<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
<PAGE>
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[FUNDS' LETTERHEADS]
August 3, 1998
Dear SG Cowen Funds Shareholder:
A combined Special Meeting of Shareholders (the "Meeting") of all seven SG Cowen
Funds will be held on September 17, 1998 to consider primarily the approval of
new investment advisory agreements between each of the Funds and SG Cowen
Securities Corporation. Shareholders of record as of July 21, 1998 will be
eligible to vote at the Meeting.
Approval of these new advisory agreements is required as a result of Societe
Generale's acquisition of Cowen & Company ("Cowen"), the former investment
adviser to the Funds, which included Cowen's prior investment advisory
agreements. Cowen's asset management business has been transferred to SG Cowen
Securities Corporation ("SG Cowen"), a subsidiary of Societe Generale. SG Cowen
has acted as the new investment adviser to the Funds since the acquisition and
will continue to serve in this capacity if the new advisory agreements are
approved by each Fund's shareholders.
You should be aware of the following:
Advisory fee rates charged to the Funds under the new advisory agreements
will be identical to the fees charged under the prior advisory agreements.
SG Cowen has agreed to manage the Funds in strict accordance with each
Fund's investment objective, policies and restrictions as set forth in
their respective prospectuses and statements of additional information.
The Board of Directors of each Fund recommends that shareholders vote "FOR"
approval of the new advisory agreements.
Not voting your proxy will have the same effect as a vote "AGAINST" the
approval of the new advisory agreements.
Please sign and mail the enclosed proxy cards as soon as possible. If you are a
shareholder of more than one SG Cowen Fund, please sign and mail an enclosed
proxy card for each of those Funds. If you have questions about the new advisory
agreements or about voting your shares, please contact our proxy solicitor,
MacKenzie Partners, Inc.
toll-free at (800) 322-2885.
On behalf of the Boards of Directors of each Fund,
Sincerely,
/ sig cut /
<PAGE>
SG COWEN INCOME + GROWTH FUND, INC.
SG COWEN STANDBY RESERVE FUND, INC.
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
SG COWEN LARGE CAP VALUE FUND (of SG Cowen Series Funds, Inc.)
SG COWEN INTERMEDIATE FIXED INCOME FUND (of SG Cowen Funds, Inc.)
SG COWEN GOVERNMENT SECURITIES FUND (of SG Cowen Funds, Inc.)
SG COWEN OPPORTUNITY FUND (of SG Cowen Funds, Inc.)
NOTICE OF THE COMBINED SPECIAL MEETING OF SHAREHOLDERS
To Be Held September 17, 1998
The combined special meeting of shareholders of each of the funds or series
of a fund listed above (each a "Fund," and collectively, the "Funds") will be
held at the offices of the Funds, Financial Square, New York, New York 10005 on
September 17, 1998 commencing at 11:00 a.m. (the "Special Meeting").
The Special Meeting is being held to consider and vote on the following
matters for each Fund, as indicated in the table below and more fully described
under the corresponding Proposals in the accompanying joint proxy statement, and
such other matters as may properly come before the meetings or any adjournments
thereof:
PROPOSAL I: To consider the approval of new investment advisory
agreements between each of the Funds and SG Cowen Securities
Corporation
PROPOSAL II: To consider the ratification of the selection of Ernst &
Young LLP as independent public accountants for the Funds
The close of business on July 21, 1998 has been fixed as the record date
for the determination of the shareholders of each Fund entitled to notice of,
and to vote at, the Special Meeting. You are cordially invited to attend the
Special Meeting.
This notice and related proxy material are first being mailed to
shareholders on or about August 3, 1998. This proxy is being solicited on behalf
of the Board of Directors of each Fund.
By Order of the Board of Directors of each Fund,
Rodd M. Baxter, Secretary
WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED VOTER INSTRUCTION CARD AND MAIL IT PROMPTLY IN THE
ENCLOSED ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE
NEED BE AFFIXED IF THE VOTER INSTRUCTION CARD IS MAILED IN THE UNITED STATES.
New York, New York, August 3, 1998
<PAGE>
SG COWEN INCOME + GROWTH FUND, INC.
SG COWEN STANDBY RESERVE FUND, INC.
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
SG COWEN LARGE CAP VALUE FUND (of SG Cowen Series Funds, Inc.)
SG COWEN INTERMEDIATE FIXED INCOME FUND (of SG Cowen Funds, Inc.)
SG COWEN GOVERNMENT SECURITIES FUND (of SG Cowen Funds, Inc.)
SG COWEN OPPORTUNITY FUND (of SG Cowen Funds, Inc.)
Financial Square
New York, New York 10005
JOINT PROXY STATEMENT FOR THE COMBINED
SPECIAL MEETING OF SHAREHOLDERS
To Be Held September 17, 1998
This joint proxy statement ("Joint Proxy Statement") is being furnished in
connection with the solicitation of proxies by the Board of Directors (each a
"Board" and collectively the "Boards") of SG Cowen Income + Growth Fund, Inc.
(the "Income + Growth Fund"), SG Cowen Standby Reserve Fund, Inc. (the "Standby
Fund"), SG Cowen Standby Tax-Exempt Reserve Fund, Inc. (the "Tax-Exempt Fund"),
SG Cowen Large Cap Value Fund (the "Large Cap Fund) (a separate series of SG
Cowen Series Funds, Inc.), SG Cowen Intermediate Fixed Income Fund (the "Income
Fund"), SG Cowen Government Securities Fund (the "Government Fund") and SG Cowen
Opportunity Fund (the "Opportunity Fund") (the latter three Funds each being a
separate series of SG Cowen Funds, Inc.) (each a "Fund," and collectively, the
"Funds") for use at the combined special meeting of the respective shareholders
of each Fund to be held at the offices of the Funds, Financial Square, New York,
New York 10005 on September 17, 1998, at 11:00 a.m. (the "Special Meeting") and
at any adjournments of the Special Meeting. This Joint Proxy Statement and
accompanying proxy card or cards ("Proxy") is expected to be mailed to
shareholders on or about August 3, 1998.
