SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
THE RBB FUND, INC.
- ------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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4) Proposed maximum aggregate value of transaction:
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5) Total Fee Paid:
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[ X ] Fee paid previously with preliminary materials.
[ X ] 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.
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1) Amount Previously Paid: $125.00
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2) Form, Schedule or Registration Statement No.:
Schedule 14A, Preliminary Proxy Statement
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3) Filing Party: The RBB Fund, Inc.
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4) Date Filed: February 27, 1995
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<PAGE>
TAX FREE PORTFOLIO
OF
THE RBB FUND, INC.
Bellevue Park Corporate Center
400 Bellevue Parkway
Wilmington, Delaware 19809
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
March 9, 1995
TO THE SHAREHOLDERS:
A special meeting of shareholders of Class D shares of Common Stock
("Tax Free Shares") of The RBB Fund, Inc. (the "Fund") representing interests
in the Tax Free Portfolio (the "Portfolio") will be held on March 31, 1995 at
10:00 a.m. at 400 Bellevue Parkway, Suite 100, Wilmington, Delaware. Holders
of the Tax Free Shares will meet for the following purposes:
(1) To approve or disapprove a proposed new Investment
Advisory Agreement between the Fund and Warburg, Pincus
Counsellors, Inc.
(2) To approve or disapprove a modification of the
fundamental policies of the Portfolio to permit the Portfolio to
30% temporarily borrow for the purposes of meeting redemptions up
to of the value of the Portfolio's total assets, and to pledge as
security in connection with such borrowing an amount up to 125% of
the amount borrowed.
Shareholders of record at the close of business on March 1, 1995 are
entitled to vote at the special meeting and any adjournments. If you attend
the meeting, you may vote your shares in person. If you do not expect to
attend the meeting, please fill in, date, sign and return the proxy in the
enclosed envelope which requires no postage if mailed in the United States.
It is important that you return your signed proxy promptly so that a
quorum may be assured.
By order of the Board of Directors,
/s/ Donald van Roden
Donald van Roden
Chairman
<PAGE>1
TAX FREE PORTFOLIO
OF
THE RBB FUND, INC.
Bellevue Park Corporate Center
400 Bellevue Parkway
Wilmington, Delaware 19809
-------------------------------
PROXY STATEMENT
-------------------------------
SPECIAL MEETING OF SHAREHOLDERS
To Be Held March 31, 1995
The accompanying proxy is solicited by the Board of Directors of The
RBB Fund, Inc. (the "Fund"). A shareholder can revoke the proxy prior to its
use by appearing at the March 31, 1995 special meeting of shareholders (such
meeting and any adjournments thereof are hereinafter collectively called the
"Meeting") and voting in person, by giving written notice of such revocation
to the Secretary of the Fund or by returning a subsequently dated proxy. It
is anticipated that the solicitation of proxies will be primarily by mail.
The officers and directors of the Fund and the Fund's service providers may
also solicit proxies by telephone, telegraph or personal interview. The cost
of soliciting proxies will be borne by the Fund. The Fund may also pay
persons holding stock in their names, or those of their nominees, for their
expenses in sending proxies and proxy materials to beneficial owners or
principals. It is expected that this proxy statement and accompanying proxy
will be first sent to shareholders on or about March 9, 1995
Only shareholders of record holding Class D shares of Common Stock of
the Fund (the "Tax Free Shares") representing interests in the Tax Free
Portfolio (the "Portfolio") at the close of business on March 1, 1995 (the
"Record Date") will be entitled to vote at the Meeting. On the Record Date,
there were 459,266.272 Tax Free Shares outstanding. Each shareholder is
entitled to one vote for each full Tax Free Share held.
At the Record Date, Gruntal & Co. was owner of record of 27.68% of
the Tax Free Shares.
The Board of Directors has named Donald van Roden, Chairman of the
Board of Directors of the Fund, and Edward J. Roach, President and Treasurer
of the Portfolio, and each of them with power of substitution as attorneys
and proxies. Unless otherwise directed by the accompanying proxy, the
proxies will vote in favor of the proposed new advisory contract and the
proposed modifications of the Portfolio's investment restrictions.
In addition, in accordance with the Fund's Charter, the Board of
Directors of the Fund has redesignated the Portfolio as the "Warburg Pincus
Tax Free Fund." Such change will be effective on March 31, 1995 to reflect
the Portfolio's proposed affiliation with Warburg, Pincus Counsellors, Inc.
("Warburg Pincus"). As before, the Portfolio remains a class of shares of
the Fund.
Shareholders may obtain, without charge, a copy of the Portfolio's
most recent annual report by writing the Fund's distributor, Counsellors
Securities, Inc., at 466 Lexington Ave., New York, NY 10017-3147, or by
calling 1-800-888-9723.
<PAGE>2
PROPOSAL 1: APPROVAL OR DISAPPROVAL
OF THE NEW INVESTMENT ADVISORY AGREEMENT
At the Meeting, shareholders of the Portfolio will be asked to
approve the proposed new advisory arrangements for the Portfolio. Approval
of the new advisory arrangements will replace the existing investment
adviser, PNC Institutional Management Corporation ("PIMC"), and the existing
investment sub-adviser, PNC Bank, National Association ("PNC Bank"), with
Warburg Pincus as the new investment adviser.
At a meeting of the Fund's Board of Directors ("Board") held on
February 1, 1995, the Board considered and approved the establishment of new
investment advisory arrangements for the Portfolio, subject to the approval
of the Portfolio's shareholders. Currently, PIMC serves as the investment
adviser to the Portfolio pursuant to an investment advisory contract dated
August 16, 1988 ("Current Advisory Agreement"). In addition, pursuant to a
subadvisory agreement ("Sub-Advisory Agreement") by and among the Fund, PIMC
and PNC Bank, PNC Bank serves as sub-adviser to the Portfolio. These
agreements were last approved by shareholders at a meeting held on December
22, 1989.
Under the new arrangements approved by the Board, the Current
Advisory and Sub-Advisory Agreements would be terminated and Warburg Pincus
would become the Portfolio's sole investment adviser in accordance with the
terms of a proposed new advisory agreement between Warburg Pincus and the
Fund relating to the Portfolio ("Proposed Advisory Agreement"). If the
Proposed Advisory Agreement is approved by shareholders, the Portfolio would
be managed by Warburg Pincus. Arnold M. Reichman, a director of the Fund, is
a Managing Director of E.M. Warburg, Pincus & Co., Inc. ("EMW"), which
controls Warburg Pincus, a wholly-owned subsidiary of Warburg, Pincus
Counsellors G.P., through its ownership of the voting preferred stock of
Warburg Pincus. Counsellors Securities Inc., the Fund's distributor, is a
wholly-owned subsidiary of Warburg Pincus.
