Exhibit h.3
ADMINISTRATION AGREEMENT
AGREEMENT made as of May 21, 2002 by and between iShares Inc., a
Maryland Corporation (the "Fund"), and INVESTORS BANK & TRUST COMPANY, a
Massachusetts trust company (the "Bank").
WHEREAS, the Fund is a registered investment company under the
Investment Company Act of 1940, as amended (the "1940 Act") consisting of the
separate series listed on Appendix A hereto (as such Appendix A may be amended
from time to time) (each an "Index Series" and collectively, the "Index
Series");
WHEREAS, common shares of each Index Series will be listed on a
registered securities exchange; and
WHEREAS, the Fund desires to retain the Bank to render certain
administrative services to the Fund and the Bank is willing to render such
services.
NOW, THEREFORE, in consideration of the mutual covenants herein set
forth, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints the Bank to act as
Administrator of the Fund on the terms set forth in this Agreement. The Bank
accepts such appointment and agrees to render the services herein set forth for
the compensation herein provided.
2. Delivery of Documents. The Fund has furnished the Bank with
copies properly certified or authenticated of each of the following:
(a) Resolutions of the Fund's Board of Directors authorizing
the appointment of the Bank to provide certain administrative services to the
Fund and approving this Agreement;
(b) The Fund's incorporating documents filed with the state
of Maryland on [date] and all amendments thereto (the "Articles");
(c) The Fund's by-laws and all amendments thereto (the
"By-Laws");
(d) The Fund's agreements with all service providers which
include any investment advisory agreements, sub-investment advisory agreements,
custody agreements, distribution agreements and transfer agency agreements
(collectively, the "Agreements");
(e) The Fund's most recent Registration Statement on Form N-1A
(the "Registration Statement") under the Securities Act of 1933 and under the
1940 Act and all amendments thereto; and
(f) The Fund's most recent prospectus and statement of
additional information (the "Prospectus"); and
(g) Such other certificates, documents or opinions as may
mutually be deemed necessary or appropriate for the Bank in the proper
performance of its duties hereunder.
The Fund will promptly furnish the Bank with copies of all
amendments of or supplements to the foregoing. Furthermore, the Fund will
promptly notify the Bank of any matter which would materially affect the
performance by the Bank of its services under this Agreement.
3. Duties of Administrator.
(a) Subject to the supervision and direction of the Board of
Directors of the Fund, the Bank, as Administrator, will conduct various aspects
of the Fund's administrative operations and undertakes to perform the services
described in Appendix B hereto. The Fund hereby represents that the sale of Fund
shares are not subject to Blue Sky laws and the Bank shall not be responsible
for any registration, tracking or other functions related to the Blue Sky laws
of any state. The Bank may, from time to time, perform additional duties and
functions which shall be set forth in an amendment to such Appendix B executed
by both parties.
(b) In performing all services under this Agreement, the Bank
shall act in conformity with the Fund's Articles and By-Laws and the 1940 Act,
as the same may be amended from time to time, and the investment objectives,
investment policies and other practices and policies set forth in the Fund's
Registration Statement, as the same may be amended from time to time.
Notwithstanding any item discussed herein, the Bank has no discretion over the
Fund's assets or choice of investments and cannot be held liable for any losses
resulting from the exercise of such discretion or investment choices.
(c) The Bank shall, during the period that this Agreement
remains in effect, maintain an Errors & Omissions policy of at least $50
million, which policy will insure against all claims sustained by any party
(including the Fund) as a result of any actual or alleged wrongful act, error or
omission in the Bank's rendering of or failure to render services in accordance
with the terms set forth in the Bank's agreements with its clients.
4. Proper Instructions. Proper Instructions shall mean
(i) instructions given by an Authorized Person (which shall include the Fund's
Distributor), such instructions to be given in such form and manner as the Bank
and the Fund shall agree upon from time to time, and (ii) instructions (which
may be continuing instructions) signed or initialed by an Authorized Person.
