<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
WARBURG, PINCUS TAX FREE FUND, INC.
-------------------------------------------------------------------
(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:
<PAGE>
(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:
<PAGE>
WARBURG, PINCUS TAX FREE FUND, INC.
466 Lexington Avenue
New York, New York 10017-3147
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
October 3, 1997
Dear Shareholders:
A special meeting of the shareholders of Warburg, Pincus Tax Free Fund,
Inc. (the "Fund") will be held on Friday, October 3, 1997 at 3:00 p.m., Eastern
Time at the offices of the Fund, 466 Lexington Avenue, New York, New York
10017-3147 (10th Floor), for the following purposes:
(1) To approve or disapprove the Plan of Dissolution, Liquidation and
Termination of the Fund (the "Plan"), which Plan was unanimously approved at a
meeting of the Board of Directors of the Fund (the "Board") held on July 30,
1997; and
(2) To transact such other business as may properly come before the
meeting.
The Fund has approximately $5,000,000 in net assets, and the Board has
concluded that the continued operation of the Fund at this size is not
economically feasible. The Board has unanimously determined that a complete
liquidation is in the best interests of the Fund and its shareholders.
We strongly urge you to approve the Plan at this time. Subject to
receipt of the requisite shareholder approval, shareholders remaining in the
Fund will receive a liquidation distribution, in cash, on or about October 17,
1997.
<PAGE>
You are entitled to vote at the meeting and any adjournments thereof if
you owned shares of the Fund at the close of business on September 2, 1997, even
if you no longer own Fund shares. If you attend the meeting, you may vote your
shares in person. If you do not expect to attend the meeting, after reading the
enclosed material, please complete, date, sign and return the enclosed proxy in
the enclosed postage paid envelope.
By Order of the Board of Directors,
Eugene P. Grace
Vice President and Secretary
The Fund will furnish, without charge, copies of its most recent Annual
and Semi-Annual Reports to a shareholder upon request. Any such request should
be directed to the Fund by calling 800 WARBURG (800-927-2874) or by writing to
Warburg, Pincus Tax Free Fund, Inc., 466 Lexington Avenue, New York, New York
10017-3147.
In order to avoid the additional expense of further solicitation, we
ask that you mail your proxy promptly no matter how many shares you own or if
you no longer own Fund shares.
YOUR VOTE IS IMPORTANT.
<PAGE>
WARBURG, PINCUS TAX FREE FUND, INC.
466 Lexington Avenue
New York, New York 10017-3147
-----------------
PROXY STATEMENT
-----------------
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
OCTOBER 3, 1997
--------------------------------------------------------------
This document is a proxy statement for Warburg, Pincus Tax Free Fund,
Inc. (the "Fund"), an open-end investment company having two classes of common
stock, Common Shares and Advisor Shares. This proxy statement, which will be
mailed to the Fund's shareholders on or about September 12, 1997, is furnished
in connection with the solicitation of proxies by the Board of Directors of the
Fund (the "Board") to be used at the Fund's Special Meeting of Shareholders and
at any adjournments thereof (the "Meeting"). The Meeting will be held on Friday,
October 3, 1997 at 3:00 p.m., Eastern Time at the offices of the Fund, 466
Lexington Avenue, New York, New York 10017-3147 (10th floor), for the purposes
set forth in the Fund's Notice of Special Meeting.
The cost of the Meeting and the solicitation of proxies (estimated at
$40,000) will be paid by Warburg, Pincus Counsellors, Inc., the Fund's
investment adviser ("Warburg"). The principal solicitation of proxies will be by
the mailing of this proxy statement, but proxies may also be solicited by
telephone and/or in person by representatives of the Fund and regular employees
of Warburg or its affiliates. Such representatives and employees will not
receive additional compensation for solicitation activities.
The proxies named on the proxy card of the Fund will vote in accordance
with the directions indicated thereon if your proxy card is received properly
executed. If you properly execute your proxy card and give no voting
instruction, your shares will be voted FOR the proposal set forth herein.
