The Taiwan Fund, Inc.
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
This Agreement, dated as of February 23rd, 2012, 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 00000-0000 (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 0000 (xxx 0000 Xxx), 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 Funds 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 Funds 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 Funds shareholders, in each case in
accordance with the requirements of the 1940 Act), and subject always to the
restrictions of the Funds 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 Funds proxies in accordance with the Funds 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 Funds 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;
(v) Assist in such marketing activities with respect to the Fund as the
Fund may reasonably request; and
(vi) 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.
(c) The Investment Manager may from time to time, in its discretion and
with the approval of the Board, delegate certain of its responsibilities under
this Agreement in respect of any Fund to APS Asset Management Pte Ltd (the
Sub-Adviser), which is registered under the Investment Advisers Act of 1940,
as amended, provided that the separate costs of employing the Sub-Adviser and
of the Sub-Adviser itself are borne by the Investment Manager or the
Sub-Adviser and not by the Fund. Notwithstanding any such delegation, the
Investment Manager shall remain responsible and liable to the Fund for the
acts and omissions of the Sub-Adviser as if any such act or omission were the
act or omission of the Investment Manager. For the avoidance of doubt, the
preceding sentence is not intended to alter any rights, claims, or actions the
Investment Manager may pursue against the Sub-Adviser.
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 Managers 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, delegees or controlling persons (as
defined in the 1940 Act), or other affiliates (each, a Performing Party)
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 Performing Party in the performance of its duties or by reason of reckless
disregard on the part of the Performing Party 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.
The Fund shall indemnify and hold harmless the Investment Manager, its
officers, managers, members, employees, agents, delegees, controlling persons
(as defined in the 1940 Act), and 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 Partys duties or
from reckless disregard on the part of such Indemnified Party of such
Indemnified Partys 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 (or the Sub-Adviser, as applicable) shall pay the
salaries and expenses of such of the Funds officers and employees and any
fees and expenses of such of the Funds directors who are managers, members,
officers or employees of the Investment Manager, the Sub-Adviser or any of
their respective affiliates, provided, however, that the Fund, and not the
Investment Manager, shall bear travel expenses for an appropriate fraction
thereof of directors and officers of the Fund who are managers, members,
officers or employees of the Investment Manager or the Sub-Adviser 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 Funds 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
Funds 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 Funds
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 Funds dividend reinvestment and cash purchase plan; costs of stationery;
any litigation expenses; and costs of stockholders 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 Managers
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 have executed a Terms of
Business Letter, as such term is defined under the FSA rules. The Terms of
Business Letter will serve as the Funds 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, the Investment Manager, the
Sub-Adviser or of any entity .regularly furnishing investment advisory
services with respect to the Fund pursuant to an agreement with the
Investment Manager or the Sub-Adviser, 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 Funds 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 Funds 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 Managers 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 authorized
and regulated by 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 FSAs 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 Managers 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 & Xxxx
Prudential Tower
Boston, MA 02199-3600
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 00000-0000
Attention: Xxxxxx X. Coop, 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 00000-0000
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 Manner
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 Funds
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: Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Title: President
Xxxxxx Xxxxxx Inc.
By: Xxxxx Xxxxxxxxxxx
Name: Xxxxx Xxxxxxxxxxx
Title: Director, Head of global equities
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 Funds Registration Statement on Form N-2.
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