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Exhibit 5(b)
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SUB-INVESTMENT ADVISORY AGREEMENT
_____________ ____, 1998
Credit Suisse Asset Management Limited
Beaufort House
00 Xx Xxxxxxx Xxxxxx
Xxxxxx XX0X0XX
Dear Sirs:
Warburg, Xxxxxx [ ] Fund, Inc. (the "Fund"), a
corporation organized and existing under the laws of the State of Maryland, and
BEA Associates, as investment adviser to the Fund ("BEA"), herewith confirms
their agreement with Credit Suisse Asset Management Limited (the "Sub-Adviser"),
a corporation organized under the laws of England, as follows:
1. Investment Description; Appointment
The Fund desires to employ the capital of the Fund by
investing and reinvesting in securities of the kind and in accordance with the
limitations specified in the Fund's Articles of Incorporation, as may be amended
from time to time (the "Articles of Incorporation"), and in the Fund's
Prospectus(es) and Statement(s) of Additional Information, as from time to time
in effect (the "Prospectus" and "SAI," respectively), 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 Prospectus, SAI and Articles of Incorporation have been
or will be submitted to the Sub-Adviser. The Fund agrees to provide the
Sub-Adviser copies of all amendments to the Prospectus and SAI on an on-going
basis. The Fund employs BEA as its investment adviser. BEA desires to employ and
hereby appoints the Sub-Adviser to act as its sub-investment adviser upon the
terms set forth in this Agreement. The Sub-Adviser accepts the appointment and
agrees to furnish the services set forth below for the compensation provided for
herein.
2. Services as Sub-Investment Adviser
(a) Subject to the supervision and direction of BEA, the
Sub-Adviser will assist BEA in providing investment advisory and portfolio
management advice to the Fund in accordance with (a) the Articles of
Incorporation, (b) the Investment Company Act of 1940, as amended (the "1940
Act"), and the Investment Advisers
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Act of 1940, as amended (the "Advisers Act"), and all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and all other
applicable laws and regulations, and (c) the Fund's investment objective and
policies as stated in the Prospectus and SAI and investment parameters provided
by BEA from time to time. In connection therewith, the Sub-Adviser will assist
BEA in:
(i) providing a continuous investment program for
the Fund, including investment research and management with respect to
securities, investments, cash and cash equivalents in the Fund's
portfolio;
(ii) determining whether to purchase, retain or sell
securities and other investments (collectively, "Investments") on
behalf of the Fund. The Sub-Adviser is hereby authorized to execute, or
place orders for the execution of, Investments on behalf of the Fund;
(iii) assisting the custodian and accounting agent
for the Fund in determining or confirming, consistent with the
procedures and policies stated in the Prospectus and SAI, the value of
any Investments for which the custodian and accounting agent seek
assistance from or identify for review by the Sub-Adviser;
(iv) monitoring the execution of orders for the
purchase or sale of Investments and the settlement and clearance of
those orders;
(v) exercising voting rights in respect of
Investments; and
(vi) providing reports to the Fund's Board of
Directors for consideration at quarterly meetings of the Board on
Investments and furnishing the Fund's Board of Directors with such
periodic and special reports as the Fund may reasonably request.
(b) In connection with the performance of the services of
the Sub-Adviser provided for herein, the Sub-Adviser: (i) will xxxxxxx XXX with
such periodic and special reports as BEA may reasonably request, and (ii) may
contract at its own expense with third parties for the acquisition of research,
clerical services and other administrative services that would not require such
parties to be required to register as an investment adviser under the Advisers
Act; provided that the Sub-Adviser shall remain liable for the performance of
its duties hereunder.
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3. Execution of Transactions
(a) The Sub-Adviser will execute transactions for the Fund
only through brokers or dealers appearing on a list of brokers and dealers
approved by BEA. In executing transactions for the Fund, selecting brokers or
dealers and negotiating any brokerage commission rates, the Sub-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 Sub-Adviser will
consider all factors it deems relevant including, but not limited to, the
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, to the extent that the execution
and price offered by more than one broker or dealer are comparable the
Sub-Adviser may consider any brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the
Sub-Adviser or to BEA for use on behalf of the Fund or other clients of the
Sub-Adviser or BEA.
(b) The Sub-Adviser will not effect orders for the purchase or
sale of securities on behalf of the Fund through brokers or dealers as agents.