Oral instructions will be considered Proper Instructions if the Bank reasonably
believes them to have been given by an Authorized Person. The Fund shall cause
all oral instructions to be promptly confirmed in writing. The Bank shall act
upon and comply with any subsequent Proper Instruction which modifies a prior
instruction and the sole obligation of the Bank with respect to any follow-up or
confirmatory instruction shall be to make reasonable efforts to detect any
discrepancy between the original instruction and such confirmation and to report
such discrepancy to the Fund. The Fund shall be responsible, at the Fund's
expense, for taking any action, including any reprocessing, necessary to correct
any such discrepancy or error, and to the extent such action requires the Bank
to act, the Fund shall give the Bank specific Proper Instructions as to the
action required. Proper Instructions shall include communication effected
directly between electro-mechanical or electronic devices, including information
transmitted by the Fund's Distributor. The Fund hereby authorizes such use of
electro-mechanical or electronic communication and the Fund and the Bank will
agree as to procedures which shall afford adequate safeguards for the Fund's
assets.
5. Fees and Expenses.
(a) For the services rendered by the Bank hereunder, the Fund
will pay to the Bank such fees at such rate as shall be agreed upon in writing
by the parties from time to time. The Fund will also pay or reimburse the Bank
from time to time for any transfer taxes payable upon any transfers made
hereunder, and for all necessary proper disbursements, expenses and charges made
or incurred by the Bank in the performance of this Agreement (including any
duties listed on any Schedule hereto, if any) including any indemnities for any
loss, liabilities or expense to the Bank as provided herein. The Bank will also
be entitled to reimbursement by the Fund for all reasonable expenses incurred in
conjunction with termination of this Agreement and any conversion or transfer
work done in connection therewith.
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(b) Fees and expenses will be calculated monthly. Fees and
expenses owed to the Bank for any month may be charged against any cash balance
held by the Fund beginning on the fifth (5th) business day after the end of such
month based on information then available. Fees charged to an account may result
in an overdraft that will be subject to normal interest charges. The Fund will
have thirty (30) days after the receipt of an invoice to dispute any charge that
appears on such invoice.
(c) The Bank shall not be required to pay any expenses
incurred by the Fund.
(d) In the case of the following transactions, not in the
ordinary course of business, namely, the merger of a series of the Fund into or
the consolidation of a series of the Fund with another investment company or
series thereof, the sale by a series of the Fund of all, or substantially all,
of its assets to another investment company or series thereof, or the
liquidation or dissolution of a series of the Fund and distribution of its
assets, upon the payment of the fees, disbursements and expenses of the Bank
through the then remaining term of this Agreement, the Bank will complete all
actions reasonably necessary to implement such merger, consolidation, or sale
upon the order of the Fund set forth in an Officers' Certificate, accompanied by
a certified copy of a resolution of the Board authorizing any of the foregoing
transactions. Upon completion of such actions and the payment of all such fees,
disbursements and expenses of the Bank, this Agreement will terminate and the
Bank shall be released from any and all obligations hereunder.
6. Limitation of Liability.
6.1 Notwithstanding anything in this Agreement to the contrary, in no
event shall the Bank or any of its officers, directors, employees or agents
(collectively, the "Indemnified Parties") be liable to the Fund or any third
party, and the Fund shall indemnify and hold the Bank and the Indemnified
Parties harmless from and against any and all loss, damage, liability, actions,
suits, claims, costs and expenses, including reasonable legal fees, (a "Claim")
arising as a result of any act or omission of the Bank or any Indemnified Party
under this Agreement, except for any Claim to the extent such Claim results from
the material breach of this Agreement by or negligence, willful misfeasance or
bad faith of the Bank or any Indemnified Party.
6.2 The Bank shall indemnify and hold the Fund, its Board of Trustees,
officers and employees and its agents harmless from and against any and all
Claims to the extent any such Claim arises out of the negligent acts or
omissions, bad faith, willful misconduct or material breach of this Agreement by
the Bank, its officers, directors or employees or any of its agents or
subcustodians in connection with the activities undertaken pursuant to this
Agreement, provided that the Bank's indemnification obligation with respect to
the acts or omissions of its subcustodians shall not exceed the indemnification
provided by the applicable subcustodian to the Bank.
