Exhibit 8(a)
CUSTODIAN AGREEMENT
AGREEMENT made this 17th day of July, 1987, between THE JAPAN FUND, INC.
(the "Fund") and Xxxxx Brothers Xxxxxxxx & Co. (the "Custodian").
WITNESSETH: That in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. The Fund hereby employs and appoints the Custodian as a custodian for
the term and subject to the provisions of this Agreement. The Fund agrees to
deliver to the Custodian all securities and cash owned by it, and all payments
of income, payments of principal or capital distributions received by it with
respect to all securities owned by the Fund from time to time, and the cash
consideration received by it for such new or treasury shares of capital stock of
the Fund as may be issued or sold from time to time.
The Custodian shall not be under any duty or obligation to require the
Fund to deliver to it any securities or funds owned by the Fund and shall have
no responsibility or liability for or on account of securities or funds not so
delivered. The Fund will deposit with the Custodian copies of the Certificate of
Incorporation and By-Laws (or comparable documents) of the Fund and all
amendments thereto, and copies of such votes and other proceedings of the Fund
as may be necessary for or convenient to the Custodian in the performance of its
duties.
1
It is understood that as used in this Agreement, the term "securities"
shall include futures contracts and options.
2. Except for securities and funds held by subcustodians appointed
pursuant to the provisions of Section 3 hereof, the Custodian shall have and
perform the following powers and duties:
A. Safekeeping - To keep safely the securities of the Fund that have been
delivered to the Custodian and from time to time to receive delivery of
securities for safekeeping.
B. Manner of Holding Securities - To hold securities of the Fund (1) by
physical possession of the share certificates or other instruments representing
such securities in registered or bearer form or of the broker's receipts or
confirmations for futures contracts, options and similar securities, or (2) in
book-entry form by a Securities System (as said term is defined in Section 2V).
C. Registered Name; Nominee - To hold registered securities of the Fund
(1) in the name or any nominee name of the Custodian or the Fund, or in the name
or any nominee name of any agent appointed pursuant to Section 6E, or (2) in
street certificate form, so-called, and in any case with or without any
indication of fiduciary capacity.
D. Purchases - Upon receipt of proper instructions, and insofar as funds
are available for the purpose, to pay for and receive securities purchased for
the account of the Fund, payment being made only upon receipt of the securities
(1) by the
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Custodian, or (2) by a clearing corporation of a national securities exchange of
which the Custodian is a member, or (3) by a Securities System. However, (i) in
the case of repurchase agreements entered into by the Fund, the Custodian (as
well as a Subcustodian or an Agent, as defined in Section 2G) may release funds
to a Securities System prior to the receipt of advice from the Securities System
that the securities underlying such repurchase agreement have been transferred
by book entry into the Account (as defined in Section 2V) of the Custodian (or
such Subcustodian or Agent) maintained with such Securities System, and (ii) in
the case of futures contracts, options and similar securities or time deposits,
call account deposits, currency deposits, and other deposits pursuant to
Sections 2M, 2N and 20, the Custodian may make payment therefor without
receiving an instrument evidencing said contract, option, security or deposit.
Exchanges - Upon receipt of proper instructions, to exchange securities
held by it for the account of the Fund for other securities in connection with
any reorganization, recapitalization, split-up of shares, change of par value,
conversion or other event, and to deposit any such securities in accordance with
the terms of any reorganization or protective plan. Without such instructions,
the Custodian may surrender securities in temporary form for definitive
securities, may surrender securities for transfer into a name or nominee name as
permitted in Section 2C, and may surrender securities for a
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different number of certificates or instruments representing the same number of
shares or same principal amount of indebtedness, provided the securities to be
issued are to be delivered to the Custodian.
F. Sales of Securities - Upon receipt of proper instructions, to make
delivery of securities which have been sold for the account of the Fund, but
only against payment therefor (1) in cash, by a certified check, bank cashier's
check, bank credit, or bank wire transfer, or (2) by credit to the account of
the Custodian with a clearing corporation of a national securities exchange of
which the Custodian is a member or (3) by credit to the account of the Custodian
or an Agent of the Custodian with a Securities System.
G. Depositary Receipts - Upon receipt of proper instructions, to instruct
a subcustodian appointed pursuant to Section 3 hereof (a "Subcustodian") or an
agent of the Custodian appointed pursuant to Section 6E hereof (an "Agent") to
surrender securities to the depositary used by an issuer of American Depositary
Receipts or International Depositary Receipts (hereinafter collectively referred
to as "ADRs") for such securities against a written receipt therefor adequately
describing such securities and written evidence satisfactory to the Subcustodian
or Agent that the depositary has acknowledged receipt of instructions to issue
with respect to such securities ADRs in the name of the Custodian, or a nominee
of the Custodian,
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for delivery to the Custodian in Boston, Massachusetts, or at such other place
as the Custodian may from time to time designate.
Upon receipt of proper instructions, to surrender ADRs to the issuer
thereof against a written receipt therefor adequately describing the ADRs
surrendered and written evidence satisfactory to the Custodian that the issuer
of the ADRs has acknowledged receipt of instructions to cause its depositary to
deliver the securities underlying such ADRs to a Subcustodian or an Agent.
