<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or 240.14a-12
THE THAI CAPITAL FUND, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
THE THAI CAPITAL FUND, INC.
C/O DAIWA SECURITIES TRUST COMPANY
ONE EVERTRUST PLAZA
JERSEY CITY, NEW JERSEY 07302
(800) 426-5523
August 9, 1999
Dear Stockholders:
The Annual Meeting of Stockholders of The Thai Capital Fund, Inc. (the
"Fund") will be held at 9:30 A.M., New York time, on Friday, September 17, 1999,
at the offices of Daiwa Securities America Inc., Financial Square, 32 Old Slip,
14th Floor, New York, New York 10005. A Notice and Proxy Statement regarding the
meeting, a proxy card for your vote at the meeting, and a postage prepaid
envelope in which to return your proxy are enclosed.
At the Annual Meeting, the stockholders will (i) elect two Class II
directors and one Class III director; (ii) consider the ratification of the
selection of PricewaterhouseCoopers LLP as independent accountants; (iii)
consider the approval of a new Investment Contract between the Fund and Thai
Farmers Asset Management Co., Ltd.; and (iv) consider the approval of a new
International Investment Advisory Agreement between the Fund and Daiwa SB
Investments (HK) Ltd. In addition, the stockholders who will be present at the
Annual Meeting will hear an investment report on the Fund and will have an
opportunity to discuss matters of interest to them.
If you will not be able to attend the Annual Meeting in person, please take
the time now to review the enclosed materials and vote your shares by proxy.
YOUR VOTE IS IMPORTANT.
The Board recommends that the stockholders vote in favor of each of the
foregoing matters.
Respectfully,
/s/ Masayasu Ohi
Masayasu Ohi
CHAIRMAN OF THE BOARD
STOCKHOLDERS ARE STRONGLY URGED TO PROMPTLY SIGN AND MAIL THE ACCOMPANYING PROXY
IN THE ENCLOSED RETURN ENVELOPE TO ENSURE A QUORUM AT THE MEETING.
YOUR VOTE IS IMPORTANT.
<PAGE>
THE THAI CAPITAL FUND, INC.
------------------------
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 17, 1999
------------------------
To the Stockholders of
The Thai Capital Fund, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of The Thai
Capital Fund, Inc. (the "Fund") will be held at the offices of Daiwa Securities
America Inc., Financial Square, 32 Old Slip, 14th Floor, New York, New York
10005, on Friday September 17, 1999, at 9:30 A.M., New York time, for the
following purposes:
1. To elect two Class II directors to serve for a term expiring on the date
on which the Annual Meeting of Stockholders is held in the year 2002 and
one Class III director to serve for a term expiring on the date on which
the Annual Meeting of Stockholders is held in the year 2000.
2. To ratify or reject the selection of PricewaterhouseCoopers LLP as
independent accountants of the Fund for its fiscal year ending December
31, 1999.
3. To approve or reject a new Investment Contract between the Fund and Thai
Farmers Asset Management Co. Ltd., as investment manager of the Fund.
4. To approve or reject a new International Investment Advisory Agreement
between the Fund and Daiwa SB Investments (HK) Ltd., as investment
adviser of the Fund.
5. To transact such other business as may properly come before the meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on July 16, 1999 as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting or any adjournments thereof.
You are cordially invited to attend the meeting. Stockholders who do not
expect to attend the meeting in person are requested to complete, date and sign
the enclosed form of proxy and return it promptly in the envelope provided for
that purpose. You may nevertheless vote in person at the meeting if you choose
to attend. Your vote is important. The enclosed proxy is being solicited by the
Board of Directors of the Fund.
By order of the Board of Directors,
Daniel F. Barry
SECRETARY
August 9, 1999
<PAGE>
THE THAI CAPITAL FUND, INC.
------------------------
PROXY STATEMENT
------------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of THE THAI CAPITAL FUND, INC. (the "Fund")
for use at the Annual Meeting of Stockholders, to be held at the offices of
Daiwa Securities America Inc., Financial Square, 32 Old Slip, 14th Floor, New
York, New York 10005, on Friday, September 17, 1999, at 9:30 A.M., New York
time, and at any adjournments thereof.
This Proxy Statement and the form of proxy are being mailed to stockholders
on or about August 9, 1999. Any stockholder giving a proxy in advance of the
Annual Meeting has the power to revoke it by mail (addressed to the Secretary,
The Thai Capital Fund, Inc., c/o Daiwa Securities Trust Company, One Evertrust
Plaza, 9th Floor, Jersey City, New Jersey 07302) or in person at the meeting, by
executing a superseding proxy or by submitting a notice of revocation to the
Fund. All properly executed proxies received in time for the meeting will be
voted as specified in the proxy or, if no specification is made, for each
proposal referred to in this Proxy Statement. Abstentions and broker non-votes
are each included in the determination of the number of shares present at the
meeting.
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT FOR ITS
FISCAL YEAR ENDED DECEMBER 31, 1998 TO ANY STOCKHOLDER REQUESTING SUCH REPORT.
REQUESTS FOR THE ANNUAL REPORT SHOULD BE MADE BY WRITING TO THE THAI CAPITAL
FUND, INC., C/O DAIWA SECURITIES TRUST COMPANY, ONE EVERTRUST PLAZA, 9TH FLOOR,
JERSEY CITY, NEW JERSEY 07302, ATTENTION: SHAREHOLDER RELATIONS, OR BY CALLING
(800) 426-5523 OR (781) 575-2000.
The Board of Directors has fixed the close of business on July 16, 1999 as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting and at any adjournments thereof. Stockholders on the
record date will be entitled to one vote for each share held, with no shares
having cumulative voting rights. As of the record date, the Fund had outstanding
6,278,588 shares of common stock. To the knowledge of the Fund's management, no
person owned beneficially more than 5% of the Fund's outstanding shares as of
July 16, 1999.
Management of the Fund knows of no business other than that mentioned in
Items 1 through 4 of the Notice of Meeting which will be presented for
consideration at the meeting. If any other matter is properly presented, it is
the intention of the persons named in the enclosed proxy to vote in accordance
with their best judgment.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF
EACH OF THE MATTERS MENTIONED IN ITEMS 1 THROUGH 4 OF THE NOTICE OF MEETING.
1
<PAGE>
(1) ELECTION OF DIRECTORS
Persons named in the accompanying form of proxy intend in the absence of
contrary instructions to vote all proxies for the election of the three nominees
listed below as directors of the Fund:
<TABLE>
<CAPTION>
CLASS II CLASS III
------------------------------ ---------------------
<S> <C>
Austin C. Dowling Masayasu Ohi
Virabongsa Ramangkura
</TABLE>
to serve for terms expiring on the date of subsequent Annual Meetings of
Stockholders as follows: Class II in the year 2002 and Class III in the year
2000, or until their successors are elected and qualified. If any such nominee
should be unable to serve, an event that is not now anticipated, the proxies
will be voted for such person, if any, as shall be designated by the Board of
Directors to replace any such nominee. The election of each director will
require the affirmative vote of a majority of the votes cast at the meeting. For
this purpose, abstentions and broker non-votes will not be counted as votes cast
at the meeting.
At its September 3, 1998 meeting, the Board of Directors elected Mr.
Masayasu Ohi as a director to fill the vacancy created by Mr. Shuichi Komori,
whose resignation was effective as of September 1998. Mr. Komori had served as a
Class III director, and Mr. Ohi is therefore standing as a Class III director.
Although the term of the Fund's Class III directors does not expire until the
date on which the Annual Meeting of Stockholders is held in the year 2000,
Maryland law and the Fund's By-laws require a director, regardless of Class, who
is elected by the Board of Directors to fill a vacancy to stand for election at
the next Annual Meeting of Stockholders.
INFORMATION CONCERNING NOMINEES AND DIRECTORS
The following table sets forth information concerning each of the nominees
as a director of the Fund, as well as the other current directors of the Fund.
Each of the nominees is now a director of the Fund and has consented to be named
in this Proxy Statement and to serve as a director of the Fund if elected.
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE
FUND, IF ANY, PRINCIPAL OCCUPATION SHARES
OR EMPLOYMENT DURING PAST BENEFICIALLY
FIVE YEARS AND OWNED PERCENT
NAME (AGE) AND ADDRESS DIRECTORSHIPS IN DIRECTOR JULY 16, OF
OF NOMINEES/DIRECTORS PUBLICLY HELD COMPANIES SINCE 1999(+) CLASS
- ---------------------------------- ------------------------------------------------------------ -------- ------------ -------
<S> <C> <C> <C> <C> <C>
NOMINEES
Austin C. Dowling (67) Director, since 1992, The Japan Equity Fund, Inc. 1990 1,250 **
1002E Long Beach Boulevard
North Beach, NJ 08008
* Masayasu Ohi (51) Chairman of the Board of the Fund since 1998; Chairman, 1998 None --
Financial Square since 1998, The Taiwan Equity Fund, Inc.; Chairman, since
32 Old Slip, 14th Floor 1998, The Singapore Fund, Inc.; Chairman and Chief Executive
New York, NY 10005 Officer, Daiwa Securities America Inc., since 1998;
Executive Officer, Daiwa Securities Group Inc., since 1999;
Director, Daiwa Securities Co. Ltd., from 1998 to 1999;
Joint
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE
FUND, IF ANY, PRINCIPAL OCCUPATION SHARES
OR EMPLOYMENT DURING PAST BENEFICIALLY
FIVE YEARS AND OWNED PERCENT
NAME (AGE) AND ADDRESS DIRECTORSHIPS IN DIRECTOR JULY 16, OF
OF NOMINEES/DIRECTORS PUBLICLY HELD COMPANIES SINCE 1999(+) CLASS
- ---------------------------------- ------------------------------------------------------------ -------- ------------ -------
<S> <C> <C> <C> <C> <C>
Masayasu Ohi (continued) Chief Executive of Daiwa Europe Limited, from 1997 to 1998;
President of Daiwa Europe Limited, London, from 1994 to
1997.
Virabongsa Ramangkura (55) Member of the Thai Senate; Chairman, Bangkok Expressway 1992 None --
99 Surasak Road Public Co., Ltd., since 1993; Executive Director, Advance
Bangrak, Bangkok Agro Public Co., Ltd., since 1994; Director, Preccha Group
10500, Thailand Public Co., Ltd.; Ex-member, The Thailand Development
Research Institute and The Council of Trustees; Ex-chairman,
Economic Board, National Research Bureau from 1996 to 1997;
Director, from 1996 to 1997, Bangkok Airways Co., Ltd.;
Chairman, from 1993 to 1994, Board of Commissioners of The
State Railway of Thailand; Member, from 1993 to 1994,
National Land Transportation Committee of Thailand. Advisor,
Orach (Thailand); Advisor, GE Capital (Thailand); Director,
Country Property, Plc.; Director, Assets Insurance Co. Ltd.;
Director, Imperial Hotel Family Plc.
OTHER CURRENT DIRECTORS
Robert F. Gurnee (71) Chairman and Chief Executive Officer, since 1990, Financial 1990 1,500 **
102 Santomera Lane Integrity Group Inc. (bank and financial services consulting
Greenville, DE 19807 firm); Director, since 1991, Vestaur Securities Co.;
Director, since 1992, The Japan Equity Fund, Inc.
Alfred C. Morley (72) Financial Consultant, since 1991; Senior Director of Old 1990 4,673 **
119 Falcon Drive Dominion Capital Management, since 1991; Senior Advisor,
Charlottesville, VA 22901 since 1990, Financial Analysts Federation; Advisor, from
1990 to 1998, Institute of Chartered Financial Analysts;
Director, since 1990, The Singapore Fund, Inc.
</TABLE>
- --------------------------
+ The information as to beneficial ownership is based on statements furnished
to the Fund by the nominees and directors.
3
<PAGE>
* Directors so noted are deemed by the Fund's counsel to be "interested
persons" (as defined in the U.S. Investment Company Act of 1940, as amended
(the "1940 Act")) of the Fund or of the Fund's investment manager or
investment adviser. Mr. Ohi is deemed an interested person because of his
affiliation with Daiwa Securities America Inc., an affiliate of the Fund's
investment adviser, Daiwa SB Investments (HK) Ltd. (the "Investment
Adviser"), or because he is an officer of the Fund, or both.
** Represented less than 1% of the outstanding shares at July 16, 1999.
The Fund's Board of Directors held four regular meetings and three special
meetings during the fiscal year ended December 31, 1998. Dr. Virabongsa attended
fewer than seventy-five percent of the aggregate number of meetings of the Board
of Directors.
The Fund's Board of Directors has an Audit Committee which is responsible
for reviewing financial and accounting matters. The current members of the Audit
Committee are Messrs. Dowling, Gurnee, Morley and Dr. Virabongsa. The Audit
Committee held two regular meetings during the fiscal year ended December 31,
1998. Each incumbent director attended at least seventy five percent of the
aggregate number of meetings of the Audit Committee. The Fund has neither a
compensation nor a nominating committee.