6.3 Notwithstanding anything to the contrary in this Agreement, in no
event shall a party to this Agreement be liable to the other party or any third
party for lost profits or lost revenues or any special, consequential, punitive
or incidental damages of any kind whatsoever in connection with this Agreement
or any activities hereunder.
6.4 Notwithstanding anything to the contrary in this Agreement, in no
event shall a party to this Agreement be liable to the other party or any third
party for losses resulting from (i) any acts of God, fires, floods, or other
disturbances of nature, epidemics, strikes, riots, nationalization,
expropriation, currency restrictions, or insurrection, and (ii) other happenings
or events beyond the reasonable control or anticipation of the party effected,
provided that (A) the effected party has in place appropriate business
resumption procedures, systems and facilities and (B) the effected party uses
its best efforts to avoid or remove the cause of such losses.
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6.5 In performing its duties hereunder, the Bank will be entitled to
receive and act upon the advice of independent counsel of its own selection,
which may be counsel for the Fund.
6.6 The Bank may rely upon any Proper Instruction which it reasonably
believes to be genuine and to be signed or presented by any Authorized Person.
The Bank shall not be held to have notice of any change of authority of any
Authorized Person until receipt of appropriate written notice thereof has been
received by the Bank from the Fund.
6.7 In order that the indemnification provisions contained in this
Article 14 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking the indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
seeking indemnification shall give the indemnifying party full and complete
authority, information and assistance to defend such claim or proceeding, and
the indemnifying party shall have, at its option, sole control of the defense of
such claim or proceeding and all negotiations for its compromise or settlement.
The party seeking indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required to indemnify it
except with the other party's prior written consent, which consent shall not be
unreasonably withheld.
7. Termination of Agreement.
7.1 The term of this Agreement shall continue through April 1,
2006 (the "Initial Term"), unless earlier terminated as provided herein. After
the expiration of the Initial Term, the term of this Agreement shall
automatically renew for successive three-year terms (each a "Renewal Term")
unless notice of non-renewal is delivered by the non-renewing party to the other
party no later than ninety days prior to the expiration of the Initial Term or
any Renewal Term, as the case may be.
(a) Either party hereto may terminate this Agreement prior to
the expiration of the Initial Term or any Renewal Term in the event the other
party breaches any material provision of this Agreement, provided that the
non-breaching party gives written notice of such breach to the breaching party
and the breaching party does not cure such violation within 90 days of receipt
of such notice.
(b) The Fund may terminate this Agreement prior to the
expiration of the Initial Term or any Renewal Term upon ninety days' prior
written notice in the event that:
(i) the Bank's parent, Investors Financial Services Corp.
("IFSC"), fails to maintain a minimum capital level
as follows: (i) total stockholders' equity, as set
forth in IFSC's most recent annual or quarterly
financial statements, shall be equal to no less than
$100 million, and (ii) the sum of (x) total
stockholders' equity and (y) the outstanding amount
of company-obligated, manditorily redeemable,
preferred securities, each as set forth in IFSC's
most recent annual or quarterly financial statements,
shall be equal to no less than $125 million; or
(ii) the Board of the Fund votes to liquidate the Fund and
terminate its registration with the Securities and
Exchange Commission other than in connection with a
merger or acquisition of the Fund or the Fund's
investment adviser.
7.2 At any time after the termination of this Agreement, the
Fund may, upon written request, have reasonable access to the records of the
Bank relating to its performance of its duties as Administrator.
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8. Miscellaneous.
(a) Any notice or other instrument authorized or required by
this Agreement to be given in writing to the Fund or the Bank shall be
sufficiently given if addressed to that party and received by it at its office
set forth below or at such other place as it may from time to time designate in
writing.
To the Fund:
iShares, Inc.
c/o Fund Administration
Barclays Global Fund Advisers
00 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
With a copy to: Legal Department
To the Bank:
Investors Bank & Trust Company
000 Xxxxxxxxx Xxxxxx, X.X. Xxx 0000
Xxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxxx, Senior Director,
Client Management
With a copy to: Xxxx X. Xxxxx, General Counsel
(b) This Agreement shall extend to and shall be binding upon
the parties hereto and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable without the written consent
of the other party.
