INVESTMENT ADVISORY AGREEMENT
December 31, 1996
Warburg, Xxxxxx Counsellors, Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Dear Sirs:
Warburg, Xxxxxx Health Sciences Fund, Inc. (the "Fund"), a corporation
organized and existing under the laws of the State of Maryland, 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 Fund 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 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, 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 Fund.
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 Fund
in accordance with the Fund's investment objective and policies as stated in the
Fund's Prospectus and Statement of Additional Information relating to the Fund
as from time to time in effect, (c) make investment decisions for the Fund and
(d) place purchase and sale orders for securities on behalf of the Fund. In
providing those services, the Adviser will provide investment research and
supervision of the Fund's investments and conduct a continual program of
investment, evaluation and, if appropriate, sale and reinvestment of the Fund's
assets. In addition, the Adviser will furnish the Fund with whatever
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statistical information the Fund may reasonably request with respect to the
securities that the Fund may hold or contemplate purchasing.
3. Brokerage
---------
In executing transactions for the Fund 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 Fund 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 Fund, 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 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 to shareholders of the Fund 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 Fund will pay the Adviser an annual fee calculated at an annual rate of
1.00% of the Fund's average daily
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net assets. The fee for the period from the date the Fund's initial registration
statement is declared effective by the Securities and Exchange Commission to the
end of the year during which the initial registration statement is declared
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 Fund's net assets shall be
computed at the times and in the manner specified in the Fund's Prospectus or
Statement of Additional Information 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 Fund 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 Fund; Securities and Exchange
Commission fees and state blue sky 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.
The Fund will be responsible for nonrecurring expenses which may
arise, including costs of litigation to which the Fund 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. 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
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whenever the Fund 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 Fund. 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.
9. Term of Agreement
-----------------
This Agreement shall continue until April 17, 1998 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, as amended) 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
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 Fund'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).
10. Representation by the Fund
---------------------------
The Fund represents that a copy of its Articles of Incorporation,
dated October 24, 1996, together with all amendments thereto, is on file in the
Department of Assessments and Taxation of the State of Maryland.
11. 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
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the investment adviser of the Fund'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 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 HEALTH
SCIENCES FUND, INC.
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Vice President and
Secretary
Accepted:
WARBURG, XXXXXX COUNSELLORS, INC.
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Vice President