H. Exercise of Rights; Tender Offers - Upon receipt of proper
instructions, to deliver to the issuer or trustee thereof, or to the agent of
either, warrants, puts, calls, futures contracts, options, rights or similar
securities for the purpose of being exercised or sold, provided that the new
securities and cash, if any, acquired by such action are to be delivered to the
Custodian, and, upon receipt of proper instructions, to deposit securities upon
invitations for tenders of securitries, provided that the consideration is to be
paid or delivered or the tendered securities are to be returned to the
Custodian.
I. Stock Dividends, Rights, Etc. - To receive and collect all stock
dividends, rights and other items of like nature; and to deal with the same
pursuant to proper instructions relative thereto.
J. Options - Upon receipt of proper instructions, to receive and retain
confirmations or other documents evidencing the purchase or writing of an option
on a security or securities index
5
by the Fund; to deposit and maintain in a segregated account, either physically
or by book-entry in a Securities System, securities subject to a covered call
option written by the Fund; and to release and/or transfer such securities or
other assets only in accordance with a notice or other communication evidencing
the expiration, termination or exercise of such covered option furnished by The
Options Clearing Corpopration, the securities or options exchange on which such
covered option is traded or such other organization as may be responsible for
handling such options transactions.
K. Futures Contracts - Upon receipt of proper instructions, to receive and
retain confirmations evidencing the purchase or sale of a futures contract or an
option on a futures contract by the Fund; to deposit and maintain in a
segregated account, for the benefit of any futures commission merchant, assets
designated by the Fund as initial, maintenance or variation "margin" deposits
intended to secure the Fund's performance of its obligations under any futures
contracts purchased or sold or any options on futures contracts written by the
Fund, in accordance with the provisions of any agreement or agreements among any
of the fund, the Custodian and such futures commission merchant, designed to
comply with the rules of xxxx Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or organizations, regarding such
margin deposits; and to release and/or transfer assets in such margin accounts
only in accordance with any such agreements or rules.
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L. Borrowings - Upon receipt of proper instructions, to deliver securities
of the Fund to lenders or their agents as collateral for borrowings effected by
the Fund, but only against receipt of the amounts borrowed, provided that if
such collateral is held in book-entry form by a Securities System (as defined in
Section 2V), such collateral may be transferred by book-entry to such lender or
its agent against receipt by the Custodian of any undertaking by such lender to
pay such borrowed money to or upon the Custodian's order on the next business
day following such transfer of collateral.
M. Demand Deposit Bank Accounts - To open and operate an account or
accounts in the name of the Fund on the Custodian's books subject only to draft
or order by the Custodian. All funds received by the Custodian from or for the
account of the Fund shall be deposited in said account(s). The responsibilities
of the Custodian to the Fund for deposits accepted on the Custodian's books
shall be that of a U. S. bank for a similar deposit.
If and when authorized by proper instructions, the Custodian may open and
operate an additional account(s) in such other banks or trust companies as may
be designated by the Fund in such instructions (any such bank or trust company
so designated by the Fund being referred to hereafter as a "Banking
Institution") provided that such account(s) shall be in the name of the
Custodian for account of the Fund and subject only to the Custodian's draft or
order. Such accounts may be opened with
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Banking Institutions in the United States and in other countries and may be
denominated in either U. S. Dollars or other currencies as the Fund may
determine. All such deposits shall be deemed to be portfolio securities of the
Fund and accordingly the responsibility of the Custodian therefor shall be the
same as and no greater than the Custodian's responsibility in respect of other
portfolio securities of the Fund.
N. Interest Bearing Call or Time Deposits - To place interest bearing
fixed term and call deposits with such banks and in such amounts as the Fund may
authorize pursuant to proper instructions. Such deposits may be placed with the
Custodian or with Subcustodians or other Banking Institutions as the Fund may
determine. Deposits may be denominated in U. S. Dollars or other currencies and
need not be evidenced by the issuance or delivery of a certificate to the
Custodian, provided that the Custodian shall include in its records with respect
to the assets of the Fund, appropriate notation as to the amount and currency of
each such deposit, the accepting Banking Institution, and other appropriate
details. Such deposits, other than those placed with the Custodian, shall be
deemed portfolio securities of the Fund and the responsibilities of the
Custodian therefor shall be the same as those for demand deposit bank accounts
placed with other banks, as described in the second paragraph of Section 2M of
this Agreement. The responsibility of the Custodian for such deposits accepted
on the Custodian's books shall be that of a U. S. bank for a similar deposit.
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O. Foreign Exchange Transactions - Pursuant to proper instructions, to
enter into foreign exchange contracts to purchase and sell foreign currencies
for spot and future delivery on behalf and for the account of the Fund, and in
connection therewith to receive and retain receipts, confirmations or other
documents evidencing such contracts and to deposit and maintain cash or
designated securities in a segregated account and to release and/or transfer
assets held in such account only in accordance with such proper instructions.
Such transactions may be undertaken by the Custodian with such Banking
Institutions, including the Custodian and Subcustodian(s) as principals, as
approved and authorized by the Fund. Foreign exchange contracts, other than
those executed with the Custodian, shall be deemed to be portfolio securities of
the Fund and the responsibilities of the Custodian therefor shall be the same as
those for demand deposit bank accounts placed with other banks as described in
the second paragraph of Section 2M of this Agreement.
P. Stock Loans - Upon receipt of proper instructions, to deliver
securities of the Fund, in connection with loans of securities by the Fund, to
the borrower thereof but only against receipt of such collateral as the Fund
shall instruct; except that in connection with any loans for which collateral is
to be credited to the Custodian's Account in a book-entry system referred to in
Section 2V(ii) hereof, the Custodian may deliver securities prior to the credit
of such collateral, provided that
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the Custodian shall promptly notify the Fund if such collateral is not credited.
