Exhibit (d)(5)
SUBSCRIPTION AGENT AGREEMENT
----------------------------
This Subscription Agent Agreement (the "Agreement") is made as of
November , 2005 between Japan Smaller Capitalization Fund, Inc. (the "
Company"), Computershare Shareholder Services, Inc., a Delaware corporation
and its fully owned subsidiary EquiServe Trust Company, N.A., a national
banking (collectively, the "Agent" or individually "CSS" and the "Trust
Company", respectively). All terms not defined herein shall have the meaning
given in the prospectus (the "Prospectus") included in the (Registration
Statement on Form N-2, File Nos. 333-128763 and 811-5992 filed by the Company
with the Securities and Exchange Commission on October 3, 2005, as amended by
any amendment filed with respect thereto (the "Registration Statement").
WHEREAS, the Company proposes to make subscription offer by issuing
certificates or other evidences of subscription rights, in the form designated
by the Company (the "Subscription Certificates") to shareholders of record
(the "Shareholders") of its Common Stock, par value $.10per share ("Common
Stock"), as of a record date specified by the Company (the "Record Date"),
pursuant to which each Shareholder will have certain rights (the "Rights") to
subscribe for shares of Common Stock, as described in and upon such terms as
are set forth in the Prospectus, a final copy of which has been or, upon
availability will promptly be, delivered to the Agent; and
WHEREAS, the Company wishes the Agent to perform certain acts on behalf
of the Company, and the Agent is willing to so act, in connection with the
distribution of the Subscription Certificates and the issuance and exercise of
the Rights to subscribe therein set forth, all upon the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreements set forth herein, the parties agree as follows:
1. Appointment.
The Company hereby appoints the Agent to act as subscription agent in
connection with the distribution of Subscription Certificates and the issuance
and exercise of the Rights in accordance with the terms set forth in this
Agreement and the Agent hereby accepts such appointment.
2. Form and Execution of Subscription Certificates.
A. Each Subscription Certificate shall be irrevocable . The Agent shall,
in its capacity as Transfer Agent of the Company, maintain a register of
Subscription Certificates and the holders of record thereof (each of whom
shall be deemed a "Shareholder" hereunder for purposes of determining the
rights of holders of Subscription Certificates).
3. Rights and Issuance of Subscription Certificates.
A. Each Subscription Certificate shall evidence the Rights of the
Shareholder therein named to purchase Common Stock upon the terms and
conditions therein and herein set forth.
B. Upon the written advice of the Company, signed by any of its duly
authorized officers, as to the Record Date, the Agent shall, from a list of
the Company Shareholders as of the Record Date to be prepared by the Agent in
its capacity as Transfer Agent of the Company, prepare and record Subscription
Certificates in the names of the Shareholders, setting forth the number of
Rights to subscribe for the Company's Common Stock calculated on the basis of
three Rights for one share of Common Stock recorded on the books in the name of
each such Shareholder as of the Record Date. One Right will beissued to each
Record Date Shareholder for each share of Common Stock such Record Shareholder
holds on the Record Date. No fractional shares of Common Stock will be issued
upon the exercise of Rights; accordingly, Rights may be exercised only in
multiples of Fractional shares will not be issued; accordingly Rights may only
be exercised in multiples of three and Rights will be rounded down by the
Subscription Agent to the nearest number divisible by three. Each
Subscription Certificate shall be dated as of the Record Date and shall be
executed manually or by facsimile signature of a duly authorized officer of
the Subscription Agent. Upon the written advice, signed as aforesaid, as to
the effective date of the Registration Statement, the Agent shall promptly
countersign and deliver the Subscription Certificates, together with a copy of
the Prospectus, instruction letter and any other document as the Company deems
necessary or appropriate, to all Shareholders with record addresses in the
United States (including its territories and possessions and the District of
Columbia). Delivery shall be by first class mail (without registration or
insurance), except for those Shareholders having a registered address outside
the United States (who will only receive copies of the Prospectus, instruction
letter and other documents as the Company deems necessary or appropriate, if
any), delivery shall be by air mail (without registration or insurance) and by
first class mail (without registration or insurance) to those Shareholders
having APO or FPO addresses. No Subscription Certificate shall be valid for
any purpose unless so executed.
