DISTRIBUTION AGREEMENT
March __, 1996
Counsellors Securities Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
This is to confirm that, in consideration of the agreements
hereinafter contained, the undersigned, Warburg, Xxxxxx Growth & Income Fund,
Inc. (the "Fund"), an open-end, non-diversified, management investment company
organized as a corporation under the laws of the State of Maryland, has agreed
that Counsellors Securities Inc. ("Counsellors Securities") shall be, for the
period of this Agreement, the distributor of shares of common stock of the Fund,
par value $.001 per share other than those designated Common Stock - Series 1.
The common stock not designated Common Stock - Series 1 or the Advisor Shares
shall be referred to as the "Common Shares", and the common stock designated the
Advisor Shares shall be referred to as the "Advisor Shares."
1. Services as Distributor
1.1 Counsellors Securities will act as agent for the
distribution of the Common Shares and Advisor Shares covered by the Fund's
registration statement on Form N-1A, under the Securities Act of 1933, as
amended (the "1933 Act"), and the Investment Company Act of 1940, as amended
(the "1940 Act") (the registration statement, together with the prospectuses
(the "prospectus") and statement of additional information (the "statement of
additional information") included as part of the registration statement, any
amendments to the registration statement, and any supplements to, or material
incorporated by reference into the prospectus or statement of additional
information, being referred to collectively in this Agreement as the
"registration statement").
1.2 Counsellors Securities agrees to use appropriate efforts
to solicit orders for the sale of the Common Shares and Advisor Shares at such
prices and on the terms and conditions set forth in the registration statement
and will undertake such advertising and promotion as it believes is reasonable
in connection with such solicitation.
1.3 All activities by Counsellors Securities as distributor of
the Common Shares and Advisor Shares shall comply with all applicable laws,
rules and regulations, including, without limitation, all rules and regulations
made or adopted by the Securities and Exchange Commission (the "SEC") or by any
securities association registered under the Securities Exchange Act of 1934.
Counsellors Securities shall not be deemed to have violated any state securities
laws if it has acted in good faith and in accordance with any Blue Sky Report
(as defined below) provided to it by the Fund from time to time.
1.4 Counsellors Securities agrees to (a) provide one or more
persons during normal business hours to respond to telephone questions
concerning the Fund and its performance, (b) provide prospectuses of other funds
advised by Warburg, Xxxxxx Counsellors, Inc. to shareholders considering
exercising the exchange privilege and (c) perform such other services as are
described in the registration statement and in the Distribution Plan (with
respect to Advisor Shares, the "Distribution Plan"), adopted by the Fund
pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1") to be performed by
Counsellors Securities including, without limitation, distributing and receiving
subscription order forms and receiving written redemption requests.
1.5 Pursuant to and in accordance with the Distribution Plan,
Counsellors Securities may enter into agreements in a form approved by the
Fund's governing board with institutional shareholders of record,
broker-dealers, financial institutions, depository institutions, retirement
plans and other financial intermediaries ("Institutions") who provide certain
services in connection with Advisor Shares. The Fund will pay Institutions
pursuant to the Distribution Plan either directly out of its own assets or
through Counsellors Securities.
1.6 Counsellors Securities acknowledges that, whenever in the
judgment of the Fund's officers such action is warranted for any reason,
including, without limitation, market, economic or political conditions, those
officers may decline to accept any orders for, or make any sales of, the Common
Shares Advisor Shares until such time as those officers deem it advisable to
accept such orders and to make such sales.
1.7 Except as set forth in Section 1.5, Counsellors Securities
will act only on its own behalf as principal should it choose to enter into
selling agreements with selected dealers or others.