Q. Collections - To collect, receive and deposit in the account or
accounts referred to in Section 2M all income and other payments with respect to
the securities held hereunder, and to execute ownership and other certificates
and affidavits for all federal and state tax purposes in connection with receipt
of income or other payments with respect to securities of the Fund or in
connection with transfer of securities, and pursuant to proper instructions to
take other actions, which involve an investment decision, with respect to
collection or receipt of funds or transfer of securities.
R. Dividends, Distributions and Redemption - Upon receipt of proper
instructions from the Fund, or upon receipt of instructions from the Fund's
shareholder servicing agent or agent with comparable duties (the "Shareholder
Servicing Agent") (given by such person or persons and in such manner on behalf
of the Shareholder Servicing Agent as the Fund shall have authorized), the
Custodian shall release funds or securities to the Shareholder Servicing Agent
or otherwise apply funds or securities, insofar as available, for the payment of
dividends or other distributions to Fund shareholders. Upon receipt of proper
instructions from the Fund, or upon receipt of instructions from the Shareholder
Servicing Agent (given by such person or persons and in such manner on behalf of
the Shareholder Servicing Agent as the Fund
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shall have authorized), the Custodian shall release funds or securities,
insofar as available, to the Shareholder Servicing Agent or as such Agent shall
otherwise instruct for payment to the Fund shareholders who have delivered to
such Agent a request for repurchase or redemption of their shares of capital
stock of the Fund.
S. Proxies, Notices, Etc. - Promptly to deliver or mail to the Fund all
forms of proxies and all notices of meetings and any other notices or
announcements affecting or relating to securities owned by the Fund that are
received by the Custodian, and upon receipt of proper instructions, to execute
and deliver or cause its nominee to execute and deliver such proxies or other
authorizations as may be required. Neither the Custodian nor its nominee shall
vote upon any of such securities or execute any proxy to vote thereon or give
any consent or take any other action with respect thereto (except as otherwise
herein provided) unless ordered to do so by proper instructions.
T. Bills - Upon receipt of proper instructions, to pay or cause to be
paid, insofar as funds are available for the purpose, bills, statements, or
other obligations of the Fund.
U. Nondiscretionary Details - Without the necessity of express
authorization from the Fund (1) to attend to all nondiscretionary details in
connection with the sale, exchange, substitution, purchase, transfer or other
dealings with securities, funds or other property of the Fund held by the
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Custodian except as otherwise directed from time to time by the Board of
Directors of the Fund, and (2) to make payments to itself or others for minor
expenses of handling securities or other similar items relating to the
Custodian's duties under this Agreement, provided that all such payments shall
be accounted for to the Fund.
V. Deposit of Fund Assets in Securities Systems - The Custodian may
deposit and/or maintain securities owned by the Fund in (i) The Depository Trust
Company, (ii) any book-entry system as provided in Subpart O of Treasury
Circular Xx. 000, 00 XXX 000, Xxxxxxx X of 31 CRF Part 350, or the book-entry
regulations of federal agencies substantially in the form of Subpart O, or (iii)
any other domestic clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934 which acts
as a securities depository and whose use the Fund has previously approved in
writing (each of the foregoing being referred to in this Agreement as a
"Securities System"). Utilization of a Securities System shall be in accordance
with applicable Federal Reserve Board and Securities and Exchange Commission
rules and regulations, if any, and subject to the following provisions:
(1) The Custodian may deposit and/or maintain Fund securities, either
directly or through one or more Agents appointed by the custodian
(provided that any such Agent shall be
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qualified to act as a custodian of the Fund pursuant to the
Investment Company Act of 1940 and the rules and regulations
thereunder), in a Securities System provided that such securities
are represented in an account ("Account") of the Custodian or such
Agent in the Securities System which shall not include any assets of
the Custodian or Agent other than assets held as a fiduciary,
custodian, or otherwise for customers;
(2) The records of the Custodian with respect to securities of the Fund
which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Fund;
(3) The Custodian shall pay for securities purchased for the account of
the fund upon (i) receipt of advice from the Securities System that
such securities have been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of the Fund. The Custodian
shall transfer securities sold for the account of the Fund upon (i)
receipt of advice from the Securities System that payment for such
securities has been
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transferred to the Account, and (ii) the making of an entry on the
records of the Custodian to reflect such transfer and payment for
the account of the Fund. Copies of all advices from the Securities
System of transfers of securities for the account of the Fund shall
identify the Fund, be maintained for the Fund by the Custodian or an
Agent as referred to above, and be provided to the Fund at its
request. The Custodian shall furnish the Fund confirmation of each
transfer to or from the account of the Fund in the form of a written
advice or notice and shall furnish to the Fund copies of daily
transaction sheets reflecting each day's transactions in the
Securities System for the account of the Fund on the next business
day;
(4) The Custodian shall provide the Fund with any report obtained by the
Custodian or any Agent as referred to above on the Securities
System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the Securities
System; and the custodian and such Agents shall send to the Fund
such reports on their own systems of
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internal accounting control as the Fund may reasonably requesst from
time to time.
(5) At the written request of the fund, the Custodian will terminate the
use of any such Securities System on behalf of the Fund as promptly
as practicable.