C. The Agent will mail a copy of the Prospectus, instruction letter, a
special notice and other documents as the Company deems necessary or
appropriate, if any, but not Subscription Certificates to Record Date
Shareholders whose record addresses are outside the United States (including
its territories and possessions and the District of Columbia ) ("Foreign
Record Date Shareholders"). The Rights to which such Subscription Certificates
relate will be held by the Agent for such Foreign Record Date Shareholders'
accounts until instructions are received to exercise, sell or transfer the
Rights.
4. Exercise.
A. Record Date Shareholders may acquire shares of Common Stock on Primary
Subscription and pursuant to the Over-Subscription Privilege by delivery to
the Agent as specified in the Prospectus of (i) the Subscription Certificate
with respect thereto, duly executed by such Shareholder in accordance with and
as provided by the terms and conditions of the Subscription Certificate,
together with (ii) the estimated purchase price, as disclosed in the
Prospectus, for each share of Common Stock subscribed for by exercise of such
Rights, in U.S. dollars by money order or check drawn on a bank in the United
States, in each case payable to the order of the Company.
B. Rights may be exercised at any time after the date of issuance of the
Subscription Certificates with respect thereto but no later than 5:00 P.M. New
York time on such date as the Company shall designate to the Agent in writing
(the "Expiration Date"). For the purpose of determining the time of the
exercise of any Rights, delivery of any material to the Agent shall be deemed
to occur when such materials are received at the Shareholder Services Division
of the Agent specified in the Prospectus.
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C. Notwithstanding the provisions of Section 4 (a) and 4 (b) regarding
delivery of an executed Subscription Certificate to the Agent prior to 5:00
P.M. New York time on the Expiration Date, if prior to such time the Agent
receives a Notice of Guaranteed Delivery by facsimile (telecopy) or otherwise
from a bank, a trust company or a New York Stock Exchange member guaranteeing
delivery of (i) payment of the full Subscription Price for the shares of
Common Stock subscribed for on Primary Subscription and any additional shares
of Common Stock subscribed for pursuant to the Over-Subscription Privilege,
and (ii) a properly completed and executed Subscription Certificate, then such
exercise of Primary Subscription Rights and Over-Subscription Rights shall be
regarded as timely, subject, however, to receipt of the duly executed
Subscription Certificate and full payment for the Common Stock by the Agent
within three Business Days (as defined below) after the Expiration Date (the
"Protect Period") and full payment for their Common Stock within ten Business
Days after the Confirmation Date (as defined in Section 4(d)). For the
purposes of the Prospectus and this Agreement, "Business Day" shall mean any
day on which trading is conducted on the New York Stock Exchange.
D. The Company will determine the Subscription Price by taking 90% of the
average of the last reported sale prices of shares of Common Stock on the New
York Stock Exchange on the Expiration Date (the "Pricing Date") and the
four preceding trading days. As soon as practicable after the Pricing Date
(but no later than December 28, 2005) (the "Confirm Date"), CSS shall send to
each exercising shareholder (or, if shares of Common Stock on the Record Date
are held by Cede & Co. or any other depository or nominee, to Cede & Co. or
such other depository or nominee) a confirmation showing the number of shares
of Common Stock acquired pursuant to the Primary Subscription, and, if
applicable, the Over-Subscription Privilege, the per share and total purchase
price for such shares, and any additional amount payable to the Company by
such shareholder or any excess to be refunded by the Company to such
shareholder in the form of a check and stub, along with a letter explaining
the allocation of shares of Common Stock pursuant to the Over-Subscription
Privilege.
E. Any additional payment required from a shareholder must be received by
CSS no later than January 9, 2005 and any excess payment to be refunded by the
Company to a shareholder will be mailed by CSS as promptly as practicable
after the Confirmation Date. If a shareholder does not make timely payment of
any additional amounts due in accordance with Section 4(D), CSS will consult
with the Company in accordance with Section 5 as to the appropriate action to
be taken. CSS will not issue or deliver certificates or Statements of Holding
for shares subscribed for until payment in full therefore has been received,
including collection of checks and payment pursuant to notices of guaranteed
delivery.