1.8 Counsellors Securities will transmit any orders received
by it for purchase or redemption of the Common Shares and Advisor Shares to
State Street Bank and Trust Company ("State Street"), the Fund's transfer and
dividend disbursing agent, or its successor of which Counsellors Securities is
notified in
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writing. The Fund will promptly advise Counsellors Securities of the
determination to cease accepting orders or selling Common Shares or Advisor
Shares or to recommence accepting orders or selling Common Shares or Advisor
Shares. The Fund (or its agent) will confirm orders for Common Shares and
Advisor Shares placed through Counsellors Securities upon their receipt, or in
accordance with any exemptive order of the SEC, and will make appropriate book
entries pursuant to the instructions of Counsellors Securities. Counsellors
Securities agrees to cause payment for Common Shares and Advisor Shares and
instructions as to book entries to be delivered promptly to the Fund (or its
agent).
1.9 The outstanding Common Shares and Advisor Shares are
subject to redemption as set forth in the prospectus. The price to be paid to
redeem the Common Shares and Advisor Shares will be determined as set forth in
the prospectus.
1.10 Counsellors Securities will prepare and deliver reports
to the Treasurer of the Fund on a regular, at least quarterly, basis, showing
the distribution expenses incurred pursuant to this Agreement and the
Distribution Plan adopted by the Fund pursuant to Rule 12b-1 and the purposes
therefor, as well as any supplemental reports as the Directors from time to time
may reasonably request.
1.11 Counsellors Securities shall furnish, at its expense and
without cost to the Fund, the services of personnel to the extent that such
services are required to carry out its obligations under this Agreement.
Counsellors Securities shall also bear the expenses of any promotional or sales
literature used by it or furnished by it in connection with the public offering
of the Fund's shares, the expenses of printing (exclusive of typesetting) and
distributing prospectuses and statements of additional information to
prospective shareholders, the expense of advertising in connection with the
public offering of the Fund's shares and all legal expenses in connection with
the foregoing. The Fund assumes and shall pay or cause to be paid all other
expenses of the Fund, including the fees provided in paragraph 1.5.
2. Duties of the Fund
2.1 The Fund agrees at its own expense to execute any and all
documents, to furnish any and all information and to take any other actions that
may be reasonably necessary in connection with the qualification of the Common
Shares and Advisor Shares for sale in those states that Counsellors Securities
may designate. The Fund shall not, however, be required to qualify as a foreign
business entity in any jurisdiction nor effect any modification of its policies
or practices in order to qualify in any jurisdiction without the approval of the
Fund's Directors. The Fund's officers, subject to the direction of the Board and
with the advice of Counsellors Securities, shall determine
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whether it is desirable to qualify or continue to offer shares in any
jurisdiction. Counsellors Securities shall have no obligation to assist in the
qualification of shares in any jurisdiction or in the maintenance of any
qualification, other than an obligation to serve as registered agent to the Fund
and execute required filings.
2.2 The Fund shall furnish from time to time, for use in
connection with the sale of the Common Shares and Advisor Shares, such
informational reports with respect to the Fund and the Common Shares and Advisor
Shares as Counsellors Securities may reasonably request, all of which shall be
signed by one or more of the Fund's duly authorized officers; and the Fund
warrants that the statements contained in any such reports, when so signed by
one or more of the Fund's officers, shall be true and correct. The Fund shall
also furnish Counsellors Securities upon request with: (a) annual audits of the
Fund's books and accounts made by independent public accountants regularly
retained by the Fund, (b) semiannual unaudited financial statements pertaining
to the Fund, (c) quarterly earnings statements prepared by the Fund, (d) a
monthly itemized list of the securities held by the Fund, (e) monthly balance
sheets as soon as practicable after the end of each month, (f) a survey
indicating the states and jurisdictions in which each class of Fund shares is
qualified for sale or exempt from the requirements of the securities laws of
such state or jurisdiction and the amounts of shares that may be sold in such
states and jurisdictions (the "Blue Sky Report"), and (g) from time to time such
additional information regarding the Fund's financial condition as Counsellors
Securities may reasonably request.