W. Other Transfers - To deliver securities, funds and other property of
the Fund to a Subcustodian or another custodian of the Fund; and, upon receipt
of proper instructions, to make such other disposition of securities, funds or
other property of the Fund in a manner other than or for purposes other than as
enumerated elsewhere in this Agreement, provided that the instructions relating
to such disposition shall include a statement of the purpose for which the
delivery is to be made, the amount of securities to be delivered and the name of
the person or persons to whom delivery is to be made.
X. Investment Limitations - In performing its duties generally, and more
particularly in connection with the purchase, sale and exchange of securities
made by or for the Fund, the Custodian may assume unless and until notified in
writing to the contrary that proper instructions received by it are not in
conflict with or in any way contrary to any provisions of the Fund's Certificate
of Incorporation or By-Laws (or comparable documents) or votes or proceedings of
the shareholders or Directors of the Fund. The Custodian shall in no event be
liable
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to the fund and shall be indemnified by the Fund for any violation of any
investment limiations to which the Fund is subject or other limitations with
respect to the Fund's powers to make expenditures, encumber securities, borrow
or take similar actions affecting its portfolio.
Y. Proper Instructions - Proper instructions shall mean a tested telex
from the Fund or a written request,, direction, instruction or certification
signed or initialled on behalf of the Fund by one or more person or persons as
the Board of Directors of the Fund shall have from time to time authorized,
provided, however, that no such instructions directing the delivery of
securities or the payment of funds to an authorized signatory of the Fund shall
be signed by such person. Those persons authorized to give proper instructions
may be identified by the Board of Directors by name, title or position and will
include at least one officer empowered by the Board to name other individuals
who are authorized to give proper instructions on behalf of the Fund. Telephonic
or other oral instructions given by any one of the above persons will be
considered proper instructions if the custodian reasonably believes them to have
been given by a person authorized to give such instructions with respect to the
transaction involved. Oral instructions will be confirmed by tested telex or in
writing in the manner set forth above but the lack of such confirmation shall in
no way affect any action taken by the Custodian in reliance upon such oral
instructions. Proper
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instructions may relate to specific transactions or to types or classes of
transactions, and may be in the form of standing instructions.
Proper instructions may include communications effected directly between
electro-mechanical or electronic devices or systems, in addition to tested
telex,, provided that the Fund and the Custodian agree in writing to the use of
such device or system.
3. Securities, funds and other property of the Fund may be held by
subcustodians appointed pursuant to the provisions of this Section 3 (a
"Subcustodian"). The Custodian may, at any time and from time to time, appoint
any bank or trust company (meeting the requirements of a custodian or a foreign
custodian under the Investment Company Act of 1940 and the rules and regulations
thereunder) to act as a Subcustodian for the Fund, provided that the Fund shall
have approved in writing (1) any such bank or trust company and the subcustodian
agreement to be entered into between such bank or trust company and the
Custodian, and (2) the Subcustodian's offices or branches at which the
Subcustodian is authorized to hold securities, cash and other property of the
Fund. Upon such approval by the Fund, the Custodian is authorized on behalf of
the Fund to notify each Subcustodian of its appointment as such. The Custodian
may, at any time in its discretion, remove any bank or trust company that has
been appointed as a Subcustodian.
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Those Subcustodians, their offices or branches which the Fund has approved
to date are set forth on Appendix A hereto. Such Appendix shall be amended from
time to time as Subcustodians, branches or offices are changed, added or
deleted. The Fund shall be responsible for informing the custodian sufficiently
in advance of a proposed investment which is to be held at a location not listed
on Appendix A, in order that there shall be sufficient time for the Fund to give
the approval required by the preceding paragraph and for the Custodian to put
the appropriate arrangements in place with such Subcustodian pursuant to such
subcustodian agreement.
If the Fund shall have invested in a security to be held in a location
before the foregoing procedures have been completed, such security shall be held
by such agent as the Custodian may appoint unless and until the Fund shall
instruct the Custodian to move the security into the possessiosn of the
Custodian or a Subcustodian. In any event, the Custodian shall be liable to the
Fund for the actions of such agent if and only to the extent the Custodian shall
have recovered from such agent for any damages caused the Fund by such agent.
With respect to the securities and funds held by a Subcustodian, either
directly or indirectly, including demand and interest bearing deposits,
currencies or other deposits and foreign exchange contracts as referred to in
Sections 2M, 2N or 2O, the Custodian shall be liable to the fund if and only to
the
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extent that such Subcustodian is liable to the custodian and the custodian
recovers under the applicable subcustodian agreement. The Custodian shall
nevertheless be liable to the Fund for its own negligence in transmitting any
instructions received by it from the Fund and for its own negligence in
connection with the delivery of any securities or funds held by it to any such
Subcustodian.
In the event that any Subcustodian appointed pursuant to the provisions of
this Section 3 fails to perform any of its obligations under the terms and
conditions of the applicable subcustodian agreement, the Custodian shall use its
best efforts to cause such Subcustodian to perform such obligations. In the
event that the Custodian is unable to cause such Subcustodian to perform fully
its obligations thereunder, the Custodian shall forthwith upon the Fund's
request terminate such Subcustodian and, if necessary or desirable, appoint
another subcustodian in accordance with the provisions of this Section 3. At the
election of the fund, it shall have the right to enforce, to the extent
permitted by the subcustodian agreement and applicable law, the Custodian's
rights against any such Subcustodian for loss or damage caused the fund by such
Subcustodian.
