INTERIM INVESTMENT ADVISER AGREEMENT
AGREEMENT, dated and effective as of 12:00 A.M. EST
(Hong Kong time) July 22, 2014
(the "Agreement"), between THE TAIWAN FUND, INC., a
Maryland corporation with
registered address at Two Avenue De Lafayette, PO
Box 5049 (02206-5049), Xxxxxx XX
00000 (herein referred to as the "Fund"), and JF
INTERNATIONAL MANAGEMENT,
INC., a corporation organized in the British Virgin
Islands with principal place of business at
00xx Xxxxx, Xxxxxx Xxxxx, 0 Xxxxxxxxx Xxxx Xxxxxxx,
Xxxx Xxxx (herein referred to as the
"Adviser").
WHEREAS, the Fund desires to retain the Adviser to
render to it interim investment advisory
and management services, and the Adviser is willing
to render such services on an interim
basis in accordance with Rule 15a-4 of the
Investment Company Act of 1940, as amended,
(the "1940 Act"); and
NOW THEREFORE, in consideration of the mutual
covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as
follows:
1. The Adviser hereby undertakes and agrees, upon
the terms and conditions herein set forth,
(i) to make investment decisions for the Fund, to
prepare and make available to the Fund
research and statistical data in connection
therewith and to supervise the acquisition and
disposition of securities by the Fund, including
the selection of 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 maintain or cause to be
maintained for the Fund all books, records, reports
and any other information required under
the 1940 Act and to furnish or cause to be
furnished all required reports or other information
under Taiwan securities laws, to the extent that
such books, records and reports and other
information are not maintained or furnished by the
custodian or other agents of the Fund; (iv)
to report regularly to the Fund's Board of
Directors on the investment program for the Fund
and to furnish the Fund's Board of Directors such
periodic and special reports as the Fund's
Board of Directors may reasonably request,
including, but not limited to, reports concerning
investment transactions and performance of the
Fund; (v) to provide reasonable assistance to
the Fund's administrator as needed in the
preparation of reports and notices by the Fund to
stockholders, in the preparation of filings with
the Securities and Exchange Commission (the
"SEC") and other regulatory and self-regulatory
organizations, including preliminary and
definitive proxy materials and post-effective
amendments to the Fund's registration statement
on Form N-2 under the Securities Act of 1933, as
amended, and the 1940 Act, as amended
from time to time, (vi) to provide reasonable
assistance to the Fund's Board of Directors or
the Fund's administrator to determine or confirm
the value of any portfolio security for
which the Fund's administrator seeks assistance
from the Adviser or identifies for review by
the Adviser, (v) to the extent permitted, to assist
in such marketing and investor relations
activities with respect to the Fund as the Fund may
reasonably request, (vi) to vote the Fund's
proxies only in accordance with the Adviser's proxy
voting policies in effect from time to
time, provided that the Fund's Board of Directors
has approved the Adviser's proxy voting
guidelines including any amendments from time to
time; and (vii) to pay the salaries and
expenses of such of the Fund's officers and
directors as are directors, officers or employees
of the Adviser (and to permit its directors,
officers or employees to so serve if elected to
such
positions by the Fund's Board of Directors);
provided, however, that the Fund, and not the
Adviser, shall bear travel expenses (or an
appropriate portion thereof) of directors and
officers of the Fund who are directors, officers or
employees of the Adviser to the extent that
such expenses relate to attendance at meetings of
the Board of Directors of the Fund or any
committees thereof or advisers thereto and provided
further that such expenses are incurred in
accordance with the Fund's travel policy in effect
at the time. The Adviser shall bear all
expenses arising out of its duties hereunder but
shall not be responsible for any expenses of
the Fund other than those specifically allocated to
the Adviser in this paragraph 1. In
particular, but without limiting the generality of
the foregoing, the Adviser shall not be
responsible for the following expenses of the Fund:
organization and certain offering
expenses of the Fund (including out-of-pocket
expenses, but not including overhead or
employee costs of the Adviser or of any one or more
organizations acting as "participating
affiliate" of the Adviser); fees payable to any
consultants, including an advisory board, if
applicable; legal expenses; auditing and accounting
expenses; telephone, telex, facsimile,
postage and other communication expenses; taxes and
governmental fees; stock exchange
listing fees; fees, dues and expenses incurred by
the Fund in connection with membership in
investment company trade organizations; fees and
expenses of the Fund's custodians,
subcustodians, transfer agents and registrars;
payment for portfolio pricing or valuation
services to pricing agents, accountants, bankers
and other specialists, if any; 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;
expenses relating to investor and public relations;
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; costs of
stockholders' and other meetings; litigation
expenses; or expenses relating to the Fund's
dividend reinvestment and cash purchase plan
(except for brokerage expenses paid by participants
in such plan).
