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DISTRIBUTION AGREEMENT
_______, 199_
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 Strategic Value 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. The common stock not designated Advisor Shares
shall be referred to as the "Common 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,
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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, as amended.
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 Shareholder Servicing and
Distribution Plan (with respect to Common Shares, the "12b-1 Plan") and in the
Distribution Plan (with respect to Advisor Shares, the "Distribution Plan"),
each adopted by the Fund pursuant to Rule 12b-1 under the 1940 Act ("Rule
12b-1") to be performed by Counsellors Securities, without limitation,
distributing and receiving subscription order forms and receiving written
redemption requests.
1.5 Pursuant to the 12b-1 Plan, the Fund will pay Counsellors
Securities on the first business day of each quarter a fee for the previous
quarter calculated at an annual rate of .25% of the average daily net assets of
the Common Shares of the Fund as compensation for the services provided by
Counsellors Securities to the Common Shares pursuant to this Agreement.
Counsellors Securities serves without compensation as distributor for the
Advisor Shares pursuant to this Agreement. Amounts paid to Counsellors
Securities under the 12b-1 Plan may be used by Counsellors Securities to cover
expenses that are primarily intended to result in, or that are primarily
attributable to, (a) the sale of the Common Shares, as set forth in the 12b-1
Plan ("Selling Services"), (b) ongoing servicing and/or maintenance of the
accounts of holders of Common Shares, as set forth in the 12b-1 Plan
("Shareholder Services"), and/or (c) sub-transfer agency services,
subaccounting services or administrative services with respect to the Common
Shares, as set forth in the 12b-1 Plan ("Administrative Services" and
collectively with Selling Services and Administrative Services, "Services")
including, without limitation, (i) payments reflecting an allocation of
overhead and other office expenses of Counsellors Securities related to
providing Services; (ii) payments made to, and reimbursement of expenses of,
persons who provide support services in connection with the distribution of the
Common Shares including, but not limited to, office space and equipment,
telephone facilities, answering routine inquiries regarding the Fund, and
providing any other Shareholder Services; (iii) payments made to compensate
selected dealers or other authorized persons for providing any Services; (iv)
costs relating to the formulation and implementation of marketing and
promotional activities for the Common Shares, including, but not limited to,
direct mail promotions and television, radio, newspaper, magazine and other
mass media advertising, and related travel and
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entertainment expenses; (v) costs of printing and distributing prospectuses,
statements of additional information and reports of the Fund to prospective
holders of Common Shares; and (vi) costs involved in obtaining whatever
information, analyses and reports with respect to marketing and promotional
activities for the Common Shares that the Fund may, from time to time, deem
advisable.
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
or Advisor Shares until such time as those officers deem it advisable to accept
such orders and to make such sales.
1.7 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 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, the 12b-1 Plan 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.
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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 sale of Common Shares
and Advisor Shares in those states that Counsellors Securities may designate.
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 and (f) 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 Common Shares and/or Advisor Shares, prospectus or
statement of additional information will be true and correct when such
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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
any such controlling person shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of or based
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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. 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
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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 (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 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. 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 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 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
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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.
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 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.
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7. Term of Agreement
This Agreement shall continue until April 17, 1998 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 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 12b-1 Plan or the Distribution Plan,
in this Agreement or in any agreement related to the 12b-1 Plan or 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
This Agreement may not be amended to increase materially the amount of
the fee with respect to the Common Shares described in Section 1.5 above
without approval of at least a majority (as defined in the 0000 Xxx) of the
outstanding Common Shares. In addition, 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.
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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 STRATEGIC
VALUE FUND, INC.
By:_________________________
Name:________________________
Title:________________________
Accepted:
COUNSELLORS SECURITIES INC.
By:___________________________
Name:_________________________
