Exhibit 5(b)
INVESTMENT ADVISORY AND
MANAGEMENT AGREEMENT
Agreement dated and effective as of July 1, 1986 between THE JAPAN
FUND, INC., a Maryland corporation (hereinafter referred to as the "Fund"), and
ASIA MANAGEMENT CORPORATION, a Delaware corporation (hereinafter referred to as
the "Advisor").
WITNESSETH: That in consideration of the mutual covenants herein
contained, it is agreed by the parties as follows:
1. The Advisor hereby undertakes and agrees, upon the terms and
conditions hereinafter set forth, (i) to make investment decisions for the Fund,
to prepare and make available to the Fund all necessary research and statistical
data in connection therewith, and to supervise the acquisition and disposition
of securities by the Fund, including the selection of the brokers or dealers to
carry out the transactions, all in accordance with the Fund's investment
objectives and policies and in accordance with guidelines and directions from
the Fund's Board of Directors; (ii) to assist the Fund as it may reasonably
request in the conduct of the Fund's business, subject to the direction and
control of the Fund's Board of Directors; (iii) to furnish at the Advisor's
expense for the use of the Fund such office space and facilities as the Fund may
require for its reasonable needs in the City of New York, and to furnish at the
Advisor's expense all bookkeeping and clerical services in the United States
that may be reasonably required by the Fund and that are not furnished to it
pursuant to its contract with its custodian; and (iv) to pay or cause to be paid
the reasonable salaries, fees and expenses of the Fund's officers and employees
(including the Fund's share of payroll taxes) and any fees and expenses of such
of the Fund's directors as are directors, officers or employees of the Advisor
or directors, officers or employees of Xxxxxxx, Xxxxxxx & Xxxxx Ltd. The Advisor
shall bear all expenses arising out of its duties hereunder but shall not be
responsible for any of the Fund's expenses other than as herein provided.
Specifically, the Advisor will not be responsible, except to the extent of the
reasonable compensation of the Fund's employees whose services may be involved
and to the extent of the Fund's office equipment and facilities involved, for
the following expenses of the Fund: legal expenses and auditing and accounting
expenses of independent auditors; taxes (other than payroll taxes) and
governmental fees; listing fees and any membership dues; fees and expenses of
the Fund's custodians, transfer agents and registrars; expenses of preparing
share certificates and other expenses in connection with the issuance, offering,
distribution, sale or underwriting of securities issued by the Fund; expenses of
registering or qualifying securities of the Fund for sale; freight, insurance
and other charges in connection with the shipment of the Fund's portfolio
securities; brokerage commissions or other costs of acquiring or disposing of
any portfolio securities of the Fund; expenses of preparing and distributing
reports, notices and dividends to stockholders; costs of stationery; or costs of
stockholders' and other meetings.
2. In rendering the services required under paragraph 1, the Advisor
may receive the assistance of The Nikko Research Center, Ltd., which is to
regularly furnish investment advisory services with respect to the Fund pursuant
to an agreement with the Advisor dated as of the date hereof, and may contract
with or consult with such banks, other securities firms or other parties in
Japan or elsewhere, including Xxxxxxx, Xxxxxxx & Xxxxx Ltd. (an Affiliated
company of the Advisor, as defined in the Investment Company Act of 1940) as it
may deem appropriate to obtain information and advice, including investment
recommendations, advice regarding economic factors and trends, advice as to
currency exchange matters, and clerical and accounting services and other
assistance, but any fees, compensation or expenses to be paid to any such
parties shall be paid by the Advisor, and no obligation shall be incurred on the
Fund's behalf in any such respect.
3. The Fund agrees to pay in United States dollars to the Advisor,
as full compensation for the services to be rendered and expenses to be borne by
the Advisor hereunder, a monthly fee equal to 3/48 of 1% of the value of the net
assets of the Fund up to and including $150,000,000; plus 1/20 of 1% of the
value of the net assets of the Fund over $150,000,000 and up to and including
$200,000,000; plus 11/240 of 1% of the value of the net assets of the Fund over
$200,000,000. For purposes of computing the monthly fee, the value of the net
assets of the Fund shall be determined as of the close of business on the last
business day of each month; provided, however, that the fee for the period from
the end of the last month ending prior to termination of this Agreement for
whatever reason, to the date of termination shall be based on the value of the
net assets of the Fund determined as of the close of business on the date of
termination and
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the fee for such period and for the period from the date hereof to the end of
the month in which this Agreement becomes effective shall be prorated according
to the proportion which such period bears to a full monthly period. Each payment
of a monthly fee to the Advisor shall be made within the fifteen days next
following the day as of which such payment is so computed.
In determining the value of the net assets of the Fund pursuant to
the preceding paragraph, Citibank, N.A., as Custodian to the Fund, or its
successor custodian (the "Custodian"), shall determine the market value of all
securities owned by the Fund, using the last bid price available from any
acceptable source of information or, if such price is not available, using the
best information available to the Custodian or a determination by the Fund's
Board of Directors. Any assets or liabilities of the Fund initially expressed in
terms of Japanese yen shall, for purposes of determining the compensation to the
Advisor, be translated into United States dollars at the selling rate of
Japanese yen against United States dollars as quoted by the New York City office
of the Custodian at 11:00 a.m. on the day of valuation of the Fund's net assets,
or, if no such rate is quoted at such time, at such other appropriate rate as
may be determined by the Fund and the Custodian.
4. The Advisor agrees that there will be full compliance with any
and all provisions of the Investment Company Act of 1940, as amended, applicable
to the Advisor and its directors, officers or employees or to interested persons
of the Advisor.
5. The Advisor agrees that it will not make a short sale of any
capital stock of the Fund, or purchase any share of the capital stock of the
Fund otherwise than for investment.
6. The services of the Advisor to the Fund are not to be deemed to
be exclusive, the Advisor being free to render similar services to others.
7. Nothing herein shall be construed as constituting the Advisor
an agent of the Fund.
8. The Advisor may rely on information reasonably believed by it to
be accurate and reliable. Except as may otherwise be provided by the Investment
Company Act of 1940, as amended, neither the Advisor nor its officers,
directors, employees or agents shall be subject to any liability for any
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act or omission in the course of, connected with or arising out of any services
to be rendered hereunder, except by reason of wilful misfeasance, bad faith or
gross negligence in the performance of the Advisor's duties or by reason of
reckless disregard of the Advisor's obligations and duties under this Agreement.
9. This Agreement shall remain in effect until the next annual
meeting of stockholders of the Fund, and shall continue in effect thereafter,
but only so long as such continuance is specifically approved at least annually
by the affirmative vote of (i) a majority of the members of the Fund's Board of
Directors who are not interested persons of the Fund or of the Advisor or of any
entity regularly furnishing investment advisory services with respect to the
Fund pursuant to an agreement with the Advisor, cast in person at a meeting
called for the purpose of voting on such approval, and (ii) a majority of the
Fund's Board of Directors or the holders of a majority of the outstanding voting
securities of the Fund. This Agreement may nevertheless be terminated at any
time, without penalty, by the Fund's Board of Directors or by vote of holders of
a majority of the outstanding voting securities of the Fund, upon sixty (60)
days written notice delivered or sent by registered mail, postage prepaid, to
the Advisor, at its office in New York, or by the Advisor upon six (6) months
such written notice to the Fund, and shall automatically be terminated in the
event of its assignment. Any such notice shall be deemed given when received by
the addressee.
10. This Agreement may not be transferred, assigned, sold or in any
manner hypothecated or pledged by either party hereto. It may be amended by
mutual agreement, but only after authorization of such amendment by the
affirmative vote of (i) the holders of a majority of the outstanding voting
securities of the Fund, and (ii) a majority of the members of the Fund's Board
of Directors who are not interested persons of the Fund or of the Advisor or of
any entity regularly furnishing investment advisory services with respect to the
Fund pursuant to an agreement with the Advisor, cast in person at a meeting
called for the purpose of voting on such approval.
11. This Agreement shall be construed in accordance with the laws of
the State of New York, provided, however, that nothing herein shall be construed
as being inconsistent with the Investment Company Act of 1940, as amended. As
used herein, the terms "interested person", "assignment", and "vote of a
majority of the outstanding voting securities"
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shall have the meanings set forth in the Investment Company Act of 1940, as
amended.
IN WITNESS WHEREOF, the parties have executed this agreement by
their officers thereunto duly authorized as of the day and year first written
above.
THE JAPAN FUND, INC.
By /s/ Xxxxxxxx Xxxxx
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Chairman of the Board
ASIA MANAGEMENT CORPORATION
By /s/ [Illegible]
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President
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