SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
WARBURG PINCUS CAPITAL APPRECIATION FUND
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
March 1999
IMPORTANT NEWS
FOR WARBURG PINCUS FUND SHAREHOLDERS
While we encourage you to read the full text of the enclosed
Proxy Statement, here's a brief overview of some matters affecting your Fund
which require a shareholder vote.
Q & A: QUESTIONS AND ANSWERS
Q. WHAT IS HAPPENING?
A. Credit Suisse Group ("Credit Suisse") has agreed to acquire Warburg
Pincus Asset Management, Inc. ("Warburg"), your Fund's investment
adviser, and intends to combine it with its existing U.S. asset
management business ("CSAM-U.S.") (together, the "Merger"). CSAM-U.S.
is part of Credit Suisse Asset Management ("CSAM"), which is the
institutional asset management and mutual fund arm of Credit Suisse,
with global assets under management of approximately $210 billion.
Credit Suisse is a global financial services company, providing a
comprehensive range of banking and insurance products.
In order for CSAM-U.S. to serve as investment adviser of your Fund
following the completion of the Merger, it is necessary for the Fund's
shareholders to approve a new investment advisory agreement. If your
Fund has a sub-investment advisory agreement to which Warburg currently
is a party, it is also necessary that a new sub-investment advisory
agreement be approved. The following pages give you additional
information on CSAM and the proposed new investment advisory and
sub-investment advisory agreements and certain other matters.
The most important matters to be voted upon by you are approval of the
new investment advisory and sub-investment advisory agreements and the
election of Board members. THE BOARD MEMBERS OF YOUR FUND, INCLUDING
THOSE WHO ARE NOT AFFILIATED WITH THE FUND, WARBURG OR CREDIT SUISSE,
RECOMMEND THAT YOU VOTE FOR THESE PROPOSALS.
Q. WHY AM I BEING ASKED TO VOTE ON THE PROPOSED NEW INVESTMENT ADVISORY
AGREEMENT?
A. The Investment Company Act of 1940, which regulates investment
companies such as your Fund, requires a shareholder vote to approve a
new investment advisory agreement following certain types of business
combinations. Credit Suisse's acquisition of Warburg and Warburg's
combination with CSAM-U.S. require shareholder approval of a new
investment advisory agreement and, where applicable, a new
sub-investment advisory agreement with your Fund.
Q. HOW WILL THE TRANSACTION AFFECT ME AS A FUND SHAREHOLDER?
A. Your Fund and your Fund's investment objective will not change. You
will still own the same shares in the same Fund. The terms of the new
investment advisory agreement and any new sub-investment advisory
agreement are the same in all material respects as the current
agreements (except that there will be a new investment adviser
following the Merger). If shareholders do not approve the new
investment advisory agreement and any applicable new sub-investment
advisory agreement, the current agreements will terminate upon the
closing of the Merger and the governing Board of your Fund will take
such action as it deems to be in the best interests of your Fund and
its shareholders.
Q. WHAT ARE THE BENEFITS OF THE MERGER?
A. Warburg believes that the combination of Warburg's and Credit Suisse
U.S.'s asset management businesses in the Merger will enhance Warburg's
current capabilities as a global asset manager. Warburg further
believes that the Merger will enable the combined businesses to deliver
improved services to you and your Fund and to fulfill its obligations
under the new investment advisory agreement and, if applicable,
sub-investment advisory agreement consistent with current practices.
Q. WILL THE INVESTMENT ADVISORY AND SUB-ADVISORY FEES REMAIN THE SAME?
A. Yes.
Q. HOW DO THE BOARD MEMBERS OF MY FUND RECOMMEND THAT I VOTE?
A. After careful consideration, the Board members of your Fund, including
those who are not affiliated with the Fund or Warburg, recommend that
you vote in favor of all the proposals on the enclosed proxy card(s).
Q. WHOM DO I CALL FOR MORE INFORMATION?
A. If you need more information, please call D.F. King & Co., Inc., your Fund's
information agent, at 1-800-848-3409.
Q. HOW CAN I VOTE MY SHARES?
A. Please choose one of the following options to vote your shares:
o By mail, with the enclosed proxy card(s);
o By telephone, with a toll-free call to the telephone number
that appears on your proxy card or, if no toll-free telephone
number appears on your proxy card, to D.F. King & Co., Inc.,
the Funds' proxy solicitor at 1-800-848-3409;
o Through the Internet, by using the Internet address located
on your proxy card and following the instructions on the
site; or
o In person at the meeting.
Q. WILL THE FUND PAY FOR THE PROXY SOLICITATION AND LEGAL COSTS ASSOCIATED
WITH THIS TRANSACTION?
A. No, Warburg and Credit Suisse will bear these costs.
Q. WHAT HAPPENS IF I OWN SHARES IN MORE THAN ONE FUND?
A. If you have more than one Fund in an account in your name at the same
address, you will receive separate proxy cards for each Fund but only
one proxy statement for the account. Please vote all issues on each
proxy card that you receive.
THANK YOU FOR MAILING YOUR PROXY CARD(S) PROMPTLY.
WARBURG PINCUS FUNDS
466 Lexington Avenue
New York, NY 10017
March __, 1999
Dear Shareholder:
On February 15, 1999 the parent companies of Warburg Pincus Asset
Management, Inc. ("Warburg") entered into an agreement with Credit Suisse Group
("Credit Suisse") pursuant to which Credit Suisse will acquire Warburg.
Following such acquisition, Credit Suisse intends to combine Warburg with its
existing U.S. asset management business. As a result of this two-stage
transaction, it is necessary for the shareholders of each of the funds for which
Warburg acts as investment adviser, including your Fund, to approve a new
investment advisory agreement. If your Fund has a sub-investment advisory
agreement to which Warburg currently is a party, it is also necessary to approve
a new sub-investment advisory agreement.
Important facts about the acquisition are:
o The acquisition has no effect on the number of shares you own or the value
of those shares.
o The contractual advisory fee rates payable by your Fund under its current
investment advisory agreement will not increase.
o The investment objective and policies of your Fund will remain the same.
Shareholders are also being asked to approve certain other matters that have
been set forth in the Fund's Notice of Meeting. THE BOARD MEMBERS OF YOUR FUND
BELIEVE THAT EACH OF THE PROPOSALS SET FORTH IN THE NOTICE OF MEETING FOR YOUR
FUND IS IMPORTANT AND RECOMMEND THAT YOU READ THE ENCLOSED MATERIALS CAREFULLY
AND THEN VOTE FOR ALL PROPOSALS.
Since all of the funds for which Warburg acts as investment adviser are
required to conduct shareholder meetings, if you own shares of more than one
fund, you will receive more than one proxy card. Please sign and return each
proxy card you receive.
Your vote is important. PLEASE TAKE A MOMENT NOW TO VOTE, EITHER BY
COMPLETING AND RETURNING YOUR PROXY CARD(S) IN THE ENCLOSED POSTAGE-PAID RETURN
ENVELOPE, BY TELEPHONE OR THROUGH THE INTERNET. You may receive a telephone call
from our proxy solicitor, D.F. King & Co., Inc., or from employees of Warburg
reminding you to vote your shares.
Respectfully,
[GENE PODSIADLO SIGNATURE]
Eugene L. Podsiadlo
President
SHAREHOLDERS ARE URGED TO VOTE BY COMPLETING AND RETURNING THE PROXY CARD, BY
TELEPHONE OR THROUGH THE INTERNET TO ENSURE A QUORUM AT THE MEETING. YOUR VOTE
IS IMPORTANT REGARDLESS OF THE SIZE OF YOUR SHAREHOLDINGS.
WARBURG PINCUS FUNDS
Warburg Pincus Balanced Fund
Warburg Pincus Capital Appreciation Fund
Warburg Pincus Cash Reserve Fund
Warburg Pincus Emerging Growth Fund
Warburg Pincus Emerging Markets Fund
Warburg Pincus Fixed Income Fund
Warburg Pincus Global Fixed Income Fund
Warburg Pincus Global Post-Venture Capital Fund
Warburg Pincus Growth & Income Fund
Warburg Pincus Health Sciences Fund
Warburg Pincus Institutional Fund, Inc.
Warburg Pincus Intermediate Maturity Government Fund
Warburg Pincus International Equity Fund
Warburg Pincus International Small Company Fund
Warburg Pincus Japan Growth Fund
Warburg Pincus Japan Small Company Fund
Warburg Pincus Major Foreign Markets Fund
Warburg Pincus New York Intermediate Municipal Fund
Warburg Pincus New York Tax Exempt Fund
Warburg Pincus Post-Venture Capital Fund
Warburg Pincus Small Company Growth Fund
Warburg Pincus Small Company Value Fund
Warburg Pincus WorldPerks Money Market Fund
Warburg Pincus WorldPerks Tax Free Money Market Fund
Warburg Pincus Trust
Warburg Pincus Trust II
NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
Please take notice that Special Meetings of Shareholders (each a "Special
Meeting") of each Warburg Pincus Fund listed above (each a "Fund" and,
collectively, the "Funds") will be held jointly at the offices of Warburg Pincus
Asset Management, Inc., 466 Lexington Avenue, New York, NY 10017, on __________
__, 1999, at 3:00 p.m., Eastern time, for the following purposes:
(1) To approve or disapprove a new investment advisory agreement between
each Fund and a direct or indirect U.S. investment advisory subsidiary
of Credit Suisse Group (the "New Adviser");
(2) To elect Directors/Trustees of the Funds;
(3) For the shareholders of Warburg Pincus Post-Venture Capital Fund,
Warburg Pincus Global Post-Venture Capital Fund, the Post-Venture
Capital Portfolios of Warburg Pincus Institutional Fund, Inc. and
Warburg Pincus Trust, Warburg Pincus WorldPerks Money Market Fund and
Warburg Pincus WorldPerks Tax Free Money Market Fund only: to approve
or disapprove a new sub-investment advisory agreement between each
Fund, the New Adviser and the relevant sub-investment adviser; and
(4) To ratify or reject the selection of PricewaterhouseCoopers LLP as the
independent accountants for each of the Funds for each Fund's current
fiscal year.
The appointed proxies, in their discretion, will vote on any other business
as may properly come before the Special Meeting or any adjournments thereof.
Holders of record of shares of each Fund at the close of business on March
9, 1999 are entitled to vote at the Special Meeting and at any adjournments
thereof. As a convenience to shareholders, you can now vote in any one of four
ways:
o By mail, with the enclosed proxy card;
o By telephone, with a toll-free call to the telephone
number that appears on your proxy card or, if no
toll-free telephone number appears on your proxy card,
to D.F. King & Co., Inc., the Fund's proxy solicitor,
at 1-800-848-3409;
o Through the Internet; or
o In person at the meeting.
In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal is not obtained at the Special
Meeting with respect to one or more Funds or, where applicable, investment
portfolios of a Fund (each a "Portfolio" and together with those Funds that do
not have any separate investment portfolios, the "Portfolios"), the persons
named as proxies may propose one or more adjournments of the Special Meeting in
accordance with applicable law, to permit further solicitation of proxies. Any
such adjournment as to a matter requiring, respectively, a Fund-wide or
Portfolio by Portfolio vote will require the affirmative vote of the holders of
a majority of the concerned Fund's (for a Fund-wide vote) or, where applicable,
the concerned Portfolio's (for a Portfolio by Portfolio vote) shares present in
person or by proxy at the Special Meeting. The persons named as proxies will
vote in favor of such adjournment those proxies which they are entitled to vote
in favor and will vote against any such adjournment those proxies to be voted
against that proposal.
We encourage you to vote by completing and returning your proxy card(s), by
telephone or through the Internet. These voting methods will reduce the time and
costs associated with the proxy solicitation. Whichever method you choose,
please read the full text of the proxy statement before your vote.
By order of the governing Boards,
[JANNA MANES SIGNATURE]
Janna Manes
Secretary
March __, 1999
IMPORTANT--IN ORDER TO AVOID THE NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS
TO ENSURE A QUORUM AT THE SPECIAL MEETINGS, WE ASK THAT YOU VOTE YOUR SHARES
PROMPTLY.
-2-
WARBURG PINCUS FUNDS
Warburg Pincus Balanced Fund
Warburg Pincus Capital Appreciation Fund
Warburg Pincus Cash Reserve Fund
Warburg Pincus Emerging Growth Fund
Warburg Pincus Emerging Markets Fund
Warburg Pincus Fixed Income Fund
Warburg Pincus Global Fixed Income Fund
Warburg Pincus Global Post-Venture Capital Fund
Warburg Pincus Growth & Income Fund
Warburg Pincus Health Sciences Fund
Warburg Pincus Institutional Fund, Inc.
Warburg Pincus Intermediate Maturity Government Fund
Warburg Pincus International Equity Fund
Warburg Pincus International Small Company Fund
Warburg Pincus Japan Growth Fund
Warburg Pincus Japan Small Company Fund
Warburg Pincus Major Foreign Markets Fund
Warburg Pincus New York Intermediate Municipal Fund
Warburg Pincus New York Tax Exempt Fund
Warburg Pincus Post-Venture Capital Fund
Warburg Pincus Small Company Growth Fund
Warburg Pincus Small Company Value Fund
Warburg Pincus WorldPerks Money Market Fund
Warburg Pincus WorldPerks Tax Free Money Market Fund
Warburg Pincus Trust
Warburg Pincus Trust II
466 Lexington Avenue
New York, NY 10017
JOINT PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors or Trustees, as the case may be (the "Board"),
of each of the Warburg Pincus Funds listed above (each a "Fund" and,
collectively, the "Funds") for use at the Special Meetings of Shareholders of
each Fund, to be held jointly at the offices of Warburg Pincus Asset Management,
Inc., 466 Lexington Avenue, New York, NY 10017, on __________ __, 1999 at 3:00
p.m., Eastern time, and at any and all adjournments thereof (the "Special
Meeting"). (In the descriptions of the various proposals below, the word "fund"
is sometimes used to mean investment companies or series thereof in general, and
not the Funds whose proxy statement this is.)
This Proxy Statement, the Notice of Special Meeting and the proxy cards are
first being mailed to shareholders on or about March 23, 1999 or as soon as
practicable thereafter. Any shareholder giving a proxy has the power to revoke
it on the Internet, by telephone, by mail (addressed to Janna Manes, Secretary
of the Funds, c/o Warburg Pincus Asset Management, Inc., 466 Lexington Avenue,
New York, NY 10017), in person at the Special Meeting, by executing a
superseding proxy or by submitting a notice of revocation. All properly executed
proxies received in time for the Special Meeting will be voted as specified in
the proxy or, if no specification is made, in favor of each proposal referred to
in the Proxy Statement.
-1-
The presence at any Special Meeting, in person or by proxy, of the holders
of one-third (one-half in the case of certain Funds and Portfolios) of the
shares entitled to be cast of a Fund (for a Fund-wide vote) or an investment
portfolio of a Fund (each a "Portfolio" and together with those Funds that do
not have any separate investment portfolios, the "Portfolios") (for a Portfolio
by Portfolio vote) shall be necessary and sufficient to constitute a quorum for
the transaction of business requiring, respectively, Fund-wide or Portfolio by
Portfolio voting. The quorum requirement for each Fund and Portfolio is
indicated next to its name on Exhibit B to this Proxy Statement. In the event
that the necessary quorum to transact business or the vote required to approve
or reject any proposal is not obtained at the Special Meeting with respect to
one or more Funds or, where applicable, Portfolios, the persons named as proxies
may propose one or more adjournments of the Special Meeting in accordance with
applicable law to permit further solicitation of proxies with respect to any
proposal which did not receive the vote necessary for its passage or to obtain a
quorum. With respect to those proposals for which there is represented a
sufficient number of votes in favor, actions taken at the Special Meeting will
be effective irrespective of any adjournments with respect to any other
proposals. Any such adjournment as to a matter requiring, respectively, a
Fund-wide or a Portfolio by Portfolio vote will require the affirmative vote of
the holders of a majority of the concerned Fund's (for a Fund-wide vote) or
Portfolio's (for a Portfolio by Portfolio vote) shares present in person or by
proxy at the Special Meeting. The persons named as proxies will vote in favor of
such adjournment those proxies which they are entitled to vote in favor for that
proposal and will vote against any such adjournment those proxies to be voted
against that proposal. For purposes of determining the presence of a quorum for
transacting business at the Special Meeting, abstentions and broker "non-votes"
will be treated as shares that are present but which have not been voted. Broker
non-votes are proxies received from brokers or nominees when the broker or
nominee has neither received instructions from the beneficial owner or other
persons entitled to vote nor has discretionary power to vote on a particular
matter. Accordingly, shareholders are urged to forward their voting instructions
promptly.
