Exhibit No. Ex-99.h(1)
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 28th day of June 2002, by and between
The Japan Fund, Inc., a Maryland corporation (the "Fund"), and SEI Investments
Mutual Funds Services (the "Administrator"), a Delaware business trust.
WHEREAS, the Fund is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund desires the Administrator to provide, and the
Administrator is willing to provide, administrative and accounting services to
such series of the Fund as the Fund and the Administrator agree upon (the
"Portfolios"), on the terms and conditions hereinafter set forth herein;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and the Administrator hereby agree as follows:
ARTICLE 1. RETENTION OF THE ADMINISTRATOR. The Fund hereby retains the
Administrator to furnish the Portfolios with accounting and administrative
services as set forth in this Agreement, and the Administrator hereby accepts
such employment. The Administrator shall be deemed to be an independent
contractor for all purposes herein.
ARTICLE 2. ADMINISTRATIVE AND ACCOUNTING SERVICES. The Administrator shall
perform or supervise the performance by others of the accounting and
administrative services set forth in Schedule A hereto. The Administrator shall
provide the Fund with all necessary office space, equipment, personnel,
compensation and facilities (including facilities for Shareholders' and
Directors' meetings) for providing such services. The Administrator may
sub-contract with third parties to perform certain of the services to be
performed by the Administrator hereunder; provided, however, that the
Administrator shall remain principally responsible to the Fund for the acts and
omissions of such other entities. In meeting its duties hereunder, the
Administrator shall have the general authority to do all acts deemed in the
Administrator's good faith belief to be necessary and proper to perform its
obligations under this Agreement.
ARTICLE 3. ALLOCATION OF CHARGES AND EXPENSES.
(A) THE ADMINISTRATOR. The Administrator shall furnish at its own expense
the executive, supervisory and clerical personnel necessary to perform its
obligations under this Agreement. The Administrator shall also pay at its own
expense all compensation, if any, of officers of the Fund as well as all
Directors of the Fund who are affiliated persons of the Administrator or any
affiliated corporation of the Administrator; provided, however, that unless
otherwise specifically provided, the Administrator shall not be obligated to pay
at its own expense the compensation of any employee of the Fund retained by the
Directors of the Fund to perform services on behalf of the Fund.
(B) FUND EXPENSES. The Fund assumes and shall pay or cause to be paid all
other expenses of the Fund not otherwise allocated in this Agreement, including,
without limitation, organizational costs, taxes, expenses for legal and auditing
services, the expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional information, proxy
solicitation material and notices to existing shareholders, all expenses
incurred in connection with issuing and redeeming Shares, the costs of pricing
services, the costs of custodial services, the cost of initial and ongoing
registration of the Shares under Federal and state securities laws, fees and
out-of-pocket expenses of Directors who are not affiliated persons of the
Administrator or any affiliated corporation of the Administrator, the costs of
Directors' meetings, insurance, interest, brokerage costs, litigation and other
extraordinary or nonrecurring expenses, and all fees and charges of service
providers to the Fund. The Fund shall reimburse the Administrator for all
reasonable SAS 70 audit charges. Subject to the approval of the Board of
Directors or its designee, the Fund shall also reimburse the Administrator for
its reasonable out of pocket expenses, including copying, postage, telephone,
and fax charges, which are not incurred in the ordinary course of business.
ARTICLE 4. COMPENSATION OF THE ADMINISTRATOR. The Fund shall pay to the
Administrator compensation at the annual rate specified in Schedule B to this
Agreement until this Agreement is terminated in accordance with Article 6. Such
compensation shall be calculated and accrued daily, and paid to the
Administrator monthly. If this Agreement becomes effective subsequent to the
first day of a month or terminates before the last day of a month, the
Administrator's compensation for that part of the month in which this Agreement
is in effect shall be prorated in a manner consistent with the calculation of
the fees as set forth above. Payment of the Administrator's compensation for the
preceding month shall be made promptly.
ARTICLE 5. LIMITATION OF LIABILITY OF THE ADMINISTRATOR. The duties of the
Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator 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 carrying out its duties hereunder, except a loss resulting from
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 5, the term "Administrator" shall include
Trustees, officers, employees and other agents of the Administrator as well as
that entity itself.) Under no circumstances shall the Administrator be liable to
the Fund for consequential, indirect or punitive damages.
