-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, XNRDKviJ8597cG1WhL16yS+JAYQweAQfSgTuOvq1GxzZmUsVhE9jFfQZKEd48i8I RvzQd/Ckw5+TqeMwiQuZ3g== 0000935069-95-000007.txt : 19950614 0000935069-95-000007.hdr.sgml : 19950614 ACCESSION NUMBER: 0000935069-95-000007 CONFORMED SUBMISSION TYPE: DEFS14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950309 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RBB FUND INC CENTRAL INDEX KEY: 0000831114 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: DEFS14A SEC ACT: 1934 Act SEC FILE NUMBER: 811-05518 FILM NUMBER: 95519426 BUSINESS ADDRESS: STREET 1: 400 BELLEVUE PKWY STE 100 CITY: WILMINGTON STATE: DE ZIP: 19809 BUSINESS PHONE: 3027911791 MAIL ADDRESS: STREET 1: 103 BELLEVUE PKWY STREET 2: SUITE 152 CITY: WILMINGTON STATE: DE ZIP: 19809 FORMER COMPANY: FORMER CONFORMED NAME: FUND INC /DE/ DATE OF NAME CHANGE: 19600201 DEFS14A 1 SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant [ X ] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [ X ] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12 THE RBB FUND, INC. - ------------------------------------------------------------------------------ (Name of Registrant as Specified in Its Charter) - ------------------------------------------------------------------------------ (Name of Person(s) Filing Proxy Statement) Payment of Filing Fee (Check the appropriate box): [ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. [ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: -------------------------------------------------------------------- 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: -------------------------------------------------------------------- 4) Proposed maximum aggregate value of transaction: -------------------------------------------------------------------- 5) Total Fee Paid: -------------------------------------------------------------------- [ X ] Fee paid previously with preliminary materials. [ X ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. -------------------------------------------------------------------- 1) Amount Previously Paid: $125.00 -------------------------------------------------------------------- 2) Form, Schedule or Registration Statement No.: Schedule 14A, Preliminary Proxy Statement -------------------------------------------------------------------- 3) Filing Party: The RBB Fund, Inc. -------------------------------------------------------------------- 4) Date Filed: February 27, 1995 -------------------------------------------------------------------- TAX FREE PORTFOLIO OF THE RBB FUND, INC. Bellevue Park Corporate Center 400 Bellevue Parkway Wilmington, Delaware 19809 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS March 9, 1995 TO THE SHAREHOLDERS: A special meeting of shareholders of Class D shares of Common Stock ("Tax Free Shares") of The RBB Fund, Inc. (the "Fund") representing interests in the Tax Free Portfolio (the "Portfolio") will be held on March 31, 1995 at 10:00 a.m. at 400 Bellevue Parkway, Suite 100, Wilmington, Delaware. Holders of the Tax Free Shares will meet for the following purposes: (1) To approve or disapprove a proposed new Investment Advisory Agreement between the Fund and Warburg, Pincus Counsellors, Inc. (2) To approve or disapprove a modification of the fundamental policies of the Portfolio to permit the Portfolio to 30% temporarily borrow for the purposes of meeting redemptions up to of the value of the Portfolio's total assets, and to pledge as security in connection with such borrowing an amount up to 125% of the amount borrowed. Shareholders of record at the close of business on March 1, 1995 are entitled to vote at the special meeting and any adjournments. If you attend the meeting, you may vote your shares in person. If you do not expect to attend the meeting, please fill in, date, sign and return the proxy in the enclosed envelope which requires no postage if mailed in the United States. It is important that you return your signed proxy promptly so that a quorum may be assured. By order of the Board of Directors, /s/ Donald van Roden Donald van Roden Chairman 1 TAX FREE PORTFOLIO OF THE RBB FUND, INC. Bellevue Park Corporate Center 400 Bellevue Parkway Wilmington, Delaware 19809 ------------------------------- PROXY STATEMENT ------------------------------- SPECIAL MEETING OF SHAREHOLDERS To Be Held March 31, 1995 The accompanying proxy is solicited by the Board of Directors of The RBB Fund, Inc. (the "Fund"). A shareholder can revoke the proxy prior to its use by appearing at the March 31, 1995 special meeting of shareholders (such meeting and any adjournments thereof are hereinafter collectively called the "Meeting") and voting in person, by giving written notice of such revocation to the Secretary of the Fund or by returning a subsequently dated proxy. It is anticipated that the solicitation of proxies will be primarily by mail. The officers and directors of the Fund and the Fund's service providers may also solicit proxies by telephone, telegraph or personal interview. The cost of soliciting proxies will be borne by the Fund. The Fund may also pay persons holding stock in their names, or those of their nominees, for their expenses in sending proxies and proxy materials to beneficial owners or principals. It is expected that this proxy statement and accompanying proxy will be first sent to shareholders on or about March 9, 1995 Only shareholders of record holding Class D shares of Common Stock of the Fund (the "Tax Free Shares") representing interests in the Tax Free Portfolio (the "Portfolio") at the close of business on March 1, 1995 (the "Record Date") will be entitled to vote at the Meeting. On the Record Date, there were 459,266.272 Tax Free Shares outstanding. Each shareholder is entitled to one vote for each full Tax Free Share held. At the Record Date, Gruntal & Co. was owner of record of 27.68% of the Tax Free Shares. The Board of Directors has named Donald van Roden, Chairman of the Board of Directors of the Fund, and Edward J. Roach, President and Treasurer of the Portfolio, and each of them with power of substitution as attorneys and proxies. Unless otherwise directed by the accompanying proxy, the proxies will vote in favor of the proposed new advisory contract and the proposed modifications of the Portfolio's investment restrictions. In addition, in accordance with the Fund's Charter, the Board of Directors of the Fund has redesignated the Portfolio as the "Warburg Pincus Tax Free Fund." Such change will be effective on March 31, 1995 to reflect the Portfolio's proposed affiliation with Warburg, Pincus Counsellors, Inc. ("Warburg Pincus"). As before, the Portfolio remains a class of shares of the Fund. Shareholders may obtain, without charge, a copy of the Portfolio's most recent annual report by writing the Fund's distributor, Counsellors Securities, Inc., at 466 Lexington Ave., New York, NY 10017-3147, or by calling 1-800-888-9723. 