3. Representations and Warranties
The Fund represents to Counsellors Securities that all
registration statements, prospectuses and statements of additional information
filed by the Fund with the SEC under the 1933 Act and the 1940 Act with respect
to the Common Shares and/or Advisor Shares have been carefully prepared in
conformity with the requirements of the 1933 Act, the 1940 Act and the rules and
regulations of the SEC thereunder. As used in this Agreement the terms
"registration statement", "prospectus" and "statement of additional information"
shall mean any registration statement, prospectus and statement of additional
information filed by the Fund with respect to the Common Shares and/or Advisor
Shares with the SEC and any amendments and supplements thereto which at any time
shall have been filed with the SEC. The Fund represents and warrants to
Counsellors Securities that any registration statement with respect to the
Common Shares and/or Advisor Shares, or prospectus and statement of additional
information contained therein, when such registration statement becomes
effective, will include all statements required to be contained therein in
conformity with the 1933 Act, the 1940 Act and the rules and regulations of the
SEC; that all statements of fact contained in any registration statement with
respect to the
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Common Shares and/or Advisor Shares, prospectus or statement of additional
information will be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any prospectus or
statement of additional information with respect to the Common Shares and/or
Advisor Shares when such registration statement becomes effective will include
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
to a purchaser of the Common Shares and/or Advisor Shares. Counsellors
Securities may, but shall not be obligated to, propose from time to time such
amendment or amendments to any registration statement and such supplement or
supplements to any prospectus or statement of additional information as, in the
light of future developments, may, in the opinion of Counsellors Securities'
counsel, be necessary or advisable. If the Fund shall not propose such amendment
or amendments and/or supplement or supplements within fifteen (15) days after
receipt by the Fund of a written request from Counsellors Securities to do so,
Counsellors Securities may, at its option, terminate this Agreement. The Fund
shall not file any amendment to any registration statement or supplement to any
prospectus or statement of additional information without giving Counsellors
Securities reasonable notice thereof in advance; provided, however, that nothing
contained in this Agreement shall in any way limit the Fund's right to file at
any time such amendments to any registration statement and/or supplements to any
prospectus or statement of additional information with respect to the Common
Shares and/or Advisor Shares, of whatever character, as the Fund may deem
advisable, such right being in all respects absolute and unconditional.
4. Indemnification
4.1 The Fund agrees to indemnify, defend and hold Counsellors
Securities, its several officers and directors, and any person who controls
Counsellors Securities within the meaning of Section 15 of the 1933 Act, free
and harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims, demands
or liabilities and any counsel fees incurred in connection therewith) which
Counsellors Securities, its officers and directors, or any such controlling
person, may incur under the 1933 Act, the 1940 Act or common law or otherwise,
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any registration statement, any prospectus or any
statement of additional information with respect to the Common Shares and/or
Advisor Shares, or arising out of or based upon any omission or alleged omission
to state a material fact required to be stated in any registration statement,
any prospectus or any statement of additional information with respect to the
Common Shares and/or Advisor Shares, or necessary to make the statements in any
of them not misleading; provided, however, that the Fund's agreement to
indemnify Counsellors Securities, its officers or directors, and
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any such controlling person shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of or based upon any statements or
representations made by Counsellors Securities or its representatives or agents
other than such statements and representations as are contained in any
registration statement, prospectus or statement of additional information with
respect to the Common Shares and/or Advisor Shares and in such financial and
other statements as are furnished to Counsellors Securities pursuant to
paragraph 2.2 hereof; and further provided that the Fund's agreement to
indemnify Counsellors Securities and the Fund's representations and warranties
hereinbefore set forth in paragraph 3 shall not be deemed to cover any liability
to the Fund or its shareholders to which Counsellors Securities would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties, or by reason of Counsellors Securities' reckless
disregard of its obligations and duties under this Agreement ("disabling
conduct") or from error of judgment, mistake of law or any negligent act or
omission by Counsellors Securities.