Section 16(a) of the U.S. Securities Exchange Act of 1934, as amended,
requires the Fund's officers and directors, and persons who own more than ten
percent of a registered class of the Fund's equity securities, to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission and the New York Stock Exchange, Inc. The Fund believes that its
officers and directors have complied with all applicable filing requirements.
OFFICERS OF THE FUND
Mr. Ohi (age 51) has been Chairman of the Board of the Fund since September
1998 (see information provided above).
Daniel F. Barry (age 52) has been Acting President of the Fund since August
1998 and Secretary of the Fund since March 1999, was also Vice President of the
Fund from December 1992 to August 1998 and Treasurer of the Fund from September
1991 to September 1994 and has been Director and Senior Vice President of Daiwa
Securities Trust Company ("DSTC"), the Fund's Administrator and Custodian, since
December 1998 and June 1993, respectively. From June 1990 to June 1993, he was
Vice President, Mutual Fund Administration of DSTC.
Sean J. Peters (age 38) has been Treasurer of the Fund since June 1998; Vice
President of DSTC since June 1998; Assistant Controller of Reserve Management
Corporation from 1994 to 1998; Assistant Vice President of Bankers Trust Company
from 1992 to 1994.
John A. Koopman (age 29) has been Assistant Treasurer of the Fund since June
1998; Assistant Vice President of DSTC since June 1998; Assistant Treasurer of
Chase Manhattan Bank NA from 1992 to 1998.
Judy Runrun Tu (age 34) has been Assistant Secretary of the Fund since March
1999; Assistant Vice President of DSTC since March 1998; Financial Analyst of
Canon USA from 1997 to 1998; Marketing Coordinator of TotalTel USA from 1995 to
1997; Assistant Controller of Daniel Caron Ltd. from 1990 to 1995.
Laurence E. Cranch (age 52), Assistant Secretary of the Fund since May 1990
and has been a partner in the law firm of Rogers & Wells LLP since 1980.
TRANSACTIONS WITH AND REMUNERATION OF OFFICERS AND DIRECTORS
The aggregate fee remuneration for directors not affiliated with the
Investment Manager or the Investment Adviser was U.S. $37,104 during the fiscal
year ended December 31, 1998. Each such non-affiliated
4
<PAGE>
director currently receives fees, paid by the Fund, of U.S. $750 for each
directors' meeting attended in person or by telephone, U.S. $600 for each audit
committee meeting attended in person or by telephone and an annual fee of U.S.
$5,000. The officers and interested directors of the Fund received no
compensation from the Fund. For the fiscal year ended December 31, 1998 the
directors voluntarily discounted their fees by 15%.
DSTC, which pays the compensation and certain expenses of the officers of
DSTC who serve as officers of the Fund, receives an administration fee and a
custodian fee.
Set forth below is a chart showing the aggregate fee compensation paid by
the Fund (in U.S. dollars) to each of its directors during the fiscal year ended
December 31, 1998, as well as the total fee compensation paid to each director
of the Fund by the Fund and by other investment companies advised by the
Investment Manager, the Investment Adviser or their respective affiliates
(collectively, the "Fund Complex") for their services as directors of such
investment companies during their respective fiscal years:
<TABLE>
<CAPTION>
TOTAL
PENSION OR COMPENSATION
RETIREMENT FROM FUND AND
AGGREGATE BENEFITS ACCRUED FUND COMPLEX
COMPENSATION AS PART OF FUND PAID TO
NAME OF DIRECTOR FROM FUND EXPENSES DIRECTORS
- ---------------------------- ------------- ----------------- --------------
<S> <C> <C> <C>
Masayasu Ohi*+ $ 0 None $ 0
Shuichi Komori*+ 0 None 0
Damrongsuk Amatyakul+ 0 None 0
Austin C. Dowling* 8,458 None 17,658
Robert F. Gurnee* 8,458 None 17,658
Alfred C. Morley* 8,458 None 17,658
Virabongsa Ramangkura 7,820 None 7,820
Suvit Yodmani** 3,910 None 3,910
</TABLE>
- --------------------------
* Also serves as a director of other investment companies for which an
affiliate of Daiwa International Capital Management (H.K.) Limited, the
Fund's investment adviser, serves as investment manager or investment
adviser.
+ Mr. Ohi and his predecessor, Mr. Komori, who are affiliated with the
Investment Adviser, and Mr. Damrongsuk, who was affiliated with the
Investment Manager, are considered "interested persons" of the Fund and did
not receive any fee compensation from the Fund for their services as
directors. Mr. Ohi was elected to the Board of Directors in September 1998
to replace Mr. Komori who resigned. Mr. Damrongsuk resigned as Director and
President of the Fund in July 1998.
** Dr. Suvit resigned as Director of the Fund in July 1998.
(2)RATIFICATION OR REJECTION OF SELECTION
OF INDEPENDENT ACCOUNTANTS
At a meeting held on March 4, 1999, the Board of Directors of the Fund,
including a majority of the directors who are not "interested persons" of the
Fund (as defined in the 1940 Act), selected PricewaterhouseCoopers LLP to act as
independent accountants for the Fund for the fiscal year ending December 31,
1999, subject to stockholder approval. The Fund knows of no direct financial or
material indirect financial interest of that firm in the Fund. One or more
representatives of PricewaterhouseCoopers
5
<PAGE>
LLP are expected to be present at the Annual Meeting and will have an
opportunity to make a statement if they so desire. Such representatives are
expected to be available to respond to appropriate questions from stockholders.
This selection of independent accountants is subject to the ratification or
rejection of the Fund's stockholders at the meeting. Ratification of the
selection of the independent accountants will require the affirmative vote of a
majority of the votes cast at the meeting. For this purpose, abstentions and
broker non-votes will not be counted as votes cast at the meeting.
(3) APPROVAL OF A NEW INVESTMENT CONTRACT
TERMINATION OF ORIGINAL INVESTMENT CONTRACT;
APPROVAL OF NEW INVESTMENT CONTRACT
Commencing in the summer of 1998, the Board of Directors of the Fund
conducted a review of the Fund's investment management arrangements. In this
connection, the Board solicited proposals from a number of investment managers
in Thailand. In response, the Board received proposals from four managers,
including Thai Farmers Asset Management Co., Ltd. ("TFAM or the "Proposed
Manager") and The Mutual Fund Public Company ("MFC"). The Board gathered further
information from these investment managers and, in January 1999, members of the
Board met with each of the four investment managers under consideration. The
information reviewed by the Board included information regarding the number and
types of clients advised by the investment managers, including other investment
funds; the amount of assets under management by the investment manager; the
number of persons employed by the investment manager and information regarding
the education and employment experience of the principal investment officers of
the investment manager; the compliance systems and personnel of the investment
manager; the affiliations of the investment manager; the performance of the
investment manager; and the fees proposed to be charged by the investment
manager. Based on its review of this information, at its quarterly meeting held
on March 4, 1999, the Board of Directors of the Fund, including a majority of
the Directors of the Fund who are not officers of the Fund or affiliated with
MFC, TFAM or Daiwa SB Investments (HK) Ltd., the Fund's investment adviser (the
"Disinterested Directors"), voting in person, approved the appointment of TFAM
as the Fund's investment manager to take effect at such time as TFAM registers
under the U.S. Investment Advisers Act of 1940, as amended, and that the
Investment Contract dated May 21, 1990 (the "Original Investment Contract")
between MFC be terminated. By means of a written notice of MFC dated July 16,
1999, the Fund provided MFC with written notice of the termination as investment
manager of the Fund under the Original Investment Contract. It is anticipated
that TFAM will commence serving as investment manager of the Fund sometime
between August 16, 1999 and September 16, 1999.
THE PROPOSED MANAGER
Thai Farmers Asset Management Co., Ltd. is one of the larger investment
managers in Thailand, managing 21 mutual funds with approximately US$1.7 billion
in assets as of June 30, 1999. TFAM manages open-end and closed-end equity
funds, fixed-income funds and balanced funds.
6
<PAGE>
TFAM was established as a mutual fund manager in March 1992 pursuant to the
Finance Business, Securities Business and Credit Foncier Business Act of
Thailand. As of June 30, 1999, TFAM's principal shareholders were as follows:
<TABLE>
<CAPTION>
PERCENTAGE
NAME AND ADDRESS OF SHAREHOLDER OWNERSHIP
- ----------------------------------------------------------------------------------- ------------
<S> <C>
Thai Farmers Bank Public Company Limited 63.69%
Thai Farmers Lane, Katburana Road, Bangkok 10140, Thailand
Muang Thai Life Assurance Company Limited 16.67%
250 Rachadaphisek Road, Huaykwang, Bangkok 10320, Thailand
Mercury Asset Management Channel Islands Limited 12.14%
Forum House, Green Ville Street, St. Helier, Jersey JE4 8RL,
Channel Islands
</TABLE>
Sombat Lansam Company Limited and Swiss Re Insurance Company Limited own 25%
and 24.99% of Muang Thai Life Assurance Company Limited, respectively. Mercury
Asset Management Channel Islands Limited is a wholly-owned subsidiary of Mercury
Holding BV which, in turn is an indirect wholly-owned subsidiary of Merrill
Lynch & Co. Inc.
The principal address of TFAM is 252/38-41 Muang Thai-Phatra Office Tower I,
31st Floor, Rachadaphisek Road, Huaykwang, Bangkok 10320.
Certain information regarding the directors and the principal executive
officers of the Manager is set forth below:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND ADDRESS AND POSITION WITH THE MANAGER
- ---------------------------------------- -----------------------------------------------------
<S> <C>
Dayana Bunnag* Director and President of TFAM
Andrew S. Dalton* Director of TFAM
Sirisopa Matrakul* Director of TFAM
Pakineenard Tiyachate* Executive Vice President, Muang Thai Life
Assurance Co., Ltd.; Director of TFAM
Kraisorn Sudas Na* First Senior Vice President, Muang Thai Life
Assurance Co., Ltd.; Director of TFAM
Charae Chutharatkul* President, Thai Tapioca Development Institute;
Director and Chairman of TFAM
Nualphan Phanchet* Director and First Senior Vice President, Muang
Thai Assurance Co., Ltd.; Director of TFAM
Som Pisansopon* First Vice President, Thai Farmers Bank Plc.;
Director of TFAM
Veerawat Phongsathit* Vice President and Chief Compliance Officer of TFAM
</TABLE>
- --------------------------
* Business Address: 252/38-41 Muang Thai-Phatra Office Tower I, 31st Floor,
Rachadaphisek Road, Huaykwang, Bangkok 10320
7
<PAGE>
THE INVESTMENT CONTRACT
The terms of the new Investment Contract between the Fund and TFAM (the "New
Investment Contract") is identical to the Fund's Original Investment Contract
(the form of which is attached as Annex A), except for the replacement of MFC as
investment manager with the Proposed Manager. The holders of a majority of the
outstanding voting securities (within the meaning of the U.S. Investment Company
Act of 1940 (the "1940 Act")) of the Fund are being asked to approve the New
Investment Contract. See "The New Investment Contract" below.
The following is a summary of the Original Investment Contract and the New
Investment Contract. The descriptions of the Original and New Investment
Contracts are qualified by reference to Annex A.
THE ORIGINAL INVESTMENT CONTRACT.
The original Investment Contract, dated as of May 21, 1990, was last
submitted to a vote by the Fund's stockholders at the June 10, 1994 Annual
Meeting of Stockholders to approve the continuance of the Investment Contract.
Under the terms of the Original Investment Contract, MFC made investment
decisions, prepared research and statistical data and supervised the purchase
and sale of securities on behalf of the Fund. MFC also supervised the selection
of brokers and dealers to carry out the transactions, all in accordance with the
Fund's investment objective and policies under the direction and control of the
Fund's Board of Directors. MFC maintained records and furnished or caused to be
furnished all required records or other information for the Fund to the extent
such records, reports and other information were not maintained or furnished by
the Fund's administrator or other agents. MFC or one of its affiliates was
responsible for the compensation and expenses of those of the Fund's Directors,
officers and employees who were Directors, officers or employees of MFC or any
of its affiliates, except that the Fund bore travel expenses or an appropriate
fraction thereof of officers and Directors of the Fund who were directors,
officers or employees of MFC to the extent such expenses related to attendance
at meetings of the Fund's Board of Directors or any committee thereof.
Under the terms of the Original Investment Contract, MFC and its affiliates
were permitted to provide investment advisory services to other clients,
including clients who may invest in securities of Thai companies and, in
providing such services, may use non-confidential information furnished by MFC.