2 PROPOSAL 1: APPROVAL OR DISAPPROVAL OF THE NEW INVESTMENT ADVISORY AGREEMENT At the Meeting, shareholders of the Portfolio will be asked to approve the proposed new advisory arrangements for the Portfolio. Approval of the new advisory arrangements will replace the existing investment adviser, PNC Institutional Management Corporation ("PIMC"), and the existing investment sub-adviser, PNC Bank, National Association ("PNC Bank"), with Warburg Pincus as the new investment adviser. At a meeting of the Fund's Board of Directors ("Board") held on February 1, 1995, the Board considered and approved the establishment of new investment advisory arrangements for the Portfolio, subject to the approval of the Portfolio's shareholders. Currently, PIMC serves as the investment adviser to the Portfolio pursuant to an investment advisory contract dated August 16, 1988 ("Current Advisory Agreement"). In addition, pursuant to a subadvisory agreement ("Sub-Advisory Agreement") by and among the Fund, PIMC and PNC Bank, PNC Bank serves as sub-adviser to the Portfolio. These agreements were last approved by shareholders at a meeting held on December 22, 1989. Under the new arrangements approved by the Board, the Current Advisory and Sub-Advisory Agreements would be terminated and Warburg Pincus would become the Portfolio's sole investment adviser in accordance with the terms of a proposed new advisory agreement between Warburg Pincus and the Fund relating to the Portfolio ("Proposed Advisory Agreement"). If the Proposed Advisory Agreement is approved by shareholders, the Portfolio would be managed by Warburg Pincus. Arnold M. Reichman, a director of the Fund, is a Managing Director of E.M. Warburg, Pincus & Co., Inc. ("EMW"), which controls Warburg Pincus, a wholly-owned subsidiary of Warburg, Pincus Counsellors G.P., through its ownership of the voting preferred stock of Warburg Pincus. Counsellors Securities Inc., the Fund's distributor, is a wholly-owned subsidiary of Warburg Pincus. The Proposed Advisory Agreement provides that the Portfolio would pay an advisory fee to Warburg Pincus at an annual rate of .50% of the Portfolio's average daily net assets. Except as specifically set forth below, the Proposed Advisory Agreement is the same as the Current Advisory Agreement. However, under the Proposed Advisory Agreement, Warburg Pincus would not provide administrative services currently provided by PIMC under the Current Advisory Agreement, and the Portfolio would incur an additional annual expense of .25% of average daily net assets for the provision of such administrative services by PFPC, Inc. ("PFPC") and Counsellors Services, Inc. ("Counsellors Services") pursuant to separate Co-Administration Agreements ("Co-Administration Agreements"). See "Description of the Proposed Advisory Agreement" and "Comparison of the Proposed Advisory Agreement to the Current Advisory Agreement - Comparison of Fees and Expenses" below. The Proposed Advisory Agreement appears as Appendix A to this Proxy Statement. In the event the Proposed Advisory Agreement is not approved, the Current Advisory Agreement and Sub-Advisory Agreement will remain in effect. The Portfolio will be co-managed by Dale C. Christensen and Sharon B. Parente. Mr. Christensen is a managing director of EMW and has been associated with EMW since 1989, before which time he was a senior vice president at Citibank, N.A. Ms. Parente is a senior vice president of Warburg Pincus and has been a portfolio manager since joining Warburg Pincus in 1992, before which time she was an assistant vice president at Citibank, N.A. THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" PROPOSAL 1 3 Description of the Proposed Advisory Agreement Under the Proposed Advisory Agreement, Warburg Pincus will serve as investment adviser to the Portfolio and be responsible for the overall management of the Portfolio. Warburg Pincus may determine what securities and other investments will be purchased, retained or sold and may place orders for purchases and sales of portfolio securities. Warburg Pincus will provide its services under the Proposed Advisory Agreement in accordance with the Portfolio's investment objectives, restrictions and policies. Warburg Pincus generally will pay the expenses it incurs in performing its duties under the Proposed Advisory Agreement, although the Portfolio will bear its own operating expenses. For the services provided and expenses assumed by it, Warburg Pincus will be entitled to receive with respect to the Portfolio an investment advisory fee, computed daily and payable monthly, of .50% of the Portfolio's average daily net assets. The Proposed Advisory Agreement provides that Warburg Pincus will reimburse the Portfolio for the amount, if any, by which the total operating expenses of the Portfolio in any fiscal year exceed the most restrictive applicable state expense limitation. Currently, the most restrictive applicable expense limitation would require Warburg Pincus to reimburse the Portfolio to the extent that the aggregate expenses borne by the Portfolio in any fiscal year, exclusive of brokerage commissions, interest, taxes and distribution expenses calculated on at least a monthly basis, exceed 2-1/2% of average annual net assets up to $30 million, 2% of the next $70 million average annual net assets and 1-1/2% of the remaining average annual net assets. Warburg Pincus has voluntarily undertaken to cap the Portfolio's total operating expenses at .50% for the first twelve (12) months that it manages the Portfolio. The Proposed Advisory Agreement also provides that none of its provisions shall be deemed to protect Warburg Pincus against any liability to the Portfolio or its shareholders to which it would otherwise be subject by reason of any breach of fiduciary duty with respect to the receipt of compensation for services or a loss resulting from willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or from reckless disregard by it of its obligations under the Proposed Advisory Agreement. The Proposed Advisory Agreement is terminable at any time without penalty by the Board of Directors or by a vote of the holders of a majority of the Tax Free Shares on 60 days' prior written notice to Warburg Pincus, or by Warburg Pincus on 90 days' prior written notice to the Fund. The Proposed Advisory Agreement also terminates automatically upon its assignment. Under the proposed new arrangements, administrative services for the Portfolio would be provided by PFPC with offices at 400 Bellevue Parkway, Wilmington, Delaware 19809, and Counsellors Services, an affiliate of Warburg Pincus with offices at 466 Lexington Avenue, New York, New York, 10017-3147. Such administrative services will be provided pursuant to separate Co-Administration Agreements, to be dated March 31, 1995. Currently, there is no Administration Agreement in effect for the Portfolio and PIMC administers the Portfolio under the Current Advisory Agreement which will terminate upon shareholder approval of the Proposed Advisory Agreement with Warburg Pincus. At its meeting held on February 1, 1995, the Board approved the Co-Administration Agreements with PFPC and Counsellors Services. PFPC will be compensated at an annual rate of .15% of the average daily net asset value, and Counsellors Services will be compensated at an annual rate of .10% of average daily net asset value. Although these Agreements are not subject to shareholder approval, they will not become effective unless and until shareholders approve the Proposed Advisory Agreement. In considering