Proposals 1 and 3 each requires the affirmative vote of a "majority of the
outstanding voting securities" of each Portfolio. The terms "majority of the
outstanding voting securities" as defined in the Investment Company Act of 1940,
as amended (the "1940 Act"), and as used in this Proxy Statement, means: the
affirmative vote of the lesser of (1) 67% of the voting securities of each
Portfolio present at the meeting if more than 50% of the outstanding shares of
the Portfolio are present in person or by proxy or (2) more than 50% of the
outstanding shares of each Portfolio. Approval of Proposal 2 requires the
affirmative vote of a plurality of the shares of each Fund voting at the Special
Meeting. Approval of Proposal 4 requires the affirmative vote of a majority of
the shares of each Fund voting at the Special Meeting.
-2-
Abstentions and broker non-votes will have the effect of a "no" vote for
Proposals 1 and 3, which require the approval of a specified percentage of the
outstanding shares of each Portfolio, if such vote is determined on the basis of
obtaining the affirmative vote of more than 50% of the outstanding shares of the
Portfolio. Abstentions and broker non-votes will not constitute "yes" or "no"
votes, and will be disregarded in determining the voting securities "present" if
such vote is determined on the basis of the affirmative vote of 67% of the
voting securities of the Portfolio present at the Special Meeting with respect
to Proposals 1 and 3. Abstentions and broker non-votes will not be counted in
favor of, but will have no other effect on the vote for Proposals 2 and 4, which
require the approval of a plurality of the shares of each Fund, and a majority
of the shares of each Fund, respectively, voting at the Special Meeting.
The Portfolios of the Warburg Pincus Trust and Warburg Pincus Trust II (the
"Trust Portfolios") offer their shares only to certain insurance companies
("Participating Insurance Companies") for allocation to certain of their
separate accounts established for the purpose of funding variable annuity
contracts and variable life insurance contracts and tax qualified pension and
retirement plans. The shares of the Trust Portfolios are currently held only by
Participating Insurance Companies. Under current law, the Participating
Insurance Companies are required to solicit voting instructions from variable
annuity contract owners who beneficially own shares in any of the Trust
Portfolios as of the Record Date and must vote all shares held in the separate
account in proportion to the voting instructions received for the Special
Meeting, or any adjournment thereof. The Participating Insurance Companies will
vote shares of the Trust Portfolios for which no instructions have been received
in the same proportion as they vote shares for which they have received
instructions. Abstentions will have the effect of a negative vote on the
proposals. Unmarked voting instructions will be voted in favor of the proposals.
Shareholders of each Portfolio will vote separately with respect to each of
Proposals 1 and 3 (if applicable); and shareholders of each Fund will vote
together on Proposals 2 and 4.
The following table summarizes those voting requirements:
-3-
SHAREHOLDERS ENTITLED VOTE REQUIRED
TO VOTE FOR APPROVAL
--------------------- ---------------------
Proposal 1 Shareholders of each Portfolio Approved by a "majority of the
(Approval of new Investment Advisory vote separately outstanding voting securities"
Agreement) of each Portfolio
Proposal 2 Shareholders of each Fund vote Each nominee must be elected by
(Election of Directors/ together for each nominee (if a a plurality of the shares of the
Trustees) Fund has several Portfolios, Fund voting at the Special
shareholders of all Portfolios Meeting
vote together as a single class)
Proposal 3 Shareholders of each Portfolio Approved by a "majority of the
(Approval of new Sub-Investment Advisory vote separately outstanding voting securities"
Agreement) of each Portfolio
Proposal 4 Shareholders of each Fund vote Approved by a majority of the
(Ratification of selection of Accountants) separately shares of each Fund voting at
the Special Meeting
Holders of record of the shares of common stock or beneficial interest, as
the case may be, of each Portfolio at the close of business on March 9, 1999
(the "Record Date"), as to any matter on which they are entitled to vote, will
be entitled to one vote per share on all business of the Special Meeting. The
table below sets forth the number of shares outstanding for each Portfolio as of
March 9, 1999.
NUMBER OF SHARES OUTSTANDING
NAME OF THE PORTFOLIO AS OF MARCH 9, 1999
- -------------------------------------------- ---------------------------
Warburg Pincus Balanced Fund
Warburg Pincus Capital Appreciation Fund
Warburg Pincus Cash Reserve Fund
Warburg Pincus Emerging Growth Fund
Warburg Pincus Emerging Markets Fund
Warburg Pincus Fixed Income Fund
Warburg Pincus Global Fixed Income Fund
-4-
NUMBER OF SHARES OUTSTANDING
NAME OF THE PORTFOLIO AS OF MARCH 9, 1999
- -------------------------------------------- ---------------------------
Warburg Pincus Global Post-Venture Capital Fund
Warburg Pincus Growth & Income Fund
Warburg Pincus Health Sciences Fund
Warburg Pincus Institutional Fund, Inc.:
Emerging Markets Portfolio
International Equity Portfolio
Japan Growth Portfolio
Post-Venture Capital Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Value Portfolio
Warburg Pincus Intermediate Maturity Government Fund
Warburg Pincus International Equity Fund
Warburg Pincus International Small Company Fund
Warburg Pincus Japan Growth Fund
Warburg Pincus Japan Small Company Fund
Warburg Pincus Major Foreign Markets Fund
Warburg Pincus New York Intermediate Municipal Fund
Warburg Pincus New York Tax Exempt Fund
Warburg Pincus Post-Venture Capital Fund
Warburg Pincus Small Company Growth Fund
Warburg Pincus Small Company Value Fund
Warburg Pincus WorldPerks Money Market Fund
Warburg Pincus WorldPerks Tax
Free Money Market Fund
Warburg Pincus Trust:
International Equity Portfolio
Growth & Income Portfolio
Emerging Markets Portfolio
Post-Venture Capital Portfolio
Small Company Growth Portfolio
Warburg Pincus Trust II:
Fixed Income Portfolio
Global Fixed Income Portfolio
-5-
Annex I attached hereto sets forth information as of March 9, 1999
regarding the persons known by each Portfolio to beneficially own more than 5%
of the outstanding shares of such Portfolio.
Each Portfolio provides periodic reports to all of its shareholders which
highlight relevant information, including investment results and a review of
portfolio changes. You may receive an additional copy of the most recent annual
report for each Portfolio and a copy of any more recent semiannual report,
without charge, by calling 800-WARBURG (800-927-2874) or by writing to Warburg
Pincus Funds, P.O. Box 9030, Boston, MA 02205-9030.
PROPOSAL 1: APPROVAL OF NEW
INVESTMENT ADVISORY AGREEMENT
INTRODUCTION
Warburg currently acts as the investment adviser to each Portfolio pursuant
to investment advisory agreements entered into between each Portfolio and
Warburg (each a "Current Advisory Agreement" and, collectively, the "Current
Advisory Agreements"). On February 15, 1999, the parent companies of Warburg
entered into a Merger Agreement and Plan of Reorganization (the "Merger
Agreement") with Credit Suisse Group ("Credit Suisse"). Under the terms of the
Merger Agreement, Credit Suisse will acquire the direct parent company of
Warburg (the "Acquisition"). Upon consummation of the Acquisition, Credit Suisse
intends to combine Warburg with Credit Suisse's existing U.S. asset management
business (the "Reorganization"), and such combined businesses are expected to be
conducted by a single direct or indirect wholly-owned U.S. subsidiary of Credit
Suisse, which would be organized as a limited liability company or a corporation
(the "New Adviser"). Following consummation of the Reorganization, the New
Adviser would act as the investment adviser to each Portfolio, as further
described below. It is currently anticipated that the New Adviser will operate
under the name "Credit Suisse Asset Management" (followed by an indication of
its status as a limited liability company or a corporation). However, it is
possible that the Acquisition will be consummated but that the Reorganization
will be delayed or ultimately not consummated, in which case Warburg (under
Credit Suisse ownership) would continue to act as the investment adviser to each
Portfolio until such time (if ever) as the Reorganization is consummated. The
Acquisition and the Reorganization are together referred to herein as the
"Merger". Upon completion of the Reorganization, the headquarters of the New
Adviser will be in New York; until completion of the Reorganization, the
headquarters of Warburg are expected to remain in New York.
-6-
The Acquisition and the Reorganization are expected to be consummated
simultaneously. In such event, consummation of the Merger would constitute a
single "assignment," as that term is defined in the 1940 Act, of each
Portfolio's Current Advisory Agreement with Warburg. As required by the 1940
Act, each of the Current Advisory Agreements provides for its automatic
termination in the event of its assignment. In anticipation of the Merger, a new
investment advisory agreement (each a "New Advisory Agreement" and,
collectively, the "New Advisory Agreements," together with the Current Advisory
Agreements, the "Advisory Agreements") between each Fund and the New Adviser is
being proposed for approval by shareholders of each Portfolio to take effect
upon consummation of the Acquisition and Reorganization. However, if the
Acquisition is consummated but the Reorganization is delayed or not ultimately
consummated, each New Advisory Agreement would take effect between the
applicable Portfolio and Warburg (under Credit Suisse ownership) upon
consummation of the Acquisition, and would remain in effect with Warburg until
such time (if ever) as the Reorganization is consummated; approval of a New
Advisory Agreement at the Special Meeting will constitute shareholder approval
for such New Advisory Agreement to take effect with the New Adviser if the
Acquisition and the Reorganization are consummated simultaneously, and to take
effect with Warburg if the Acquisition is consummated prior to consummation of
the Reorganization.
In the event that the Acquisition and the Reorganization are not
simultaneously consummated, upon consummation of the Reorganization, each New
Advisory Agreement would be transferred to the New Adviser as part of the
combination of the businesses of Warburg and Credit Suisse's existing U.S. asset
management business, and the New Adviser thereafter would act as the investment
adviser to each Portfolio pursuant to such New Advisory Agreement. If not
consummated simultaneously with the Acquisition, consummation of the
Reorganization could be deemed to constitute a second "assignment" of each
Portfolio's investment advisory agreement (which would result in its automatic
termination, as discussed above); approval of a New Advisory Agreement at the
Special Meeting also will constitute shareholder approval for such New Advisory
Agreement to take effect with the New Adviser upon consummation of the
Reorganization (if consummated) in the event that the Reorganization is
consummated after consummation of the Acquisition.
-7-
A copy of the master form of the New Advisory Agreement is attached hereto
as Exhibit A. THE NEW ADVISORY AGREEMENT FOR EACH PORTFOLIO IS IN ALL MATERIAL
RESPECTS ON THE SAME TERMS AS THE CORRESPONDING CURRENT ADVISORY AGREEMENT
(except that the New Adviser will be the investment adviser following
consummation of the Reorganization). Conforming changes are being recommended to
the New Advisory Agreement in order to promote consistency among all of the
funds currently advised by Warburg and to permit ease of administration. The
material terms of each Current Advisory Agreement are described under
"Description of the Current Advisory Agreements" below.
BOARD RECOMMENDATION
On March 8, 1999, the Board of Directors or Trustees, as the case may be
(hereinafter referred to as "Directors"), of each Fund, including the Directors
who are not parties to any such agreement or "interested persons" (as defined
under the 1940 Act) of any such party (the "Non-interested Directors"), voted
unanimously to approve the New Advisory Agreements and to recommend their
respective approval to shareholders.
The Directors of each Fund recommend that the Fund's shareholders vote in
favor of the approval of the New Advisory Agreement for each Portfolio.
BOARD EVALUATION
On February 19, 1999, representatives of Warburg and Credit Suisse met in
person with the Non-interested Directors of each Fund. At that time, the
representatives described the general terms of the Merger and the anticipated
benefits for the Warburg organization and for the Funds and Warburg's other
investment advisory clients.
Credit Suisse subsequently furnished the Non-interested Directors with
additional information regarding the Merger, including the terms of the Merger
and additional information regarding Credit Suisse and its affiliates, including
its existing U.S. asset management business. In a subsequent in person meeting,
the Non-interested Directors discussed this information among themselves and
with representatives of Warburg and Credit Suisse. They were assisted in their
review of this information by their independent legal counsel.
In the course of these discussions, Warburg advised the Non-interested
Directors that it did not expect that the proposed Merger would have a material
effect on the operations of the Funds or their shareholders. Warburg has advised
the Non-interested Directors that the Merger Agreement, by its terms, does not
contemplate any changes in the structure or operations of the Funds (other than
certain changes in the Board as discussed under "Proposal 2: Election of
Directors/Trustees" below). However, Warburg has advised the Non-interested
-8-
Directors that, as a result of its operations being combined with Credit
Suisse's existing U.S. asset management business, it is possible that changes in
certain personnel and service providers currently involved in providing services
to the Funds may result from future efforts to combine the strengths and
efficiencies of both firms. Senior executives of Warburg are expected to retain
similar positions in the combined firm following consummation of the
Reorganization. In their discussions with the Non-interested Directors, Warburg
and Credit Suisse representatives also emphasized the strengths of the Credit
Suisse organization and its commitment to provide the combined asset management
organization with the resources necessary to continue to provide high quality
services to the Funds and other investment advisory clients of the organization.
The Board of each Fund was advised that Warburg intends to rely on Section
15(f) of the 1940 Act, which provides a non-exclusive safe harbor for an
investment adviser to an investment company or any of the investment adviser's
affiliated persons (as defined under the 1940 Act) to receive any amount or
benefit in connection with a change in control of the investment adviser so long
as two conditions are met. First, for a period of three years after the
Acquisition, at least 75% of the board members of the investment company must
not be "interested persons" of the investment company's investment adviser or
its predecessor adviser. On or prior to the consummation of the Acquisition,
each of the Boards, assuming the election of the nominees that shareholders are
being asked to elect in "Proposal 2: Election of Directors/Trustees," would be
in compliance with this provision of Section 15(f). (See "Proposal 2: Election
of Directors/Trustees".) Second, an "unfair burden" must not be imposed upon the
investment company as a result of such transaction or any express or implied
terms, conditions or understandings applicable thereto. The term "unfair burden"
is defined in Section 15(f) to include any arrangement during the two-year
period after the transaction whereby the investment adviser, or any interested
person of any such adviser, receives or is entitled to receive any compensation,
directly or indirectly, from the investment company or its shareholders (other
than fees for bona fide investment advisory or other services) or from any other
person in connection with the purchase or sale of securities or other property
to, from or on behalf of the investment company (other than bona fide ordinary
compensation as principal underwriter for such investment company). No such
compensation agreements are contemplated in connection with the Merger. Warburg
and Credit Suisse have undertaken to pay the costs of preparing and distributing
proxy materials to, and of holding the Special Meetings as well as other direct
fees and expenses incurred by the Funds in connection with the Merger, including
the fees and expenses of legal counsel to the Funds and the Non-interested
Directors.
During the course of their deliberations, the Non-interested Directors
considered a variety of factors including the nature, quality and extent of the
services that Warburg has provided and the New Adviser will provide to the
Portfolios; the continuity from and quality of personnel from Warburg to the New
Adviser; the increased complexity of the domestic and international securities
markets; current and developing conditions in the financial services industry,
including the entry into the industry of large and well capitalized companies
which are spending and appear to be prepared to continue to spend substantial
sums to engage personnel and to provide services to competing investment
companies; and the financial resources of Credit Suisse and the continuance of
appropriate incentives to assure that the New Adviser will furnish high quality
services to the Funds.
-9-
In addition to the foregoing factors, the Non-interested Directors gave
careful consideration to the likely impact of the Merger on the Funds and
Warburg's asset management operations. In this regard, the Non-interested
Directors considered, among other things, the continuity of the day-to-day
management of the Portfolios after the Merger; the maintenance of the identical
contractual advisory fee rates; the substantially identical nature of the
Current Advisory Agreements to the New Advisory Agreements (other than the
change to the New Adviser as the investment adviser upon consummation of the
Reorganization); the structure of the Merger; Credit Suisse's commitment to the
New Adviser's paying compensation adequate to attract and retain top quality
personnel; Credit Suisse's strategy for the development of its asset management
business in the United States through the New Adviser; information regarding the
financial resources and business reputation of Credit Suisse and its asset
management operations; and the complementary nature of various aspects of the
current businesses of Warburg and Credit Suisse's asset management business and
the intention ultimately to develop a single brand in the U.S. mutual fund
business.
In their deliberations, the Board of each Fund, including its
Non-interested Directors, considered the above-referenced factors as they relate
to Warburg under the assumption that both the Reorganization is consummated and
that, alternatively, it is not.
The Non-interested Directors considered the foregoing factors with respect
to each of the Portfolios.
On March 8, 1999, the Directors of each Fund, including the Non-interested
Directors of each Fund, unanimously approved the New Advisory Agreements.
