<PAGE> 1
As filed with the Securities and Exchange Commission
on March 26, 1997 (to be effective April 1, 1997)
Securities Act File No. 33-5676
Investment Company Act File No 811-4672
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 14 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [ X ]
Amendment No. 15 [ X ]
(Check appropriate box or boxes)
COWEN INCOME + GROWTH FUND, INC.
.................................................................
(Exact Name of Registrant as Specified in Charter)
Financial Square
New York, New York 10005
...................................... ........
(address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 495-6724
Rodd M. Baxter, Esq.
Cowen Income + Growth Fund, Inc.
Financial Square
New York, New York 10005
...........................................
(Name and Address of Agent for Service)
Copies to:
Jon S. Rand, Esq.
Willkie, Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
<PAGE> 2
It is proposed that this filing will become effective (check appropriate box):
[ ] Immediately upon filing pursuant to paragraph (b), or
[ X ] On April 1, 1997 pursuant to paragraph (b), or
[ ] 60 days after filing pursuant to paragraph (a), or
[ ] On _________ pursuant to paragraph (a) of Rule 485
DECLARATION PURSUANT TO RULE 24f-2
Registrant has registered an indefinite number of shares of its Common
Stock, $.001 par value per share, under the Securities Act of 1933 pursuant to
Section (a)(1) of Rule 24f-2 under the Investment Company Act of 1940. The Rule
24f-2 Notice for Registrant's fiscal year ended November 30, 1996 was filed on
January 10, 1997.
2
<PAGE> 3
COWEN INCOME + GROWTH FUND, INC.
FORM N-1A
CROSS REFERENCE SHEET
Part A
Item No. Prospectus Heading
- -------- ------------------
1. Cover Page..................... Cover Page
2. Synopsis....................... The Fund's Expenses
3. Financial Highlights........... Financial Highlights
4. General Description of
Registrant..................... Cover Page;
Investment
Objectives and Policies; and
Additional Information
5. Management of the Fund......... Management of the Fund; and
Investment Objectives and Policies
5.a. Management Discussion of
Fund Performance............... Not Applicable
6. Capital Stock and Other
Securities..................... Dividends,
Distributions and Taxes
and Additional Information
7. Purchase of Securities
Being Offered.................. Cover Page;
Management of the Fund;
Net Asset Value;
Purchase of Shares; and
Dividends, Distributions and Taxes
8. Redemption or Repurchase....... Redemption of Shares
9. Pending Legal Proceedings...... Not applicable
3
<PAGE> 4
10. Cover Page..................... Cover Page
11. Table of Contents.............. Contents
12. General Information and
History........................ Not applicable
13. Investment Objectives and
Policies....................... Investment Objectives
and Policies
Part B Heading in Statement of
Item No. Additional Information
- -------- ----------------------
14. Management of the Fund......... Management of the Fund
15. Control Persons and
Principal Holders of
Securities..................... Management of the Fund
16. Investment Advisory and
Other Services................. Management of the Fund
17. Brokerage Allocation
and Other Practices............ Investment Objectives
and Policies
18. Capital Stock and Other
Securities..................... See in the Prospectus
"Dividends, Distributions
and Taxes" and
"Additional Information"
19. Purchase, Redemption and
Pricing of Securities
Being Offered.................. Purchases and Redemptions;
Investment Objectives and Policies; and
See in the Prospectus
"Purchase of Shares"
20. Tax Status..................... Taxes
4
<PAGE> 5
21. Underwriters................... Cover Page and
Purchases and Redemptions
22. Calculation
of Performance Data............ Performance Information
23. Financial Statements........... Financial Statements
Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
5
<PAGE> 6
- --------------------------------------------------------------------------------
PROSPECTUS APRIL 1, 1997
COWEN
INCOME + GROWTH
FUND, INC.
Financial Square New York, NY
10005-3597 800-262-7116 212-495-6724
Cowen Income + Growth Fund, Inc. is a mutual fund that
seeks a high level of dividend income, to the extent
consistent with prudent investment management, by
investing primarily in income-producing equity securities.
Capital appreciation is a secondary objective of the Fund.
This Prospectus briefly sets forth certain information
about the Fund that investors should know before
investing. Investors are advised to read this Prospectus
and retain it for future reference. For convenience,
certain terms that appear throughout this Prospectus have
been abbreviated: Cowen Income + Growth Fund, Inc. will be
referred to as the "Fund"; Cowen & Company, the Fund's
principal underwriter, will be referred to as "Cowen";
Cowen, through its investment management division, Cowen
Asset Management, will serve as the Fund's investment
manager and in that capacity will be referred to as "Cowen
Asset Management"; and Investors Fiduciary Trust Company,
the Fund's custodian and transfer and dividend agent, will
be referred to as the "Bank" or "IFTC."
Additional information about the Fund, contained in a
Statement of Additional Information, has been filed with
the Securities and Exchange Commission ("SEC") and is
available to investors without charge by calling the
Fund's distributor at 800-262-7116 or 212-495-6724 or by
contacting your account representative. The Statement of
Additional Information bears the same date as this
Prospectus and is incorporated by reference into this
Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
(COWEN LOGO)
COWEN & COMPANY
principal underwriter
CIGF-1 4/97
- --------------------------------------------------------------------------------
<PAGE> 7
CONTENTS
Financial Highlights...........................................................3
The Fund's Expenses............................................................5
Investment Objectives and Policies.............................................6
Management of the Fund.........................................................9
Net Asset Value...............................................................12
Purchase of Shares............................................................12
Redemption of Shares..........................................................17
Dividends, Distributions and Taxes............................................19
Additional Information........................................................20
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS
OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS. THE STATEMENT OF ADDITIONAL
INFORMATION OR THE FUND'S OFFICIAL SALES
LITERATURE IN CONNECTION WITH THE OFFERING
OF THE FUND'S SHARES AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED ON AS HAVING BEEN
AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER IN ANY STATE IN
WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER
MAY NOT LAWFULLY BE MADE.
<PAGE> 8
FINANCIAL HIGHLIGHTS
The following table has been audited by Ernst & Young LLP, the Fund's
independent auditors, whose report thereon for each of the three years in the
period ended July 31, 1994, for the four months ended November 30, 1994 and for
each of the two years in the period ended November 30, 1996 appears in the
Fund's annual report to shareholders, which is incorporated by reference in the
Statement of Additional Information. This information should be read in
conjunction with the financial statements and related notes which also appear in
the Fund's annual report to shareholders as of November 30, 1996. The
information appearing herein for each of the periods prior to July 31, 1992,
also has been audited by Ernst & Young LLP, whose report thereon was
unqualified.
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------
Four
Months
Ended
Years Ended Nov. 30, Nov. Years Ended July 31,
--------------------- 30, ----------------------------
1996 1995 1994 1994 1993 1992
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period............... $ 13.19 $ 10.62 $11.06 $ 12.97 $ 12.85 $ 11.30
------- ------- ------- ------- ------- -------
Income from Investment Operations:
Net Investment Income............. .48 .51 .19 .52 .48 .46
Net Realized and Unrealized Gains
(Losses) on Investments......... 1.74 2.54 (.50) (.44) .68 1.57
------- ------- ------- ------- ------- -------
Net from Investment Operations.... 2.22 3.05 (.31) .08 1.16 2.03
------- ------- ------- ------- ------- -------
Less Distributions:
Dividends from Net Investment
Income.......................... (.52) (.48) (.13) (.52) (.49) (.48)
Distributions from Net Realized
Gains on Investments............ (.49) -- -- (1.47) (.55) --
------- ------- ------- ------- ------- -------
Total Distributions............... (1.01) (.48) (.13) (1.99) (1.04) (.48)
------- ------- ------- ------- ------- -------
Net Asset Value,
End of Period..................... $ 14.40 $ 13.19 $10.62 $ 11.06 $ 12.97 $ 12.85
======= ======= ======= ======= ======= =======
Total Return(4).................... 17.86% 29.50% (8.50%)(2) .28% 9.45% 18.49%
Ratios/Supplemental Data Net Assets
(000 omitted)..................... $52,502 $49,298 $32,104 $34,722 $35,016 $32,956
Ratio of Expenses to Average Net
Assets.......................... 1.24% 1.31% .47%(3) 1.26% 1.33% 2.02%
Ratio of Net Investment Income to
Average Net Assets.............. 3.56% 4.29% 1.65%(3) 4.32% 3.74% 3.84%
Decrease Reflected in Above
Expense Ratios Due to Expense
Reimbursements/ Waivers......... .15% .19% .07%(3) .04% -- --
Portfolio Turnover Rate........... 79% 72% 31% 76% 62% 73%
Average commission rate paid(5).... $ .0612 $ .0596
<CAPTION>
Period
from
September
19,
1986(1)
to
Years Ended July 31, July
-------------------------------------- 31,
1991 1990 1989 1988 1987
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period............... $ 10.59 $ 11.91 $ 9.66 $ 10.70 $10.00
------- ------- ------- ------- -------
Income from Investment Operations:
Net Investment Income............. .44 .47 .42 .45 .32
Net Realized and Unrealized Gains
(Losses) on Investments......... .72 (.85) 2.26 (.78) .69
------- ------- ------- ------- -------
Net from Investment Operations.... 1.16 (.38) 2.68 (.33) 1.01
------- ------- ------- ------- -------
Less Distributions:
Dividends from Net Investment
Income.......................... (.44) (.47) (.43) (.45) (.31)
Distributions from Net Realized
Gains on Investments............ (.01) (.47) -- (.26) --
------- ------- ------- ------- -------
Total Distributions............... (.45) (.94) (.43) (.71) (.31)
------- ------- ------- ------- -------
Net Asset Value,
End of Period..................... $ 11.30 $ 10.59 $ 11.91 $ 9.66 $10.70
======= ======= ======= ======= =======
Total Return(4).................... 11.40% (3.51%) 28.50% (3.09%) 11.61%(2)
Ratios/Supplemental Data Net Assets
(000 omitted)..................... $32,098 $40,647 $47,260 $30,517 $31,028
Ratio of Expenses to Average Net
Assets.......................... 2.26% 2.04% 2.05% 2.21% 1.60%(3)
Ratio of Net Investment Income to
Average Net Assets.............. 4.07% 4.13% 4.03% 4.64% 3.33%(3)
Decrease Reflected in Above
Expense Ratios Due to Expense
Reimbursements/ Waivers......... -- -- -- -- .30%(3)
Portfolio Turnover Rate........... 41% 21% 35% 26% 26%
Average commission rate paid(5)....