The Proposed Advisory Agreement provides that the Portfolio would pay
an advisory fee to Warburg Pincus at an annual rate of .50% of the
Portfolio's average daily net assets. Except as specifically set forth
below, the Proposed Advisory Agreement is the same as the Current Advisory
Agreement. However, under the Proposed Advisory Agreement, Warburg Pincus
would not provide administrative services currently provided by PIMC under
the Current Advisory Agreement, and the Portfolio would incur an additional
annual expense of .25% of average daily net assets for the provision of such
administrative services by PFPC, Inc. ("PFPC") and Counsellors Services, Inc.
("Counsellors Services") pursuant to separate Co-Administration Agreements
("Co-Administration Agreements"). See "Description of the Proposed Advisory
Agreement" and "Comparison of the Proposed Advisory Agreement to the Current
Advisory Agreement - Comparison of Fees and Expenses" below. The Proposed
Advisory Agreement appears as Appendix A to this Proxy Statement. In the
event the Proposed Advisory Agreement is not approved, the Current Advisory
Agreement and Sub-Advisory Agreement will remain in effect.
The Portfolio will be co-managed by Dale C. Christensen and Sharon B.
Parente. Mr. Christensen is a managing director of EMW and has been
associated with EMW since 1989, before which time he was a senior vice
president at Citibank, N.A. Ms. Parente is a senior vice president of
Warburg Pincus and has been a portfolio manager since joining Warburg Pincus
in 1992, before which time she was an assistant vice president at Citibank,
N.A.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE
"FOR" PROPOSAL 1
<PAGE>3
Description of the Proposed Advisory Agreement
Under the Proposed Advisory Agreement, Warburg Pincus will serve as
investment adviser to the Portfolio and be responsible for the overall
management of the Portfolio. Warburg Pincus may determine what securities
and other investments will be purchased, retained or sold and may place
orders for purchases and sales of portfolio securities. Warburg Pincus will
provide its services under the Proposed Advisory Agreement in accordance with
the Portfolio's investment objectives, restrictions and policies. Warburg
Pincus generally will pay the expenses it incurs in performing its duties
under the Proposed Advisory Agreement, although the Portfolio will bear its
own operating expenses.
For the services provided and expenses assumed by it, Warburg Pincus
will be entitled to receive with respect to the Portfolio an investment
advisory fee, computed daily and payable monthly, of .50% of the Portfolio's
average daily net assets.
The Proposed Advisory Agreement provides that Warburg Pincus will
reimburse the Portfolio for the amount, if any, by which the total operating
expenses of the Portfolio in any fiscal year exceed the most restrictive
applicable state expense limitation. Currently, the most restrictive
applicable expense limitation would require Warburg Pincus to reimburse the
Portfolio to the extent that the aggregate expenses borne by the Portfolio in
any fiscal year, exclusive of brokerage commissions, interest, taxes and
distribution expenses calculated on at least a monthly basis, exceed 2-1/2%
of average annual net assets up to $30 million, 2% of the next $70 million
average annual net assets and 1-1/2% of the remaining average annual net
assets. Warburg Pincus has voluntarily undertaken to cap the Portfolio's
total operating expenses at .50% for the first twelve (12) months that it
manages the Portfolio. The Proposed Advisory Agreement also provides that
none of its provisions shall be deemed to protect Warburg Pincus against any
liability to the Portfolio or its shareholders to which it would otherwise be
subject by reason of any breach of fiduciary duty with respect to the receipt
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 under the Proposed Advisory
Agreement.
The Proposed Advisory Agreement is terminable at any time without
penalty by the Board of Directors or by a vote of the holders of a majority
of the Tax Free Shares on 60 days' prior written notice to Warburg Pincus, or
by Warburg Pincus on 90 days' prior written notice to the Fund. The Proposed
Advisory Agreement also terminates automatically upon its assignment.
Under the proposed new arrangements, administrative services for the
Portfolio would be provided by PFPC with offices at 400 Bellevue Parkway,
Wilmington, Delaware 19809, and Counsellors Services, an affiliate of
Warburg Pincus with offices at 466 Lexington Avenue, New York, New York,
10017-3147. Such administrative services will be provided pursuant to
separate Co-Administration Agreements, to be dated March 31, 1995.
Currently, there is no Administration Agreement in effect for the Portfolio
and PIMC administers the Portfolio under the Current Advisory Agreement which
will terminate upon shareholder approval of the Proposed Advisory Agreement
with Warburg Pincus. At its meeting held on February 1, 1995, the Board
approved the Co-Administration Agreements with PFPC and Counsellors Services.
PFPC will be compensated at an annual rate of .15% of the average daily net
asset value, and Counsellors Services will be compensated at an annual rate
of .10% of average daily net asset value. Although these Agreements are not
subject to shareholder approval, they will not become effective unless and
until shareholders approve the Proposed Advisory Agreement.
In considering whether to approve an increase in the administrative
fee in the event that Proposal 1 is approved by shareholders, the Board
specifically noted that, under the Current Advisory Agreement, PIMC is
responsible for providing certain administrative services which will, under
the proposed new co-administration arrangements, be performed by PFPC
(primarily accounting and fund administrative services) and Counsellors
<PAGE>4
Services (primarily shareholder liaison and account maintenance services).
Under the new arrangements, Warburg Pincus would not provide the
administrative services currently provided by PIMC under the Current Advisory
Agreement, and the Portfolio would incur an additional annual expense of .25%
of average daily net assets for such administrative services provided by PFPC
and Counsellors Services under the Co-Administration Agreements. See
"Comparison of the Proposed Advisory Agreement to the Current Advisory
Agreement - Comparison of Fees and Expenses" below.
In addition to the foregoing, the Board considered and approved a
proposal to eliminate sales charges in connection with the sale of shares of
the Portfolio. Previously, a sales charge of up to 4.75% of the public
offering price was imposed on purchases of Portfolio shares. At the same
time, the Board voted to limit the payment of distribution expenses to 0.25%
of the Portfolio's daily net assets. The Portfolio currently pays 0.40% of
its average daily net assets for distribution expenses. The Board determined
to create a more competitive distribution fee structure by eliminating the
sales charges and reducing the distribution fees. The Board was also
furnished with information relating to the manner in which Warburg Pincus
plans to promote sales of Portfolio shares, particularly in light of the
amendment of the Distribution Agreement Supplement and elimination of sales
charges. It should be noted, however, that the amendment of the Distribution
Agreement Supplement to reduce the distribution fee and elimination of sales
charges became effective on February 1, 1995 and is not contingent on
approval of the Proposed Advisory Agreement.
