ADMINISTRATION AGREEMENT
THIS ADMINISTRATION AGREEMENT ("Agreement") is made this _____ day of
_________ 2004 by and between RMK STRATEGIC INCOME FUND, INC. (the "Fund"), a
Maryland corporation, having its principal place of business at Xxxxx Xxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000, and XXXXXX ASSET MANAGEMENT, INC. (the
"Administrator"), a Tennessee corporation, having its principal place of
business at 000 Xxxxx 00xx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxx 00000.
WHEREAS, the Fund, a closed-end, diversified management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), wishes to retain the Administrator to provide administrative services to
the Fund; and
WHEREAS, the Administrator is willing to furnish such services on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1. APPOINTMENT OF THE ADMINISTRATOR. The Fund hereby appoints the
Administrator to act as the administrator for the Fund for the period, in the
manner, and on the terms set forth in this Agreement. The Administrator hereby
accepts such appointment and agrees during such period to render the services
and to assume the obligations herein set forth. The Administrator shall for all
purposes herein be deemed to be an independent contractor and shall, except as
expressly provided or authorized (whether herein or otherwise), have no
authority to act for or represent the Fund in any way or otherwise be deemed an
agent of the Fund
2. ADMINISTRATIVE SERVICES. As administrator, and subject to the
supervision and control of the Board of Directors of the Fund, the Administrator
shall perform (or supervise the performance by others) and will provide
facilities, equipment and personnel to carry out the following administrative
services for operation of the business and affairs of the Fund:
(i) furnish without cost to the Fund, or pay the cost of, such office
space, office equipment and office facilities as are adequate for
the needs of the Fund;
(ii) provide, without remuneration from or other cost to the Fund, the
services of individuals competent to perform all of the executive,
administrative and clerical functions of the Fund that are not
performed by employees or other agents engaged by the Fund or by the
Administrator acting in some other capacity pursuant to a separate
agreement or arrangement with the Fund;
(iii) assist the Fund in selecting and coordinating the activities of the
other agents engaged by the Fund, including the Fund's dividend
disbursing agent, custodian, independent public accountants and
legal counsel;
(iv) authorize and permit the Administrator's directors, officers or
employees who may be elected or appointed as officers of the Fund or
directors of the Fund to serve in such capacities, without
remuneration from or other cost to the Fund;
(v) assure that all financial, accounting and other records required to
be maintained and preserved by the Fund are maintained and preserved
by it or on its behalf in accordance with applicable laws and
regulations;
(vi) assist in the preparation of (but not pay for) all periodic reports
by the Fund to stockholders of the Fund and all reports and filings
required to maintain the registration, qualification and listing on
a national securities exchange of the Fund and the shares of the
Fund, or to meet other regulatory or tax requirements applicable to
the Fund or the shares of the Fund, under federal and state
securities and tax laws;
(vii) respond to telephonic and in-person inquiries from existing
stockholders or their representatives requesting information
regarding matters such as stockholder account or transaction status,
net asset value of Fund shares, and Fund performance, Fund services,
plans and options, Fund investment policies, Fund portfolio
holdings, and Fund distributions and classification thereof for tax
purposes;
(viii) handle stockholder complaints and correspondence directed to or
brought to the attention of the Administrator; generate or develop
and distribute special data, notices, reports, programs and
literature required by large stockholders, by stockholders with
specialized informational needs, or by stockholders generally in
light of developments, such as changes in tax laws; and
(ix) provide such other services required by the Fund as the parties may
from time to time agree in writing are appropriate to be provided
under this Agreement.
3. BOOKS AND RECORDS. The Administrator shall maintain customary records
in connection with its duties as specified in this Agreement. Any records
required to be maintained and preserved pursuant to Rules 31a-1 and 31a-2 under
the 1940 Act which are prepared or maintained by the Administrator on behalf of
the Fund shall be the property of the Fund and will be made available or
surrendered to the Fund promptly upon request. In the case of any request or
demand for the inspection of such records by another party, the Administrator
shall notify the Fund and follow the Fund's instructions as to permitting or
refusing such inspection.
4. REPORTS. The Administrator shall furnish to or place at the disposal
of the Fund such information, evaluations, analyses and opinions formulated or
obtained by the Administrator in the discharge of its duties as the Fund may,
from time to time, reasonably request. The Fund shall furnish the Administrator
with such documents and information with regard to its affairs as the
Administrator may, at any time or from time to time, reasonably request in order
to discharge its obligations under this Agreement.
5. FUND PERSONNEL. The Administrator agrees to permit individuals who are
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directors, officers or employees of the Administrator to serve (if duly
appointed or elected) as directors, officers or employees of the Fund, without
remuneration from or other cost to the Fund.