The Special Meeting is being held to consider and vote on the following
matters for each Fund, as indicated in the table below and described more fully
under the corresponding Proposals discussed herein, and such other matters as
may properly come before the meetings or any adjournments thereof:
PROPOSAL I: To consider the approval of new investment advisory
agreements between each of the Funds and SG Cowen Securities
Corporation
PROPOSAL II: To consider the ratification of the selection of Ernst &
Young LLP as independent public accountants for the Funds
A Notice of the Special Meeting of shareholders and Proxy accompany this
Joint Proxy Statement. Proxy solicitations will be made primarily by mail, but
solicitations may also be made by telephone, telegraph or in person by officers
or agents of the Funds. All costs of solicitation, including (a) printing and
mailing of this Joint Proxy Statement and accompanying material, (b) the
reimbursement of brokerage firms and others for their expenses in forwarding
solicitation material to the beneficial owners of the Funds' shares, (c) payment
of MacKenzie Partners, Inc. for its services in soliciting Proxies
(approximately $35,000), and (d) supplementary solicitations to submit Proxies,
will be borne by SG Cowen Securities Corporation.
<PAGE>
The Annual Report of each Fund containing audited financial statements for
the fiscal year ended September 30, 1997 (the Standby Fund only) or November 30,
1997 (all other Funds) and the Semi-Annual Report of each Fund (collectively,
the "Reports") have previously been furnished to the shareholders of the
respective Funds. An additional copy of each Report will be furnished without
charge upon request by writing to the Funds at the address set forth on the
cover of this Joint Proxy Statement or by calling 1-800-262-7116.
If the enclosed Proxy is properly executed and returned in time to be voted
at the Special Meeting, the shares represented thereby will be voted in
accordance with the instructions marked on the Proxy. If no instructions are
marked on the Proxy with respect to a specific Proposal, the Proxy will be voted
"FOR" the approval of such Proposal and in accordance with the judgment of the
persons appointed as proxies upon any other matter that may properly come before
the Special Meeting. Any shareholder giving a Proxy has the right to attend the
Special Meeting to vote his or her shares in person (thereby revoking any prior
Proxy) and also the right to revoke the Proxy at any time by written notice
received by the applicable Fund prior to the time it is voted.
In the event that a quorum is present at the Special Meeting with respect
to a Fund but sufficient votes to approve the Proposal are not received, the
persons named as proxies may propose one or more adjournments of the Special
Meeting to permit further solicitation of Proxies. Any such adjournment will
require the affirmative vote of a majority of those shares represented at the
Special Meeting in person or by Proxy. If a quorum is present, the persons named
as proxies will vote those Proxies that they are entitled to vote "FOR" any
Proposal in favor of an adjournment and will vote those Proxies required to be
voted "AGAINST" any such Proposal against any adjournment. A shareholder vote
may be taken on one or more of the Proposals in the Joint Proxy Statement prior
to any adjournment if sufficient votes have been received and it is otherwise
appropriate. A quorum of shareholders is constituted by the presence in person
or by Proxy of the holders of a majority of the outstanding shares of a Fund
entitled to vote at the Special Meeting. For purposes of determining the
presence of a quorum for transacting business at the Special Meeting,
abstentions and broker "non-votes" (that is, Proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner or other persons entitled to vote shares on a particular matter with
respect to which the brokers or nominees do not have discretionary power) will
be treated as shares that are present but which have not been voted.
Shareholders of record at the close of business on July 21, 1998 (the
"Record Date") are entitled to notice of, and to vote at, the Special Meeting.
As of the Record Date, the following number of shares of each Fund were issued
and outstanding:
Income + Growth Fund............................ __________ shares
Standby Fund.................................... __________ shares
Tax-Exempt Fund ................................ __________ shares
Large Cap Fund.................................. __________ shares
Income Fund..................................... __________ shares
Government Fund................................. __________ shares
Opportunity Fund................................ __________ shares
Information regarding the beneficial ownership of the Funds' shares, as of July
21, 1998, by (i) the only persons known by each Fund to beneficially own more
than five percent of the outstanding shares of the Fund, (ii) the directors of
each Fund, (iii) the executive officers of each Fund, and (iv) the directors and
executive officers of each Fund as a group is set forth in Schedule A to this
Joint Proxy
-2-
<PAGE>
Statement. With respect to the ______ Funds, the officers and directors
collectively own less than 1% of each Fund's outstanding shares.
This Joint Proxy Statement is being used in order to reduce the
preparation, printing, handling and postage expenses that would result from the
use of a separate statement for each Fund and, because shareholders may own
shares of more than one Fund, to avoid burdening shareholders with more than one
proxy statement. Shares of a Fund are entitled to one vote each at the Special
Meeting and fractional shares are entitled to proportionate shares of one vote.
To the extent information relating to common ownership is available to the
Funds, a shareholder that owns of record shares in two or more of the Funds will
receive a package containing a Joint Proxy Statement and Proxies for the Funds
in which such shareholder is a record owner. If the information relating to
common ownership is not available to the Funds, a shareholder that beneficially
owns shares in two or more Funds may receive two or more packages each
containing a Joint Proxy Statement and a Proxy for each Fund in which such
shareholder is a beneficial owner. Thus, if a Proposal is approved by
shareholders of one Fund and disapproved by shareholders of other Funds, the
Proposal will be implemented for the Fund that approved the Proposal and will
not be implemented for any Fund that did not approve the Proposal. Therefore, it
is essential that shareholders complete, date, sign and return each enclosed
Proxy.
In order that your shares may be represented, you are requested to:
indicate your instructions on the Proxy or Proxies;
date and sign the Proxy or Proxies;
mail the Proxy or Proxies promptly in the enclosed envelope; and
allow sufficient time for the Proxy or Proxies to be received before the
commencement of the Special Meeting on September 17, 1998.