5. Validity of Subscriptions.
Irregular subscriptions not otherwise covered by specific instructions
herein shall be submitted to an appropriate officer of the Company and handled
in accordance with his or her instructions. Such instructions will be
documented by the Agent indicating the instructing officer and the date
thereof.
6. Over-Subscription.
If, after allocation of shares of Common Stock to Record Date
Shareholders, there remain unexercised Rights, then the Agent shall allot the
shares issuable upon exercise of such unexercised Rights (the "Remaining
Shares") to shareholders who have exercised all the Rights initially issued to
them and who wish to acquire more than the number of shares for which the
Rights issued to them are
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exercisable. Shares subscribed for pursuant to the Over-Subscription Privilege
will be allocated in the amounts of such over-subscriptions. If the number of
shares for which the Over-Subscription Privilege has been exercised is greater
than the Remaining Shares, the Agent shall allocate the Remaining Shares to
Record Date Shareholders exercising Over-Subscription Privilege based on the
number of shares of Common Stock owned by them on the Record Date. The
percentage of Remaining Shares each over-subscribing Record Date Shareholder
may acquire will be roundeddown to result in delivery of whole shares of
Common Stock. The Agent shall advise the Company immediately upon the
completion of the allocation set forth above as to the total number of shares
subscribed and distributable.
7. Delivery of Shares.
The Agent will deliver (i) certificates or Statement of Holding
reflecting new shares of Company Common Stock in the Direct Registration
System, representing those shares of Common Stock purchased pursuant to
exercise of Primary Subscription Rights as soon as practicable after the
corresponding Rights have been validly exercised and full payment for such
shares has been received and cleared and (ii) certificates or Statements of
Holding representing those shares purchased pursuant to the exercise of the
Over-Subscription Privilege as soon as practicable after the Expiration Date
and after all allocations have been effected.
8. Holding Proceeds of Rights Offering.
A. All proceeds received by CSS from Shareholders in respect of the
exercise of Rights shall be held by CSS, on behalf of the Company, in a
segregated account (the "Account"). No interest shall accrue to the Company or
shareholders on funds held in the Account pending disbursement in the manner
described in Section 4(E) above.
B. CSS shall deliver all proceeds received in respect of the exercise of
Rights to the Company as promptly as practicable, but in no event later than
ten business days after the Confirmation Date.
C. The Company acknowledges that the bank accounts maintained by CSS in
connection with the services provided under this Agreement will be in its name
and that CSS may receive investment earnings in connection with the investment
at CSS's risk and for its benefit of funds held in those accounts from time to
time.
9. Reports.
Daily, during the period commencing on November 21, 2005, until
termination of the Subscription Period, the Agent will report by telephone or
telecopier, confirmed by letter, to an Officer of the Company, data regarding
Rights exercised, the total number of shares of Common Stock subscribed for,
and payments received therefor, bringing forward the figures from the previous
day's report in each case so as to show the cumulative totals and any such
other information as may be mutually determined by the Company and the Agent.
10. Loss or Mutilation.
If any Subscription Certificate is lost, stolen, mutilated or destroyed,
the Agent may, on such terms which will indemnify and protect the Company and
the Agent as the Agent may in its discretion impose (which shall, in the case
of a mutilated Subscription Certificate include the surrender and
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cancellation thereof), issue a new Subscription Certificate of like
denomination in substitution for the Subscription Certificate so lost, stolen,
mutilated or destroyed.
11. Compensation for Services.
The Company agrees to pay to the Agent compensation for its services
hereunder in accordance with its Fee Schedule to act as Agent attached hereto
as Exhibit A. The Company further agrees that it will reimburse the Agent for
its reasonable out-of-pocket expenses incurred in the performance of its
duties as such.
12. Instructions, Indemnification and Limitation of Liability.
The Agent undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions:
A. The Agent shall be entitled to rely upon any instructions or
directions furnished to it by an appropriate officer of the Company, whether
in conformity with the provisions of this Agreement or constituting a
modification hereof or a supplement hereto. Without limiting the generality of
the foregoing or any other provision of this Agreement, the Agent, in
connection with its duties hereunder, shall not be under any duty or
obligation to inquire into the validity or invalidity or authority or lack
thereof of any instruction or direction from an officer of the Company which
conforms to the applicable requirements of this Agreement and which the Agent
reasonably believes to be genuine and shall not be liable for any delays,
errors or loss of data occurring by reason of circumstances beyond the Agent's
control.