Conversely, information furnished by others to MFC in the course of providing
services to clients other than the Fund may have been useful to, and used by,
MFC in providing services to the Fund.
The Original Investment Contract provided that MFC was not liable for any
act or omission, error of judgment or mistake of law, or for any loss suffered
by the Fund in connection with matters to which the Original Investment Contract
related, except for losses resulting from willful misfeasance, bad faith or
gross negligence on the part of MFC in the performance of its duties, or from
reckless disregard by MFC of its obligations and duties under the Original
Investment Contract.
For its services, MFC received a monthly fee, payable in Thai Baht, at an
annual rate of 0.60% of the Fund's assets held under the Investment Contract.
For the fiscal year ended December 31, 1998, MFC earned a fee for management and
certain administrative services, including expenses, of U.S. $114,290.
THE NEW INVESTMENT CONTRACT.
The Board of Directors of the Fund, including the Disinterested Directors,
approved the succession of MFC by TFAM as the Fund's investment manager on March
4, 1999, subject to TFAM's registration under the U.S. Investment Advisers Act
of 1940 and recommended the New Investment Contract for approval by the
stockholders of the Fund. The New Investment Contract is identical to the
Original Investment Contract. The New Investment Contract will take effect upon
TFAM's commencing to provide services under the
8
<PAGE>
contract, which, as described above, is expected to occur between August 16,
1999 and September 16, 1999. Continuance of the New Investment Contract for a
period beyond 120 days from its effective date is subject to stockholder
approval. If so approved, the New Investment Contract will continue in effect
for an initial two-year term and thereafter for successive annual periods as
long as such continuance is approved in accordance with the 1940 Act.
The investment management fee as a percentage of net assets payable by the
Fund to TFAM will be the same under the New Investment Contract as under the
Original Investment Contract.
In the event that stockholders of the Fund do not approve the New Investment
Contract, the Board will take such action as it deems in the best interest of
the Fund and its stockholders, which may include proposing that stockholders
approve an agreement in lieu of the New Investment Contract.
STOCKHOLDER APPROVAL
To become effective, the New Investment Contract must be approved by a vote
of a majority of the outstanding voting securities of the Fund. The "vote of a
majority of the outstanding voting securities" is defined under the 1940 Act as
the lesser of the vote of (i) 67% or more of the shares of the Fund entitled to
vote thereon present at the Meeting if the holders of more than 50% of such
outstanding shares of the Fund are present in person or represented by proxy, or
(ii) more than 50% of such outstanding shares of the Fund entitled to vote
thereon. The New Investment Contract was approved by the Board after
consideration of all factors which they determined to be relevant to their
deliberations, including those discussed above. The Board also determined to
submit the New Investment Contract for consideration by the stockholders of the
Fund.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "FOR" APPROVAL
OF THE NEW INVESTMENT CONTRACT.
(4) APPROVAL OF A NEW ADVISORY AGREEMENT
THE ADVISER
Daiwa SB Investments (HK) Ltd. (formerly, Daiwa International Capital
Management (H.K.) Limited) (the "Adviser") acts as the Fund's investment
adviser. It was established in 1988 to provide a direct investment access not
only to the Japanese investors but also worldwide investors in the high growth
Pacific Basin markets, and at the same time, to work as an intermediary for
Asian investors investing in Japan, North America, Europe and other countries.
It has acted as investment adviser to the Fund since the Fund commenced its
investment operations. The Adviser is registered under the U.S. Investment
Advisers Act of 1940, as amended.
The Adviser is a direct subsidiary of Daiwa SB Investments, Ltd. (formerly,
Daiwa International Capital Management Co., Ltd.) ("DSBI") which maintains sole
ownership of investment advisory subsidiaries in the United States, London, Hong
Kong and Singapore to provide investment advisory services to a global
clientele. DSBI is a leading investment management organization in Japan,
managing net assets of US $29 billion worldwide, as of April 1999. DSBI's
clients include European, Asian and North American pension funds, mutual funds
and financial institutions.
The address of the Adviser is Level 30, One Pacific Place, 88 Queensway,
Hong Kong. The principal address of Daiwa SB Investments Ltd. is 7-9 Nihonbashi
2-chome, Chuo-ku, Tokyo 103-0027.
9
<PAGE>
Certain information regarding the directors and the principal executive
officers of the Investment Adviser is set forth below:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
AND POSITION WITH THE
NAME AND ADDRESS ADVISER
- ------------------------------------------------------------------- --------------------------
<S> <C>
Shuunsuke Ichijo*.................................................. Managing Director
Nobumasa Wakabayashi*.............................................. Director
Shunsuke Omae*..................................................... Director
Ambrose Chang Chung Kwon*.......................................... Director and Chief
Investment Officer
</TABLE>
- --------------------------
* Business Address: Level 30, One Pacific Place, 88 Queensway, Hong Kong
THE MERGER
On April 1, 1999, Daiwa International Capital Management Co., Ltd. merged
with two investment management subsidiaries of The Sumitomo Bank, Limited (the
"Sumitomo Bank"), SB Investment Management Co., Ltd. and SBIM Investment Trust
Management Co., Ltd (the "Merger"). The surviving corporation is named Daiwa SB
Investments Ltd. and is the direct parent company of the Adviser owning 100% of
its outstanding capital stock.
As of August 2, 1999, Daiwa Securities Group Inc., Sumitomo Bank and TRPH
Corporation each held 44.0%, 30.4% and 10.0% of the outstanding stock of Daiwa
SB Investments Ltd., respectively. TRPH Corporation is a wholly owned subsidiary
of T. Rowe Price Associates, Inc. The principal address of Sumitomo Bank is
4-6-5 Kitahama, Chuo-ku, Osaka, Japan 541-0041. The principal address of Daiwa
Securities Group Inc. is 6-4, Otemachi 2-chome, Chiyoda-ku, Japan, 100-8101. The
principal address of TRPH Corporation and T. Rowe Price Associates, Inc. is 100
East Pratt Street, Baltimore, Maryland 21202.
In connection with the Merger, Sumitomo Bank and Daiwa Securities Group Inc.
have become holders of a controlling block of securities (25% or more) in Daiwa
SB Investments Ltd. thereby possibly resulting in the assignment of The
International Investment Advisory Agreement dated May 21, 1990, between the Fund
and the Adviser (the "Original Advisory Agreement") for purposes of Section 15
(a)(4) of the 1940 Act. Pursuant to the requirements of Section 15(a)(4) of the
1940 Act, the Original Advisory Agreement automatically terminates upon its
assignment.
The Adviser does not anticipate any reduction in the quality of services now
provided to the investment manager and the Adviser and does not expect that the
Merger will result in any material changes in its business or in the manner in
which it renders services to the investment manager and the Fund. In addition,
the Adviser does not anticipate that the Merger or any ancillary transactions
will have any adverse effect on its ability to fulfill its obligations under the
New Advisory Agreement (as defined below) with the Fund or to operate its
business in a manner consistent with past business practice.
THE ADVISORY AGREEMENT
As a result of the possible termination of the Original Advisory Agreement,
a majority of the Directors of the Fund who are not officers of the Fund or
affiliated with the Adviser, MFC or TFAM (the "Disinterested Directors")
approved, voting in person, a new international investment advisory agreement
(the "New Advisory Agreement") between the Fund and the Advisor. The New
Advisory Agreement is substantially the same as the Original Advisory Agreement,
except for the date of execution and provisions that Daiwa SB Investments (HK)
Ltd. will not be entitled to receive fees for services or reimbursements for
expenses unless and until the payment of fees and expenses are approved by the
stockholders of the Fund. The holders of a
10
<PAGE>
majority of the outstanding voting securities (within the meaning of the 1940
Act) of the Fund are being asked to approve the New Advisory Agreement,
including the payment of fees and expenses of the Adviser from April 1, 1999 to
the date the New Advisory Agreement is approved by the Fund's stockholders. See
"The New Advisory Agreement" below.
The following is a summary of the Original Advisory Agreement and the New
Advisory Agreement. The description of the New Advisory Agreement is qualified
by reference to Annex B.
THE ORIGINAL ADVISORY AGREEMENT.
The original International Investment Advisory Agreement, dated as of May
21, 1990, was last submitted to a vote by the Fund's stockholders at the June
10, 1994 Annual Meeting of Stockholders to approve the continuance of the
International Investment Advisory Agreement.
Under the terms of the Original Advisory Agreement, the Adviser was required
to advise the Fund's investment manager on macro-economic issues as they related
to investment decisions involving the Fund's portfolio, to prepare and make
available research and statistical data and to provide general and specific
advice to the investment manager regarding the Fund's investments. The Fund's
investment manager, however, made the ultimate investment decisions. The
information and investment advice received by the Fund's investment manager from
the Adviser was used for the purpose of managing the Fund's investment portfolio
and was evaluated by the investment manager's staff in light of their own
expertise and information from other sources. The Adviser also was responsible
for monitoring the activities of the Fund's administrator, custodians, transfer
agent, accountants, legal counsel and other persons providing services to the
Fund.
The Adviser or one of its affiliates was responsible for the compensation
and expenses of the Fund's Directors, officers and employees who were directors,
officers or employees of the Adviser or any of its affiliated persons, except
that the Fund bore travel expenses of officers and Directors of the Fund who
were managing directors, officers or employees of the Adviser to the extent such
expenses related to attendance at meetings of the Fund's Board of Directors or
any committee thereof.
The Original Advisory Agreement provided that the Adviser was not liable for
any error of judgment or mistake of law, or for any loss suffered by the Fund in
connection with matters to which the Advisory Agreement related, except for loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Adviser in the performance of its obligations and duties or by reason of its
reckless disregard of its obligations and duties under the Original Advisory
Agreement.
For its services, the Adviser received a monthly fee, payable in U.S.
Dollars, at an annual rate equal to 0.60% of the Fund's average weekly net
assets (including both Thai and U.S. assets). For the fiscal year ended December
31, 1998, the Adviser earned a fee, including expenses, of U.S. $113,679.
Daiwa Securities Trust Company ("DSTC"), an affiliate of the Adviser, acts
as Administrator to the Fund. For its services as Administrator, DSTC received
from the Fund a fee of U.S. $100,000 for the fiscal year ended December 31,
1998, reflecting a waiver of $50,000. DSTC is also the U.S. Custodian. For its
services as U.S. Custodian, DSTC received from the Fund fees and expenses of
U.S. $10,459 for the fiscal year ended December 31, 1998. After the approval of
the New Advisory Agreement, DTSC will continue to act as Administrator and U.S.
Custodian of the Fund.
The Original Advisory Agreement had a provision for termination without
penalty at any time by the Fund or by the Adviser upon 60 days' written notice.
11
<PAGE>
THE NEW ADVISORY AGREEMENT.
The Board of Directors of the Fund (the "Board"), including the
Disinterested Directors, approved the New Advisory Agreement on March 4, 1999,
the form of which is attached as Annex B (the "New Advisory Agreement") and
recommended the Agreement for approval by the stockholders of the Fund. The New
Advisory Agreement is substantially the same as the Original Advisory Agreement.
The New Advisory Agreement took effect on April 1, 1999, subject to stockholder
approval. The New Advisory Agreement will continue in effect for an initial
two-year term and thereafter for successive annual periods as long as such
continuance is approved in accordance with the 1940 Act.
The investment advisory fee as a percentage of net assets payable by the
Fund to the Adviser will be the same under the New Advisory Agreement as under
the Original Advisory Agreement.
In evaluating the New Advisory Agreement, the Board took into account that
the Fund's Original Advisory Agreement and the New Advisory Agreement, including
that their terms relating to the services to be provided thereunder by the
Adviser and the fees and expenses payable by the Fund, are identical, except for
the date of execution and the provision relating to the payment of fees and
expenses as described above.
The Board also examined the terms of the Merger and the possible effects of
the Merger upon the Adviser's organization and upon the ability of the Adviser
to provide advisory services to the Fund. The Board also considered the skills
and capabilities of the Adviser.
The Board also weighed the effect on the Fund of the Adviser's becoming an
affiliated person of Sumitomo Bank. Following the Merger, the Investment Company
Act will prohibit or impose certain conditions on the ability of the Fund to
engage in certain transactions with Sumitomo Bank and its affiliates.
After consideration of the above factors and such other factors and
information that the Board deemed relevant, the Directors, and the Disinterested
Directors voting separately, unanimously approved the New Advisory Agreement and
voted to recommend its approval to the stockholders of the Fund.
In the event that stockholders of the Fund do not approve the New Advisory
Agreement, the Board will take such action as it deems in the best interest of
the Fund and its stockholders, which may include proposing that stockholders
approve an agreement in lieu of the New Advisory Agreement.