Abstentions will be counted as present for purposes of determining a quorum, but
as shares which have
<PAGE>
not voted. Broker non-votes (i.e., proxies received from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote the shares on a particular
matter with respect to which the broker or nominees do not have discretionary
power) will be treated the same as abstentions. Abstentions and broker non-votes
will not be counted in favor of, but will have no other effect on, the vote for
the Proposal. Proxies may be revoked at any time prior to their exercise by
execution of a subsequent proxy card, by written notice to the Secretary of the
Fund or by voting in person at the Meeting.
Copies of the Fund's most recent Semi-Annual Report for the six months
ended February 28, 1997, which includes unaudited financial statements, and the
Fund's Annual Report for the year ended August 31, 1996, which includes audited
financial statements, have heretofore been mailed to each of the shareholders of
the Fund. The Fund will furnish without charge additional copies of its
Semi-Annual Report and Annual Report to any shareholders who request them by
calling 800 WARBURG (800-927-2874). These reports do not form any part of the
proxy solicitation material.
The affirmative vote of shareholders holding a majority of the voting
securities of the Fund outstanding at the close of business on September 2, 1997
(the "Record Date"), voting in the aggregate without regard to class, in person
or by proxy, is required for approval of the liquidation of the assets and
dissolution of the Fund pursuant to the provisions of the Plan of Dissolution,
Liquidation and Termination of the Fund (the "Plan") as set forth in Exhibit A
hereto.
At the Meeting, the presence in person or by proxy of shareholders of
the Fund entitled to cast at least one-third of the votes entitled to be cast,
in the aggregate without regard to class, shall constitute a quorum for the
transaction of business. In the event a quorum is not present, or in the event
that a quorum is present at the Meeting but sufficient votes to approve the
proposal are not received, the persons named as proxies by the Fund may propose
one or more adjournments of the Meeting to permit further solicitation of
proxies. Any such adjournment will
2
<PAGE>
require the affirmative vote of a majority of the Fund's shares represented at
the Meeting in person or by proxy.
Shareholders of record at the close of business on the Record Date are
entitled to vote at the Meeting, even if they sold their Fund shares after the
Record Date.
Each full share outstanding is entitled to one vote and each fractional
share outstanding is entitled to a proportionate fractional share of one vote.
As of the Record Date, the Fund had outstanding 365,267.0570 Common Shares and
no Advisor Shares. The persons who owned more than 5% of any class of the Fund's
outstanding shares as of the Record Date to the knowledge of the Fund, are set
forth in Exhibit B hereto.
PROPOSAL TO LIQUIDATE THE ASSETS
AND DISSOLVE THE FUND PURSUANT
TO THE PROVISIONS OF THE PLAN OF
DISSOLUTION, LIQUIDATION AND TERMINATION
The Liquidation in General
The Fund proposes to liquidate the assets and dissolve the Fund
pursuant to the provisions of the Plan as approved by the Board on July 30,
1997, when the Board determined that an orderly liquidation of the Fund's assets
was in the best interests of the Fund and its shareholders. The Plan provides
for the complete liquidation of all of the assets of the Fund. If the Plan is
approved by the requisite shareholder vote, Warburg will undertake to liquidate
the Fund's assets at market prices and on such terms and conditions as Warburg
shall determine to be reasonable and in the best interests of the Fund and its
shareholders.
In the event the Plan is not approved by the requisite shareholder
vote, the Board will consider what other action should be taken.
Reasons for the Liquidation
The Fund is an open-end, diversified management investment company
organized as a Maryland corporation on January 29, 1996. On May 3, 1996, the
Fund acquired all of the assets and
3
<PAGE>
liabilities of the corresponding investment portfolio of The RBB Fund, Inc. (the
"RBB Fund") with a similar name. As of June 30, 1997, the Fund's net assets were
approximately $4,967,000.
