DISTRIBUTION AGREEMENT
December 31, 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 Pincus Funds (the "Fund") 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, 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 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
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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
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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 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,
By: _____________________________
Name:
Title:
Accepted:
COUNSELLORS SECURITIES INC.
By: __________________________
Name:
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