(c) It is understood that the services of the Sub-Adviser are
not exclusive, and nothing in this Agreement shall prevent the Sub-Adviser from
providing similar services to other investment companies or from engaging in
other activities, provided that those activities do not adversely affect the
ability of the Sub-Adviser to perform its services under this Agreement. The
Fund and BEA further understand and acknowledge that the persons employed by the
Sub-Adviser to assist in the performance of its duties under this Agreement will
not devote their full time to that service. Nothing contained in this Agreement
will be deemed to limit or restrict the right of the Sub-Adviser or any
affiliate of the Sub-Adviser to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature, provided that doing
so does not adversely affect the ability of the Sub-Adviser to perform its
services under this Agreement.
(d) On occasions when the Sub-Adviser deems the purchase or
sale of a security to be in the best interest of the Fund as well as of other
investment advisory clients of the Sub-Adviser, the Sub-Adviser may, to the
extent permitted by applicable laws and regulations, but shall not be obligated
to, aggregate the securities to be so sold or purchased with those of its other
clients. In such event, allocation of the securities
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so purchased or sold, as well as the expenses incurred in the transaction, will
be made by the Sub-Adviser in a manner that is fair and equitable, in the
judgment of the Sub-Adviser, in the exercise of its fiduciary obligations to the
Fund and to such other clients. The Sub-Adviser shall provide to BEA and the
Fund all information reasonably requested by BEA and the Fund relating to the
decisions made by the Sub-Adviser regarding allocation of securities purchased
or sold, as well as the expenses incurred in a transaction, among the Fund and
the Sub-Adviser's other investment advisory clients.
(e) In connection with the purchase and sale of securities for
the Fund, the Sub-Adviser will provide such information as may be reasonably
necessary to enable the custodian and co-administrators to perform their
administrative and recordkeeping responsibilities with respect to the Fund.
4. Disclosure Regarding the Sub-Adviser
(a) The Sub-Adviser has reviewed the disclosure about the
Sub-Adviser contained in the Fund's registration statement and represents and
warrants that, with respect to such disclosure about the Sub-Adviser or
information related, directly or indirectly, to the Sub-Adviser, such
registration statement contains, as of the date hereof, no untrue statement of
any material fact and does not omit any statement of a material fact which is
required to be stated therein or necessary to make the statements contained
therein not misleading.
(b) The Sub-Adviser agrees to notify BEA and the Fund promptly
of (i) any statement about the Sub-Adviser contained in the Fund's registration
statement that becomes untrue in any material respect, (ii) any omission of a
material fact about the Sub-Adviser in the Fund's registration statement which
is required to be stated therein or necessary to make the statements contained
therein not misleading, or (iii) any reorganization or change in the
Sub-Adviser, including any change in its ownership or key employees.
(c) Prior to the Fund or BEA or any affiliated person (as
defined in the 1940 Act, an "Affiliate") of either using or distributing sales
literature or other promotional material referring to the Sub-Adviser
("Promotional Material"), the Fund or BEA, where applicable, shall forward such
material to the Sub-Adviser and shall allow the Sub-Adviser reasonable time to
review the material. The Sub-Adviser will not act unreasonably in its review of
Promotional Material and the Fund or BEA, where applicable, will use all
reasonable efforts to ensure that all Promotional Material used or distributed
by or on behalf of the Fund or BEA will comply with the requirements of the
Advisers
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Act, the 1940 Act and the rules and regulations promulgated thereunder.
(d) The Sub-Adviser has supplied BEA and the Fund copies of
its Form ADV with all exhibits and attachments thereto and will hereinafter
supply BEA and the Fund, promptly upon preparation thereof, copies of all
amendments or restatements of such document.
5. Certain Representations and Warranties of the Sub-Adviser
(a) The Sub-Adviser represents and warrants that it is a duly
registered investment adviser under the Advisers Act, a duly registered
investment adviser in any and all states of the United States in which the
Sub-Adviser is required to be so registered and has obtained all necessary
licenses and approvals in order to perform the services provided in this
Agreement. The Sub-Adviser covenants to maintain all necessary registrations,
licenses and approvals in effect during the term of this Agreement.
(b) The Sub-Adviser represents that it has read and
understands the Prospectus and SAI and warrants that in investing the Fund's
assets it will use all reasonable efforts to adhere to the Fund's investment
objectives, policies and restrictions contained therein.
