Exhibit (k)(1)
ACCOUNTING AGENCY AGREEMENT
THIS ACCOUNTING AGENCY AGREEMENT is made as of ____________, 2002 by and
between XXXXX BROTHERS XXXXXXXX & CO., a limited partnership organized under
the laws of the State of New York (the "Accounting Agent"), and JAPAN SMALLER
CAPITALIZATION FUND, INC. (the "Fund").
WHEREAS, the Fund is registered as management investment company under
the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Fund desires to retain the Accounting Agent to perform
certain accounting and recordkeeping services on behalf of the Fund, and the
Accounting Agent is willing to render such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. Employment of Accounting Agent. The Fund hereby employs and appoints
the Accounting Agent to act as its fund accounting agent on the terms set
forth in this Agreement, and the Accounting Agent accepts such appointment.
2. Delivery of Documents. The Fund will (i) furnish the Accounting Agent
with properly certified or authenticated copies of resolutions of the Fund's
Board of Directors or Trustees authorizing the appointment of the Accounting
Agent to provide certain fund accounting services to the Fund and approving
this Agreement; (ii) provide the Accounting Agent with any other documents or
resolutions (including but not limited to directions or resolutions of the
Fund's Board of Directors or Trustees) which relate to or affect the
Accounting Agent's performance of its duties hereunder or which the Accounting
Agent may reasonably request; and (iii) notify the Accounting Agent promptly
of any matter affecting the performance by the Accounting Agent of its
services under this Agreement.
3. Recordkeeping and Calculation of Net Asset Value. The Accounting Agent
shall compute and determine the net asset value per share 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 Fund's Declaration of Trust or Certificate of Incorporation
and By-Laws, as they may from time to time be amended and delivered to the
Accounting Agent, (2) the votes of the Board of Trustees or Directors of the
Fund at the time in force and applicable, as they may from time be delivered
to the Accounting Agent; and (3) Proper Instructions. On each day that the
Accounting Agent shall compute the net asset value per share of the Fund, the
Accounting Agent shall provide the Fund's investment adviser with written
reports which the investment adviser will use to verify that portfolio
transactions have been recorded in accordance with the Fund's instructions and
are reconciled with the Fund's trading records.
In computing the net asset value, the Accounting Agent may rely upon any
information furnished by Proper Instructions, including 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 Accounting Agent, (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
available, 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). The Fund may instruct the
Accounting Agent to utilize a particular source for the valuation of a
specific Security or other Property and the Accounting Agent shall protected
in utilizing the valuation provided by such source without further inquiry in
order to effect calculation of the Fund's net asset value. Notwithstanding
anything in this Agreement to the contrary, the Accounting Agent shall not be
responsible for the failure of the Fund or its investment adviser to provide
the Accounting Agent with Proper Instructions regarding liabilities which
ought to be included in the calculation of the Fund's net asset value.
In like manner, the Accounting Agent shall compute and determine the net
asset value as of such other times as the Board of Trustees or Directors of
the Fund from time to time may reasonably request.
4. Expenses and Compensation. For the services to be rendered and the
facilities to be furnished by the Accounting Agent as provided for in this
Agreement, the Fund shall pay the Accounting Agent for its services rendered
pursuant to this Agreement a fee based on such fee schedule as may from time
to time be agreed upon in writing by the Fund and the Accounting Agent. In
addition to such fee, the Accounting Agent shall xxxx the Fund separately for
any out-of-pocket disbursements of the Accounting Agent. Out-of-pocket
disbursements shall include, but shall not be limited to, postage, including
courier services; telephone; telecommunications; printing, duplicating and
photocopying charges; forms and supplies; filing fees; legal expenses; and
travel expenses. The foregoing fees and disbursements shall be billed to the
Fund by the Accounting Agent and shall be paid promptly by wire transfer or
other appropriate means to the Accounting Agent.
