<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use
of Commission Only
(as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
WARBURG, PINCUS POST-VENTURE CAPITAL 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] $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:
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is calculated
and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
<PAGE>
(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, of 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 POST-VENTURE CAPITAL FUND, INC.
466 Lexington Avenue
New York, New York 10017-3147
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
MAY 10, 1996
Dear Shareholders:
A special meeting of the shareholders of the Warburg,
Pincus Post-Venture Capital Fund, Inc. (the "Fund") will be held
on Friday, May 10, 1996, at 3:00 p.m., Eastern Time, at the offices of
the Fund, 466 Lexington Avenue, New York, New York 10017-3147 (10th Floor),
or any adjournment thereof, for the following purposes:
(1) To approve the Sub-Investment Advisory Agreement (the
"Sub-Advisory Agreement") between the Fund, Warburg, Pincus Counsellors, Inc.
("Warburg") and Abbott Capital Management, L.P. ("Abbott") with respect to
the Fund; and
(2) To transact such other business as may properly come before
the meeting.
Approval of the Sub-Advisory Agreement will allow the Fund to
utilize the extensive experience of Abbott in investing in partnerships that
themselves invest in companies in the venture capital and post-venture
capital stages of development. Warburg will pay a sub-advisory fee to
Abbott out of the advisory fee that Warburg receives from the Fund, so that
APPROVAL OF THE SUB-ADVISORY AGREEMENT WILL NOT INCREASE THE TOTAL FEES
AND EXPENSES OF FUND SHAREHOLDERS. THE BOARD OF DIRECTORS OF THE FUND
UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE SUB-ADVISORY
AGREEMENT.
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 March 1, 1996. If you
attend the meeting, you may vote your shares in person. If you do not expect to
attend the meeting, 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
March __, 1996
<PAGE>
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS MOST
RECENT ANNUAL REPORT TO A SHAREHOLDER UPON REQUEST. ANY SUCH REQUEST SHOULD
BE DIRECTED TO THE FUND BY CALLING (800) 888-6878 OR BY WRITING TO THE
FUND, 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.
YOUR VOTE IS IMPORTANT.
<PAGE>1
PRELIMINARY PROXY STATEMENT, DATED MARCH 1, 1996
WARBURG, PINCUS POST-VENTURE CAPITAL FUND, INC.
466 Lexington Avenue
New York, New York 10017-3147
-----------------------------------------------
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
MAY 10, 1996
-----------------------------------------------
This document is a proxy statement for Warburg, Pincus Post-Venture
Capital Fund, Inc. (the "Fund"), an open-end mutual fund having two classes of
common stock. This proxy statement, which will be mailed to Shareholders on or
about March __, 1996, 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 (the "Meeting"). The Meeting will be held
on Friday, May 10, 1996, 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 Notice of the Meeting.
The proxies named on the proxy card 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 will not be counted
as voting. Broker non-votes (i.e., proxies 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. 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.
Approval of the proposal set forth herein will require the affirmative
vote of a majority of the outstanding shares of the Fund, voting in the
aggregate without regard to class, in person or by proxy, if a quorum is
present. In the event that a quorum is present at the Meeting but sufficient
votes to approve a proposal are not received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitation
of proxies. Any such adjournment will require the affirmative vote of a majority
of those shares represented at the Meeting in person or by proxy.
<PAGE>2
The costs of the Meeting (estimated at $________), including the
solicitation of proxies, will be paid by the Fund. 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, Pincus
Counsellors, Inc. ("Warburg") or its affiliate(s). Such representatives and
employees will not receive additional compensation for solicitation
activities. The Fund has retained the services of D.F. King & Co., Inc. to
assist in the solicitation of proxies. For its services, D.F. King & Co.,
Inc. will be paid a fee by the Fund expected to equal approximately $25,000.
Each full share outstanding is entitled to one vote and each fractional
share outstanding is entitled to a proportionate share of one vote. As of March
1, 1996, the Fund had ________ outstanding shares. The persons who beneficially
owned more than 5% of any class of the Fund's outstanding shares as of March 1,
1996, to the knowledge of the Fund, are set forth in APPENDIX A hereto.
PROPOSAL -- APPROVAL OF SUB-INVESTMENT ADVISORY AGREEMENT
The shareholders of the Fund will be asked at the Meeting to approve a
Sub-Investment Advisory Agreement (the "Sub-Advisory Agreement") among the Fund,
Warburg and Abbott Capital Management, L.P. ("Abbott") with respect to the Fund.
The Sub-Advisory Agreement was unanimously approved by the Board, including all
of the Directors who are not parties to the Sub-Advisory Agreement or interested
persons of such parties ("independent directors"), at a meeting held on February
8, 1996. Warburg, as investment adviser to the Fund, had recommended to the
Board that the Fund retain Abbott to serve as the sub-investment adviser for the
Fund. Warburg's principal office is located at 466 Lexington Avenue, New York,
New York 10017-3147, and Abbott's principal office is located at 50 Rowes Wharf,
Suite 240, Boston, Massachusetts 02110-3328. A form of the Sub-Advisory
Agreement among the Fund, Warburg and Abbott is attached as APPENDIX B. THE
SUB-ADVISORY AGREEMENT WILL NOT IN ANY MANNER INCREASE THE FEES OTHERWISE
INCURRED BY FUND SHAREHOLDERS.
The Fund commenced investment operations on September 29, 1995 with
Warburg serving as the Fund's investment adviser from that date. The Fund
focuses its investments on equity securities of post-venture capital companies,
as described more fully in its Prospectus. Warburg believes that it would be
advantageous to invest a portion of the Fund's assets in private investment
partnerships that themselves invest in companies in the venture capital and
post-venture capital stages of development. Because this is an area in which
Abbott has extensive experience, Warburg
<PAGE>3
recommended that the Fund retain Abbott as sub-investment adviser.
Warburg will monitor the activities and performance of Abbott and may, in its
discretion, increase or decrease the portion of the Fund's assets allocated to
Abbott for investment. The Fund has determined initially that Warburg may
allocate up to 10% of the Fund's assets to Abbott, which can be changed by the
Board at any time. The fee paid to Abbott will be paid by Warburg out of the
advisory fee paid to Warburg by the Fund.
The Fund's other service agreements will not be affected by the
Sub-Advisory Agreement. Currently, the Fund employs as co-administrators
Counsellors Funds Service, Inc. ("Counsellors") and PFPC Inc. ("PFPC").
Counsellors' address is 466 Lexington Avenue, New York, New York 10017-3147.
PFPC has its principal offices at 400 Bellevue Parkway, Wilmington, Delaware
19809. The Fund employs PNC Bank, National Association ("PNC") as custodian of
the Fund's U.S. assets and State Street Bank and Trust Company ("State Street")
as custodian of the Fund's non-U.S. assets. PNC's principal business address is
Broad and Chestnut Streets, Philadelphia, Pennsylvania 19101. State Street's
principal business address is 225 Franklin Street, Boston, Massachusetts 02110.
The Fund employs Counsellors Securities Inc., a subsidiary of Warburg, as
distributor of the shares of the Fund.
The Sub-Advisory Agreement as approved by the Board is now being
submitted for approval by the shareholders of the Fund. If it is approved by a
Majority Vote of the outstanding shares of the Fund, it will continue in effect
for an initial term ending April 17, 1997, and will continue from year to year
thereafter, subject to approval annually by the Board or by a Majority Vote of
the outstanding shares of the Fund, and also, in either event, approval by a
majority of the independent directors who are not parties to the Sub-Advisory
Agreement or interested persons (as defined in the Investment Company Act of
1940, as amended (the "1940 Act")) of any such party at a meeting called for the
purpose of voting on such approval. "Majority Vote" for purposes of this proxy
statement, and under the 1940 Act, means the lesser of (i) 67% of the shares
represented at a meeting at which more than 50% of the outstanding shares of the
Fund are represented or (ii) more than 50% of the outstanding shares of the
Fund. If the shareholders of the Fund should fail to approve the Sub-Advisory
Agreement, the Board shall consider appropriate action with respect to such
non-approval of the Sub-Advisory Agreement.
INVESTMENT ADVISORY AGREEMENT
Warburg, a professional investment counselling firm, serves as the
Fund's investment adviser. Incorporated in 1970, Warburg is a wholly owned
subsidiary of Warburg, Pincus Counsellors, G.P. ("Counsellors G.P."), a New
York general partnership. E.M. Warburg, Pincus & Co., Inc. controls Warburg
through its
<PAGE>4
ownership of a class of voting preferred stock of Warburg. Counsellors G.P.
has no business other than being a holding company of Warburg and its
subsidiaries.
Pursuant to the Investment Advisory Agreement between Warburg and the
Fund, dated September 29, 1995 (the "Advisory Agreement"), and subject to the
supervision and direction of the Board, Warburg is responsible for managing the
Fund in accordance with the Fund's stated investment objective and policies. As
compensation for its services to the Fund, Warburg receives compensation at the
annual rate of 1.25% of the average daily net assets of the Fund. For the fiscal
period ended October 31, 1995, Warburg earned, and voluntarily waived, $1,756,
the full amount due it under the Advisory Agreement. WHETHER THE SUB-ADVISORY
AGREEMENT IS APPROVED OR NOT, WARBURG WILL CONTINUE TO SERVE AS INVESTMENT
ADVISER TO THE FUND PURSUANT TO THE ADVISORY AGREEMENT.
Warburg is responsible for providing investment advisory services as
well as a continual program of investment, evaluation and, if appropriate, sale
and reinvestment of the Fund's assets. In addition to expenses that Warburg may
incur in performing its services under the Advisory Agreement, Warburg pays the
compensation, fees and related expenses of all Directors of the Fund who are
affiliated persons of Warburg or any of its subsidiaries and, if the
Sub-Advisory Agreement is approved by shareholders, will pay a sub-advisory fee
to Abbott. The Fund pays all other expenses incurred in its operation, including
general administrative expenses.
SUB-ADVISORY AGREEMENT
If the Sub-Advisory Agreement with Abbott is approved by a Majority
Vote of the Fund's outstanding shares, Abbott will become the sub-adviser of the
Fund. The services of Abbott under the Sub-Advisory Agreement are not exclusive,
however. Abbott has the right to provide similar services to other investment
companies or to engage in other activities, provided that those activities do
not adversely affect Abbott's ability to perform its services under this
Sub-Advisory Agreement.
Subject to the supervision of Warburg, the Sub-Advisory Agreement
requires Abbott, in the exercise of its best judgment, to provide investment
advisory assistance and portfolio management advice to the Fund in accordance
with (a) the Fund's Articles of Incorporation, (b) the 1940 Act and the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and all
applicable Rules and Regulations of the Securities and Exchange Commission (the
"SEC") and all other applicable laws and regulations and (c) the Fund's
investment objective and policies as stated in the prospectuses (the
"Prospectuses") and Statement of Additional Information (the "SAI") and
investment parameters provided by Warburg from time to time.
<PAGE>5
In connection with the Sub-Advisory Agreement, Abbott will:
(i) determine whether to purchase, retain or sell
interests in United States or foreign private investment vehicles that
themselves invest in debt and equity securities of companies in the
venture capital and post-venture capital stages of development or
companies engaged in special situations or changes in corporate
control, including buy-outs ("Investments"). Abbott may execute, or
place orders for the execution of, all Investments on behalf of the
Fund;
(ii) assist the custodian and accounting agent for
the Fund in determining or confirming, consistent with the procedures
and policies stated in the Prospectuses and SAI, the value of any
Investments for which the custodian and accounting agent seek
assistance from or identify for review by Abbott;
(iii) monitor the execution of orders for the
purchase or sale of Investments and the settlement and clearance of
those orders;
(iv) exercise voting rights in respect of
Investments; and
(v) provide reports to the Board for consideration
at quarterly meetings of the Board on the Investments and furnish
Warburg and the Board with such periodic and special reports as
the Fund or Warburg may reasonably request.
In connection with the performance of the services of Abbott as
provided for in the Sub-Advisory Agreement, Abbott may contract at its own
expense with third parties for the acquisition of research, clerical services
and other administrative services that would not require such parties to be
required to register as an investment adviser under the Advisers Act; provided
that Abbott shall remain liable for the performance of its duties.
The Sub-Advisory Agreement will terminate automatically in the event of
its assignment. In addition, it may be terminated by Warburg upon 60 days'
written notice to Abbott and the Fund; by Abbott upon 60 days' written notice to
Warburg and the Fund; or by the Fund, upon the vote of a majority of the Fund's
Board or a majority of the outstanding voting securities of the Fund, upon 60
days' written notice to Warburg and Abbott.
Under the Sub-Advisory Agreement, Warburg will pay Abbott a fee,
payable quarterly, based on the aggregate average daily net assets of the Fund,
at the annual rate of 0.55% of the net asset value of the Investments as of the
last day of each calendar quarter. The fee for the period from the date of the
Sub-
<PAGE>6
Advisory Agreement to the end of the quarter during which the Sub-Advisory
Agreement commences shall be prorated according to the proportion that such
period bears to the full quarterly period. Upon any termination of the
Sub-Advisory Agreement before the end of a quarter, the fee for such part of
that quarter shall be prorated according to the proportion that such period
bears to the full quarterly period. WARBURG WILL PAY ABBOTT THIS SUB-ADVISORY
FEE OUT OF THE ADVISORY FEE THAT IT RECEIVES FROM THE FUND. ABBOTT SHALL HAVE NO
RIGHT TO OBTAIN COMPENSATION DIRECTLY FROM THE FUND FOR SERVICES PROVIDED UNDER
THE SUB-ADVISORY AGREEMENT AND MAY LOOK SOLELY TO WARBURG FOR PAYMENT OF FEES
DUE.
INFORMATION ABOUT ABBOTT
Abbott, which was founded in 1986, is an independent specialized
investment firm with assets under management of approximately $3 billion. Abbott
is a registered investment adviser which concentrates on venture capital, buyout
and special situations partnership investments. Abbott's management team
provides full-service private equity programs to clients.
The general partners and principal executive officers of
Abbott and their principal occupations are as shown below. The business address
of Mr. Pratt is 50 Rowes Wharf, Suite 240, Boston, Massachusetts 02110-3328 and
that of Messrs. Held, Solomon and Gray is 1330 Avenue of the Americas, Suite
2800, New York, New York 10019.
POSITION WITH ABBOTT
NAME AND PRINCIPAL OCCUPATION
- ---- ------------------------
Raymond L. Held...................... General Partner; investment manager.
Stanley E. Pratt..................... General Partner; investment manager.
Gary H. Solomon...................... General Partner; investment manager.
Thaddeus I. Gray, CFA................ Limited Partner; investment manager.
For tax and other business purposes, the partners of Abbott plan to
merge Abbott with and into, or transfer all of the assets of Abbott to, a
newly-formed Delaware limited liability company ("Abbott LLC"), with Abbott LLC
to survive and assume all of the liabilities of Abbott as part of the
transaction. This transaction, which is expected to occur before September 30,
1996 and is subject to certain contingencies, will not involve any material
change in the management, ownership, personnel, operations or activities of
Abbott. The present partners of
<PAGE>7
Abbott will be members of Abbott LLC and will hold officerships and other
positions in Abbott LLC carrying responsibilities generally commensurate with
their present responsibilities. Pursuant to a new sub-advisory agreement (the
"New Sub-Advisory Agreement"), Abbott LLC, as successor to Abbott, will perform
the services then being performed by Abbott. The New Sub-Advisory Agreement will
be substantially identical to the Sub-Advisory Agreement, except for the change
of the service provider from Abbott to Abbott LLC. Prior to its effectiveness,
the New Sub-Advisory Agreement will be approved by the Board of Directors of the
Fund. Shareholder approval of the Sub-Advisory Agreement will be deemed to
represent approval of the New Sub-Advisory Agreement.
THE DIRECTORS' RECOMMENDATION
In determining whether it was appropriate to approve the Sub-Advisory
Agreement and to recommend approval to shareholders, the Board, including the
Directors who are not interested persons of Warburg or Abbott, considered
various matters and materials provided by Abbott. Information considered by the
Directors included, among other things, the following: (1) that the compensation
to be received by Abbott will not increase the fees otherwise incurred by Fund
shareholders; (2) the expertise of Abbott with venture capital, buyout and
special situations partnership investments; (3) the personnel and research
capabilities of Abbott and Abbott's methodology in managing portfolios for
institutional clients; and (4) the lack of any anticipated adverse impact to the
Fund as a result of the Sub-Advisory Agreement.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU
VOTE FOR THIS PROPOSAL.
* * * * * * * * * * * * *
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 should send their written
proposals to the Secretary of Warburg, Pincus Post-Venture Capital 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 be
considered for inclusion in the materials for that meeting. Timely submission of
a proposal does not, however, necessarily mean that such proposal will be
included.
<PAGE>8
OTHER BUSINESS
Management knows of no business to be presented to the Meeting
other than the matter set forth in this proxy statement, but should any other
matter requiring the vote of shareholders arise, the proxies will vote thereon
according to their best judgment in the interests of the Fund.
By Order of the Board of Directors,
Eugene P. Grace
Vice President and Secretary
New York, New York
March __, 1996
<PAGE>
PROXY CARD
WARBURG, PINCUS POST-VENTURE CAPITAL FUND, INC.
SPECIAL MEETING OF SHAREHOLDERS
I hereby instruct Arnold M. Reichman and Eugene P. Grace to
vote the shares of Warburg, Pincus Post-Venture Capital Fund, Inc. (the "Fund")
as to which I am entitled to vote, as shown above, at a Special Meeting of the
Shareholders of the Fund (the "Meeting") to be held on Friday, May 10, 1996, at
3:00 p.m., Eastern Time, at the offices of the Fund, 466 Lexington Avenue, New
York, New York 10017-3147 (10th Floor), and any adjournments thereof, as
follows:
(1) To approve the Sub-Advisory Agreement between the
Fund, Warburg, Pincus Counsellors, Inc. and Abbott
Capital Management, L.P.:
[ ] For [ ] Against [ ] Abstain
(2) To transact such other business as may properly come
before the Meeting or any adjournment thereof.
THE BOARD OF DIRECTORS OF THE FUND
RECOMMENDS A VOTE FOR PROPOSAL 1.
PLEASE SIGN AND DATE THIS PROXY CARD AND RETURN PROMPTLY.
I hereby revoke any and all proxies with respect to such
shares previously given by me. I acknowledge receipt of the Proxy Statement
dated March __, 1996. THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED "FOR" PROPOSAL 1.
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.
------------------------------ -------------------
Shareholder Signature(s) Date
------------------------------
(Title(s), if applicable)
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY. 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.
<PAGE>
APPENDIX A
BENEFICIAL OWNERS OF MORE THAN
5% OF THE OUTSTANDING SHARES
OF A CLASS OF THE FUND
Common Shares
- -------------
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF COMMON SHARES
------------------------------------ -------------------- ------------------------
<S> <C> <C>
</TABLE>
Advisor Shares
- --------------
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF ADVISOR SHARES
------------------------------------ -------------------- -------------------------
<S> <C> <C>
</TABLE>
<PAGE>1
APPENDIX B
FORM OF SUB-INVESTMENT ADVISORY AGREEMENT
________ __, 1996
Abbott Capital Management, L.P.
50 Rowes Wharf
Boston, MA 02110
Dear Sirs:
Warburg, Pincus Post-Venture Capital Fund, Inc., a Maryland
corporation registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end, management investment company (the "Fund"), and
Warburg, Pincus Counsellors, Inc., as investment adviser to the Fund
("Warburg"), herewith confirms their agreement with Abbott Capital Management,
L.P. (the "Sub-Adviser") as follows:
1. Investment Description; Appointment
The Fund desires to employ its capital by investing and
reinvesting in securities of the kind and in accordance with the limitations
specified in its Articles of Incorporation, as may be amended from time to time
(the "Articles"), and in its Prospectuses and Statement of Additional
Information as from time to time in effect (the "Prospectus" and "SAI,"
respectively), and in such manner and to such extent as may from time to time be
approved by the Board of Directors of the Fund. Copies of the Prospectus, SAI
and Articles have been or will be submitted to the Sub-Adviser. The Fund agrees
to provide the Sub-Advisor copies of all amendments to the Prospectus and SAI on
an on-going basis. The Fund employs Warburg as its investment adviser. Warburg
desires to employ and hereby appoints the Sub-Adviser to act as its
sub-investment adviser upon the terms set forth in this Agreement. The
Sub-Adviser accepts the appointment and agrees to furnish the services set forth
below for the compensation provided for herein.
2. Services as Sub-Investment Adviser
(a) Subject to the supervision and direction of Warburg, the
Sub-Adviser will provide investment advisory assistance and portfolio management
advice to the Fund in accordance with (a) the Articles, (b) the 1940 Act and the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and all
applicable Rules and Regulations of the Securities and Exchange Commission (the
"SEC") and all other applicable laws and regulations and (c) the Fund's
investment objective and policies as stated in the Prospectus and SAI and
investment parameters
<PAGE>2
provided by Warburg from time to time. In connection therewith, the
Sub-Adviser will:
(i) determine whether to purchase, retain or sell
interests in United States or foreign private investment vehicles that
themselves invest in debt and equity securities of companies in the
venture capital and post-venture capital stages of development or
companies engaged in special situations or changes in corporate
control, including buyouts("Investments"). The Sub-Adviser is hereby
authorized to execute, or place orders for the execution of, all
Investments on behalf of the Fund;
(ii) assist the custodian and accounting agent for
the Fund in determining or confirming, consistent with the procedures
and policies stated in the Prospectus and SAI, the value of any
Investments for which the custodian and accounting agent seek
assistance from or identify for review by the Sub-Adviser;
(iii) monitor the execution of orders for the
purchase or sale of Investments and the settlement and clearance of
those orders;
(iv) exercise voting rights in respect of
Investments; and
(v) provide reports to the Fund's Board of Directors
for consideration at quarterly meetings of the Board on the Investments
and furnish Warburg and the Fund's Board of Directors with such
periodic and special reports as the Fund or Warburg may reasonably
request.
(b) In connection with the performance of the services of the
Sub-Adviser provided for herein, the Sub-Adviser may contract at its own expense
with third parties for the acquisition of research, clerical services and other
administrative services that would not require such parties to be required to
register as an investment adviser under the Advisers Act; provided that the
Sub-Adviser shall remain liable for the performance of its duties hereunder.
3. Execution of Transactions
(a) The Sub-Adviser will not effect orders for the purchase or
sale of securities on behalf of the Fund through brokers or dealers as agents.
(b) It is understood that the services of the Sub-Adviser are
not exclusive, and nothing in this Agreement shall prevent the Sub-Adviser from
providing similar services to other investment companies or from engaging in
other activities, provided that those activities do not adversely affect the
ability of the Sub-Adviser to perform its services under this
<PAGE>3
Agreement. The Fund and Warburg further understand and acknowledge that the
persons employed by the Sub-Adviser to assist in the performance of its duties
under this Agreement will not devote their full time to that service. Nothing
contained in this Agreement will be deemed to limit or restrict the right of
the Sub-Adviser or any affiliate of the Sub-Adviser to engage in and devote
time and attention to other businesses or to render services of whatever kind
or nature, provided that doing so does not adversely affect the ability of the
Sub-Adviser to perform its services under this Agreement.
(c) On occasions when the Sub-Adviser deems the purchase or
sale of a security to be in the best interest of the Fund as well as of other
investment advisory clients of the Sub-Adviser, the Sub-Adviser may, to the
extent permitted by applicable laws and regulations, but shall not be obligated
to, aggregate the securities to be so sold or purchased with those of its other
clients. In such event, allocation of the securities so purchased or sold, as
well as the expenses incurred in the transaction, will be made by the
Sub-Adviser in a manner that is fair and equitable, in the judgment of the
Sub-Adviser, in the exercise of its fiduciary obligations to the Fund and to
such other clients. The Sub-Adviser shall provide to Warburg and the Fund all
information reasonably requested by Warburg and the Fund relating to the
decisions made by the Sub-Adviser regarding allocation of securities purchased
or sold, as well as the expenses incurred in a transaction, among the Fund and
the Sub-Adviser's other investment advisory clients.
(d) In connection with the purchase and sale of securities for
the Fund, the Sub-Adviser will provide such information as may be reasonably
necessary to enable the custodian and co-administrators to perform their
administrative and recordkeeping responsibilities with respect to the Fund.
4. Disclosure Regarding the Sub-Adviser
(a) The Sub-Adviser has reviewed the disclosure about the
Sub-Adviser contained in the Fund's registration statement and represents and
warrants that, with respect to such disclosure about the Sub-Adviser or
information related, directly or indirectly, to the Sub-Adviser, such
registration statement contains, as of the date hereof, no untrue statement of
any material fact and does not omit any statement of a material fact which is
required to be stated therein or necessary to make the statements contained
therein not misleading.
(b) The Sub-Adviser agrees to notify Warburg and the Fund
promptly of any (i) statement about the Sub-Adviser contained in the Fund's
registration statement that becomes untrue in any material respect or (ii)
omission of a material fact about the Sub-Adviser in the Fund's registration
statement which is required to be stated therein or necessary to make the
statements contained therein not misleading or (iii) any
<PAGE>4
reorganization or change in the Sub-Adviser, including any change in its
ownership or key employees.
(c) Prior to the Fund or Warburg or any affiliated person (as
defined in the 1940 Act, an "Affiliate") of either using or distributing sales
literature or other promotional material referring to the Sub-Adviser, the
Sub-Adviser shall have the right to approve the general advertising or
promotional plan pursuant to which such literature or material is being utilized
or distributed; provided that the Sub-Adviser shall be deemed to have approved
such advertising or plan if it has not objected to its use within ten (10)
business days after such material has been sent to it. The Fund or Warburg will
use all reasonable efforts to ensure that all advertising, sales and promotional
material used or distributed by or on behalf of the Fund or Warburg that refers
to the Sub-Adviser will comply with the requirements of the Advisers Act, the
1940 Act and the rules and regulations promulgated thereunder.
(d) The Sub-Adviser has supplied Warburg and the Fund copies
of its Form ADV with all exhibits and attachments thereto and will hereinafter
supply Warburg, promptly upon preparation thereof, copies of all amendments or
restatements of such document.
5. Certain Representations and
Warranties of the Sub-Adviser
(a) The Sub-Adviser represents and warrants that it is a duly
registered investment adviser under the Advisers Act, a duly registered
investment adviser in any and all states of the United States in which the
Sub-Adviser is required to be so registered and has obtained all necessary
licenses and approvals in order to perform the services provided in this
Agreement. The Sub-Adviser covenants to maintain all necessary registrations,
licenses and approvals in effect during the term of this Agreement.
(b) The Sub-Adviser represents that it has read and
understands the Prospectus and SAI and warrants that in investing the Fund's
assets it will use all reasonable efforts to adhere to the Fund's investment
objectives, policies and restrictions contained therein.
6. Compliance
(a) The Sub-Adviser agrees that it shall promptly notify
Warburg and the Fund (i) in the event that the SEC or any other regulatory
authority has censured its activities, functions or operations; suspended or
revoked its registration as an investment adviser; or has commenced proceedings
or an investigation that may result in any of these actions, (ii) in the event
that there is a change in the Sub-Adviser, financial or otherwise, that
adversely affects its ability to perform services
<PAGE>5
under this Agreement or (iii) upon having a reasonable basis for believing
that, as a result of the Sub-Adviser's investing the Fund's assets, the
Fund's investment portfolio has ceased to adhere to the Fund's investment
objectives, policies and restrictions as stated in the Prospectus or SAI or is
otherwise in violation of applicable law.
(b) Warburg agrees that it shall promptly notify the
Sub-Adviser in the event that the SEC has censured Warburg or the Fund; placed
limitations upon any of their activities, functions or operations; suspended or
revoked Warburg's registration as an investment adviser; or has commenced
proceedings or an investigation that may result in any of these actions.
(c) The Fund and Warburg shall be given access to the records
of the Sub-Adviser at reasonable times solely for the purpose of monitoring
compliance with the terms of this Agreement and the rules and regulations
applicable to the Sub-Adviser relating to its providing investment advisory
services to the Fund, including without limitation records relating to trading
by employees of the Sub-Adviser for their own accounts and on behalf of other
clients. The Sub-Adviser agrees to cooperate with the Fund and Warburg and their
representatives in connection with any such monitoring efforts.
7. Books and Records
(a) In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Sub-Adviser hereby agrees that all records which it maintains
for the Fund are the property of the Fund and further agrees to surrender
promptly to either Warburg or the Fund any of such records upon the request of
either of them. The Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act and to preserve the records required
by Rule 204-2 under the Advisers Act for the period specified therein.
(b) The Sub-Adviser hereby agrees to furnish to regulatory
authorities having the requisite authority any information or reports in
connection with services that the Sub-Adviser renders pursuant to this Agreement
which may be requested in order to ascertain whether the operations of the Fund
are being conducted in a manner consistent with applicable laws and regulations.
<PAGE>6
8. Provision of Information;
Proprietary and Confidential Information
(a) Warburg agrees that it will furnish to the Sub-Adviser
information related to or concerning the Fund that the Sub-Adviser may
reasonably request.
(b) The Sub-Adviser agrees on behalf of itself and its
employees to treat confidentially and as proprietary information of the Fund all
records and other information relative to the Fund, Warburg and prior, present
or potential shareholders and not to use such records and information for any
purpose other than performance of its responsibilities and duties hereunder
except after prior notification to and approval in writing of the Fund, which
approval shall not be unreasonably withheld and may not be withheld where the
Sub-Adviser may be exposed to civil or criminal contempt proceedings for failure
to comply or when requested to divulge such information by duly constituted
authorities.
(c) The Sub-Adviser represents and warrants that neither it
nor any affiliate will use the name of the Fund, Warburg or any of their
affiliates in any prospectus, sales literature or other material in any manner
without the prior written approval of the Fund or Warburg, as applicable.
9. Standard of Care
The Sub-Adviser shall exercise its best judgment in rendering
the services described herein. The Sub-Adviser shall not be liable for any error
of judgment or mistake of law or for any loss suffered by the Fund or Warburg in
connection with the matters to which this Agreement relates, except that the
Sub-Adviser shall be liable for a loss resulting from a breach of fiduciary duty
by the Sub-Adviser with respect to the receipt of compensation for services;
provided that nothing herein shall be deemed to protect or purport to protect
the Sub-Adviser against any liability to the Fund, to Warburg or to shareholders
of the Fund to which the Sub-Adviser would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of the Sub-Adviser's reckless disregard
of its obligations and duties under this Agreement. The Fund and Warburg
understand and agree that the Sub-Adviser may rely upon information furnished to
it reasonably believed by the Sub-Adviser to be accurate and reliable and,
except as herein provided, the Sub-Adviser shall not be accountable for loss
suffered by the Fund by reason of such reliance of the Sub-Adviser.
10. Indemnification
(a) The Sub-Adviser agrees to indemnify and hold harmless the
Fund, Warburg, any affiliate of either, and each person, if any, who, within the
meaning of Section 15 of the
<PAGE>7
Securities Act of 1933, as amended (the "1933 Act"), controls
("controlling person") either or both of the Fund and Warburg (all of such
persons being referred to as "Fund Indemnified Persons") against any and all
losses, claims, damages, liabilities or litigation (including legal and other
expenses) to which any Fund Indemnified Person may become subject under the 1933
Act, the 1940 Act, the Advisers Act, the Internal Revenue Code or under any
other statute, at common law or otherwise, arising out of the Sub-Adviser's
responsibilities as Sub-Adviser to the Fund which (i) may be based upon any
misfeasance, malfeasance or nonfeasance by the Sub-Adviser, or any of its
employees or representatives, or any affiliate of or any person acting on behalf
of the Sub-Adviser, (ii) may be based upon a failure to comply with paragraph
5(b) of this Agreement, or (iii) may be based upon any untrue statement or
alleged untrue statement of a material fact about the Sub-Adviser contained in
the registration statement covering the shares of the Fund, or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact about the Sub-Adviser known or which should have been known to the
Sub-Adviser and was required to be stated therein or necessary to make the
statements therein not misleading, if such a statement or omission was made in
reliance upon information furnished to Warburg, the Fund or any affiliate of
either by the Sub-Adviser or any affiliate of the Sub-Adviser; provided that in
no case shall the indemnity in favor of any Indemnified Person be deemed to
protect such persons against any liability to which any such person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
(b) The Fund agrees to indemnify and hold harmless the
Sub-Adviser, any of its affiliates, and each controlling person, if any, of the
Sub-Adviser (all of such persons being referred to as "Sub-Adviser Indemnified
Persons") against any and all losses, claims, damages, liabilities or litigation
(including legal and other expenses) to which any Sub-Adviser Indemnified Person
may become subject under the 1933 Act, the 1940 Act, the Advisers Act, the
Internal Revenue Code or under any other statute, at common law or otherwise,
which (i) may be based upon any misfeasance, malfeasance or nonfeasance by the
Fund or Warburg, or any of its respective employees or representatives, or any
affiliate of or any person acting on behalf of the Fund or Warburg, (ii) may be
based upon a failure by the Fund or Warburg to comply with this Agreement, or
(iii) may be based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement covering the shares of the
Fund, or any amendment or supplement thereto, or the omission or alleged
omission to state therein a material fact known or which should have been known
to the Fund and was required to be stated therein or necessary to make the
statements therein not misleading, unless such a statement or omission was made
in reliance upon information furnished to Warburg, the Fund or any
<PAGE>8
affiliate of either by the Sub-Adviser or any affiliate of the
Sub-Adviser; provided that in no case shall the indemnity in favor of any
Sub-Adviser Indemnified Person be deemed to protect such persons against any
liability to which any such person would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
under this Agreement.
(c) A party (the "Indemnifying Person") shall not be liable
under paragraphs 10(a) or 10(b) herein with respect to any claim made against
any Fund Indemnified Person or Sub-Adviser Indemnified Person, as applicable, (a
Fund Indemnified Person and a Sub-Adviser Indemnified Person may be referred to
in this paragraph 10(c) as an "Indemnified Person") unless such Indemnified
Person shall have notified the Indemnifying Person in writing within a
reasonable time after the summons, notice or other first legal process or notice
giving information of the nature of the claim shall have been served upon such
Indemnified Person (or after such Indemnified Person shall have received notice
of such service on any designated agent), but failure to notify the Indemnifying
Person of any such claim shall not relieve the Indemnifying Person from any
liability which it may have to any Indemnified Person against whom such action
is brought otherwise than on account of this paragraph 10. In case any such
action is brought against any Indemnified Person, the Indemnifying Person will
be entitled to participate, at its own expense, in the defense thereof or, after
notice to the Indemnified Person, to assume the defense thereof, with counsel
satisfactory to the Indemnified Person. If the Indemnifying Person assumes the
defense of any such action and the selection of counsel by the Indemnifying
Person to represent the Indemnifying Person and the Indemnified Person would
result in a conflict of interests and therefore would not, in the reasonable
judgment of the Indemnified Person, adequately represent the interests of the
Indemnified Person, the Indemnifying Person will, at its own expense, assume the
defense with counsel to the Indemnifying Person and, also at its own expense,
with separate counsel to the Indemnified Person which counsel shall be
satisfactory to the Indemnifying Person and to the Indemnified Person. The
Indemnified Person shall bear the fees and expenses of any additional counsel
retained by it, and the Indemnifying Person shall not be liable to the
Indemnified Person under this Agreement for any legal or other expenses
subsequently incurred by the Indemnified Person independently in connection with
the defense thereof other than reasonable costs of investigation. The
Indemnifying Person shall not have the right to compromise on or settle the
litigation without the prior written consent of the Indemnified Person if such
compromise or settlement results, or may result, in a finding of wrongdoing on
the part of the Indemnified Person.
<PAGE>9
11. Compensation
In consideration of the services rendered pursuant to this
Agreement, Warburg will pay the Sub-Adviser a quarterly fee calculated at an
annual rate of .55% of the net asset value of the Investments as of the last day
of each calendar quarter. The fee for the period from the date of this Agreement
to the end of the quarter during which this Agreement commenced shall be
prorated according to the proportion that such period bears to the full
quarterly period. Such fee shall be paid by Warburg to the Sub-Adviser within
ten (10) business days after the last day of each quarter or, upon termination
of this Agreement before the end of a quarter, within ten (10) business days
after the effective date of such termination. Upon any termination of this
Agreement before the end of a quarter, the fee for such part of that quarter
shall be prorated according to the proportion that such period bears to the full
quarterly period. For the purpose of determining fees payable to the
Sub-Adviser, the value of the Investments shall be computed in the manner
specified in the Prospectus or SAI. The Sub-Adviser shall have no right to
obtain compensation directly from the Fund for services provided hereunder and
agrees to look solely to Warburg for payment of fees due.
12. Expenses
(a) The Sub-Adviser will bear all expenses in connection with
the performance of its services under this Agreement, which shall not include
the Fund's expenses listed in paragraph 12(b).
(b) The Fund will bear certain other expenses to be incurred
in its operation, including: investment advisory and administration fees; taxes,
interest, brokerage fees and commissions, if any; fees of Directors of the Fund
who are not officers, directors, or employees of the Fund, Warburg or the
Sub-Adviser or affiliates of any of them; fees of any pricing service employed
to value shares of the Fund; SEC fees, state Blue Sky qualification fees and any
foreign qualification fees; charges of custodians and transfer and dividend
disbursing agents; the Fund's proportionate share of insurance premiums; outside
auditing and legal expenses; costs of maintenance of the Fund's existence; costs
attributable to investor services, including, without limitation, telephone and
personnel expenses; costs of preparing and printing prospectuses and statements
of additional information for regulatory purposes and for distribution to
existing shareholders; costs of shareholders' reports and meetings of the
shareholders of the Fund and of the officers or Board of Directors of the Fund;
and any extraordinary expenses.
<PAGE>10
13. Term of Agreement
This Agreement shall continue until April 17, 1997 and
thereafter shall continue automatically for successive annual periods, provided
such continuance is specifically approved at least annually by (a) the Board of
Directors of the Fund or (b) a vote of a "majority" (as defined in the 1940 Act)
of the Fund's outstanding voting securities, provided that in either event the
continuance is also approved by a majority of the Board of Directors who are not
"interested persons" (as defined the 1940 Act) of any party to this Agreement,
by vote cast in person at a meeting called for the purpose of voting on such
approval. This Agreement is terminable, without penalty, (i) by Warburg on 60
(sixty) days' written notice to the Fund and the Sub-Adviser, (ii) by the Board
of Directors of the Fund or by vote of holders of a majority of the Fund's
shares on 60 (sixty) days' written notice to Warburg and the Sub-Adviser, or
(iii) by the Sub-Adviser upon 60 (sixty) days' written notice to the Fund and
Warburg. This Agreement will also terminate automatically in the event of its
assignment (as defined in the 1940 Act) by any party hereto. In the event of
termination of this Agreement for any reason, all records relating to the Fund
kept by the Sub-Adviser shall promptly be returned to Warburg or the Fund, free
from any claim or retention of rights in such records by the Sub-Adviser. In the
event this Agreement is terminated or is not approved in the foregoing manner,
the provisions contained in paragraph numbers 4(c), 7, 8, 9 and 10 shall remain
in effect.
14. Amendments
No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (a) the holders of a majority of the
outstanding voting securities of the Fund and (b) the Board of Directors of the
Fund, including a majority of Directors who are not "interested persons" (as
defined in the 1940 Act) of the Fund or of either party to this Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval, if such approval is required by applicable law.
<PAGE>11
15. Notices
All communications hereunder shall be given (a) if to the
Sub-Adviser, to Abbott Capital Management, L.P., 1330 Avenue of the
Americas, Suite 2800, New York, New York 10019 (Attention: Raymond L. Held),
telephone: (212) 757-2700, telecopy: (212) 757-0835, (b) if to Warburg, to
Warburg, Pincus Counsellors, Inc., 466 Lexington Avenue, New York, New York
10017-3147 (Attention: Eugene P. Grace), telephone: (212) 878-0600, telecopy:
(212) 878-9351, and (c) if to the Fund, to Warburg, Pincus Post-Venture Capital
Fund, Inc., c/o Warburg Pincus Funds, 466 Lexington Avenue, New York, New York
10017-3147, telephone: (212) 878-0600, telecopy: (212) 878-9351 (Attention:
President).
16. Choice of Law
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York in the United States,
including choice of law principles; provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act, the Advisers Act or any
applicable rules, regulations or orders of the SEC.
17. Change of Membership. For so long as the Sub-Adviser is a
partnership, the Sub-Adviser agrees to notify Warburg and the Fund of any
change in the membership of the Sub-Adviser within a reasonable time after such
change.
18. Miscellaneous
(a) The captions of this Agreement are included for
convenience only and in no way define or limit any of the provisions herein or
otherwise affect their construction or effect.
(b) If any provision of this Agreement shall be held or made
invalid by a court decision, by statute or otherwise, the remainder of this
Agreement shall not be affected thereby and, to this extent, the provisions of
this Agreement shall be deemed to be severable.
(c) Nothing herein shall be construed to make the
Sub-Adviser an agent of Warburg or the Fund.
(d) This Agreement may be executed in counterparts, with
the same effect as if the signatures were upon the same instrument.
<PAGE>12
Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place below indicated,
whereupon it shall become a binding agreement between us.
Very truly yours,
WARBURG, PINCUS COUNSELLORS, INC.
By: _________________________________
WARBURG, PINCUS POST-VENTURE CAPITAL FUND, INC.
By: _________________________________
President
Accepted:
ABBOTT CAPITAL MANAGEMENT, L.P.
By: _____________________________
General Partner
