Exhibit (g)(1)
MANAGEMENT AGREEMENT
AGREEMENT made this 13th day of November 2001, by and between JAPAN
OTC EQUITY FUND, INC., a Maryland corporation (hereinafter referred to as the
"Fund"), and NOMURA ASSET MANAGEMENT U.S.A. INC., a New York corporation
(hereinafter referred to as the "Manager").
W I T N E S S E T H:
WHEREAS, the Fund is engaged in business as a non-diversified,
closed-end, management investment company registered under the Investment
Company Act of 1940, as amended (hereinafter referred to as the "Investment
Company Act"); and
WHEREAS, the Manager is willing to provide management and investment
advisory services to the Fund on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements of the parties hereto as herein set forth, the parties covenant and
agree as follows:
ARTICLE I
Duties of the Manager
The Fund hereby retains the Manager to act as the manager of the Fund
and to furnish the Fund with the management and investment advisory services
described below, subject to the policies of, review by and overall control of
the Board of Directors of the Fund, for the period and on the terms and
conditions set forth in this Agreement. The Manager hereby accepts such
employment and agrees during such period, at its own expense, to render, or
arrange for the rendering of, such services and to assume the obligations
herein set forth for the compensation provided for herein.
(a) Management and Administrative Services. The Manager shall
perform, or supervise the performance of, the management and administrative
services necessary for the operation of the Fund including administering
shareholder accounts and handling shareholder relations. The Manager shall
provide the Fund with office space, equipment and facilities and such other
services as the Manager, subject to review by the Board of Directors of the
Fund, shall from time to time determine to be necessary or useful to perform
its obligations under this Agreement. The Manager shall also, on behalf of the
Fund, conduct relations with custodians, depositories, transfer agents,
dividend disbursing agents, other shareholder servicing agents, accountants,
attorneys, underwriters, brokers and dealers, corporate fiduciaries, insurers,
banks and such other persons in any such other capacity deemed to be necessary
or desirable. The Manager shall generally monitor the Fund's compliance with
investment policies and restrictions as set forth in filings made by the Fund
under Federal securities laws. The Manager shall make reports to the Board of
Directors of the Fund of the performance of its obligations hereunder and
furnish advice and recommendations with respect to such other aspects of the
business and affairs of the
Fund as it shall determine to be desirable. The Manager and each of its
affiliates shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have
no authority to act for or represent the Fund in any way or otherwise be deemed
an agent of the Fund.
(b) Investment Advisory Services. The Manager shall provide the Fund
with such investment research, advise and supervision as the latter may from
time to time consider necessary for the proper supervision of the assets of
the Fund. The Manager shall act as investment adviser to the Fund and as such
shall furnish continuously an investment program for the Fund and shall
determine from time to time which securities shall be purchased, sold or
exchanged and what portion of the assets of the Fund shall be held in the
various securities in which the Fund invests, options, futures, options on
futures or in cash, subject always to the restrictions of the Articles of
Incorporation and By-Laws of the Fund, as amended from time to time, the
provisions of the Investment Company Act and the statements relating to the
Fund's investment objective, investment policies and investment restrictions
as the same are set forth in filings made by the Fund under Federal securities
laws. The Manager shall make decisions for the Fund as to foreign currency
matters and make determinations as to foreign exchange contracts. The Manager
shall make recommendations as to the manner in which voting rights, rights to
consent to corporate action and any other rights pertaining to the Fund's
portfolio securities shall be exercised. Should the Board of Directors of the
Fund at any time, however, make any definite determination as to investment
policy and notify the Manager thereof in writing, the Manager shall be bound
by such determination for the period, if any, specified in such notice or
until similarly notified that such determination has been revoked. The Manager
shall take, on behalf of the Fund, all actions which it deems necessary to
implement the investment policies determined as provided above, and in
particular to place all orders for the purchase or sale of portfolio
securities for the Fund's account with brokers or dealers selected by it, and
to that end, the Manager is authorized as the agent of the Fund to give
instructions to the Custodian of the Fund as to deliveries of securities and
payments of cash for the account of the Fund. In connection with the selection
of such brokers and dealers and the placing of such orders, the Manager is
directed at all times to seek to obtain execution and price within the policy
guidelines determined by the Board of Directors of the Fund and set forth in
the filings made by the Fund under Federal securities laws. Subject to this
requirement and the provisions of the Investment Company act, the Securities
Exchange Act of 1934, as amended, and other applicable provisions of law, the
Manager may select brokers or dealers with which it, or the Fund, is
affiliated.
ARTICLE II
Allocation of Charges and Expenses
(a) The Manager. The Manager assumes and shall pay for maintaining
the staff and personnel necessary to perform its obligations under this
Agreement and shall, at its own expense, provide the office space, equipment
and facilities which it is obligated to provide under Article I hereof, and
shall pay all compensation of officers of the Fund and all directors of the
Fund who are "affiliated persons" (as defined in the Investment Company Act)
of the Manager.
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(b) The Fund. The Fund assumes and shall pay or cause to be paid all
other expenses of the Fund, including, without limitation: organization costs,
taxes, expenses for legal and auditing services, costs of printing proxies,
stock certificates, shareholder reports, prospectuses, charges of the
Custodian, any Sub-Custodian and Transfer and Dividend Disbursing Agent,
expenses of portfolio transactions, Securities and Exchange Commission and
stock exchange fees, expenses of registering the Fund's shares under Federal,
state and foreign laws, expenses of administering any dividend reinvestment
plan (except to the extent set forth in such plan), fees and actual
out-of-pocket expenses of directors who are not affiliated persons of the
Manager, accounting and pricing costs (including the calculation of the net
asset value), insurance, interest, brokerage costs, litigation and other
extraordinary or non-recurring expenses, and other like expenses properly
payable by the Fund.
ARTICLE III
Compensation of the Manager
For the services rendered, the equipment and facilities furnished and
expenses assumed by the Manager, the Fund shall pay to the Manager at the end
of each calendar month a fee at the annual rate of 1.10% of the Fund's average
weekly net assets (i.e., the average weekly value of the total assets of the
Fund, minus the sum of liabilities of the Fund), not in excess of $50 million,
1.00% of the Fund's average weekly net assets in excess of $50 million but not
in excess of $100 million, .90% of the Fund's average weekly net assets in
excess of $100 million but not in excess of $175 million and .80% of the
average weekly net assets in excess of $175 million, commencing on the day
following effectiveness hereof. For purposes of this calculation, average
weekly net assets is determined at the end of each month on the basis of the
average net assets of the Fund for each week during the month. The assets for
each weekly period are determined by averaging the net assets at the last
business day of the prior week. If this Agreement becomes effective subsequent
to the first day of a month or shall terminate before the last day of a month,
compensation for that part of the month this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fee as set forth
above. During any period when the determination of net asset value is
suspended by the Board of Directors of the Fund, the average net asset value
of a share for the last week prior to such suspension shall for this purpose
be deemed to be the net asset value at the close of each succeeding week until
it is again determined.
ARTICLE IV
Retention of Investment Adviser
This Agreement is entered into with the understanding that the
Manager will enter into a separate Investment Advisory Agreement with Nomura
Asset Management Co., Ltd., in the form attached hereto as Exhibit A, in which
the Manager will contract for advisory services and pay the Investment Adviser
compensation for its services out of the compensation received hereunder
pursuant to Article III at the rates set forth therein. Such Investment
Advisory Agreement will be coterminous with this Management Agreement. The
Fund acknowledges that the Manager, with
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the prior authorization of the Fund's Board of Directors, may delegate its
investment discretion set forth in Article I(b) hereof to the Investment
Adviser.
ARTICLE V
Limitation of Liability of the Manager
The Manager shall not be liable for any error of judgment or mistake
of law or for any loss arising out of any investment or for any act or
omission in the execution and management of the Fund, except for willful
misfeasance, bad faith or gross negligence in the performance of its duties,
or by reason of reckless disregard of its obligations and duties hereunder. As
used in this Article V, the term "Manager" shall include any affiliates of the
Manager performing services for the Fund contemplated hereby and directors,
officers and employees of the Manager as well as the corporation itself.
ARTICLE VI
Activities of the Manager
The services of the Manager to the Fund are not to be deemed to be
exclusive, the Manager and any person controlled by or under common control
with the Manager (for purposes of this Article VI referred to as "affiliates")
being free to render services to others. It is understood that directors,
officers, employees and shareholders of the Fund are or may become interested
in the Manager and its affiliates, as directors, officers, employees,
partners, and shareholders or otherwise and that directors, officers,
employees, partners, and shareholders of the Manager and its affiliates are or
may become similarly interested in the Fund, and that the Manager is or may
become interested in the Fund as shareholder or otherwise.
ARTICLE VII
Duration and Termination of this Agreement
This Agreement shall become effective as of the date first above
written and shall remain in force until November 1, 2003 and thereafter, but
only so long as such continuance is specifically approved at least annually by
(i) the Board of Directors of the Fund, or by the vote of a majority of the
outstanding voting securities of the Fund, and (ii) a majority of those
directors who are not parties to this Agreement or interested persons of any
such party cast in person at a meeting called for the purpose of voting on
such approval.
This Agreement may be terminated at any time, without the payment of
any penalty, by the Board of Directors of the Fund or by vote of a majority of
the outstanding voting securities of the Fund, or by the Manager, on sixty
days' written notice to the other party. This Agreement shall automatically
terminate in the event of its assignment.
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ARTICLE VIII
Amendments of the Agreement
This Agreement may be amended by the parties only if such amendment
is specifically approved in accordance with applicable requirements under the
Investment Company Act.
ARTICLE IX
Definitions of Certain Terms
The terms "vote of a majority of outstanding voting securities,"
"assignment," "affiliated person" and "interested person," when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act and the rules and regulations thereunder, subject, however, to
such exemptions as may be granted by the Securities and Exchange Commission
under said Act.
ARTICLE X
Governing Law
This Agreement shall be construed in accordance with the laws of the
State of New York and the applicable provisions of the Investment Company Act.
To the extent that the applicable laws of the State of New York, or any of the
provisions herein, conflict with applicable provisions of the Investment
Company Act, the latter shall control.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
JAPAN OTC EQUITY FUND, INC.
By /s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx
Vice President
NOMURA ASSET MANAGEMENT U.S.A. INC.
By /s/ Xxxxxxxx Xxxx
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Xxxxxxxx Xxxx
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