At a meeting of the Board held on July 30, 1997, the Board was advised
by Warburg that the continued operation of the Fund was not economically
feasible or in the best interests of the Fund or its shareholders considering
all relevant factors, including, without limitation, the relatively small size
of the Fund's assets, the resulting high expense ratio of the Fund (before fee
waivers and expense reimbursements), and the improbability that sales of the
Fund's shares could be increased to raise the Fund's assets to a more
economically viable level. Warburg requested that the Board consider the
liquidation of the Fund pursuant to the Plan attached to this Proxy Statement as
Exhibit A.
At the July 30, 1997 Board meeting, the Board considered various
alternatives for the Fund: (i) increasing the size of the Fund through a special
marketing effort; (ii) merging the Fund with an investment company with a
similar investment focus and (iii) liquidating the Fund. Warburg reported to the
Board that it had considered each alternative and had concluded that a prompt
liquidation of the Fund was the alternative that was in the best interests of
the shareholders of the Fund. Warburg's view was that further marketing efforts
would not be successful in increasing the Fund's size sufficiently enough to
permit the Fund to assume the payment of all of its expenses. Warburg reported
that the merger of the Fund with a similar investment company was not a
realistic option because of the relatively small amount of assets in the Fund,
the expense involved in a merger and the fact that many Fund shareholders could
be reasonably expected to redeem any interest in the merged entity.
The Board acknowledged that Warburg has voluntarily waived all of its
advisory fees since it assumed investment advisory responsibilities with respect
to the Fund on April 10, 1995, when the Fund was an investment portfolio of the
RBB Fund, and, in addition, Warburg has been reimbursing a substantial part of
the Fund's expenses during the same period. PFPC Inc., co-administrator for the
Fund, has also waived all of its co-administration fees since April 10, 1995.
The Fund's total return for the year ended June 30, 1997 was 7.50% (5.38%
without waivers) and for the period from April 10, 1995 to June 30, 1997 the
Fund's cumulative total return was 15.04% (9.32% without
4
<PAGE>
waivers). Furthermore, in the absence of those waivers and reimbursements, the
Fund's yield, for the thirty-day period ended, June 30, 1997, would have been
2.08%. The Board recognized that this yield would make the Fund unattractive to
new investors and that the Fund's adviser and co-administrator are under no
obligation to continue fee waivers and expense reimbursements. Based upon
Warburg's presentation and recommendation and other relevant factors, the Board
concluded that a liquidation of the Fund was in the best interests of the Fund
and its shareholders. See "Federal Income Tax Consequences" below.
The Board, including all of the Directors who are not "interested
persons" of the Fund (as that term is defined in the Investment Company Act of
1940, as amended), then unanimously adopted resolutions approving the Plan,
declaring the proposed liquidation and dissolution advisable and directing that
it be submitted to the shareholders for consideration. In connection with the
proposal, Warburg will bear the costs associated with the liquidation of the
Fund, which are expected to total approximately $40,000.
The liquidation of the assets and termination of the Fund will have the
effect of permitting the Fund's shareholders to invest the distributions to be
received by them upon the Fund's liquidation in investment vehicles of their own
choice. Investors who desire the continued use of a managed investment such as a
mutual fund may obtain prospectuses for other Warburg Pincus Funds by calling,
toll free, 800 WARBURG (800-927-2874).
In the event that the shareholders do not approve the Plan, the Board
will continue to search for other alternatives for the Fund.
Plan of Dissolution, Liquidation and Termination of the Fund
The Plan provides for the complete liquidation of all of the assets of
the Fund. If the Plan is approved, Warburg will undertake to liquidate the
Fund's assets at market prices and on such terms and conditions as Warburg shall
determine to be reasonable and in the best interests of the Fund and its
shareholders.
5
<PAGE>
Liquidation Value
If the Plan is adopted by the Fund's shareholders at the Meeting, as
soon as practicable after the consummation of the sale of all of the Fund's
portfolio securities and the payment of all of the Fund's known liabilities and
obligations, each Fund shareholder will receive a distribution in an amount
equal to the net asset value per share, as determined in accordance with the
Fund's current registration statement, together with accrued and unpaid
dividends and distributions, with respect to each of the shareholder's shares of
the Fund (the "Liquidation Distribution").