PROPOSAL I
APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENTS
BETWEEN EACH OF THE FUNDS AND THE "NEW ADVISER"
Background
The Funds. Each of the Income + Growth Fund, the Standby Fund, the
Tax-Exempt Fund, SG Cowen Series Funds, Inc. and SG Cowen Funds, Inc. is a
registered management investment company organized under the laws of the State
of Maryland. The Large Cap Value Fund is a separate series of SG Cowen Series
Funds, Inc. and the Income Fund, the Government Fund and the Opportunity Fund
are each separate series of SG Cowen Funds, Inc. SG Cowen Securities
Corporation, located at Financial Square, New York, N.Y. 10005, serves as the
current investment adviser of each Fund. Funds Distributors, Inc., located at 60
State Street, Suite 1300, Boston, MA 02109, serves as each Fund's principal
underwriter. For the fiscal year ended November 30, 1997, the Opportunity Fund
paid $245 in commissions to Cowen & Company, an "affiliated broker" of the Fund
(as defined in Schedule 14A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")). Such amount constituted .03% of the Fund's
aggregate commissions paid for that year.
The Prior Advisory Agreements. Prior to July 1, 1998, Cowen & Company (the
"Prior Adviser"), through its asset management division, Cowen Asset Management,
served as investment adviser to each of the Funds pursuant to separate
investment advisory agreements with the Funds (the "Prior Advisory Agreements").
The Prior Advisory Agreements with respect to the Opportunity
-3-
<PAGE>
Fund, dated May 9, 1994, and the Government Fund and the Income Fund, each dated
July 11, 1994, were initially approved by the applicable Fund's Board, including
a majority of the directors who are not "interested persons" of the Fund (as
defined under the Investment Company Act of 1940, as amended (the "1940 Act"))
(the "Independent Directors"), on February 3, 1994, and were last renewed by
vote of the Board on November 13, 1997. The Prior Advisory Agreements with
respect to the Income + Growth Fund and the Tax-Exempt Fund, each dated March
29, 1991, were initially approved by the applicable Fund's Board, including a
majority of the Independent Directors, on November 15, 1990, and were last
renewed by vote of the Board on November 13, 1997. The Prior Advisory Agreement
with respect to the Large Cap Fund, dated November 14, 1997, was initially
approved by the Fund's Board, including a majority of the Independent Directors,
on November 13, 1997. The Prior Advisory Agreement with respect to the Standby
Fund, dated June 1, 1998, was initially approved by the Fund's Board, including
a majority of the Independent Directors, with a reduced advisory fee structure
on May 21, 1998. The Prior Advisory Agreements for the Income + Growth Fund, the
Income Fund, the Government Fund and the Opportunity Fund were last submitted
for approval by the respective shareholders of the Funds on April 19, 1994.
For the fiscal year ended November 30, 1997, the Income + Growth Fund and
the Opportunity Fund paid the Prior Adviser $509,586 and $981,026, respectively,
for services rendered pursuant to the applicable Prior Advisory Agreements. For
the fiscal year ended September 30, 1997, the Standby Fund and the Tax-Exempt
Fund paid the Prior Adviser $6,144,043 and $905,499, respectively, for services
rendered pursuant to the applicable Prior Advisory Agreements. The Prior Adviser
waived all investment advisory fees payable by the Income Fund and the
Government Fund for services rendered pursuant to the applicable Prior Advisory
Agreements for the fiscal year ended November 30, 1997.
The Acquisition. On July 1, 1998, pursuant to an Acquisition Agreement,
dated as of February 22, 1998, by and among the Prior Adviser and Cowen
Incorporated, the general partner of the Prior Adviser (collectively, "Cowen"),
and Societe Generale, a banking corporation organized under the laws of France
("SG"), SG purchased certain assets, including the Prior Advisory Agreements,
and assumed certain liabilities of Cowen (the "Acquisition"). Under the terms of
the Acquisition, the Prior Adviser's business was transferred to Societe
Generale Securities Corporation ("SGSC"), a subsidiary of SG, and SGSC was
renamed SG Cowen Securities Corporation (the "New Adviser"). The total amount
involved in the Acquisition was $540 million.
Impact of the Acquisition on the Prior Advisory Agreements. Section 15(a)
of the 1940 Act provides, in pertinent part, that "[i]t shall be unlawful for
any person to serve or act as investment adviser of a registered investment
company, except pursuant to a written contract, which contract, whether with
such registered company or with an investment adviser of such registered
company, has been approved by the vote of a majority of the outstanding voting
securities of such registered company . . . ." Section 15(a)(4) of the 1940 Act
further requires that such written contract provide for automatic termination in
the event of its assignment. Section 2(a)(4) of the 1940 Act defines
"assignment" to include any direct or indirect transfer of a contract by the
assignor.
As discussed above, under the terms of the Acquisition, Cowen transferred
certain of its assets, including the Prior Advisory Agreements, to SG. As such,
the Acquisition resulted in an "assignment" of the Prior Advisory Agreements
within the meaning of Section 2(a)(4) of the 1940 Act, terminating such
agreements according to their respective terms and the 1940 Act as of July 1,
1998.
-4-
<PAGE>
On June 16, 1998, Cowen & Company and SGSC were granted an exemptive order
(the "Exemptive Order") by the Securities and Exchange Commission pursuant to
which new investment advisory agreements between each of the Funds and the New
Adviser (the "New Advisory Agreements") were permitted to be implemented without
shareholder approval beginning on July 1, 1998 and continuing, for a period of
up to 150 days, through the date on which each of the New Advisory Agreements
are approved or disapproved by the respective shareholders of each Fund. Under
the terms of the Exemptive Order, the New Adviser was allowed to receive
advisory fees pursuant to the New Advisory Agreements, provided that such fees
would be held in escrow pending shareholder approval of the New Advisory
Agreements. In accordance with the Exemptive Order, the advisory fees paid by
the Funds to the New Adviser under the New Advisory Agreements have been held in
escrow, and the Funds expect to continue to deposit such fees in escrow until
approval of the New Advisory Agreements by the respective shareholders of the
Funds has been obtained.