</TABLE>
- ---------------
(1) Commencement of operations.
(2) Annualized.
(3) Not annualized.
(4) Exclusive of sales charges.
(5) Disclosure required for years beginning after September 1, 1995.
3
<PAGE> 9
<TABLE>
<CAPTION>
Class B
-----------------------------------------------
Period
Year Ended Four Months from
Nov. 30, Ended 5/17/94(4)
------------------ Nov. 30, through
1996 1995 1994 7/31/94
------ ------ ----------- ----------
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period......... $13.14 $10.58 $ 11.04 $10.85(1)
------ ------ ------- ------
Income from Investment
Operations:
Net Investment Income....... .37 .42 .16 .09
Net Realized and Unrealized
Gains (Losses) on
Investments............... 1.73 2.54 (.50) .20
------ ------ ------- ------
Net from Investment
Operations................ 2.10 2.96 (.34) .29
------ ------ ------- ------
Less Distributions:
Dividends from Net
Investment Income......... (.44) (.40) (.12) (.10)
Distributions from Net
Realized Gains on
Investments............... (.49) -- -- --
------ ------ ------- ------
Total Distributions......... (.93) (.40) (.12) (.10)
------ ------ ------- ------
Net Asset Value,
End of Period............... $14.31 $13.14 $ 10.58 $11.04
====== ====== ======= ======
Total Return(5).............. 16.89% 28.49% (9.33%)(2) 13.19%(2)
Ratios/Supplemental Data
Net Assets (000 omitted).... $2,581 $1,453 $ 280 $ 56
Ratio of Expenses to Average
Net Assets................ 2.04% 2.07% .75%(3) .57%(3)
Ratio of Net Investment
Income to Average Net
Assets.................... 2.76% 3.44% 1.31%(3) .45%(3)
Decrease Reflected in Above
Expense Ratios Due to
Expense
Reimbursements/Waivers.... .15% .19% .07%(3) .04%(3)
Portfolio Turnover Rate..... 79% 72% 31% 76%
Average commission rate
paid(6)..................... $.0612 $.0596
<CAPTION>
Class C
--------------------------------------------------
Year Ended Four Months Period from
Nov. 30, Ended Nov. 5/9/94(4)
-------------------- 30, through
1996 1995 1994 7/31/94
------- ------- ----------- -----------
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period......... $ 13.23 $ 10.62 $ 11.06 $ 10.91(1)
------- ------- ------- -------
Income from Investment
Operations:
Net Investment Income....... .58 .52 .20 .10
Net Realized and Unrealized
Gains (Losses) on
Investments............... 1.69 2.59 (.50) .16
------- ------- ------- -------
Net from Investment
Operations................ 2.27 3.11 (.30) .26
------- ------- ------- -------
Less Distributions:
Dividends from Net
Investment Income......... (.56) (.50) (.14) (.11)
Distributions from Net
Realized Gains on
Investments............... (.49) -- -- --
------- ------- ------- -------
Total Distributions......... (1.05) (.50) (.14) (.11)
------- ------- ------- -------
Net Asset Value,
End of Period............... $ 14.45 $ 13.23 $ 10.62 $ 11.06
======= ======= ======= =======
Total Return(5).............. 18.25% 29.99% (8.37%)(2) 10.63%(2)
Ratios/Supplemental Data
Net Assets (000 omitted).... $11,733 $19,309 $ 6,029 $ 4,988
Ratio of Expenses to Average
Net Assets................ .90% .96% .40%(3) .28%(3)
Ratio of Net Investment
Income to Average Net
Assets.................... 3.90% 4.66% 1.68%(3) 1.13%(3)
Decrease Reflected in Above
Expense Ratios Due to
Expense
Reimbursements/Waivers.... .16% .19% .07%(3) .05%(3)
Portfolio Turnover Rate..... 79% 72% 31% 76%
Average commission rate
paid(6)..................... $ .0612 $ .0596
</TABLE>
- ---------------
(1) Based upon the Class A net asset value on the day prior to commencement of
distribution.
(2) Annualized.
(3) Not annualized.
(4) Commencement of distribution.
(5) Exclusive of sales charges.
(6) Disclosure required for years beginning after September 1, 1995.
4
<PAGE> 10
THE FUND'S EXPENSES
Under the Multiple Pricing System, the Fund presently offers three methods
of purchasing shares, enabling investors to choose the Class that, given the
amount of purchase and intended length of investment, best suits their needs.
When purchasing shares of the Fund, investors must specify whether the purchase
is for Class A shares, Class B shares or Class C shares, as described below. The
following table lists the costs that an investor will incur, either directly or
indirectly, as a shareholder of the Fund, based upon the Fund's projected annual
operating expenses:
<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales charge imposed on purchases of
shares (as a percentage of offering
price)...................................... 4.75% 0 % 0%
Maximum sales charge imposed on reinvested
dividends................................... 0% 0 % 0%
Maximum contingent deferred sales charge (as a
percentage of redemption proceeds).......... 0% 5.00% 0%
Redemption fees............................... $ 0 $ 0 $ 0
Exchange fee (per transaction)................ $ 0 $ 0 $ 0
Annual Portfolio Operating Expenses (after expense
reimbursement)
(as percentage of average net assets)
Management fees............................... .75% .75% .75%
12b-1 fees (distribution and service fees).... .25% 1.00% 0%
Other expenses (after expense
reimbursement)*............................. .24% .30% .17%
----- ---- - ---
Total Fund Operating Expenses (after expense
reimbursement)*.................................. 1.24% 2.05% .92%
===== ===== ===
</TABLE>
- ---------------
* Cowen is voluntarily absorbing .14% of all "Other expenses" for each Class. It
is currently anticipated that this arrangement will continue through March 31,
1998. Based on the Fund's projected annualized average net assets, if these
expenses are not absorbed, "Other expenses" would be .38%, .44% and .31% for
Class A, B and C respectively and "Total Fund Operating Expenses" would be
1.38%, 2.19% and 1.06% for Class A, B and C, respectively.
The nature of the services for which the Fund pays management fees is
described below under "Management of the Fund." The Fund bears an annual Rule
12b-1 service fee of .25% of the value of the average daily net assets
attributable to Class A shares and an annual Rule 12b-1 fee of 1.00% of the
value of the average daily net assets attributable to Class B shares, consisting
of a .25% service fee and a .75% distribution fee. Long-term shareholders of
Class B shares may pay more than the economic equivalent of the maximum
front-end sales charge currently permitted by the rules of the National
Association of Securities Dealers, Inc. ("NASD") governing investment company
sales charges. See "Management of the Fund -- Distributor."
The percentage of "Other expenses" in the table above is based on amounts
for expenses that include fees for shareholder services, custodial fees, legal
and accounting fees, printing costs and registration fees.
5
<PAGE> 11
Example
The following example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over various periods with respect to
a hypothetical $1,000 investment in the Fund assuming (1) a 5% annual return,
(2) payment of the shareholder transaction expenses and annual Fund operating
expenses set forth in the table above and (3) complete redemption at the end of
the period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A............................................. $ 60 $86 $ 114 $194
Class B ............................................ $ 72 $96 $ 134 $245
Class C............................................. $ 10 $30 $ 52 $116
</TABLE>
An investor would pay the following expenses on the same investment in
Class B shares assuming no redemption.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ------ ------- ------- --------
<S> <C> <C> <C>
$22 $66 $ 114 $245
</TABLE>
The above example is intended to assist an investor in understanding
various costs and expenses that the investor would bear upon becoming a
shareholder of the Fund. The example should not be considered to be a
representation of past or future expenses. Actual expenses of the Fund may be
greater or less than those shown above. The assumed 5% annual return shown in
the example is hypothetical and should not be considered to be a representation
of past or future annual return; the actual return of the Fund may be greater or
less than the assumed return.
INVESTMENT OBJECTIVES AND POLICIES
IN GENERAL
The primary investment objective of the Fund is to realize a high level of
dividend income to the extent consistent with prudent investment management.
Capital appreciation is a secondary objective of the Fund. The Fund seeks to
achieve its investment objectives by investing at least 80 percent of its assets
under normal market conditions in equity securities, such as common and
preferred stock or securities convertible into or exchangeable for common stock.
Cowen Asset Management emphasizes investments in companies that have a record of
paying and increasing dividends and, in Cowen Asset Management's judgment, the
potential for increasing dividends. See "Investment Strategy." Cowen Asset
Management may also make temporary investments in investment grade corporate
debt obligations and U.S. Government securities for defensive purposes when it
believes market conditions warrant and as a cash management technique. See
"Temporary Investments." In addition, Cowen Asset Management may write covered
call options and engage in securities lending transactions in order to generate
additional income for the Fund. See "Covered Call Options" and "Lending of
Securities." The Fund's investment objectives may not be changed without
shareholder approval. There is no assurance that the Fund's investment
objectives will be achieved.
