INVESTMENT ADVISORY AGREEMENT
July 30, 1997
Warburg, Xxxxxx Counsellors, Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Dear Sirs:
Warburg, Xxxxxx Institutional Fund, Inc., a corporation organized under
the laws of the State of Maryland (the "Fund"), is an open-end, management
investment company that currently offers six portfolios, one of which is the
Post-Venture Capital Portfolio (the "Portfolio"). The Fund on behalf of the
Portfolio herewith confirms its agreement with Warburg, Xxxxxx Counsellors, Inc.
(the "Adviser") as follows:
1. Investment Description; Appointment
-----------------------------------
The Fund desires to employ the capital of the Portfolio by investing
and reinvesting in investments of the kind and in accordance with the
limitations specified in its Articles of Incorporation, as may be amended from
time to time, and in its Prospectus and Statement of Additional Information
relating to the Portfolio as from time to time in effect, and in such manner and
to such extent as may from time to time be approved by the Board of Directors of
the Fund. Copies of the Fund's Prospectus and Statement of Additional
Information relating to the Portfolio and Articles of Incorporation, as each may
be amended from time to time, have been or will be submitted to the Adviser. The
Fund desires to employ and hereby appoints the Adviser to act as investment
adviser to the Portfolio. The Adviser accepts the appointment and agrees to
furnish the services for the compensation set forth below.
2. Services as Investment Adviser
------------------------------
Subject to the supervision and direction of the Board of Directors of
the Fund, the Adviser will (a) act in strict conformity with the Fund's Articles
of Incorporation, the Investment Company Act of 1940 and the Investment Advisers
Act of 1940, as the same may from time to time be amended, (b) manage the
Portfolio in accordance with the Portfolio's investment objective and policies
as stated in the Fund's Prospectus and Statement of Additional Information
relating to the Portfolio as from time to time in effect, (c) make investment
decisions for the Portfolio and (d) place purchase and sale orders for
securities on behalf of the Portfolio. In providing those services, the Adviser
will provide investment research and supervision of the Portfolio's investments
and conduct a continual program of investment, evaluation and, if appropriate,
sale and reinvestment of the Portfolio's assets. In addition, the Adviser will
furnish the Fund with whatever statistical information the Fund may reasonably
request with respect to the securities that the Portfolio may hold or
contemplate purchasing.
3. Brokerage
---------
In executing transactions for the Portfolio and selecting brokers or
dealers, the Adviser will use its best efforts to seek the best overall terms
available. In assessing the best overall terms available for any portfolio
transaction, the Adviser will consider all factors it deems relevant including,
but not limited to, breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer and the reasonableness of any commission for the specific transaction and
for transactions executed through the broker or dealer in the aggregate. In
selecting brokers or dealers to execute a particular transaction and in
evaluating the best overall terms available, the Adviser may consider the
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934, as the same may from time to time be
amended) provided to the Portfolio and/or other accounts over which the Adviser
or an affiliate exercises investment discretion.
4. Information Provided to the Fund
--------------------------------
The Adviser will keep the Fund informed of developments materially
affecting the Portfolio, and will, on its own initiative, furnish the Fund from
time to time with whatever information the Adviser believes is appropriate for
this purpose.
5. Standard of Care
----------------
The Adviser shall exercise its best judgment in rendering the services
listed in paragraphs 2, 3 and 4 above. The Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund or the
Portfolio in connection with the matters to which this Agreement relates,
provided that nothing herein shall be deemed to protect or purport to protect
the Adviser against any liability to the Fund or the Portfolio or to
shareholders of the Fund or the Portfolio to which the Adviser would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or by reason of the Adviser's reckless
disregard of its obligations and duties under this Agreement.
6. Compensation
------------
In consideration of the services rendered pursuant to this Agreement,
the Portfolio will pay the Adviser an annual fee calculated at an annual rate of
1.10% of the Portfolio's average daily net assets. The fee for the period from
the date the Fund's registration statement amendment relating to the Portfolio
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becomes effective by the Securities and Exchange Commission to the end
of the year during which such registration statement amendment becomes effective
shall be prorated according to the proportion that such period bears to the full
yearly period. Upon any termination of this Agreement before the end of a year,
the fee for such part of that year shall be prorated according to the proportion
that such period bears to the full yearly period and shall be payable upon the
date of termination of this Agreement. For the purpose of determining fees
payable to the Adviser, the value of the Portfolio's net assets shall be
computed at the times and in the manner specified in the Fund's Prospectus or
Statement of Additional Information relating to the Portfolio as from time to
time in effect.