At the written request of the Fund, the Custodian will terminate any
Subcustodian appointed pursuant to the provisions of this Section 3 in
accordance with the termination provisions under the applicable subcustodian
agreement. The Custodian will not
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amend any subcustodian agreement or agree to change or permit any changes
thereunder except upon the prior written approval of the Fund.
In the event the custodian intends to make any payment to a Subcustodian
under the indemnification provisions of any subcustodian agreement, the
Custodian shall give the Fund written notice of such intention no less than
thirty (30) days prior to the date such payment is to be made. The Fund shall be
obligated promptly to reimburse the custodian the amount of such payment, unless
the Fund shall, within thirty (30) days of receipt of the Custodian's notice,
object in writing to such payment to the Subcustodian or to reimbursement of the
Custodian (i) because the fund disputes the right of the Subcustodian to be so
indemnified or (ii) because the Fund believes that the Custodian was or might
have been responsible by reason of the Custodian's negligence or misconduct for
the event or occurance giving rise to the Subcustodian's demand for
indemnification. In the event the Fund, at the direction of its Board of
Directors or any Executive Committee thereof, shall give written notice of such
objection and the reasons therefor, the Custodian may nevertheless make such
payment to the Subcustodian, but without prejudice to the Fund's right to refuse
to reimburse the custodian if the Fund's objection under clause (i) or (ii)
above shall be upheld in an appropriate judicial or other proceeding; or in the
alternative, the Custodian may refuse to pay the indemnification demanded by the
Subcustodian
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and the Custodian shall in such event defend against any judicial or other
proceeding brought against the Custodian by the Subcustodian to obtain such
indemnification. Such defense shall be conducted by counsel reasonably
satisfactory to both the Fund and the Custodian. The Fund shall be entitled to
participate in any such proceeding with separate counsel of its own choice if it
believes its position might otherwise be compromised and, if the Fund or the
Custodian believes there may be a conflict in the respective positions of the
Fund and the Custodian, then each may retain separate counsel of its own choice.
The Fund shall bear the costs and expenses of defending against the
Subcustodian's claim, and the fund shall indemnify the Custodian and hold it
harmless from all claims, liabilities, judgments, costs and expenses (including
counsel fees) and settlements of such claim (provided that such settlement shall
have been effected with the Fund's written consent) incurred or assesssed
against the Custodian. Notwithstanding the foregoing, if it shall be determined
in an appropriate proceeding, including in a proceeding as aforesaid brought by
the Subcustodian, that, although the Subcustodian was entitled to
indemnification the Custodian was not entitled to reimbursement by the Fund
because the custodian was responsible by reason of its negligence or misconduct
for the occurance or event giving rise to the Subcustodian's right to
indemnification, then in such event the Fund shall not be obligated to indemnify
the Custodian as aforesaid and the
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Custodian shall reimburse the Fund for any amounts paid by the Fund to Custodian
in respect of the costs and expenses of defending against the subcustodian's
claim.
4. The Custodian may assist generally in the preparation of reports to
Fund shareholders, regulatory authorities and others, audits of accounts, and
other ministerial matters of like nature.
5. The Fund hereby also appoints the custodian as its financial agent.
With respect to the appointment as financial agent, the Custodian shall have and
perform the following powers and duties:
A. Records - To create, maintain and retain such records relating to its
activities and obligations under this Agreement as are required under the
Investment Company Act of 1940 and the rules and regulations thereunder
(including Section 31 thereof and Rules 31a-l and 31a-2 thereunder) and under
applicable Federal and State tax laws and administrative regulations. All such
records will be the property of the Fund and in the event of termination of this
Agreement shall be delivered to the successor custodian.
B. Accounts - To keep books of account and render statements, including
interim monthly and complete quarterly financial statements, or copies thereof,
from time to time as reasonably requested by proper instructions.
C. Access to Records - Subject to security requirements of the Custodian
applicable to its own employees having access to similar records within the
Custodian and such regulations as may
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be reasonably imposed by the Custodian, the books and records maintained by the
Custodian pursuant to Sections 5A and 5B shall be open to inspection and audit
at reasonable times by officers of, attorneys for, and auditors employed by, the
Fund.
D. Calculation of Net Asset Value - To compute and determine the net asset
value per share of capital stock of the Fund as of the close of business on the
New York Stock Exchange on each day on which such Exchange is open, unless
otherwise directed by proper instructions. Such computation and determination
shall be made in accordance with (1) the provisions of the Certificate of
Incorporation and By-Laws of the Fund, as they may from time to time be amended
and delivered to the custodian, (2) the votes of the Board of Directors of the
Fund at the time in force and applicable, as they may from time to time be
delivered to the Custodian, and (3) proper instructions from such officers of
the Fund or other persons as are from time to time authorized by the Board of
Directors of the fund to give instructions with respect to computation and
determination of the net asset value. On each day that the Custodian shall
compute the net asset value per share of the Fund, the Custodian shall provide
the Fund with written reports which permit the Fund to verify that portfolio
transactions have been recorded in accordance with the Fund's instructions.
In computing the net asset value, the Custodian may rely upon any
information furnished by proper instructions, including
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without limitation any information (1) as to accrual of liabilities of the Fund
and as to liabilities of the Fund not appearing on the books of account kept by
the custodian, (2) as to the existence, status and proper treatment of reserves,
if any, authorized by the fund, (3) as to the sources of quotations to be used
in computing the net asset value, including those listed in Appendix B, (4) as
to the fair value to be assigned to any securities or other property for which
price quotations are not readily avilable, and (5) as to the sources of
information with respect to "corporate actions" affecting portfolio securities
of the fund, including those listed in Appendix B. (Information as to "corporate
actions" shall include information as to dividends, distributions, stock splits,
stock dividends, rights offerings, conversions, exchanges, recapitalizations,
mergers, redemptions, calls, maturity dates and similar transactions, including
the ex- and record dates and the amounts or other terms thereof.)