Although a consideration in the selection of the Fund's investments,
capital appreciation is not the primary objective of the Fund and investors
should not expect appreciation comparable to that of mutual funds with capital
appreciation as a primary objective. It also cannot be assured that the Fund
will earn the level of income
6
<PAGE> 12
that might be achieved through investment in a portfolio of fixed income
securities. Because the Fund will invest primarily in equity securities, it will
be subject to general conditions prevailing in securities markets and the net
asset value of the Fund's shares will fluctuate with changes in the market
prices of its portfolio securities. It is anticipated that the securities in
which the Fund will invest will be traded on the New York or American Stock
Exchanges, although the Fund may invest in securities traded in the
over-the-counter market. Cowen Asset Management will attempt to avoid investment
in speculative securities or those with speculative characteristics and the Fund
has adopted certain other policies designed to limit investment risk. See
"Investment Restrictions."
INVESTMENT STRATEGY
Cowen Asset Management uses its Dividend Method of Investing in managing
the Fund's assets, which is a screening process developed by Cowen Asset
Management to identify investment opportunities. In making investment
selections, Cowen Asset Management focuses on certain fundamental financial
characteristics of a company, including:
- Current dividend yield.
- Historic operating cash flow and dividend growth.
- Dividend payout ratio based on operating cash flow.
- Debt to capital ratios.
- Price-cash flow ratios.
- Market capitalization.
- Potential to continue its historic record and to maintain above-average
dividend growth.
With respect to common stocks, Cowen Asset Management considers each of the
characteristics described above. With the respect to preferred and convertible
preferred stocks and convertible debentures, Cowen Asset Management considers
all of the foregoing characteristics with the exception of that relating to
current dividend yield and historical dividend growth. Convertible securities
are fixed income securities that may be converted at either a stated price or
stated rate into underlying shares of common stock. Because of this conversion
feature, convertible securities enable an investor to benefit from increases in
the market price of the underlying common stock while permitting the investor to
obtain a yield that is generally greater than that obtainable from the
underlying common stock. In addition, convertible securities generally offer
greater stability of price than the underlying common stock during declining
market periods. Cowen Asset Management may make modifications of its investment
strategy for the Fund as it deems advisable in light of its experience in
managing the Fund or in response to changing market or economic conditions.
TEMPORARY INVESTMENTS
The Fund may invest up to 20 percent of its assets, and in excess of that
amount when Cowen Asset Management believes market conditions warrant a
temporary defensive posture, in corporate bonds rated at least Baa by Moody's
Investors Service, Inc. or BBB by Standard & Poor's Corporation, commercial
paper
7
<PAGE> 13
rated at least Prime-2 by Moody's or A-2 by Standard & Poor's and obligations
issued or guaranteed by the U.S. Government or by its agencies or
instrumentalities and repurchase agreements in respect of such obligations.
Obligations of certain agencies and instrumentalities of the U.S. Government,
such as the Government National Mortgage Association, are supported by the "full
faith and credit" of the U.S. Government; others, such as those of the Federal
National Mortgage Association, are supported by the discretionary authority of
the U.S. Government to purchase the agency's obligations; and still others, such
as those of the Export-Import Bank of the U.S., are supported by the right of
the issuer to borrow from the U.S. Treasury; and still others, such as those of
the Student Loan Marketing Association, 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. Bonds rated Baa by Moody's and BBB by S&P,
while considered "investment grade" obligations, may have speculative
characteristics.
COVERED CALL OPTIONS
In an effort to enhance the Fund's performance through receipt of premiums
and generally to assist in the management of its portfolio, the Fund may engage
without limitation in the writing (selling) of call option contracts on
securities at such times as Cowen Asset Management shall determine to be
appropriate. However, options shall be written solely as "covered" call options;
that is, options on securities that the Fund owns. The Fund will write covered
call options on securities held in the portfolio only at the exercise price
which would approximate the price at which the security's dividend yield would
fall below Cowen Asset Management's minimum criteria and cause it to be sold.
A call option gives the purchaser of the option the right to buy a security
from a writer at the exercise price at any time prior to the expiration of the
contract, regardless of the market price of the security during the option
period. The premium paid to the writer is the consideration for undertaking the
obligations under the option contract. The writer 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 a profit. The Fund will
write call option contracts only if Cowen Asset Management believes that the
Fund's performance can be increased through receipt of premiums.
The Fund will purchase options only to close out a call option position. In
order to close out a position, the Fund will make a "closing purchase
transaction" which involves the purchase of a call option on the same security
with the same exercise price and expiration date as a call option which it has
previously written. When a security is sold from the Fund's portfolio, the Fund
will effect a closing purchase transaction so as to close out any existing call
option on that security. The Fund will realize a profit or loss from a closing
purchase transaction if the amount paid to purchase a call option is less or
more than the amount received from the sale thereof. There can be no assurance
that the Fund will be able to effect closing purchase transactions at a time
when it desires to do so. To facilitate closing purchase transactions, however,
the Fund will write options only if a secondary market for the options exists on
a national securities exchange.
Securities for the Fund's portfolio will at all times be bought and sold
solely on the basis of investment considerations and appropriateness to the
fulfillment of the Fund's objectives.
8
<PAGE> 14
LENDING OF SECURITIES
The Fund may lend its portfolio securities to broker-dealers and other
financial institutions pursuant to agreements requiring that the loans be
continuously secured by cash, letters of credit or U.S. Government securities of
a value equal to at least the fair market value of the securities lent. Such
loans will not be made if as a result the aggregate of all outstanding loans
exceeds 30 percent of the value of the Fund's total assets taken at current
value.
INVESTMENT RESTRICTIONS
In order to limit investment risk, the Fund has adopted certain investment
restrictions which are changeable only by shareholder vote. These restrictions,
among other things, prohibit the Fund from: purchasing securities of any issuer,
other than U.S. Government securities, if the purchase would cause more than
five percent of the Fund's assets, taken at market value, to be invested in the
securities of that issuer, except that 25 percent of the Fund's assets may be
invested without regard to this limit; purchasing more than 10 percent of the
voting securities or any class of securities of any issuer; engaging in short
sales or purchasing securities on margin; borrowing money or mortgaging or
hypothecating the Fund's assets, although the prohibition against borrowing does
not prohibit limited short-term borrowings to meet redemption requests and the
prohibition against mortgaging or hypothecating assets does not prohibit escrow
arrangements contemplated by writing covered call options; investing more than
10 percent of the Fund's assets in restricted or illiquid securities, including
repurchase agreements of greater than seven days' duration, or securities that
are not readily marketable; concentrating more than 25 percent of the Fund's
assets in any one industry; or buying or selling commodities or commodity
contracts.
PORTFOLIO TRANSACTIONS
All orders for transactions in securities and options on behalf of the Fund
are placed with broker-dealers selected by Cowen Asset Management. Cowen may
serve as the Fund's broker in effecting portfolio transactions on national
securities exchanges and retain commission in accordance with certain
regulations of the SEC. In addition, Cowen Asset Management may select
broker-dealers that provide it with research services and may cause the Fund to
pay these broker-dealers commissions that exceed those that other broker-dealers
may have charged, if it views the commissions as reasonable in relation to the
value of the brokerage and/or research services received.
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS
The business and affairs of the Fund are managed under the direction of its
Board of Directors. By virtue of the responsibilities assumed by Cowen Asset
Management under its Investment Management Agreement with the Fund, the Fund
will not require any executive employees other than its officers, none of whom
will devote full time to the affairs of the Fund.
9
<PAGE> 15
INVESTMENT MANAGER
Cowen, an investment adviser and broker-dealer registered with the SEC,
through Cowen Asset Management, serves as the Fund's investment manager. Cowen
currently serves as investment manager for five other mutual funds, Cowen
Standby Reserve Fund, Inc., Cowen Standby Tax-Exempt Reserve Fund, Inc., and
Cowen Opportunity Fund, Cowen Intermediate Fixed Income Fund and Cowen
Government Securities Fund (all series of Cowen Funds, Inc.). Cowen Asset
Management also serves as investment manager for Cowen Special Value Fund, which
also is a series of Cowen Funds, Inc. and which has not yet commenced
operations. Cowen's principal address is Financial Square, New York, New York
10005-3597.
Pursuant to the Investment Management Agreement between Cowen Asset
Management and the Fund, Cowen Asset Management has agreed to be responsible for
the Fund's investment program. Subject to the supervision and direction of the
Fund's Board of Directors, Cowen Asset Management manages the Fund's portfolio
in accordance with the stated policies of the Fund. Cowen Asset Management makes
investment decisions for the Fund and places the purchase and sale orders for
portfolio transactions. Cowen Asset Management also furnishes the Fund's
statistical and research data, clerical help, accounting, data processing,
bookkeeping, internal auditing and certain legal and other services required by
the Fund; prepares reports to shareholders of the Fund, tax returns, reports to
and filings with the SEC and state Blue Sky authorities; calculates the net
asset value of shares of the Fund and generally assists in all aspects of the
Fund's operation. For the services provided pursuant to the Investment
Management Agreement, Cowen Asset Management is entitled to receive a fee,
computed daily and payable monthly, at the annual rate of .75 of one percent of
the Fund's average daily net assets, which exceeds the management fee paid by
most other investment companies.
William Rechter, Senior Investment Officer and Senior Vice President, and
Benedict Capaldi, Senior Investment Officer, are primarily responsible for the
daily management of the Fund. Mr. Rechter has had such responsibility since the
Fund commenced operations on September 19, 1986 and a Managing Director of
Cowen. He has been with Cowen Asset Management since December, 1985. Mr. Capaldi
joined Cowen in December, 1996 as a Managing Director. Mr. Capaldi's prior
experience includes being Portfolio Manager for Provident Capital Management,
Inc., Senior Vice President and Portfolio Manager for Radnor Capital Management,
President of Chestnut Hill Advisors, Inc. and Managing Director for Brandywine
Asset Management, Inc.