STOCKHOLDER APPROVAL
To become effective, the New Advisory Agreement must be approved by vote of
a majority of the outstanding voting securities of the Fund. The "vote of a
majority of the outstanding voting securities" is defined under the 1940 Act as
the lesser of the vote of (i) 67% or more of the shares of the Fund entitled to
vote thereon present at the Meeting if the holders of more than 50% of such
outstanding shares of the Fund are present in person or represented by proxy, or
(ii) more than 50% of such outstanding shares of the Fund entitled to vote
thereon. The New Advisory Agreement was approved by the Board after
consideration of all factors which they determined to be relevant to their
deliberations, including those discussed above. The Board also determined to
submit the New Advisory Agreement for consideration by the stockholders of the
Fund.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "FOR" APPROVAL
OF THE NEW ADVISORY AGREEMENT INCLUDING THE PAYMENT OF FEES AND EXPENSES OF THE
ADVISER FROM APRIL 1, 1999 TO THE DATE THE NEW ADVISORY AGREEMENT IS APPROVED BY
THE FUND'S STOCKHOLDERS.
12
<PAGE>
MISCELLANEOUS
Proxies will be solicited by mail and may be solicited in person or by
telephone or telegraph by officers of the Fund or personnel of DSTC. The Fund
has retained Corporate Investor Communications, Inc. to assist in the proxy
solicitation. The fee for such services is estimated at U.S. $3,500, plus
reimbursement of expenses. The expenses connected with the solicitation of these
proxies and with any further proxies which may be solicited by the Fund's
officers or agents in person, by telephone or by telegraph will be borne by the
Fund. The Fund will reimburse banks, brokers, and other persons holding the
Fund's shares registered in their names or in the names of their nominees for
their expenses incurred in sending proxy material to and obtaining proxies from
the beneficial owners of such shares.
It is important that you promptly submit your vote as a stockholder of the
Fund. In the event that sufficient votes in favor of any proposal set forth in
the Notice of this meeting are not received by September 17, 1999, the persons
named as attorneys in the enclosed proxy may propose one or more adjournments of
the meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of the holders of a majority of the shares present
in person or by proxy at the session of the meeting to be adjourned. The persons
named as attorneys in the enclosed proxy will vote in favor of such adjournment
those proxies which they are entitled to vote in favor of the proposal for which
further solicitation of proxies is to be made. They will vote against any such
adjournment those proxies required to be voted against such proposal. The costs
of any such additional solicitation and of any adjourned session will be borne
by the Fund.
STOCKHOLDER PROPOSALS
Any proposal by a stockholder of the Fund intended to be included in the
proxy materials for the year 2000 meeting of stockholders of the Fund must be
received by the Fund, c/o Daiwa Securities Trust Company, One Evertrust Plaza,
9th Floor, Jersey City, New Jersey 07302, not later than December 10, 1999.
The Fund's By-laws require that any proposal by a stockholder of the Fund
intended to be presented at a meeting of stockholders must be received by the
Fund, c/o Daiwa Securities Trust Company, One Evertrust Plaza, 9th Floor, Jersey
City, New Jersey 07302, not earlier than 90 days prior and not later than 60
days prior to such meeting of stockholders.
By order of the Board of Directors,
Daniel F. Barry
SECRETARY
One Evertrust Plaza
Jersey City, New Jersey 07302
August 9, 1999
13
<PAGE>
ANNEX A
THE THAI CAPITAL FUND, INC.
INVESTMENT CONTRACT
MAY 21, 1990
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
TITLE PAGE
- ----------------------------------------------------------------------------------------------------------- -----
<S> <C>
1. Definitions............................................................................................. 1
2. Establishment of the Investment Plan.................................................................... 2
3. Basic Obligations and Rights of the Thai Manager........................................................ 3
4. Enforcement by Unitholder and the Thai Manager.......................................................... 5
5. Units................................................................................................... 5
6. Calculation of Net Asset Value.......................................................................... 5
7. Investment Objective, Policies and Limitations.......................................................... 6
8. Duration, Changes in Manager or Custodian, and Termination.............................................. 6
9. Accounts and Statements................................................................................. 8
10. Distributions.......................................................................................... 9
11. Payments............................................................................................... 10
12. Currency............................................................................................... 10
13. Information and Notices................................................................................ 10
14. Amendments............................................................................................. 11
15. Governing Law, Jurisdiction; Language and Miscellaneous................................................ 11
Exhibit A.............................................................................................. 13
Exhibit B.............................................................................................. 14
Exhibit C.............................................................................................. 15
</TABLE>
<PAGE>
Investment Contract (the "Investment Contract") dated as of May 21, 1990 by
and among THE MUTUAL FUND COMPANY LIMITED ("MFC"), a Thai limited company, with
its principal place of business located at IFCT building, 1770 New Petchburi
Road, Bankok 10310, Thailand, and THE THAI CAPITAL FUND, INC. (the
"Unitholder"), a Maryland corporation, with its principal place of business
located at 800 Scudders Mill Road, Plainsboro, New Jersey 08536.
1. DEFINITIONS
In this Investment Contract, the following terms have the following
meanings:
"ADVISORY SECTIONS" means Sections 3.1; 3.3; 3.4; 3.8; Article 8 (other than
Section 8.2(b)(Y)) and Section 8.5, insofar as such Section relates to
appointment of liquidators under Thai law; and Article 14 (other than Section
14.1(b)(Y));
"ASSETS" means all assets and rights held by the Investment Plan during its
life, including but not limited to Thai Securities;
"AUDITORS" has the meaning ascribed thereto in Section 9.4(a);
"BENEFICIAL CERTIFICATE" has the meaning ascribed thereto in Section 5.2;
"BOARD OF DIRECTORS" means the Board of Directors of the Unitholder;
"BOT" means the Bank of Thailand or any successor agency or institution of
the Royal Thai Government from time to time authorized by law to supervise
mutual funds in Thailand;
"BUSINESS DAY" means a day on which the SET and the New York Stock Exchange
are both open for business;
"CUSTODIAN" means The Bangkok Bank Limited or its successors or permitted
assigns under the Thai Custody Contract;
"DISTRICT COURT" has the meaning ascribed thereto in Section 15.3;
"DOLLARS" or "$" or "US $" means U.S. dollars;
"EFFECTIVE DATE" means the date on which the Registration Statement is first
declared effective by the SEC under the United States Securities Act of 1933, as
amended;
"FINANCIAL STATEMENTS" has the meaning ascribed thereto in Section 9.2;
"FUNDS" means the Investment Plan and the Unitholder, jointly and severally,
as if such entities were one entity;
"INVESTMENT PLAN" means the investment project or Krongkarn known in
Thailand as the Thai Capital Fund and established by this Agreement;
"INVESTMENT COMPANY ACT" means the United States Investment Company Act of
1940, as amended;
"REGISTRATION STATEMENT" means the Unitholder's registration statement on
Form N-2 filed with the SEC;
"SEC" means the United States Securities and Exchange Commission;
1
<PAGE>
"SECURITIES" means all securities, instruments and rights held by the
Investment Plan pursuant to this Investment Contract;
"SET" has the meaning ascribed thereto in Section 6.2(a);
"SUPREME COURT" has the meaning ascribed thereto in Section 15.3;
"THAI CUSTODY CONTRACT" means the Custody Contract among the Unitholder, the
Manager and the Custodian in respect of the Investment Plan;
"THAI MANAGER" means MFC or any successor thereto permitted under Thai law
and the U.S. Law;
"THAI NAV" has the meaning ascribed thereto in Section 6.1;
"THAI SECURITIES" means all Baht denominated securities and instruments held
by the Investment Plan pursuant to this Agreement;
"UNDERWRITING AGREEMENT" means collectively the Underwriting Agreements in
respect of the Unitholder's shares of common stock ($0.01 par value) to be
offered in the United States and elsewhere executed on or after the date hereof;
"UNITED STATES" means the United States of America (including the States and
the District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction;
"UNITHOLDER" means the Thai Capital Fund, Inc., a Maryland corporation;
"U.S. GAAP" has the meaning ascribed thereto in Section 6.5;
"U.S. LAW" means applicable United States federal law (including the
Internal Revenue Code, Securities Act of 1933, Securities Exchange Act of 1934,
Investment Company Act of 1940 and the Investment Advisers Act of 1940, each as
from time to time amended) and New York law;
"U.S. SECTIONS" shall mean the Advisory Sections and Sections 2.1 (with
respect to U.S. Law) ; 2.2; 3.6 (except 3.6(b)); 3.7; Article 4 (with respect to
U.S. Law) ; Section 5.3; Article 6 (with respect to U.S. GAAP and U.S. Law);
Article 7 (except 7(2)); Article 9 (other than Sections 9.1(b) (ii) and 9.3);
Article 10; Section 11.1; Article 12; Section 13.B; and Article 15;
"VALUATION DATE" has the meaning ascribed thereto in Section 6.1.
2. ESTABLISHMENT OF THE INVESTMENT PLAN
2.1 The Investment Plan is hereby established as a securities investment
fund with effect on and from the Effective Date under the laws of the
Kingdom of Thailand for the exclusive benefit of the Unitholder. This
Investment Contract, together with the exhibits hereto and the relevant
provisions of the laws and regulations of the Kingdom of Thailand, and,
with respect to the U.S. Sections, U.S. Law alone, shall govern the
relationships, which are contractual relationships, between the Thai
Manager and the Unitholder.
2.2 The Unitholder shall be liable for all liabilities incurred by or on
behalf of the Investment Plan in accordance with the terms of this
Investment Contract, provided, however, that this Section 2.2 shall not
operate to enlarge in any way any liabilities incurred by or on behalf
of the Investment Plan.
2
<PAGE>
3. BASIC OBLIGATIONS AND RIGHTS OF THE THAI MANAGER
3.1 (a) The Thai Manager, as investment manager to the Investment Plan
hereby undertakes and agrees, upon the terms and conditions
herein set forth in this Investment Contract, to manage the
acquisition, holding and disposition of Assets, in accordance
with the investment objectives and policies as set forth in or
contemplated by this Investment Contract and in accordance with
such directions and instructions, if any, as are given by the
Board of Directors and mutually agreed to by the Thai Manager and
the Board of Directors, to pay the permitted expenses of the
Investment Plan set forth in Exhibit B hereto and to prepare and
make available to the Unitholder information and statistical data
in connection therewith.
(b) The Thai Manager, at its own expense, undertakes and agrees (i) to
assist the Funds as they may reasonably request in the conduct of
the Funds' business to the extent the conduct of such business
involves matters of or relates to Thai law, operation of the
Investment Plan or investment of assets of the Investment Plan;
(ii) to maintain or cause to be maintained for the Funds all books
and records required under Thai law and regulations to the extent
that such books and records are not maintained or furnished by the
Thai Custodian or other agents of the Funds; (iii) to furnish at
the Thai Manager's expense for the use of the Funds such office
space and facilities as the Funds may require for their reasonable
needs in Thailand and to furnish at the Thai Manager's expense
clerical services in Thailand related to information, statistical
and investment work for the benefit of the Funds; and (iv) to pay
the reasonable salaries, fees and expenses of such of the Funds'
officers and employees (including the Funds' share of Thai payroll
taxes) and any fees and expenses of such of the Funds' directors
as are directors, officers or employees of the Thai Manager.
(c) (i) Notwithstanding the foregoing, the Thai Manager shall in
discharging its duties under this Section, be entitled to
rely on information provided by the Unitholder's
administrator and on advice from counsel or accountants for
the Unitholder as to compliance with the Unitholder's
investment policies or investment limitations, compliance
with the requirements of the Investment Company Act,
compliance with the requirements of Subchapter M of the
United States Internal Revenue Code of 1986, as amended, or
compliance with any requirement under the rules of the New
York Stock Exchange. The Thai Manager shall have access to
the Unitholder's counsel and accountants.
(ii) The Thai Manager shall not be responsible for maintaining the
Unitholder's books and records except to the extent it is
required under the Investment Advisers Act of 1940 to
maintain such records. The Thai Manager will provide to the
Unitholder's administrator all information in the Thai
Manager's possession about or relating to the Fund and
necessary for the administrator to comply with the
Unitholder's recordkeeping requirements under the Investment
Company Act.
3.2 The Thai Manager agrees to act hereunder in such capacity or capacities
as are necessary or appropriate under Thai law, including with respect
to the establishment of the Investment Plan pursuant to Section 2.1
hereof. It is expressly agreed that the Thai Manager shall hold legal
title to all Assets solely for the account of the Investment Plan for
the
3
<PAGE>
benefit of the Unitholder and that nothing herein shall constitute the
Thai Manager or require it to act as agent, nominee or trustee of the
Unitholder with respect to legal title to Thai Securities. The Thai
Manager shall hold legal title of Assets separate from its own assets,
free and clear of all liens, claims and encumbrances of any party except
as provided by this Investment Contract.