In like manner, the Custodian shall compute and determine the net asset
value as of such other times as the Board of Directors of the Fund from time to
time may reasonably request.
Notwithstanding any other provisions of this Agreement, including Section
6C, the following provisions shall apply with respect to the Custodian's
foregoing responsibilities in this Section 5D: The Custodian shall be held to
the exercise of reasonable care in computing and determining net asset value as
provided in this Section 5D, but shall not be held accountable or
- 24 -
liable for any losses, damages or expenses the Fund or any shareholder or former
shareholder of the Fund may suffer or incur arising from or based upon errors or
delays in the determination of such net asset value unless such error or delay
was due to the Custodian's negligence, gross negligence or reckless or willful
misconduct in determination of such net asset value. (The parties hereto
acknowledge, however, that the Custodian's causing an error or delay in the
determination of net asset value may, but does not in and of itself, constitute
negligence, gross negligence or reckless or willful misconduct.) In no event
shall the Custodian be liable or responsible to the Fund, any present or former
shareholder of the fund or any other party for any error or delay which
continued or was undetected after the date of an audit performed by the
certified public accountants employed by the Fund if, in the exercise of
reasonable care in accordance with generally accepted accounting standards, such
accountants should have become aware of such error or delay in the course of
performing such audit. The Custodian's liability for any such negligence, gross
negligence or reckless or willful misconduct which results in an error in
determination of such net asset value shall be limited to the direct,
out-of-pocket loss the Fund, shareholder or former shareholder shall actually
incur, measured by the difference between the actual and the erroneously
computed net asset value, and any expenses the fund shall incur in connection
with correcting the records of the Fund affected by
- 25 -
such error (including charges made by the Fund's registrar and transfer agent
for making such corrections) or communicating with shareholders or former
shareholders of the Fund affected by such error.
Without limiting the foregoing, the Custodian shall not be held
accountable or liable to the Fund, any shareholder or former shareholder thereof
or any other person for any delays or losses, damages or expenses any of them
may suffer or incur resulting from (1) the Custodian's failure to receive timely
and suitable notification concerning quotations or corporate actions relating to
or affecting portfolio securities of the fund or (2) any errors in the
computation of the net asset value based upon or arising out of quotations or
information as to corporate actions if received by the Custodian either (i) from
a source which the Custodian was authorized pursuant to the second paragraph of
this Section 5D to rely upon, or (ii) from a source which in the Custodian's
reasonable judgment was as reliable a source for such quotations or information
as the sources authorized pursuant to that paragraph. Nevertheless, the
Custodian will use its best judgment in determining whether to verify through
other sources any information it has received as to quotations or corporate
actions if the Custodian has reason to believe that any such information might
be incorrect.
In the event of any error or delay in the determination of such net asset
value for which the Custodian may be liable, the
- 26 -
Fund and the Custodian will consult and make good faith efforts to reach
agreement on what actions should be taken in order to mitigate any loss suffered
by the Fund or its present or former shareholders, in order that the custodian's
exposure to liability shall be reduced to the extent possible after taking into
account all relevant factors and alternatives. Such actions might include the
Fund or the custodian taking reasonable steps to collect from any shareholder or
former shareholder who has received any overpayment upon redemption of shares
such overpaid amount or to collect from any shareholder who has underpaid upon a
purchase of shares the amount of such underpayment or to reduce the number of
shares issued to such shareholder. It is understood that in attempting to reach
agreement on the actions to be taken or the amount of the loss which should
appropriately be borne by the Custodian, the Fund and the Custodian will
consider such relevant factors as the amount of the loss involved, the Fund's
desire to avoid loss of shareholder good will, the fact that other persons or
entitles could have been reasonably expected to have detected the error sooner
than the time it was actually discovered, the appropriateness of limiting or
eliminating the benefit which shareholders or former shareholders might have
obtained by reason of the error, and the possibility that other parties
providing services to the fund might be induced to absorb a portion of the loss
incurred.
E. Disbursements - Upon receipt of proper instructions, to
- 27 -
pay or cause to be paid, insofar as funds are avilable for the purpose, bills,
statements and other obligations of the Fund (including but not limited to
interest charges, taxes, advisory fees, compensation to Fund officers and
employees, and other operating expenses of the Fund).
6. A. The Custodian shall not be liable for any action taken or omitted in
reliance upon proper instructions reasonably believed by it to be genuine or
upon any other written notice, request, direction, instruction, certificate or
other instrument believed by it to be genuine and signed by the proper party or
parties.
The Secretary or Assistant Secretary of the Fund shall certify to the
custodian the names, signatures and scope of authority of all persons authorized
to give proper instructions or any other such notice, request, direction,
instructions, certificate or instrument on behalf of the Fund, the names and
signatures of the officers of the Fund, the name and address of the Shareholder
Servicing Agent, and any resolutions, votes, instructions or directions of the
Fund's Board of Directors or shareholders. Such certificate may be accepted and
relied upon by the Custodian as conclusive evidence of the facts set forth
therein and may be considered in full force and effect until receipt of a
similar certificate to the contrary.