B. The Company will indemnify the Agent and its nominees against, and
hold it harmless from, all liability and expense which may arise out of or in
connection with the services described in this Agreement or the instructions
or directions furnished to the Agent relating to this Agreement by an
appropriate officer of the Company, except for any liability or expense which
shall arise out of the gross negligence, bad faith or willful misconduct of
the Agent, or such nominees or independent contractors.
Promptly after the receipt by the Agent of notice of any demand or claim
or the commencement of any action, suit, proceeding or investigation, the
Agent shall, if a claim in respect thereof is to be made against the Company,
notify the Company thereof in writing. The Company shall be entitled to
participate as its own expense in the defense of any such claim or proceeding,
and, if it so elects at any time after receipt of such notice, it may assume
the defense of any suit brought to enforce any such claim or of any other
legal action or proceeding. For the purposes of this Section 12, the term
"expense or loss" means any amount paid or payable to satisfy any claim,
demand, action, suit or proceeding settled with the express written consent of
the Agent, and all reasonable costs and expenses, including, but not limited
to, reasonable counsel fees and disbursements, paid or incurred in
investigating or defending against any such claim, demand, action, suit,
proceeding or investigation.
C. The Agent shall be responsible for and shall indemnify and hold the
Company harmless from and against any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising out of or attributable
to Agent's refusal or failure to comply with the terms of this Agreement, or
which arise out of Agent's or an independent contractor's
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negligence or willful misconduct or which arise out of the breach of any
representation or warranty of the Agent hereunder, for which the Agent is not
entitled to indemnification under this Agreement; provided, however, that
Agent's aggregate liability during any term of this Agreement with respect to,
arising from, or arising in connection with this Agreement, or from all
services provided or omitted to be provided under this Agreement, whether in
contract, or in tort, or otherwise, is limited to, and shall not exceed, the
amounts paid hereunder by the Company to Agent as fees and charges.
13. Changes in Subscription Certificate.
The Agent may, without the consent or concurrence of the Shareholders in
whose names Subscription Certificates are registered, by supplemental
agreement or otherwise, concur with the Company in making any changes or
corrections in a Subscription Certificate that it shall have been advised by
counsel (who may be counsel for the Company) is appropriate to cure any
ambiguity or to correct any defective or inconsistent provision or clerical
omission or mistake or manifest error therein or herein contained, and which
shall not be inconsistent with the provision of the Subscription Certificate
except insofar as any such change may confer additional rights upon the
Shareholders.
14. Assignment/Delegation.
A. Except as provided in Section 14(B) below, neither this Agreement nor
any rights or obligations hereunder may be assigned or delegated by either
party without the written consent of the other party.
B. The Agent may, without further consent on the part of the Company,
subcontract with other subcontractors for systems, processing, telephone and
mailing services, and post-exchange activities, as may be required from time
to time; provided, however, that the Agent shall be as fully responsible to
the Company for the acts and omissions of any subcontractor as it is for its
own acts and omissions.
C. Except as explicitly stated elsewhere in this Agreement, nothing under
this Agreement shall be construed to give any rights or benefits in this
Agreement to anyone other than the Agent and the Company and the duties and
responsibilities undertaken pursuant to this Agreement shall be for the sole
and exclusive benefit of the Agent and the Company.
15. Governing Law.
The validity, interpretation and performance of this Agreement shall be
governed by the law of the Commonwealth of Massachusetts and shall inure to
the benefit of and the obligations created hereby shall be binding upon the
successors and permitted assigns of the parties hereto.
16. Third Party Beneficiaries.
This Agreement does not constitute an agreement for a partnership or
joint venture between the Agent and the Company. Neither party shall make any
commitments with third parties that are binding on the other party without the
other party's prior written consent.