5. Standard of Care. The Accounting Agent shall be held only to the
exercise of reasonable care in computing and determining net asset value as
provided in this Agreement, but shall not be held accountable or liable for
any losses or damages the Fund or any shareholder or former shareholder of the
Fund or any other person may suffer or incur arising from or based upon errors
or delays in the determination of such net asset value resulting from any
event beyond the reasonable control of the Accounting Agent unless such error
or delay was due to the Accounting Agent's negligence or reckless or willful
misconduct in determination of such net asset value. (The parties hereto
acknowledge, however, that the Accounting Agent's causing an error or delay in
the determination of net asset value may, but does not in and of itself,
constitute negligence or reckless or willful misconduct.) In no event shall
the Accounting Agent be liable or responsible to the Fund, any present or
former shareholder of the Fund or any other person 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
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aware of such error or delay in the course of performing such audit. The
Accounting Agent's liability for any such negligence or reckless or willful
misconduct which results in an error in determination of such net asset value
shall be limited exclusively 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 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 Accounting Agent 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 Accounting Agent'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
Accounting Agent either (i) from a source which the Accounting Agent was
authorized pursuant to the third paragraph of this Section to rely upon, (ii)
from a source which in the Administrator's reasonable judgment was as reliable
a source for such quotations or information as the sources authorized pursuant
to that third paragraph, or (iii) relevant information known to the Fund or
the Investment Adviser which would impact the calculation of net asset value
but which is not communicated by the Fund or the investment adviser to the
Accounting Agent.
In the event of any error or delay in the determination of such net asset
value for which the Accounting Agent may be liable, the Fund and the
Accounting Agent 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 Accounting
Agent'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 Accounting Agent 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
Accounting Agent, the Fund and the Accounting Agent 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 entities
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.
6. Limitation of Liability.
(a) The Accounting Agent shall incur no liability with respect to any
telecommunications, equipment or power failures, or any failures to perform on
delays in performance by postal or courier services or third-party information
providers. The Accounting
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Agent shall also incur no liability under this Agreement if the Accounting
Agent or any agent or entity utilized by the Accounting Agent shall be
prevented, forbidden or delayed from performing, or omits to perform, any act
or thing which this Agreement provides shall be performed or omitted to be
performed, by reason of causes or events beyond its control, including but not
limited to (x) any Sovereign Risk, or (y) any provision of any present or
future law, regulation or order of the United States or any state thereof, or
of any foreign country or political subdivision thereof, or of any securities
depository or clearing agency, or (z) any provision of any order or judgment
of any court of competent jurisdiction. A "Sovereign Risk" shall mean any
nationalization; expropriation; devaluation; revaluation; confiscation;
seizure; cancellation; destruction; strike; act of war, terrorism,
insurrection or revolution; or any other act or event beyond the Accounting
Agent's control.
(b) Notwithstanding any other provision of this Agreement, the
Accounting Agent shall not be held accountable or liable for any losses,
damages or expenses the Fund or any shareholder or former shareholder of the
Fund or any other person may suffer or incur arising from acts, omissions,
errors or delays of the Accounting Agent in the performance of its obligations
and duties hereunder, including without limitation any error of judgment or
mistake of law, except a damage, loss or expense resulting from the Accounting
Agent's willful malfeasance, bad faith or negligence in the performance of
such obligations and duties. The Accounting Agent shall in no event be
required to take any action which is in contravention of any applicable law,
rule or regulation or any order or judgment of any court of competent
jurisdiction. The Fund hereby agrees to indemnify the Accounting Agent against
and hold it harmless from any and all losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and expenses) resulting from any
act, omission, error or delay or any claim, demand, action or suit, in
connection with or arising out of performance of its obligations and duties
under this Agreement, not resulting from the willful malfeasance, bad faith or
negligence of the Accounting Agent in the performance of such obligations and
duties.
The Accounting Agent shall in no event be liable or responsible to the
Fund, any present or former shareholder of the Fund or any other person 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. It is also agreed that, in
the event of an act, omission, error or delay which leads to losses, costs or
expenses for which the Accounting Agent may be liable, the Fund and the
Accounting Agent 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 Accounting
Agent's exposure to liability shall be reduced to the extent possible after
taking into account all relevant factors and alternatives. 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 Accounting Agent, the
Fund and the Accounting Agent 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 entities 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.