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the
- 28 -
title, validity or genuineness of any property or evidence of title thereto
received by it or delivered by it pursuant to this Agreement.
The Custodian shall be entitled, at the expense of the Fund, to receive
and act upon advice of counsel (who may be counsel for the Fund) on all matters,
and the Custodian shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
B. With respect to the portfolio securities, cash and other property of
the fund held by a Securities System, the Custodian shall be liable to the Fund
for any loss or damage to the fund resulting from use of the Securities System
if caused by any negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees or from any failure of the
Custodian or any such agent to enforce effectively such rights as it may have
against the Securities System. At the election of the fund, it shall be entitled
to be subrogated to the rights of the Custodian with respect to any claim
against the Securities System or any other person which the Custodian may have
as a consequence of any such loss or damage if and to the extent that the Fund
has not been made whole for any such loss or damage. The Custodian shall be
subject to the same responsibility with respect to all securities of the Fund,
and all cash, stock dividends, rights and items of like nature to which the Fund
is entitlted, held or received by such Securities System, as if the same where
held or received by the Custodian at its own office.
- 29 -
C. Except as may otherwise be set forth in this Agreement with respect to
particulare matters, the Custodian shall be held only to the exercise of
reasonable care and diligence in carrying out the provisions of this Agreement,
provided that the Custodian shall not thereby be required to take any action
which is in contravention of any applicable law. The Fund agrees to indemnify
and hold harmless the Custodian and its nominees from all claims and liabilities
(including counsel fees) incurred or assessed against it or its nominees in
connection with the performance of this Agreement, except such as may arise from
its or its nominee's breach of the relevant standard of conduct set forth in
this Agreement. Without limiting the foregoing indemnification obligation of the
Fund, the Fund agrees to indemnify the Custodian and its nominees against any
liability the Custodian or such nominee may incur by reason of taxes assessed to
the Custodian or such nominee or other costs, liability or expense incurred by
the Custodian or such nominee resulting directly or indirectly from the fact
that portfolio securities or other property of the fund are registered in the
name of the Custodian or such nominee.
It is also understood that the Custodian shall not be liable for any loss
involving any securities, currencies, deposits or other property of the Fund,
whether maintained by it, a Subcustodian, an agent of the Custodian or a
Subcustodian, a Securities System or a Banking Institution, or a loss arising
from a foreign currency transaction or contract, resulting from a
- 30 -
Sovereign Risk. A "Sovereign Risk" shall mean nationalization, expropriation,
devaluation, revaluation, confiscation, seizure, cancellation, destruction or
similar action by any governmental authority, de facto or de jure; or enactment,
promulgation, imposition or enforcement by any such governmental authority of
currency restrictions, exchange controls, taxes, levies or other charges
affecting the Fund's property; or acts of war, terrorism, insurrection or
revolution; or any other similar act or event beyond the Custodian's control.
D. The Custodian shall be entitled to receive reimbursement from the Fund
on demand, in the manner provided in Section 7, for its cash disbursements,
expenses and charges (including the fees and expenses of any Subcustodian or any
Agent) in connection with this Agreement, but excluding salaries and usual
overhead expenses.
E. The Custodian may at any time or times in its discretion appoint (and
may at any time remove) any other bank or trust company as its agent (an
"Agent") to carry out such of the provisions of this Agreement as the Custodian
may from time to time direct, provided, however, that the appointment of such
Agent (other than an Agent appointed pursuant to the third paragraph of Section
3) shall not relieve the Custodian of any of its responsibilities under this
Agreement.
F. Upon request, the Fund shall deliver to the Custodian such proxies,
power of attorney or other instruments as may be
- 31 -
reasonable and necessary or desirable in connection with the performance by the
Custodian or any Subcustodian of their respective obligations under this
Agreement or any applicable subcustodian agreement.
7. The Fund shall pay the Custodian a custody fee based on such fee
schedule as may from time to time be agreed upon in writing by the custodian and
the Fund. Such fee, together with all amounts for which the Custodian is to be
reimbursed in accordance with Section 6D, shall be billed to the Fund in such a
manner as to permit payment either by a direct cash payment to the Custodian or
by placing Fund portfolio transactions with the Custodian resulting in an
agreed-upon amount of commissions being paid to the Custodian within an
agreed-upon period of time.
8. This Agreement shall continue in full force and effect until terminated
by either party by an instrument in writing delivered or mailed, postage
prepaid, to the other party, such termination to take effect not sooner than
sixty (60) days after the date of such delivery or mailing. In the event of
termination the Custodian shall be entitled to receive prior to delivery of the
securities, funds and other property held by it all accrued fees and
unreimbursed expenses the payment of which is contemplated by Sections 6D and 7,
upon receipt by the Fund of a statement setting forth such fees and expenses.
In the event of the appointment of a successor custodian, it is agreed
that the funds and securities owned by the Fund and
- 32 -
held by the Custodian or any Subcustodian shall be delivered to the successor
custodian, and the Custodian agrees to cooperate with the fund in execution of
documents and performance of other actions necessary or desirable in order to
substitute the successor custodian for the Custodian under this Agreement.
9. This Agreement constitutes the entire understanding and agreement of
the parties hereto with respect to the subject matter hereof. No provision of
this Agreement may be amended or terminated except by a statement in writing
signed by the party against which enforcement of the amendment or termination is
sought.