2. The Fund acknowledges that in rendering
investment advisory services to the Fund under
this Agreement, the Adviser may use the resources
of its affiliate, JPMorgan Asset
Management (Taiwan) Limited ("JPMAM Taiwan") that
is not registered under the U.S.
Investment Advisers Act of 1940 (the "Advisers
Act") to provide non-discretionary
investment advice to the Adviser and execute
portfolio trades for the Fund. JPMAM Taiwan
is a "participating affiliate" of the Adviser as
that term is used in relief granted by the staff of
the SEC allowing U.S. registered advisers to use
investment advisory and trading resources
of unregistered non-U.S. advisory affiliates
subject to the regulatory supervision of the
registered adviser. JPMAM Taiwan and its employees
who provide services to the Fund are
considered under the Memorandum of Understanding
("MOU") between the Adviser and
JPMAM Taiwan to be "associated persons" of the
Adviser as that term is defined in the
Advisers Act for purposes of the Adviser's required
supervision.
3. In the selection of brokers or dealers and the
placing of orders for the purchase and sale of
portfolio investments for the Fund, the Adviser
shall seek to obtain for the Fund the most
favorable price and execution available, except to
the extent it may be permitted to pay higher
brokerage commissions for brokerage and research
services as described below. In using its
best efforts to obtain for the Fund the most
favorable price and execution available, the
Adviser, bearing in mind the Fund's best interests
at all times, shall consider all factors it
deems relevant, including by way of illustration,
price, the size of the transaction, the nature
of the market for the 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's Board of Directors may determine,
the Adviser shall not be deemed to have acted
unlawfully or to have breached any duty
created by this Agreement or otherwise solely by
reason of its having caused the Fund to pay
a broker or dealer that provides brokerage and
research services to the Adviser 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
Adviser determines in good faith that such amount
of commission was reasonable in relation
to the value of the brokerage and research services
provided by such broker or dealer, viewed
in terms of either that particular transaction or
the Adviser's overall responsibilities with
respect to the Fund and to other clients of the
Adviser as to which the Adviser exercises
investment discretion. In selecting brokers or
dealers to execute a particular transaction and in
evaluating the best overall terms available, the
Adviser may consider the brokerage and
research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act
of 1934) provided to the Fund and/or other accounts
over which the Adviser or an affiliate
exercises investment discretion. The Fund hereby
agrees with the Adviser that any entity or
person associated with the Adviser which is a
member of a national securities exchange is
authorized to effect any transaction on such
exchange for the account of the Fund which is
permitted by Section 11(a) of the Securities
Exchange Act of 1934 (the "1934 Act"), subject
to compliance with the 1940 Act and the rules
thereunder.
4. The services to be rendered and expenses to be
borne by the Adviser hereunder will be
rendered and borne by the Adviser without fee.
5. The Adviser 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. Where the
Adviser provides services to the Fund in relation
to derivative products, including futures
contracts and options, the Adviser shall provide to
the Fund, upon request, product
specifications and prospectus or offering documents
(if any).
6. Nothing herein shall be construed as prohibiting
the Adviser from providing investment
advisory services to, or entering into investment
advisory agreements with, other clients
(including other registered investment companies),
including clients which may invest in
securities of Taiwan issuers, except that the
Adviser shall notify the Fund where it acts as the
investment adviser or investment manager to any
other investment company that is listed on
the New York Stock Exchange and has a policy to
invest primarily in Taiwan securities. The
Fund acknowledges and agrees that the Adviser will
not give such notice to the Fund until its
appointment as adviser to another investment
company is public information. In addition, the
Adviser may not utilize information furnished to
the Adviser by advisers and consultants to
the Fund in providing investment management
services to another New York Stock Exchange
listed investment company with a policy to invest
primarily in Taiwan securities. Nothing
contained herein shall be construed as constituting
the Adviser as an agent of the Fund.
Whenever the Fund and one or more other accounts or
investment companies advised by the
Adviser have available funds for investment,
investments suitable and appropriate for each
shall be allocated in accordance with procedures
believed by the Adviser to be equitable to
each entity, which procedures and any amendments
thereto shall be provided to the Fund's
Board for review. Similarly, opportunities to sell
securities shall be allocated in a manner
believed by the Adviser to be equitable. The Fund
recognizes that in some cases this
procedure may adversely affect the size of the
position that may be acquired or disposed of
for the Fund. In addition, the Fund acknowledges
that the persons employed by the Adviser
to assist in the performance of the Adviser's
duties hereunder will not devote their full time to
such service and nothing contained herein shall be
deemed to limit or restrict the right of the
Adviser or any affiliate of the Adviser to engage
in and devote time and attention to other
businesses or to render services of whatever kind
or nature.