17. Force Majeure.
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In the event either party is unable to perform its obligations under the
terms of this Agreement because of acts of God, strikes, terrorist acts,
equipment or transmission failure or damage reasonably beyond its control, or
other cause reasonably beyond its control, such party shall not be liable for
damages to the other for any damages resulting from such failure to perform or
otherwise solely from such causes. Performance under this Agreement shall
resume when the affected party or parties are able to perform substantially
that party's duties.
18. Consequential Damages.
Neither party to this Agreement shall be liable to the other party for
any consequential, indirect, special or incidental damages under any
provisions of this Agreement or for any consequential, indirect, penal,
special or incidential damages arising out of any act or failure to act
hereunder even if that party has been advised of or has foreseen the
possibility of such damages.
19. Severability.
If any provision of this Agreement shall be held invalid, unlawful, or
unenforceable, the valididty, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired.
20. Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original and all of which together shall be considered one
and the same agreement.
21. Captions.
The captions and descriptive headings herein are for the convenience of
the parties only. They do not in any way modify, amplify, alter or give full
notice of the provisions hereof.
22. Confidentiality.
The Agent and the Company agree that all books, records, information and
data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement
including the fees for services set forth in the attached schedule shall
remain confidential, and shall not be voluntarily disclosed to any other
person, except as may be required by law.
23. Term and Termination.
This Agreement shall remain in effect until the earlier of (a) thirty
(30) days after the Expiration Date; (b) it is terminated by either party upon
a material breach of this Agreement which remains uncured for 30 days after
written notice of such breach has been provided; or (c) 30 days' written
notice has been provided by either party to the other. Upon termination of the
Agreement, the Agent shall retain all canceled Certificates and related
documentation as required by applicable law.
24. Notices.
Until further notice in writing by either party hereto to the other
party, all
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written reports, notices and other communications between the Exchange Agent
and the Company required or permitted hereunder shall be delivered or mailed
by first class mail, postage prepaid, telecopier or overnight courier
guaranteeing next day delivery, addressed as follows:
If to the Company, to:
Keiko, Tani, Esq.
Japan Smaller Capitalization Fund, Inc.
Two World Xxxxxxxxx Xxxxxx, Xxxxxxxx X
Xxx Xxxx, XX 00000
If to the Agent, to:
EquiServe Trust Company, N.A.
c/o Computershare Shareholder Services, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Reorganization Department
or
000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxx Xxxx, XX 00000
Attn: Reorganization Department
25. Survival.
The provisions of Paragraphs 12, 15, 17-19, 22, and 24-26 shall survive
any termination, for any reason, of this Agreement.
26. Merger of Agreement.
This Agreement constitutes the entire agreement between the parties
hereto and supercedes any prior agreement with respect to the subject matter
hereof whether oral or written.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, hereunto duly authorized, as of the day
and year first above written.
EQUISERVE TRUST COMPANY, NA. COMPANY
By:______________________________ By:_______________________
Date:____________________________ Date:______________________
Title:____________________________ Title:______________________
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COMPUTERSHARE SHAREHOLDER SERVICES, INC.
By:______________________________
Date:_____________________________
Title:_____________________________
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[GRAPHIC OMITTED] EquiServe(R)
EQUISERVE TRUST COMPANY, N.A.