6. EXPENSES. The Administrator shall be responsible for expenses incurred
in providing office space, equipment and personnel as may be necessary or
convenient to provide administrative services to the Fund, including the payment
of all fees, expenses and salaries of the directors, officers or employees of
the Fund who are directors, officers or employees of the Administrator. The Fund
shall bear the expense of its operation, except those specifically allocated to
the Administrator under this Agreement or under any separate agreement between
the Fund and the Administrator. Subject to any separate agreement or arrangement
between the Fund and the Administrator, the expenses hereby allocated to the
Fund, and not to the Administrator, include, but are not limited to: (i)
organizational expenses; (ii) legal and audit expenses; (iii) borrowing
expenses; (iv) interest; (v) taxes; (vi) governmental fees; (vii) fees,
voluntary assessments and other expenses incurred in connection with membership
in investment company organizations; (viii) the cost (including brokerage
commissions or charges, if any) of securities purchased or sold by the Fund and
any losses incurred in connection therewith; (ix) fees of custodians, transfer
agents, registrars or other agents; (x) expenses of preparing share
certificates; (xi) expenses relating to the redemption or repurchase of shares;
(xii) expenses of registering and qualifying shares for sale under applicable
federal law and maintaining such registrations and qualifications; (xiii)
expenses of preparing, setting in print, printing and distributing prospectuses,
proxy statements, reports, notices and dividends to stockholders; (xiv) cost of
stationery; (xv) costs of stockholders and other meetings of the Fund; (xvi)
compensation and expenses of the independent directors of the Fund; (xvii) the
Fund's portion of premiums of any fidelity bond and other insurance covering the
Fund and its officers and directors; and (xviii) the fees and other expenses of
listing and maintaining the Fund's shares on the New York Stock Exchange or any
other national stock exchange.
7. COMPENSATION. As compensation for the services performed hereunder,
the Administrator shall receive from the Fund an administration fee at the
annual rate of 0.15% of the Fund's average daily total assets minus liabilities
(other than the aggregate indebtedness entered into for purposes of leverage)
("Managed Assets"). This administration fee shall be payable monthly as soon as
practicable after the last day of each month based on the average of the daily
values placed on the Managed Assets of the Fund as determined at the close of
business on each day throughout the month. The Managed Assets of the Fund will
be valued as of the close of regular trading on the New York Stock Exchange
(currently 4:00 p.m., Eastern time) on each business day throughout the month
or, if the Fund lawfully determines the value of its Managed Assets as of some
other time on each business day, as of such time. The first payment of such fee
shall be made as promptly as possible at the end of the month next succeeding
the effective date of this Agreement. In the event that the Administrator's
right to such fee commences on a date other than the first day of the month, the
fee for such month shall be based on the average daily Managed Assets of the
Fund in that period from the date of commencement to the last day of the month.
If the Fund determines the value of its Managed Assets more than once on any
business day, the last such determination on that day shall be deemed to be the
sole determination on that day. The value of the Managed Assets shall be
determined pursuant to the applicable provisions of the Fund's Articles of
Incorporation, its By-Laws and the 1940 Act. If, pursuant to such provisions,
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the determination of the net asset value of the Fund is suspended for any
particular business day, then the value of the Managed Assets of the Fund on
that day shall be deemed to be the value of its Managed Assets as determined on
the preceding business day. If the determination of the net asset value of the
Fund has been suspended for more than one month, the Administrator's
compensation payable at the end of that month shall be computed on the basis of
the value of the Managed Assets of the Fund as last determined (whether during
or prior to such month).
8. NON-EXCLUSIVE SERVICES. Nothing in this Agreement shall limit or
restrict the right of any director, officer or employee of the Administrator who
may also be a director, officer or employee of the Fund, to engage in any other
business or to devote his time and attention in part to the management or other
aspects of any other business, whether of a similar nature or a dissimilar
nature, nor to limit or restrict the right of the Administrator to engage in any
other business or to render services of any kind, including administrative
services, to any other corporation, firm, individual or association, provided
that any such other services and activities do not, during the term of this
Agreement, interfere, in a material manner, with the Administrator's ability to
meet all of its obligations to the Fund hereunder.
9. Limitation of Liability.
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9.1 LIABILITY OF THE ADMINISTRATOR. Neither the Administrator nor any
director, officer or employee of the Administrator performing services for the
Fund at the direction or request of the Administrator in connection with the
Administrator's discharge of its obligations hereunder shall be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with any matter to which this Agreement relates; provided that
nothing herein contained shall be construed (i) to protect the Administrator
against any liability to the Fund or its stockholders to which the Administrator
would otherwise be subject by reason of the Administrator's misfeasance, bad
faith, or gross negligence in the performance of the Administrator's duties, or
by reason of the Administrator's reckless disregard of its obligations and
duties under this Agreement ("disabling conduct"), or (ii) to protect any
director, officer or employee of the Administrator who is or was a director or
officer of the Fund against any liability to the Fund or its stockholders to
which such person would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of such person's office with the Fund.