INFORMATION CONCERNING THE TRANSACTION, CREDIT SUISSE AND CSAM
Under the Merger Agreement, Credit Suisse will pay up to $650 million to
Warburg, Pincus Counsellors G.P. ("Counsellors") for Warburg in a combination of
cash and Credit Suisse common stock, which includes an initial $450 million
payable at closing and additional contingent consideration of up to $200 million
payable over three years. Counsellors, 70% of which is owned by Warburg, Pincus
& Co. and 30% of which is owned by certain employees of Warburg, is the indirect
owner of Warburg.
-10-
The Acquisition is subject to a number of conditions, including (but not
limited to) the absence of any judgment or injunction preventing the
Acquisition, or any governmental litigation challenging the Acquisition or
seeking damages in connection therewith or private litigation that is reasonably
likely to succeed on the merits, and the continued accuracy of the
representations and warranties contained in the Merger Agreement; the consent to
the "assignment" of the advisory agreements resulting from the Acquisition by
Warburg advisory clients whose advisory contracts provide for the management of
at least $18 billion of assets (excluding for such purpose fluctuations in
market value of assets under management subsequent to December 31, 1998) and
$13.5 billion of assets (including all fluctuations in market value); the
approval of the governing Board and shareholders of each Fund having more than
$10 million of net assets of the matters set forth in Proposals 1 and 3 of this
proxy statement; no more than 25% of the Directors of any Fund being "interested
persons" (as defined in the 1940 Act) of Counsellors, Credit Suisse or their
respective affiliates; the contemporaneous consummation of the Private Equity
Investment (as described below); Credit Suisse having been granted a perpetual,
world-wide, royalty-free license to use the "Warburg Pincus" name in the asset
management sector of the financial services industry; and all necessary
regulatory approvals. Each of the foregoing conditions may be waived in whole or
in part in connection with the consummation of the Acquisition. The Acquisition
is expected to close in mid-1999, although there is no assurance that it will be
consummated.
Counsellors and Warburg Pincus Asset Management Holdings, Inc. have agreed
to use their reasonable best efforts to assure, prior to the closing of the
Acquisition, the satisfaction of the conditions set forth in Section 15(f) of
the 1940 Act with respect to each Fund (see "Board Evaluation" above for Section
15(f) requirements). In addition, the Merger Agreement provides that, as of the
closing of the Acquisition, the Board of each Fund shall be composed of eight
Directors consisting of one Director selected by Counsellors who is an officer
of the parent company of Warburg (who shall be the Vice-Chairman of the Board of
such Fund), one Director selected by Credit Suisse who is an officer of Credit
Suisse or one of its subsidiaries (who shall be Chairman of the Board of such
Fund) and six Directors who are not "interested persons" of Counsellors, Credit
Suisse or their respective affiliates within the meaning of the 1940 Act.
In addition to acquiring Warburg, Credit Suisse also has agreed to acquire
an interest in the private equity business of Warburg, Pincus & Co., the current
ultimate parent company of Warburg. Credit Suisse has agreed to purchase a 19.9%
passive minority stake in Warburg, Pincus & Co.'s private equity business (the
"Private Equity Investment"). Warburg, Pincus & Co. manages over $7 billion in
private equity investments, with an additional $5 billion of committed capital
investments available for investment.
-11-
Each of Messrs. John L. Furth and Arnold M. Reichman, current directors of
the Funds (Mr. Reichman also being a nominee for Director of the Funds), is a
partner of Counsellors and of Warburg, Pincus & Co., the current ultimate parent
company of Warburg, and will share in the purchase prices received by
Counsellors and Warburg, Pincus & Co. from Credit Suisse in connection with the
Acquisition and the Private Equity Investment, respectively.
The information set forth above concerning the Merger has been provided to
the Funds by Warburg, and the information set forth below concerning Credit
Suisse and Credit Suisse Asset Management ("CSAM") has been provided to the
Funds by Credit Suisse.
Credit Suisse Group
Credit Suisse Group is a global financial services company, providing a
comprehensive range of banking and insurance products. Active on every continent
and in all major financial centers, Credit Suisse comprises five business units
- -- CSAM (asset management), Credit Suisse First Boston (investment banking);
Credit Suisse Private Banking (private banking); Credit Suisse (retail banking);
and Winterthur (insurance). Credit Suisse has approximately $680 billion of
global assets under management and employs approximately 62,000 people
worldwide. The principal business address of Credit Suisse is Paradeplatz 8, CH
8070, Zurich, Switzerland.
Credit Suisse Asset Management
CSAM is the institutional asset management and mutual fund arm of Credit
Suisse. CSAM employs approximately 1,600 people worldwide and has global assets
under management of approximately $210 billion in multiple product services,
including equities, fixed income, derivatives and balanced portfolios. The
principal business address of CSAM is Uetlibergstrasse 231, CH 8045, Zurich,
Switzerland.
[Description of Credit Suisse's current U.S. asset management business to
be provided.]
DESCRIPTION OF THE CURRENT ADVISORY AGREEMENTS
Under each Current Advisory Agreement, Warburg provides each Portfolio with
ongoing investment advisory services. Warburg (a) manages each Portfolio's
assets in accordance with the Portfolio's investment objective and policies as
stated in the Portfolio's Prospectus and Statement of Additional Information,
(b) makes investment decisions for the Portfolio and (c) places purchase and
sale orders for securities on behalf of the Portfolio [1] In providing those
services, Warburg provides investment research and supervision of the
Portfolio's investments and conducts a continual program of investment,
evaluation and, if appropriate, sale and reinvestment of the Portfolio's assets.
-12-
Under each Current Advisory Agreement, each Portfolio is responsible for
expenses other than those incurred by Warburg in performance of its services
under the Current Advisory Agreement (which would include fees payable to any
investment sub-adviser [2] 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 Warburg or any of
its affiliates; fees of any pricing service employed to value shares of the
Portfolio; Securities and Exchange Commission (the "SEC") 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
Directors of the Fund; and any extraordinary expenses. Each Portfolio is also
responsible for nonrecurring expenses which may arise, including costs of any
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.
Warburg is responsible for the payment of the compensation and expenses of
all Directors, officers and employees of each Fund who are affiliated with
Warburg.
- --------
1 In the case of Warburg Pincus Cash Reserve Fund and Warburg Pincus New
York Tax Exempt Fund, Warburg makes only general investment decisions
for the Portfolio including decisions concerning (i) the specific
types of securities to be held by the Portfolio and the proportion of
the Portfolio's assets that should be allocated to such investments
during particular market cycles, (ii) the specific issuers whose
securities will be purchased or sold by the Portfolio, (iii) the
appropriate maturity of its portfolio investments and (iv) the
appropriate average weighted maturity of its portfolio in light of
current market conditions.
2 Except in the case of Warburg Pincus Cash Reserve Fund and Warburg
Pincus New York Tax Exempt Fund, where the sub-advisory fees are paid
directly by the Fund.
-13-
In return for the services provided by Warburg as investment adviser, and
the expenses it assumes under each Current Advisory Agreement, each Portfolio
pays Warburg an advisory fee at an annual rate based on the Portfolio's average
daily net assets. The advisory fee rate for each Portfolio's most recently
completed fiscal year, after waivers and/or expense limitations, is set forth in
the table below. As of the end of each Portfolio's last fiscal year, each
Portfolio had net assets and paid an aggregate advisory fee to Warburg during
such period as set forth below. For each Portfolio's current contractual
advisory fee rate, see Exhibit B attached to this Proxy Statement.
AGGREGATE
FISCAL YEAR ADVISORY FEE ADVISORY FEE
PORTFOLIO ENDED NET ASSETS RATE PAID
- ---------------------------------------- ------------------ ----------- ------------- -------------
Warburg Pincus Balanced Fund
10/31/98
Warburg Pincus Capital Appreciation Fund
10/31/98
Warburg Pincus Cash Reserve Fund
12/31/98
Warburg Pincus Emerging Growth Fund
10/31/98
Warburg Pincus Emerging Markets Fund
10/31/98
Warburg Pincus Fixed Income Fund
10/31/98
Warburg Pincus Global Fixed Income Fund
10/31/98
Warburg Pincus Global Post-Venture Capital
Fund 10/31/98
Warburg Pincus Growth & Income Fund
10/31/98
Warburg Pincus Health Sciences Fund
10/31/98
Warburg Pincus Institutional Fund, Inc.:
Emerging Markets Portfolio
10/31/98
International Equity Portfolio
10/31/98
Japan Growth Portfolio
10/31/98
-14-
AGGREGATE
FISCAL YEAR ADVISORY FEE ADVISORY FEE
PORTFOLIO ENDED NET ASSETS RATE PAID
- ---------------------------------------- ------------------ ----------- ------------- -------------
Post-Venture Capital Portfolio
10/31/98
Small Company Growth Portfolio
10/31/98
Small Company Value Portfolio
10/31/98
Value Portfolio
10/31/98
Warburg Pincus Intermediate Maturity
Government Fund 10/31/98
Warburg Pincus International Equity Fund
10/31/98
Warburg Pincus International Small Company
Fund 10/31/98
Warburg Pincus Japan Growth Fund
10/31/98
Warburg Pincus Japan Small Company Fund
10/31/98
Warburg Pincus Major Foreign Markets Fund
10/31/98
Warburg Pincus New York Intermediate
Municipal Fund 10/31/98
Warburg Pincus New York Tax Exempt Fund
12/31/98
Warburg Pincus Post-Venture Capital Fund
10/31/98
Warburg Pincus Small Company Growth Fund
10/31/98
Warburg Pincus Small Company Value Fund
10/31/98
Warburg Pincus WorldPerks Money Market Fund
12/31/98
Warburg Pincus WorldPerks Tax Free Money
Market Fund 12/31/98
Warburg Pincus Trust:
International Equity Portfolio
12/31/98
Growth & Income Portfolio
12/31/98
Emerging Markets Portfolio
12/31/98
- -
Post-Venture Capital Portfolio
12/31/98
Small Company Growth Portfolio
12/31/98
Warburg Pincus Trust II:
Fixed Income Portfolio
12/31/98
Global Fixed Income Portfolio
12/31/98
-15-
Each Current Advisory Agreement further provides that Warburg shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
any Portfolio in connection with matters to which such agreement relates, except
a loss resulting from willful misfeasance, bad faith or gross negligence on the
part of Warburg in the performance of its duties or from reckless disregard by
Warburg of its obligations and duties under such agreement.
Each Current Advisory Agreement may be terminated without penalty upon
ninety (90) days' written notice by Warburg and upon sixty (60) days' written
notice by the Fund. Each Portfolio may agree to terminate its Current Advisory
Agreement either by the vote of a majority of the outstanding voting securities
of the Portfolio, or by a vote of the Board. As stated above, each Current
Advisory Agreement automatically terminates in the event of its assignment.
On March __, 1999, Warburg, CSAM and the relevant sub-advisers applied for
an exemptive order from the SEC which, if granted, would permit the New Advisory
Agreements and sub-investment advisory agreements between each of the Portfolios
and the New Adviser to go into effect without shareholder approval beginning on
the consummation of the Merger and continuing for a period of up to 150 days,
through the date on which each of the new agreements are approved or disapproved
by the respective shareholders of each Portfolio. It is expected that the terms
of the exemptive order, if granted, would allow the New Adviser to receive
advisory fees pursuant to the New Advisory Agreements, provided that such fees
would be held in escrow pending shareholder approval for the agreements.
Warburg has acted as the investment adviser for each Portfolio since each
Portfolio commenced operations, except as shown below. Also shown below is the
date of each Current Advisory Agreement, the date when each Current Advisory
Agreement was last approved by the Directors and the shareholders of each
Portfolio and the date to which each Current Advisory Agreement was last
continued. Each Current Advisory Agreement was last submitted to shareholders
prior to its becoming effective, as required by the 1940 Act.
-16-
DATE OF DATE LAST APPROVED BY
CURRENT ----------------------
COMMENCEMENT OF ADVISORY DATE CONTINUED
PORTFOLIO OPERATIONS* AGREEMENT DIRECTORS SHAREHOLDERS TO
- --------------------------------------- ---------- --------- ------------ ------------- --------------
Warburg Pincus Balanced Fund
10/6/88 3/4/96 3/8/99 4/17/00
Warburg Pincus Capital Appreciation
Fund 8/17/87 7/10/87 3/8/99 4/17/00
Warburg Pincus Cash Reserve Fund
4/16/85 4/16/85 3/8/99 4/17/00
Warburg Pincus Emerging Growth Fund
1/21/88 1/21/88 3/8/99 4/17/00
Warburg Pincus Emerging Markets Fund
12/30/94 12/30/94 3/8/99 4/17/00
Warburg Pincus Fixed Income Fund
8/17/87 7/10/87 3/8/99 4/17/00
Warburg Pincus Global Fixed Income
Fund 11/1/90 11/1/90 3/8/99 4/17/00
Warburg Pincus Global Post-Venture
Capital Fund 9/30/96 7/1/97 3/8/99 7/1/97 4/17/00
Warburg Pincus Growth & Income Fund
10/6/88 3/4/96 3/8/99 4/17/00
Warburg Pincus Health Sciences Fund
12/31/96 12/31/96 3/8/99 4/17/00
Warburg Pincus Institutional Fund,
Inc.:
Emerging Markets Portfolio
9/30/96 9/30/96 3/8/99 4/17/00
- ---------
* Warburg commenced providing investment advisory services for Warburg
Pincus Balanced and Warburg Pincus Growth & Income Funds on
September 30, 1994 and January 1, 1992, respectively.
-17-
DATE OF DATE LAST APPROVED BY
CURRENT ----------------------
COMMENCEMENT OF ADVISORY DATE CONTINUED
PORTFOLIO OPERATIONS* AGREEMENT DIRECTORS SHAREHOLDERS TO
- --------------------------------------- ---------- --------- ------------ --------------- --------------
International Equity Portfolio
9/1/92 9/1/92 3/8/99 4/17/00
Japan Growth Portfolio
10/31/97 10/31/97 3/8/99 4/17/00
Post-Venture Capital Portfolio
10/31/97 10/31/97 3/8/99 4/17/00
Small Company Growth Portfolio
12/29/95 12/29/95 3/8/99 4/17/00
Small Company Value Portfolio
10/31/97 10/31/97 3/8/99 4/17/00
Value Portfolio
6/30/97 6/30/97 3/8/99 4/17/00
Warburg Pincus Intermediate
Maturity Government Fund 8/22/88 8/22/88 3/8/99 4/17/00
Warburg Pincus International
Equity Fund 5/2/89 4/17/89 3/8/99 4/17/00
Warburg Pincus International Small
Company Fund 5/29/98 5/29/98 3/8/99 4/17/00
Warburg Pincus Japan Growth Fund
12/29/95 12/24/95 3/8/99 4/17/00
Warburg Pincus Japan Small
Company Fund 9/30/94 9/27/94 3/8/99 4/17/00
Warburg Pincus Major Foreign
Markets Fund 3/31/97 3/31/97 3/8/99 4/17/00
Warburg Pincus New York Intermediate
Municipal Fund 4/1/87 4/1/87 3/8/99 4/17/00
Warburg Pincus New York Tax Exempt
Fund 4/18/85 4/17/85 3/8/99 4/17/00
Warburg Pincus Post-Venture Capital
Fund 9/29/95 7/1/97 3/8/99 7/1/97 4/17/00
Warburg Pincus Small Company Growth
Fund 12/31/96 12/31/96 3/8/99 4/17/00
Warburg Pincus Small Company Value
Fund 12/29/95 12/29/95 3/8/99 4/17/00
Warburg Pincus WorldPerks Money
Market Fund 10/1/98 9/30/98 3/8/99 4/17/00
Warburg Pincus WorldPerks Tax Free
Money Market Fund 10/1/98 9/30/98 3/8/99 4/17/00
Warburg Pincus Trust:
International Equity Portfolio
6/30/95 6/20/95 3/8/99 4/17/00
Growth & Income Portfolio
10/31/97 10/10/97 3/8/99 4/17/00
Emerging Markets Portfolio
12/31/97 7/2/96 3/8/99 4/17/00
Post-Venture Capital Portfolio
9/30/96 7/1/97 3/8/99 7/1/97 4/17/00
Small Company Growth Portfolio
6/30/95 6/30/95 3/8/99 4/17/00
Warburg Pincus Trust II:
Fixed Income Portfolio
3/31/97 1/15/97 3/8/99 4/17/00
Global Fixed Income Portfolio
3/31/97 1/15/97 3/8/99 4/17/00
-18-
THE NEW ADVISORY AGREEMENTS
Shareholders are not being asked to approve or disapprove the Merger;
rather, they are being asked only to approve or disapprove the New Advisory
Agreements for the Portfolios. OTHER THAN IDENTIFICATION OF THE NEW ADVISER AND
THE EXECUTION AND TERMINATION DATES, THE NEW ADVISORY AGREEMENTS ARE
SUBSTANTIALLY SIMILAR TO THE CURRENT ADVISORY AGREEMENTS. IN PARTICULAR, THE
CONTRACTUAL ADVISORY FEE RATES CHARGED TO THE PORTFOLIOS WILL NOT BE CHANGED.