Shareholders of the Funds are not being asked to approve or disapprove the
Acquisition; rather, they are being asked under this Proposal to approve and
continue the New Advisory Agreements for the Funds. Other than identification of
the New Adviser, and the execution and termination dates of the agreements, the
New Advisory Agreements (which have been in effect since July 1, 1998) are
identical in form and terms to the Prior Advisory Agreements. The advisory fee
rate charged to the Funds under the Prior Advisory Agreements have continued to
apply under the New Advisory Agreements. In addition, the Funds can expect to
continue to receive the same level of services under the New Advisory Agreements
as they received under the Prior Advisory Agreements. The New Adviser does not
anticipate any changes, nor have there been any changes, in the investment
management personnel who currently provide investment advisory services to the
Funds under the New Advisory Agreements as compared to the personnel who
provided investment advisory services to the Funds under the Prior Advisory
Agreements.
The New Advisory Agreements
Each of the New Advisory Agreements, a form of which is attached to this
Joint Proxy Statement as Exhibit A, became effective as of July 1, 1998, the
date of the consummation of the Acquisition. If shareholders approve the New
Advisory Agreements, each of the agreements will remain in effect for an initial
term of two years from its effective date (unless sooner terminated), and
thereafter shall continue in effect so long as its continuance is specifically
approved at least annually by (i) the Board of the applicable Fund or (ii) a
vote of a majority of the applicable Fund's outstanding voting securities,
provided that in either event the continuance is also approved by a majority of
the Board who are not "interested persons" (as defined in the 1940 Act) of any
party to the agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. All of the terms and provisions of the New
Advisory Agreements, other than identification of the New Adviser, the effective
date and termination date, are the same as those of the Prior Advisory
Agreements.
Under the terms of the New Advisory Agreements, as under the Prior Advisory
Agreements, the New Adviser has agreed to furnish the Funds with investment
advisory services in connection with a continuous investment program for the
Funds, which is to be managed in accordance with the investment objective,
policies and restrictions of the Funds as set forth in each Fund's respective
Prospectus and Statement of Additional Information and in accordance with each
Fund's respective Articles of Incorporation and By-laws. Subject to the
supervision and control of the Boards, the New Adviser has agreed to (a) act in
strict conformity with the Funds' Articles of Incorporation and By-laws, the
1940 Act and the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), (b) manage the portfolio of the Funds in accordance with the Funds'
investment objectives, policies
-5-
<PAGE>
and restrictions, as stated in the Funds' Prospectuses and Statements of
Additional Information as amended from time to time, (c) make general investment
decisions for the Funds, including decisions concerning (i) the specific types
of securities to be held by the Funds and the proportion of the Funds' assets
that should be allocated to such investments during particular market cycles and
(ii) the specific issuers whose securities will be purchased or sold by the
Funds, and (d) supply administrative, clerical and professional support and
general assistance in all aspects of the Funds' operations. In providing these
services, the New Adviser will supervise the Funds' investments generally and
conduct a continual program of evaluation of the Funds' assets. Under the New
Advisory Agreements, as under the Prior Advisory Agreements, the New Adviser
will keep the Funds informed of developments materially affecting the Funds'
investments, and will, on its own initiative, furnish the Funds from time to
time with whatever information the New Adviser believes is appropriate for this
purpose.
The advisory fee rate charged to the Funds under the New Advisory
Agreements is identical to the advisory fee rate charged under the Prior
Advisory Agreements. Under the New Advisory Agreements, the New Adviser is paid
a monthly fee, calculated daily, at the annual rates set forth below:
<PAGE>
Fund Rate
The Income + Growth Fund .75 of 1.00%
The Standby Fund .50 of 1.00% of assets not in
excess of $1.5 billion; .475 of
1.00% of assets over $1.5 billion
but not in excess of $2.5 billion;
and .45 of 1.00% of assets over
$2.5 billion
The Tax-Exempt Fund .50 of 1.00%
The Large Cap Fund .75 of 1.00%
The Income Fund .50 of 1.00%
The Government Fund .60 of 1.00%
The Opportunity Fund .90 of 1.00%
Under the New Advisory Agreements, the New Adviser shall exercise its best
judgment in rendering its advisory services. The New 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 matters to which the New Advisory Agreements
relate, provided that nothing therein shall be deemed to protect or purport to
protect the New Adviser against any liability to the Funds or to its
shareholders to which the New Adviser could otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of the New Adviser's reckless disregard
of its obligations and duties under the New Advisory Agreements.
If approved, each New Advisory Agreement will remain in effect for an
initial two year term (unless sooner terminated), and thereafter shall continue
in effect so long as its continuance is specifically approved at least annually
by (i) the Board of the applicable Fund or (ii) a vote of a majority of the
applicable Fund's outstanding voting securities, provided that in either event
the continuance is also approved by a majority of the Board who are not
"interested persons" (as defined in the 1940 Act) of any party to the agreement,
by vote cast in person at a meeting called for the purpose of voting on such
approval. Like the Prior Advisory Agreements, each New Advisory Agreement will
-6-
<PAGE>
terminate upon assignment by any party and is terminable, without penalty, on 60
days' written notice by the Board or by a "majority" vote of the shareholders of
the Fund (as defined in the 1940 Act) or upon 90 days' written notice by the New
Adviser.
The New Adviser now acts and will continue to act as investment adviser to
fiduciary and other managed accounts and as investment manager, investment
adviser, sub-investment adviser and/or administrator to one or more other
investment companies, and the Funds have no objection to the New Adviser so
acting. In addition, the New Adviser is obligated to pay certain expenses
associated with providing the services contemplated by the New Advisory
Agreements. The Funds bear certain other expenses including compensation of, and
office space for, its officers and employees and the fees of the Boards. The
Funds pay any extraordinary expenses incurred.
The New Adviser
The New Adviser, a corporation organized under the laws of the State of New
York, is an investment adviser registered under the Advisers Act, a
broker-dealer registered under the Exchange Act and a member of several U.S.
stock exchanges, the National Association of Securities Dealers, Inc. and the
Securities Investors Protection Corporation. The New Adviser serves as the U.S.
investment banking and securities underwriting, dealing and brokerage arm of SG,
and provides full-service execution, clearing, deal structuring and
administrative services for its customer base, which is widely distributed
across Europe and the United States. The New Adviser is a wholly-owned
subsidiary of SG which is located at Tour Societe Generale, 17 Cours Valmy,
92972 Paris - La Defense, France. SG, an international banking corporation
organized under the laws of France, is among the largest banks in the world with
offices in over 80 countries. The New Adviser is involved in a broad range of
financial services, including corporate underwriting and strategic advisory
services, institutional sales and trading coverage, industry research and asset
management.
The names, titles and principal occupations of the current directors and
executive officers of the New Adviser are set forth below. Except as indicated,
the business address of the individuals and entities named below is Financial
Square, New York, N.Y. 10005.
Joseph M. Cohen is a Director and Chairman of the Board of the New Adviser.
The principal occupation of Mr. Cohen is to serve as the Chairman of the Board
of the New Adviser.
Mr. Curtis Welling is the Chief Executive Officer and President of the New
Adviser. The principal occupation of Mr. Welling is to serve as the Chief
Executive Officer and President of the New Adviser.
Mr. James Kelly is the Chief Operating Officer of the New Adviser. The
principal occupation of Mr. Kelly is to serve as the Chief Operating Officer of
the New Adviser.
Mr. Ray Moran is the Senior Managing Director of the New Adviser. The
principal occupation of Mr. Moran is to serve as the Senior Managing Director of
the New Adviser.
Mr. James M. Walsh is a Director of the New Adviser. The principal
occupation of Mr. Walsh is to serve as the Head of the Private Client and
Industry Services Group of the New Adviser.
Mr. Jacques Bouhet is a Director of the New Adviser. The principal
occupation of Mr. Bouhet is to serve as the Deputy Chief Executive Officer,
International & Finance Division and a member of the Management Committee of SG.
-7-
<PAGE>
Mr. Jean-Bernard Guillebert is a Director of the New Adviser. The principal
occupation of Mr. Guillebert is to serve as the Counselor to the President of
SG.
Mr. Jean Huet is a Director of the New Adviser. The principal occupation of
Mr. Huet is to serve as the Chief Executive Officer of SG Americas and a member
of the Management Committee of SG.
Mr. Alain Joyet is a Director of the New Adviser. The principal occupation
of Mr. Joyet is to serve as President of SG (Canada) Montreal.
Mr. Gerald Lacaze is a Director of the New Adviser. The principal
occupation of Mr. Lacaze is to serve as a Deputy Director of SG.
Mr. Robert Le Roux is a Director of the New Adviser. The principal
occupation of Mr. Le Roux is to serve as a Director of SG.
Mr. Jean-Paul Oudet is a Director of the New Adviser. The principal
occupation of Mr. Oudet is to serve as a Director of SG and a member of the
Management Committee of SG.
Mr. Yves Tuloup is a Director of the New Adviser. The principal occupation
of Mr. Tuloup is to serve as the Chief Executive Officer of the International &
Finance Division of SG and a member of the Management Committee of SG.
The officers and directors of each Fund, other than James H. Carey, Peter
P. Gill, Martin J. Gruber and Burton J. Weiss, are either officers, directors or
employees of the New Adviser.
Prior to the Acquisition, Joseph M. Cohen, a Director of each Fund, was
Chairman of the Board of Directors and a principal shareholder of Cowen
Incorporated, and a limited partner of Cowen & Company. Creighton H. Peet and
Gerald Kaminsky, who until May 20, 1998 were Directors of the Cowen Standby
Reserve Fund, Inc. and the Cowen Standby Tax-Exempt Reserve Fund, Inc. (now, the
"SG Cowen Standby Reserve Fund, Inc." and the "SG Cowen Standby Tax Exempt
Reserve Fund, Inc.," respectively), similarly were shareholders of Cowen
Incorporated and limited partners of Cowen & Company prior to the Acquisition.
Section 15(f) of the 1940 Act
Section 15 of the 1940 Act provides that when a change of control of an
investment adviser to an investment company occurs, the investment adviser or
any of its affiliated persons may receive an amount or benefit in connection
therewith as long as two conditions are satisfied.
First, no "unfair burden" may be imposed on the Funds as a result of the
transaction relating to the change of control, or any express or implied terms,
conditions or understandings applicable thereto. As defined in the 1940 Act, the
term "unfair burden" includes any arrangement during the two year period after
the change in control whereby the New Adviser (or predecessor or successor
adviser), or any "interested person" (as defined in the 1940 Act) of the New
Adviser, receives or is entitled to receive any compensation, directly or
indirectly, from the Funds or their respective shareholders (other than fees for
bona fide investment advisory or other services), or from any person in
connection with the purchase or sale or other property to, or on behalf of the
Funds (other than fees for bona fide brokerage and principal underwriting
services). The Boards have not been advised by
-8-
<PAGE>
the New Adviser of any circumstances arising from the Acquisition that might
result in an unfair burden being imposed on the Funds.
The second condition is that, during the three year period immediately
following the Acquisition, at least 75% of the members of the Boards of the
Funds must not be "interested persons" (as defined in the 1940 Act) of the New
Adviser (after the Acquisition) or the Prior Adviser within the meaning of the
1940 Act. Since the Acquisition, 75% of the directors of the Funds are not
"interested persons" of the New Adviser or the Prior Adviser.
Recommendation of the Boards
At a meeting of the Boards held on May 21, 1998 called for the purpose of,
among other things, voting on approval of the New Advisory Agreements, the
Boards, including the Independent Directors, unanimously approved the New
Advisory Agreements. In reaching this conclusion, the Boards obtained from the
New Adviser such information as they deemed reasonably necessary to approve the
New Adviser as investment adviser to the Funds and considered a number of
factors, including, among other things, the continuity of the management of the
Funds after the Acquisition; the continuity of personnel from the Prior Adviser
to the New Adviser; the nature, scope and quality of services that the New
Adviser will provide to the Funds; the quality of the personnel of the New
Adviser; the New Adviser's commitment to continue to provide such services in
the future; the maintenance of the identical advisory fee rate that was
incorporated in the Prior Advisory Agreements; the materially and substantively
identical nature of the Prior Advisory Agreements and New Advisory Agreements;
and the potential impact of the Acquisition on the foregoing.
Based on these factors, the Boards determined that the New Advisory
Agreements are fair and reasonable and in the best interest of the Funds and
their respective shareholders. Therefore, after careful consideration, the Board
of each Fund, including the Independent Directors, recommends that the
respective shareholders of the Funds vote "FOR" the approval of the New Advisory
Agreements as set forth in this Proposal. If the New Advisory Agreements are
approved by the shareholders, such approval will ratify the approval by the
Boards on May 21, 1998.
Vote Required
Approval of each New Advisory Agreement requires the affirmative vote of a
"majority" of the outstanding shares of the applicable Fund. "Majority" (as
defined in the 1940 Act) means the lesser of (a) 67% or more of the shares of
the applicable Fund present at the Special Meeting if the holders of more than
50% of the outstanding shares of the applicable Fund are present in person or by
proxy, or (b) more than 50% of the outstanding shares of the applicable Fund.
Because abstentions and broker non-votes are not treated as shares voted, any
abstentions and broker non-votes would have no impact on approval of this
Proposal.
If the New Advisory Agreements are approved by the Funds' respective
shareholders, each agreement will terminate two years after its effective date
absent annual continuance. If a New Advisory Agreement is not approved at the
Special Meeting, the advisory fees held in escrow with respect to such agreement
will be paid over to the applicable Fund and the Fund's Board will consider
appropriate action.
-9-
<PAGE>
THE BOARD OF EACH FUND, INCLUDING THE INDEPENDENT DIRECTORS,
RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" APPROVAL OF PROPOSAL I.
ANY UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL II
RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FUNDS
The second Proposal to be submitted at the Special Meeting is the
ratification or rejection of the selection by the Boards of Ernst & Young LLP as
independent public accountants for the Funds for the current fiscal year. At a
meeting held on May 21, 1998, the Board of each Fund, including the Independent
Directors, approved the selection of Ernst & Young LLP as independent public
accountants for the Funds for the current fiscal year. Ernst & Young LLP has
served as independent public accountants for each of the Funds since
commencement of the Funds' respective operations and has informed the Funds that
it has no material direct or indirect financial interest in any Fund. A
representative of Ernst & Young LLP will be available by telephone at the
Special Meeting and will be available to respond to appropriate questions.
Vote Required
Ratification of the selection of Ernst & Young LLP as independent public
accountants for the Funds requires the affirmative vote of a "majority" of each
Fund (as defined under Proposal I above).
THE BOARD OF EACH FUND, INCLUDING THE INDEPENDENT DIRECTORS,
RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" RATIFICATION OF
PROPOSAL II. ANY UNMARKED PROXIES WILL BE SO VOTED.
OTHER MATTERS WHICH MAY COME BEFORE THE SPECIAL MEETING;
SHAREHOLDER PROPOSALS
The Boards are not aware of any other matters that will come before the
Special Meeting. Should any other matter properly come before the Special
Meeting, it is the intention of the persons named in the accompanying Proxy to
vote the Proxy in accordance with their judgment on such matters.
The Funds do not hold regular shareholders' meetings. Shareholders wishing
to submit proposals for inclusion in a proxy statement for a subsequent
shareholders' meeting should send their written proposals to the Secretary of
the respective Fund, as appropriate, at the address set forth on the cover of
this Joint Proxy Statement. Proposals must be received at a reasonable time
prior to the date of a meeting of shareholders to be considered for inclusion in
the materials for the applicable Fund's meeting. Timely submission of a proposal
does not, however, necessarily mean that the proposal will be included.
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE SPECIAL MEETING
AND WHO WISH TO HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
-10-
<PAGE>
By Order of each Board of Directors,
Rodd M. Baxter, Secretary
August 3, 1998
THE BOARD OF DIRECTORS OF EACH FUND HOPES THAT SHAREHOLDERS WILL ATTEND THE
SPECIAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY OR VOTING INSTRUCTION CARD IN THE
ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR
THE SPECIAL MEETING AND YOUR COOPERATION WILL BE APPRECIATED.
-11-
<PAGE>
SCHEDULE A
BENEFICIAL OWNERSHIP OF SHARES
Shares % of Shares
Beneficially Beneficially
Name and Address Owned Owned
- ---------------- ----- -----
The number of shares beneficially owned by each director or executive officer
noted above is determined under rules of the Securities and Exchange Commission,
and the information is not necessarily indicative of beneficial ownership for
any other purpose. Unless otherwise indicated, each person has sole investment
and voting power (or shares such power with his or her spouse) with respect to
the shares set forth in the above table. The inclusion of any shares deemed
beneficially owned does not constitute an admission of beneficial ownership of
such shares.
<PAGE>
[PROXY CARD]
SG COWEN [ ] FUND
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR SPECIAL MEETING OF
STOCKHOLDERS TO BE HELD ON SEPTEMBER 17, 1998
The undersigned owner of Common Stock, par value $.001 per share (the "Common
Stock") of the SG Cowen [ ] Fund (the "Fund") hereby instructs David R. Sarns
and Rodd M. Baxter (Proxies), and each of them, to vote the shares of the Common
Stock which the undersigned is entitled in any capacity to vote at the Special
Meeting of Shareholders of the Fund to be held at 11:00 a.m., local time, on
September 17, 1998 at Financial Square, New York, NY 10005 and at any
adjournment thereof, in the manner directed on the reverse side with respect to
the matters referred to in the Proxy Statement for the Meeting, receipt of which
is hereby acknowledged, and to the Proxies' discretion, upon such matters as may
properly come before the meeting or any adjournment thereof.
Please vote, sign and date this voting instruction and return it in the enclosed
envelope.
These voting instructions will be voted as specified. If no specification is
made for any proposal, this voting instruction will be voted FOR such proposal.
- --------------------------------------------------------------------------------
IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE STRONGLY
URGE YOU TO REVIEW, COMPLETE AND RETURN YOUR BALLOT AS SOON AS POSSIBLE. YOUR
VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------ ------------------------
- ------------------------ ------------------------
- ------------------------ ------------------------
<PAGE>
<TABLE>
[REVERSE SIDE]
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
* THIS VOTING INSTRUCTION CARD IS VALID ONLY WHEN SIGNED AND DATED *
___________________________ THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
PROPOSALS 1 AND 2.
SG COWEN
<S> <C> <C> <C> <C>
For Against Abstain
- ---------------------------
1) To approve or disapprove a new [ ] [ ] [ ]
[ ] FUND Investment Advisory Agreement
between the Fund and SG Cowen
Securities Corporation.
Account Number:
Shares: For Against Abstain
Control Number
2) To approve or disapprove [ ] [ ] [ ]
the selection of Ernst &
Young LLP as independent
public accountants for the Fund.
: 3) To transact such other business as may
properly come before the Meeting or any
adjournment thereof.
This voting instruction card shall be
signed exactly as your name(s)
appear(s) hereon. If signing as an
attorney, executor, guardian or other
representative capacity or as an
officer of a corporation, please add
titles as such. Joint owners must each
sign.
Please be sure to sign and date this Voting Instruction Card. Date
Mark box at right if an address change [ ]
or comment has been noted on the
reverse side of this card.
- ----------------------------------------------------------------
Shareholder sign here Co-owner sign here:
</TABLE>
INVESTMENT MANAGEMENT AGREEMENT
[FUND]
[DATE]
SG Cowen Securities Corporation
[address]
Dear Sirs:
_______________ (the "Fund"), a corporation organized under the laws of the
State of Maryland, herewith confirms its agreement with SG Cowen Securities
Corporation ("SG Cowen"), as follows:
1. Investment Description; Appointment
The Fund desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the limitations specified in its
Articles of Incorporation, as amended, and in its Prospectuses and Statements of
Additional Information as from time to time in effect, and in such manner and to
such extent as may from time to time be approved by the Board of Directors of
the Fund. Copies of the Fund's Prospectuses, Statements of Additional
Information and Articles of Incorporation, as amended, have been or will be
submitted to SG Cowen. The Fund desires to employ and hereby appoints SG Cowen
to act as investment manager to its portfolio (the "Portfolio"). SG Cowen
accepts the appointment and agrees to furnish the services set forth below for
the compensation set forth below.
2. Services as Investment Manager
Subject to the supervision and direction of the Board of Directors of the
Fund, SG Cowen will (a) act in strict conformity with the Fund's Articles of
Incorporation and By-laws, the Investment Company Act of 1940 (the "Act") and
the Investment Advisers Act of 1940, as the same may from time to time be
amended, (b) manage the Portfolio in accordance with the Fund's investment
objective and policies as stated in the Fund's Prospectus and Statement of
Additional Information as from time to time in effect, (c) make general
investment decisions for the Fund including decisions concerning (i) the
specific types of securities to be held by the Fund and the proportion of the
Fund's assets that should be allocated to such investments during particular
market cycles and (ii) the specific issuers whose securities will be purchased
or sold by the Fund, [(iii) the extent to which taxable securities will be
purchased for and held by the Fund, (iv) the appropriate maturity of its
portfolio investments (v) the appropriate average weighted maturity of its
portfolio in light of current market conditions]* and (d) supply office
facilities (which may be in SG Cowen's own offices); statistical and research
data; data
- --------
* Note that the bracketed text is omitted from the New Advisory Agreement and
the Prior Advisory Agreement for all Funds, with the exception of the
Standby Tax-Exempt Reserve Fund, Inc.
<PAGE>
processing services; clerical, [accounting and bookkeeping]* services; internal
auditing and legal services; internal executive and administrative services;
stationery and office supplies; preparation of reports to shareholders of the
Fund; preparation of tax returns, reports to and filings with the Securities and
Exchange Commission and state Blue Sky authorities; calculation of the net asset
value of shares of the Fund; and general assistance in all aspects of the Fund's
operations. In providing those services, SG Cowen will supervise the Fund's
investments generally and conduct a continual program of evaluation of the
Fund's assets.
In connection with the performance of its duties under this Agreement, it
is understood that SG Cowen will from time to time employ or associate with
itself such person or persons as SG Cowen may believe to be particularly fitted
to assist it in the performance of this Agreement, it being understood that the
compensation of such person or persons shall be paid by SG Cowen and that no
obligation may be incurred on the Fund's behalf in any such respect. SG Cowen, a
limited partnership formed under the laws of the state of New York, will notify
the Fund of any change in its membership within a reasonable time after such
change.
3. Information Provided to the Fund; Books and Records
(a) SG Cowen will keep the Fund informed of developments materially
affecting the Fund, and will, on its own initiative, furnish the Fund from time
to time with whatever information SG Cowen believes is appropriate for this
purpose.
(b) In compliance with the requirements of Rule 31a-3 under the Act, SG
Cowen hereby agrees that all records which it maintains for the Fund are the
property of the Fund and further agrees to surrender promptly to the Fund any of
such records upon the Fund's request.
4. Standard of Care
SG Cowen shall exercise its best judgment in rendering the services listed
in paragraph 2 above. SG Cowen shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates, provided that nothing herein shall be
deemed to protect or purport to protect SG Cowen against any liability to the
Fund or to its shareholders to which SG Cowen could otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of SG Cowen's reckless disregard of its
obligations and duties under this Agreement.
Any person, even though also a partner, officer, employee, or agent of SG
Cowen, who may be or become a Director, officer, employee or agent of the Fund,
shall be deemed, when rendering services to the Fund or acting on any business
of the Fund, to be rendering such services to or acting solely for the Fund and
not as a Director, officer, employee, or agent or one under the control or
direction of SG Cowen even though paid by it.
- ----------
* Note that the bracketed text is omitted from both the New Advisory
Agreement and the Prior Advisory Agreement for the Large Cap Fund.
-2-
<PAGE>
5. Compensation
In consideration of the services rendered pursuant to this Agreement, the
Fund will pay SG Cowen on the first business day of each month a fee for the
previous month, calculated daily, at the annual rate of __________% of the
Fund's average daily net assets. The fee for the period from the date the Fund
commences investment operations to the end of the month during which the Fund
commences investment operations shall be prorated according to the proportion
that such period bears to the full monthly period. Upon any termination of this
Agreement before the end of a month, the fee for such part of that month shall
be prorated according to the proportion that such period bears to the full
monthly period and shall be payable upon the date of termination of this
Agreement. For the purpose of determining fees payable to SG Cowen, the value of
the Fund's net assets shall be computed at the times and in the manner specified
in the Fund's Prospectus and the Statement of Additional Information as from
time to time in effect.
6. Expenses
SG Cowen will bear all expenses in connection with the performance of its
services under this Agreement. The Fund will bear certain other expenses to be
incurred in its operation, including: taxes, interest, brokerage fees and
commissions, if any; fees of directors of the Fund who are not officers or
employees of SG Cowen; Securities and Exchange Commission fees and state Blue
Sky qualification fees; management, advisory and administration fees; charges of
custodians and transfer and dividend disbursing agents; [outside accounting and
bookkeeping expenses;]* certain insurance premiums; outside auditing and legal
expenses; costs of maintenance of corporate existence; costs attributable to
investor services, including, without limitation, telephone and personnel
expenses; costs of preparing and printing prospectuses and statements of
additional information for regulatory purposes and for distribution to existing
shareholders; costs of shareholders' reports and meetings of the shareholders,
officers or Board of Directors of the Fund; and any extraordinary expenses.
7. Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the Fund (including fees
pursuant to this Agreement, but excluding interest, taxes, brokerage expenses,
an applicable portion of distribution expenses and, with the prior written
consent of the appropriate state securities commissions, extraordinary expenses)
exceed the applicable expense limitation of any state having jurisdiction over
the Fund, SG Cowen will reimburse the excess expense. SG Cowen's expense
reimbursement obligation will be limited to the amount of its fees received
pursuant to this Agreement, however, SG Cowen shall reimburse the Fund for such
excess expenses regardless of the amount of fees paid to it during such fiscal
year to the extent that the securities regulations of any state in which Fund
shares are registered and qualified for sale so require. This expense
reimbursement, if any, will be estimated, reconciled and paid on a monthly
basis. From time to time SG Cowen, in its sole discretion and as it deems
appropriate, may assume certain expenses of the Fund while retaining the ability
to be reimbursed by the Fund for such amounts prior to the end of the fiscal
year.
- -----------
* Note that the bracketed text is omitted from both the New Advisory
Agreement and the Prior Advisory Agreement for each Fund except the Large
Cap Fund.
-3-
<PAGE>
8. Services to Other Companies or Accounts
The Fund understands that SG Cowen now acts and will continue to act as
investment adviser to fiduciary and other managed accounts and now acts and will
continue to act as investment manager, investment adviser, sub-investment
adviser and/or administrator to one or more other investment companies, and the
Fund has no objection to SG Cowen's so acting, provided that whenever the Fund
and one or more other accounts or investment companies advised by SG Cowen have
available funds for investment, investments suitable and appropriate for each
will be allocated in a manner believed to be equitable to each entity. The Fund
recognizes that in some cases this procedure may adversely affect the size of
the position obtainable for the Fund. In addition, the Fund understands that the
persons employed by SG Cowen to assist in the performance of SG Cowen's duties
hereunder will not devote their full time to such service and nothing contained
herein shall be deemed to limit or restrict the right of SG Cowen or any
affiliate of SG Cowen to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature.
9. Term of Agreement
This Agreement shall become effective on the date first written above and
shall continue for an initial two year term and thereafter shall continue
automatically, provided such continuance is specifically approved at least
annually by (a) the Board of Directors of the Fund or (b) a vote of a "majority"
(as defined in the Act) of the Fund's outstanding voting securities, provided
that in either event the continuance is also approved by a majority of the Board
of Directors who are not "interested persons" (as defined in that Act) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable, without
penalty, on 60 days' written notice, by the Board of Directors of the Fund or by
vote of holders of a majority of the Fund's shares, or upon 90 days' written
notice, by SG Cowen. This Agreement will also terminate automatically in the
event of its assignment (as defined in the Act and the Rules thereunder).
10. Amendment of this Agreement
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no material amendment of this Agreement shall be effective until
approved by vote of the holders of a majority of the outstanding voting
securities of the Fund.
11. Miscellaneous
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of this Agreement shall be
held or made invalid by court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be invalidated or rendered unenforceable
thereby. This Agreement shall inure to the benefit of the parties hereto and
their respective successors and shall be governed by New York law without giving
effect to the conflict of law provisions thereof.
-4-
<PAGE>
If the foregoing is in accordance with your understanding indicate your
acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours,
[FUND]
By:_________________________________
Name:
Title:
Accepted and Agreed:
SG COWEN SECURITIES CORPORATION
By:____________________________
Name:
Title:
