INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of __________, 1996 between WARBURG, XXXXXX
BALANCED FUND, INC., a Maryland corporation (herein called the "Company"), and
Warburg, Xxxxxx Counsellors, Inc. (herein called the "Investment Advisor").
WHEREAS, the Company is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Company desires to retain the Investment Advisor
to render certain investment advisory services to the Company, and the
Investment Advisor is willing to so render such services,
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained and intending to be legally bound hereby, it is
agreed between the parties hereto as follows:
1. Appointment. The Company hereby appoints the Investment
Advisor to act as its investment advisor for the period and on the terms set
forth in this Agreement. The Investment Advisor accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided.
2. Delivery of Documents. The Company has furnished the
Investment Advisor with copies properly certified or authenticated of each of
the following:
(a) Resolutions of the Board of Directors of the Company
authorizing the appointment of the Investment Advisor and the execution and
delivery of this Agreement;
(b) The Prospectuses and Statement of Additional Information
relating to the Company in effect under the Securities Act of 1933, as amended,
(such prospectus and statement of additional information, as presently in effect
and as it shall from time to time be amended and supplemented, is herein called
the "Prospectus").
The Company will furnish the Investment Advisor from time to
time with copies, properly certified or authenticated, of all amendments of or
supplements to the foregoing, if any.
3. Management of the Company. Subject to the supervision of
the Board of Directors of the Company, the Investment Advisor will provide for
the overall management of the Company including (a) the provision of a
continuous investment program for the Company, including investment research and
management with respect to all securities, investments, cash and cash
equivalents in the Company, (b) the determination from time to time of what
securities and other investments will be purchased, retained or sold by the
Company and (c) the placement from time
to time of orders for all purchases and sales made for the Company. The
Investment Advisor will provide the services rendered by it hereunder in
accordance with the Company's investment objectives, restrictions and policies
as stated in the applicable Prospectus. The Investment Advisor further agrees
that it will render to the Company's Board of Directors such periodic and
special reports regarding the performance of its duties under this Agreement as
the Board may request. The Investment Advisor agrees to provide to the Company
(or its agents and service providers) prompt and accurate data with respect to
the Company's transactions and, where not otherwise available, the daily
valuation of securities in the Company.
4. Brokerage. The Investment Advisor may place orders either
directly with the issuer or with any broker or dealer. In placing orders with
brokers and dealers, the Investment Advisor will attempt to obtain the best
price and the most favorable execution of its orders. In placing orders, the
Investment Advisor will consider the experience and skill of the executing
firm's securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, the Investment
Advisor may, subject to the review of the Board of Directors, select brokers on
the basis of the research, statistical and pricing services they provide to the
Company and other clients of the Investment Advisor. Information and research
received from such brokers will be in addition to, and not in lieu of, the
services required to be performed by the Investment Advisor hereunder. A
commission paid to such brokers may be higher than that which another qualified
broker would have charged for effecting the same transaction, provided that the
Investment Advisor determines in good faith that such commission is reasonable
in terms either of the transaction or the overall responsibility of the
Investment Advisor to the Company and its other clients and that the total
commissions paid by the Company will be reasonable in relation to the benefits
to the Company over the long term. In no instance will the Company's securities
be purchased from or sold to the Company's principal underwriter, the Investment
Advisor, or any affiliated person thereof, except to the extent permitted by
exemptive order of the Securities and Exchange Commission or by applicable law.
5. Conformity with Law; Confidentiality. The Investment
Advisor further agrees that it will comply with all applicable rules and
regulations of all federal regulatory agencies having jurisdiction over the
Investment Advisor in the performance of its duties hereunder. The Investment
Advisor will treat confidentially and as proprietary information of the Company
all records and other information relating to the Company and prior, present or
potential shareholders (except clients of the Investment Advisor and its
affiliates), and will not use such records and information for any purpose other
than performance of
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its responsibilities and duties hereunder, except after prior notification to
and approval in writing by the Company, which approval shall not be unreasonably
withheld and may not be withheld where the Investment Advisor 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 Company.
6. Services Not Exclusive. The investment management and
services rendered by the Investment Advisor hereunder are not to be deemed
exclusive, and the Investment Advisor shall be free to render similar services
to others so long as its services under this Agreement are not impaired thereby.
7. Books and Records. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, the Investment Advisor hereby agrees that all
records which it maintains for the Company are the property of the Company and
further agrees to surrender promptly to the Company any of such records upon the
Company's request. The Investment Advisor further agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
8. Expenses. During the term of this Agreement, the Investment
Advisor will pay all expenses incurred by it in connection with its activities
under this Agreement other than the cost of securities purchased for the Company
(including brokerage commissions, if any), the cost of independent pricing
services used in valuing the Company's securities and fees and expenses of
registering and qualifying shares for distribution under state securities laws.