DISTRIBUTOR
Cowen acts as distributor of the Fund's shares. Cowen is a member of the
NASD and of the New York, American and other principal national securities
exchanges. Cowen is paid monthly fees by the Fund in connection with (1) the
servicing of shareholder accounts in Class A and Class B shares and (2)
providing distribution related services in respect of Class B shares. A monthly
service fee, authorized pursuant to a Shareholder Servicing and Distribution
Plan (the "Plan") adopted by the Fund pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "1940 Act"), is calculated at
the annual rate of .25% of the value of the average daily net assets of the Fund
attributable to each of Class A and Class B shares and is used by Cowen to
provide compensation for ongoing servicing and/or maintenance of shareholder
accounts with the Fund. Compensation is paid by Cowen to persons, including
Cowen employees, who respond to inquiries of shareholders of the Fund regarding
their ownership of shares or their accounts with the Fund or who provide other
similar services not otherwise required to be provided by the Fund's investment
adviser, transfer agent or other agent of the Fund.
10
<PAGE> 16
In addition, pursuant to the Plan, the Fund pays to Cowen a monthly
distribution fee at the annual rate of .75% of the Fund's average daily net
assets attributable to Class B shares. The distribution fee is used by Cowen to
provide (1) initial and ongoing sales compensation to its registered
representatives or those of other broker-dealers that enter into selected dealer
agreements with Cowen in respect of sales of Class B shares; (2) costs of
printing and distributing the Fund's Prospectus, Statement of Additional
Information and sales literature to prospective investors in Class B shares; (3)
costs associated with any advertising relating to Class B shares; and (4)
payments to, and expenses of, persons who provide support services in connection
with the distribution of Class B shares.
Payments under the Plan are not tied exclusively to the service and/or
distribution expenses actually incurred by Cowen, and the payments may exceed
expenses actually incurred by Cowen. The Board of Directors evaluates the
appropriateness of the Plan and its payment terms on a continuing basis and in
doing so considers all relevant factors, including expenses borne by Cowen and
amounts it receives under the Plan.
Under its terms, the Plan continues from year to year, so long as its
continuance is approved annually by vote of the Board of Directors, including a
majority of the Directors who are not interested persons of the Fund and who
have no direct or indirect financial interest in the operation of the Plan (the
"Independent Directors"). The Plan may not be amended to increase materially the
amount to be spent for the services provided by Cowen without shareholder
approval, and all material amendments of the Plan also must be approved by the
Directors in the manner described above. The Plan may be terminated with respect
to a Class at any time, without penalty, by vote of a majority of the
Independent Directors or by a vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) represented by the Class on not more
than 30 days' written notice to Cowen.
Pursuant to the Plan, Cowen will provide the Board of Directors with
periodic reports of amounts expended under the Plan and the purpose for which
the expenditures were made. The Directors believe that the Fund's expenditures
under the Plan will benefit the Fund and its shareholders by providing better
shareholder services and by facilitating the distribution of shares.
CUSTODIAN AND TRANSFER AND DIVIDEND AGENT
Investors Fiduciary Trust Company, a subsidiary of State Street Boston
Corp., serves as the custodian of the Fund's investments and as its transfer and
dividend agent. Communications to the Bank should be directed at P.O. Box
419111, Kansas City, Missouri 64141.
EXPENSES OF THE FUND
Operating expenses for the Fund generally consist of all costs not
specifically borne by Cowen Asset Management, including investment management
fees, fees for necessary professional and brokerage services, the costs of
regulatory compliance and costs associated with maintaining legal existence and
shareholder relations. The Fund's Investment Management Agreement with Cowen
Asset Management provides that Cowen Asset Management will reimburse the Fund to
the extent required by applicable state law for certain expenses that are
described in the Statement of Additional Information. From time to time, Cowen
Asset Management, in its sole discretion and as it deems appropriate, may waive
a portion or all of the fees payable to it by the Fund.
11
<PAGE> 17
Each Class bears its own expenses, which generally include all costs not
specifically borne by Cowen Asset Management. Included among a Class' expenses
are (1) transfer agency fees as identified by the transfer agent as being
attributable to a specific Class; (2) printing and postage expenses related to
preparing and distributing materials such as shareholder reports, prospectuses
and proxies to current shareholders; (3) Blue Sky registration fees incurred by
a Class; (4) SEC registration fees incurred by a Class; (5) the expenses of
administrative personnel and services as required to support the shareholders of
a specific Class; (6) litigation or other legal expenses relating solely to one
Class; and (7) directors' fees incurred as a result of issues relating to one
Class. In addition, each Class will bear an allocable portion of all other Fund
expenses not attributable to a particular Class based on the Class' relative net
assets.
NET ASSET VALUE
The net asset value per share of the Fund is calculated as of 4:15 p.m.
Eastern time, on each day on which the New York Stock Exchange, Inc. is open.
The Exchange is currently open on each Monday through Friday, except (a) January
1st, Washington's Birthday (the third Monday in February), Good Friday, Memorial
Day (the last Monday in May), July 4th, Labor Day (the first Monday in
September), Thanksgiving Day (the fourth Thursday in November) and December
25th; and (b) the preceding Friday when one of those holidays falls on a
Saturday or the subsequent Monday when one of those holidays falls on a Sunday.
Net asset value per share is computed by dividing the value of the Fund's net
assets by the total number of its shares outstanding. Assets traded on a
securities exchange or other recognized market are valued on the basis of market
quotations. Assets for which quotations are not readily available are valued at
fair value as determined in good faith under procedures approved by the Board of
Directors. High quality money market instruments with remaining maturities of 60
days or less are valued on the basis of amortized cost, which involves valuing a
portfolio instrument at its market value on the 61st day prior to maturity and
thereafter assuming a constant amortization to maturity of any market discount
or premium, generally without regard to the effect of fluctuating interest rates
on the market value of the instrument.
PURCHASE OF SHARES
GENERAL INFORMATION
Shares of the Fund are sold at the net asset value per share next
determined after receipt of an order, plus a sales charge in the case of Class A
shares. Investors whose orders are received by Cowen not later than 4:15 p.m.,
New York time, will become shareholders on that day. Investors whose orders are
received after 4:15 p.m., New York time, will become shareholders on the
following business day. The Fund reserves the right to reject any order to
purchase shares. Certificates for shares will be issued only upon the specific
request of a shareholder.
The minimum initial investment in the Fund is $1,000 and the minimum
subsequent investment is $100, except that the minimum initial and subsequent
investments for purchases of Fund shares through Retirement Plans for
Self-Employed Persons and Individual Retirement Accounts will be $500 and $50,
respectively. The Fund reserves the right to vary these minimums at any time.
Retirement Plans. Shares may be purchased in connection with various
qualified tax-deferred retirement plans. Forms for establishing these plans are
available through any Cowen account representative. Investors are urged to
consult with a tax adviser in connection with the establishment of retirement
plans.
12
<PAGE> 18
Automatic Investment Plan. The Fund offers an Automatic Investment Plan
whereby the Bank is permitted through preauthorized checks of $100 or more ($50
in the case of Retirement Plans for Self-Employed Persons and Individual
Retirement Accounts) to charge the regular bank account of a shareholder on a
regular basis to provide systematic additions to the Fund account of the
shareholder. While there is no charge to shareholders for this service, a charge
of $10.00 will be deducted from a shareholder's Fund account for checks returned
for insufficient funds. A shareholder's Automatic Investment Plan may be
terminated at any time without charge or penalty by the shareholder, the Fund,
the Bank or Cowen. Further information regarding the Automatic Investment Plan
may be obtained through any Cowen account representative.
Under the Multiple Pricing System, the Fund presently offers three methods
of purchasing shares, enabling investors to choose the Class that, given the
amount of purchase and intended length of investment, best suits their needs.
Cowen account representatives and other persons remunerated on the basis of
sales of shares may receive different levels of compensation for selling one
Class of shares over another. From time to time, Cowen's registered
representatives and those of other broker-dealers that enter into selected
dealer agreements with Cowen will receive additional non-cash compensation in
the form of gifts or prizes such as merchandise or trips. When purchasing shares
of the Fund, investors must specify whether the purchase is for Class A shares,
Class B shares or Class C shares, as described below. In addition, the
Distributor will from its own resources make additional payments to Branch
Cabell and Company at a maximum annual rate of .25% of the net asset value of
all shares of the Fund sold by Branch Cabell and Company.
CLASS A SHARES
The public offering price of Class A shares is the net asset value per
Class A share next determined after a purchase order is received plus a sales
charge, if applicable. Class A shares are subject to a service fee at the annual
rate of .25% of the value of the Fund's average daily net assets attributable to
this Class. See "Management of the Fund -- Distributor." The sales charge
payable upon the purchase of Class A shares will vary with the amount of
purchase as set forth below.
<TABLE>
<CAPTION>
Sales Charge as a Sales Charge as a
Percentage of the Percentage of the
Shares Purchased in Public Offering Net Amount Dealer
Single Transaction Price Invested Reallowance
----------------------------------------- ----------------- ----------------- -----------
<S> <C> <C> <C>
Up to $49,999............................ 4.75% 5.00% 4.00%
$50,000-$99,999.......................... 4.00% 4.17% 3.25%
$100,000-$249,999........................ 3.75% 3.90% 3.00%
$250,000-$499,999........................ 2.50% 2.56% 2.00%
$500,000-$999,999........................ 2.00% 2.04% 1.50%
$1,000,000-$2,999,999.................... 0% 0% 1.00%
$3,000,000-$3,999,999*................... 0% 0% .50%
</TABLE>
- ---------------
* Investors who purchase $4 million or more of shares will receive Class C
shares, which are not subject to any front-end sales charge or service fee.
See "Class C Shares."
