SUB-INVESTMENT ADVISORY AGREEMENT
________ __, 1997
Xxxxxx Capital Management, L.L.C.
00 Xxxxx Xxxxx
Xxxxxx, XX 00000
Dear Sirs:
Warburg Pincus Trust, a Massachusetts business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), an open-end, management investment company (the "Trust"), on behalf of
the Post-Venture Capital Portfolio (the "Portfolio"), and Warburg, Xxxxxx
Counsellors, Inc., as investment adviser to the Portfolio ("Warburg"), herewith
confirms their agreement with Xxxxxx Capital Management, L.L.C. (the
"Sub-Adviser") as follows:
1. Investment Description; Appointment
The Trust desires to employ the capital of the Portfolio by
investing and reinvesting in securities of the kind and in accordance with the
limitations specified in the Trust's Declaration of Trust, as may be amended
from time to time (the "Declaration of Trust"), and in the Prospectuses and
Statement of Additional Information, relating to the Portfolio 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 Trustees
of the Trust. Copies of the Prospectus, SAI and Declaration of Trust have been
or will be submitted to the Sub-Adviser. The Trust agrees to provide the
Sub-Advisor copies of all amendments to the Prospectus and SAI on an on-going
basis. The Trust employs Warburg as its investment adviser to the Portfolio.
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 Portfolio in accordance with (a) the Declaration of Trust, (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
Portfolio'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 Portfolio;
(ii) assist the custodian and accounting agent for the
Portfolio 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 Trust's Board of Trustees for
consideration at quarterly meetings of the Board on the Investments and
furnish Warburg and the Trust's Board of Trustees with such periodic and
special reports as the Trust 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 Portfolio 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
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Agreement. The Trust 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 Portfolio 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 Portfolio and
to such other clients. The Sub-Adviser shall provide to Warburg and the
Portfolio all information reasonably requested by Warburg and the Portfolio
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 Portfolio and the Sub-Adviser's other investment advisory clients.
(d) In connection with the purchase and sale of securities for
the Portfolio, 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
Portfolio.
4. Disclosure Regarding the Sub-Adviser
(a) The Sub-Adviser has reviewed the disclosure about the
Sub-Adviser contained in the Trust'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 Trust
promptly of any (i) statement about the Sub-Adviser contained in the Trust's
registration statement that becomes untrue in any material respect or (ii)
omission of a material fact about the Sub-Adviser in the Trust's registration
statement which is required to be stated therein or necessary to make the
statements contained therein not misleading or (iii) any
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reorganization or change in the Sub-Adviser, including any change in its
ownership or key employees.
(c) Prior to the Trust 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 Trust 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 Trust 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 Trust 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 Portfolio's assets it
will use all reasonable efforts to adhere to the Portfolio's investment
objectives, policies and restrictions contained therein.
6. Compliance
(a) The Sub-Adviser agrees that it shall promptly notify Warburg
and the Trust (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
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under this Agreement or (iii) upon having a reasonable basis for believing that,
as a result of the Sub-Adviser's investing the Portfolio's assets, the
Portfolio's investment portfolio has ceased to adhere to the Portfolio'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 Trust; 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 Trust 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 Portfolio, 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 Portfolio 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 Portfolio are the property of the Trust and further agrees to surrender
promptly to either Warburg or the Trust 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 Trust and the Portfolio are being conducted in a manner consistent with
applicable laws and regulations.
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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 Portfolio 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 Trust all records
and other information relative to the Portfolio, 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 Trust, 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 Trust, the Portfolio, Warburg or any of
their affiliates in any prospectus, sales literature or other material in any
manner without the prior written approval of the Trust 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 Trust, the Portfolio
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 Trust, the Portfolio, or
Warburg or to shareholders of the Trust or the Portfolio 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 Trust 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 Trust or the Portfolio by reason of such reliance of the Sub-Adviser.
