The Taiwan Fund, Inc.
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
This Agreement, dated as of May 8, 2010 between THE
TAIWAN FUND, INC., a corporation organized under the
Delaware Laws of the United States with a registered
office at c/o State Street Bank and Trust Company,
P.O. Box 5049, 0 Xxxxxx xx Xxxxxxxxx, Xxxxxx, XX 00000
5409 the Fund, and XXXXXX XXXXXX INC., a company
incorporated in New York and registered as an
investment adviser with the U.S. Securities and Exchange
Commission and authorized and regulated by the Financial
Services Authority of the United Kingdom, the regulator
for financial services institutions in the United Kingdom
the FSA the Investment Manager.
The Fund is a closed end, diversified management
investment company registered under the Investment Company
Act of 1940 the 1940 Act, the shares of common stock
of which are registered under the Securities Exchange Act
of 1934 and listed on the New York Stock Exchange. The
Fund s investment objective is long-term capital
appreciation through investment primarily in securities
of Republic of China companies listed on the Taiwan Stock
Exchange.
The Fund desires to retain the Investment Manager to
provide investment management services with respect to the
Fund's assets, and the Investment Manager agrees to provide
such services, based upon its professional investment
judgment and within the scope of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
hereafter contained, the parties hereto hereby agree as
follows:
1. Appointment of Investment Manager
a. The Fund hereby employs the Investment
Manager for the period and on the terms and conditions
set forth herein, subject at all times to the supervision
of the Board of Directors of the Fund the Board, to:
i. Make all investment decisions for the
assets of the Fund the Fund Assets and to manage the
investment and reinvestment of the Fund Assets in accordance
with the investment objective and policies of the Fund, as
such investment objective and policies are amended from time
to time by the Board or with the concurrence of the Fund s
shareholders, in each case in accordance with the requirements
of the 1940 Act, and subject always to the restrictions of the
Fund s Certificate of Incorporation and By-Laws, as amended or
restated from time to time. Should the Board at any time make
any definite determination as to investment policy and notify
the Investment Manager thereof, the Investment Manager shall
be bound by such determination for the period, if any, specified
in such notice or until similarly notified that such
determination has been revoked. The Investment Manager shall
vote the Fund s proxies in accordance with the Fund s proxy
voting policies, which may be amended from time to time by the
Board and communicated to the Investment Manager. The Investment
Manager shall make such reports to the Board concerning such
proxy voting as the Board may deem necessary or advisable and as
may be required by rules and regulations under the 1940 Act. The
Fund acknowledges that no assurance has been or can be provided
that the investment objective of the Fund can or will be achieved.
The Investment Manager shall take, on behalf of the Fund, all
actions that the Investment Manager deems necessary to implement
the investment policies of the Fund and to place all orders for
the purchase or sale of portfolio securities for the Fund with
brokers or dealers selected by the Investment Manager, and in
connection therewith, the Investment Manager is authorized as
agent of the Fund to give instructions to the custodians from
time to time of the Fund Assets as to deliveries of securities and
payments of cash for the account of the Fund. In connection with the
selection of such brokers or dealers and the placing of such orders,
the Investment Manager is directed at all times to seek to use its
best efforts to obtain for the Fund the most favorable net results
available best execution. In using its best efforts to obtain
for the Fund best execution, the Investment Manager shall consider
all factors it deems relevant, including, by way of illustration,
price, the size of the transaction, the nature of the market security,
the amount of the commission, the timing of the transaction taking into
account market prices and trends, the reputation, experience and
financial stability of the broker or dealer involved and the quality
of service rendered by the broker or dealer in other transactions.
Subject to such policies as the Fund may communicate to the Investment
Manager in writing, the Investment Manager shall not be deemed to have
acted unlawfully or to have breached any duty created by this Agreement
solely by reason of its having caused the Fund to pay a broker or
dealer that provides brokerage and research services to the Investment
Manager or its affiliates an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission
another broker or dealer would have charged for effecting that
transaction, if the Investment Manager determines in good faith that
such amount of commission was reasonable;
ii. Assist the administrator of the Fund, as
requested, in the preparation of the Fund s periodic financial
statements and in the valuation of the Fund Assets and the
determination of its liabilities;
iii. Prepare and make available to the Fund
pertinent research and statistical data;
iv. Maintain or cause to be maintained for
the Fund all books and records required under the 1940 Act, to
the extent that such books and records are not maintained or
furnished by administrators, custodians or other agents of the
Fund; and
v. Provide the Fund with such other services
and advice, consistent with the foregoing, as the Board may
reasonably request.