whether to approve an increase in the administrative fee in the event that Proposal 1 is approved by shareholders, the Board specifically noted that, under the Current Advisory Agreement, PIMC is responsible for providing certain administrative services which will, under the proposed new co-administration arrangements, be performed by PFPC (primarily accounting and fund administrative services) and Counsellors 4 Services (primarily shareholder liaison and account maintenance services). Under the new arrangements, Warburg Pincus would not provide the administrative services currently provided by PIMC under the Current Advisory Agreement, and the Portfolio would incur an additional annual expense of .25% of average daily net assets for such administrative services provided by PFPC and Counsellors Services under the Co-Administration Agreements. See "Comparison of the Proposed Advisory Agreement to the Current Advisory Agreement - Comparison of Fees and Expenses" below. In addition to the foregoing, the Board considered and approved a proposal to eliminate sales charges in connection with the sale of shares of the Portfolio. Previously, a sales charge of up to 4.75% of the public offering price was imposed on purchases of Portfolio shares. At the same time, the Board voted to limit the payment of distribution expenses to 0.25% of the Portfolio's daily net assets. The Portfolio currently pays 0.40% of its average daily net assets for distribution expenses. The Board determined to create a more competitive distribution fee structure by eliminating the sales charges and reducing the distribution fees. The Board was also furnished with information relating to the manner in which Warburg Pincus plans to promote sales of Portfolio shares, particularly in light of the amendment of the Distribution Agreement Supplement and elimination of sales charges. It should be noted, however, that the amendment of the Distribution Agreement Supplement to reduce the distribution fee and elimination of sales charges became effective on February 1, 1995 and is not contingent on approval of the Proposed Advisory Agreement. Comparison of the Proposed Advisory Agreement to the Current Advisory Agreement Contract Terms. Under the Proposed Advisory Agreement, Warburg Pincus will be entitled to receive an advisory fee at an annual rate of .50% of the Portfolio's average daily net assets. Under the Current Advisory Agreement, PIMC is entitled to receive the following fees, computed daily and payable monthly: .50% of the first $250 million of the Portfolio's average daily net assets; .45% of the next $250 million of the Portfolio's average daily net assets; and .40% of the Portfolio's average daily net assets in excess of $500 million. PIMC pays 75% of this fee to PNC Bank for services under the Current Subadvisory Agreement. The Current Advisory and Sub-Advisory Agreements are each dated August 16, 1994, and were re-approved by the Board of Directors of the Fund at a meeting called for that purpose on August 3, 1994. The Current Advisory and Sub-Advisory Agreements were last submitted to a vote of Shareholders of the Portfolio at a meeting held on December 22, 1989. Under the Current Advisory and Sub-Advisory Agreement, PIMC and PNC Bank are liable to the Portfolio for damages arising from the gross negligence, bad faith or willful misfeasance on their part in the performance of their duties or from reckless disregard by them of their obligations. Under the Proposed Advisory Agreement, Warburg Pincus will be liable under the same standard of care currently applied to PIMC and PNC Bank. The Proposed Advisory Agreement requires the Portfolio to indemnify Warburg Pincus against liability resulting from claims not involving gross negligence, willful misfeasance, bad faith or reckless disregard on the part of Warburg Pincus. No such indemnification is included in the Current Advisory Agreement or Current Sub-Advisory Agreement. Under the Proposed Advisory Agreement, Warburg Pincus will be responsible for providing the overall management of the Portfolio, including the provision of a continuous investment research and management program for the Portfolio with respect to all securities, investments, cash and cash equivalents. In addition, the Proposed Advisory Agreement provides that Warburg Pincus will furnish to the Fund, its agents and service providers prompt and accurate information with respect to all of the Portfolio's activities for which Warburg Pincus is responsible. Like the Current Advisory Agreement, the Proposed Advisory Agreement authorizes the Portfolio's investment adviser 5 to direct brokerage transactions to brokers who provide research and certain other services to such adviser. However, as noted above, under the new arrangements Warburg Pincus would not provide the administrative services to the Portfolio which are currently provided by PIMC under the Current Advisory Agreement. Comparison of Fees and Expenses. As of March 1, 1995, the Portfolio had net assets of $4,680,266.62. During the fiscal year ended August 31, 1994, pursuant to the terms of the Current Advisory Agreement, PIMC received fees of $0 and paid $0 to PNC Bank. During that same period, PIMC voluntarily waived fees in the amount of $29,801 payable to it with respect to the Portfolio. 6 The table set forth below illustrates the effect that the compensation arrangements contained in the Proposed Advisory Agreement and the Co-Administration Agreements would have had on the fees payable by and expense ratio of the Portfolio had those agreements been in effect during the Portfolio's last fiscal year.
Current Arrangements Pro Forma ------------------------------ ----------------------------- Aggregate Fee Rate of Fee Payable by the (% of avg. Portfolio for the Rate of Fee daily net Fiscal Year (% of avg. Aggregate assets) Ended 8/31/94 daily net assets) Fee ------------ --------------- ----------------- --------- - ------------ PIMC (Advisory Services) .50%(1)(2) $29,801(1)(3) Warburg Pincus (Advisory Fees) .50% $29,801 Rule 12b-1 fees (payable to .40% $23,841 .25% $14,900 Counsellors Securities Inc.) PFPC (Administrative Services) -0- -0- .15% $8,940 Counsellors Services (Administrative Services) -0- -0- .10% $5,960 Other Expenses .94% 55,947 .94% $55,947 Total (before waivers and reimbursements) 1.84% $109,589 1.94% $115,548 ===== ======== ===== ======== Total (after waivers and reimbursements) .15% $8,952 .50% $29,801 ===== ======== ===== ======== 1 Of the fee payable by the Portfolio, PIMC waived $29,801 for the year ended August 31, 1994, resulting in an effective rate of 0%. 2 PNC Bank is entitled to receive 75% of the fee paid to PIMC by the Portfolio. 3 PNC Bank would have received $22,351 from PIMC for services to the Portfolio if there has been no waivers of fees by PIMC.
7 Expense Example An investor would pay the following expenses on a $1000 investment in the Portfolio under the current and proposed arrangements, assuming (1) a 5% annual return, and (2) redemption at the end of each time period:
1 Year 3Years 5 Years 10 Years ------ ------ ------- -------- Current Arrangements: $49* $52* $56* $66* Pro Forma: $5 $16 $28 $63 *Reflects the imposition of the maximum sales charge at the beginning of the period.
The Fee Table is designed to assist an investor in understanding the various costs and expenses that an investor in the Portfolio will bear directly or indirectly under the current and pro forma arrangements. The Fee Table reflects the voluntary partial waivers of fees and expenses for the Portfolio. However, there can be no assurance that any future partial waivers of fees and expenses (if any) will not vary from the figures reflected in the Fee Table. In addition, Warburg Pincus has voluntarily undertaken to cap the Portfolio's total operating expenses at .50% for the first twelve (12) months that it manages the Portfolio. There can be no assurance that Warburg Pincus will continue to assume such expenses after the initial 12 month period. Assumption of additional expenses will have the effect of lowering a Portfolio's overall expense ratio and increasing its yield to investors. Board Consideration of the Advisory Agreement On February 1, 1995, the Board held an in-person meeting called for the purpose, among other things, of considering the Proposed Advisory Agreement. Following the deliberations summarized below, the Board, including a majority of those directors who are not "interested persons" of the Fund approved, subject to the approval of the Portfolio's shareholders, the Proposed Advisory Agreement for an initial term ending on August 16, 1995. In its presentation to the Board, Warburg Pincus proposed that in the event that shareholders approve the Proposed Advisory Agreement, it will manage the Portfolio consistent with the Portfolio's investment objective in the Prospectus. In reaching its decision to approve the Proposed Advisory Agreement, the Board considered such factors as it deemed reasonably necessary. These factors included, among others: (1) the nature and quality of advisory services available through Warburg Pincus; (2) the experience of the portfolio managers to be assigned to manage the Portfolio; (3) the relationship of the proposed advisory fee to the fee schedules of comparable mutual funds; (4) other changes in the administrative and distribution arrangements relating to the Portfolio; (5) the costs that will be borne by Warburg Pincus in serving as the Portfolio's sole investment adviser; and (6) the relationship between the Portfolio's projected expense ratio and those of comparable funds. In approving the Proposed Advisory Agreement, the Board took special note of the outstanding investment performance achieved by Warburg Pincus in its capacity as adviser to the Fund's Warburg Pincus Growth & Income Fund and recognized that the Portfolio would have access to the same quality of service under the Proposed Advisory Agreement. The Board also reviewed comparative industry statistics for tax-free funds which included, among other things, comparisons of investment advisory fees, expense ratios and cost per account information. The Board noted that the fee payable to Warburg Pincus is comparable to the fee payable by most funds with comparable investment objectives. The Board believes that in light of its expectations that the level of investment services to be provided by Warburg Pincus will benefit shareholders, the investment advisory fee is appropriate. The Board 8 specifically determined that the proposed rate of advisory fee is reasonable, and not excessive, in light of the nature, quality and scope of the advisory and portfolio management services to be provided by Warburg Pincus. Under the Investment Company Act of 1940 (the "1940 Act"), the Proposed Advisory Agreement must be approved by the holders of a majority of the outstanding Tax Free Shares. As used herein, "a majority of the outstanding Tax Free Shares" means the lesser of (i) 67% of the Tax Free Shares present at the Meeting if the holders of more than 50% of the outstanding Tax Free Shares are present in person or by proxy, or (ii) more than 50% of the outstanding Tax Free Shares. For purposes of this vote, abstentions and broker non-votes will count toward the presence of a quorum and will have the same effect as a vote "Against" Proposal 1. PROPOSAL 2: MODIFICATION OF INVESTMENT LIMITATIONS At its meeting, the Board also approved a proposal by PIMC and Warburg Pincus that the fundamental policies applicable to the Portfolio be modified to the extent necessary to permit the Portfolio to temporarily borrow for the sole purpose of meeting redemptions up to 30% of the value of the Portfolio's total assets, and to pledge as security in connection with such borrowing in an amount up to 125% of the amount borrowed. In the event the proposed modification to the Portfolio's fundamental policies is not approved, the Portfolio will remain subject to its current fundamental policy (see below) on temporary borrowing. The proposed change permits the Portfolio to collateralize such borrowings by pledging assets in excess of the amount borrowed. The Portfolio has been informed by various lenders that such lenders require collateral in excess of 100% of the amount of the loan. Collateral might be requested at 110% to 115% of the loan amount. Under the present policy the Portfolio is effectively unable to borrow, even for temporary purposes, since it is prohibited from pledging collateral above the amount of the loan. The Board therefore recommends to shareholders that the policy be changed to permit the Portfolio to pledge assets in excess of the amount of the borrowing. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 2 The following sets forth the current and the proposed fundamental policies applicable to the Portfolio to permit temporary borrowing. The Portfolio's current fundamental policy with respect to temporary borrowing is stated as follows: The Tax Free Portfolio may not: * * * 2. Borrow money, except from banks for temporary purposes and then in amounts not in excess of 10% of the value of the Portfolios's total assets at the time of such borrowing, and only if after such borrowing there is asset coverage of at least 300% for all borrowings of the Portfolio; or mortgage, pledge or hypothecate any of its assets except in connection with any such borrowing and in amounts not in excess of the lesser of the dollar amounts borrowed or 10% of the value of the Portfolio's total assets at the time of such borrowing; or purchase portfolio securities while borrowings in excess of 5% of the Portfolio's total assets are outstanding. (This borrowing provision is not for investment leverage, but solely to facilitate management of the Portfolio's securities by enabling the Portfolio to meet redemption requests where the liquidation of portfolio securities is deemed to be disadvantageous or inconvenient.) 9 * * * The Board proposes to shareholders a change in this policy to read as follows: The Tax Free Portfolio may not: * * * 2. Borrow money, except from banks for temporary purposes and then in amounts not in excess of 30% of the value of the Portfolio's total assets at the time of such borrowing, and only if after such borrowing there is asset coverage of at least 300% for all borrowings of the Portfolio; or mortgage, pledge or hypothecate any of its assets except in connection with any such borrowing and in amounts not in excess of 125% of the dollar amounts borrowed; or purchase portfolio securities while borrowings in excess of 5% of the Portfolio's total assets are outstanding. (This borrowing provision is not for investment leverage, but solely to facilitate management of the Portfolio's securities by enabling the Portfolio to meet redemption requests where the liquidation of portfolio securities is deemed to be disadvantageous or inconvenient.) * * * Under the Investment Company Act of 1940 (the "1940 Act"), the proposed modification in the fundamental policy must be approved by the holders of a majority of the outstanding Tax Free Shares. As used herein, "a majority of the outstanding Tax Free Shares" means the lesser of (i) 67% of the Tax Free Shares present at the Meeting if the holders of more than 50% of the outstanding Tax Free Shares are present in person or by proxy, or (ii) more than 50% of the outstanding Tax Free Shares. For purposes of this vote, abstentions and broker non-votes will count toward the presence of a quorum and will have the same effect as a vote "Against" Proposal 2. Information About Warburg Pincus Warburg Pincus. Warburg Pincus Counsellors, Inc. ("Warburg Pincus"), a Delaware corporation, was organized in 1970, and is a wholly owned subsidiary of Warburg, Pincus Counsellors, G.P., a New York general partnership. E.M. Warburg Pincus and Co., Inc. ("EMW") controls Warburg Pincus through its ownership of a class of voting preferred stock of Warburg Pincus. EMW is wholly owned by Warburg, Pincus and Co., a general partnership. Lionel I. Pincus holds a majority interest in Warburg, Pincus Counsellors G.P. and Warburg, Pincus and Co. Other directors and officers of Warburg Pincus and its affiliates own various minority interests in the partnerships. The principal office of these entities is located at 466 Lexington Avenue, New York, New York 10017-3147. Warburg Pincus provides investment management services for individuals and institutions (including pension and profit sharing plans, foundations and endowment funds). As of March 1, 1995, Warburg Pincus also provided advisory services to the following registered investment companies which have investment objectives similar to the Portfolio, certain information as to which is set forth below: 10
Annual Rate of Fee Name of Net Assets at (based on average net assets) Investment Company March 1, 1995 (after waivers and reimbursements) - ---------------------------- ------------- --------------------------------- Warburg Pincus New York Municipal Intermediate Fund $84,344,000 .40% Warburg Pincus Short-Term Tax Advantaged Bond Fund $26,013,000 .55%
The names and principal occupations of the chief executive officer and each director of Warburg Pincus as of March 1, 1995 are as follows: Lionel I. Pincus, Chairman, Chief Executive Officer and Director of Warburg Pincus and EMW and officer and director of certain of its affiliates; John L. Furth, President and Director of Warburg Pincus, Vice Chairman and Director of EMW and officer and director of certain of its affiliates; and John L. Vogelstein, Director and Managing Director of Warburg Pincus, Vice Chairman and Director of EMW and officer and director of certain of its affiliates. Each of the above persons may be reached c/o E.M. Warburg, Pincus & Co., Inc., 466 Lexington Avenue, New York, New York 10017-3147. Arnold M. Reichman, a Director of the Fund, is the Managing Director and Assistant Secretary of EMW, Chief Executive Officer and Secretary of Counsellors Securities Inc., the Fund's distributor, and an Officer of various investment companies advised by Warburg Pincus. Since December 31, 1994, there have been no purchases or sales of securities of Warburg Pincus, its parents or subsidiaries, by Directors of the Fund in excess of 1% of the outstanding securities of any class of Warburg Pincus, its parents or subsidiaries. Distribution Arrangements. Counsellors Securities Inc., a wholly owned subsidiary of Warburg Pincus, with offices at 466 Lexington Avenue, New York, New York 10017-3147, serves as distributor to each of the twenty-eight classes of Common Stock of the Fund being sold to the public as of the Record Date, representing interests in eighteen investment portfolios. The Fund's Board has adopted separate plans of distribution for each of such classes pursuant to Rule 12b-1 under the 1940 Act. For the Fund's fiscal year ended August 31, 1994, the Portfolio paid distribution fees to Counsellors Securities Inc. pursuant to the Portfolio's 12b-1 plan in the amount of $23,841, a substantial portion of which was reimbursed to the Portfolio by PIMC. As described above, however, the Board has reduced the amount payable by the Portfolio under the plan to .25% of the Portfolio's average daily net assets, and Warburg Pincus has undertaken to cap the Portfolio's total operating expenses at .50% for the first twelve (12) months that it manages the Portfolio. Counsellors Securities Inc. will continue to serve as distributor regardless of whether the Proposed Advisory Agreement is approved or disapproved. 11 ADDITIONAL INFORMATION ABOUT THE FUND Additional Information Concerning the Fund's Portfolios In addition to the Portfolio, on the Record Date, the Fund also offered classes of shares of Common Stock representing interests in seventeen other investment portfolios:
Portfolio Shares Outstanding - ------------------------------------------- ---------------------- Warburg Pincus Growth & Income Fund 55,379,809.8 Warburg Pincus Balanced Fund 114,927.44 Money Market Portfolio 1,156,510,892.34 Municipal Money Market Portfolio 305,280,710.36 New York Municipal Money Market Portfolio 48,209,220.58 Government Securities Portfolio 5,593,637.266 Government Obligations Money Market Portfolio 191,797,098.99 BEA International Equity Portfolio 41,540,347.11 BEA Emerging Markets Equity Portfolio 6,820,037.020 BEA Strategic Fixed Income Portfolio 9,322,648.401 BEA U.S. Core Equity Portfolio 1,333,429.501 BEA U.S. Core Fixed Income Portfolio 4,038,565.120 BEA Global Fixed Income Portfolio 1,210,619.985 BEA Municipal Bond Fund Portfolio 3,281,542.084 Laffer/Canto Equity Portfolio 67,433.341
12 Principal Holders of the Fund's Outstanding Common Stock The Fund's outstanding Common Stock has been classified into twenty-nine classes (Classes A, C through J, L through P, R through Z, and AA through EE). The following table sets forth as of March 1, 1995, those known by the Fund to be the owners of record of more than 5% of any class of the Fund's outstanding Common Stock. The Fund has no knowledge regarding the beneficial ownership of such shares.
Percent of Outstanding Name and Addresses Number of Shares Shares of Class of Common Stock of Record Owners Owned of Record Class Owned - ---------------------- ------------------ ---------------- ----------- Class A (Growth & Income) Boston Financial Data Services Omnibus Account Attn: Warburg Pincus 3rd Floor 2 Heritage Drive Quincy, MA 02171 55,128,002.425 99.545 Class C (Balanced) Jane T. Bell 15 Schooner Drive Mystic, CT 06355-1913 7,666.950 6.67% Planco Inc. P/S/P Trust 16 Industrial Blvd. Paoli, PA 19301-1609 26,008.019 22.63% E.M. Warburg Pincus & Co., Inc. 466 Lexington Ave. New York, NY 10017-3140 38,460.783 33.475 Class D (Tax-Free) Gruntal Co. FBO 995-16852-14 14 Wall Street New York, NY 10005 40,483.925 8.814 Gruntal Co. FBO 998-10773-13 14 Wall Street New York, NY 10005 43,332.377 9.435 Gruntal Co. FBO 995-10702-19 14 Wall Street New York, NY 10005 43,332.377 9.435
13
Percent of Outstanding Name and Addresses Number of Shares Shares of Class of Common Stock of Record Owners Owned of Record Class Owned - ---------------------- ------------------ ---------------- ----------- Class E (Money) PNC Bank, N.A. Custodian FBO Harold Y. Erfer 414 Charles Lane Wynnewood, PA 19096 6,947.110 13.739 PNC Bank, N.A. Custodian FBO Karen N. McElhinny and Contribution Account 4943 King Authur Drive Erie, PA 16506 9,026.700 17.852 E.L. Haines, Jr. and Betty J. Haines 2341 Pinebluff Drive Dallas, TX 75228 4,186.180 8.279 John Robert Estrada and Shirley Ann Estrada 1700 Raton Drive Arlington, TX 76018 7,917.920 15.660 Eric Levine and Linda & Howard Levine Jt. Ten. WROS 67 Lanes Pond Road Howell, NJ 07731 15,781.240 31.212 Class F (Municipal Money) William B. Pettus TRST Augustine W. Pettus Trust 827 Winding Path Lane St. Louis, MO 63021-6635 646.640 12.898 Seymour Fein P.O. 486 Tremont Post Office Bronx, NY 10457-0486 4,366.570 87.101 Class G (Money) Saver's Marketing Inc. c/o Planco 16 Industrial Blvd Paoli, PA 19301 47,969.450 21.067
14
Percent of Outstanding Name and Addresses Number of Shares Shares of Class of Common Stock of Record Owners Owned of Record Class Owned - ---------------------- ------------------ ---------------- ----------- Jewish Family and Children's Agency of Philadelphia Capital Campaign Attn: S. Ramm 1610 Spruce Street Philadelphia, PA 19103 95,431.460 41.912 Lynda P. Succ. Trste For In Tr under the Lynda S. Campbell Caring Trust dtd 10/19/92 935 Rutger Street St. Louis, MO 63104 16,329.480 7.171 Class H (Municipal Money) Kelly W. Vandelicht and Crystal C. Vandelicht P.O. Box 296 Belle, MD 65013 13,456.220 6.789 Deborah C. Brown of Trste For Barbara J.C. Custis Trustee The Crowe Trust dtd 11/23/88 9921 West 128th Terrace Overland Park, KS 66213 55,053.050 27.778 Kenneth Farwell and Valerie Farwell, Jt Ten 3654 Sullivan St. Louis, MO 63107 11,139.680 5.620 Larnie Johnson and Mary Alice Johnson 4927 Lee Avenue St. Louis, MO 63114-1726 16,425.940 8.288 Gary L. Lange and Susan D. Lange 13 Muirfield Court, North St. Charles, MO 66304 18,225.440 9.196 Marcella L. Haugh Caring Trust dtd 8/12/91 40 Plaza Square, Apt. 202 St. Louis, MO 63103 12,565.120 6.340
15
Percent of Outstanding Name and Addresses Number of Shares Shares of Class of Common Stock of Record Owners Owned of Record Class Owned - ---------------------- ------------------ ---------------- ----------- Class I (Money) Wasner & Co. For Account of Paine Webber and Managed Assets Sundry Holdings Attn: Income Collection Dept. 200 Stevens Drive Lester, PA 19113 324,254,754.220 80.786 Wasner & Co. For Account of Paine Webber and Managed Assets Sundry Holdings Attn: Joe Domildo 76 A 260 ABC 200 Stevens Drive Lester, PA 19113 62,797,024.000 15.645 Class P (Government) Home Indemnity Company 59 Maiden Lane Attn: Erik Weitzel 21st Floor New York, NY 10038 333,890.692 5.969 Home Insurance Company 59 Maiden Lane Attn: Erik Weitzel 21st Floor New York, NY 10038 4,072.683.802 72.809 Class U (BEA Strategic) Chase Manhattan Bankers Trst For Kendale Company Master Pension Plan Attn: Mark Tesoriero 3 Metrotech Center, 6th Floor Brooklyn, NY 11245 1,283,891.752 13.771 State of Oregon Treasury Department 159 State Capital Building Salem, OR 97310 3,980,886.793 42.701 Class V (BEA Emerging) Amherst H. Wilder Foundation 919 Lafond Avenue Saint Paul, MN 55104 341,194.821 5.002
16
Percent of Outstanding Name and Addresses Number of Shares Shares of Class of Common Stock of Record Owners Owned of Record Class Owned - ---------------------- ------------------ ---------------- ----------- Wachovia Bank North Carolina Trst Carolina Power & Light Co. Supplemental Retirement Trust 301 N. Main Street Winston Salem, NC 27101 589,613.226 8.645 Bryn Mawr College 101 North Merion Avenue Bryn Mawr, PA 19010-2899 738,062.307 10.821 Northern Trust Company, Trste for Texas Instruments Employee Plan P.O. Box 92956 AC 22-6996672-059328 Chicago, IL 60675-2956 1,354,839.061 19.865 Northern Trust Trst Pillsbury P.O. Box 92956 Chicago, IL 60675 710,936.777 10.424 Class W (Laffer) PNC Bank, N.A., Custodian FBO Victor A. Canto P.O. Box 1471 Rancho Santa Fe, CA 92067 6,626.665 9.826 Lois G. Smith FBO Lois G. Smith Trust UAD 12/18/86 12035 Hoosier Court, Apt. 103 Bayonet Point, FL 34667-3143 4,705.606 7.037 Rauscher Pierce Refsnes FBO Charles Wright Special Account Route 1, Box 138 Coleman, TX 76834 4,815.841 7.141 John Hancock Clearing Corporation For Special Custody Account The and Exclusive Benefit of Customers One WFC, 200 Liberty Street New York, NY 10281 17,007.596 25.221
17
Percent of Outstanding Name and Addresses Number of Shares Shares of Class of Common Stock of Record Owners Owned of Record Class Owned - ---------------------- ------------------ ---------------- ----------- Class X (BEA U.S. Core Equity) Bank of New York Trst APU Buckeye Pipeline One Wall Street New York, NY 10286 1,154,388.969 86.572 Werner & Pfleiderer Pension Plan Employees 663 E. Crescent Avenue Ramsey, NJ 07446 135,910.719 10.192 Class Y (BEA U.S. Core Fixed Income) New England UFCW & Employers' Pension Fund Board of Trustees 101 Forbes Rd. Suite 201 Braintree, MA 02184 1,622,660.514 40.179 Bankers Trust Trst Pechiney CCPR Fr Pension Master Trust 34 Exchange Pl., 4th Floor Jersey City, NJ 01302 1,398,266.740 34.622 Kollmorgen Corporation Pension Trust 1601 Thapelo Rd. Waltham, MA 02154 328,768.137 8.140 Class Z (BEA Global Fixed Income) Bank of New York Trst Eastern Enterprises Retire Pl Tr One Wall Street, 8th Floor New York, NY 10286 431,722.261 35.661 Sunkist Master Trust 14130 Riverside Drive Sherman Oaks, CA 91423 778,987.444 64.337 Class AA (BEA Municipal Bond) William A. Marquard 2199 Maysville Road Carlisle, KY 40311 419,362.695 12.779 John C. Cahill c/o David Holngren 30 White Birch Lane Cts Cob, CT 06870 192,351.535 5.861
18 Ownership of the Fund's Stock by Directors and Officers As of March 1, 1995, the officers and directors of the Fund beneficially owned less than 1% of the outstanding shares of the Fund. ANNUAL MEETINGS The Fund does not currently intend to hold annual meetings of shareholders except as required by the 1940 Act or other applicable law. Under the Fund's amended By-laws, shareholders who, taken together, own 10% of the outstanding shares of all classes of the Fund have the right to call for a meeting of shareholders to consider the removal of one or more directors. By order of the Board of Directors, /s/ Donald van Roden DONALD VAN RODEN Chairman March 9, 1995 18 APPENDIX A INVESTMENT ADVISORY AGREEMENT (Warburg Pincus Tax Free Fund) AGREEMENT made as of March __, 1995 between THE RBB FUND, INC., a Maryland corporation (herein called the "Company"), and Warburg, Pincus Counsellors, Inc. (herein called the "Investment Advisor"). WHEREAS, the Company is registered as an open-end, management investment company under the Investment Company Act of 1940 (the "1940 Act"), of which the Warburg Pincus Tax Free Fund (the "Fund") is a separate investment portfolio; and WHEREAS, the Company desires to retain the Investment Advisor to render certain investment advisory services to the Company with respect to the Fund, and the Investment Advisor is willing to so render such services, NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and intending to be legally bound hereby, it is agreed between the parties hereto as follows: 1. Appointment. The Company hereby appoints the Investment Advisor to act as investment advisor for the Fund for the period and on the terms set forth in this Agreement. The Investment Advisor accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided. 2. Delivery of Documents. The Company has furnished the Investment Advisor with copies properly certified or authenticated of each of the following: (a) Resolutions of the Board of Directors of the Company authorizing the appointment of the Investment Advisor and the execution and delivery of this Agreement; (b) The Prospectus and Statement of Additional Information relating to the class of Shares representing interests in the Fund of the Company in effect under the 1933 Act (such prospectus and statement of additional information, as presently in effect and as it shall from time to time be amended and supplemented, is herein called the "Prospectus"). The Company will furnish the Investment Advisor from time to time with copies, properly certified or authenticated, of all amendments of or supplements to the foregoing, if any. 19 3. Management of the Fund. Subject to the supervision of the Board of Directors of the Company, the Investment Advisor will provide for the overall management of the Fund including (i) the provision of a continuous investment program for the Fund, including investment research and management with respect to all securities, investments, cash and cash equivalents in the Fund, (ii) the determination from time to time of what securities and other investments will be purchased, retained, or sold by the Company for the Fund, and (iii) the placement from time to time of orders for all purchases and sales made for the Fund. The Investment Advisor will provide the services rendered by it hereunder in accordance with the Fund's investment objectives, restrictions and policies as stated in the applicable Prospectus contained in the Registration Statement. The Investment Advisor further agrees that it will render to the Company's Board of Directors such periodic and special reports regarding the performance of its duties under this Agreement as the Board may request. The Investment Advisor agrees to provide to the Company (or its agents and service providers) prompt and accurate data with respect to the Fund's transactions and, where not otherwise available, the daily valuation of securities in the Fund. 4. Brokerage. The Investment Advisor may place orders either directly with the issuer or with any broker or dealer. In placing orders with brokers and dealers, the Investment Advisor will attempt to obtain the best price and the most favorable execution of its orders. In placing orders, the Investment Advisor will consider the experience and skill of the firm's securities traders as well as the firm's financial responsibility and administrative efficiency. Consistent with this obligation, the Investment Advisor may, subject to the review of the Board of Directors, select brokers on the basis of the research, statistical and pricing services they provide to the Fund and other clients of the Investment Advisor. Information and research received from such brokers will be in addition to, and not in lieu of, the services required to be performed by the Investment Advisor hereunder. A commission paid to such brokers may be higher than that which another qualified broker would have charged for effecting the same transaction, provided that the Investment Advisor determines in good faith that such commission is reasonable in terms of either the transaction or the overall responsibility of the Investment Advisor to the Fund and its other clients and that the total commissions paid by the Fund will be reasonable in relation to the benefits to the Fund over the long-term. In no instance will the Fund's securities be purchased from or sold to the Company's principal underwriter, the Investment Advisor, or any affiliated person thereof, except to the extent permitted by SEC exemptive order or by applicable law. 20 5. Conformity with Law; Confidentiality. The Investment Advisor further agrees that it will comply with all applicable rules and regulations of all federal regulatory agencies having jurisdiction over the Investment Advisor in the performance of its duties hereunder. The Investment Advisor will treat confidentially and as proprietary information of the Company all records and other information relating to the Company and prior, present or potential shareholders (except clients of the Investment Advisor and its affiliates), and will not use such records and information for any purpose other than performance of its responsibilities and duties hereunder, except after prior notification to and approval in writing by the Company, which approval shall not be unreasonably withheld and may not be withheld where the Investment Advisor may be exposed to civil or criminal contempt proceedings for failure to comply, when requested to divulge such information by duly constituted authorities, or when so requested by the Company. 6. Services Not Exclusive. The investment management and services rendered by the Investment Advisor hereunder are not to be deemed exclusive, and the Investment Advisor shall be free to render similar services to others so long as its services under this Agreement are not impaired thereby. 7. Books and Records. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Investment Advisor hereby agrees that all records which it maintains for the Fund are the property of the Company and further agrees to surrender promptly to the Company any of such records upon the Company's request. The Investment Advisor further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1 under the 1940 Act. 8. Expenses. During the term of this Agreement, the Investment Advisor will pay all expenses incurred by it in connection with its activities under this Agreement other than the cost of securities purchased for the Fund (including brokerage commissions, if any), the cost of independent pricing services used in valuing the Fund's securities and fees and expenses of registering and qualifying shares for distribution under state securities laws. If the expenses borne by the Fund in any fiscal year exceed the most restrictive applicable expense limitations imposed by the securities regulations of any state in which the Shares of the Fund are registered or qualified for sale to the public, the Investment Advisor shall reimburse the Fund for any excess up to the amount of the fees payable by the Fund to it during such fiscal year pursuant to Paragraph 9 hereof; provided, 21 however, that notwithstanding the foregoing, the Investment Advisor shall reimburse the Fund for such excess expenses regardless of the amount of such fees payable to it during such fiscal year to the extent that the securities regulations of any state in which the Shares are registered or qualified for sale so require. 9. Compensation. (a) For the services provided and the expenses assumed pursuant to this Agreement with respect to the Fund, the Company will pay the Investment Advisor from the assets of the Fund and the Investment Advisor will accept as full compensation therefor a fee, computed daily and payable monthly, at the annual rate of .50% of the Fund's average daily net assets. (b) The fee attributable to the Fund shall be satisfied only against assets of the Fund and not against the assets of any other investment portfolio of the Company. 