Federal Income Tax Consequences
The following summary provides general information with regard to the
federal income tax consequences to shareholders on receipt of the Liquidation
Distribution from the Fund pursuant to the provisions of the Plan. This summary
also discusses the effect of federal income tax provisions on the Fund resulting
from its liquidation and dissolution; however, the Fund has not sought a ruling
from the Internal Revenue Service (the "Service") with respect to the
liquidation of the Fund. This summary is based on the tax laws and regulations
in effect on the date of this proxy statement, all of which are subject to
change by legislative or administrative action, possibly with retroactive
effect.
This summary does not address the particular federal income tax
consequences which may apply to certain shareholders such as trusts, estates,
tax exempt organizations, non-resident aliens or other foreign investors. This
summary does not address state or local tax consequences. The tax consequences
discussed herein may affect shareholders differently depending on their
particular tax situations unrelated to the Liquidation Distribution, and
accordingly, this summary is not a substitute for careful tax planning on an
individual basis. Shareholders may wish to consult their personal tax advisers
concerning their particular tax situations and the impact thereon of receiving
the Liquidation Distribution as discussed herein. The receipt of the Liquidation
Distribution may result in tax consequences that are unanticipated by
shareholders.
As discussed above, pursuant to the Plan, the Fund will sell its
assets, distribute the proceeds to its shareholders and
6
<PAGE>
dissolve. The Fund anticipates that it will retain its qualification as a
regulated investment company under the Internal Revenue Code of 1986, as amended
(the "Code"), during the liquidation period and, therefore, will not be taxed on
any of its net income from the sale of its assets.
For federal income tax purposes, a corporate shareholder's receipt of
the Liquidation Distribution will be a taxable event in which the corporate
shareholder will be viewed as having sold its shares of the Fund in exchange for
an amount equal to the Liquidation Distribution that it receives. Each corporate
shareholder will recognize gain or loss measured by the difference between the
adjusted tax basis in its shares and the aggregate Liquidation Distribution
received from the Fund. If the shares are held as a capital asset, the gain or
loss will be characterized as a capital gain or loss. Generally, a capital gain
or loss attributable to shares held for more than one year will constitute a
long-term capital gain or loss, while a capital gain or loss attributable to
shares held for not more than one year will constitute a short-term capital gain
or loss.
The Fund will designate in a written notice to shareholders the amount
of the Liquidating Distribution attributable to accrued and unpaid dividends.
Although the federal income tax treatment of corporate shareholders will be as
described in the preceding paragraph, noncorporate shareholders will treat as a
dividend amounts so designated by the Fund. If a noncorporate shareholder
receives an exempt-interest dividend with respect to shares of the Fund held for
six months or less, any loss realized by the shareholder as a result of the
liquidation of the Fund will be disallowed to the extent of the exempt-interest
dividend. In addition, the Code may require a noncorporate shareholder, if he or
she receives an exempt-interest dividend, to treat as taxable income a portion
of certain otherwise non-taxable social security and railroad retirement benefit
payments. Furthermore, that portion of any exempt-interest dividend paid by the
Fund that represents income from private activity bonds may not retain its
tax-exempt status in the hands of a noncorporate shareholder who is a
"substantial user" (or a person related thereto) of a facility financed by such
bonds. If a portion of an exempt-interest dividend is attributable to interest
on certain specified private activity bonds, the Fund will identify in the
written notice that portion which must be treated by the noncorporate
shareholder as a tax preference item for purposes of the alternative minimum
tax.
7
<PAGE>
The Fund will also designate in a written notice to shareholders the
portion of the Liquidation Distribution that may be treated as a capital gain
dividend. A capital gain dividend will be taxable to noncorporate shareholders
as long-term capital gain, regardless of how long a shareholder has held the
Fund's shares. The Fund will provide information relating to that portion of the
capital gain dividend that may be treated by noncorporate shareholders as
eligible for the reduced capital gains rate for capital assets held for more
than 18 months. If a noncorporate shareholder receives a capital gain dividend
with respect to his or her shares, and if the shares have been held by the
noncorporate shareholder for six months or less, then any loss (to the extent
not disallowed pursuant to the other six-month rule described in the preceding
paragraph) realized by the shareholder as a result of the liquidation will be
treated as a long-term capital loss to the extent of the capital gain dividend.