(c) This Agreement shall be construed in accordance with the
laws of the State of New York, without regard to its conflict of laws
provisions.
(d) This Agreement may be executed in any number of
counterparts each of which shall be deemed to be an original and which
collectively shall be deemed to constitute only one instrument.
(e) The captions of this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
9. Confidentiality. Both parties hereto agree than any non-public
information obtained hereunder concerning the other party is confidential and
may not be disclosed without the consent of the other party, except as may be
required by applicable law or at the request of a governmental agency or
self-regulatory organization. The parties further agree that a breach of this
provision would irreparably damage the other party and accordingly agree that
each of them is entitled, in addition to all other remedies at law or in equity
to an injunction or injunctions without bond or other security to prevent
breaches of this provision. In addition, the parties further agree that any
Nonpublic Personal Information, as defined under Section 248.3(t) of Regulation
S-P ("Regulation S-P"), promulgated under the Xxxxx-Xxxxx-Xxxxxx Act (the
"Act"), disclosed by a party hereunder is for the specific purpose of permitting
the other party to perform the services set forth in this Agreement. Each party
agrees that, with respect to such information, it will comply with Regulation
S-P and the Act and that it will not disclose any Nonpublic Personal
Information received in connection with this Agreement, to any other party,
except as necessary to carry out the services set forth in this Agreement or as
otherwise permitted by Regulation S-P or the Act.
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10. Fund Liability. The Bank agrees that the obligations assumed by the
Fund hereunder shall be limited in all cases to the assets of the Fund and that
the Bank shall not seek satisfaction of any such obligation from the officers,
agents, employees, trustees, or shareholders of the Fund.
11. Several Obligations of the Index Series. This Agreement is an
agreement entered into between the Bank and the Fund with respect to each Index
Series. With respect to any obligation of the Fund on behalf of any Index Series
arising out of this Agreement, the Bank shall look for payment or satisfaction
of such obligation solely to the assets of the Index Series to which such
obligation relates as though the Bank had separately contracted with the Fund by
separate written instrument with respect to each Index Series.
12. Use of Name. A party shall not use the name of the other party or
any of its affiliates in any prospectus, sales literature or other material
relating to the Fund in a manner not approved by the other party prior thereto
in writing; provided however, that such approval shall not be required for any
use of its name which merely refers in accurate and factual terms to the Bank's
appointment hereunder or which is required by the Securities and Exchange
Commission or any state securities authority or any
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other appropriate regulatory, governmental or judicial authority; provided
further, that in no event shall such approval be unreasonably withheld or
delayed.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed and delivered by their duly authorized officers as of the date
first written above.
iSHARES, INC.
By: /s/ Xxxxxxx Xxxxxx
------------------
Name: Xxxxxxx Xxxxxx
Title: Secretary and Treasurer
INVESTORS BANK & TRUST COMPANY
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
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Appendices
Appendix A ..................................... Portfolios
Appendix B ..................................... Services
APPENDIX A
iShares, Inc.
iShares MSCI Australia Index Fund
iShares MSCI Austria Index Fund
iShares MSCI Belgium Index Fund
iShares MSCI Brazil Index Fund
iShares MSCI Canada Index Fund
iShares MSCI Emerging Markets Index Fund
iShares MSCI EMU Index Fund
iShares MSCI France Index Fund
iShares MSCI Germany Index Fund
iShares MSCI Hong Kong Index Fund
iShares MSCI Italy Index Fund
iShares MSCI Japan Index Fund
iShares MSCI Malaysia Index Fund
iShares MSCI Mexico Index Fund
iShares MSCI Netherlands Index Fund
iShares MSCI Pacific ex-Japan Index Fund
iShares MSCI Singapore Index Fund
iShares MSCI South Africa Index Fund
iShares MSCI South Korea Index Fund
iShares MSCI Spain Index Fund
iShares MSCI Sweden Index Fund
iShares MSCI Switzerland Index Fund
iShares MSCI Taiwan Index Fund
iShares MSCI United Kingdom Index Fund