(c) The Sub-Adviser represents that it has adopted a written
Code of Ethics in compliance with Rule 17j-1 under the 1940 Act and will provide
the Fund with any amendments to such Code.
6. Compliance
(a) The Sub-Adviser agrees that it shall promptly notify BEA
and the Fund (i) in the event that the SEC or any other regulatory authority has
censured its activities, functions or operations; suspended or revoked its
registration as an investment adviser; or has commenced proceedings or an
investigation that may result in any of these actions, (ii) in the event that
there is a change in the Sub-Adviser, financial or otherwise, that adversely
affects its ability to perform services under this Agreement or (iii) upon
having a reasonable basis for believing that, as a result of the Sub-Adviser's
investing the Fund's assets, the Fund's investment portfolio has ceased to
adhere to the Fund's investment objectives, policies and restrictions as stated
in the Prospectus or SAI or is otherwise in violation of applicable law.
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(b) BEA agrees that it shall promptly notify the Sub-Adviser
in the event that the SEC has censured BEA or the Fund; placed limitations upon
any of their activities, functions or operations; suspended or revoked BEA's
registration as an investment adviser; or has commenced proceedings or an
investigation that may result in any of these actions.
(c) The Fund and BEA shall be given access to the records of
the Sub-Adviser at reasonable times solely for the purpose of monitoring
compliance with the terms of this Agreement and the rules and regulations
applicable to the Sub-Adviser relating to its providing investment advisory
services to the Fund, including without limitation records relating to trading
by employees of the Sub-Adviser for their own accounts and on behalf of other
clients. The Sub-Adviser agrees to cooperate with the Fund and BEA and their
representatives in connection with any such monitoring efforts.
7. Books and Records
(a) In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Sub-Adviser hereby agrees that all records which it maintains
for the Fund are the property of the Fund and further agrees to surrender
promptly to the Fund any of such records upon request. The Sub-Adviser 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 and to
preserve the records required by Rule 204-2 under the Advisers Act for the
period specified therein.
(b) The Sub-Adviser hereby agrees to furnish to regulatory
authorities having the requisite authority any information or reports in
connection with services that the Sub-Adviser renders pursuant to this Agreement
which may be requested in order to ascertain whether the operations of the Fund
are being conducted in a manner consistent with applicable laws and regulations.
8. Provision of Information; Proprietary and Confidential
Information
(a) BEA agrees that it will furnish to the Sub-Adviser
information related to or concerning the Fund that the Sub-Adviser may
reasonably request.
(b) The Sub-Adviser 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, BEA and 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
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after prior notification to and approval in writing of the Fund, which approval
shall not be unreasonably withheld and may not be withheld where the Sub-Adviser
may be exposed to civil or criminal contempt proceedings for failure to comply
or when requested to divulge such information by duly constituted authorities.
(c) The Sub-Adviser represents and warrants that neither it
nor any affiliate will use the name of the Fund, BEA or any of their affiliates
in any prospectus, sales literature or other material in any manner without the
prior written approval of the Fund or BEA, as applicable.
9. Standard of Care
The Sub-Adviser shall exercise its best judgment in rendering
the services described herein. The Sub-Adviser shall not be liable for any error
of judgment or mistake of law or for any loss suffered by the Fund or BEA in
connection with the matters to which this Agreement relates, except that the
Sub-Adviser shall be liable for a loss resulting from a breach of fiduciary duty
by the Sub-Adviser with respect to the receipt of compensation for services;
provided that nothing herein shall be deemed to protect or purport to protect
the Sub-Adviser against any liability to the Fund or BEA or to shareholders of
the Fund to which the Sub-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 Sub-Adviser's reckless disregard
of its obligations and duties under this Agreement. The Fund and BEA understand
and agree that the Sub-Adviser may rely upon information furnished to it
reasonably believed by the Sub-Adviser to be accurate and reliable and, except
as herein provided, the Sub-Adviser shall not be accountable for loss suffered
by the Fund by reason of such reliance of the Sub-Adviser.
10. Compensation
In consideration of the services rendered pursuant to this
Agreement, BEA will pay the Sub-Adviser a quarterly fee equal to 30% of the net
quarterly amount received by BEA from the Fund for its services as the Fund's
investment adviser. The fee for the period from the date of this Agreement to
the end of the quarter during which this Agreement commenced shall be prorated
according to the proportion that such period bears to the full quarterly period.