The New Advisory Agreement for each Portfolio will be dated as of the date
of the consummation of the Acquisition, which is expected to occur in mid-1999.
Each New Advisory Agreement will be in effect for an initial two-year term
ending on the second anniversary of the Acquisition, and may continue thereafter
from year to year with respect to a Portfolio only if specifically approved at
least annually by the Board of a relevant Fund or by the vote of "a majority of
the outstanding voting securities" of each Portfolio, and, in either event, the
vote of a majority of the Non-interested Directors, cast in person at a meeting
called for such purpose. In the event that shareholders of a Portfolio do not
approve the New Advisory Agreement, the corresponding Current Advisory Agreement
will remain in effect until the closing of the Acquisition, at which time it
would terminate. In such event, the Board of the relevant Fund will take such
action as it deems to be in the best interests of the relevant Portfolio and its
shareholders. In the event the Acquisition is not consummated, Warburg will
continue to provide services to each Portfolio in accordance with the terms of
each Current Advisory Agreement for such periods as may be approved at least
annually by the Board, including a majority of the Non-interested Directors.
-19-
DIFFERENCES BETWEEN THE CURRENT AND NEW ADVISORY AGREEMENTS
The New Advisory Agreements are substantially the same as the Current
Advisory Agreements in all material respects. The principal changes that have
been made are summarized below. The New Advisory Agreements reflect conforming
changes that have been made in order to promote consistency among all Funds
currently advised by Warburg and to permit ease of administration. For example,
the New Advisory Agreements expressly grant the investment adviser the authority
to exercise voting rights with respect to portfolio securities, to engage and
monitor sub-advisers for the Portfolio and to negotiate brokerage commissions on
behalf of the Portfolio. These rights were not expressly provided in all of the
Current Advisory Agreements.
In addition, each New Advisory Agreement would change the provisions
governing the use of the Warburg Pincus name and expand such provisions to
permit certain uses of the name Credit Suisse. Pursuant to a License Agreement
to be entered into among Warburg, Pincus & Co., Credit Suisse and other parties
thereto, Credit Suisse will be granted by Warburg, Pincus & Co. an exclusive
license of the rights to use and sublicense the names "Warburg Pincus" and
derivations and abbreviations thereof in the asset management sector of the
financial services industry (together the "Warburg Marks"). Under each New
Advisory Agreement, each Fund, with respect to each of its Portfolios, if any,
has the nonexclusive right to use one or more of the Warburg Marks and the name
"Credit Suisse" and derivations and abbreviations thereof (together the "CS
Marks") as part of its name or the names of certain classes of its shares, as
applicable, and to use the Warburg Marks and the CS Marks in the Fund's
investment products and services. This license continues only as long as the New
Advisory Agreement is in place, and with respect to the Warburg Marks only as
long as Credit Suisse continues to be a licensee of the Warburg Marks as
described above. As a condition of the license, each Fund, on behalf of each of
its Portfolios, if any, undertakes certain responsibilities and agrees to
certain restrictions, such as agreeing not to challenge the validity of the
Warburg Marks or the CS Marks or any ownership by Warburg, Pincus & Co. of the
Warburg Marks or Credit Suisse of the CS Marks, and the obligation to use the
names within commercially reasonable standards of quality. In the event the New
Advisory Agreement is terminated, each Fund, on behalf of each of its
Portfolios, if any, must not use a name likely to be confused with those
associated with the Warburg Marks or the CS Marks.
WARBURG AND CERTAIN AFFILIATES
Warburg is a professional investment firm which provides investment
services to investment companies, employee benefit plans, endowment funds,
foundations and other institutions and individuals. As of February 28, 1999,
Warburg managed approximately $___ billion of assets, including approximately
$__ billion of investment company assets. Incorporated in 1970, Warburg is
indirectly controlled by Warburg, Pincus & Co., which has no business other than
being a holding company of Warburg and its affiliates. Lionel I. Pincus, the
managing partner of Warburg, Pincus & Co., may be deemed to control both
Warburg, Pincus & Co. and Warburg. Warburg's principal business address is 466
Lexington Avenue, New York, NY 10017-3147.
-20-
Co-Administrators. Each Portfolio employs Counsellors Funds Service, Inc.
("Counsellors Service"), a wholly owned subsidiary of Warburg, as a
co-administrator. As co-administrator, Counsellors Service provides shareholder
liaison services to the Portfolio including responding to shareholder inquiries
and providing information on shareholder investments. Counsellors Service also
performs a variety of other services, including furnishing certain executive and
administrative services, acting as liaison between the Portfolio and its various
service providers, furnishing corporate secretarial services, which include
preparing materials for meetings of the Board, preparing proxy statements and
annual, semiannual and quarterly reports, assisting in other regulatory filings
as necessary and monitoring and developing compliance procedures for the Fund.
As compensation, each Portfolio pays Counsellors Service a fee calculated at an
annual rate of 0.10% of the Portfolio's average daily net assets, exclusive of
out-of-pocket expenses.
Each Portfolio employs PFPC Inc. ("PFPC"), an indirect, wholly owned
subsidiary of PNC Bank Corp., as a co-administrator. As a co-administrator, PFPC
calculates the Portfolio's net asset value, provides accounting services for the
Portfolio and assists in related aspects of the Portfolio's operations. As
compensation, each Portfolio pays PFPC a fee calculated as set forth below,
exclusive of out-of-pocket expenses. The principal business address of PFPC is
400 Bellevue Parkway, Wilmington, DE 19809.
PFPC
Co-Administration
Name of Portfolio Fee
- ----------------- ---
Warburg Pincus Balanced Fund
Warburg Pincus Capital Appreciation Fund Warburg
Pincus Cash Reserve Fund
Warburg Pincus Emerging Growth Fund
Warburg Pincus Emerging Markets Fund
Warburg Pincus Fixed Income Fund
Warburg Pincus Global Fixed Income Fund
Warburg Pincus Global Post-Venture Capital Fund
Warburg Pincus Growth & Income Fund
Warburg Pincus Health Sciences Fund
Warburg Pincus Institutional Fund, Inc.:
Emerging Markets Portfolio
International Equity Portfolio
-21-
PFPC
Co-Administration
Name of Portfolio Fee
- ----------------- ---
Japan Growth Portfolio
Post-Venture Capital Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Value Portfolio
Warburg Pincus Intermediate Maturity Government Fund
Warburg Pincus International Equity Fund
Warburg Pincus International Small Company Fund
Warburg Pincus Japan Growth Fund
Warburg Pincus Japan Small Company Fund
Warburg Pincus Major Foreign Markets Fund
Warburg Pincus New York Intermediate Municipal Fund
Warburg Pincus New York Tax Exempt Fund
Warburg Pincus Post-Venture Capital Fund
Warburg Pincus Small Company Growth Fund
Warburg Pincus Small Company Value Fund
Warburg Pincus WorldPerks Money Market Fund
Warburg Pincus WorldPerks Tax Free Money Market Fund
Warburg Pincus Trust:
International Equity Portfolio
Growth & Income Portfolio
Emerging Markets Portfolio
Post-Venture Capital Portfolio
Small Company Growth Portfolio
Warburg Pincus Trust II:
Fixed Income Portfolio
Global Fixed Income Portfolio
Distributor. Counsellors Securities Inc. ("Counsellors Securities") serves
as distributor of the shares of each Portfolio. Counsellors Securities is a
wholly owned subsidiary of Warburg and its principal business address is at 466
Lexington Avenue, New York, NY 10017-3147. Counsellors Securities receives a fee
at an annual rate equal to 0.25% of the average daily net assets of certain
Portfolios' Common Shares and up to 0.75% (currently 0.50%) of the average daily
net assets of a Portfolio's Advisor Shares for distribution services, pursuant
to a shareholder servicing and distribution plan (the "12b-1 Plan") adopted by
the Portfolio pursuant to Rule 12b-1 under the 1940 Act. 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, the sale of the Common Shares or the Advisor
Shares, as the case may be, and ongoing servicing and/or maintenance of the
accounts of the respective class of shareholders of the Portfolio.
-22-
AGGREGATE FEE
AGGREGATE FEE PAID TO
PAID COUNSELLORS
TO COUNSELLORS SECURITIES
SERVICE DURING DURING LAST
PORTFOLIO FISCAL YEAR ENDED LAST FISCAL YEAR FISCAL YEAR
- ------------------------------- ----------------- ------------------- -----------------------
Warburg Pincus
Balanced Fund
10/31/98
Warburg Pincus
Capital
Appreciation Fund 10/31/98
Warburg Pincus
Cash Reserve Fund 12/31/98
Warburg Pincus
Emerging Growth
Fund 10/31/98
Warburg Pincus
Emerging Markets
Fund 10/31/98
Warburg Pincus
Fixed Income Fund 10/31/98
Warburg Pincus
Global Fixed
Income Fund 10/31/98
Warburg Pincus
Global Post-
Venture Capital
Fund 10/31/98
Warburg Pincus
Growth & Income
Fund 10/31/98
Warburg Pincus
Health Sciences
Fund 10/31/98
Warburg Pincus
Institutional Fund, Inc.:
Emerging Markets
Portfolio 10/31/98
International
Equity Portfolio 10/31/98
Japan Growth
Portfolio 10/31/98
Post-Venture
Capital
Portfolio 10/31/98
-23-
AGGREGATE FEE
AGGREGATE FEE PAID TO
PAID COUNSELLORS
TO COUNSELLORS SECURITIES
SERVICE DURING DURING LAST
PORTFOLIO FISCAL YEAR ENDED LAST FISCAL YEAR FISCAL YEAR
- ------------------------------- ----------------- ------------------- -----------------------
Small Company
Growth Portfolio 10/31/98
Small Company
Value Portfolio 10/31/98
Value Portfolio
10/31/98
Warburg Pincus
Intermediate
Maturity
Government Fund 10/31/98
Warburg Pincus
International
Equity Fund 10/31/98
Warburg Pincus
International
Small Company Fund 10/31/98
Warburg Pincus
Japan Growth Fund 10/31/98
Warburg Pincus
Japan Small
Company Fund 10/31/98
Warburg Pincus
Major Foreign
Markets Fund 10/31/98
Warburg Pincus New
York Intermediate
Municipal Fund 10/31/98
Warburg Pincus New
York Tax Exempt
Fund 12/31/98
Warburg Pincus
Post-Venture
Capital Fund 10/31/98
Warburg Pincus
Small Company
Growth Fund 10/31/98
Warburg Pincus
Small Company
Value Fund 10/31/98
-24-
AGGREGATE FEE
AGGREGATE FEE PAID TO
PAID COUNSELLORS
TO COUNSELLORS SECURITIES
SERVICE DURING DURING LAST
PORTFOLIO FISCAL YEAR ENDED LAST FISCAL YEAR FISCAL YEAR
- ------------------------------- ----------------- ------------------- -----------------------
Warburg Pincus
WorldPerks Money
Market Fund 12/31/98
Warburg Pincus
WorldPerks Tax
Free Money Market
Fund 12/31/98
Warburg Pincus Trust:
International
Equity Portfolio 12/31/98
Growth & Income
Portfolio 12/31/98
Emerging Markets
Portfolio 12/31/98
Post-Venture
Capital
Portfolio 12/31/98
Small Company
Growth Portfolio 12/31/98
Warburg Pincus Trust II:
Fixed Income
Portfolio 12/31/98
Global Fixed
Income Portfolio 12/31/98
Counsellors Service is expected to continue to provide
services to the Portfolios under the current arrangements if the New Advisory
Agreements are approved. However, upon or shortly following the closing of the
Acquisition, Counsellors Securities is expected to cease to be the principal
underwriter of each Portfolio and will no longer perform certain other
distribution services due to restrictions imposed by regulations applicable to
Credit Suisse and its subsidiaries under the Bank Holding Company Act of 1956,
as amended. Such discontinuation of Counsellors Securities' services may be
delayed for an initial period if appropriate regulatory approvals are received
which will provide the Funds with additional time to select an appropriate new
principal underwriter and during any such period, Counsellors Securities would
be expected to continue to serve under the current arrangements.
-25-
Exhibit C sets forth the fees and other information regarding
other U.S. registered investment companies advised by Warburg or CSAM.
BROKERAGE COMMISSIONS ON PORTFOLIO TRANSACTIONS
In selecting brokers and dealers with which to place portfolio
transactions for a Portfolio, neither Warburg nor the New Adviser will consider
sales of shares of funds currently advised by either of them, although each may
place such transactions with brokers and dealers that sell shares of funds
currently advised by either of them. Allocation of Fund portfolio transactions
is supervised by Warburg. The Portfolios currently do not execute portfolio
transactions through Counsellors Securities or any other affiliate of Warburg.
Following the closing of the Acquisition, the Portfolios may be authorized to
execute portfolio transactions through Credit Suisse First Boston, an affiliate
of CSAM, or another Credit Suisse affiliated broker-dealer (including
Counsellors Securities), subject to compliance with the 1940 Act.
REQUIRED VOTE
Approval of the New Advisory Agreement for any Portfolio
requires the affirmative vote of a "majority of the outstanding voting
securities," as defined above, of the Portfolio. The Directors of each Fund,
including the Non-interested Directors, unanimously recommend that the
shareholders of each Portfolio vote in favor of this Proposal 1.
PROPOSAL 2: ELECTION OF DIRECTORS/TRUSTEES FOR EACH FUND
At the Special Meeting, eight (8) Directors are to be elected
who will constitute the Board of each Fund. For election of Directors at the
Special Meeting, each Fund's Board has approved the nomination of the following
individuals: William W. Priest, Arnold M. Reichman, Richard H. Francis, Jack W.
Fritz, Jeffrey E. Garten, James S. Pasman, Jr., Steven N. Rappaport and
Alexander B. Trowbridge. The election of Messrs. Priest, Francis, Pasman and
Rappaport to a Fund's Board will take effect only upon the closing of the
Acquisition (assuming Proposal 1 is approved by such Fund, or at least one
Portfolio of such Fund, where applicable); the election of Messrs. Reichman,
Fritz, Garten and Trowbridge will be immediately effective in any event as they
currently are members of each Board, although Messrs. Reichman and Garten have
not previously been presented to shareholders of certain Funds. Effective upon
the closing of the Acquisition, assuming Proposal 1 is approved by a Fund (or at
least one Portfolio of such Fund, where applicable), the terms of each of
Richard N. Cooper, John L. Furth and Thomas A. Melfe as current Directors of
such Fund will expire.
-26-
The persons named as proxies on the enclosed proxy card will
vote for the election of the nominees named above unless authority to vote for
any or all of the nominees is withheld in the proxy. Each Director so elected
will serve as a Director of the respective Fund until the next meeting of
shareholders, if any, called for the purpose of electing Directors and until the
election and qualification of a successor or until such Director sooner resigns,
dies or is removed as provided in the organizational documents of each Fund.
Each of the nominees has indicated that he is willing to serve
as a Director. If any or all of the nominees should become unavailable for
election due to events not now known or anticipated, the persons named as
proxies will vote for such other nominee or nominees as the Directors may
recommend.
The following table sets forth certain information concerning
the current Directors and the nominees. Unless otherwise noted, each of the
Directors and nominees has engaged in the principal occupation listed in the
following table for more than five years, but not necessarily in the same
capacity.
NOMINEES
PRESENT OFFICE WITH THE FUNDS (DATE
NOMINEE BECAME DIRECTOR), PRINCIPAL
OCCUPATION OR EMPLOYMENT AND
NAME (AGE) DIRECTORSHIPS
- ------------------------- --------------------------------------
William W. Priest* (56) Nominee for Director of the Funds;
c/o Credit Suisse Asset Chairman- Management Committee, Chief
Management Executive Officer and Executive
153 East 53rd Street Director of CSAM since 1990; Director
New York, NY 10022 of TIG Holdings, Inc.; Director of
other investment companies advised by
CSAM.
Arnold M. Reichman *+ (50) Director of the Funds since February
466 Lexington Avenue __, 1996; Managing Director and Chief
New York, NY 10017-3147 Operating Officer of Warburg;
Associated with Warburg since 1984;
Officer of Counsellors Securities and
other companies affiliated with
Warburg; Director/Trustee of other
investment companies in the Warburg
Pincus family of funds.
-27-
PRESENT OFFICE WITH THE FUNDS (DATE
NOMINEE BECAME DIRECTOR), PRINCIPAL
OCCUPATION OR EMPLOYMENT AND
NAME (AGE) DIRECTORSHIPS
- ------------------------- --------------------------------------
Richard H. Francis (65) Nominee for Director of the Funds;
40 Grosvenor Road Currently retired; Executive Vice
Short Hills, NJ 07078 President and Chief Financial Officer
of Pan Am Corporation and Pan American
World Airways, Inc. from 1988 to1991;
Director of one other investment
company advised by CSAM; Director of
The Infinity Mutual Funds, BISYS Group
Incorporated.