The above schedule of sales charges is applicable to purchases in a single
transaction by, among others: (1) an individual; (2) an individual, his or her
spouse and their children under the age of 21 purchasing shares for his or her
own accounts; (3) a trustee or other fiduciary purchasing shares for a single
trust estate or a
13
<PAGE> 19
single fiduciary account; (4) a pension, profit-sharing or other employee
benefit plan qualified or non-qualified under Section 401 of the Internal
Revenue Code of 1986 (the "Code"); (5) tax-exempt organizations enumerated in
Section 501(c)(3) or (13) of the Code; (6) employee benefit plans qualified
under Section 401 of the Code of a single employer or of employers who are
"affiliated persons" of each other, as defined in the 1940 Act and for
investments in Individual Retirement Accounts of employees of a single employer
through Systematic Payroll Deduction plans; or (7) any other organized group of
persons, whether incorporated or not, provided the organization has been in
existence for at least six months and has some purpose other than the purchase
of redeemable securities of a registered investment company at a discount.
You may benefit from a reduction of the sales charges in accordance with
the above schedule if the cumulative value (at current net asset value) of Class
A shares purchased in a single transaction, together with those Class A shares
previously purchased subject to payment of a sales charge, plus Class A shares
of Cowen Opportunity Fund, Cowen Intermediate Fixed Income Fund and Cowen
Government Securities Fund, each a series of Cowen Funds, Inc., previously or
simultaneously purchased subject to a sales charge, amounts to $50,000 or more.
The foregoing schedule of reduced sales charges will also be available to
investors who enter into a written Letter of Intent providing for the purchase,
within a 13-month period, of Class A shares of the Fund, Cowen Opportunity Fund,
Cowen Intermediate Fixed Income Fund and Cowen Government Securities Fund from
Cowen. Class A shares of the Fund, Cowen Opportunity Fund, Cowen Intermediate
Fixed Income Fund and Cowen Government Securities Fund previously purchased
during a 90-day period prior to the date of receipt by Cowen of the Letter of
Intent and still owned by the shareholder may also be included in determining
the applicable reduction.
A shareholder who has redeemed his Class A shares may reinvest all or part
of the redemption proceeds within 30 days without imposition of a sales charge.
This privilege may be exercised only once by a shareholder. Shareholders should
note that no loss will be allowed on the sale of Fund shares to the extent that
the shareholder acquired other shares in the Fund within a period beginning 30
days before the sale or disposition of the shares in which the shareholder
incurred a loss and ending 30 days after such sale.
The Fund offers Class A shares without imposition of a sales charge to (1)
employees of Cowen and registered representatives of securities dealers that
participate in distribution of the Fund's shares; (2) Individual Retirement
Accounts for those persons; (3) the spouses, children, parents, grandparents,
siblings, spouse's parents and sibling's children of those persons when purchase
orders on their behalf are placed by those persons; (4) directors and trustees
of registered investment companies whose shares are distributed by Cowen,
Individual Retirement Accounts for those persons, employee benefit plans for
those persons, and the spouses and minor children of those persons when purchase
orders on their behalf are placed by those persons; (5) Cowen and its
subsidiaries; (6) participants in any pension, profit-sharing or other employee
benefit plan qualified or non-qualified under Section 401 of the Code when
purchase orders are placed by such participants pursuant to such plans; (7)
officers, directors, partners and employees of the Fund's counsel or auditors;
and (8) investors who purchase shares of the Fund to the extent that the
investment represents (a) the proceeds from the redemption made within the
preceding 60 days of shares of another mutual fund not affiliated with Cowen
Asset Management whose shares were purchased subject to a sales charge, or (b)
the net proceeds of the sale within the preceding 60 days of shares of any
closed-end investment company. The Distributor pays a sales commission equal to
1.00% of the amount invested to dealers who sell Class A Shares without
imposition of a sales charge to investors described in items (6) and (8).
14
<PAGE> 20
CLASS B SHARES
The public offering price of Class B shares is the net asset value per
share next determined after a purchase order is received without imposition of
any front-end sales charge. The Distributor pays a sales commission equal to
4.00% of the amount invested to dealers who sell Class B shares. Class B shares
may be subject upon redemption to a contingent deferred sales charge ("CDSC").
See "Redemption of Shares." Class B shares are subject to a service fee at the
annual rate of .25%, and a distribution fee at the annual rate of .75%, of the
value of the Fund's average daily net assets attributable to this Class. See
"Management of the Fund -- Distributor." Cowen has adopted guidelines, in view
of the relative sales charges, service fees and distribution fees, directing
account representatives that all purchases of shares should be for Class A
shares when the purchase is for $500,000 or more by an investor not eligible to
purchase Class C shares. Cowen reserves the right to vary these guidelines at
any time.
CLASS C SHARES
The public offering price of Class C shares is the net asset value per
share next determined after a purchase order is received without imposition of
any sales charge. Class C shares, which are not subject to any service fee or
distribution fee, are available exclusively to (1) employee benefit plans for
employees of Cowen and securities dealers that participate in distribution of
the Fund's shares; (2) charitable organizations (as defined in Section 501(c)(3)
of the Code) investing $100,000 or more; (3) any pension fund, corporation,
state or local government, Taft-Hartley plan, foundation and/or endowment which
is a client of a consulting firm, if such consulting firm has contacted the
Fund, Cowen or any subsidiary of Cowen with respect to furnishing advice to the
client of that consulting firm or with respect to the purchase of the securities
of the Fund by such client; (4) investors purchasing $4 million or more of
shares of the Fund; (5) accounts as to which a bank, registered investment
adviser or broker-dealer charges an account management fee, provided the bank,
registered investment adviser or broker-dealer has an agreement with Cowen
relating to investment in the Fund; (6) investors, and their spouses and minor
children, who are investment advisory clients of Cowen or any of its
subsidiaries or who are affiliated persons or sponsoring companies of those
clients; and (7) purchasers placing orders through a broker that maintains an
omnibus account with the Fund and such purchases are made (i) by investment
advisers or financial planners placing trades for their accounts or the accounts
of their clients, and who charge a fee for their services; (ii) clients of such
investment adviser or financial planner who place trades for their own accounts
if the accounts are linked to a master account of such investment adviser or
financial planner on the books and records of the broker or agent, or (iii) for
retirement and deferred compensation plans and trusts used to fund those plans,
including but not limited to those defined in section 401(a), 403(b) or 457 of
the Internal Revenue Code or "rabbi trusts." Investors who purchase pursuant to
(7) may be charged a fee by the broker or agent utilized to effect the
transaction. The Distributor will from its own resources compensate
broker-dealers and service agents at a maximum annual rate of .15%, 15% and
.35%, respectively of the net asset value of shares purchased pursuant to (3),
(5) and (7), respectively.
15
<PAGE> 21
EXCHANGE PRIVILEGE
Shares of the Fund may be exchanged for shares of the same Class (or the
sole class offered) of the mutual funds listed below for which Cowen serves as a
distributor.
- Cowen Standby Reserve Fund, Inc., a money market fund whose investment
objective is the maximization of current income to the extent consistent
with preservation of capital and maintenance of liquidity.
- Cowen Standby Tax-Exempt Reserve Fund, Inc., a money market fund whose
investment objective is the maximization of current income that is exempt
from federal income taxes to the extent consistent with the preservation
of capital and the maintenance of liquidity.
- Cowen Intermediate Fixed Income Fund, a fund that seeks current income
and stability of principal by investing primarily in high quality
intermediate term fixed income securities. This fund is a series of Cowen
Funds, Inc.
- Cowen Government Securities Fund, a fund that seeks total return
consistent of current income and appreciation of capital through
investing primarily in securities issued or guaranteed by the U.S.
Government, its agencies, authorities or instrumentalities. This fund is
a series of Cowen Funds, Inc.
- Cowen Opportunity Fund, a fund whose investment objective is appreciation
of capital through investing primarily in equity securities of companies
that, in the opinion of its investment manager, are expected to benefit
from scientific and technological improvements and advances.
For purposes of this discussion, Cowen Standby Reserve Fund, Inc. and Cowen
Standby Tax-Exempt Reserve Fund, Inc. are referred to as "money market funds"
and Cowen Opportunity Fund, Cowen Intermediate Fixed Income Fund and Cowen
Government Securities Fund are referred to as "non-money market funds."
Shares of these mutual funds are available only to investors residing in
states where these mutual funds are qualified for sale. They are sold pursuant
to separate prospectuses that may be obtained through any Cowen account
representative, through account representatives of Cowen correspondents, or
through any other member of the NASD, or any foreign nonmember of the NASD,
which has entered into a Sales Agreement with Cowen with respect to such funds.
An exchange of shares is treated for federal income tax purposes as a redemption
(sale) of shares given in exchange by the shareholder and an exchanging
shareholder may, therefore, realize a taxable gain or loss in connection with
the exchange. The exchange privilege is subject to termination and its terms are
subject to change upon 60 days' notice to shareholders.
Under the Multiple Pricing System, an exchange of shares of the Fund with
other Cowen funds' shares will be limited to shares of the same class or the
sole class (money market funds only) of shares of a fund from which the exchange
is to be effected. For example, if a holder of Class A shares of a non-money
market fund exchanges his shares for shares of a money market fund and
thereafter wishes to exchange those shares for shares of the Fund, he may
receive only Class A shares in the latter transaction. As another example, if a
holder of shares of a money market fund acquired as a result of an initial
investment and not from an exchange wishes to exchange his shares for shares of
a non-money market fund, he may receive Class A shares, Class B shares or Class
C shares (depending on his eligibility for Class C shares) in the exchange
transaction. Thereafter, any further exchanges would be subject to the principal
described above limiting subsequent exchanges to the same class or the sole
class of shares of other funds.
