FORM OF SUB-INVESTMENT ADVISORY AGREEMENT
, 1996
XXXXXX CAPITAL MANAGEMENT, L.P.
00 Xxxxx Xxxxx
Xxxxxx, XX 00000
Dear Sirs:
Warburg, Xxxxxx 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,
Xxxxxx Counsellors, Inc., as investment adviser to the Fund ('Warburg'),
herewith confirms their agreement with Xxxxxx 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-Adviser
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 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
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(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 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 reorganization or change in the Sub-Adviser,
including any change in its ownership or key employees.
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(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 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.
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(b) The Sub-Adviser hereby agrees to furnish to regulatory authorities
having the requisite authority any information or reports in connection with
services that the Sub-Adviser renders pursuant to this Agreement which may be
requested in order to ascertain whether the operations of the Fund are being
conducted in a manner consistent with applicable laws and regulations.
8. PROVISION OF INFORMATION; PROPRIETARY AND CONFIDENTIAL INFORMATION
(a) 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 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
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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 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.
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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.
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 0000 Xxx) 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 0000 Xxx) 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 0000 Xxx) 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,
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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 0000 Xxx) of the Fund or of either party to this Agreement,
by vote cast in person at a meeting called for the purpose of voting on such
approval, if such approval is required by applicable law.
15. NOTICES
All communications hereunder shall be given (a) if to the Sub-Adviser, to
Xxxxxx Capital Management, L.P., 1330 Avenue of the Americas, Xxxxx 0000, Xxx
Xxxx, Xxx Xxxx 00000 (Attention: Xxxxxxx X. Held), telephone: (000) 000-0000,
telecopy: (000) 000-0000, (b) if to Warburg, to Warburg, Xxxxxx Counsellors,
Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 (Attention: Xxxxxx X.
Xxxxx), telephone: (000) 000-0000, telecopy: (000) 000-0000, and (c) if to the
Fund, to Warburg, Xxxxxx Post-Venture Capital Fund, Inc., c/o Warburg Pincus
Funds, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, telephone: (212)
000-0000, telecopy: (000) 000-0000 (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.
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Please confirm that the foregoing is in accordance with your understanding
by indicating your acceptance hereof at the place below indicated, whereupon it
shall become a binding agreement between us.
Very truly yours,
WARBURG, XXXXXX COUNSELLORS, INC.
By: __________________________________
WARBURG, XXXXXX POST-VENTURE CAPITAL
FUND, INC.
By: __________________________________
President
Accepted:
XXXXXX CAPITAL MANAGEMENT, L.P.
By: __________________________________
General Partner
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