Indemnification shall be made only following: (i) a final
decision on the merits by a court or other body before whom the proceeding was
brought that Counsellors Securities was not liable by reason of disabling
conduct, error of judgment, mistake of law or any negligent act or omission or
(ii) in the absence of such a decision, a reasonable determination, based upon a
review of the facts, that Counsellors Securities was not liable by reason of
disabling conduct, error of judgment, mistake of law or any negligent act or
omission by (a) the vote of a majority of a quorum of directors of the Fund who
are neither "interested persons" of the Fund nor parties to the proceeding
("disinterested non-party directors") or (b) an independent legal counsel in a
written opinion. Counsellors Securities, its officers, directors and control
persons shall be entitled to advances from the Fund for payment of the
reasonable expenses incurred by it or them in connection with the matters as to
which it or they are seeking indemnification in the manner and to the fullest
extent permissible under the Maryland General Corporation law. Counsellors
Securities shall provide to the Fund a written affirmation of its good faith
belief that the standard of conduct necessary for indemnification by the Fund
has been met and a written undertaking to repay any such advance if it should
ultimately be determined that the standard of conduct has not been met. In
addition, at least one of the following additional conditions shall be met: (a)
Counsellors Securities shall provide a security in form and amount acceptable to
the Fund for its undertaking; (b) the Fund is insured against losses arising by
reason of the advance; or (c) a majority of a quorum of disinterested non-party
directors, or independent legal counsel selected by the disinterested directors,
in a written opinion, shall have determined, based on a review of facts readily
available to the Fund at the time the advance is proposed to be
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made, that there is reason to believe that Counsellors Securities will
ultimately be found to be entitled to indemnification.
The Fund's agreement to indemnify Counsellors Securities, its
officers and directors, and any such controlling person, as aforesaid, is
expressly conditioned upon the Fund's being notified of any action brought
against Counsellors Securities, its officers or directors, or any such
controlling person, such notification to be given by letter or by telegram
addressed to the Fund at its principal office in New York, New York and sent to
the Fund by the person against whom such action is brought, within ten (10) days
after the summons or other first legal process shall have been served. The
failure to so notify the Fund of any such action shall not relieve the Fund from
any liability that the Fund may have to the person against whom such action is
brought by reason of any such untrue or alleged untrue statement or omission or
alleged omission otherwise than on account of the Fund's indemnity agreement
contained in this paragraph 4.1. The Fund's indemnification agreement contained
in this paragraph 4.1 and the Fund's representations and warranties in this
Agreement shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of Counsellors Securities, its officers and
directors, or any controlling person, and shall survive the delivery of any of
the Fund's shares. This agreement of indemnity will inure exclusively to
Counsellors Securities' benefit, to the benefit of its several officers and
directors, and their respective estates, and to the benefit of the controlling
persons and their successors. The Fund agrees to notify Counsellors Securities
promptly of the commencement of any litigation or proceedings against the Fund
or any of its officers or directors in connection with the issuance and sale of
any of the Common Shares and/or Advisor Shares.
4.2 Counsellors Securities agrees to indemnify, defend and
hold the Fund, its several officers and directors, and any person who controls
the Fund within the meaning of Section 15 of the 1933 Act, free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the costs of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) that the
Fund, its officers or directors or any such controlling person may incur under
the 1933 Act, the 1940 Act or common law or otherwise, but only to the extent
that such liability or expense incurred by the Fund, its officers or directors
or such controlling person resulting from such claims or demands shall arise out
of or be based upon (a) any unauthorized sales literature, advertisements,
information, statements or representations or wrongful sales activities of
Counsellors Securities or its registered representatives or (b) any untrue or
alleged untrue statement of a material fact contained in information furnished
in writing by Counsellors Securities to the Fund specifically for use in the
registration statement and used in the answers to any of the items of the
registration statement
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or in the corresponding statements made in the prospectus or statement of
additional information, or shall arise out of or be based upon any omission or
alleged omission to state a material fact in connection with such information
furnished in writing by Counsellors Securities to the Fund and required to be
stated in such answers or necessary to make such information not misleading.
