<PAGE>
As filed with the Securities and Exchange Commission on January 4, 2000
Registration Nos. 2-92665; 811-4088
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
Post-Effective Amendment No. 35 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [x]
Amendment No. 37 [x]
Excelsior Funds, Inc.
(Exact Name of Registrant as Specified in Charter)
73 Tremont Street
Boston, Massachusetts 02108-3913
(Address of Principal Executive Offices)
Registrant's Telephone Number: (800) 446-1012
W. Bruce McConnel, III
Drinker Biddle & Reath LLP
One Logan Square
18/th/ and Cherry Streets
Philadelphia, Pennsylvania 19103-6996
(Name and Address of Agent for Service)
It is proposed that this post-effective amendment will become effective (check
appropriate box)
[ ] Immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[X] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
__________________________
Title of Securities Being Registered Advisor Shares of Common Stock
<PAGE>
Prospectus
[_______________], 2000
Excelsior Funds, Inc.
Advisor Shares
Blended Equity Fund
Large Cap Growth Fund
Value and Restructuring Fund
Intermediate-Term Managed Income Fund
Investment Adviser
United States Trust Company of New York
U.S. Trust Company
The Securities and Exchange Commission has not approved or disapproved any Fund
shares or determined whether this prospectus is accurate or complete. It is a
crime for anyone to tell you otherwise.
LOGO
<PAGE>
Table of Contents
Excelsior Funds, Inc. is a mutual fund family that offers shares in separate
investment portfolios which have individual investment goals and strategies.
This prospectus gives you important information about the Blended Equity, Large
Cap Growth, Value and Restructuring, and Intermediate Term Managed Income Funds)
of Excelsior Funds, Inc. (each, a Fund) that you should know before investing.
All four Funds offer two classes of shares: Advisor Shares, which are offered
in this prospectus, and Shares, which are offered in a separate prospectus.
Please read this prospectus and keep it for future reference.
This prospectus has been arranged into different sections so that you can easily
review this important information. On the next page, there is some general
information you should know about the Funds. For more detailed information about
each Fund, please see:
<TABLE>
<CAPTION>
Page
<S> <C>
Blended Equity Fund..................................................................................... 2
Large Cap Growth Fund................................................................................... 4
Value and Restructuring Fund............................................................................ 6
Intermediate-Term Managed Income Fund................................................................... 8
More Information About Risk............................................................................. 10
Each Fund's Other Investments........................................................................... 11
The Investment Adviser and Portfolio Managers........................................................... 11
Purchasing, Selling and Exchanging Fund Shares.......................................................... 12
Distribution of Fund Shares............................................................................. 15
Dividends, Distributions and Taxes...................................................................... 15
How to Obtain More Information About Excelsior Funds.................................................... Back Cover
</TABLE>
<PAGE>
Information Common to All Funds
Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.
Each Fund has its own investment goal and strategies for reaching that goal. The
investment managers invest Fund assets in a way that they believe will help a
Fund achieve its goal. Still, investing in each Fund involves risk and there is
no guarantee that a Fund will achieve its goal. An investment manager's
judgments about the markets, the economy, or companies may not anticipate actual
market movements, economic conditions or company performance, and these
judgments may affect the return on your investment. In fact, no matter how good
a job an investment manager does, you could lose money on your investment in the
Fund, just as you could with other investments. A Fund share is not a bank
deposit and is not insured or guaranteed by the Federal Deposit Insurance
Corporation (FDIC) or any government agency.
The value of your investment in a Fund is based on the market value of the
securities the Fund holds. These prices change daily due to economic and other
events that affect particular companies and other issuers. These price
movements, sometimes called volatility, may be greater or lesser depending on
the types of securities a Fund owns and the markets in which they trade. The
effect on a Fund of a change in the value of a single security will depend on
how widely the Fund diversifies its holdings.
The Adviser's Equity Investment Philosophy
The Adviser manages each of the Fund's investments with a view toward long-term
success. To achieve this success, the Adviser utilizes two fundamental
investment strategies, value and growth. The Adviser believes that, over the
long-term, the blending of these strategies will result in reduced volatility.
These strategies are combined with "longer-term investment themes" to assess the
investment potential of individual companies. Specific investment selection is a
"bottom-up" approach, guided by these strategies and themes to ensure proper
diversification, risk control and market focus.
Value
This long-term strategy consists of searching for, identifying and obtaining the
benefits of present or future investment values. For example, such values may be
found in a company's future earnings potential or in its existing resources and
assets. Accordingly, the Adviser is constantly engaged in assessing, comparing
and judging the worth of companies, particularly in comparison to the price the
markets place on such companies' shares.
Growth
This long-term strategy consists of buying and holding equity securities of
companies which it believes to be of high quality and high growth potential.
Typically, these companies are industry leaders with the potential to dominate
their markets by being low-cost, high-quality producers of products or services.
Usually these companies have an identifiable competitive advantage. The Adviser
believes that the earnings growth rate of these companies is the primary
determinant of their stock prices and that efficient markets will reward
consistently above average earnings growth with greater-than-average capital
appreciation over the long-term.
Themes
To complete the Adviser's investment philosophy in managing the funds, the
investment strategies discussed above are applied in concert with long-term
investment themes to identify investment opportunities. The Adviser believes
these longer-term themes represent strong and inexorable trends arising from
economic, social, demographic and cultural forces. The Adviser also believes
that understanding the instigation, catalysts and effects of these long-term
trends will enable it to identify companies that are currently or will soon
benefit from these trends.
<PAGE>
Blended Equity Fund
--------------------------------------------------
FUND SUMMARY
Investment Goal Long-term capital appreciation
Investment Focus Common stocks of U.S. companies
Share Price Volatility High
Principal Investment Strategy Invests in common
stocks that the Adviser believes are undervalued
in the market
Investor Profile Investors seeking growth of
capital, and who are willing to accept the risks
of investing in equity securities
--------------------------------------------------
Investment Objective
The Blended Equity Fund seeks long-term capital appreciation by investing in
companies that represent good long-term values not currently recognized in the
market prices of their securities.
Investment Strategy of the Blended Equity Fund
The Blended Equity Fund invests at least 65% of its assets in large
capitalization (i.e., companies with market capitalizations over $5 billion)
common stocks of U.S. and, to a lesser extent, foreign companies that the
Adviser believes have value that is not currently reflected in their market
prices. The Adviser generally diversifies the Fund's investments over a variety
of industries and types of companies. The Fund may invest in companies of any
size, including small, high growth companies.
The Adviser takes a long-term approach to managing the Fund and tries to
identify companies with characteristics that will lead to future earnings growth
or recognition of their true value. The Adviser looks for companies that are
positioned to provide solutions to or benefit from complex social and economic
trends, or whose products are early in their life cycle and will experience
accelerating growth in the future. In addition, the Adviser invests a smaller
portion of the Fund's assets in a quantitatively selected segment of large
capitalization U.S. companies designed to complement the Fund's core holdings by
reducing portfolio volatility and further diversifying the Fund. In considering
whether to sell one or more portfolio holdings, the Adviser will generally seek
to minimize the tax impact of any such sale(s).
Principal Risks of Investing in the Blended Equity Fund
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate substantially from day-to-day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
The Fund also may be subject to risks particular to its investments in foreign,
medium and smaller capitalization companies. These risks are discussed in
greater detail in the section entitled "More Information About Risk."
The Fund is also subject to the risk that undervalued common stocks may
underperform other segments of the equity markets or the equity markets as a
whole.
-2-
<PAGE>
Performance Information
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future. There is
no performance data for the Advisor Shares of the Fund because they have not yet
been offered. The data presented below is for the Shares Class of the Fund,
which is not offered in the prospectus. The performance of the Advisor Class is
expected to be lower than the Shares Class because the expenses of the Advisor
Class are higher than the Shares Class.
This bar chart shows changes in the performance of the Shares Class of the Fund
from year to year.
LOGO
Best Quarter Worst Quarter
24.92% (25.56%)
12/31/85 12/31/87
This table compares the Fund's average annual total returns of the Shares Class
of the Fund for the periods ended December 31, 1999 to those of the Standard &
Poor's 500 Composite Stock Price Index.
1 Year 5 Years 10 Years
- ---------------------------------------------------------------
Blended Equity Fund 22.67% 25.89% 17.62%
Standard & Poor's 500
Composite Stock Price Index [____]% [____]% [____]%
What is an Index?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower.
Fund Fees and Expenses
Every mutual fund has operating expenses to pay for services such as
professional advisory, shareholder, administration and custody services and
other costs of doing business. This table describes the fees and expenses that
you may pay if you buy and hold shares of the Fund.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fees 0.75%
Distribution (12b-1) Fees 0.25%
Other Expenses
Administrative Servicing Fee 0.25%
Other Operating Expenses 0.22%
Total Other Expenses 0.47%
Total Annual Fund Operating Expenses 1.47%
Fee Waiver 0.02%
Net Annual Fund Operating Expenses 1.45%*
* This is the actual total fund operating expense you will pay as an investor in
this class of shares of the Fund for the year ending March 31, 2000. That's
because the Adviser has contractually agreed to waive that portion of the
annual management fees payable by the Fund. The Fund's total annual fund
operating expenses and net annual fund operating expenses are estimated based
on expenses expected to be incurred in the current fiscal year. For more
information about these fees, see "Investment Adviser." Investors shall be
aware that, due to the distribution fees, a long-term Shareholder in a Fund
may pay over time more than the economic equivalent of the maximum front-end
sales charge permitted under the rules of the National Association of
Securities Dealers, Inc.
Example
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
1 Year 3 Years 5 Years 10 Years
------------------------------------------------
$148 $459 $792 $1,735
-3-
<PAGE>
Large Cap Growth Fund
-------------------------------------------------
FUND SUMMARY
Investment Goal Long-term growth of capital
Investment Focus Common stocks of large U.S.
companies
Share Price Volatility
High Principal Investment Strategy Invests in
common stocks of large companies that the
Adviser believes have above-average growth prospects
Investor Profile Investors seeking growth of
capital, and who are willing to accept the risks
of investing in equity securities of larger
companies
-------------------------------------------------
Investment Objective
The Large Cap Growth Fund seeks superior, risk-adjusted total return by
investing in larger companies whose growth prospects, in the opinion of the
Adviser, appear to exceed that of the overall market. This objective may be
changed without shareholder approval.
Investment Strategy of the Large Cap Growth Fund
The Large Cap Growth Fund invests at least 65% of its assets in common stocks of
large U.S. companies with market capitalizations over $5 billion that the
Adviser believes have above-average growth prospects.
The Adviser takes a long-term approach to managing the Fund and invests in
companies with characteristics that it believes will lead to future earnings
growth or recognition of their true value. In selecting particular investments,
the Adviser applies a bottom-up investment approach designed to identify the
best companies in the most rapidly growing industries. Frequently, these are
well established companies that are positioned to provide solutions to or
benefit from complex social and economic trends. However, the Fund also may
invest in smaller, high growth companies when the Adviser expects their earnings
to grow at an above-average rate.
Principal Risks of Investing in the Large Cap Growth Fund
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate substantially from day-to-day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
The Fund also may be subject to risks particular to its investments in smaller
capitalization companies. These risks are discussed in greater detail in the
section entitled "More Information About Risk."
The Fund is also subject to the risk that large capitalization growth stocks may
underperform other segments of the equity markets or the equity markets as a
whole.
-4-
<PAGE>
Performance Information
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future. There is
no performance data for the Advisor Shares of the Fund because they have not yet
been offered. The data presented below is for the Shares Class of the Fund,
which is not offered in the prospectus. The performance of the Advisor Class is
expected to be lower than the Shares Class because the expenses of the Advisor
Class are higher than the Shares Class.
This bar chart shows changes in the performance of the Shares Class of the Fund
from year to year.
LOGO
Best Quarter Worst Quarter
39.37% (9.28)%
12/31/98 9/30/98
This table compares the average annual total returns of the Shares Class of the
Fund for the periods ended December 31, 1999 to those of the Standard & Poor's
500 Composite Stock Price Index.
Since
1 Year Inception
- -------------------------------------------------------------
Large Cap Growth Fund 47.31% 50.10%*
Standard & Poor's 500
Composite Stock Price Index [____]% [____]%**
* Since October 1, 1997 ** Since September 30, 1997
What is an Index?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower.
Fund Fees and Expenses
Every mutual fund has operating expenses to pay for services such as
professional advisory, shareholder, administration and custody services and
other costs of doing business. This table describes the fees and expenses that
you may pay if you buy and hold shares of the Fund.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fees 0.75%
Distribution (12b-1) Fees 0.25%
Other Expenses
Administrative Servicing Fee 0.25%
Other Operating Expenses 0.25%
Total Other Expenses .50%
- ---------------------------------------------------------------
Total Annual Fund Operating Expenses 1.50%*
* The Adviser has agreed to waive fees or reimburse expenses payable by the
Fund to the extent necessary to maintain total annyal operating expenses of
not more than 1.50% of average daily net assets. The Fund's total annual fund
operating expenses are estimated based on expenses expected to be incurred in
the current fiscal year. For more information about these fees, see
"Investment Adviser." Investors shall be aware that, due to the distribution
fees, a long-term Shareholder in a Fund may pay over time more than the
economic equivalent of the maximum front-end sales charge permitted under the
rules of the National Association of Securities Dealers, Inc.
Example
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
1 Year 3 Years 5 Years 10 Years
------------------------------------------------
$153 $474 $818 $1,791
-5-
<PAGE>
Value and Restructuring Fund
--------------------------------------------------
FUND SUMMARY
Investment Goal Long-term capital appreciation
Investment Focus Equity securities of U.S. issuers
Share Price Volatility High
Principal Investment Strategy Investing in common
stocks of companies which the Adviser believes are
undervalued by the market and whose share price
are expected to benefit from the value created
through restructuring or industry consolidation
Investor Profile Investors seeking long-term
capital appreciation, and who are willing to bear
the risks of investing in equity securities
--------------------------------------------------
Investment Objective
The Value and Restructuring Fund seeks long-term capital appreciation by
investing in companies which will benefit from their restructuring or
redeployment of assets and operations in order to become more competitive or
profitable.
Investment Strategy of the Value and Restructuring Fund
The Value and Restructuring Fund invests at least 65% of its assets in common
stocks of U.S. and, to a lesser extent, foreign companies whose share price, in
the opinion of the Adviser, does not reflect the economic value of the company's
assets, but where the Adviser believes restructuring efforts or industry
consolidation will serve to highlight the true value of the company.
In choosing investments for the Fund, the Adviser looks for companies where
restructuring activities, such as consolidations, outsourcing, spin-off or
reorganization, will offer significant value to the issuer and increase its
investment potential. The Adviser may select companies of any size for the Fund
and the Fund invests in a diversified group of companies across a number of
different industries.
Principal Risks of Investing in the Value and Restructuring Fund
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate substantially from day-to-day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
The smaller capitalization companies the Fund invests in may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, these small companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.
Therefore, small cap stocks may be more volatile than those of larger companies.
These securities may be traded over-the-counter or listed on an exchange and may
or may not pay dividends.
The Fund also may be subject to risks particular to its investments in foreign
and medium capitalization companies. These risks are discussed in greater detail
in the section entitled "More Information About Risk."
The Fund is also subject to the risk that equity securities of issuers expected
to experience a restructuring or business combination may underperform other
segments of the equity markets or the equity markets as a whole.
-6-
<PAGE>
Performance Information
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future. There is
no performance data for the Advisor Shares of the Fund because they have not yet
been offered. The data presented here is for the Shares Class of the Fund,
which is not offered in this prospectus. The performance of the Advisor Class
is expected to be lower than the Shares Class because the expenses of the
Advisor Class are higher than the Shares Class.
This bar chart shows changes in the performance of the Shares Class of the Fund
from year to year.
LOGO
Best Quarter Worst Quarter
28.03% (20.46)%
12/31/99 9/30/98
This table compares the average annual total returns for the of the Shares Class
of the Fund for the periods ended December 31, 1999 to those of the Russell 1000
Value Index.
Since
1 Year 5 Years Inception
- --------------------------------------------------------------
Value and Restructuring Fund 41.83% 29.37% 26.58%*
Russell 1000 Value Index [___] [____] [___]
* Since December 31, 1992
What is an Index?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower.
Fund Fees and Expenses
Every mutual fund has operating expenses to pay for services such as
professional advisory, shareholder, administration and custody services and
other costs of doing business. This table describes the fees and expenses that
you may pay if you buy and hold shares of the Fund.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fees 0.60%
Distribution (12-1) Fees 0.25%
Other Expenses
Administrative Servicing Fee 0.25%
Other Operating Expenses 0.33%
Total Other Expenses 0.58%
- ----------------------------------------------------------------
Total Annual Fund Operating Expenses 1.43%*
* The Fund's total annual fund operating expenses are estimated based on
expenses expected to be incurred in the current fiscal year. For more
information about these fees, see "Investment Adviser." Investors shall be
aware that, due to the distribution fees, a long-term Shareholder in a Fund
may pay over time more than the economic equivalent of the maximum front-end
sales charge permitted under the rules of the National Association of
Securities Dealers, Inc.
Example
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
1 Year 3 Years 5 Years 10 Years
------------------------------------------------
$146 $452 $782 $1,713
-7-
<PAGE>
Intermediate-Term Managed Income Fund
---------------------------------------------------------
FUND SUMMARY
Investment Goal Current income
Investment Focus Investment grade fixed income securities
Share Price Volatility Medium
Principal Investment Strategy Investing in
investment grade government and corporate fixed
income securities
Investor Profile Investors seeking current income,
and who are willing to accept the risks of
investing in fixed income securities
---------------------------------------------------------
Investment Objective
The Intermediate-Term Managed Income Fund seeks as high a level of current
interest income as is consistent with relative stability of principal.
Investment Strategy of the
Intermediate-Term Managed Income Fund
The Intermediate-Term Managed Income Fund invests at least 65% of its assets in
fixed income securities issued or guaranteed by the U.S. Government, its
agencies and instrumentalities, and corporate issuers, including mortgage-backed
securities, rated at the time of investment in one of the three highest rating
categories by a major rating agency. The Fund also may invest up to 25% of its
assets in dollar-denominated fixed income securities of foreign issuers and may
place a portion of its assets in fixed income securities that are rated below
investment grade. These securities are sometimes called "high yield" or "junk"
bonds.
The Fund maintains a dollar-weighted average portfolio maturity of 3 to 10
years. The Adviser manages the Fund's average portfolio maturity in light of
current market and economic conditions to provide a competitive current yield
with reasonable risk of price volatility. In selecting particular investments,
the Adviser looks for securities that offer relative value, based on its
assessment of real interest rates and the yield curve. The fixed income
securities held by the Fund also may have the potential for moderate price
appreciation. There is no limit on the maximum maturity for a particular
security.
Principal Risks of Investing in the Intermediate-Term Managed Income Fund
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise, and the volatility of lower rated securities is even greater than
that of higher rated securities.
The Fund's U.S. Government securities are not guaranteed against price movements
due to changing interest rates. Obligations issued by some U.S. Government
agencies are backed by the U.S. Treasury, while others are backed solely by the
ability of the agency to borrow from the U.S. Treasury or by the agency's own
resources.
The mortgages underlying mortgage-backed securities may be paid off early, which
makes it difficult to determine their actual maturity and therefore calculate
how they will respond to changes in interest rates. The Fund may have to
reinvest prepaid amounts at lower interest rates. This risk of prepayment is an
additional risk of mortgage-backed securities.
The Fund also may be subject to risks particular to its investments in foreign
fixed income securities. These risks are discussed in greater detail in the
section entitled "More Information About Risk.
-8-
<PAGE>
Junk bonds are considered speculative, involve greater risks of default or
downgrade and are more volatile than investment grade securities. Junk bonds
involve additional risks which are discussed in greater detail in the section
entitled "More Information About Risk."
The Fund is also subject to the risk that intermediate-term fixed income
securities may underperform other segments of the fixed income markets or the
fixed income markets as a whole.
Performance Information
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future. There is
no performance data for the Advisor Shares of the Fund because they have not yet
been offered. The data presented here is for the Shares Class of the Fund,
which is not offered in this prospectus. The performance of the Advisor Class
is expected to be lower than the Shares Class because the expenses of the
Advisor Class are higher than the Shares Class.
This bar chart shows changes in the performance of the Shares Class of the Fund
from year to year.
LOGO
Best Quarter Worst Quarter
6.83% (3.79)%
6/30/95 3/31/94
This table compares the average annual total returns of the Shares Class of the
Fund for the periods ended December 31, 1999 to those of the Lehman Brothers
Intermediate Govt/Corp Bond Index.
Since
1 Year 5 Years Inception
- ----------------------------------------------------------------
Intermediate-Term Managed
Income Fund (1.57)% 7.06% 5.65%*
Lehman Brothers Intermediate
Govt/Corp Bond Index % % %*
* Since December 31, 1992
What is an Index?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower.
Fund Fees and Expenses
Every mutual fund has operating expenses to pay for services such as
professional advisory, shareholder, administration and custody services and
other costs of doing business. This table describes the fees and expenses that
you may pay if you buy and hold shares of the Fund.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fees 0.35%
Distribution (12b-1) Fees 0.25%
Other Expenses
Administrative Servicing Fee 0.25%
Other Operating Expenses 0.23%
Total Other Expenses 0.48%
- -------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.08%
Fee Waiver 0.03%
Net Annual Operating Expenses 1.05%*
* This is the actual total fund operating expense you will pay as an investor in
this class of shares of the Fund for the year ending March 31, 2000. That's
because the Adviser has contractually agreed to waive that portion of the
annual management fees payable by the Fund. The Fund's total annual fund
operating expenses and net annual fund operating expenses are estimated based
on expenses expected to be incurred in the current fiscal year. For more
information about these fees, see "Investment Adviser." Investors shall be
aware that, due to the distribution fees, a long-term Shareholder in a Fund
may pay over time more than the economic equivalent of the maximum front-end
sales charge permitted under the rules of the National Association of
Securities Dealers, Inc.
Example
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
1 Year 3 Years 5 Years 10 Years
------------------------------------------------
$107 $334 $579 $1,283
-9-
<PAGE>
More Information About Risk
Equity Risk
(Blended Equity Fund, Large Cap Growth Fund and Value and Restructing Fund))--
Equity securities include public and privately issued equity securities, common
and preferred stocks, warrants, rights to subscribe to common stock and
convertible securities, as well as instruments that attempt to track the price
movement of equity indices. Investments in equity securities and equity
derivatives in general are subject to market risks that may cause their prices
to fluctuate over time. The value of securities convertible into equity
securities, such as warrants or convertible debt, is also affected by prevailing
interest rates, the credit quality of the issuer and any call provision.
Small Cap Risk
(Blended Equity Fund, Large Cap Growth Fund and Value and Restructuring Fund,--
The smaller capitalization companies in which the Funds may invest in may be
more vulnerable to adverse business or economic events than larger, more
established companies. In particular, these small companies may have limited
product lines, markets and financial resources, and may depend upon a relatively
small management group. Therefore, small cap stocks may be more volatile than
those of larger companies.
Mid Cap Risk
(Blended Equity Fund and Value and Restructuring Fund--The medium capitalization
companies that the Funds may invest in may be more vulnerable to adverse
business or economic events than larger companies. In particular, these
companies may have limited product lines, markets and financial resources, and
may depend on a relatively small management group. Therefore, medium
capitalization on stocks may be more volatile than those of larger companies.
Fixed Income Risk
(Intermediate-Term Managed Income Fund)--The market value of fixed income
investments change in response to interest rate changes and other factors.
During periods of falling interest rates, the values of outstanding fixed income
securities generally rise. Moreover, while securities with longer maturities
tend to produce higher yields, the prices of longer maturity securities are also
subject to greater market fluctuations as a result of changes in interest rates.
As the average maturity or duration of a security lengthens, the risk that the
price of such security will become more volatile increases. Duration
approximates the price sensitivity of a security to changes in interest rates.
In contrast to maturity which measures only time until final payment, duration
combines consideration of yield, interest payments, final maturity and call
features.
Call Risk
(Intermediate-Term Managed Income Fund))--During periods of falling interest
rates, certain debt obligations with high interest rates may be prepaid (or
"called") by the issuer prior to maturity. This may cause a Fund's average
weighted maturity to fluctuate, and may require the Fund to invest the
resulting proceeds at lower interest rates.
Credit Risk
(Intermediate-Term Managed Income Fund))--The possibility that an issuer will
be unable to make timely payments of either principal or interest.
Event Risk
(Intermediate-Term Managed Income Fund)--Securities may suffer declines in
credit quality and market value due to issuer restructurings or other factors.
This risk should be reduced because of the Fund's multiple holdings.
High-Yield, Lower Rated Securities
(Intermediate-Term Managed Income Fund )--"Junk bonds" are subject to additional
risks associated with investing in high-yield securities, including:
Greater risk of default or price declines due to changes in the issuer's
creditworthiness. Junk bonds are subject to the risk that the issuer may not be
able to pay interest or dividends and ultimately to repay principal upon
maturity. Discontinuation of these payments could substantially adversely affect
the market value of the security.
A thinner and less active market, which may increase price volatility and limit
the ability of a Fund to sell these securities at their carrying values.
Prices for high-yield, lower rated securities may be affected by investor
perception of issuer credit quality and the outlook for economic growth, such
that prices may move independently of interest rates and the overall bond
market. Issuers of junk bonds may be more susceptible than other issuers to
economic downturns.
Mortgage-Backed Securities
(Intermediate-Term Managed Income Fund)--Mortgage-backed securities are fixed
income securities representing an interest in a pool of underlying mortgage
loans. They are sensitive to changes in interest rates, but may respond to these
changes differently from other fixed income securities due to the possibility of
prepayment of the underlying mortgage loans. As a result, it may not be possible
to determine in advance the actual maturity date or average life of a mortgage-
backed security. Rising interest rates tend to discourage refinancings, with the
result that the average life and volatility of the security will increase,
exacerbating its decrease in market price. When interest rates fall, however,
-10-
<PAGE>
mortgage-backed securities may not gain as much in market value because of the
expectation of additional mortgage prepayments that must be reinvested at lower
interest rates. Prepayment risk may make it difficult to calculate the average
maturity of a portfolio of mortgage-backed securities and, therefore, to assess
the volatility risk of that portfolio.
Foreign Security Risks
(All Funds)--Investments in securities of foreign companies or governments can
be more volatile than investments in U.S. companies or governments. Diplomatic,
political, or economic developments, including nationalization or appropriation,
could affect investments in foreign countries. Foreign securities markets
generally have less trading volume and less liquidity than U.S. markets. In
addition, the value of securities denominated in foreign currencies, and of
dividends from such securities, can change significantly when foreign currencies
strengthen or weaken relative to the U.S. dollar. Foreign companies or
governments generally are not subject to uniform accounting, auditing, and
financial reporting standards comparable to those applicable to domestic U.S.
companies or governments. Transaction costs are generally higher than those in
the U.S. and expenses for custodial arrangements of foreign securities may be
somewhat greater than typical expenses for custodial arrangements of similar
U.S. securities. Some foreign governments levy withholding taxes against
dividend and interest income. Although in some countries a portion of these
taxes is recoverable, the non-recovered portion will reduce the income received
from the securities comprising the portfolio.
Currency Risk
(All Funds)--Investments in foreign securities denominated in foreign currencies
involve additional risks, including:
. A Fund may incur substantial costs in connection with conversions between
various currencies.
. Only a limited market currently exists for hedging transactions relating to
currencies in certain emerging markets.
Year 2000 Risk
(All Funds)--The Funds depend on the smooth functioning of computer systems in
almost every aspect of their business. Like other mutual funds, businesses and
individuals around the world, the Funds could be adversely affected if the
computer systems used by their service providers do not properly process dates
on and after January 1, 2000, and distinguish between the year 2000 and the year
1900. This is commonly known as the "Year 2000 Problem." The Adviser and the
Funds' other service providers advise that they have taken and continue to take
steps to address the Year 2000 Problem with respect to the computer systems that
they use. Currently, they do not anticipate that the transition to the 21st
Century will have any material impact on their ability to continue to service
the Funds at current levels. At this time, however, there can be no assurance
that their efforts will be sufficient to avoid any adverse impact on the Funds
as a result of the Year 2000 Problem. In addition, the Funds and their
shareholders may experience losses as a result of computer difficulties
experienced by issuers of portfolio securities or third parties, such as
custodians, banks, broker-dealers or others with which the Funds do business.
Furthermore, many foreign countries are not as prepared as the U.S. for the year
2000 transition. As a result, computer difficulties in foreign markets and with
foreign institutions as a result of the Year 2000 Problem may add to the
possibility of losses to the Funds and their shareholders.
Each Fund's Other Investments
In addition to the investments and strategies described in this prospectus, each
Fund also may invest in other securities, use other strategies and engage in
other investment practices. These investments and strategies, as well as those
described in this prospectus, are described in detail in our Statement of
Additional Information.
The investments and strategies described in this prospectus are those that we
use under normal conditions. During adverse economic, market or other
conditions, each Fund may take temporary defensive positions such as investing
up to 100% of its assets in investments that would not ordinarily be consistent
with a Fund's objective. The Fund may not achieve its objective when so
invested. A Fund will do so only if the Adviser believes that the risk of loss
outweighs the opportunity for capital gains or higher income. Of course, a Fund
cannot guarantee that it will achieve its investment goal.
Investment Adviser
United States Trust Company of New York and U.S. Trust Company (together, U.S.
Trust or the Adviser) serve as investment adviser to each Fund. United States
Trust Company of New York is a state-chartered bank and trust company and a
member bank of the Federal Reserve System. U.S. Trust Company is a Connecticut
state bank and trust company. Each is a wholly-owned subsidiary of U.S. Trust
Corporation, a registered bank holding company. U.S. Trust is one of the oldest
investment management companies in the country. Since 1853, U.S. Trust has been
a leader in wealth management for sophisticated investors providing trust and
banking services to individuals, corporations and institutions, both nationally
and internationally, including investment management, estate and trust
administration, financial planning, corporate trust and agency banking, and
personal and corporate banking.
-11-
<PAGE>
On December 31, 1999, U.S. Trust had approximately $__ billion in aggregate
assets under management. United States Trust Company of New York has its
principal offices at 114 W. 47th Street, New York, NY 10036. U.S. Trust Company
has its principal offices at 225 High Ridge Road, East Building, Stamford, CT
06905. The Adviser makes investment decisions for the Funds and continuously
reviews, supervises and administers each Fund's investment program.
The Board of Directors of Excelsior Funds, Inc. supervises the Adviser and
establishes policies that the Adviser must follow in its management activities.
For the fiscal year ended March 31, 1999, U.S. Trust received advisory fees, as
a percentage of average daily net assets, of:
Blended Equity Fund 0.69%
Large Cap Growth Fund 0.71%
Value and Restructuring Fund 0.48%
Intermediate Term Managed Income 0.28%
Portfolio Managers
Leigh H. Weiss and Bruce Tavel have served as the Blended Equity Fund's
portfolio co-managers since 1997. Mr. Weiss, a Managing Director and Senior
Portfolio Manager, has been with U.S. Trust since 1993. Prior to joining U.S.
Trust, Mr. Weiss was a portfolio manager with Goldman, Sachs & Co. Mr. Tavel, a
Managing Director and head of U.S. Trust's Structured Investments Division, has
been with U.S. Trust since 1980. Mr. Weiss and Mr. Tavel are primarily
responsible for the day to day management of the Blended Equity Fund's
portfolio. Research, analyses, trade execution and other facilities provided by
U.S. Trust and other personnel also play a significant role in portfolio
management and performance.
David J. Williams has served as the Value and Restructuring Fund portfolio
manager since its inception. Mr. Williams, a Managing Director and Senior
Portfolio Manager of the Personal Investment Division of U.S. Trust, has been
with U.S. Trust since 1987. Mr. Williams is primarily responsible for the day to
day management of the Value and Restructuring Fund's portfolio. Research,
analyses, trade execution and other facilities provided by U.S. Trust and other
personnel also play a significant role in portfolio management and performance.
All investment decisions for the Large Cap Growth Fund are made by a committee
of investment professionals and no persons are primarily responsible for making
recommendations to that committee. United States Trust Company of New York
provides its investment advisory services to the Large Cap Growth Fund
primarily through its Campbell Cowperthwait division.
Frank A. Salem has served as the Intermediate-Term Managed Income Fund's
portfolio manager since August 1998. Mr. Salem is a Senior Vice President in
U.S. Trust's Fixed-Income division and has been with U.S. Trust since 1998.
Prior to joining U.S. Trust, Mr. Salem was a Director and Portfolio Manager in
the Fixed-Income Department of Mackay Shields in New York. Mr. Salem is
primarily responsible for the day to day management of the Intermediate-Term
Managed Income Fund's portfolio. Research, analyses, trade execution and other
facilities provided by U.S. Trust and other personnel also play a significant
role in portfolio management and performance.
Purchasing, Selling and Exchanging Fund Shares
This section tells you how to buy, sell (sometimes called "redeem") or exchange
Advisor Shares of the Funds.
How to Purchase Fund Shares
You may purchase shares directly by:
. Mail
. Telephone
. Wire, or
. Automatic Investment Program
To purchase shares directly from us, please call (800) 446-1012 (from overseas,
call (617) 557-8280), or complete and send in the enclosed application to
Excelsior Funds, c/o Chase Global Funds Services Company, P.O. Box 2798, Boston,
MA 02208-2798. Unless you arrange to pay by wire or through the automatic
investment program, write your check, payable in U.S. dollars, to "Excelsior
Funds" and include the name of the appropriate Fund(s) on the check. A Fund
cannot accept third-party checks, credit cards, credit card checks or cash. To
purchase shares by wire, please call us for instructions. Federal funds and
registration instructions should be wired through the Federal Reserve System to:
The Chase Manhattan Bank
ABA #021000021
Excelsior Funds, Account Number 9102732915
For Further Credit To:
Excelsior Funds
Wire Control Number
Excelsior Funds Account Registration (including account number)
-12-
<PAGE>
Investors making initial investments by wire must promptly complete the enclosed
application and forward it to the address indicated on the application.
Investors making subsequent investments by wire should follow the above
instructions.
You may also buy shares through accounts with brokers and other institutions
that are authorized to place trades in Fund shares for their customers. If you
invest through an authorized institution, you will have to follow its
procedures, which may be different from the procedures for investing directly.
Your institution may charge a fee for its services, in addition to the fees
charged by the Fund. You will also generally have to address your correspondence
or questions regarding a Fund to your institution.
The Funds' distributor may institute promotional incentive programs for dealers,
which will be paid for by the distributor out of its own assets and not out of
the assets of the Funds. Under any such program, the distributor may provide
incentives, in the form of cash or other compensation, including merchandise,
airline vouchers, trips and vacation packages, to dealers selling shares of a
Fund. If any such program is made available to any dealer, it will be made
available to all dealers on the same terms.
General Information
You may purchase shares on any day that the New York Stock Exchange (NYSE) and
the Adviser are open for business (a "Business Day"). A Fund may reject any
purchase request if it is determined that accepting the request would not be in
the best interests of the Fund or its shareholders.
The price per share (the offering price) will be the net asset value per share
(NAV) next determined after a Fund receives your purchase request in good order.
We consider requests to be in "good order" when all required documents are
properly completed, signed and received.
Each Fund calculates its NAV once each Business Day at the regularly-scheduled
close of normal trading on the NYSE (normally, 4:00 p.m., Eastern time). So, for
you to receive the current Business Day's NAV, a Fund must receive your purchase
request in good order before 4:00 p.m., Eastern time.
How We Calculate NAV
NAV for one Fund share is the value of that share's portion of all of the assets
in the Fund.
In calculating NAV, a Fund generally values its investment portfolio at market
price. If market prices are unavailable or the Adviser thinks that they are
unreliable, fair value prices may be determined in good faith using methods
approved by the Board of Directors. Fixed income investments with remaining
maturities of 60 days or less generally are valued at their amortized cost which
approximates their market value.
Some Funds may hold securities that are listed on foreign exchanges. These
securities may trade on weekends or other days when the Funds do not calculate
NAV. As a result, the market value of a Fund's investments may change on days
when you cannot purchase or sell Fund shares.
Minimum Purchases
To purchase shares for the first time, you must invest at least $500 ($250 for
IRAs) in any Fund.
Your subsequent investments must be made in amounts of at least $50.
A Fund may accept investments of smaller amounts at its discretion.
Automatic Investment Program
If you have a checking, money market or NOW account with a bank, you may
purchase shares automatically through regular deductions from your account in
amounts of at least $50 per transaction.
With a $50 minimum initial investment, you may begin regularly scheduled
investments once per month, on either the first or fifteenth day, or twice per
month, on both days.
How to Sell Your Fund Shares
You may sell shares directly by:
. Mail
. Telephone, or
. Systematic Withdrawal Plan
Holders of Fund shares may sell (sometimes called "redeem") shares by following
procedures established when they opened their account or accounts. If you have
questions, call (800) 446-1012 (from overseas, call (617) 557-8280).
You may sell your shares by sending a written request for redemption to:
Excelsior Funds
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
Please be sure to indicate the number of shares to be sold, identify your
account number and sign the request.
If you own your shares through an account with a broker or other institution,
contact that broker or institution to sell your shares.
-13-
<PAGE>
If you own your shares directly and previously indicated on your account
application or arranged in writing to do so, you may sell your shares on any
Business Day by contacting a Fund directly by telephone at (800) 446-1012 (from
overseas, call (617) 557-8280). The minimum amount for telephone redemptions is
$500. We may reject a telephone redemption request if we deem it advisable to do
so.
If you would like to sell $50,000 or more of your shares, or any amount if the
proceeds are to be sent to an address other than the address of record, please
notify the Fund in writing and include a signature guarantee by a bank or other
financial institution (a notarized signature is not sufficient).
The sale price of each share will be the next NAV determined after the Fund
receives your request in good order.
Systematic Withdrawal Plan
If you have at least $10,000 in your account, you may use the systematic
withdrawal plan. Under the plan you may arrange monthly, quarterly, semi-annual
or annual automatic withdrawals from any Fund. The proceeds of each withdrawal
will be mailed to you by check or, if you have a checking or savings account
with a bank, electronically transferred to your account.
Receiving Your Money
Normally, we will send your sale proceeds within five Business Days after we
receive your request in good order. Your proceeds can be wired to your bank
account (if more than $500) or sent to you by check. If you recently purchased
your shares by check, redemption proceeds may not be available until your check
has cleared (which may take up to 15 Business Days).
Redemptions in Kind
We generally pay sale (redemption) proceeds in cash. However, under unusual
conditions that make the payment of cash unwise, we might pay all or part of
your redemption proceeds in liquid securities with a market value equal to the
redemption price (redemption in kind). It is highly unlikely that your shares
would ever be redeemed in kind, but if they were you would probably have to pay
transaction costs to sell the securities distributed to you, as well as taxes on
any capital gains from the sale as with any redemption.
Involuntary Sales of Your Shares
If your account balance drops below $500 because of redemptions, you may be
required to sell your shares. But, we will always give you at least 60 days'
written notice to give you time to add to your account and avoid the sale of
your shares.
Suspension of Your Right to Sell Your Shares
A Fund may suspend your right to sell your shares if the NYSE restricts trading,
the SEC declares an emergency or for other reasons. More information about this
is in our Statement of Additional Information.
How to Exchange Your Shares
You may exchange your Advisor Shares on any Business Day for Advisor Shares of
any other portfolio of Excelsior Funds, Inc., Excelsior Tax-Exempt Funds, Inc.
or Excelsior Institutional Trust offering Advisor Shares. In order to protect
other shareholders, we may limit your exchanges to no more than six per year,
and we may reject any exchange request. Shares can be exchanged directly by
mail, or by telephone if you previously selected the telephone exchange option
on the account application.
You may also exchange shares through your financial institution. Exchange
requests must be for an amount of at least $500.
If you recently purchased shares by check you may not be able to exchange your
shares until your check has cleared (which may take up to 15 Business Days).
This exchange privilege may be changed or canceled at any time upon 60 days'
notice.
When you exchange shares, you are really selling your shares and buying other
Fund shares. So, your sale price and purchase price will be based on the NAV
next calculated after the Fund receives your exchange request in good order.
Telephone Transactions
Purchasing, selling and exchanging Fund shares over the telephone is extremely
convenient, but not without risk. Although the Funds have certain safeguards and
procedures to confirm the identity of callers and the authenticity of
instructions, the Funds are not responsible for any losses or costs incurred by
following telephone instructions we reasonably believe to be genuine. If you or
your financial institution transact with a Fund over the telephone, you will
generally bear the risk of any loss.
Authorized Intermediaries
Certain intermediaries, such as brokers or other shareholder organizations, are
authorized to accept purchase, redemption and exchange requests for Fund shares.
These intermediaries may authorize other organizations to accept purchase,
redemption and exchange requests for Fund shares. These requests are normally
executed at the NAV next determined after the intermediary receives the request
in good order. Authorized intermediaries are responsible for transmitting
requests and delivering funds on a timely basis.
-14-
<PAGE>
Shareholder Servicing
The Funds are permitted to pay a shareholder servicing fee to certain
shareholder organizations for providing services to their customers who hold
shares of the Funds. These services may include assisting in the processing of
purchase, redemption and exchange requests and providing periodic account
statements. The shareholder servicing fee may be up to 0.40% of the average
daily net asset value of Fund shares held by clients of a shareholder
organization.
Distribution of Fund Shares
The Funds have adopted a distribution plan that allows Advisor Shares of the
Funds to pay distribution fees for the sale and distribution of their shares in
an amount not to exceed the annual rate of 0.50% of the average daily net asset
value of each Fund's outstanding Advisor Shares. Because these fees are paid
out of a Fund's assets continuously, over time these fees will increase the cost
of your investment and may cost you more than paying other types of sales
charges.
Dividends, Distributions and Taxes
The Blended Equity Fund, Large Cap Growth Fund and Value and Restructuring Fund
distribute dividends from their income quarterly.
The Intermediate-Term Managed Income Fund distributes its income by declaring a
dividend daily and paying accumulated dividends monthly.
Each Fund makes distributions of capital gains, if any, at least annually. If
you own Fund shares on a Fund's record date, you will be entitled to receive the
distribution.
Dividends and distributions for shares held of record by U.S. Trust and its
affiliates or correspondent banks will be paid in cash. Otherwise, dividends and
distributions will be paid in the form of additional Fund shares unless you
elect to receive payment in cash. To elect cash payment, you must notify the
Fund in writing prior to the date of the distribution. Your election will be
effective for dividends and distributions paid after the Fund receives your
written notice. To cancel your election, simply send the Fund written notice.
Taxes
Please consult your tax adviser regarding your specific questions about federal,
state and local income taxes. Below we have summarized some important tax issues
that affect the Funds and their shareholders. This summary is based on current
tax laws, which may change.
Each Fund will distribute substantially all of its income and capital gains, if
any. The dividends and distributions you receive may be subject to federal,
state and local taxation, depending upon your tax situation. Distributions you
receive from a Fund may be taxable whether or not you reinvest them. Income
distributions are generally taxable at ordinary income tax rates. Capital gains
distributions are generally taxable at the rates applicable to long-term capital
gains. Each sale or exchange of Fund shares is a taxable event.
The Blended Equity Fund, Large Cap Growth Fund and Value and Restructuring Fund
may be able to pass along a tax credit for foreign income taxes they pay. The
Fund will notify you if you are entitled to the credit.
More information about taxes is in the Statement of Additional Information.
-15-
<PAGE>
Excelsior Funds, Inc.
Investment Adviser
United States Trust Company of New York
114 W. 47th Street
New York, New York 10036
U.S. Trust Company
225 High Ridge Road
East Building
Stamford, Connecticut 06905
Distributor
Edgewood Services, Inc.
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-5829
More information about each Fund is available without charge through the
following:
Statement of Additional Information (SAI)
The SAI dated [_______], 2000 includes detailed information about Excelsior
Funds, Inc. The SAI is on file with the SEC and is incorporated by reference
into this prospectus. This means that the SAI, for legal purposes, is a part of
this prospectus.
Annual and Semi-Annual Reports
These reports contain additional information about the Funds' investments. The
Annual Report also lists each Fund's holdings and contains information from the
Fund's managers about strategies, and recent market conditions and trends.
To Obtain More Information:
By Telephone: Call (800) 466-1012 (from overseas, call (617) 557-8280)
By Mail: Excelsior Funds, 73 Tremont Street, Boston, Massachusetts 02108-3913
By Internet: http://www.excelsiorfunds.com
From the SEC: You can also obtain the SAI or the Annual and Semi-Annual reports,
as well as other information about Excelsior Funds, Inc., from the SEC's website
("http://www.sec.gov"). You may review and copy documents at the SEC Public
Reference Room in Washington, DC (for information call 1-800-SEC-0330). You may
request documents by mail from the SEC, upon payment of a duplicating fee, by
writing to: Securities and Exchange Commission, Public Reference Section,
Washington, DC 20549-6009. Excelsior Funds, Inc.'s Investment Company Act
registration number is 811-4088.
<PAGE>
EXCELSIOR FUNDS, INC.
Advisor Shares
Blended Equity Fund
Value and Restructuring Fund
Large Cap Growth Fund
Intermediate-Term Managed Income Fund
STATEMENT OF ADDITIONAL INFORMATION
[ ], 2000
This Statement of Additional Information is not a prospectus but should be
read in conjunction with the current prospectus for the Advisor Shares of the
Blended Equity, Value and Restructuring, Large Cap Growth and Intermediate-Term
Managed Income Funds (individually, a "Fund" and collectively, the "Funds") of
Excelsior Funds, Inc. dated [ ], 2000 (the "Prospectus"). A copy of
the Prospectus may be obtained by writing Excelsior Funds, Inc. c/o Chase Global
Funds Services Company, 73 Tremont Street, Boston, MA 02108-3913 or by calling
(800) 446-1012. Capitalized terms not otherwise defined have the same meaning as
in the Prospectus.
The audited financial statements and related report of Ernst & Young LLP,
independent auditors, contained in the annual report to the Funds' shareholders
for the fiscal year ended March 31, 1999 are incorporated herein by reference in
the section entitled "Financial Statements." No other parts of the annual report
are incorporated herein by reference. The unaudited financial statements
contained in the semi-annual report to the Funds' shareholder for the period
ended September 30, 1999 are also incorporated herein be reference in the
statement entitled "Financial Statements." Copies of the semi-annual report and
annual report may be obtained upon request and without charge by calling (800)
446-1012.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
CLASSIFICATION AND HISTORY...................................................................................... 1
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS..................................................................... 1
Investment Philosophy and Strategies (Blended Equity, Value and Restructuring and Large Cap Growth Funds).. 1
Additional Investment Policies (Blended Equity, Value and Restructuring and Large Cap Growth Funds)........ 3
Additional Investment Policies (Intermediate-Term Managed Income Fund)..................................... 4
Additional Information on Portfolio Instruments............................................................ 5
Investment Limitations..................................................................................... 17
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION.................................................................. 22
Purchase of Shares......................................................................................... 24
Redemption Procedures...................................................................................... 26
Other Redemption Information............................................................................... 28
INVESTOR PROGRAMS............................................................................................... 29
Systematic Withdrawal Plan................................................................................. 29
Exchange Privilege......................................................................................... 29
Retirement Plans........................................................................................... 30
Automatic Investment Program............................................................................... 31
Additional Information..................................................................................... 31
DESCRIPTION OF CAPITAL STOCK.................................................................................... 31
MANAGEMENT OF THE FUNDS......................................................................................... 33
Directors and Officers..................................................................................... 33
Investment Advisory and Administration Agreements.......................................................... 38
Shareholder Organizations.................................................................................. 40
Expenses................................................................................................... 41
Custodian and Transfer Agent............................................................................... 41
PORTFOLIO TRANSACTIONS.......................................................................................... 42
PORTFOLIO VALUATION............................................................................................. 45
INDEPENDENT AUDITORS............................................................................................ 46
COUNSEL......................................................................................................... 46
ADDITIONAL INFORMATION CONCERNING TAXES......................................................................... 46
PERFORMANCE AND YIELD INFORMATION............................................................................... 48
Yields and Performance..................................................................................... 49
MISCELLANEOUS................................................................................................... 52
FINANCIAL STATEMENTS............................................................................................ 53
APPENDIX A...................................................................................................... A-1
</TABLE>
<PAGE>
CLASSIFICATION AND HISTORY
--------------------------
Excelsior Funds, Inc. (the "Company") is an open-end, management
investment company. Each Fund is a separate series of the Company and is
classified as diversified under the Investment Company Act of 1940, as amended
(the "1940 Act"). The Company was organized as a Maryland corporation on August
2, 1984. Prior to December 28, 1995, the Company was known as "UST Master
Funds, Inc." Prior to August 1, 1997, the Blended Equity Fund and Value and
Restructuring Fund were known as the Equity Fund and Business and Industrial
Restructuring Fund, respectively.
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
-------------------------------------------
The following information supplements the description of the
investment objectives, strategies and risks of the Funds as set forth in the
Prospectus. The investment objective of each of the Blended Equity, Value and
Restructuring and the Intermediate-Term Managed Income Funds may not be changed
without the vote of the holders of a majority of its outstanding shares (as
defined below). The investment objective of the Large Cap Growth Fund may be
changed without shareholder approval. Except as expressly noted below, each
Fund's investment policies may be changed without shareholder approval.
Investment Philosophy and Strategies (Blended Equity, Value and Restructuring
- ------------------------------------
and Large Cap Growth Funds)
In managing investments for the Blended Equity, Value and
Restructuring and Large Cap Growth Funds, the Adviser follows a long-term
investment philosophy which generally does not change with the short-term
variability of financial markets or fundamental conditions. Its approach begins
with the conviction that all worthwhile investments are grounded in value. The
Adviser believes that an investor can identify fundamental values that
eventually should be reflected in market prices, such that over time, a
disciplined search for fundamental value will achieve better results than
attempting to take advantage of short-term price movements.
The Adviser's investment philosophy is to identify investment values
available in the market at attractive prices. Investment value arises from the
ability to generate earnings or from the ownership of assets or resources.
Underlying earnings potential and asset values are frequently demonstrable but
not recognized in the market prices of the securities representing their
ownership. The Adviser employs the following three different but closely
interrelated portfolio strategies to focus and organize its search for
investment values.
1. Problem/Opportunity Companies. Important investment
-----------------------------
opportunities often occur where companies develop solutions to large, complex,
fundamental problems, such as declining industrial productivity; rising costs
and declining sources of energy; the economic imbalances and value erosion
caused by years of high inflation and interest rates; the soaring
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costs and competing priorities of providing health care; and the accelerating
interdependence and "shrinking size" of the world.
Solutions or parts of solutions to large problems may be generated by
established companies or comparatively new companies of all sizes through the
development of new products, technologies or services, or through new
applications of older ones.
Investment in such companies represents a very wide range of
investment potential, current income return rates, and exposure to fundamental
and market risks. Income generated by each Fund's investments in these
companies would be expected to be moderate, characterized by lesser rates than
those of a fund whose sole objective is current income, and somewhat higher
rates than those of a higher-risk growth fund.
2. Transaction Value Companies. In the opinion of the Adviser, the
---------------------------
stock market frequently values the aggregate ownership of a company at a
substantially lower figure than its component assets would be worth if they were
sold off separately over time. Such assets may include intangible assets such as
product and market franchises, operating know-how, or distribution systems, as
well as such tangible properties as oil reserves, timber, real estate, or
production facilities. Investment opportunities in these companies are
determined by the magnitude of difference between economic worth and current
market price.
Market undervaluations are very often corrected by purchase and sale,
restructuring of the company, or market appreciation to recognize the actual
worth. The recognition process may well occur over time, however, incurring a
form of time-exposure risk. Success from investing in these companies is often
great, but may well be achieved only after a waiting period of inactivity.
Income derived from investing in undervalued companies is expected to
be moderately greater than that derived from investments in either the
Problem/Opportunity or Early Life Cycle companies.
3. Early Life Cycle Companies. Investments in Early Life Cycle
--------------------------
companies tend to be narrowly focused on an objective of higher rates of capital
appreciation. They correspondingly will involve a significantly greater degree
of risk and the reduction of current income to a negligible level. Such
investments will not be limited to new, small companies engaged only in frontier
technology, but will seek opportunities for maximum appreciation through the
full spectrum of business operations, products, services, and asset values.
Consequently, the Funds' investments in Early Life Cycle companies are primarily
in younger, small- to medium- sized companies in the early stages of their
development. Such companies are usually more flexible in trying new approaches
to problem-solving and in making new or different employment of assets. Because
of the high risk level involved, the ratio of success among such companies is
lower than the average, but for those companies which succeed, the magnitude of
investment reward is potentially higher.
To complete the Adviser's investment philosophy in managing the Funds,
the three portfolio strategies discussed above are applied in concert with other
longer-term
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investment "themes" to identify investment opportunities. The Adviser believes
these longer-term themes represent strong and inexorable trends. The Adviser
also believes that understanding the instigation, catalysts and effects of these
longer-term trends should help to identify companies that are beneficiaries of
these trends.
Additional Investment Policies (Blended Equity, Value and Restructuring and
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Large Cap Growth Funds)
Under normal market and economic conditions, each of the Blended
Equity, Value and Restructuring and Large Cap Growth Funds will invest at least
65% of its total assets in common stock, preferred stock and securities
convertible into common stock. Normally, up to 35% of each Fund's total assets
may be invested in other securities and instruments including, e.g., other
investment-grade debt securities (i.e., debt obligations classified within the
four highest ratings of a nationally recognized statistical rating organization
such as Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Ratings
Services ("S&P") or, if unrated, determined by the Adviser to be of comparable
quality), warrants, options and futures instruments as described in more detail
below. During temporary defensive periods or when the Adviser believes that
suitable stocks or convertible securities are unavailable, each Fund may hold
cash and/or invest some or all of its assets in U.S. government securities,
high-quality money market instruments and repurchase agreements collateralized
by the foregoing obligations.
Portfolio holdings will include equity securities of companies having
capitalizations of varying amounts, and the Funds may invest in the securities
of high growth, small companies when the Adviser expects earnings and the price
of the securities to grow at an above-average rate. Certain securities owned by
the Funds may be traded only in the over-the-counter market or on a regional
securities exchange, may be listed only in the quotation service commonly known
as the "pink sheets," and may not be traded every day or in the volume typical
of trading on a national securities exchange. As a result, there may be a
greater fluctuation in the value of a Fund's shares, and a Fund may be required,
in order to satisfy redemption requests or for other reasons, to sell these
securities at a discount from market prices, to sell during periods when such
disposition is not desirable, or to make many small sales over a period of time.
The Funds may invest in the securities of foreign issuers directly or
indirectly through sponsored and unsponsored American Depository Receipts
("ADRs"). ADRs represent receipts typically issued by a U.S. bank or trust
company which evidence ownership of underlying securities of foreign issuers.
Investments in unsponsored ADRs involve additional risk because financial
information based on generally accepted accounting principles ("GAAP") may not
be available for the foreign issuers of the underlying securities. ADRs may not
necessarily be denominated in the same currency as the underlying securities
into which they may be converted. The Funds may also enter into foreign
currency exchange transactions for hedging purposes.
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Additional Investment Policies (Intermediate-Term Managed Income Fund)
- ------------------------------
The Intermediate-Term Managed Income Fund may invest in the following
types of securities: corporate debt obligations such as bonds, debentures,
obligations convertible into common stocks and money market instruments;
preferred stocks; and obligations issued or guaranteed by the U.S. Government
and its agencies or instrumentalities. The Fund is also permitted to enter into
repurchase agreements. The Fund may, from time to time, invest in debt
obligations issued by or on behalf of states, territories and possessions of the
United States, the District of Columbia and their respective authorities,
agencies, instrumentalities and political subdivisions, the interest from which
is, in the opinion of bond counsel to the issuer, exempt from federal income tax
("Municipal Obligations"). The purchase of Municipal Obligations may be
advantageous when, as a result of prevailing economic, regulatory or other
circumstances, the performance of such securities, on a pre-tax basis, is
comparable to that of corporate or U.S. Government debt obligations.
Under normal market conditions, at least 75% of the Intermediate-Term
Managed Income Fund's total assets will be invested in investment-grade debt
obligations rated within the three highest ratings of Standard & Poor's Ratings
Services ("S&P") or Moody's Investors Service, Inc. ("Moody's") (or in unrated
obligations considered to be of comparable credit quality by the Adviser) and in
U.S. Government obligations and money market instruments of the types listed
below under "Additional Information on Portfolio Instruments - Money Market
Instruments." When, in the opinion of the Adviser, a defensive investment
posture is warranted, the Fund may invest temporarily and without limitation in
high quality, short-term money market instruments.
Unrated securities will be considered of investment grade if deemed by
the Adviser to be comparable in quality to instruments so rated, or if other
outstanding obligations of the issuers of such securities are rated "Baa/BBB" or
better. It should be noted that obligations rated in the lowest of the top four
ratings ("Baa" by Moody's or "BBB" by S&P) are considered to have some
speculative characteristics and are more sensitive to economic change than
higher rated bonds.
The Intermediate-Term Managed Income Fund may invest up to 25% of its
total assets in: preferred stocks; dollar-denominated debt obligations of
foreign issuers, including foreign corporations and foreign governments; and
dollar-denominated debt obligations of U.S. companies issued outside the United
States. The Fund may also enter into foreign currency exchange transactions for
hedging purposes. The Fund may invest up to 10% of its total assets in
obligations rated below the four highest ratings of S&P or Moody's ("junk
bonds") with no minimum rating required. The Fund will not invest in common
stocks, and any common stocks received through conversion of convertible debt
obligations will be sold in an orderly manner as soon as possible.
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Additional Information on Portfolio Instruments
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Options
-------
The Value and Restructuring and Large Cap Growth Funds may purchase
put and call options listed on a national securities exchange and issued by the
Options Clearing Corporation. Such purchases would be in an amount not
exceeding 5% of each such Fund's net assets. Such options may relate to
particular securities or to various stock and bond indices. Purchase of options
is a highly specialized activity which entails greater than ordinary investment
risks, including a substantial risk of a complete loss of the amounts paid as
premiums to the writer of the options. Regardless of how much the market price
of the underlying security increases or decreases, the option buyer's risk is
limited to the amount of the original investment for the purchase of the option.
However, options may be more volatile than the underlying securities, and
therefore, on a percentage basis, an investment in options may be subject to
greater fluctuation than an investment in the underlying securities. A listed
call option gives the purchaser of the option the right to buy from a clearing
corporation, and the writer has the obligation to sell to the clearing
corporation, the underlying security at the stated exercise price at any time
prior to the expiration of the option, regardless of the market price of the
security. The premium paid to the writer is in consideration for undertaking
the obligations under the option contract. A listed put option gives the
purchaser the right to sell to a clearing corporation the underlying security at
the stated exercise price at any time prior to the expiration date of the
option, regardless of the market price of the security. Put and call options
purchased by the Value and Restructuring and Large Cap Growth Funds will be
valued at the last sale price or, in the absence of such a price, at the mean
between bid and asked prices.
The Value and Restructuring and Large Cap Growth Funds may engage in
writing covered call options (options on securities owned by the particular
Fund) and enter into closing purchase transactions with respect to such options.
Such options must be listed on a national securities exchange and issued by the
Options Clearing Corporation. The aggregate value of the securities subject to
options written by each Fund may not exceed 25% of the value of its net assets.
By writing a covered call option, a Fund forgoes the opportunity to profit from
an increase in the market price of the underlying security above the exercise
price except insofar as the premium represents such a profit, and it will not be
able to sell the underlying security until the option expires or is exercised or
the Fund effects a closing purchase transaction by purchasing an option of the
same series.
When a Fund writes a covered call option, it may terminate its
obligation to sell the underlying security prior to the expiration date of the
option by executing a closing purchase transaction, which is effected by
purchasing on an exchange an option of the same series (i.e., same underlying
security, exercise price and expiration date) as the option previously written.
Such a purchase does not result in the ownership of an option. A closing
purchase transaction will ordinarily be effected to realize a profit on an
outstanding call option, to prevent an underlying security from being called, to
permit the sale of the underlying security or to permit the writing of a new
call option containing different terms on such underlying security. The cost of
such a liquidation purchase plus transaction costs may be greater than the
premium received upon the original option, in which event the writer will have
incurred a loss on the transaction.
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An option position may be closed out only on an exchange which provides a
secondary market for an option of the same series. There is no assurance that a
liquid secondary market on an exchange will exist for any particular option. A
covered option writer, unable to effect a closing purchase transaction, will not
be able to sell the underlying security until the option expires or the
underlying security is delivered upon exercise, with the result that the writer
in such circumstances will be subject to the risk of market decline in the
underlying security during such period. A Fund will write an option on a
particular security only if the Adviser believes that a liquid secondary market
will exist on an exchange for options of the same series, which will permit the
Fund to make a closing purchase transaction in order to close out its position.
When a Fund writes an option, an amount equal to the net premium (the
premium less the commission) received by that Fund is included in the liability
section of that Fund's statement of assets and liabilities as a deferred credit.
The amount of the deferred credit will be subsequently marked to market to
reflect the current value of the option written. The current value of the
traded option is the last sale price or, in the absence of a sale, the average
of the closing bid and asked prices. If an option expires on the stipulated
expiration date, or if the Fund involved enters into a closing purchase
transaction, the Fund will realize a gain (or loss if the cost of a closing
purchase transaction exceeds the net premium received when the option is sold),
and the deferred credit related to such option will be eliminated. If an option
is exercised, the Fund involved may deliver the underlying security from its
portfolio or purchase the underlying security in the open market. In either
event, the proceeds of the sale will be increased by the net premium originally
received, and the Fund involved will realize a gain or loss. Premiums from
expired call options written by the Funds and net gains from closing purchase
transactions are treated as short-term capital gains for Federal income tax
purposes, and losses on closing purchase transactions are short-term capital
losses. The use of covered call options is not a primary investment technique
of the Funds and such options will normally be written on underlying securities
as to which the Adviser does not anticipate significant short-term capital
appreciation.
Repurchase Agreements
---------------------
Each Fund may agree to purchase portfolio securities subject to the
seller's agreement to repurchase them at a mutually agreed upon date and price
("repurchase agreements"). The Funds will enter into repurchase agreements only
with financial institutions that are deemed to be creditworthy by the Adviser,
pursuant to guidelines established by the Company's Board of Directors. The
Funds will not enter into repurchase agreements with the Adviser or any of its
affiliates. Repurchase agreements with remaining maturities in excess of seven
days will be considered illiquid securities and will be subject to the
limitations described below under "Illiquid Securities." The repurchase price
under a repurchase agreement generally equals the price paid by a Fund plus
interest negotiated on the basis of current short-term rates (which may be more
or less than the rate on the securities underlying the repurchase agreement).
The seller under a repurchase agreement will be required to maintain
the value of the obligations subject to the agreement at not less than the
repurchase price. Default or bankruptcy of the seller would, however, expose a
Fund to possible delay in connection with the
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disposition of the underlying securities or loss to the extent that proceeds
from a sale of the underlying securities were less than the repurchase price
under the agreement.
Securities subject to repurchase agreements are held by the Funds'
custodian (or sub-custodian) or in the Federal Reserve/Treasury book-entry
system. The seller under a repurchase agreement will be required to maintain
the value of the securities which are subject to the agreement and held by a
Fund at not less than the repurchase price. Default or bankruptcy of the seller
would, however, expose a Fund to possible delay in connection with the
disposition of the underlying securities or loss to the extent that proceeds
from a sale of the underlying securities were less than the repurchase price
under the agreement. Repurchase agreements are considered loans by a Fund under
the 1940 Act.
Futures Contracts and Related Options
-------------------------------------
Each of the Blended Equity, Value and Restructuring and Large Cap
Growth Funds may invest in futures contracts and options thereon. They may
enter into interest rate futures contracts and other types of financial futures
contracts, including foreign currency futures contracts, as well as any index or
foreign market futures which are available on recognized exchanges or in other
established financial markets. A futures contract on foreign currency creates a
binding obligation on one party to deliver, and a corresponding obligation on
another party to accept delivery of, a stated quantity of a foreign currency for
an amount fixed in U.S. dollars. Foreign currency futures, which operate in a
manner similar to interest rate futures contracts, may be used by the Funds to
hedge against exposure to fluctuations in exchange rates between the U.S. dollar
and other currencies arising from multinational transactions.
The Intermediate-Term Managed Income Fund may invest in interest rate
futures contracts and municipal bond index futures contracts as a hedge against
changes in market conditions. A municipal bond index assigns values daily to the
municipal bonds included in the index based on the independent assessment of
dealer-to-dealer municipal bond brokers. A municipal bond index futures contract
represents a firm commitment by which two parties agree to take or make delivery
of an amount equal to a specified dollar amount multiplied by the difference
between the municipal bond index value on the last trading date of the contract
and the price at which the futures contract is originally struck. No physical
delivery of the underlying securities in the index is made. Any income from
investments in futures contracts will be taxable income of the Intermediate-Term
Managed Income Fund.
The Intermediate-Term Managed Income Fund may enter into contracts for
the future delivery of fixed-income securities commonly known as interest rate
futures contracts. Interest rate futures contracts are similar to municipal bond
index futures contracts except that, instead of a municipal bond index, the
"underlying commodity" is represented by various types of fixed-income
securities.
Futures contracts will not be entered into for speculative purposes,
but to hedge risks associated with a Fund's securities investments. The Funds
will engage in futures transactions only to the extent permitted by the
Commodity Futures Trading Commission ("CFTC") and the Securities and Exchange
Commission ("SEC"). When investing in futures
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contracts, the Funds must satisfy certain asset segregation requirements to
ensure that the use of futures is unleveraged. When a Fund takes a long
position in a futures contract, it must maintain a segregated account containing
liquid assets equal to the purchase price of the contract, less any margin or
deposit. When a Fund takes a short position in a futures contract, the Fund
must maintain a segregated account containing liquid assets in an amount equal
to the market value of the securities underlying such contract (less any margin
or deposit), which amount must be at least equal to the market price at which
the short position was established. Asset segregation requirements are not
applicable when a Fund "covers" an options or futures position generally by
entering into an offsetting position. Each Fund will limit its hedging
transactions in futures contracts and related options so that, immediately after
any such transaction, the aggregate initial margin that is required to be posted
by the Fund under the rules of the exchange on which the futures contract (or
futures option) is traded, plus any premiums paid by the Fund on its open
futures options positions, does not exceed 5% of the Fund's total assets, after
taking into account any unrealized profits and unrealized losses on the Fund's
open contracts (and excluding the amount that a futures option is "in-the-money"
at the time of purchase). An option to buy a futures contract is "in-the-money"
if the then-current purchase price of the underlying futures contract exceeds
the exercise or strike price; an option to sell a futures contract is "in-the-
money" if the exercise or strike price exceeds the then-current purchase price
of the contract that is the subject of the option. In addition, the use of
futures contracts is further restricted to the extent that no more than 10% of a
Fund's total assets may be hedged. This restriction does not apply to the
Intermediate-Term Managed Income Fund.
Positions in futures contracts may be closed out only on an exchange
which provides a secondary market for such futures. However, there can be no
assurance that a liquid secondary market will exist for any particular futures
contract at any specific time. Thus, it may not be possible to close a futures
position. In the event of adverse price movements, a Fund would continue to be
required to make daily cash payments to maintain its required margin. In such
situations, if the Fund has insufficient cash, it may have to sell portfolio
securities to meet daily margin requirements at a time when it may be
disadvantageous to do so. In addition, the Fund may be required to make
delivery of the instruments underlying futures contracts it holds. The
inability to close options and futures positions also could have an adverse
impact on the Fund's ability to effectively hedge.
Transactions in futures as a hedging device may subject a Fund to a
number of risks. Successful use of futures by a Fund is subject to the ability
of the Adviser to correctly predict movements in the direction of the market.
For example, if a Fund has hedged against the possibility of a decline in the
market adversely affecting securities held by it and securities prices increase
instead, the Fund will lose part or all of the benefit to the increased value of
its securities which it has hedged because it will have approximately equal
offsetting losses in its futures positions. There may be an imperfect
correlation, or no correlation at all, between movements in the price of the
futures contracts (or options) and movements in the price of the instruments
being hedged. In addition, investments in futures may subject a Fund to losses
due to unanticipated market movements which are potentially unlimited. Further,
there is no assurance that a liquid market will exist for any particular futures
contract (or option) at any particular time. Consequently, a Fund may realize a
loss on a futures transaction that is not offset by a favorable movement in the
price of securities which it holds or intends to purchase or
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may be unable to close a futures position in the event of adverse price
movements. In addition, in some situations, if a Fund has insufficient cash, it
may have to sell securities to meet daily variation margin requirements at a
time when it may be disadvantageous to do so. Such sales of securities may be,
but will not necessarily be, at increased prices which reflect the rising
market.
As noted above, the risk of loss in trading futures contracts in some
strategies can be substantial, due both to the low margin deposits required, and
the extremely high degree of leverage involved in futures pricing. As a result,
a relatively small price movement in a futures contract may result in immediate
and substantial loss (as well as gain) to the investor. For example, if at the
time of purchase, 10% of the value of the futures contract is deposited as
margin, a subsequent 10% decrease in the value of the futures contract would
result in a total loss of the margin deposit, before any deduction for the
transaction costs, if the account were then closed out. A 15% decrease would
result in a loss equal to 150% of the original margin deposit, before any
deduction for the transaction costs, if the contract were closed out. Thus, a
purchase or sale of a futures contract may result in losses in excess of the
amount invested in the contract.
Utilization of futures transactions involves the risk of loss by a
Fund of margin deposits in the event of bankruptcy of a broker with whom such
Fund has an open position in a futures contract or related option.
Most futures exchanges limit the amount of fluctuation permitted in
futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may vary
either up or down from the previous day's settlement price at the end of a
trading session. Once the daily limit has been reached in a particular type of
contract, no trades may be made on that day at a price beyond that limit. The
daily limit governs only price movement during a particular trading day and
therefore does not limit potential losses, because the limit may prevent the
liquidation of unfavorable positions. Futures contract prices have occasionally
moved to the daily limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of futures positions and
subjecting some futures traders to substantial losses.
The trading of futures contracts is also subject to the risk of
trading halts, suspensions, exchange or clearing house equipment failures,
government intervention, insolvency of a brokerage firm or clearing house or
other disruptions of normal trading activity, which could at times make it
difficult or impossible to liquidate existing positions or to recover excess
variation margin payments.
Options on Futures Contracts
----------------------------
Each of the Blended Equity, Value and Restructuring and Large Cap
Growth Funds may purchase options on the futures contracts in which they are
permitted to invest, which are described above. A futures option gives the
holder, in return for the premium paid, the right to buy (call) from or sell
(put) to the writer of the option a futures contract at a specified price at any
time during the period of the option. Upon exercise, the writer of the option
is obligated to pay the difference between the cash value of the futures
contract and the exercise price. Like the buyer or seller of a futures
contract, the holder, or writer, of an option has the right to terminate
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its position prior to the scheduled expiration of the option by selling, or
purchasing, an option of the same series, at which time the person entering into
the closing transaction will realize a gain or loss.
Investments in futures options involve some of the same considerations
that are involved in connection with investments in futures contracts (for
example, the existence of a liquid secondary market). In addition, the purchase
of an option also entails the risk that changes in the value of the underlying
futures contract will not be fully reflected in the value of the option
purchased. Depending on the pricing of the option compared to either the
futures contract upon which it is based, or upon the price of the instruments
being hedged, an option may or may not be less risky than ownership of the
futures contract or such instruments. In general, the market prices of options
can be expected to be more volatile than the market prices on the underlying
futures contract. Compared to the purchase or sale of futures contracts,
however, the purchase of call or put options on futures contracts may frequently
involve less potential risk to a Fund because the maximum amount at risk is the
premium paid for the options (plus transaction costs). Although permitted by
their fundamental investment policies, the Funds do not currently intend to
write futures options, and will not do so in the future absent any necessary
regulatory approvals.
When-Issued and Forward Transactions
------------------------------------
Each Fund may purchase eligible securities on a "when-issued" basis
and may purchase or sell securities on a "forward commitment" basis. These
transactions involve a commitment by a Fund to purchase or sell particular
securities with payment and delivery taking place in the future, beyond the
normal settlement date, at a stated price and yield. Securities purchased on a
"forward commitment" or "when-issued" basis are recorded as an asset and are
subject to changes in value based upon changes in the general level of interest
rates. When a Fund agrees to purchase securities on a "when-issued" or "forward
commitment" basis, the custodian will set aside cash or liquid portfolio
securities equal to the amount of the commitment in a separate account.
Normally, the custodian will set aside portfolio securities to satisfy a
purchase commitment and, in such case, the Fund may be required subsequently to
place additional assets in the separate account in order to ensure that the
value of the account remains equal to the amount of the Fund's commitment. It
may be expected that a Fund's net assets will fluctuate to a greater degree when
it sets aside portfolio securities to cover such purchase commitments than when
it sets aside cash. Because a Fund will set aside cash or liquid assets to
satisfy its purchase commitments in the manner described, its liquidity and
ability to manage its portfolio might be affected in the event its forward
commitments or commitments to purchase "when-issued" securities ever exceed 25%
of the value of its assets.
It is expected that "forward commitments" and "when-issued" purchases
will not exceed 25% of the value of a Fund's total assets absent unusual market
conditions, and that the length of such commitments will not exceed 45 days.
The Funds do not intend to engage in "when-issued" purchases and "forward
commitments" for speculative purposes, but only in furtherance of their
investment objectives.
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A Fund will purchase securities on a "when-issued" or "forward
commitment" basis only with the intention of completing the transaction. If
deemed advisable as a matter of investment strategy, however, a Fund may dispose
of or renegotiate a commitment after it is entered into, and may sell securities
it has committed to purchase before those securities are delivered to the Fund
on the settlement date. In these cases, the Fund may realize a taxable capital
gain or loss.
When a Fund engages in "when-issued" or "forward commitment"
transactions, it relies on the other party to consummate the trade. Failure of
such other party to do so may result in the Fund incurring a loss or missing an
opportunity to obtain a price considered to be advantageous.
The market value of the securities underlying a "when-issued" purchase
or a "forward commitment" to purchase securities and any subsequent fluctuations
in their market value are taken into account when determining the market value
of a Fund starting on the day the Fund agrees to purchase the securities. The
Fund does not earn interest on the securities it has committed to purchase until
they are paid for and delivered on the settlement date.
Each Fund will conduct its currency exchange transactions either on a
spot (i.e., cash) basis at the rate prevailing in the currency exchange markets,
or by entering into forward currency contracts. A forward foreign currency
contract involves an obligation to purchase or sell a specific currency for a
set price at a future date. In this respect, forward currency contracts are
similar to foreign currency futures contracts; however, unlike futures contracts
which are traded on recognized commodities exchange, forward currency contracts
are traded in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. Also, forward currency
contracts usually involve delivery of the currency involved instead of cash
payment as in the case of futures contracts.
A Fund's participation in forward currency contracts will be limited
to hedging involving either specific transactions or portfolio positions.
Transaction hedging involves the purchase or sale of foreign currency with
respect to specific receivables or payables of the Fund generally arising in
connection with the purchase or sale of its portfolio securities. The purpose
of transaction hedging is to "lock in" the U.S. dollar equivalent price of such
specific securities. Position hedging is the sale of foreign currency with
respect to portfolio security positions denominated or quoted in that currency.
The Funds will not speculate in foreign currency exchange transactions.
Transaction and position hedging will not be limited to an overall percentage of
a Fund's assets, but will be employed as necessary to correspond to particular
transactions or positions. A Fund may not hedge its currency positions to an
extent greater than the aggregate market value (at the time of entering into the
forward contract) of the securities held in its portfolio denominated, quoted
in, or currently convertible into that particular currency. When the Funds
engage in forward currency transactions, certain asset segregation requirements
must be satisfied to ensure that the use of foreign currency transactions is
unleveraged. When a Fund takes a long position in a forward currency contract,
it must maintain a segregated account containing liquid assets equal to the
purchase price of the contract, less any margin or deposit. When a Fund takes a
short position in a forward currency contract, the Fund must maintain a
segregated account containing liquid assets in an amount equal to the market
value of the
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<PAGE>
currency underlying such contract (less any margin or deposit), which amount
must be at least equal to the market price at which the short position was
established. Asset segregation requirements are not applicable when a Fund
"covers" a forward currency position generally by entering into an offsetting
position.
The transaction costs to the Funds of engaging in forward currency
transactions vary with factors such as the currency involved, the length of the
contract period and prevailing currency market conditions. Because currency
transactions are usually conducted on a principal basis, no fees or commissions
are involved. The use of forward currency contracts does not eliminate
fluctuations in the underlying prices of the securities being hedged, but it
does establish a rate of exchange that can be achieved in the future. Thus,
although forward currency contracts used for transaction or position hedging
purposes may limit the risk of loss due to an increase in the value of the
hedged currency, at the same time they limit potential gain that might result
were the contracts not entered into. Further, the Adviser may be incorrect in
its expectations as to currency fluctuations, and a Fund may incur losses in
connection with its currency transactions that it would not otherwise incur. If
a price movement in a particular currency is generally anticipated, a Fund may
not be able to contract to sell or purchase that currency at an advantageous
price.
At or before the maturity of a forward sale contract, a Fund may sell
a portfolio security and make delivery of the currency, or retain the security
and offset its contractual obligation to deliver the currency by purchasing a
second contract pursuant to which the Fund will obtain, on the same maturity
date, the same amount of the currency which it is obligated to deliver. If the
Fund retains the portfolio security and engages in an offsetting transaction,
the Fund, at the time of execution of the offsetting transaction, will incur a
gain or a loss to the extent that movement has occurred in forward contract
prices. Should forward prices decline during the period between a Fund's
entering into a forward contract for the sale of a currency and the date it
enters into an offsetting contract for the purchase of the currency, the Fund
will realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should
forward prices increase, the Fund will suffer a loss to the extent the price of
the currency it has agreed to sell is less than the price of the currency it has
agreed to purchase in the offsetting contract. The foregoing principles
generally apply also to forward purchase contracts.
Municipal Obligations
---------------------
The Intermediate-Term Managed Income Fund may, when deemed appropriate
by the Adviser in light of the Fund's investment objectives, invest in Municipal
Obligations. Although yields on Municipal Obligations can generally be expected
under normal market conditions to be lower than yields on corporate and U.S.
Government obligations, from time to time municipal securities have
outperformed, on a total return basis, comparable corporate and federal debt
obligations as a result of prevailing economic, regulatory or other
circumstances. Dividends paid by the Intermediate-Term Managed Income Fund that
are derived from interest on municipal securities would be taxable to the Fund's
shareholders for federal income tax purposes.
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<PAGE>
Stand-By Commitments
--------------------
The Intermediate-Term Managed Income Fund may acquire "stand-by
commitments" with respect to Municipal Obligations held by it. Under a "stand-by
commitment," a dealer or bank agrees to purchase from a Fund, at the Fund's
option, specified Municipal Obligations at a specified price. The amount payable
to a Fund upon its exercise of a "stand-by commitment" is normally (i) the
Fund's acquisition cost of the Municipal Obligations (excluding any accrued
interest which the Fund paid on their acquisition), less any amortized market
premium or plus any amortized market or original issue discount during the
period the Fund owned the securities, plus (ii) all interest accrued on the
securities since the last interest payment date during that period. "Stand-by
commitments" are exercisable by a Fund at any time before the maturity of the
underlying Municipal Obligations, and may be sold, transferred or assigned by
the Fund only with the underlying instruments.
The Intermediate-Term Managed Income Fund expects that "stand-by
commitments" will generally be available without the payment of any direct or
indirect consideration. However, if necessary or advisable, the Fund may pay for
a "stand-by commitment" either separately in cash or by paying a higher price
for securities which are acquired subject to the commitment (thus reducing the
yield to maturity otherwise available for the same securities). Where the Fund
has paid any consideration directly or indirectly for a "stand-by commitment,"
its cost will be reflected as unrealized depreciation for the period during
which the commitment was held by the Fund.
The Intermediate-Term Managed Income Fund intends to enter into
"stand-by commitments" only with banks and broker/dealers which, in the
Adviser's opinion, present minimal credit risks. In evaluating the
creditworthiness of the issuer of a "stand-by commitment," the Adviser will
review periodically the issuer's assets, liabilities, contingent claims and
other relevant financial information. The Fund will acquire "stand-by
commitments" solely to facilitate portfolio liquidity and does not intend to
exercise its rights thereunder for trading purposes. "Stand-by commitments"
acquired by the Fund will be valued at zero in determining the Fund's net asset
value.
Real Estate Investment Trusts
-----------------------------
Each of the Blended Equity, Value and Restructuring and Large Cap
Growth Funds may invest in equity real estate investment trusts ("REITs").
REITs pool investors' funds for investment primarily in commercial real estate
properties. Investments in REITs may subject a Fund to certain risks. REITs
may be affected by changes in the value of the underlying property owned by the
trust. REITs are dependent upon specialized management skill, may not be
diversified and are subject to the risks of financing projects. REITs are also
subject to heavy cash flow dependency, defaults by borrowers, self liquidation
and the possibility of failing to qualify for the beneficial tax treatment
available to REITs under the Internal Revenue Code of 1986, as amended (the
"Code"), and to maintain exemption from the 1940 Act. As a shareholder in a
REIT, a Fund would bear, along with other shareholders, its pro rata portion of
the REIT's operating expenses. These expenses would be in addition to the
advisory and other expenses a Fund bears directly in connection with its own
operations.
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<PAGE>
Securities Lending
------------------
To increase return on its portfolio securities, each Fund may lend its
portfolio securities to broker/dealers pursuant to agreements requiring the
loans to be continuously secured by collateral equal at all times in value to at
least the market value of the securities loaned. Collateral for such loans may
include cash, securities of the U.S. government, its agencies or
instrumentalities, or an irrevocable letter of credit issued by a bank, or any
combination thereof. Such loans will not be made if, as a result, the aggregate
of all outstanding loans of a Fund exceeds 30% of the value of its total assets.
When a Fund lends its securities, it continues to receive interest or dividends
on the securities lent and may simultaneously earn interest on the investment of
the cash loan collateral, which will be invested in readily marketable, high-
quality, short-term obligations. Although voting rights, or rights to consent,
attendant to lent securities pass to the borrower, such loans may be called at
any time and will be called so that the securities may be voted by a Fund if a
material event affecting the investment is to occur.
There may be risks of delay in receiving additional collateral or in
recovering the securities loaned or even a loss of rights in the collateral
should the borrower of the securities fail financially. However, loans are made
only to borrowers deemed by the Adviser to be of good standing and when, in the
Adviser's judgment, the income to be earned from the loan justifies the
attendant risks.
Money Market Instruments
------------------------
All Funds may invest in "money market instruments," which include,
among other things, bank obligations, commercial paper and corporate bonds with
remaining maturities of 13 months or less.
Bank obligations include bankers' acceptances, negotiable certificates
of deposit, and non-negotiable time deposits earning a specified return and
issued by a U.S. bank which is a member of the Federal Reserve System or insured
by the Bank Insurance Fund of the Federal Deposit Insurance Corporation
("FDIC"), or by a savings and loan association or savings bank which is insured
by the Savings Association Insurance Fund of the FDIC. Bank obligations also
include U.S. dollar-denominated obligations of foreign branches of U.S. banks
and obligations of domestic branches of foreign banks. Investments in bank
obligations of foreign branches of financial institutions or of domestic
branches of foreign banks are limited so that no more than 5% of the value of a
Fund's total assets at the time of purchase may be invested in any one branch,
and no more than 20% of a particular Fund's total assets at the time of purchase
may be invested in the aggregate in such obligations (see investment limitation
No. 17 below under "Investment Limitations"). Investments in time deposits are
limited to no more than 5% of the value of a Fund's total assets at the time of
purchase.
Investments by the Funds in commercial paper will consist of issues
that are rated "A-2" or better by S&P or "Prime-2" or better by Moody's or, in
the case of the Intermediate-Term Managed Income Fund, "F2" or better by Fitch.
In addition, each Fund may acquire
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<PAGE>
unrated commercial paper that is determined by the Adviser at the time of
purchase to be of comparable quality to rated instruments that may be acquired
by the particular Fund.
Commercial paper may include, in the case of the Blended Equity, Value
and Restructuring and Large Cap Growth Funds, variable and floating rate
instruments. While there may be no active secondary market with respect to a
particular instrument purchased by a Fund, the Fund may, from time to time as
specified in the instrument, demand payment of the principal of the instrument
or may resell the instrument to a third party. The absence of an active
secondary market, however, could make it difficult for a Fund to dispose of the
instrument if the issuer defaulted on its payment obligation or during periods
that the Fund is not entitled to exercise its demand rights, and the Fund could,
for this or other reasons, suffer a loss with respect to such instrument.
Government Obligations
----------------------
Each of the Blended Equity, Value and Restructuring and Large Cap
Growth Funds may invest in U.S. Government obligations, including U.S. Treasury
Bills and the obligations of Federal Home Loan Banks, Federal Farm Credit Banks,
Federal Land Banks, the Federal Housing Administration, the Farmers Home
Administration, the Export-Import Bank of the United States, the Small Business
Administration, the Government National Mortgage Association, the Federal
National Mortgage Association, the General Services Administration, the Central
Bank for Cooperatives, the Federal Home Loan Mortgage Corporation, the Federal
Intermediate Credit Banks and the Maritime Administration.
The Intermediate-Term Managed Income Fund may purchase government
obligations that include obligations issued or guaranteed by the U.S.
Government, its agencies and instrumentalities. Obligations of certain agencies
and instrumentalities of the U.S. Government are supported by the full faith and
credit of the U.S. Treasury; others are supported by the right of the issuer to
borrow from the Treasury; others are supported by the discretionary authority of
the U.S. Government to purchase the agency's obligations; still others are
supported only by the credit of the instrumentality. No assurance can be given
that the U.S. Government would provide financial support to U.S. Government-
sponsored instrumentalities if it is not obligated to do so by law. Obligations
of such instrumentalities will be purchased on behalf of the Intermediate-Term
Managed Income Fund only when the Adviser believes that the credit risk with
respect to the instrumentality is minimal.
Examples of the types of U.S. Government obligations that may be held
by the Intermediate-Term Managed Income Fund include, in addition to U.S.
Treasury Bills, the obligations of Federal Home Loan Banks, the Farm Credit
System Financial Assistance Corporation, Federal Land Banks, the Federal
Financing Bank, the Federal Housing Administration, Farmers Home Administration,
Export-Import Bank of the United States, Small Business Administration,
Government National Mortgage Association, Federal National Mortgage Association,
General Services Administration, Central Bank for Cooperatives, Federal Home
Loan Mortgage Corporation, Federal Intermediate Credit Banks, the Tennessee
Valley Authority and Maritime Administration.
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<PAGE>
Investment Company Securities
-----------------------------
Each Fund may invest in securities issued by other investment
companies which invest in high-quality, short-term debt securities and which
determine their net asset value per share based on the amortized cost or penny-
rounding method. In addition to the advisory fees and other expenses a Fund
bears directly in connection with its own operations, as a shareholder of
another investment company, a Fund would bear its pro rata portion of the other
investment company's advisory fees and other expenses. As such, the Fund's
shareholders would indirectly bear the expenses of the Fund and the other
investment company, some or all of which would be duplicative. Such securities
will be acquired by each Fund within the limits prescribed by the 1940 Act,
which include, subject to certain exceptions, a prohibition against a Fund
investing more than 10% of the value of its total assets in such securities.
Borrowing and Reverse Repurchase Agreements
-------------------------------------------
Each Fund may borrow funds, in an amount up to 10% of the value of its
total assets, for temporary or emergency purposes, such as meeting larger than
anticipated redemption requests, and not for leverage. Each Fund may also agree
to sell portfolio securities to financial institutions such as banks and broker-
dealers and to repurchase them at a mutually agreed date and price (a "reverse
repurchase agreement"). The SEC views reverse repurchase agreements as a form
of borrowing. At the time a Fund enters into a reverse repurchase agreement, it
will place in a segregated custodial account liquid assets having a value equal
to the repurchase price, including accrued interest. Reverse repurchase
agreements involve the risk that the market value of the securities sold by a
Fund may decline below the repurchase price of those securities.
Illiquid Securities
-------------------
No Fund will knowingly invest more than 10% (15%, with respect to the
Large Cap Growth Fund) of the value of its net assets in securities that are
illiquid. A security will be considered illiquid if it may not be disposed of
within seven days at approximately the value at which the particular Fund has
valued the security. Each Fund may purchase securities which are not registered
under the Securities Act of 1933, as amended (the "Act"), but which can be sold
to "qualified institutional buyers" in accordance with Rule 144A under the Act.
Any such security will not be considered illiquid so long as it is determined by
the Adviser, acting under guidelines approved and monitored by the Board, that
an adequate trading market exists for that security. This investment practice
could have the effect of increasing the level of illiquidity in a Fund during
any period that qualified institutional buyers are no longer interested in
purchasing these restricted securities.
Portfolio Turnover
------------------
Each Fund may sell a portfolio investment immediately after its
acquisition if the Adviser believes that such a disposition is consistent with
the investment objective of the particular Fund. Portfolio investments may be
sold for a variety of reasons, such as a more favorable investment opportunity
or other circumstances bearing on the desirability of continuing to hold such
investments. A high rate of portfolio turnover may involve correspondingly
greater
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<PAGE>
brokerage commission expenses and other transaction costs, which must be borne
directly by a Fund and ultimately by its shareholders. High portfolio turnover
may result in the realization of substantial net capital gains. To the extent
net short-term capital gains are realized, any distributions resulting from such
gains are considered ordinary income for federal income tax purposes. (See
"Additional Information Concerning Taxes.")
Investment Limitations
- ----------------------
The investment limitations enumerated below are matters of fundamental
policy. Fundamental investment limitations may be changed with respect to a
Fund only by a vote of the holders of a majority of such Fund's outstanding
shares. As used herein, a "vote of the holders of a majority of the outstanding
shares" of the Company or a particular Fund means, with respect to the approval
of an investment advisory agreement or a change in a fundamental investment
policy, the affirmative vote of the lesser of (a) more than 50% of the
outstanding shares of the Company or such Fund, or (b) 67% or more of the shares
of the Company or such Fund present at a meeting if more than 50% of the
outstanding shares of the Company or such Fund are represented at the meeting in
person or by proxy. Investment limitations which are "operating policies" with
respect to a Fund may be changed by the Company's Board of Directors without
shareholder approval.
The following investment limitations are fundamental with respect to
each of the Funds. Each Fund may not:
1. Make loans, except that (i) each Fund may purchase or hold debt
securities in accordance with its investment objective and policies, and may
enter into repurchase agreements with respect to obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, (ii) each
of the Blended Equity, Value and Restructuring and Intermediate-Term Managed
Income Funds may lend portfolio securities in an amount not exceeding 30% of its
total assets, and (iii) the Large Cap Growth Fund may lend portfolio securities
in accordance with its investment objective and policies; and
2. Purchase any securities which would cause more than 25% of the
value of its total assets at the time of purchase to be invested in the
securities of one or more issuers conducting their principal business activities
in the same industry, provided that (i) with respect to the Blended Equity Fund,
there is no limitation with respect to securities issued or guaranteed by the
U.S. Government or domestic bank obligations, (ii) with respect to the Value and
Restructuring and Intermediate-Term Managed Income Funds, there is no limitation
with respect to securities issued or guaranteed by the U.S. Government, (iii)
with respect to the Large Cap Growth Fund, there is no limitation with respect
to securities issued or guaranteed by the U.S. Government, any state, territory
or possession of the United States, the District of Columbia or any of their
authorities, agencies, instrumentalities or political subdivisions, and
repurchase agreements secured by such securities, and (iv) neither all finance
companies, as a group, nor all utility companies, as a group, are considered a
single industry for purposes of this policy.
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<PAGE>
The following investment limitations are fundamental with respect to
each of the Blended Equity, Value and Restructuring and Intermediate-Term
Managed Income Funds. Each such Fund may not:
3. Act as an underwriter of securities within the meaning of the
Securities Act of 1933, except insofar as the Blended Equity and Value and
Restructuring Funds might be deemed to be underwriters upon disposition of
certain portfolio securities acquired within the limitation on purchases of
restricted securities;
4. Purchase or sell real estate, except that each Fund may purchase
securities of issuers which deal in real estate and may purchase securities
which are secured by interests in real estate;
5. Purchase securities of any one issuer, other than U.S. Government
obligations, if immediately after such purchase more than 5% of the value of its
total assets would be invested in the securities of such issuer, except that up
to 25% of the value of its total assets may be invested without regard to this
5% limitation;
6. Borrow money except from banks for temporary purposes, and then
in amounts not in excess of 10% of the value of its total assets at the time of
such borrowing; or mortgage, pledge, or hypothecate any assets except in
connection with any such borrowing and in amounts not in excess of the lesser of
the dollar amounts borrowed and 10% of the value of its total assets at the time
of such borrowing. (This borrowing provision is included solely to facilitate
the orderly sale of portfolio securities to accommodate abnormally heavy
redemption requests and is not for leverage purposes.) A Fund will not purchase
portfolio securities while borrowings in excess of 5% of its total assets are
outstanding. In the case of the Blended Equity and Value and Restructuring
Funds, optioned stock held in escrow is not deemed to be a pledge; and
7. Issue any senior securities, except insofar as any borrowing in
accordance with a Fund's investment limitation contained in the Prospectus might
be considered to be the issuance of a senior security.
The following investment limitations are fundamental with respect to
the Large Cap Growth Fund. The Fund may not:
8. Borrow money or mortgage, pledge or hypothecate its assets except
to the extent permitted under the 1940 Act. Optioned stock held in escrow is not
deemed to be a pledge;
9. Purchase securities of any one issuer, other than securities
issued or guaranteed by the U.S. Government, its agencies or instrumentalities
or other investment companies if, immediately after such purchase, more than 5%
of the value of its total assets would be invested in the securities of such
issuer, except that up to 25% of the value of its total assets may be invested
without regard to this 5% limitation;
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<PAGE>
10. Act as an underwriter of securities within the meaning of the
Securities Act of 1933, except insofar as it might be deemed to be an
underwriter upon disposition of certain portfolio securities acquired within the
limitation on purchases of restricted securities and except to the extent that
the purchase of obligations directly from the issuer thereof in accordance with
its investment objective, policies and limitations may be deemed to be
underwriting;
11. Purchase or sell real estate, except that (a) the Fund may
purchase securities of issuers which deal in real estate and may purchase
securities which are secured by real estate or interests therein, and (b) the
Fund may hold and sell any real estate it acquires as a result of the Fund's
ownership of such securities;
12. Issue any senior securities, except insofar as any borrowing in
accordance with the Fund's investment limitations might be considered to be the
issuance of a senior security; and
13. Purchase or sell commodities or commodities futures contracts or
invest in oil, gas, or other mineral exploration or development programs;
provided, however, that the Fund may: (a) purchase publicly traded securities of
companies engaging in whole or in part in such activities or invest in
liquidating trust receipts, certificates of beneficial ownership or other
instruments in accordance with its investment objective and policies, and (b)
purchase and sell options, forward contracts, futures contracts and futures
options.
The following investment limitations are fundamental with respect to
the Blended Equity Fund, but are operating policies with respect to the Value
and Restructuring and Large Cap Growth Funds. No Fund may:
14. Purchase securities on margin, make short sales of securities, or
maintain a short position;
15. Invest in companies for the purpose of exercising management or
control; and
16. Acquire any other investment company or investment company
security, except in connection with a merger, consolidation, reorganization, or
acquisition of assets or where otherwise permitted by the 1940 Act.
The following investment limitations are fundamental with respect to
the Blended Equity Fund. The Fund may not:
17. Invest in obligations of foreign branches of financial
institutions or in domestic branches of foreign banks, if immediately after such
purchase (i) more than 5% of the value of its total assets would be invested in
obligations of any one foreign branch of the financial institution or domestic
branch of a foreign bank; or (ii) more than 20% of its total assets
-19-
<PAGE>
would be invested in foreign branches of financial institutions or in domestic
branches of foreign banks;
18. Knowingly invest more than 10% of the value of its total assets
in illiquid securities, including repurchase agreements with remaining
maturities in excess of seven days, restricted securities, and other securities
for which market quotations are not readily available;
19. Invest in or sell put options, call options, straddles, spreads,
or any combination thereof; provided, however, that the Fund may write covered
call options with respect to its portfolio securities that are traded on a
national securities exchange, and may enter into closing purchase transactions
with respect to such options if, at the time of the writing of such option, the
aggregate value of the securities subject to the options written by the Fund
does not exceed 25% of the value of its total assets;
20. Invest more than 5% of its total assets in securities issued by
companies which, together with any predecessor, have been in continuous
operation for fewer than three years; and
21. Purchase or sell commodities futures contracts or invest in oil,
gas, or other mineral exploration or development programs; provided, however,
that this shall not prohibit the Fund from purchasing publicly traded securities
of companies engaging in whole or in part in such activities.
The following investment limitation is fundamental with respect to the
Value and Restructuring and Intermediate-Term Managed Income Funds. These Funds
may not:
22. Purchase or sell commodities or commodities futures contracts or
invest in oil, gas, or other mineral exploration or development programs;
provided, however, that (i) this shall not prohibit the Value and Restructuring
Fund from purchasing publicly traded securities of companies engaging in whole
or in part in such activities or from investing in liquidating trust receipts,
certificates of beneficial ownership or other instruments in accordance with
their investment objectives and policies, and (ii) each Fund may enter into
futures contracts and futures options.
The following investment limitations are fundamental with respect to
the Intermediate-Term Managed Income Fund. The Fund may not:
23. Make loans, except that (i) the Fund may purchase or hold debt
securities in accordance with its investment objective and policies, and may
enter into repurchase agreements with respect to obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, and (ii)
the Fund may lend portfolio securities in an amount not exceeding 30% of its
total assets.
24. Borrow money except from banks for temporary purposes, and then
in amounts not in excess of 10% of the value of its total assets at the time of
such borrowing; or mortgage, pledge, or hypothecate any assets except in
connection with any such borrowing and
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<PAGE>
in amounts not in excess of the lesser of the dollar amounts borrowed and 10% of
the value of its total assets at the time of such borrowing, provided that the
Fund may enter futures contracts and futures options. (This borrowing provision
is included solely to facilitate the orderly sale of portfolio securities to
accommodate abnormally heavy redemption requests and is not for leverage
purposes.) A Fund will not purchase portfolio securities while borrowings in
excess of 5% of its total assets are outstanding.
25. Issue any senior securities, except insofar as any borrowing in
accordance with a Fund's investment limitation contained in the Prospectus might
be considered to be the issuance of a senior security; provided that the Fund
may enter into futures contracts and futures options.
* * *
In addition to the investment limitations described above, no Fund may
invest in the securities of any single issuer if, as a result, the Fund holds
more than 10% of the outstanding voting securities of such issuer. This is a
fundamental policy with respect to the Intermediate-Term Managed Income Fund.
The Value and Restructuring and Large Cap Growth Funds may not invest
in obligations of foreign branches of financial institutions or in domestic
branches of foreign banks if immediately after such purchase (i) more than 5% of
the value of their respective total assets would be invested in obligations of
any one foreign branch of the financial institution or domestic branch of a
foreign bank; or (ii) more than 20% of their respective total assets would be
invested in foreign branches of financial institutions or in domestic branches
of foreign banks. In addition, the Large Cap Growth Fund will not purchase
portfolio securities while borrowings in excess of 5% of its total assets are
outstanding. These investment policies may be changed by the Company's Board of
Directors without shareholder approval.
The Blended Equity Fund will not invest more than 25% of the value of
its total assets in domestic bank obligations.
Each Fund currently intends to limit its investments in warrants so
that, valued at the lower of cost or market value, they do not exceed 5% of the
Fund's net assets. For the purpose of this limitation, warrants acquired by a
Fund in units or attached to securities will be deemed to be without value.
Each of the Blended Equity, Value and Restructuring and Large Cap Growth Funds
also intend to refrain from entering into arbitrage transactions.
For the purpose of Investment Limitation No. 4, the prohibition of
purchases of real estate includes acquisition of limited partnership interests
in partnerships formed with a view toward investing in real estate, but does not
prohibit purchases of shares in real estate investment trusts.
In Investment Limitation No. 9 above: (a) a security is considered to
be issued by the governmental entity or entities whose assets and revenues back
the security, or, with respect to a private activity bond that is backed only by
the assets and revenues of a non-governmental
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<PAGE>
user, such non-governmental user; (b) in certain circumstances, the guarantor of
a guaranteed security may also be considered to be an issuer in connection with
such guarantee; and (c) securities issued or guaranteed by the United States
Government, its agencies or instrumentalities (including securities backed by
the full faith and credit of the United States) are deemed to be U.S. Government
obligations.
The Blended Equity Fund may not purchase or sell commodities except as
provided in Investment Limitation No. 13 above.
The following investment limitations are operating policies with
respect to the Intermediate-Term Managed Income Fund. The Fund may not:
1. Purchase securities on margin, make short sales of securities, or
maintain a short position; provided that each Fund may enter into futures
contracts and futures options;
2. Invest in companies for the purpose of exercising management or
control;
3. Purchase foreign securities; provided that the Fund may purchase
(a) dollar-denominated debt obligations issued by foreign issuers, including
foreign corporations and governments, by U.S. corporations outside the United
States in an amount not to exceed 25% of its total assets at time of purchase;
and (b) certificates of deposit, bankers' acceptances, or other similar
obligations issued by domestic branches of foreign banks, or foreign branches of
U.S. banks, in an amount not to exceed 20% of its total net assets; and
4. Acquire any other investment company or investment company
security, except in connection with a merger, consolidation, reorganization, or
acquisition of assets or where otherwise permitted by the 1940 Act.
The Intermediate-Term Managed Income Fund's transactions in futures
contracts and futures options (including the margin posted by the Fund in
connection with such transactions) are excluded from the Fund's prohibitions:
against the purchase of securities on margin, short sales of securities and the
maintenance of a short position; the issuance of senior securities; writing or
selling puts, calls, straddles, spreads, or combinations thereof; and the
mortgage, pledge or hypothecation of the Funds' assets.
If a percentage limitation is satisfied at the time of investment, a
later increase or decrease in such percentage resulting from a change in value
of a Fund's securities will not constitute a violation of such limitation.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
----------------------------------------------
Advisor Shares are continuously offered for sale by Edgewood Services,
Inc. (the "Distributor"), a registered broker-dealer and the Company's sponsor
and distributor. The Distributor is a wholly-owned subsidiary of Federated
Investors, Inc. and is located at 5800
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<PAGE>
Corporate Drive, Pittsburgh, PA 15237-5829. The Distributor has agreed to use
appropriate efforts to solicit all purchase orders.
At various times the Distributor may implement programs under which a
dealer's sales force may be eligible to win nominal awards for certain sales
efforts or under which the Distributor will make payments to any dealer that
sponsors sales contests or recognition programs conforming to criteria
established by the Distributor, or that participates in sales programs sponsored
by the Distributor. The Distributor in its discretion may also from time to
time, pursuant to objective criteria established by the Distributor, pay fees to
qualifying dealers for certain services or activities which are primarily
intended to result in sales of shares of the Funds. If any such program is made
available to any dealer, it will be made available to all dealers on the same
terms and conditions. Payments made under such programs will be made by the
Distributor out of its own assets and not out of the assets of the Funds.
In addition, the Distributor may offer to pay a fee from its own
assets to financial institutions for the continuing investment of customers'
assets in the Funds or for providing substantial marketing, sales and
operational support. The support may include initiating customer accounts,
participating in sales, educational and training seminars, providing sales
literature, and engineering computer software programs that emphasize the
attributes of the Funds. Such assistance will be predicated upon the amount of
shares the financial institution sells or may sell, and/or upon the type and
nature of sales or marketing support furnished by the financial institution.
The net asset value of each Fund is determined and the shares of each
Fund are priced at the close of regular trading hours on the New York Stock
Exchange (the "Exchange"), currently 4:00 p.m. (Eastern time). Net asset value
and pricing for each Fund are determined on each day the Exchange and the
Adviser are open for trading (a "Business Day"). Currently, the holidays which
the Funds observe are New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day,
Veterans Day, Thanksgiving Day and Christmas. The net asset value per share of
each class of a Fund for purposes of pricing sales and redemptions is calculated
by dividing the value of all securities and other assets allocable to the class,
less the liabilities allocable to the class, by the number of its outstanding
shares of the class.
As described below, shares may be sold to customers ("Customers") of
financial institutions ("Shareholder Organizations"). Shares are also offered
for sale directly to institutional investors and to members of the general
public. Different types of Customer accounts at the Shareholder Organizations
may be used to purchase shares, including eligible agency and trust accounts.
In addition, Shareholder Organizations may automatically "sweep" a Customer's
account not less frequently than weekly and invest amounts in excess of a
minimum balance agreed to by the Shareholder Organization and its Customer in
shares selected by the Customer. Investors purchasing shares may include
officers, directors, or employees of the particular Shareholder Organization.
The Company has authorized certain brokers to accept on its behalf
purchase, exchange and redemption requests. Such brokers are authorized to
designate other
-23-
<PAGE>
intermediaries to accept purchase, exchange and redemption requests on behalf of
the Company. The Company will be deemed to have received a purchase, exchange
or redemption request when the request is received by an authorized broker or
designated intermediary in good order.
Purchase of Shares
- ------------------
Advisor Shares of the Funds are offered for sale at their net asset
value per share next computed after a purchase request is received in good order
by the Company's sub-transfer agent or by an authorized broker or designated
intermediary. The Distributor has established several procedures for purchasing
Advisor shares in order to accommodate different types of investors.
Advisor Shares are sold primarily to clients of financial
intermediaries, such as financial planners and investment advisers ("Financial
Intermediaries"), to participants in employer-sponsored contribution plans, to
investors maintaining certain qualified accounts at financial institutions and
to certain other institutional investors. Advisor Shares may be purchased
directly by individuals ("Direct Investors") or by institutions ("Institutional
Investors" and, collectively with Direct Investors, "Investors"). Shares may
also be purchased by Customers of the Adviser, its affiliates and correspondent
banks, and other Shareholder Organizations that have entered into agreements
with the Company. A Shareholder Organization may elect to hold of record shares
for its Customers and to record beneficial ownership of shares on the account
statements provided by it to its Customers. If it does so, it is the
Shareholder Organization's responsibility to transmit to the Distributor all
purchase requests for its Customers and to transmit, on a timely basis, payment
for such requests to Chase Global Funds Services Company ("CGFSC"), the Funds'
sub-transfer agent, in accordance with the procedures agreed to by the
Shareholder Organization and the Distributor. Confirmations of all such
Customer purchases (and redemptions) will be sent by CGFSC to the particular
Shareholder Organization. As an alternative, a Shareholder Organization may
elect to establish its Customers' accounts of record with CGFSC. In this event,
even if the Shareholder Organization continues to place its Customers' purchase
(and redemption) requests with the Funds, CGFSC will send confirmations of such
transactions and periodic account statements directly to the shareholders of
record. Shares in the Funds bear the expense of fees payable to Shareholder
Organizations for such services. See "Shareholder Organizations."
Customers wishing to purchase shares through their Shareholder
Organization should contact such entity directly for appropriate instructions.
(For a list of Shareholder Organizations in your area, call (800) 446-1012.) An
Investor purchasing shares through a registered investment adviser or certified
financial planner may incur transaction charges in connection with such
purchases. Such Investors should contact their registered investment adviser or
certified financial planner for further information on transaction fees.
Investors may also purchase shares directly from the Distributor in accordance
with procedures described in the Prospectus.
-24-
<PAGE>
Direct Investors may purchase shares by completing the Application
accompanying the Prospectus and mailing it, together with a check payable to
Excelsior Funds Inc., to:
Excelsior Funds, Inc.
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
Subsequent investments in an existing account in a Fund may be made at
any time by sending to the above address a check payable to Excelsior Funds,
Inc. along with: (a) the detachable form that regularly accompanies the
confirmation of a prior transaction; (b) a subsequent order form which may be
obtained from CGFSC; or (c) a letter stating the amount of the investment, the
name of the Fund and the account number in which the investment is to be made.
Institutional Investors may purchase shares by transmitting their purchase
orders to CGFSC by telephone at (800) 446-1012 or by terminal access.
Institutional Investors must pay for shares with federal funds or funds
immediately available to CGFSC.
Investors may also purchase shares by wiring federal funds to CGFSC.
Prior to making an initial investment by wire, an Investor must telephone CGFSC
at (800) 446-1012 (from overseas, call (617) 557-8280) for instructions.
Federal funds and registration instructions should be wired through the Federal
Reserve System to:
The Chase Manhattan Bank
ABA #021000021
Excelsior Funds, Account No. 9102732915
For further credit to:
Excelsior Funds
Wire Control Number
Account Registration
(including account number)
Investors making initial investments by wire must promptly complete
the Application accompanying the Prospectus and forward it to CGFSC.
Redemptions by Investors will not be processed until the completed Application
for purchase of shares has been received by CGFSC and accepted by the
Distributor. Investors making subsequent investments by wire should follow the
above instructions.
Except as provided below, the minimum initial investment by an
Investor or initial aggregate investment by a Shareholder Organization investing
on behalf of its Customers is $500 per Fund. The minimum subsequent investment
for both types of investors is $50 per Fund. Customers may agree with a
particular Shareholder Organization to make a minimum purchase with respect to
their accounts. Depending upon the terms of the particular account, Shareholder
Organizations may charge a Customer's account fees for automatic investment and
other cash management services provided. The Company reserves the right to
reject any
-25-
<PAGE>
purchase order, in whole or in part, or to waive any minimum investment
requirements. Third party checks will not be accepted as payment for Fund
shares.
Redemption Procedures
- ---------------------
A request for the redemption of shares will receive the net asset
value per share next computed after the request is received in good order by the
Company's sub-transfer agent or an authorized broker or designated intermediary.
Customers of Shareholder Organizations holding shares of record may
redeem all or part of their investments in a Fund in accordance with procedures
governing their accounts at the Shareholder Organizations. It is the
responsibility of the Shareholder Organizations to transmit redemption requests
to CGFSC and credit such Customer accounts with the redemption proceeds on a
timely basis. Redemption requests for Institutional Investors must be
transmitted to CGFSC by telephone at (800) 446-1012 or by terminal access. No
charge for wiring redemption payments to Shareholder Organizations or
Institutional Investors is imposed by the Company, although Shareholder
Organizations may charge a Customer's account for wiring redemption proceeds.
Information relating to such redemption services and charges, if any, is
available from the Shareholder Organizations. An Investor redeeming shares
through a Financial Intermediary may incur transaction charges in connection
with such redemptions. Such Investors should contact their Financial
Intermediary for further information on transaction fees. Investors may redeem
all or part of their shares in accordance with any of the procedures described
below (these procedures also apply to Customers of Shareholder Organizations for
whom individual accounts have been established with CGFSC).
Shares may be redeemed by a Direct Investor by submitting a written
request for redemption to:
Excelsior Funds, Inc.
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
A written redemption request to CGFSC must (i) state the number of
shares to be redeemed, (ii) identify the shareholder account number and tax
identification number, and (iii) be signed by each registered owner exactly as
the shares are registered. If the shares to be redeemed were issued in
certificate form, the certificates must be endorsed for transfer (or accompanied
by a duly executed stock power) and must be submitted to CGFSC together with the
redemption request. A redemption request for an amount in excess of $50,000 per
account, or for any amount if the proceeds are to be sent elsewhere than the
address of record, must be accompanied by signature guarantees from any eligible
guarantor institution approved by CGFSC in accordance with its Standards,
Procedures and Guidelines for the Acceptance of Signature Guarantees ("Signature
Guarantee Guidelines"). Eligible guarantor institutions generally include
banks, broker/dealers, credit unions, national securities exchanges, registered
securities associations, clearing agencies and savings associations. All
eligible guarantor institutions must participate in the Securities Transfer
Agents Medallion Program ("STAMP") in order to be
-26-
<PAGE>
approved by CGFSC pursuant to the Signature Guarantee Guidelines. Copies of the
Signature Guarantee Guidelines and information on STAMP can be obtained from
CGFSC at (800) 446-1012 or at the address given above.
CGFSC may require additional supporting documents for redemptions made
by corporations, executors, administrators, trustees and guardians. A
redemption request will not be deemed to be properly received until CGFSC
receives all required documents in good order. Payment for shares redeemed will
ordinarily be made by mail within five Business Days after receipt by CGFSC of
the redemption request in good order. Questions with respect to the proper form
for redemption requests should be directed to CGFSC at (800) 446-1012 (from
overseas, call (617) 557-8280).
Direct Investors who have so indicated on the Application, or have
subsequently arranged in writing to do so, may redeem shares by instructing
CGFSC by wire or telephone to wire the redemption proceeds directly to the
Direct Investor's account at any commercial bank in the United States. Direct
Investors who are shareholders of record may also redeem shares by instructing
CGFSC by telephone to mail a check for redemption proceeds of $500 or more to
the shareholder of record at his or her address of record. Institutional
Investors may also redeem shares by instructing CGFSC by telephone at (800) 446-
1012 or by terminal access. Only redemptions of $500 or more will be wired to a
Direct Investor's account. The redemption proceeds for Direct Investors must be
paid to the same bank and account as designated on the Application or in written
instructions subsequently received by CGFSC.
In order to arrange for redemption by wire or telephone after an
account has been opened or to change the bank or account designated to receive
redemption proceeds, a Direct Investor must send a written request to the
Company c/o CGFSC, at the address listed above. Such requests must be signed by
the Direct Investor, with signatures guaranteed, as discussed above. Further
documentation may be requested.
CGFSC and the Distributor reserve the right to refuse a wire or
telephone redemption if it is believed advisable to do so. Procedures for
redeeming shares by wire or telephone may be modified or terminated at any time
by the Company, CGFSC or the Distributor. The Company, CGFSC, and the
Distributor will not be liable for any loss, liability, cost or expense for
acting upon telephone instructions that are reasonably believed to be genuine.
In attempting to confirm that telephone instructions are genuine, the Company
will use such procedures as are considered reasonable, including recording those
instructions and requesting information as to account registration.
If any portion of the shares to be redeemed represents an investment
made by personal check, the Company and CGFSC reserve the right not to honor the
redemption until CGFSC is reasonably satisfied that the check has been collected
in accordance with the applicable banking regulations, which may take up to 15
days. A Direct Investor who anticipates the need for more immediate access to
his or her investment should purchase shares by federal funds or bank wire or by
certified or cashier's check. Banks normally impose a charge in connection with
the use of bank wires, as well as certified checks, cashier's checks and federal
-27-
<PAGE>
funds. If a Direct Investor's purchase check is not collected, the purchase
will be cancelled and CGFSC will charge a fee of $25.00 to the Direct Investor's
account.
During periods of substantial economic or market change, telephone
redemptions may be difficult to complete. If an Investor is unable to contact
CGFSC by telephone, the Investor may also deliver the redemption request to
CGFSC in writing at the address noted above.
Except as described in "Investor Programs" below, Investors may be
required to redeem shares in a Fund after 60 days' written notice if due to
Investor redemptions the balance in the particular account with respect to the
Fund remains below $500. If a Customer has agreed with a particular Shareholder
Organization to maintain a minimum balance in his or her account at the
institution with respect to shares of a Fund, and the balance in such account
falls below that minimum, the Customer may be obliged by the Shareholder
Organization to redeem all or part of his or her shares to the extent necessary
to maintain the required minimum balance.
Other Redemption Information
- ----------------------------
The Company may suspend the right of redemption or postpone the date
of payment for shares for more than 7 days during any period when (a) trading on
the Exchange is restricted by applicable rules and regulations of the SEC; (b)
the Exchange is closed for other than customary weekend and holiday closings;
(c) the SEC has by order permitted such suspension; or (d) an emergency exists
as determined by the SEC.
In the event that shares are redeemed in cash at their net asset
value, a shareholder may receive in payment for such shares an amount that is
more or less than his original investment due to changes in the market prices of
that Fund's portfolio securities.
The Company reserves the right to honor any request for redemption or
repurchase of a Fund's shares by making payment in whole or in part in
securities chosen by the Company and valued in the same way as they would be
valued for purposes of computing a Fund's net asset value (a "redemption in
kind"). If payment is made in securities, a shareholder may incur transaction
costs in converting these securities into cash. The Company has filed a notice
of election with the SEC under Rule 18f-1 of the 1940 Act. Therefore, a Fund is
obligated to redeem its shares solely in cash up to the lesser of $250,000 or 1%
of its net asset value during any 90-day period for any one shareholder of the
Fund.
Under certain circumstances, the Company may, in its discretion,
accept securities as payment for shares. Securities acquired in this manner
will be limited to securities issued in transactions involving a bona fide
reorganization or statutory merger, or other transactions involving securities
that meet the investment objective and policies of any Fund acquiring such
securities.
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<PAGE>
INVESTOR PROGRAMS
-----------------
Systematic Withdrawal Plan
- --------------------------
An Investor who owns shares with a value of $10,000 or more may begin
a Systematic Withdrawal Plan. The withdrawal can be on a monthly, quarterly,
semiannual or annual basis. There are four options for such systematic
withdrawals. The Investor may request:
(1) A fixed-dollar withdrawal;
(2) A fixed-share withdrawal;
(3) A fixed-percentage withdrawal (based on the current value of the
account); or
(4) A declining-balance withdrawal.
Prior to participating in a Systematic Withdrawal Plan, the Investor
must deposit any outstanding certificates for shares with CGFSC. Under this
Plan, dividends and distributions are automatically reinvested in additional
shares of a Fund. Amounts paid to investors under this Plan should not be
considered as income. Withdrawal payments represent proceeds from the sale of
shares, and there will be a reduction of the shareholder's equity in the Fund
involved if the amount of the withdrawal payments exceeds the dividends and
distributions paid on the shares and the appreciation of the Investor's
investment in the Fund. This in turn may result in a complete depletion of the
shareholder's investment. An Investor may not participate in a program of
systematic investing in a Fund while at the same time participating in the
Systematic Withdrawal Plan with respect to an account in the same Fund.
Customers of Shareholder Organizations may obtain information on the
availability of, and the procedures and fees relating to, the Systematic
Withdrawal Plan directly from their Shareholder Organizations.
Exchange Privilege
- ------------------
Investors and Customers of Shareholder Organizations may exchange
Advisor Shares having a value of at least $500 for Advisor Shares of any other
portfolio of the Company or Excelsior Tax-Exempt Funds, Inc. ("Excelsior Tax-
Exempt Fund" and, collectively with the Company, the "Companies") or for Advisor
Shares of Excelsior Institutional Trust. An exchange involves a redemption of
all or a portion of the shares in a Fund and the investment of the redemption
proceeds in shares of another portfolio. The redemption will be made at the per
share net asset value of the shares being redeemed next determined after the
exchange request is received in good order. The shares of the portfolio to be
acquired will be purchased at the per share net asset value of those shares next
determined after receipt of the exchange request in good order.
Shares may be exchanged by wire, telephone or mail and must be made to
accounts of identical registration. There is no exchange fee imposed by the
Companies or Excelsior Institutional Trust. In order to prevent abuse of this
privilege to the disadvantage of
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<PAGE>
other shareholders, the Companies and Excelsior Institutional Trust reserve the
right to limit the number of exchange requests of Investors to no more than six
per year. The Companies and Excelsior Institutional Trust may modify or
terminate the exchange program at any time upon 60 days' written notice to
shareholders, and may reject any exchange request. Customers of Shareholder
Organizations may obtain information on the availability of, and the procedures
and fees relating to, such program directly from their Shareholder
Organizations.
For federal income tax purposes, exchanges are treated as sales on
which the shareholder will realize a gain or loss, depending upon whether the
value of the shares to be given up in exchange is more or less than the basis in
such shares at the time of the exchange. Generally, a shareholder may include
sales loads incurred upon the purchase of shares in his or her tax basis for
such shares for the purpose of determining gain or loss on a redemption,
transfer or exchange of such shares. However, if the shareholder effects an
exchange of shares for shares of another portfolio of the Companies within 90
days of the purchase and is able to reduce the sales load otherwise applicable
to the new shares (by virtue of the Companies' exchange privilege), the amount
equal to such reduction may not be included in the tax basis of the
shareholder's exchanged shares but may be included (subject to the limitation)
in the tax basis of the new shares.
Retirement Plans
- ----------------
Shares are available for purchase by Investors in connection with the
following tax-deferred prototype retirement plans offered by United States Trust
Company of New York ("U.S. Trust New York"):
. IRAs (including "rollovers" from existing retirement plans) for
individuals and their spouses;
. Profit Sharing and Money-Purchase Plans for corporations and self-
employed individuals and their partners to benefit themselves and
their employees; and
. Keogh Plans for self-employed individuals.
Investors investing in the Funds pursuant to Profit Sharing and
Money-Purchase Plans and Keogh Plans are not subject to the minimum investment
and forced redemption provisions described above. The minimum initial investment
for IRAs is $250 per Fund and the minimum subsequent investment is $50 per Fund.
Detailed information concerning eligibility, service fees and other matters
related to these plans can be obtained by calling (800) 446-1012 (from overseas,
call (617) 557-8280). Customers of Shareholder Organizations may purchase shares
of the Funds pursuant to retirement plans if such plans are offered by their
Shareholder Organizations.
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<PAGE>
Automatic Investment Program
- ----------------------------
The Automatic Investment Program permits Investors to purchase shares
(minimum of $50 per Fund per transaction) at regular intervals selected by the
Investor. The minimum initial investment for an Automatic Investment Program
account is $50 per Fund. Provided the Investor's financial institution allows
automatic withdrawals, shares are purchased by transferring funds from an
Investor's checking, bank money market or NOW account designated by the
Investor. At the Investor's option, the account designated will be debited in
the specified amount, and shares will be purchased, once a month, on either the
first or fifteenth day, or twice a month, on both days.
The Automatic Investment Program is one means by which an Investor may
use "Dollar Cost Averaging" in making investments. Instead of trying to time
market performance, a fixed dollar amount is invested in shares at predetermined
intervals. This may help Investors to reduce their average cost per share
because the agreed upon fixed investment amount allows more shares to be
purchased during periods of lower share prices and fewer shares during periods
of higher prices. In order to be effective, Dollar Cost Averaging should usually
be followed on a sustained, consistent basis. Investors should be aware,
however, that shares bought using Dollar Cost Averaging are purchased without
regard to their price on the day of investment or to market trends. In addition,
while Investors may find Dollar Cost Averaging to be beneficial, it will not
prevent a loss if an Investor ultimately redeems his shares at a price which is
lower than their purchase price. The Company may modify or terminate this
privilege at any time or charge a service fee, although no such fee currently is
contemplated. An Investor may also implement the Dollar Cost Averaging method on
his own initiative or through other entities.
Additional Information
- ----------------------
Customers of Shareholder Organizations may obtain information on the
availability of, and the procedures and fees relating to, the above programs
directly from their Shareholder Organizations.
DESCRIPTION OF CAPITAL STOCK
----------------------------
The Company's Charter authorizes its Board of Directors to issue up to
thirty-five billion full and fractional shares of common stock, $.001 par value
per share, and to classify or reclassify any unissued shares of the Company into
one or more classes or series by setting or changing in any one or more respects
their respective preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption. The Company's authorized common stock is currently
classified into 41 series of shares representing interests in 18 investment
portfolios.
Each share in a Fund represents an equal proportionate interest in the
particular Fund with other shares of the same class, and is entitled to such
dividends and distributions out
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<PAGE>
of the income earned on the assets belonging to such Fund as are declared in the
discretion of the Company's Board of Directors.
Shares have no preemptive rights and only such conversion or exchange
rights as the Board of Directors may grant in its discretion. When issued for
payment as described in the Prospectus, shares will be fully paid and non-
assessable. In the event of a liquidation or dissolution of a Fund, its
shareholders are entitled to receive the assets available for distribution
belonging to that Fund and a proportionate distribution, based upon the relative
asset values of the Company's portfolios, of any general assets of the Company
not belonging to any particular portfolio of the Company which are available for
distribution. In the event of a liquidation or dissolution of the Company, its
shareholders will be entitled to the same distribution process.
Shareholders of the Company are entitled to one vote for each full
share held, and fractional votes for fractional shares held, and will vote in
the aggregate and not by class, except as otherwise required by the 1940 Act or
other applicable law or when the matter to be voted upon affects only the
interests of the shareholders of a particular class. Voting rights are not
cumulative and, accordingly, the holders of more than 50% of the aggregate of
the Company's shares may elect all of the Company's directors, regardless of
votes of other shareholders.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Company shall not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding shares of
each portfolio affected by the matter. A portfolio is affected by a matter
unless it is clear that the interests of each portfolio in the matter are
substantially identical or that the matter does not affect any interest of the
portfolio. Under the Rule, the approval of an investment advisory agreement or
any change in a fundamental investment policy would be effectively acted upon
with respect to a portfolio only if approved by a majority of the outstanding
shares of such portfolio. However, the Rule also provides that the ratification
of the appointment of independent public accountants and the election of
directors may be effectively acted upon by shareholders of the Company voting
without regard to class.
The Company's Charter authorizes its Board of Directors, without
shareholder approval (unless otherwise required by applicable law), to: (a)
sell and convey the assets of a Fund to another management investment company
for consideration which may include securities issued by the purchaser and, in
connection therewith, to cause all outstanding shares of the Fund involved to be
redeemed at a price which is equal to their net asset value and which may be
paid in cash or by distribution of the securities or other consideration
received from the sale and conveyance; (b) sell and convert a Fund's assets into
money and, in connection therewith, to cause all outstanding shares of the Fund
involved to be redeemed at their net asset value; or (c) combine the assets
belonging to a Fund with the assets belonging to another portfolio of the
Company, if the Board of Directors reasonably determines that such combination
will not have a material adverse effect on shareholders of any portfolio
participating in such combination, and, in connection therewith, to cause all
outstanding shares of the Fund involved to be redeemed at their net asset value
or converted into shares of another class of the Company's common stock at net
asset value. The exercise of such authority by the Board of Directors will be
subject to the provisions of the 1940 Act, and the Board of Directors will not
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<PAGE>
take any action described in this paragraph unless the proposed action has been
disclosed in writing to the particular Fund's shareholders at least 30 days
prior thereto.
Notwithstanding any provision of Maryland law requiring a greater vote
of the Company's common stock (or of the shares of a Fund voting separately as a
class) in connection with any corporate action, unless otherwise provided by law
(for example, by Rule 18f-2, discussed above) or by the Company's Charter, the
Company may take or authorize such action upon the favorable vote of the holders
of more than 50% of the outstanding common stock of the Company voting without
regard to class.
Certificates for shares will not be issued unless expressly requested
in writing to CGFSC and will not be issued for fractional shares.
MANAGEMENT OF THE FUNDS
-----------------------
Directors and Officers
- ----------------------
The business and affairs of the Funds are managed under the direction
of the Company's Board of Directors. The directors and executive officers of
the Company, their addresses, ages, principal occupations during the past five
years, and other affiliations are as follows:
<TABLE>
<CAPTION>
Principal Occupation
Position with During Past 5 Years and
Name and Address the Company Other Affiliations
- ---------------- ----------- ------------------
<S> <C> <C>
Frederick S. Wonham/1/ Chairman of the Retired; Director of the Company and Excelsior
238 June Road Board, President Tax-Exempt Fund (since 1995); Trustee of
Stamford, CT 06903 and Treasurer Excelsior Funds and Excelsior Institutional
Age: 68 Trust (since 1995); Vice Chairman of U.S. Trust
Corporation and U.S. Trust New York (from
February 1990 until September 1995); and
Chairman, U.S. Trust Company (from March 1993
to May 1997).
Donald L. Campbell Director Retired; Director of the Company and Excelsior
333 East 69th Street Tax-Exempt Fund (since 1984); Director of UST
Apt. 10-H Master Variable Series, Inc. (from 1994 to June
New York, NY 10021 1997); Trustee of Excelsior Institutional Trust
Age: 73 (since 1995); and Director, Royal Life
Insurance Co. of New York (since 1991).
Rodman L. Drake Director Director of the Company and Excelsior
Continuation Investments Group, Inc. Tax-Exempt Fund (since 1996); Trustee of
</TABLE>
__________________
/1./ This director is considered to be an "interested person" of the Company as
defined in the 1940 Act.
-33-
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation
Position with During Past 5 Years and
Name and Address the Company Other Affiliations
- ---------------- ----------- ------------------
<S> <C> <C>
1251 Avenue of the Americas Excelsior Institutional Trust and Excelsior
9/th/ Floor Funds (since 1994); Director, Parsons
New York, NY 10020 Brinkerhoff, Inc. (engineering firm) (since
Age: 56 1995); President, Continuation Investments
Group, Inc. (since 1997); President, Mandrake
Group (investment and consulting firm)
(1994-1997); Chairman, MetroCashcard
International, Inc. (since 1999); Director,
Hotelvision, Inc. (since 1999); Director,
Alliance Group Services, Inc. (since 1998);
Director, Hyperion Total Return Fund, Inc. and
three other funds for which Hyperion Capital
Management, Inc. serves as investment adviser
(since 1991); Co-Chairman, KMR Power
Corporation (power plants) (from 1993 to 1996);
Director, The Latin America Smaller Companies
Fund, Inc. (from 1993 to 1998); Member of
Advisory Board, Argentina Private Equity Fund
L.P. (from 1992 to 1996) and Garantia L.P.
(Brazil) (from 1993 to 1996); and Director,
Mueller Industries, Inc. (from 1992 to 1994).
Joseph H. Dugan Director Retired; Director of the Company and Excelsior
913 Franklin Lake Road Tax-Exempt Fund (since 1984); Director of UST
Franklin Lakes, NJ 07417 Master Variable Series, Inc. (from 1994 to June
Age: 74 1997); and Trustee of Excelsior Institutional
Trust (since 1995).
Wolfe J. Frankl Director Retired; Director of the Company and Excelsior
2320 Cumberland Road Tax-Exempt Fund (since 1986); Director of UST
Charlottesville, VA 22901-7726 Master Variable Series, Inc. (from 1994 to June
Age: 79 1997); Trustee of Excelsior Institutional Trust
(since 1995); Director, Deutsche Bank
Financial, Inc. (since 1989); Director, The
Harbus Corporation (since 1951); and Trustee,
HSBC Funds Trust and HSBC Mutual Funds Trust
(since 1988).
Jonathan Piel Director Director of the Company and Excelsior
558 E. 87th Street Tax-Exempt Fund (since 1996); Trustee of
New York, NY 10128 Excelsior Institutional Trust and Excelsior
Age: 60 Funds (since 1994); Vice President and Editor,
Scientific American, Inc. (from 1986 to 1994);
Director, Group for The South Fork,
Bridgehampton, New York (since 1993); and
Member, Advisory Committee, Knight Journalism
Fellowships, Massachusetts Institute of
Technology (since 1984).
</TABLE>
-34-
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation
Position with During Past 5 Years and
Name and Address the Company Other Affiliations
- ---------------- ----------- ------------------
<S> <C> <C>
Robert A. Robinson Director Director of the Company and Excelsior
Church Pension Group Tax-Exempt Fund (since 1987); Director of UST
445 Fifth Avenue Master Variable Series, Inc. (from 1994 to June
New York, NY 10016 1997); Trustee of Excelsior Institutional Trust
Age: 73 (since 1995); President Emeritus, The Church
Pension Fund and its affiliated companies
(since 1966); Trustee, H.B. and F.H. Bugher
Foundation and Director of its wholly owned
subsidiaries -- Rosiclear Lead and Flourspar
Mining Co. and The Pigmy Corporation (since
1984); Director, Morehouse Publishing Co.
(1974-1998); Trustee, HSBC Funds Trust and HSBC
Mutual Funds Trust (since 1982); and Director,
Infinity Funds, Inc. (since 1995).
Alfred C. Tannachion/2/ Director Retired; Director of the Company and Excelsior
6549 Pine Meadows Drive Tax-Exempt Fund (since 1985); Chairman of the
Spring Hill, FL 34606 Board of Excelsior Fund and Excelsior
Age: 73 Tax-Exempt Fund (1991-1997) and Excelsior
Institutional Trust (1996-1997); President and
Treasurer of Excelsior Fund and Excelsior
Tax-Exempt Fund (1994-1997) and Excelsior
Institutional Trust (1996-1997); Chairman of
the Board, President and Treasurer of UST
Master Variable Series, Inc. (1994-1997); and
Trustee of Excelsior Institutional Trust (since
1995).
W. Bruce McConnel, III Secretary Partner of the law firm of Drinker
One Logan Square Biddle & Reath LLP.
18th and Cherry Streets
Philadelphia, PA 19103-6996
Age: 56
Michael P. Malloy Assistant Secretary Partner of the law firm of Drinker Biddle &
One Logan Square Reath LLP.
18/th/ and Cherry Streets
Philadelphia, PA 19103-6996
Age: 40
Eddie Wang Assistant Manager of Blue Sky Compliance, Chase Global
Chase Global Funds Secretary Funds Services Company (November 1996 to
Services Company present); and Officer and Manager of Financial
73 Tremont Street Reporting, Investors Bank & Trust Company
Boston, MA 02108-3913 (January 1991 to November 1996).
Age: 38
</TABLE>
___________________________________
/2./ This director is considered to be an "interested person" of the Company as
defined in the 1940 Act.
-35-
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation
Position with During Past 5 Years and
Name and Address the Company Other Affiliations
- ---------------- ----------- ------------------
<S> <C> <C>
Patricia M. Leyne Assistant Vice President, Chase Global Funds Services
Chase Global Funds Treasurer Company (since July 1999); Assistant Vice
Services Company President, Senior Manager of Fund
73 Tremont Street Administration, Chase Global Funds Services
Boston, MA 02108-3913 Company (from July 1998 to July 1999);
Age: 32 Assistant Treasurer, Manager of Fund
Administration, Chase Global Funds Services
Company (from November 1996 to July 1998);
Supervisor, Chase Global Funds Services Company
(from September 1995 to November 1996); Fund
Administrator, Chase Global Funds Services
Company (from February 1993 to September 1995).
</TABLE>
Each director of the Company receives an annual fee of $9,000 plus a
meeting fee of $1,500 for each meeting attended and is reimbursed for expenses
incurred in attending meetings. The Chairman of the Board is entitled to
receive an additional $5,000 per annum for services in such capacity. Drinker
Biddle & Reath LLP, of which Messrs. McConnel and Malloy are partners, receives
legal fees as counsel to the Company. The employees of CGFSC do not receive any
compensation from the Company for acting as officers of the Company. No person
who is currently an officer, director or employee of the Adviser serves as an
officer, director or employee of the Company. As of December 14, 1999, the
directors and officers of the Company as a group owned beneficially less than 1%
of the outstanding shares of each fund of the Company, and less than 1% of the
outstanding shares of all funds of the Company in the aggregate.
-36-
<PAGE>
The following chart provides certain information about the fees
received by the Company's directors in the most recently completed fiscal year.
<TABLE>
<CAPTION>
Pension or Total Compensation from
Aggregate Retirement Benefits the Company
Name of Compensation from Accrued as Part of and Fund Complex*
Person/Position the Company Fund Expenses Paid to Directors
- --------------- -------------------- -------------------- ------------------------
<S> <C> <C> <C>
Donald L. Campbell $15,000 None $33,250(3)**
Director
Rodman L. Drake $16,500 None $41,250(4)**
Director
Joseph H. Dugan $16,500 None $36,500(3)**
Director
Wolfe J. Frankl $16,500 None $36,500(3)**
Director
W. Wallace McDowell, Jr.*** $11,250 None $28,000(4)**
Director
Jonathan Piel $16,500 None $41,500(4)**
Director
Robert A. Robinson $16,500 None $36,500(3)**
Director
Alfred C. Tannachion $16,500 None $36,500(3)**
Director
Frederick S. Wonham $21,500 None $51,500(4)**
Chairman of the Board,
President and Treasurer
</TABLE>
- ------------------------------
* The "Fund Complex" consists of the Company, Excelsior Tax-Exempt Fund,
Excelsior Funds and Excelsior Institutional Trust.
** Number of investment companies in the Fund Complex for which director
served as director or trustee.
*** Mr. McDowell resigned from the Company, Excelsior Tax-Exempt Fund,
Excelsior Funds and Excelsior Institutional Trust on May 21, 1999.
-37-
<PAGE>
Investment Advisory and Administration Agreements
- -------------------------------------------------
U.S. Trust New York and U.S. Trust Company (collectively with U.S.
Trust New York, "U.S. Trust" or the "Adviser") serve as investment advisers to
the Funds. In the Investment Advisory Agreements, the Adviser has agreed to
provide the services described in the Prospectus. The Adviser has also agreed
to pay all expenses incurred by it in connection with its activities under the
respective agreements other than the cost of securities, including brokerage
commissions, purchased for the Funds.
Prior to May 16, 1997, U.S. Trust New York served as investment
adviser to the Blended Equity, Value and Restructuring and Intermediate-Term
Managed Income Funds pursuant to advisory agreements substantially similar to
the Investment Advisory Agreements currently in effect for such Funds.
For the services provided and expenses assumed pursuant to the
Investment Advisory Agreements, the Adviser is entitled to be paid a fee
computed daily and paid monthly, at the annual rate of 0.75% of the average
daily net assets of each of the Blended Equity and Large Cap Growth Funds, 0.60%
of the average daily net assets of each of the Value and Restructuring Fund, and
0.35% of the average daily net assets of the Intermediate-Term Managed Income
Fund.
From time to time, the Adviser may voluntarily waive all or a portion
of the advisory fees payable to it by a Fund, which waiver may be terminated at
any time.
For the fiscal year ended March 31, 1999, the Company paid U.S. Trust
advisory fees of $4,320,430, $2,624,874, $317,118 and $803,946 with respect to
the Blended Equity, Value and Restructuring, Intermediate-Term Managed Income
and Large Cap Growth Funds, respectively. For the same period, U.S. Trust
waived advisory fees totaling $360,040, $639,405, $74,201 and $44,157 with
respect to the Blended Equity, Value and Restructuring, Intermediate-Term
Managed Income and Large Cap Growth Funds, respectively.
For the fiscal year or period ended March 31, 1998, the Company paid
U.S. Trust advisory fees of $3,139,705, $1,163,708, $260,708 and $65,472 with
respect to the Blended Equity, Value and Restructuring, Intermediate-Term
Managed Income and Large Cap Growth Funds, respectively. For the same period,
U.S. Trust waived advisory fees totaling $332,044, $84,739, $42,260 and $16,680
with respect to the Blended Equity, Value and Restructuring, Intermediate-Term
Managed Income and Large Cap Growth Funds, respectively.
For the fiscal year or period ended March 31, 1997, the Company paid
U.S. Trust advisory fees of $1,954,607, $552,746 and $217,254 with respect to
the Blended Equity, Value and Restructuring and Intermediate-Term Managed Income
Funds, respectively. For the same period, U.S. Trust waived advisory fees
totaling $132,737, $41,509 and $35,586 with respect to the Blended Equity, Value
and Restructuring and Intermediate-Term Managed Income Funds, respectively.
-38-
<PAGE>
The Investment Advisory Agreements provide that the Adviser shall not
be liable for any error of judgment or mistake of law or for any loss suffered
by the Funds in connection with the performance of such agreements, except that
U.S. Trust New York and U.S. Trust Company shall be jointly, but not severally,
liable for a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for advisory services or a loss resulting from willful
misfeasance, bad faith or gross negligence in the performance of their duties or
from reckless disregard by them of their duties and obligations thereunder. In
addition, the Adviser has undertaken in the Investment Advisory Agreements to
maintain its policy and practice of conducting its Asset Management Group
independently of its Banking Group.
CGFSC, Federated Administrative Services (an affiliate of the
Distributor) and U.S. Trust Company (collectively, the "Administrators") serve
as the Company's administrators and provide the Funds with general
administrative and operational assistance. Under the Administration Agreement,
the Administrators have agreed to maintain office facilities for the Funds,
furnish the Funds with statistical and research data, clerical, accounting and
bookkeeping services, and certain other services required by the Funds, and to
compute the net asset value, net income and realized capital gains or losses, if
any, of the respective Funds. The Administrators prepare semiannual reports to
the SEC, prepare federal and state tax returns, prepare filings with state
securities commissions, arrange for and bear the cost of processing share
purchase and redemption orders, maintain the Funds' financial accounts and
records, and generally assist in the Funds' operations.
Prior to May 16, 1997, CGFSC, Federated Administrative Services and
U.S. Trust New York served as the Company's administrators pursuant to an
administration agreement substantially similar to the Administration Agreement
currently in effect for the Company.
The Administrators also provide administrative services to the other
investment portfolios of the Company and to all of the investment portfolios of
Excelsior Tax-Exempt Fund and Excelsior Institutional Trust which are also
advised by U.S. Trust and its affiliates and distributed by the Distributor. For
services provided to all of the investment portfolios of the Company, Excelsior
Tax-Exempt Fund and Excelsior Institutional Trust (except for the international
portfolios of the Company and Excelsior Institutional Trust), the Administrators
are entitled jointly to fees, computed daily and paid monthly, based on the
combined aggregate average daily net assets of the three companies (excluding
the international portfolios of the Company and Excelsior Institutional Trust)
as follows:
Combined Aggregate Average Daily Net Assets
of the Company, Excelsior Tax-Exempt Fund and
Excelsior Institutional Trust (excluding
the international portfolios of the Company
and Excelsior Institutional Trust)
----------------------------------
Annual Fee
----------
First $200 million........................................ 0.200%
Next $200 million......................................... 0.175%
Over $400 million......................................... 0.150%
-39-
<PAGE>
Administration fees payable to the Administrators by each portfolio of
the Company, Excelsior Tax-Exempt Fund and Excelsior Institutional Trust are
allocated in proportion to their relative average daily net assets at the time
of determination. From time to time, the Administrators may voluntarily waive
all or a portion of the administration fee payable to them by a Fund, which
waivers may be terminated at any time.
For the fiscal year ended March 31, 1999, the Company paid the
Administrators $952,859, $712,300, $170,673 and $171,488 in the aggregate with
respect to the Blended Equity, Value and Restructuring, Intermediate-Term
Managed Income and Large Cap Growth Funds, respectively. For the same period,
the Administrators waived administration fees totaling $1,957, $120,091, $389
and $1,525 with respect to the Blended Equity, Value and Restructuring,
Intermediate-Term Managed Income and Large Cap Growth Funds, respectively.
For the fiscal year or period ended March 31, 1998, the Company paid
CGFSC, Federated Administrative Services and U.S. Trust $707,403, $315,023,
$132,050 and $16,759 in the aggregate with respect to the Blended Equity, Value
and Restructuring, Intermediate-Term Managed Income and Large Cap Growth Funds,
respectively. For the same period, CGFSC, Federated Administrative Services and
U.S. Trust waived administration fees totaling $834, $3,331 and $381 with
respect to the Blended Equity, Value and Restructuring and Intermediate-Term
Managed Income Funds, respectively.
For the fiscal year ended March 31, 1997, the Company paid CGFSC,
Federated Administrative Services and U.S. Trust New York $422,505, $152,248 and
$110,146 in the aggregate with respect to the Blended Equity, Value and
Restructuring and Intermediate-Term Managed Income Funds, respectively. For the
same period, CGFSC, Federated Administrative Services and U.S. Trust New York
waived administration fees totaling $5,344, $108 and $909 with respect to the
Blended Equity, Value and Restructuring and Intermediate-Term Managed Income
Funds, respectively.
Shareholder Organizations
- -------------------------
The Company has entered into agreements with certain Shareholder
Organizations. Such agreements require the Shareholder Organizations to provide
shareholder administrative services to their Customers who beneficially own
shares in consideration for a Fund's payment of not more than the annual rate of
0.25% of the average daily net assets of the Fund's Advisor Shares beneficially
owned by Customers of the Shareholder Organization. Such services may include:
(a) acting as recordholder of Advisor Shares; (b) assisting in processing
purchase, exchange and redemption transactions; (c) transmitting and receiving
funds in connection with Customer orders to purchase, exchange or redeem Advisor
Shares; (d) providing periodic statements showing a Customer's account balances
and confirmations of transactions by the Customer; (e) providing tax and
dividend information to shareholders as appropriate; (f) transmitting proxy
statements, annual reports, updated prospectuses and other communications from
the Company to Customers; and (g) providing or arranging for the provision of
other related services. It is the responsibility of Shareholder Organizations
to advise Customers of any fees that they may charge in connection with a
Customer's investment. Until further notice, the
-40-
<PAGE>
Adviser and Administrators have voluntarily agreed to waive fees payable by a
Fund in an aggregate amount equal to administrative service fees payable by that
Fund.
The Company's agreements with Shareholder Organizations are governed
by an Administrative Services Plan (the "Plan") adopted by the Company.
Pursuant to the Plan, the Company's Board of Directors will review, at least
quarterly, a written report of the amounts expended under the Company's
agreements with Shareholder Organizations and the purposes for which the
expenditures were made. In addition, the arrangements with Shareholder
Organizations will be approved annually by a majority of the Company's
directors, including a majority of the directors who are not "interested
persons" of the Company as defined in the 1940 Act and have no direct or
indirect financial interest in such arrangements (the "Disinterested
Directors").
Any material amendment to the Company's arrangements with Shareholder
Organizations must be approved by a majority of the Company's Board of Directors
(including a majority of the Disinterested Directors). So long as the Company's
arrangements with Shareholder Organizations are in effect, the selection and
nomination of the members of the Company's Board of Directors who are not
"interested persons" (as defined in the 1940 Act) of the Company will be
committed to the discretion of such Disinterested Directors.
Expenses
- --------
Except as otherwise noted, the Adviser and the Administrators bear all
expenses in connection with the performance of their services. The Funds bear
the expenses incurred in their operations. Expenses of the Funds include:
taxes; interest; fees (including fees paid to the Company's directors and
officers who are not affiliated with the Distributor or the Administrators); SEC
fees; state securities qualifications fees; costs of preparing and printing
prospectuses for regulatory purposes and for distribution to shareholders;
advisory, administration and administrative servicing fees; charges of the
custodian, transfer agent, and dividend disbursing agent; certain insurance
premiums; outside auditing and legal expenses; costs of independent pricing
services; costs of shareholder reports and shareholder meetings; and any
extraordinary expenses. The Funds also pay for brokerage fees and commissions
in connection with the purchase of portfolio securities.
Custodian and Transfer Agent
- ----------------------------
The Chase Manhattan Bank ("Chase"), a wholly-owned subsidiary of The
Chase Manhattan Corporation, serves as custodian of the Funds' assets. Under
the Custodian Agreement, Chase has agreed to: (i) maintain a separate account
or accounts in the name of the Funds; (ii) make receipts and disbursements of
money on behalf of the Funds; (iii) collect and receive all income and other
payments and distributions on account of the Funds' portfolio securities; (iv)
respond to correspondence from securities brokers and others relating to its
duties; (v) maintain certain financial accounts and records; and (vi) make
periodic reports to the Company's Board of Directors concerning the Funds'
operations. Chase may, at its own expense, open and maintain custody accounts
with respect to the Funds with other banks or trust companies, provided that
Chase shall remain liable for the performance of all its custodial duties
-41-
<PAGE>
under the Custodian Agreement, notwithstanding any delegation. Communications
to the custodian should be directed to Chase, Mutual Funds Service Division, 3
Chase MetroTech Center, 8th Floor, Brooklyn, NY 11245.
U.S. Trust New York serves as the Funds' transfer agent and dividend
disbursing agent. In such capacity, U.S. Trust New York has agreed to: (i)
issue and redeem shares; (ii) address and mail all communications by the Funds
to their shareholders, including reports to shareholders, dividend and
distribution notices, and proxy materials for its meetings of shareholders;
(iii) respond to correspondence by shareholders and others relating to its
duties; (iv) maintain shareholder accounts; and (v) make periodic reports to the
Company's Board of Directors concerning the Funds' operations. For its transfer
agency, dividend disbursing, and subaccounting services, U.S. Trust New York is
entitled to receive $15.00 per annum per account and subaccount. In addition,
U.S. Trust New York is entitled to be reimbursed for its out-of-pocket expenses
for the cost of forms, postage, processing purchase and redemption orders,
handling of proxies, and other similar expenses in connection with the above
services. U.S. Trust New York is located at 114 W. 47th Street, New York, New
York 10036.
U.S. Trust New York may, at its own expense, delegate its transfer
agency obligations to another transfer agent registered or qualified under
applicable law, provided that U.S. Trust New York shall remain liable for the
performance of all of its transfer agency duties under the Transfer Agency
Agreement, notwithstanding any delegation. Pursuant to this provision in the
agreement, U.S. Trust New York has entered into a sub-transfer agency
arrangement with CGFSC, an affiliate of Chase, with respect to accounts of
shareholders who are not Customers of U.S. Trust New York. CGFSC is located at
73 Tremont Street, Boston, Massachusetts 02108-3913. For the services provided
by CGFSC, U.S. Trust New York has agreed to pay CGFSC $15.00 per annum per
account or subaccount plus out-of-pocket expenses. CGFSC receives no fee
directly from the Company for any of its sub-transfer agency services. U.S.
Trust New York may, from time to time, enter into sub-transfer agency
arrangements with third party providers of transfer agency services.
PORTFOLIO TRANSACTIONS
----------------------
Subject to the general control of the Company's Board of Directors,
the Adviser is responsible for, makes decisions with respect to, and places
orders for all purchases and sales of all portfolio securities of the Funds.
Purchases and sales of portfolio securities of the Intermediate-Term Managed
Income Fund will usually be principal transactions without brokerage
commissions.
The Funds may engage in short-term trading to achieve their investment
objectives. Portfolio turnover may vary greatly from year to year as well as
within a particular year. It is expected that the Intermediate-Term Managed
Income Fund's turnover rates may remain higher than those of many other
investment companies with similar investment objectives and policies. However,
since brokerage commissions are not normally paid on instruments purchased by
the Fund, portfolio turnover is not expected to have a material effect on the
net income of the Fund. The Funds' portfolio turnover rates may also be
affected by cash
-42-
<PAGE>
requirements for redemptions of shares and by regulatory provisions which enable
the Funds to receive certain favorable tax treatment. Portfolio turnover will
not be a limiting factor in making portfolio decisions. See "Financial
Highlights" in the Funds' Prospectus for the Funds' portfolio turnover rates.
Transactions on U.S. stock exchanges involve the payment of negotiated
brokerage commissions. On exchanges on which commissions are negotiated, the
cost of transactions may vary among different brokers. In executing portfolio
transactions for the Funds, the Adviser may use affiliated brokers in accordance
with the requirements of the 1940 Act. The Adviser may also take into account
the sale of Fund shares in allocating brokerage transactions.
For the fiscal years ended March 31, 1999, 1998 and 1997, the Blended
Equity Fund paid brokerage commissions aggregating $228,573, $288,470 and
$271,411, respectively, $0, $0 and $0 of which was paid to affiliates of U.S.
Trust.
For the fiscal years ended March 31, 1999, 1998 and 1997, the Value
and Restructuring Fund paid brokerage commissions aggregating $278,966, $412,406
and $271,334, respectively, of which $525, $26,847 and $13,069, respectively,
was paid to UST Securities Corp., an affiliate of U.S. Trust. For the same
periods, the percentages of total commissions paid by the Fund to UST Securities
Corp. were 0.19%, 6.51% and 4.82%, respectively, and the percentages of the
total amount of the Fund's brokerage transactions involving the payment of
commissions that was effected through UST Securities Corp. were 0.24%, 7.74% and
5.76%, respectively. For the same periods, the average commissions per share
paid by the Fund to UST Securities Corp. and other unaffiliated brokers were
$0.07 and $0.06, $0.09 and $0.06, and $0.09 and $0.08, respectively.
For the fiscal years or periods ended March 31, 1999 and 1998, the
Large Cap Growth Fund paid brokerage commissions aggregating $89,509 and
$25,680, respectively, of which $0 and $0 was paid to affiliates of U.S. Trust.
For the year ended March 31, 1999, the percentage of total commissions paid by
the Fund to UST Securities Corp. was 0%, and the percentage of the total amount
of the Fund's brokerage transactions involving the payment of commissions that
was effected through UST Securities Corp. was 0%. For the same period, the
average commissions per share paid by the Fund to UST Securities Corp. and other
unaffiliated brokers were $0 and $0.07, respectively.
Securities purchased and sold by the Intermediate-Term Managed Income
Fund are generally traded in the over-the-counter market on a net basis (i.e.,
without commission) through dealers, or otherwise involve transactions directly
with the issuer of an instrument. The cost of securities purchased from
underwriters includes an underwriting commission or concession, and the prices
at which securities are purchased from and sold to dealers include a dealer's
mark-up or mark-down. With respect to over-the-counter transactions, the Funds,
where possible, will deal directly with dealers who make a market in the
securities involved, except in those situations where better prices and
execution are available elsewhere.
-43-
<PAGE>
Transactions in domestic over-the-counter markets are generally
principal transactions with dealers, and the costs of such transactions involve
dealer spreads rather than brokerage commissions. With respect to over-the-
counter transactions, the Funds, where possible, will deal directly with the
dealers who make a market in the securities involved, except in those
circumstances where better prices and execution are available elsewhere.
The Investment Advisory Agreements between the Company and the Adviser
provide that, in executing portfolio transactions and selecting brokers or
dealers, the Adviser will seek to obtain the best net price and the most
favorable execution. The Adviser shall consider factors it deems relevant,
including the breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker or dealer and
whether such broker or dealer is selling shares of the Company, and the
reasonableness of the commission, if any, for the specific transaction and on a
continuing basis.
In addition, the Investment Advisory Agreements authorize the Adviser,
to the extent permitted by law and subject to the review of the Company's Board
of Directors from time to time with respect to the extent and continuation of
the policy, to cause the Funds to pay a broker which furnishes brokerage and
research services a higher commission than that which might be charged by
another broker for effecting the same transaction, provided that the Adviser
determines in good faith that such commission is reasonable in relation to the
value of the brokerage and research services provided by such broker, viewed in
terms of either that particular transaction or the overall responsibilities of
the Adviser to the accounts as to which it exercises investment discretion.
Such brokerage and research services might consist of reports and statistics on
specific companies or industries, general summaries of groups of stocks and
their comparative earnings, or broad overviews of the stock market and the
economy.
Supplementary research information so received is in addition to and
not in lieu of services required to be performed by the Adviser and does not
reduce the investment advisory fees payable by the Funds. Such information may
be useful to the Adviser in serving the Funds and other clients and, conversely,
supplemental information obtained by the placement of business of other clients
may be useful to the Adviser in carrying out its obligations to the Funds.
During the fiscal year ended March 31, 1999, the Adviser directed Fund
brokerage transactions to brokers because of research services provided. The
amounts of such transactions and their related commissions were as follows:
<TABLE>
<CAPTION>
Fund Amount of Transactions Related Commission
---- ---------------------- ------------------
<S> <C> <C>
Blended Equity Fund $136,842,126 $ 88,500
Value and Restructuring Fund $149,252,350 $217,450
Large Cap Growth Fund $ 46,627,415 $ 49,375
</TABLE>
Portfolio securities will not be purchased from or sold to the
Adviser, Distributor, or any of their affiliated persons (as such term is
defined in the 1940 Act) acting as principal, except to the extent permitted by
the SEC.
-44-
<PAGE>
Investment decisions for the Funds are made independently from those
for other investment companies, common trust funds and other types of funds
managed by the Adviser. Such other investment companies and funds may also
invest in the same securities as the Funds. When a purchase or sale of the same
security is made at substantially the same time on behalf of a Fund and another
investment company or common trust fund, the transaction will be averaged as to
price, and available investments allocated as to amount, in a manner which the
Adviser believes to be equitable to the Fund and such other investment company
or common trust fund. In some instances, this investment procedure may
adversely affect the price paid or received by the Funds or the size of the
position obtained by the Funds. To the extent permitted by law, the Adviser may
aggregate the securities to be sold or purchased for the Funds with those to be
sold or purchased for other investment companies or common trust funds in order
to obtain best execution.
The Company is required to identify any securities of its regular
brokers or dealers (as defined in Rule 10b-1 under the 1940 Act) or their
parents held by the Funds as of the close of the most recent fiscal year. As of
March 31, 1999, the following Funds held the following securities of the
Company's regular brokers or dealers or their parents: the Blended Equity Fund
held 202,694 shares of common stock of Morgan Stanley Dean Witter & Co.; the
Value and Restructuring Fund held 115,000 shares of common stock of Morgan
Stanley Dean Witter & Co., 275,000 shares of common stock of Donaldson, Lufkin
and Jenrette Securities Corp. and 200,000 shares of common stock of Bear Stearns
& Co., Inc.; and the Large Cap Growth Fund held 125,000 shares of common stock
of Merrill Lynch & Co.
PORTFOLIO VALUATION
-------------------
Assets in the Funds which are traded on a recognized domestic stock
exchange are valued at the last sale price on the securities exchange on which
such securities are primarily traded or at the last sale price on the national
securities market. Securities traded only on over-the-counter markets are
valued on the basis of closing over-the-counter bid prices. Securities for
which there were no transactions are valued at the average of the most recent
bid and asked prices. A futures contract is valued at the last sales price
quoted on the principal exchange or board of trade on which such contract is
traded, or in the absence of a sale, the mean between the last bid and asked
prices. An option or futures contract is valued at the last sales price quoted
on the principal exchange or board of trade on which such option or contract is
traded, or in the absence of a sale, the mean between the last bid and asked
prices. Restricted securities and securities or other assets for which market
quotations are not readily available are valued at fair value, pursuant to
guidelines adopted by the Company's Board of Directors. Absent unusual
circumstances, portfolio securities maturing in 60 days or less are normally
valued at amortized cost. The net asset value of shares in the Funds will
fluctuate as the market value of their portfolio securities changes in response
to changing market rates of interest and other factors.
Portfolio securities which are primarily traded on foreign securities
exchanges are generally valued at the preceding closing values of such
securities on their respective exchanges, except that when an event subsequent
to the time where value was so established is likely to have changed such value,
then the fair value of those securities will be determined by consideration of
-45-
<PAGE>
other factors under the direction of the Board of Directors. A security which
is listed or traded on more than one exchange is valued at the quotation on the
exchange determined to be the primary market for such security. Investments in
debt securities having a maturity of 60 days or less are valued based upon the
amortized cost method. All other foreign securities are valued at the last
current bid quotation if market quotations are available, or at fair value as
determined in accordance with guidelines adopted by the Board of Directors. For
valuation purposes, quotations of foreign securities in foreign currency are
converted to U.S. dollars equivalent at the prevailing market rate on the day of
conversion. Some of the securities acquired by a Fund may be traded on foreign
exchanges or over-the-counter markets on days which are not Business Days. In
such cases, the net asset value of the shares may be significantly affected on
days when investors can neither purchase nor redeem the Fund's shares. The
Company's administrators have undertaken to price the securities in the Funds'
portfolio, and may use one or more independent pricing services in connection
with this service. The methods used by the pricing services and the valuations
so established will be reviewed by the Administrators under the general
supervision of the Boards of Directors.
INDEPENDENT AUDITORS
--------------------
Ernst & Young LLP, independent auditors, 200 Clarendon Street, Boston,
MA 02116, serve as auditors of the Company.
COUNSEL
-------
Drinker Biddle & Reath LLP (of which Mr. McConnel, Secretary of the
Company, and Mr. Malloy, Assistant Secretary of the Company, are partners), One
Logan Square, 18th and Cherry Streets, Philadelphia, Pennsylvania 19103, is
counsel to the Company and will pass upon the legality of the shares offered by
the Prospectus.
ADDITIONAL INFORMATION CONCERNING TAXES
---------------------------------------
The following supplements the tax information contained in the
Prospectus.
For federal income tax purposes, each Fund is treated as a separate
corporate entity and has qualified and intends to continue to qualify as a
regulated investment company under the Internal Revenue Code of 1986, as amended
(the "Code"). Such qualification generally relieves a Fund of liability for
federal income taxes to the extent its earnings are distributed in accordance
with applicable requirements. If, for any reason, a Fund does not qualify for a
taxable year for the special federal tax treatment afforded regulated investment
companies, such Fund would be subject to federal tax on all of its taxable
income at regular corporate rates, without any deduction for distributions to
shareholders. In such event, dividend
-46-
<PAGE>
distributions would be taxable as ordinary income to shareholders to the extent
of the Fund's current and accumulated earnings and profits and would be eligible
for the dividends received deduction in the case of corporate shareholders.
A 4% non-deductible excise tax is imposed on regulated investment
companies that fail to currently distribute an amount equal to specified
percentages of their ordinary taxable income and capital gain net income (excess
of capital gains over capital losses). The Funds intend to make sufficient
distributions or deemed distributions of their ordinary taxable income and any
capital gain net income prior to the end of each calendar year to avoid
liability for this excise tax.
Each Fund will distribute substantially all of its taxable income
including its net capital gain (the excess of long-term capital over short-term
capital loss), if any. As noted in the Funds' Prospectus, the dividends and
distributions you receive may be subject to federal, state and local taxation,
depending upon your tax situation. Distributions you receive from a Fund will
generally be taxable regardless of whether they are paid in cash or reinvested
in additional shares. Distributions attributable to the net capital gain of a
Fund will be taxable to you as long-term capital gain, regardless of how long
you have held your shares. Other Fund distributions will generally be taxable
as ordinary income.
You should note that if you purchase shares just before a
distribution, the purchase price will reflect the amount of the upcoming
distribution, but you will be taxed on the entire amount of the distribution
received, even though, as an economic matter, the distribution simply
constitutes a return of capital. This is known as "buying into a dividend."
You will recognize taxable gain or loss on a sale, exchange or
redemption of your shares, including an exchange for shares of another Fund,
based on the difference between your tax basis in the shares and the amount you
receive for them. To aid in computing your tax basis, you generally should
retain your account statements for the periods during which you held shares.
Any loss realized on shares held for six months or less will be
treated as a long-term capital loss to the extent of any capital gain dividends
that were received on the shares.
The one major exception to these tax principles is that distributions
on, and sales, exchanges and redemptions of share held in an IRA (or other tax-
qualified plan) will not be currently taxable.
Dividends declared in October, November or December of any year
payable to shareholders of record on a specified date in such months will be
deemed to have been received by shareholders and paid by a Fund on December 31
of such year if such dividends are actually paid during January of the following
year.
Each Fund will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of taxable dividends or gross proceeds realized upon sale
paid to shareholders who have failed to provide a correct tax identification
number in the manner required, who are subject
-47-
<PAGE>
to withholding by the Internal Revenue Service for failure properly to include
on their return payments of taxable interest or dividends, or who have failed to
certify to the Fund when required to do so either that they are not subject to
backup withholding or that they are "exempt recipients."
The foregoing discussion is based on federal tax laws and regulations
which are in effect on the date of this Statement of Additional Information;
such laws and regulations may be changed by legislative or administrative
action. Shareholders are advised to consult their tax advisers concerning their
specific situations and the application of state, local and foreign taxes.
PERFORMANCE AND YIELD INFORMATION
---------------------------------
The Funds may advertise the "average annual total return" for their
shares. Such total return figure reflects the average percentage change in the
value of an investment in a Fund from the beginning date of the measuring period
to the end of the measuring period. Average total return figures will be given
for the most recent one-year period, and may be given for other periods as well
(such as from the commencement of a Fund's operations, or on a year-by-year
basis). The average annual total return is computed by determining the average
annual compounded rate of return during specified periods that equates the
initial amount invested to the ending redeemable value of such investment
according to the following formula:
ERV 1/n
T = [(-----) - 1]
P
Where: T = average annual total return.
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1, 5 or 10
year (or other) periods at the end of the
applicable period (or a fractional portion
thereof).
P = hypothetical initial payment of $1,000.
n = period covered by the computation, expressed in years.
Each Fund may also advertise the "aggregate total return" for its
shares for various periods, representing the cumulative change in the value of
an investment in the Fund for the specific period. The aggregate total return
is computed by determining the aggregate compounded rates of return during
specified periods that likewise equate the initial amount invested to the ending
redeemable value of such investment. The formula for calculating aggregate
total return is as follows:
-48-
<PAGE>
ERV
Aggregate Total Return = [(------)] - 1
P
The above calculations are made assuming that (1) all dividends and
capital gain distributions are reinvested on the reinvestment dates at the price
per share existing on the reinvestment date, (2) all recurring fees charged to
all shareholder accounts are included, and (3) for any account fees that vary
with the size of the account, a mean (or median) account size in a Fund during
the periods is reflected. The ending redeemable value (variable "ERV" in the
formula) is determined by assuming complete redemption of the hypothetical
investment after deduction of all nonrecurring charges at the end of the
measuring period.
Based on the foregoing calculations, the average annual total returns
for the Shares Class of the Blended Equity, Value and Restructuring, Large Cap
Growth and Intermediate-Term Managed Income Funds for the one year period ended
September 30, 1999 were 29.02%, 36.25%, 62.51% and (1.43)%, respectively. The
average annual total returns for the Shares Class of the Blended Equity,
Intermediate-Term Managed Income Fund and Value and Restructuring Funds for the
five year period ended September 30, 1999 were 21.68%, 7.17% and 22.16%
respectively. The average annual total returns for the Shares Class of the
Blended Equity Fund for the ten year period ended September 30, 1999 was 15.80%.
The average annual total returns for the Shares Class of the Value and
Restructuring and Intermediate-Term Managed Income Funds for the period from
December 31, 1992 (commencement of operations) to September 30, 1999 was 23.14%
and 5.90%, respectively. The average annual total return for the Shares Class
of the Large Cap Growth Fund for the period from October 1, 1997 (commencement
of operations) to September 30, 1999 was 40.59%.
Yields and Performance
- ----------------------
The Intermediate-Term Managed Income Fund may advertise the
standardized effective 30-day (or one month) yields calculated in accordance
with the method prescribed by the SEC for mutual funds. Such yield will be
calculated separately for each Fund according to the following formula:
a-b
Yield = 2 [(-------- + 1)/6/ - 1]
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of
reimbursements).
c = average daily number of shares outstanding that were
entitled to receive dividends.
d = maximum offering price per share on the last day of the
period.
-49-
<PAGE>
For the purpose of determining interest earned during the period
(variable "a" in the formula), the Intermediate-Term Managed Income Fund
computes the yield to maturity of any debt obligation held by it based on the
market value of the obligation (including actual accrued interest) at the close
of business on the last business day of each month, or, with respect to
obligations purchased during the month, the purchase price (plus actual accrued
interest). Such yield is then divided by 360, and the quotient is multiplied by
the market value of the obligation (including actual accrued interest) in order
to determine the interest income on the obligation for each day of the
subsequent month that the obligation is in the portfolio. It is assumed in the
above calculation that each month contains 30 days. Also, the maturity of a
debt obligation with a call provision is deemed to be the next call date on
which the obligation reasonably may be expected to be called or, if none, the
maturity date. The Fund calculates interest gained on tax-exempt obligations
issued without original issue discount and having a current market discount by
using the coupon rate of interest instead of the yield to maturity. In the case
of tax-exempt obligations with original issue discount, where the discount based
on the current market value exceeds the then-remaining portion of original issue
discount, the yield to maturity is the imputed rate based on the original issue
discount calculation. Conversely, where the discount based on the current
market value is less than the remaining portion of the original issue discount,
the yield to maturity is based on the market value.
Expenses accrued for the period (variable "b" in the formula) include
all recurring fees charged by each of the Funds to all shareholder accounts and
to the particular series of shares in proportion to the length of the base
period and that Fund's mean (or median) account size. Undeclared earned income
will be subtracted from the maximum offering price per share (variable "d" in
the formula).
Based on the foregoing calculations, the effective yields for the
Shares Class of the Intermediate-Term Managed Income Managed Income Fund for the
30-day period ended September 30, 1999 was 6.04%.
The average annual total returns for each of the Funds and the
effective yields for the Intermediate-Term Managed Income Funds set forth above
are for the Shares Class of the Funds. Fees charged on the Advisor Class of
shares are higher than the fees charged on the Shares Class. If the fees of the
Advisor Class had been included in the returns and yields reported above,
performance of these Funds would have been lower.
The Funds may also from time to time include in advertisements, sales
literature and communications to shareholders a total return figure that is not
calculated according to the formulas set forth above in order to compare more
accurately a Fund's performance with other measures of investment return. For
example, in comparing a Fund's total return with data published by Lipper
Analytical Services, Inc., CDA Investment Technologies, Inc. or Weisenberger
Investment Company Service, or with the performance of an index, a Fund may
calculate its aggregate total return for the period of time specified in the
advertisement or communication by assuming the investment of $10,000 in shares
and assuming the reinvestment of each dividend or other distribution at net
asset value on the reinvestment date. Percentage
-50-
<PAGE>
increases are determined by subtracting the initial value of the investment from
the ending value and by dividing the remainder by the beginning value.
The total return and yield of shares of a Fund may be compared to that
of other mutual funds with similar investment objectives and to other relevant
indices or to ratings prepared by independent services or other financial or
industry publications that monitor the performance of mutual funds. For
example, the total return of a Fund may be compared to data prepared by Lipper
Analytical Services, Inc., CDA Investment Technologies, Inc. and Weisenberger
Investment Company Service. The total return of the Blended Equity, Value and
Restructuring and Large Cap Growth Funds also may be compared to the Standard &
Poor's 500 Stock Index ("S&P 500"), an unmanaged index of common stocks of 500
companies, most of which are listed on the Exchange, the Consumer Price Index,
or the Dow Jones Industrial Average, a recognized unmanaged index of common
stocks of 30 industrial companies listed on the Exchange. Total return and
yield data as reported in national financial publications such as Money
-----
Magazine, Forbes, Barron's, The Wall Street Journal and The New York Times, or
- -------- ------ -------- --- ---- ------ ------- --- --- ---- -----
in publications of a local or regional nature, may also be used in comparing the
performance of a Fund. Advertisements, sales literature or reports to
shareholders may from time to time also include a discussion and analysis of
each Fund's performance, including, without limitation, those factors,
strategies and techniques that, together with market conditions and events,
materially affected each Fund's performance.
The Funds may also from time to time include discussions or
illustrations of the effects of compounding in advertisements. "Compounding"
refers to the fact that, if dividends or other distributions on a Fund
investment are reinvested by being paid in additional Fund shares, any future
income or capital appreciation of a Fund would increase the value, not only of
the original Fund investment, but also of the additional Fund shares received
through reinvestment. As a result, the value of the Fund investment would
increase more quickly than if dividends or other distributions had been paid in
cash. The Funds may also include discussions or illustrations of the potential
investment goals of a prospective investor, investment management techniques,
policies or investment suitability of a Fund, economic conditions, the effects
of inflation and historical performance of various asset classes, including but
not limited to, stocks, bonds and Treasury bills. From time to time
advertisements, sales literature or communications to shareholders may summarize
the substance of information contained in shareholder reports (including the
investment composition of a Fund), as well as the views of the Adviser as to
current market, economy, trade and interest rate trends, legislative, regulatory
and monetary developments, investment strategies and related matters believed to
be of relevance to a Fund. The Funds may also include in advertisements charts,
graphs or drawings which illustrate the potential risks and rewards of
investment in various investment vehicles, including but not limited to, stocks,
bonds, Treasury bills and shares of a Fund. In addition, advertisements, sales
literature or shareholder communications may include a discussion of certain
attributes or benefits to be derived by an investment in a Fund. Such
advertisements or communications may include symbols, headlines or other
material which highlight or summarize the information discussed in more detail
therein.
Performance and yields will fluctuate and any quotation of performance
and yield should not be considered as representative of a Fund's future
performance. Since yields
-51-
<PAGE>
fluctuate, yield data cannot necessarily be used to compare an investment in the
Intermediate-Term Managed Income Fund with bank deposits, savings accounts and
similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Shareholders should remember that
performance is generally a function of the kind and quality of the instruments
held in a portfolio, operating expenses, and market conditions. Any fees
charged by Shareholder Organizations with respect to accounts of Customers that
have invested in shares will not be included in calculations of performance.
MISCELLANEOUS
-------------
As used herein, "assets allocable to the Fund" means the consideration
received upon the issuance of shares in the Fund, together with all income,
earnings, profits, and proceeds derived from the investment thereof, including
any proceeds from the sale of such investments, any funds or payments derived
from any reinvestment of such proceeds, and a portion of any general assets of
the Company not belonging to a particular portfolio of the Company. In
determining a Fund's net asset value, assets allocable to the Fund are charged
with the direct liabilities in respect of the Fund and with a share of the
general liabilities of the Company which are normally allocated in proportion to
the relative asset values of the Company's portfolios at the time of allocation.
Subject to the provisions of the Company's Charter, determinations by the Board
of Directors as to the direct and allocable liabilities, and the allocable
portion of any general assets with respect to a particular Fund, are conclusive.
As of December 14 1999, U.S. Trust and its affiliates held of record
substantially all of the Funds' outstanding shares of the Shares Class as agent
or custodian for their customers, but did not own such shares beneficially
because they did not have the voting or investment discretion with respect to
such shares.
As of December 14 1999, the name, address and percentage ownership of
each person that owned beneficially or of record 5% or more of the outstanding
shares of the Shares Class of the Funds were as follows:
<TABLE>
<CAPTION>
Percentage
Name and Address Fund Class Ownership
- ---------------- ---- ----- ---------
<S> <C> <C> <C>
UST Co. Retirement Fund Blended Equity Shares 9.78%
c/o United States Trust Company of
New York
114 West 47/th/ Street
New York, NY 10036
</TABLE>
-52-
<PAGE>
<TABLE>
<CAPTION>
Percentage
Name and Address Fund Class Ownership
- ---------------- ---- ----- ---------
<S> <C> <C> <C>
United States Trust Company of Blended Equity Shares 5.82%
New York, as Trustee for the
benefit of U.S. Trust Plan
4380 SW Macadam Ave.
Suite 450
Portland, OR 97201
Charles Schwab & Co., Inc. Large Cap Growth Shares 5.69%
Special Custody Account Value and Restructuring Shares 22.18%
Attn.: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104
</TABLE>
Any persons or organizations listed above as owning 25% or more of the
outstanding shares of a portfolio may be presumed to "control" (as that term is
defined in the 1940 Act) the portfolio. As a result, those persons or
organizations could have the ability to vote a majority of the shares of the
portfolio on any matter requiring the approval of shareholders of the portfolio.
FINANCIAL STATEMENTS
--------------------
The audited financial statements and notes thereto in the Company's
Annual Reports to Shareholders for the fiscal year ended March 31, 1999 (the
"1999 Annual Reports") for the Funds are incorporated in this Statement of
Additional Information by reference. No other parts of the 1999 Annual Reports
are incorporated by reference herein. The financial statements included in the
1999 Annual Reports for the Funds have been audited by the Companies'
independent auditors, Ernst & Young LLP, whose reports thereon also appear in
the 1999 Annual Reports and are incorporated herein by reference. Such
financial statements have been incorporated herein in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing. The
unaudited financial statements and notes thereto in the Company's Semi-Annual
Reports to Shareholders for the period ended September 30, 1999 (the "1999 Semi-
Annual Reports") are also incorporated in this Statement of Additional
Information by reference. Additional copies of the 1999 Annual Reports and the
1999 Semi-Annual Reports may be obtained at no charge by telephoning CGFSC at
the telephone number appearing on the front page of this Statement of Additional
Information.
-53-
<PAGE>
APPENDIX A
--------
Commercial Paper Ratings
- ------------------------
A Standard & Poor's ("S&P") commercial paper rating is a current assessment
of the likelihood of timely payment of debt having an original maturity of no
more than 365 days. The following summarizes the rating categories used by
Standard and Poor's for commercial paper:
"A-1" - Obligations are rated in the highest category indicating that the
obligor's capacity to meet its financial commitment on the obligation is strong.
Within this category, certain obligations are designated with a plus sign (+).
This indicates that the obligor's capacity to meet its financial commitment on
these obligations is extremely strong.
"A-2" - Obligations are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in higher
rating categories. However, the obligor's capacity to meet its financial
commitment on the obligation is satisfactory.
"A-3" - Obligations exhibit adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.
"B" - Obligations are regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.
"C" - Obligations are currently vulnerable to nonpayment and are dependent
upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the obligation.
"D" - Obligations are in payment default. The "D" rating category is used
when payments on an obligation are not made on the date due, even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The "D" rating will also be used upon the
filing of a bankruptcy petition or the taking of a similar action if payments on
an obligation are jeopardized.
Moody's commercial paper ratings are opinions of the ability of issuers to
repay punctually senior debt obligations not having an original maturity in
excess of one year, unless explicitly noted. The following summarizes the rating
categories used by Moody's for commercial paper:
"Prime-1" - Issuers (or supporting institutions) have a superior ability
for repayment of senior short-term debt obligations. Prime-1 repayment ability
will often be evidenced by many of the following characteristics: leading market
positions in well-established industries; high rates of return on funds
employed; conservative capitalization structure with moderate reliance
A-1
<PAGE>
on debt and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.
"Prime-2" - Issuers (or supporting institutions) have a strong ability for
repayment of senior short-term debt obligations. This will normally be evidenced
by many of the characteristics cited above but to a lesser degree. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
"Prime-3" - Issuers (or supporting institutions) have an acceptable ability
for repayment of senior short-term debt obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
"Not Prime" - Issuers do not fall within any of the Prime rating
categories.
The three rating categories of Duff & Phelps for investment grade
commercial paper and short-term debt are "D-1," "D-2" and "D-3." Duff & Phelps
employs three designations, "D-1+," "D-1" and "D-1-," within the highest rating
category. The following summarizes the rating categories used by Duff & Phelps
for commercial paper:
"D-1+" - Debt possesses the highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-free U.S.
Treasury short-term obligations.
"D-1" - Debt possesses very high certainty of timely payment. Liquidity
factors are excellent and supported by good fundamental protection factors. Risk
factors are minor.
"D-1-" - Debt possesses high certainty of timely payment. Liquidity factors
are strong and supported by good fundamental protection factors. Risk factors
are very small.
"D-2" - Debt possesses good certainty of timely payment. Liquidity factors
and company fundamentals are sound. Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good. Risk factors
are small.
"D-3" - Debt possesses satisfactory liquidity and other protection factors
qualify issues as to investment grade. Risk factors are larger and subject to
more variation. Nevertheless, timely payment is expected.
"D-4" - Debt possesses speculative investment characteristics. Liquidity is
not sufficient to insure against disruption in debt service. Operating factors
and market access may be subject to a high degree of variation.
"D-5" - Issuer has failed to meet scheduled principal and/or interest
payments.
A-2
<PAGE>
Fitch IBCA short-term ratings apply to debt obligations that have time
horizons of less than 12 months for most obligations, or up to three years for
U.S. public finance securities. The following summarizes the rating categories
used by Fitch IBCA for short-term obligations:
"F1" - Securities possess the highest credit quality. This designation
indicates the strongest capacity for timely payment of financial commitments and
may have an added "+" to denote any exceptionally strong credit feature.
"F2" - Securities possess good credit quality. This designation indicates a
satisfactory capacity for timely payment of financial commitments, but the
margin of safety is not as great as in the case of the higher ratings.
"F3" - Securities possess fair credit quality. This designation indicates
that the capacity for timely payment of financial commitments is adequate;
however, near-term adverse changes could result in a reduction to non-investment
grade.
"B" - Securities possess speculative credit quality. This designation
indicates minimal capacity for timely payment of financial commitments, plus
vulnerability to near-term adverse changes in financial and economic conditions.
"C" - Securities possess high default risk. This designation indicates that
default is a real possibility and that the capacity for meeting financial
commitments is solely reliant upon a sustained, favorable business and economic
environment.
"D" - Securities are in actual or imminent payment default.
Thomson Financial BankWatch short-term ratings assess the likelihood of An
untimely payment of principal and interest of debt instruments with original
maturities of one year or less. The following summarizes the ratings used by
Thomson Financial BankWatch:
"TBW-1" - This designation represents Thomson Financial BankWatch's highest
category and indicates a very high likelihood that principal and interest will
be paid on a timely basis.
"TBW-2" - This designation represents Thomson Financial BankWatch's second-
highest category and indicates that while the degree of safety regarding timely
repayment of principal and interest is strong, the relative degree of safety is
not as high as for issues rated "TBW-1."
"TBW-3" - This designation represents Thomson Financial BankWatch's lowest
investment-grade category and indicates that while the obligation is more
susceptible to adverse developments (both internal and external) than those with
higher ratings, the capacity to service principal and interest in a timely
fashion is considered adequate.
A-3
<PAGE>
"TBW-4" - This designation represents Thomson Financial BankWatch's lowest
rating category and indicates that the obligation is regarded as non-investment
grade and therefore speculative.
Corporate and Municipal Long-Term Debt Ratings
- ----------------------------------------------
The following summarizes the ratings used by Standard & Poor's for
corporate and municipal debt:
"AAA" - An obligation rated "AAA" has the highest rating assigned by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is extremely strong.
"AA" - An obligation rated "AA" differs from the highest rated obligations
only in small degree. The obligor's capacity to meet its financial commitment on
the obligation is very strong.
"A" - An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations in
higher rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
"BBB" - An obligation rated "BBB" exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
Obligations rated "BB," "B," "CCC," "CC" and "C" are regarded as having
significant speculative characteristics. "BB" indicates the least degree of
speculation and "C" the highest. While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.
"BB" - An obligation rated "BB" is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.
"B" - An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB", but the obligor currently has the capacity to meet its
financial commitment on the obligation. Adverse business, financial or economic
conditions will likely impair the obligor's capacity or willingness to meet its
financial commitment on the obligation.
"CCC" - An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial and economic conditions for
the obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial or economic conditions, the obligor is not likely to
have the capacity to meet its financial commitment on the obligation.
A-4
<PAGE>
"CC" - An obligation rated "CC" is currently highly vulnerable to
nonpayment.
"C" - The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on this
obligation are being continued.
"D" - An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due,
even if the applicable grace period has not expired, unless S & P believes that
such payments will be made during such grace period. The "D" rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be modified
by the addition of a plus or minus sign to show relative standing within the
major rating categories.
"r" - This symbol is attached to the ratings of instruments with
significant noncredit risks. It highlights risks to principal or volatility of
expected returns which are not addressed in the credit rating. Examples include:
obligations linked or indexed to equities, currencies or commodities;
obligations exposed to severe prepayment risk - such as interest-only or
principal-only mortgage securities; and obligations with unusually risky
interest terms, such as inverse floaters.
The following summarizes the ratings used by Moody's for corporate and
municipal long-term debt:
"Aaa" - Bonds are judged to be of the best quality. They carry the smallest
degree of investment risk and are generally referred to as "gilt edged."
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
"Aa" - Bonds are judged to be of high quality by all standards. Together
with the "Aaa" group they comprise what are generally known as high-grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in "Aaa" securities or fluctuation of protective elements may be
of greater amplitude or there may be other elements present which make the long-
term risk appear somewhat larger than the "Aaa" securities.
"A" - Bonds possess many favorable investment attributes and are to be
considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
"Baa" - Bonds are considered as medium-grade obligations, (i.e., they are
neither highly protected nor poorly secured). Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
A-5
<PAGE>
"Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of these ratings
provide questionable protection of interest and principal ("Ba" indicates
speculative elements; "B" indicates a general lack of characteristics of
desirable investment; "Caa" are of poor standing; "Ca" represents obligations
which are speculative in a high degree; and "C" represents the lowest rated
class of bonds). "Caa," "Ca" and "C" bonds may be in default.
Con. (---) - Bonds for which the security depends upon the completion of
some act or the fulfillment of some condition are rated conditionally. These are
bonds secured by (a) earnings of projects under construction, (b) earnings of
projects unseasoned in operating experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting condition
attaches. Parenthetical rating denotes probable credit stature upon completion
of construction or elimination of basis of condition.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from "Aa" through "Caa". The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category; the modifier
2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the
lower end of its generic rating category.
The following summarizes the long-term debt ratings used by Duff & Phelps
for corporate and municipal long-term debt:
"AAA" - Debt is considered to be of the highest credit quality. The risk
factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.
"AA" - Debt is considered to be of high credit quality. Protection factors
are strong. Risk is modest but may vary slightly from time to time because of
economic conditions.
"A" - Debt possesses protection factors which are average but adequate.
However, risk factors are more variable in periods of greater economic stress.
"BBB" - Debt possesses below-average protection factors but such protection
factors are still considered sufficient for prudent investment. Considerable
variability in risk is present during economic cycles.
"BB," "B," "CCC," "DD," and "DP" - Debt that possesses one of these ratings
is considered to be below investment grade. Although below investment grade,
debt rated "BB" is deemed likely to meet obligations when due. Debt rated "B"
possesses the risk that obligations will not be met when due. Debt rated "CCC"
is well below investment grade and has considerable uncertainty as to timely
payment of principal, interest or preferred dividends. Debt rated "DD" is a
defaulted debt obligation, and the rating "DP" represents preferred stock with
dividend arrearages.
To provide more detailed indications of credit quality, the "AA," "A,"
"BBB," "BB" and "B" ratings may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within these major categories.
A-6
<PAGE>
The following summarizes the ratings used by Fitch IBCA for corporate and
municipal bonds:
"AAA" - Bonds considered to be investment grade and of the highest credit
quality. These ratings denote the lowest expectation of credit risk and are
assigned only in case of exceptionally strong capacity for timely payment of
financial commitments. This capacity is highly unlikely to be adversely affected
by foreseeable events.
"AA" - Bonds considered to be investment grade and of very high credit
quality. These ratings denote a very low expectation of credit risk and indicate
very strong capacity for timely payment of financial commitments. This capacity
is not significantly vulnerable to foreseeable events.
"A" - Bonds considered to be investment grade and of high credit quality.
These ratings denote a low expectation of credit risk and indicate strong
capacity for timely payment of financial commitments. This capacity may,
nevertheless, be more vulnerable to changes in circumstances or in economic
conditions than is the case for higher ratings.
"BBB" - Bonds considered to be investment grade and of good credit quality.
These ratings denote that there is currently a low expectation of credit risk.
The capacity for timely payment of financial commitments is considered adequate,
but adverse changes in circumstances and in economic conditions are more likely
to impair this capacity.
"BB" - Bonds considered to be speculative. These ratings indicate that
there is a possibility of credit risk developing, particularly as the result of
adverse economic change over time; however, business or financial alternatives
may be available to allow financial commitments to be met. Securities rated in
this category are not investment grade.
"B" - Bonds are considered highly speculative. These ratings indicate that
significant credit risk is present, but a limited margin of safety remains.
Financial commitments are currently being met; however, capacity for continued
payment is contingent upon a sustained, favorable business and economic
environment.
"CCC", "CC" and "C" - Bonds have high default risk. Default is a real
possibility, and capacity for meeting financial commitments is solely reliant
upon sustained, favorable business or economic developments. "CC" ratings
indicate that default of some kind appears probable, and "C" ratings signal
imminent default.
"DDD," "DD" and "D" - Bonds are in default. The ratings of obligations in
this category are based on their prospects for achieving partial or full
recovery in a reorganization or liquidation of the obligor. While expected
recovery values are highly speculative and cannot be estimated with any
precision, the following serves as general guidelines. "DDD" obligations have
the highest potential for recovery, around 90% - 100% of outstanding amounts and
accrued interest. "DD" indicates potential recoveries in the range of 50% -90%,
and "D" the lowest recovery potential, i.e., below 50%.
A-7
<PAGE>
Entities rated in this category have defaulted on some or all of their
obligations. Entities rated "DDD" have the highest prospect for redemption of
performance or continued operation with or without a formal reorganization
process. Entities rated "DD" and "D" are generally undergoing a formal
reorganization or liquidation process; those rated "DD" are likely to satisfy a
higher portion of their outstanding obligations, while entities rated "D" have a
poor prospect for repaying all obligations.
To provide more detailed indications of credit quality, the Fitch IBCA
ratings from and including "AA" to "CCC" may be modified by the addition of a
plus (+) or minus (-) sign to show relative standing within these major rating
categories.
Thomson Financial BankWatch assesses the likelihood of an untimely
repayment of principal or interest over the term to maturity of long term debt
and preferred stock which are issued by United States commercial banks, thrifts
and non-bank banks; non-United States banks; and broker-dealers. The following
summarizes the rating categories used by Thomson BankWatch for long-term debt
ratings:
"AAA" - This designation indicates that the ability to repay principal and
interest on a timely basis is extremely high.
"AA" - This designation indicates a very strong ability to repay principal
and interest on a timely basis, with limited incremental risk compared to issues
rated in the highest category.
"A" - This designation indicates that the ability to repay principal and
interest is strong. Issues rated "A" could be more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.
"BBB" - This designation represents the lowest investment-grade category
and indicates an acceptable capacity to repay principal and interest. Issues
rated "BBB" are more vulnerable to adverse developments (both internal and
external) than obligations with higher ratings.
"BB," "B," "CCC," and "CC" - These designations are assigned by Thomson
Financial BankWatch to non-investment grade long-term debt. Such issues are
regarded as having speculative characteristics regarding the likelihood of
timely payment of principal and interest. "BB" indicates the lowest degree of
speculation and "CC" the highest degree of speculation.
"D" - This designation indicates that the long-term debt is in default.
PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC" may include a
plus or minus sign designation which indicates where within the respective
category the issue is placed.
A-8
<PAGE>
Municipal Note Ratings
- ----------------------
A Standard and Poor's rating reflects the liquidity factors and market
access risks unique to notes due in three years or less. The following
summarizes the ratings used by Standard & Poor's for municipal notes:
"SP-1" - The issuers of these municipal notes exhibit a strong capacity to
pay principal and interest. Those issues determined to possess a very strong
capacity to pay debt service are given a plus (+) designation.
"SP-2" - The issuers of these municipal notes exhibit satisfactory capacity
to pay principal and interest, with some vulnerability to adverse financial and
economic changes over the term of the notes.
"SP-3" - The issuers of these municipal notes exhibit speculative capacity
to pay principal and interest.
Moody's ratings for state and municipal notes and other short-term loans
are designated Moody's Investment Grade ("MIG") and variable rate demand
obligations are designated Variable Moody's Investment Grade ("VMIG"). Such
ratings recognize the differences between short-term credit risk and long-term
risk. The following summarizes the ratings by Moody's Investors Service, Inc.
for short-term notes:
"MIG-1"/"VMIG-1" - This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
"MIG-2"/"VMIG-2" - This designation denotes high quality, with margins of
protection that are ample although not so large as in the preceding group.
"MIG-3"/"VMIG-3" - This designation denotes favorable quality, with all
security elements accounted for but lacking the undeniable strength of the
preceding grades. Liquidity and cash flow protection may be narrow and market
access for refinancing is likely to be less well established.
"MIG-4"/"VMIG-4" - This designation denotes adequate quality. Protection
commonly regarded as required of an investment security is present and although
not distinctly or predominantly speculative, there is specific risk.
"SG" - This designation denotes speculative quality. Debt instruments in
this category lack of margins of protection.
Fitch IBCA and Duff & Phelps use the short-term ratings described under
Commercial Paper Ratings for municipal notes.
A-9
<PAGE>
EXCELSIOR FUNDS, INC.
FORM N-1A
---------
PART C. OTHER INFORMATION
Item 23. Exhibits
(a) (1) Articles of Incorporation of Registrant dated
August 1, 1984 (4).
(2) Articles Supplementary of Registrant dated
October 29, 1985 (4).
(3) Articles Supplementary of Registrant dated
September 30, 1986 (4).
(4) Articles Supplementary of Registrant dated
April 10, 1987 (4).
(5) Articles Supplementary of Registrant dated
April 27, 1990 (4).
(6) Articles Supplementary of Registrant dated
October 26, 1990 (4).
(7) Articles Supplementary of Registrant dated
January 29, 1991 (4).
(8) Articles Supplementary of Registrant dated
December 23, 1992 (4).
(9) Articles Supplementary of Registrant dated
August 31, 1995 (1).
(10) Articles Supplementary of Registrant dated
December 28, 1995 (1).
(11) Articles Supplementary of Registrant dated
September 11, 1997 (3).
(12) Articles Supplementary of Registrant dated
December 22, 1997 (4).
<PAGE>
(13) Articles Supplementary of Registrant dated
November 13, 1998 (5).
(14) Articles of Amendment of Registrant dated
July 1, 1999 (8).
(15) Articles Supplementary of Registrant dated
January 3, 2000 (8).
(b) (1) Amended and Restated By-Laws of Registrant
dated February 2, 1995 (3).
(2) Amendment No. 1 to Amended and Restated By-
Laws of Registrant dated May 16, 1997 (3).
(c) (1) Articles VI, VII, VIII and X of Registrant's
Articles of Incorporation dated August 1, 1984
(4).
(2) Articles I, II, IV and VI of Registrant's
Amended and Restated By-Laws dated February 2,
1995 (3).
(d) (1) Investment Advisory Agreement among
Registrant, U.S. Trust Company of Connecticut and
United States Trust Company of New York dated May
16, 1997 with respect to the Money Fund,
Government Money Fund, Blended Equity Fund, Small
Cap Fund, Long-Term Supply of Energy Fund,
Productivity Enhancers Fund, Environmentally-
Related Products and Services Fund, Aging of
America Fund, Communication and Entertainment
Fund, Value and Restructuring Fund, Global
Competitors Fund, Latin America Fund, Pacific/Asia
Fund, Pan European Fund, Short-Term Government
Securities Fund and Intermediate-Term Managed
Income Fund (2).
(2) Amendment No. 1 dated July 25, 1997 to the
Investment Advisory Agreement among Registrant,
U.S. Trust Company of Connecticut and United
States Trust Company of New York dated May 16,
1997 (adding the Large Cap Growth and Real Estate
Funds)(3).
(3) Amendment No. 2 dated November 14, 1997 to
the Investment Advisory Agreement among
Registrant, U.S. Trust Company of Connecticut and
United States Trust Company of New York dated May
16, 1997 (adding the Emerging Markets Fund)(4).
-2-
<PAGE>
(4) Investment Advisory Agreement among
Registrant, U.S. Trust Company of Connecticut and
United States Trust Company of New York dated May
16, 1997 with respect to the Managed Income Fund
(2).
(5) Investment Advisory Agreement among
Registrant, U.S. Trust Company of Connecticut and
United States Trust Company of New York dated May
16, 1997 with respect to the Income and Growth
Fund (2).
(6) Investment Advisory Agreement among
Registrant, U.S. Trust Company of Connecticut and
United States Trust Company of New York dated May
16, 1997 with respect to the International Fund
(2).
(7) Investment Advisory Agreement among
Registrant, U.S. Trust Company of Connecticut and
United States Trust Company of New York dated May
16, 1997 with respect to the Treasury Money Fund
(2).
(e) Amended and Restated Distribution Contract dated
July 31, 1998 between the Registrant and Edgewood
Services, Inc. (5).
(f) None.
(g) (1) Custody Agreement between the Registrant and
The Chase Manhattan Bank dated September 1, 1995
(as amended and restated on August 1, 1997)(3).
(2) Amendment No. 1 dated May 22, 1998 to the
Custody Agreement dated September 1, 1995 (as
amended and restated on August 1, 1997) between
the Registrant and The Chase Manhattan Bank (5).
(3) Amendment No. 2 dated May 22, 1998 to the
Custody Agreement dated September 1, 1995 (as
amended and restated on August 1, 1997, between
the Registrant and The Chase Manhattan Bank (5).
(4) Amendment No. 3 dated July 31, 1998 to the
Custody Agreement dated September 1, 1995 (as
amended and restated on August 1, 1997) between
the Registrant and The Chase Manhattan Bank (5).
-3-
<PAGE>
(5) Amended Exhibit A dated November 28, 1997 to
the Custody Agreement dated September 1, 1995 (as
amended and restated on August 1, 1997)(4).
(h) (1) Amended and Restated Administration Agreement
dated July 31, 1998 among the Registrant, Chase
Global Funds Services Company, Federated
Administrative Services and U.S. Trust Company of
Connecticut (5).
(2) Amended and Restated Mutual Funds Transfer
Agency Agreement dated as of July 31, 1998 between
the Registrant and United States Trust Company of
New York (5).
(3) Letter Agreement dated September 11, 1997
with respect to the Mutual Funds Transfer Agency
Agreement dated September 1, 1995 (4).
(4) Letter Agreement dated November 14, 1997 with
respect to the Mutual Funds Transfer Agency
Agreement dated September 1, 1995 (4).
(5) Amended and Restated Mutual Funds Sub-
Transfer Agency Agreement dated as of July 31,
1998 between United States Trust Company of New
York and Chase Global Funds Services Company (5).
(6) Letter Agreement dated September 11, 1997
with respect to the Mutual Funds Sub-Transfer
Agency Agreement dated September 1, 1995 (4).
(7) Letter Agreement dated November 14, 1997 with
respect to the Mutual Funds Sub-Transfer Agency
Agreement dated September 1, 1995 (4).
(8) Amended and Restated Administrative Services
Plan and Related Form of Shareholder Servicing
Agreement (3).
(9) Administrative Services Plan and Related Form
of Servicing Agreement with Respect to the
Institutional Shares of the Money Fund (7).
(10) Administrative Services Plan and Related Form
of Servicing Agreement with Respect to the Plan
Shares Class of the Value and Restructuring, Large
Cap Growth,
-4-
<PAGE>
Blended Equity and Intermediate-Term Managed
Income Funds (8).
(11) Form of Waiver and Reimbursement Agreement
among Registrant, United States Trust Company of
New York and U.S. Trust Company (8).
(12) Credit Agreement dated December 27, 1999 by
and among Registrant, Excelsior Tax-Exempt Funds,
Inc., Excelsior Institutional Trust, The Chase
Manhattan Bank and the other lenders thereunder
(8).
(i) Opinion of counsel (8).
(j) (1) Consent of Drinker Biddle & Reath LLP
included herewith within Exhibit (i).
(j) (2) Consent of Ernst & Young LLP (8).
(k) None.
(l) (1) Purchase Agreement between Registrant and
Shearson Lehman Brothers Inc. dated February 6,
1985 (4).
(2) Purchase Agreement between Registrant and UST
Distributors, Inc. dated December 29, 1992 (4).
(3) Purchase Agreement between Registrant and
Edgewood Services, Inc. dated November 17, 1995
(1).
(4) Purchase Agreement between Registrant and
Edgewood Services, Inc. dated September 25, 1997
(3).
(5) Purchase Agreement between Registrant and
Edgewood Services, Inc. dated December 30, 1997
(4).
(6) Form of Purchase Agreement between Registrant
and Edgewood Services, Inc. (8)
(m) Distribution Plan and Related Form of Distribution
Agreement relating to Advisor Shares of the Value
and Restructuring, Blended Equity, Large Cap
Growth and Intermediate-Term Managed Income Funds
(8).
(n) Amended and Restated Plan Pursuant to Rule 18f-3
for Operation of a Multi-Class System (8).
-5-
<PAGE>
(p) Code of Ethics of Registrant (8).
Notes:
- -----
(1) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 23 to its Registration Statement on Form N-1A filed July 31, 1996.
(2) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 29 to its Registration Statement on Form N-1A filed July 31, 1997.
(3) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 30 to its Registration Statement on Form N-1A filed October 8, 1997.
(4) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 31 to its Registration Statement on Form N-1A filed March 13, 1998.
(5) Incorporated herein by reference to Registrant's Registration Statement on
Form N-14 filed April 5, 1999.
(6) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 33 to its Registration Statement on Form N-1A filed May 28, 1999.
(7) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 34 to its Registration Statement on Form N-1A filed July 29, 1999.
(8) Filed herewith.
Item 24. Persons Controlled By or Under
Common Control with Registrant
------------------------------
Registrant is controlled by its Board of Directors.
Item 25. Indemnification
---------------
Article VII, Section 3 of Registrant's Articles of Incorporation,
incorporated herein by reference to Exhibit (a)(1) hereto, and Article VI,
Section 2 of Registrant's Amended and Restated Bylaws, incorporated herein by
reference to Exhibit (b)(1) hereto, provide for the indemnification of
Registrant's directors and officers. Indemnification of Registrant's principal
underwriter, custodian, transfer agent and co-administrators is provided for,
respectively, in Section 1.11 of the Amended and Restated Distribution Contract
incorporated herein by reference to Exhibit (e) hereto, Section 12 of the
Custody Agreement incorporated herein by reference to Exhibit (g)(1) hereto,
Section 7 of the Amended and Restated Mutual Funds Transfer Agency Agreement
incorporated herein by reference to Exhibit (h)(2) hereto, and Section 6 of the
Amended and Restated Administration Agreement incorporated herein by reference
to Exhibit (h)(1) hereto.
-6-
<PAGE>
Registrant has obtained from a major insurance carrier a directors' and
officers' liability policy covering certain types of errors and omissions. In no
event will Registrant indemnify any of its directors, officers, employees, or
agents against any liability to which such person would otherwise be subject by
reason of his willful misfeasance, bad faith, gross negligence in the
performance of his duties, or by reason of his reckless disregard of the duties
involved in the conduct of his office or arising under his agreement with
Registrant. Registrant will comply with Rule 484 under the Securities Act of
1933 and Release No. 11330 under the Investment Company Act of 1940 in
connection with any indemnification.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers, and controlling
persons of Registrant pursuant to the foregoing provisions, or otherwise,
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a director, officer, or controlling person of Registrant in
the successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 26. Business and Other Connections of the Investment Adviser
--------------------------------------------------------
(a) U.S. Trust Company:
U.S. Trust Company ("U.S. Trust") is a Connecticut state bank and
trust company located in Stamford, Connecticut. Set forth below are the names
and principal businesses of the directors and certain senior executive officers
of U.S. Trust CT, including those who are engaged in any other business,
profession, vocation or employment of a substantial nature.
-7-
<PAGE>
<TABLE>
<CAPTION>
Position
with U.S. Principal Type of
Trust CT Name Occupation Business
- -------- ---- ---------- --------
<S> <C> <C> <C>
Director John N. Irwin Lawyer
1133 Avenue of the
Americas
New York, NY 10036
Director June Noble Larkin Foundation Not-for-Profit
Edward John Noble Director Organization
Foundation, Inc.
32 East 57th Street
New York, NY 10022
Director Tucker H. Warner Co-Founder, Consulting Firm
The Nutmeg Financial Partner &
Group, LLC Director
1157 Highland Avenue
West Cheshire, CT 06903
Director Thomas C. Clark Managing Director, Asset Management,
United States Trust United States Trust Investment and
Company of New York Company of New York Fiduciary Services
11 West 54th Street
New York, NY 10019
Director Maribeth S. Rahe Vice Chairman, Asset Management,
United States Trust United States Trust Investment and
Company of New York Company of New York Fiduciary Services
114 West 47th Street
New York, NY 10036
Director Frederick B. Taylor Vice Chairman, Asset Management,
United States Trust United States Trust Investment and
Company of New York Company of New York Fiduciary Services
114 West 47th Street
New York, NY 10036
Director Kenneth G. Walsh Executive Vice Asset Management,
United States Trust President, Investment and
Company of New York United States Fiduciary Services
114 West 47th Street Trust Company of
New York, NY 10036 New York
</TABLE>
-8-
<PAGE>
Position
with U.S. Principal Type of
Trust CT Name Occupation Business
- -------- ---- ---------- --------
Director, William V. Ferdinand Managing Director Asset Management,
Managing U.S. Trust Company & CIO Fiduciary Services
Director & 225 High Ridge Road & Private Banking
CIO Stamford, CT 06905
Director, W. Michael Funck President & CEO Asset Management,
President & U.S. Trust Company Fiduciary Services
CEO 225 High Ridge Road & Private Banking
Stamford, CT 06905
Vice Presi- Neil M. McDonnell Vice President & Asset Management,
dent & U.S. Trust Company Treasurer Fiduciary Services
Treasurer 225 High Ridge Road & Private Banking
Stamford, CT 06905
Vice Presi- Alberto Rodriguez Vice President & Asset Management,
dent & U.S. Trust Company Secretary Fiduciary Services
Secretary 225 High Ridge Road & Private Banking
Stamford, CT 06905
-9-
<PAGE>
(b) United States Trust Company of New York:
United States Trust Company of New York ("U.S. Trust NY") is a full-
service state-chartered bank located in New York, New York. Set forth below are
the names and principal businesses of the trustees and certain senior executive
officers of U.S. Trust NY, including those who are engaged in any other
business, profession, vocation, or employment of a substantial nature.
<TABLE>
<CAPTION>
Position
with U.S. Principal Type of
Trust NY Name Occupation Business
- -------- ---- ----------- --------
<S> <C> <C> <C>
Director Eleanor Baum Dean of School Academic
The Cooper Union for of Engineering
the Advancement
of Science & Art
4 Arleigh Road
Great Neck, NY 11021
Director Samuel C. Butler Partner in Cravath, Law Firm
Cravath, Swaine Swaine & Moore
& Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Director Peter O. Crisp Retired Chairman of Venture
103 Horseshoe Road Venrock, Inc. Capital
Mill Neck, NY 11765 Retired
Director Antonia M. Grumbach Partner in Patter- Law Firm
Patterson, Belknap, son, Belknap, Webb
Webb & Tyler LLP & Tyler
1133 Avenue of the
Americas
New York, NY 10036
Director, H. Marshall Schwarz Chairman of the Asset Management,
Chairman United States Trust Board & Chief Exe- Investment and
of the Board Company of New York cutive Officer of Fiduciary Services
and Chief 114 West 47th Street U.S. Trust Corp. and
Executive New York, NY 10036 U.S. Trust Company of
Officer New York
</TABLE>
-10-
<PAGE>
<TABLE>
<CAPTION>
Position
with U.S. Principal Type of
Trust NY Name Occupation Business
- -------- ----- ---------- --------
<S> <C> <C> <C>
Director Philippe de Montebello Director of the Art Museum
The Metropolitan Museum Metropolitan
of Art Museum of Art
1000 Fifth Avenue
New York, NY 10028-0198
Director John H. Stookey Chairman of Petrochemicals and
Box 455 Suburban Propane Pts. Propane
Sheffield, MA 01257
Director Robert N. Wilson Vice Chairman of Health Care
Johnson & Johnson the Board of Johnson Products
One Johnson & & Johnson
Johnson Plaza
New Brunswick, NJ 08933
Director Peter L. Malkin Chairman of Law Firm
Wein & Malkin LLP Wein & Malkin LLP
Lincoln Building
60 East 42nd Street
New York, NY 10165
Director David A. Olsen Retired Chairman of Risk & Insurance
1120 Park Avenue Johnson & Higgins Services
New York, NY 10128
Director Ruth A. Wooden President, Not for Profit
60 Gramercy Park North National Parenting
Apt. 2H Association
New York, NY 10010
Executive Paul K. Napoli Executive Asset Management,
Vice United States Trust Vice President of Investment and
President Company of New York U.S. Trust Corporation Fiduciary Services;
114 West 47th Street and United States Trust Private Banking
New York, NY 10036 Company of New York
</TABLE>
-11-
<PAGE>
<TABLE>
<CAPTION>
Position
with U.S. Principal Type of
Trust NY Name Occupation Business
- -------- ----- ---------- --------
<S> <C> <C> <C>
Director and Maribeth S. Rahe Vice Chairman Asset Management,
Vice Chair- United States Trust of U.S. Trust Corporation Investment and
man Company of New York and United States Trust Fiduciary Services
114 West 47th Street Company of New York
New York, NY 10036
Director, Frederick B. Taylor Vice Chairman and Asset Management,
Vice Chair- United States Trust Chief Investment Of- Investment and
man and Company of New York ficer of U.S. Trust Fiduciary Services
Chief Invest- 114 West 47th Street Corporation and United
ment Officer New York, NY 10036 States Trust Company
of New York
Director, Jeffrey S. Maurer President and Asset Management,
President, United States Trust Chief Operating Investment and
and Chief Company of New York Officer of U.S. Trust Fiduciary Services
Operating 114 West 47th Street Corporation and United
Officer New York, NY 10036 States Trust Company of
New York
Executive John L. Kirby Executive Asset Management,
Vice United States Trust Vice President; Investment and
President Company of New York Chief Financial Fiduciary Services
114 West 47th Street Officer of U.S. Trust
New York, NY 10030 Corporation and United
States Trust Company of
New York
Executive Kenneth G. Walsh Executive Asset Management,
Vice United States Trust Vice President of Investment and
President Company of New York U.S. Trust Corporation Fiduciary Services
114 West 47th Street and United States Trust
New York, NY 10030 Company of New York
Director Philip L. Smith Corporate Director and
P.O. Box 386 Trustee
Ponte Verde Beach, FL 32004
</TABLE>
-12-
<PAGE>
<TABLE>
<CAPTION>
Position
with U.S. Principal Type of
Trust NY Name Occupation Business
- -------- ----- ---------- --------
<S> <C> <C> <C>
Director Robert E. Denham Partner in Munger, Tolles Law Firm
Munger, Tolles & & Olson
Olson LLP
355 South Grand Avenue
35/th/ Floor
Los Angeles, CA 90071-1560
Director Carl H. Pforzheimer, III Managing Partner in Broker-Dealer,
Carl H. Pforzheimer & Co. Carl H. Pforzheimer & investment
650 Madison Avenue Co. advisor
23/rd/ Floor
New York, NY 10022
Executive John M. Deignan Executive Investment
Vice United States Trust Vice President Management and
President Company of New York Fiduciary Services;
114 West 47th Street Private Banking
New York, NY 10030
</TABLE>
-13-
<PAGE>
<TABLE>
<CAPTION>
(b) Names and Principal Positions and Offices with Offices with
Business Addresses the Distributor Registrant
-------------------- --------------------------- ----------
<S> <C> <C>
Lawrence Caracciolo Director and President, --
5800 Corporate Drive Edgewood Services, Inc.
Pittsburgh, PA 15237-7002
Arthur L. Cherry Director, --
5800 Corporate Drive Edgewood Services, Inc.
Pittsburgh, PA 15237-7002
J. Christopher Donahue Director, --
5800 Corporate Drive Edgewood Services, Inc.
Pittsburgh, PA 15237-7002
Thomas P. Sholes Vice President, --
5800 Corporate Drive Edgewood Services, Inc.
Pittsburgh, PA 15237-7002
Ernest L. Linane Vice President, --
5800 Corporate Drive Edgewood Services, Inc.
Pittsburgh, PA 15237-7002
Christine T. Johnson Vice President, --
5800 Corporate Drive Edgewood Services, Inc.
Pittsburgh, PA 15237-7002
Dennis McAuley, III Assistant Treasurer, --
5800 Corporate Drive Edgewood Services, Inc.
Pittsburgh, PA 15237-7002
Thomas R. Donahue Treasurer, --
5800 Corporate Drive Edgewood Services, Inc.
Pittsburgh, PA 15237-7002
Robert M. Rossi Assistant Vice President, --
5800 Corporate Drive Edgewood Services, Inc.
Pittsburgh, PA 15237-7002
Timothy S. Johnson Secretary,
5800 Corporate Drive Edgewood Services, Inc.
Pittsburgh, PA 15237-7002
</TABLE>
-14-
<PAGE>
<TABLE>
<CAPTION>
(b) Names and Principal Positions and Offices with Offices with
Business Addresses the Distributor Registrant
-------------------- --------------------------- ----------
<S> <C> <C>
Victor R. Siclari Assistant Secretary,
5800 Corporate Drive Edgewood Services, Inc.
Pittsburgh, PA 15237-7002
</TABLE>
(c) Not Applicable.
Item 28. Location of Accounts and Records
--------------------------------
1. United States Trust Company of New York, 114 W. 47th Street, New
York, NY 10036 (records relating to its functions as investment adviser and
transfer agent).
2. U.S. Trust Company, 225 High Ridge Road, East Building, Stamford,
Connecticut 06905 (records relating to its function as investment adviser and
co-administrator).
3. Edgewood Services, Inc., Clearing Operations, 5800 Corporate
Drive, Pittsburgh, PA 15237-5829 (records relating to its function as
distributor).
4. Chase Global Funds Services Company, 73 Tremont Street, Boston,
Massachusetts 02108-3913 (records relating to its function as co-administrator
and sub-transfer agent).
5. Federated Administrative Services, Federated Investors Tower,
Pittsburgh, PA 15222-3799 (records relating to its function as co-
administrator).
6. The Chase Manhattan Bank, 3 Chase MetroTech Center, 8th Floor,
Brooklyn, NY 11245 (records relating to its function as custodian).
7. Drinker Biddle & Reath LLP, One Logan Square, 18th and Cherry
Streets, Philadelphia, Pennsylvania 19103-6996 (Registrant's Articles of
Incorporation, Bylaws, and Minute Books).
Item 29. Management Services
-------------------
Not Applicable.
Item 30. Undertakings
------------
Not Applicable.
-15-
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 (the "1933
Act") and the Investment Company Act of 1940, Excelsior Funds, Inc. has duly
caused this Registration Statement Post-Effective Amendment No. 35 to its
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Vero Beach and the State of Florida on the
4/th/ day of January, 2000.
EXCELSIOR FUNDS, INC.
Registrant
/s/ Frederick S. Wonham
--------------------------------------------
Frederick S. Wonham, President and Treasurer
(Signature and Title)
Pursuant to the requirements of the 1933 Act, this Post-Effective
Amendment No. 35 to Excelsior Funds, Inc.'s Registration Statement on Form N-1A
has been signed below by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Frederick S. Wonham Chairman of the Board,
- -----------------------
Frederick S. Wonham President and Treasurer January 4, 2000
* Joseph H. Dugan Director January 4, 2000
- -----------------
Joseph H. Dugan
* Donald L. Campbell Director January 4, 2000
- --------------------
Donald L. Campbell
* Wolfe J. Frankl Director January 4, 2000
- -----------------
Wolfe J. Frankl
* Robert A. Robinson Director January 4, 2000
- --------------------
Robert A. Robinson
* Alfred Tannachion Director January 4, 2000
- -------------------
Alfred Tannachion
* Jonathan Piel Director January 4, 2000
- ---------------
Jonathan Piel
*Rodman L. Drake Director January 4, 2000
- ----------------
Rodman L. Drake
</TABLE>
*By: /s/ W. Bruce McConnel, III
----------------------------------------
W. Bruce McConnel, III, Attorney-in-Fact
<PAGE>
EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
POWER OF ATTORNEY
-----------------
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby appoints
Frederick S. Wonham and W. Bruce McConnel, III, and either of them, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in his capacity as
director/trustee or officer, or both, to execute amendments to Excelsior Funds,
Inc.'s, Excelsior Tax-Exempt Funds, Inc.'s and Excelsior Institutional Trust's
(collectively, the "Companies") respective Registration Statements on Form N-1A
pursuant to the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "Acts") and all instruments necessary or incidental
in connection therewith pursuant to said Acts and any rules, regulations, or
requirements of the Securities and Exchange Commission in respect thereof, and
to file the same with the Securities and Exchange Commission, and said attorney
shall have full power and authority, to do and perform in the name and on behalf
of the undersigned in any and all capacities, every act whatsoever requisite or
necessary to be done, as fully and to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorney may
lawfully do or cause to be done by virtue hereof.
Dated: May 21, 1999 /s/ Alfred C. Tannachion
------------------------
Alfred C. Tannachion
<PAGE>
EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
POWER OF ATTORNEY
-----------------
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby appoints
Frederick S. Wonham and W. Bruce McConnel, III, and either of them, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in his capacity as
director/trustee or officer, or both, to execute amendments to Excelsior Funds,
Inc.'s, Excelsior Tax-Exempt Funds, Inc.'s and Excelsior Institutional Trust's
(collectively, the "Companies") respective Registration Statements on Form N-1A
pursuant to the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "Acts") and all instruments necessary or incidental
in connection therewith pursuant to said Acts and any rules, regulations, or
requirements of the Securities and Exchange Commission in respect thereof, and
to file the same with the Securities and Exchange Commission, and either of said
attorneys shall have full power and authority, to do and perform in the name and
on behalf of the undersigned in any and all capacities, every act whatsoever
requisite or necessary to be done, as fully and to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that either
of said attorneys may lawfully do or cause to be done by virtue hereof.
Dated: May 21, 1999 /s/ Donald L. Campbell
----------------------
Donald L. Campbell
<PAGE>
EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
POWER OF ATTORNEY
-----------------
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby appoints
Frederick S. Wonham and W. Bruce McConnel, III, and either of them, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in his capacity as
director/trustee or officer, or both, to execute amendments to Excelsior Funds,
Inc.'s, Excelsior Tax-Exempt Funds, Inc.'s and Excelsior Institutional Trust's
(collectively, the "Companies") respective Registration Statements on Form N-1A
pursuant to the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "Acts") and all instruments necessary or incidental
in connection therewith pursuant to said Acts and any rules, regulations, or
requirements of the Securities and Exchange Commission in respect thereof, and
to file the same with the Securities and Exchange Commission, and either of said
attorneys shall have full power and authority, to do and perform in the name and
on behalf of the undersigned in any and all capacities, every act whatsoever
requisite or necessary to be done, as fully and to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that either
of said attorneys may lawfully do or cause to be done by virtue hereof.
Dated: May 21, 1999 /s/ Joseph H. Dugan
-------------------
Joseph H. Dugan
<PAGE>
EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
POWER OF ATTORNEY
-----------------
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby appoints
Frederick S. Wonham and W. Bruce McConnel, III, and either of them, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in his capacity as
director/trustee or officer, or both, to execute amendments to Excelsior Funds,
Inc.'s, Excelsior Tax-Exempt Funds, Inc.'s and Excelsior Institutional Trust's
(collectively, the "Companies") respective Registration Statements on Form N-1A
pursuant to the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "Acts") and all instruments necessary or incidental
in connection therewith pursuant to said Acts and any rules, regulations, or
requirements of the Securities and Exchange Commission in respect thereof, and
to file the same with the Securities and Exchange Commission, and either of said
attorneys shall have full power and authority, to do and perform in the name and
on behalf of the undersigned in any and all capacities, every act whatsoever
requisite or necessary to be done, as fully and to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that either
of said attorneys may lawfully do or cause to be done by virtue hereof.
Dated: May 21, 1999 /s/ Robert A. Robinson
----------------------
Robert A. Robinson
<PAGE>
EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
POWER OF ATTORNEY
-----------------
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby appoints
Frederick S. Wonham and W. Bruce McConnel, III, and either of them, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in his capacity as
director/trustee or officer, or both, to execute amendments to Excelsior Funds,
Inc.'s, Excelsior Tax-Exempt Funds, Inc.'s and Excelsior Institutional Trust's
(collectively, the "Companies") respective Registration Statements on Form N-1A
pursuant to the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "Acts") and all instruments necessary or incidental
in connection therewith pursuant to said Acts and any rules, regulations, or
requirements of the Securities and Exchange Commission in respect thereof, and
to file the same with the Securities and Exchange Commission, and either of said
attorneys shall have full power and authority, to do and perform in the name and
on behalf of the undersigned in any and all capacities, every act whatsoever
requisite or necessary to be done, as fully and to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that either
of said attorneys may lawfully do or cause to be done by virtue hereof.
Dated: May 21, 1999 /s/ Wolfe J. Frankl
-------------------
Wolfe J. Frankl
<PAGE>
EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
EXCELSIOR FUNDS
POWER OF ATTORNEY
-----------------
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby appoints
W. Bruce McConnel, III his true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, for him and in his name, place and
stead, in his capacity as director/trustee or officer, or both, to execute
amendments to Excelsior Funds, Inc.'s, Excelsior Tax-Exempt Funds, Inc.'s,
Excelsior Institutional Trust's and Excelsior Funds' (collectively, the
"Companies") respective Registration Statements on Form N-1A pursuant to the
Investment Company Act of 1940, as amended, and the Securities Act of 1933, as
amended (the "Acts") and all instruments necessary or incidental in connection
therewith pursuant to said Acts and any rules, regulations, or requirements of
the Securities and Exchange Commission in respect thereof, and to file the same
with the Securities and Exchange Commission, and said attorney shall have full
power and authority, to do and perform in the name and on behalf of the
undersigned in any and all capacities, every act whatsoever requisite or
necessary to be done, as fully and to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorney may
lawfully do or cause to be done by virtue hereof.
Dated: May 21, 1999 /s/ Frederick S. Wonham
------------------------
Frederick S. Wonham
<PAGE>
EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
EXCELSIOR FUNDS
POWER OF ATTORNEY
-----------------
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby appoints
Frederick S. Wonham and W. Bruce McConnel, III, and either of them, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in his capacity as
director/trustee or officer, or both, to execute amendments to Excelsior Funds,
Inc.'s, Excelsior Tax-Exempt Funds, Inc.'s, Excelsior Institutional Trust's and
Excelsior Funds' (collectively, the "Companies") respective Registration
Statements on Form N-1A pursuant to the Investment Company Act of 1940, as
amended, and the Securities Act of 1933, as amended (the "Acts") and all
instruments necessary or incidental in connection therewith pursuant to said
Acts and any rules, regulations, or requirements of the Securities and Exchange
Commission in respect thereof, and to file the same with the Securities and
Exchange Commission, and either of said attorneys shall have full power and
authority, to do and perform in the name and on behalf of the undersigned in any
and all capacities, every act whatsoever requisite or necessary to be done, as
fully and to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that either of said attorneys may lawfully do or
cause to be done by virtue hereof.
Dated: May 21, 1999 /s/ Rodman L. Drake
-------------------
Rodman L. Drake
<PAGE>
EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
EXCELSIOR FUNDS
POWER OF ATTORNEY
-----------------
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby appoints
Frederick S. Wonham and W. Bruce McConnel, III, and either of them, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in his capacity as
director/trustee or officer, or both, to execute amendments to Excelsior Funds,
Inc.'s, Excelsior Tax-Exempt Funds, Inc.'s, Excelsior Institutional Trust's and
Excelsior Funds' (collectively, the "Companies") respective Registration
Statements on Form N-1A pursuant to the Investment Company Act of 1940, as
amended, and the Securities Act of 1933, as amended (the "Acts") and all
instruments necessary or incidental in connection therewith pursuant to said
Acts and any rules, regulations, or requirements of the Securities and Exchange
Commission in respect thereof, and to file the same with the Securities and
Exchange Commission, and either of said attorneys shall have full power and
authority, to do and perform in the name and on behalf of the undersigned in any
and all capacities, every act whatsoever requisite or necessary to be done, as
fully and to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that either of said attorneys may lawfully do or
cause to be done by virtue hereof.
Dated: May 21, 1999 /s/ Jonathan Piel
-----------------
Jonathan Piel
<PAGE>
EXCELSIOR FUNDS, INC.
Certificate of Secretary
The following resolution was duly adopted by the Board of Directors of
Excelsior Funds, Inc. on November 19, 1999 and remains in effect on the date
hereof:
FURTHER RESOLVED, that the directors and officers of Excelsior Funds,
Inc. who may be required to execute such Registration Statement on Form N-
1A (and any amendments thereto), and each of them, hereby appoint Frederick
S. Wonham and W. Bruce McConnel, III, and each of them, their true and
lawful attorney, or attorneys, to execute in their name, place and stead,
in their capacity as director or officer, or both, of Excelsior Funds,
Inc., the Registration Statement on Form N-1A, any amendments thereto, and
all instruments necessary or incidental in connection therewith, and to
file the same with the SEC, and either of said attorneys shall have power
to act with or without the other of said attorneys and shall have full
power of substitution and re-substitution; and either of said attorneys
shall have full power and authority to do and perform in the name and on
behalf of each of said directors or officers, or any or all of them, 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 each of said
directors or officers, or any or all of them, being hereby ratified and
approved; and
FURTHER RESOLVED, that such Post-Effective Amendment shall be in such
form as the officer or officers executing the same, on the advice of
counsel to Excelsior Funds, Inc., may approve as necessary or desirable,
such approval to be conclusively evidenced by his, her or their execution
thereof.
EXCELSIOR FUNDS, INC.
By: /s/ W. Bruce McConnel, III
--------------------------
W. Bruce McConnel, III
Secretary
Dated: January 4, 2000
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
(a)(14) Articles of Amendment of Registrant dated July 1, 1999.
(a)(15) Articles Supplementary of Registrant.
(h)(10) Administrative Services Plan and Related Form of Servicing
Agreement with Respect to the Advisor Shares Class of the Value
and Restructuring, Large Cap Growth, Blended Equity and
Intermediate-Term Managed Income Funds.
(h)(11) Form of Waiver and Reimbursement Agreement among Registrant,
United States Trust Company of New York and U.S. Trust Company.
(h)(12) Credit Agreement dated December 27, 1999 by and among Registrant,
United States Trust Company of New York and U.S. Trust Company.
(i) Opinion and consent of Counsel.
(j) Consent of Ernst & Young LLP.
(l)(6) Form of Purchase Agreement between Registrant and Edgewood
Services, Inc.
(m) Distribution Plan and Related Form of Distribution Agreement
relating to Advisor Shares of the Value and Restructuring,
Blended Equity, Large-Cap Growth and Intermediate-Term Managed
Income Funds.
(o) Amended and Restated Plan pursuant to Rule 18f-3 for Operation of
a Multi-Class System.
(p) Code of Ethics.
<PAGE>
EXHIBIT (a)(14)
EXCELSIOR FUNDS, INC.
ARTICLES OF AMENDMENT
EXCELSIOR FUNDS, INC., a Maryland corporation having its principal office
in the City of Baltimore, Maryland (the "Company"), certifies that:
FIRST: The Charter of the Company is amended by reclassifying all of the
-----
shares of the Company's Class E Common Stock as shares of the Company's Class C
Common Stock.
SECOND: Upon effectiveness of these Articles of Amendment:
------
(a) All of the assets and liabilities belonging to the Company's
Class E Common Stock shall be conveyed, transferred and delivered to the
Company's Class C Common Stock, and shall thereupon become and be assets
and liabilities belonging to Class C Common Stock.
(b) Each of the issued and outstanding shares (and fractions thereof)
of the Company's Class E Common Stock will automatically, and without the
need of any further act or deed, be reclassified and changed to full and
fractional issued and outstanding shares of the Company's Class C Common
Stock of equal aggregate net asset value, in such number of such Class C
Common Stock shares as shall be determined by multiplying one (1) times the
number obtained by dividing the net asset value of a share of the Class E
Common Stock by the net asset value of a share of the Class C Common Stock,
all determined as of 4:00 p.m., Eastern time, on the date immediately
preceding the effective date of these Articles of Amendment.
(c) Each unissued share (or fraction thereof) of the Company's Class
E Common Stock will automatically, and without the need of any further act
or deed, be reclassified and changed to such number of unissued shares (or
fractions thereof) of the Company's Class C Common Stock as shall result,
as of the effective time of these Articles of Amendment and as a result
hereof, in the total number of unissued shares of the Company's Class C
Common Stock being increased by 375,000,000 shares less the number of
issued and outstanding shares of the Company's Class C Common Stock
resulting from paragraph (b) above.
(d) Open accounts on the share records of the Company's Class C
Common Stock shall be established representing the appropriate number of
shares of Class C Common Stock owned by each former holder of Class E
Common Stock as a result of the reclassification.
THIRD: This amendment does not increase the authorized capital stock of
-----
the Company or the aggregate par value thereof. This amendment reclassifies and
<PAGE>
changes the 375,000,000 authorized shares of Class E Common Stock to 375,000,000
additional authorized shares of Class C Common Stock but does not amend the
description of any class of stock as set forth in the Charter.
FOURTH: Outstanding certificates representing issued and outstanding
------
shares of Class E Common Stock immediately prior to these Articles of Amendment
becoming effective shall, upon these Articles becoming effective, be deemed to
represent the appropriate number of issued and outstanding shares of Class C
Common Stock, calculated as set forth in Article Second of these Articles.
Certificates representing shares of Class C Common Stock resulting from the
aforesaid change and reclassification need not be issued until certificates
representing the shares of Class E Common Stock so changed and reclassified, if
issued, have been received by the Company or its agent duly endorsed for
transfer.
FIFTH: This amendment has been duly authorized and advised by the Board
-----
of Directors of the Company and approved by the stockholders of the Company
entitled to vote thereon.
SIXTH: These Articles of Amendment shall be effective as of July 9,
-----
1999.
IN WITNESS WHEREOF, EXCELSIOR FUNDS, INC. has caused these Articles of
Amendment to be signed in its name and on its behalf by its President, and
attested by its Secretary, on the 1/st/ day of July, 1999.
ATTEST: EXCELSIOR FUNDS, INC.
By: /s/ W. Bruce McConnel, III By: /s/ Frederick S. Wonham
-------------------------- -----------------------
W. Bruce McConnel, III Frederick S. Wonham
-2-
<PAGE>
EXHIBIT (a)(15)
EXCELSIOR FUNDS, INC.
ARTICLES SUPPLEMENTARY
Excelsior Funds, Inc., a Maryland corporation having its principal
office in the City of Baltimore, Maryland (hereinafter called the "Company"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Pursuant to Section 2-208 of the Maryland General Corporation
Law, the Board of Directors of the Company has classified 2,000,000 of the
unissued shares of the Company's Common Stock pursuant to the following
resolutions:
RESOLVED, that pursuant to Article VI of the Articles of
Incorporation of Excelsior Funds, Inc. (the "Charter"), (1)
500,000,000 authorized but unissued and currently unclassified shares
of Common Stock (of the par value of One Mill ($.001) per share and of
the aggregate par value of Five Hundred Thousand Dollars ($500,000)),
be, and hereby are, classified into a separate series to be known as
Class C Common Stock - Special Series 2; (2) 500,000,000 authorized
but unissued and currently unclassified shares of Common Stock (of the
par value of One Mill ($.001) per share and of the aggregate par value
of Five Hundred Thousand Dollars ($500,000)), be, and hereby are,
classified into a separate series to be known as Class N Common Stock
- Special Series 2; (3) 500,000,000 authorized but unissued and
currently unclassified shares of Common Stock (of the par value of One
Mill ($.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000)), be, and hereby are, classified into a
separate series to be known as Class T Common Stock - Special Series
2; and (4) 500,000,000 authorized but unissued and currently
unclassified shares of Common Stock (of the par value of One Mill
($.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000)) be, and hereby are, classified into a
separate series to be known as Class U Common Stock - Special Series
2.
Class C Common Stock
--------------------
FURTHER RESOLVED, that all consideration received by the
Company for the issue or sale of each share of Special Series 2 of
Class C Common Stock shall be invested and reinvested with the
consideration received by the Company for the issue and sale of all
other shares now or hereafter authorized of Class C Common Stock
(irrespective of whether said shares have been designated as part
<PAGE>
of a series of said Class and, if so designated, irrespective of the
particular series designation), together with all income, earnings,
profits and proceeds derived from the sale, exchange or liquidation
thereof, any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, and any general assets of
the Company allocated to the shares of such Special Series 2 of Class
C Common Stock (or to such other shares) by the Board of Directors of
the Company in accordance with the Company's Charter;
FURTHER RESOLVED, that the assets belonging to Class C
Common Stock, including Class C Common Stock, Class C Common Stock -
Special Series 1, Class C Common Stock - Special Series 2, and any
other series of Class C Common Stock currently authorized or
hereinafter authorized, shall be charged with the expenses and
liabilities of the Company in respect of Class C Common Stock, Class C
Common Stock - Special Series 1, Class C Common Stock - Special Series
2 and any other series of Class C Common Stock hereafter authorized,
and in respect of any general expenses and liabilities of the Company
allocated to Class C Common Stock by the Board of Directors in
accordance with the Company's Charter, except that only shares of
Special Series 2 of Class C Common Stock shall bear: (x) the expenses
and liabilities of payments to institutions under any agreement
entered into by or on behalf of the Company which provides for
services exclusively for customers of such institution who
beneficially own shares of such Special Series 2, and (y) any other
liabilities and expenses which the Board of Directors determines are
directly attributable to shares of such Special Series 2 and which are
to be borne solely by such Special Series 2 shares;
FURTHER RESOLVED, that income, earnings, gain or loss on the
assets belonging to Class C Common Stock (including Class C Common
Stock, Class C Common Stock - Special Series 1, Class C Common Stock -
Special Series 2 and any other series of Class C Common Stock
hereafter authorized shall be allocated among Class C Common Stock,
Class C Common Stock - Special Series 1, Class C Common Stock -
Special Series 2 and any other series of Class C Common Stock
hereafter authorized pro rata in accordance with the number of shares
outstanding of Class C Common Stock, Class C Common Stock - Special
Series 1, Class C Common Stock - Special Series 2 and any other new
series of Class C Common Stock hereafter authorized;
FURTHER RESOLVED, that dividends on shares of Class C Common
Stock, Class C Common Stock - Special Series 1, Class C Common Stock -
Special Series 2 and any other series of Class C Common Stock
hereafter authorized, shall be paid only out of the assets allocable
to such respective series less the liabilities and expenses allocable
to such series in accordance with the preceding resolutions;
FURTHER RESOLVED, that in the event of the liquidation or
dissolution of the Company's portfolio consisting of Class C
-2-
<PAGE>
Common Stock, Class C Common Stock - Special Series 1, Class C Common
Stock -Special Series 2 and any other series of Class C Common Stock
hereafter authorized, the stockholders of each such series shall be
entitled to receive, out of the assets of this portfolio available for
distribution, only the assets allocable to each such series,
respectively;
FURTHER RESOLVED, that each share of Special Series 2 of
Class C Common Stock shall otherwise have the same preferences,
conversion and other rights, voting powers, restrictions, limitations
as to dividends, qualifications and terms and conditions of redemption
as each other share of such Special Series 2 and all other shares now
or hereafter authorized of Class C Common Stock (irrespective of
whether said shares have been designated as part of a series of said
Class and, if so designated, irrespective of the particular series
designation), except that on any matter that pertains to the
agreements or any of the liabilities or expenses referred to in the
preceding resolution and that is submitted to a vote of shareholders,
only shares of Special Series 2 of Class C Common Stock bearing such
liabilities and expenses shall be entitled to vote, except that (i) if
said matter affects shares of the Company other than shares of such
Special Series 2 of Class C Common Stock, such other affected shares
shall also be entitled to vote, and in such case shares of Special
Series 2 of Class C Common Stock shall be voted in the aggregate
together with such other affected shares and not by class or series
except where otherwise required by law or permitted by the Board of
Directors of the Company; and (ii) if said matter does not affect
shares of Special Series 2 of Class C Common Stock, said shares shall
not be entitled to vote (except where required by law or permitted by
the Board of Directors) even though the matter is submitted to a vote
of the holders of shares other than shares of such Special Series 2 of
Class C Common Stock;
Class N Common Stock
--------------------
FURTHER RESOLVED, that all consideration received by the
Company for the issue or sale of each share of Special Series 2 of
Class N Common Stock shall be invested or reinvested with the
consideration received by the Company for the issue and sale of all
other shares now or hereafter authorized of Class N Common Stock
(irrespective of whether said shares have been designated as part of a
series of said Class and, if so designated, irrespective of the
particular series designation), together with all income, earnings,
profits and proceeds derived from the sale, exchange or liquidation
thereof, any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, and any general assets of
the Company allocated to the shares of such Special Series 2 of Class
N Common Stock (or to such other shares) by the Board of Directors of
the Company in accordance with the Company's Charter;
FURTHER RESOLVED, that the assets belonging to Class N
Common Stock, including Class N Common Stock, Class N Common Stock -
Special Series 1, Class N Common Stock - Special Series 2 and any
other series of Class
-3-
<PAGE>
N Common Stock hereafter authorized, shall be charged with the
expenses and liabilities of the Company in respect of Class N Common
Stock, Class N Common Stock - Special Series 1, Class N- Special
Series 2 and any other series of Class N Common Stock hereafter
authorized, and in respect of any general expenses and liabilities of
the Company allocated to Class N Common Stock by the Board of
Directors in accordance with the Company's Charter, except that only
shares of Special Series 2 of Class N Common Stock shall bear: (x) the
expenses and liabilities of payments to institutions under any
agreement entered into by or on behalf of the Company which provides
for services exclusively for customers of such institution who
beneficially own shares of such Special Series 2, and (y) any other
liabilities and expenses which the Board of Directors determines are
directly attributable to shares of such Special Series 2 and which are
to be borne solely by such Special Series 2 shares;
FURTHER RESOLVED, that income, earnings, gain or loss on the
assets belonging to Class N Common Stock (including Class N Common
Stock, Class N Common Stock - Special Series 1, Class N - Special
Series 2 and any other series of Class N Common Stock hereafter
authorized) shall be allocated among Class N Common Stock, Class N
Common Stock - Special Series 1, Class N - Special Series 2 and any
other series of Class N Common Stock hereafter authorized pro rata in
accordance with the number of shares outstanding of Class N Common
Stock, Class N Common Stock - Special Series 1, Class N - Special
Series 2 and any other new series of Class N Common Stock hereafter
authorized;
FURTHER RESOLVED, that dividends on shares of Class N Common
Stock, Class N Common Stock - Special Series 1, Class N Common Stock -
Special Series 2 and any other series of Class N Common Stock
hereafter authorized, shall be paid only out of the assets allocable
to such respective series less the liabilities and expenses allocable
to such series in accordance with the preceding resolutions;
FURTHER RESOLVED, that in the event of the liquidation or
dissolution of the Company's portfolio consisting of Class N Common
Stock, Class N Common Stock - Special Series 1, Class N Common Stock -
Special Series 2 and any other series of Class N Common Stock
hereafter authorized, the stockholders of each such series shall be
entitled to receive, out of the assets of this portfolio available for
distribution, only the assets allocable to each such series,
respectively;
FURTHER RESOLVED, that each share of Special Series 2 of
Class N Common Stock shall otherwise have the same preferences,
conversion and other rights, voting powers, restrictions, limitations
as to dividends, qualifications and terms and conditions of redemption
as each other share of such Special Series 2 and all other shares now
or hereafter authorized of Class N Common Stock (irrespective of
whether said shares have been designated as part of a series of said
Class and, if so designated, irrespective of the particular series
designation),
-4-
<PAGE>
except that on any matter that pertains to the agreements or any of
the liabilities or expenses referred to in the preceding resolution
and that is submitted to a vote of shareholders, only shares of
Special Series 2 of Class N Common Stock bearing such liabilities and
expenses shall be entitled to vote, except that (i) if said matter
affects shares of the Company other than shares of such Special Series
2 of Class N Common Stock, such other affected shares shall also be
entitled to vote, and in such case shares of Special Series 2 of Class
N Common Stock shall be voted in the aggregate together with such
other affected shares and not by class or series except where
otherwise required by law or permitted by the Board of Directors of
the Company; and (ii) if said matter does not affect shares of Special
Series 2 of Class N Common Stock, said shares shall not be entitled to
vote (except where required by law or permitted by the Board of
Directors even though the matter is submitted to a vote of the holders
of shares other than shares of such Special Series 2 Class N Common
Stock;
Class T Common Stock
--------------------
FURTHER RESOLVED, that all consideration received by the
Company for the issue or sale of each share of Special Series 2 of
Class T Common Stock shall be invested or reinvested with the
consideration received by the Company for the issue and sale of all
other share s now or hereafter authorized of Class T Common Stock
(irrespective of whether said shares have been designated as part of a
series of said Class and, if so designated, irrespective of the
particular series designation), together with all income, earnings,
profits and proceeds derived from the sale, exchange or liquidation
thereof, any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, and any general assets of
the Company allocated to the shares of such Special Series 2 (or to
such other shares) by the Board of Directors of the Company in
accordance with the Company's Charter;
FURTHER RESOLVED, that the assets belonging to Class T
Common Stock, including Class T Common Stock, Class T Common Stock -
Special Series 1, Class T Common Stock - Special Series 2 and any
other series of Class T Common Stock hereafter authorized, shall be
charged with the expenses and liabilities of the Company in respect of
Class T Common Stock, Class T Common Stock --Special Series 1, Class T
- Special Series 2 and any other series of Class T Common Stock
hereafter authorized, and in respect of any general expenses and
liabilities of the Company allocated to Class T Common Stock by the
Board of Directors in accordance with the Company's Charter, except
that only shares of Special Series 2 of Class T Common Stock shall
bear: (x) the expenses and liabilities of payments to institutions
under any agreement entered into by or on behalf of the Company which
provides for services exclusively for customers of such institution
who beneficially own shares of such Special Series 2, and (y) any
other liabilities and expenses which the Board of Directors determines
are directly attributable to shares of such Special Series 2 and which
are to be borne solely by such Special Series 2 shares;
-5-
<PAGE>
FURTHER RESOLVED, that income, earnings, gain or loss on the
assets belonging to Class T Common Stock (including Class T Common
Stock, Class T Common Stock - Special Series 1, Class T Common Stock -
Special Series 2 and any other series of Class T Common Stock
hereafter authorized) shall be allocated among Class T Common Stock,
Class T Common Stock - Special Series 1, Class T Common Stock -
Special Series 2 and any other series of Class T Common Stock
hereafter authorized pro rata in accordance with the number of shares
outstanding of Class T Common Stock, Class T Common Stock --Special
Series 1, Class T Common Stock - Special Series 2 and any other new
series of Class T Common Stock hereafter authorized;
FURTHER RESOLVED, that dividends on shares of Class T Common
Stock, Class T Common Stock - Special Series 1, Class T Common Stock -
Special Series 2 and any other series of Class T Common Stock
hereafter authorized, shall be paid only out of the assets allocable
to such respective series less the liabilities and expenses allocable
to such series in accordance with the preceding resolutions;
FURTHER RESOLVED, that in the event of the liquidation or
dissolution of the Company's portfolio consisting of Class T Common
Stock, Class T Common Stock - Special Series 1, Class T Common Stock -
Special Series 2 and any other series of Class T Common Stock
hereafter authorized, the stockholders of each such series shall be
entitled to receive, out of the assets of this portfolio available for
distribution, only the assets allocable to each such series,
respectively;
FURTHER RESOLVED, that each share of Special Series 2 of
Class T Common Stock shall otherwise have the same preferences,
conversion and other rights, voting powers, restrictions, limitations
as to dividends, qualifications and terms and conditions of redemption
as each other share of such Special Series 2 and all other shares now
or hereafter authorized of Class T Common Stock (irrespective of
whether said shares have been designated as part of a series of said
Class and, if so designated, irrespective of the particular series
designation), except that on any matter that pertains to the
agreements or any of the liabilities or expenses referred to in the
preceding resolution and that is submitted to a vote of shareholders,
only shares of Special Series 2 of Class T Common Stock bearing such
liabilities and expenses shall be entitled to vote, except that (i) if
said matter affects shares of the Company other than shares of such
Special Series 2 of Class T Common Stock, such other affected shares
shall also be entitled to vote, and in such case shares of Special
Series 2 of Class T Common Stock shall be voted in the aggregate
together with such other affected shares and not by class or series
except where otherwise required by law or permitted by the Board of
Directors of the Company; and (ii) if said matter does not affect
shares of Special Series 2 of Class T Common Stock, said shares shall
not be entitled to vote (except where required by law or permitted by
the Board of Directors) even though the matter is
-6-
<PAGE>
submitted to a vote of the holders of shares other than shares of such
Special Series 2 of Class T Common Stock.
Class U Common Stock
--------------------
FURTHER RESOLVED, that all consideration received by the
Company for the issue or sale of each share of Special Series 2 of
Class U Common Stock shall be invested or reinvested with the
consideration received by the Company for the issue and sale of all
other share s now or hereafter authorized of Class U Common Stock
(irrespective of whether said shares have been designated as part of a
series of said Class and, if so designated, irrespective of the
particular series designation), together with all income, earnings,
profits and proceeds derived from the sale, exchange or liquidation
thereof, any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, and any general assets of
the Company allocated to the shares of such Special Series 2 (or to
such other shares) by the Board of Directors of the Company in
accordance with the Company's Charter;
FURTHER RESOLVED, that the assets belonging to Class U
Common Stock, including Class U Common Stock, Class U Common Stock -
Special Series 2 and any other series of Class U Common Stock
hereafter authorized, shall be charged with the expenses and
liabilities of the Company in respect of Class U Common Stock, Class U
Common Stock - Special Series 2 and any other series of Class U Common
Stock hereafter authorized, and in respect of any general expenses and
liabilities of the Company allocated to Class U Common Stock by the
Board of Directors in accordance with the Company's Charter, except
that only shares of Special Series 2 of Class U Common Stock shall
bear: (x) the expenses and liabilities of payments to institutions
under any agreement entered into by or on behalf of the Company which
provides for services exclusively for customers of such institution
who beneficially own shares of such Special Series 2, and (y) any
other liabilities and expenses which the Board of Directors determines
are directly attributable to shares of such Special Series 2 and which
are to be borne solely by such Special Series 2 shares;
FURTHER RESOLVED, that income, earnings, gain or loss on the
assets belonging to Class U Common Stock (including Class U Common
Stock, Class U Common Stock - Special Series 2 and any other series of
Class U Common Stock hereafter authorized) shall be allocated among
Class U Common Stock, Class U Common Stock - Special Series 2 and any
other series of Class U Common Stock hereafter authorized pro rata in
accordance with the number of shares outstanding of Class U Common
Stock, Class U Common Stock - Special Series 2 and any other new
series of Class U Common Stock hereafter authorized;
FURTHER RESOLVED, that dividends on shares of Class U Common
Stock, Class U Common Stock - Special Series 2 and any other series of
Class U Common Stock hereafter authorized, shall be paid only out of
the assets allocable
-7-
<PAGE>
to such respective series less the liabilities and expenses allocable
to such series in accordance with the preceding resolutions;
FURTHER RESOLVED, that in the event of the liquidation or
dissolution of the Company's portfolio consisting of Class U Common
Stock, Class U Common Stock - Special Series 2 and any other series of
Class U Common Stock hereafter authorized, the stockholders of each
such series shall be entitled to receive, out of the assets of this
portfolio available for distribution, only the assets allocable to
each such series, respectively;
FURTHER RESOLVED, that each share of Special Series 2 of
Class U Common Stock shall otherwise have the same preferences,
conversion and other rights, voting powers, restrictions, limitations
as to dividends, qualifications and terms and conditions of redemption
as each other share of such Special Series 2 and all other shares now
or hereafter authorized of Class U Common Stock (irrespective of
whether said shares have been designated as part of a series of said
Class and, if so designated, irrespective of the particular series
designation), except that on any matter that pertains to the
agreements or any of the liabilities or expenses referred to in the
preceding resolution and that is submitted to a vote of shareholders,
only shares of Special Series 2 of Class U Common Stock bearing such
liabilities and expenses shall be entitled to vote, except that (i) if
said matter affects shares of the Company other than shares of such
Special Series 2 of Class U Common Stock, such other affected shares
shall also be entitled to vote, and in such case shares of Special
Series 2 of Class U Common Stock shall be voted in the aggregate
together with such other affected shares and not by class or series
except where otherwise required by law or permitted by the Board of
Directors of the Company; and (ii) if said matter does not affect
shares of Special Series 2 of Class U Common Stock bearing such
liabilities and expenses, said shares shall not be entitled to vote
(except where required by law or permitted by the Board of Directors)
even though the matter is submitted to a vote of the holders of shares
other than shares of such Special Series 2 of Class U Common Stock.
SECOND: The shares of Class C Common Stock - Special Series 2, N
Common Stock - Special Series 2 and T Common Stock - Special Series 2 and U
Common Stock - Special Series 2 Common Stock of the Company classified pursuant
to the resolutions set forth in Article FIRST of these Articles Supplementary
have been classified by the Company's Board of Directors under the authority
contained in the Charter of the Company.
THIRD: These Articles Supplementary do not increase the total number
of shares that the Company is authorized to issue or the aggregate par value
thereof. The total number of
-8-
<PAGE>
shares of capital stock which the Company is presently authorized to issue
remains Thirty-Five Billion (35,000,000,000) shares of capital stock of the par
value of One Mill ($0.001) per share and of the aggregate par value of Thirty-
Five Million Dollars ($35,000,000), classified or remaining unclassified as
follows:
Class A Common Stock: Two Billion (2,000,000,000) shares of capital
--------------------
stock of the Company of the par value of One Mill ($0.001) per share and of
the aggregate par value of Two Million Dollars ($2,000,000);
Class A Common Stock -- Special Series 1: One Billion (1,000,000,000)
----------------------------------------
shares of capital stock of the Company of the par value of One Mill
($0.001) per share and of the aggregate par value of One Million Dollars
($1,000,000);
Class B Common Stock: Two Billion (2,000,000,000) shares of capital
--------------------
stock of the Company of the par value of One Mill ($0.001) per share and of
the aggregate par value of Two Million Dollars ($2,000,000);
Class B Common Stock -- Special Series 1: One Billion (1,000,000,000)
----------------------------------------
shares of capital stock of the Company of the par value of One Mill
($0.001) per share and of the aggregate par value of One Million Dollars
($1,000,000);
Class C Common Stock: Seven Hundred Fifty Million (750,000,000)
--------------------
shares of capital stock of the Company of the par value of One Mill
($0.001) per share and of the aggregate par value of Seven Hundred Fifty
Dollars ($750,000);
Class C Common Stock -- Special Series 1: One Billion (1,000,000,000)
----------------------------------------
shares of capital stock of the Company of the par value of One Mill
($0.001) per share and of the aggregate par value of One Billion Dollars
($1,000,000);
Class C Common Stock -- Special Series 2: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class D Common Stock: Three Hundred Seventy Five Million
--------------------
(375,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Three Hundred
Seventy Five Thousand Dollars ($375,000);
Class D Common Stock -- Special Series 1: Three Hundred Seventy Five
----------------------------------------
Million (375,000,000) shares of capital stock of the Company of the par
value of One Mill ($0.001) per share and of the aggregate par value of
Three Hundred Seventy Five Thousand Dollars ($375,000);
-9-
<PAGE>
Class F Common Stock: Three Hundred Seventy Five Million
--------------------
(375,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Three Hundred
Seventy Five Thousand Dollars ($375,000);
Class F Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class G Common Stock: Two Billion (2,000,000,000) shares of capital
--------------------
stock of the Company of the par value of One Mill ($0.001) per share and of
the aggregate par value of Two Million Dollars ($2,000,000);
Class G Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class H Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class H Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class I Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class I Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class J Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class J Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class K Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
-10-
<PAGE>
Class K Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class L Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class L Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class M Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class M Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class N Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class N Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class N Common Stock -- Special Series 2: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class O Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class O Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class P Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
-11-
<PAGE>
Class P Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class Q Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class Q Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class R Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class R Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class S Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class S Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class T Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class T Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class T Common Stock -- Special Series 2: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class U Common Stock : Five Hundred Million (500,000,000) shares of
---------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
-12-
<PAGE>
Class U Common Stock -- Special Series 2: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class V Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000); and
Class W Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000).
The total number of authorized and unclassified shares of capital
stock of the Company remaining after the actions described above is Six Billion
Six Hundred Twenty-Five Million (6,625,000,000) shares of capital stock of the
par value of One Mill ($0.001) per share and of the aggregate par value of Six
Billion Six Hundred Twenty-Five Million Dollars ($6,625,000).
-13-
<PAGE>
IN WITNESS WHEREOF, Excelsior Funds, Inc. has caused these presents to
be signed in its name and on its behalf by its President and its corporate seal
to be herewith affixed and attested to by its Assistant Secretary as of January
3, 2000.
[SEAL] EXCELSIOR FUNDS, INC.
Attest By: /s/ Frederick S. Wonham
-----------------------
Frederick S. Wonham, President
/s/ Michael P. Malloy
- ---------------------
Michael P. Malloy
Assistant Secretary
-14-
<PAGE>
CERTIFICATE
THE UNDERSIGNED, President of EXCELSIOR FUNDS, INC., who executed on
behalf of said Corporation the attached Articles Supplementary of said
Corporation, of which this Certificate is made a part, hereby acknowledges, in
the name and on behalf of said Corporation, the attached Articles Supplementary
to be the corporate act of said Corporation, and certifies that to the best of
his knowledge, information and belief the matters and facts set forth in the
attached Articles Supplementary with respect to authorization and approval are
true in all material respects under the penalties for perjury.
/s/ Frederick S. Wonham
----------------------------
Frederick S. Wonham, President
Dated as of: January 3, 2000
<PAGE>
EXHIBIT (h)(10)
EXCELSIOR FUNDS, INC.
---------------------
ADMINISTRATIVE SERVICES PLAN
Section 1. Upon the recommendation of Chase Global Funds Services
----------
Company, Federated Administrative Services or U.S. Trust Company (each a "Co-
Administrator") as Co-Administrator of Excelsior Funds, Inc. (the "Company"),
any officer of the Company (or any other person authorized by the Company's
Board) is authorized to execute and deliver, in the name and on behalf of the
Company, written agreements in substantially the form attached hereto or in any
other form duly approved by the Board of Directors ("Servicing Agreements") with
institutions that are shareholders of record or that have clients that are
shareholders of record or beneficial owners of the Value and Restructuring,
Blended Equity, Large Cap Growth and Intermediate-Term Managed Income Funds (the
"Funds") of the Company, including without limitation the Company's service
providers and their affiliates ("Service Organizations"). Such Servicing
Agreements shall require the Service Organizations to provide or arrange for the
provision of support services as set forth therein to their clients who
beneficially own Advisor Shares of the Funds offered by the Company in
consideration of a fee, computed and paid in the manner set forth in the
Servicing Agreements, at the annual rate of up to .25% of the applicable net
asset value of Advisor Shares beneficially owned by such clients. Among other
institutions, any bank, trust company, thrift institution or broker-dealer is
eligible to become a Service Organization and to receive fees under this Plan.
All expenses incurred by the Company with respect to Advisor Shares of the Fund
in connection with Servicing Agreements and the implementation of this Plan
shall be borne entirely by the holders of that class or series.
Section 2. The Co-Administrators shall monitor the arrangements
----------
pertaining to the Company's Servicing Agreements with Service Organizations in
accordance with the terms of the Co-Administration Agreement by and among the
Co-Administrators and the Company. The Co-Administrators shall not, however, be
obliged by this Plan to recommend, and the Company shall not be obliged to
execute, any Servicing Agreement with any qualifying Service Organization.
Section 3. So long as this Plan is in effect, the Co-Administrators
----------
shall provide to the Company's Board of Directors, and the Directors shall
review, at least quarterly, a written report of the amounts expended pursuant to
this Plan and the purposes for which such expenditures were made.
Section 4. This Plan shall become effective immediately upon the
----------
approval of the Plan (and the form of Servicing Agreement attached hereto) by a
majority of the Board of Directors, including a majority of the Directors who
are not "interested persons" as defined in the Investment Company Act of 1940
(the "Act") of the Company and have no direct or indirect financial interest in
the operation of this Plan or in any Servicing Agreement or other agreements
<PAGE>
related to this Plan (the "Disinterested Directors"), pursuant to a vote cast in
person at a meeting called for the purpose of voting on the approval of this
Plan (or form of Servicing Agreement).
Section 5. Unless sooner terminated, this Plan shall continue until
----------
November 19, 2000 and thereafter shall continue automatically for successive
annual periods provided such continuance is approved at least annually in the
manner set forth in Section 4.
Section 6. This Plan may be amended at any time by the Board of
----------
Directors, provided that any material amendments of the terms of this Plan shall
become effective only upon the approvals set forth in Section 4.
Section 7. This Plan is terminable at any time by vote of a majority
----------
of the Disinterested Directors.
Section 8. While this Plan is in effect, the selection and nomination
----------
of the new Directors of the Company who are not "interested persons" (as defined
in the Act) of the Company shall be committed to the discretion of the existing
Disinterested Directors.
Section 9. The Company adopted this Plan as of November 19, 1999.
----------
-2-
<PAGE>
FORM OF
SHAREHOLDER SERVICING AGREEMENT
THIS AGREEMENT, by and between Excelsior Funds, Inc. (the
"Corporation") and the shareholder service organization (the "Organization")
listed on the signature page hereof;
WITNESSETH:
WHEREAS, certain transactions in Shares of Common Stock, $.001 par
value, of the Corporation or of any series now existing or later created of the
Corporations ("Shares") may be made by investors who are customers of, and using
the services of or arranged by, an Organization, including without limitation
the Company's service providers and their affiliates, that has entered into a
shareholder servicing agreement with the Corporation; and
WHEREAS, the Organization wishes to make it possible for its customers
(the "Customers") to purchase Shares and wishes to act as the Customers' agent
in performing or arranging for the performance of certain administrative
functions in connection with purchases, exchanges and redemptions of Shares from
time to time upon the order and for the account of Customers and to provide
related services to its Customers in connection with their investments in the
Corporation; and
WHEREAS, it is in the interest of the Corporation to make the services
of the Organization available to Customers who are or may become beneficial
owners of Shares of the Corporation;
NOW, THEREFORE, the Corporation and the Organization hereby agree as
follows:
1. Appointment. The Organization, as an independent contractor, hereby
-----------
agrees to perform or to have performed certain services for Customers as
hereinafter set forth. The Organization's appointment hereunder is non-
exclusive, and the parties recognize and agree that, from time to time, the
Corporation may enter into other shareholder servicing agreements, with others
without the Organization's consent. For the purposes of this Agreement, the
Organization is deemed an independent contractor and will have no authority to
act as the Corporation's agent in any respect.
2. Service to be Performed.
-----------------------
2.1 Type of Service. The Organization shall be responsible for
---------------
performing or having performed shareholder account administrative and servicing
functions, which shall include without limitation/1/: (a) assisting Customers in
designating and changing dividend options,
___________________
1. Services may be modified or omitted in a particular case and items
relettered or renumbered.
-3-
<PAGE>
account designations and addresses; (b) providing necessary personnel and
facilities to establish and maintain certain shareholder accounts and records,
as may reasonably be requested from time to time by the Corporation; (c)
assisting in processing purchases, exchange and redemption transactions; (d)
arranging for the wiring of funds; (e) transmitting and receiving funds in
connection with Customer orders to purchase, exchange or redeem Shares; (f)
verifying and guaranteeing Customer signatures in connection with redemption
orders, transfers among and changes in Customer-designated accounts; (g)
providing periodic statements showing a Customer's account balances and, to the
extent practicable, integration of such information with information concerning
other client transactions otherwise effected with or through the Organization;
(h) furnishing on behalf of the Corporation's distributor (either separately or
on an integrated basis with other reports sent to a Customer by the
Organization) periodic statements and confirmations of all purchases, exchanges
and redemptions of Shares in a Customer's account required by applicable federal
or state law, all such confirmations and statements to conform to Rule 10b-10
under the Securities Exchange Act of 1934 and other applicable federal or state
law; (i) transmitting proxy statements, annual reports, updating prospectuses
and other communications from the Corporation to Customers; (j) receiving,
tabulating and transmitting to the Corporation proxies executed by Customers
with respect to annual and special meetings of shareholders of the Corporation;
(k) providing reports (at least monthly, but more frequently if so requested by
the Corporation's distributor) containing state-by-state listings of the
principal residences of the beneficial owners of the Shares; and (l) providing
or arranging for the provision of such other related services as the Corporation
or a Customer may reasonably request. The Organization shall provide or arrange
for all personnel and facilities to perform the functions described in this
paragraph with respect to its Customers.
2.2 Standard of Services. All services to be rendered or arranged for by
--------------------
the Organization hereunder shall be performed in a professional, competent and
timely manner. The details of the operating standards and procedures to be
followed in performance of the services described above shall be determined from
time to time by agreement between the Organization and the Corporation. The
Corporation acknowledges that the Organization's ability to perform on a timely
basis certain of its obligations under this Agreement depends upon the
Corporation's timely delivery of certain materials and/or information to the
Organization. The Corporation agrees to use its best efforts to provide such
materials to the Organization in a timely manner.
3. Fees.
----
3.1 Fees from the Corporation. In consideration for the services
-------------------------
described in Section 2 hereof and the incurring of expenses in connection
therewith, the Organization shall receive fees set forth in Appendix A hereto,
such fees to be paid in arrears periodically (but in no event less frequently
than semi-annually) at annual rates of up to .25% of the average daily net
assets of the Corporation's Shares owned during the period for which payment has
been made by Customers for whom the Organization is the holder or agent of
record or with whom it maintains a servicing relationship. For purposes of
determining the fees payable to the Organization hereunder, the value of the
Corporation's net assets shall be computed in the manner specified in the
(..continued)
-4-
<PAGE>
Corporation's then-current prospectus for computation of the net asset value of
the Corporation's Shares. The above fees constitute all fees to be paid to the
Organization by the Corporation with respect to the transactions contemplated
hereby. The Corporation may at any time in its discretion suspend or withdraw
the sale of its Shares.
3.2 Fees from Customers. It is agreed that the Organization may impose
-------------------
certain conditions on Customers, in addition to or different from those imposed
by the Corporation, such as requiring a minimum initial investment or charging
Customers direct fees for the same or similar services as are provided hereunder
by the Organization (which fees may either relate specifically to the
Organization's services with respect to the Corporation or generally cover
services not limited to those with respect to the Corporation). The Organization
shall bill Customers directly for such fees. In the event the Organization
charges Customers such fees, it shall notify the Corporation in advance and make
appropriate prior written disclosure (such disclosure to be in accordance with
all applicable laws) to Customers of any such fees charged to the Customer. To
the extent required by applicable rules and regulations of the Securities and
Exchange Commission, the Corporation shall make written disclosure of the fees
paid or to be paid to the Organization pursuant to Section 3.1 of this
Agreement. It is understood, however, that in no event shall the Organization
have recourse or access to the account of any shareholder of the Corporation
except to the extent expressly authorized by law or by such shareholder, or to
any assets of the Corporation, for payment of any direct fees referred to in
this Section 3.2.
4. Information Pertaining to the Shares. The Organization and its
------------------------------------
officers, employees and agents are not authorized to make any representations
concerning the Corporation or the Shares to Customers or prospective Customers,
excepting only accurate communication of any information provided by or on
behalf of any administrator or distributor of the Corporation or any factual
information contained in the then-current prospectus relating to the Corporation
or to any series of the Corporation. In furnishing such information regarding
the Corporation or the Shares, the Organization shall act as agent for the
Customer only and shall have no authority to act as agent for the Corporation.
Advance copies or proofs of all materials which are generally circulated or
disseminated by the Organization to Customers or prospective Customers which
identify or describe the Corporation shall be provided to the Corporation at
least 10 days prior to such circulation or dissemination (unless the Corporation
consents in writing to a shorter period), and such materials shall not be
circulated or disseminated or further circulated or disseminated at any time
after the Corporation shall have given written notice within such 10 day period
to the Organization of any objection thereto.
Nothing in this Section 4 shall be construed to make the
Corporation liable for the use (or accuracy unless prepared by the Corporation
for the specific use) of any information about the Corporation which is
disseminated by the Organization.
5. Use of the Organization's Name. The Corporation shall not use the
------------------------------
name of the Organization (or any of its affiliates or subsidiaries) in any
prospectus, sales literature or other material relating to the Corporation in a
manner not approved by the Organization prior thereto in writing; provided,
however, that the approval of the Organization shall not be required for any use
of its name which merely refers in accurate and factual terms to its appointment
hereunder and the terms hereof or which is required by law, including without
limitation, by the Securities
-5-
<PAGE>
and Exchange Commission or any state securities authority or any other
appropriate regulatory, governmental or judicial authority; provided, further,
that in no event shall such approval be unreasonably withheld or delayed.
6. Use of the Corporation's Name. The Organization shall not use the
-----------------------------
name of the Corporation on any checks, bank drafts, bank statements or forms for
other than internal use in a manner not approved by the Corporation prior
thereto in writing; provided, however, that the approval of the Corporation
shall not be required for the use of the Corporation's name in connection with
communications permitted by Section 4 hereof or (subject to Section 4, to the
extent the same may be applicable) for any use of the Corporation's name which
merely refers in accurate and factual terms to the Corporation in connection
with the Organization's role hereunder or which is required by law, including
without limitations, by the Securities and Exchange Commission or any state
securities authority or any other appropriate regulatory, governmental or
judicial authority; provided, further, that in no event shall such approval be
unreasonably withheld or delayed.
7. Security. The Organization represents and warrants that to the best
--------
of its knowledge, the various procedures and systems which it has implemented
(including provision for twenty-four hours a day restricted access) with regard
to safeguarding from loss or damage attributable to fire, theft or any other
cause the Corporation's records and other data and the Organization's records,
data, equipment, facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as in its judgment are required for the secure performance of
its obligations hereunder. The parties shall review such systems and procedures
on a periodic basis, and the Corporation shall from time to time specify the
types of records and other data of the Corporation to be safeguarded in
accordance with this Section 7.
8. Compliance with Laws. The Organization shall comply with all
--------------------
applicable federal and state laws and regulations, including without limitation
securities laws. The Organization represents and warrants to the Corporation
that the performance of all its obligations hereunder will comply with all
applicable laws and regulations, the provisions of its charter documents and by-
laws and all material contractual obligations binding upon the Organization. The
Organization furthermore undertakes that it will promptly, after the
Organization becomes so aware, inform the Corporation of any change in
applicable laws or regulations (or interpretations thereof) or in its charter or
by-laws or material contracts which would prevent or impair full performance of
any of its obligations hereunder.
9. Reports. Quarterly, and more frequently to the extent requested by
-------
the Corporation from time to time, the Organization agrees that it will provide
the administrator of the Corporation with a written report of the amounts
expended by the Organization pursuant to this Agreement and the purposes for
which such expenditures were made. Such written reports shall be in a form
satisfactory to the Corporation and shall supply all information necessary for
the Corporation to discharge its responsibilities under applicable laws and
regulations.
-6-
<PAGE>
10. Record Keeping.
--------------
10.1 Section 31. The Organization shall maintain records in a form
----------
reasonably acceptable to the Corporation and in compliance with applicable laws
and the rules and regulations of the Securities and Exchange Commission,
including but not limited to the record-keeping requirements of Section 31 of
the Investment Company Act of 1940, as amended (the "1940 Act") and the rules
thereunder. Such records shall be deemed to be the property of the Corporation
and will be made available at the Corporation's request for inspection and use
by the Corporation, representatives of the Corporation and governmental
authorities. The Organization agrees that, for so long as it retains any records
of the Corporation, it will meet all reporting requirements pursuant to the 1940
Act and applicable to the Organization with respect to such records. Upon
termination of this Agreement, the Organization shall deliver to the
administrator of the Corporation all books and records maintained by the
Organization and deemed to be the Corporation's property hereunder.
10.2 Rules 17a-3 and 17a-4. The Organization shall maintain accurate and
---------------------
complete records with respect to services performed by the Organization in
connection with the purchase and redemption of Shares. Such records shall be
maintained in form reasonably acceptable to the Corporation and in compliance
with the requirements of all applicable laws, rules and regulations, including
without limitation, Rules 17a-3 and 17a-4 under the Securities Exchange Act of
1934, as amended, pursuant to which any dealer of the Shares must maintain
certain records. All such records maintained by the Organization shall be the
property of such dealer and will be made available for inspection and use by the
Corporation or such dealer upon the request of either. The Organization shall
file with the Securities and Exchange Commission and other appropriate
governmental authorities, and furnish to the Corporation and any such dealer
copies of, all reports and undertakings as may be reasonably requested by the
Corporation or such dealer in order to comply with the said rules. If so
requested by any such dealer, the Organization shall confirm to such dealer its
obligations under this Section 10.2 by a writing reasonably satisfactory to such
dealer.
10.3 Transfer of Customer Data. In the event this Agreement is terminated
-------------------------
or a successor to the Organization is appointed, the Organization shall transfer
to such designee as the Corporation may direct a certified list of the
shareholders of the Corporation serviced by the Organization (with name, address
and tax identification or Social Security number, if any), a complete record of
the account of each such shareholder and the status thereof, and all other
relevant books, records, correspondence, and other data established or
maintained by the Organization under this Agreement. In the event this Agreement
is terminated, the Organization will use its best efforts to cooperate in the
orderly transfer of such duties and responsibilities, including assistance in
the establishment of books, records and other data by the successor.
10.4 Survival of Record-Keeping Obligations. The record-keeping
--------------------------------------
obligations imposed in this Section 10 shall survive the termination of this
Agreement for a period of three years.
10.5 Obligations Pursuant to Agreement Only. Nothing in this Section 10
--------------------------------------
shall be construed so that the Organization would, by virtue of its role
hereunder, be required under
-7-
<PAGE>
applicable law to maintain the records required to be maintained by it under
this Section 10, but is understood that the Organization has agreed to do so in
order to enable the Corporation and its dealer or dealers to comply with laws
and regulations applicable to them.
10.6 Organization's Rights to Copy Records. Anything in this Section 10
-------------------------------------
to the contrary notwithstanding, except to the extent otherwise prohibited by
law, the Organization shall have the right to copy, maintain and use any records
maintained by the Organization pursuant to this Section 10, except as otherwise
prohibited by Sections 4 and 6 hereof.
11. Force Majeure. The Organization shall not be liable or responsible
-------------
for delays or errors by reason of circumstances beyond its reasonable control,
including, but not limited to, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdown, flood or
catastrophe, Acts of God, insurrection, war, riots or failure of communication
or power supply.
12. Indemnification.
---------------
12.1 Indemnification of the Organization. The Corporation will indemnify
-----------------------------------
and hold the Organization harmless from all losses, claims, damages, liabilities
or expenses (including reasonable counsel fees and expenses) from any claim,
demand, action or suit (collectively, "Claims") arising in connection with
material misstatements or omissions in the Corporation's Prospectus.
Notwithstanding anything herein to the contrary, the Corporation will indemnify
and hold the Organization harmless from any and all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and expenses)
resulting from any Claim as a result of its acting in accordance with any
written instructions reasonably believed by the Organization to have been
executed by any person duly authorized by the Corporation, or as a result of
acting in reliance upon any instrument or stock certificate reasonably believed
by the Organization to have been genuine and signed, countersigned or executed
by a person duly authorized by the Corporation, excepting only the negligence or
bad faith of the Organization.
In any case in which the Corporation may be asked to indemnify or
hold the Organization harmless, the Corporation shall be advised of all
pertinent facts concerning the situation in question and the Organization shall
use reasonable care to identify and notify the Corporation promptly concerning
any situation which presents or appears likely to present a claim for
indemnification against the Corporation. The Corporation shall have the option
to defend the Organization against any Claim which may be the subject of
indemnification hereunder. In the event that the Corporation elects to defend
against such Claim, the defense shall be conducted by counsel chosen by the
Corporation and satisfactory to the Organization. The Organization may retain
additional counsel at its expense. Except with the prior written consent of the
Corporation, the Organization shall not confess any Claim or make any compromise
in any case in which the Corporation will be asked to indemnify the
Organization.
12.2 Indemnification of the Corporation. Without limiting the rights of
----------------------------------
the Corporation under applicable law, the Organization will indemnify and hold
the Corporation harmless from all losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and expenses) from any Claim (a)
arising from (i) the bad faith or negligence of the
-8-
<PAGE>
Organization, its officers, employees or agents, (ii) any breach of applicable
law by the Organization, its officers, employees or agents, (iii) any action of
the Organization, its officers, employees or agents which exceeds the legal
authority of the Organization or its authority hereunder, or (iv) any actions,
inactions, errors or omissions of the Organization, its officers, employees or
agents with respect to the purchase, redemption, transfer and registration of
Customers' Shares or the Corporation's verification or guarantee of any Customer
signature.
In any case in which the Organization may be asked to indemnify or
hold the Corporation harmless, the Organization shall be advised of all
pertinent facts concerning the situation in question and the Corporation shall
use reasonable care to identify and notify the Organization promptly concerning
any situation which presents or appears likely to present a claim for
indemnification against the Organization. The Organization shall have the option
to defend the Corporation against any Claim which may be the subject of
indemnification hereunder. In the event that the Organization elects to defend
against such Claim, the defense shall be conducted by counsel chosen by the
Organization and satisfactory to the Corporation. The Corporation may retain
additional counsel at its expense. Except with the prior written consent of the
Organization, the Corporation shall not confess any Claim or make any compromise
in any case in which the Organization will be asked to indemnify the
Corporation.
12.3 Survival of Indemnities. The indemnities granted by the parties in
-----------------------
this Section 12 shall survive the termination of this Agreement.
13. Notices. All notices or other communications hereunder to either
-------
party shall be in writing and shall be deemed sufficient if mailed to such party
at the address of such party set forth on the signature page of this Agreement
or at such other address as such party may have designated by written notice to
the other.
14. Further Assurances. Each party agrees to perform such further acts
------------------
and execute such further documents as are necessary to effectuate the purposes
hereof.
15. Termination. Unless sooner terminated, this Agreement will continue
-----------
until _______, 2000 and thereafter will continue automatically for successive
annual periods provided such continuance is specifically approved at least
annually by vote of a majority of (i) the Board of Directors of the Corporation
and (ii) those Directors who are not "interested persons" (as defined in the
1940 Act) of the Corporation and have no direct or indirect financial interest
in the operation of the Corporation's Administrative Services Plan or in any
agreement related thereto cast in person at a meeting called for the purpose of
voting on such approval ("Disinterested Directors"). This Agreement is
terminable, without penalty, at any time by the Corporation (which termination
may be by a vote of a majority of the Disinterested Directors) or by you upon
notice to the Corporation.
16. Changes; Amendments. This Agreement may be changed or amended only
-------------------
by written instrument signed by both parties hereto.
17. Subcontracting By Organization. The Organization may, with the
------------------------------
written approval of the Corporation (such approval not to be unreasonably
withheld), subcontract for the
-9-
<PAGE>
performance of the Organization's obligations hereunder with any one or more
persons, including but not limited to any one or more persons which is an
affiliate of the Organization; provided, however, that the Organization shall be
as fully responsible to the Corporation for the acts and omissions of any
subcontractor as it would be for its own acts or omissions.
18. Compliance with Laws and Policies; Cooperation. The Corporation
----------------------------------------------
hereby agrees that it will comply with all laws and regulations applicable to
its operations and the Organization agrees that it will comply with all laws and
regulations applicable to its operations hereunder. Each party understands that
the other may from time to time adopt or modify policies relating to the subject
matter of this Agreement, in which case the party adopting or modifying such a
policy shall notify the other thereof and the parties shall consider the
applicability thereof and endeavor to comply therewith to the extent not
impracticable or unreasonably burdensome. Each of the parties agrees to
cooperate with the other in connection with the performance of this Agreement
and the resolution of any problems, questions or disagreements in connection
herewith.
18.1 Annual Financial Reports. At least once a year, the Corporation
------------------------
shall send to the record owners of its shares the Corporation's audited
financial statements.
18.2 Annual Certification. At least once a year, the Organization shall
--------------------
certify to the Corporation that it is conducting its business in accordance with
the terms and conditions of the Agreement.
19. Single Portfolio. Notwithstanding anything in this Agreement to the
----------------
contrary, any amount owed by Corporation to the Organization under this
Agreement or otherwise with respect to any matter hereunder shall be paid only
from and shall be limited to the assets and property of the particular
investment portfolio of the Corporation to which the matter relates.
20. Miscellaneous. This Agreement shall be construed and enforced in
-------------
accordance with and governed by the laws of the State of Maryland. The captions
in this Agreement are included for convenience of reference only and in no way
define or limit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument. The terms of this
Agreement shall become effective as of the date set forth below.
-10-
<PAGE>
IN WITNESS WHEREOF, intending to be legally bound hereby, the parties
hereto have caused this Agreement to be executed and delivered in their names
and on their behalf by the undersigned, thereunto duly authorized, all as of the
day and year set forth below.
Dated as of:_____________________
Excelsior Funds, Inc. Address for Notices:
______________________________
______________________________
______________________________
By: ____________________________ ______________________________
(Authorized Officer)
_________________________________ Address for Notices:
[Service Organization] ______________________________
______________________________
______________________________
______________________________
By: _____________________________
(Authorized Officer)
-11-
<PAGE>
APPENDIX A
----------
EXCELSIOR FUNDS, INC.
Pursuant to the terms and conditions set forth in the attached
Shareholder Servicing Agreement, the Organization will receive the fees set
forth below in consideration for the services described in Section 2 of said
Agreement and the incurring of expenses in connection therewith, such fees
(calculated pursuant to Section 3.1 of said Agreement) to be paid in arrears
periodically (but in no event less frequently than semi-annually):
<TABLE>
<CAPTION>
===============================================================================================
FUND-____ SHARES Shareholder Servicing Fee
- -----------------------------------------------------------------------------------------------
<S> <C>
Intermediate-Term Managed Income Fund .25%
Blended Equity Fund .25%
Value and Restructuring Fund .25%
Large Cap Growth Fund .25%
===============================================================================================
</TABLE>
-12-
<PAGE>
EXHIBIT (h)(11)
WAIVER AND REIMBURSEMENT AGREEMENT
Agreement ("Agreement") dated as of the __ day of _________, 1999 by and
among Excelsior Funds, Inc., a Maryland corporation and a registered investment
company under the Investment Company Act of 1940, as amended ("Excelsior"), and
United States Trust Company of New York, a state-chartered bank and trust
company ("United States Trust") and U.S. Trust Company, a Connecticut state bank
and trust company ("U.S. Trust" and together with United States Trust, the
"Advisers").
BACKGROUND
The Advisers serve as investment advisers to each portfolio of Excelsior
pursuant to an Investment Advisory Agreement among the Advisers and Excelsior
dated as of May 16, 1997.
The parties to this Agreement wish to provide for an undertaking by the
Advisers to limit investment advisory or other fees or reimburse expenses of
each of the portfolios of Excelsior in order to improve the performance of each
such portfolio.
AGREEMENT
THEREFORE, in consideration of the foregoing, the parties intending to be
legally bound hereby, agree as follows:
The Advisers shall, from the date of this Agreement until March 31, 2000,
waive all or a portion of their investment advisory fees and/or reimburse
expenses in amounts necessary so that after such waivers and/or reimbursements,
the maximum total operating expense ratios of the portfolios of Excelsior shall
not exceed the amounts set forth on Exhibit A hereto.
Each of the Advisers acknowledges and agrees that it shall not be entitled
to collect on or make a claim for waived fees or reimbursed expenses at any time
in the future.
This Agreement shall be governed by and construed under the laws of the
State of New York, without regard to its conflict of law provisions.
-1-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
EXCELSIOR FUNDS, INC. UNITED STATES TRUST COMPANY OF NEW
YORK
By:____________________ By:_____________________________________
Name: Name:
Title: Title:
U.S. TRUST COMPANY
By:_____________________________________
Name:
Title:
-2-
<PAGE>
Exhibit A
Excelsior Funds, Inc.
---------------------
Name of Portfolio Total Annual Operating Expenses
- ----------------- -------------------------------
Blended Equity Fund 1.45%
Intermediate-Term Managed Income Fund 1.05%
-3-
<PAGE>
EXHIBIT (h)(12)
- -------------------------------------------------------------------------------
EXCELSIOR FUNDS, INC.,
EXCELSIOR TAX-EXEMPT FUNDS, INC.
AND EXCELSIOR INSTITUTIONAL TRUST
ON BEHALF OF EACH SERIES
OR PORTFOLIO NAMED HEREIN
-----
$250,000,000
CREDIT AGREEMENT
Dated as of December 27, 1999
-----
THE CHASE MANHATTAN BANK,
as Administrative Agent,
CHASE SECURITIES INC.,
as Sole Book Manager and Lead Arranger
And
THE BANK OF NOVA SCOTIA,
as Syndication Agent
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. DEFINITIONS.......................................................................................... 1
1.1 Defined Terms............................................................................................. 1
1.2 Other Definitional Provisions............................................................................. 8
1.3 Assumptions Regarding Structure........................................................................... 8
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS...................................................................... 8
2.1 Commitments............................................................................................... 9
2.2 Procedure for Borrowing................................................................................... 9
2.3 Fees...................................................................................................... 9
2.5 Repayment of Loans; Evidence of Debt...................................................................... 10
2.6 Optional and Mandatory Prepayments........................................................................ 11
2.7 Interest Rates and Payment Dates.......................................................................... 12
2.8 Computation of Interest and Fees.......................................................................... 12
2.9 Pro Rata Treatment and Payments........................................................................... 13
2.10 Requirements of Law...................................................................................... 14
2.11 Taxes.................................................................................................... 14
2.12 Change of Lending Office; Replacement of Lender.......................................................... 16
2.13 Swing Line Commitment...............................................................Error! Bookmark not defined.
2.14 Procedure for Swing Line Borrowing....................................................................... 17
2.15 Refunding of Swing Line Loans............................................................................ 17
2.16 Designation of Additional Borrowers; Amendments to Schedule I............................................ 18
SECTION 3. REPRESENTATIONS AND WARRANTIES....................................................................... 19
3.1 Financial Condition....................................................................................... 19
3.2 No Change................................................................................................. 19
3.3 Existence; Compliance with Law............................................................................ 19
3.4 Power; Authorization; Enforceable Obligations............................................................. 20
3.5 No Legal Bar.............................................................................................. 20
3.6 No Material Litigation.................................................................................... 20
3.7 No Default................................................................................................ 20
3.8 Ownership of Property; Liens.............................................................................. 20
3.9 No Burdensome Restrictions................................................................................ 21
3.10 Taxes.................................................................................................... 21
3.11 Federal Regulations...................................................................................... 21
3.12 ERISA.................................................................................................... 21
3.13 Certain Regulations...................................................................................... 21
3.14 Subsidiaries............................................................................................. 21
3.15 Registration of the Funds................................................................................ 21
3.16 Offering in Compliance with Securities Laws.............................................................. 21
3.17 Investment Policies...................................................................................... 22
</TABLE>
<PAGE>
<TABLE>
<S> <C>
3.18 Permission to Borrow..................................................................................... 22
3.19 Accuracy of Information.................................................................................. 22
3.20 Affiliated Persons....................................................................................... 22
3.21 Year 2000................................................................................................ 20
SECTION 4. CONDITIONS PRECEDENT.................................................................................. 22
4.1 Conditions to Initial Loans.............................................................................. 23
4.2 Conditions to Each Loan................................................................................... 24
SECTION 5. AFFIRMATIVE COVENANTS................................................................................ 25
5.1 Financial Statements...................................................................................... 25
5.2 Certificates; Other Information......................................................................... 26
5.3 Payment of Obligations.................................................................................... 27
5.4 Conduct of Business and Maintenance of Existence.......................................................... 27
5.5 Maintenance of Property; Insurance........................................................................ 27
5.6 Inspection of Property; Books and Records; Discussions.................................................... 28
5.7 Notices................................................................................................... 28
5.8 Purpose of Loans.......................................................................................... 29
SECTION 6. NEGATIVE COVENANTS................................................................................... 29
6.1 Financial Condition Covenant.............................................................................. 29
6.2 Limitation on Indebtedness................................................................................ 29
6.3 Limitation on Liens....................................................................................... 29
6.4 Limitation on Guarantee Obligations....................................................................... 30
6.5 Limitation on Fundamental Changes......................................................................... 30
6.6 Limitation on Distributions............................................................................... 30
6.7 Limitation on Investments, Loans and Advances............................................................. 31
6.8 Limitation on Transactions with Affiliates................................................................ 31
6.9 Limitation on Negative Pledge Clauses..................................................................... 31
6.10 Limitation on Changes to Investment Policies............................................................. 31
SECTION 7. EVENTS OF DEFAULT.................................................................................... 31
SECTION 8. THE ADMINISTRATIVE AGENT............................................................................. 34
8.1 Appointment............................................................................................... 34
8.2 Delegation of Duties...................................................................................... 34
8.3 Exculpatory Provisions.................................................................................... 35
8.4 Reliance by Administrative Agent.......................................................................... 35
8.5 Notice of Default......................................................................................... 35
8.6 Non-Reliance on Administrative Agent and Other Lenders.................................................... 36
8.7 Indemnification........................................................................................... 36
8.8 Administrative Agent in Its Individual Capacity........................................................... 37
</TABLE>
<PAGE>
<TABLE>
<S> <C>
8.9 Successor Administrative Agent............................................................................ 37
SECTION 9. MISCELLANEOUS........................................................................................ 37
9.1 Amendments and Waivers.................................................................................... 37
9.2 Notices................................................................................................... 38
9.3 No Waiver; Cumulative Remedies............................................................................ 39
9.4 Survival of Representations and Warranties................................................................ 39
9.5 Payment of Expenses and Taxes; Indemnification............................................................ 39
9.6 Successors and Assigns; Participations and Assignments.................................................... 40
9.7 Adjustments; Set-off...................................................................................... 42
9.8 Counterparts.............................................................................................. 43
9.9 Severability.............................................................................................. 43
9.10 Integration.............................................................................................. 43
9.11 GOVERNING LAW............................................................................................ 43
9.12 Submission To Jurisdiction; Waivers...................................................................... 43
9.13 Acknowledgements......................................................................................... 44
9.14 WAIVERS OF JURY TRIAL.................................................................................... 44
9.15 Non-Recourse............................................................................................. 45
9.16 Waiver of Conflicts; Confidentiality..................................................................... 40
</TABLE>
SCHEDULES:
- ---------
Schedule I Borrowers & Allocations
Schedule II Commitments, Addresses, Etc.
Schedule III Investment Management Agreements
Schedule IV Custodian Agreements
Schedule V Distribution Agreements
Schedule VI Shareholder Services Agreements
EXHIBITS:
- --------
Exhibit 2.5(e) Form of Note
Exhibit 2.16(a) Form for Designation of New Borrowers
Exhibit 4.1(h) Form of Opinion
Exhibit 9.6(c) Form of Assignment and Acceptance
<PAGE>
CREDIT AGREEMENT, dated as of December 27, 1999 (this "Agreement") among (i)
---------
each fund signatory hereto (each a "Fund" and, collectively, the "Funds") on
---- -----
behalf of the series or portfolios of the Fund, which series and portfolios are
listed on Schedule I beside the name of the Fund of which each series or
----------
portfolio is a series or portfolio (each such series or portfolio, a "Borrower"
--------
and, collectively, the "Borrowers"), (ii) the several banks and other financial
---------
institutions from time to time parties to this Agreement (the "Lenders"), (iii)
-------
THE BANK OF NOVA SCOTIA as Syndication Agent, and (iv) THE CHASE MANHATTAN BANK,
a New York banking corporation, as administrative agent for the Lenders
hereunder (in such capacity, the "Administrative Agent");
--------------------
W I T N E S S E T H :
- - - - - - - - - - -
WHEREAS, each Fund is an open-end registered investment company under the
Investment Company Act of 1940 for which UST (as defined below) acts as an
investment manager;
WHEREAS, each Borrower has requested the Lenders to make Loans (as
hereinafter defined) severally to each Borrower and to make available to it a
credit facility for the purposes and on the terms and conditions set forth
herein; and
WHEREAS, each Lender acknowledges that each Borrower shall be liable
hereunder only for the Loans made to such Borrower hereunder and interest
thereon and for the fees and expenses associated therewith and as otherwise set
forth herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
-------------
have the following meanings:
"Administrative Agent": The Chase Manhattan Bank, together with its
--------------------
affiliates, as the arranger of the Commitments and as the administrative agent
for the Lenders under this Agreement and the other Loan Documents.
"Affiliate": as to any Person, any other Person (other than a
---------
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes of this definition,
"control" of a Person means the power, directly or indirectly, either to (a)
vote 10% or more of the securities having ordinary voting power for the election
of directors of such Person or (b) direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"Aggregate Commitment": the total of all Commitments of all Lenders, as
--------------------
may be reduced from time to time in the accordance with the terms of this
Agreement. On the Closing
<PAGE>
Date at the time of closing, the Aggregate Commitment shall be equal to
$250,000,000.
"Agreement": this Credit Agreement, as amended, restated, supplemented
---------
or otherwise modified from time to time.
"Allocation": as to each Borrower, the percentage amount stated in
----------
Schedule I to this Agreement; provided that, if no Event of Default shall have
- ---------- --------
occurred and be continuing, the Funds, on behalf of the Borrowers and without
the consent of the Lenders, by written notice to the Administrative Agent, may
change the Allocations from time to time in the Funds' sole discretion
substantially in accordance with changes in the ratio of each Borrower's Average
Net Assets to the aggregate Average Net Assets of all Borrowers; provided
--------
further, that, after any such change in Allocations, the aggregate amount of all
- -------
Allocations shall equal 100%.
"Applicable Margin": 0.5% per annum.
-----------------
"Asset Coverage Ratio": with respect to any Borrower, the ratio which
--------------------
the value of the Total Assets of such Borrower less all liabilities and
indebtedness not represented by Senior Securities, bears to the aggregate amount
of all Senior Securities representing Indebtedness of such Borrower. For the
purposes of calculating the Asset Coverage Ratio, the amount of any liability or
indebtedness deducted from Total Assets shall be equal to the greater of (x) the
outstanding amount of such liability or indebtedness and (y) the fair market
value of all assets securing such liability or indebtedness.
"Assignee": as defined in Section 9.6(c).
--------
"Available Commitment": as to any Lender with respect to any Borrower
--------------------
at any time, an amount equal to the excess, if any, of (a) the amount of such
Lender's Commitment to such Borrower less (b) the aggregate principal amount of
all Loans to such Borrower made by such Lender then outstanding; collectively,
as to all the Lenders, the "Available Commitments".
---------------------
"Average Net Assets": As to any Borrower at any date, an amount equal
------------------
to the average daily value of the aggregate net assets of such Borrower during
the specified period, determined in the manner and at the times specified in
that Borrower's Prospectus.
"Benefited Lender": as defined in Section 9.7(a).
----------------
"Borrower" and "Borrowers": as defined in the preamble hereto.
-------- ---------
"Borrowing Date": any Business Day specified in a notice pursuant to
--------------
Section 2.2 as a date on which a Borrower requests the Lenders to make Loans
hereunder.
"Business Day": a day other than a Saturday, Sunday or other day on
------------
which commercial banks in New York City are authorized or required by law to
close.
"Chase": The Chase Manhattan Bank, a New York banking corporation,
-----
and its permitted successors and assigns.
<PAGE>
"Closing Date": the date on which the conditions precedent set forth
------------
in Section 4.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time to
----
time.
"Commitment": as to any Lender, the obligation of such Lender to make
----------
Loans to the Borrowers hereunder in an aggregate principal amount at any one
time outstanding not to exceed the amount set forth opposite such Lender's name
on Schedule II.
-----------
"Commitment Fee": as defined in Section 2.3.
--------------
"Commitment Percentage": as to any Lender at any time, the percentage
---------------------
which such Lender's Commitment then constitutes of the aggregate Commitments of
all Lenders (or, at any time after the Commitments of all the Lenders shall have
expired or terminated, the percentage which the aggregate principal amount of
such Lender's Loans then outstanding constitutes of the aggregate principal
amount of the Loans then outstanding).
"Commitment Period": the period from and including the date hereof to,
-----------------
but not including, the Termination Date.
"Commonly Controlled Entity": an entity, whether or not incorporated,
--------------------------
which is under common control with any Borrower within the meaning of Section
4001 of ERISA or is part of a group which includes any Borrower and which is
treated as a single employer under Section 414 of the Code.
"Contractual Obligation": as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Custody Agreement": as to any Fund or each Borrower, as applicable,
-----------------
the Custody Agreement(s) set forth in Schedule IV hereto.
-----------
"Default": any of the events specified in Section 7, whether or not
-------
any requirement for the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.
"Distribution Agreement": as to any Fund or each Borrower, as
----------------------
applicable, the Distribution Agreement(s) set forth in Schedule V hereto.
----------
"Dollars" and "$": dollars in lawful currency of the United States of
------- -
America.
"Eligible Lender": an entity that is a "Bank" (as defined in the 1940
---------------
Act) but not an "Affiliated Person" (as defined in the 1940 Act) or a "Principal
Underwriter" (as defined in the 1940 Act) of any Borrower or any "Affiliated
Person" of any such Person.
<PAGE>
"ERISA": the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"Event of Default": any of the events specified in Section 7, provided
---------------- --------
that any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Federal Funds Rate": for any day, the "offered rate", as determined
------------------
by Chase, for overnight federal funds, which rate is determined day to day and
will be reasonably representative of the market conditions at the times set.
"Financing Lease": any lease of property, real or personal, the
---------------
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"GAAP": generally accepted accounting principles in the United States
----
of America in effect from time to time.
"Governmental Authority": any nation or government, any state or other
----------------------
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
-------------------- -------------------
any obligation of (a) the guaranteeing person or (b) another Person (including,
without limitation, any bank under any letter of credit) to induce the creation
of which the guaranteeing person has issued a reimbursement, counterindemnity or
similar obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
-------------------
of any other third Person (the "primary obligor") in any manner, whether
---------------
directly or indirectly, including, without limitation, any obligation of the
guaranteeing person, whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,
(ii) to advance or supply funds (A) for the purchase or payment of any such
primary obligation or (B) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the term
-------- -------
Guarantee Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee Obligation is made and (b) the maximum amount
for which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary obligation
and the maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated liability in
respect thereof as determined by such guaranteeing person in good faith.
<PAGE>
"Indebtedness": of any Person at any date, (a) all indebtedness of such
------------
Person for borrowed money or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the ordinary course
of business and payable in accordance with customary practices), (b) any other
indebtedness of such Person which is evidenced by a note, bond, debenture or
similar debt instrument, (c) all obligations of such Person under Financing
Leases, (d) all obligations of such Person in respect of acceptances (as defined
in Section 3-410 of the UCC) issued or created for the account of such Person,
(e) all reimbursement obligations of such person arising out of any letters of
credit and (f) all liabilities secured by any Lien on any property owned by such
Person even though such Person has not assumed or otherwise become liable for
the payment thereof.
"Interest Payment Date": as to any Loan, the Maturity Date for such
---------------------
Loan, or with respect to any prepayment, the date of such prepayment.
"Investment Management Agreement": as to each Fund and each Borrower,
-------------------------------
the Investment Management Agreements set forth on Schedule III hereto.
------------
"Investment Policies": as to each Borrower, the policies and
-------------------
objectives for, and limits and restrictions on, investing by such Borrower set
forth in the Prospectus relating to such Borrower.
"Lenders": as defined in the preamble hereto.
-------
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any Financing Lease
having substantially the same economic effect as any of the foregoing).
"Loan Documents": this Agreement and the Notes.
--------------
"Loans": all loans made pursuant to this Agreement; individually, a
-----
"Loan".
- -----
"Material Adverse Effect": a material adverse effect on (a) the
-----------------------
business, financial condition or ability to timely perform any of its material
obligations under the Loan Documents of a Borrower or (b) the legality,
validity, binding nature or enforceability of the Loan Documents or the rights
or remedies of the Administrative Agent or the Lenders under the Loan Documents.
"Maturity Date": as to each Loan, the date which is the earliest of (a)
-------------
30 days after the Borrowing Date for such Loan (except that, with respect to any
Swingline Loan, the Maturity Date shall be the seventh day after the Borrowing
date therefor), (b) the Termination Date and (c) the payment in full of such
Loan.
<PAGE>
"Moody's": Moody's Investor Service, Inc.
-------
"1940 Act": the Investment Company Act of 1940, as amended, together
--------
with all rules and regulations promulgated from time to time thereunder.
"Non-Excluded Taxes": as defined in Section 2.11.
------------------
"Non-Recourse Person": as defined in Section 9.15.
-------------------
"Notes": the collective reference to the Revolving Credit Notes; one
-----
of the Notes, a "Note".
----
"Participant": as defined in Section 9.6(b).
-----------
"Person": an individual, partnership, corporation, business trust,
------
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan covered by
----
ERISA which any Fund or any Borrower maintains.
"Prospectus": as to each Borrower at a particular time, shall mean the
----------
currently effective prospectus(es) and statement(s) of additional information of
such Borrower.
"Register": as defined in Section 9.6(d).
--------
"Regulation T": Regulation T of the Board of Governors of the Federal
------------
Reserve System as in effect from time to time.
"Regulation U": Regulation U of the Board of Governors of the Federal
------------
Reserve System as in effect from time to time.
"Regulation X": Regulation X of the Board of Governors of the Federal
------------
Reserve System as in effect from time to time.
"Required Lenders": at any time, Lenders the Commitment Percentages of
----------------
which aggregate more than 50%.
"Requirement of Law": as to any Person, the certificate of
------------------
incorporation, by-laws, partnership agreement, or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer": the president, treasurer, assistant treasurer,
-------------------
or secretary of each Fund, or, with respect to financial matters, the treasurer
or assistant
<PAGE>
treasurer of each Fund; provided, however, that as used in (i) Section 5.1(c)
-------- -------
and (ii) with respect to the certificate required to accompany the financial
statements referred to in Section 5.1(c) only, Section 5.2(b), "Responsible
-----------
Officer" shall also include the following officers of U.S. Trust Company of
- -------
Connecticut: Brian Schmidt, Vice President; Frank Bruno, Vice President; and
Alice McClave, Financial Officer.
"Revolving Credit Loan": as defined in Section 2.1.
---------------------
"Revolving Credit Note": as defined in Section 2.5(e).
---------------------
"S&P": Standard & Poor's Ratings Group, a division of the McGraw-Hill
---
Companies.
"Senior Securities Representing Indebtedness": any Senior Security
-------------------------------------------
other than stock.
"Senior Security": any bond, debenture, note or similar obligation or
---------------
instrument constituting a security and evidencing indebtedness (including,
without limitation, all Loans under this Agreement), and any share of beneficial
interest of a Borrower of a class having priority over any other class of shares
of such Borrower as to distribution of assets or payment of dividends.
"Shareholder Services Agreement": as to each Fund or each Borrower, as
------------------------------
applicable, the Shareholder Services Agreement(s) set forth in Schedule VI
-----------
hereto.
"Subsidiary": as to any Person, a corporation, partnership or other
----------
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person.
"Swing Line Commitment": the obligation of the Swing Line Lender to
---------------------
make Swing Line Loans pursuant to Section 2.13 hereof in the aggregate principal
amount at any one time outstanding not to exceed $10,000,000.
"Swing Line Lender": as defined in Section 2.13 hereof.
-----------------
"Swing Line Loans": as defined in Section 2.13 hereof.
----------------
"Swing Line Participation Amount": as defined in Section 2.15(c)
-------------------------------
hereof.
"Termination Date": the date which is 364 days following the Closing
----------------
Date or such earlier date on which the Commitments shall terminate as provided
herein.
"Total Assets": at any time, all assets of a Borrower which in
------------
accordance with
<PAGE>
GAAP would be classified as assets on a balance sheet of such Borrower prepared
as of such time; provided, however, that the term Total Assets shall not include
--------
(a) equipment, (b) securities owned by a Borrower which are in default and (c)
deferred organizational and offering expenses.
"Transferee": as defined in Section 9.6(f).
----------
"UCC": the Uniform Commercial Code as from time to time in effect in
---
the State of New York.
"UST": United States Trust Company of New York, a New York state
---
chartered bank and trust company, U.S. Trust Company, a Connecticut state bank
and trust company, and U.S. Trust Company, N.A., a national bank acting as
investment manager for the Borrowers as indicated on Schedule III hereto.
1.2 Other Definitional Provisions. (a) Unless otherwise specified therein,
-----------------------------
all terms defined in this Agreement shall have the defined meanings when used in
any Notes or any certificate or other document made or delivered pursuant
hereto.
(b) As used herein and in any Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to any
Borrower not defined in Section 1.1 and accounting terms partly defined in
Section 1.1, to the extent not defined, shall have the respective meanings given
to them under GAAP (as consistently applied).
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
1.3 Assumptions Regarding Structure. For the sake of clarity and
-------------------------------
construction, the parties hereto hereby set forth their acknowledgment and
agreement that each Borrower is a separate portfolio of the Fund acting on its
behalf and as such is not a separately existing legal entity entitled to enter
into contractual agreements or to execute instruments and for these reasons,
each Fund acting on behalf of a Borrower is executing this Agreement and each
respective Note on behalf of its portfolios, as Borrowers, and that such
portfolios will utilize the Loans thus made on their behalf. No Fund shall make
any designation, provide any notice or take any other action on behalf of any
Borrower that is not an investment portfolio of such Fund.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Commitments. Subject to the terms and conditions hereof, each Lender
-----------
severally agrees to make revolving credit loans ("Revolving Credit Loans")
----------------------
to each Borrower, from time to time during the Commitment Period in an aggregate
principal amount at any one time
<PAGE>
outstanding not to exceed the amount of such Lender's Commitment. During the
Commitment Period each Borrower may use Commitments by borrowing, prepaying
Loans in whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof; provided that at no time may the aggregate principal amount
--------
of Revolving Credit Loans and Swing Line Loans to all Borrowers exceed the
Aggregate Commitment.
2.2 Procedure for Borrowing. A Borrower may borrow under the Commitments
-----------------------
during the Commitment Period on any Business Day, provided that the Borrower
--------
shall give the Administrative Agent irrevocable notice (which notice must be
received by the Administrative Agent prior to 12:00 Noon, New York City time on
the requested Borrowing Date), specifying (i) the amount to be borrowed, and
(ii) the requested Borrowing Date. The aggregate amount of each borrowing by a
Borrower under the Commitments on any Borrowing Date shall be in an amount equal
to $2,000,000 or a whole multiple of $1,000,000 in excess thereof (or, if the
then Available Commitments are less than $1,000,000, such lesser amount). Upon
receipt of any such notice from a Borrower, the Administrative Agent shall
promptly notify each Lender thereof. Each Lender will make the amount of its pro
rata share of each borrowing available to the Administrative Agent for the
account of such Borrower at the office of the Administrative Agent specified in
Section 9.2 prior to 3:00 P.M., New York City time, on the Borrowing Date
requested by such Borrower in funds immediately available to the Administrative
Agent. Such borrowing will then be made available to such Borrower on such
Borrowing Date by the Administrative Agent transferring by wire to the custodian
of and for the account of such Borrower the aggregate of the amounts made
available to the Administrative Agent by the Lenders and in like funds as
received by the Administrative Agent; provided that if, on the Borrowing Date of
--------
any Revolving Credit Loans of a Borrower, any Swing Line Loans to such Borrower
shall be outstanding, the proceeds of such Revolving Credit Loans to such
Borrower shall first be applied to pay in full such Swing Line Loans, with any
remaining proceeds to be made available to such Borrower as provided above.
2.3 Fees. (a) Each Borrower severally agrees to pay to the Administrative
----
Agent for the account of each Lender such Borrower's pro rata Allocation (as
adjusted from time to time in accordance with the terms hereof) of a commitment
fee ("Commitment Fee") during the period which shall begin on the first day of
--------------
the Commitment Period and shall extend to the Termination Date, which Commitment
Fee shall be a quarterly fee, computed at the rate of .10% per annum on the
average daily amount of the Available Commitments of all Lenders in the
aggregate during each calendar quarter. Such Commitment Fee shall be payable
quarterly in arrears on the last Business Day of each March, June, September and
December and on the Termination Date, commencing on the first of such dates to
occur after the date hereof. Solely for the purpose of calculating the
Commitment Fee, Swing Line Loans will not be deemed a utilization of the
Aggregate Commitments of all Lenders.
(b) Each Borrower severally agrees to pay the Administrative Agent for
the account of the Administrative Agent the fees separately agreed to.
2.4 Termination or Reduction of Commitments. (a) Each Borrower shall have
---------------------------------------
the right, upon not less than three Business Days' notice to the Administrative
Agent, to terminate all Commitments with respect to such Borrower. Any
termination of all Commitments to a
<PAGE>
Borrower shall be accompanied by prepayment in full of the Loans to such
Borrower then outstanding, and payment of such Borrower's Allocation of (i) any
accrued Commitment Fees payable by such Borrower hereunder and (ii) any other
accrued fees, expenses or indemnified liabilities payable by such Borrower
hereunder. The amount of the Aggregate Commitment shall not be affected by any
Borrower's termination. Prior to such termination, the Funds shall notify the
Administrative Agent in writing as to the Allocations of the remaining
Borrowers, effective as of the termination.
(b) Interest accrued on the amount of any prepayment relating to such
termination and any unpaid Commitment Fee accrued hereunder shall be paid on the
date of such termination.
(c) Upon the effective date of such termination, the terminating
Borrower shall no longer be obligated to pay Commitment Fees hereunder or any
share of any other fees, expenses, or indemnified liabilities that may accrue
thereafter (except in connection with indemnification obligations with respect
to events arising prior to such termination, payment for which is not sought by
the indemnified party until after such termination), and such payment
obligations accruing after the date of such termination shall be allocated among
the remaining Borrowers.
(d) The Borrowers shall have the right, upon not less than three
Business Days' notice to the Administrative Agent, to reduce irrevocably the
Commitments of the Lenders with respect to all Borrowers. Any such reduction
shall be accompanied by prepayment in full of any amount by which the Loans
exceed the reduced Commitments then outstanding. Prior to such reduction
becoming effective, the Funds shall notify the Administrative Agent in writing
as to the Allocations of the Borrowers, effective as of the reduction.
2.5 Repayment of Loans; Evidence of Debt. (a) Each Borrower hereby
------------------------------------
severally (and neither jointly nor jointly and severally) and unconditionally
promises to pay to the Administrative Agent for the account of each Lender the
then unpaid principal amount of each Loan of such Lender to such Borrower on the
Maturity Date for such Loan (or such earlier date on which the Loans become due
and payable pursuant to Section 7). Each Borrower hereby further severally
agrees to pay to the Administrative Agent for the account of each Lender
interest on the unpaid principal amount of the Loans to such Borrower from time
to time outstanding from the date hereof until payment in full thereof at the
rates per annum, and on the dates, set forth in Section 2.7.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing indebtedness of each Borrower to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(c) The Administrative Agent shall maintain the Register pursuant to
Section 9.6(d), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Loan made hereunder, (ii) the amount of any
principal or interest due and payable or to become due and payable from each
Borrower to each Lender hereunder and (iii) both the amount
<PAGE>
of any sum received by the Administrative Agent hereunder from each Borrower and
each Lender's share thereof. The Administrative Agent shall provide a copy of
the Register to each Borrower upon request.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.5(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
----- -----
obligations of the Borrower therein recorded, provided, however, that the
-------- -------
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of any Borrower to repay (with applicable interest) the Loans made to
such Borrower by such Lender in accordance with the terms of this Agreement.
(e) Each Fund agrees that, upon the request of any Lender to the
Administrative Agent, such Fund will execute and deliver to such Lender a
promissory note of each Borrower evidencing the Loans of such Lender to such
Borrower, substantially in the form of Exhibit 2.5(e) with appropriate
--------------
insertions as to date and principal amount (a "Revolving Credit Note").
---------------------
(f) The obligations of each Borrower under its Notes shall be several
and not joint or joint and several. Notwithstanding anything to the contrary
contained in this Agreement, the parties hereto acknowledge and agree that the
sole source of payment of the obligations of each Borrower hereunder, including,
without limitation, the principal of and interest on each Loan made hereunder to
any Borrower, the Commitment Fee payable pursuant to Section 2.3 and any other
amounts attributable to the Loans made hereunder to any Borrower shall be the
revenues and assets of such Borrower, and not the revenues and assets of any
other Borrower or the revenues and assets of a Fund acting on behalf of a
Borrower (except to the extent of such Borrower).
2.6 Optional and Mandatory Prepayments. (a) Each Borrower may prepay
----------------------------------
the Loans made to it, in whole or in part, without premium or penalty, upon at
-------
least one Business Day's irrevocable notice to the Administrative Agent,
specifying the date and amount of prepayment. Upon receipt of any such notice
the Administrative Agent shall promptly notify each Lender thereof. If any such
notice is given, the amount specified in such notice shall be due and payable on
the date specified therein. Partial prepayments shall be in an aggregate
principal amount of $100,000 or an integral multiple of $100,000 in excess
thereof.
(b) If, at any time and from time to time, either (i) the Asset
Coverage Ratio for all borrowings of a Borrower shall be less than 300% or (ii)
the aggregate amount of Loans made to a Borrower then outstanding exceeds the
borrowing limits provided in such Borrower's Prospectus, then within three
Business Days thereafter such Borrower shall repay Loans made to such Borrower
to the extent necessary to ensure that (x) the Asset Coverage Ratio of all
borrowings of such Borrower after such payments is in compliance with applicable
covenants concerning minimum Asset Coverage Ratios set forth in this Agreement
or (y) the aggregate amount of Loans made to such Borrower then outstanding does
not after such payments exceed such limits, as the case may be.
<PAGE>
2.7 Interest Rates and Payment Dates. (a) Each Loan shall bear interest
--------------------------------
at a rate per annum equal to the Federal Funds Rate plus the Applicable Margin.
In addition, during the period from December 1, 1999 to January 31, 2000, if a
Lender's cost of funds exceeds the Federal Funds Rate, then the Federal Funds
Rate shall be adjusted upwards in an amount, not to exceed 1.50% per annum,
equal to the excess of such Lender's cost of funding over the Federal Funds
Rate. If any Lender becomes entitled to claim any such additional amounts, it
shall promptly notify the Borrowers (with a copy to the Administrative Agent) of
the event by reason of which it has become so entitled by providing a
certificate setting forth in reasonable detail the basis for the claim for
additional amounts, the amounts required to be paid by the Borrowers to such
Lender, and the computations made by such Lender to determine the amounts;
provided that such Lender shall not be required to disclose any confidential
information. Failure or delay on the part of any Lender to demand compensation
pursuant hereto shall not constitute a waiver of such Lender's right to demand
such compensation; provided that a Lender claiming such compensation pursuant to
this Section 2.7 must have made its demand for such compensation on or before
March 15, 2000.
(b) Notwithstanding any provision to the contrary contained herein,
(i) upon the occurrence and continuance of any Event of Default specified in
Section 7(e) with respect to a Borrower or (ii) upon notice given by the
Administrative Agent or the Required Lenders to the Borrower of any other Event
of Default, all Loans outstanding to such Borrower shall bear interest at a rate
per annum which is the rate that would otherwise be applicable thereto pursuant
to the provisions of section 2.7(a), plus 2% per annum. If all or a portion of
(i) the principal amount of any Loan, (ii) any interest payable thereon or (iii)
any Commitment Fee or other amount payable hereunder shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum which is the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
section 2.7(a) plus 2% per annum from the date of such non-payment until such
amount is paid in full (before as well as after judgment).
(c) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to the second sentence of
--------
paragraph (b) of this section 2.7 shall be payable from time to time on demand.
2.8 Computation of Interest and Fees. (a) Commitment Fees and interest
--------------------------------
shall be calculated on the basis of a 360-day year for the actual days elapsed.
Any change in the interest rate on a Loan resulting from a change in the Federal
Funds Rate shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the Lenders of the effective date and the
amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on each Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of a Borrower, deliver to such
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 2.7(a).
<PAGE>
2.9 Pro Rata Treatment and Payments. (a) Each borrowing by a Borrower
-------------------------------
from the Lenders hereunder, each payment by a Borrower on account of any
Commitment Fee hereunder and any reduction of the Commitments of the Lenders
shall be made pro rata according to the respective Commitment Percentages of the
Lenders. Each payment (including each prepayment) by a Borrower on account of
principal of and interest on the Loans shall be made pro rata according to the
respective outstanding principal amounts of the Loans of such Borrower then held
by the Lenders. All payments (including prepayments) to be made by a Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without set off or counterclaim and shall be made no later than 10:00
A.M., New York City time, on the due date thereof to the Administrative Agent,
for the account of the Lenders, at the Administrative Agent's office specified
in Section 9.2 hereof, in Dollars and in immediately available funds. The
Administrative Agent shall distribute such payments to the Lenders promptly upon
receipt in like funds as received. If any payment hereunder becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension.
(b) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its Commitment Percentage of such borrowing
available to the Administrative Agent, the Administrative Agent may assume that
such Lender is making such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make available to
the Fund on behalf of the requesting Borrower a corresponding amount. If such
amount is not made available to the Administrative Agent by the required time on
the Borrowing Date therefor, such Lender shall pay to the Administrative Agent,
on demand, such amount with interest thereon at a rate equal to the daily
average Federal Funds Rate for the period until such Lender makes such amount
immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this Section shall be conclusive in the absence of manifest error. If such
Lender's Commitment Percentage of such borrowing is not made available to the
Administrative Agent by such Lender within three Business Days of such Borrowing
Date, the Administrative Agent shall also be entitled to recover such amount
with interest thereon at the rate per annum applicable to Loans hereunder, on
demand, from the relevant Borrower (and such Borrower may borrow under the
Commitments or under the Swing Line Commitment to satisfy such demand; provided
--------
that, for purposes of determining the Available Commitment, the Commitment of
any non-funding Lender shall be excluded).
2.10 Requirements of Law. (a) If any Lender shall have determined that
-------------------
the adoption of or any change in any Requirement of Law of any Governmental
Authority regarding capital adequacy or in the interpretation or application
thereof or compliance by such Lender or any corporation controlling such Lender
with any request or directive regarding capital adequacy (whether or not having
the force of law) from any Governmental Authority made subsequent to the date
hereof shall have the effect of reducing the rate of return on such Lender's or
such corporation's capital as a consequence of its obligations hereunder to a
level below that which such Lender or such corporation could have achieved but
for such adoption, change or compliance (taking into consideration such Lender's
or such corporation's policies with respect to
<PAGE>
capital adequacy) by an amount determined by such Lender to be material, then
from time to time, each Borrower shall promptly pay to such Lender such
additional amount or amounts as will compensate such Lender for such reduction.
(b) If any Lender becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify the Borrowers (with a copy to
the Administrative Agent) of the event by reason of which it has become so
entitled by providing a certificate setting forth in reasonable detail the basis
for the claim for additional amounts, the amounts required to be paid by the
Borrowers to such Lender, and the computations made by such Lender to determine
the amounts; provided that such Lender shall not be required to disclose any
--------
confidential information. Such certificate as to any additional amounts payable
pursuant to this Section submitted by such Lender to the Borrowers (with a copy
to the Administrative Agent) shall be conclusive in the absence of manifest
error. The agreements in this Section shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
No Borrower shall be responsible to compensate such Lender for additional
amounts attributable to another Borrower's loans.
(c) Failure or delay on the part of any Lender to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender's right to
demand such compensation; provided that the Borrowers shall not be required to
--------
compensate a Lender pursuant to this Section for any increased costs or
reductions incurred more than 270 days prior to the date that such Lender
notifies the Borrower of the change in the Requirement of Law giving rise to
such increased costs or reductions and of such Lender's intention to claim
compensation therefor; provided further that, if the change in the Requirement
-------- -------
of Law giving rise to such increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof.
2.11 Taxes. (a) All payments made by any Borrower under this Agreement
-----
and any Notes shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding all present and future income taxes and
franchise taxes (imposed in lieu of net income taxes) imposed on the
Administrative Agent or any Lender as a result of a present or former connection
between the Administrative Agent or such Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Administrative Agent or such Lender having executed, delivered or performed
its obligations or received a payment under, or enforced, this Agreement or any
Note). If any such non-excluded taxes, levies, imposts, duties, charges, fees
deductions or withholdings ("Non-Excluded Taxes") are required to be withheld
------------------
from any amounts payable to the Administrative Agent or any Lender hereunder or
under any Note, the amounts so payable to the Administrative Agent or such
Lender shall be increased to the extent necessary to yield to the Administrative
Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified in
this Agreement, provided, however, that a Borrower shall not be required to
-------- -------
increase any such amounts payable to any Lender that is not organized under the
laws of the United States of America or a state thereof if such Lender fails to
comply
<PAGE>
with the requirements of paragraph (b) of this Section. Whenever any Non-
Excluded Taxes are payable by a Borrower, as promptly as possible thereafter
such Borrower shall send to the Administrative Agent for its own account or for
the account of such Lender, as the case may be, a certified copy of an original
official receipt received by such Borrower showing payment thereof. If a
Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the required receipts or
other required documentary evidence, such Borrower shall indemnify the
Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lender as a
result of any such failure. The agreements in this Section shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(i) deliver to UST and the Administrative Agent (A) two duly
completed copies of United States Internal Revenue Service Form 1001 or
4224, or successor applicable form, as the case may be, and (B) an Internal
Revenue Service Form W-8 or W-9, or successor applicable form, as the case
may be;
(ii) deliver to UST and the Administrative Agent two further copies
of any such form or certification on or before the date that any such form
or certification expires or becomes obsolete and after the occurrence of any
event requiring a change in the most recent form previously delivered by it
to UST; and
(iii) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by UST or the
Administrative Agent;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises UST and the Administrative
Agent. Such Lender shall certify (A) in the case of a Form 1001 or 4224, that it
is entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes and (B) in the case of a
Form W-8 or W-9, that it is entitled to an exemption from United States backup
withholding tax. Each Person that shall become a Lender or a Participant
pursuant to Section 9.6 shall, upon the effectiveness of the related transfer,
be required to provide all of the forms and statements required pursuant to this
Section, provided that in the case of a Participant such Participant shall
furnish all such required forms and statements to the Lender from which the
related participation shall have been purchased.
2.12 Change of Lending Office; Replacement of Lender. (a) Each Lender
-----------------------------------------------
agrees that if it makes any demand for payment under Section 2.10, or 2.11 it
will use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions and so long as such efforts would not be disadvantageous
to it, as determined in its sole discretion) to designate a
<PAGE>
different lending office if the making of such a designation would reduce or
obviate the need for a Borrower to make payments under Section 2.10 or 2.11.
(b) If any Lender shall have required compensation pursuant to
Section 2.10, the Borrowers shall have the right, with the consent of the
Administrative Agent (which shall not be unreasonably withheld), to substitute
such Lender with an Eligible Lender (a "Replacement Lender") satisfactory to the
------------------
Borrowers (which may be one or more of the Lenders if they, in their sole
discretion, elect to become such Replacement Lender) to assume the Commitment of
such Lender and to purchase the Notes held by such Lender, if any, for an amount
equal to the principal of, and accrued and unpaid interest on, such Notes,
together with any costs reasonably incurred by such Lender in connection with
its sale of such Notes and the assignment of such Commitment (without recourse
to or warranty by such Lender and subject to all amounts owing to such Lender
under this Agreement having been paid in full). Upon the exercise of such right
by the Borrower and the satisfaction of such conditions thereto, such Lender
shall convey its interest to the Replacement Lender in accordance with the
procedures set forth in Section 9.6(c).
2.13 Swing Line Commitment. Subject to the terms and conditions hereof,
---------------------
Chase (in such capacity, the "Swing Line Lender") agrees to make available to
-----------------
each Borrower a portion of the credit otherwise available under the Commitments
from time to time during the Commitment Period by making swing line loans
("Swing Line Loans") to such Borrower in an aggregate principal amount not to
----------------
exceed at any one time outstanding the Swing Line Commitment (notwithstanding
that the Swing Line Loans outstanding at any time, when aggregated with the
Swing Line Lender's other outstanding Revolving Credit Loans hereunder, may
exceed the Swing Line Lender's Commitment then in effect); provided, however,
-------- -------
that on the date of the making of any Swing Line Loan, the sum of the aggregate
principal amount of all outstanding Revolving Credit Loans and Swing Line Loans
shall not exceed the total Commitments (less the Commitment of any non-funding
Lender referred to in Section 2.9(b)). During the Commitment Period applicable
to each Borrower, such Borrower may use the Swing Line Commitment by borrowing,
repaying and reborrowing, all in accordance with the terms and conditions
hereof. Each Swing Line Loan shall bear interest at a rate per annum equal to
the Federal Funds Rate plus the Applicable Margin.
2.14 Procedure for Swing Line Borrowing. Whenever a Borrower desires that
----------------------------------
the Swing Line Lender make Swing Line Loans under Section 2.13, the Borrower
shall give the Swing Line Lender irrevocable telephonic notice confirmed
promptly in writing (which telephonic notice must be received by the Swing Line
Lender not later than 3:00 P.M., New York City time, on the proposed Borrowing
Date), specifying the amount of each requested Swing Line Loan. Each borrowing
under the Swing Line Commitment shall be in an amount equal to $100,000 or an
integral multiple of $100,000 in excess thereof. Not later than 5:00 P.M., New
York City time, on the Borrowing Date specified in a notice by a Borrower in
respect of Swing Line Loans, the Swing Line Lender shall make available to the
Administrative Agent for the account of such Borrower at the office of the
Administrative Agent specified in Section 9.2 an amount in immediately available
funds equal to the amount of the Swing Line Loan to be made by the Swing Line
Lender. The proceeds of such Swing Line Loan will then be made available to such
Borrower on such Borrowing Date by the Administrative Agent transferring by wire
to the custodian of and for the account of such Borrower the aggregate of the
amounts made
<PAGE>
available to the Administrative Agent by the Swing Line Lender in immediately
available funds.
2.15 Refunding of Swing Line Loans. (a) If the Swingline Loan has not
-----------------------------
been repaid, the Swing Line Lender, at any time in its sole and absolute
discretion may, and, if any Swingline Loan has not bee repaid, on the seventh
day (or if such day is not a Business Day, the next Business Day) after the
Borrowing Date with respect to any Swing Line Loans to a Borrower, shall, on
behalf of such Borrower (and each Borrower hereby irrevocably directs the Swing
Line Lender to so act on its behalf and with respect to each Borrower), upon
notice given by the Swing Line Lender no later than 10:00 A.M., New York City
time, on the relevant refunding date, request each Lender to make, and each
Lender hereby agrees to make, a Revolving Credit Loan to such Borrower, at the
rate applicable to the Swing Line Loans of such Borrower, in an amount equal to
such Lender's Commitment Percentage of the amount of such Swing Line Loans of
such Borrower (the "Refunded Swing Line Loans") outstanding on the date of such
-------------------------
notice, to repay the Swing Line Lender. Each Lender shall make the amount of
such Revolving Credit Loan available to the Administrative Agent at its office
set forth in Section 9.2 in immediately available funds, no later than 1:00
P.M., New York City time, on the date of such notice. The proceeds of such
Revolving Credit Loans shall be distributed by the Administrative Agent to the
Swing Line Lender and immediately applied by the Swing Line Lender to repay the
Refunded Swing Line Loans. Effective on the day such Revolving Credit Loans are
made, the portion of the Swing Line Loans so paid shall no longer be outstanding
as Swing Line Loans.
(b) The making of any Swing Line Loan hereunder at the request of a
Borrower shall be subject to the satisfaction of the applicable conditions
precedent thereto set forth in Section 4 (unless otherwise waived in accordance
with Section 9.1).
(c) If prior to the making of a Revolving Credit Loan to a Borrower
pursuant to Section 2.15(a) one of the events described in paragraph (e) of
Section 7 shall have occurred with respect to such Borrower, each Lender
severally, unconditionally and irrevocably agrees that it shall purchase a
participating interest in the applicable Swing Line Loans ("Unrefunded Swing
----------------
Line Loans") in an amount equal to the amount of Revolving Credit Loans which
- ----------
would otherwise have been made by such Lender pursuant to Section 2.15(a). Each
Lender will immediately transfer to the Administrative Agent, in immediately
available funds, the amount of its participation (the "Swing Line Participation
------------------------
Amount"), and the proceeds of such participation shall be distributed by the
- ------
Administrative Agent to the Swing Line Lender in such amount as will reduce the
amount of the participating interest retained by the Swing Line Lender in its
Swing Line Loans to the amount of the Revolving Credit Loans which were to have
been made by it pursuant to Section 2.15(a).
(d) Whenever, at any time after the Swing Line Lender has received
from any Lender such Lender's Swing Line Participation Amount, the Swing Line
Lender receives any payment on account of the Swing Line Loans, the Swing Line
Lender will distribute to such Lender its Swing Line Participation Amount
(appropriately adjusted, in the case of interest payments, to reflect the period
of time during which such Lender's participating interest was outstanding and
funded and, in the case of principal and interest payments, to reflect such
Lender's pro rata portion of such payment if such payment is not sufficient to
--------
pay the principal of an interest on all Swing Line Loans then due); provided,
--------
however, that in the event that such
- -------
<PAGE>
payment received by the Swing Line Lender is required to be returned, such
Lender will return to the Swing Line Lender any portion thereof previously
distributed to it by the Swing Line Lender.
(e) Each Lender's obligation to make the Loans referred to in Section
2.15(a) and to purchase participating interests pursuant to Section 2.15(c)
shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any setoff, counterclaim,
recoupment, defense or other right which such Lender may have against the Swing
Line Lender or any other Person for any reason whatsoever; (ii) the occurrence
or continuance of a Default or an Event of Default or the failure to satisfy any
of the other conditions specified in Section 4; (iii) any adverse change in the
condition (financial or otherwise) of any Borrower; (iv) any breach of this
Agreement or any other Loan Document by any Borrower or any Lender; or (v) any
other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing.
2.16 Designation of Additional Borrowers; Amendments to Schedule I. (a)
-------------------------------------------------------------
Other series of each Fund and other investment companies registered under the
1940 Act, in either case (a) which have at least $2,000,000 in Total Assets and
(b) for which UST or a Subsidiary of UST acts as the investment manager, may,
with the prior written consent of the Administrative Agent and each Lender,
become parties to this Agreement in addition to those Borrowers listed on
Schedule I, and be deemed Borrowers for all purposes of this Agreement by
- ----------
executing an instrument substantially in the form of Exhibit 2.16(a) hereto
---------------
(with such changes therein as may be approved by the Administrative Agent and
the Lenders), which instrument shall (x) have attached to it a copy of this
Agreement (as the same may have been amended) with a revised Schedule I
----------
reflecting the participation of such additional series or investment company and
any prior revisions to Schedule I effected in accordance with the terms hereof
-----------
and (y) be accompanied by the documents and instruments required to be delivered
by the Borrowers pursuant to Section 4.1, including, without limitation, an
opinion of counsel for the Funds substantially in the form of Exhibit 4.1(h)
hereto.
(b) No series of any Fund or investment company shall be admitted as
a party to this Agreement as a Borrower unless at the time of such admission and
after giving effect thereto: (i) the representations and warranties set forth in
Section 3 shall be true and correct with respect to such Borrower; (ii) such
Borrower shall be in compliance in all material respects with all of the terms
and provisions set forth herein on its part to be observed or performed at the
time of the admission and after giving effect thereto; and (iii) no Default or
Event of Default with respect to such Borrower shall have occurred and be
continuing.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans, each Fund on behalf of itself and each Borrower
hereby represents and warrants to the Administrative Agent and each Lender that
(it being agreed that each Fund represents and warrants only to matters with
respect to itself and each Borrower that is a series of such Fund, and each
Borrower represents and warrants only to matters with respect to itself):
<PAGE>
3.1 Financial Condition. For each Borrower, the statement of assets
-------------------
and liabilities as of such Borrower's most recently ended fiscal year for which
annual reports have been prepared and the related statements of operations and
of changes in net assets for the fiscal year ended on such date, copies of which
financial statements, certified by the independent public accountants for each
Fund acting on behalf of each Borrower, have heretofore been delivered to each
Lender, fairly present, in all material respects, the financial position of such
Borrower as of such date and the results of its operations for such period, in
conformity with GAAP (as consistently applied).
3.2 No Change. For each Borrower, since the date of the statement of
---------
assets and liabilities for the most recently ended fiscal year for which annual
reports have been prepared for such Borrower, there has been no development or
event which has had or could reasonably be expected to have a Material Adverse
Effect with respect to such Borrower.
3.3 Existence; Compliance with Law. Each Fund (a) is duly organized,
------------------------------
validly existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the power and authority and the legal right to own its
property and to conduct the business in which it is currently engaged, (c) is
duly qualified as a foreign corporation or business trust and is in good
standing under the laws of each jurisdiction where its ownership of property or
the conduct of its business requires such qualification and (d) is in compliance
with all Requirements of Law except to the extent that the failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect. The shares of each Fund have been validly authorized.
3.4 Power; Authorization; Enforceable Obligations. Each Fund acting on
---------------------------------------------
behalf of one or more Borrowers, has the power and authority and the legal
right, to execute, deliver and perform the Loan Documents to which it is a party
and to borrow hereunder and has taken all necessary action to authorize the
borrowings on the terms and conditions of this Agreement and any Notes and to
authorize the execution, delivery and performance of the Loan Documents to which
it is a party including, but not limited to, receiving the approval of the
majority of non-interested members of the board of trustees or board of
directors of such Fund as to entering into the transactions contemplated hereby.
No consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of the Loan Documents to which the Funds
and any Borrower is a party. This Agreement has been, and each other Loan
Document to which it is a party will be, duly executed and delivered by each
Fund on behalf of its Borrowers. This Agreement constitutes, and each other Loan
Document to which it is a party when executed and delivered will constitute, a
legal, valid and binding obligation of the Funds and each Borrower enforceable
against the Funds and each Borrower severally in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
3.5 No Legal Bar. The execution, delivery and performance of the Loan
------------
Documents to which each of the Funds and the Borrowers is a party, the
borrowings hereunder and the use of the proceeds thereof will not violate any
material Requirement of Law (including, without
<PAGE>
limitation, the 1940 Act) or Contractual Obligation of any Fund or any Borrower
and will not result in, or require, the creation or imposition of any Lien on
any of their respective properties or revenues pursuant to any such Requirement
of Law or Contractual Obligation.
3.6 No Material Litigation. No litigation, investigation or proceeding
----------------------
of or before any arbitrator or Governmental Authority is pending or, to the
knowledge of any Fund or any Borrower, threatened by or against any Fund or any
Borrower or against any of their respective properties or revenues (a) with
respect to any of the Loan Documents or any of the transactions contemplated
hereby or thereby, or (b) which could reasonably be expected to have a Material
Adverse Effect.
3.7 No Default. Neither any Fund nor any Borrower is in default under
----------
or with respect to any of its Contractual Obligations in any respect which could
reasonably be expected to have a Material Adverse Effect. No Default or Event of
Default has occurred and is continuing.
3.8 Ownership of Property; Liens. Each Fund and each Borrower has good
----------------------------
title to all its property, and none of such property is subject to any Lien
except as permitted by Section 6.3.
3.9 No Burdensome Restrictions. No Requirement of Law or Contractual
--------------------------
Obligation of any Fund or any Borrower could reasonably be expected to have a
Material Adverse Effect.
3.10 Taxes. (a) Each Fund and each Borrower has filed all tax returns
-----
which, to the knowledge of such Fund and such Borrower, are required to be filed
and has paid all taxes shown to be due and payable on said returns or on any
assessments made against it or any of its property and all other taxes, fees or
other charges imposed on it or any of its property by any Governmental Authority
(other than any the amount or validity of which are currently being contested in
good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of such Fund or such
Borrower); no tax Lien has been filed, and, to the knowledge of each Fund and
each Borrower, no claim is being asserted, with respect to any such tax, fee or
other charge.
(b) Each Borrower is a "regulated investment company" as defined in
the Code.
3.11 Federal Regulations. No filing or other action is required under
-------------------
the provisions of Regulations T, U or X in connection with the execution and
delivery of the Agreement and the making of the Loans hereunder. If requested by
any Lender or the Administrative Agent from time to time, each Fund and each
Borrower will furnish to the Administrative Agent and each Lender a statement to
the foregoing effect in conformity with the requirements of FR Form U-1 and FR
Form G-3, as appropriate, referred to in said Regulation U.
3.12 ERISA. Neither any Fund, any Borrower nor any Commonly Controlled
-----
Entity has currently or has had at any time any liability or obligation under
ERISA or the Code with respect to any Plan.
3.13 Certain Regulations. Neither any Fund nor any Borrower is subject
-------------------
to regulation
<PAGE>
under any Federal or State statute or regulation (other than Regulation X of the
Board of Governors of the Federal Reserve System and the 1940 Act) which limits
its ability to incur Indebtedness.
3.14 Subsidiaries. Each Fund has no Subsidiaries, and no equity
------------
investment or interest in any other Person (other than portfolio securities
which have been acquired in the ordinary course of business).
3.15 Registration of the Funds. Each Borrower is a series or portfolio
-------------------------
of a Fund and all Funds are registered as open-end, management investment
companies under the 1940 Act.
3.16 Offering in Compliance with Securities Laws. Each Fund and each
-------------------------------------------
Borrower has issued all of its securities pursuant to an effective registration
statement on Form N-1A or otherwise in accordance with all Federal and State
securities laws applicable thereto.
3.17 Investment Policies. Each Borrower is in compliance in all material
-------------------
respects with all of its fundamental Investment Policies.
3.18 Permission to Borrow. Each Borrower is permitted to borrow
--------------------
hereunder pursuant to the limits and restrictions set forth in its statement of
Additional Information.
3.19 Accuracy of Information. All financial information, information
-----------------------
regarding each Borrower's investment policies and information contained in
exhibits attached hereto heretofore or contemporaneously furnished by or on
behalf of each Fund and each Borrower in writing to the Administrative Agent or
any Lender for purposes of or in connection with this Agreement or any
transaction contemplated hereby (in each case, as amended, superseded,
supplemented or otherwise modified) is, and all other such factual information
with respect to a Borrower or a Fund hereafter furnished in writing by or on
behalf of each Fund and each Borrower to the Administrative Agent or any Lender
(in each case, as amended, superseded, supplemented or otherwise modified) will
be, true and accurate in every material respect on the date as of which such
information is dated or certified, and to the extent such information was
furnished to the Administrative Agent or such Lender heretofore or
contemporaneously, as of the date of execution and delivery of this Agreement by
the Administrative Agent or such Lender, and such information is not, or shall
not be, as the case may be, incomplete by omitting to state any material fact
necessary to make such information not misleading.
3.20 Affiliated Persons. To the best knowledge of each Fund and each
------------------
Borrower, such Fund and such Borrower, together with their respective Affiliates
is not an "Affiliated Person" (as defined in the 1940 Act) of the Administrative
Agent or any Lender.
3.21 Year 2000. Each Fund has used commercially reasonable efforts to
---------
obtain assurances deemed reasonable by such Fund from its investment adviser,
administrator, transfer agent, distributor and custodian (together, the "Service
-------
Providers") that the services provided by such Fund will not be materially
- ---------
disrupted due to the inability of the Service Providers' computer systems to
process properly dates on and after January 1, 2000 and distinguish between the
year 2000 and the year 1900 ("Year 2000 Problem"). Each Fund has been advised
-----------------
by the Service
<PAGE>
Providers that they anticipate that the transition to the 21st century will not
result in a Material Adverse Effect. The disclosures contained herein regarding
Year 2000 readiness are designated as Year 2000 readiness disclosures related to
the Year 2000 Information & Readiness Disclosure Act.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Closing. The effectiveness of this Agreement is
---------------------
subject to the satisfaction, prior to or on the Closing Date, of the following
conditions precedent, which conditions precedent apply to and shall be satisfied
by the Borrowers severally:
(a) Executed Agreement. The Administrative Agent shall have received
------------------
this Agreement, executed and delivered by a duly authorized officer of each
Fund on behalf of such Fund and each Borrower, with a counterpart for each
Lender.
(b) Notes. The Administrative Agent shall have received Notes for
-----
each Lender which has requested Notes pursuant to Section 2.5(e), executed
and delivered by a duly authorized officer of each Fund on behalf of each
Borrower.
(c) Related Agreements. The Administrative Agent shall have received
------------------
true and correct copies, certified as to authenticity by each Fund, of the
most recent Prospectus for each Borrower, the Shareholder Services Agreement
for each Borrower, the Custody Agreement for each Borrower, the Distribution
Agreement for each Borrower, the Investment Management Agreement of each
Fund with respect to each Borrower, the current registration statement for
each Borrower, the most recent annual and semi-annual financial reports for
each Borrower and such other documents or instruments as may be reasonably
requested by the Administrative Agent, including, without limitation, a copy
of any debt instrument, security agreement or other material contract to
which any Borrower may be a party.
(d) Proceedings of the Funds and the Borrowers. The Administrative
------------------------------------------
Agent shall have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Administrative Agent,
of the board of trustees or directors, as the case may be, of each Fund
authorizing (i) the execution, delivery and performance of this Agreement
and the other Loan Documents to which each Fund and each Borrower is a party
and (ii) the borrowings contemplated hereunder, certified by the Secretary
or an Assistant Secretary of such Person as of the Closing Date, which
certificate shall be in form and substance satisfactory to the
Administrative Agent and shall state that the resolutions thereby certified
have not been amended, modified, revoked or rescinded and are in full force
and effect.
(e) Incumbency Certificate. The Administrative Agent shall have
----------------------
received, with a counterpart for each Lender, a Certificate of each Fund,
dated the Closing Date, as to the incumbency and signature of the officers
of such Fund executing any Loan Document executed by the Secretary or any
Assistant Secretary of such Fund, satisfactory
<PAGE>
in form and substance to the Administrative Agent.
(f) Organizational Documents. The Administrative Agent shall have
------------------------
received, with a counterpart for each Lender, true and complete copies of
the charter or certificate, as the case may be, and by-laws of each Fund,
certified as of the Closing Date as complete and correct copies thereof by
the Secretary or an Assistant Secretary of each Fund.
(g) Regulations U; Forms U-1 and G-1. The Lenders shall be satisfied
--------------------------------
that the Loans and the use of proceeds thereof comply in all respects with
Regulation U. If required by Regulation , the Administrative Agent shall
have received a copy of either (i) FR Form U-1 or FR Form G3 (as
applicable), duly executed and delivered by each Fund on behalf of each
Borrower and completed for delivery to each Lender, in form acceptable to
the Administrative Agent, or (ii) a current list of "margin stock" (as
defined in Regulation U) from each Borrower, in form acceptable to the
Administrative Agent and in compliance with Section 221.3(c)(2) of
Regulation U.
(h) Legal Opinions. The Administrative Agent shall have received, with
--------------
a counterpart for each Lender, the executed legal opinion of counsel to the
Funds and each Borrower, substantially in the form of Exhibit 4.1(h)
--------------
hereto. Such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(i) Financial Information. The Administrative Agent shall have
---------------------
received, with a copy for each Lender, the most recent publicly available
financial information (which includes a list of portfolio securities) for
each Fund and each Borrower.
(j) Termination of other Credit Facilities. All other credit
--------------------------------------
facilities to which any Borrower is a party including, but not limited to,
the $50,000,000 bilateral facility heretofore entered into between Chase
and the Borrowers, shall have been terminated.
(k) Representations and Warranties. Each of the representations and
------------------------------
warranties made by a Fund acting on behalf of a requesting Borrower and by
the requesting Borrower in or pursuant to the Loan Documents shall be true
and correct in all material respects on and as of such date as if made on
and as of such date.
4.2 Conditions to Each Loan. The agreement of each Lender to make any
-----------------------
Loan requested by a particular Borrower to be made by it on any date (including,
without limitation, its initial Loan) is subject to the satisfaction of the
following conditions precedent:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties (other than Section 3.2) made by a Fund acting on behalf of a
requesting Borrower and by the requesting Borrower in or pursuant to the
Loan Documents shall be true and correct in all material respects on and as
of such date as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have occurred
----------
with
<PAGE>
respect to the requesting Borrower, or the Fund acting on behalf of a
requesting Borrower, and be continuing on such date or after giving effect
to the Loans requested to be made on such date.
(c) Maximum Borrowing Limitation. After giving effect to the proposed
----------------------------
Loans to be made, the Asset Coverage Ratio for all borrowings of such
Borrower shall not be less than 300% and the requesting Borrower shall not
have violated any Requirements of Law or exceeded the borrowing limits set
forth in its Prospectus.
(d) Regulation U; Forms U-1 and G-1. The Lenders shall be satisfied
-------------------------------
that the Loans and the use of proceeds thereof comply in all respects with
Regulation U. To the extent required by Regulation U, the Administrative
Agent shall have received a copy of either (i) FR Form U-1 or FR Form G3 (as
applicable), duly executed and delivered by each Fund on behalf of each
Borrower and completed for delivery to each Lender, in form acceptable to
the Administrative Agent, or (ii) a current list of "margin stock" (as
defined in Regulation U) from each Borrower, in form acceptable to the
Administrative Agent and in compliance with Section 221.3(c)(2) of
Regulation U.
(e) Additional Matters. All corporate and other proceedings, and all
------------------
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Loan Documents
shall be reasonably satisfactory in form and substance to the Administrative
Agent, and the Administrative Agent shall have received such other documents
and legal opinions in respect of any aspect or consequence of the
transactions contemplated hereby or thereby as it shall reasonably request.
Each borrowing by a Borrower hereunder shall constitute a representation and
warranty by such Borrower as of the date thereof that the conditions contained
in this Section have been satisfied with respect to such Borrower.
SECTION 5. AFFIRMATIVE COVENANTS
Each Fund for itself and each Borrower for itself severally and not jointly
or jointly and severally hereby agrees that, so long as (i) the Commitments
remain in effect with respect to it or (in the case of any Fund) any Borrower
that is a series of such Fund or (ii) any amount is owing by it or (in the case
of any Fund) any Borrower that is a series of such Fund to any Lender or the
Administrative Agent hereunder or under any other Loan Document, it and (in the
case of any Fund) any Borrower that is a part of such Fund shall (it being
agreed that each Fund covenants only to matters with respect it itself and each
Borrower that is a part of such Fund, and each Borrower covenants only to
matters with respect to itself):
5.1 Financial Statements. Furnish to the Administrative Agent (with
--------------------
copies for each Lender):
(a) as soon as available and in any event within 75 days after the end
of each
<PAGE>
fiscal year of such Borrower, a statement of assets and liabilities
of such Borrower as at the end of such fiscal year, a statement of
operations for such fiscal year, a statement of changes in net assets for
such fiscal year and the preceding fiscal year, a portfolio of investments
as at the end of such fiscal year and the per share and other data for such
fiscal year prepared in accordance with GAAP (as consistently applied) and
all regulatory requirements, and all presented in a manner acceptable to the
Securities and Exchange Commission or any successor or analogous
Governmental Authority and acceptable to Ernst & Young LLP or any other
independent certified public accountants of recognized standing;
(b) as soon as available and in any event within 60 days after the
close of the first six-month period of each fiscal year of such Borrower, a
statement of assets and liabilities as at the end of such six-month period,
a statement of operations for such six-month period, a statement of changes
in net assets for such six-month period and a portfolio of investments as at
the end of such six-month period, all prepared in accordance with regulatory
requirements and all certified (subject to normal year end adjustments) as
to fairness of presentation, GAAP (as consistently applied) and consistency
by a Responsible Officer; and
(c) as soon as available, but in any event not later than 10 days after
the end of each month of each fiscal year of each Borrower, the net asset
value sheet of such Borrower as at the end of such month, in the form and
detail similar to those customarily prepared by the Funds' management for
internal use and reasonably satisfactory to the Administrative Agent,
certified by a Responsible Officer as being fairly stated in all material
respects; provided, however, that if any Borrower has Loans outstanding,
-------- -------
such Borrower shall provide each Lender with (i) such net asset value sheet
described above in this Section and (ii) a certificate of a Responsible
Officer showing in reasonable detail the calculations supporting such
Borrower's compliance with Section 6.1, within two Business Days after the
end of each calendar week so long as any Loans to such Borrower remain
outstanding;
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
5.2 Certificates; Other Information. Furnish to the Administrative Agent
--------------------------------
(with copies for each Lender):
(a) concurrently with the delivery of the financial statements referred
to in Section 5.1(a), a certificate of the independent certified public
accountants reporting on such financial statements stating that in making
the examination necessary therefor no knowledge was obtained of any Default
or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements referred
to in
<PAGE>
Sections 5.1(a), (b) and (c) and the quarterly report in Section
5.2(d), a certificate of a Responsible Officer stating that, to the best of
such Officer's knowledge, such Borrower during such period has observed or
performed all of its covenants and other agreements, and satisfied every
condition, contained in this Agreement and the other Loan Documents to be
observed, performed or satisfied by it, and that no Default or Event of
Default has occurred and is continuing except as specified in such
certificate;
(c) within five days after the same are sent, copies of all financial
statements and reports which each Borrower sends to its investors, and
within five Business Days after the same are filed, copies of all financial
statements and reports which each Borrower may make to, or file with, the
Securities and Exchange Commission or any successor or analogous
Governmental Authority;
(d) as soon as available, but in any event not later than ten days
after the end of each quarter, a certificate of a Responsible Officer (i)
stating that the list of each Borrower's portfolio securities attached to
such certificate is true and correct and (ii) showing in reasonable detail
the calculations supporting such Borrower's compliance with Section 6.1; and
(e) promptly, such additional financial and other information as any
Lender may from time to time reasonably request, including, but not limited
to, copies of all changes to the Prospectus and registration statement.
5.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
----------------------
before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
such Borrower or such Fund, as the case may be.
5.4 Conduct of Business and Maintenance of Existence; Change of Custodian.
---------------------------------------------------------------------
Continue to engage in its investment business in accordance with its Investment
Policies, Prospectus and registration statement and preserve, renew and keep in
full force and effect its existence and take all reasonable action to maintain
all rights, privileges and franchises necessary or desirable in the normal
conduct of its business; comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not, in the aggregate, be reasonably expected to have a Material Adverse Effect;
maintain at all times its status as an investment company or a series of an
investment company registered under the 1940 Act; maintain at all times a
custodian which is a bank or trust company organized under the laws of the
United States or a political subdivision thereof having assets of at least
$10,000,000,000 and a long-term debt or deposit rating of at least A from S&P or
A2 from Moody's.
5.5 Maintenance of Property; Insurance. Keep all property useful and
----------------------------------
necessary in its business, if any, in good working order and condition; maintain
with financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks as are usually
insured against in the same general area by entities engaged in the same or
similar business or as may otherwise be required by the Securities and Exchange
<PAGE>
Commission or any successor or analogous Governmental Authority (including,
without limitation, (a) fidelity bond coverage as shall be required by Rule 17g-
1 promulgated under the 1940 Act or any successor provision and (b) errors and
omissions insurance); and furnish to each Lender, upon written request, full
information as to the insurance carried.
5.6 Inspection of Property; Books and Records; Discussions. Keep proper
------------------------------------------------------
books of records and account in which full, true and correct in all material
respects entries in conformity with GAAP and all material Requirements of Law
shall be made of all dealings and transactions in relation to its business and
activities; and permit representatives of (i) the Administrative Agent, or its
representatives, upon its own discretion or at the reasonable request of any
Lender, and (ii) upon the occurrence and during the continuance of an Event of
Default, any Lender, or its representatives, to visit and inspect any of such
Borrower's properties and examine and make abstracts from any of its books and
records during normal business hours and to discuss the business, operations,
properties and financial and other condition of such Borrower with officers and
employees of such Borrower and with its independent certified public
accountants; provided that, unless a Default or an Event of--------Default shall
have occurred and be continuing, the Administrative Agent shall provide the
Borrowers with five Business Days' prior notice of such visit and shall only
conduct such visit once a year.
5.7 Notices. Promptly give notice to the Administrative Agent and each
-------
Lender of:
(a) the occurrence of any Default or Event of Default with respect to
such Borrower;
(b) any (i) default or event of default under any Contractual
Obligation of such Borrower or such Fund or (ii) litigation, investigation
or proceeding which may exist at any time between any Fund and/or any
Borrower and any Governmental Authority, which in either case, if not cured
or if adversely determined, as the case may be, could reasonably be expected
to have a Material Adverse Effect;
(c) any litigation or proceeding affecting such Borrower in which the
amount reasonably determined to be at risk is $1,000,000 or more and not
covered by insurance or in which injunctive or similar relief is sought;
(d) change in such Borrower's Prospectus or registration statement
involving fundamental Investment Policies which could materially increase
the risks to the shareholders of the Borrower; and
(e) any development (other than widely reported general economic or
industry developments) or event which could reasonably be expected to have a
Material Adverse Effect on any such Borrower.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action such Fund or such Borrower proposes to take with respect
thereto.
<PAGE>
5.8 Purpose of Loans. Use the proceeds of the Loans for temporary or
----------------
emergency purposes. Without limiting the foregoing, no Borrower will, directly
or indirectly, use any part of such proceeds for any purpose which would violate
any provision of its registration statement or any applicable statute,
regulation.
SECTION 6. NEGATIVE COVENANTS
Each Fund for itself and each Borrower for itself hereby agrees that,
so long as (i) the Commitments remain in effect with respect to it or (in the
case of any Fund) any Borrower that is a part of such Fund or (ii) any amount is
owing by it or (in the case of any Fund) any Borrower that is a part of such
Fund to any Lender or the Administrative Agent hereunder or under any other Loan
Document, it and (in the case of any Fund) any Borrower that is a part of such
Fund shall not, without the prior written consent of the Required Lenders,
directly or indirectly:
6.1 Financial Condition Covenant. Permit the Asset Coverage Ratio of such
----------------------------
Borrower to be less than 300%, or allow borrowings and/or Indebtedness of such
Borrower to exceed the limits set forth in such Borrower's Prospectus or allow
borrowing and/or Indebtedness to exceed the requirements of the 1940 Act.
6.2 Limitation on Indebtedness. Create, incur, assume or suffer to exist
--------------------------
any Indebtedness of such Borrower, except Indebtedness of such Borrower incurred
(i) under this Agreement and the Notes, (ii) in the ordinary course of business
of such Borrower or (iii) in the form of reverse repurchase transactions, dollar
rolls or other transactions entered into primarily for investment purposes which
have the effect of borrowing and, in each case, which is not otherwise
prohibited by law is in the ordinary course of business, is not in contravention
of such Borrower's Prospectus and is reflected properly in the calculation of
the Asset Coverage Ratio.
6.3 Limitation on Liens. Create, incur, assume or suffer to exist any Lien
-------------------
upon any of the property, assets or revenues, whether now owned or hereafter
acquired of such Borrower, except for (i) Liens for taxes not yet due or which
are being contested in good faith by appropriate proceedings, provided that
--------
adequate reserves with respect thereto are maintained on the books of such
Borrower in conformity with GAAP, (ii) Liens arising in connection with claims
for advances made by or payments due to any custodian under the Custodian
Agreements set forth in Schedule IV hereto and (iii) any other Liens created,
-----------
incurred, assumed or suffered to exist in compliance with the registration
statement of such Borrower which are not otherwise prohibited by any Requirement
of Law, and for which the Administrative Agent has been given prior written
notice.
6.4 Limitation on Guarantee Obligations. Create, incur, assume or suffer
-----------------------------------
to exist any material Guarantee Obligation of such Borrower.
6.5 Limitation on Fundamental Changes. Enter into any merger,
---------------------------------
consolidation or amalgamation, or liquidate, wind up or dissolve such Borrower
or fund (or suffer any liquidation or dissolution), or convey, sell, lease,
assign, transfer or otherwise dispose of all of the property,
<PAGE>
business or assets of such Borrower in a single transaction or in related
transactions, or make any material change in its present method of conducting
business; except that, so long as no Default or Event of Default shall have
occurred and be continuing, a Borrower will be permitted to (i) enter into any
merger, consolidation or amalgamation with one or more Borrowers or, with the
consent of the Administrative Agent (which consent shall not be unreasonably
withheld), one or more Affiliates or such Borrower if, in each case, UST or one
of its affiliates is the investment manager to the entity surviving such merger,
consolidation or amalgamation and such entity assumes the obligations of such
Borrower under the Loan Documents and complies with the provisions hereof or
(ii) liquidate, wind up or convey, sell, lease, assign, transfer or otherwise
dispose of all of the property, business or assets of such Borrower if it repays
all Loans made to it prior to liquidation or (iii) sell, transfer or otherwise
dispose of all or substantially all of its assets to one or more Borrowers or,
with the consent of the Administrative Agent (which consent shall not be
unreasonably withheld), one or more Affiliate of such Borrower if UST or one of
its affiliates is the investment manager to the entity surviving such merger,
consolidation or amalgamation and such entity assumes the obligations of such
Borrower under the Loan Documents and complies with the provisions hereof. Any
Borrower undertaking any action described in clause (ii) above shall comply with
the termination provisions described in Section 2.4 hereof.
6.6 Limitation on Distributions. At any time, make any distribution to
---------------------------
the shareholders of such Borrower, whether now or hereafter existing, either
directly or indirectly, whether in cash or property or in obligations of the
borrower if such distribution results in a Default or an Event of Default ,
except to the extent that such distributions are required to enable such
Borrower to continue to qualify as a "regulated investment company" under
Sections 851-855 of the Code or otherwise to minimize or eliminate federal or
state income or excise taxes payable by such Borrower and except as otherwise
required by any other Requirement of Law. During the occurrence and continuation
of an Event of Default specified in paragraphs (a) or (e) of Section 7 or an
Event of Default arising in connection with a Borrower's having failed to comply
with Section 6.1, make any distribution to the shareholders of such Borrower,
whether now or hereafter existing, either directly or indirectly, whether in
cash or property or in obligations of the Borrower, except to the extent that
such distributions are required to enable such Borrower to continue to qualify
as a "regulated investment company" under Sections 851-855 of the Code or
otherwise to minimize or eliminate federal or state income or excise taxes
payable by such Borrower and except as otherwise required by any other
Requirement of Law.
6.7 Limitation on Investments, Loans and Advances. Make any advance, loan,
---------------------------------------------
extension of credit or capital contribution to, or purchase any stock, bonds,
notes, debentures or other securities of or any assets constituting a business
unit of or make any other investment in, any Person, except those not
inconsistent with such Borrower's Investment Policies.
6.8 Limitation on Transactions with Affiliates. Enter into any
------------------------------------------
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) not otherwise prohibited under this Agreement and not in
violation of the 1940 Act, (b) in the ordinary course of such Borrower's
business, and (c) upon fair and reasonable terms no less favorable to such
Borrower than it would obtain in a comparable arm's length transaction with a
Person which is not an Affiliate.
<PAGE>
6.9 Limitation on Negative Pledge Clauses. Enter into with any Person any
-------------------------------------
agreement, other than this Agreement or the other Loan Documents, which
prohibits or limits the ability of such Borrower to create, incur, assume or
suffer to exist any Lien upon any of its property, assets or revenues, whether
now owed or hereafter acquired.
6.10 Limitation on Changes to Investment Policies. Except as may be
--------------------------------------------
required by law, make any amendment to the Prospectus or registration statement
of such Borrower relating to changes in the fundamental Investment Policies of
such Borrower which amendment requires approval of such Borrower's shareholders
without the consent of the Required Lenders, which consent shall not be
unreasonably withheld.
SECTION 7. EVENTS OF DEFAULT
Subject to the final paragraph of this Section 7, if any of the following
events shall occur and be continuing with respect to a Borrower or a Fund, on
behalf of such Borrower, as the case may be (each an "Event of Default"):
----------------
(a) A Borrower shall fail to pay any principal of any Loan when due in
accordance with the terms thereof or hereof, including without limitation
any failure to make a mandatory prepayment due pursuant to the provisions of
Section 2.6(b); or a Borrower shall fail to pay any interest on any Loan, or
any other amount payable hereunder, within three Business Days after any
such interest or other amount becomes due in accordance with the terms
thereof or hereof; or
(b) Any representation or warranty made or deemed made by a Borrower or
any Fund herein or in any other Loan Document or which is contained in any
certificate, document or financial or other statement furnished by it at any
time under or in connection with this Agreement or any such other Loan
Document shall prove to have been incorrect in any material respect on or as
of the date made or deemed made; or
(c) A Borrower or a Fund shall default in the observance or performance
of any other covenant or agreement contained in this Agreement or any other
Loan Document (other than as provided in paragraphs (a) and (b) of this
Section), and such default shall continue unremedied for a period of 30 days
or, solely in the case of such default arising under Sections 5.4 or 6.5
hereof, 15 Business Days; or
(d) A Borrower or a Fund shall (i) default in any payment of principal
of or interest on any Indebtedness (other than the Loans) or in the payment
of any Guarantee Obligation, beyond the grace period (not to exceed 30
days), if any, provided in the instrument or agreement under which such
Indebtedness or Guarantee Obligation was created, if the aggregate amount of
the Indebtedness and/or Guarantee Obligations in respect of which such
default or defaults shall have occurred is at least 5% of such Borrower's or
such Fund's net assets; or (ii) default in the observance or performance of
any other agreement or condition relating to any such Indebtedness or
Guarantee
<PAGE>
Obligation or contained in any instrument or agreement evidencing, securing
or relating thereto, or any other event shall occur or condition exist, the
effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Guarantee Obligation (or a trustee or agent on behalf
of such holder or holders or beneficiary or beneficiaries) to cause, with
the giving of notice if required, such Indebtedness to become due prior to
its stated maturity or such Guarantee Obligation to become payable; or
(e) (i) Any Fund shall commence any case, proceeding or other action
with respect to itself or any Borrower (A) under any then applicable law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets, or a Borrower or a Fund shall make a general assignment
for the benefit of its creditors; or (ii) there shall be commenced against a
Borrower or a Fund any case, proceeding or other action of a nature referred
to in clause (i) above which (A) results in the entry of an order for relief
or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against a Borrower or a Fund any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in
the entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) a Borrower or a Fund shall take any action in writing in
furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) a
Borrower or a Fund shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become due; or
(f) Either a Borrower or any Commonly Controlled Entity of such
Borrower incurs any liability to any Plan which could reasonably be expected
to have a Material Adverse Effect; or
(g) One or more judgments or decrees shall be entered against a
Borrower or a Fund involving in the aggregate a liability (not fully covered
by insurance or otherwise paid or discharged) of 5% or more of such
Borrower's net assets, and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 30 days from the
entry thereof; or
(h) Unless consented to by the Lenders, UST or a Person directly
controlling, controlled by, or under common control with UST shall no longer
act as investment manager for the Funds; or
(i) A Fund or a Borrower's registration under the 1940 Act shall lapse
or be suspended (or proceedings for such purpose shall have been
instituted); or
<PAGE>
(j) A Borrower shall fail to materially comply with its fundamental
Investment Policies;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (e) of this Section with respect to such
Borrower (or a Fund acting on behalf of one or more Borrowers), automatically
the Commitments available to such Borrower (or all of the Borrowers that are
portfolios of such Fund) shall immediately terminate and the Loans hereunder
made to any such Borrower (with accrued interest thereon) and all other amounts
owing under this Agreement by such Borrower shall immediately become due and
payable, and (B) if such event is any other Event of Default with respect to
such Borrower (or a Fund acting on behalf of one or more Borrowers), any or all
of the following actions may be taken: (i) with the consent of the Required
Lenders, the Administrative Agent may, or upon the request of the Required
Lenders, the Administrative Agent shall, by notice to such Borrower declare the
Commitments available to such Borrower (or all of the Borrowers issued under
such Fund if such Event of Default is a Fund Event of Default (as defined
below)) to be terminated forthwith, whereupon such Commitments shall immediately
terminate; and (ii) with the consent of the Required Lenders, the Administrative
Agent may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to such Borrower, declare the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement by such
Borrower (or all of the Borrowers issued under such Fund if such Event of
Default is a Fund Event of Default) to be due and payable forthwith, whereupon
the same shall immediately become due and payable. Except as expressly provided
above in this Section, presentment, demand, protest and all other notices of any
kind are hereby expressly waived.
Notwithstanding any other provision herein to the contrary, Defaults and
Events of Defaults shall have the following results:
(i) a Default or Event of Default with respect to one Borrower shall
not constitute a Default or Event of Default to any other
Borrower;
(ii) except as set forth in clause (iii) below, a Default or Event of
Default with respect to a Fund acting on behalf of one or more
Borrowers shall constitute a Default or Event of Default, as the
case may be, only to the Borrower implicated in, or affected by,
the act or omission causing such Default or Event of Default;
(iii) a Fund Default or a Fund Event of Default with respect to a Fund
acting on behalf of one or more Borrowers shall constitute a
Default or Event of Default, as the case may be, to all
Borrowers issued by such Fund; and
(iv) an Event of Default of the type described in paragraph (h) of
this Section 7 shall constitute an Event of Default to all
Borrowers.
"Fund Event of Default" shall mean an Event of Default with respect to a Fund as
---------------------
a whole and not with respect to any Borrower or a Fund acting on behalf of a
Borrower (A) of any of the
<PAGE>
types described in paragraphs (d), (e), (g), or (i) of this Section 7, or (B)
arising from such Fund's failure to comply with the covenants set forth in
Sections 5.3, 5.4, 5.5 or 6.5. "Fund Default" shall mean any of the events
------------
giving rise to Fund Events of Default, whether or not any requirement for the
giving of notice, the lapse of time, or both, or any other condition, has been
satisfied. Notwithstanding anything herein to the contrary, a Default or Event
of Default with respect to one Borrower shall not constitute a Default or Event
of Default with respect to any other Borrower.
SECTION 8. THE ADMINISTRATIVE AGENT
8.1 Appointment. Each Lender hereby irrevocably designates and
-----------
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
8.2 Delegation of Duties. The Administrative Agent may execute any of
--------------------
its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent
shall not be responsible for the negligence, willful misfeasance, bad faith or
misconduct of any agents or attorneys in-fact selected by it with reasonable
care.
8.3 Exculpatory Provisions. Neither the Administrative Agent nor any
----------------------
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall be (a) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement or any other Loan
Document (except for its or such Person's own gross negligence or willful
misconduct) or (b) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by any Fund or any
Borrower or any officer thereof contained in this Agreement or any other Loan
Document or in any certificate, report, statement or other document referred to
or provided for in, or received by the Administrative Agent under or in
connection with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document or for any failure of any Borrower or any
Fund to perform its obligations hereunder or thereunder. The Administrative
Agent shall not be under any obligation to any Lender to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of any Fund or any Borrower.
<PAGE>
8.4 Reliance by Administrative Agent. The Administrative Agent shall
--------------------------------
be entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
reasonably believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Funds or the
Borrowers), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
The Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.
8.5 Notice of Default. The Administrative Agent shall not be deemed to
-----------------
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or a
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event
that the Administrative Agent receives such a notice, the Administrative Agent
shall give notice thereof to the Lenders. The Administrative Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; provided that unless and until the
--------
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
8.6 Non-Reliance on Administrative Agent and Other Lenders. Each Lender
------------------------------------------------------
expressly acknowledges that neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates has made
any representations or warranties to it and that no act by the Administrative
Agent hereinafter taken, including any review of the affairs of the Funds or
Borrowers, shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender. Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrowers and made its own decision to
make its Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the
<PAGE>
business, operations, property, financial and other condition and
creditworthiness of the Borrowers. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Funds or the Borrowers which
may come into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
8.7 Indemnification. The Lenders agree to indemnify the Administrative
---------------
Agent in its capacity as such (to the extent not reimbursed by the Borrowers and
without limiting the obligation of the Borrowers to do so), ratably according to
their respective Commitment Percentages in effect on the date on which
indemnification is sought (or, if indemnification is sought after the date upon
which the Commitments shall have terminated and the Loans shall have been paid
in full, ratably in accordance with their Commitment Percentages immediately
prior to such date), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Loans) be imposed on,
incurred by or asserted against the Administrative Agent in any way relating to
or arising out of the Commitments, this Agreement, any of the other Loan
Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Administrative Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any portion of such
- --------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Administrative
Agent's gross negligence or willful misconduct. The agreements in this Section
shall survive the payment of the Loans and all other amounts payable hereunder.
8.8 Administrative Agent in Its Individual Capacity. The Administrative
-----------------------------------------------
Agent and its Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with any Fund or any Borrower as though the
Administrative Agent were not the Administrative Agent hereunder and under the
other Loan Documents. With respect to the Loans made by it, the Administrative
Agent shall have the same rights and powers under this Agreement and the other
Loan Documents as any Lender and may exercise the same as though it were not the
Administrative Agent, and the terms "Lender" and "Lenders" shall include the
Administrative Agent in its individual capacity.
8.9 Successor Administrative Agent. The Administrative Agent may resign
------------------------------
as Administrative Agent upon 10 Business Days' notice to the Lenders and the
Borrowers; provided that no such resignation shall be effective until a
successor Administrative Agent has been appointed hereunder. If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from among
the Lenders a successor agent for the Lenders (or, if the Required Lenders do
not appoint such successor agent within 30 days of the date of the resigning
Administrative Agents resignation notice, the resigning Administrative Agent
shall appoint from among the Lenders a successor agent) whereupon such successor
agent shall succeed to the rights, powers and duties of the Administrative
Agent, and the term "Administrative Agent" shall mean such successor
<PAGE>
agent effective upon such appointment and approval, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this Section 8 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers. Neither this Agreement nor any other Loan
----------------------
Document, nor any terms hereof or thereof, may be amended, supplemented or
modified except in accordance with the provisions of this Section. The Required
Lenders may, or, with the written consent of the Required Lenders, the
Administrative Agent may, from time to time, (a) enter into with any Fund on
behalf of a Borrower written amendments, supplements or modifications hereto and
to the other Loan Documents for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
the Lenders or of such Borrower hereunder or thereunder or (b) waive, on such
terms and conditions as the Required Lenders or the Administrative Agent, as the
case may be, may specify in such instrument, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
--------
supplement or modification shall (i) reduce the amount or extend the scheduled
date of maturity of any Loan or of any installment thereof, or reduce the stated
rate of any interest or fee payable hereunder or extend the scheduled date of
any payment thereof or increase the amount or extend the expiration date of any
Lender's Commitment, in each case without the consent of each Lender affected
thereby, or (ii) amend, modify or waive any provision of this subsection or
reduce the percentage specified in the definition of Required Lenders, or
consent to the assignment or transfer by any Borrower of any of its rights and
obligations under this Agreement and the other Loan Documents, in each case
without the written consent of all the Lenders, or (iii) amend or modify the
first two sentences of Section 2.9(a), in each case without the written consent
of all the Lenders, or (iv) amend or modify the requirement contained in the
first sentence of Section 2.16(a) that consent of all the Lenders is required
to approve the addition of Borrowers to this Agreement, in each case without the
written consent of all the Lenders, or (v) amend or modify Section 2.6(b)
without the written consent of all the lenders, or (vi) amend or modify Section
6.1 without the written consent of all the Lenders, or (vii) amend, modify or
waive any provision of Section 8 without the written consent of the then
Administrative Agent. Any such waiver and any such amendment, supplement or
modification shall be effective (i) only for such Borrower(s) on whose behalf
any Fund executed such document(s) and (ii) in the specific instance and for the
specific purpose for which given.
9.2 Notices. All notices, requests and demands to or upon the respective
-------
parties hereto to be effective shall be in writing (which writing may be in the
form of a facsimile transmission), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered, or five
days after being deposited in the mail, postage prepaid, or, in the case of
facsimile notice, when received, addressed as follows in the case of any Fund,
any
<PAGE>
Borrower and the Administrative Agent, and as set forth in Schedule II in the
case of the other parties hereto, or to such other address as may be hereafter
notified by the respective parties hereto:
The Funds and
the Borrowers: United States Trust Company of Connecticut
225 High Ridge Road
East Tower
Stamford, Connecticut 06905
Attention: Brian F. Schmidt
Facsimile: (203) 973-0465
The Administrative
Agent:
The Chase Manhattan Bank
Loan and Agency Services Group
One Chase Manhattan Plaza
Eighth Floor
New York, New York 10081
Attention: Ms. Laura Rebecca
Facsimile: (212) 552-7490
and
The Chase Manhattan Bank
270 Park Avenue
Thirty-sixth Floor
New York, New York 10017
Attention: Ms. Roberta Whittington
Facsimile: (212) 270-0670
provided that any notice, request or demand to or upon the Administrative Agent
- --------
or the Lenders pursuant to Section 2.2, 2.4, 2.6, or 2.8 shall not be effective
until received.
9.3 No Waiver; Cumulative Remedies. No failure to exercise and no
------------------------------
delay in exercising, on the part of any party hereto, any right, remedy, power
or privilege hereunder or under the other Loan Documents shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
9.4 Survival of Representations and Warranties. All representations
------------------------------------------
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
<PAGE>
9.5 Payment of Expenses and Taxes; Indemnification. (a) Each Borrower
----------------------------------------------
agrees severally (ratably, in accordance with its Allocation) (a) to reimburse
the Administrative Agent for its reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Administrative Agent; provided, however, that
the fees and disbursements of counsel to the Administrative Agent incurred for
the preparation of this Agreement and the other Loan Documents shall be limited
as previously agreed to by the Borrowers and the Administrative Agent, (b) to
reimburse each Lender and the Administrative Agent for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement with respect to such Borrower, the other Loan
Documents and any such other documents, including, without limitation, the fees
and disbursements of counsel to each Lender and of counsel to the Administrative
Agent, (c) to indemnify and hold each Lender and the Administrative Agent
harmless, from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, which may be payable or reasonably determined to
be payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents with
respect to such Borrower, and (d) to indemnify and hold each Lender and the
Administrative Agent (and their respective affiliates, directors, officers,
agents and employees (collectively with the Administrative Agent and the
Lenders, the "Indemnified Parties")) harmless from and against any and all other
-------------------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, out-of-pocket expenses or disbursements of any kind or nature whatsoever
arising from or in connection with the actual or proposed use of proceeds or the
execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents (all the
foregoing in this clause (d), collectively, the "indemnified liabilities"),
-----------------------
provided, that such Borrower shall have no obligation hereunder to the
- --------
Administrative Agent or any Lender with respect to indemnified liabilities
arising from (i) the gross negligence or willful misconduct of the
Administrative Agent or any such Lender, (ii) disputes arising between or among
the Lenders or (iii) the failure of the Administrative Agent (and its
Affiliates) or of any Lender to comply with any Requirement of Law. The
agreements in this Section shall survive repayment of the Loans and all other
amounts payable hereunder.
(b) Notwithstanding any other provision in this Agreement to the
contrary, to the extent any obligation to reimburse or indemnify any Indemnified
Party arises pursuant to Section 9.5(a) is not attributable to any particular
Borrower, then such reimbursement or indemnification shall be made by each
Borrower (ratably, in accordance with its Allocation). To the extent any such
obligation to reimburse or indemnify any Indemnified Party is attributable to
one or more Borrowers, then such reimbursement or indemnification shall be made
ratably by each such Borrower any by no other Borrower.
9.6 Successors and Assigns; Participations and Assignments. (a) This
------------------------------------------------------
Agreement shall be binding upon and inure to the benefit of the Funds, the
Borrowers, the Lenders, the
<PAGE>
Administrative Agent and their respective successors and assigns, except that
neither any Fund nor any Borrower may assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender; provided that such consent of the Administrative Agent shall not be
--------
required if such assignment or transfer is made in furtherance of a merger,
consolidation or amalgamation which, by the express terms of Section 6.5, is
permitted to occur without the prior written consent of the Administrative
Agent.
(b) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable laws, at any time sell to one or more
Eligible Lenders ("Participants") participating interests in any Loan owing to
------------
such Lender, any Commitment of such Lender or any other interest of such Lender
hereunder and under the other Loan Documents. In the event of any such sale by
a Lender of a participating interest to a Participant, such Lender's obligations
under this Agreement to the other parties to this Agreement shall remain
unchanged, such Lender shall remain solely responsible for the performance
thereof, such Lender shall remain the holder of any such Loan for all purposes
under this Agreement and the other Loan Documents, and the Borrowers and the
Administrative Agent shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents. Any agreement pursuant to which any Lender may grant
such a participating interest shall provide that such Lender shall retain the
sole right and responsibility to enforce the obligations of the Borrowers
hereunder including the right to approve any amendment, modification or waiver
of any provision of this Agreement; provided that such participation agreement
--------
may provide that (i) such Lender will not agree to any modification, amendment
or waiver of this Agreement described in clause (i) of the proviso in Section
9.1 without the consent of the Participant and (ii) the Participant may obtain
voting rights limited to changes in respect of the principal amount, interest
rates, fees and term of the Loans. Each Borrower agrees that if amounts
outstanding under this Agreement are due or unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall, to the maximum extent permitted by applicable laws, be
deemed to have the right of setoff in respect of its participating interest in
amounts owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, provided that, in purchasing such participating interest, such
--------
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 9.7(a) as fully as if it were a Lender
hereunder. Each Borrower also agrees that each Participant shall be entitled to
the benefits of Sections 2.10 and 2.11 with respect to its participation in the
Commitments and the Loans outstanding from time to time as if it was a Lender;
provided that, in the case of Section 2.11, such Participant shall have complied
- --------
with the requirements of said Section and provided, further, that no Participant
--------
shall be entitled to receive any greater amount pursuant to any such Section
than the transferor Lender would have been entitled to receive in respect of the
amount of the participation transferred by such transferor Lender to such
Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time and from time to
time assign to any Lender or any affiliate thereof that is an Eligible Lender
or, with the consent of the Funds (unless an Event of Default has occurred and
is continuing), to an additional Eligible Lender (an "Assignee") all or any part
--------
of its rights and obligations under this Agreement and the other Loan
<PAGE>
Documents pursuant to an Assignment and Acceptance, substantially in the form of
Exhibit 9.6(c), executed by such Assignee, such assigning Lender and the
- --------------
Administrative Agent and delivered to the Administrative Agent for its
acceptance and recording in the Register; provided, however, that assignments to
-------- -------
entities other than Lenders or Affiliates thereof must be in amounts of at least
$5,000,000. Upon such execution, delivery, acceptance and recording, from and
after the effective date determined pursuant to such Assignment and Acceptance,
(x) the Assignee thereunder shall be a party hereto and, to the extent provided
in such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with a Commitment as set forth therein, and (y) the assigning Lender
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such assigning Lender
shall cease to be a party hereto).
(d) The Administrative Agent, on behalf of the Borrowers, shall
maintain at the address of the Administrative Agent referred to in Section 9.2 a
copy of each Assignment and Acceptance delivered to it and a register (the
"Register") for the recordation of the names and addresses of the Lenders and
- ---------
the Commitment of, and principal amount of the Loans owing to, each Lender from
time to time. The entries in the Register shall be conclusive, in the absence
of manifest error, and the Borrowers, the Administrative Agent and the Lenders
may (and, in the case of any Loan or other obligation hereunder not evidenced by
a Note, shall) treat each Person whose name is recorded in the Register as the
owner of a Loan or other obligation hereunder as the owner thereof for all
purposes of this Agreement and the other Loan Documents, notwithstanding any
notice to the contrary. Any assignment of any Loan or other obligation
hereunder not evidenced by a Note shall be effective only upon appropriate
entries with respect thereto being made in the Register. The Register shall be
available for inspection by the Borrowers or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee, the Administrative Agent (and (i) in the case
such Assignee is not then a Lender or an Affiliate of a Lender to the extent and
(ii) no Event of Default has occurred and is continuing, by the Funds) together
with payment by the assigning Lender or Assignee to the Administrative Agent of
a registration and processing fee of $3,000 (for which no Borrower shall have an
obligation to reimburse), the Administrative Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Register and
give notice of such acceptance and recordation to the Lenders, the Funds and the
Borrowers.
(f) Each Fund and each Borrower authorize each Lender to disclose to
any Participant or Assignee (each, a "Transferee") and any prospective
----------
Transferee any and all financial information in such Lender's possession
concerning any Fund or any Borrower and their Affiliates which has been
delivered to such Lender by or on behalf of the Funds or the Borrowers pursuant
to this Agreement or which has been delivered to such Lender by or on behalf of
the Funds or the Borrowers in connection with such Lender's credit evaluation of
the Borrowers and their Affiliates prior to becoming a party to this Agreement.
<PAGE>
(g) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this Section concerning assignments of Loans and Notes
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law.
9.7 Adjustments; Set-off. (a) If any Lender (a "Benefited Lender")
-------------------- ----------------
shall at any time receive any payment of all or part of its Loans, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 7(e), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender's Loans, or interest thereon, such Benefited Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loan, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such Benefited Lender to share the excess payment or benefits
of such collateral or proceeds ratably with each of the Lenders; provided,
--------
however, that if all or any portion of such excess payment or benefits is
- -------
thereafter recovered from such Benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to any Borrower, any
such notice being expressly waived by each Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by a Borrower hereunder
(whether at the stated maturity, by acceleration or otherwise) to set-off and
appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or the
account of such Borrower. Each Lender agrees promptly to notify such Borrower
and the Administrative Agent after any such set-off and application made by such
Lender, provided that the failure to give such notice shall not affect the
--------
validity of such set-off and application.
9.8 Counterparts. This Agreement may be executed by one or more of the
------------
parties to this Agreement on any number of separate counterparts (including by
facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Funds and the
Administrative Agent.
9.9 Severability. Any provision of this Agreement which is prohibited
------------
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
<PAGE>
9.10 Integration. This Agreement and the other Loan Documents represent
-----------
the agreement of each Fund, each Borrower, the Administrative Agent and the
Lenders with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.
9.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
-------------
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
9.12 Submission To Jurisdiction; Waivers. Each Fund and each Borrower
-----------------------------------
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the
State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such Fund
or such Borrower at its address set forth in Section 9.2 or at such other
address of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential
damages.
9.13 Acknowledgments. Each Fund and each Borrower hereby acknowledges
---------------
that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to such Fund or such Borrower arising
out of or in connection
<PAGE>
with this Agreement or any of the other Loan Documents, and the
relationship between Administrative Agent and Lenders, on one hand, and
each Fund and each Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Funds, the Borrowers and the Lenders.
9.14 WAIVERS OF JURY TRIAL. EACH FUND, EACH BORROWER, THE ADMINISTRATIVE
---------------------
AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY
IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
9.15 Non-Recourse. The Administrative Agent and the Lenders hereby
------------
agree for the benefit of UST and each and every shareholder, trustee, director
and officer of the Funds and the Borrowers and any successor, assignee, heir,
estate, executor, administrator or personal representative of any such
shareholder, trustee, director and officer (a "Non-Recourse Person") that: (a)
-------------------
no Non-Recourse person shall have any personal liability for any obligation of
any Fund or Borrower under this Agreement or any Loan Document or any other
instrument or document delivered pursuant hereto or thereto (except, in the case
of any shareholder, to the extent of its investment in the Borrower); (b) no
claim against any Non-Recourse Person may be made for any obligation of any Fund
or Borrower under this Agreement or any Loan Document or other instrument or
document delivered pursuant hereto or thereto, whether for payment of principal
of, or interest on, the Loans or for any fees, expense, or other amounts payable
by any Fund or Borrower hereunder or thereunder, or otherwise; and (c) the
obligations of each Borrower under this Agreement or any Loan Document or other
instrument or document delivered pursuant hereto or thereto are enforceable
solely against such Borrower and its properties and assets.
9.16 Waiver of Conflicts; Confidentiality. (a) Each Fund, on its own
------------------------------------
behalf or on behalf of the investment portfolios thereof which are Borrowers,
acknowledges that each of the Administrative Agent and each Lender and their
respective affiliates (collectively, the "Bank Parties") may be providing debt
------------
financing, equity capital or other services (including financial advisory
services) to other companies in respect of which such Funds and Borrowers may
have conflicting interests regarding the transactions described herein and
otherwise. Except as may otherwise be permitted herein, the Bank Parties will
not disclose Confidential Information obtained from such Funds and/or Borrowers
by virtue of the transactions contemplated by this Agreement or their other
relationships with such Funds and/or Borrowers in connection with the
performance by each of the Bank Parties of services for other companies, and
each of the Bank Parties will not disclose any such Confidential Information to
other companies. Such Funds and Borrowers also acknowledge that no Bank Party
has any obligation to use in connection with the transactions contemplated by
this Agreement, or to furnish to any Fund or Borrower, confidential information
obtained from other companies. The provisions of this Section 9.16(a) shall
survive the termination of this Agreement.
(b) For purposes of this Section, "Confidential Information" shall mean
------------------------
all
<PAGE>
information received from any of the Funds, the Borrowers or UST relating to any
of them or their business, other than any such information that is available to
the Administrative Agent or any Lender on a nonconfidential basis other than as
a result of a breach of this Agreement. Each of the Administrative Agent and
each Lender agrees to maintain the confidentiality of, and not to use the
Confidential Information, except that Confidential Information may be disclosed
(i) to its and its Affiliates' directors, officers and employees including
without limitation accountants, legal counsel and other advisors for purposes
relating to the transactions contemplated by this Agreement or for conducting
legitimate audits (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Confidential
Information and will have agreed to keep such Confidential Information
confidential), (ii) to the extent requested by any legal or regulatory authority
having or claiming jurisdiction over such Person, (iii) to the extent required
by applicable laws or regulations or by any subpoena or similar legal process,
(iv) to any other party to this Agreement for purposes relating to the
transactions contemplated hereby, (v) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (vi) subject to an agreement containing
provisions substantially the same as those of this subsection, to any Assignee
or Participant or any prospective Assignee or Participant which executes such
agreement, or (vii) with the written consent of the Borrowers. Any Person
required to maintain the confidentiality of Confidential Information as provided
in this Section shall be considered to have complied with its obligation to do
so if such Person has used its reasonable best efforts to maintain the
confidentiality of such Information. The provisions of this Section 9.16(b)
shall survive the termination of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first written above.
THE CHASE MANHATTAN BANK, as
Administrative Agent and as a Lender
By: /s/ Gail Weiss
----------------
Name: Gail Weiss
Title: Vice President
<PAGE>
1999 EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
AND EXCELSIOR INSTITUTIONAL TRUST
CREDIT AGREEMENT SIGNATURE PAGE
EXCELSIOR FUNDS, INC., on behalf of
Money Fund
Government Money Fund
Treasury Money Fund
Short-Term Government Securities Fund
Intermediate-Term Managed Income Fund
Managed Income Fund
Blended Equity Fund
Energy and Natural Resources Fund
Value and Restructuring Fund
Small Cap Fund
International Fund
Emerging Markets Fund
Pacific/Asia Fund
Pan European Fund
Latin America Fund
Large Cap Growth Fund
Real Estate Fund
By: /s/ Frederick S. Wonham
-----------------------
Name: Frederick S. Wonham
Title: President
<PAGE>
1999 EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
AND EXCELSIOR INSTITUTIONAL TRUST
CREDIT AGREEMENT SIGNATURE PAGE
EXCELSIOR TAX-EXEMPT FUNDS, INC., on behalf of
Tax-Exempt Money Fund
Short-Term Tax-Exempt Securities Fund
Intermediate-Term Tax-Exempt Fund
Long-Term Tax-Exempt Fund
New York Intermediate-Term Tax-Exempt Fund
California Tax-Exempt Income Fund
New York State Tax-Exempt Money Fund
By: /s/ Frederick S. Wonham
-----------------------
Name: Frederick S. Wonham
Title: President
EXCELSIOR INSTITUTIONAL TRUST, on behalf of
Equity Fund
Income Fund
Total Return Bond Fund
International Equity Fund
Optimum Growth Fund
Value Equity Fund
By: /s/ Frederick S. Wonham
-----------------------
Name: Frederick S. Wonham
Title: President
<PAGE>
1999 EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
AND EXCELSIOR INSTITUTIONAL TRUST
CREDIT AGREEMENT SIGNATURE PAGE
MELLON BANK, N.A.
By: /s/ John R. Cooper
------------------
Name: John R. Cooper
Title: Vice President
<PAGE>
1999 EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
AND EXCELSIOR INSTITUTIONAL TRUST
CREDIT AGREEMENT SIGNATURE PAGE
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, New York Branch
By: /s/ Lillian T. Lum
------------------
Name: Lillian T. Lum
Title: Director
By: /s/ Kenneth R. Crespo
---------------------
Name: Kenneth R. Crespo
Title: Vice President
<PAGE>
1999 EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
AND EXCELSIOR INSTITUTIONAL TRUST
CREDIT AGREEMENT SIGNATURE PAGE
THE BANK OF NOVA SCOTIA
By: /s/ James R. Trimble
--------------------
Name: James R. Trimble
Title: Managing Director
<PAGE>
1999 EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
AND EXCELSIOR INSTITUTIONAL TRUST
CREDIT AGREEMENT SIGNATURE PAGE
THE BANK OF NEW YORK
By: /s/ Robert F. Darmanin
----------------------
Name: Robert F. Darmanin
Title: Vice President
<PAGE>
1999 EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
AND EXCELSIOR INSTITUTIONAL TRUST
CREDIT AGREEMENT SIGNATURE PAGE
DEN DANSKE BANK
By: /s/ George Neoffercas
---------------------
Name: George Neoffercas
Title: Assistant Vice President
By: /s/ John A. O'Neill
-------------------
Name: John A. O'Neill
Title: Vice President
<PAGE>
SCHEDULE I
----------
BORROWERS & ALLOCATIONS
-----------------------
BORROWER PRO RATA ALLOCATION
- -------- -------------------
I. Excelsior Funds, Inc.
Money Fund 12.36%
Government Money Fund 10.09%
Treasury Money Fund 5.28%
Short-Term Government Securities Fund 0.76%
Intermediate-Term Managed Income Fund 1.77%
Managed Income Fund 2.65%
Blended Equity Fund 9.70%
Energy and Natural Resources 0.68%
Value and Restructuring Fund 8.73%
Small Cap Fund 0.60%
International Fund 2.84%
Emerging Markets Fund 0.10%
Pacific/Asia Fund 0.71%
Pan European Fund 1.59%
Latin America Fund 0.17%
Large Cap Growth Fund 3.50%
Real Estate Fund 0.44%
<PAGE>
II. Excelsior Tax-Exempt Funds, Inc.
Tax-Exempt Money Fund 16.23%
Short-Term Tax-Exempt Securities Fund 0.48%
Intermediate-Term Tax-Exempt Fund 3.81%
Long-Term Tax-Exempt Fund 2.05%
New York Intermediate-Term Tax-Exempt Fund 1.86%
California Tax-Exempt Income Fund 0.76%
New York Tax-Exempt Money Fund 3.53%
III. Excelsior Institutional Trust
Equity Fund 2.30%
Income Fund 0.93%
Total Return Bond Fund 3.18%
International Equity Fund 1.19%
Optimum Growth Fund 1.16%
Value Equity Fund 0.55%
<PAGE>
SCHEDULE II
-----------
COMMITMENTS, ADDRESSES, ETC.
----------------------------
Amount of
Name and Address of Lender Commitment
- -------------------------- ------------
THE CHASE MANHATTAN BANK $45,000,000
270 Park Avenue
New York, New York 10017
Attention: Christine Herrick
Telephone: (212) 270-9747
Fax: (212) 270-1789
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, New York Branch $45,000,000
1211 Avenue of the Americas
New York, NY 10036
Attention: Jay S. White
Telephone: (212) 852-6315
Fax: (212) 852-6156
THE BANK OF NOVA SCOTIA $45,000,000
One Liberty Plaza
New York, NY 10006
Attention: John Morale
Telephone: (212) 225-5062
Fax: (212) 225-5286
MELLON BANK, N.A. $45,000,000
One Mellon Bank Center, Room 4425
Pittsburgh, PA 15258
Attention: Marla De Yulis
Telephone: (412) 236-9141
Fax: (412) 234-9047
DEN DANSKE BANK $45,000,000
280 Park Avenue
New York, NY 10017
Attention: George Neofitidis
Telephone: (212) 984-8439
Fax: (212) 599-2493
<PAGE>
THE BANK OF NEW YORK $25,000,000
One Wall Street
New York, NY 10286
Attention: William Stanton
Telephone: (212) 635-6828
Fax: (212) 635-6348
<PAGE>
SCHEDULE III
------------
INVESTMENT MANAGEMENT AGREEMENTS
--------------------------------
<PAGE>
SCHEDULE IV
-----------
CUSTODIAN AGREEMENTS
--------------------
<PAGE>
SCHEDULE V
----------
DISTRIBUTION AGREEMENTS
-----------------------
<PAGE>
SCHEDULE VI
-----------
SHAREHOLDER SERVICES AGREEMENTS
-------------------------------
<PAGE>
EXHIBIT 2.5(e)
--------------
NON-NEGOTIABLE
FORM OF NOTE
$___________________ New York, New York
________, ________,
FOR VALUE RECEIVED, the undersigned Fund, on behalf of the Series designated
below (the "Borrower"), hereby promises to pay to the order of
--------
__________________________, at the office of The Chase Manhattan Bank, as
administrative agent for the Lenders (the "Lenders") under the Credit Agreement,
-------
as hereinafter defined (in such capacity, the "Administrative Agent"), located
--------------------
at 270 Park Avenue, New York, New York 10017, in lawful money of the United
States of America and in immediately available funds, on the Maturity Date the
principal amount of (a) __________________________DOLLARS
($______________________), or, if less (b) the aggregate unpaid principal amount
of all Loans made by the Lenders to the Borrower pursuant to subsection 2.1 of
the Credit Agreement, as hereinafter defined.
The Fund, on behalf of the Borrower, further agrees to pay interest in like
money at such office on the unpaid principal amount hereof from time to time
outstanding from the Closing Date at the applicable rates per annum set forth in
subsection 2.7 of the Credit Agreement referred to below until any such amount
shall become due and payable (whether at the stated maturity, by acceleration or
otherwise), and thereafter on such overdue amount at the rate per annum set
forth in subsection 2.7(c) of the Credit Agreement until paid in full (both
before and after judgment). Interest shall be payable in arrears on each
applicable Interest Payment Date, commencing on the first such date to occur
after the date hereof and terminating upon payment (including prepayment) in
full of the unpaid principal amount hereof; provided that interest accruing on
--------
any overdue amount shall be payable on demand.
Anything in this Note to the contrary notwithstanding, the Borrower shall
be liable hereunder only for Loans borrowed by it under the Credit Agreement and
shall not be liable for the borrowings of any other Borrower under the Credit
Agreement. The sole source of repayment of the principal of and interest on
each Loan hereunder and the other obligations with respect thereto made with
respect to the Borrower shall be the revenues and assets of such Borrower, and
not the revenue and assets of the Fund (as defined below) of which such Borrower
is a series.
As set forth in Sections 2.5(f) and 9.15 of the Credit Agreement, no Non-
Recourse person defined therein shall have any personal liability under or by
reason of this Note, the Credit Agreement or the Loan Documents, and all
obligations of the Borrower hereunder and thereunder are enforceable solely
against the Borrower and the Borrower's assets and properties.
The holder of this Note is authorized to endorse on the schedule annexed
hereto and made a part hereof the date and amount of each Loan made to the
Borrower pursuant to the Credit Agreement and the date and amount of each
payment or prepayment of principal thereof. Each
<PAGE>
such endorsement shall constitute prima facie evidence of the accuracy of the
----- -----
information endorsed. The failure to make any such endorsement shall not affect
the obligations of the Borrower in respect of such Loan.
This Note (a) is one of the Notes referred to in the Credit Agreement, dated
as of December 27, 1999 (as amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"), among the each of the open-end registered
----------------
investment companies a party thereto (each, a "Fund"), on behalf of one or more
series or portfolios of such Fund, the Lenders and the Administrative Agent, (b)
is subject to the provisions of the Credit Agreement and (c) is subject to
optional and mandatory prepayment in whole or in part as provided in the Credit
Agreement.
<PAGE>
Upon the occurrence of one or more Events of Default, all amounts then
remaining unpaid on this Note shall become, or may be declared to be,
immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK.
[NAME OF FUND] on behalf
of [NAME OF BORROWER]
By:___________________________
Name:
Title:
<PAGE>
Schedule A to Note
------------------
LOANS AND REPAYMENTS OF LOANS
============================================================================
AMOUNT OF UNPAID
PRINCIPAL PRINCIPAL
AMOUNT OF OF LOANS BALANCE OF NOTATION
DATE LOANS REPAID LOANS MADE BY
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
============================================================================
<PAGE>
EXHIBIT 2.16(a)
---------------
FORM FOR DESIGNATION OF NEW BORROWERS
_________ __, ____
The Chase Manhattan Bank, as Administrative Agent
[List Lenders]
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of December 27,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement") by and among each registered open-end management investment
- -----------------
company party thereto (each a "Fund") on behalf of the series or portfolios
----
thereof, which series and portfolios are listed on Schedule I (each such series
----------
or portfolio, a "Borrower" and, collectively, the "Borrowers"), (ii) the several
-------- ---------
banks and other financial institutions from time to time parties to this
Agreement (the "Lenders") and (iii) THE CHASE MANHATTAN BANK, as Administrative
-------
Agent. Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Credit Agreement.
[NAME OF FUND](the "Fund") on behalf of [NAME OF NEW BORROWER] (the "Series")
------
hereby requests pursuant to Section 2.16 of the Credit Agreement that the Series
be admitted as an additional Borrower under the Credit Agreement. Furthermore,
the Fund on behalf of the New Borrower requests that Schedule I to the Credit
----------
Agreement be replaced with the form of Schedule I attached hereto.
----------
The Fund, on behalf of the New Borrower, hereby represents and warrants to
the Administrative Agent and each Lender that as of the date hereof and after
giving effect to the admission of the New Borrower as an additional Borrower
under the Credit Agreement: (i) the representations and warranties set forth in
Section 3 of the Credit Agreement are true and correct with respect to the New
Borrower; (ii) the New Borrower is in compliance in all material respects with
all the terms and provisions set forth in the Credit Agreement on its part to be
observed or performed as of the date hereof and after giving effect to the
admission; (iii) no Default or Event of Default with respect to the New
Borrower, nor any event which with the giving of notice or the expiration of any
applicable grace period or both would constitute such a Default or Event of
Default with respect to the New Borrower has occurred and is continuing.
The New Borrower agrees to be bound by the terms and conditions of the Credit
Agreement in all respects as a Borrower thereunder and hereby assumes all of the
obligations of a Borrower thereunder.
The New Borrower hereby gives the Administrative Agent and each Lender notice
that a copy of the relevant Trust's Agreement and Declaration of Trust
(including any amendments
<PAGE>
thereto) is on file with the Secretary of State of the Commonwealth of
Massachusetts. The Administrative Agent and each Lender hereby acknowledge that
this designation of a New Borrower, the Credit Agreement and the Loan Documents,
and any other document related hereto or thereto, are each executed by the
trustees of the relevant Trust as trustees, and not individually, and that the
obligations of or arising out of this designation, the Credit Agreement and the
Loan Documents, and any other document related hereto or thereto, are not
binding upon any of the trustees or officers or shareholders individually, but
are binding only upon the assets and property of the relevant Borrower
(including the New Borrower).
Please indicate your assent to the admission of each Series as an additional
Borrower under the Credit Agreement and the replacement of Schedule I to the
----------
Credit Agreement by signing below where indicated.
[FUND on behalf of New
Borrower]
By:____________________________________
Name:
Title:
AGREED AND ACCEPTED:
THE CHASE MANHATTAN BANK
as Administrative Agent and as a Lender
By:__________________________________
Name:
Title:
[Signature block for each Lender follows]
<PAGE>
EXHIBIT 9.6 (c)
---------------
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of December 27, 1999
(as amended, supplemented or otherwise modified from time to time, the "Credit
------
Agreement"), by and among each registered open-end management investment company
- ---------
parties thereto (each a "Fund" and collectively the "Funds") on behalf of the
-----
series or portfolios of such Fund, which series and portfolios are listed on
Schedule I thereto (each such series or portfolio, a "Borrower" and,
- ---------- --------
collectively, the "Borrowers"), (ii) the several banks and other financial
---------
institutions from time to time parties to this Agreement (the "Lenders") and
-------
(iii) THE CHASE MANHATTAN BANK, a New York banking corporation, as
administrative agent for the Lenders hereunder (in such capacity, the
"Administrative Agent"). Unless otherwise defined herein, terms defined in the
- ---------------------
Credit Agreement and used herein shall have the meanings ascribed to them in the
Credit Agreement.
_________ (the "Assignee") and __________ (the "Assignor") agree as
follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee without
recourse to the Assignor, and the Assignee hereby irrevocably purchases and
assumes from the Assignor without recourse to the Assignor, as of the Effective
Date (as defined below) the interest described in Schedule 1 hereto (the
"Assigned Interest") in and to the Assignor's rights and obligations under the
Credit Agreement.
2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to or in any connection with the Credit Agreement or
with respect to the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement, any other Loan Document or any
other instrument or document furnished pursuant thereto, other than that the
Assignor has not created any adverse claim upon the interest being assigned by
it hereunder and that such interest is free and clear of any such adverse claim;
(b) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of any Borrower, or any other obligor or the
performance or observance by any Borrower, or any other obligor of any of their
respective obligations under the Credit Agreement or any other Loan Document or
any other instrument or document furnished pursuant hereto or thereto; and (c)
attaches any Notes held by it evidencing the Assigned Interest and (i) requests
that the Administrative Agent, upon request by the Assignee, exchange the
attached Notes for a new Note or Notes payable to the Assignee and (ii) if the
Assignor has retained any interest in the Aggregate Commitment, requests that
the Administrative Agent exchange the attached Notes for a new Note or Notes
payable to the Assignor, in each case in amounts which reflect the assignment
being made hereby (and after giving effect to any other assignments which have
become effective on the Effective Date).
3. The Assignee (a) represents and warrants that it is legally authorized to
enter into this Assignment and Acceptance; (b) confirms that it has received a
copy of the Credit Agreement, together with copies of such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (c) agrees that it will,
independently and without reliance upon the Assignor, the Administrative Agent
or any other
<PAGE>
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement, the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; (d) appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers and discretion under the Credit Agreement, the other
Loan Documents or any other instrument or document furnished pursuant hereto or
thereto as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are incidental thereto; and (e) agrees that it will
perform in accordance with its terms all the obligations which by the terms of
the Credit Agreement are required to be performed by it as a Lender including,
if it is organized under the laws of a jurisdiction outside the United States,
its obligation pursuant to subsection 2.11(b) of the Credit Agreement.
4. The effective date of this Assignment and Acceptance shall be
________________(the "Effective Date"). Following the execution of this
--------------
Assignment and Acceptance, it will be delivered to the Administrative Agent for
acceptance by it and recording by the Administrative Agent pursuant to the
Credit Agreement, effective as of the Effective Date (which shall not, unless
otherwise agreed to by the Administrative Agent, be earlier than five Business
Days after the date of such acceptance and recording by the Administrative
Agent).
5. Upon such acceptance and recording, from and after the Effective Date, the
Administrative Agent shall make all payments in respect of the Assigned Interest
(including payments of principal, interest, fees and other amounts) to the
Assignee whether such amounts have accrued prior to the Effective Date or accrue
subsequent to the Effective Date. The Assignor and the Assignee shall make all
appropriate adjustments in payments by the Administrative Agent for periods
prior to the Effective Date or with respect to the making of this assignment
directly between themselves.
6. From and after the Effective Date, (a) the Assignee shall be a party to
the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and under the
other Loan Documents and shall be bound by the provisions thereof and (b) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
7. This Assignment and Acceptance shall be governed by and construed in
accordance with the substantive laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule 1 hereto.
<PAGE>
SCHEDULE 1 TO ASSIGNMENT AND ACCEPTANCE
RELATING TO THE CREDIT AGREEMENT
DATED AS OF DECEMBER 27, 1999
Name of Assignor:
Name of Assignee:
Effective Date of Assignment:
Principal Commitment Percentage
Amount Assigned Assigned/1/
$ ___________ _______________ %
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By:_______________________ By:_______________________
Name: Name:
Title: Title:
Accepted and Consented To:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By:_______________________
Name:
Title:
- -------------------------
Calculate the Commitment Percentage that is assigned to at least 15 decimal
places and show as a percentage of the aggregate commitments of all Lenders.
<PAGE>
EXHIBIT (i)
Drinker Biddle & Reath LLP
One Logan Square
18/th/ and Cherry Streets
Philadelphia, PA 19103-6996
(215) 988-2700
January 4, 2000
Excelsior Funds, Inc.
73 Tremont Street
Boston, MA 02108-3913
Re: Excelsior Funds, Inc. - Advisor Shares of Common Stock
------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Excelsior Funds, Inc., a Maryland
corporation (the "Company"), in connection with the registration by the Company
of its shares of common stock, par value $.001 per share, under the Securities
Act of 1933, as amended (the "1933 Act").
The Articles of Incorporation of the Company, as amended and
supplemented (the "Articles of Incorporation"), authorize the issuance of
35,000,000,000 shares of common stock. The Board of Directors of the Company has
the power to classify or reclassify any authorized but unissued shares of common
stock into one or more classes of shares and to divide and classify shares of
any class into one or more series of such class. Pursuant to such authority, the
Board of Directors (i) has previously classified 28,375,000,000 of such
authorized shares into 22 classes (the "Classes"), each Class representing
interests in a separate portfolio of investments (the "Portfolios") and (ii) has
classified each Class of shares into one, two or three series of shares (the
"Series"). The Classes and Series are referred to herein as "Shares." The Board
has previously authorized the issuance of Shares to the public. Currently, the
Company is authorized to issue Shares of the following Classes and Series:
<PAGE>
Excelsior Funds, Inc.
Page 2
Portfolio Authorized Shares
--------- -----------------
Money Fund
A Shares....................................... 2,000,000,000
A-Special Series 1 Shares...................... 1,000,000,000
Government Money Fund
B Shares....................................... 2,000,000,000
B-Special Series 1 Shares...................... 1,000,000,000
Blended Equity Fund
C Shares....................................... 750,000,000
C-Special Series 1 Shares...................... 1,000,000,000
C-Special Series 2 Shares...................... 500,000,000
Managed Income Fund
D Shares....................................... 375,000,000
D-Special Series 1 Shares...................... 375,000,000
International Fund
F Shares....................................... 375,000,000
F-Special Series 1 Shares...................... 500,000,000
Treasury Money Fund
G Shares....................................... 2,000,000,000
G-Special Series 1 Shares...................... 500,000,000
Small Cap Fund
H Shares....................................... 500,000,000
H-Special Series 1 Shares...................... 500,000,000
Energy and Natural Resources Fund
I Shares....................................... 500,000,000
I-Special Series 1 Shares...................... 500,000,000
Productivity Enhancers Fund
J Shares....................................... 500,000,000
J-Special Series 1 Shares...................... 500,000,000
<PAGE>
Excelsior Funds, Inc.
Page 3
Portfolio Authorized Shares
--------- -----------------
Environmentally-Related Products and Services Fund
K Shares....................................... 500,000,000
K-Special Series 1............................. 500,000,000
Aging of America Fund
L Shares....................................... 500,000,000
L-Special Series 1............................. 500,000,000
Communication and Entertainment Fund
M Shares....................................... 500,000,000
M-Special Series 1............................. 500,000,000
Value and Restructuring Fund
N Shares....................................... 500,000,000
N-Special Series 1............................. 500,000,000
N-Special Series 2............................. 500,000,000
Global Competitors Fund
O Shares....................................... 500,000,000
O-Special Series 1............................. 500,000,000
Latin America Fund
P Shares....................................... 500,000,000
P-Special Series 1............................. 500,000,000
Pacific/Asia Fund
Q Shares....................................... 500,000,000
Q-Special Series 1............................. 500,000,000
Pan European Fund
R Shares....................................... 500,000,000
R-Special Series 1............................. 500,000,000
Short-Term Government Securities Fund
S Shares....................................... 500,000,000
S-Special Series 1............................. 500,000,000
<PAGE>
Excelsior Funds, Inc.
Page 4
Portfolio Authorized Shares
--------- -----------------
Intermediate-Term Managed Income Fund
T Shares....................................... 500,000,000
T-Special Series 1............................. 500,000,000
T-Special Series 2............................. 500,000,000
Large Cap Growth Fund
U Shares....................................... 500,000,000
U-Special Series 2............................. 500,000,000
Real Estate Fund
V Shares....................................... 500,000,000
Emerging Markets Fund
W Shares....................................... 500,000,000
Unclassified Shares................................. 6,625,000,000
--------------
Total.......................................... 35,000,000,000
We have reviewed the Articles of Incorporation, Amended and Restated
By-Laws (the "By-Laws"), resolutions of the Company's Board of Directors and
shareholders, and such other legal and factual matters as we have deemed
appropriate. We have also reviewed the Company's Registration Statement on Form
N-1A under the 1933 Act (the "Registration Statement"), as amended through Post-
Effective Amendment No. 35 thereto.
This opinion is based exclusively on the Maryland General Corporation
Law and the federal law of the United States of America.
We have also assumed the following for this opinion:
1. Shares have been and will continue to be issued in accordance
with the Company's Articles of Incorporation and By-Laws and resolutions of the
Company's Board of Directors and shareholders relating to the creation,
authorization and issuance of Shares.
2. Shares have been and will continue to be issued against
consideration therefor as described in the Registration Statement, and such
consideration will have been in each case at least equal to the applicable net
asset value and the applicable par value.
<PAGE>
Excelsior Funds, Inc.
Page 5
3. The number of outstanding Shares will not exceed the number of
Shares authorized for the particular Class or Series.
4. Prior to effectiveness of Post-Effective Amendment No. 35 under
the Securities Act of 1933, as amended, the Company will have filed with the
Maryland Department of Assessments and Taxation all necessary documents to
authorize, classify and establish the Shares.
On the basis of the foregoing, it is our opinion that any Shares
issued and sold after the date hereof will be validly and legally issued, fully
paid and non-assessable by the Company.
We hereby consent to the use of our name and to the references to our
Firm included in the Registration Statement on Form N-1A under the Securities
Act of 1933, as amended (the "1933 Act"), and the Investment Company Act of
1940, as amended, respectively. This consent does not constitute a consent under
section 7 of the 1933 Act, and in consenting to the use of our name and the
references to our Firm we have not certified any part of the Registration
Statement and do not otherwise come within the categories of persons whose
consent is required under said section 7 or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Drinker Biddle & Reath LLP
------------------------------
DRINKER BIDDLE & REATH LLP
<PAGE>
EXHIBIT (j)(2)
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Financial
Statements" and "Independent Auditors" in the Statement of Additional
Information and to the incorporation by reference in Post-Effective Amendment
Number 35 to Registration Statement (Form N-1A, No. 2-92665) of Excelsior Funds,
Inc. of our reports dated May 7, 1999 on the financial statements and financial
highlights included in the 1999 Annual Reports to Shareholders.
/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP
Boston, Massachusetts
January 4, 2000
<PAGE>
EXHIBIT (l)(6)
FORM OF
PURCHASE AGREEMENT
------------------
Excelsior Funds, Inc. (the "Company"), a Maryland corporation, and Edgewood
Services, Inc. ("Edgewood"), a New York corporation, hereby agree with each
other as follows:
1. The Company hereby offers Edgewood and Edgewood hereby purchases two
Advisor Shares each of the Company's Blended Equity, Value and
Restructuring, Intermediate-Term Managed Income and Large Cap Growth
Funds at $10 per share. The Company hereby acknowledges receipt from
Edgewood of funds in the total amount of $80 in full payment for the
Advisor Shares.
2. Edgewood represents and warrants to the Company that the Advisor
Shares are being acquired for investment purposes and not with a view
to the distribution thereof.
IN AGREEMENT WHEREOF, and intending to be legally bound hereby, the parties
hereto have executed this Agreement as of the ____ day of _____________, 1999.
EXCELSIOR FUNDS, INC.
By:__________________________
Title:_______________________
EDGEWOOD SERVICES, INC.
By:__________________________
Title:_______________________
<PAGE>
EXHIBIT (m)
EXCELSIOR FUNDS, INC.
DISTRIBUTION PLAN
-----------------
November 19, 1999
This Distribution Plan (the "Plan") was adopted by the Board of Directors
of Excelsior Funds, Inc. (the "Company") in conformance with Rule 12b-1 under
the Investment Company Act of 1940 (the "Act") on November 19, 1999.
Section 1. Payments. The Company may compensate its Distributor (or any
--------- --------
other person) for services relating to the offering and sale of the Advisor
Shares Class of each of the Company's Value and Restructuring, Blended Equity,
Large Cap and Intermediate-Term Managed Income Funds (all such shares,
hereinafter called "Advisor Shares" and all such Funds hereinafter called
"Funds"). Payments by the Company under the Plan will be calculated daily and
paid monthly at a rate or rates set from time to time by the Company's Board of
Directors, provided that no rate set by the Board for any Fund may exceed the
annual rate of .25% of the average daily net asset value of Advisor Shares of
such Fund. For purposes of determining the compensation payable under the Plan,
the net asset value of the outstanding Advisor Shares of the respective Fund
shall be computed in the manner specified in the Company's prospectuses and
statements of additional information for such Advisor Shares.
Section 2. Payments Under the Plan. Payments to the Distributor under
--------- -----------------------
Section 1 of the Plan will be to compensate the Distributor for its services
which are intended to result in the sale of the Advisor Shares. Such amounts may
be spent by the Distributor on any activities or expenses primarily intended to
result in the sale of the Advisor Shares, including, without limitation: (a)
direct out-of-pocket promotional expenses incurred by the Distributor in
connection with the advertising and marketing of Advisor Shares; and (b)
payments to one or more securities dealers, financial institutions or other
industry professionals and financial intermediaries, such as but not limited to
investment advisers, accountants and estate planning firms, including affiliates
of the Distributor (severally, a "Distribution Organization") for distribution
assistance. As used herein, "direct out-of-pocket promotional expenses" include
without limitation amounts spent by the Distributor in connection with
advertising via radio, television, newspapers, magazines and otherwise;
preparing, printing and mailing sales materials, brochures and prospectuses
(except for prospectuses used for regulatory purposes or for distribution to
existing shareholders); and other out-of-pocket expenses incurred in connection
with the promotion of the Advisor Shares.
Payments made by a particular Fund must be for distribution services
rendered for or on behalf of such Fund. However, joint distribution financing
with respect to Advisor Shares of the Funds (which financing may also involve
other investment portfolios or companies that are affiliated persons of such a
person, or affiliated persons of the Distributor) shall be permitted in
<PAGE>
accordance with applicable regulations of the Securities and Exchange Commission
as in effect from time to time.
Section 3. Reports of Distributor. So long as the Plan is in effect, the
--------- ----------------------
Distributor shall provide to the Company's Board of Directors, and the Directors
shall review, at least quarterly, a written report of the amounts expended
pursuant to the Plan and the purposes for which such expenditures were made.
Section 4. Approval of Plan. The Plan will become effective immediately,
--------- ----------------
as to any series of Advisor Shares, upon its approval by a majority of the Board
of Directors, including a majority of the Directors who are not "interested
persons" (as defined in the Act) of the Company and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements
entered into in connection with the Plan, pursuant to a vote cast in person at a
meeting called for the purpose of voting on the approval of the Plan.
Section 5. Continuance of Plan. The Plan shall continue in effect for so
--------- -------------------
long as its continuance is specifically approved at least annually by the
Company's Board of Directors in the manner described in Section 4.
Section 6. Amendments. The Plan may be amended at any time by the Board of
--------- ----------
Directors provided that (a) any amendment to increase materially the costs which
any series of Advisor Shares may bear for distribution pursuant to the Plan
shall be effective only upon approval by a vote of a majority of the outstanding
Advisor Shares of such series, and (b) any material amendments of the terms of
the Plan shall become effective only upon approval as provided in paragraph 4
hereof.
Section 7. Termination. The Plan is terminable, as to any series of
--------- -----------
Advisor Shares, without penalty at any time by (a) a vote of a majority of the
Directors who are not "interested persons" (as defined in the Act) of the
Company and who have no direct or indirect financial interest in the operation
of the Plan or in any agreements entered into in connection with the Plan, or
(b) a vote of a majority of the outstanding Advisor Shares of such series.
Section 8. Selection/Nomination of Directors. While this Plan is in
--------- ---------------------------------
effect, the selection and nomination of those Directors who are not "interested
persons" (as defined in the Act) of the Company shall be committed to the
discretion of such non-interested Directors.
Section 9. Miscellaneous. The captions in this Agreement are included for
--------- -------------
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
-2-
<PAGE>
Adopted by the Board of Directors of Excelsior Funds, Inc. on November 19,
1999.
-3-
<PAGE>
DISTRIBUTION AGREEMENT
Gentlemen:
We wish to enter into this Distribution Agreement ("Agreement") with you
concerning the provision of distribution services in connection with the Advisor
Shares Class ("Advisor Shares") of the Value and Restructuring, Blended Equity,
Large Cap and Intermediate Term Managed Income Funds offered by Excelsior Funds,
Inc. (the "Company"), of which we are the principal underwriter as defined in
the Investment Company Act of 1940 (the "Act") and the exclusive agent for the
continuous distribution of said Advisor Shares.
The terms and conditions of this Agreement are as follows:
Section 1. You agree to provide reasonable assistance in connection
with the distribution of Advisor Shares to your Clients as requested from time
to time by us, which assistance may include without limitation forwarding sales
literature and advertising provided by us for Clients, and such other similar
services as we may reasonably request to the extent you are permitted to do so
under applicable statutes, rules and regulations.
Section 2. You will provide such office space and equipment,
telephone facilities and personnel (which may be any part of the space,
equipment and facilities currently used in your business, or any personnel
employed by you) as may be reasonably necessary or beneficial in order to
provide the aforementioned services and assistance to Clients.
Section 3. Neither you nor any of your officers, employees or agents
are authorized to make any representations concerning us or the Advisor Shares
except those contained in the Company's applicable prospectuses and statements
of additional information for the Advisor Shares, copies of which will be
supplied by us to you, or in such supplemental literature or advertising as may
be authorized by us in writing.
Section 4. For all purposes of this Agreement you will be deemed to
be an independent contractor, and will have no authority to act as agent for us
or the Company in any matter or in any respect. By your written acceptance of
this Agreement, you agree to and do release, indemnify and hold us harmless and
the Company harmless from and against any and all direct or indirect liabilities
or losses resulting from requests, directions, actions or inactions of or by you
or your officers, employees or agents regarding your responsibilities hereunder
or the purchase, redemption, transfer of registration of Advisor Shares (or
orders relating to the same) by or on behalf of Clients. You and your employees
will, upon request, be available during normal business hours to consult with us
or our designees concerning the performance of your responsibilities under this
Agreement.
Section 5. In consideration of the services and facilities provided
by you hereunder, we will pay to you, and you will accept as full payment
therefor, a fee at the annual rate of .25% of the average daily net asset value
of the Advisor Shares beneficially owned by your Clients for whom you are the
dealer of record or holder of record (the "Clients' Advisor Shares"), which fee
will be computed daily and payable monthly. For purposes of determining
<PAGE>
the fees payable under this Section 5, the average daily net asset value of the
Clients' Advisor Shares will be computed in the manner specified in the
Company's Registration Statement (as the same is in effect from time to time) in
connection with the computation of the net asset value of the particular Advisor
Shares involved for purposes of purchases and redemptions. The fee rate stated
above may be prospectively increased or decreased by us, in our sole discretion,
at any time upon notice to you. Further, we may, in our discretion and without
notice, suspend or withdraw the sale of Advisor Shares, including the sale of
Advisor Shares for the account of any Client or Clients.
Section 6. Any person authorized to direct the disposition of monies
paid or payable by us pursuant to this Agreement will provide to us and the
Company, and the Company's Directors will review, at least quarterly, a written
report of the amounts so expended and the purposes for which such expenditures
were made. In addition, you will furnish us or our designees with such
information as we or they may reasonably request (including, without limitation,
periodic certifications confirming the provision to Clients of the services
described herein), and will otherwise cooperate with us and our designees
(including, without limitation, any auditors designated by us), in connection
with the preparation of reports to the Company's Board of Directors concerning
this Agreement and the monies paid or payable by us pursuant hereto, as well as
any other reports or filings that may be required by law.
Section 7. We may enter into other similar Agreements with any other
person or persons without your consent.
Section 8. By your written acceptance of this Agreement, you
represent, warrant and agree that this Agreement has been entered into pursuant
to Rule 12b-1 under the Act, and is subject to the provisions of said Rule, as
well as any other applicable rules or regulations promulgated by the Securities
and Exchange Commission.
Section 9. This Agreement will become effective on the date a fully
executed copy of this Agreement is received by us or our designee. Unless sooner
terminated, this Agreement will continue until _____, 2000 and thereafter will
continue automatically for successive annual periods provided such continuance
is specifically approved at least annually by the Company in the manner
described in Section 12. This Agreement is terminable with respect to any series
of Advisor Shares, without penalty, at any time by the Company (which
termination may be by a vote of a majority of the Disinterested Directors as
defined in Section 12 or by vote of the holders of a majority of the outstanding
Advisor Shares of such series) or by us or you upon notice to the other party
hereto. This Agreement will also terminate automatically in the event of its
assignment (as defined in the Act).
Section 10. All notices and other communications to either you or us
will be duly given if mailed, telegraphed, telexed or transmitted by similar
telecommunications device to the appropriate address stated herein, or to such
other address as either party shall so provide the other.
Section 11. This Agreement will be construed in accordance with the
laws of the State of Maryland.
-2-
<PAGE>
Section 12. This Agreement has been approved by vote of a majority of
(i) the Company's Board of Directors and (ii) those Directors of the Company who
are not "interested persons" (as defined in the Act) of the Company and have no
direct or indirect financial interest in the operation of the Distribution Plan
adopted by the Company regarding the provision of distribution services in
connection with the Advisor Shares or in any agreement related thereto cast in
person at a meeting called for the purpose of voting on such approval
("Disinterested Directors").
If you agree to be legally bound by the provisions of this Agreement,
please sign a copy of this letter where indicated below and promptly return it
to us, at the following address: Edgewood Services Inc., 5800 Corporate Drive,
Pittsburgh, Pennsylvania 15237-5829.
Very truly,
EDGEWOOD SERVICES, INC.
Date: By:_____________________________
Name:___________________________
Title:__________________________
Accepted and Agreed to:
[Distribution Organization]
Name: __________________________
Date: ________________ Title:__________________________
Address of Distribution ________________________________
Organization ________________________________
________________________________
-3-
<PAGE>
EXHIBIT (o)
EXCELSIOR FUNDS, INC.
(the "Company")
AMENDED AND RESTATED PLAN PURSUANT TO RULE 18f-3 FOR OPERATION OF
A MULTI-CLASS SYSTEM
--------------------
I. INTRODUCTION
----------------
On February 23, 1995, the Securities and Exchange Commission (the
"Commission") adopted Rule 18f-3 under the Investment Company Act of 1940, as
amended (the "1940 Act"), which permits the creation and operation of a multi-
class distribution structure without the need to obtain an exemptive order under
Section 18 of the 1940 Act. Rule 18f-3, which became effective on April 3, 1995,
requires an investment company to file with the Commission a written plan
specifying all of the differences among classes, including the various services
offered to shareholders, different distribution arrangements for each class,
methods for allocating expenses relating to those differences and any conversion
features or exchange privileges. On May 19, 1995, the Board of Directors of the
Company initially authorized the Company to operate a multi-class distribution
structure in compliance with Rule 18f-3. This Plan pursuant to Rule 18f-3 is
hereby amended and restated as of November 19, 1999.
II. ATTRIBUTES OF CLASSES
--------------------------
A. Generally
---------
The Company is authorized to offer two classes of shares - Shares and
Institutional Shares - in each of the Money, Government Money, Managed Income,
International Fund, Treasury Money, Small Cap, Energy and Natural Resources,
Latin America, Pacific/Asia, Pan European, and Short-Term Government Securities
Funds; the Company is authorized to offer three classes of shares - Shares,
Institutional Shares and Advisor Shares in each of the Blended Equity, Value and
Restructuring and Intermediate-Term Managed Income Funds; and the Company is
authorized to offer two classes of shares - Shares and Advisor Shares in the
Large Cap Growth Fund (each, a "Fund" and, collectively, the "Funds"). The Real
Estate and Emerging Markets Funds are authorized to issue one class of shares -
Shares.
In general, shares of each class shall initially be identical except
for different expense variables (which will result in different total returns
for each class), certain related rights and certain shareholder services. More
particularly, the Shares, Institutional Shares and Advisor Shares of a Fund
shall represent interests in the same portfolio of investments of the Fund, and
shall be identical in all respects, except for: (a) the impact of (i) expenses
assessed to a class pursuant to an Administrative Services Plan ("Services
Plan") adopted for that class, and (ii) any
<PAGE>
other incremental expenses identified from time to time that should be properly
allocated to one class so long as any changes in expense allocations are
reviewed and approved by a vote of the Board of Directors, including a majority
of the non-interested directors; (b) the fact that each class shall vote
separately on any matter submitted to shareholders that pertains to (i) the
Services Plan adopted for that class or (ii) any class expense borne by that
class; (c) the exchange privileges of each class of shares; (d) the designation
of each class of shares of the Fund; and (e) any different shareholder services
relating to a class of shares.
B. Shareholder Servicing Arrangements
----------------------------------
1. Shares
Shares of a Fund shall initially be available for purchase directly by
individuals or by institutions. Shares of a Fund shall be offered without a
sales charge.
Shares of a Fund shall initially be subject to a fee payable to United
States Trust Company of New York, U.S. Trust Company, their affiliates and
correspondent banks, and other institutions (collectively, "Shareholder
Organizations") pursuant to the Services Plan adopted for that class which shall
not initially exceed .40% (on an annual basis) of the average daily net asset
value of the Fund's Shares held by customers of such Shareholder Organizations.
Shareholder services provided under the Services Plan adopted for the
class may include: (i) assisting in processing purchase, exchange and redemption
requests; (ii) transmitting and receiving funds in connection with customer
orders to purchase, exchange or redeem shares; and (iii) providing periodic
statements.
2. Institutional Shares
Institutional Shares of a Fund shall initially be available for
purchase directly by institutions. Institutional Shares of a Fund shall be
offered without a sales charge.
Institutional Shares of a Fund shall initially be subject to a fee
payable to Shareholder Organizations pursuant to the Services Plan adopted for
that class which shall not initially exceed .15% (on an annual basis) of the
average daily net asset value of the Fund's Institutional Shares held by
customers of such Shareholder Organizations.
Shareholder services provided under the Services Plan adopted for the
class may include (i) assisting in processing purchase, exchange and redemption
requests; (ii) transmitting and receiving funds in connection with customer
orders to purchase, exchange or redeem shares; and (iii) providing periodic
statements.
3. Advisor Shares
Advisor Shares of a Fund shall initially be available for purchase by
financial intermediaries, such as financial planners and investment advisers, to
participants in employer-
-2-
<PAGE>
sponsored contribution plans and to investors maintaining certain qualified
accounts at financial institutions and certain other institutional investors.
Advisor Shares of a Fund shall be offered without a sales charge.
Advisor Shares of a Fund shall initially be subject to a fee payable
to Shareholder Organizations pursuant to the Services Plan adopted for that
class which shall not initially exceed .25% (on an annual basis) of the average
daily net asset value of the Fund's Advisor Shares held by customers of such
Shareholder Organizations.
Shareholder services provided under the Services Plan adopted for the
class may include (i) assisting in processing purchase, exchange and redemption
requests; (ii) transmitting and receiving funds in connection with customer
orders to purchase, exchange or redeem shares; and (iii) providing periodic
statements.
C. Distribution Arrangements
-------------------------
Advisor Shares of each Fund shall not be subject to a sales charge but
shall be subject to a fee payable pursuant to the Distribution Plan adopted for
that class which shall not initially exceed .25% (on an annual basis) of the
average daily net asset value of the Fund's outstanding Advisor Shares. Payments
under the Distribution Plan will be used to compensate the Company's distributor
for its services which are intended to result in the sale of Advisor Shares.
D. Shareholder Services
--------------------
1. Exchange Privileges
-------------------
a. Shares
Investors shall initially be permitted to exchange, without an
exchange fee imposed by the Company, their Shares in a Fund for: (i) Shares of
another investment portfolio offered by the Company; (ii) Shares of any
investment portfolio offered by Excelsior Tax-Exempt Funds, Inc.; and (iii)
Shares of any investment portfolio offered by Excelsior Institutional Trust,
provided that such other shares may legally be sold in the state of the
investor's residence.
b. Institutional Shares
Holders of Institutional Shares generally shall initially be permitted
to exchange, without an exchange fee imposed by the Company, their Institutional
Shares in a Fund for Institutional Shares of any investment portfolio offered by
Excelsior Institutional Trust, provided that such other shares may legally be
sold in the state of the investor's residence.
-3-
<PAGE>
c. Advisor Shares
Holders of Advisor Shares generally shall initially be permitted to
exchange, without an exchange fee imposed by the Company, their Advisor Shares
in a Fund for Shares of the Blended Equity, Large Cap Growth, Value and
Restructuring and Intermediate- Term Managed Income Funds provided that such
other shares may legally be sold in the state of the investor's residence.
2. Retirement Plans
----------------
a. Shares, Institutional Shares and Advisor Shares
The Company generally shall initially make Shares, Institutional
Shares and Advisor Shares available for purchase by investors in connection with
the following tax-deferred prototype retirement plans: (i) IRAs (including
"rollovers" from existing retirement plans) for individuals and their spouses;
(ii) profit-sharing and money-purchase plans for corporations and self-employed
individuals and their partners to benefit themselves and their employees; and
(iii) Keogh plans for self-employed individuals.
3. Automatic Investment Program
----------------------------
a. Shares
The Company shall initially offer an automatic investment program
whereby, in general, an investor may arrange to have Shares purchased
automatically by authorizing the Company's transfer agent to withdraw funds from
the investor's bank account.
4. Systematic Withdrawal Plan
--------------------------
a. Shares
The Company shall initially offer a systematic withdrawal plan
whereby, in general, an investor may arrange to have Shares redeemed
automatically.
E. Methodology for Allocating Expenses Between Classes
---------------------------------------------------
Class-specific expenses of a Fund shall be allocated to the specific
class of shares of the Fund. Non-class-specific expenses of a Fund shall be
allocated in accordance with paragraph (c) of Rule 18f-3.
-4-
<PAGE>
EXHIBIT (p)
EXCELSIOR FUNDS, INC.
(the "Company")
CODE OF ETHICS
--------------
I. Legal Requirement.
-----------------
Rule 17j-1(a) under the Investment Company Act of 1940, as amended (the
"1940 Act"), makes it unlawful for any officer or director of the Company in
connection with the purchase or sale by such person of a security "held or to be
acquired" by the Company:
1. To employ any device, scheme or artifice to defraud the Company;
2. To make to the Company any untrue statement of a material fact or
omit to state to the Company a material fact necessary in order
to make the statements made, in light of the circumstances under
which they are made, not misleading;
3. To engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon the Company;
or
4. To engage in any manipulative practice with respect to the
Company.
II. Purpose of the Code of Ethics.
-----------------------------
The Company expects that its officers and directors will conduct their
personal investment activities in accordance with (1) the duty at all times to
place the interests of the Company's shareholders first, (2) the requirement
that all personal securities transactions be conducted consistent with this Code
of Ethics and in such a manner as to avoid any actual or potential conflict of
interest or any abuse of an individual's position of trust and responsibility,
and (3) the fundamental standard that investment company personnel should not
take inappropriate advantage of their positions.
In view of the foregoing, the provisions of Section 17(j) of the 1940 Act,
the "Report of the Advisory Group on Personal Investing" issued by the
Investment Company Institute on May 9, 1994 and the Securities and Exchange
Commission's September 1994 Report on "Personal Investment Activities of
Investment Company Personnel," the Company has determined to adopt this Code of
Ethics on behalf of the Company to specify a code of conduct for certain types
of personal securities transactions which might involve conflicts of interest or
an appearance of impropriety, and to establish reporting requirements and
enforcement procedures.
<PAGE>
III. Definitions.
-----------
A. An "Access Person" means: (1) each director or officer of the Company;
(2) each employee (if any) of the Company (or of any company in a
control relationship to the Company) who, in connection with his or
her regular functions or duties, makes, participates in, or obtains
information regarding the purchase or sale of a security by the
Company or whose functions relate to the making of any recommendations
with respect to such purchases or sales; and (3) any natural person in
a control relationship to the Company who obtains information
concerning recommendations made to the Company with regard to the
purchase or sale of a security.
B. "Restricted Director" or "Restricted Officer" means each director or
officer of the Company who is not also a director, officer, partner,
employee or controlling person of the Company's investment adviser,
custodian, transfer agent or distributor, or of any sub-adviser or
administrator of the Company.
C. An Access Person's "immediate family" includes a spouse, minor
children and adults living in the same household as the Access Person.
D. A security is "held or to be acquired" if within the most recent 15
days it (1) is or has been held by the Company, or (2) is being or has
been considered by the Company or its investment adviser or a sub-
adviser for purchase by the Company. A purchase or sale includes the
writing of an option to purchase or sell.
E. "Exempt Security" means:
1. Securities which the Company's investment portfolios are not
permitted to purchase under the investment objectives and
policies set forth in the Company's then current prospectuses
under the Securities Act of 1933 or the Company's registration
statement on Form N-1A.
2. Securities issued by the Government of the United States (i.e.,
U.S. Treasury securities), short-term debt securities which are
"government securities" within the meaning of section 2(a)(16) of
the 1940 Act (which includes securities of the U.S. Government
and its instrumentalities), bankers' acceptances, bank
certificates of deposit, commercial paper, and shares of
registered open-end investment companies.
3. Securities purchased or sold in any account over which the Access
Person has no direct or indirect influence or control.
4. Securities purchased or sold in a transaction which is non-
volitional on the part of either the Access Person or the
Company.
2
<PAGE>
5. Securities acquired as a part of an automatic dividend
reinvestment plan.
6. Securities acquired upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities, to
--- ----
the extent such rights were acquired from such issuer, and sales
of such rights so acquired.
IV. Policies of the Company Regarding Personal Securities Transactions.
------------------------------------------------------------------
A. General Policy.
--------------
No Access Person of the Company shall engage in any act, practice or
course of business that would violate the provisions of Rule 17j-1(a)
set forth above, or in connection with any personal investment
activity, engage in conduct inconsistent with this Code of Ethics.
B. Specific Policies.
-----------------
1. Restrictions on Personal Securities Transactions By Access
----------------------------------------------------------
Persons Other Than Restricted Directors and Restricted Officers.
---------------------------------------------------------------
a. No Access Person who is not a Restricted Director or
Restricted Officer may buy or sell securities other than
Exempt Securities for his or her personal portfolio or the
portfolio of a member of his or her immediate family without
obtaining oral authorization from the Compliance Officer of
the Company's investment adviser prior to effecting such
-----
security transaction.
A written authorization for such security transaction will
be provided by the investment adviser's Compliance Officer
to the person receiving the authorization (if granted) and
to Chase Global Funds Service Company ("CGFSC") to
memorialize the oral authorization that was granted.
Note: If an Access Person has questions as to whether
purchasing or selling a security for his or her
personal portfolio or the portfolio of a member of his
or her immediate family requires prior oral
authorization, the Access Person should consult the
investment adviser's Compliance Officer for clearance
or denial of clearance to trade prior to effecting any
-----
securities transactions.
b. Pre-clearance approval under paragraph (a) will expire at
the close of business on the trading day after the date on
which oral authorization is received, and the Access Person
is required to renew clearance for the transaction if the
trade is not completed before the authority expires.
3
<PAGE>
c. No clearance will be given to an Access Person other than a
Restricted Director or Restricted Officer to purchase or
sell any security (1) on a day when any portfolio of the
Company has a pending "buy" or "sell" order in that same
security until that order is executed or withdrawn or (2)
when the investment adviser's Compliance Officer has been
advised by the investment adviser or a sub-adviser that the
same security is being considered for purchase or sale for
any portfolio of the Company.
2. Restrictions on Personal Securities Transactions by Restricted
--------------------------------------------------------------
Directors and Restricted Officers.
---------------------------------
The Company recognizes that a Restricted Director and a
Restricted Officer do not have on-going, day-to-day involvement
with the operations of the Company. In addition, it has been the
practice of the Company to give information about securities
purchased or sold by the Company or considered for purchase and
sale by the Company to Restricted Directors and Restricted
Officers in materials circulated more than 15 days after such
securities are purchased or sold by the Company or are considered
for purchase or sale by the Company. Accordingly, the Company
believes that less stringent controls are appropriate for
Restricted Directors and Restricted Officers, as follows:
a. The securities pre-clearance requirement contained in
paragraph IV.B.1.a. above shall only apply to a Restricted
Director or Restricted Officer if he or she knew or, in the
ordinary course of fulfilling his or her official duties as
a director or officer, should have known, that during the
fifteen day period before the transaction in a security
other than an Exempt Security or at the time of the
transaction that the security purchased or sold by him or
her other than an Exempt Security was also purchased or sold
by the Company or considered for the purchase or sale by the
Company.
b. If the pre-clearance provisions of the preceding paragraph
apply, no clearance will be given to a Restricted Director
or Restricted Officer to purchase or sell any security (1)
on a day when any portfolio of the Company has a pending
"buy" or "sell" order in that same security until that order
is executed or withdrawn or (2) when the investment
adviser's Compliance Officer has been advised by the
investment adviser or a sub-adviser that the same security
is being considered for purchase or sale for any portfolio
of the Company.
4
<PAGE>
V. Procedures.
----------
A. In order to provide the Company with information to enable it to
determine with reasonable assurance whether the provisions of this
Code are being observed by its Access Persons:
1. Each Access Person of the Company other than a Restricted
Director or Restricted Officer shall direct his or her broker to
supply to the Compliance Officer of CGFSC, on a timely basis,
duplicate copies of confirmations of all securities transactions
in which the person has, or by reason of such transaction
acquires any direct or indirect beneficial ownership/1/ and
copies of periodic statements for all securities accounts.
2. Each Access Person of the Company, other than a director who is
not an "interested person" (as defined in the 1940 Act), shall
submit reports in the form attached hereto as Exhibit A to CGFSC,
showing all transactions in securities other than Exempt
Securities in which the person has, or by reason of such
transaction acquires, any direct or indirect beneficial
ownership./2/ Such reports shall be filed no later than 10 days
after the end of each calendar quarter.
3. Each director who is not an "interested person" of the Company
shall submit the same quarterly report as required under
paragraph 2 to CGFSC, but only for a transaction in a security
other than an Exempt Security where he or she knew at the time of
the transaction or, in the ordinary course of fulfilling his or
her official duties as a director or officer, should
_____________________
1. You will be treated as the "beneficial owner" of a security under this policy
only if you have a direct or indirect pecuniary interest in the security.
(a) A direct pecuniary interest is the opportunity, directly or
indirectly, to profit, or to share the profit, from the transaction.
(b) An indirect pecuniary interest is any nondirect financial interest,
but is specifically defined in the rules to include securities held by
members of your immediate family sharing the same household;
securities held by a partnership of which you are a general partner;
securities held by a trust of which you are the settlor if you can
revoke the trust without the consent of another person, or a
beneficiary if you have or share investment control with the trustee;
and equity securities which may be acquired upon exercise of an option
or other right, or through conversion.
For interpretive guidance on this test, you should consult counsel.
2. See footnote 1 above.
5
<PAGE>
have known that during the 15-day period immediately preceding or
after the date of the transaction, such security is or was
purchased or sold, or considered for purchase or sale, by the
Company.
4. CGFSC shall notify each Access Person of the Company who may be
required to make reports pursuant to this Code that such person
is subject to this reporting requirement and shall deliver a copy
of this Code to each such person.
5. CGFSC shall review the reports received, and as appropriate
compare the reports with the pre-clearance authorization
received, and report to the Company's Board of Directors:
a. with respect to any transaction that appears to evidence a
possible violation of this Code; and
b. apparent violations of the reporting requirement stated
herein.
6. The Board shall consider reports made to it hereunder and shall
determine whether the policies established in Sections IV and V
of this Code of Ethics have been violated, and what sanctions, if
any, should be imposed on the violator, including but not limited
to a letter of censure, suspension or termination of the
employment of the violator, or the unwinding of the transaction
and requiring such person to disgorge any profits to the Company.
The Board shall review the operation of this Code of Ethics at
least once a year.
7. The Company's investment adviser, sub-advisers and principal
underwriter shall adopt, maintain and enforce separate codes of
ethics with respect to its personnel in compliance with
Rule 17j-l and Rule 204-2(a)(12) of the Investment Advisers Act
of 1940 or Section 15(f) of the Securities Exchange Act of 1934,
as applicable. Any Access Person who is subject to the Code of
Ethics adopted by the Company's investment adviser, sub-advisers
or principal underwriter that includes securities transaction
preclearance and securities transaction reporting requirements
shall submit the requisite reports to such investment adviser,
sub-advisers or principal underwriter and shall not be subject to
this Code of Ethics. The Company's investment adviser, sub-
advisers and principal underwriter shall forward to CGFSC and the
Company's counsel copies of such codes and all future amendments
and modifications thereto.
8. At each quarterly Board of Directors' meeting, the investment
adviser, sub-advisers and principal underwriter of the Company
shall report to the Company's Board of Directors:
a. any reported securities transaction that occurred during the
prior
6
<PAGE>
quarter that may have been inconsistent with the provisions
of the codes of ethics adopted by the Company's investment
adviser, sub-advisers or principal underwriter; and
b. all disciplinary actions/3/ taken in response to such
violations.
9. At least once a year, the Company's investment adviser, sub-
advisers and principal underwriter shall provide to the Board a
report which contains (a) a summary of existing procedures
concerning personal investing by advisory persons and any changes
in the procedures during the past year and (b) an evaluation of
current compliance procedures and a report on any recommended
changes in existing restrictions or procedures based upon the
Company's experience under this Code of Ethics, industry
practices, or developments in applicable laws and regulations.
10. This Code, the code of the investment adviser, sub-advisers and
principal underwriter, a copy of each report by an Access Person,
any written report hereunder by CGFSC, the Company's investment
adviser, sub-advisers or principal underwriter, and lists of all
persons required to make reports shall be preserved with the
Company's records for the period required by Rule 17j-l.
VI. Certification.
-------------
Each Access Person will be required to certify annually that he or she has
read and understood this Code of Ethics, and will abide by them. Each Access
Person will further certify that he has disclosed or reported all personal
securities transactions required to be disclosed or reported under the Code of
Ethics. A form of such certification is attached hereto as Exhibit B.
The Board of Directors of
Excelsior Funds, Inc.
________________
3. Disciplinary action includes but is not limited to any action that has a
material financial effect upon the employee, such as fining, suspending, or
demoting the employee, imposing a substantial fine or requiring the disgorgement
of profits.
7
<PAGE>
Exhibit A
EXCELSIOR FUNDS, INC.
Securities Transaction Report
For the Calendar Quarter Ended____________________________
(month/day/year)
To: Chase Global Funds Service Company, as Co-Administrator of the above listed
Company
During the quarter referred to above, the following transactions were
effected in securities of which I had, or by reason of such transactions
acquired, direct or indirect beneficial ownership, and which are required to be
reported pursuant to the Code of Ethics of the Company:
<TABLE>
<CAPTION>
Number of Nature of Broker/Dealer
Shares or Dollar Amount Transaction or Bank
Date of Principal of (Purchase, Through Whom
Security Transaction Amount Transaction Sale, Other) Price Effected
- ---------- ----------- --------- ------------- ------------ ----- -------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
This report (i) excludes transactions with respect to which I had no
direct or indirect influence or control, (ii) excludes other transactions not
required to be reported, and (iii) is not an admission that I have or had any
direct or indirect beneficial ownership in the securities listed above.
Signature: _______________________
Print Name: _______________________
A-1
<PAGE>
Exhibit B
EXCELSIOR FUNDS, INC.
ANNUAL CERTIFICATE
Pursuant to the requirements of the Code of Ethics of Excelsior Funds,
Inc. (the "Company"), the undersigned hereby certifies as follows:
1. I have read the Company's Code of Ethics.
2. I understand the Code of Ethics and acknowledge that I am subject
to it.
3. Since the date of the last Annual Certificate (if any) given
pursuant to the Code of Ethics, I have reported all personal
securities transactions required to be reported under the
requirements of the Code of Ethics.
Date: _____________________________ ______________________________
Print Name
______________________________
Signature
B-1