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(c) Notwithstanding anything else in this Agreement to the contrary,
the Accounting Agent's entire liability to the Fund for any loss or damage
arising or resulting from its performance hereunder or for any other cause
whatsoever, and regardless of the form of action, shall be limited to the
Fund's actual and direct out-of-pocket expenses and losses which are
reasonably incurred by the Fund. In no event and under no circumstances shall
the Accounting Agent or a Fund be held liable to the other party for
consequential or indirect damages, loss of profits, damage to reputation or
business or any other special damages arising under or by reason of any
provision of this Agreement or for any act or omission hereunder.
7. Reliance by the Accounting Agent on Proper Instructions and Opinions
of Counsel and Opinions of Certified Public Accountants.
(a) The Accounting Agent shall not be liable for, and shall be
indemnified by the Fund against any and all losses, costs, damages or expenses
arising from or as a result of, any action taken or omitted in reliance upon
Proper Instructions or upon any other written notice, request, direction,
instruction, certificate or other instrument believed by it to be genuine and
signed or authorized by the proper party or parties.
Proper Instructions shall include a written request, direction,
instruction or certification signed or initialed on behalf of the Fund by one
or more persons as the Board of Trustees or Directors of the Fund shall have
from time to time authorized. These persons authorized to give Proper
Instructions may be identified by the Board of Trustees or 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 or instructions
given by telefax transmission may be given by any one of the above persons and
will also be considered Proper Instructions if the Accounting Agent believes
them to have been given by a person authorized to give such instructions with
respect to the transaction involved.
With respect to telefax transmissions, the Fund hereby acknowledges that
(i) receipt of legible instructions cannot be assured, (ii) the Accounting
Agent cannot verify that authorized signatures on telefax instructions are
original, and (iii) the Accounting Agent shall not be responsible for losses
or expenses incurred through actions taken in reliance on such telefax
instructions. The Fund agrees that such telefax instructions shall be
conclusive evidence of the Fund's Proper Instruction to the Accounting Agent
to act or to omit to act.
Proper Instructions given orally will be confirmed by written
instructions in the manner set forth above, including by telefax, but the lack
of such confirmation shall in no way affect any action taken by the Accounting
Agent in reliance upon such oral instructions. The Fund authorizes the
Accounting Agent to tape record any and all telephonic or other oral
instructions given to the Accounting Agent by or on behalf of the Fund
(including any of its officers, Directors, Trustees, employees or agents or
any investment manager or adviser or person or entity with similar
responsibilities which is authorized to give Proper Instructions on behalf of
the Fund to the Accounting Agent.)
(b) The Accounting Agent may consult with its counsel or the Fund's
counsel in any case where so doing appears to the Accounting Agent to be
necessary or desirable. The
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Accounting Agent shall not be considered to have engaged in any misconduct or
to have acted negligently and shall be without liability in acting upon the
advice of its counsel or of the Fund's counsel.
(c) The Accounting Agent may consult with a certified public
accountant or the Fund's Treasurer in any case where so doing appears to the
Accounting Agent to be necessary or desirable. The Accounting Agent shall not
be considered to have engaged in any misconduct or to have acted negligently
and shall be without liability in acting upon the advice of such certified
public accountant or of the Fund's Treasurer.
8. Termination of Agreement.
(a) This Agreement shall continue in full force and effect until
terminated by the Accounting Agent or the Fund by an instrument in writing
delivered or mailed, postage prepaid, to the other party, such termination to
take effect not sooner than ninety (90) days after the date of such delivery
or mailing. In the event a termination notice is given by a party herein, all
expenses associated with the movement of records and materials and the
conversion thereof shall be paid by the Fund for which services shall cease to
be performed hereunder. The Accounting Agent shall be responsible for
completing all actions in progress when such termination notice is given
unless otherwise agreed.
Notwithstanding anything in the foregoing provisions of this clause, if
it appears impracticable in the circumstances to effect an orderly delivery of
the necessary and appropriate records of the Accounting Agent to a successor
within the time specified in the notice of termination as aforesaid, the
Accounting Agent and the Fund agree that this Agreement shall remain in full
force and effect for such reasonable period as may be required to complete
necessary arrangements with a successor.