Jack W. Fritz (71) Director of the Funds since their
2425 North Fish Creek Road inception; Private investor;
P.O. Box 483 Consultant and Director of Fritz
Wilson, WY 83014 Broadcasting, Inc. and Fritz
Communications (developers and
operators of radio stations);
Director of Advo, Inc. (direct mail
advertising); Director/Trustee of
other investment companies in the
Warburg Pincus family of funds.
Jeffrey E. Garten (52) Director of the Funds since February
Box 208200 6, 1998; Dean of Yale School of
New Haven, CT 06520-8200 Management and William S. Beinecke
Professor in the Practice of
International Trade and Finance;
Undersecretary of Commerce for
International Trade from November 1993
to October 1995.
James S. Pasman, Jr. (68) Nominee for Director of the Funds;
29 The Trillium Currently retired; President and Chief
Pittsburgh, PA 15238 Operating Officer of National
InterGroup, Inc. from April 1989 to
March 1991; Chairman of Permian
Oil Co. from April 1989 to March 1991;
Director of two other investment
companies advised by CSAM; Director
of Education Management Corp., Tyco
International Ltd.; Trustee, BT
Insurance Fund Trust.
-28-
PRESENT OFFICE WITH THE FUNDS (DATE
NOMINEE BECAME DIRECTOR), PRINCIPAL
OCCUPATION OR EMPLOYMENT AND
NAME (AGE) DIRECTORSHIPS
- ------------------------- --------------------------------------
Steven N. Rappaport (49) Nominee for Director of the Funds;
c/o Loanet, Inc. President of Loanet, Inc.
153 East 53rd Street, (1997-present); Executive Vice
Suite 5500 President of Loanet, Inc.
New York, NY 10022 (1994-present); Director, President,
North American Operations, and former
Executive Vice President (1992-1993)
of Worldwide Operations of Metallurg
Inc. (metal alloy company); Executive
Vice President, Telerate, Inc.
(1987-1992); Partner, in the law firm
of Hartman & Craven until 1987;
Director of other investment companies
advised by CSAM.
Alexander B. Trowbridge (69) Director of the Funds since their
1317 F Street, N.W., inception; President of Trowbridge
5th Floor Partners, Inc. (business consulting)
Washington, DC 20004 from January 1990 to November 1996;
Director or Trustee of New England
Mutual Life Insurance Co., ICOS
Corporation (biopharmaceuticals),
WMX Technologies Inc. (solid and
hazardous waste collection and
disposal), The Rouse Company (real
estate development), Harris Corp.
(electronics and communications
equipment), The Gillette Co. (personal
care products) and Sun Company Inc.
(petroleum refining and marketing);
Director/Trustee of other investment
companies in the Warburg Pincus family
of funds.
* Nominees considered by the Funds and their counsel to be
"interested persons" (as defined in the 1940 Act) of the Funds or of their
investment adviser because of their employment by Warburg or CSAM.
+ Mr. Reichman, as a partner of Counsellors and of Warburg,
Pincus & Co., the current ultimate parent company of Warburg, will share in the
purchase prices received by Counsellors and Warburg, Pincus & Co. from Credit
Suisse in connection with the Acquisition and the Private Equity Investment,
respectively.
-29-
CURRENT DIRECTORS NOT STANDING FOR RE-ELECTION:
PRESENT OFFICE WITH THE FUNDS (DATE
PERSON BECAME DIRECTOR), PRINCIPAL
OCCUPATION OR EMPLOYMENT AND
NAME (AGE) DIRECTORSHIPS
- ------------------------- --------------------------------------
Richard N. Cooper* (64) Director of the Funds since their
Harvard University inception; Professor at Harvard
1737 Cambridge Street University; National Intelligence
Cambridge, MA 02138 Council from June 1995 until January
1997; Director or Trustee of
CircuitCity Stores, Inc. (retail
electronics and appliances) and
Phoenix Home Mutual Life Insurance
Company; Director/Trustee of other
investment companies in the Warburg
Pincus family of funds.
John L. Furth*+ (68) Director of the Funds since their
466 Lexington Avenue inception; Chairman of the Board of
New York, NY 10017-3147 the Funds and Warburg and Managing
Director of Warburg; Associated with
Warburg since 1970; Chairman of the
Board of other companies affiliated
with and investment companies advised
by Warburg; Director/ Trustee of other
investment companies in the Warburg
Pincus family of funds.
Thomas A. Melfe* (67) Director of the Funds since their
1251 Avenue of the Americas inception; Partner in the law firm of
29th Floor Piper & Marbury, L.L.P.; Partner in
New York, NY 10020-1104 the law firm of Donovan Leisure
Newton & Irvine from April 1984 to
April 1998; Chairman of the Board,
Municipal Fund for New York Investors,
Inc.; Director/Trustee of other
investment companies in the Warburg
Pincus family of funds.
* Directors considered by the Funds and their counsel to be
"interested persons" (as defined in the 1940 Act) of the Funds or of their
investment adviser. Mr. Furth is considered an "interested person" because of
his employment by Warburg. Mr. Cooper is considered an "interested person"
because he provides economic consulting services to a controlling person of
Warburg. Mr. Melfe is considered an "interested person" of Warburg Pincus
Intermediate Maturity Government Fund and Warburg Pincus Global Fixed Income
Fund because his law firm provided certain legal services to these Funds within
the past two fiscal years of the Funds.
-30-
+ Mr. Furth, as a partner of Counsellors and of Warburg,
Pincus & Co., the current ultimate parent company of Warburg, will share in the
purchase prices received by Counsellors and Warburg, Pincus & Co. from Credit
Suisse in connection with the Acquisition and the Private Equity Investment,
respectively.
The table below sets forth the number of shares of each
Portfolio owned directly or beneficially by the nominees to and Directors of the
relevant Board as of March 9, 1999. Nominees or Directors who do not own any
Shares have been omitted from the table. Portfolios which are not owned by any
nominees or Directors also have been omitted from the table.
ALL CURRENT
DIRECTORS AND
EXECUTIVE
PORTFOLIO OFFICERS AS A
NAME (1) [DIRECTOR] [DIRECTOR] [DIRECTOR] GROUP
- ----------------------- -------------- --------------- --------------- ----------------------
[to come]
(1) The information as to beneficial ownership is based on statements
furnished to the Funds by each Director and nominee. Unless otherwise
noted, beneficial ownership is based on sole voting and investment
power. Each Director's and nominee's individual shareholdings of any
Portfolio constitutes less than 1/4 of 1% of the shares outstanding of
such Portfolio.
(2) Mr. ______'s shares, representing ___% of the outstanding shares of
___________________________ Fund, are held in a fiduciary
capacity as to which he shares investment and voting power.
(3) As a group on March 9, 1999 the Directors and executive officers owned
beneficially ___% of the outstanding shares of _____________________
Fund of which ___ shares were held with sole investment and voting
power and ______ shares were held with shared investment and voting
power.
Certain accounts for which Warburg acts as investment adviser
owned _________ shares in the aggregate, or _____% of the outstanding shares of
________________________ Fund on March 9, 1999. [Put in chart form] Lionel I.
Pincus may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
-31-
To the best of each Fund's knowledge, as of March 9, 1999, no
person owned beneficially more than 5% of any Portfolio's outstanding shares
except as stated above or in Annex I.
RESPONSIBILITIES OF THE BOARD -- BOARD AND COMMITTEE MEETINGS
The Board of Directors of each Fund is responsible for the
general oversight of Fund business. A majority of the Board's members are not
affiliated with Warburg. These Non-interested Directors have primary
responsibility for assuring that each Fund is managed in a manner consistent
with the best interests of its shareholders.
Each Board meets in person at least quarterly to review the
investment performance of the Portfolios and other operational matters,
including policies and procedures designed to assure compliance with various
regulatory requirements. At least annually, the Non-interested Directors review
the fees paid to Warburg and its affiliates for investment advisory services and
administrative and distribution services.
The Board of each Fund has both an Audit Committee and a
Nominating Committee, the responsibilities of which are described below.
AUDIT COMMITTEE
The Board of each Fund has an Audit Committee consisting of
Messrs. Cooper, Fritz, Garten, Melfe and Trowbridge. The Audit Committee reviews
with management and the independent accountants for each Portfolio, among other
things, the scope of the audit and the internal controls for each Portfolio and
its agents, reviews and approves in advance the type of services to be rendered
by independent accountants, recommends the selection of independent accountants
for each Portfolio to the Board and, in general, considers and reports to the
Board on matters regarding each Portfolio's accounting and bookkeeping
practices.
NOMINATING COMMITTEE
The Board of each Fund has a Nominating Committee consisting
of all the Non-interested Directors. The Committee is charged with the duty of
making all nominations of Non-interested Directors and consideration of other
related matters. Shareholders' recommendations as to nominees received by Fund
management would be referred to the Committee for its consideration and action.
-32-
The following chart sets forth the number of meetings of the
Board, the Audit Committee and the Nominating Committee of each Fund during the
calendar year 1998.
NUMBER OF BOARD AND COMMITTEE MEETINGS HELD
DURING THE CALENDAR YEAR 1998
BOARD OF AUDIT NOMINATING
DIRECTORS COMMITTEE COMMITTEE
NAME OF FUND MEETINGS MEETINGS MEETINGS
- -------------------------------------------- ----------------- ---------------- ----------------
Warburg Pincus Balanced Fund
Warburg Pincus Capital Appreciation Fund
Warburg Pincus Cash Reserve Fund
Warburg Pincus Emerging Growth Fund
Warburg Pincus Emerging Markets Fund
Warburg Pincus Fixed Income Fund
Warburg Pincus Global Fixed Income Fund
Warburg Pincus Global Post-Venture
Capital Fund
Warburg Pincus Growth & Income Fund
Warburg Pincus Health Sciences Fund
Warburg Pincus Institutional Fund, Inc.:
Emerging Markets Portfolio
International Equity Portfolio
Japan Growth Portfolio
Post-Venture Capital Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Value Portfolio
Warburg Pincus Intermediate Maturity
Government Fund
Warburg Pincus International Equity Fund
Warburg Pincus International Small Company
Fund
Warburg Pincus Japan Growth Fund
Warburg Pincus Japan Small Company Fund
Warburg Pincus Major Foreign Markets Fund
Warburg Pincus New York Intermediate
Municipal Fund
Warburg Pincus New York Tax Exempt Fund
-33-
BOARD OF AUDIT NOMINATING
DIRECTORS COMMITTEE COMMITTEE
NAME OF FUND MEETINGS MEETINGS MEETINGS
- -------------------------------------------- ----------------- ---------------- ----------------
Warburg Pincus Post-Venture Capital Fund
Warburg Pincus Small Company Growth Fund
Warburg Pincus Small Company Value Fund
Warburg Pincus WorldPerks Money Market
Fund
Warburg Pincus WorldPerks Tax Free Money
Market Fund
Warburg Pincus Trust:
International Equity Portfolio
Growth & Income Portfolio
Emerging Markets Portfolio
Post-Venture Capital Portfolio
Small Company Growth Portfolio
Warburg Pincus Trust II:
Fixed Income Portfolio
Global Fixed Income Portfolio
Each incumbent Director attended at least 75% of the total
number of Board meetings and meetings of committees on which he served during
each Fund's last full fiscal year.
EXECUTIVE OFFICERS
The following persons are executive officers of each of the
Funds:
-34-
PRESENT OFFICE WITH THE FUNDS (YEAR
FIRST BECAME AN OFFICER); PRINCIPAL
NAME (AGE) OCCUPATION OR EMPLOYMENT (1)(2)
- ------------------------- --------------------------------------
Eugene L. Podsiadlo (42) President ( )
466 Lexington Avenue Managing Director of Warburg;
New York, NY 10017-3147 Associated with Warburg since 1991;
Officer of Counsellors Securities and
of other companies affiliated with and
investment companies in the Warburg
Pincus family of funds.
Steven B. Plump (40) Executive Vice President (1998)
466 Lexington Avenue Senior Vice President of Warburg;
New York, NY 10017-3147 Associated with Warburg since 1995;
Associated with Chemical Investment
Services and its affiliates from 1993
until 1995; Officer of Counsellors
Securities and other investment
companies in the Warburg Pincus
family of funds.
Stephen Distler (45) Vice President ( )
466 Lexington Avenue Managing Director of Warburg;
New York, NY 10017-3147 Associated with Warburg since 1984;
Officer of Counsellors Securities and
of other companie affiliated with and
investment companies in the Warburg
Pincus family of funds.
Lynn Martin ( ) Vice President of Warburg Pincus
466 Lexington Avenue Emerging Growth Fund, Warburg Pincus
New York, NY 10017-3147 Global Post-Venture Capital Fund,
Warburg Pincus Post-Venture Capital
Fund, Warburg Pincus Small Company
Growth Fund, Warburg Pincus Small
Company Value Fund, Warburg Pincus
Institutional Fund, Inc. and Warburg
Pincus Trust only ( )
Managing Director of Warburg;
Associated with Warburg
since 1992; ; Director of Weeden &
Company from ____ to _____; Vice
President of Prudential-Bache
Securities from ____ to ____;
Associated with MMG Patricof & Company
from ____ to ____; Officer of
Counsellors Securities and of other
companies affiliated with and
investment companies in the Warburg
Pincus family of funds.
-35-
PRESENT OFFICE WITH THE FUNDS (YEAR
FIRST BECAME AN OFFICER); PRINCIPAL
NAME (AGE) OCCUPATION OR EMPLOYMENT (1)(2)
- ------------------------- -------------------------------------
Janna Manes, Esq. (31) Vice President and Secretary (1996)
466 Lexington Avenue Vice President, Secretary and General
New York, NY 10017-3147 Counsel of Warburg; Associated with
Warburg since 1996; Associated with the
law firm of Willkie Farr & Gallagher
from 1993 to 1996; Officer of
Counsellors Securities and of other
companies affiliated with and
investment companies in the Warburg
Pincus family of funds.
Howard Conroy, CPA (45) Vice President and Chief Financial
466 Lexington Avenue Officer ( ) Vice President of
New York, NY 10017-3147 Warburg; Associated with Warburg since
1992; Officer of Counsellors Securities
and of other companies affiliated with
and investment companies in the Warburg
Pincus family of funds.
Daniel S. Madden, CPA (33) Treasurer and Chief Accounting Officer
466 Lexington Avenue ( ) Vice President of Warburg;
New York, NY 10017-3147 Associated with Warburg since 1995;
Associated with BlackRock Financial
Management, Inc. from September 1994 to
October 1996; Associated with CSAM from
April 1993 to September 1994; Officer
of other investment companies in the
Warburg Pincus family of funds.
- ----------------------
(1) Unless otherwise stated, all of the executive officers have been
associated with their respective companies for more than five years,
although not necessarily in the same capacity.
(2) The President, Treasurer and Secretary each holds office until his or
her successor has been duly elected and qualified, and all other
officers hold offices in accordance with the by-laws of the Fund.
It is presently contemplated that certain of the executive
officers of the Funds may change and that additional executive officers may be
added following consummation of the Acquisition, subject in each case to Board
approval and compliance with any restrictions imposed by regulations applicable
to Credit Suisse and its subsidiaries under the Bank Holding Company Act of
1956, as amended.
-36-
COMPENSATION OF DIRECTORS AND OFFICERS
Each Fund pays each Director who is not an employee of Warburg
an annual fee and an annual Audit Committee fee plus specified amounts for Board
meetings attended and compensates him for out-of-pocket expenses related to Fund
business.
Warburg supervises each Portfolio's investments, pays the
compensation and certain expenses of its personnel who serve as Directors and
officers of each Fund and receives an advisory fee for its services. Several of
each Fund's officers and Directors are also officers, Directors, employees or
indirect shareholders of Warburg and participate in the fees paid to that firm,
although each such Fund makes no direct payments to them.
The following Compensation Table provides in tabular form the
following data:
Column (1) All Directors who receive compensation
from each Fund.
Column (2) Aggregate compensation received by each
Director of each Fund during the calendar year 1998.
Column (3) Total compensation received by each
Director from Warburg Pincus Funds (collectively, the "Fund
Complex") during the calendar year 1998.
The Directors do not receive any pension or retirement
benefits from any Fund in the Fund Complex.