9.2 INDEMNIFICATION BY THE FUND. The Fund will indemnify the
Administrator against, and hold it harmless from, any and all expenses
(including reasonable counsel fees and expenses) incurred investigating or
defending against claims for losses or liabilities described in Section 9.1 not
resulting from negligence, disregard of its obligations and duties under this
Agreement or disabling conduct by the Administrator. Indemnification shall be
made only following: (i) a final decision on the merits by a court or other body
before whom the proceeding was brought that the Administrator was not liable by
reason of negligence, disregard of its obligations and duties under this
Agreement or disabling conduct or (ii) in the absence of such a decision, a
reasonable determination, based upon a review of the facts, that the
Administrator was not liable by reason of negligence, disregard of its
obligations and duties under this Agreement or disabling conduct by (a) the vote
of a majority of a quorum of directors of the Fund who are neither "interested
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persons" of the Fund nor parties to the proceeding ("disinterested non-party
directors") or (b) an independent legal counsel in a written opinion. The
Administrator shall be entitled to advances from the Fund for payment of the
reasonable expenses incurred by it in connection with the matter as to which it
is seeking indemnification hereunder in the manner and to the fullest extent
permissible under the Maryland General Corporation Law. The Administrator shall
provide to the Fund a written affirmation of its good faith belief that the
standard of conduct necessary for indemnification by the Fund has been met and a
written undertaking to repay any such advance if it should ultimately be
determined that the standard of conduct has not been met. In addition, at least
one of the following additional conditions shall be met: (a) the Administrator
shall provide security in form and amount acceptable to the Fund for its
undertaking; (b) the Fund is insured against losses arising by reason of the
advance; or (c) a majority of a quorum of the full Board of Directors of the
Fund, the members of which majority are disinterested non-party directors, or
independent legal counsel, in a written opinion, shall have determined, based on
a review of facts readily available to the Fund at the time the advance is
proposed to be made, that there is reason to believe that the Administrator will
ultimately be found to be entitled to indemnification hereunder.
9.3 INDEMNIFICATION BY THE ADMINISTRATOR. The Administrator shall
indemnify the Fund and hold it harmless from and against any and all losses,
damages and expenses, including reasonable attorneys' fees and expenses,
incurred by the Fund which result from: (i) the Administrator's failure to
comply with the terms of this Agreement; or (ii) the Administrator's lack of
good faith in performing its obligations hereunder; or (iii) the Administrator's
negligence or misconduct or that of its employees, agents or contractors in
connection herewith. The Fund shall not be entitled to such indemnification in
respect of actions or omissions constituting negligence or misconduct on the
part of the Fund or its employees, agents or contractors other than the
Administrator unless such negligence or misconduct results from or is
accompanied by negligence or misconduct on the part of the Administrator, any
affiliated person of the Administrator, or any affiliated person of an
affiliated person of the Administrator. Before confessing any claim against it
which may be subject to indemnification hereunder, the Fund shall give the
Administrator reasonable opportunity to defend against such claim in its own
name or in the name of the Fund.
10. TERM OF AGREEMENT. The term of this Agreement shall begin on the date
first written above and, unless sooner terminated as hereinafter provided, this
Agreement shall remain in effect through __________ ___, 2005. Thereafter, this
Agreement shall continue in effect from year to year, subject to the termination
provisions and all other terms and conditions hereof; provided such continuance
is approved at least annually by vote or written consent of the directors,
including a majority of the directors who are not interested persons of either
party hereto ("Independent Directors"); and provided further, that the
Administrator shall not have notified the Fund in writing at least sixty (60)
days prior to the first expiration date hereof or at least sixty (60) days prior
to any expiration date in any year thereafter that it does not desire such
continuation. The Administrator shall furnish the Fund, promptly upon its
request, such information as may reasonably be necessary to evaluate the terms
of this Agreement or any extension, renewal or amendment thereof.
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11. AMENDMENT OR ASSIGNMENT OF AGREEMENT. This Agreement may be amended at
any time, but only by written agreement between the Administrator and the Fund,
which agreement has been authorized by the Board, including the vote or written
consent of a majority of the Independent Directors. This Agreement shall
terminate automatically and immediately in the event of its assignment.
12. TERMINATION OF AGREEMENT. This Agreement may be terminated at any time
by either party hereto, without the payment of any penalty, upon at least sixty
(60) days' prior written notice to the other party; provided that, in the case
of termination by the Fund, such action shall have been authorized by the Board,
including the vote or written consent of a majority of the Independent
Directors.
13. INTERPRETATION AND DEFINITION OF TERMS. Any question of interpretation
of any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such term or provision of the 1940 Act and to interpretation thereof, if any,
by the United States courts or, in the absence of any controlling decision of
any court, by rules, regulations or orders of the Securities and Exchange
Commission validly issued pursuant to the 1940 Act. Specifically, the terms
"assignment," "interested person" and "majority of the outstanding voting
securities" shall have the meanings given to them by Section 2(a) of the 1940
Act, subject to such exemptions as may be granted by the Securities and Exchange
Commission by any rule, regulation or order.
14. GOVERNING LAW. Except insofar as the 1940 Act or other federal laws
and regulations may be controlling, this Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Maryland.
15. NOTICE. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed postage prepaid to the other party to this
Agreement at its principal place of business.
16. CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
17. SEVERABILITY. 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.
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IN WITNESS WHEREOF the parties have caused this instrument to be signed on
their behalf by their respective officers thereunto duly authorized all as of
the date first written above.
RMK STRATEGIC Income Fund, Inc.
By:
---------------------------------
Name:
Title:
XXXXXX ASSET MANAGEMENT, INC.
By:
---------------------------------
Name:
Title:
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