10. Limitation of Liability of the Investment Advisor. The Investment Advisor shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Company in connection with the matters to which this Agreement relates, except a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services or a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Investment Advisor in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement ("Disabling Conduct"). The Fund will indemnify the Investment Advisor against and hold it harmless from any and all losses, claims, damages, liabilities or expenses (including reasonable counsel fees and expenses) resulting from any claim, demand, action or suit not resulting from Disabling Conduct by the Investment Advisor. Indemnification shall be made only following: (i) a final decision on the merits by a court or other body before whom the proceeding was brought that the Investment Advisor was not liable by reason of Disabling Conduct; or (ii) in the absence of such a decision, a reasonable determination, based upon a review of the facts, that the Investment Advisor was not liable by reason of Disabling Conduct by (a) the vote of a majority of a quorum of directors of the Fund who are neither "interested persons" of the Fund nor parties to the proceeding ("Disinterested Non-Party Directors") or (b) an independent legal counsel in a written opinion. The Investment Advisor shall be entitled to advances from the Fund for payment of the reasonable expenses incurred by it in connection with the matter as to which it is seeking indemnification in the manner and to the fullest extent permissible under the Maryland General Corporation Law. 22 The Investment Advisor shall provide to the Fund a written affirmation of its good faith belief that the standard of conduct necessary for indemnification by the Fund has been met and a written undertaking to repay any such advance if it should ultimately be determined that the standard of conduct has not been met. In addition, at least one of the following additional conditions shall be met: (a) the Investment Advisor shall provide a security in form and amount acceptable to the Fund for its undertaking; (b) the Fund is insured against losses arising by reason of the advance; or (c) a majority of a quorum of Disinterested Non-Party Directors, or independent legal counsel, in a written opinion, shall have determined, based upon a of facts readily available to the Fund at the time the advance is proposed to review be made, that there is reason to believe that the Investment Advisor will ultimately be found to be entitled to indemnification. Any amounts payable by the Fund under this Section shall be satisfied only against the assets of the Fund and not against the assets of any other investment portfolio of the Company. 11. Duration and Termination. This Agreement shall become effective with respect to the Fund on the day after approval of this Agreement by vote of a majority of the outstanding voting securities of the Fund and, unless sooner terminated as provided herein, shall continue with respect to the Fund until August 16, 1995. Thereafter, if not terminated, this Agreement shall continue with respect to the Fund for successive annual periods ending on August 16, provided such continuance is specifically approved at least annually (a) by the vote of a majority of those members of the Board of Directors of the Company who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval, and (b) by the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Fund; provided, however, that this Agreement may be terminated with respect to the Fund by the Company at any time, without the payment of any penalty, by the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Fund, on 60 days' prior written notice to the Investment Advisor, or by the Investment Advisor at any time, without payment of any penalty, on 90 days' prior written notice to the Company. This Agreement will immediately terminate in the event of its assignment. (As used in this Agreement, the terms "majority of the outstanding voting securities," "interested person" and "assignment" shall have the same meaning as such terms have in the 1940 Act). 12. Amendment of this Agreement. No provision of this Agreement may be changed, discharged or terminated orally, except by an instrument in writing signed by the party against which 23 enforcement of the change, discharge or termination is sought, and no amendment of this Agreement affecting the Fund shall be effective until approved by vote of the holders of a majority of the outstanding voting securities of the Fund. 13. Miscellaneous. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and shall be governed by and construed and enforced in accordance with the laws of the state of New York without giving effect to the conflicts of laws principles thereof. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of the day and year first above written. THE RBB FUND, INC. By: ----------------------------- President WARBURG, PINCUS COUNSELLORS, INC. By: ----------------------------- 24 PROXY Tax Free Portfolio of The RBB Fund, Inc. Special Meeting of Shareholders March 31, 1995 This Proxy is solicited on behalf of the Directors The undersigned hereby appoints Donald van Roden and Edward J. Roach, and each of them, attorneys and proxies, with power of substitution in each of them, to vote and act on behalf of the undersigned at the Special Meeting of Shareholders of Class D shares of Common Stock (the "Tax Free Shares") of The RBB Fund, Inc. (the "Fund") representing interests in the Tax Free Portfolio (the "Portfolio") at 400 Bellevue Parkway, Wilmington, Delaware 19809 on March 31, 1995 at 10:00 a.m., and at all adjournments thereof, according to the number of Tax Free Shares which the undersigned would be entitled to vote if then personally present, upon such subjects as may properly come before the meeting, all as set forth in the notice of the meeting and the proxy statement furnished herewith, copies of which have been received by the undersigned; hereby ratifying and confirming all that said attorneys and proxies may do or cause to be done by virtue hereof. It is agreed that unless otherwise marked hereon, said attorneys and proxies are appointed with authority to vote For Proposal 1 and Proposal 2. The Directors recommend voting "FOR" Proposal 1 and Proposal 2. 1. Proposal to approve the proposed new Investment Advisory Agreement between the Fund and Warburg, Pincus Counsellors, Inc. in respect of the Fund's Portfolio. FOR AGAINST ABSTAIN / / / / / / 2. Proposal to approve a modification of the fundamental policies of the Portfolio to permit the Portfolio to temporarily borrow for the purposes of meeting redemptions up to 30% of the value of the Portfolio's total assets, and to pledge as security in connection with such borrowing an amount up to 125% of the amount borrowed. FOR AGAINST ABSTAIN / / / / / / 3. In the discretion of such proxies, upon such other business as may properly come before the meeting or any adjournment thereof. PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN TAX FREE SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR AS EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. Dated: ______________, 1995 X_________________________________________ Signature/Title X_________________________________________ Signature, if held jointly Please Sign, Date and Return the Proxy Promptly Using the Enclosed Envelope. -----END PRIVACY-ENHANCED MESSAGE-----