COMPENSATION TABLE
(1) (2) (3)
AGGREGATE COMPENSATION
----------------------------------------------------------------------------------
TOTAL
COMPENSATION
FROM THE FUNDS
AND FUND
COMPLEX PAID
TO DIRECTOR
NAME OF DIRECTOR FUND FUND FUND FUND FUND (no. of Funds)
- ---------------- --------------- --------------- -------------- --------------- --------------- --------------
[TO COME]
REQUIRED VOTE
Election of each of the listed nominees for Director requires
the affirmative vote of a plurality of the votes of each Fund cast at the
Special Meeting in person or by proxy. This means that the eight nominees
receiving the largest number of votes will be elected. The Directors of each
Fund, including the Non-interested Directors, unanimously recommend that the
shareholders of each Fund vote in favor of each of the nominees listed in this
Proposal 2.
-37-
PROPOSAL 3: APPROVAL OF NEW
SUB-INVESTMENT ADVISORY AGREEMENT
As investment adviser to Warburg Pincus WorldPerks Money
Market, Warburg Pincus WorldPerks Tax Free Money Market, Warburg Pincus
Post-Venture Capital and Warburg Pincus Global Post-Venture Capital Funds and
the Post-Venture Capital Portfolios of Warburg Pincus Institutional Fund, Inc.
and Warburg Pincus Trust, Warburg is a party to the sub-investment advisory
agreement that each such Fund (a "Sub-Advised Fund") has entered into with the
relevant sub-investment adviser (each, a "Current Sub-Advisory Agreement"). The
sub-adviser to Warburg Pincus WorldPerks Money Market and Warburg Pincus
WorldPerks Tax Free Money Market Funds is BlackRock Institutional Management
Corporation ("BlackRock"); and the sub-adviser to the Warburg Pincus
Post-Venture Capital and Warburg Pincus Global Post-Venture Capital Funds and
the Post-Venture Capital Portfolios of Warburg Pincus Institutional Fund, Inc.
and Warburg Pincus Trust is Abbott Capital Management, LLC ("Abbott"). Abbott
and Blackrock are each herein referred to as the Sub-Adviser, as applicable. The
Merger has no effect on either BlackRock or Abbott or on the services that they
are and have been providing to the Sub-Advised Funds.
As is the case with the Current Advisory Agreements,
consummation of the Acquisition would constitute an "assignment" of the Current
Sub-Advisory Agreements, as that term is defined in the 1940 Act, merely because
Warburg is a party to them, and, if later consummated, consummation of the
Reorganization could be deemed to constitute a second "assignment". As a result,
each Current Sub-Advisory Agreement will terminate upon consummation of the
Merger and, therefore, in anticipation of the Merger a new sub-investment
advisory agreement (each a "New Sub-Advisory Agreement" and collectively, the
"New Sub-Advisory Agreements") among each Sub-Advised Fund, the New Adviser and
the relevant sub-adviser is being proposed for approval by shareholders of each
Sub-Advised Fund to take effect upon consummation of the Acquisition and
Reorganization.
However, if the Acquisition is consummated but the
Reorganization is delayed or not ultimately consummated, each New Sub-Advisory
Agreement would take effect between the applicable Sub-Adviser and Warburg
(under Credit Suisse ownership) upon consummation of the Acquisition, and would
remain in effect with Warburg until such time (if ever) as the Reorganization is
consummated; approval of a New Sub-Advisory Agreement at the Special Meeting
will constitute shareholder approval for such New Sub-Advisory Agreement to take
effect with the New Adviser if the Acquisition and the Reorganization are
consummated simultaneously, and to take effect with Warburg if the Acquisition
is consummated prior to consummation of the Reorganization.
-38-
In the event that the Acquisition and the Reorganization are
not simultaneously consummated, upon consummation of the Reorganization, each
New Sub-Advisory Agreement would be transferred to the New Adviser as part of
the combination of the businesses of Warburg and Credit Suisse's existing U.S.
asset management business. If not consummated simultaneously with the
Acquisition, consummation of the Reorganization could be deemed to constitute a
second "assignment" of each Sub-Advised Fund's sub-investment advisory agreement
(which would result in its automatic termination, as discussed above); approval
of a New Sub-Advisory Agreement at the Special Meeting also will constitute
shareholder approval for such New Advisory Agreement to take effect with the New
Adviser upon consummation of the Reorganization (if consummated) in the event
that the Reorganization is consummated after consummation of the Acquisition.
A copy of the master form of the New Sub-Advisory Agreement
for BlackRock Sub-Advised Funds is attached hereto as Exhibit D-1 and that for
the Abbott Sub-Advised Funds is attached hereto as Exhibit D-2. THE NEW
SUB-ADVISORY AGREEMENT FOR EACH SUB-ADVISED FUND IS IN ALL MATERIAL RESPECTS ON
THE SAME TERMS AS THE CORRESPONDING CURRENT SUB-ADVISORY AGREEMENT (except that
the New Adviser will be the investment adviser thereunder following the
consummation of the Reorganization (if consummated)). The material terms of each
current Sub-Advisory Agreement are described under "Description of the Current
Sub-Advisory Agreements" below.
BOARD EVALUATION AND RECOMMENDATION
At the same time and in the same manner that the Board of each
Fund considered the New Advisory Agreements, the relevant Boards considered the
New Sub-Advisory Agreements. (See "Board Evaluation" under "Proposal 1: Approval
of New Investment Advisory Agreement") Since neither of the Sub-Advisers nor the
services they perform nor the compensation they receive will be affected by the
Merger, no considerations arise with regard to approval of the New Sub-Advisory
Agreements that are not also present for the New Advisory Agreements.
Each of Messrs. John L. Furth and Arnold M. Reichman, current
directors of Funds (Mr. Reichman also being a nominee for Director of the
Funds), is a partner of Counsellors and of Warburg, Pincus & Co., the current
ultimate parent company of Warburg, and will share in the purchase prices
received by Counsellors and Warburg, Pincus & Co. from Credit Suisse in
connection with the Acquisition and the Private Equity Investment, respectively.
On March 8, 1999, the Directors of each relevant Fund,
including the Non-interested Directors of each relevant Fund, unanimously
approved the New Sub-Advisory Agreements.
DESCRIPTION OF THE CURRENT SUB-ADVISORY AGREEMENTS
-39-
Under the Current Sub-Advisory Agreements entered into with
BlackRock, BlackRock supervises the day-to-day operations of and provides
ongoing investment advisory services to each Sub-Advised Fund. BlackRock (a)
provides investment research and credit analysis concerning the Sub-Advised
Fund's investments, (b) conducts a continual program of investment of the
Sub-Advised Fund's assets, (c) places orders for all purchases and sales of the
investments made for the Fund and (d) maintains the books and records required
in connection with its duties thereunder.
Under the Current Sub-Advisory Agreements entered into with
Abbott, Abbott provides each Sub-Advised Fund with ongoing specialized
investment advisory services. Abbott (a) determines whether to purchase, retain
or sell interests in United States or foreign private investment vehicles which
invest in debt and equity securities of companies in the venture-capital and
post-venture-capital stages of development or companies engaged in special
situations or changes in corporate control, including buyouts, (b) authorizes
the execution and orders for the execution of the foregoing investments on
behalf of the Sub-Advised Fund, (c) assists the custodian and accounting agent
of the Sub-Advised Fund to determine or confirm the value of these investments,
(d) monitors the execution of orders for the purchase or sale of these
investments and the settlement and clearance of these orders, (e) exercises
voting rights in respect of these investments, and (d) provides reports to the
Sub-Advised Fund's Board. In providing these services, Abbott may contract at
its own expense with third parties for the acquisition of research.
In return for the services provided by the Sub-Adviser as
sub-investment adviser, and the expenses it assumes under each Current
Sub-Advisory Agreement, Warburg pays the Sub-Adviser an advisory fee which is
accrued daily and payable monthly to BlackRock and quarterly to Abbott out of
the advisory fee that Warburg receives from the relevant Sub-Advised Fund.
Each Current Sub-Advisory Agreement further provides that the
Sub-Adviser shall not be liable for any error of judgment or mistake of law or
for any loss suffered by any Sub-Advised Fund in connection with matters to
which such agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of the Sub-Adviser in the performance
of its duties or from reckless disregard by the Sub-Adviser of its obligations
and duties under such agreement.
Each Current Sub-Advisory Agreement may be terminated without
penalty upon sixty (60) days' written notice by the Sub-Adviser, the Sub-Advised
Fund or Warburg.3 Each Sub-Advised Fund may agree to terminate its Current
Sub-Advisory Agreement either by a vote of the Board or by the vote of a
majority of the outstanding voting securities of the Sub-Advised Fund. As stated
above, each Current Sub-Advisory Agreement automatically terminates in the event
of its assignment.
- --------
3 In the case of the Current Sub-Advisory Agreements with BlackRock, the
Sub-Advised Fund can terminate the agreements immediately.
-40-
Each Sub-Adviser has acted as the sub-investment adviser for
each Sub-Advised Fund since each Sub-Advised Fund commenced operations, except
as shown below. Also shown below is the date of each Current Sub-Advisory
Agreement, the date when each Current Sub-Advisory Agreement was last approved
by the Board and the shareholders of each Sub-Advised Fund and the date to which
each Current Sub-Advisory Agreement was last continued. Each Current
Sub-Advisory Agreement was last submitted to shareholders prior to its becoming
effective, as required by the 1940 Act.
DATE LAST APPROVED BY
COMMENCEMENT DATE OF CURRENT ----------------------- DATE
OF SUB-ADVISORY CONTINUED
FUND OPERATIONS* AGREEMENT BOARD SHAREHOLDERS TO
- ---------------------------- -------------- -------------- ------ ------------ -------------
Warburg Pincus Global 9/30/96 7/1/97 3/8/99 7/1/97 4/17/00
Post-Venture Capital
Fund
Warburg Pincus
Institutional Fund, 10/31/97 10/31/97 3/8/99 10/31/97 4/17/00
Inc. - Post-Venture
Capital Portfolio
Warburg Pincus Post-
Venture Capital Fund 9/29/95 7/1/97 3/8/99 7/1/97 4/17/00
Warburg Pincus Trust - 9/30/96 7/1/97 3/8/99 7/1/97 4/17/00
Post-Venture Capital
Portfolio
Warburg Pincus 10/1/98 9/30/98 3/8/99 9/30/98 4/17/00
WorldPerks Money
Market Fund
Warburg Pincus 10/1/98 9/30/98 3/8/99 9/30/98 4/17/00
WorldPerks Tax Free
Money Market Fund
THE NEW SUB-ADVISORY AGREEMENTS
Shareholders of the Sub-Advised Funds are not being asked to
approve or disapprove the Merger; rather, they are being asked only to approve
or disapprove the New Sub-Advisory Agreements for the relevant Portfolios. OTHER
THAN THE EXECUTION AND TERMINATION DATES AND THE IDENTIFICATION OF THE NEW
ADVISER AS THE INVESTMENT ADVISER THEREUNDER FOLLOWING THE CONSUMMATION OF THE
REORGANIZATION (IF CONSUMMATED), THE NEW SUB-ADVISORY AGREEMENTS ARE
SUBSTANTIALLY IDENTICAL TO THE CURRENT SUB-ADVISORY AGREEMENTS. IN PARTICULAR,
THE SUB-ADVISORY FEES WILL CONTINUE TO BE PAID BY NEW ADVISER RATHER THAN BY THE
SUB-ADVISED FUND.
- --------
* Abbott commenced providing investment advisory services for Warburg
Pincus Post-Venture Capital Fund on May 28, 1996.
-41-
The New Sub-Advisory Agreement for each Fund will be dated as
of the date of the consummation of the Merger, which is expected to occur in
mid-1999. Each New Sub-Advisory Agreement will be in effect for an initial
two-year term ending on the second anniversary of the Acquisition, and may
continue thereafter from year to year only if specifically approved at least
annually by the Board or by the vote of "a majority of the outstanding voting
securities" of each Sub-Advised Fund, and, in either event, the vote of a
majority of the Non-interested Directors, cast in person at a meeting called for
such purpose. In the event that shareholders of a Sub-Advised Fund do not
approve the New Sub-Advisory Agreement, the corresponding Current Sub-Advisory
Agreement will remain in effect until the closing of the Acquisition, at which
time it would terminate. In such event, the Board of the relevant Sub-Advised
Fund will take such action as it deems to be in the best interests of the
relevant Sub-Advised Fund and its shareholders. In the event the Acquisition is
not consummated, each Sub-Adviser will continue to provide services to each
Sub-Advised Fund in accordance with the terms of each Current Sub-Advisory
Agreement for such periods as may be approved at least annually by the Board,
including a majority of the Non-interested Directors.
DIFFERENCES BETWEEN THE CURRENT AND NEW SUB-ADVISORY AGREEMENTS
The New Sub-Advisory Agreements are substantially the same as
the Current Sub-Advisory Agreements in all material respects (except that the
New Adviser will become a party to the New Sub-Advisory Agreements following the
consummation of the Reorganization (if consummated)).
REQUIRED VOTE
Approval of the New Sub-Advisory Agreement for any Sub-Advised
Fund requires the affirmative vote of a "majority of the outstanding voting
securities," as defined above, of the Portfolio. The Directors of each
Sub-Advised Fund, including the Non-interested Directors, unanimously recommend
that the shareholders of each relevant Sub-Advised Fund vote in favor of this
Proposal 3.
-42-
PROPOSAL 4: RATIFICATION OR REJECTION
OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors of each of the Funds, including a
majority of the Non-interested Directors, has selected PricewaterhouseCoopers
LLP to act as independent accountants for each of the Portfolios for each
Portfolio's current fiscal year. PricewaterhouseCoopers LLP are independent
accountants and have advised the Portfolios that they have no direct financial
interest or material indirect financial interest in the Portfolios. One or more
representatives of PricewaterhouseCoopers LLP are expected to be present at the
Special Meeting and will have an opportunity to make a statement if they so
desire. Such representatives are expected to be available to respond to
appropriate questions posed by shareholders or management.
REQUIRED VOTE
Ratification of the selection of independent accountants
requires the affirmative vote of a majority of the votes of each Fund cast at
the Special Meeting in person or by proxy. The Directors of each Fund
unanimously recommend that the shareholders of each Fund vote in favor of this
Proposal 4.
ADDITIONAL INFORMATION
GENERAL
The cost of preparing, printing and mailing the enclosed
proxy, accompanying notice and proxy statement and all other costs incurred in
connection with the solicitation of proxies, including any additional
solicitation made by letter or telephone, will be paid by Warburg and Credit
Suisse. In addition to solicitation by mail, certain officers and
representatives of each Fund, officers and employees of Warburg and certain
financial services firms and their representatives, who will receive no extra
compensation for their services, may solicit proxies in person or by telephone.
D.F. King & Co., Inc. (the "Agent") has been engaged to assist
in the solicitation of proxies. As the Special Meeting date approaches, certain
shareholders of each Portfolio may receive a telephone call from a
representative of the Agent if their vote has not yet been received.
Authorization to permit the Agent to execute proxies may be obtained by
telephonic or electronic transmitted instructions from shareholders of each
Portfolio. Proxies that are obtained telephonically will be recorded in
accordance with the procedures set forth below. The Directors believe that these
procedures are reasonably designed to ensure that the identity of the
shareholder casting the vote and the shareholder's voting instructions are
accurately determined.
-43-
In all cases where a telephonic proxy is solicited, the
Agent's representative is required to ask for each shareholder's full name,
address, last four digits of the shareholder's social security or employer
identification number, title of the person calling (if the shareholder is an
entity, such as a corporation) and whether such person is authorized to direct
the voting of such shares and the number of shares owned, if known, and to
confirm that the shareholder has received the proxy statement card in the mail.
If the information solicited agrees with the information provided to the Agent,
then the Agent representative has the responsibility to explain the process,
read the proposals listed on the proxy card, and ask for the shareholder's
instructions on each proposal. The Agent's representative, although he or she is
permitted to answer questions about the process, is not permitted to recommend
to the shareholder how to vote, other than to read any recommendation set forth
in the proxy statement. The Agent will record the shareholder's instructions on
the card. Within 72 hours, the shareholder will be sent a letter to confirm his
or her vote and asking the shareholder to call the Agent immediately if his or
her votes are not correctly reflected in the confirmation.
If the shareholder wishes to participate in the Special
Meeting, but does not wish to give his or her proxy by telephone, or by the
Internet, the shareholder may still submit the proxy card originally sent with
the proxy statement or attend in person. Should shareholders require additional
information regarding the proxy or replacement proxy cards, they may contact the
Agent toll-free at 1-800-848-3409. Any proxy given by a shareholder, whether in
writing, by telephone or by the Internet, is revocable.
PROPOSALS OF SHAREHOLDERS
Shareholders wishing to submit proposals for inclusion in a
proxy statement for a shareholder meeting subsequent to the Special Meeting, if
any, should send their written proposals to Janna Manes, Secretary of the
Warburg Pincus Funds, c/o Warburg Pincus Asset Management, Inc., 466 Lexington
Avenue, New York, NY 10017, within a reasonable time before the solicitation of
proxies for such meeting. The timely submission of a proposal does not guarantee
its inclusion.