PROPOSAL TO SERVE AS SUBSCRIPTION AGENT FOR
JAPAN SMALLER CAP FUND
A. FEES FOR SERVICES *
===================================================================================================
$ 12,500.00 Project Management Fee*
$ 9.50 Per subscription form processed (registered and beneficial)
$ 15.00 Per defective subscription form received
$ 15.00 Per notice of guaranteed delivery received
$ 2.00 Per broker split certificate issued
$ 3.00 Per sale of right (if applicable)
$ 4.50 Per invoice mailed (if applicable)
$ 1.75 Per refund check issued and mailed (if applicable)
$ 5.00 Per solicitation check processed and mailed (if applicable)
$ 15.00 Per withdrawal of subscription certificate (if applicable)
$ 50.00 Per wire (if applicable)
$ 2,500.00 New York window fee for Midnight expiration (if applicable)
$ 3,000.00 Per offer extension
$ 5,000.00 Minimum charge should the project be canceled for any reason prior to
the mailing of the subscription form
===================================================================================================
$ 5,000.00 Information Agent Services (as described below)
===================================================================================================
*Excludes out-of-pocket expenses as described in Section C, "Items
Not Covered"
B. SERVICES COVERED
o Designating an operational team to carry out Subscription,
Distribution and Information Agent duties, including document
review and execution of legal agreement, review of subscription
form and communication materials, project management,
distribution of materials, communications and on-going project
updates and reporting
o Converting Japan Smaller Cap Fund's records to EquiServe's
Corporate Actions System
o Calculating Rights to be distributed to each shareholder and
printing shareholder information on the subscription form
o Printing, enclosing and mailing subscription forms to
registered shareholders
o Establishing Rights Offering with the Depositary Trust Company
(DTC) to facilitate Broker/Street Shareholder participation
o Opening and processing Rights received and exercised
o Tracking and reporting the number of exercises made, as
required
o Processing sale of Rights requests received, if applicable
o Deposit participant checks daily and forward all participant
funds to Japan Smaller Cap Fund at the end of the offering
period
o Providing receipt summation of checks received
o Prorating, calculating and allocating shares upon the
expiration of the offer
o Issuing and mailing stock certificates, checks and/or invoices
o Affixing legends to appropriate stock certificates, where
applicable
o Calculating, issuing and mailing of proration and/or
over-subscription shares and refund checks, if applicable
o Calculating, issuing and mailing of solicitation checks, if
applicable
INFORMATION AGENT SERVICES
o Requesting banks/brokers/dealers listing from DTC
o Contacting banks/brokers/dealers to inform them of the offering
and requesting the number of sets of materials they will
require to distribute to their shareholders
o Distributing requested materials to banks/brokers/dealers
o Establishing fulfillment telephone number to be include in the
prospectus and DTC's electronic notice to banks/brokers/dealers
o Distributing additional sets of materials as requested through
the fulfillment number
o Establishing toll-free number to be include in the prospectus
and DTC's electronic notice to banks/brokers/dealers to
facilitate banks/brokers/dealers/shareholders telephone
inquiries
o Responding to banks/brokers/dealers/shareholders telephone and
correspondence inquiries
o Tracking and reporting the number of telephone calls received
and their nature
C. ITEMS NOT COVERED
o Items not specified in the "Services Covered" section set forth
in this Agreement, including any services associated with new
duties, legislation or regulatory fiat which become effective
after the date of this Agreement (these will be provided on an
appraisal basis)
o All out-of-pocket expenses such as telephone line charges,
overprinting, certificates, checks, postage, stationery, wire
transfers, and excess material disposal (these will be billed
as incurred)
o Reasonable legal review fees if referred to outside counsel
o Overtime charges assessed in the event of late delivery of
material for mailings unless the target mail date is
rescheduled
D. ASSUMPTIONS
o Proposal based upon document review and information known at
this time about the transaction.
o Significant changes made in the terms or requirements of this
transaction could require modifications to this proposal
o Proposal must be executed prior to the initial mailing
o Fund responsible for printing of materials (Rights Card,
Prospectus and ancillary documents)
o Material to be mailed to shareholders must be received no less
than five (5) business days prior to the start of the mailing
project
o No interest shall accrue to the Fund or the shareholders
E. PAYMENT FOR SERVICES
The Project Management Fee will be rendered and payable on the
effective date of the transaction. An invoice for any out-of-pockets
and per item fees realized will be rendered and payable on a monthly
basis, except for postage expenses in excess of $5,000. Funds for
such mailing expenses must be received one (1) business day prior to
the scheduled mailing date.
EquiServe Trust Company, N.A. Japan Smaller Cap Fund
By: By:
-------------------------------------- --------------------------------------------
Xxxx Xxxxxxxxxxxx
Title: Director, Business Development Title:
----------------------------------- -----------------------------------------
Date: 11/13/05 Date:
----------------------------------- ------------------------------------------
EquiServe, Inc.
By:
--------------------------------------
Xxxx Xxxxxxxxxxxx
Title: Director, Business Development
-----------------------------------
Date: 11/13/05
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