(b) If a party hereto shall fail to perform its duties and
obligations hereunder (a "Defaulting Party") resulting in material loss to
another party (the "Non-Defaulting Party"), the Non-Defaulting Party may give
written notice thereof to the Defaulting Party, and if such material breach
shall not have been remedied within thirty (30) days after such written notice
is given, then the Non-Defaulting Party may terminate this Agreement by giving
thirty (30) days' written notice of such termination to the Defaulting Party.
If the Accounting Agent is the Non-Defaulting Party, its termination of this
Agreement shall not constitute a waiver of any other rights or remedies of the
Accounting Agent with respect to payment for services performed prior to such
termination or rights of the Accounting Agent to be reimbursed for
out-of-pocket expenses. In all cases, termination by the Non-Defaulting Party
shall not constitute a waiver by the Non-Defaulting Party of any other rights
it might have under this Agreement or otherwise against the Defaulting Party.
(c) This Section 7 shall survive any termination of this Agreement,
whether for cause or not for cause.
9. Amendment of this Agreement. This Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof. No
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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 of this Agreement, the Fund and the
Accounting Agent may agree in writing from time to time on such provisions
interpretive of or in addition to the provisions of this Agreement as may in
their joint opinion be consistent with the general tenor of this Agreement. No
interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Agreement.
In the event any provision of this Agreement is determined to be void or
unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
The section headings and the use of defined terms in the singular or
plural tenses in this Agreement are for the convenience of the parties and in
no way alter, amend, limit or restrict the contractual obligations of the
parties set forth in this Agreement.
10. GOVERNING LAW AND JURISDICTION. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND BE GOVERNED BY THE LAWS OF, THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW OF SUCH STATE. THE PARTIES
HERETO IRREVOCABLY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK AND THE FEDERAL COURTS LOCATED IN NEW YORK CITY IN THE
BOROUGH OF MANHATTAN.
11. Notices. Notices and other writings delivered or mailed postage
prepaid to a Fund addressed to the Fund at [______________________] or to such
other address as the Fund may have designated to the Accounting Agent in
writing, or to the Accounting Agent at 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000,
Attention: Manager, Fund Accounting Department, or to such other address as
the Accounting Agent may have designated to the Fund in writing, shall be
deemed to have been properly delivered or given hereunder to the respective
addressee.
12. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Fund and the Accounting Agent and their respective successors
and assigns, provided that no party hereto may assign this Agreement or any of
its rights or obligations hereunder without the written consent of the other
party.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and which
collectively shall be deemed to constitute only one instrument. This Agreement
shall become effective when one or more counterparts have been signed and
delivered by each of the parties.
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14. Exclusivity. The services furnished by the Accounting Agent hereunder
are not to be deemed exclusive, and the Accounting Agent shall be free to
furnish similar services to others.
15. Authorization. The Fund hereby represents and warrants that the
execution and delivery of this Agreement have been authorized by the Fund's
Board of Directors or Trustees and that this Agreement has been signed by an
authorized officer of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their duly authorized officers as of the date
first written above.
XXXXX BROTHERS XXXXXXXX & CO. JAPAN SMALLER CAPITALIZATION
FUND, INC.
By: /s/ Xxxxx X. Xxxx By: /s/ Xxxx Xxxxxx-Xxxxxxxxxxx
----------------------------------- --------------------------------
Name: Xxxxx X. Xxxx Name: Xxxx Xxxxxx-Xxxxxxxxxxx
Title: Managing Director Title: Treasurer
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APPENDIX B
JAPAN SMALLER CAPITALIZATION FUND, INC.
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THE FOLLOWING AUTHORIZED SOURCES ARE TO BE USED FOR PRICING AND FOREIGN
EXCHANGE QUOTATIONS, CORPORATE ACTIONS, DIVIDENDS AND RIGHTS OFFERINGS:
AUTHORIZED SOURCES
------------------
BLOOMBERG
FUND MANAGERS
FT INTERACTIVE DATA CORPORATION
REPUTABLE BROKERS
REUTERS
SUBCUSTODIAN BANKS
TELEKURS
REPUTABLE FINANCIAL PUBLICATIONS
STOCK EXCHANGES
FINANCIAL INFORMATION INC. CARD
XX XXXXX
FRI CORPORATION
XXXXXXX XXXXX PRICING SERVICE
BRIDGE