3.3 The Thai Manager shall be entitled to be paid in Baht from the Assets
of the Investment Plan, as full compensation for the services rendered
and expenses borne by the Thai Manager under the Advisory Sections
hereunder, a monthly fee, which accrues weekly and is payable, except as
provided below, within five (5) Bangkok business days of the first day
of each month following the day on which such payment is computed, at an
annual rate equal to 0.60 percent of the net assets of the Investment
Plan of the 0.60 percent per annum management fee payable to the Thai
Manager, 0.50 percent per annum is for the Thai Manager's investment
advisory and asset management services, and 0.10 percent per annum is
for the Thai Manager's administrative services. The value of the accrued
weekly net assets of the Investment Plan for a month shall be determined
as of the close of business in Bangkok on the last SET business day of
each week where such last business day falls within one month. Such fee
shall be payable from the Investment Plan and shall be computed
beginning on the "Closing Date" (as defined in the Underwriting
Agreement) until the termination of this Investment Contract for
whatever reason. For the purposes of this Investment Contract the net
assets of the Investment Plan shall be computed as herein provided.
3.4 The Thai Manager's services hereunder are not to be deemed exclusive
and the Thai Manager is free to render similar services to others.
3.5 The Thai Manager represents and warrants that it is duly (a) registered
and authorized as an investment adviser under the U.S. Investment
Advisers Act of 1940, as amended, and (b) licensed as an investment
manager under the Act on the Undertaking of Finance Business, Securities
Business and Credit Foncier Business, B.E. 2522 (1979) of Thailand, as
amended, and it agrees to use all reasonable efforts to maintain
effective its registration, authorization and license, as the case may
be, until the termination of this Investment Contract.
3.6 Neither the Thai Manager nor any affiliate of the Thai Manager shall
receive any compensation in connection with the placement or execution
of any transaction for the purchase or sale of securities or for the
investment of funds for the account of the Investment Plan, except that
the Thai Manager or the Thai Manager's affiliates may receive a
commission, fee or other remuneration in connection with the sale of
securities to or by the Investment Plan, but only to the extent
permitted under the Investment Company Act.
3.7 The Thai Manager may rely on information reasonably believed by the
Thai Manager to be accurate and reliable, including without limitation
directions or instructions of the Board of Directors pursuant to Section
3.1(a), the information provided by the Unitholder's administrator and
advice of the Unitholder's counsel and accountants. Neither the Thai
Manager, the Thai Manager's officers, directors, employees, agents or
any controlling persons as defined in the Securities Act of 1933 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 Funds in the course
of, connected with or arising out of any services to be rendered
hereunder except by
4
<PAGE>
reason of willful misfeasance, bad faith or gross negligence in the
performance of the Thai Manager's duties or by reason of reckless
disregard on the part of the Thai Manager of the Thai Manager's
obligations and duties under this Investment Contract.
3.8 The Thai Manager shall consult with and review information and advice
provided to it by Daiwa International Capital Management (H.K.) Limited,
and, in the discretion of the Thai Manager, may or may not follow any
such advice.
4. ENFORCEMENT BY UNITHOLDER AND THE THAI MANAGER
4.1 The Unitholder shall have the right at all times to enforce against the
Thai Manager the obligations of the Thai Manager under this Investment
Contract, including but not limited to, the obligation to act for the
benefit of the Unitholder.
4.2 The Thai Manager shall have the right at all times to enforce against
the Unitholder the obligations of the Unitholder under this Investment
Contract.
5. UNITS
5.1 Units shall be issued to the Unitholder against payment therefor with
respect to all transfers of any assets to the Investment Plan. The value
of Units shall, upon the initial transfer of any monies to the
Investment Plan be $10.00 each, provided, however, that the value of
Units shall thereafter be determined in accordance with Article 6 of
this Investment Contract.
5.2 A beneficial certificate (the "Beneficial Certificate") representing
one or more Units, in substantially the form of Exhibit A attached
hereto, shall be issued to the Unitholder in respect of all Units issued
to the Unitholder. The Beneficial Certificate shall be signed and sealed
by the authorised representative(s) of the Thai Manager.
5.3 Units are not transferable. The Thai Manager shall not issue or deliver
a Unit or a Beneficial Certificate to any person other than the
Unitholder. The Unitholder may not transfer or assign Units or
Beneficial Certificate.
6. CALCULATION OF NET ASSET VALUE
6.1 The net asset value of the Assets (the "Thai NAV") at any time shall be
the value of the Assets less the liabilities of the Investment Plan at
such time. The net asset value of Units at any time following the
initial issuance thereof as described in Section 5.1 shall be the Thai
NAV divided by the number of Units issued and outstanding as of such
time. The Thai NAV shall be calculated by the Thai Manager with the
concurrence of the Unitholder's designee at last business day at the
close of each week in Bangkok (a "Valuation Date") as well as when
required for the issue of Units pursuant to Article 5 hereof. The Thai
NAV shall be calculated by reference to the criteria set forth below
(and such other criteria as may be necessary to implement the provisions
of the Investment Company Act).
6.2 The value of Assets held in the Investment Plan shall be determined as
follows:
(a) where the Assets are equity securities listed and traded on the
Securities Exchange of Thailand (the "SET") and SET market
quotations are readily available, at the
5
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last sales price on such exchange on the applicable Valuation
Date or, if there is no sale on such exchange on that date, the
mean between the last current bid and the asked prices;
(b) where the Assets are unlisted equity securities, at the mean
between current bid and asked prices, if any, or if the same are
not available, as determined by the Board of Directors;
(c) short-term investments having a maturity of 60 days at cost with
accrued interest, or discount carried thereon, included in
interest receivable;
(d) other securities as to which market quotations are readily
available shall be valued at their market values; and
(e) all other securities and assets will be taken at fair value in
accordance with procedures determined by the Board of Directors.
6.3 In instances where price cannot be determined in accordance with the
above procedures, or in instances in which the Board of Directors
determines that it is impracticable or inappropriate to determine price
in accordance with the above procedures, the price will be determined in
such manner as the Board of Directors may prescribe.
6.4 There shall be made such allowance (if any) as the Board of Directors
may consider appropriate in the case of any asset which the Board of
Directors considers may not be fully recoverable.
6.5 For purposes of determining the Thai NAV, liabilities shall include the
amount of any fee payable to the Thai Manager hereunder or to the
Custodian under the Thai Custody Contract or other fees and expenses
payable hereunder from the Assets of the Investment Plan. Other
liabilities shall be determined in accordance with United States
generally accepted accounting principles ("U.S. GAAP").
6.6 Notwithstanding anything in this Investment Contract, (a) for purposes
of all reporting required under U.S. Law, the "Unitholder's designee" as
used in this Article 6 shall be Princeton Administrators, Inc., which
shall determine the Thai NAV in Dollars based upon information supplied
by the Thai Manager and/or the Custodian, and (b) for purposes of all
reporting required under Thai law, the Thai Manager shall determine the
Thai NAV in Baht.
7. INVESTMENT OBJECTIVE, POLICIES AND LIMITATIONS
The investment objective, policies and limitations of the Funds will be as
described in Exhibit C subject to revision in accordance with (1) U.S. Law and
(2) Thai law.
8. DURATION, CHANGES IN MANAGER OR CUSTODIAN, AND TERMINATION
8.1 This Investment Contract shall become effective on the Effective Date
hereof. This Investment Contract, other than the Advisory Sections
hereof, shall continue in effect, if not continued in accordance with
applicable U.S. Law and Thai law, until the twenty fifth anniversary of
the Effective Date or until terminated in accordance with Section 8.4.
The Advisory Sections shall continue in effect, if not continued in
accordance with applicable U.S. Law as further provided below, until two
years from the date hereof. If not sooner
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terminated, the Advisory Sections shall continue in effect for
successive periods of 12 months each thereafter; provided that each such
continuance shall be specifically approved annually by the vote of a
majority of the Board of Directors who are not parties to this
Investment Contract or interested persons (as such term is defined in
the Investment Company Act) of any such party, cast in person at a
meeting called for the purpose of voting on such approval and (a) either
the vote of a majority of the outstanding voting securities of the
Unitholder, or (b) a majority of the Board of Directors as a whole.
8.2 Notwithstanding anything in this Agreement to the contrary, the
Advisory Sections may be terminated at any time by the Unitholder
without the payment of any penalty upon a vote of a majority of the
Board of Directors or a majority of the outstanding voting securities of
the Unitholder on 60 days' written notice to the Investment Manager. The
Advisory Sections shall automatically terminate (a) in the event of
assignment of this Investment Contract (as such term is defined in the
Investment Company Act); (b) the suspension or revocation of the Thai
Manager's license or status to act as Thai Manager to the Investment
Plan or investment adviser to the Unitholder, under (X) Thai law, or (Y)
U.S. Law, as the case may be. Any notice shall be deemed given when
received by the addressee.
8.3 Upon termination of the Advisory Sections, except as provided by
Section 8.4 hereof, the Unitholder shall, in accordance with (a) U.S.
Law, and (b) Thai law, provide for a successor manager approved by the
Bank of Thailand within three months to execute, as investment manager
under an agreement in substance similar to the Advisory Sections of this
Investment Contract (which may be evidenced by an agreement to become
party to all provisions of this Investment Contract) with all such
changes, however, as the parties thereto shall agree upon.
8.4 This Investment Contract, including the Advisory Sections, shall
terminate if:
(a) There is any transfer, assignment or other disposition of any of
the Unitholder's interest in the Investment Plan, or any delivery
of a Unit or Beneficial Certificate to any person other than the
Unitholder;
(b) The Thai Manager notifies the Unitholder in writing that due to
a change in Thai law, in its opinion further operation of the
Investment Plan in accordance with this Investment Contract is
illegal or infeasible having regard solely to the interests of
the Unitholder;
(c) There has been a suspension of trading for more than 1 day on
the Securities Exchange of Thailand; the declaration by Thailand
authorities of a banking moratorium; or any war, blockade,
embargo, insurrection or armed conflict or escalation of any
thereof involving Thailand or the United States, if in any such
case the Board of Directors determines that termination is in the
best interests of Unitholder;
(d) Termination of the Custodian's appointment pursuant to the Thai
Custody Contract if no successor custodian approved by the Bank
of Thailand is appointed thereunder or otherwise;
(e) A court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Unitholder or the Thai
Manager in any involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or
7
<PAGE>
appoint a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Unitholder or the Thai
Manager, as the case may be or for any substantial part of the
property thereof, or order the winding-up or liquidation of the
affairs thereof;
(f) The Unitholder or the Thai Manager shall commence a voluntary
case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or shall consent to the entry of
an order for relief in an involuntary case under any such law, or
shall consent to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of the Unitholder or the Thai Manager, as
the case may be, or for any substantial part of the property
thereof, or shall make any general assignment for the property
thereof, or shall make any general assignment for the benefit of
creditors thereof, or shall fail generally to pay its debts as
they become due; or
(g) Upon the termination of the Advisory Sections if no successor
investment manager is appointed pursuant to Section 8.3; or
(h) At the discretion of the Unitholder, the Thai Manager and the
Board of Directors are unable to reach an agreement regarding any
instructions or directions given by the Board of Directors to the
Thai Manager as provided in Section 3.1(a).
8.5 Upon termination of this Investment Contract pursuant to Section 8.4,
the Investment Plan will be liquidated by a liquidator appointed by the
Thai Manager and agreed to by the Board of Directors, which appointment
will be subject to the approval of the BOT. Such liquidation will in an
orderly manner dispose of Thai Securities which are restricted as to
foreign ownership or which otherwise are not capable of transfer to the
Unitholder and remit the proceeds thereof to the Unitholder and, unless
directed by the Board of Directors otherwise, cause all other Assets of
the Investment Plan to be registered in the name of Unitholder, subject
to compliance with Thai law. To the extent that the Unitholder does not
take action in respect of Sections 5.3 and 8.4(a), (e) and (f) hereof,
the Thai Manager will take all actions necessary to effectuate such
Sections and this Section 8.5.
8.6 This Investment Contract may not be transferred, assigned, sold or in
any matter hypothecated or pledged by any party hereto other than as
permitted by Article 8 hereof.
8.7 As used in this Investment Contract, the phrase "majority of the
outstanding voting securities of the Unitholder" shall mean the
affirmative vote of the holders of a majority of the outstanding voting
securities of the Unitholder.
9. ACCOUNTS AND STATEMENTS
9.1 The Thai Manager shall maintain in its principal office in Bangkok
sufficient accounts and records to enable a complete and accurate view
to be formed by the Unitholder or its designee of the Assets and
liabilities and the income and expenditures of the Investment Plan. Such
accounts shall be kept in form necessary in order to prepare financial
statements (i) pursuant to U.S. GAAP and, (ii) in addition may be kept
in such form and language required by the BOT.