Each noncorporate shareholder will recognize gain or loss on the
Liquidation Distribution that is measured by the difference between the
shareholder's adjusted tax basis in his or her Fund shares and the amount of the
Liquidation Distribution received from the Fund, reduced by the amount of such
distribution that was designated by the Fund as a dividend (including
exempt-interest and capital gain dividends).
If a shareholder has failed to furnish a correct taxpayer
identification number, has failed to report fully dividend or interest income,
or has failed to certify that he or she has provided a correct taxpayer
identification number and that he or she is not subject to "backup withholding,"
the shareholder may be subject to a 31% backup withholding tax with respect to
(i) taxable dividends and distributions and (ii) other taxable proceeds received
as part of the Liquidation Distribution. An individual's taxpayer identification
number is his or her social security number. Certain shareholders specified in
the Code may be exempt from backup withholding. The backup withholding tax is
not an additional tax and may be credited against a taxpayer's federal income
tax liability.
Liquidation Distribution
At present, the date on which the Fund will be liquidated and on which
the Fund will pay Liquidation Distributions to its shareholders is uncertain,
but it is anticipated that if the Plan
8
<PAGE>
is adopted by the shareholders such liquidation would occur on October 17, 1997
(the "Liquidation Date"). Shareholders holding Fund shares as of the close of
business on October 16, 1997 will receive their Liquidation Distribution on the
Liquidation Date without any further action on their part.
The right of a shareholder to redeem his or her shares of the Fund at
any time has not been impaired by the proposal to liquidate the assets and
dissolve the Fund and the adoption of the Plan. Therefore, a shareholder may
redeem shares in accordance with redemption procedures set forth in the Fund's
current Prospectuses and Statement of Additional Information without the
necessity of waiting for the Fund to take any action. The Fund does not impose
any redemption charges.
Conclusion
The Board unanimously recommends that the shareholders vote FOR the
proposed liquidation of assets and dissolution of the Fund pursuant to the
provisions of the Plan of Dissolution, Liquidation and Termination.
OTHER MATTERS
The Board does not know of any matters to be presented at the Meeting
other than that set forth in this Proxy Statement. If any other business should
come before the Meeting, the persons named as proxies in the accompanying proxy
will vote thereon in accordance with their best judgment.
* * * * * * * * * * * * *
SHAREHOLDER PROPOSALS
As a general matter, the Fund does not hold annual meetings of
shareholders. Shareholders wishing to submit proposals for inclusion in a proxy
statement for a subsequent meeting of shareholders (assuming that the Fund is
not liquidated as proposed) should send their written proposals to the Secretary
of Warburg, Pincus Tax Free Fund, Inc., 466 Lexington Avenue, New York, New York
10017-3147. Proposals must be received at a reasonable time prior to the date of
a meeting of shareholders to
9
<PAGE>
be considered for inclusion in the materials for the Fund's meeting. Timely
submission of a proposal does not, however, necessarily mean that such proposal
will be included.
It is important that proxies be returned promptly. If you do not expect to
attend the Meeting, please sign your proxy card promptly and return it in the
enclosed envelope to avoid unnecessary expense and delay. No postage is
necessary.
By Order of the Board of Directors,
Eugene P. Grace
Vice President and Secretary
New York, New York
September 4, 1997
10
<PAGE>
[PROXY CARD]
WARBURG, PINCUS TAX FREE FUND, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
I hereby instruct Eugene L. Podsiadio and Eugene P. Grace to vote the shares of
Warburg, Pincus Tax Free Fund, Inc. (the "Fund") as to which I am entitled to
vote, as shown on the reverse side, at a Special Meeting of the Shareholders of
the Fund (the "Meeting") to be held on Friday, October 3, 1997 at 3:00 p.m.,
Eastern Time at the offices of the Fund, 466 Lexington Avenue, New York, New
York 10017 (10th Floor), and any adjournments thereof, as follows:
I hereby revoke any and all proxies with respect to such shares previously given
by me. I acknowledge receipt of the Proxy Statement dated September 4, 1997.