Comparison of the Proposed Advisory Agreement to the Current Advisory
Agreement
Contract Terms. Under the Proposed Advisory Agreement, Warburg
Pincus will be entitled to receive an advisory fee at an annual rate of .50%
of the Portfolio's average daily net assets. Under the Current Advisory
Agreement, PIMC is entitled to receive the following fees, computed daily and
payable monthly: .50% of the first $250 million of the Portfolio's average
daily net assets; .45% of the next $250 million of the Portfolio's average
daily net assets; and .40% of the Portfolio's average daily net assets in
excess of $500 million. PIMC pays 75% of this fee to PNC Bank for services
under the Current Subadvisory Agreement.
The Current Advisory and Sub-Advisory Agreements are each dated
August 16, 1994, and were re-approved by the Board of Directors of the Fund
at a meeting called for that purpose on August 3, 1994. The Current Advisory
and Sub-Advisory Agreements were last submitted to a vote of Shareholders of
the Portfolio at a meeting held on December 22, 1989.
Under the Current Advisory and Sub-Advisory Agreement, PIMC and PNC
Bank are liable to the Portfolio for damages arising from the gross
negligence, bad faith or willful misfeasance on their part in the performance
of their duties or from reckless disregard by them of their obligations.
Under the Proposed Advisory Agreement, Warburg Pincus will be liable under
the same standard of care currently applied to PIMC and PNC Bank. The
Proposed Advisory Agreement requires the Portfolio to indemnify Warburg
Pincus against liability resulting from claims not involving gross
negligence, willful misfeasance, bad faith or reckless disregard on the part
of Warburg Pincus. No such indemnification is included in the Current
Advisory Agreement or Current Sub-Advisory Agreement.
Under the Proposed Advisory Agreement, Warburg Pincus will be
responsible for providing the overall management of the Portfolio, including
the provision of a continuous investment research and management program for
the Portfolio with respect to all securities, investments, cash and cash
equivalents. In addition, the Proposed Advisory Agreement provides that
Warburg Pincus will furnish to the Fund, its agents and service providers
prompt and accurate information with respect to all of the Portfolio's
activities for which Warburg Pincus is responsible. Like the Current
Advisory Agreement, the Proposed Advisory Agreement authorizes the
Portfolio's investment adviser
<PAGE>5
to direct brokerage transactions to brokers who provide research and certain
other services to such adviser. However, as noted above, under the new
arrangements Warburg Pincus would not provide the administrative services to
the Portfolio which are currently provided by PIMC under the Current
Advisory Agreement.
Comparison of Fees and Expenses. As of March 1, 1995, the Portfolio
had net assets of $4,680,266.62. During the fiscal year ended August 31,
1994, pursuant to the terms of the Current Advisory Agreement, PIMC received
fees of $0 and paid $0 to PNC Bank. During that same period, PIMC
voluntarily waived fees in the amount of $29,801 payable to it with respect
to the Portfolio.
<PAGE>6
The table set forth below illustrates the effect that the
compensation arrangements contained in the Proposed Advisory Agreement and
the Co-Administration Agreements would have had on the fees payable by and
expense ratio of the Portfolio had those agreements been in effect during the
Portfolio's last fiscal year.
<TABLE>
<CAPTION>
Current Arrangements Pro Forma
------------------------------ -----------------------------
Aggregate Fee
Rate of Fee Payable by the
(% of avg. Portfolio for the Rate of Fee
daily net Fiscal Year (% of avg. Aggregate
assets) Ended 8/31/94 daily net assets) Fee
------------ --------------- ----------------- ---------
- ------------
<S> <C> <C> <C> <C>
PIMC
(Advisory
Services) .50%(1)(2) $29,801(1)(3)
Warburg Pincus
(Advisory Fees) .50% $29,801
Rule 12b-1 fees
(payable to .40% $23,841 .25% $14,900
Counsellors
Securities Inc.)
PFPC
(Administrative
Services) -0- -0- .15% $8,940
Counsellors Services
(Administrative
Services) -0- -0- .10% $5,960
Other Expenses .94% 55,947 .94% $55,947
Total (before
waivers and
reimbursements) 1.84% $109,589 1.94% $115,548
===== ======== ===== ========
Total (after
waivers and
reimbursements) .15% $8,952 .50% $29,801
===== ======== ===== ========
<FN>
1 Of the fee payable by the Portfolio, PIMC waived $29,801 for the
year ended August 31, 1994, resulting in an effective rate of 0%.
2 PNC Bank is entitled to receive 75% of the fee paid to PIMC by the
Portfolio.
3 PNC Bank would have received $22,351 from PIMC for services to the
Portfolio if there has been no waivers of fees by PIMC.
</FN>
</TABLE>
<PAGE>7
Expense Example
An investor would pay the following expenses on a $1000 investment in
the Portfolio under the current and proposed arrangements, assuming (1) a 5%
annual return, and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 Year 3Years 5 Years 10 Years
------ ------ ------- --------
<S> <C> <C> <C> <C>
Current Arrangements: $49* $52* $56* $66*
Pro Forma: $5 $16 $28 $63
<FN>
*Reflects the imposition of the maximum sales charge at the beginning
of the period.
</FN>
</TABLE>
The Fee Table is designed to assist an investor in understanding the
various costs and expenses that an investor in the Portfolio will bear
directly or indirectly under the current and pro forma arrangements. The Fee
Table reflects the voluntary partial waivers of fees and expenses for the
Portfolio. However, there can be no assurance that any future partial
waivers of fees and expenses (if any) will not vary from the figures
reflected in the Fee Table. In addition, Warburg Pincus has voluntarily
undertaken to cap the Portfolio's total operating expenses at .50% for the
first twelve (12) months that it manages the Portfolio. There can be no
assurance that Warburg Pincus will continue to assume such expenses after the
initial 12 month period. Assumption of additional expenses will have the
effect of lowering a Portfolio's overall expense ratio and increasing its
yield to investors.
Board Consideration of the Advisory Agreement
On February 1, 1995, the Board held an in-person meeting called for
the purpose, among other things, of considering the Proposed Advisory
Agreement. Following the deliberations summarized below, the Board,
including a majority of those directors who are not "interested persons" of
the Fund approved, subject to the approval of the Portfolio's shareholders,
the Proposed Advisory Agreement for an initial term ending on August 16,
1995.
In its presentation to the Board, Warburg Pincus proposed that in the
event that shareholders approve the Proposed Advisory Agreement, it will
manage the Portfolio consistent with the Portfolio's investment objective in
the Prospectus.