In connection with the operation or this Agreement, the Custodian and the
Fund may agree in writing from time to time on such provisions interpretative of
or in addition to the provisions of this Agreement as may in their joint opinion
be consistent with the generaltenor of this Agreement. No interpretative or
additional provisions made as provided in the preceding sentence shall be deemed
to be an amendment of this Agreement.
10. This instrument is executed and delivered in The Commonwealth of
Massachusetts and shall be governed by and construed according to the laws of
said Commonwealth.
11. Notices and other writings delivered or mailed postage prepaid to the
fund addressed to the Fund at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or to
such other address as the Fund may have designated to the Custodian in writing,
or to the Custodian
- 33 -
at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Manager, Securities
Department, or to such other address as the Custodian may have designated to the
Fund in writing, shall be deemed to have been properly delivered or given
hereunder to the respective addressee.
12. This Agreement shall be binding on and shall inure to the benefit of
the Fund and the Custodian and their respective successors and assigns, provided
that neither party hereto may assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of the other party.
l3. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original. This Agreement shall become effective when
one or more counterparts have been signed and delivered by each of the parties.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executedin its name and behalf on the day and year first above written.
THE JAPAN FUND, INC. XXXXX BROTHERS XXXXXXXX & CO.
By /s/ [Illegible] per pro /s/ [Illegible]
-------------------------- --------------------------
- 34 -
THE JAPAN FUND, INC.
APPENDIX A
COUNTRY SUBCUSTODIAN DEPOSITORY
------- ------------ ----------
JAPAN CITIBANK, N. A., TOKYO NONE
TRANSNATIONAL OPERATED BY XXXXXX GUARANTY TRUST COMPANY EUROCLEAR
OF NEW YORK, BRUSSELS
APPROVED: /s/ [Illegible] 8-18-87
-------------------------------------------------------------
DATE
APPENDIX B
THE JAPAN FUND, INC.
THE FOLLOWING AUTHORIZED SOURCES ARE TO BE USED FOR PRICING AND FOREIGN EXCHANGE
QUOTATIONS, CORPORATE ACTIONS, DIVIDENDS AND RIGHTS OFFERINGS:
AUTHORIZED SOURCES
QUOTRON
REUTERS
INTERACTIVE DATA CORPORATION
VALORINFORM (GENEVA)
SUBSCRIPTION BANKS
FUND MANAGERS
EXTEL (LONDON)
REPUTABLE FOREIGN BROKERS
APPROVED: /s/ [Illegible]
-------------------------------------------
DATE
The Japan Fund, Inc.
Certificate as to Resolution
of
Board of Directors
The undersigned certifies that she is the Secretary of The Japan Fund, Inc. (the
"Fund"), a Maryland corporation, and that, as such, she is authorized to execute
this Certificate on behalf of the Fund, and further certifies that the following
is a complete and correct copy of a resolution duly adopted by the duly elected
Board of Directors of the Fund at a meeting duly called, convened and held on
July 23, 1987, at which a quorum was present and acting throughout, and that
such resolution has not been amended and is in full force and effect.
RESOLVED, that any of the following designated persons in their
capacities as officers of the Fund or officers of Xxxxxxx Xxxxxxx &
Xxxxx Ltd., the Fund's investment manager as appropriate, may give
instructions to Xxxxx Brothers Xxxxxxxx & Co. in accordance with
Paragraph 2(Y) of the Custodian Agreement:
Xxx Falling
Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxxxxxx
Xxxxx X. Xxx
Xxxxxx X. XxXxxxxxx
Xxxxxx X. XxXxxxx
Xxxxxx X. X'Xxxxxxx
Juris Padegs
Xxxxxx Xxxxxx
Xxxxxx X. Xxxxxx
Xxxx Xxxxxxxxxx
O. Xxxxxx Xxxxxxxxx
Xxxxx X. Luckyn-Xxxxxx
Xxxxxxxx Xxxxx
Xxxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxx
IN WITNESS WHEREOF, I hereunto set my hand and seal of said Fund this 13th day
of August, 1987.
/s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------
(Corporate Seal)
THE JAPAN FUND, INC.
000 XXXX XXXXXX
XXX XXXX, X.X. 00000
TELEX: 222116 TELEPHONE (212) 000-00XX
July 17, 1987
Xxxxx Brothers Xxxxxxxx & Co.
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx,
Assistant Manager
RE: THE JAPAN FUND. INC.
This letter will acknowledge, on behalf of The Japan Fund, Inc. ("Fund"),
that the Fund will hold Xxxxx Brothers Xxxxxxxx & Co. harmless with respect to
any loss suffered by the Fund insofar as such loss is the result of your
reasonable reliance in the performance of your duties as the Fund's custodian or
record keeper, upon records and books of account that were maintained for the
Fund prior to the employment of Xxxxx Brothers Xxxxxxxx & Co. as custodian and
record keeper.
The undersigned, as President of the Fund, is fully authorized as
President to make this representation on behalf of the Fund.
Sincerely,
/s/ O. Xxxxxx Xxxxxxxxx
--------------------------
O. Xxxxxx Xxxxxxxxx
XXX/lti
THE JAPAN FUND, INC.
APPENDIX A
COUNTRY SUBCUSTODIAN DEPOSITORY
------- ------------ ----------
JAPAN CITIBANK, N. A., TOKYO NONE
TRANSNATIONAL OPERATED BY XXXXXX GUARANTY TRUST COMPANY EUROCLEAR
OF NEW YORK, BRUSSELS
APPROVED: /s/ [Illegible] August 10, 1987
-------------------------------------------------------------
DATE