7. Expenses
--------
The Adviser will bear all expenses in connection with the performance
of its services under this Agreement. The Portfolio will bear its proportionate
share of certain other expenses to be incurred in its operation, including:
investment advisory and administration fees; taxes, interest, brokerage fees and
commissions, if any; fees of Directors of the Fund who are not officers,
directors, or employees of the Adviser or any of its affiliates; fees of any
pricing service employed to value shares of the Portfolio; Securities and
Exchange Commission fees and state blue sky qualification fees; charges of
custodians and transfer and dividend disbursing agents; the Portfolio's
proportionate share of insurance premiums; outside auditing and legal expenses;
costs of maintenance of the Portfolio's existence; costs attributable to
investor services, including, without limitation, telephone and personnel
expenses; costs of preparing and printing prospectuses and statements of
additional information for regulatory purposes and for distribution to existing
shareholders; costs of shareholders' reports and meetings of the shareholders of
the Portfolio and of the officers or Board of Directors of the Fund; and any
extraordinary expenses.
The Portfolio will be responsible for nonrecurring expenses which may
arise, including costs of litigation to which the Portfolio is a party and of
indemnifying officers and Directors of the Fund with respect to such litigation
and other expenses as determined by the Directors.
8. Reimbursement to the Fund
-------------------------
If in any fiscal year the aggregate expenses of the Portfolio
(including fees pursuant to this Agreement and the Portfolio's administration
agreements, but excluding interest, taxes, brokerage and, if permitted by state
securities commissions, extraordinary expenses) exceed the expense limitation of
any state having jurisdiction over the Portfolio, the Adviser will reimburse the
Portfolio for such excess expense. The Adviser's expense reimbursement
3
obligation will be imited to the amount of its fees received pursuant to this
Agreement. Such expense reimbursement, if any, will be estimated, reconciled
and paid on a monthly basis.
9. Services to Other Companies or Accounts
---------------------------------------
The Fund understands that the Adviser now acts, will continue to act
and may act in the future as investment adviser to fiduciary and other managed
accounts and to one or more other investment companies or series of investment
companies, and the Fund has no objection to the Adviser so acting, provided that
whenever the Portfolio and one or more other accounts or investment companies or
portfolios advised by the Adviser have available funds for investment,
investments suitable and appropriate for each will be allocated in accordance
with a formula believed to be equitable to each entity. The Fund recognizes that
in some cases this procedure may adversely affect the size of the position
obtainable for the Portfolio. In addition, the Fund understands that the persons
employed by the Adviser to assist in the performance of the Adviser's duties
hereunder will not devote their full time to such service and nothing contained
herein shall be deemed to limit or restrict the right of the Adviser or any
affiliate of the Adviser to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature.
10. Term of Agreement
-----------------
This Agreement shall continue until April 17, 1999 and thereafter shall
continue automatically for successive annual periods, provided such continuance
is specifically approved at least annually by (a) the Board of Directors of the
Fund or (b) a vote of a "majority" (as defined in the Investment Company Act of
1940) of the Portfolio's outstanding voting securities, provided that in either
event the continuance is also approved by a majority of the Board of Directors
who are not "interested persons" (as defined in said Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. This Agreement is terminable, without penalty, on 60 days'
written notice, by the Board of Directors of the Fund or by vote of holders of a
majority of the Portfolio's shares, or upon 90 days' written notice, by the
Adviser. This Agreement will also terminate automatically in the event of its
assignment (as defined in said Act).
11. Representation by the Fund
--------------------------
The Fund represents that a copy of its Articles of Incorporation filed
on May 13, 1992, together with all amendments thereto, is on file in the
Department of Assessments and Taxation of the State of Maryland.
4
12. Miscellaneous
-------------
The Fund recognizes that directors, officers and employees of the
Adviser may from time to time serve as directors, trustees, officers and
employees of corporations and business trusts (including other investment
companies) and that such other corporations and trusts may include the name
"Warburg, Xxxxxx" as part of their names, and that the Adviser or its affiliates
may enter into advisory or other agreements with such other corporations and
trusts. If the Adviser ceases to act as the investment adviser of the
Portfolio's shares, the Fund agrees that, at the Adviser's request, the Fund's
license to use the words "Warburg, Xxxxxx" will terminate and that the Fund will
take all necessary action to change the name of the Fund and the Portfolio to
names not including the words "Warburg, Xxxxxx."
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 INSTITUTIONAL
FUND, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President & Secretary
Accepted:
WARBURG, XXXXXX COUNSELLORS, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President