Such fee shall be paid by BEA to the Sub-Adviser within ten (10) business days
after the last day of each quarter or, upon termination of this Agreement before
the end of a quarter, within ten (10) business days after the effective date of
such termination. Upon any termination of this Agreement before the end of a
quarter, the fee for such part of that
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quarter shall be prorated according to the proportion that such period bears to
the full quarterly period. For the purpose of determining fees payable to the
Sub-Adviser, the net quarterly advisory fee received by BEA from the Fund shall
be the advisory fee set forth in the Investment Advisory Agreement between BEA
and the Fund reduced by any applicable fee waivers or expense reimbursements
provided by BEA. The Sub-Adviser shall have no right to obtain compensation
directly from the Fund for services provided hereunder and agrees to look solely
to BEA for payment of fees due.
11. Expenses
(a) The Sub-Adviser will bear all expenses in connection with
the performance of its services under this Agreement, which shall not include
the Fund's expenses listed in paragraph 11(b).
(b) The Fund will bear 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 Fund, BEA or the
Sub-Adviser or affiliates of any of them; fees of any pricing service employed
to value shares of the Fund; SEC fees, state Blue Sky qualification fees and any
foreign qualification fees; charges of custodians and transfer and dividend
disbursing agents; the Fund's proportionate share of insurance premiums; outside
auditing and legal expenses; costs of maintenance of the Fund'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 Fund and of the officers or Board of Directors of the Fund;
and any extraordinary expenses.
12. Term of Agreement
This Agreement shall commence on the date first written above
and shall continue until April 17, 2000, 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 0000 Xxx) of the Fund'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 the 0000 Xxx) 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, (i) by BEA on 60
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(sixty) days' written notice to the Fund and the Sub-Adviser, (ii) by the Board
of Directors of the Fund or by vote of holders of a majority of the Fund's
shares on 60 (sixty) days' written notice to BEA and the Sub-Adviser, or (iii)
by the Sub-Adviser upon 60 (sixty) days' written notice to the Fund and BEA.
This Agreement will also terminate automatically in the event of its assignment
(as defined in the 0000 Xxx) by any party hereto. In the event of termination of
this Agreement for any reason, all records relating to the Fund kept by the
Sub-Adviser shall promptly be returned to BEA or the Fund, free from any claim
or retention of rights in such records by the Sub-Adviser. In the event this
Agreement is terminated or is not approved in the foregoing manner, the
provisions contained in paragraph numbers 4(c), 7, 8 and 9 shall remain in
effect.
13. Amendments
No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (a) the holders of a majority of the
outstanding voting securities of the Fund and (b) the Board of Directors of the
Fund, including a majority of Directors who are not "interested persons" (as
defined in the 0000 Xxx) of the Fund or of either party to this Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval, if such approval is required by applicable law.
14. Notices
All communications hereunder shall be given (a) if to the
Sub-Adviser, to Credit Suisse Asset Management Limited, Beaufort House, 00 Xx
Xxxxxxx Xxxxxx, Xxxxxx XX0X0XX (Attention: [INSERT]), telephone: [INSERT],
telecopy: [INSERT], (b) if to BEA, to BEA Associates, One Citicorp Center, 000
Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (Attention: [INSERT]), telephone:
[INSERT], telecopy: [INSERT], and (c) if to the Fund, c/o Warburg Pincus Funds,
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, telephone: (000) 000-0000,
telecopy: (000) 000-0000 (Attention: President).
15. Choice of Law
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York in the United States,
including choice of law principles; provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act, the Advisers Act or any
applicable rules, regulations or orders of the SEC.
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16. Miscellaneous
(a) The captions of this Agreement are included for
convenience only and in no way define or limit any of the provisions herein or
otherwise affect their construction or effect.
(b) If any provision of this Agreement shall be held or made
invalid by a court decision, by statute or otherwise, the remainder of this
Agreement shall not be affected thereby and, to this extent, the provisions of
this Agreement shall be deemed to be severable.
(c) Nothing herein shall be construed to make the Sub-Adviser
an agent of BEA or the Fund.
(d) This Agreement may be executed in counterparts, with the
same effect as if the signatures were upon the same instrument.
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,
BEA ASSOCIATES
By: _________________________________
Name:
Title:
WARBURG, XXXXXX [ ] FUND, INC.
By: _________________________________
Name:
Title:
CREDIT SUISSE ASSET
MANAGEMENT LIMITED
By: _______________________________
Name:
Title:
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