This proxy will be voted as specified. If no specification is made, this proxy
will be voted "for" the Proposal.
This instruction may be revoked at any time prior to its exercise at the Meeting
by execution of a subsequent proxy card, by written notice to the Secretary of
the Fund or by voting in person at the Meeting.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY IN THE ENCLOSED ENVELOPE.
Signature should be exactly as the name or names appear on this proxy card. If
the individual signing the proxy card is a fiduciary (e.g., attorney, executor,
trustee, guardian, etc.), the individual's signature must be followed by his
full title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------ ------------------------
- ------------------------ ------------------------
- ------------------------ ------------------------
<PAGE>
[REVERSE SIDE]
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
<TABLE>
<S> <C>
VOTE THIS PROXY CARD TODAY! THE BOARD OF DIRECTORS OF THE FUND UNANIMOUSLY RECOMMENDS A VOTE FOR THE
YOUR PROMPT RESPONSE WILL SAVE PROPOSAL.
THE EXPENSE OF ADDITIONAL MAILINGS
This proxy, if properly For Against Abstain
executed, will be voted in 1) Proposal to liquidate and dissolve the
this manner directed by the Fund pursuant to the provisions of [ ] [ ] [ ]
undersigned shareholder. the Plan of Dissolution, Liquidation
IF NO DIRECTION IS MADE, THIS and Termination.
PROXY WILL
BE VOTED "FOR" APPROVAL OF THE
PROPOSAL.
2) The transaction of such other business as may properly come before the
Meeting or any adjournments thereof.
RECORD DATE SHARES:
Please be sure to sign and date Mark box at right if comments or address change
this Proxy. Date have been noted on the reverse side. [ ]
Shareholder sign here Co-owner sign here:
- ------------------- -------------------
DETACH CARD
</TABLE>
<PAGE>
EXHIBIT A
PLAN OF DISSOLUTION, LIQUIDATION AND TERMINATION
OF
WARBURG, PINCUS TAX FREE FUND, INC.
Warburg, Pincus Tax Free Fund, Inc., a Maryland corporation (the
"Fund"), shall proceed to a complete liquidation of the Fund according to the
procedures set forth in this Plan of Dissolution, Liquidation and Termination
(the "Plan"). The Plan has been approved by the Board of Directors of the Fund
(the "Board") as being advisable and in the best interests of the Fund and its
shareholders. The Board has directed that this Plan be submitted to the holders
of the outstanding voting shares of the Fund (each a "Shareholder" and,
collectively, the "Shareholders"), voting in the aggregate without regard to
class, for their adoption or rejection at a special meeting of shareholders and
has authorized the distribution of a Proxy Statement (the "Proxy Statement") in
connection with the solicitation of proxies for such meeting. Upon Shareholder
approval of the Plan, the Fund shall voluntarily dissolve and completely
liquidate in accordance with the requirements of the Maryland General
Corporation Law (the "MGCL") and the Internal Revenue Code of 1986, as amended
(the "Code"), as follows:
1. Adoption of Plan. The effective date of the Plan (the
"Effective Date") shall be the date on which the Plan is adopted by the
Shareholders.
2. Liquidation and Distribution of Assets. As soon as
practicable after the Effective Date and by October 17, 1997 (the "Liquidation
Period"), or as soon thereafter as practicable depending on market conditions
and consistent with the terms of this Plan, the Fund and the Fund's investment
adviser, Warburg, Pincus Counsellors, Inc. ("Warburg"), shall have the authority
to engage in such transactions as may be appropriate for the Fund's liquidation
and dissolution, including, without limitation, the consummation of the
transactions described in the Proxy Statement.
3. Provisions for Liabilities. The Fund shall pay or discharge
or set aside a reserve fund for, or otherwise provide for the payment or
discharge of, any liabilities and obligations, including, without limitation,
contingent liabilities.
4. Distribution to Shareholders. As soon as practicable after
the Effective Date, the Fund shall liquidate and distribute pro rata on the date
of liquidation (the "Liquidation Date") to its shareholders of record as of the
close of business on October 16, 1997 all of the remaining assets of the Fund in
complete
<PAGE>
cancellation and redemption of all the outstanding shares of the Fund,
except for cash, bank deposits or cash equivalents in an estimated amount
necessary to (i) discharge any unpaid liabilities and obligations of the Fund on
the Fund's books on the Liquidation Date, including, but not limited to, income
dividends and capital gains distributions, if any, payable through the
Liquidation Date, and (ii) pay such contingent liabilities as the Board shall
reasonably deem to exist against the assets of the Fund on the Fund's books.
5. Notice of Liquidation. As soon as practicable after the
Effective Date, the Fund shall mail notice to the appropriate parties that this
Plan has been approved by the Board and the Shareholders and that the Fund will
be liquidating its assets, to the extent such notice is required under the MGCL.
6. Articles of Dissolution. Subject to shareholder approval,
within the Liquidation Period and pursuant to the MGCL, the Fund shall prepare
and file Articles of Dissolution (the "Articles") with and for acceptance by the
Maryland State Department of Assessments and Taxation.
7. Amendment or Abandonment of Plan. The Board may modify or
amend this Plan at any time without Shareholder approval if it determines that
such action would be advisable and in the best interests of the Fund and its
Shareholders. If any amendment or modification appears necessary and in the
judgment of the Board will materially and adversely affect the interests of the
Shareholders, such an amendment or modification will be submitted to the
Shareholders for approval. In addition, the Board may abandon this Plan without
Shareholder approval at any time prior to the filing of the Articles if it
determines that abandonment would be advisable and in the best interests of the
Fund and its Shareholders.
8. Powers of Board and Officers. The Board and the officers of
the Fund are authorized to approve such changes to the terms of any of the
transactions referred to herein, to interpret any of the provisions of this
Plan, and to make, execute and deliver such other agreements, conveyances,
assignments, transfers, certificates and other documents and take such other
action as the Board and the officers of the Fund deem necessary or desirable in
order to carry out the provisions of this Plan and effect the complete
liquidation and dissolution of the Fund in accordance with the Code and the
MGCL, including, without limitation, filing of a Form N-8F with the Securities
and Exchange Commission, withdrawing any state registrations of the Fund and/or
its shares, withdrawing any qualification to conduct business in any state in
which the Fund is so qualified and the preparation and filing of any tax
returns.
9. Termination of Business Operations. As soon as practicable
upon adoption of this Plan, the Fund shall cease to conduct business except as
shall be necessary in connection with the effectuation of its liquidation and
dissolution.
10. Expenses. The expenses of carrying out the terms of this
Plan shall be borne by Warburg, whether or not the liquidation contemplated by
this Plan is effected.
<PAGE>
EXHIBIT B
Warburg, Pincus Tax Free Fund, Inc.
OWNERS OF MORE THAN
5% OF THE OUTSTANDING SHARES
OF A CLASS OF THE FUND
AS OF SEPTEMBER 2, 1997
COMMON SHARES
Number of Percent of
Common Shares Common Shares
Name and Address Beneficially Owned Outstanding
- ---------------- ------------------ -------------
Gruntal & Co., L.L.C. 49,444.8730 13.53%
FBO 995-10702-19
14 Wall Street
New York, NY 10005-2101
Charles Schwab & Co. Inc 45,849.4420 12.60%
Reinvest Account
Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
Gruntal & Co., L.L.C. 40,483.9250 11.08%
FBO 995-16852-14
14 Wall Street
New York, NY 10005-2101
Nat'l Financial Svcs Corp. 28,883.4600 7.91%
FBO Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908
Gruntal & Co., L.L.C. 21,314.9170 5.83%
FBO 995-10773-13
14 Wall Street
New York, NY 10005-2101
William & Waller 21,032.5210 5.76%
1585 Broadland Lane
Lake Forest, IL 60045-4821