So long as the Administrator, or its agents, acts without willful
misfeasance, bad faith or gross negligence in the performance of its duties, and
without reckless disregard of its obligations and duties hereunder, the Fund
assumes full responsibility and shall indemnify the Administrator and hold it
harmless from and against any and all actions, suits and claims, whether
groundless or otherwise, and from and against any and all losses, damages,
costs, charges, reasonable counsel fees and disbursements, payments, expenses
and liabilities (including reasonable investigation expenses) arising directly
or indirectly out of any act or omission of Administrator in carrying out its
duties hereunder. The indemnity and defense provisions set forth herein shall
indefinitely survive the termination of this Agreement.
The indemnification rights hereunder shall include the right to reasonable
advances of defense expenses in the event of any pending or threatened
litigation with respect to which indemnification hereunder may ultimately be
merited. If in any case the Fund may be asked to indemnify or hold the
Administrator harmless, the Administrator shall promptly advise the Fund of the
pertinent facts concerning the situation in question, and the Administrator will
use all reasonable care to identify and notify the Fund promptly concerning any
situation which presents or appears likely to present the probability of such a
claim for indemnification, but failure to do so shall not affect the rights
hereunder.
The Fund shall be entitled to participate at its own expense or, if it so
elects, to assume the defense of any suit brought to enforce any claims subject
to this indemnity provision. If the Fund elects to assume the defense of any
such claim, the defense shall be conducted by counsel chosen by the Fund and
satisfactory to the Administrator, whose approval shall not be unreasonably
withheld. In the event that the Fund elects to assume the defense of any suit
and retain counsel, the Administrator shall bear the fees and expenses of any
additional counsel retained by it. If the Fund does not elect to assume the
defense of a suit, it will reimburse the Administrator for the fees and expenses
of any counsel retained by the Administrator.
The Administrator may apply to the Fund at any time for instructions and
may consult counsel for the Fund or its own counsel and with accountants and
other experts with respect to any matter arising in connection with the
Administrator's duties, and the Administrator shall not be liable or accountable
for any action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. Nor shall the Administrator be held to have
notice of any change of authority of any officers, employee or agent of the Fund
until receipt of written notice thereof from the Fund.
Nothing herein shall make Administrator liable for the performance or
omissions of unaffiliated third parties not under Administrator's reasonable
control such as, by way of example and not limitation, transfer agents,
custodians, investment advisers or sub-advisers, postal or delivery services,
telecommunications providers and processing and settlement services.
ARTICLE 6. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement
shall become effective on the date set forth in Schedule B hereto and shall
remain in effect for the full duration of the Initial Term and each Renewal
Term, each as set forth in Schedule B, unless terminated in accordance with the
provisions of this Article 6. This Agreement may be terminated only: (a) by
either party at the end of the Initial Term or the end of any Renewal Term on 90
days' prior written notice; (b) by either party hereto on such date as is
specified in written notice given by the terminating party, in the event of a
material breach of this Agreement by the other party, provided the terminating
party has notified the other party of such material breach at least 45 days
prior to the specified date of termination and the breaching party has not
remedied such breach by the specified date; or (c) as to any Portfolio or the
Fund, effective upon the liquidation of such Portfolio or the Fund, as the case
may be. For purposes of this paragraph, the
term "liquidation" shall mean a transaction in which the assets of the Fund or a
Portfolio are sold or otherwise disposed of and proceeds therefrom are
distributed in cash to the shareholders in complete liquidation of the interests
of such shareholders in the entity.
ARTICLE 7. ACTIVITIES OF THE ADMINISTRATOR. The services of the
Administrator rendered to the Fund are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests.
ARTICLE 8. CONFIDENTIALITY. The Administrator agrees on behalf of itself
and its employees to treat confidentially all records and other information
relative to the Fund and its shareholders received by the Administrator in
connection with this Agreement, including any non-public personal information as
defined in Regulation S-P, and that it shall not use or disclose any such
information except for the purpose of carrying out the terms of this Agreement;
provided, however, that Administrator may disclose such information as required
by law or after prior notification to and approval in writing by the Fund, which
approval may not be withheld where the Administrator may be exposed to civil or
criminal contempt proceedings or penalties for failure to comply.
ARTICLE 9. CERTAIN 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 prepared and maintained at the expense of the
Administrator, but shall be the property of the Fund and will be made available
to or surrendered promptly to the Fund on request.
In 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; provided that the
Administrator may exhibit such records to any person in any case where it is
advised by its counsel that it may be held liable for failure to do so, unless
(in cases involving potential exposure only to civil liability) the Fund has
agreed to indemnify the Administrator against such liability.
ARTICLE 10. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS. The
Administrator undertakes to comply in all material respects with applicable
requirements of the Securities Act of 1933, the Securities Exchange Act of 1934,
the 1940 Act, and any laws, rules and regulations of governmental authorities
having jurisdiction with respect to the duties to be performed by the
Administrator hereunder.
ARTICLE 11. INTERNET ACCESS. Data and information may be made
electronically accessible to the Fund and its adviser and/or sub-adviser through
Internet access to one or more links provided by the Administrator ("Web Link").
All rights in Web Link (including text and "look and feel" attributes) are owned
by Administrator. Any commercial use of the content or any other aspect of Web
Link requires the written permission of Administrator. Use of the Web Link by
the Fund or its agents will be subject to any terms of use set forth on the web
site. A Web Link and the information (including text, graphics and
functionality) in the Web Link is
presented "As Is" and "As Available" without express or implied warranties
including, but not limited to, implied warranties of non-infringement,
merchantability and fitness for a particular purpose. Administrator neither
warrants that the Web Link will be uninterrupted or error free, nor guarantees
the accessibility, reliability, performance, timeliness, sequence, or
completeness of information provided on the Web Link.
ARTICLE 12. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the
entire agreement between the parties hereto and supersedes any prior agreement,
draft or proposal with respect to the subject matter hereof. This Agreement or
any part hereof may be changed or waived only by an instrument in writing signed
by the party against which enforcement of such change or waiver is sought.
ARTICLE 13. ASSIGNMENT. This Agreement shall not be assignable by either
party without the prior written consent of the other party.
ARTICLE 14. AGREEMENT FOR SOLE BENEFIT OF SEI AND THE FUND. This Agreement
is for the sole benefit of the Administrator and the Fund and will not be deemed
to be for the direct or indirect benefit of the clients or customers of the
Administrator or the Fund. The clients or customers of the Administrator or the
Fund will not be deemed to be third party beneficiaries of this Agreement nor to
have any other contractual relationship with the Administrator by reason of this
Agreement and each party hereto agrees to indemnify and hold harmless the other
party from any claims of its clients or customers against the other party
including any attendant expenses and attorneys' fees, based on this Agreement or
the services provided hereunder.
ARTICLE 15. WAIVER. Any term or provision of this Agreement may be waived
at any time by the party entitled to the benefit thereof by written instrument
executed by such party. No failure of either party hereto to exercise any power
or right granted hereunder, or to insist upon strict compliance with any
obligation hereunder, and no custom or practice of the parties with regard to
the terms of performance hereof, will constitute a waiver of the rights of such
party to demand full and exact compliance with the terms of this Agreement.
ARTICLE 16. NOTICE. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by registered or certified
mail, federal express (or substantially similar delivery service), postage
prepaid, addressed by the party giving notice to the other party at the last
address furnished by the other party to the party giving notice: if to the Fund,
at The Japan Fund, Inc., x/x Xxxxx, Xxxx and Xxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, XX 00000, Attn.: Xxxx Xxxxxx; and if to the Administrator, at Xxx Xxxxxxx
Xxxxxx Xxxxx, Xxxx, Xxxxxxxxxxxx, 00000.
ARTICLE 17. FORCE MAJEURE. No breach of any obligation of a party to this
Agreement will constitute an event of default or breach to the extent it arises
out of a cause, existing or future, that is beyond the control and without
negligence of the party otherwise chargeable with breach or default, including
without limitation: work action or strike; lockout or other labor dispute;
flood; war; riot; theft; earthquake or natural disaster. Either party desiring
to rely upon any of the foregoing as an excuse for default or breach will, when
the cause arises, give to the other party prompt notice of the facts which
constitute such cause; and, when the cause ceases to exist, give prompt notice
thereof to the other party.
ARTICLE 18. EQUIPMENT FAILURES. In the event of equipment failures beyond
the Administrator's control, the Administrator shall take reasonable and prompt
steps to minimize service interruptions but shall have no liability with respect
thereto. The Administrator shall develop and maintain a plan for recovery from
equipment failures which may include contractual arrangements with appropriate
parties making reasonable provision for emergency use of electronic data
processing equipment to the extent appropriate equipment is available.
ARTICLE 19. DEFINITIONS OF CERTAIN TERMS. The term "affiliated person,"
when used in this Agreement, shall have the meaning specified in the 1940 Act
and the rules and regulations thereunder, subject to such exemptions as may be
granted by the Securities and Exchange Commission.
ARTICLE 20. HEADINGS. All Article headings contained in this Agreement are
for convenience of reference only, do not form a part of this Agreement and will
not affect in any way the meaning or interpretation of this Agreement. Words
used herein, regardless of the number and gender specifically used, will be
deemed and construed to include any other number, singular or plural, and any
other gender, masculine, feminine, or neuter, as the contract requires.
ARTICLE 21. GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Delaware and the applicable provisions of the 1940
Act. To the extent that the applicable laws of the State of Delaware, or any of
the provisions herein, conflict with the applicable provisions of the 1940 Act,
the latter shall control.
ARTICLE 22. MULTIPLE ORIGINALS. This Agreement may be executed in two or
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
ARTICLE 23. BINDING AGREEMENT. This Agreement, and the rights and
obligations of the parties hereunder, shall be binding on, and inure to the
benefit of, the parties and their respective successors and assigns.
ARTICLE 24. SEVERABILITY. If any part, term or provision of this Agreement
is held to be illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable and not be affected,
and the rights and obligations of the parties shall be construed and enforced as
if the Agreement did not contain the particular part, term or provision held to
be illegal or invalid.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
THE JAPAN FUND, INC.
By: /S/XXXXXXX X. XXXXXX
--------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman
SEI INVESTMENTS MUTUAL FUNDS SERVICES
By: /S/XXXXXXX X. XXXXXXX, XX.
--------------------------
Name: Xxxxxxx X. Xxxxxxx, Xx.
Title: V.P. & Assistant Secretary
SCHEDULE A
Administrator shall provide the following services to the Fund:
(a) Maintain the Fund's accounting books and records and assist in
establishing the accounting policies of the Fund and the resolution of
accounting issues that may arise with respect to the Fund's operations;
(b) Obtain portfolio security valuations from appropriate sources consistent
with the Fund's pricing and valuation policies, and calculate net asset
value of each portfolio and class;
(c) Compute yields, total return, expense ratios, portfolio turnover rate and
average dollar-weighted portfolio maturity, as appropriate;
(d) Track and validate income and expense accruals, analyze and modify expense
accrual changes periodically, and process expense disbursements to vendors
and service providers;
(e) Perform cash processing such as recording paid-in capital activity,
perform necessary reconciliations with the transfer agent and the
custodian, and provide cash availability data to the adviser, if
requested;
(f) Calculate required ordinary income and capital gains dividends and
distributions, coordinate estimated cash payments, and perform necessary
reconciliations with the transfer agent;
(g) Provide standardized performance reporting data to the Fund and its
adviser;
(h) Provide performance, financial and expense information for registration
statements and proxies;
(i) Communicate net asset value, yield, total return or other financial data
to appropriate third party reporting agencies, and assist in resolution of
errors reported by such third party agencies;
(j) Prepare the Fund's financial statements for review by fund management and
independent auditors, manage and prepare annual and semi-annual reports
and other required notices to shareholders, prepare Forms N-SAR and 24f-2,