7. (a) The Adviser does not guarantee the future
performance of the Fund or any specific
level of performance, the success of any investment
decision or strategy that the Adviser may
use, or the success of the Adviser's overall
management of the Fund. The Fund understands
that investment decisions made for the Fund by the
Adviser are subject to various market,
currency, economic, political and business risks,
and that those investment decisions will not
always be profitable.
(b) The Adviser may rely on information reasonably
believed by it to be accurate and
reliable. Neither the Adviser nor its officers,
directors, employees or agents 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 Adviser in the performance of
its duties or by reason of reckless disregard
on the part of the Adviser of its obligations and
duties under this Agreement. Any person,
even though also employed by the Adviser, who may
be or become an employee of the Fund
and paid by 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 Adviser.
(c) Neither party shall be liable to the other for
any indirect, consequential, punitive or special
loss or damages under this Agreement.
8. (a) The Adviser agrees to indemnify the Fund
for, and hold it harmless against, any and all
losses, claims, damages, liabilities (including
amounts paid in settlement with the written
consent of the Adviser) or litigation (including
reasonable legal and other expenses) to which
the Fund may become subject ("Losses") as a direct
result of Adviser's willful misfeasance,
bad faith or gross negligence in the performance of
its duties or from reckless disregard by it
of its obligations and duties under this Agreement;
provided, however, that nothing contained
herein shall require that the Fund be indemnified
for Losses that resulted from the Fund's or
its agent's willful misfeasance, bad faith or gross
negligence in the performance of its duties
or from reckless disregard by it of its obligations
and duties under this Agreement; further
provided that the Adviser shall have been given
written notice concerning any matter for
which indemnification is claimed under this
Section.
(b) The Fund agrees to indemnify the Adviser
for, and hold it harmless against, any
and all Losses to which the Adviser may become
subject as a direct result of this Agreement
or the Adviser's performance of its duties
hereunder; provided, however, that nothing
contained herein shall require that the Adviser be
indemnified for Losses that resulted from
the Adviser's willful misfeasance, bad faith or
gross negligence in the performance of its
duties or from reckless disregard by it of its
obligations and duties under this Agreement;
provided that the Fund shall have been given
written notice concerning any matter for which
indemnification is claimed under this Section.
9. This Agreement shall be in effect for an initial
term until December 19, 2014, unless
sooner terminated in accordance with this
Agreement. This Agreement may nevertheless be
terminated without penalty at any time with or
without cause, on 10 days' written notice by
the Fund's Board of Directors or by the Adviser to
each other, or by vote of holders of a
majority of the outstanding voting securities of
the Fund.
This Agreement shall automatically be terminated in
the event of its assignment. Any notice
to the Fund or the Adviser 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, except as permitted
under the 1940 Act or rules and
regulations adopted thereunder. It may be amended
by mutual agreement of the parties, but
only after authorization of such amendment by the
affirmative vote of (i) a majority of the
members of the Fund's Board of Directors who are
not parties to this Agreement or interested
persons of any party to this Agreement, or of any
entity regularly furnishing investment
advisory services with respect to the Fund pursuant
to an agreement with any party to this
Agreement, cast in person at a meeting called for
the purpose of voting on such approval and
(ii) if required by applicable SEC rules,
regulations or orders, a vote of the holders of a
majority of the outstanding voting securities of
the Fund,
11. The Adviser may, without cost to the Fund,
employ an affiliate or a third party to perform
any accounting, administrative, reporting and
ancillary services required to enable the
Adviser to perform its functions under this
Agreement. Notwithstanding any other provision
of the Agreement, the Adviser may provide
information about the Fund to any such affiliate
or other third party for the purpose of providing
the services contemplated under this clause.
The Adviser will act in good faith in the
selection, use and monitoring of affiliates and
other
third parties, and any delegation or appointment
hereunder shall not relieve the Adviser of
any of its obligations under this Agreement.
12. This Agreement shall be construed in accordance
with the laws of the State of New York,
without giving effect to the conflicts of laws
principles thereof, provided, however, that
nothing herein shall be construed as being
inconsistent with the 1940 Act. 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, the rules and regulations
thereunder and interpretations thereof by the SEC
or its staff.
13. This Agreement may be executed simultaneously
in two or more counterparts, each of
which shall be deemed an original, and it shall not
be necessary in making proof of this
Agreement to produce or account for more than one
such counterpart.
14. Each party hereto irrevocably agrees that any
suit, action or proceeding against either of
the Adviser 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.