16
<PAGE> 22
Class A Exchanges. A shareholder may effect exchanges among the mutual
funds listed above and the Fund on the basis of relative net asset values
without imposition of a sales charge; provided, however, that where shares of a
money market fund acquired through a direct purchase are exchanged for Class A
shares of the Fund or another non-money market fund, the appropriate sales
charge will be imposed at the time of the exchange. Because a substantially
lower sales charge is paid upon purchase of Class A shares of Cowen Intermediate
Fixed Income Fund, holders of these shares will not be able to exchange their
shares with shares of the Fund or any of the non-money market funds for a period
of 90 days from the date of purchase. After the 90-day waiting period has
expired, Class A shares of Cowen Intermediate Fixed Income Fund will be
exchangeable without the imposition of any additional sales charge.
Class B Exchanges. As described below under "Redemption of Shares," the
CDSC payable by Class B shareholders upon redemption of their shares will vary
with the period of time that the shares are held (the "CDSC holding period").
For purposes of calculating the CDSC holding period, any Class B shares received
in an exchange will be deemed to have been purchased on the same date as the
Class B shares given in exchange. If, however, a Class B shareholder exchanges
his shares for shares of either money market fund, which do not offer a class of
shares subject to a CDSC, such exchange will toll, or suspend, the running of
the CDSC holding period for as long as the money market fund shares are held
and, if those shares are redeemed, a CDSC will be imposed based on the CDSC
holding period without regard to the period during which the money market fund
shares were held. For example, if a holder of Class B shares of the Fund who has
held those shares for a period of more than four but less than five years
exchanges his shares for shares of a money market fund, holds those shares of
the money market fund for a period of one year, and thereafter exchanges those
shares for Class B shares of the Fund, such shareholder will be deemed to have
held the Class B shares for a period of four full years on the date of the last
exchange. If the shareholder were to then immediately redeem his Class B shares
of the Fund, such redemption would be subject to a 2.00% CDSC. Similarly, the
same CDSC would be imposed if at any time the money market fund shares were
redeemed. Conversely, if the shareholder had held his Class B shares of the Fund
for the full six year period, no CDSC would have been imposed upon redemption.
Because a substantially lower CDSC schedule is applicable to Class B shares
of Cowen Intermediate Fixed Income Fund, holders of these shares will not be
able to exchange their shares with shares of the Fund or any of the non-money
market funds for a period of 90 days from the date of purchase. After the 90-day
waiting period has expired, if a holder of these shares wanted to exchange all
or a portion of his shares for Class B shares of the Fund or of any of the
non-money market funds that offer Class B shares subject to a higher CDSC than
that imposed by Cowen Intermediate Fixed Income Fund, the exchanged Class B
shares will not be subject to the higher applicable CDSC. Upon redemption, the
lower CDSC schedule applicable to Class B shares of Cowen Intermediate Fixed
Income Fund will apply.
REDEMPTION OF SHARES
REDEMPTION PROCEDURES
The Fund will redeem shares without charge at the net asset value per share
next determined after receipt of a redemption order in proper form by Cowen or
the Bank, less any CDSC imposed on Class B shares. Any redemption request
received by Cowen prior to 4:15 p.m., New York time, will be transmitted to the
Bank on that day and the proceeds of such redemption will be transmitted in
accordance with the investor's instructions within seven days. Redemption
requests received at or after 4:15 p.m., New York time, will be effected on the
17
<PAGE> 23
next business day. Proceeds of any redemptions will not be sent until the check
(including a certified or cashier's check) used for investment has been cleared
for payment by the investor's bank, which may take up to 15 days. Pending such
clearance, Cowen will hold redemption proceeds under circumstances resulting in
no earnings to investors. Investors can avoid the inconvenience associated with
check clearance delays by purchasing shares with immediately available funds
held in a brokerage account with Cowen or at a participating securities dealer
or by transmitting funds to the Bank by wire transfer.
Cowen generally will effect redemptions of shares upon oral instructions
received from the shareholders. If shares are to be redeemed pursuant to an
order sent to the Bank by the shareholder, the Bank will require written
redemption instructions signed by the shareholder of record, which signature
must be guaranteed by a commercial bank or trust company (not a savings bank)
located or having a correspondent in New York City, or by a member organization
of the New York Stock Exchange, Inc. The redemption order must specify which
Class of shares is being redeemed. If certificates have been issued representing
the shares to be redeemed, such certificates must also be endorsed, or a duly
executed stock power must be furnished, with signatures guaranteed as discussed
above, and must be submitted to Cowen or the Bank with the redemption request.
Cowen or the Bank may require further documentation if the shareholder is a
corporation, partnership, trust, estate or other entity. The payment of
redemptions may be wired to a shareholder's commercial bank account. There is a
$10 charge for each federal funds wire transaction. The minimum amount for wire
redemptions is $10,000. A shareholder who wishes to redeem by wire should
contact IFTC at 1-800-262-7116.
The Fund may suspend the right of redemption or postpone the date of
payment upon redemption (as well as suspend or postpone the recordation of the
transfer of its shares) for such periods as are permitted under the 1940 Act.
The Fund reserves the right to redeem shares in any account, other than an
Individual Retirement Account or other qualified retirement plan, at their net
asset value if the value of the account is less than $250. The shareholder
having the account will first be notified in writing that the account has a
value of less than $250 and will be allowed 60 days to make an additional
investment before the redemption is processed by the Fund.
The Fund offers a Systematic Withdrawal Plan under which a shareholder with
$10,000 or more in the Fund may elect to redeem periodic payments to himself or
a designated payee on a monthly, quarterly or annual basis. For accounts other
than qualified retirement plans, the minimum rate of withdrawal is $50 per month
and the maximum monthly withdrawal is one percent of the current account value
in the Fund as of commencement of participation in the plan. Maintenance of a
Systematic Withdrawal Plan concurrently with purchases of additional shares of
the Fund may be disadvantageous to the shareholder because of the sales charge
on such purchases. A shareholder who elects to use the Systematic Withdrawal
Plan should be aware that such periodic payments will be made from redemptions
of his shares. However, any Class B shares redeemed under the Systematic
Withdrawal Plan will not be subject to a CDSC as described below. Dividends and
distributions paid on his shares may not cover the full amount of each periodic
payment.
CONTINGENT DEFERRED SALES CHARGE -- CLASS B SHARES
A CDSC payable to Cowen is imposed on any redemption of Class B shares held
less than six years equal to a specified percentage, as set forth below, of the
net asset value of the shares redeemed at the time of purchase or at the time of
redemption, whichever is lower. Class B shares held six years or longer and
Class B shares purchased through reinvestment of dividends or capital gains
distributions are not subject to the CDSC.
18
<PAGE> 24
Furthermore, no CDSC will be imposed on an amount that represents an increase in
value of the shareholder's account resulting from capital appreciation.
In circumstances in which the CDSC is imposed, the amount of the charge
will depend on the number of years since the shareholder purchased the shares
being redeemed. The following table sets forth the rates of the CDSC for
redemptions of Class B shares by investors:
<TABLE>
<CAPTION>
Year Since Purchase in Which
Redemption is Effected CDSC
----------------------------------------------------------------------------- ------
<S> <C>
Year 1....................................................................... 5.00%
Year 2....................................................................... 4.00%
Year 3....................................................................... 3.00%
Year 4....................................................................... 3.00%
Year 5....................................................................... 2.00%
Year 6....................................................................... 1.00%
Thereafter................................................................... None
</TABLE>
In determining the applicability and rate of any CDSC, redemptions of Class
B shares are made first of amounts due to capital appreciation, next of shares
representing reinvestment of dividends and capital gains distributions, and then
of other shares held by the shareholder for the longest period of time. As a
result, the CDSC, if any, will be imposed at the lowest possible rate. For
example, assume that an investor owns 100,000 shares that he purchased seven
years ago, 100,000 shares that he purchased more than four but less than five
years ago at $10 per share and 1,000 shares received in respect of reinvestment
of dividends and distributions. The shares now have a net asset value of $20 per
share. The investor may redeem the 100,000 shares he purchased seven years ago
and the 1,000 shares he acquired through reinvestments without paying a CDSC. If
the investor redeems the balance of his shares, he would pay a CDSC based on the
net asset value at the time of purchase ($10 per share). Thus, the investor
would pay a CDSC equal to $20,000 (100,000 shares multiplied by $10 per share
times the applicable rate of 2%).
Waivers of CDSC. The CDSC, if any, will be waived in the case of (1)
redemptions of Class B shares held at the time a shareholder dies or becomes
disabled, including the Class B shares of a shareholder who owns the shares with
his or her spouse as joint tenants with right of survivorship, provided that the
redemption is requested within one year of the death or initial determination of
disability and (2) redemptions in connection with the following retirement plan
distributions: (a) lump-sum or other distributions from a qualified retirement
plan following retirement; (b) distributions from an Individual Retirement
Account, Keogh plan or custodial account under Section 403(b)(7) of the Code
following attainment of age 59 1/2; (c) a tax-free return of an excess
contribution to an Individual Retirement Account, and (d) distributions pursuant
to Systematic Withdrawal Plans.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to declare and pay dividends quarterly from its net
investment income. Any net realized long-term capital gains will generally be
paid annually, shortly after the close of the Fund's fiscal year. Unless a
shareholder elects in writing to receive dividends and distributions on shares
of any Class in cash, such amounts will be reinvested automatically in
additional shares of the same Class at net asset value, without a sales charge.
19
<PAGE> 25
The Fund has qualified and intends to continue to qualify and elect to be
treated each year as a regulated investment company ("RIC") for federal income
tax purposes. A RIC is not taxed on any income or gains distributed to its
shareholders if it distributes 90 percent of its investment income to them
within applicable time periods. In addition, the Fund will be subject to a
nondeductible excise tax of 4 percent of the amount by which the Fund fails to
distribute specified percentages of its investment income and capital gains
during any applicable 12 month period. The Fund will pay dividends and
distributions more frequently than stated above, if necessary, to avoid
application of the excise tax, if such payments are determined to be in the best
interest of the Fund's shareholders. The per share dividends and distributions
on Class C shares will be higher than those on Class A shares, which in turn
will be higher than those on Class B shares, as a result of the different
service, distribution and transfer agency fees applicable to the Classes. See
"The Fund's Expenses," "Purchase of Shares," "Management of the
Fund -- Distributor" and "Additional Information."