provide fund performance data for annual report, coordinate printing and
delivery of annual and semi-annual reports to shareholders, and file Form
N-SAR, Form 24f-2 and annual/semi-annual reports via XXXXX;
(k) Monitor each Portfolio's compliance with the requirements of Subchapter M
of the Internal Revenue Code with respect to status as a regulated
investment company;
(l) Prepare and file federal and state tax returns for the Fund, and provide
data for year-end 1099's and supplemental tax letters;
(m) Provide such fund accounting and financial reports in connection with
quarterly meetings of the Board of Directors as are required or as the
Board may reasonably request;
(n) Manage the proxy process, including evaluating proxy distribution
channels, coordinating with outside service provider to distribute
proxies, track shareholder responses and tabulate voting results, and
managing the proxy solicitation vendor if necessary;
(o) Provide individuals to serve as officers of the Fund, as requested;
(p) Coordinate with the Fund's counsel on drafting, review and filing of
registration statements and proxies, and coordinate printing and delivery
of prospectuses and proxies;
(q) Coordinate the Fund's Board of Directors' schedule, agenda and production
of Board meeting materials, and attend Board meetings (if requested);
(r) Provide consultation to the Fund and its adviser on regulatory matters
relating to the operation of the Fund, and update the Fund and its adviser
on significant regulatory and legislative developments which may affect
the Fund;
(s) Develop or assist legal counsel to the Fund in the development of policies
and procedures relating to the operation of the Fund;
(t) Act as liaison to legal counsel to the Fund and, where applicable, to
legal counsel to the Fund's independent Directors;
(u) Coordinate with the Fund counsel in the preparation, review and execution
of contracts between the Fund and third parties, such as the Fund's
investment adviser, transfer agent, and custodian, and record-keepers or
shareholder service providers;
(v) Assist the Fund in handling and responding to routine regulatory
examinations with respect to records retained or services provided by the
Administrator, and coordinate with the Fund's legal counsel in responding
to any non-routine regulatory matters with respect to such matters;
(w) Provide consulting with respect to the ongoing design, development and
operation of the Fund, including new portfolios or share classes and/or
load structures and financing, as well as changes to investment objectives
and polices for existing portfolios;
(x) Coordinate as necessary the registration or qualification of shares of the
Fund with appropriate state securities authorities.
(y) Provide assistance with investor inquires.
(z) Provide other assistance to the Fund as it may reasonably request in the
conduct of the Fund's business, subject to the direction and control of
the Fund's Board of Directors.
[END OF SCHEDULE A]
SCHEDULE B
Portfolios: This Agreement shall apply with respect to all Portfolios of the
Fund, either now existing or in the future created.
Fees: Pursuant to Article 4, the Fund shall pay the Administrator the following
fees, at the annual rate set forth below, calculated based upon the aggregate
average daily net assets ("assets") of the Fund:
0.15% of the assets not exceeding $400 million;
0.125% of the assets exceeding $400 million but not exceeding $750 million;
and
0.10% of the assets exceeding $750 million
This fee schedule is subject to a minimum annual fee of
$575,000 for all Portfolios and classes in existence as of the
effective date of this Agreement. The minimum fee shall be increased
$65,000 for each Portfolio created after the effective date of this
Agreement. In addition, the minimum fee shall be increased $16,000
for each new class added to a Portfolio of the Fund after the
effective date of this Agreement, as well as for each class in
excess of one (1) for new Portfolios added after the effective date
of this Agreement.
Term: This Agreement shall become effective on the first business day following
the conversion of the Fund's books and records from its current administrator to
SEI ("Conversion Date"), which date shall be recorded in the minutes of the next
Board of Directors meeting of the Fund, and shall remain in effect for the
initial term of five (5) years ("Initial Term") and, thereafter, for successive
terms of two (2) years each (each a "Renewal Term"), unless and until this
Agreement is terminated in accordance with the provisions of Article 6 hereof.
Misc.: The Fund acknowledges and agrees that Administrator reserves the right to
impose a five percent (5%) per annum surcharge on a Portfolio basis against the
Portfolios in the event the Fund have not implemented by the first anniversary
of this Agreement an automated trade ticket process with Administrator to
facilitate the orderly and timely processing of Portfolio transactions,
valuations and reconciliations.
[END OF SCHEDULE B]