Notwithstanding anything contained herein to the contrary, Counsellors
Securities shall not be responsible to the Fund for and shall not indemnify the
Fund, its officers, directors or controlling persons from and against any
claims, demands, liabilities and expenses arising solely as a result of actions
taken or omitted to be taken in good faith reliance on, and in conformity with,
the Blue Sky Report.
Counsellors Securities shall also indemnify and hold harmless
the Fund, its officers and directors and persons who control the Fund within the
meaning of Section 15 of the 1933 Act for any liability to the Fund or to the
holders of shares by reason of Counsellors Securities' disabling conduct. The
Fund, its officers, directors and control persons shall be entitled to advances
from Counsellors Securities for payment of the reasonable expenses incurred by
it or them in connection with the matters as to which it or they are seeking
indemnification in the manner and to the fullest extent permissible under
Maryland General Corporation law. The Fund shall provide to Counsellors
Securities a written confirmation of its good faith belief that the standard of
conduct necessary for indemnification by Counsellors Securities has been met and
a written undertaking to repay any such advance if it should be determined that
the standard of conduct has not been met. Counsellors Securities' agreement to
indemnify the Fund, its officers and directors, and any such controlling person,
as aforesaid, is expressly conditioned upon Counsellors Securities' being
notified of any action brought against the Fund, its officers or directors, or
any such controlling person, such notification to be given by letter or telegram
addressed to Counsellors Securities at its principal office in New York, New
York and sent to Counsellors Securities by the person against whom such action
is brought, within ten (10) days after the summons or other first legal process
shall have been served. The failure to so notify Counsellors Securities of any
such action shall not relieve Counsellors Securities from any liability that
Counsellors Securities may have to the Fund, its officers or directors, or to
such controlling person by reason of any such untrue or alleged untrue statement
or omission or alleged omission otherwise than on account of Counsellors
Securities' indemnity agreement contained in this paragraph 4.2. Counsellors
Securities agrees to notify the Fund promptly of the commencement of any
litigation or proceedings against Counsellors Securities or any of its officers
or directors in connection with the issuance and sale of any of the Common
Shares and/or Advisor Shares.
4.3 In case any action shall be brought against any
indemnified party under paragraph 4.1 or 4.2, and it shall timely
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notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate in, and, to the extent that it shall wish
to do so, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party. If the indemnifying party opts to assume the defense of
such action, the indemnifying party will not be liable to the indemnified party
for any legal or other expenses subsequently incurred by the indemnified party
in connection with the defense thereof other than (a) reasonable costs of
investigation or the furnishing of documents or witnesses and (b) all reasonable
fees and expenses of separate counsel to such indemnified party if (i) the
indemnifying party and the indemnified party shall have agreed to the retention
of such counsel or (ii) the indemnified party shall have concluded reasonably
that representation of the indemnifying party and the indemnified party by the
same counsel would be inappropriate due to actual or potential differing
interests between them in the conduct of the defense of such action. If the
indemnifying party does not elect to assume the defense of any such action or if
the indemnified party does not reasonably approve of counsel chosen by the
indemnifying party or if separate counsel is authorized pursuant to the
preceding sentence, the indemnifying party will reimburse all indemnified
parties involved in such action for the fees and expenses of only one counsel or
firm retained by such indemnified persons.
In the event that any claim for indemnification is made and,
based on the advice of counsel, there is a reasonable basis for believing that
such indemnification is against public policy as expressed in the 1933 Act, the
1934 Act and/or the 1940 Act, the indemnifying party, at its expense to the
extent permitted by law, will submit to a court of appropriate jurisdiction the
question of whether or not indemnification by it is against public policy as
expressed in the 1933 Act, the 1934 Act and/or the 1940 Act, and the
indemnifying party and the indemnified party will be governed by the final
adjudication of such question.