In reaching its decision to approve the Proposed Advisory Agreement,
the Board considered such factors as it deemed reasonably necessary. These
factors included, among others: (1) the nature and quality of advisory
services available through Warburg Pincus; (2) the experience of the
portfolio managers to be assigned to manage the Portfolio; (3) the
relationship of the proposed advisory fee to the fee schedules of comparable
mutual funds; (4) other changes in the administrative and distribution
arrangements relating to the Portfolio; (5) the costs that will be borne by
Warburg Pincus in serving as the Portfolio's sole investment adviser; and
(6) the relationship between the Portfolio's projected expense ratio and
those of comparable funds.
In approving the Proposed Advisory Agreement, the Board took special
note of the outstanding investment performance achieved by Warburg Pincus in
its capacity as adviser to the Fund's Warburg Pincus Growth & Income Fund and
recognized that the Portfolio would have access to the same quality of
service under the Proposed Advisory Agreement. The Board also reviewed
comparative industry statistics for tax-free funds which included, among
other things, comparisons of investment advisory fees, expense ratios and
cost per account information. The Board noted that the fee payable to
Warburg Pincus is comparable to the fee payable by most funds with comparable
investment objectives. The Board believes that in light of its expectations
that the level of investment services to be provided by Warburg Pincus will
benefit shareholders, the investment advisory fee is appropriate. The Board
<PAGE>8
specifically determined that the proposed rate of advisory fee is reasonable,
and not excessive, in light of the nature, quality and scope of the advisory
and portfolio management services to be provided by Warburg Pincus.
Under the Investment Company Act of 1940 (the "1940 Act"), the
Proposed Advisory Agreement must be approved by the holders of a majority of
the outstanding Tax Free Shares. As used herein, "a majority of the
outstanding Tax Free Shares" means the lesser of (i) 67% of the Tax Free
Shares present at the Meeting if the holders of more than 50% of the
outstanding Tax Free Shares are present in person or by proxy, or (ii) more
than 50% of the outstanding Tax Free Shares. For purposes of this vote,
abstentions and broker non-votes will count toward the presence of a quorum
and will have the same effect as a vote "Against" Proposal 1.
PROPOSAL 2: MODIFICATION OF INVESTMENT LIMITATIONS
At its meeting, the Board also approved a proposal by PIMC and
Warburg Pincus that the fundamental policies applicable to the Portfolio be
modified to the extent necessary to permit the Portfolio to temporarily
borrow for the sole purpose of meeting redemptions up to 30% of the value of
the Portfolio's total assets, and to pledge as security in connection with
such borrowing in an amount up to 125% of the amount borrowed. In the event
the proposed modification to the Portfolio's fundamental policies is not
approved, the Portfolio will remain subject to its current fundamental policy
(see below) on temporary borrowing.
The proposed change permits the Portfolio to collateralize such
borrowings by pledging assets in excess of the amount borrowed. The
Portfolio has been informed by various lenders that such lenders require
collateral in excess of 100% of the amount of the loan. Collateral might be
requested at 110% to 115% of the loan amount. Under the present policy the
Portfolio is effectively unable to borrow, even for temporary purposes, since
it is prohibited from pledging collateral above the amount of the loan. The
Board therefore recommends to shareholders that the policy be changed to
permit the Portfolio to pledge assets in excess of the amount of the
borrowing.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE "FOR" PROPOSAL 2
The following sets forth the current and the proposed fundamental
policies applicable to the Portfolio to permit temporary borrowing.
The Portfolio's current fundamental policy with respect to temporary
borrowing is stated as follows:
The Tax Free Portfolio may not:
* * *
2. Borrow money, except from banks for temporary purposes
and then in amounts not in excess of 10% of the value of the
Portfolios's total assets at the time of such borrowing, and only if
after such borrowing there is asset coverage of at least 300% for all
borrowings of the Portfolio; or mortgage, pledge or hypothecate any
of its assets except in connection with any such borrowing and in
amounts not in excess of the lesser of the dollar amounts borrowed
or 10% of the value of the Portfolio's total assets at the time of
such borrowing; or purchase portfolio securities while borrowings in
excess of 5% of the Portfolio's total assets are outstanding. (This
borrowing provision is not for investment leverage, but solely to
facilitate management of the Portfolio's securities by enabling the
Portfolio to meet redemption requests where the liquidation of
portfolio securities is deemed to be disadvantageous or
inconvenient.)
<PAGE>9
* * *
The Board proposes to shareholders a change in this policy to read as
follows:
The Tax Free Portfolio may not:
* * *
2. Borrow money, except from banks for temporary purposes and
then in amounts not in excess of 30% of the value of the Portfolio's
total assets at the time of such borrowing, and only if after such
borrowing there is asset coverage of at least 300% for all borrowings
of the Portfolio; or mortgage, pledge or hypothecate any of its
assets except in connection with any such borrowing and in amounts not
in excess of 125% of the dollar amounts borrowed; or purchase
portfolio securities while borrowings in excess of 5% of the
Portfolio's total assets are outstanding. (This borrowing provision
is not for investment leverage, but solely to facilitate management
of the Portfolio's securities by enabling the Portfolio to meet
redemption requests where the liquidation of portfolio securities is
deemed to be disadvantageous or inconvenient.)
* * *
Under the Investment Company Act of 1940 (the "1940 Act"), the
proposed modification in the fundamental policy must be approved by the
holders of a majority of the outstanding Tax Free Shares. As used herein, "a
majority of the outstanding Tax Free Shares" means the lesser of (i) 67% of
the Tax Free Shares present at the Meeting if the holders of more than 50% of
the outstanding Tax Free Shares are present in person or by proxy, or (ii)
more than 50% of the outstanding Tax Free Shares. For purposes of this
vote, abstentions and broker non-votes will count toward the presence of a
quorum and will have the same effect as a vote "Against" Proposal 2.
Information About Warburg Pincus
Warburg Pincus. Warburg Pincus Counsellors, Inc. ("Warburg Pincus"),
a Delaware corporation, was organized in 1970, and is a wholly owned
subsidiary of Warburg, Pincus Counsellors, G.P., a New York general
partnership. E.M. Warburg Pincus and Co., Inc. ("EMW") controls Warburg
Pincus through its ownership of a class of voting preferred stock of Warburg
Pincus. EMW is wholly owned by Warburg, Pincus and Co., a general
partnership. Lionel I. Pincus holds a majority interest in Warburg, Pincus
Counsellors G.P. and Warburg, Pincus and Co. Other directors and officers of
Warburg Pincus and its affiliates own various minority interests in the
partnerships. The principal office of these entities is located at 466
Lexington Avenue, New York, New York 10017-3147.