15. The Adviser represents and warrants that it is
duly registered as an investment adviser
under the U.S. Investment Advisers Act of 1940 and
licensed by the Hong Kong Securities
and Futures Commission ("the SFC") to carry out
Type 4 (advising on securities), and Type 9
(asset management) regulated activities as set out
in Schedule 5 to the Securities and Futures
Ordinance. The Adviser's CE number with the SFC is
ABG492. JPMAM Taiwan has
received a license from the Financial Supervisory
Commission (the "FSC") in the Republic
of China to provide services under the MOU. The
Adviser will use its reasonable efforts to,
and to procure JPMAM Taiwan (as the case may be)
to, maintain in effect such registration
and license during the term of this Agreement. The
MOU complies with the laws and
regulations of the Republic of China.
The Fund acknowledges that the Fund may have
provided and may, from time to time,
provide certain personal information on individuals
relating to the Fund and/or a third party
("Data") to the Adviser. The Fund acknowledges
that the Adviser has informed the Fund of
its right to request access to and/or correction of
the Data which the Adviser may hold and
that request may be made to the Personal Data
Officer of the Adviser at its principal place of
business in Hong Kong as stated at the beginning of
this Agreement. The Fund further
acknowledges that the Adviser has informed the Fund
and the Fund hereby consents that Data
may be collected, held, processed, disclosed or
used by the Adviser and transferred to any
office of the Adviser, any of Adviser's holding
companies or Associates, any of the Adviser's
agents and any other third party which provides
services to the Adviser, within or outside
Hong Kong, for the purposes of the Adviser or any
such other entity providing the services
contemplated under this Agreement and to facilitate
the provision by an affiliate to the Fund
of potential additional products and services. The
Fund represents and warrants that
appropriate consent has been obtained from the
relevant individuals for such collection,
storage, processing, disclosure, usage and transfer
of Data.
16. 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. The Fund
also confirms that it has notice of the risk
disclosure statement as set out in Appendix to this
Agreement.
16. The parties will inform each other in writing
within a reasonable time of material
changes to the information provided to each other
under this Agreement.
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/ Xxx X. Xxxxxx
Name: Xxx X. Xxxxxx
Title: Chairman
JF INTERNATIONAL MANAGEMENT INC
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: Chief Operating Officer, Asia Pacific
APPENDIX
RISK DISCLOSURE STATEMENT
RISK OF SECURITIES TRADING
The prices of securities fluctuate, sometimes
dramatically. The price of a security may move
up or down, and may become valueless. It is as
likely that losses will be incurred rather than
profit made as a result of buying and selling
securities.
RISK OF TRADING FUTURES AND OPTIONS
The risk of loss in trading futures contracts or
options is substantial. In some circumstances,
you may sustain losses in excess of your initial
margin funds. Placing contingent orders, such
as "stop-loss" or "stop-limit" orders, will not
necessarily avoid loss. Market conditions may
make it impossible to execute such orders. You may
be called upon at short notice to deposit
additional margin funds. If the required funds are
not provided within the prescribed time,
your position may be liquidated. You will remain
liable for any resulting deficit in your
account. You should therefore study and understand
futures contracts and options before you
trade and carefully consider whether such trading
is suitable in the light of your own financial
position and investment objectives. If you trade
options you should inform yourself of
exercise and expiration procedures and your rights
and obligations upon exercise or expiry.
RISK OF TRADING IN LEVERAGED FOREIGN EXCHANGE
CONTRACTS
The risk of loss in leveraged foreign exchange
trading can be substantial. You may sustain
losses in excess of your initial margin funds.
Placing contingent orders, such as "stop-loss" or
"stop-limit" orders, will not necessarily limit
losses to the intended amounts. Market
conditions may make it impossible to execute such
orders. You may be called upon at short
notice to deposit additional margin funds. If the
required funds are not provided within the
prescribed time, your position may be liquidated.
You will remain liable for any resulting
deficit in your account. You should therefore
carefully consider whether such trading is
suitable in light of your own financial position
and investment objectives.
RISK OF MARGIN TRADING
The risk of loss in financing a transaction by
deposit of collateral is significant. You may
sustain losses in excess of your cash and any other
assets deposited as collateral with the
dealer or securities margin financier. Market
conditions may make it impossible to execute
contingent orders, such as "stop-loss" or "stop-
limit" orders. You may be called upon at short
notice to make additional margin deposits or
interest payments. If the required margin
deposits or interest payments are not made within
the prescribed time, your collateral may be
liquidated without your consent. Moreover, you
will remain liable for any resulting deficit in
your account and interest charged on your account.
You should therefore carefully consider
whether such a financing arrangement is suitable in
light of your own financial position and
investment objectives.