The indemnification provisions contained in this Agreement and
the representations and warranties in this Agreement shall remain operative and
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party and shall survive the sale of any of the shares made
pursuant to this Agreement. This agreement of indemnity will inure exclusively
to the benefit of the indemnified parties, and to the extent permitted by the
1940 Act or any other applicable law consistent with the 1940 Act to the benefit
of any of their successors and assigns. The indemnified party agrees promptly to
notify the indemnifying party of the commencement of any litigation or
proceeding against the former.
5. Effectiveness of Registration
None of the Common Shares or Advisor Shares shall be offered
by either Counsellors Securities or the Fund under any of
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the provisions of this Agreement and no orders for the purchase or sale of the
Common Shares or Advisor Shares shall be accepted by the Fund if and so long as
the effectiveness of the registration statement shall be suspended under any of
the provisions of the 1933 Act or if and so long as the prospectus is not on
file with the SEC; provided, however, that nothing contained in this paragraph 5
shall in any way restrict or have an application to or bearing upon the Fund's
obligation to repurchase its shares from any shareholder in accordance with the
provisions of the prospectus or statement of additional information.
6. Notice to Counsellors Securities
The Fund agrees to advise Counsellors Securities immediately
in writing:
(a) of any request by the SEC for amendments to the
registration statement, prospectus or statement of additional
information then in effect with respect to the Common Shares and/or
Advisor Shares or for additional information;
(b) in the event of the issuance by the SEC of any
stop order suspending the effectiveness of the registration statement,
prospectus or statement of additional information then in effect with
respect to the Common Shares and/or Advisor Shares or the initiation of
any proceeding for that purpose;
(c) of the happening of any event that makes untrue
any statement of a material fact made in the registration statement,
prospectus or statement of additional information then in effect with
respect to the Common Shares and/or Advisor Shares or that requires the
making of a change in such registration statement, prospectus or
statement of additional information in order to make the statements
therein not misleading; and
(d) of all actions of the SEC with respect to any
amendment to any registration statement, prospectus or statement of
additional information with respect to the Common Shares or Advisor
Shares which may from time to time be filed with the SEC.
7. Term of Agreement
This Agreement shall continue until April 17, 1997 with
respect to each of the Common Shares and Advisor Shares, and thereafter shall
continue automatically for successive annual periods ending on April 17th of
each year, provided such continuance is specifically approved at least annually
by (a) a vote of a majority of the Fund's Board of Directors or (b) a vote of a
majority (as defined in the 0000 Xxx) of each of the
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outstanding Common Shares and Advisor Shares, respectively, provided that the
continuance is also approved by a vote of a majority of the Fund's Directors who
are not interested persons (as defined in the 0000 Xxx) of the Fund and who have
no direct or indirect financial interest in the operation of the Distribution
Plan, in this Agreement or in any agreement related to the Distribution Plan
("Qualified Directors"), by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable with respect to
the Common Shares or the Advisor Shares without penalty (a) on sixty (60) days'
written notice, by a vote of a majority of the Fund's Qualified Directors or by
vote of a majority (as defined in the 0000 Xxx) of the outstanding Common Shares
or Advisor Shares, as applicable, or (b) on ninety (90) days' written notice by
Counsellors Securities. This Agreement will also terminate automatically in the
event of its assignment (as defined in the 1940 Act).
8. Amendments
All material amendments to this Agreement must be approved by
vote of the Fund's Board of Directors, and by a vote of a majority of the
Qualified Directors, cast in person at a meeting called for the purpose of
voting on the approval.
9. Confidentiality
Counsellors Securities agrees on behalf of itself and its
employees to treat confidentially and as proprietary information of the Fund all
records and other information relative to the Fund and its prior, present or
potential shareholders, and not to use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Fund, which
approval shall not be unreasonably withheld and may not be withheld where
Counsellors Securities may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Fund.
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Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place below indicated,
whereupon it shall become a binding agreement between us.
Very truly yours,
WARBURG, XXXXXX GROWTH & INCOME FUND, INC.
By: _______________________________
Name:
Title:
Accepted:
COUNSELLORS SECURITIES INC.
By: ________________________________
Name:
Title:
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