OTHER MATTERS TO COME BEFORE THE SPECIAL MEETING
No Board is aware of any matters that will be presented for
action at the Special Meeting other than the matters set forth herein. Should
any other matters requiring a vote of shareholders arise, the proxy in the
accompanying form will confer upon the person or persons entitled to vote the
shares represented by such proxy the discretionary authority to vote the shares
as to any such other matters in accordance with their best judgment in the
interest of each Fund and/or Portfolio.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) PROMPTLY. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Boards of Trustees,
/s/ [Janna Manes signature]
Janna Manes
Secretary
-44-
[PROXY]
WARBURG PINCUS FUNDS
[FUND NAME]
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Eugene L. Podsiadlo, Janna
Manes and Stuart J. Cohen, and each of them, as proxies of the undersigned, each
with the power to appoint his or her substitute, and hereby authorizes a
majority of them, or any one if only one be present, to represent and to vote,
as designated on the reverse side, all the shares of the Warburg Pincus Fund
named above held of record by the undersigned, or with respect to which the
undersigned is entitled to vote or act, at the Special Meeting of Shareholders
to be held on ______________, 1999 at 3:00 p.m., Eastern time, for the purposes
referred to on the reverse side.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE: Please sign exactly as your name(s) appear(s) hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give your full title as such.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------ -----------------------------------
- ------------------------------ -----------------------------------
- ------------------------------ -----------------------------------
-1-
0561812.
[REVERSE SIDE]
----- PLEASE MARK VOTES
x AS IN THIS EXAMPLE
----
- -----------------------------------
WARBURG PINCUS FUNDS
- ----------------------------------- 1. To approve or disapprove a new
(FUND NAME) investment advisory agreement for the Fund
For Against Abstain
[ ] [ ] [ ]
VOTE THIS CARD TODAY!
BY MAIL, BY PHONE AT 1-800-848-3409
OR ON-LINE AT www.warburg.com
2. To elect Directors/Trustees of the Fund
R.H. Francis W.W. Priest
J.W. Fritz S.N. Rappaport
J.E. Garten A.M. Reichman
J.C. Pasman A.B. Trowbridge
For all Withheld For All
Nominees Except
[ ] [ ] [ ]
INSTRUCTION: To withhold authority to vote
for any individual nominee, mark the "For
All Except" box and strike a line through
the name(s) of the nominee(s).
For Against Abstain
[ ] [ ] [ ]
3. To approve or disapprove a new sub-
investment advisory agreement for the Fund
For Against Abstain
[ ] [ ] [ ]
4. To ratify the selection of Pricewaterhouse
Coopers LLP as independent accountants for
the Fund for the current fiscal year
Please be sure to sign and
date this Proxy. Date Mark box at right if comments
or address change have been
noted on the reverse side. [ ]
- -----------------------------------------------------
Shareholder sign here Co-owner sign here: RECORD DATE SHARES:
-2-
A-7
EXHIBIT A
NEW ADVISORY AGREEMENT
MASTER FORM
INVESTMENT ADVISORY AGREEMENT
June __, 1999
______________ Asset Management, Inc.
466 Lexington Avenue
New York, New York 10017-3147
Dear Sirs:
[______________________________] Fund, Inc. (the "Fund"),
[a corporation organized and existing under the laws of the State of Maryland,]
[a business trust organized under the laws of the Commonwealth of
Massachusetts,] herewith confirms its agreement with [___________________] Asse
Management, 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,] [Agreement and
Declaration of Trust,] as may be amended from time to time, 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]
[Trustees] of the Fund. Copies of the Fund's Prospectus and SAI 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] [Trustees] of the Fund, the Adviser will (a) act in strict
conformity with the Fund's [Articles of Incorporation,] [Agreement and
Declaration of Trust,] the Investment Company Act of 1940 (the "1940 Act") and
the Investment Advisers Act of 1940, as the same may from time to time be
amended, (b) manage the Fund's assets in accordance with the Fund's investment
objective and policies as stated in the Fund's Prospectus and SAI, (c) make
investment decisions for the Fund, [1] (d) place purchase and sale orders for
securities on behalf of the Fund, [2](e) exercise voting rights in respect of
portfolio securities and other investments for the Fund, [2] and (f) monitor and
evaluate the services provided by the Fund's investment sub-adviser(s), if any,
under the terms of the applicable investment sub-advisory agreement(s). 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 statistical
information the Fund may reasonably request with respect to the securities that
the Fund may hold or contemplate purchasing.
Subject to the approval of the Board of [Directors] [Trustees] of the
Fund and where required, the Fund's shareholders, the Adviser may engage an
investment sub-adviser or sub-advisers to provide advisory services in respect
of the Fund and may delegate to such investment sub-adviser(s) the
responsibilities described in subparagraphs (b), (c), (d) and (e) above. In the
event that an investment sub-adviser's engagement has been terminated, the
Adviser shall be responsible for furnishing the Fund with the services required
to be performed by such investment sub-adviser(s) under the applicable
investment sub-advisory agreements or arranging for a successor investment
sub-adviser(s) to provide such services on terms and conditions acceptable to
the Fund and the Fund's Board of [Directors] [Trustees] and subject to the
requirements of the 1940 Act.
- ---------
1 In the case of Warburg Pincus Cash Reserve Fund and Warburg Pincus New
York Tax-Exempt Fund, the Adviser will make only general investment
decisions for the Fund including decisions concerning (i) the specific
types of securities to be held by the Fund and the proportion of the
Fund's assets that should be allocated to such investments during
particular market cycles, (ii) the specific issuers whose securities
will be purchased or sold by the Fund, (iii) the appropriate maturity
of its portfolio investments and (iv) the appropriate average weighted
maturity of its portfolio in light of current market conditions.
2 These services will not be provided by the Adviser in the case of
Warburg Pincus Cash Reserve Fund or Warburg Pincus New York Tax-Exempt
Fund.
A-2
3. Brokerage [3]
------------
In executing transactions for the Fund, selecting brokers or
dealers and negotiating any brokerage commission rates, 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.
- ----------
3 Section 3. Brokerage will be omitted in the Investment Advisory
Agreements for Warburg Pincus Cash Reserve Fund and Warburg Pincus New
York Tax-Exempt Fund.
A-3
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 [___%] [4] of the Fund's average daily net assets. The fee for the
period from the date of this Agreement to the end of the year 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 SAI.
7. Expenses
--------
The Adviser will bear all expenses in connection with the
performance of its services under this Agreement[, including the fees payable to
any investment sub-adviser engaged pursuant to paragraph 2 of this
Agreement[5]]. 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] [Trustees] of the Fund who are not officers, directors, or
employees of the Adviser, any sub-adviser or any of their 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] [Trustees] 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] [Trustees] of the Fund with respect to
such litigation and other expenses as determined by the [Directors] [Trustees].
- ----------
4 For fee rates for each Fund, see Exhibit __.
5 Except in the case of Warburg Pincus Cash Reserve Fund and Warburg
Pincus New York Tax-Exempt Fund, where the sub-advisory fees are paid
to the sub-adviser directly by the respective Fund.
A-4
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 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, provided that
doing so does not adversely affect the ability of the adviser to perform its
services under this Agreement.
9. Term of Agreement
-----------------
This Agreement shall continue for an initial two-year period
commencing on the date first written above, and thereafter shall continue
automatically for successive annual periods, provided such continuance is
specifically approved at least annually by (a) the Board of [Directors]
[Trustees] of the Fund or (b) a vote of a "majority" (as defined in the 1940
Act) 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]
[Trustees] 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] [Trustees] 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,] [Agreement and Declaration of Trust,] dated [_________________],
together with all amendments thereto, is on file in the [Department of
Assessments and Taxation of the State of Maryland.] [office of the Secretary of
State of the Commonwealth of Massachusetts.]
A-5
INCLUDE THE FOLLOWING SECTION 11 ONLY FOR FUNDS THAT ARE
MASSACHUSETTS BUSINESS TRUSTS
[11.] Limitation of Liability
-----------------------
It is expressly agreed that this Agreement was executed by or
on behalf of the Fund and not by the Trustees of the Fund or its officers
individually, and the obligations of the Fund hereunder shall not be binding
upon any of the Trustees, shareholders, nominees, officers, agents or employees
of the Fund individually, but bind only the assets and property of the Fund, as
provided in the Agreement and Declaration of Trust of the Fund. The execution
and delivery of this Agreement have been authorized by the Trustees and the sole
shareholder of the Fund and signed by an authorized officer of the Fund, acting
as such, and neither such authorization by such Trustees and shareholder nor
such execution and delivery by such officer shall be deemed to have been made by
any of them individually or to impose any liability on any of them personally,
but shall bind only the trust property of the Fund as provided in its Agreement
and Declaration of Trust.]
[11.] [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 or certain classes of its
shares, as applicable, may include the name "Warburg Pincus", "Credit Suisse" or
any derivation or abbreviation thereof 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 Fund's shares, the Fund agrees that, at the Adviser's request,
the Fund's license to use the words "Warburg Pincus", "Credit Suisse" or any
derivation or abbreviation thereof 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 Pincus", "Credit Suisse" or any derivation or abbreviation
thereof. As a condition of the Fund's license, the Fund agrees (a) not to
challenge the validity of any Warburg Pincus or Credit Suisse trademarks or the
ownership by Warburg, Pincus & Co. or Credit Suisse Group or their respective
affiliates of any of their respective trademarks; and (b) to use the names
"Warburg Pincus", "Credit Suisse" or any derivation or abbreviation thereof
within commercially reasonable standards of quality.
Please confirm that the foregoing is in accordance with your
A-6
understanding by indicating your acceptance hereof at the place below indicated,
whereupon it shall become a binding agreement between us.
Very truly yours,
[_____________] FUND, INC.
By: _______________________
Name: ________________
Title: _______________
Accepted:
[__________________] ASSET MANAGEMENT, INC.
By: _______________________
Name: ________________
Title: _______________
A-7
EXHIBIT A
ADVISORY FEE RATES FOR EACH FUND
A-8
EXHIBIT B
CURRENT ADVISORY FEE RATE
FOR EACH PORTFOLIO
Current Advisory
Name of Portfolio Fee Rate
- ----------------- --------
Warburg Pincus Balanced Fund 0.90%
Warburg Pincus Capital Appreciation Fund 0.70%
Warburg Pincus Cash Reserve Fund* 0.25%
Warburg Pincus Emerging Growth Fund* 0.90%
Warburg Pincus Emerging Markets Fund 1.25%
Warburg Pincus Fixed Income Fund* 0.50%
Warburg Pincus Global Fixed Income Fund* 1.00%
Warburg Pincus Global Post-Venture Capital Fund 1.25%
Warburg Pincus Growth & Income Fund 0.75%
Warburg Pincus Health Sciences Fund 1.00%
Warburg Pincus Institutional Fund, Inc.*:
Emerging Markets Portfolio* 1.00%
International Equity Portfolio* 0.80%
Japan Growth Portfolio* 1.10%
Post-Venture Capital Portfolio* 1.10%
Small Company Growth Portfolio* 0.90%
Small Company Value Portfolio* 0.90%
Value Portfolio* 0.75%
Warburg Pincus Intermediate Maturity Government Fund 0.50%
Warburg Pincus International Equity Fund 1.00%
Warburg Pincus International Small Company Fund 1.10%
Warburg Pincus Japan Growth Fund 1.25%
Warburg Pincus Japan Small Company Fund 1.25%
Warburg Pincus Major Foreign Markets Fund 1.00%
Warburg Pincus New York Intermediate Municipal Fund* 0.40%
Warburg Pincus New York Tax Exempt Fund* 0.25%
Warburg Pincus Post-Venture Capital Fund 1.25%
Warburg Pincus Small Company Growth Fund 1.00%
Warburg Pincus Small Company Value Fund 1.00%
B-1
Current Advisory
Name of Portfolio Fee Rate
- ----------------- --------
Warburg Pincus WorldPerks Money Market Fund 0.40%
Warburg Pincus WorldPerks Tax Free Money Market Fund 0.40%
Warburg Pincus Trust*:
International Equity Portfolio* 1.00%
Growth & Income Portfolio* 0.75%
Emerging Markets Portfolio* 1.00%
Post-Venture Capital Portfolio* 1.25%
Small Company Growth Portfolio* 0.90%
Warburg Pincus Trust II*:
Fixed Income Portfolio* 0.50%
Global Fixed Income Portfolio* 1.00%
* For this Portfolio (for a Portfolio by Portfolio vote) or Fund (for a
Fund-wide vote), the holders of a majority of the shares entitled to be
cast of such Fund or Portfolio shall be necessary and sufficient to
constitute a quorum.
B-2
EXHIBIT C
OTHER U.S. REGISTERED INVESTMENT COMPANIES
ADVISED BY WARBURG OR CSAM:
FEES AND OTHER INFORMATION
Net Assets Advisory Fee
as of (as a Percent
Name of Portfolio March 9, 1999 of Assets)
- ----------------- ------------- ----------
Warburg, Pincus International
Growth Fund, Inc.
Warburg, Pincus Emerging Markets
II Fund, Inc.
Warburg, Pincus U.S. Core Equity
Fund, Inc.
Warburg, Pincus U.S. Core Fixed
Income Fund, Inc.
Warburg, Pincus Strategic Global
Fixed Income Fund, Inc.
Warburg, Pincus High Yield Fund, Inc.
Warburg, Pincus Municipal Bond Fund, Inc.
Warburg, Pincus Global
Telecommunications Fund, Inc.
Warburg, Pincus Long-Short Market
Neutral Fund,Inc.
Warburg, Pincus Long-Short Equity Fund, Inc.
Warburg, Pincus Select Economic
Value Equity Fund, Inc.
Warburg, Pincus European Equity Fund, Inc.
Warburg, Pincus Central &
Eastern Europe Fund, Inc.
[Warburg Sub-Advised Funds to come]
[indicate whether investment adviser has waived, reduced or
agreed to reduce compensation under any applicable contract]
C-2
EXHIBIT D-1
FORM OF NEW ABBOTT SUB-ADVISORY AGREEMENT
June , 1999
Abbott Capital Management, LLC
50 Rowes Wharf
Boston, MA 02110
Dear Sirs:
[_______] Post-Venture Capital Fund, Inc. (the "Fund"), a
corporation organized and existing under the laws of the State of Maryland, and
[_____________] Asset Management, Inc., as its investment adviser (the
"Adviser"), herewith confirm their agreement with Abbott Capital Management, LLC
(the "Sub-Adviser") 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 Prospectus and
Statement 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 the Adviser as its investment adviser. The Adviser 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-Adviser
-----------------------
(a) Subject to the supervision and direction of the Adviser,
the Sub-Adviser will provide investment advisory assistance 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 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 the Adviser from time to time. In connection
therewith, the Sub-Adviser will:
D-1
(i) determine whether to purchase, retain or sell
interests in United States or foreign private investment vehicles that
themselves invest in debt and equity securities of companies in the
venture capital and post-venture capital stages of development or
companies engaged in special situations or changes in corporate
control, including buyouts ("Investments"). The Sub-Adviser is hereby
authorized to execute, or place orders for the execution of, all
Investments on behalf of the Fund;
(ii) assist 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;
(iii) monitor the execution of orders for the
purchase or sale of Investments and the settlement and clearance of
those orders;
(iv) exercise voting rights in respect of
Investments; and
(v) provide reports to the Fund's Board of Directors
for consideration at quarterly meetings of the Board on the Investments
and furnish the Adviser and the Fund's Board of Directors with such
periodic and special reports as the Fund or the Adviser may reasonably
request.
(b) In connection with the performance of the services of the
Sub-Adviser provided for herein, the Sub-Adviser 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.
3. Execution of Transactions
-------------------------
(a) 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.
(b) 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 the Adviser 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-2
(c) 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 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 the Adviser and the Fund
all information reasonably requested by the Adviser 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.
(d) 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.
D-3
(b) The Sub-Adviser agrees to notify the Adviser and the Fund
promptly of any (i) statement about the Sub-Adviser contained in the Fund's
registration statement that becomes untrue in any material respect or (ii)
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 the Adviser 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, the
Sub-Adviser shall have the right to approve the general advertising or
promotional plan pursuant to which such literature or material is being utilized
or distributed; provided that the Sub-Adviser shall be deemed to have approved
such advertising or plan if it has not objected to its use within ten (10)
business days after such material has been sent to it. The Fund or the Adviser
will use all reasonable efforts to ensure that all advertising, sales and
promotional material used or distributed by or on behalf of the Fund or the
Adviser that refers to the Sub-Adviser will comply with the requirements of the
Advisers Act, the 1940 Act and the rules and regulations promulgated thereunder.