b. The Investment Manager accepts such appointment and
agrees during the term of this Agreement to render such services, to
permit any of its managers, members, officers or employees to serve
without compensation as directors or officers of the Fund if elected
to such positions and to assume the obligations herein for the
compensation herein provided. The Investment Manager shall for all
purposes herein provided be deemed to be an independent contractor
and, unless otherwise expressly provided or authorized, shall have no
authority to act for or represent the Fund in any way or otherwise
be deemed an agent of the Fund.
2. Compensation
For the services and facilities described in Section 1,
the Fund agrees to pay to the Investment Manager, a fee in U.S. dollars
in accordance with the schedule set forth as Exhibit A hereto. For the
month and year in which this Agreement becomes effective or terminates,
there shall be an appropriate proration on the basis of the number of
days that this Agreement is in effect during such month and year,
respectively.
3. Investment in Fund Stock
The Investment Manager agrees that it will not make a short sale
of any shares of the Fund.
4. Non Exclusivity of Services
Nothing herein shall be construed as prohibiting the Investment
Manager or any of its affiliates from providing investment advisory
services to, or entering into investment advisory agreements with,
any other clients including other registered investment companies,
including clients which may invest in Taiwanese or Chinese equity
securities,so long as the Investment Manager s services to the Fund
pursuant to this Agreement are not materially impaired thereby, except
that, without the prior written consent of the Fund the Investment
Manager may not act as the investment adviser or investment manager
to any other investment company that is listed on the New York Stock
Exchange and that has the same investment strategy as the Fund. The
Investment Manager is not obligated to purchase or sell for the Fund
any security which the Investment Manager or its affiliates may purchase
or sell for their own accounts or the accounts of other clients.
5. Standard of Care; Indemnification
The Investment Manager may rely on information reasonably believed by
it to be accurate and reliable. Neither the Investment Manager nor its
officers, managers, members, employees, agents or controlling persons
as defined in the 1940 Act shall be subject to any liability for any
act or omission, error of judgment or mistake of law, or for any loss
suffered by the Fund, in the course of, connected with or arising out
of any services to be rendered hereunder except by reason of willful
misfeasance, bad faith or gross negligence on the part of the Investment
Manager in the performance of its duties or by reason of reckless disregard
on the part of the Investment Manager of its obligations and duties under
this Agreement. Any person, even though also employed by the Investment
Manager, who may be or become an employee of the Fund shall be deemed,
when acting within the scope of his employment by the Fund, to be acting
in such employment solely for the Fund and not as an employee or agent
of the Investment Manager. In no event shall the Investment Manager have
any responsibility for the acts or omissions of any other adviser of the
Fund.
The Fund shall indemnify and hold harmless the Investment Manager,
its officers, managers, members, employees, agents, controlling persons
or other affiliates each, an Indemnified Party for any losses, costs
and expenses incurred or suffered by any Indemnified Party arising from
any action, proceeding or claims that may be brought against such
Indemnified Party in connection with the performance or non performance
of its functions under this Agreement, except for such losses, costs and
expenses resulting from willful misfeasance, bad faith or gross negligence
in the performance of such Indemnified Party s duties or from reckless
disregard on the part of such Indemnified Party of such Indemnified
Party s obligations and duties under this Agreement.
6. Allocation of Charges and Expenses
a. The Investment Manager shall assume and pay for maintaining
its staff and personnel and shall at its own expense provide the equipment,
office space and facilities necessary to perform its obligations hereunder.
The Investment Manager shall pay the salaries and expenses of such of the
Fund s officers and employees and any fees and expenses of such of the
Fund s directors who are managers, members, officers or employees of the
Investment Manager or any of its affiliates, provided, however, that the
Fund, and not the Investment Manager, shall bear travel expenses or an
appropriate fraction thereof of directors and officers of the Fund who are
managers, members, officers or employees of the Investment Manager to the
extent that such expenses relate to attendance at meetings of the Board or
any committee thereof, and provided, further, that such expenses are
incurred in accordance with the Fund s travel policy.
b. In addition to the fee of the Investment Manager, the
Fund shall assume and pay the following expenses: legal fees and expenses
of counsel to the Fund; auditing and accounting expenses; taxes and
governmental fees; New York Stock Exchange listing fees; dues and expenses
incurred in connection with membership in investment company organizations;
fees and expenses of the Fund s custodian, sub custodian, transfer agents
and registrars; fees and expenses with respect to administration, except
as may be herein expressly provided otherwise; expenses for portfolio
pricing services by a pricing agent, if any; expenses of preparing share
certificates and other expenses in connection with the issuance, offering
and underwriting of shares issued by the Fund; expenses relating to investor
and public relations; expenses of registering or qualifying securities of
the Fund for public 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 holding of the
Fund; expenses of preparation and distribution of reports, notices and
dividends to shareholders; expenses of the Fund s dividend reinvestment
and cash purchase plan; costs of stationery; any litigation expenses;
and costs of stockholder s and other meetings.
7. Potential Conflicts of Interest
a. Subject to applicable statutes and regulations, managers,
members, officers, employees, agents or owners of the Investment Manager
may be interested in the Fund as a director, officer, agent or otherwise.
b. If the Investment Manager considers the purchase or sale
of securities for the Fund and other advisory clients of the Investment
Manager at or about the same time, transactions in such securities shall
be made for the Fund and such other clients in accordance with the
Investment Manager s trade allocation procedures, as they may be amended
from time to time and approved by the Board.
8. Compliance with FSA requirements
In order for the Investment Manager to comply with the requirements of
the FSA, the Fund and the Investment Manager will execute a Terms of
Business Letter, as such term is defined under the FSA rules. The Terms
of Business Letter will serve as the Fund s acknowledgement that the
Investment Manager has made to the Fund certain prescribed disclosures
as required by the FSA.
9. Duration and Termination
a. This Agreement shall be effective for a period of two
2 years from the date hereof and shall continue in effect from year
to year thereafter, provided that such continuance is specifically
approved at least annually by i. a majority of the members of the Board
who are neither parties to this Agreement nor interested persons of the
Fund or of the Investment Manager or of any entity regularly furnishing
investment advisory services with respect to the Fund pursuant to an
agreement with the Investment Manager, cast in person at a meeting called
for the purpose of voting on such approval, and ii. separately by the
Board all directors voting or by vote of a majority of the Fund s
outstanding voting securities.
b. This Agreement may nevertheless be terminated at any
time, without payment of penalty, by the Investment Manager or by the Fund
acting pursuant to a vote of the Board or by vote of a majority of the
Fund s outstanding securities upon sixty 60 days written notice. This
Agreement shall automatically be terminated in the event of its assignment,
provided, however, that a transaction that does not, in accordance with
the 1940 Act and applicable rules thereunder, result in a change of
actual control or management of the Investment Manager s business shall
not be deemed to be an assignment for the purposes of this Agreement.
This Agreement shall automatically be terminated if the Investment Manager
ceases to be a member of the FSA or any successor organization. In
addition, this Agreement shall be terminated upon proper notice if the
Investment Manager is required to terminate the Agreement on the FSA s
instructions.
c. Termination of this Agreement shall not i. affect the
right of the Investment Manager to receive payments of any unpaid balance
of the compensation described in Section 2 earned prior to such termination
or ii. extinguish the Investment Manager s right of indemnification
under Section 5.
As used herein, the terms interested person, assignment and vote of
a majority of the outstanding voting securities shall have the meanings
set forth in the 1940 Act.
10. Amendment
This Agreement may be amended by mutual agreement, provided that if
required by the 1940 Act or other applicable law any such amendment shall
only become effective after 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 Board who are not interested
persons of the Fund or of the Investment Manager, cast in
person at a meeting called for the purpose of voting on such
approval.
11. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, provided, however, that nothing herein
shall be construed in a manner inconsistent with the 1940 Act.
12. Notices
Any communication hereunder must be in writing and must be made by letter,
telex or facsimile. Any communication or document to be made or delivered
by one person to another pursuant to this Agreement shall ,unless that other
person has by fifteen 15 days notice to the other specified another address,
be made or delivered to that other person at the following relevant address:
If to the Investment Manager:
Xxxxxx Xxxxxx Inc.
Xxxxxxx Xxxxx
00 Xxxxxx Xxxxxxx
Xxxxxxxxx
XX0 0XX
Attention: Xxxxx Xxxxxxx
Telephone No.: x00 000 000 0000 / x00 000 000 0000
Facsimile No.: x00 000 000 0000
With copies to:
Ropes and Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx Raine
Telephone No.: 000 000 0000
Facsimile No.: 000 000 0000
If to the Fund:
The Taiwan Fund, Inc.
x/x Xxxxx Xxxxxx Xxxx and Trust Company
X.X. Xxx 0000
0 Xxxxxx xx Xxxxxxxxx, Xxxxxx, XX 00000 5409
Attention: Xxxxxxxxx X. Xxxxxx, Assistant Secretary
Telephone No.: 000 000 0000
Facsimile No.: 000 000 0000
With copies to:
Xxxxxxxx Chance US LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 6131
Attention: Xxxxxxx Xxxxxx, Esq.
Telephone No.: 000 000 0000
Facsimile No.: 000 000 0000
and shall, if made by letter, be deemed to have been received when delivered
by hand or if sent by mail within ten 10 days if the letter is sent by
first class mail, and shall, if sent by facsimile, be deemed to have been
received upon production of a transmission report by the machine from which
the facsimile was sent indicating that the facsimile was sent in its entirety
to the facsimile number of the recipient and provided that a hard copy of the
notice so served by facsimile is posted that same day as the notice was
served by electronic means.
13. Jurisdiction
Each party hereto irrevocably agrees that any suit, action or proceeding
against either of the Investment Manager or the Fund arising out of or
relating to this Agreement shall be subject to the jurisdiction of the
United States District Court for the Southern District of New York or
the Supreme Court of the State of New York, New York County, and each
party hereto irrevocably submits to the jurisdiction of each such court
in connection with any such suit, action or proceeding. Each party hereto
waives any objection to the laying of venue of any such suit, action or
proceeding in either such court, and waives any claim that such suit, action
or proceeding has been brought in an inconvenient forum. Each party hereto
irrevocably consents to service of process in connection with any such suit,
action or proceeding by mailing a copy thereof by registered or certified mail,
postage prepaid, to its address as set forth in this Agreement.
14. Representation and Warranty of the Investment Manager
The Investment Manager represents and warrants that it is duly registered
as an investment adviser under the U.S. Investment Advisers Act of 1940
and duly licensed by the FSA and that it will use its reasonable efforts
to maintain effective such registration and license during the term of
this Agreement.
15. Representation and Warranty of the Fund
The Fund represents and warrants that it has full legal right to enter
into this Agreement and to perform the obligations hereunder and that
it has obtained all necessary consents and approvals to enter into
this Agreement.
16. Provision of Certain Information by the Fund
The Fund shall furnish the Investment Manager with copies of the Fund s
Certificate of Incorporation, By Laws and Registration Statement on
Form N 2, as amended or restated from time to time, any press releases
made by the Fund and any reports made by the Fund to its shareholders,
as soon as practicable after such documents become available. The Fund
shall furnish the Investment Manager with any further documents, materials
or information that the Investment Manager may reasonably request to enable
it to perform its duties pursuant to this Agreement.
17. Press Releases, Reports, Other Disclosures
Any reports, press releases or other disclosures made by the Fund that
contain statements about the management of assets by the Investment Manager
shall be subject to the prior approval of the Investment Manager.
18. Severability
If any provision of the Agreement is determined by a court of competent
jurisdiction to be invalid or unenforceable, such finding shall not
affect the validity or enforceability of the remaining portions of
this Agreement.
19. Counterparts
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument.
20. Captions
The captions in this Agreement are included for convenience of reference
only and in no way define any of the provisions hereof or otherwise
affect their construction or effect.
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 Taiwan Fund, Inc.
By: /s/ Xxxxxx Xxxxx
Name: Xxxxxx Xxxxx
Title: Chairman, Board of Directors
Xxxxxx Xxxxxx Inc.
By: /s/ Xxxxx XxxXxxx
Name: Xxxxx XxxXxxx
Title: Director
EXHIBIT A
The Investment Manager shall receive a fee for its services under the
Agreement, computed daily and payable monthly, at the annual rate of
0.90 on the first 150 million in total net assets under management,
0.80 on the next 150 million in total net assets under management
and 0.70 on total net assets under management over 300 million.
The net asset value of the Fund Assets shall be determined in the manner
provided in the Fund s Registration Statement on Form N 2.