To qualify as a RIC for a particular taxable year, the Fund, among other
things, must earn less than 30 percent of its gross income for that year from
the disposition of securities held for less than three months. The 30-percent
test will limit the extent to which the Fund may (1) sell securities held for
less than three months; (2) write options that expire in less than three months;
or (3) effect closing purchase transactions with respect to options written
within the preceding three months.
For federal income tax purposes, the Fund's dividends and distributions are
taxable to a shareholder whether paid in cash or reinvested in additional
shares. Dividends of the Fund's investment income and distributions of its
short-term capital gains will be taxable as ordinary income. Distributions of
long-term capital gains, if any, will be taxable to a shareholder as such,
regardless of the length of time the shareholder has held shares of the Fund. If
a shareholder receives a distribution taxable as long-term capital gain with
respect to Fund shares, and redeems or exchanges the shares before holding them
for more than six months, any loss on the redemption or exchange up to the
amount of the distribution will be treated as a long-term capital loss. In
general, only dividends that reflect the Fund's income from certain
dividend-paying stocks of domestic corporations will be eligible for the federal
dividends-received deduction for corporate shareholders.
Each shareholder will receive an annual statement setting forth the dollar
amounts of dividends and any distributions for the prior calendar year and the
tax status of such dividends and distributions for federal income tax purposes.
Shareholders should consult their own tax advisers as to the state and local tax
consequences of investing in the Fund.
ADDITIONAL INFORMATION
The Fund is registered under the 1940 Act as an open-end, diversified,
management investment company and was incorporated on May 12, 1986 under the
laws of the State of Maryland. The Fund has an authorized capitalization of
750,000,000 shares with a par value of $.001 per share and transferable without
restriction of which 250,000,000 have been allocated in respect of each Class of
the Fund. All shares of the Fund have equal rights and privileges as to
participation in dividends and distributions and in the net distributable assets
of the Fund on liquidation.
When issued, shares are fully paid and nonassessable, and have no
preemptive, conversion or exchange rights. Each Class represents an identical
interest in the Fund's investment portfolio. As a result, the Classes have the
same rights, privileges and preferences, except with respect to: (1) the
designation of each Class; (2) the effect of the respective sales charges, if
any, for each Class; (3) the distribution and/or service fees, if any, borne by
each Class; (4) the expenses allocable exclusively to each Class; (5) voting
rights on matters
20
<PAGE> 26
exclusively affecting a single Class; and (6) the exchange privilege of each
Class. The Board of Directors does not anticipate that there will be any
conflicts among the interests of the holders of the different Classes. The
Directors, on an ongoing basis, will consider whether any conflict exists and,
if so, take appropriate action. Certain aspects of the shares may be changed,
upon notice to Fund shareholders, to satisfy certain tax regulatory
requirements, if the change is deemed necessary by the Directors.
From time to time, advertisements or reports to shareholders may compare
the performance of the Classes to that of other mutual funds (or classes
thereof) with a similar investment objective. The performance of the Classes
also might be compared to rankings prepared by Lipper Analytical Services, Inc.
and Morningstar, Inc., which are widely recognized, independent services that
monitor the performance of mutual funds, as well as to various unmanaged
indices, such as the Standard & Poor's 500 Composite Stock Price Index. To the
extent any advertisement or sales literature of a Fund describes the expenses or
performance of any Class, it will also disclose the information for other
Classes. Performance information may be useful in reviewing the performance of
the Classes and in providing a basis for comparison with other investment
alternatives. Investors should be aware that, because the performance of the
Classes changes in response to fluctuations in interest rates, price
fluctuations in securities markets, each Class' expenses and other factors, a
performance quotation should not be considered representative of the Classes'
performance for any future period. Shareholders may make inquiries regarding the
Fund, including current performance quotations, by calling any Cowen account
representative.
21
<PAGE> 27
(This page is intentionally left blank)
<PAGE> 28
(This page is intentionally left blank)
<PAGE> 29
STATEMENT OF ADDITIONAL INFORMATION
April 1, 1997
COWEN INCOME + GROWTH FUND, INC.
Financial Square, New York, NY 10005, (212) 495-6724, (800) 262-7116
CONTENTS
Page
----
Investment Objectives and Policies. . . . . 1
Purchase and Redemptions. . . . . . . . . . 9
Management of the Fund. . . . . . . . . . . 9
Taxes. . . . . . . . . . . . . . . . . . . 14
Performance Information. . . . . . . . . . 15
Financial Statements. . . . . . . . . . . . 17
This Statement of Additional Information is meant to be read in conjunction with
the Prospectus of Cowen Income + Growth Fund, Inc. (the "Fund") dated April 1,
1997, and is incorporated by reference in its entirety into that Prospectus.
Because this Statement of Additional Information is not itself a prospectus, no
investment in shares of the Fund should be made solely upon the information
contained herein. Copies of the Fund's Prospectus may be obtained by calling
Cowen & Co. ("Cowen"), the Fund's principal underwriter, at (212) 495-6724 or
(800) 262-7116 or by contacting any Cowen account representative.
COWEN & CO.
Principal Underwriter
1
<PAGE> 30
INVESTMENT OBJECTIVES AND POLICIES
The primary investment objective of the Fund is to realize a high level of
dividend income to the extent consistent with the preservation of capital.
Capital appreciation is a secondary objective of the Fund. Cowen, through its
investment management division, Cowen Asset Management, will serve as the Fund's
investment manager. The Fund is not intended to constitute a balanced investment
program.
Additional Information on Investment Practices
U.S. Government Securities. Examples of the types of U.S. Government
securities that the Fund may hold include, in addition to those described in the
Prospectus and U.S. Treasury Bills, the obligations of the Federal Housing
Administration, Farmers Home Administration, Small Business Administration,
General Services Administration, Central Bank for Cooperatives, Federal Farm
Credit Banks, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation,
Federal Intermediate Credit Banks, Federal Land Banks and Maritime
Administration. It is not anticipated that the Fund will in the foreseeable
future invest in excess of five percent of its net assets in U.S. Government
securities that represent interests in pools of mortgages.
Lending of Securities. The Fund has the authority to lend securities
to brokers, dealers and the other financial organizations. The Fund will not
lend securities to Cowen or its affiliates. By lending its securities, the Fund
can increase its income by continuing to receive interest on the loaned
securities as well as by either investing the cash collateral in short-term
securities or obtaining yield in the form of interest paid by the borrower when
U.S. Government securities are used as collateral. The Fund will adhere to the
following conditions whenever its securities are loaned: (a) the Fund must
receive at least 100 percent cash collateral or equivalent securities from the
borrower; (b) the borrower must increase this collateral whenever the market
value of the securities including accrued interest rises above the level of the
collateral; (c) the Fund must be able to terminate the loan at any time; (d) the
Fund must receive reasonable interest on the loan, as well as any dividends,
interest or other distributions on the loaned securities and any increase in
market value; (e) the Fund may pay only reasonable custodian fees in connection
with the loan; and (f) voting rights on the loaned securities may pass to the
borrower; provided, however, that if a material event adversely affecting the
investment occurs, the Fund's Board of Director must terminate the loan and
regain the right to vote the securities.
Covered Call Options. Options written by the Fund will normally have
expiration dates between one and nine months from the date written. So long as
the obligation of the Fund as the writer of an option continues, the Fund may be
assigned an exercise notice by the broker-dealer through which the option was
sold, requiring the Fund to deliver the underlying security against payment of
the exercise price. This obligation terminates when the option expires or the
Fund effects a closing purchase transaction. The Fund can no longer effect a
closing purchase transaction with respect to an option once it has been assigned
an exercise notice. To secure its obligation to deliver the underlying security
when it writes a call option the Fund will be required to deposit in escrow the
underlying security or other assets in accordance with the rules of the Options
Clearing Corporation (the "Clearing Corporation") and of the national securities
exchange on which the option is written.
2
<PAGE> 31
An option position may be closed out only where there exists a
secondary market for an option of the same series on a recognized national
securities exchange in the over-the-counter market. In light of this fact and
current trading conditions the Fund expects to write options only on national
securities exchanges and in the over-the-counter market. As of the date of this
Statement of Additional Information, the national securities exchanges on which
options are traded are: The Chicago Board Options Exchange, The Board of Trade
of the City of Chicago, American Stock Exchange, Philadelphia Stock Exchange,
Pacific Stock Exchange and New York Stock Exchange ("NYSE"). Options are also
traded on the national securities exchanges with respect to unlisted securities
reported through the NASDAQ system.
Although the Fund will write only those options for which Cowen Asset
Management believes there is an active secondary market so as to facilitate
closing purchase transactions, there is no assurance that sufficient trading
interest to create a liquid secondary market on a securities exchange will exist
for any particular option or at any particular time, and for some options no
such secondary market may exist. A liquid secondary market in an option may
cease to exist for a variety of reasons. In the past, for example, higher than
anticipated trading activity or order flow, or other unforeseen events, have at
times rendered certain of the facilities of the Clearing Corporation and the
national securities exchanges inadequate and resulted in the institution of
special procedures, such as trading rotations, restrictions on certain types of
orders or trading halts or suspensions in one or more options. There can be no
assurance that similar events, or events that may otherwise interfere with the
timely execution of customer orders, will not recur. In such event, it might not
be possible to effect closing purchase transactions in particular options. If,
as a covered call option writer, the Fund is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
securities until the option expires or it delivers the underlying security upon
exercise.