(d) The Sub-Adviser has supplied the Adviser and the Fund
copies of its Form ADV with all exhibits and attachments thereto and will
hereinafter supply The Adviser, 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.
6. Compliance
----------
(a) The Sub-Adviser agrees that it shall promptly notify The
Adviser 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 objective, policies and restrictions
as stated in the Prospectus or SAI or is otherwise in violation of applicable
law.
D-4
(b) The Adviser agrees that it shall promptly notify the
Sub-Adviser in the event that the SEC has censured the Adviser or the Fund;
placed limitations upon any of their activities, functions or operations;
suspended or revoked the Adviser'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 the Adviser 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 the Adviser
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 either the Adviser or the Fund any of such records upon the request
of either of them. 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) The Adviser agrees that it will furnish to the Sub-Adviser
information related to or concerning the Fund that the Sub-Adviser may
reasonably request.
D-5
(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, the Adviser 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 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, the Adviser 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 the Adviser, 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 the
Adviser 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 the Adviser 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 the
Adviser 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. Indemnification
---------------
(a) The Sub-Adviser agrees to indemnify and hold harmless the
Fund, the Adviser, any affiliate thereof, and each person, if any, who, within
the meaning of Section 15 of the Securities Act of 1933, as amended (the "1933
Act"), controls ("controlling person") any or all of the Fund and the Adviser
(all of such persons being referred to as "Fund Indemnified Persons") against
any and all losses, claims, damages, liabilities or litigation (including legal
and other expenses) to which any Fund Indemnified Person may become subject
under the 1933 Act, the 1940 Act, the Advisers Act, the Internal Revenue Code of
1986, as amended (the "Code"), or under any other statute, at common law or
otherwise, arising out of the Sub-Adviser's responsibilities as Sub-Adviser to
D-6
the Fund which (i) may be based upon any misfeasance, malfeasance or nonfeasance
by the Sub-Adviser, or any of its employees or representatives, or any affiliate
of or any person acting on behalf of the Sub-Adviser, (ii) may be based upon a
failure to comply with paragraph 5(b) of this Agreement, or (iii) may be based
upon any untrue statement or alleged untrue statement of a material fact about
the Sub-Adviser contained in the registration statement covering the shares of
the Fund, or any amendment or supplement thereto, or the omission or alleged
omission to state therein a material fact about the Sub-Adviser known or which
should have been known to the Sub-Adviser and was required to be stated therein
or necessary to make the statements therein not misleading, if such a statement
or omission was made in reliance upon information furnished to the Adviser, the
Fund or any affiliate thereof by the Sub-Adviser or any affiliate of the
Sub-Adviser; provided that in no case shall the indemnity in favor of any Fund
Indemnified Person be deemed to protect such persons against any liability to
which any such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence in the performance of its duties or by
reason of its reckless disregard of its obligations and duties under this
Agreement.
(b) The Fund agrees to indemnify and hold harmless the
Sub-Adviser, any of its affiliates, and each controlling person, if any, of the
Sub-Adviser (all of such persons being referred to as "Sub-Adviser Indemnified
Persons") against any and all losses, claims, damages, liabilities or litigation
(including legal and other expenses) to which any Sub-Adviser Indemnified Person
may become subject under the 1933 Act, the 1940 Act, the Advisers Act, the Code
or under any other statute, at common law or otherwise, which (i) may be based
upon any misfeasance, malfeasance or nonfeasance by the Fund or the Adviser, or
any of their respective employees or representatives, or any affiliate of or any
person acting on behalf of the Fund or the Adviser, (ii) may be based upon a
failure by the Fund or the Adviser to comply with this Agreement, or (iii) may
be based upon any untrue statement or alleged untrue statement of a material
fact contained in the registration statement covering the shares of the Fund, or
any amendment or supplement thereto, or the omission or alleged omission to
state therein a material fact known or which should have been known to the Fund
and was required to be stated therein or necessary to make the statements
therein not misleading, unless such a statement or omission was made in reliance
upon information furnished to the Adviser, the Fund or any affiliate thereof by
the Sub-Adviser or any affiliate of the Sub-Adviser; provided that in no case
shall the indemnity in favor of any Sub-Adviser Indemnified Person be deemed to
protect such persons against any liability to which any such person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
D-7
(c) A party (the "Indemnifying Person") shall not be liable
under paragraphs 10(a) or 10(b) herein with respect to any claim made against
any Fund Indemnified Person or Sub-Adviser Indemnified Person, as applicable (a
Fund Indemnified Person and a Sub-Adviser Indemnified Person may be referred to
in this paragraph 10(c) as an "Indemnified Person"), unless such Indemnified
Person shall have notified the Indemnifying Person in writing within a
reasonable time after the summons, notice or other first legal process or notice
giving information of the nature of the claim shall have been served upon such
Indemnified Person (or after such Indemnified Person shall have received notice
of such service on any designated agent), but failure to notify the Indemnifying
Person of any such claim shall not relieve the Indemnifying Person from any
liability which it may have to any Indemnified Person against whom such action
is brought otherwise than on account of this paragraph 10. In case any such
action is brought against any Indemnified Person, the Indemnifying Person will
be entitled to participate, at its own expense, in the defense thereof or, after
notice to the Indemnified Person, to assume the defense thereof, with counsel
satisfactory to the Indemnified Person. If the Indemnifying Person assumes the
defense of any such action and the selection of counsel by the Indemnifying
Person to represent the Indemnifying Person and the Indemnified Person would
result in a conflict of interests and therefore would not, in the reasonable
judgment of the Indemnified Person, adequately represent the interests of the
Indemnified Person, the Indemnifying Person will, at its own expense, assume the
defense with counsel to the Indemnifying Person and, also at its own expense,
with separate counsel to the Indemnified Person which counsel shall be
satisfactory to the Indemnifying Person and to the Indemnified Person. The
Indemnified Person shall bear the fees and expenses of any additional counsel
retained by it, and the Indemnifying Person shall not be liable to the
Indemnified Person under this Agreement for any legal or other expenses
subsequently incurred by the Indemnified Person independently in connection with
the defense thereof other than reasonable costs of investigation. The
Indemnifying Person shall not have the right to compromise on or settle the
litigation without the prior written consent of the Indemnified Person if such
compromise or settlement results, or may result, in a finding of wrongdoing on
the part of the Indemnified Person.
11. Compensation
------------
In consideration of the services rendered pursuant to this
Agreement, the Adviser will pay the Sub-Adviser a quarterly fee calculated at an
annual rate of 1.00% of the net asset value of the Investments as of the last
day of each calendar quarter. The fee for the period from the date of this
D-8
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 the Adviser 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
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 value of the Investments shall be computed in the manner
specified in the Prospectus or SAI. The Sub-Adviser shall have no right to
obtain compensation directly from the Fund for services provided hereunder and
agrees to look solely to the Adviser for payment of fees due.
12. 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 12(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, the Adviser 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.
13. Term of Agreement
-----------------
This Agreement shall continue for an initial two-year period
commencing on the date first written above, 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 1940 Act) of the Fund's
D-9
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 1940 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, (i) by the Adviser on 60 (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 the Adviser and the Sub-Adviser, or (iii) by the
Sub-Adviser upon 60 (sixty) days' written notice to the Fund and the Adviser.
This Agreement will also terminate automatically in the event of its assignment
(as defined in the 1940 Act) 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 the Adviser 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, 9 and 10 shall remain in
effect.
14. 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 1940 Act) 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.
15. Notices
-------
All communications hereunder shall be given (a) if to the
Sub-Adviser, to Abbott Capital Management, LLC, 1330 Avenue of the Americas,
Suite 2800, New York, New York 10019 (Attention: Raymond L. Held), telephone:
(212) 757-2700, telecopy: (212) 757-0835, (b) if to the Adviser, to
[___________] Asset Management, Inc., 466 Lexington Avenue, New York, New York
10017-3147 (Attention: President), telephone: (212) 878-0600, telecopy:
(212) 878-9351, and (c) if to the Fund, c/o [_________________] Asset
Management, Inc., 466 Lexington Avenue, New York, New York 10017-3147,
telephone: (212) 878-0600, telecopy: (212) 878-9351 (Attention: President).
16. 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.
D-10
17. 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 the Adviser or the Fund.
(d) This Agreement may be executed in counterparts, with the
same effect as if the signatures were upon the same instrument.
D-11
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,
[___________] ASSET MANAGEMENT, INC.
By: _________________________________
Name:
Title:
[__________] POST-VENTURE
CAPITAL FUND, INC.
By: _________________________________
Name:
Title:
ABBOTT CAPITAL MANAGEMENT, LLC
By: _______________________________
Name:
Title:
D-12
EXHIBIT D-2
FORM OF NEW BLACKROCK SUB-ADVISORY AGREEMENT
AGREEMENT dated as of June __, 1999 between [___________] ASSET
MANAGEMENT, INC., a Delaware corporation (herein called the "Investment
Advisor") and BLACKROCK INSTITUTIONAL MANAGEMENT CORPORATION, a Delaware
corporation (herein called the "Sub-Advisor").
WHEREAS, the Investment Advisor is the investment advisor to [________]
WORLDPERKS [_____________] FUND, INC. (herein called the "Fund"), an open-end,
diversified, management investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Investment Advisor wishes to retain the Sub-Advisor to
assist the Investment Advisor in providing investment advisory services to the
Fund; and
WHEREAS, the Sub-Advisor is willing to provide such services to the
Investment Advisor upon the conditions and for the compensation set forth below.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, it is agreed between
the parties hereto as follows:
1. Appointment. The Investment Advisor hereby appoints the Sub-Advisor
its sub-advisor with respect to the Fund as provided for in the Investment
Advisory Agreement between the Investment Advisor and the Fund dated as of June
__, 1999 (such Agreement or the most recent successor advisory agreement between
such parties is herein called the "Advisory Agreement").
The Sub-Advisor accepts such appointment and agrees to render the
services herein set forth for the compensation herein provided.
2. Delivery of Documents. The Investment Advisor shall provide to the
Sub-Advisor copies of the Fund's most recent prospectus and statement of
additional information (including any supplement thereto) which relate to any
class of shares representing interests in the Fund (each such prospectus and
statement of additional information as presently in effect, and as they shall
from time to time be amended and supplemented, is herein respectively called a
"Prospectus" and a "Statement of Additional Information").
3. Sub-Advisory Services to the Fund. Subject to the supervision of the
Investment Advisor, the Sub-Advisor will supervise the day-to-day operations of
the Fund and perform the following services: (i) provide investment research and
D-13
credit analysis concerning the Fund's investments, (ii) conduct a continual
program of investment of the Fund's assets, (iii) place orders for all purchases
and sales of the investments made for the Fund and (iv) maintain the books and
records required in connection with its duties hereunder. In addition, the
Sub-Advisor will keep the Investment Advisor promptly informed in writing of
developments materially affecting the Fund. The Sub-Advisor will communicate to
the Investment Advisor on each day that a purchase or sale of a security is
effected for the Fund (i) the name of the issuer, (ii) the amount of the
purchase or sale, (iii) the name of the broker or dealer, if any, through which
the purchase or sale will be effected, (iv) the CUSIP number of the security, if
any, and (v) such other information as the Investment Advisor may reasonably
require for purposes of fulfilling its obligations to the Fund under the
Advisory Agreement. The Sub-Advisor will render to the Fund's Board of Directors
such periodic and special reports as the Investment Advisor may reasonably
request. The Sub-Advisor will provide the services rendered by it hereunder in
accordance with the Fund's investment objectives, policies and restrictions as
stated in the Prospectus and Statement of Additional Information.
4. Brokerage. The Sub-Advisor may place orders pursuant to its
investment determinations for the Fund either directly with the issuer or with
any broker or dealer. In placing orders, the Sub-Advisor will consider the
experience and skill of the firm's securities traders as well as the firm's
financial responsibility and administrative efficiency. The Sub-Advisor will
attempt to obtain the best price and the most favorable execution of its orders.
Consistent with these obligations, the Sub-Advisor may, subject to the approval
of the Board of Directors, select brokers on the basis of the research,
statistical and pricing services they provide to the Fund. A commission paid to
such brokers may be higher than that which another qualified broker would have
charged for effecting the same transaction, provided that the Sub-Advisor
determines in good faith that such transaction is reasonable in terms either of
the transaction or the overall responsibility of the Sub-Advisor to the Fund and
its other clients and that the total commissions paid by the Fund will be
reasonable in relation to the benefits to the Fund over the long-term. In no
instance will portfolio securities be purchased from or sold to the Fund's
principal distributor, the Investment Advisor, or any affiliate thereof, except
to the extent permitted by an exemptive order of the Securities and Exchange
Commission or by applicable law.
5. Compliance with Laws; Confidentiality. The Sub-Advisor agrees that
it will comply with all applicable rules and regulations of all federal and
state regulatory agencies having jurisdiction over the Sub-Advisor in
D-14
performance of its duties hereunder (herein called the "Rules"). The Sub-Advisor
will treat confidentially and as proprietary information of the Fund all records
and information relative to the Fund, and will not use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in writing by
the Fund, which approval shall not be unreasonably withheld and may not be
withheld where the Sub-Advisor may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Fund.
6. Control by the Fund's Board of Directors. Any recommendations
concerning the Fund's investment program proposed by the Sub-Advisor to the Fund
and the Investment Advisor pursuant to this Agreement, as well as any other
activities undertaken by the Sub-Advisor on behalf of the Fund pursuant thereto,
shall at all times be subject to any applicable directives of the Board of
Directors of the Fund.
7. Services Not Exclusive. The Sub-Advisor's services hereunder are not
deemed to be exclusive, and the Sub-Advisor shall be free to render similar
services to others so long as its services under this Agreement are not impaired
thereby.
8. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-Advisor 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 such records upon the Fund's request. The
Sub-Advisor further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act, the records required to be maintained by the Sub-Advisor
hereunder pursuant to Rule 31a-1 and Rule 2a-7 under the 1940 Act.
9. Expenses. During the term of this Agreement, the Sub-Advisor will
bear all expenses in connection with the performance of its services under this
Agreement. The Sub-Advisor shall not bear certain other expenses related to the
operation of the Fund including, but not limited to: taxes, interest, brokerage
fees and commissions and any extraordinary expense items.
10. Compensation. For the services which the Sub-Advisor will render to
the Investment Advisor under this Agreement, the Investment Advisor will pay to
the Sub-Advisor on the first day of each month, a fee for the previous month
calculated daily, at an annual rate of .06% of the Fund's average daily net
assets.
11. Limitation on Liability. The Sub-Advisor will not be liable for any
error of judgment or mistake of law or for any loss suffered by the Investment
Advisor or by the Fund in connection with the matters to which this Agreement
relates, except that it shall be liable to the Investment Advisor and the Fund
for a loss resulting from a breach of fiduciary duty with respect to the receipt
D-15
of compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations or duties under this Agreement.
12. Duration and Termination. This Agreement shall become effective
with respect to the Fund upon approval of this Agreement by vote of a majority
of the outstanding voting securities of the Fund and, unless sooner terminated
as provided herein, shall continue in effect with respect to the Fund for an
initial two-year period commencing on the date first written above. Thereafter,
if not terminated, this Agreement shall continue in effect for successive annual
periods, provided such continuance is specifically approved at least annually
(a) by the vote of a majority of those members of the Board of Directors of the
Fund who are not interested persons of the Fund or any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Board of Directors of the Fund or by vote of a majority of the
outstanding voting securities of the Fund. Notwithstanding the foregoing, this
Agreement may be terminated at any time, without the payment of any penalty, by
the Fund (by vote of the Board of Directors of the Fund or by vote of a majority
of the outstanding voting securities of the Fund), or by the Investment Advisor
or the Sub-Advisor on sixty (60) days' written notice. This Agreement will
immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meaning as such terms
have in the 1940 Act.)
13. Amendment of this Agreement. No provision of this Agreement may be
changed, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, discharge or
termination is sought, and no amendment of this Agreement affecting the Fund
shall be effective until approved by vote of the holders of a majority of the
outstanding voting securities of the Fund.
14. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any provisions
hereof or otherwise affect their construction or effect. If any provision of
this Agreement shall be held or made invalid by a court decision, statute, rule
or otherwise, the remainder of this Agreement shall not be affected thereby.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and shall be governed by Delaware
law.
D-16
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day and
year first above written.
[_________] ASSET MANAGEMENT, INC.
By: _________________________
Title:
BLACKROCK INSTITUTIONAL
MANAGEMENT CORPORATION
By: _________________________
Title:
D-17
Annex I
Percent
Name and Address Shares Held Ownership
- ---------------- ----------- ----------
[ ] Fund: