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811-2320
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-2
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 16
(Check appropriate box or boxes)
Vestaur Securities, Inc.
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(Exact Name of Registrant as Specified in Charter)
123 S. Broad St., Philadelphia, PA 19109
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(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code (215) 985-5152
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Dung Vukhac
President
Vestaur Securities, Inc.
c/o PA 4822
First Union National Bank
123 S. Broad Street
Philadelphia, PA 19109
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(Name of Address of Agent for Service)
With a Copy to:
Audrey C. Talley
Drinker Biddle & Reath LLP
1345 Chestnut Street
Suite 1100
Philadelphia, PA 19107-3496
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CROSS REFERENCE SHEET
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Part A - INFORMATION REQUIRED IN A PROSPECTUS Location
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Item 1. Outside Front Cover Not Applicable
Item 2. Inside Front and Outside Back Cover Page Not Applicable
Item 3. Fee table and Synopsis Not Applicable
Item 4. Financial Highlights Not Applicable
Item 5. Plan of Distribution Not Applicable
Item 6. Selling Stockholders Not Applicable
Item 7. Use of Proceeds Not Applicable
Item 8. General Description of the Registrant Item 8
Item 9. Management Item 9
Item 10. Capital Stock, Long-Term Debt, and Other
Securities Item 10
Item 11. Defaults and Arrears on Senior Securities Item 11
Item 12. Legal Proceedings Item 12
Item 13. Table of Contents of the Statement of Additional
Information Item 13
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Part B. - INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
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Item 14. Cover Page Not Applicable
Item 15. Table of Contents Part A, Item 13
Item 16. General Information and History Part A, Item 8
Item 17. Investment Objective and Policies Part A, Item 8
Item 18. Management Part A, Item 9
and Item 18
Item 19. Control Persons and Principal Holders of Securities Item 19
Item 20. Investment Advisory and Other Services Part A, Item 9
Item 21. Brokerage Allocation and Other Practices Part A, Item 8
Item 22. Tax Status Part A, Item 10
Item 23. Financial Statements Incorporated by Reference to Annual Report to
Share-holders filed with the Commission
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Part C OTHER INFORMATION
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Item 24. Financial Statements and Exhibits Financial Data Schedule and Exhibit List
Item 25. Marketing Arrangements Not Applicable
Item 26. Other Expenses of Issuance and Distribution Not Applicable
Item 27. Persons Controlled by or Under Common Control Item 27
Item 28. Number of Holders of Securities Item 28
Item 29. Indemnification Item 29
Item 30. Business and Other Connections of Investment
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Adviser Item 30
Item 31. Location of Accounts and Records Item 31
Item 32. Management Services Item 32
Item 33. Undertakings Item 33
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PART A
INFORMATION REQUIRED IN PROSPECTUS
Item 8. Description of the Registrant
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Registrant is a corporation formed on October 10, 1972 under the laws
of the State of Delaware.
Registrant is a closed-end, diversified management investment company.
Investment Objectives and Policies
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(a) The primary investment objective of the Registrant is to seek a
high level of current income for its shareholders through investment in a
diversified portfolio predominately of marketable debt securities which
management considers to be of high quality. Where appropriate, management may
invest in debt securities which are privately placed or which have equity
features. Capital appreciation will be a secondary investment objective. In
seeking to achieve its objectives, management may utilize the Registrant's
ability to expand its investments through borrowings and may engage in short-
term trading of debt securities. There can be no assurance that the Registrant's
investment objective will be attained. In pursuing its objectives the
Registrant's assets will be invested in the following manner:
A. At least 75% of the Registrant's total assets will be invested
in the following types of interest-bearing debt securities:
(1) marketable and privately placed straight debt
securities which are rated at the time of purchase within
the four highest grades assigned by Moody's Investors
Services, Inc. (Aaa, Aa, A or Baa) or Standard & Poor's
Corporation (AAA, AA, A or BBB);
(2) marketable securities of, or guaranteed by, the United
States Government, its agencies or instrumentalities;
(3) marketable securities (payable in U.S. dollars) of or
guaranteed by, the Government of Canada or of a Province of
Canada or any instrumentality or political subdivision
thereof, acquired under circumstances that would not
subject the Registrant to payment of U.S. Interest
Equalization Tax, such securities not to exceed 25% of the
Registrant's total assets;
(4) obligations of, or guaranteed by, U.S. banks or U.S.
bank holding companies, (i.e., companies whose primary
assets are U.S. banks) which obligations, although not
rated as a matter of policy by either Moody's Investors
Service, Inc. or Standard & Poor's
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Corporation, are considered by management to have investment
quality comparable to securities which may be purchased under
Item (1) above; and
(5) commercial paper.
B. Up to 25% of the Registrant's total assets may consist of:
(1) debt securities not included in Items (1) through (5) above;
(2) securities which may be convertible into or exchangeable
for, or carry warrants to purchase, common stock or other equity
interests; and
(3) preferred stocks.
In making purchases within the above guidelines, the Registrant will not
invest more than 25% of the value of its total assets in securities which have
been acquired through private placement transactions (restricted securities).
The foregoing percentage limitations will apply at the time of the purchase
of securities. Securities received upon conversion or upon exercise of warrants
and securities remaining upon the breakup of units or detachment of warrants may
be retained to permit advantageous disposition.
The Registrant intends to use short-term trading as a means of managing its
portfolio to achieve its investment objectives. As used herein, "Short-Term
Trading" means selling securities held for a relatively brief period of time,
usually less than three months. Short-term trading will be used by the
Registrant primarily in two situations:
(1) Market Developments. A security may be sold to avoid
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depreciation in what the Registrant anticipates will be a market
decline (a rise in interest rates) or a security may be purchased
in anticipation of a market rise (a decline in interest rates)
and later sold; and
(2) Yield Disparities. A security may be sold and another of
-----------------
comparable quality purchased at approximately the same time in
order to take advantage of what the Registrant believes is a
temporary disparity in the normal yield relationship between the
two securities (a "yield disparity").
Short-term trading to take advantage of a yield disparity may be undertaken
even if levels of interest rates remain unchanged. Yield disparities occur
frequently for reasons not directly related to the investment quality of the
respective issues or the general movement of interest rates, but may result from
changes in the overall demand for or supply of various types of bonds,
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changes in the investment objectives or the cash requirements of investors, and
the requirements of dealers to correct long or short inventory positions.
Short-term trading techniques will be used principally in connection with
higher quality, non-convertible debt securities, which are often better suited
for short-term trading because the market in such securities is generally of
greater depth and offers greater liquidity than the market in debt securities of
lower quality. It is anticipated that short-term trading will be less
applicable to convertible securities, since such securities will usually be
purchased when the Registrant believes that the market value of the underlying
equity security is likely to appreciate over a period of time.
The Registrant will engage in short-term trading if it believes the
transactions, net of costs (including commission, if any), will result in
improving the appreciation potential or income of its portfolio. Whether any
improvement will be realized by short-term trading will depend upon the ability
of the Registrant to evaluate particular securities and anticipate relevant
market factors, including interest rate trends and variations from such trends.
Short-term trading such as that contemplated by the Registrant places a premium
upon the ability of the Registrant to obtain relevant information, evaluate it
promptly, and take advantage of its evaluation of completing transactions on a
favorable basis.
The Registrant may borrow funds on an unsecured basis to purchase
securities, provided that the aggregate amount of such borrowings does not
exceed 20% of the value of the total assets of the Registrant immediately after
giving effect to such borrowings. Such borrowings may be represented by demand
notes, which could be called at a time when it might be disadvantageous for the
Registrant to sell securities in order to repay the loan. The extent to which
the Registrant borrows will depend upon the availability of funds, as well as
the cost of borrowing from time to time as compared with the possible benefit
the Registrant expects to achieve therefrom. If the Registrant uses borrowed
funds to make additional investments, any income derived from the additional
funds in excess of the interest which the Registrant will have to pay thereon,
will cause the Registrant's net income to rise more rapidly than if borrowing
were not used. Conversely, if the income from the securities purchased with the
borrowed funds is not sufficient to cover the cost of borrowing, the net income
of the Registrant will decline more rapidly than if borrowing were not used.
The Registrant will not borrow funds from First Union National Bank or its
affiliates.
Except as otherwise stated, the investment objectives and policies of the
Registrant may be changed without the vote of the holders of a majority of the
Registrant's outstanding voting securities.
(b) The following fundamental policies of the Registrant may not be
changed without the approval of a majority of the Registrant's outstanding
voting securities.
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The Registrant will not:
(1) Issue senior securities (as defined in the Investment
Company Act of 1940, as amended) except insofar as any borrowing
permitted in Item (2) below might be considered to be the
issuance of senior securities.
(2) Make short sales, except against the box; purchase
securities on margin, except that it may obtain such short-term
credits as may be necessary for the clearance of purchases or
sales of securities; invest in puts, calls or combinations
thereof.
(3) Borrow money except:
(i) On an unsecured basis to purchase securities, provided
that the aggregate amount of such borrowings does not
exceed 20% of the value of the total assets of the
Registrant immediately after giving effect to such
borrowings; and
(ii) From banks for temporary or emergency purposes in an
amount not exceeding 5% of the value of its total
assets.
(4) Underwrite the securities of other issuers, except to the
extent that, in connection with the disposition of portfolio
securities, it may be deemed an underwriter under applicable
laws. The Registrant will not invest more than 25% of the value
of its total assets in securities which have been acquired
through private placement transactions (restricted securities).
(5) Concentrate its investments in any particular industry;
provided, however, it may invest up to 25% of the value of its
total assets in the securities of the issuers in any one
industry. Utility companies, gas, electric, water and telephone
companies will be considered as separate industries.
(6) Purchase and sell real estate, except it may purchase or
sell securities issued by companies owning real estate or
interests therein.
(7) Purchase and sell commodities or commodity contracts.
(8) Make loans to other persons, except for the purchase of debt
securities through private placements (restricted securities) in
accordance with the Registrant's investment objectives and
policies and repurchase agreements.
(9) The Registrant deems the following to be matters of
fundamental policy also:
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(i) The Registrant may not purchase or retain the
securities of any issuer, if, to the Registrant's
knowledge, those officers or directors of the
Registrant or of the Registrant's investment adviser
who individually own beneficially more than 0.5% of
the outstanding securities of such issuer, together
own beneficially more than 5% of such outstanding
securities.
(ii) The Registrant will not invest more than 25% of the
value of its total assets in securities of, or
guaranteed by, the Government of Canada or of a
Province of Canada or any instrumentality or political
subdivision thereof.
(iii) The Registrant will not participate on a joint or a
joint and several basis in any securities trading
account.
(iv) The Registrant will not invest more than 5% of the
value of its total assets in the securities of any one
issuer (other than cash items and securities of the
United States Government or its agencies or
instrumentalities) or purchase more than 10% of any
class of the outstanding voting securities of any one
issuer;
(c) The following investment policies of Registrant are not deemed
fundamental and may be changed by the Board of Directors of Registrant without
the vote of the holders of a majority of the Registrant's outstanding voting
securities.
The Registrant will not:
(1) Invest for the purpose of exercising control or management.
(2) Purchase the securities of other investment companies.
The Registrant invests 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 obligations 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
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these transactions, the securities purchased by the Registrant will be held
by the Registrant'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 Registrant 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 Registrant and not within the control of the Registrant. As a
result, the Registrant's ability to realize on such collateral may be
automatically stayed. Finally, it is possible that the Registrant 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
Registrant's management acknowledges these risks, it is expected that they
can be controlled through careful monitoring procedures.
The Registrant uses 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.
Brokerage Allocation
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The Registrant paid no brokerage commissions during its three most
recent fiscal years.
The Registrant invests in debt instruments and all securities
transactions are on a principal basis, so that Registrant pays no brokerage
commission. In response to this item, Registrant has not included as brokerage
commissions the amount of compensation on those principal transactions (i.e.,
new issues and secondary distributions) where the discount or concession was
specified in the prospectus or fixed by the terms of the offering.
The Registrant pays no commissions to brokers. In executing portfolio
transactions, FUNB (the "Adviser"), adviser to the Registrant, will seek the
most favorable prices consistent with the best execution. Over-the-counter
transactions, including transactions in listed securities whose primary market
is believed to be over-the-counter, will be placed with principal market makers
unless it has been determined that better price and execution are available
elsewhere. So long as the Adviser believes it is obtaining the best price and
execution, it will give consideration in placing portfolio transactions to
dealers which furnish quotations for securities held in the portfolio of the
Registrant. Receipt of research services is not a factor in selecting dealers.
Registrant did not acquire any securities of its regular brokers or dealers or
their parents during its most recent fiscal year.
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Share Price Data:
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Registrant's common stock is listed on the New York Stock Exchange, Symbol VES.
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1999 1998
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High Low High Low
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Fiscal Quarter
February 28
Net Asset Value $14.71 $14.68 $14.80 $14.85
Market Price 15.126 +2.83%* 14.625 -0.36%* 14.9375 0.93%* 14.250 -4.04%
Volume of Trading 295,700 320,200
Fiscal Quarter
May 31
Net Asset Value N/A N/A 14.91 14.91
Market Price N/A N/A 15.0625 +1.02%* 13.9375 -6.50%*
Volume of Trading 338,700
Fiscal Quarter
August 31
Net Asset Value N/A N/A 14.74 14.80
Market Price N/A N/A 14.50 -1.62%* 14.0625 -4.96%
Volume of Trading 335,200
Fiscal Quarter
November 30
Net Asset Value N/A N/A 14.53 14.61
Market Price N/A N/A 15.00 +3.24%* 14.50 -0.74%
Volume of Trading 320,400
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1997
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High Low
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Fiscal Quarter
February 28
Net Asset Value $14.51 $14.41
Market Price 13.875 -4.38%* 13.25 -8.05%*
Volume of Trading 331,800
Fiscal Quarter
May 31
Net Asset Value 14.42 14.02
Market Price 13.875 -3.78%* 13.376 -4.60%*
Volume of Trading 351,300
Fiscal Quarter
August 31
Net Asset Value 14.66 14.34
Market Price 14.00 -4.50%* 13.50 -5.86%*
Volume of Trading 404,900
Fiscal Quarter
November 30
Net Asset Value 14.77 14.65
Market Price 14.125 -4.37% 13.875 -5.29%
Volume of Trading 361,200
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* (-%) Discount or (+%) Premium to net asset value. Historically, the
Registrant's common stock has traded both above and below its net asset value.
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Item 9. Management
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The Board of Directors manages the Registrant pursuant to its
responsibilities under the laws of the State of Delaware.
The Registrant's adviser, First Union National Bank ("FUNB"), is a
wholly-owned subsidiary of First Union Corporation ("First Union"), 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
provides 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, credits cards,
leasing, investment banking, insurance and securities brokerage services,
through other subsidiaries. First Union is the sixth largest bank holding
company in the United States, based on assets at December 31, 1998. The
principal executive offices of First Union and FUNB are located at One First
Union Center, Charlotte, North Carolina 28288-0013, and its telephone number is
(704) 374-6365.
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.
Pursuant to the terms of the Advisory Agreement between FUNB and the
Registrant, FUNB provides the Registrant with an investment program complying
with the investment objectives, policies and restrictions of the Registrant and,
in carrying out such program is responsible for the investment and reinvestment
of the Registrant's assets. FUNB performs and absorbs the cost of research,
statistical analysis and continuous complete supervision of the Fund's
investment portfolio. In return for its advisory and other services and the
expenses it assumes, under the terms of the Advisory Agreement, FUNB is entitled
to receive a monthly fee at an annual rate of 0.5% of the average monthly net
asset value of the Registrant plus 2.5% of the net amount of interest and
dividend income after deducting interest on borrowed funds.
Under the Advisory Agreement, FUNB causes the Fund to be furnished
office space and all ordinary and necessary office facilities, equipment and
personnel for managing the affairs of the Registrant. FUNB pays 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 FUNB or
any of its affiliated companies.
Administrative services provided by FUNB under the Advisory Agreement,
are provided by Evergreen Investment Services, Inc. ("EIS"), an affiliated
company of FUNB. EIS manages the day-to-day business administration of the
Registrant. EIS is entitled to receive a fee based on the average daily net
assets of the Registrant 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,
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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.
The Registrant paid advisory and administrative fees of $693,302 for
fiscal year 1998, $683,381 for fiscal year 1997 and $685,368 for fiscal year
1996. Payments for fiscal years 1997 and 1996 were made to CoreStates
Investment Advisers, Inc., the previous investment adviser to the Registrant,
pursuant to the terms of a substantially similar advisory and administrative
services agreement with an identical advisory fee.
Portfolio Management: Karen G. Bater, Vice President and Secretary of
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the Registrant has been primarily responsible for the day-to-day management of
the Registrant's portfolio, since the beginning of 1999. Ms. Bater has been a
member of the Registrant's portfolio management team for more than five years.
Prior to serving as a portfolio manager for FUNB, she served as Vice President
and Senior Portfolio Manager at CoreStates Investment Adviser, the previous
investment adviser for the Registrant from 1986-1998.
Affiliated Officers of the Registrant
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Position with FUNB
Name, Address and Age Position with Registrant (or FUNB affiliate)
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Glen T. Insley Chairman of the Board Senior Vice President,
Two First Union Center Managing Director of Fixed
NC-1157 Income, First Union, First
Charlotte, NC 28288 (52) Capital Group
Dung Vukhac President Senior Vice President;
123 South Broad Street formerly, Managing Director,
Philadelphia, PA 19109 (55) Senior Vice President, Fixed
Income Services, CoreStates
Investment Advisers, Inc.
Karen G. Bater Assistant Vice President Senior Portfolio Manager,
55 Valley Stream Parkway and Secretary formerly, Vice President and
Malvern, PA 19355 (40) Senior Portfolio Manager,
CoreStates Investment
Advisers, Inc.
J.P. Weaver Vice President Director of Fixed Income and
Two First Union Center Research and Portfolio
Charlotte, NC 28288 (39) Manager; Vice President, First
Capital Group
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Position with FUNB
Name, Address and Age Position with Registrant (or FUNB affiliate)
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Carol Kosel Treasurer Vice President, Director of
200 Berkeley Street Fund Administration, Evergreen
Boston, MA 02116-5034 (35) Investment Services; formerly
Vice President -- Technical
Accounting
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Custodian:
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State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110, serves as custodian of the assets of the
Registrant.
Independent Public Accountant:
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Deloitte & Touche, LLP, 125 Summer Street, Boston, Massachusetts
02110-1617, examine the Registrant's books and securities and certify from time
to time the Registrant's financial statements.
Transfer Agent and Dividend-Paying Agent:
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Equiserve First Chicago Trust Division, P.O. Box 2500, Jersey
City, 07303-2500 is transfer agent and dividend paying agent for the Registrant.
Registrant's Investment Advisory and Services Agreement provides that FUNB shall
pay all fees and expenses of the Registrant's transfer agent and dividend
disbursing agent.
Control Persons
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As of March 2, 1999, no person controls the Registrant.
Item 10. Capital Stock
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Registrant has only one class of capital stock, which is
designated as Common Stock, $.01 par value. The Registrant has no long-term debt
outstanding. The Registrant has no class of securities outstanding except common
stock.
Each share of Common Stock has equal
(i) dividend,
(ii) voting,
(iii) liquidation rights, and
(iv) is not subject to further call or assessment by the
Registrant.
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The Common Stock is not subject to any right of
(i) pre-emption,
(ii) conversion,
(iii) redemption, and
(iv) is not subject to any sinking fund provision.
The rights of the holders of Common Stock may not be modified
otherwise than by vote of a majority or more of the outstanding voting
securities, voting as a class, except as described below.
There is no restriction on the repurchase or redemption of shares of
the Registrant while there is an arrearage in the payment of dividends or
sinking fund installments.
Article SEVENTH (f)(3) of the Certificate of Incorporation of the
Registrant requires the affirmative vote of seventy percent (70%) of the
aggregate number of votes entitled to be cast thereon to authorize any of the
following actions: (i) the dissolution of the Corporation; (ii) a merger or
consolidation of the Corporation with or into any other corporation; (iii) the
sale, lease, exchange or other disposal of all or substantially all of the
property and assets of the Corporation to any person (as such term is defined in
the Investment Company Act of 1940); or (iv) any amendment of this Certificate
of Incorporation which makes any class of the Corporation's stock a redeemable
security (as such term is defined in the Investment Company Act of 1940) or
reduces the seventy percent (70%) vote required to authorize the actions
described in this paragraph.
The stockholders of the Corporation have the power by the affirmative
vote of the holders of a majority of the outstanding shares entitled to vote
thereon, to authorize any other corporate act and any action described in
Article SEVENTH (f)(3) which has been declared advisable by resolution of the
Board of Directors of the Corporation.
Automatic Dividend Investment Plan
----------------------------------
Any registered stockholder of Vestaur Securities, Inc. may participate
in the Automatic Dividend Investment Plan (the "Plan"), with the exception of
brokers and nominees of banks and other financial institutions. A beneficial
owner, whose shares are registered in the name of another (e.g., in a broker's
"street name") who desires to participate in the Plan, must become a registered
holder by having the shares transferred to his or her name.
To participate in the Plan, the stockholder must complete and forward
an enrollment authorization form to the Plan agent. This form authorizes the
Plan agent to receive the stockholder's dividends and other distributions from
the Company in additional shares of common stock. The additional shares will be
issued by the Company, if the net asset value per share is equal to or lower
than the market price of the Company's common stock plus brokerage commissions
or sufficient common stock cannot be purchased in the market. The newly issued
shares will be valued in accordance with the Plan. If the net asset value per
share is higher than
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the market price of the Company's common stock plus brokerage commissions, the
additional shares will be purchased in the open market and the cost of the
brokerage commissions will be charged against the amounts invested.
Stockholders have the option of receiving their dividends in cash or
in the Registrant's common stock in accordance with the Registrant's Automatic
Dividend Investment Plan. For those dividends paid in common stock, the
Registrant attempts to repurchase enough common stock in the market to satisfy
its dividend needs. If the market price of the common stock plus brokerage
commission equals or exceeds the net asset value or sufficient common stock
cannot be repurchased in the market, the Registrant will issue new shares and
record the common stock at the greater of (i) the per share net asset value, or
(ii) 95% of the market price per share as of the close of business on the last
trading day of the month in which the dividend or other distribution is paid.
Distributions from net realized capital gains, if any, are paid at least
annually.
Shares will be held by First Chicago Trust Company of New York, the
Plan agent. Stockholders receive a statement each time shares are distributed by
the Company or purchased by the stockholder.
There is no direct charge for Plan participation. The administrative
costs of the Plan are paid out of the investment advisory fees received from the
Company by its investment adviser, First Union National Bank.
If dividends and other distributions are reinvested, they will be
subject to capital gains and income taxes as if they were paid to you in cash.
Stockholders may terminate their participation in the Plan at any time by giving
written notice to the Plan agent.
A stockholder may terminate his or her participation in the Plan by
giving notice to the Plan agent. The stockholder is entitled to a stock
certificate for the number of full shares credited to his or her account (or
cash if he or she so elects) and a check for any fractional shares valued at the
then current market price of the stock, less costs.
Additional information on the Plan, can be obtained by writing to
Equiserve First Chicago Trust Division, P.O. Box 2500, Jersey City, NJ 07303-
2500 or calling 1-201-324-0313.
Tax Status and Distributions
----------------------------
The Registrant has qualified and intends to continue to qualify as a
regulated investment company under the Internal Revenue of 1986, as amended (the
"Code"). Thus, the Registrant does not intend to incur any federal income tax
liability since it is expected to distribute all of its net investment company
taxable income and net capital gains, if any, to its stockholders. The
Registrant also intends to avoid any excise tax liability by making the required
distributions under the Code. Accordingly, no provision for federal taxes is
required. To the extent that realized capital gains can be offset by capital
loss carryforwards, it is the Registrant's policy not to distribute such gains.
-15-
<PAGE>
Dividends to stockholders from net investment income are declared and
paid on a quarterly basis. These dividends are recorded on the ex-dividend
date.
Distributions are taxable ordinary income or capital gains.
Stockholders may be proportionately liable for taxes on income and gains of the
Registrant, but stockholders not subject to tax on their income will not be
required to pay tax on amounts distributed to them. Registrant will inform
stockholders of the amount and nature of the income or gains.
Income and capital gains distributions to stockholders are determined
in accordance with income tax regulations, which may differ from generally
accepted accounting principles. The significant differences between financial
statement amounts available for distributions and distributions made in
accordance with income tax regulations are primarily due to differing treatment
of paydown gains and losses. During the year ended November 30, 1998, $6,943
was reclassified from accumulated net realized loss on investments to
undistributed net investment income and $1,582 was reclassified from capital in
excess of par value to accumulated net realized loss on investments due to
current year differences between book and tax accounting for mortgage backed
securities and distributions. In addition, $1,026,041 was reclassified from
undistributed net investment income to capital in excess of par value due to
prior year cumulative differences between book and tax accounting. These
reclassifications had no effect on the Registrant's net assets or net asset
value per share.
Outstanding securities as of February 28, 1999:
(1) (2) (3) (4)
Amount held by Amount outstanding
Registrant or for Exclusive of Shown
Title of Class Amount Authorized its Accounts Under (3)
- --------------- ------------------- ----------------- ------------------
Common Stock 10,000,000 -0- 6,746,565
Item 11. Defaults and Arrears on Senior Securities
-----------------------------------------
Not Applicable
-16-
<PAGE>
Item 12. Pending Legal Proceedings
-------------------------
The Registrant and its investment adviser are not a party to any
material pending legal proceedings that are likely to have a material adverse
effect on the Registrant, or on the ability of the investment adviser to perform
its contract with the Registrant, other than ordinary routine litigation
incidental to their business.
Item 13. Table of Contents of the Statement of Additional Information
------------------------------------------------------------
1. Management
2. Control Persons and Principal Holders of Securities.
-17-
<PAGE>
PART B
INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
Item 18. Management
----------
Board of Directors:
<TABLE>
<CAPTION>
Age ( ) Principal Occupation First Became
Name and Address And Other Affiliations Director
---------------- ---------------------------- ------------
<S> <C> <C>
Steven S. Elbaum (50) Director. Chairman and Chief 1999
1790 Broadway Executive Officer of The Alpine Group,
New York, NY 10019 Inc. (Holding Company) and Superior
Telecom Inc.
Paul B. Fay, Jr. (80) Director. President, The Fay 1972
3766 Clay Street Improvement Company; Trustee of Odell
San Francisco, CA 94118 Charitable Foundation and Naval War
College Foundation (Emeritus); Director
of First American Financial Corporation
and Compensation Resource Group
Incorporated.
#Robert F. Gurnee (71) Director. Chairman, Financial 1991
3801 Kennett Pike Integrity Group, Inc., Director, Japan
Building B, Suite 201 Equity 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.
* (52) Chairman of the Board. Senior Vice 1998
**Glen T. Insley President, Managing Director Fixed
Two First Union Center Income, First Union, First Capital Group.
NC-1157
Charlotte, NC 28288
#John C. Jansing (73) Director. Director, Lord Abbett & 1976
162 S. Beach Road Co. managed group of mutual funds and
Hobe Sound, FL 33455 Alpine Group Inc. Formerly, Chairman,
Independent Election Corporation of
America
</TABLE>
-18-
<PAGE>
<TABLE>
<CAPTION>
Age ( ) Principal Occupation First Became
Name and Address And Other Affiliations Director
---------------- ---------------------------- ------------
<S> <C> <C>
Charles P. Pizzi (48) Director. President, Greater 1997
200 S. Broad Street Philadelphia Chamber of Commerce
Suite 700
Philadelphia, PA 19102
#**Philip R. Reynolds (71) Director. Treasurer and Trustee of 1972
43 Montclair Drive J. Walton Bissell Foundation since 1989.
West Hartford, CT 06107 Formerly, Executive Vice President,
Investments, Phoenix Mutual Life
Insurance Co.
**Marciarose Shestack (65) Director. Freelance television 1972
Parkway House broadcaster, journalist and public
2201 Pennsylvania Ave. relations consultant since 1990.
Philadelphia, PA 19130 Formerly, Consultant of Philadelphia
Developers Alliance, and President,
Philadelphia Developers' Alliance.
Robert E. Shultz (59) Director. Senior Vice President, 1999
120 Scarlet Oak Dr. The Common Fund; formerly Managing
Wilton, CT 06897 Director, Trust Company of the West.
</TABLE>
# Member of Audit Committee
* Interested Person
** Member of Executive Committee
Officers:
--------
See Item 9 Management--Affiliated Officers of the Registrant.
-19-
<PAGE>
COMPENSATION TABLE
------------------
Each of the directors of the Registrant who are not affiliated persons
(as defined in the Investment Company Act of 1940, as amended) of the Adviser,
or of its parent, receives an annual fee of $7,000, and $200 for each Board
meeting attended, as compensation for services. The Registrant also pays such
Board members $100 for each Executive Committee Meeting attended and $150 for
each Audit Committee Meeting attended. The Registrant reimburses all Directors
who are not affiliated persons for expenses incurred in connection with
attending meetings of the Board of Directors. Fees, salaries or other
remuneration of officers of the Registrant who also serve as directors,
officers, employees or special consultants to the Adviser or any of its
affiliated companies are borne by the Adviser or affiliate for whom the
individual serves. All present officers are covered by this provision, and did
not receive any compensation or expense reimbursement from the Registrant.
<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 11-30-98 Ended 11-30-98
- -------------- --------------------- -------------------
<S> <C> <C>
Steven S. Elbaum -0- -0-
Director
Paul B. Fay, Jr. $7,800.00 $7,800.00
Director
Robert F. Gurnee $8,100.00 $8,100.00
Director
Glen T. Insley -0- -0-
Director
John C. Jansing, Sr. $8,100.00 $8,100.00
Director
Charles P. Pizzi $7,800.00 $7,800.00
Director
James S. Morgan $5,450.00 $5,450.00
Former Director
Philip R. Reynolds $7,900.00 $7,900.00
Director
Marciarose Shestack $7,800.00 $7,800.00
Director
Robert E. Shultz -0- -0-
Director
</TABLE>
-20-
<PAGE>
Item 19. Control Persons and Principal Holders of Securities
---------------------------------------------------
As of March 2, 1999, there was no control person of the Registrant.
No person is known by the Registrant to own of record or beneficially five
percent or more of any class of the Registrant's outstanding equity securities.
The directors and officers of the Registrant as a group own less than
1% of the outstanding shares of common stock of the Registrant.
-21-
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
---------------------------------
1. Financial Statements for 11/30/98 fiscal year end*
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements Independent Auditors' Report
*Incorporated by reference to Registrant's Annual Report to Shareholders filed
with the Commission.
2. Exhibits.
--------
(a) Registrant's charter. Incorporated by reference to Form S-4
Registration Statement No. 2-46065 for Vestaur Securities, Inc. which was filed
on October 17, 1972. Amendment No. 14 to Registrant's Registration Statement on
Form N-2 for the year ended November 30, 1990; and Amendment No. 15 to
Registrant's Registration Statement on Form N for the year ended November 30,
1990; and Amendment No. 15 to Registrant's Registration Statement on Form N-2
for the year ended November 30, 1991.
(b) Registrant's by-laws. Incorporated by reference to Amendment No.
3 to Form S-4 Registration Statement No. 2-46065 for Vestaur Securities, Inc.,
filed on November 29, 1982.
(i) Amendment to Section 9.01 of Registrant's by-laws.
Incorporated by reference to Exhibit (2)(i) to Form N-2
of Vestaur Securities, Inc., filed on March 28, 1980.
(ii) Amendment to Section 7.01 of Registrant's by-laws.
Incorporated by reference to the definitive proxy
statement of Vestaur Securities, Inc. filed on January
10, 1975.
(iii) Amended Sections 4.01, 4.02, 4.03, 4.05, 4.06, 4.07,
6.01 and 11.01 of Registrant's by-laws. Incorporated by
reference to Exhibit (2) (iii) to Form N-2 of Vestaur
Securities, Inc. filed on March 30, 1981.
(c) Inapplicable. There is no voting trust agreement with respect to
securities of the Registrant.
-22-
<PAGE>
(d) See 2(a) above, specimen copy of Stock Certificate for
Registrant's shares. Incorporated by reference to Amendment No. 3 to Form S-4
Registration Statement No. 2-46065 for Vestaur Securities, Inc. filed on
November 29, 1972.
(e) Automatic Dividend Investment Plan.
(f) Inapplicable. Registrant has no long-term debt.
(g) Investment Advisory and Services Agreement.
(h) Not Applicable.
(i) Not Applicable.
(j) Custodian Contract.
(k) Not Applicable.
(l) Not Applicable.
(m) (1) Accountants Consent
(2) Powers of Attorney
(n) Not Applicable.
(o) Agreements or understandings in consideration of providing
initial capital. Incorporated by reference to Exhibit 14 to Form N-2 of Vestaur
Securities, Inc. filed on March 28, 1989.
(p) Not Applicable.
(q) Financial Data Schedule.
Item 25. Marketing Arrangements.
----------------------
Not Applicable.
Item 26. Other Expenses of Issuance and Distribution.
-------------------------------------------
Not Applicable.
Item 27. Persons Controlled by or Under Common Control.
---------------------------------------------
None.
-23-
<PAGE>
Item 28. Number of Holders of Securities.
-------------------------------
As of 2/28/99:
Title of Number of
Class Record Holders
-------- --------------
Common Stock 9,719
Item 29. Indemnification.
---------------
Section 5.01 of Registrant's by-laws provides generally that each of
its directors, officers, employees or agents is to be reimbursed for any
litigation expenses and liabilities incurred in his capacity as such while
acting in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of Registrant, provided that if it is a criminal
proceeding, he had no reasonable cause to believe his conduct was unlawful.
Determination as to whether the director, officer, employee or agent has met the
required standards of conduct is made by majority vote or directors who are not
parties to the litigation, by independent legal counsel or by the stockholders
of the Registrant. Section 5.01 provided further that no such person is to be
indemnified (a) in respect of any claim by or in the right of Registrant as to
which he has been adjudged liable for negligence or misconduct in the
performance of his duty to Registrant unless a court deems him to be fairly and
reasonably entitled to indemnity or (b) against any liability to Registrant or
its security holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of duties.
Registrant's directors, officers, employees or agents may also be
indemnified against liability pursuant to the provisions of Section 145 of the
General Corporation Laws of the State of Delaware. The general effect of these
provisions is similar to the indemnification provisions of Section 5.01 of
Registrant's by-laws.
Item 30. Business and Other Connection of Investment Adviser.
---------------------------------------------------
The Registrant's adviser, First Union National Bank ("FUNB"), is a
wholly-owned subsidiary of First Union Corporation ("First Union"), 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
provides 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. The principal executive offices of First Union and FUNB are
located at One First Union Center, Charlotte, North Carolina 28288-0013, and its
telephone number is (704) 374-6365.
-24-
<PAGE>
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.
The Directors and principal executive officers of FUNB are:
Edward E. Crutchfield, Jr. Chairman and 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 persons listed below are the only officers of the Adviser or its
affiliates with direct responsibility for the management of Registrant.
Affiliated Officers of the Registrant
-------------------------------------
<TABLE>
<CAPTION>
Position Position
With With FUNB
Name Registrant (or FUNB Affiliate)
---- ----------- -------------------
<S> <C> <C>
Glen T. lnsley Chairman of the Board Senior Vice President,
Managing Director of Fixed
Income, First Union, First
Capital Group.
Dung Vukhac President Senior Vice President;
formerly, Managing Director,
Senior Vice President, Fixed
Income Services, CoreStates
Investment Advisers, Inc.
Karen G. Bater Assistant Vice President and Senior Portfolio Manager,
Secretary formerly, Vice President and
Senior Portfolio Manager,
CoreStates Investment
Advisers, Inc.
J.P. Weaver Vice President Director of Fixed Income and
Research and Portfolio
Manager; Vice President, First
Capital Group.
</TABLE>
-25-
<PAGE>
<TABLE>
<CAPTION>
Position Position
With With FUNB
Name Registrant (or FUNB Affiliate)
---- ----------- -------------------
<S> <C> <C>
Carol Kosel Treasurer Vice President, Director of
Fund Administration, Evergreen
Investment Services.
</TABLE>
The persons listed above are not engaged for their own account or in
the capacity of director, officer, employee, partner or trustee in any other
business, profession, vocation or employment of a substantial nature.
Item 31. Location of Accounts and Records.
--------------------------------
The corporate charter, by-laws and minute books of stockholders are
maintained by the Secretary of the Registrant at First Union National Bank, 123
S. Broad Street, Philadelphia, PA 19109.
Records showing the name of each stockholder of record of the
Registrant and the number of shares held are maintained by Equiserve First
Chicago Trust Division, P.O. Box 2500, Jersey City, NJ 07303-2500, (201) 324-
0313.
All other records required to be maintained by Section 31(a) of the
Investment Company Act, as amended, and the Rules promulgated thereunder are
maintained at:
Evergreen Investment Services
200 Berkeley Street
Boston, MA 02116-5034
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Item 32. Management Services.
-------------------
Not Applicable. The Registrant is not party to any management service
contract.
Item 33. Undertaking.
-----------
Not Applicable.
This amendment to the Registration Statement of Registrant is filed
under only the Investment Company Act of 1940, as amended.
-26-
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Investment Company Act of 1940,
the Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Philadelphia, and Commonwealth of Pennsylvania, on the 31st day of March, 1999.
Vestaur Securities, Inc.
By: /s/ Glen T. Insley*
---------------------------------------
Glen T. Insley
Chairman of the Board
/s/ Audrey C. Talley
- ------------------------------------
* By Audrey C. Talley pursuant
to power of attorney
-27-
<PAGE>
EXHIBIT INDEX
Item 24.
(e) Automatic Dividend Investment Plan
(g) Investment Advisory and Services Agreement
(j) Custodian Contract
(m) (1) Accountant's Consent
(2) Powers of Attorney
(q) Financial Data Schedule
-28-
<PAGE>
EXHIBIT 24(e)
VESTAUR SECURITIES, INC.
Automatic Dividend Investment Plan
Who can participate in the Automatic Dividend Investment Plan?
Any registered stockholder of Vestaur Securities, Inc. (the "Company")
(with the exception of brokers and nominees of banks and other financial
institutions) may participate. A beneficial owner, whose shares are registered
in the name of another (e.g., in a broker's "street name") and who desires to
participate in the Plan, must become the registered holder by having all or a
portion of such shares transferred to his or her name.
How does the Plan work?
To join the Plan you need only sign and return the enclosed enrollment
authorization form in the envelope provided. Be sure to sign exactly as your
name appears on the enrollment authorization form. (All joint owners must
sign.)
The form authorizes First Chicago Trust Company of New York ("First
Chicago"), as your agent, to receive your dividends or other distributions from
the Company in additional shares of Common Stock, if the net asset value per
share is equal to or lower than the market price of the Company's Common Stock
plus brokerage commissions, or to receive your dividends or other distributions
in cash and purchase additional shares on the open market if the net asset value
per share is higher than the market price of the Company's Common Stock plus
brokerage commissions.
You will receive a statement each time shares are distributed by the
Company or purchased for you, showing the total shares credited to your account
under the Plan, the dividend amount, the number of shares acquired and the
applicable price per share.
As the number of shares you hold grows, dividends paid on the
increased number of shares are automatically reinvested, as long as you continue
in the Plan.
What are the main features of the Plan?
Whenever the Company's Board of Directors declares a dividend or other
distribution, you will receive the distribution in authorized but theretofore
unissued shares of the Company valued at the greater of: (a) the per share net
asset value, or (b) 95% of the market price per share as of the close of
business on the last trading day of the month preceding the payment date, if
such per share net asset value is equal to or lower than the market price of the
Company's shares plus brokerage commissions as of the close of business on the
fourth trading day prior to the payment date of such dividend or other
distribution. If the net asset value of the Company's shares is higher than
such market price plus brokerage commissions, First Chicago, consistent with
obtaining the best price and execution, will buy shares of the Company for
participants'
-29-
<PAGE>
accounts, on any securities exchange where such shares are traded, in the over-
the-counter market or by negotiated transactions, commencing three trading days
prior to the payment date of such dividend or other distribution. The price of
the Company's shares on the New York Stock Exchange as of the close of business
on the fourth trading day prior to the payment date of such dividend or other
distribution is used in determining whether the Plan participants receive
authorized but unissued shares or shares purchased in the market.
When shares are purchased in the market by First Chicago during the
three trading days prior to the payment date of such dividend or other
distribution, it is possible that the price of such shares plus brokerage
commissions will increase so that it is equal to or above the net asset value as
determined above. In this event, First Chicago will continue to purchase shares
of the Company in the market only when, at the time of purchase, the market
price plus brokerage commissions of such shares is lower than the net asset
value as determined above.
If First Chicago undertakes to purchase Company shares in the open
market at any time and is unable to complete its purchase requirements by the
close of business on the last trading day before the payment date, then the
balance of the dividend or other distribution will be accomplished in authorized
but unissued shares of the Company at the per share net asset value as of the
close of business on the last trading day of the month preceding the month in
which the dividend or other distribution is paid.
Shares credited to participants' accounts will be determined on the
basis of the average of the cost, including all costs of purchase, for shares
purchased on the open market and shares issued by the Company at net asset
value.
If distributions are received by Plan participants at the greater of:
(a) the per share net asset value, or (b) 95% of the market price per share when
the market price is higher than net asset value, the participants will receive
Common Stock having a market value which may exceed the cash value of the
dividend or other distribution.
Who pays the Plan's expenses?
The investment advisory fees are borne by the Company. The
administrative costs of the Plan are paid by the Company's investment adviser,
CoreStates Investment Advisers, Inc. ("CSIA"), out of the investment advisory
fees. There is no service charge to reinvest a dividend or other distribution,
nor are there brokerage commissions for shares issued directly by the Company.
However, when shares are purchased in the market, you pay your proportionate
share of the brokerage commissions on the total shares purchased for that
dividend or other distribution.
When the Plan starts
You can sign up for the Plan at any time. If your signed enrollment
authorization form is received by First Chicago before the record date for a
dividend or other distribution, the Plan will go into effect for you with that
payment.
-30-
<PAGE>
The record date for the determination of those Company stockholders
who are entitled to a dividend or other distribution on shares shall be the last
trading date of the month preceding the month of the payment date. Dividends
are customarily paid in the months of January, April, July and October.
What are the advantages of participating in the Plan?
. Participants are able to acquire additional shares of the Company's Common
Stock through the reinvestment of dividends. The Plan is designed to
provide participants with a convenient way to increase their holdings of
the Company's Common Stock while having an opportunity to realize lower
brokerage commissions through having purchases for each participant
combined with purchases for other participants when shares are purchased in
the open market. The administrative costs of the Plan are borne by the
Company's investment adviser, CSIA.
. The participant's dividend is invested in additional shares of the
Company's Common Stock. If the total amount is not equal to an exact number
of whole shares, fractional shares are credited to the participant's
account along with the full shares, and the fractional shares as well as
full shares participate proportionately in all subsequent dividends.
. Shares acquired under the Plan and credited to a participant's account are
held by First Chicago and a participant avoids the need for safekeeping of
the certificates for the shares. Stock certificates for full shares
credited to a participant's account will be delivered upon written request
or upon withdrawal from the Plan.
. For safekeeping purposes, you may deposit with First Chicago any Company
Common Stock certificates now or hereafter registered in your name for
credit under the Plan. Thereafter, such shares will be treated in the same
manner as shares purchased through the Plan. There is no charge for this
custodial service and, by making the deposit, you will be relieved of the
responsibility for loss, theft or destruction of the certificates.
. If you wish to deposit your Common Stock certificates, you must mail them
along with a request to First Chicago. The certificates should not be
endorsed. To insure against loss resulting from mailing certificates, First
Chicago will provide mail insurance free of charge. To be eligible for
certificate mailing insurance, the following guidelines must be observed.
Certificates must be mailed in brown, pre-addressed return envelopes
supplied by First Chicago, which can be obtained by contacting them as
noted in this document. Certificates mailed will be insured for up to
$25,000 current market value provided they are mailed first class. First
Chicago must be notified of any claim within thirty (30) calendar days of
the date the certificates were mailed. To submit a claim, you must be a
participant in the Plan or current holder of record of shares of Common
Stock. In the latter case, you must enroll in the Plan at the time the
insurance claim is processed. The maximum insurance protection provided is
$25,000 and the coverage is available only when the certificate(s) are sent
in accordance with the guidelines described above.
-31-
<PAGE>
Insurance covers the replacement of shares of stock, but in no way protects
against any loss resulting from fluctuations in the value of such shares
from the time the certificates are mailed until such time as a replacement
can be effected.
If you do not use the brown pre-addressed envelope provided by First
Chicago, certificates mailed should be insured for possible mail loss for
2% of the market value (minimum of $20.00); this represents the replacement
cost to you.
. You may at any time, including upon withdrawal, request the sale of all or
any whole shares held in your account under the Plan. Any such request may
be made by either writing to First Chicago or calling First Chicago's
Stockholder Customer Service at the number provided in the "Telephone"
section in this document. First Chicago will make every effort to process
all sale orders (written and telephone) on the day it receives them,
provided that instructions are received before 1:00 p.m. Eastern Standard
Time on a business day when First Chicago and the relevant securities
market are open. The proceeds from such sale, less a service fee, any
brokerage commissions, required withholding for income taxes, and any other
costs of sale, will be remitted to you. Each sale request will be processed
and a check for the net proceeds will be mailed as promptly as possible
after First Chicago receives such sale request.
. The Plan affords participants simplified recordkeeping since First Chicago
will mail quarterly statements to participants reflecting all current
activity in their Plan accounts.
Voting
You can vote the full shares acquired under the Plan whether the
shares are physically held by First Chicago or by you.
To discontinue
You may terminate your participation in the Plan at any time by giving
written notice to First Chicago.
Upon discontinuing, you will receive a stock certificate for the
number of full shares credited to your Plan account and a check for any fraction
of a share, valued at the then current market price of the stock less any
brokerage commissions, any service fee and any other costs of sale.
If you prefer, First Chicago will sell all or part of the shares that
are held for you under the Plan and send you a check for the proceeds, less any
brokerage commissions, a service fee and any other costs of sale.
Income tax information
Even though your dividends will be reinvested, they are subject to
income taxes as if they were paid to you in cash.
-32-
<PAGE>
The distribution by the Company to Plan participants will be made in
shares of Common Stock if the net asset value per share is lower than the market
price of the Common Stock plus brokerage commissions. The newly issued shares of
Common Stock will be valued at the greater of: (a) the net asset value per
share, or (b) 95% of the market price per share. If shares are distributed, a
participant will be required to include in gross income an amount equal to the
fair market value (average of the high and low sales prices on the day of
distribution) of the shares received by the participant.
No taxable income is realized when a participant withdraws shares
purchased under the Plan. However, a participant may recognize a taxable gain or
loss when shares acquired under the Plan are sold by First Chicago under a
participant's withdrawal of shares from the Plan.
Participants should consult their own tax advisers concerning the tax
consequences of participating in the Plan.
Changes to the Plan
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Company reserves the right to amend or terminate the Plan.
Notice thereof shall be sent to participants in the Plan at least 30 days before
the record date for the dividend or other distribution to which any such change
would apply.
Correspondence
Any notices, questions, or other communications regarding the Plan
should be addressed to:
First Chicago Trust Company of New York
Dividend Reinvestment Plan
P.O. Box 2598
Jersey City, NJ 07303-2598
Be sure to include a reference to Vestaur in your correspondence.
Telephone
Stockholder customer service, including sale of shares:
Until November 30, 1995, call (201) 324-0498
Commencing December 1, 1995, call (201) 324-0313
Normal hours: 8:00 a.m. - 10:00 p.m., Eastern time, each business day.
8:00 a.m. - 3:30 p.m., Eastern time, Saturdays.
Customer Service Representatives are available: 9:00 a.m. - 6:00 p.m., Eastern
time, each business day.
Internet: Messages forwarded on the Internet will be responded to within 1
business day.
-33-
<PAGE>
The First Chicago Internet address is: "http://www.fctc.com".
TDD: (201) 222-4955 Telecommunications Device for the Deaf service.
Please read the Terms and Conditions that follow.
----------------------------
Terms and Conditions
1. A stockholder may authorize Vestaur Securities, Inc. (the "Company") to
pay his or her dividends and other distributions to First Chicago Trust Company
of New York ("First Chicago"), agent for each participant in the Automatic
Dividend Investment Plan. First Chicago, as agent for such participant, will
receive such dividend or distribution in authorized but theretofore unissued
shares of Common Stock of the Company, valued at the greater of: (a) the per
share net asset value, or (b) 95% of the market price per share as of the close
of business on the last trading day of the month preceding the payment date, if
such per share net asset value is equal to or lower than the market price of the
Company's shares plus brokerage commissions as of the close of business on the
fourth trading day prior to the payment date of such dividend or other
distribution. If the net asset value of the Company's shares is higher than
such market price plus brokerage commissions, First Chicago, consistent with
obtaining the best price and execution, will buy shares of the Company for
participants' accounts on any securities exchange where such shares are traded,
in the over-the-counter market, or by negotiated transactions and may be subject
to such terms of price, delivery, etc., as First Chicago may agree, commencing
three trading days prior to the payment date of such dividend or other
distribution. The price of the Company's shares on the New York Stock Exchange
as of the close of business on the fourth trading day prior to the payment date
of such dividend or other distribution is used in determining whether Plan
participants receive authorized but unissued shares or shares purchased in the
market.
When shares are purchased in the market by First Chicago during the three
trading days prior to the payment date of such dividend or other distribution,
it is possible that the price of such shares plus brokerage commissions will
increase so that it is equal to or above the net asset value as determined
above. In this event, First Chicago will continue to purchase shares of the
Company in the market only when, at the time of purchase, the market price plus
brokerage commissions of such shares is lower than the net asset value as
determined above. If First Chicago undertakes to purchase Company shares in the
open market at any time and is unable to complete its purchase requirements by
the close of business on the last trading day before the payment date, then the
balance of the distribution will be accomplished in authorized but unissued
shares of the Company at the per share net asset value as of the close of
business on the last trading day of the month preceding the month in which the
dividend or other distribution is paid.
Shares credited to participants' accounts will be determined on the basis
of the average of the cost, including all costs of purchase, for shares
purchased on the open market and shares issued by the Company at net asset
value.
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Neither the Company nor any stockholder shall have any authority or power
to direct the time or price at which shares may be purchased, or the selection
of the broker or dealer through or from whom purchases are to be made.
2. For the purpose of making purchases in the market, First Chicago will
commingle each participant's funds with those of all other holders of the
Company's Common Stock who are participants in the Plan. The price per share
purchased for each participant's account shall be the average price (including
brokerage commissions and any other costs of purchase) of all shares purchased
with the funds available from that dividend or other distribution. First
Chicago will hold the total shares purchased for all participants in its name or
in the name of its nominee and will have no responsibility for the value of such
shares after their purchase.
3. A statement describing the dividend amount, the number of shares
acquired, the applicable price per share, and total shares credited to a
participant's account under the Plan will be mailed quarterly to each
participant by First Chicago as soon as practicable after completion of each
investment for a participant's account.
4. Each participant may obtain, without charge, a certificate or
certificates for all or part of the full shares credited to the participant's
account at any time by making a request in writing to First Chicago.
Participants who wish to do so may deposit Company Common Stock certificates
registered in their names for credit as accrued shares held under the Plan.
There is no charge for such deposits. Dividends will be reinvested on shares
represented by the certificates deposited with First Chicago.
5. Participation in the Plan may be terminated by a participant at any
time by written instructions to that effect to First Chicago. Such instructions
will be processed as promptly as possible after receipt. If a notice to
discontinue is received by First Chicago on or after the record date for a
payment, First Chicago, in its sole discretion, may either pay such dividend in
cash or reinvest it in shares on behalf of the terminating participant. First
Chicago, upon Vestaur's approval, may terminate a participant's participation in
the Plan upon mailing a notice to terminate to the participant at the
participant's address as it appears on First Chicago's records.
Upon termination, a participant will receive certificates for the full
shares of common stock credited to the participant's account. Upon withdrawal of
shares from the Plan (whether or not a participant has requested termination), a
participant may instruct First Chicago to sell all or part of such shares. Such
sale may, but need not, be made by purchase of the shares for the account of
other participants, and any such transaction shall be deemed to have been made
at the then current market price less any brokerage commissions, a service fee
and any other costs of sale. Fractional shares credited to a terminating account
will be paid for in cash at the then current market price less any brokerage
commissions, any service fee and any other costs of sale. All sale instructions
received by First Chicago will be processed promptly thereafter, and in no
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event later than five business days after the date on which the order
is received (except where deferral is necessary under applicable federal or
state laws or regulations).
6. A participant will have the sole right to vote all full shares credited
to the participant's account under the Plan on the record date for a vote.
Proxies with respect to shares of the Company's Common Stock sent to a
participant by First Chicago, as Transfer Agent, will include the number of full
shares held for the participant under the Plan.
7. The fact that dividends are reinvested or that participants receive
shares from the Company in lieu of dividends does not relieve participants of
liability for income taxes that may be payable on such dividends or the receipt
of such shares. Dividends paid on the accumulated shares will be included in
the Form 1099-DIV information return sent to the Internal Revenue Service. The
Form 1099-DIV will also include with respect to the shares acquired at net asset
value (if any) the amount by which the fair market value exceeds the net asset
value. Only one Form 1099-DIV will be sent to each participant.
8. The Tax Equity and Fiscal Responsibility Act of 1982 imposes certain
reporting obligations upon brokers and other middlemen. As a result, First
Chicago will be required to report to the Internal Revenue Service and to the
participant any sales of stock by it on behalf of the participant.
9. First Chicago shall not be liable under the Plan for any act or for any
omission to act occurring without gross negligence and in good faith including,
without limitation, any claims for liability: (1) arising out of failure to
terminate a participant's participation in the Plan upon the participant's death
prior to receipt of notice in writing of such death; and (2) with respect to the
prices at which shares are purchased or sold for participants' accounts and the
time such purchases or sales are made.
10. The terms and conditions of the Plan and its operation shall be
governed by the laws of the State of New York.
11. The Company reserves the right to amend or terminate the Plan at any
time. Notice thereof shall be sent to participants in the Plan at least thirty
(30) days before the record date for the distribution to which such amendment
applies or before such termination.
12. First Chicago may resign as Agent under the Plan upon sixty (60) days'
written notice to the Company.
11/95
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EXHIBIT 24(g)
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.
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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 desirable 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 performed
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.
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(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 Transfer Agent, Dividend Disbursing Agent, Registrar
and the Agent or Agents under the Company's Automatic Dividend Investment Plan.
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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;
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(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 I 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.
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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
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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.
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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 the
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.
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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.
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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:
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EXHIBIT 24(j)
CUSTODIAN CONTRACT
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This Contract is made by and between Vestaur Securities, Inc., a Delaware
corporation (the "Fund") with its principal place of business at Centre Square
West -- Upper Mezz, Philadelphia, Pennsylvania 19101, and State Street Bank and
Trust Company, a Massachusetts trust company (the "Custodian") with its
principal place of business at 225 Franklin Street, Boston, Massachusetts 02110.
WITNESSETH:
WHEREAS, the Fund desires to retain the Custodian to serve as custodian for
certain of the Fund's assets, and the Custodian desires to provide such
services;
WHEREAS, the Fund intends to deposit with the Custodian such assets to be
held by the Custodian for the Fund;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
-----------------------------------------------------
The Fund hereby employs the Custodian as the custodian of its assets
pursuant to the provisions of the Articles of Incorporation. The Fund agrees to
deliver to the Custodian all securities and cash owned by it, and all payments
of income, payments of principal or capital distributions received by it with
respect to all securities owned by the Fund from time to time, and the cash
consideration received by it for such new or treasury shares of capital stock,
$.01 par value, ("Shares") of the Fund as may be issued or sold from time to
time. The Custodian shall not be responsible for any property of the Fund held
or received by the Fund and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (as defined in Section 3), the
Custodian shall from time to time employ one or more sub-custodians, but only in
accordance with an applicable vote by the Board of Directors of the Fund, and
provided that the Custodian shall have no more or less responsibility or
liability to the Fund on account of any actions or omissions of any sub-
custodian so employed than any such sub-custodian has to the Custodian.
2. Duties of the Custodian with Respect to Property of the Fund Held By the
Custodian.
2.1 Holding Securities. The Custodian shall hold and physically segregate for
------------------
the account of the Fund all non-cash property, including all securities
owned by the Fund, other than (a) securities which are maintained pursuant
to Section 2.9 in a clearing agency registered
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with the Securities and Exchange Commission ("SEC") under Section 17A of
the Securities Exchange Act of 1934 (the "Exchange Act") is and which acts
as a securities depository or in a book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies (a "Securities
System") and (b) commercial paper of an issuer for which State Street Bank
and Trust Company acts as issuing and paying agent ("Direct Paper") which
is deposited, and/or maintained in the Direct Paper System of the Custodian
(the "Direct Paper System") pursuant to Section 2.10.
2.2 Delivery of Securities. The Custodian shall release and deliver securities
----------------------
owned by the Fund held by the Custodian or in a Securities System account
of the Custodian ("Securities System Account") or in the Custodian's Direct
Paper System book-entry account ("Direct Paper System Account") only upon
receipt of Proper Instructions, which may be continuing instructions when
deemed appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Fund and receipt
of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.9 hereof,
4) To the depository agent in connection with tender or other similar
offers for securities of the Fund;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of the
Fund or into the name of any nominee or nominees of the Custodian or
into the name or nominee name of any agent appointed pursuant to
Section 2.8 or into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a different
number of bonds, certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in any such
--------
case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the Fund, to the
broker or its clearing agent, against a receipt, for examination in
accordance with "street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or liability for any
loss arising from the delivery of such securities prior to receiving
payment for such securities except as may arise from the Custodian's
own negligence or willful misconduct;
A-2
<PAGE>
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for
definitive securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by the
Fund, but only against receipt of adequate collateral as agreed upon
--- ----
from time to time by the Custodian and the Fund, which may be in the
form of cash or obligations issued by the United States government,
its agencies or instrumentalities, except that in connection with any
loans for which collateral is to be credited to the Custodian's
account in the book-entry system authorized by the U.S. Department of
the Treasury, the Custodian will not be held liable or responsible for
the delivery of securities owned by the Fund prior to the receipt of
such collateral;
11) For delivery as security in connection with any borrowings by the Fund
requiring a pledge of assets by the Fund, but only against receipt of
--- ----
amounts borrowed;
12) For delivery in accordance with the provisions of any agreement among
the Fund, the Custodian and a broker-dealer registered under the
Exchange Act and a member of The National Association of Securities
Dealers, Inc. ("NASD"), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Fund;
13) For delivery in accordance with the provisions of any agreement among
the Fund, the Custodian, and a futures commission merchant registered
under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission (the "CFTC") and/or
any contract market, or any similar organization or organizations,
regarding account deposits in connection with transactions by the
Fund;
14) For any other proper corporate purpose, but only upon receipt of, in
--- ----
addition to Proper Instructions, a certified copy of a resolution of
the Board of Directors or of the Executive Committee signed by an
officer and certified by the Secretary or an Assistant Secretary,
specifying the securities of the Fund to be delivered, setting forth
the purpose for which such delivery is to be made, declaring such
purpose to
A-3
<PAGE>
be a proper corporate purpose, and naming the person or persons to
whom delivery of such securities shall be made.
2.3 Registration of Securities. Securities held by the Custodian (other than
--------------------------
bearer securities) shall be registered in the name of the Fund or in the
name of any nominee of the Fund or of any nominee of the Custodian which
nominee shall be assigned exclusively to the Fund, unless the Fund has
authorized in writing the appointment of a nominee to be used in common
with other registered investment companies having the same investment
adviser as the Fund, or in the name or nominee name of any agent appointed
pursuant to Section 2.8 or in the name or nominee name of any sub-custodian
appointed pursuant to Article 1. All securities accepted by the Custodian
on behalf of the Fund under the terms of this Contract shall be in "street
name" or other good delivery form. If, however, the Fund directs the
Custodian to maintain securities in "street name", the Custodian shall
utilize its best efforts only to timely collect income due the Fund on such
securities and to notify the Fund on a best efforts basis only of relevant
corporate actions including, without limitation, pendency of calls,
maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
-------------
account or accounts in the name of the Fund, subject only to draft or order
by the Custodian acting pursuant to the terms of this Contract, and shall
hold in such account or accounts, subject to the provisions hereof, all
cash received by, it from or for the account of the Fund, other than cash
maintained by the Fund in a bank account established and used in accordance
with Rule 17f-3 under the Investment Company Act of 1940, as amended (the
"1940 Act"). Funds held by the Custodian for the Fund may be deposited by
it to its credit as Custodian in the Banking Department of the Custodian or
in such other banks or trust companies as it may in its discretion deem
necessary or desirable; provided, however, that every such bank or trust
--------
company shall be qualified to act as a custodian under the 1940 Act and
that each such bank or trust company and the funds to be deposited with
each such bank or trust company shall be approved by vote of a majority of
the Board of Directors of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the Fund and
-----------------------------
the Custodian, the Custodian shall, upon the receipt of Proper
Instructions, make federal funds available to the Fund as of specified
times agreed upon from time to time by the Fund and the Custodian in the
amount of checks received in payment for Shares of the Fund which are
deposited into the Fund's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
--------------------
Custodian shall collect on a timely basis all income and other payments
with respect to registered securities held hereunder to which the Fund
shall be entitled either by law or pursuant to custom in the securities
business, and shall collect on a timely basis all income and other payments
with respect to bearer securities if, on the date of payment by the issuer,
such securities are held by the Custodian or its agent thereof and shall
credit such income, as collected, to the Fund's custodian account. Without
limiting the generality of the foregoing, the
A-4
<PAGE>
Custodian shall detach and present for payment all coupons and other income
items requiring presentation as and when they become due and shall collect
interest when due on securities held hereunder. Income due the Fund on
securities loaned pursuant to the provisions of Section 2.2 (10) shall be
the responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the Fund with
such information or data as may be necessary to assist the Fund in
arranging for the timely delivery to the Custodian of the income to which
the Fund is properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions, which may be
----------------------
continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of the Fund in the following cases only:
1) Upon the purchase of securities, options, futures contracts or options
on futures contracts for the account of the Fund but only (a) against
the delivery of such securities or evidence of title to such options,
futures contracts or options on futures contracts to the Custodian (or
any bank, banking firm or trust company doing business in the United
States or abroad which is qualified under the 1940 Act, to act as a
custodian and has been designated by the Custodian as its agent for
this purpose) registered in the name of the Fund or in the name of a
nominee of the Custodian referred to in Section 2.3 hereof or in
proper form for transfer; (b) in the case of a purchase effected
through a Securities System, in accordance with the conditions set
forth in Section 2.9 hereof-, (c) in the case of a purchase involving
the Direct Paper System, in accordance with the conditions set forth
in Section 2.10; (d) in the case of repurchase agreements entered
into between the Fund and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against delivery of the
securities either in certificate form or through an entry crediting
the Custodian's account at the Federal Reserve Bank with such
securities or (ii) against delivery of the receipt evidencing purchase
by the Fund of securities owned by the Custodian along with written
evidence of the agreement by the Custodian to repurchase such
securities from the Fund or (e) for transfer to a time deposit account
of the Fund in any bank; such transfer may be effected prior to
receipt of a confirmation from a broker and/or the applicable bank
pursuant to Proper Instructions as defined in Section 3;
2) In connection with conversion, exchange or surrender of securities
owned by the Fund as set forth in Section 2.2 hereof,
3) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account of
the Fund: interest, taxes, management, accounting, transfer agent and
legal fees, and operating expenses of the Fund whether or not such
expenses are to be in whole or part capitalized or treated as deferred
expenses;
4) For the payment of any dividends declared pursuant to the governing
documents of the Fund;
A-5
<PAGE>
5) For payment of the amount of dividends received in respect of
securities sold short;
6) For any other proper purpose, but only upon receipt of, in addition to
--- ----
Proper Instructions, a certified copy of a resolution of the Board of
Directors or of the Executive Committee of the Fund signed by an
officer of the Fund and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such purpose
to be a proper purpose, and naming the person or persons to whom such
payment is to be made.
2.8 Appointment of Agents. The Custodian may at any time or times in its
---------------------
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the 1940 Act to act as a custodian,
as its agent to carry out such of the provisions of this Article 2 as the
Custodian may from time to time direct; provided, however, that the
--------
appointment of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.9 Deposit of Fund Assets in Securities Systems. The Custodian may deposit
--------------------------------------------
and/or maintain securities owned by the Fund in a Securities System in
accordance with applicable Federal Reserve Board and SEC rules and
regulations, if any, and subject to the following provisions:
1) The Custodian may keep securities of the Fund in a Securities System
provided that such securities are represented in the Securities System
Account of the Custodian in the Securities System which shall not
include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of the Fund
which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Fund;
3) The Custodian shall pay for securities purchased for the account of
the Fund upon (i) receipt of advice from the Securities System that
such securities have been transferred to the Securities System
Account, and (ii) the making of an entry on the records of the
Custodian to reflect such payment and transfer for the account of the
Fund. The Custodian shall transfer securities sold for the account of
the Fund upon (i) receipt of advice from the Securities System that
payment for such securities has been transferred to the Securities
System Account, and (ii) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account of the
Fund. Copies of all advices from the Securities System of transfers of
securities for the account of the Fund shall identify the Fund, be
maintained for the Fund by the Custodian and be provided to the Fund
A-6
<PAGE>
at its request. Upon request, the Custodian shall furnish the Fund
confirmation of each transfer to or from the account of the Fund in
the form of a written advice or notice and shall furnish to the Fund
copies of daily transaction sheets reflecting each day's transactions
in the Securities System for the account of the Fund;
4) The Custodian shall provide the Fund with any report obtained by the
Custodian on the Securities System's accounting system, internal
accounting control and procedures for safeguarding securities
deposited in the Securities System;
5) The Custodian shall have received the initial certificate required by
Article 12 hereof,
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the
Fund resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees or from failure of the
Custodian or any such agent to enforce effectively such rights as it
may have against the Securities System; at the election of the Fund,
it shall be entitled to be subrogated to the rights of the Custodian
with respect to any claim against the Securities System or any other
person which the Custodian may have as a consequence of any such loss
or damage if and to the extent that the Fund has not been made whole
for any such loss or damage.
2.10 Fund Assets Held in the Custodian's Direct Paper System. The Custodian may
-------------------------------------------------------
deposit and/or maintain securities owned by the Fund in the Direct Paper
System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will
be effected in the absence of Proper Instructions;
2) The Custodian may keep securities of the Fund in the Direct Paper
System only if such securities are represented in the Direct Paper
System Account of the Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the Fund
which are maintained in the Direct Paper System shall identify by
book-entry those securities belonging to the Fund;
4) The Custodian shall pay for securities purchased for the account of
the Fund upon the making of an entry on the records of the Custodian
to reflect such payment and transfer of securities to the account of
the Fund. The Custodian shall transfer securities sold for the account
of the Fund upon the making of an entry on the
A-7
<PAGE>
records of the Custodian to reflect such transfer and receipt of
payment for the account of the Fund;
5) The Custodian shall furnish the Fund confirmation of each transfer to
or from the account of the Fund, in the form of a written advice or
notice, of Direct Paper on the next business day following such
transfer and shall furnish to the Fund copies of daily transaction
sheets reflecting each day's transaction in the Securities System for
the account of the Fund;
6) The Custodian shall provide the Fund with any report on its system of
internal accounting control as the Fund may reasonably request from
time to time.
2.11 Segregated Account. The Custodian shall upon receipt of Proper Instructions
------------------
establish and maintain a segregated account or accounts for and on behalf
of the Fund, into which account or accounts may be transferred cash and/or
securities, including securities maintained in an account by the Custodian
pursuant to Section 2.9 hereof, (i) in accordance with the provisions of
any agreement among the Fund, the Custodian and a broker-dealer registered
under the Exchange Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act), relating to
compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange (or the CFTC or any registered
contract market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions by
the Fund, (ii) for purposes of segregating cash or government securities in
connection with options purchased, sold or written by the Fund or commodity
futures contracts or options thereon purchased or sold by the Fund, (iii)
for the purposes of compliance by the Fund with the procedures required by
SEC Investment Company Act Release No. 10666, or any subsequent release or
releases of the SEC relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper corporate
purposes, but only , in the case of clause (iv), upon receipt of, in
--- ----
addition to Proper Instructions, a certified copy of a resolution of the
Board of Directors or of the Executive Committee signed by an officer of
the Fund and certified by the Secretary or an Assistant Secretary, setting
forth the purpose or purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
2.12 Ownership Certificates for Tax Purposes. The Custodian shall execute
---------------------------------------
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to securities of the Fund held by it and in connection with
transfers of such securities.
2.13 Proxies. The Custodian shall, with respect to the securities held
-------
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Fund or a nominee of the Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to
the Fund such proxies, all proxy soliciting materials and all notices
relating to such securities.
A-8
<PAGE>
2.14 Communications Relating to Fund Securities. Subject to the provisions of
------------------------------------------
Section 2.3, the Custodian shall transmit promptly to the Fund all written
information (including, without limitation, pendency of calls and
maturities of securities and expirations of rights in connection therewith
and notices of exercise of call and put options written by the Fund and the
maturity of futures contracts purchased or sold by the Fund) received by
the Custodian from issuers of the securities being held for the Fund. With
respect to tender or exchange offers, the Custodian shall transmit promptly
to the Fund all written information received by the Custodian from issuers
of the securities whose tender or exchange is sought and from the party (or
his agents) making the tender or exchange offer. If the Fund desires to
take action with respect to any tender offer, exchange offer or any other
similar transaction, the Fund shall notify the Custodian at least three
business days prior to the date on which the Custodian is to take such
action.
2.15 Reports to Fund by Independent Public Accountants. The Custodian shall
-------------------------------------------------
provide the Fund, at such times as the Fund may reasonably require, with
reports by independent public accountants on the accounting system,
internal accounting control and procedures for safeguarding securities,
futures contracts and options on futures contracts, including securities
deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian under this Contract, such reports, shall
be of sufficient scope and in sufficient detail, as may reasonably be
required by the Fund, to provide reasonable assurance that any material
inadequacies would be disclosed by such examination, and, if there are no
such inadequacies, the reports shall so state.
3. Proper Instructions
-------------------
"Proper Instructions" as used herein means a writing signed or initialed by
one or more person or persons as the Board of Directors shall have from time to
time authorized. Each such writing shall set forth the specific transaction or
type of transaction involved, including a specific statement of the purpose for
which such action is requested. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to be confirmed in
writing. Proper Instructions may include communications effected directly
between electromechanical or electronic devices provided that the Board of
Directors of the Fund and the Custodian are satisfied that such procedures
afford adequate safeguards for the Fund's assets. For purposes of this Section,
Proper Instructions shall include instructions received by the Custodian
pursuant to any three-party agreement which requires a segregated asset account
in accordance with Section 2.11.
4. Actions Permitted without Express Authority
-------------------------------------------
The Custodian may in its discretion, without express authority from the
Fund:
A-9
<PAGE>
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
the Fund;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Fund except as
otherwise directed by the Board of Directors of the Fund.
5. Evidence of Authority
---------------------
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote of the Board of
Directors of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Directors pursuant to the Articles of Incorporation as described
in such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
6. Duties of Custodian with Respect to the Books of Account and Calculation of
---------------------------------------------------------------------------
Net Asset Value and Net Income
------------------------------
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Directors of the Fund to keep the
books of account of the Fund and/or compute the net asset value per share of the
outstanding shares of the Fund or, unless directed otherwise in writing by the
Fund, shall itself keep such books of account and/or compute such net asset
value per share. Unless directed otherwise by the Fund, the Custodian shall also
calculate weekly the net income of the Fund as described in the Fund's
registration statement on Form N-2 under the 1940 Act as filed with the SEC (the
"Registration Statement") and shall advise the Fund and the Transfer Agent
weekly of the total amounts of such net income and, if instructed in writing by
an officer of the Fund to do so, shall advise the Transfer Agent periodically of
the division of such net income among its various components. The calculations
of the net asset value per share and the weekly income of the Fund shall be made
at the time or times described from time to time in the Fund's Registration
Statement.
7. Records
-------
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the
A-10
<PAGE>
1940 Act, with particular attention to Section 31 thereof and Rules 3la-1 and
3la-2 thereunder. All such records shall be the property of the Fund and shall
at all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the Fund and
employees and agents of the SEC. The Custodian shall, at the Fun(Ts request,
supply the Fund with a tabulation of securities owned by the Fund and held by
the Custodian and shall, when requested to do so by the Fund and for such
compensation as shall be agreed upon between the Fund and the Custodian, include
certificate numbers in such tabulations.
8. Opinion of Fund's Independent Accountant
----------------------------------------
The Custodian shall take all reasonable action, as the Fund may from time
to time request, to obtain from year to year favorable opinions from the Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of the Fund's Registration Statement, and Form N-SAR or
other annual reports to the SEC and with respect to any other requirements of
the SEC.
9. Compensation of Custodian
-------------------------
The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund and
the Custodian.
10. Responsibility of Custodian
---------------------------
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence. It shall be entitled
to rely on and may act upon advice of counsel (who may be counsel for the Fund)
on all matters, and shall be without liability for any action reasonably taken
or omitted pursuant to such advice.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned to
the Fund being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries or agents,
to advance cash or securities for any purpose (including but not limited to
securities settlements and assumed
A-11
<PAGE>
settlement) or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Fund shall be
security therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of the
Fund's assets to the extent necessary to obtain reimbursement.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
11. Effective Period, Termination and Amendment
-------------------------------------------
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; provided, however that the
--------
Custodian shall not act under Section 2.9 hereof in the absence of receipt of an
initial certificate of the Secretary or an Assistant Secretary that the Board of
Directors of the Fund has approved the initial use of a particular Securities
System, as required by Rule 17f-4 under the 1940 Act and that the Custodian
shall not act under Section 2.10 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the Board of
Directors has approved the initial use of the Direct Paper System; provided
--------
further, however, that the Fund shall not amend or terminate this Contract in
- -------
contravention of any applicable federal or state regulations, or any provision
of the Articles of Incorporation, and further provided, that the Fund may at any
time by action of its Board of Directors (i) substitute another bank or trust
company for the Custodian by giving notice as described above to the Custodian,
or (ii) immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Office of the Comptroller of
the Currency or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination and shall likewise
reimburse the Custodian for its costs, expenses and disbursements.
12. Successor Custodian
-------------------
If a successor custodian shall be appointed by the Board of Directors of
the Fund, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities then held by it hereunder and shall transfer to an
account of the successor custodian all of the Fund's securities held in a
Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Fund, deliver at the
A-12
<PAGE>
office of the Custodian and transfer such securities, funds and other properties
in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the 1940 Act, doing business in Boston,
Massachusetts, of its own selection, having an aggregate capital, surplus, and
undivided profits, as shown by its last published report, of not less than
$25,000,000, all securities, funds and other properties held by the Custodian
and all instruments held by the Custodian relative thereto and all other
property held by it under this Contract and to transfer to an account of such
successor custodian all of the Fund's securities held in any Securities System.
Thereafter, such bank or trust company shall be the successor of the Custodian
under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Directors to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
13. Interpretive and Additional Provisions
--------------------------------------
In connection with the operation of this Contract, the Custodian and the
Fund, may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
--------
shall contravene any applicable federal or state regulations or any provision of
the Articles of Incorporation of the Fund. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be an
amendment of this Contract.
14. Massachusetts Law to Apply
--------------------------
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
15. Prior Contracts
---------------
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund and the Custodian relating to the custody of the
Fund's assets.
16. Reproduction of Documents
-------------------------
A-13
<PAGE>
This Contract and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm, micro-
card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
17. Notices
-------
Any notice, instruction or other instrument required to be given hereunder
may be delivered in person to the offices of the parties as set forth herein
during normal business hours or delivered prepaid registered mail or by telex,
cable or telecopy to the parties at the following addresses or such other
addresses as may be notified by any party from time to time.
To the Fund: Vestaur Securities, Inc.
c/o Evergreen Investment Services
200 Berkeley Street
Boston, Massachusetts 02116
Attention: Kevin Kenely
Telephone: 617-210-3326
Telecopy: 617-210-3568
To the Custodian: State Street Bank and Trust Company
One Heritage Drive
JPB/3S
North Quincy, Massachusetts 02171
Attention: Ron Mauriello
Telephone: 617-985-1891
Telecopy: 617-537-1229
Such notice, instruction or other instrument shall be deemed to have been
served in the case of a registered letter at the expiration of five business
days after posting, in the case of cable twenty-four hours after dispatch and,
in the case of telex, immediately on dispatch and if delivered outside normal
business hours it shall be deemed to have been received at the next time after
delivery when normal business hours commence and in the case of cable, telex or
telecopy on the business day after the receipt thereof. Evidence that the
notice was properly addressed, stamped and put into the post shall be conclusive
evidence of posting.
18. Shareholder Communications Election
-----------------------------------
SEC Rule 14b-2 requires banks which hold securities for the account of
customers to respond to requests by issuers of securities for the names,
addresses and holdings of beneficial owners of securities of that issuer held by
the bank unless the beneficial owner has expressly objected to disclosure of
this information. In order to comply with the rule, the Custodian needs
A-14
<PAGE>
the Fund to indicate whether it authorizes the Custodian to provide the Fund's
name, address, and share position to requesting companies whose securities the
Fund owns. If the Fund tells the Custodian "no", the Custodian will not provide
this information to requesting companies. If the Fund tells the Custodian "yes"
or does not check either "yes" or "no" below, the Custodian is required by the
rule to treat the Fund as consenting to disclosure of this information for all
securities owned by the Fund or any funds or accounts established by the Fund.
For the Fund's protection, the Rule prohibits the requesting company from using
the Fund's name and address for any purpose other than corporate communications.
Please indicate below whether the Fund consents or objects by checking one of
the alternatives below.
YES [_] The Custodian is authorized to release the Fund's name,
address, and share positions.
NO [_] The Custodian is not authorized to release the Fund's
name, address, and share positions.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 1st day of April, 1998.
ATTEST: VESTAUR SECURITIES, INC.
- ------------------------------ -------------------------------------------
Name: Michael Malloy Name: Dung Vukhac
Title: Vice President Title: President
ATTEST: STATE STREET BANK AND TRUST COMPANY
- ------------------------------ -------------------------------------------
Thomas M. Lenz Ronald E. Logue
Vice President Executive Vice President
A-15
<PAGE>
EXHIBIT 24 (m)(1)
Consent of Independent Auditors
We consent to the incorporation by reference in this Amendment No. 16 to the
Registration Statement of Vestaur Securities, Inc. on Form N-2 (File No. 811-
2320) of our Independent Auditors' Report dated December 21, 1998, on our audit
of the financial statements of Vestaur Securities, Inc. as of November 30, 1998
and for the periods then ended referred to in our report.
We also consent to the reference to our firm under the caption "Independent
Public Accountant" in the Prospectus in Amendment No. 16 to the Registration
Statement on Form N-2 (File No. 811-2320) and related Prospectus of Vestaur
Securities, Inc. to be filed with the Securities and Exchange Commission on
March 30, 1999.
/s/ Deloitte & Touche LLP
-------------------------
Deloitte & Touche
Boston, Massachusetts
March 29, 1999
A-1
<PAGE>
EXHIBIT 24(m)(2)
Vestaur Securities, Inc.
(the "Company")
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned, Glen T. Insley,
hereby constitutes and appoints Dung Vukhac, Carol Kosel and Audrey C. Talley,
his true and lawful attorneys, to execute in his name, place, and stead, in his
capacity as Director or officer, or both, of the Company, the Registration
Statement on Form N-2 and any amendments thereto and all instruments necessary
or incidental in connection therewith, and to file the same with the Securities
and Exchange Commission; and said attorneys shall have full power and authority
to do and perform in his name and on his behalf, in any and all capacities,
every act whatsoever requisite or necessary to be done in the premises, as fully
and to all intents and purposes as he might or could do in person, said acts of
said attorneys being hereby ratified and approved.
DATED: March 10, 1999
/s/ Glen T. Insley
------------------
Glen T. Insley
A-1
<PAGE>
EXHIBIT 24(m)(2)
Vestaur Securities, Inc.
(the "Company")
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned, Robert F.
Gurnee, hereby constitutes and appoints Dung Vukhac, Carol Kosel and Audrey C.
Talley, his true and lawful attorneys, to execute in his name, place, and stead,
in his capacity as Director or officer, or both, of the Company, the
Registration Statement on Form N-2 and any amendments thereto and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission; and said attorneys shall have
full power and authority to do and perform in his name and on his behalf, in any
and all capacities, every act whatsoever requisite or necessary to be done in
the premises, as fully and to all intents and purposes as he might or could do
in person, said acts of said attorneys being hereby ratified and approved.
DATED: March 10, 1999
/s/ Robert F. Gurnee
--------------------
Robert F. Gurnee
A-2
<PAGE>
EXHIBIT 24(m)(2)
Vestaur Securities, Inc.
(the "Company")
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned, Philip R.
Reynolds, hereby constitutes and appoints Dung Vukhac, Carol Kosel and Audrey C.
Talley, his true and lawful attorneys, to execute in his name, place, and stead,
in his capacity as Director or officer, or both, of the Company, the
Registration Statement on Form N-2 and any amendments thereto and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission; and said attorneys shall have
full power and authority to do and perform in his name and on his behalf, in any
and all capacities, every act whatsoever requisite or necessary to be done in
the premises, as fully and to all intents and purposes as he might or could do
in person, said acts of said attorneys being hereby ratified and approved.
DATED: March 10, 1999
/s/ Philip R. Reynolds
----------------------
Philip R. Reynolds
A-3
<PAGE>
EXHIBIT 24(m)(2)
Vestaur Securities, Inc.
(the "Company")
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned, Paul B. Fay,
hereby constitutes and appoints Dung Vukhac, Carol Kosel and Audrey C. Talley,
his true and lawful attorneys, to execute in his name, place, and stead, in his
capacity as Director or officer, or both, of the Company, the Registration
Statement on Form N-2 and any amendments thereto and all instruments necessary
or incidental in connection therewith, and to file the same with the Securities
and Exchange Commission; and said attorneys shall have full power and authority
to do and perform in his name and on his behalf, in any and all capacities,
every act whatsoever requisite or necessary to be done in the premises, as fully
and to all intents and purposes as he might or could do in person, said acts of
said attorneys being hereby ratified and approved.
DATED: March 10, 1999
/s/ Paul B. Fay, Jr.
--------------------
Paul B. Fay, Jr.
A-4
<PAGE>
EXHIBIT 24(m)(2)
Vestaur Securities, Inc.
(the "Company")
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned, Charles P.
Pizzi, hereby constitutes and appoints Dung Vukhac, Carol Kosel and Audrey C.
Talley, his true and lawful attorneys, to execute in his name, place, and stead,
in his capacity as Director or officer, or both, of the Company, the
Registration Statement on Form N-2 and any amendments thereto and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission; and said attorneys shall have
full power and authority to do and perform in his name and on his behalf, in any
and all capacities, every act whatsoever requisite or necessary to be done in
the premises, as fully and to all intents and purposes as he might or could do
in person, said acts of said attorneys being hereby ratified and approved.
DATED: March 10, 1999
/s/ Charles P. Pizzi
--------------------
Charles P. Pizzi
A-5
<PAGE>
EXHIBIT 24(m)(2)
Vestaur Securities, Inc.
(the "Company")
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned, Marciarose
Shestack, hereby constitutes and appoints Dung Vukhac, Carol Kosel and Audrey C.
Talley, his true and lawful attorneys, to execute in his name, place, and stead,
in his capacity as Director or officer, or both, of the Company, the
Registration Statement on Form N-2 and any amendments thereto and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission; and said attorneys shall have
full power and authority to do and perform in his name and on his behalf, in any
and all capacities, every act whatsoever requisite or necessary to be done in
the premises, as fully and to all intents and purposes as he might or could do
in person, said acts of said attorneys being hereby ratified and approved.
DATED: March 10, 1999
/s/ Marciarose Shestack
-----------------------
Marciarose Shestack
A-6
<PAGE>
EXHIBIT 24(m)(2)
Vestaur Securities, Inc.
(the "Company")
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned, John C. Jansing,
hereby constitutes and appoints Dung Vukhac, Carol Kosel and Audrey C. Talley,
his true and lawful attorneys, to execute in his name, place, and stead, in his
capacity as Director or officer, or both, of the Company, the Registration
Statement on Form N-2 and any amendments thereto and all instruments necessary
or incidental in connection therewith, and to file the same with the Securities
and Exchange Commission; and said attorneys shall have full power and authority
to do and perform in his name and on his behalf, in any and all capacities,
every act whatsoever requisite or necessary to be done in the premises, as fully
and to all intents and purposes as he might or could do in person, said acts of
said attorneys being hereby ratified and approved.
DATED: March 10, 1999
/s/ John C. Jansing
-------------------
John C. Jansing
A-7
<PAGE>
EXHIBIT 24(m)(2)
Vestaur Securities, Inc.
(the "Company")
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned, Steven S.
Elbaum, hereby constitutes and appoints Dung Vukhac, Carol Kosel and Audrey C.
Talley, his true and lawful attorneys, to execute in his name, place, and stead,
in his capacity as Director or officer, or both, of the Company, the
Registration Statement on Form N-2 and any amendments thereto and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission; and said attorneys shall have
full power and authority to do and perform in his name and on his behalf, in any
and all capacities, every act whatsoever requisite or necessary to be done in
the premises, as fully and to all intents and purposes as he might or could do
in person, said acts of said attorneys being hereby ratified and approved.
DATED: March 10, 1999
/s/ Steven S. Elbaum
--------------------
Steven S. Elbaum
A-8
<PAGE>
EXHIBIT 24(m)(2)
Vestaur Securities, Inc.
(the "Company")
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned, Robert E.
Shultz, hereby constitutes and appoints Dung Vukhac, Carol Kosel and Audrey C.
Talley, his true and lawful attorneys, to execute in his name, place, and stead,
in his capacity as Director or officer, or both, of the Company, the
Registration Statement on Form N-2 and any amendments thereto and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission; and said attorneys shall have
full power and authority to do and perform in his name and on his behalf, in any
and all capacities, every act whatsoever requisite or necessary to be done in
the premises, as fully and to all intents and purposes as he might or could do
in person, said acts of said attorneys being hereby ratified and approved.
DATED: March 10, 1999
/s/ Robert E. Shultz
--------------------
Robert E. Shultz
A-9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> EVERGREEN VESTAUR FUND CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> DEC-01-1997
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 94,578,384
<INVESTMENTS-AT-VALUE> 96,965,654
<RECEIVABLES> 2,218,040
<ASSETS-OTHER> 5,639
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 99,189,333
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 74,537
<TOTAL-LIABILITIES> 74,537
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 96,510,920
<SHARES-COMMON-STOCK> 6,722,465
<SHARES-COMMON-PRIOR> 6,652,438
<ACCUMULATED-NII-CURRENT> 262,829
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (46,223)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,387,270
<NET-ASSETS> 99,114,796
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,011,412
<OTHER-INCOME> 0
<EXPENSES-NET> (961,178)
<NET-INVESTMENT-INCOME> 7,050,235
<REALIZED-GAINS-CURRENT> (43,202)
<APPREC-INCREASE-CURRENT> (363,550)
<NET-CHANGE-FROM-OPS> 6,643,483
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6,951,195)
<DISTRIBUTIONS-OF-GAINS> (199,573)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> (19,935)
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 21,511
<NET-CHANGE-IN-ASSETS> 520,471
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (693,302)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (961,178)
<AVERAGE-NET-ASSETS> 98,854,316
<PER-SHARE-NAV-BEGIN> 14.82
<PER-SHARE-NII> 1.05
<PER-SHARE-GAIN-APPREC> (0.06)
<PER-SHARE-DIVIDEND> (1.04)
<PER-SHARE-DISTRIBUTIONS> (0.03)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.74
<EXPENSE-RATIO> 0.97
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