9.2 The Unitholder or its designee shall prepare Financial Statements of
the Funds for successive accounting periods, each accounting period
commencing immediately after the end of
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<PAGE>
the last preceding such accounting period (or in the case of the first
such period from the date of establishment of the Funds) and ending on
December 31 in each year (the first such date being December 31, 1990)
(the "Financial Statements") and shall also prepare such Financial
Statements as of and for the monthly periods ending on the last day of
each calendar month (which monthly reports shall be prepared within ten
business days after the end of each month), in each case in U.S. dollars
on the basis of U.S. GAAP on the respective forms and containing the
information for the time being required by the SEC and the New York
Stock Exchange.
9.3 The Thai Manager shall prepare Financial Statements of the Investment
Plan in the manner required by Thai law and shall make or cause to be
made all reports, publications, notices and filings with respect to the
Investment Plan required by Thai law.
9.4 The Thai Manager and the Unitholder shall:
(a) cause the Financial Statements to be audited in accordance with
U.S. GAAP by an internationally recognized accountancy firm
authorized under the laws of the Kingdom of Thailand and the
regulations of the BOT (the "Auditors"). The initial Auditors
shall be Price Waterhouse. The Thai Manager shall be entitled,
with the prior written approval of the Board of Directors or the
shareholders of the Unitholder, to remove any person or firm of
Auditors and appoint another internationally recognized
accountancy firm to be the Auditors. The Thai Manager shall
ensure that at all times there are such Auditors for the
Investment Plan;
(b) submit the Financial Statements together with the Auditors'
report and such report as the Thai Manager may intend to make to
the Unitholder thereon to the Unitholder and the BOT; and
(c) comply with such requirements as the SEC or BOT may make with
respect to such statements and report.
9.5 FORM OF AUDITOR'S REPORTS. The Auditors' report on the Financial
Statements of the Investment Plan shall be in the form required under Thai
law and the SEC and the New York Stock Exchange and prepared in accordance
with U.S. GAAP. The Thai Manager shall sign all Financial Statements of the
Investment Plan, if requested to do so by the Board of Directors.
10. DISTRIBUTIONS
10.1 The Investment Plan will distribute to the Unitholder, at least once
each year (on such dates as is determined by the Board of Directors),
all or part of the net profit of the Investment Plan for such year.
For this purpose, the net profits of the Investment Plan will be
calculated in Baht and will include dividends and interest paid with
respect to securities, interest on bank deposits, net capital gains
from the sale of securities and any other income arising from the
Investment Plan's operations, less all expenses of the Investment
Plan. Except with respect to payment of expenses as may be further
provided in Section 10.2, the Investment Plan shall not make any
distribution to Unitholder except out of current net profits or
accumulated prior years' net profits not previously distributed, or
otherwise as may be declared in accordance with the direction of the
Board of Directors.
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10.2 Costs and expenses are payable and distributable out of the assets of
the Investment Plan when and as provided in this Investment Contract.
11. PAYMENTS
11.1 Any expenses payable to the Thai Manager or others by the Investment
Plan shall be paid, upon order of the Unitholder in the manner as
instructed by the Unitholder or a person designated by the
Unitholder, provided that the payment by the Thai Manager of expenses
directly incurred in connection with the purchase and sale of
Securities (i.e., brokerage fees and commissions, transfer and stamp
taxes) shall not require the prior order of the Unitholder.
11.2 All payments from the Investment Plan to be made in currencies other
than Baht are subject to Thai law including the Exchange Control law
and regulations thereunder.
12. CURRENCY
Except as otherwise provided in this Investment Contract, the accounts and
records of the Investment Plan, payments into the Investment Plan and payments
out of the Investment Plan shall be made in Baht. Distributions from the
Investment Plan shall be calculated in Baht and then converted into Dollars on
the date of the making of the distribution. The Financial Statements of the
Funds shall be prepared in Dollars, provided, however, that Financial Statements
may also be prepared as provided in Section 9.3 hereof. Currency exchange rates
between Baht and Dollars for purposes of the Investment Plan's accounts and
records shall be determined by the Unitholder or its designee.
13. INFORMATION AND NOTICES
13.1 DOCUMENTS TO BE MADE AVAILABLE; OFFICES
There shall be held available by the Thai Manager for inspection by any
person without charge at the principal office of the Thai Manager in Bangkok at
all reasonable business hours copies of:
(a) this Investment Contract as from time to time amended;
(b) the most current sales prospectus related to shares of the
Unitholder;
(c) all filings made by the Unitholder with the SEC (including
financial statements) for the two latest fiscal years of the
Unitholder or (if less) for all periods since the establishment
of the Unitholder; and
(d) The Thai Manager shall at all times maintain an office or
offices in Bangkok and shall notify the Unitholder in the manner
prescribed by Section 13.B below of any change in the address of
its principal office in Bangkok.
13.2 NOTICES
Except as otherwise provided herein, all notices or other communications to
the respective parties hereto shall be deemed to have been duly made when
delivered by airmail, fax, telex or personal delivery at its address specified
below or to such other address as any of the parties hereto may hereafter
specify to the other in writing.
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For the Manager:
The Mutual Fund Company Limited
IFCT Building
1770 New Petchburi Road
Bangkok 10210, Thailand
For the Unitholder:
The Thai Capital Fund, Inc.
800 Scudders Mill Road
Plainsboro, New Jersey 08536
14. AMENDMENTS
14.1 This Investment Contract shall be capable of amendment only (a) with
the prior mutual agreement of the Unitholder (which, in the case of
the Advisory Sections, shall be obtained in accordance with U.S. Law)
and the Thai Manager, and (b) subject to (X) applicable U.S. Law and
(Y) applicable Thai law, including approval of the BOT.
14.2 Sections 5.3 and 8.4(a), (e) and (f) hereof, in addition to the
requirements of Section 15.1, may not be amended without the consent
of two- thirds of the outstanding voting securities of the
Unitholder.
15. GOVERNING LAW, JURISDICTION; LANGUAGE AND MISCELLANEOUS
15.1 This Investment Contract and the Beneficial Certificate shall be
governed by and construed in accordance with the laws of the Kingdom
of Thailand, provided, however, that all U.S. Sections and all
matters arising out of or relating thereto, or as to whether a
provision is part of U.S. Sections, shall be governed by U.S. Law.
15.2 The parties irrevocably agree that any suit, action or proceeding
against the Unitholder arising out of or relating to this Investment
Contract shall be subject to the non-exclusive jurisdictions of the
United States District Court for the Southern District of New York
and the Supreme Court of the State of New York, New York County, and
irrevocably submit to the jurisdiction of each such Court in
connection with any such suit, action or proceeding. The parties
waive any objection to the laying of venue of any such suit, action
or proceeding in either such Court, and waive any claim that such
suit, action or proceeding has been brought in an inconvenient forum.
The parties irrevocably consent to service of process in connection
with any such suit, action or proceeding by prepaid mail at their
respective addresses as set forth in this Investment Contract.
15.3 The parties further agree that any suit, action or proceeding against
the Thai Manager arising out of or relating to this Investment
Contract may, at the sole and unreviewable option of the Unitholder,
be commenced in the jurisdictions either (i) of the courts of the
Kingdom of Thailand or (ii) of the United States District Court for
the Southern District of New York (the "District Court") or the
Supreme Court of the State of New York, New York County (the "Supreme
Court"). In the event the Unitholder exercises its option to commence
a suit, action or proceeding in either the District Court or the
Supreme Court, the Thai Manager irrevocably submits to the
jurisdiction of each such court in connection with any such suit,
action or proceeding, and the Thai Manager further agrees that,
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in the event the District Court, for whatever reason, declines to
exercise or is determined not to have jurisdiction in connection with
any such suit, action or proceeding, the Unitholder may commence a
subsequent such suit, action or proceeding in the Supreme Court, and
the Thai Manager irrevocably submits to the jurisdiction of the
Supreme Court in connection with any such subsequent suit, action or
proceeding. The Thai Manager waives any object to the laying of venue
of any such suit, action or proceeding in the District Court or the
Supreme Court, and waives any claim that such suit, action or
proceeding has been brought in an inconvenient forum. The Thai
Manager irrevocably consents to service of process in connected with
any such suit, action or proceeding by prepaid mail at its address as
set forth in this investment Contract.
15.4 To the extent that the Thai Manager or Unitholder may now or
hereafter be entitled, in any jurisdiction in which judicial
proceedings may at any time be commenced with respect to this
Investment Contract, to claim for itself or its revenues or
properties any immunity from suit, court jurisdiction, attachment
prior to judgment, attachment in aid of execution of a judgment,
execution of a judgment or from set-off, banker's lien, counterclaim
or any other legal process or remedy with respect to its obligations
under this Investment Contract and/or to the extent that in such
jurisdiction there may be attributed to the Thai Manager or the
Unitholder such an immunity (whether or not claimed), the Thai
Manager and the Unitholder, as the case may be, hereby to the fullest
extent permitted by applicable law irrevocably agrees not to claim,
and hereby to the fullest extent permitted by applicable law
expressly waives, any such immunity, including, without limitation, a
complete waiver of immunity pursuant to the United States Foreign
Sovereign Immunities Act.
15.5 The governing language of this Investment Contract shall be English.
15.6 The headings contained in this Investment Contract are for reference
only and shall not be deemed to limit or affect any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers or representatives thereunto duly
authorized, all as of the date first above written.
<TABLE>
<S> <C> <C>
THE MUTUAL FUND COMPANY LIMITED
By:
------------------------------------------
Name:
Title:
THE THAI CAPITAL FUND, INC.
By:
------------------------------------------
Name:
Title:
</TABLE>
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EXHIBIT A
FORM OF CERTIFICATE
BENEFICIAL CERTIFICATE OF
THE THAI CAPITAL FUND PURSUANT TO
INVESTMENT CONTRACT
dated as of , 1990 (the "Investment Contract")
Unitholder: The Thai Capital Fund, Inc., a Maryland Corporation.
Issue Date of Units:
Issue Date of Certificate:
Total Number of Units represented hereby:
Per Unit Value:
Time and Place of Payment: As described in the Investment Contract.
Remuneration and other fees: As described in the Investment Contract.
Redemption: Only as specifically permitted in the Investment Contract.
Calculation of Net Asset Value: As described in the Investment Contract.
Duration of the Investment Plan: As described in the Investment Contract.
Notices: As described in the Investment Contract.
Pursuant to the Investment Contract which establishes the Investment Plan,
The Mutual Fund Company Limited, as Thai Manager, issues this Beneficial
Certificate subject to all of the terms of the Investment Contract.
<TABLE>
<S> <C>
THE MUTUAL FUND COMPANY LIMITED
By:
----------------------------------------
Name:
Title:
</TABLE>
Seal of The Mutual Fund Company Limited (SEAL)
This Certificate and the interests represented hereby are nontransferable
and may not be held by persons other than The Thai Capital Fund, Inc. This
Certificate and the interests represented hereby are in all respects governed
by, and subject to, the Investment Contract.
* * * * * * *
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EXHIBIT B
PERMITTED EXPENSES OF THE INVESTMENT PLAN
The expenses which the Thai Manager is required and authorized to pay out of
the Assets of the Investment Plan in accordance with Section 3.1 of Article 3
are required to be properly vouched and verified by the auditor of the
Investment Plan and consist of (only):
1. Any expenses properly incurred in the publication of the prospectus of the
Investment Plan;
2. The reasonable costs of printing beneficial certificates representing units
in the Investment Plan;
3. All expenses properly incurred in preparing for the publication in
newspapers of notices required by Thai and other laws;
4. All stamp duties, brokerage fees and other expenses properly incurred in
acquiring and disposing of Assets;
5. All expenses properly incurred in making distributions of income and/or
capital to the Unitholder;
6. Audit fees for the Investment Plan;
7. The fees of the Custodian;
8. Taxes properly payable in relation to income, profits or gains of the
Investment Plan (but not other taxation suffered by the Thai Manager);
9. Interest and other bank charges properly incurred for the account of the
Investment Plan;
10. The fees of any adviser to the Investment Plan whose appointment and
remuneration have been approved in accordance with applicable law;
11. Travelling and out-of-pocket expenses reasonably incurred by the Thai
Manager's representatives attending meetings outside Thailand, which
meetings have been authorized by the Board of Directors or its designee;
12. International communication costs reasonably incurred by the Thai Manager;
13. Expenses incurred in preparing and distributing reports contemplated by
this Investment Contract;
14. Such other expenses as the Board of Directors may approve; and
15. Any amount necessary to indemnify the Thai Manager against any action,
proceeding, claims, costs, demands and expenses which may be brought
against, suffered or incurred by the Thai Manager (other than with respect
to any action, proceeding, claim or demand or on behalf of the Unitholder)
in connection with the performance or non-performance in good faith of its
functions under this Agreement except by reason of wilful misfeasance, bad
faith or gross negligence in the performance of the Thai Manager's duties
or by reckless disregard on the part of the Thai Manager of the Thai
Manager's obligation and duties under the Investment Contract as shall
arise by reason of the fraud, negligence or wilful default of the Thai
Manager or its officers, servants or delegates.
