SCHEDULE 14A SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section14(a) of the Securities Exchange Act of
1934 (Amendment No. )
Filed by the Registrant [X] Filed by a Party other than the Registrant [ ]
Check the appropriate box: [ ] Preliminary Proxy Statement [ ]
Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2))
[X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ]
Soliciting Material Pursuant to ss240.14a-11(c) or ss240.14a-12
Vestaur Securities, Inc. File No. 811-2320; 2-47081
__________________________________________________________________
(Name of Registrant as Specified In Its Charter)
__________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
__________________________________________________________________
2) Aggregate number of securities to which transaction applies:
__________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
__________________________________________________________________
4) Proposed maximum aggregate value of transaction:
__________________________________________________________________
5) Total fee paid:
__________________________________________________________________
[ ] Fee paid previously with preliminary materials. [ ] Check box if any part
of the fee is offset as provided by Exchange Act Rule 0-11 (a)(2) and identify
the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the form or schedule an d
the date of its filing.
1) Amount Previously Paid:
________________________________________________________
2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
________________________________________________________
4) Date Filed:
________________________________________________________
VESTAUR SECURITIES, INC.
Centre Square West - UM Floor 15th and Market Streets Philadelphia,
Pennsylvania 19101
_____________
Dear Stockholder:
I am writing to you to inform you of recent events that resulted in the
scheduling of the Vestaur Securities, Inc. (the "Fund") Annual Meeting of
Stockholders (the "Meeting") on April 28, 1998. Before the Meeting I would
like your vote on the important issues affecting the Fund as described in the
attached Proxy Statement. The Meeting is necessitated by the events described
below.
On November 18, 1998, CoreStates Financial Corp ("CoreStates") agreed to merge
with and into First Union Corporation ("First Union") (the "Merger").
CoreStates Bank, N.A., a subsidiary of CoreStates and parent company of
CoreStates Investment Advisers, the adviser to the Fund, will merge with and
into First Union National Bank ("FUNB"), a subsidiary of First Union. The
Capital Management Group of FUNB and its investment adviser affiliates manage
or otherwise oversee the investment of over $75 billion in assets belonging to
a wide-range of clients, including the Evergreen family of mutual funds, which
funds had assets of approximately $40 billion as of December 31, 1997.
As a consequence of the Merger and in order to facilitate the investment
management of assets and the delivery of shareholder services to the Fund, and
to integrate the Fund into First Union's affiliated Evergreen family of mutual
funds, the Board of Directors of
the Fund has proposed for your approval an investment advisory agreement with
FUNB. The election of directors and ratification of the Fund's auditors are
also on the agenda for the meeting.
Whether or not you plan to be present, we need your vote. We urge you to
complete, sign
and return the enclosed proxy card promptly. A postage-paid envelope is
enclosed for this purpose.
If you return your proxy promptly you can help the Fund avoid follow-up
mailings to achieve a quorum. If your shares in the Fund are held in street
name, your bank or broker can vote your shares, but may do so only upon
receipt of your specific instructions. Please contact the person responsible
for your account and instruct him or her to execute a proxy card today. If
you decide between now and the meeting that you can attend the meeting in
person, you can revoke your proxy at that time and vote your shares
at the meeting.
THE BOARD OF DIRECTORS OF THE FUND HAS UNANIMOUSLY APPROVED THE PROPOSALS AND
RECOMMENDS
THAT YOU VOTE FOR ALL OF THE PROPOSALS DESCRIBED IN THIS PROXY STATEMENT.
If we do not receive your completed proxy card after several weeks, you may be
contacted
by our proxy solicitor, Corporate Investor Communications, Inc. They will
remind you to vote your shares.
Thank you for taking these matters seriously and participating in this
important process.
Sincerely,
Mark E. Stalnecker
Chairman of the Board
Vestaur Securities, Inc.
Philadelphia, Pennsylvania
March 30, 1998
VESTAUR SECURITIES, INC.
Centre Square West - UM Floor 15th and Market Streets Philadelphia,
Pennsylvania 19101
_____________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 28, 1998
_____________
TO THE STOCKHOLDERS OF VESTAUR SECURITIES, INC.
Notice is hereby given that the annual meeting of stockholders of Vestaur
Securities, Inc. will be held on Tuesday, April 28, 1998, at 11:00 a.m. local
time, in Conference Room #3, at ARAMARK, 1500 Market Street, 41st Floor,
Centre Square West Tower, Philadelphia, PA 19102, for the following purposes.
1. To elect a Board of eight Directors to serve until the next annual meeting
and until
their successors shall have been elected and qualified.
2. To ratify the action of the Board of Directors in selecting Deloitte &
Touche, LLP as auditors to examine the books and financial statements of
Vestaur Securities, Inc., for the period commencing December 1, 1997 and
ending November 30, 1998.
3. To consider and vote upon a proposal to approve a new advisory agreement
between Vestaur Securities, Inc. and First Union National Bank ("FUNB"),
pursuant to which FUNB will act as investment adviser with respect to the
assets of the Fund, effective upon the date of the annual meeting.
4. The transaction of such other business as may properly be brought before
the meeting.
Stockholders of record at the close of business on March 20, 1998 will be
entitled to vote at the meeting. A complete list of the Stockholders entitled
to vote at the meeting shall be available for examination by any stockholder
at the principal office of the Fund during normal business hours from
April 14, until the commencement of the meeting, at which time the list
will be available at the place of the meeting.
It is hoped that you will attend the meeting, but if you cannot do so, please
fill in and sign the enclosed proxy, and return it in the accompanying
envelope as promptly as possible. Any stockholder attending can vote in
person even though a proxy has already been returned.
By Order of the Board of Directors
Karen Bater
Acting Secretary
Philadelphia, Pennsylvania
March 30, 1998
VESTAUR SECURITIES, INC.
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation by and
on behalf of the Board of Directors of Vestaur Securities, Inc. ("Vestaur" or
the "Fund") for use at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held in Conference Room #3, at ARAMARK, 1500 Market Street,
Centre Square West Tower, 41st Floor, Philadelphia, Pennsylvania 19102, on
Tuesday, April 28, 1998 at 11:00 a.m., local time. The address of the
principal office of the Fund is Centre Square West - UM-Floor, Philadelphia,
Pennsylvania 19101.
Proxy Solicitation
All proxies in the enclosed form which are properly executed and returned to
the Fund will be voted as provided therein at the Annual Meeting or at any
adjournments thereof. A stockholder executing and returning a proxy has the
power to revoke it at any time before it is exercised by giving written notice
of such revocation to the Secretary of the Fund. Signing and mailing the
proxy will not affect your right to give a later proxy or to attend the Annual
Meeting and vote your shares in person.
The Board of Directors intends to bring before the meeting the matters set
forth in items 1, 2 and 3 in the foregoing notice. The persons named in the
enclosed proxy and acting thereunder will vote with respect to items 1, 2 and
3 in accordance with the directions of the stockholders as specified on the
proxy card; if no choice is specified, the shares will be voted IN FAVOR of
the election of the eight directors named
under item
1, IN FAVOR of ratification of Deloitte & Touche, LLP as auditors and IN FAVOR
of approval of the investment advisory agreement described in item 3. If any
other matters are properly presented to the meeting for action, it is intended
that the persons named in the enclosed proxy and acting thereunder will vote
in accordance with the views of management thereon. Abstentions and broker
non-votes are counted for quorum purposes. With regard to the election of
directors, votes may be cast in favor or withheld; votes that are withheld
will be excluded entirely from the vote and will have no effect. Abstentions
will be excluded from the proposal to ratify approval of accountants and the
proposal to approve the investment advisory agreement. For this reason,
abstentions and broker non-votes will have the effect of a negative vote on
the proposal to ratify approval of accountants because it requires the
affirmative vote of a majority of shares present in person or by proxy and
entitled to vote and similarly, will have the effect of a negative vote on
the proposal to approve the investment advisory agreement
because it requires the vote of a majority of the outstanding voting
securities, as defined in the Investment Company Act of 1940 (the "1940 Act")
and described below. Under the rules of the New York Stock Exchange, Inc.
brokers who hold shares in street name for customers have the authority to
vote on certain items when they have not received instructions from
beneficial owners. Brokers that do not receive instructions are entitled to
vote on the election of directors.
The affirmative vote of a plurality of the shares present in person or
represented by proxy at the meeting is required for the election of Directors
(Item 1); the affirmative vote of a majority of the shares cast at the meeting
is required for ratification of the selection of independent public
accountants (item 2); and the affirmative vote of more than 50% of the Fund's
outstanding shares entitled to vote at the meeting, or a two-thirds majority
of the shares present at the meeting if the holders of more than 50% of the
outstanding shares entitled to vote at the meeting are present in person or by
proxy, is required for approval of the investment advisory agreement.
In the event a quorum is not present at the meeting or in the event that a
quorum is present but sufficient votes to approve the proposed item are not
received, the persons named as proxies may propose one or more adjournments of
the meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of a majority of those shares represented at
such meeting in person or by proxy. The persons named as proxies will vote
those proxies that they are entitled to vote FOR any such proposal, IN FAVOR
of such an adjournment, and will vote those proxies required to be voted
AGAINST any such proposal, AGAINST any such adjournment.
The Fund will bear the costs of preparing, printing and mailing this proxy
statement, the proxies and any additional materials which may be furnished to
stockholders. Solicitation may be undertaken by mail, telephone, telegraph and
personal contact. The Fund has engaged Corporate Investor Communications,
Inc. to solicit proxies from brokers, banks, other institutional holders and
individual stockholders for a fee of approximately $5,000. The Annual Report
of the Fund has been mailed to all stockholders entitled to vote at the
Annual Meeting. The Fund will furnish, without charge, a copy of the Annual
Report to a stockholder upon request. Stockholder requests should be directed
to J. Kevin Kenely, Evergreen Keystone Funds, 200 Berkeley Street,
Boston, MA 02116-5034; telephone by collect call to (617) 210-3326.
This proxy statement and Form of proxy were first sent to stockholders
on or about March 30, 1998.
Voting Securities and Principal Holders Thereof
Holders of Common Stock of the Fund of record at the close of business March
20, 1998 will be entitled to vote at the Annual meeting or any adjournment
thereof. As of March 20, 1998, the Fund has outstanding 6,681,019 shares of
Common Stock. The stockholders are entitled to one vote per share on all
business of the meeting. To the knowledge of the Fund, there is no beneficial
owner of more than 5% of the outstanding Common Stock of the Fund.
The officers and directors of the Fund as a group beneficially own in the
aggregate 5617.446 shares (0.84%) of the outstanding Common Stock of the Fund
and less than 1% of the outstanding securities of CoreStates Financial Corp
("CoreStates"), ultimate parent of CoreStates Bank, N.A. ("CoreStates Bank")
and CoreStates Investment Advisers, Inc. (the "Adviser") and First Union
Corporation ("First Union"), parent of First Union Bank ("FUNB"),
respectively.
I. ELECTION OF DIRECTORS
At the Annual Meeting eight Directors, constituting the entire Board of
Directors of the
Fund, are to be elected to hold office until the next annual meeting and until
their successors are elected and shall have qualified. If any nominee for any
reason becomes unable to serve, the persons named as proxies will vote for the
election of such other persons as they believe will carry on the present
policies of the Fund and as they deem to be qualified. The Board of Directors
has no reason to believe that any of the eight nominees will be unable to
serve. Mr. Jansing was previously a Director of the Fund from its inception in
1972 until his resignation in July, 1974. The ages, principal occupations and
certain other affiliations of the nominees, the amount of stock owned
beneficially, directly or indirectly, in the Fund and the years they first
became Directors of the Fund are as follows:
<TABLE>
<CAPTION>
Name and Address Age () Principal First Shares Owned Percent
Occupation and other Became beneficially, of Class
affiliations Director directly or 3-20-98
indirectly
3-20-98
<S> <C> <C> <C> <C>
Paul B. Fay, Jr. (79) President, The Fay Improvement 1972 1,463.000 0.020
3766 Clay Street Company; Trustee of Odell Charitable
San Francisco, CA 94118 Foundation and Naval War College
Foundation (Emeritus); Director of
First American Financial Corporation,
and Compensation Resource Group
Incorporated.
#Robert F. Gurnee (70) Chairman, Financial Integrity 1991 200.000 0.003
3801 Kennett Pike Group, Inc., Director, Japan Equity
Building B, Suite 201 Fund Inc., The Thai Capital Fund.
Greenville, DE 19807 Formerly, Chairman, Sears Roebuck
Acceptance Corporation, and Sears
Receivables Financing Group; and
Vice President and Corporate Treasurer,
Sears, Roebuck and Co.
* **Glen T.Insley (51) Senior Vice President, Managing 1998 -0- -0-
Two First Union Center Director of Fixed Income, First
NC-1157 Union, First Capital Group.
Charlotte, NC 28288
#John C. Jansing (72) Director,Lord Abbett & Co. 1976 1,000.000 0.015
162 S. Beach Road managed group of mutual funds
Hobe Sound, FL 33455 and Alpine Group Inc. Formerly,
Chairman, Independent Election
Corporation of America.
*James S. Morgan (81) Private Investor; Vice 1978 1,000.000(1) 0.015
Woodside-282 President, Rittenhouse Financial
1515 The Fairway Services, Inc.; Vice President
Rydal, PA 19046 and Director, The Rittenhouse
Trust Co. Formerly, Senior Vice
President of First Pennsylvania
Bank N.A. Chairman of the Fund
until 1982.
Charles P. Pizzi (47) President, Greater . 1997 -0- -0-
200 S. Broad Street Philadelphia Chamber of Commerce
Suite 700
Philadelphia, PA 19102
**Philip R. Reynolds (70) Treasurer and Trustee 1972 1,040.931 0.016
43 Montclair Drive of J. Walton Bissell
West Hartford,CT 06107 Foundation since 1989. Formerly,
Executive Vice President,
Investments, Phoenix Mutual Life
Insurance Co.
**Marciarose Shestack (64) Freelance television 1972 613.515 0.009
Parkway House broadcaster, journalist and
2201 Pennsylvania Ave. public relations consultant
Phila., PA 19130 since 1990. Formerly, Consultant
to Philadelphia Developers Alliance,
and President, Philadelphia
Developers' Alliance.
</TABLE>
____________________________
# Member of Audit Committee
* Interested Person
** Member of Executive Committee
(1) Does not include 1,000 shares held by a family member of Mr. Morgan as to
which he disclaims beneficial ownership.
Under the 1940 Act, Mr. Insley is an "interested person" of the Fund because
he is an officer of First Union. Mr. Morgan is an "interested person" because
he owns beneficially 5,445 shares of Common Stock of CoreStates. Mr. Pizzi is
not considered an "interested person" of the Fund; however, the Greater
Philadelphia Chamber of Commerce is a party to an investment advisory agreement
with the Adviser and maintains certain banking and trust relationships with
CoreStates Bank. The Fund does not believe that the relationships are material
business relationships. If these circumstances change, the Board of Directors
will determine whether any action is required to change the composition of
the Board.
The officers of the Fund, the period during which each has served, their ages,
principal
occupations during the last five years including offices held with the
Adviser, CoreStates and its affiliated companies and beneficial ownership of
shares of the Common Stock of CoreStates are as follows:
<TABLE>
<CAPTION>
Name, Age () and Office Principal Occupation CoreStates*** Common
Shares Owned Stock***
Beneficially Options to
3-20-98 Purchase
3-20-98
<S> <C> <C> <C>
Mark E. Stalnecker (46) Executive Vice President, CoreStates Bank, N.A. 7,853 63,353
Chairman of the Board since and CoreStates Financial Corp. since 1988.
1993. Chief Trust and Investment Services Officer,
CoreStates Financial Corp. 1990-1995.
Chairman and President, CoreStates
Investment Advisers, Inc., Director, CoreStates
Bank of Delaware, N.A. and Philadelphia
International Investment Corp.
Dung Vukhac (54) Director, Senior Vice President, Fixed 7,903 19,912
President since 1995. Income Services, CoreStates
Investment Advisers, Inc. since 1987; Previously,
Securities Analyst, Economist, Vice President
and Fixed Income Manager, Trust Department,
Philadelphia National Bank.
Michael F. Melloy (60) Vice President and Portfolio Manager, 442 1,153
Vice President since 1990; CoreStates Investment Advisers, Inc. since 1990.
Acting Treasurer Previously, Executive Vice President, Centre
Since 1998. Square Investment Group and Vice President,
First Pennsylvania Bank N.A.
Karen G. Bater (39) Vice President and Senior Portfolio Manager, 885.03 750.000
Assistant Vice President CoreStates Investment Advisers, Inc. since 1986.
since 1992;
Acting Secretary
Since 1998.
</TABLE>
_______________________________
*** CoreStates Financial Corp has 138,714,797 shares of Common Stock
outstanding. First Union has approximately 568,296,416 shares of Common Stock
outstanding. Assuming consummation of the Merger, First Union will have
approximately 907,744,530 shares of common stock on the closing date of the
Merger. Upon consummation of the Merger, each outstanding share of CoreStates
Common Stock will be converted into 1.62 shares of First Union Common Stock.
Effective April 28, 1998, Mr. Stalnecker will no longer be an officer of the
Fund. His term as a member of the Board of Directors will also expire. It is
anticipated that Glen
T. Insley (see above) will assume the duties of and office previously held by
Mr. Stalnecker, with respect to the management of the Fund. It is also
anticipated that J. Kevin Kenely will be appointed treasurer of the Fund
and Karen Bater will be appointed secretary of the Fund,as of April 28, 1998
All officers are elected to one-year terms. All officers and directors may be
reached through the principal offices of the Fund at Centre Square West - UM
Floor, 1500 Market Street, Philadelphia,
Pennsylvania 19101. The Fund had no Nominating or Compensation Committees
during fiscal year 1997. The Board of Directors held four regular meetings in
fiscal year 1997.
Unless instructed by the stockholders to refrain from so voting, it is the
intention of the persons named as proxies to vote for election of the eight
nominees listed above as Directors. Provided that a quorum is present, a
plurality of the votes validly cast at the meeting is required to elect each
of the Directors.
OTHER REMUNERATION AND AFFILIATIONS OF OFFICERS AND DIRECTORS
Each of the seven directors of the Fund who are not affiliated persons (as
defined in the Investment Company Act of 1940, as amended) of the Adviser, or
of CoreStates, its parent, receives an annual fee of $7,000, and $200 for each
Board meeting attended, as compensation for services. The Fund also pays such
Board members $100 for each Executive
Committee Meeting attended and $150 for each Audit Committee Meeting attended.
The Fund also reimburses all Directors who are not affiliated persons for
expenses incurred in connection with attending meetings of the Board of
Directors. For the year ended November 30, 1997 aggregate Directors fees paid
were $53,050 and expenses paid were $12,020 (see table below). Fees, salaries
or other remuneration of officers of the Fund who also serve as directors,
officers, employees or special consultants to the Adviser, CoreStates or any
of their affiliated companies are borne by the appropriate CoreStates
affiliate. All present officers are covered by this provision, and did not
receive any compensation or expense reimbursement from the Fund.
<TABLE>
<CAPTION>
Total
Compensation
from Registrant
Aggregate and Fund Complex
Compensation from Paid to Directors
Name of Person Registrant for fiscal for the fiscal year
and Position Year Ended 11-30-97 ended 11-30-97
<S> <C> <C>
Paul B. Fay, Jr. $7,800.00 $7,800.00
Director
Robert F. Gurnee $7,750.00 $7,750.00
Director
John C. Jansing, Sr. $8,100.00 $8,100.00
Director
Charles P. Pizzi $5,850.00 $5,850.00
Director
James S. Morgan $7,800.00 $7,800.00
Director
Philip R. Reynolds $7,950.00 $7,950.00
Director
Marciarose Shestack $7,800.00 $7,800.00
Director
Mark E. Stalnecker -0- -0-
Director
</TABLE>
II. RATIFICATION OF APPOINTMENT OF AUDITORS
At a meeting held on December 10, 1997, the Board of Directors, including a
majority of those Directors who are not interested persons of the Fund,
selected Deloitte & Touche, LLP, the current auditors for the Fund, as
auditors to examine the Fund's books and securities and to certify from time
to time the Fund's financial statements for the period December 1, 1997 to
November 30, 1998, subject to ratification by the stockholders
of the Fund. The firm has no direct or indirect material interest in the
Fund. Representatives of Deloitte & Touche, LLP are expected to be present at
the Annual Meeting with the opportunity to make a statement if they desire to
do so, and they will be available to respond to appropriate questions. A
majority vote of the shares represented in person and by proxy at the meeting
is necessary to ratify the selection of the auditors.
The Board of Directors has appointed an Audit Committee consisting of John C.
Jansing and Robert F. Gurnee. The purpose of this Committee is to evaluate
financial management, meet with the auditors, and deal with other matters of
a financial nature that they deem appropriate. The Committee met twice during
fiscal year 1997.
III. APPROVAL OF THE NEW INVESTMENT ADVISORY AGREEMENT FOR THE FUND
Background
One of the purposes of the meeting is to consider a new investment advisory
agreement for Vestaur as a result of the merger whereby CoreStates will merge
into First Union (the
"Merger") on or about April-30, 1998. The Merger represents a change in
ownership of the parent corporation of the Adviser and, as such, has
the effect under the 1940 Act of terminating the existing
advisory agreement between Vestaur and the Adviser (the "Existing
Advisory Agreement"). Accordingly, shareholders are
being asked to approve a new advisory agreement embodying exactly the same
terms and fees with the Adviser under its new ownership (the "New Advisory
Agreement") and to approve the payment of advisory fees to the Adviser for the
period from the consummation of the Merger through the date of the Annual
Meeting. The Fund's Board of Directors, including a majority of the
non-interested Directors (those Directors who are not parties to the New
Advisory Agreement, or interested persons of such parties) approved the New
Advisory Agreement, subject to approval by the shareholders of the Fund, to
become effective upon the date of the Annual Meeting.
First Union is a North Carolina-based, multi-bank holding company subject to
the Bank Holding Company Act of 1956, as amended, and the rules and
regulations promulgated thereunder (the "BHCA"). Through its full-service
banking subsidiaries, First Union p rovides a wide range of commercial and
retail banking services and trust services in North Carolina, Florida, South
Carolina, Georgia, Tennessee, Virginia, Maryland, Delaware, Pennsylvania, New
Jersey, New York, Connecticut and Washington, D.C. First Union also provides
various other financial services, including mortgage banking, home equity
lending, credit cards, leasing, investment banking, insurance and securities
brokerage services, through other subsidiaries. As of September 30, 1997, and
for the nine months then ended, First Union reported assets of $144 billion,
net loans of $95 billion, deposits of $92 billion, stockholders' equity of $11
billion and net income applicable to common stockholders of $1.5 billion,
and as of such date First Union operated in 38 states, Washington,
D.C. and six foreign countries. First Union is the sixth largest
bank holding company in the United States, based on assets at
September 30, 1997. The principal executive offices of First Union are
located at One First Union Center, Charlotte, North Carolina 28288-0013, and
its telephone number is (704) 374-6365.
Under the terms of the Merger Agreement, CoreStates will merge with and into
First Union. Upon consummation of the Merger, each outstanding share of
CoreStates Common Stock will be converted into 1.62 shares of First Union
Common Stock, subject to possible increase under certain circumstances.
It is anticipated that approximately 340,000,000 shares of
First Union Common Stock will be issued in the Merger.
In addition, the Merger Agreement provides that CoreStates Bank and FUNB,
based in Avondale, Pennsylvania, will merge following the Effective Date.
Subject to the terms and conditions of the merger Agreement (including receipt
of all necessary regulatory and stockholder approvals), the effective date of
the Merger (the "Effective Date") will occur on (i) such date as shall be
mutually agreed upon by CoreStates and First Union, or (ii) if such parties
are not so able to agree, such date as First Union shall notify CoreStates in
writing not less than five days prior thereto, which date shall not be more
than 15 days after the conditions to the obligations of the parties to effect
the Merger have been satisfied or waived in writing. Subject to the
foregoing, it is currently anticipated that the Effective Date will occur on
or about April-30, 1998. The Merger is subject to the prior approval of the
Board of Governors of the Federal Reserve System
(the "Federal Reserve Board") under the BHCA. In addition, the Merger may
require certain approvals of or notices to state, federal and other
regulatory authorities.
As required by the 1940 Act, the Existing Advisory Agreement provides for its
automatic termination upon "assignment." Consummation of the Merger may be
deemed to be an assignment (as defined in the 1940 Act) of
the Existing Advisory Agreement resulting in the termination of the Existing
Advisory Agreement in accordance with its terms. In anticipation of the
Consummation of the Merger, and to provide continuity in investment advisory
services, Vestaur's Board of Directors, including a majority of the Board
members who are not "interested persons" (as defined in the 1940 Act) at a
meeting held on March 11, 1998, approved and directed that there be submitted
to shareholders for approval a new investment advisory agreement.
The Fund and the Adviser have received an Order from the Securities and
Exchange Commission, which permits the implementation, without shareholder
approval, of a new investment advisory agreement for a period of up to 120
days following the consummation of the Merger (but in no event later than
July 31, 1998), in the event that the Merger is consummated prior to
shareholder approval of the New Advisory Agreement. The Order permits the
Adviser to receive all fees earned under the new advisory agreement following
shareholder approval (the "Interim Period Advisory Fees"). The fees paid will
be unchanged from the fees paid under the existing advisory agreement. The
fees will be paid into an interest-bearing escrow account maintained by an
independent escrow agent. The escrow agent will release the amounts held in
the escrow account (including any interest earned): (a) to the Adviser upon
approval of the New Advisory Agreement by shareholders at this meeting; or (b)
to the Fund if the 120 day period ends and the new investment advisory
agreement has not received the requisite shareholder approval.
In connection with the Fund's approval of the New Advisory Agreement, the
Board considered that the terms of the Merger do not require a material change
in the Fund's investment objective or policies, the Adviser's investment
management or operation of the Fund, the investment personnel managing
the Fund, the investment advisory fee or the shareholder services
or other business activities of the Fund. FUNB has informed the Board
of Vestaur that the Merger will not at this time result in any material
changes, although no assurance can be given that such a change
will not occur in the future.
As described in more detail below, the Existing Advisory Agreement provides
that the Adviser will provide certain administrative services to the Fund and
that the Adviser may delegate its responsibilities to affiliated companies.
The Adviser currently provides day-to-day fund administrative services under
those terms. If the New Advisory Agreement is approved by shareholders, it
is contemplated that administrative services will be provided to the Fund by
Evergreen Investment Services, Inc., an affiliate of FUNB. Fees for
administrative services will continue to be paid from the advisory fee.
The Board has also approved an unaffiliated new custodian for the Fund,
State Street Bank and Trust Company, with no increase in custodian fees
paid by the Fund. The Board of the Fund also modified certain non-fundamental
investment policies of the Fund, as described below. To enable the Fund to
more effectively manage its assets, the Fund is now permitted to invest in
the following short-term cash equivalent instruments in addition to
commercial paper:
Variable amount master demand notes. These are promissory notes that are
payable on demand and that bear interest tied to a money market rate or index.
The rate on the note is adjusted upward or downward each time the base rate
changes. The payment obl igations may be backed solely by the unsecured
promise of the issuer to make payments when due.
Repurchase Agreements. A repurchase agreement is a means of investing monies
for a short period. In a repurchase agreement, a seller - a U.S.
commercial bank or recognized U.S. securities dealer - sells securities to a
fund and agrees to repurchase the securities at the fund's cost plus interest
within a specified period (normally one day). In these transactions, the
securities purchased by the Fund will have a total value equal to or in excess
of the value of the repurchase agreement, and will be held by the Fund's
Custodian Bank until repurchased.
The use of repurchase agreements involves certain risks. For example, if the
other party to the agreement defaults on its obligation to repurchase
the underlying security at a time when the value of the security has
declined, the Fund may incur a loss upon disposition of the security.
If the other party to the agreement becomes insolvent and subject to
liquidation or reorganization under the Bankruptcy Code or other laws, a court
may determine that the underlying security is collateral for a loan by the
Fund and not within the control of the Fund. As a result, the Fund's ability
to realize on such collateral may be automatically stayed. Finally, it is
possible that the Fund may not be able to substantiate its interest
in the underlying security and may be deemed an unsecured creditor of
the other party to the agreement. While the Fund's management acknowledges
these risks, it is expected that they can be controlled through careful
monitoring procedures.
The Board also approved the use of pricing services to value securities traded
in the over-the-counter market when such prices are believed to reflect the
fair market value of such securities.
Section 15(f) of the 1940 Act provides that when a change in the control of an
investment adviser occurs, the investment adviser or any of its affiliated
persons may receive any amount or benefit in connection therewith as long as
two conditions are satis fied. First, no "unfair burden" may be imposed on
the investment company as a result of the transaction relating to the change
of control, or any express or implied terms, conditions or understandings
applicable thereto. The term "unfair burden," as defined in
the 1940 Act, includes any arrangement during the two-year period after the
change in control whereby the investment adviser (or predecessor or successor
adviser), or any interested person of any such adviser, receives or is
entitled to receive any compensation, directly or indirectly, from the
investment company or its security holders (other than fees for bona fide
investment advisory or other services) or from any person in connection with
the purchase or sale of securities or other property to, from, or on behalf of
the investment company (other than fees for bona fide principal underwriting
services). No such compensation arrangements are in effect or contemplated
insofar as the Fund is concerned.
The second condition is that, during the three-year period immediately
following consummation of the transaction, at least 75% of the investment
company's board of directors must not be "interested persons" of the Adviser
within the meaning of the 1940 Act. At present and following the merger of
CoreStates and First Union, two of the Fund's directors out of eight
directors, are and will be, interested persons of the Adviser. The Fund
expects to comply with Section 15(f).
If the Merger is not completed, the Existing Advisory Agreement will remain in
effect. In the event the New Advisory Agreement is not approved by the Fund's
shareholders, the Directors will promptly seek to enter into a new advisory
arrangement for the Fund, subject to approval by the Fund's shareholders.
THE INVESTMENT ADVISER
The Adviser has managed the Fund since June 14, 1990. The address of the
Adviser is Upper Mezzanine, 1500 Market Street, Philadelphia, Pennsylvania
19102. The Adviser provides investment advisory services to individuals,
investment companies, pension and profit sharing plans and corporations or
other business entities. Mark Stalnecker is Chairman, President and a
Director of the Adviser, and reports to Peter Welber, President
of CoreStates Asset Management. In such capacity, he is responsible for the
investment management activities of the Adviser. The other Directors of the
Adviser are Dung Vukhac, Steve Dalton, Charles T. Meisse, and JoAnne T.
Fredericks, also the Treasurer. Michael F. Melloy, Stuart
N. Hosansky and Karen G. Bater are Vice Presidents of the Adviser and William
T. Lawrence is Vice President and Secretary of the Adviser. All of the above
may be reached at the address of the Adviser stated above.
As of December 31, 1997, CoreStates Bank, N.A. managed the investments of 29
common trust funds having assets of more than $3.1 billion. The Adviser is
investment manager to CoreFund, Inc., a management investment company
presently consisting of the following portfolios: CoreFund Cash Reserve,
CoreFund
Treasury Reserve, CoreFund Elite Tax Free Reserve, CoreFund Tax-Free Reserve,
CoreFund Special Equity Fund, CoreFund Growth Equity Fund, CoreFund Core
Equity Fund, CoreFund Equity Index Fund, CoreFund International Growth Fund,
CoreFund Balanced Fund, CoreFund Global Bond Fund, CoreFund Government Income
Fund, CoreFund Short-Intermediate Bond Fund, CoreFund Bond Fund, CoreFund
Short-Term Income Fund, CoreFund Intermediate Municipal Fund, CoreFund New
Jersey Municip al Fund and CoreFund Pennsylvania Municipal Fund. These
portfolios have aggregate assets of $3.9 billion.
FUNB will serve as investment adviser to the Fund under the terms of the New
Advisory Agreement. First Union and its subsidiaries provide a broad range of
financial services to individuals and businesses. The Capital Management
Group of FUNB and investment advisory affiliates of FUNB manage or otherwise
oversee the investment of over $75 billion in assets belonging to a wide range
of clients, including the Evergreen family of mutual funds.
FUNB currently serves as investment adviser to the following companies or
series of an investment company with an investment objective similar to the
Fund.
<TABLE>
<CAPTION>
Investment
Net Assets Advisory
Fund at 12-31-97 Fees*
<S> <C> <C>
Evergreen Select Fixed Income Fund $466,563,009 0.50%
Evergreen Select Income Plus Fund $1,162,201,382 0.50%
</TABLE>
____________________________________
* Annually of average net assets
During First Union's fiscal year ended December 31, 1997, there were no
transactions in First Union's securities by any current officer or current
Director of the Fund and or officer or director of First Union or FUNB or the
Adviser in an amount equal to or exceeding 1% of the outstanding securities of
First Union.
The names, addresses and principal occupations of the directors and principal
executive officers of FUNB are set forth below.
The Directors and principal executive officers of FUNB
are:
Edward E. Crutchfield, Jr. Chairman and Chief Executive Officer, First Union
Corporation; Chief Executive Officer and Chairman,
First Union National Bank
John R. Georgius President, First Union Corporation;
President, First Union National Bank
Marion A. Cowell, Jr. Executive Vice President, Secretary &
General Counsel, First Union Corporation;
Secretary and Executive Vice President,
First Union National Bank
Robert T. Atwood Executive Vice President and Chief Financial
Officer, First Union Corporation; Chief Financial
Officer and Executive Vice President,
First Union National Bank
The Chairman and Chief Executive Officer of CoreStates is Terrence A. Larsen
who also is a Director of CoreStates. The names of all of the other Directors
of CoreStates are as follows: Robert W. Cardy, Chairman, President and Chief
Executive Officer, Carpenter Technology Corp.; Carlton E. Hughes, Chairman and
Director, Stewart-Amos Steel, Inc.; Ernest E. Jones, Executive Director,
Greater Philadelphia Urban Affairs Coalition; Herbert Lotman, Chairman and
Chief Executive Officer, Keystone Foods Corporation; George V. Lynett, Esq.,
Publisher, The Scranton Times; Samuel A. McCullough, Special Consultant to
CoreStates; Patricia A. McFate, Senior Scientist and Program Director, Science
Applications International Corporation; Marlin Miller, Jr., President, Chief
Executive Officer and Director, Arrow International, Inc.; James M. Seabrook,
Chairman and Chief Executive Officer, Seabrook Brothers & Sons, Inc.; Raymond
W. Smith, Chairman, Chief Executive Officer and Director, Bell Atlantic
Corporation; George Strawbridge, Jr. Private Investor; Peter S. Strawbridge,
Retired President, Strawbridge and Clothier; and Judith M. von Seldeneck,
President and Chief Executive Officer, the Diversified Search Companies.
Charles L. Coltman, III is Vice Chairman of CoreStates and CoreStates Bank.
Albert Mandia is Executive Vice President and Chief Financial Officer of
CoreStates. All of the above persons may be reached in care of CoreStates
Financial Corp., 1500 Market Street, Philadelphia, PA 19101. None of the
foregoing persons owns as much as 1% of the outstanding stock of CoreStates
and all of them own less than 5%.
CoreStates Bank, serves as custodian of the Fund's assets. For the fiscal
year ended November 30, 1997, the Fund paid custodian fees of $23,543 to
CoreStates Bank. At the meeting of the Board held on March-11, 1998, the
Board approved a new custodian agreement for the Fund with State Street Bank
and Trust Company ("State Street"). Under the terms of the Agreement, State
Street will provide custodian services for the Fund. State Street will also
provide accounting services for the Fund pursuant to an agreement with
Evergreen Investment Services, Inc. on behalf of the Fund, as described below.
THE EXISTING ADVISORY AGREEMENT AND THE NEW ADVISORY AGREEMENT
The Existing Advisory Agreement and the proposed New Advisory Agreement are
identical in all substantive respects, differing only in their effective and
termination dates. The description of the New Advisory Agreement is qualified
in its entirety by reference to the form of Agreement attached as Exhibit A to
this proxy statement. Pursuant to the terms of the Existing Advisory Agreement
and the New Advisory Agreement, the Adviser provides and FUNB will provide, the
Fund with an investment program complying with the investment objectives,
policies and restrictions of the Fund and, in carrying out such program is
responsible for the investment and reinvestment of the Fund's assets. The
Adviser performs and absorbs the cost of research, statistical analysis and
continuous complete supervision of the Fund's investment portfolio. FUNB will
assume the same responsibility under the New Advisory Agreement.
Under the Existing Advisory Agreement, the Adviser causes the Fund to be
furnished office space and all ordinary and necessary office facilities,
equipment and personnel for managing the affairs of the Fund. The Adviser or
its affiliates paid the fees, s alaries or other remuneration of directors and
officers of the Fund who also served as directors, officers or employees of or
special consultants to the Adviser, CoreStates, CoreStates Bank, or any of
their affiliated companies. Similarly, following the Merger, FUNB or its
affiliates will pay the fees, salaries or other remuneration of directors and
officers of the Fund who also serve as directors, officers or employees of or
special consultants to First Union, First Union Bank, or any of their
affiliated companies.
The Adviser absorbed the costs and expenses of the Fund's Transfer Agent,
Dividend Disbursing Agent and Agent under the Automatic Dividend Investment
Plan and the Fund's Registrar, and FUNB will continue to do so pursuant to the
New Advisory Agreement. The Existing Advisory Agreement and the New Advisory
Agreement provide that the Adviser and FUNB, respectively, may delegate its
obligations under the Agreement to its affiliated companies. If the New
Advisory Agreement is approved, it is anticipated that administrative services
previously provided by the Adviser under the Existing Agreement, will be
provided by an affiliated company of FUNB. The Fund will enter into a "New
Administrative Services Agreement" with Evergreen Investment Services, Inc.
("EIS"). EIS will manage the day-to-day business administration of the Fund
and provide services similar to those currently provided to the Fund by the
Adviser. The New Administrative Services Agreement was approved by the Fund's
Board on March 11, 1998 and is not subject to shareholder approval. EIS is
entitled to receive a fee based on the average daily net
assets of the Fund at a rate based on the total assets of the funds
administered by EIS for which FUNB or its affiliates also serve as investment
adviser, calculated in accordance with the following schedule: .050% of the
first $7 billion; .035% on the next $3 billion; .030% on the next $5 billion;
.020% on the next $10 billion; .015% on the next $5 billion; and .010% on assets
in excess of $30 billion. In return for its advisory and other services and
the expenses it assumes, under the terms of the Existing Advisory Agreement
and the New Advisory Agreement, the Adviser and FUNB, respectively, are
entitled to receive a monthly fee at an annual rate of 0.5% of the average
monthly net asset value of the Fund plus 2.5% of the net amount of interest
and dividend income after deducting interest on borrowed funds. In computing
the advisory fee, the Adviser first multiplies the average monthly net asset
value times 0.5%. The Adviser then determines investment income, net of
interest paid on borrowings. In recent years, there have been no borrowings
by the Fund and no interest paid thereon to deduct from investment income.
If there were borrowings, the Adviser would deduct the interest paid on
borrowings from the Fund's investment income and then multiply that remainder
times 2.5%. The product of that computation would be added to
the product of the first computation based on average monthly net
assets. Amortization of debt discount is not considered interest income for
the purpose of calculating such fee. For the fiscal year ended November 30,
1997, the Adviser received $683,391 (0.70% of average net assets) from
the Fund in fees under the Existing Advisory Agreement. As of February 28,
1998, the Fund had net assets of $98.6 million. FUNB would have received the
same fees if the New Advisory Agreement had been in effect during the fiscal
year ended November 30, 1997.
The Fund is responsible under the Existing Advisory Agreement and the New
Advisory Agreement for all other costs and expenses of its operations,
including fees of the Directors who were not "affiliated persons" (as defined
in the 1940 Act) of the Adviser, CoreStates, CoreStates Bank or any of their
affiliated companies, (and with respect to the New Advisory Agreement First
Union, FUNB or any of their affiliated companies), custodian
expenses, legal fees, expenses of independent accountants, costs of
acquiring and disposing of portfolio securities, brokerage fees, taxes, stock
exchange listing expenses, reports to shareholders, proxy materials, and the
cost of printing share certificates and other expenses. The Existing Advisory
Agreement and the New Advisory Agreement provide that the Adviser and FUNB,
respectively, will not be liable for any error of judgment or mistake of law
or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the Adviser's part in
the performance of its duties under this Agreement.
Annual Fund Operating Expenses. If the proposed New Advisory Agreement
had been in effect during the most recent fiscal year, total Fund
operating expenses would have been the same as the expenses at the
end of the most recent fiscal year.
The Existing Advisory Agreement was approved by the Shareholders of the Fund
on April 22, 1996 for an initial two year term in connection with the merger
of Meridian Bancorp, Inc. into CoreStates. The proposed New Advisory
Agreement will become effective on the date of shareholder approval and
continue in force for an initial two year period. The Existing Advisory
Agreement and the New Advisory Agreement provide that the respective Agreement
will continue from year to year so long as such continuance is specifically
approved at least annually by (1) the Board of Directors of the Fund or (2)
the vote of a majority of the outstanding voting securities of the Fund;
provided, however, that in either event the continuance also is required
to be approved by the vote of a majority of the Directors of the
Fund who are not "interested persons" (as defined in the 1940 Act) of the
Fund or the Adviser cast in person at a meeting
called for the purpose of voting upon such approval. The Existing
Advisory Agreement and the New Advisory Agreement provide for automatic
termination of the respective Agreement in the event of its assignment. In
addition, each Agreement is terminable at any time, without penalty, by the
Board of Directors of the Fund or by the vote of a majority of the outstanding
voting securities of the Fund on 60 days' written notice to the Adviser or by
the Adviser on 60 days' written notice to the Fund.
If the Board's approval of the New Advisory Agreement is ratified by either
more than 50% of the Fund's outstanding shares entitled to vote at the meeting
or by a two-thirds majority of the shares present at such meeting if the
holders of more than 50% of the outstanding shares entitled to vote at the
meeting are present in person or by proxy, the New Advisory Agreement
will be approved. No arrangements, other than the nomination of Mr.
Insley described above, have been made in connection with the New
Advisory Agreement with respect to the composition of the Board of
Directors of the Fund or FUNB.
The proposed New Advisory Agreement between the Fund and FUNB is Exhibit A of
this proxy statement.
The Board of Directors recommends that shareholders vote to approve the New
Advisory Agreement.
ADDITIONAL INFORMATION
The Adviser has informed the Fund that the services provided under the
Existing Advisory Agreement and the New Advisory Agreement may be performed by
the Adviser or FUNB and its bank and non-bank affiliates without violation of
applicable statutes and regulations, including the federal statute commonly
known as the Glass-Steagall Act. The Glass-Steagall Act, among other things,
relates to the activities of bank holding companies and banks and their
subsidiaries and affiliates in connection with investment companies. Future
changes in either Federal or state statutes and regulations relating to the
permissible activities of banks or bank holding companies and the subsidiaries
or affiliates of those entities, as well as further judicial or administrative
decisions or interpretations of present and future statutes and regulations
could prevent or restrict the ability of FUNB or any other affiliates or
subsidiaries of First Union to continue to perform such services for the Fund.
Depending upon the nature of any changes in the services which could be
provided by FUNB or First Union's other affiliates, the Board of Directors of
the Fund would review the relationships with First Union's affiliates and
subsidiaries and consider taking all actions necessary in the circumstances.
STOCKHOLDER PROPOSALS
Any stockholder desiring to present a proposal for consideration at the 1999
Annual Meeting of Stockholders of the Fund should submit such proposal in
writing to Dung Vukhac, President, Vestaur Secuities, Inc. Centre Square
West - UM Floor,15th and Market Streets, Ph iladelphia, Pennsylvania 19101,
by not later than December 2, 1998. Mere submission of a stockholder
proposal does not guarantee inclusion of the proposal in the proxy
statement or presentation of the proposal at the Annual Meeting since
such inclusion and presentation are subject to compliance with certain
federal regulations.
Karen Bater, Acting Secretary
March 30, 1998
A-
INVESTMENT ADVISORY AND SERVICES AGREEMENT VESTAUR SECURITIES, INC.
THIS AGREEMENT, made as of the 28th day of April, 1998 by and between VESTAUR
SECURITIES, INC., a Delaware corporation (the "Company"), and FIRST UNION
NATIONAL BANK, a national bank (the "Adviser").
In consideration of the premises and of the mutual agreements hereinafter set
forth, the
Company and the Adviser agree as follows:
PART ONE
Definitions
1) "The period of this Agreement" means the term of this Agreement and any
renewal or extension thereof, or until any prior termination thereof.
2) The "1940 Act" means the Investment Company Act of 1940, as amended.
3) The "vote of the majority of the outstanding voting securities" of the
Company has the meaning contained in the 1940 Act.
4) The terms "interested person", "affiliated person" and "assignment" have
the meanings contained in the 1940 Act.
5) The terms "affiliated company" and "affiliated companies" means with
respect, to the Adviser, First Union Corporation and any corporation
controlling, controlled by or under common control with First Union
Corporation.
6) The term "interim period" means the period commencing on the date of the
consummation of the merger of CoreStates Financial Corp and First Union
Corporation and ending on the date that this agreement shall have been
approved by the vote of the majority of the outstanding voting securities
of the Company.
PART TWO
Investment Advice and Other Services
1) The Company hereby retains the Adviser, and the Adviser hereby agrees, for
the period of this Agreement and under the terms and conditions hereinafter
set forth, to provide or to cause to be provided administration of the
day-to-day investment operations of the Company, to furnish the Company
continuously with investment planning to provide investment advice with regard
to the Company's portfolio, to prepare and make available to the Company all
necessary research and statistical data in connection therewith and to
supervise the purchase and sale and the acquisition and disposition of
specific securities by the Company. The Adviser shall keep or cause its
affiliated companies to keep the books and financial records of the Company,
and on behalf of the Company shall compute the net asset value of the
Company's shares (in accordance with any instructions of the Board of
Directors of the Company (the "Board")) at such times as the Board may direct.
The Adviser shall furnish, to the Company and to such other persons as the
Company may direct, any statements with respect to the net asset value per
share, at such times, and in such forms, as the Company may reasonably
prescribe.
The Adviser shall maintain a continuous record of all the investments and
securities which comprise the Company's portfolio and shall furnish to the
Board a resume of such portfolio, at such times, and in such forms, as the
Board may reasonably prescribe. The Adviser shall also render to the Board a
report on all matters pertaining to the services provided by the Adviser
hereunder, at such times, and in such forms, as the Board may reasonably
prescribe. The Adviser shall perform such other services as are reasonably
incidental to the foregoing duties.
The Adviser shall furnish the Company or cause its affiliated companies to
furnish the Company with the services of a person or persons satisfactory to
the Company whose duties shall include (except for the legal and auditing
aspects thereof) the supervision of the Company's financial statements and
reports, the preparation of reports to shareholders and others, and any
statements or reports required by regulatory authorities of the United States,
or states thereof in which the Company has qualified its shares for sale.
In addition, the Adviser shall furnish or cause its affiliated companies to
furnish to the Company such office space and facilities, including, without
limitation, stenographic, telephone, telegraphic, mailing, and other
facilities as may be required for the management of the affairs and business
of the Company. It is the intent of this Agreement that the Adviser shall
supply or, in the case of noninvestment advisory services, cause its
affiliated companies to supply, such services as are necessary or des irable
and proper for the continuous operation of the Company. However, the Adviser
shall not be required to perform or to cause the performance of (a) those
services customarily performed by the members of the Board; (b) those services
customarily perfor med by the officers of the Company (except to the extent
requested, those of the Secretary of the Company); or (c) those services
customarily performed by the independent accountant, broker, dealer or
independent legal counsel.
2) The Adviser shall arrange, if requested by the Company, for officers and
directors of the Adviser or its affiliated companies to serve without
compensation from the Company as directors or officers of the Company,
if duly elected to such positions by the shareholders or directors of
the Company, or as employees of the Company. In addition, the Adviser
will bear the cost of fees, salaries or other
remuneration of directors and officers of the Company who also serve as
directors, officers, employees or special consultants to the Adviser or any of
its affiliated companies.
3) The Adviser covenants and agrees that in making purchases, sales,
acquisitions and dispositions of specific securities on behalf of the Company,
it shall at all times be governed by the Company's investment objectives and
policies as delineated and limited by the statements contained in the various
documents filed with the Securities and Exchange Commission (the "Commission")
as such documents may from time to time be amended (whether
or not such amendments are filed with the Commission). The Company agrees to
supply the Adviser with copies of all documents filed with the Commission,
together with any amendments thereto (whether or not such are filed with the
Commission).
4) The Adviser hereby covenants and agrees that it will make no separate
charge to any shareholders of his individual account for any service rendered
to said shareholder or the Company by the Adviser or its affiliated companies
hereunder unless such charges for special services are specifically approved
by the Board, including a majority of the directors who are not "interested
persons' of the Adviser. No special charge will be levied retroactively or
without appropriate notice to affected shareholders.
5) The Adviser hereby acknowledges that all records necessary in the
operation of the Company, including records pertaining to its shareholders and
investments, are the sole and exclusive property of the Company, and in the
event that a transfer of management or investment advisory services to someone
other than the Adviser should even occur, the Adviser will promptly, and at
its own cost, take all steps necessary to segregate such records and deliver
them to the Company.
6) Subject to approval of this Agreement by the vote of a majority of the
outstanding voting securities of the Company, the Adviser hereby covenants and
agrees to cause payment or reimbursement to the Company of all fees and
expenses of the Company's Transfe r Agent, Dividend Disbursing Agent,
Registrar and the Agent or Agents under the Company's Automatic
Dividend Investment Plan.
PART THREE
Compensation to Investment Adviser
1) The Company covenants and agrees to pay to the Adviser, and the Adviser
covenants and agrees to accept from the Company in full compensation, and as
the only compensation to which the Adviser shall be entitled to receive under
this Agreement, for all investment advice, material and other services
furnished, and for all facilities and equipment and for all expenses paid or
reimbursed by the Adviser hereunder, a monthly fee at an annual rate of 0.5%
of the average monthly net asset value of the Company, plus 2.5% of the net
amount on interest and dividend income after deducting interest on borrowed
funds (the "Advisory Fee"). The Advisory Fee shall be computed as of the
close of business on the last business day of each month. The Advisory Fee
shall be prorated for any fraction of a month at the commencement or
termination of this Agreement.
2) Net asset value of the Company for purposes of computing the Advisory Fee
will be determined as of the close of trading on the last business day in each
month on which the New York Stock Exchange is open, and will be computed
pursuant to the provisions of the Company's Bylaws and any currently
effective Prospectus of the Company.
3) The Advisory Fee provided for hereunder shall be paid in cash by the
Company to the Adviser within ten (10) business days after the last day of
each month and such Advisory Fee shall be adjusted, if necessary, at the time
of the payment due in the last month in the fiscal year of the Company. Any
overpayment of the Advisory Fee shall promptly be refunded to the Company.
Notwithstanding the foregoing provisions of Part Three of this Agreement, the
Advisory Fee during the interim period shall be accrued on the books of the
Company and paid into an interest-bearing escrow account maintained by a
financial institution that is not affiliated with the Adviser. The amounts in
the escrow account will be paid to the Adviser upon shareholder approval of
this Agreement. The escrow agent will pay the escrow amounts to the Fund in
the absence of shareholder approval by the end of the interim period.
PART FOUR
Allocation of Expenses
1) Subject to approval of this Agreement by a majority of the outstanding
voting securities of the Company, the Adviser agrees to cause payment or
reimbursement to the Company for all its expenses during the period of this
Agreement except:
a) fees payable to the Adviser for its services under this Agreement;
b) all taxes of any kind paid by the Company;
c) all custodian or trustee fees, costs and expenses;
d) costs and expenses in connection with the auditing and certification of
the records and accounts of the Company by the Company's Independent certified
public accountants;
e) brokerage commissions and charges including transfer taxes and similar
taxes, incurred in acquiring and disposing of portfolio securities;
f) costs of obtaining and printing stock certificates, reports to
shareholders, notices, proxies, proxy statements, and also the cost of
envelopes in which such are to be mailed; provided, however, that the
Adviser shall receive no compensation for the use of its facilities or
personnel in connection with the preparation and distribution of reports to
shareholders or the preparation and distribution of proxy material for the
Company, and the Adviser shall pay the fees of its counsel for services
rendered in such connection;
g) postage on all communications, notices and statements to brokers, dealers,
and the Company's shareholders;
h) fees paid to directors who are not "affiliated persons" of the Adviser;
i) all fees and expenses of independent legal counsel for the Company;
j) all stock exchange listing expenses;
k) the cost of insurance authorized by the Board or required of the Company
by law; and
l) expenses which from time to time may be designated as extraordinary by a
resolution adopted by a majority of the directors of the Company who are not
"interested persons" of the Adviser.
2) Notwithstanding any other provisions of this Agreement, including the
provisions of paragraph 6 of Part Two and paragraph 1 of Part Four hereof, the
Adviser shall not be responsible for payment or reimbursement of any expenses
incurred by the Company during the interim period unless and until Advisory
Fees for such period shall have been paid to the Adviser.
PART FIVE
Multiple Capacities
Nothing contained in this Agreement shall be deemed to prohibit the Adviser
from acting, and being separately compensated for acting, in one or more
capacities on behalf of the Company. Whenever the Adviser shall be required
to act in multiple capacities on behalf of the Company, either under this
Agreement or by virtue of this and any other Agreement between the Adviser and
the Company, the Adviser shall maintain the appropriate separate accounts and
records for each such capacity. The Company understands that the Adviser or
its parent, First Union Corporation including any of its subsidiaries or
affiliates, may act in one or more capacities on behalf of other investment
companies and customers and the Company consents thereto. While information
and recommendations supplied to the Company shall, in the Adviser's judgment,
be appropriate under the circumstances and in light of the investment
objectives and policies of the Company, they may be different from the
information and recommendations supplied to other investment companies and
customers. The Company shall be entitled to equitable treatment under the
circumstances in receiving information, recommendations and any other
services, but the Company recognizes that it is not entitled to receive
preferential treatment as compared with the treatment given to any other
investment company or customer.
PART SIX
Inconsistent Position
1) The Adviser agrees that no officer or director of the Adviser will deal
for or on behalf of the Company with himself as principal or agent, or with
any corporation, partnership or other person in which he may have a financial
interest, except that this shall not prohibit:
a) Officers and directors of the Adviser from having a financial interest in
the Company or in the Adviser.
b) The purchase of securities for the Company, or the sale of securities
owned by the Company, through a security broker or dealer, one or more of
whose partners, officers or directors is an officer or a director of the
Adviser, provided such transactions are handled in the capacity of broker only
and provided commissions charged do not exceed customary brokerage charges for
such services.
2) If any occasion should arise in which the Adviser or any of its officers
or directors advises persons concerning the shares of the Company,
the Adviser or such officer or director will act solely on its, hers or
his own behalf and not in any way on behalf of the Company.
3) The Adviser agrees that, except as herein otherwise expressly provided,
neither it nor any of its officers or directors shall at any time during the
period of this Agreement make, accept or receive, directly or indirectly, any
fees, profits or emoluments of any character in connection with the purchase
or sale of securities (except securities issued by the Company) or other
assets by or for the Company.
4) Notwithstanding any other provisions of this Agreement, nothing herein is
to be construed to prevent the Adviser, subject to approval of the Board of
Directors of the Company and compliance with applicable laws and regulations,
to serve as custodian of the Company's assets or as its transfer or dividend
disbursing agent.
PART SEVEN
Name of the Company
The Company may use the name "Vestaur" or any name derived from or similar
thereto only for so long as this Agreement or any extension, renewal or
amendment hereof remains in effect. At such time as such an agreement shall
no longer be in effect, the Company will (to the extent that it lawfully can)
cease to use such a name or any other name indicating that it is advised by or
otherwise connected with the Adviser, or an affiliate of the Adviser.
PART EIGHT
Limitation of Liability of Adviser
The Adviser 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 willful misfeasance, bad
faith or gross negligence on the Adviser's part in the performance of its
duties under this Agreement. Any person,even though also employed by the
Adviser, who may be or become an employee of and paid by the Company shall be
deemed, when acting within the scope of his employment by the Company, to be
acting in such employment solely for the Company and not as the Adviser's
employee or agent.
PART NINE
Amendment
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.
PART TEN
Effectiveness, Renewal and Termination
1) This Agreement shall become effective for the stated interim period if
any, preceding the date first written above and otherwise, upon consummation of
the merger of CoreStates Financial Corp and First Union Corporation.
Subject to its approval by a vote of the majority of the outstanding
voting securities of the Company, this Agreement shall remain in full force
and effect, subject to prior termination as provided herein, for a period of
two years from the date of such approval. This Agreement shall thereafter
continue in full force and effect from year to year, subject to prior
termination as provided herein, but only so long as its continuance shall
be specifically approved at least annually (1) by the Board or by a vote of
the majority of the outstanding voting securities of the Company, and (2) by
the vote of a majority of the directors 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.
2) This Agreement may be terminated by either the Company or the Adviser at
any time by giving the other party sixty days' written notice of such
intention to terminate; provided that any such termination shall be made
without the payment of any penalty, and provided further that such termination
may be effected either by the Board or by a vote of the majority of the
outstanding voting securities of the Company.
3) This Agreement shall terminate in the event of its "assignment".
PART ELEVEN
Nature of Relationship
The Company and the Adviser are not partners or joint venturers with each
other and nothing herein shall be construed so as to make them such partners
or joint venturers or impose any liability as such on either of them. The
Adviser shall be deemed to be an independent contractor and, except as
expressly provided or authorized in this Agreement, as amended, shall
have no authority to act for or represent the Company.
PART TWELVE
Notice
Any notice under this Agreement shall be given in writing, addressed and
delivered, or mailed postpaid, to the party to this Agreement entitled to
receive such at such address as such other party may designate in writing
mailed for receipt of such notice.
PART THIRTEEN
Miscellaneous
1) Neither this Agreement nor any transaction made pursuant hereto shall be
invalidated or in any way affected by the fact that directors, officers,
agents and/or shareholders of the Company are or may be interested in the
Adviser, or any successor or assignee thereof, as directors, officers,
shareholders or otherwise; that directors, officers, shareholders or agents of
the Adviser are or may be interested in the Company as directors, officers
shareholders or otherwise or that the Adviser or any successor or assignee, is
or may be interested in the Company as shareholders or otherwise provided,
however, that neither the Adviser nor any officer or director of the Adviser
or of the Company shall sell to or buy from the Company any property or
security other than a security issued by the Company, except in accordance
with an applicable order or exemptive rule of the Commission.
2) This Agreement shall be subject to all applicable provisions of law,
including, without limitation, the applicable provisions of the 1940 Act and
the laws and regulations governing national banks. To the extent that any
provisions herein contained
conflict with any such applicable provisions of law and regulations, the
latter shall control.
3) This Agreement is executed and delivered in the Commonwealth of
Pennsylvania and shall be construed in accordance with the laws and decisions
of said Commonwealth.
4) 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.
5) This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original but all of which constitute one and the same
instrument.
IN WITNESS WHEREOF, the Company and the Adviser have each caused this
Agreement to be executed in duplicate in its name and on its behalf by its
undersigned duly authorized officers, or on the day and year first above
written.
ATTEST: VESTAUR SECURITIES, INC.
_____________________________________ By:___________________________________
Title: Chairman
ATTEST: FIRST UNION NATIONAL BANK
_____________________________________ By:___________________________________
Title:
PROXY
VESTAUR SECURITIES, INC.
This Proxy is solicited on Behalf of the Board of Directors of the Corporation
for the Annual Meeting of Stockholders, April 28, 1998
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints Karen G. Bater with power of substitution as attorney and proxy to
appear and vote all of the shares of stock standing in the name of the
undersigned at the annual meeting of stockholders of Vestaur Securities,
Inc. to be held in Conference Room #3 at ARAMARK, 41st Floor, 1500 Market
Street, Centre Square West Tower, Philadelphia, PA 19102 on the 28th day of
April, 1998 at 11:00 o-clock a.m.,local time, and at any and all adjournments
thereof, and the undersigned hereby instructs said attorneys to vote:
(Continued, and to be signed on other side)
Please mark your
X votes as in this
example.
The shares represented by this proxy will be voted as specified in the
following items 1, 2 and 3 but if no choice is specified, they will be voted
For the election of the 8 persons named in the proxy statement as Directors,
For ratification of the appoint ment of the auditors named and For approval of
the Investment Advisory Agreement.
<TABLE>
<CAPTION>
1. ELECTION OF DIRECTORS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FOR all nominees [ ] WITHHOLD [ ] Nominees: Paul B Fay, Jr. James S. Morgan 2. The ratification FOR AGAINST ABSTAIN
(except as marked AUTHORITY Robert F. Gurnee Charles P. Pizzi of the selection [ ] [ ] [ ]
to the contrary to vote for Glen T. Insley Philip R. Reynolds of Deloitte &
below*) all nominees John C. Jansing Marciarose Shestack Touche as
auditors for the
period December 1,
1997 through
November 30, 1998
3. The approval of FOR AGAINST ABSTAIN
the Investment [ ] [ ] [ ]
Advisory Agreement
between Vestaur
Securities, Inc.
and First Union
National Bank
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
(*INSTRUCTION: To withhold authority to vote for any individual nominee, 4. Upon any other business which may
write the name of the nominee(s) below.) properly come before the meeting or
any adjournment thereof. The
management knows of no other such
business.
</TABLE>
SIGNATURE(S)__________________________________________________________________
Signature of all joint owners is required. Fiduciaries please indicate
your full title.)
DATE_____________, 1998. ________________________
If any other matters properly come before the meeting about which
the proxy holders were not aware prior to the time of the solicitation,
authorization is given the proxy holders to vote in accordance with the
views of the management thereto. The management is not
aware of any such matters.
________________________
( PLEASE SIGN AND RETURN THIS PROXY CARD IN THE ENCLOSED ENVELOPE.)
________________________
