may need
for tax records. Common stock in your account will be held by the
Plan Administrator in non-certificated form. The Plan Administrator
will forward to each participant any proxy solicitation material
and will vote any shares so held only in accordance with proxies
returned to us. Any proxy you receive will include all common stock
you have received under the DRIP.
There is no brokerage charge for reinvestment of your
Distributions in common stock. However, all participants will pay a
pro rata share of brokerage commissions incurred by the Plan
Administrator when it makes open market purchases.
Automatically reinvesting Distributions does not mean that you do
not have to pay income taxes due upon receiving Distributions, even
though you have not received any cash with which to pay the
resulting tax. See "Tax Matters."
If you hold your common stock with a brokerage firm that does not
participate in the DRIP, you will not be able to participate in the
DRIP and any Distribution reinvestment may be effected on different
terms than those described above. Consult your financial adviser
for more information.
The Plan Administrator's fees under the DRIP will be borne by us.
There is no direct service charge to participants in the DRIP;
however, we reserve the right to amend or terminate the DRIP,
including amending the DRIP to include a service charge payable by
the participants, if in the judgment of the Board of Directors the
change is warranted. Any amendment to the DRIP, except amendments
necessary or appropriate to comply with applicable law or the rules
and policies of the SEC or any other regulatory authority, require
us to provide at least 30 days written notice to each participant.
Additional information about the DRIP may be obtained from American
Stock Transfer & Trust Company at 6201 15th Avenue, Brooklyn,
New York 11219.