If the expenses borne by the Company in any fiscal year exceed
the most restrictive applicable expense limitations imposed by the securities
regulations of any state in which the shares of the Company are registered or
qualified for sale to the public, the Investment Advisor shall reimburse the
Company for any excess up to the amount of the fees payable by the Company to it
during such fiscal year pursuant to Paragraph 9 hereof in the same proportion
that its fees bear to the total fees paid by the Company for investment advisory
services; provided, however, that notwithstanding the foregoing, the Investment
Advisor shall reimburse the Company for such excess expenses regardless of the
amount of such fees payable to it during such fiscal year to the extent that the
securities regulations of any state in which the shares of the Company are
registered or qualified for sale so require.
9. Compensation.
For the services provided and the expenses assumed pursuant to
this Agreement, the Company will pay the Investment Advisor, and the Investment
Advisor will accept as full
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compensation therefor a fee, computed daily and payable monthly, at the annual
rate of .90% of the Company's average daily net assets.
10. Limitation of Liability of the Investment Advisor. The
Investment Advisor shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Company in connection with the matters to
which this Agreement relates, except a loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services or a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Investment Advisor in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement ("disabling
conduct"). The Company will indemnify the Investment Advisor against and hold it
harmless from any and all losses, claims, damages, liabilities or expenses
(including reasonable counsel fees and expenses) resulting from any claim,
demand, action or suit not resulting from disabling conduct by the Investment
Advisor. Indemnification shall be made only following: (a) a final decision on
the merits by a court or other body before whom the proceeding was brought that
the Investment Advisor was not liable by reason of disabling conduct or (b) in
the absence of such a decision, a reasonable determination, based upon a review
of the facts, that the Investment Advisor was not liable by reason of disabling
conduct by (i) the vote of a majority of a quorum of directors of the Company
who are neither "interested persons" of the Company nor parties to the
proceeding ("Disinterested Non-Party Directors") or (ii) an independent legal
counsel in a written opinion. The Investment Advisor shall be entitled to
advances from the Company for payment of the reasonable expenses incurred by it
in connection with the matter as to which it is seeking indemnification in the
manner and to the fullest extent permissible under the Maryland General
Corporation Law. The Investment Advisor shall provide to the Company a written
affirmation of its good faith belief that the standard of conduct necessary for
indemnification by the Company 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) the Investment Advisor shall provide a security in
form and amount acceptable to the Company for its undertaking; (b) the Company
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, in
a written opinion, shall have determined, based upon a review of facts readily
available to the Company at the time the advance is proposed to be made, that
there is reason to believe that the Investment Advisor will ultimately be found
to be entitled to indemnification.
11. Duration and Termination. This Agreement shall become
effective upon approval of this Agreement by vote of a majority of the
outstanding voting securities of the Company and,
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unless sooner terminated as provided herein, shall continue until April 17,
1997. Thereafter, if not terminated, this Agreement shall continue for
successive annual periods ending on April 17, provided such continuance is
specifically approved at least annually (a) by the vote of a majority of those
members of the Board of Directors of the Company who are not parties to this
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Board of
Directors of the Company or by vote of a majority of the outstanding voting
securities of the Company; provided, however, that this Agreement may be
terminated by the Company at any time, without the payment of any penalty, by
the Board of Directors of the Company or by vote of a majority of the
outstanding voting securities of the Company, on 60 days' prior written notice
to the Investment Advisor, or by the Investment Advisor at any time, without
payment of any penalty, on 90 days' prior written notice to the Company. This
Agreement will immediately terminate in the event of its assignment. (As used in
this Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meaning as such terms
have in the 1940 Act.)
12. Amendment of this Agreement. No provision of this
Agreement may be changed, discharged or terminated orally, but may be changed,
discharged or terminated by an instrument in writing signed by the party against
which enforcement of the change, discharge or termination is sought, and no
amendment of this Agreement affecting the Company shall be effective until
approved by vote of the holders of a majority of the outstanding voting
securities of the Company.
13. Miscellaneous. 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. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.
14. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without giving effect to the conflicts of laws principles thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day and
year first above written.
WARBURG, XXXXXX BALANCED FUND, INC.
By: ______________________________________
Name:
Title:
WARBURG, XXXXXX COUNSELLORS, INC.
By: ______________________________________
Name:
Title:
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