10. Indemnification
(a) The Sub-Adviser agrees to indemnify and hold harmless the
Trust, the Portfolio, Warburg, any affiliate
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thereof, and each person, if any, who, within the meaning of Section 15 of the
Securities Act of 1933, as amended (the "1933 Act"), controls ("controlling
person") any or all of the Trust, the Portfolio and Warburg (all of such persons
being referred to as "Portfolio Indemnified Persons") against any and all
losses, claims, damages, liabilities or litigation (including legal and other
expenses) to which any Portfolio Indemnified Person may become subject under the
1933 Act, the 1940 Act, the Advisers Act, the Internal Revenue Code of 1986, as
amended (the "Code")or under any other statute, at common law or otherwise,
arising out of the Sub-Adviser's responsibilities as Sub-Adviser to the
Portfolio 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 Portfolio, 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 Trust, the Portfolio or any affiliate thereof by the Sub-Adviser or
any affiliate of the Sub-Adviser; provided that in no case shall the indemnity
in favor of any Portfolio 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 Trust agrees to indemnify and hold harmless the
Sub-Adviser, any of its affiliates, and each controlling person, if any, of the
Sub-Adviser (all of such persons being referred to as "Sub-Adviser Indemnified
Persons") against any and all losses, claims, damages, liabilities or litigation
(including legal and other expenses) to which any Sub-Adviser Indemnified Person
may become subject under the 1933 Act, the 1940 Act, the Advisers Act, the Code
or under any other statute, at common law or otherwise, which (i) may be based
upon any misfeasance, malfeasance or nonfeasance by the Trust, the Portfolio or
Warburg, or any of their respective employees or representatives, or any
affiliate of or any person acting on behalf of the Trust, the Portfolio or
Warburg, (ii) may be based upon a failure by the Trust, the Portfolio 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 Portfolio, 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 Trust and was required to be stated
therein or
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necessary to make the statements therein not misleading, unless such a statement
or omission was made in reliance upon information furnished to Warburg, the
Trust, the Portfolio or any affiliate thereof by the Sub-Adviser or any
affiliate of the Sub-Adviser; provided that in no case shall the indemnity in
favor of any Sub-Adviser Indemnified Person be deemed to protect such persons
against any liability to which any such person would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence in the performance of
its duties or by reason of its reckless disregard of its obligations and duties
under this Agreement.
(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
Portfolio Indemnified Person or Sub-Adviser Indemnified Person, as applicable
(a Portfolio 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 1.00% of the net asset value of the Investments as of the last
day of each calendar quarter. The fee for the period from the date of this
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 Trust or the Portfolio 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
Portfolio's expenses listed in paragraph 12(b).
(b) The Portfolio 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 Trustees of the Trust
who are not officers, directors, or employees of the Trust, Warburg or the
Sub-Adviser or affiliates of any of them; fees of any pricing service employed
to value shares of the Portfolio; SEC fees, state Blue Sky qualification fees
and any foreign qualification fees; charges of custodians and transfer and
dividend disbursing agents; the Portfolio's proportionate share of insurance
premiums; outside auditing and legal expenses; costs of maintenance of the
Portfolio's existence; costs attributable to investor services, including,
without limitation, telephone and personnel expenses; costs of preparing and
printing prospectuses and statements of additional information for regulatory
purposes and for distribution to existing shareholders; costs of shareholders'
reports and meetings of the shareholders of the Portfolio and of the officers or
Board of Trustees of the Trust; and any extraordinary expenses.
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13. Term of Agreement
This Agreement shall commence on the date first written above and
shall continue until April 17, 1998, and thereafter shall continue automatically
for successive annual periods, provided such continuance is specifically
approved at least annually by (a) the Board of Trustees of the Trust or (b) a
vote of a "majority" (as defined in the 0000 Xxx) of the Portfolio's outstanding
voting securities, provided that in either event the continuance is also
approved by a majority of the Board of Trustees who are not "interested persons"
(as defined in 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 Portfolio and the Sub-Adviser, (ii) by the Board of
Trustees of the Trust or by vote of holders of a majority of the Portfolio'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 Trust 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
Portfolio kept by the Sub-Adviser shall promptly be returned to Warburg or the
Trust, 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 Portfolio and (b) the Board of Trustees of the Trust,
including a majority of Trustees who are not "interested persons" (as defined in
the 0000 Xxx) of the Trust 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.L.C., 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: (212)
878-9351, and (c) if to the Portfolio, to Warburg Xxxxxx Xxxxx,
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x/x Xxxxxxx Pincus Funds, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000,
telephone: (000) 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. 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, the Trust or the Portfolio.
(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 PINCUS TRUST
By: ________________________________
President
Accepted:
XXXXXX CAPITAL MANAGEMENT, L.L.C.