Warburg Pincus provides investment management services for
individuals and institutions (including pension and profit sharing plans,
foundations and endowment funds). As of March 1, 1995, Warburg Pincus also
provided advisory services to the following registered investment companies
which have investment objectives similar to the Portfolio, certain
information as to which is set forth below:
<PAGE>10
<TABLE>
<CAPTION>
Annual Rate of Fee
Name of Net Assets at (based on average net assets)
Investment Company March 1, 1995 (after waivers and reimbursements)
- ---------------------------- ------------- ---------------------------------
<S> <C> <C>
Warburg Pincus New York
Municipal Intermediate Fund $84,344,000 .40%
Warburg Pincus Short-Term
Tax Advantaged Bond Fund $26,013,000 .55%
</TABLE>
The names and principal occupations of the chief executive officer
and each director of Warburg Pincus as of March 1, 1995 are as follows:
Lionel I. Pincus, Chairman, Chief Executive Officer and Director of Warburg
Pincus and EMW and officer and director of certain of its affiliates; John L.
Furth, President and Director of Warburg Pincus, Vice Chairman and Director
of EMW and officer and director of certain of its affiliates; and John L.
Vogelstein, Director and Managing Director of Warburg Pincus, Vice Chairman
and Director of EMW and officer and director of certain of its affiliates.
Each of the above persons may be reached c/o E.M. Warburg, Pincus & Co.,
Inc., 466 Lexington Avenue, New York, New York 10017-3147. Arnold M.
Reichman, a Director of the Fund, is the Managing Director and Assistant
Secretary of EMW, Chief Executive Officer and Secretary of Counsellors
Securities Inc., the Fund's distributor, and an Officer of various investment
companies advised by Warburg Pincus.
Since December 31, 1994, there have been no purchases or sales of
securities of Warburg Pincus, its parents or subsidiaries, by Directors of
the Fund in excess of 1% of the outstanding securities of any class of
Warburg Pincus, its parents or subsidiaries.
Distribution Arrangements. Counsellors Securities Inc., a wholly
owned subsidiary of Warburg Pincus, with offices at 466 Lexington Avenue, New
York, New York 10017-3147, serves as distributor to each of the twenty-eight
classes of Common Stock of the Fund being sold to the public as of the Record
Date, representing interests in eighteen investment portfolios. The Fund's
Board has adopted separate plans of distribution for each of such classes
pursuant to Rule 12b-1 under the 1940 Act. For the Fund's fiscal year ended
August 31, 1994, the Portfolio paid distribution fees to Counsellors
Securities Inc. pursuant to the Portfolio's 12b-1 plan in the amount of
$23,841, a substantial portion of which was reimbursed to the Portfolio by
PIMC. As described above, however, the Board has reduced the amount payable
by the Portfolio under the plan to .25% of the Portfolio's average daily net
assets, and Warburg Pincus has undertaken to cap the Portfolio's total
operating expenses at .50% for the first twelve (12) months that it manages
the Portfolio. Counsellors Securities Inc. will continue to serve as
distributor regardless of whether the Proposed Advisory Agreement is approved
or disapproved.
<PAGE>11
ADDITIONAL INFORMATION ABOUT THE FUND
Additional Information Concerning the Fund's Portfolios
In addition to the Portfolio, on the Record Date, the Fund also
offered classes of shares of Common Stock representing interests in seventeen
other investment portfolios:
<TABLE>
<CAPTION>
Portfolio Shares Outstanding
- ------------------------------------------- ----------------------
<S> <C>
Warburg Pincus Growth & Income Fund 55,379,809.8
Warburg Pincus Balanced Fund 114,927.44
Money Market Portfolio 1,156,510,892.34
Municipal Money Market Portfolio 305,280,710.36
New York Municipal Money Market Portfolio 48,209,220.58
Government Securities Portfolio 5,593,637.266
Government Obligations Money Market Portfolio 191,797,098.99
BEA International Equity Portfolio 41,540,347.11
BEA Emerging Markets Equity Portfolio 6,820,037.020
BEA Strategic Fixed Income Portfolio 9,322,648.401
BEA U.S. Core Equity Portfolio 1,333,429.501
BEA U.S. Core Fixed Income Portfolio 4,038,565.120
BEA Global Fixed Income Portfolio 1,210,619.985
BEA Municipal Bond Fund Portfolio 3,281,542.084
Laffer/Canto Equity Portfolio 67,433.341
</TABLE>
<PAGE>12
Principal Holders of the Fund's Outstanding Common Stock
The Fund's outstanding Common Stock has been classified into
twenty-nine classes (Classes A, C through J, L through P, R through Z, and AA
through EE). The following table sets forth as of March 1, 1995, those known
by the Fund to be the owners of record of more than 5% of any class of the
Fund's outstanding Common Stock. The Fund has no knowledge regarding the
beneficial ownership of such shares.
<TABLE>
<CAPTION>
Percent of
Outstanding
Name and Addresses Number of Shares Shares of
Class of Common Stock of Record Owners Owned of Record Class Owned
- ---------------------- ------------------ ---------------- -----------
<S> <C> <C> <C>
Class A
(Growth & Income) Boston Financial Data Services
Omnibus Account
Attn: Warburg Pincus 3rd Floor
2 Heritage Drive
Quincy, MA 02171 55,128,002.425 99.545
Class C
(Balanced) Jane T. Bell
15 Schooner Drive
Mystic, CT 06355-1913 7,666.950 6.67%
Planco Inc. P/S/P Trust
16 Industrial Blvd.
Paoli, PA 19301-1609 26,008.019 22.63%
E.M. Warburg Pincus & Co., Inc.
466 Lexington Ave.
New York, NY 10017-3140 38,460.783 33.475
Class D
(Tax-Free)
Gruntal Co.
FBO 995-16852-14
14 Wall Street
New York, NY 10005 40,483.925 8.814
Gruntal Co.
FBO 998-10773-13
14 Wall Street
New York, NY 10005 43,332.377 9.435
Gruntal Co.