* * * * * * *
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EXHIBIT C
INVESTMENT OBJECTIVE AND POLICIES
AND
INVESTMENT LIMITATIONS
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is long-term capital appreciation which
it seeks through investment primarily in equity securities of Thai companies.
"Equity securities of Thai companies" is defined as ordinary shares, preferred
shares, warrants and convertible debentures or other convertible debt securities
of companies: (i) traded principally on a stock exchange in Thailand or in the
over-the-counter market in Thailand; (ii) that derive 50% or more of their total
revenue from goods produced, sales made or services performed in Thailand; or
(iii) that are organized under the laws of Thailand but not listed or traded on
a stock exchange (provided that any such company is not a start-up and intends
to seek a listing on the SET or other organized stock exchange within a
reasonable period (i.e., one to three years) of the date of such investment).
This objective may not be changed without the approval of the BOT and without
the approval of a majority of the Fund's outstanding voting securities. A
"majority of the Fund's outstanding voting securities" means the lesser of
either (i) 67% of the shares represented at a meeting at which more than 50% of
the outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. There is no assurance that the Fund will achieve its investment
objective.
It is anticipated that under normal circumstances, after the net proceeds of
this offering have been invested under the Investment Plan, at least 75% of the
Fund's total assets will be invested in equity securities of Thai companies. The
remainder of the Fund's assets, under normal circumstances, generally will be
invested, to the extent held under the Investment Plan, in Baht bank deposits,
short-term debt obligations issued or guaranteed by the Thai government and
other short-term Baht-denominated securities, including short- term money market
instruments, and, to the extent held outside the Investment Plan, in U.S. Dollar
bank deposits or U.S. Dollar short-term money market instruments held outside of
Thailand. The purposes of these investments are to provide the Fund with
appropriate liquidity to take advantage of market opportunities and meet cash
needs. After its initial investment period, the Fund intends to be substantially
invested through the Investment Plan in equity securities of Thai companies, but
it may hold up to ten percent of its assets outside the Investment Plan to pay
expenses incurred by the Fund in the United States and as a reserve for
dividends and other distributions to shareholders. Investments in Thai money
market instruments may include short-term Thai government obligations and
Baht-denominated commercial paper, bankers' acceptances, negotiable certificates
of deposit and non-negotiable time deposits. Investments in U.S. Dollar money
market instruments may include U.S. Treasury bills and notes, commercial paper,
bankers' acceptances, negotiable certificates of deposit and non-negotiable time
deposits. Thai government approval of the Investment Plan is subject to the
requirement that, except during the first year of operation of the Investment
Plan and except with special permission thereafter, none of the Investment
Plan's net assets be invested in non-Thai and non-Baht securities and
instruments.
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There is currently no rating system for debt securities in Thailand.
However, the Fund intends to invest only in debt securities of companies that
the Thai Manager believes to be of high quality.
Of that portion of the Fund's assets invested in equity securities of Thai
companies, it is anticipated that at least 75% will be in securities listed on
the SET. The Fund does not intend to emphasize the larger capitalization issues
when investing in securities listed on the SET. The balance of its equity
investments will be in unlisted securities, including securities that are traded
in the Thai over-the-counter market and securities of companies that have
applied to be listed on the SET. The Fund may also invest in securities of
unlisted companies in the later stages of development that have indicated that
they intend to seek (and have reasonable prospects of obtaining) a listing on
the set or other organized exchange, generally within one to three years. The
Fund will not invest in start-up companies. The Fund intends to invest its
assets over a broad spectrum of industries comprising the Thai economy,
including, as conditions warrant from time to time, cement, chemicals and
plastics, construction, electrical/electronics, finance, food, textiles, glass,
rubber, pulp and paper, metal products and machinery, retailing and tourism. In
selecting industries and companies for investment, the Thai Manager will
consider overall growth prospects, competitive position in export markets,
technology, research and development, productivity, labor costs, raw material
costs and sources, profit margins, return on investment, capital resources,
government regulation, management and other factors.
For temporary defensive purposes, e.g., during periods in which changes in
the Thai securities markets, other economic conditions or political conditions
in Thailand warrant, the Fund may invest, without limit, in high quality debt
instruments, such as Thai government securities, or hold cash. The Fund may also
at any time invest its assets held outside of the Investment Plan in U.S. Dollar
money market instruments to pay Fund expenses in the United States and as
reserves for dividends and other distributions to shareholders and in response
to unforeseen circumstances.
The Fund's policy is to purchase and hold securities for long-term capital
appreciation and not to trade in securities for short-term gain, although
volatility of the Thai securities market may make it necessary to engage in some
short-term trading in order to preserve investment gains. The Fund's annual
portfolio turnover rate is not expected to exceed 50%, although in any
particular year market conditions could result in portfolio activity at a
greater or lesser rate than anticipated. The rate of portfolio turnover will not
be a limiting factor when management of the Fund deems it appropriate to
purchase or sell securities for the Fund. The portfolio turnover rate is
calculated by dividing the lesser of sales or purchases of portfolio securities
by the average monthly value of the Fund's portfolio securities, excluding money
market instruments.
INVESTMENT LIMITATIONS
The following investment limitations are fundamental policies of the Fund
and may not be changed without the express approval of the BOT and without the
approval of the holders of a majority of the Fund's outstanding voting
securities as defined above under "Investment Objective and Policies." If a
percentage restriction on investment or use of assets set forth below is adhered
to at the time a transaction is effected, later changes in the percentage
resulting from changing values will not be considered a violation of the
restriction. Also, if the Fund receives from an issuer of Thai securities held
by the Fund subscription rights to purchase securities of that Thai issuer, and
if the Fund exercises such subscription rights at a time when the Fund's
portfolio holdings of securities of that issuer (or that issuer's industry)
would otherwise exceed the limits set forth below (or would, as
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<PAGE>
result of such exercise, exceed those limits), it will not constitute a
violation if, prior to receipt of securities upon exercise of such rights, and
after announcement of such rights, the Fund has sold at least as many shares of
the same class and value as it would receive on exercise of such rights.
The Fund, through the Investment Plan or otherwise, is not permitted to:
(1) Purchase securities on margin, except as set forth in paragraph (3)
below.
(2) Make short sales of securities or maintain a short position in any
security.
(3) Issue senior securities, borrow money or pledge its assets, except that
the Fund may borrow money in an amount not to exceed 10% (calculated at
the lower of cost or current market value) of its total assets (not
including the amount borrowed) (i) to pay any dividends required to be
distributed in order for the Fund to maintain its qualification as a
regulated investment company under the Code or otherwise to avoid having
the Fund be subject to U.S. taxes, (ii) from a bank for temporary or
emergency purposes, (iii) for such short-term credits as may be
necessary for the clearance or settlement of transactions, and (iv) for
repurchases of its common stock. The Fund may pledge its assets to
secure such borrowings. Notwithstanding the above, initial and variation
margin in respect of futures contracts and options thereon and any
collateral arrangements in respect of options on securities or indexes
will not be prohibited by this paragraph (3) or any other investment
restrictions.
(4) Buy and sell any commodities or commodity futures contracts or
commodity options, or real estate or interests in real estate or real
estate mortgages, except that (i) the Fund may buy or sell securities of
companies which invest or deal in commodities or real estate, and (ii)
the Fund may enter into foreign currency and stock index futures
contracts and options thereon and may buy or sell forward currency
contracts.
(5) Make loans, except through the purchase of debt securities consistent
with its investment objective and policies.
(6) Act as underwriter of securities of other issuers except, in connection
with the purchase of securities for the Fund's own portfolio or the
disposition of portfolio securities or of subscription rights thereto,
to the extent that it may be deemed to be an underwriter under
applicable U.S. securities laws.
(7) Make any investment for the purpose of exercising control or
management.
(8) Be operated in breach of Thai laws or the provisions of the Investment
Contract.
Additional Restrictions Imposed by U.S. and Thai Law.
The Fund is not subject to diversification requirements under the 1940 Act.
However, the Fund, and the Investment Plan, are subject to the following
requirements. The Fund and the Investment Plan are not permitted to:
(1) Invest 25% or more of its assets in a single industry. (For this
purpose, the Thai Government and its agencies or instrumentalities will
be considered an industry).
17
<PAGE>
(2) Purchase or hold (i) more than 15% of the total number of shares
outstanding of any Thai limited company, or (ii) more than 15% of all of
the outstanding debentures of any Thai limited company, or (iii) invest
more than 15% of the value of the Investment Plan in the securities of
any single Thai limited company.
(3) Purchase or hold promissory notes issued by a Thai credit foncier
company if the value thereof would exceed 5% of the Investment Plan's
assets.
(4) Purchase or hold promissory notes issued by a Thai credit foncier
company if the total value of promissory notes issued by all Thai
finance companies would exceed 10% of the Investment Plan's assets.
The Fund is also subject to certain requirements under the U.S. Internal
Revenue Code of 1986, as amended with respect to its qualification as a
regulated investment company requirements. Pursuant to the 1940 Act, the Fund
may not invest in securities of Thai companies engaged in the securities
business. The Fund intends to file with the Commission a request for an
exemptive order permitting the Fund to invest in securities of certain Thai
securities companies; however, there is no assurance that such relief will be
granted. The Fund believes that securities of Thai companies engaged in the
securities business represent a significant industry group within the Thai
securities market. If the requested exemptive relief is not granted, the Fund
may be adversely affected. To the extent that requirements under Thai law or
U.S. law or other investment limitations described in this paragraph are changed
by applicable law, the Fund may make investments, directly or through the
Investment Plan, in accordance with such changed law.
* * * * * * *
18
<PAGE>
ANNEX B
INTERNATIONAL INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of April 1, 1999, by and between THE THAI CAPITAL FUND,
INC., a Maryland corporation (the "Fund"), and DAIWA SB INVESTMENTS (HK)
LIMITED., a Hong Kong corporation (the "Adviser").
WHEREAS, the Fund is a closed-end, non-diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Fund's investment objective is long-term capital appreciation
which it seeks through investment primarily in the equity securities of Thai
companies; and
WHEREAS, the Fund makes its investments in Thailand through an investment
plan (the "Investment Plan") created under Thai law pursuant to an Investment
Contract, dated May 21, 1990 (the "Investment Contract"), between the Fund and
The Mutual Fund Public Company Limited (the "Manager"); and
WHEREAS, under the Investment Contract the Fund has retained the Manager to
manage its assets held under the Investment Plan; and
WHEREAS, the Fund desires to retain the Adviser to render investment
advisory services to the Fund with respect to its assets held outside of the
Investment Plan and to provide investment advice to the Manager with respect to
the Fund's assets held through the Investment Plan; and
WHEREAS, the Adviser is willing to render such services.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. APPOINTMENT OF ADVISER. (a) The Fund hereby employs the Adviser 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, to:
(i) Act as the investment adviser and to manage the investment and
reinvestment of the assets of the Fund held outside of the Investment Plan
(the "Non-Investment Plan Assets") in accordance with the investment
objectives and policies of the Fund, as set forth in the Fund's Prospectus
(as defined below). In acting as investment adviser for the Fund's
Non-Investment Plan Assets, the adviser shall regularly provide the Fund
with such investment research and advice as the Adviser may from time to
time consider necessary and shall determine from time to time what
securities shall be purchased, sold or exchanged and what portion of the
Fund's Non-Investment Plan Assets shall be held in the various securities in
which it may invest, subject always to the restrictions of the Fund's
Articles of Incorporation and By-Laws, as amended from time to time, the
provisions of the 1940 Act and the Fund's investment objectives, investment
policies and investment limitations, as the same are set forth in the
prospectus (the "Prospectus") of the Fund contained in its registration
statement on Form N-2 filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, and the 1940 Act. Should the
Board of Directors of the Fund at any time make any definite determination
as to investment policy and notify the Adviser thereof, the Adviser 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
Adviser shall take, on behalf of the Fund, all actions which it deems
necessary to implement the investment policies of the Fund applicable to the
Fund's Non-Investment Plan Assets and with respect to the Fund's
Non-Investment Plan Assets to place all
<PAGE>
orders for the purchase or sale of portfolio securities for the Fund with
brokers or dealers selected by it, and in connection therewith, the Adviser
is authorized as agent of the Fund to give instructions to the custodian
from time to time of the Fund's Non-Investment Plan 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 Adviser is directed at all times to seek to obtain for the
Fund the most favorable net results as determined by the Board of Directors
and set forth in the Prospectus. Subject to this requirement and the
provisions of the 1940 Act, the Securities Exchange Act of 1934, and any
other applicable provisions of law, nothing shall prohibit the Adviser from
selecting brokers or dealers with which it or the Fund is affiliated;
(ii) Furnish the Manager with factual information, research reports and
investment recommendations relating to securities of Thai companies and the
Fund's investments held through the Investment Plan. The foregoing
information shall include written and oral reports and analyses and
statistical information as market trends and reports and advice concerning
specific industries, specific Thai companies and specific securities. The
foregoing reports, information and advice shall be used by the Manager in
such manner and for such purposes as the Manager deems appropriate for the
purpose of managing the investments of the Fund held through the Investment
Plan. In that regard, it is acknowledged that the Manager may review all
information and advice it receives from the Adviser and decide on the basis
of the Manger's own analysis, and on the basis of any other information and
advice that the Manager may wish to consider, whether, when, and how to
implement any of the investment advice and recommendations received from the
Adviser;
(iii) Assist the Fund in the management and conduct of its business. In
this connection, the Adviser agrees to (A) 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
the administrator, custodians or other agents of the Fund, (B) furnish at
its own expense for the use of the Fund such office space and facilities as
the Fund may require for its reasonable needs to the extent that the same
are not furnished by the Fund's administrator (C) provide to the Fund's
administrator, on a timely basis, such information as may be necessary or
appropriate for the performance by the administrator of its duties, and (D)
provide such other administrative services relating to the operation of the
Fund, as the Fund may reasonably request;
(iv) Advise the Fund as to the operation of the Investment Plan,
including advice as to the extent to which the Fund's assets should be
invested under the Investment Plan and when such investments should be made,
advice regarding the extent to which distributions should be made from the
Investment Plan and when such distributions should be made and advice
regarding termination of the Investment Plan, if at the time appropriate;
and
(v) Advise the Fund regarding services provided by the Fund's
administrator, custodians, transfer agent or dividend disbursing agent, any
administrator for its dividend reinvestment plan, independent auditors,
legal counsel and other persons providing services to the Fund.
(b) The Adviser accepts such employment and agrees during the term of this
Agreement to render such services, to furnish for the Fund such office
facilities, bookkeeping and other administrative services as may be required
hereunder, to permit any of its offices or employees to serve without
compensation as directors or officers of the Fund if elected to such positions
and to assume the
2
<PAGE>
obligations herein set forth for the compensation herein provided. The Adviser
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. All services to be rendered and facilities to be provided by the
Adviser hereunder shall, at all times, be rendered or provided outside of the
Kingdom of Thailand. Consistent with the foregoing and the provisions of Section
1(a)(ii), but without limiting the effect thereof, the Adviser shall in no event
have discretion to invest or reinvest assets of the Fund held through the
Investment Plan, nor to conclude contracts on behalf of the Manager or the Fund,
including contracts for the purchase or sale of securities held or to be held
under the Investment Plan. It is understood and agreed that the Adviser, by
separate agreements with the Fund, may also serve the Fund in other capacities.
2. COMPENSATION. For the services and facilities described in Section 1,
the Fund will pay to the Adviser at the end of each calendar month (as accrued
weekly), an investment advisory fee in U.S. Dollars computed at an annual rate
of 0.60% of the Fund's average weekly net assets (including both Thai and U.S.
assets). 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 the Agreement is in effect during such month and year,
respectively. Notwithstanding anything to the contrary in this Section 2, the
Adviser shall not be entitled to receive fees for services provided pursuant to
this Agreement for the period from the date of this Agreement to the date on
which this Agreement is approved by the stockholders of the Fund unless and
until the payment of fees and expenses under this Agreement are approved by the
stockholders of the Fund.
3. NON-EXCLUSIVITY OF SERVICES. The services of the Adviser to the Fund
under this Agreement are not to be deemed exclusive, and the Adviser shall be
free to render similar services or other services to others so long as its
services hereunder are not impaired thereby.
4. ALLOCATION OF CHARGES AND EXPENSES. (a) The Adviser 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 under this Agreement, and shall pay all compensation of officers of
the Fund and the fees of all directors of the Fund who are affiliated persons of
the Adviser or its affiliates. Notwithstanding anything to the contrary in this
Section 4(a), the Adviser shall not be entitled to receive reimbursement for its
expenses from the Fund pursuant to this Agreement for the period from the date
of this Agreement to the date on which this Agreement is approved the
stockholders of the Fund unless and until the payment of fees and expenses under
this Agreement are approved by the stockholders of the Fund.
(b) In addition to the fee of the Adviser, the Fund shall assume and pay any
expenses for services rendered by any custodian for the safekeeping of the
Fund's securities or other property (including assets held under the Investment
Plan), for keeping its books of account, for any other charges of any such
custodian, and for calculating the net assets value of the Fund as provided in
the prospectus of the Fund. The Fund shall also assume and pay all other charges
and expenses of its operations, including compensation of the Fund's directors
(other than those affiliated with the Manager or the Adviser), the charges and
expenses of its independent auditors, legal counsel and administrator, any
transfer or dividend disbursing agent, any registrar and any administrator for
its dividend reinvestment plan, the costs of acquiring and disposing of
portfolio securities, interest, if any, on any obligations incurred by the Fund,
the cost of share certificates and of reports, membership dues in the Investment
Company Institute or any similar trade organization, insurance, reports and
notices to
3
<PAGE>
shareholders, other like miscellaneous expenses and all taxes and fees payable
to federal, state or other governmental agencies on account of the registration
of securities issued by the Fund, filing of corporate documents or otherwise.
5. POTENTIAL CONFLICTS OF INTEREST. Subject to applicable statutes and
regulations, it is understood that directors, officers or agents of the Fund are
or may be interested in the Adviser as officers, directors, agents, shareholders
or otherwise, and that the officers, directors, shareholders and agents of the
Adviser may be interested in the Fund as a director, officer or agent or
otherwise.
6. STANDARD OF CARE; INDEMNIFICATION. (a) The Adviser will exercise its
best judgment in rendering the services to be provided by it hereunder. The
Adviser shall not be liable for any error of judgment or of law or for any loss
suffered by the Fund in connection with the matters to which this Agreement
relates, except loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Adviser in the performance of its obligations and
duties or by reason of its reckless disregard of its obligations and duties
under this Agreement.
(b) The Fund agrees to indemnify and hold harmless the Adviser for any
losses, costs and expenses incurred or suffered by the Adviser arising from any
action, proceeding or claims which may be brought against the Adviser in
connection with the performance or nonperformance in good faith of its functions
under this Agreement, except losses, costs and expenses resulting from willful
misfeasance, bad faith or gross negligence in the performance if the Adviser's
duties or from reckless disregard on the part of the Adviser of the Adviser's
obligations and duties under this Agreement.
7. DURATION AND TERMINATION. This Agreement shall become effective on the
date hereof and shall remain in full force for a period of two years from the
date hereof, unless sooner terminated as hereinafter provided. This Agreement
shall continue in force from year to year thereafter, but only as long as such
continuance is specifically approved at least annually in the manner required by
the 1940 Act and the rules and regulations thereunder; provided, however, that
if the continuation of this Agreement is not approved, the Adviser may continue
to serve in such capacity in the manner and to the extent permitted by the 1940
Act and the rules and regulations thereunder.
This Agreement shall automatically terminate in the event of its assignment
and may be terminated at any time without the payment of any penalty by the Fund
or by the Adviser on 60 days' written notice to the other party. The Fund may
effect termination by action of the Board of Directors or by vote of the holders
of a majority of the outstanding voting securities of the Fund.
This Agreement may be terminated at any time without the payment of any
penalty by the Board of Directors or by vote of the holders of a majority of the
outstanding voting securities of the Fund in the event that it shall have been
established by a court of competent jurisdiction that the Adviser or any officer
or director of the Adviser has taken any action which results in a breach of the
covenants of the Adviser set forth herein.
The terms "assignment" and "vote of the holders of a majority of the
outstanding voting securities" shall have the meanings set forth in the 1940 Act
and the rules and regulations thereunder.
Termination of this Agreement shall not affect the right of the Adviser to
receive payments on any unpaid balance of the compensation described in Section
2 earned prior to such termination.
8. SURVIVAL. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder shall not
be thereby affected.
4
<PAGE>
9. NOTICES. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
10. GOVERNING LAW. This Agreement shall be construed in accordance with
applicable federal law and the laws of the State of New York.
11. MISCELLANEOUS.
(a) The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect.
(b) Terms not defined herein shall have the meaning set forth in the
Prospectus.
(c) This Agreement may be executed simultaneously 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.
(d) This Agreement may be amended, changed, modified or altered only by a
written agreement signed by the parties hereto.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to
be executed as of the day and year first above written.
<TABLE>
<S> <C>
THE THAI CAPITAL FUND, INC.
By:
-------------------------------------------
Name:
Title:
DAIWA SB INVESTMENTS (HK) LIMITED
By:
-------------------------------------------
Shunsuke Omae
Director
</TABLE>
5
<PAGE>
SKU# TCFCM-PS-98
<PAGE>
THE THAI CAPITAL FUND, INC.
c/o Daiwa Securities Trust Company, One Evertrust Plaza, Jersey
City, New Jersey 07302
Proxy Solicited on Behalf of the Board of Directors for the
Annual Meeting of Stockholders on
September 17, 1999
The undersigned stockholder of The Thai Capital Fund, Inc. (the "Fund") hereby
appoints Daniel F. Barry, Sean J. Peters, John A. Koopman and Judy Runrun Tu, or
any of them, proxies of the undersigned, with full power of substitution, to
vote and act for and in the name and stead of the undersigned at the Annual
Meeting of Stockholders of the Fund to be held at the offices of Daiwa
Securities America, Inc., Financial Square, 32 Old Slip, 14th Floor, New York,
New York 10005, on September 17, 1999 at 9:30 a.m., New York time, and at any
and all adjournments thereof, according to the number of votes the undersigned
would be entitled to cast if personally present.
The shares represented by this proxy will be voted in accordance with the
instructions given by the undersigned stockholder, but if no instructions are
given, this proxy will be voted in favor of proposals 1 through 4 as set forth
in this proxy. In addition, this proxy will be voted, in the discretion of such
proxies, upon such other business as may properly come before the meeting or any
adjournments thereof. The undersigned hereby revokes any and all proxies
heretofore given by the undersigned with respect to such shares. The undersigned
acknowledges receipt of the Proxy Statement dated August 9, 1999.
- -------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND PROMPTLY RETURN THIS PROXY IN THE
ENCLOSED ENVELOPE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) on the books of the Fund. Joint
owners should each sign. Trustees and other fiduciaries should indicate the
capacity in which they sign, and where more than one name appears, a majority
must sign. If a corporation, this signature should be that of an authorized
officer who should indicate his or her title.
- -------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- --------------------------------- --------------------------------
- --------------------------------- --------------------------------
- --------------------------------- --------------------------------
- -------------------------------------------------------------------------------
<PAGE>
<TABLE>
<S><C>
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
- --------------------------------------------------------------- The Board of Directors recommends a vote FOR Proposals
THE THAI CAPITAL FUND, INC. 1 through 4 below.
- ---------------------------------------------------------------
For All With- For All
1. Election of two Class II Nominees hold Except
directors to serve for / / / / / /
a term expiring on the date
on which the Annual Meeting
of Stockholders is held in
the year 2002, and the
election of one Class III
director to serve for
a term expiring on the
date on which the Annual
Meeting of Stockholders is
held in the year 2000.
CLASS II: Austin C. Dowling, Virabongsa Ramangkura
CLASS III: Masayasu Ohi
NOTE: If you do not wish your shares voted "For" a
particular nominee, mark the "For All Except" box and strike
a line through the name of the nominee in the list above.
CONTROL NUMBER:
For Against Abstain
2. The ratification of the / / / / / /
selection of
PricewaterhouseCoopers LLP
as independent accountants
of the Fund for its fiscal
year ending December 31, 1999.
3. The approval of the new / / / / / /
Investment Management
Agreement between the Fund
and Thai Farmers Asset
Management Company.
4. The approval of the new / / / / / /
Investment Advisory
Agreement between the Fund
and Daiwa SB Investments
(HK) Limited ("DSBI HK"),
including the payment of fees and
expenses of DSBI HK from
April 1, 1999 to the date the new
Investment Advisory Agreement
-------------- is approved by the Fund's
Please be sure to sign and date this Proxy. Date stockholders.
- ---------------------------------------------------------------
Mark box at right if an address change or / /
comment has been noted on the reverse
side of this card.
- ---------Stockholder sign here------------Co-owner sign here--- RECORD DATE SHARES:
</TABLE>