By: _______________________________
Title:
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SUB-INVESTMENT ADVISORY AGREEMENT
________ __, 1997
Xxxxxx Capital Management, L.P.
00 Xxxxx Xxxxx
Xxxxxx, XX 00000
Dear Sirs:
Warburg Pincus Trust, a Massachusetts business trust registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), an
open-end, management investment company (the "Trust"), on behalf of the
Post-Venture Capital Portfolio (the "Portfolio"), and Warburg, Xxxxxx
Counsellors, Inc., as investment adviser to the Portfolio ("Warburg"), herewith
confirms their agreement with Xxxxxx Capital Management, L.P. (the
"Sub-Adviser") as follows:
1. Investment Description; Appointment
The Trust desires to employ the capital of the Portfolio by
investing and reinvesting in securities of the kind and in accordance with the
limitations specified in the Trust's Declaration of Trust, as may be amended
from time to time (the "Declaration of Trust"), and in the Prospectuses and
Statement of Additional Information, relating to the Portfolio 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 Trustees
of the Trust. Copies of the Prospectus, SAI and Declaration of Trust have been
or will be submitted to the Sub-Adviser. The Trust agrees to provide the
Sub-Advisor copies of all amendments to the Prospectus and SAI on an on-going
basis. The Trust employs Warburg as its investment adviser to the Portfolio.
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 Portfolio in accordance with (a) the Declaration of Trust, (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
Portfolio'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 Portfolio;
(ii) assist the custodian and accounting agent for the
Portfolio 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 Trust's Board of Trustees for
consideration at quarterly meetings of the Board on the Investments and
furnish Warburg and the Trust's Board of Trustees with such periodic and
special reports as the Trust 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 Portfolio 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
Trust and Warburg further understand and acknowledge that the persons employed
by the Sub-Adviser to assist in the performance of its duties under this
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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 Portfolio 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 Portfolio and
to such other clients. The Sub-Adviser shall provide to Warburg and the
Portfolio all information reasonably requested by Warburg and the Portfolio
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 Portfolio and the Sub-Adviser's other investment advisory clients.
(d) In connection with the purchase and sale of securities for
the Portfolio, 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
Portfolio.
4. Disclosure Regarding the Sub-Adviser
(a) The Sub-Adviser has reviewed the disclosure about the
Sub-Adviser contained in the Trust'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 Trust
promptly of any (i) statement about the Sub-Adviser contained in the Trust's
registration statement that becomes untrue in any material respect or (ii)
omission of a material fact about the Sub-Adviser in the Trust's registration
statement which is required to be stated therein or necessary to make the
statements contained therein not misleading or (iii) any
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reorganization or change in the Sub-Adviser, including any change in its
ownership or key employees.
(c) Prior to the Trust 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 Trust 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 Trust 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 Trust 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 Portfolio's assets it
will use all reasonable efforts to adhere to the Portfolio's investment
objectives, policies and restrictions contained therein.
6. Compliance
(a) The Sub-Adviser agrees that it shall promptly notify Warburg
and the Trust (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
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under this Agreement or (iii) upon having a reasonable basis for believing that,
as a result of the Sub-Adviser's investing the Portfolio's assets, the
Portfolio's investment portfolio has ceased to adhere to the Portfolio'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 Trust; 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 Trust 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 Portfolio, 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 Portfolio 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 Portfolio are the property of the Trust and further agrees to surrender
promptly to either Warburg or the Trust 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 Trust and the Portfolio are being conducted in a manner consistent with
applicable laws and regulations.
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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 Portfolio 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 Trust all records
and other information relative to the Portfolio, 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 Trust, 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 Trust, the Portfolio, Warburg or any of
their affiliates in any prospectus, sales literature or other material in any
manner without the prior written approval of the Trust 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 Trust, the Portfolio
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 Trust, the Portfolio, or
Warburg or to shareholders of the Trust or the Portfolio 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 Trust 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 Trust or the
Portfolio by reason of such reliance of the Sub-Adviser.