FBO 995-10702-19
14 Wall Street
New York, NY 10005 43,332.377 9.435
</TABLE>
<PAGE>13
<TABLE>
<CAPTION>
Percent of
Outstanding
Name and Addresses Number of Shares Shares of
Class of Common Stock of Record Owners Owned of Record Class Owned
- ---------------------- ------------------ ---------------- -----------
<S> <C> <C> <C>
Class E
(Money)
PNC Bank, N.A. Custodian FBO
Harold Y. Erfer
414 Charles Lane
Wynnewood, PA 19096 6,947.110 13.739
PNC Bank, N.A. Custodian FBO
Karen N. McElhinny
and Contribution Account
4943 King Authur Drive
Erie, PA 16506 9,026.700 17.852
E.L. Haines, Jr.
and Betty J. Haines
2341 Pinebluff Drive
Dallas, TX 75228 4,186.180 8.279
John Robert Estrada
and Shirley Ann Estrada
1700 Raton Drive
Arlington, TX 76018 7,917.920 15.660
Eric Levine
and Linda & Howard Levine
Jt. Ten. WROS
67 Lanes Pond Road
Howell, NJ 07731 15,781.240 31.212
Class F
(Municipal Money)
William B. Pettus
TRST Augustine W. Pettus Trust
827 Winding Path Lane
St. Louis, MO 63021-6635 646.640 12.898
Seymour Fein
P.O. 486 Tremont Post Office
Bronx, NY 10457-0486 4,366.570 87.101
Class G
(Money)
Saver's Marketing Inc.
c/o Planco
16 Industrial Blvd
Paoli, PA 19301 47,969.450 21.067
</TABLE>
<PAGE>14
<TABLE>
<CAPTION>
Percent of
Outstanding
Name and Addresses Number of Shares Shares of
Class of Common Stock of Record Owners Owned of Record Class Owned
- ---------------------- ------------------ ---------------- -----------
<S> <C> <C> <C>
Jewish Family and Children's
Agency of Philadelphia Capital
Campaign
Attn: S. Ramm
1610 Spruce Street
Philadelphia, PA 19103 95,431.460 41.912
Lynda P. Succ. Trste
For In Tr under the
Lynda S. Campbell Caring Trust
dtd 10/19/92
935 Rutger Street
St. Louis, MO 63104 16,329.480 7.171
Class H
(Municipal Money)
Kelly W. Vandelicht
and Crystal C. Vandelicht
P.O. Box 296
Belle, MD 65013 13,456.220 6.789
Deborah C. Brown of Trste
For Barbara J.C. Custis Trustee
The Crowe Trust dtd 11/23/88
9921 West 128th Terrace
Overland Park, KS 66213 55,053.050 27.778
Kenneth Farwell
and Valerie Farwell, Jt Ten
3654 Sullivan
St. Louis, MO 63107 11,139.680 5.620
Larnie Johnson
and Mary Alice Johnson
4927 Lee Avenue
St. Louis, MO 63114-1726 16,425.940 8.288
Gary L. Lange
and Susan D. Lange
13 Muirfield Court, North
St. Charles, MO 66304 18,225.440 9.196
Marcella L. Haugh Caring Trust
dtd 8/12/91
40 Plaza Square, Apt. 202
St. Louis, MO 63103 12,565.120 6.340
</TABLE>
<PAGE>15
<TABLE>
<CAPTION>
Percent of
Outstanding
Name and Addresses Number of Shares Shares of
Class of Common Stock of Record Owners Owned of Record Class Owned
- ---------------------- ------------------ ---------------- -----------
<S> <C> <C> <C>
Class I
(Money)
Wasner & Co.
For Account of Paine Webber and
Managed Assets Sundry Holdings
Attn: Income Collection Dept.
200 Stevens Drive
Lester, PA 19113 324,254,754.220 80.786
Wasner & Co.
For Account of Paine Webber and
Managed Assets Sundry Holdings
Attn: Joe Domildo
76 A 260 ABC 200 Stevens Drive
Lester, PA 19113 62,797,024.000 15.645
Class P
(Government)
Home Indemnity Company
59 Maiden Lane
Attn: Erik Weitzel
21st Floor
New York, NY 10038 333,890.692 5.969
Home Insurance Company
59 Maiden Lane
Attn: Erik Weitzel
21st Floor
New York, NY 10038 4,072.683.802 72.809
Class U
(BEA Strategic)
Chase Manhattan Bankers
Trst For Kendale Company Master
Pension Plan
Attn: Mark Tesoriero
3 Metrotech Center, 6th Floor
Brooklyn, NY 11245 1,283,891.752 13.771
State of Oregon
Treasury Department
159 State Capital Building
Salem, OR 97310 3,980,886.793 42.701
Class V
(BEA Emerging)
Amherst H. Wilder Foundation
919 Lafond Avenue
Saint Paul, MN 55104 341,194.821 5.002
</TABLE>
<PAGE>16
<TABLE>
<CAPTION>
Percent of
Outstanding
Name and Addresses Number of Shares Shares of
Class of Common Stock of Record Owners Owned of Record Class Owned
- ---------------------- ------------------ ---------------- -----------
<S> <C> <C> <C>
Wachovia Bank North Carolina
Trst Carolina Power & Light Co.
Supplemental Retirement Trust
301 N. Main Street
Winston Salem, NC 27101 589,613.226 8.645
Bryn Mawr College
101 North Merion Avenue
Bryn Mawr, PA 19010-2899 738,062.307 10.821
Northern Trust Company, Trste for
Texas Instruments Employee Plan
P.O. Box 92956 AC 22-6996672-059328
Chicago, IL 60675-2956 1,354,839.061 19.865
Northern Trust
Trst Pillsbury
P.O. Box 92956
Chicago, IL 60675 710,936.777 10.424
Class W
(Laffer)
PNC Bank, N.A., Custodian FBO
Victor A. Canto
P.O. Box 1471
Rancho Santa Fe, CA 92067 6,626.665 9.826
Lois G. Smith
FBO Lois G. Smith Trust
UAD 12/18/86
12035 Hoosier Court, Apt. 103
Bayonet Point, FL 34667-3143 4,705.606 7.037
Rauscher Pierce Refsnes FBO
Charles Wright
Special Account
Route 1, Box 138
Coleman, TX 76834 4,815.841 7.141
John Hancock Clearing Corporation
For Special Custody Account The
and Exclusive Benefit of Customers
One WFC, 200 Liberty Street
New York, NY 10281 17,007.596 25.221
</TABLE>
<PAGE>17
<TABLE>
<CAPTION>
Percent of
Outstanding
Name and Addresses Number of Shares Shares of
Class of Common Stock of Record Owners Owned of Record Class Owned
- ---------------------- ------------------ ---------------- -----------
<S> <C> <C> <C>
Class X
(BEA U.S. Core Equity)
Bank of New York
Trst APU Buckeye Pipeline
One Wall Street
New York, NY 10286 1,154,388.969 86.572
Werner & Pfleiderer Pension Plan
Employees
663 E. Crescent Avenue
Ramsey, NJ 07446 135,910.719 10.192
Class Y
(BEA U.S. Core Fixed Income)
New England UFCW & Employers'
Pension Fund Board of Trustees
101 Forbes Rd. Suite 201
Braintree, MA 02184 1,622,660.514 40.179
Bankers Trust
Trst Pechiney CCPR Fr Pension Master Trust
34 Exchange Pl., 4th Floor
Jersey City, NJ 01302 1,398,266.740 34.622
Kollmorgen Corporation Pension Trust
1601 Thapelo Rd.
Waltham, MA 02154 328,768.137 8.140
Class Z
(BEA Global Fixed Income)
Bank of New York
Trst Eastern Enterprises Retire Pl Tr
One Wall Street, 8th Floor
New York, NY 10286 431,722.261 35.661
Sunkist Master Trust
14130 Riverside Drive
Sherman Oaks, CA 91423 778,987.444 64.337
Class AA
(BEA Municipal Bond)
William A. Marquard
2199 Maysville Road
Carlisle, KY 40311 419,362.695 12.779
John C. Cahill
c/o David Holngren
30 White Birch Lane
Cts Cob, CT 06870 192,351.535 5.861
</TABLE>
<PAGE>18
Ownership of the Fund's Stock by Directors and Officers
As of March 1, 1995, the officers and directors of the Fund
beneficially owned less than 1% of the outstanding shares of the Fund.
ANNUAL MEETINGS
The Fund does not currently intend to hold annual meetings of
shareholders except as required by the 1940 Act or other applicable law.
Under the Fund's amended By-laws, shareholders who, taken together, own 10%
of the outstanding shares of all classes of the Fund have the right to call
for a meeting of shareholders to consider the removal of one or more
directors.
By order of the Board of Directors,
/s/ Donald van Roden
DONALD VAN RODEN
Chairman
March 9, 1995
<PAGE>18
APPENDIX A
INVESTMENT ADVISORY AGREEMENT
(Warburg Pincus Tax Free Fund)
AGREEMENT made as of March __, 1995 between THE RBB FUND,
INC., a Maryland corporation (herein called the "Company"), and Warburg,
Pincus Counsellors, Inc. (herein called the "Investment Advisor").
WHEREAS, the Company is registered as an open-end, management
investment company under the Investment Company Act of 1940 (the "1940 Act"),
of which the Warburg Pincus Tax Free Fund (the "Fund") is a separate
investment portfolio; and
WHEREAS, the Company desires to retain the Investment Advisor
to render certain investment advisory services to the Company with respect to
the Fund, and the Investment Advisor is willing to so render such services,
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 Company hereby appoints the
Investment Advisor to act as investment advisor for the Fund for the period
and on the terms set forth in this Agreement. The Investment Advisor accepts
such appointment and agrees to render the services herein set forth, for the
compensation herein provided.
2. Delivery of Documents. The Company has furnished
the Investment Advisor with copies properly certified or authenticated of
each of the following:
(a) Resolutions of the Board of Directors of
the Company authorizing the appointment of the Investment Advisor and the
execution and delivery of this Agreement;
(b) The Prospectus and Statement of Additional
Information relating to the class of Shares representing interests in the
Fund of the Company in effect under the 1933 Act (such prospectus and
statement of additional information, as presently in effect and as it shall
from time to time be amended and supplemented, is herein called the
"Prospectus").
The Company will furnish the Investment Advisor from time to
time with copies, properly certified or authenticated, of all amendments of
or supplements to the foregoing, if any.
<PAGE>19
3. Management of the Fund. Subject to the supervision
of the Board of Directors of the Company, the Investment Advisor will provide
for the overall management of the Fund including (i) the provision of a
continuous investment program for the Fund, including investment research and
management with respect to all securities, investments, cash and cash
equivalents in the Fund, (ii) the determination from time to time of what
securities and other investments will be purchased, retained, or sold by the
Company for the Fund, and (iii) the placement from time to time of orders for
all purchases and sales made for the Fund. The Investment Advisor will
provide the services rendered by it hereunder in accordance with the Fund's
investment objectives, restrictions and policies as stated in the applicable
Prospectus contained in the Registration Statement. The Investment Advisor
further agrees that it will render to the Company's Board of Directors such
periodic and special reports regarding the performance of its duties under
this Agreement as the Board may request. The Investment Advisor agrees to
provide to the Company (or its agents and service providers) prompt and
accurate data with respect to the Fund's transactions and, where not
otherwise available, the daily valuation of securities in the Fund.
4. Brokerage. The Investment Advisor may place orders
either directly with the issuer or with any broker or dealer. In placing
orders with brokers and dealers, the Investment Advisor will attempt to
obtain the best price and the most favorable execution of its orders. In
placing orders, the Investment Advisor will consider the experience and skill
of the firm's securities traders as well as the firm's financial
responsibility and administrative efficiency. Consistent with this
obligation, the Investment Advisor may, subject to the review of the
Board of Directors, select brokers on the basis of the research, statistical
and pricing services they provide to the Fund and other clients of the
Investment Advisor. Information and research received from such brokers
will be in addition to, and not in lieu of, the services required to be
performed by the Investment Advisor hereunder. 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 Investment
Advisor determines in good faith that such commission is reasonable in terms
of either the transaction or the overall responsibility of the Investment
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 the Fund's securities be purchased from
or sold to the Company's principal underwriter, the Investment Advisor, or
any affiliated person thereof, except to the extent permitted by SEC
exemptive order or by applicable law.
<PAGE>20
5. Conformity with Law; Confidentiality. The
Investment Advisor further agrees that it will comply with all applicable
rules and regulations of all federal regulatory agencies having jurisdiction
over the Investment Advisor in the performance of its duties hereunder. The
Investment Advisor will treat confidentially and as proprietary information
of the Company all records and other information relating to the Company and
prior, present or potential shareholders (except clients of the Investment
Advisor and its affiliates), 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
Company, which approval shall not be unreasonably withheld and may not be
withheld where the Investment 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
Company.
6. Services Not Exclusive. The investment management
and services rendered by the Investment Advisor hereunder are not to be
deemed exclusive, and the Investment Advisor shall be free to render similar
services to others so long as its services under this Agreement are not
impaired thereby.
7. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Investment Advisor hereby
agrees that all records which it maintains for the Fund are the property of
the Company and further agrees to surrender promptly to the Company any of
such records upon the Company's request. The Investment Advisor 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.
8. Expenses. During the term of this Agreement, the
Investment Advisor will pay all expenses incurred by it in connection with
its activities under this Agreement other than the cost of securities
purchased for the Fund (including brokerage commissions, if any), the cost of
independent pricing services used in valuing the Fund's securities and fees
and expenses of registering and qualifying shares for distribution under
state securities laws.