10. Indemnification
(a) The Sub-Adviser agrees to indemnify and hold harmless the
Trust, the Portfolio, Warburg, any affiliate
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thereof, and each person, if any, who, within the meaning of Section 15 of the
Securities Act of 1933, as amended (the "1933 Act"), controls ("controlling
person") any or all of the Trust, the Portfolio and Warburg (all of such persons
being referred to as "Portfolio Indemnified Persons") against any and all
losses, claims, damages, liabilities or litigation (including legal and other
expenses) to which any Portfolio Indemnified Person may become subject under the
1933 Act, the 1940 Act, the Advisers Act, the Internal Revenue Code of 1986, as
amended (the "Code") or under any other statute, at common law or otherwise,
arising out of the Sub-Adviser's responsibilities as Sub-Adviser to the
Portfolio 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 Portfolio, 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 Trust, the Portfolio or any affiliate thereof by the Sub-Adviser or
any affiliate of the Sub-Adviser; provided that in no case shall the indemnity
in favor of any Portfolio 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 Trust agrees to indemnify and hold harmless the
Sub-Adviser, any of its affiliates, and each controlling person, if any, of the
Sub-Adviser (all of such persons being referred to as "Sub-Adviser Indemnified
Persons") against any and all losses, claims, damages, liabilities or litigation
(including legal and other expenses) to which any Sub-Adviser Indemnified Person
may become subject under the 1933 Act, the 1940 Act, the Advisers Act, the Code
or under any other statute, at common law or otherwise, which (i) may be based
upon any misfeasance, malfeasance or nonfeasance by the Trust, the Portfolio or
Warburg, or any of their respective employees or representatives, or any
affiliate of or any person acting on behalf of the Trust, the Portfolio or
Warburg, (ii) may be based upon a failure by the Trust, the Portfolio 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 Portfolio, 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 Trust and was required to be stated
therein or
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necessary to make the statements therein not misleading, unless such a statement
or omission was made in reliance upon information furnished to Warburg, the
Trust, the Portfolio or any affiliate thereof by the Sub-Adviser or any
affiliate of the Sub-Adviser; provided that in no case shall the indemnity in
favor of any Sub-Adviser Indemnified Person be deemed to protect such persons
against any liability to which any such person would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence in the performance of
its duties or by reason of its reckless disregard of its obligations and duties
under this Agreement.
(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
Portfolio Indemnified Person or Sub-Adviser Indemnified Person, as applicable
(a Portfolio 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 1.00% of the net asset value of the Investments as of the last
day of each calendar quarter. The fee for the period from the date of this
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 Trust or the Portfolio 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
Portfolio's expenses listed in paragraph 12(b).
(b) The Portfolio 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 Trustees of the Trust
who are not officers, directors, or employees of the Trust, Warburg or the
Sub-Adviser or affiliates of any of them; fees of any pricing service employed
to value shares of the Portfolio; SEC fees, state Blue Sky qualification fees
and any foreign qualification fees; charges of custodians and transfer and
dividend disbursing agents; the Portfolio's proportionate share of insurance
premiums; outside auditing and legal expenses; costs of maintenance of the
Portfolio's existence; costs attributable to investor services, including,
without limitation, telephone and personnel expenses; costs of preparing and
printing prospectuses and statements of additional information for regulatory
purposes and for distribution to existing shareholders; costs of shareholders'
reports and meetings of the shareholders of the Portfolio and of the officers or
Board of Trustees of the Trust; and any extraordinary expenses.
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13. Term of Agreement
This Agreement shall commence on the date first written above and
shall continue until April 17, 1998, and thereafter shall continue automatically
for successive annual periods, provided such continuance is specifically
approved at least annually by (a) the Board of Trustees of the Trust or (b) a
vote of a "majority" (as defined in the 0000 Xxx) of the Portfolio's outstanding
voting securities, provided that in either event the continuance is also
approved by a majority of the Board of Trustees who are not "interested persons"
(as defined in 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 Portfolio and the Sub-Adviser, (ii) by the Board of
Trustees of the Trust or by vote of holders of a majority of the Portfolio'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 Trust 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
Portfolio kept by the Sub-Adviser shall promptly be returned to Warburg or the
Trust, 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 Portfolio and (b) the Board of Trustees of the Trust,
including a majority of Trustees who are not "interested persons" (as defined in
the 0000 Xxx) of the Trust 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: (212)
878-9351, and (c) if to the Portfolio, to
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Xxxxxxx Xxxxxx Trust, c/o Warburg Pincus Funds, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000-0000, telephone: (000) 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. 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, the Trust or the Portfolio.
(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 PINCUS TRUST
By: ________________________________
President
Accepted:
XXXXXX CAPITAL MANAGEMENT, L.P.
By: _______________________________
Title:
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