If the expenses borne by the Fund in any fiscal year exceed
the most restrictive applicable expense limitations imposed by the securities
regulations of any state in which the Shares of the Fund are registered or
qualified for sale to the public, the Investment Advisor shall reimburse the
Fund for any excess up to the amount of the fees payable by the Fund to it
during such fiscal year pursuant to Paragraph 9 hereof; provided,
<PAGE>21
however, that notwithstanding the foregoing, the Investment Advisor shall
reimburse the Fund for such excess expenses regardless of the amount of such
fees payable to it during such fiscal year to the extent that the securities
regulations of any state in which the Shares are registered or qualified for
sale so require.
9. Compensation.
(a) For the services provided and the expenses
assumed pursuant to this Agreement with respect to the Fund, the Company will
pay the Investment Advisor from the assets of the Fund and the Investment
Advisor will accept as full compensation therefor a fee, computed daily and
payable monthly, at the annual rate of .50% of the Fund's average daily net
assets.
(b) The fee attributable to the Fund shall be
satisfied only against assets of the Fund and not against the assets of any
other investment portfolio of the Company.
10. Limitation of Liability of the Investment Advisor.
The Investment Advisor shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Company in connection with the
matters to which this Agreement relates, except a loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Investment Advisor in the performance of its
duties or from reckless disregard by it of its obligations and duties under
this Agreement ("Disabling Conduct"). The Fund will indemnify the Investment
Advisor against and hold it harmless from any and all losses, claims,
damages, liabilities or expenses (including reasonable counsel fees and
expenses) resulting from any claim, demand, action or suit not resulting from
Disabling Conduct by the Investment Advisor. Indemnification shall be made
only following: (i) a final decision on the merits by a court or other body
before whom the proceeding was brought that the Investment Advisor was not
liable by reason of Disabling Conduct; or (ii) in the absence of such a
decision, a reasonable determination, based upon a review of the facts, that
the Investment Advisor was not liable by reason of Disabling Conduct by (a)
the vote of a majority of a quorum of directors of the Fund who are neither
"interested persons" of the Fund nor parties to the proceeding
("Disinterested Non-Party Directors") or (b) an independent legal counsel in
a written opinion. The Investment Advisor shall be entitled to advances from
the Fund for payment of the reasonable expenses incurred by it in connection
with the matter as to which it is seeking indemnification in the manner and
to the fullest extent permissible under the Maryland General Corporation Law.
<PAGE>22
The Investment Advisor shall provide to the Fund a written affirmation of
its good faith belief that the standard of conduct necessary for
indemnification by the Fund has been met and a written undertaking to repay
any such advance if it should ultimately be determined that the standard of
conduct has not been met. In addition, at least one of the following
additional conditions shall be met: (a) the Investment Advisor shall provide
a security in form and amount acceptable to the Fund for its undertaking; (b)
the Fund is insured against losses arising by reason of the advance; or (c) a
majority of a quorum of Disinterested Non-Party Directors, or independent
legal counsel, in a written opinion, shall have determined, based upon a
of facts readily available to the Fund at the time the advance is proposed to
review be made, that there is reason to believe that the Investment Advisor
will ultimately be found to be entitled to indemnification. Any amounts
payable by the Fund under this Section shall be satisfied only against the
assets of the Fund and not against the assets of any other investment
portfolio of the Company.
11. Duration and Termination. This Agreement shall become
effective with respect to the Fund on the day after 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 with
respect to the Fund until August 16, 1995. Thereafter, if not terminated,
this Agreement shall continue with respect to the Fund for successive annual
periods ending on August 16, 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 Company who are not parties to this Agreement
or interested persons of any such party, cast in person at a meeting called
for the purpose of voting on such approval, and (b) by the Board of Directors
of the Company or by vote of a majority of the outstanding voting securities
of the Fund; provided, however, that this Agreement may be terminated with
respect to the Fund by the Company at any time, without the payment of any
penalty, by the Board of Directors of the Company or by vote of a majority of
the outstanding voting securities of the Fund, on 60 days' prior written
notice to the Investment Advisor, or by the Investment Advisor at any time,
without payment of any penalty, on 90 days' prior written notice to the
Company. 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).
12. Amendment of this Agreement. No provision of this
Agreement may be changed, discharged or terminated orally, except by an
instrument in writing signed by the party against which
<PAGE>23
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.
13. Miscellaneous. The captions in this Agreement are included
for convenience of reference only and in no way define or delimit any of the
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 and construed and enforced in accordance with the
laws of the state of New York without giving effect to the conflicts of laws
principles thereof.
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.
THE RBB FUND, INC.
By:
-----------------------------
President
WARBURG, PINCUS COUNSELLORS, INC.
By:
-----------------------------
<PAGE>24
PROXY
Tax Free Portfolio of The RBB Fund, Inc.
Special Meeting of Shareholders
March 31, 1995
This Proxy is solicited on behalf of the Directors
The undersigned hereby appoints Donald van Roden and Edward
J. Roach, and each of them, attorneys and proxies, with power of substitution
in each of them, to vote and act on behalf of the undersigned at the Special
Meeting of Shareholders of Class D shares of Common Stock (the "Tax Free
Shares") of The RBB Fund, Inc. (the "Fund") representing interests in the Tax
Free Portfolio (the "Portfolio") at 400 Bellevue Parkway, Wilmington,
Delaware 19809 on March 31, 1995 at 10:00 a.m., and at all adjournments
thereof, according to the number of Tax Free Shares which the undersigned
would be entitled to vote if then personally present, upon such subjects as
may properly come before the meeting, all as set forth in the notice of the
meeting and the proxy statement furnished herewith, copies of which have been
received by the undersigned; hereby ratifying and confirming all that said
attorneys and proxies may do or cause to be done by virtue hereof.
It is agreed that unless otherwise marked hereon, said
attorneys and proxies are appointed with authority to vote For Proposal 1 and
Proposal 2.
The Directors recommend voting "FOR" Proposal 1 and Proposal 2.
1. Proposal to approve the proposed new Investment Advisory Agreement
between the Fund and Warburg, Pincus Counsellors, Inc. in respect of the
Fund's Portfolio.
FOR AGAINST ABSTAIN
/ / / / / /
2. Proposal to approve a modification of the fundamental policies of
the Portfolio to permit the Portfolio to temporarily borrow for the
purposes of meeting redemptions up to 30% of the value of
the Portfolio's total assets, and to pledge as security in connection
with such borrowing an amount up to 125% of the amount borrowed.
FOR AGAINST ABSTAIN
/ / / / / /
3. In the discretion of such proxies, upon such other business as may
properly come before the meeting or any adjournment thereof.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN
TAX FREE SHARES ARE HELD BY JOINT TENANTS, BOTH
SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR AS
EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME
BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
Dated: ______________, 1995
X_________________________________________
Signature/Title
X_________________________________________ Signature, if held jointly
Please Sign, Date and Return the Proxy Promptly Using the
Enclosed Envelope.