The national securities exchanges have established limitations
governing the maximum number of options of each class which may be held or
written, or exercised within certain time periods, by an investor or group of
investors acting in concert (regardless of whether the options are written on
the same or different national securities exchanges or are held, written or
exercised in one or more accounts or through one or more brokers). It is
possible that the Fund and other clients of Cowen Asset Management and certain
of its affiliates may be considered to be such a group. A national securities
exchange may order the liquidation of positions found to be in violation of
these limits and it may impose certain other sanctions.
In the case of options written by the Fund that are deemed covered by
virtue of the Fund's holding convertible or exchangeable preferred stock or debt
securities, the time required to convert or exchange and obtain physical
delivery of the underlying common stocks with respect to which the Fund has
written options may exceed the time within which the Fund must make delivery in
accordance with an exercise notice. In these instances, the Fund may purchase or
temporarily borrow the underlying securities for purposes of physical delivery.
By so doing, the Fund will not bear any market risk, since the Fund will have
the absolute right to receive from the issuer of the underlying security an
equal number of shares to replace the borrowed stock, but the Fund may incur
additional transaction costs or interest expenses in connection with any such
purchase or borrowing.
3
<PAGE> 32
Repurchase Agreements. The Fund may engage in repurchase agreement
transactions involving its portfolio securities with banks, registered
broker-dealers and government securities dealers approved by the Fund's Board of
Directors. It is not anticipated that the Fund will in the foreseeable future
invest in excess of five percent of its net assets in repurchase agreements.
Under the terms of a typical repurchase agreement, the Fund would acquire an
underlying debt obligation for a relatively short period (usually not more than
one week) subject to an obligation of the seller to repurchase, and the Fund to
resell, the obligation at an agreed price and time, thereby determining the
yield during the Fund's holding period. Thus, repurchase agreements may be seen
to be loans by the Fund collateralized by the underlying debt obligation. This
arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Fund's holding period. The value of the underlying
securities will be at least equal at all times to the total amount of the
repurchase obligation, including interest. The Fund bears a risk of loss in the
event that the other party to a repurchase agreement defaults on its obligations
and the Fund is delayed in or prevented from exercising its rights to dispose of
the collateral securities, including the risk of a possible decline in the value
of the underlying securities during the period in which the Fund seeks to assert
these rights. Cowen Asset Management, acting under the supervision of the Fund's
Board of Directors, reviews the credit-worthiness of those banks and dealers
with which the Fund enters into repurchase agreements to evaluate these risks
and monitors on an ongoing basis the value of the securities subject to
repurchase agreements to ensure that the value is maintained at the required
level.
Investment Restrictions
The investment restrictions numbered 1 through 12 below have been
adopted by the Fund as fundamental policies, which means that they may not be
changed without the vote of a majority of the outstanding voting securities of
the Fund, which is defined as the lesser of (a) 67 percent or more of the shares
present at a shareholders meeting if the holders of more than 50 percent of the
outstanding shares of the Fund are present or represented by proxy, or (b) more
than 50 percent of the outstanding shares. Investment restrictions 13 through 19
may be changed by vote of a majority of the Fund's Directors at any time.
The investment policies adopted by the Fund prohibit it from:
1. With respect to 75 percent of its assets, purchasing the
securities of any issuer, other than U.S. Government securities, if as a result
more than five percent of the Funds total assets would be invested in the
securities of the issuer.
2. Purchasing more than 10 percent of the voting securities of any
one issuer or more than 10 percent of the securities of any class of any one
issuer. This limitation shall not apply to investments in U.S.
Government securities.
3. Purchasing securities on margin, except that the Fund may obtain
any short-term credit necessary for the clearance of purchases and sales of
securities.
4
<PAGE> 33
4. Making short sales of securities or maintaining a short position.
5. Borrowing money, except that the Fund may borrow for temporary or
emergency (but not leveraging) purposes, including the meeting of redemption
requests that might otherwise require the untimely disposition of securities, in
an amount not exceeding 10 percent of the value of the Fund's total assets
(including the amount borrowed) valued at the lesser of cost or market, less
liabilities (not including the amount borrowed) at the time the borrowing is
made. Whenever borrowing exceed five percent of the value of the Fund's total
assets, the Fund will not make any additional investments.
6. Pledging, hypothecating, mortgaging or otherwise encumbering more
than 10 percent of the value of the Fund's total assets, except that this
prohibition shall no longer prohibit the escrow arrangements contemplated by
writing covered call options.
7. Underwriting the securities of the issuers, except insofar as the
Fund may be deemed to be an underwriter under the Securities Act of 1933, as
amended, by virtue of disposing of portfolio securities.
8. Making loans to others, except through purchasing qualified debt
obligations or lending portfolio securities.
9. Investing in securities of other investment companies, except as
they may be acquired as part of a merger, consolidation, reorganization,
acquisition of assets or offer of exchanges.
10. Purchasing any securities that would cause more than 25 percent
of the value of the Fund's total assets to be invested in the securities of
issuers conducting their principal business activities in the same industry;
provided that there shall be no limit on the purchase of U.S.
Government securities.
11. Investing in commodities.
12. Purchasing restricted securities, illiquid securities (such as
repurchase agreements with maturities in excess of five business days) or
securities that are not readily marketable if more than 10 percent of the total
assets of the Fund would be invested in those securities.
13. Purchasing or selling real estate or interests in real estate,
including interests in real estate limited partnerships, except that the Fund
may purchase and sell securities that are issued by companies that invest or
deal in real estate, including readily-marketable interests in real estate
investment trusts or readily marketable securities of other companies which
invest in real estate.
The Fund also reserves the right to own real estate used principally for its own
office space, although it has no current intention to do so.
14. Writing or selling puts, calls, straddles, spreads or
combinations thereof, except that the Fund may write covered call options and
enter into closing purchase transactions with respect to
5
<PAGE> 34
options it has written, provided these transactions are conducted in a manner
consistent with, and subject to the limitations set forth in, the description of
these transactions in the Prospectus and this Statement of Additional
Information.
15. Investing in oil, gas or other mineral exploration or development
programs or oil, gas or mineral leases, except that the Fund may invest in the
securities of companies that invest in or sponsor those programs.
16. Purchasing any security if as a result the Fund would then have
more than five percent of its total assets invested in securities of issuers
(including predecessors) that have been in continual operation for less than
three years. This limitation shall not apply to investments in U.S. Government
securities.
17. Making investments for the purpose of exercising control or
management.
18. Investing in warrants, although warrants acquired by the Fund as
part of a unit or attached to securities at the time of acquisition are not
subject to this limitation.
19. Purchasing or retaining the securities of any issuer if, to the
knowledge of the Fund, any of the officers of directors of the Fund or Cowen
individually owns more than 0.5 percent of the outstanding securities of the
issuer and together they own beneficially more than five percent of the
securities.
The percentage limitations contained in the restrictions listed
above apply at the time of purchases of securities. If a percentage restriction
is adhered to at the time of an investment, a later increase or decrease in
percentage resulting from a change in values or assets will not constitute a
violation of such restriction. The Fund may make commitments more restrictive
than the restrictions listed above so as to permit the sale of shares of the
Fund in certain states. Should the Fund determine that and such commitment is no
longer in the best interests of the Fund and its shareholders, the Fund will
revoke the commitment by terminating the sale of shares of the Fund in the state
involved.
Portfolio Turnover
For regulatory reporting purposes, the Fund's turnover rate is
calculated by dividing the lesser of purchases or sales of securities for the
fiscal year by the monthly average of the value of the Fund's securities, with
certain other obligations with less than one year to maturity at the time of
purchase excluded. Thus, a 100 percent turnover rate would occur, for example,
if all included securities were replaced once during the year. The Fund will not
normally engage in the trading of securities for the purpose of realizing short
term profits, but will adjust its holdings as considered advisable in view of
prevailing or anticipated market conditions, and turnover will not be a limiting
factor should Cowen Asset Management deem it advisable to purchase or sell
securities.
6
<PAGE> 35
Portfolio Transactions
Decisions to buy and sell securities and other financial instruments
for the Fund are made by Cowen Asset Management, which also is responsible for
placing these transactions, subject to the overall review of the Fund's Board of
Directors. Although investment requirements for the Fund are reviewed
independently from those of the other accounts managed by Cowen Asset
Management, investments of the type the Fund may make may also be made by these
other accounts. When the Fund and one or more other accounts managed by Cowen
Asset Management are prepared to invest in, or desire to dispose of, the same
security or other financial instrument, available investments or opportunities
for sales will be allocated in a manner believed by Cowen Asset Management to be
equitable to each. In some cases, this procedure may affect adversely the price
paid or received by the Fund or the size of the position obtained or disposed of
by the Fund.
Portfolio transactions are in most cases effected on U.S. stock
exchanges and involve the payment of negotiated brokerage commissions. There is
generally no stated commission in the case of securities traded in the
over-the-counter markets, but the prices of those securities may include
commissions or mark-ups. Purchases and sales of money market instruments and
debt securities usually are principal transactions. These securities are
normally purchased directly from the issuer or from an underwriter or market
maker for the securities. 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. U.S. Government securities are generally purchased from underwriters
or dealers, although certain newly-issued U.S. Government securities may be
purchased directly from the U.S. Treasury or from the issuing agency or
instrumentality.
To the extent consistent with applicable provisions of the Act, other
securities laws and the rules and exemptions adopted by the Securities and
Exchange Commission (the "SEC") thereunder, the Fund's Board of Directors has
determined that portfolio transactions may be effected through Cowen if, in the
judgment of Cowen Asset Management, the use of Cowen normally is likely to
result in price and execution at least as favorable as those of other qualified
broker-dealers, and if, in particular transactions, Cowen charges the Fund a
rate consistent with that charged to comparable unaffiliated customers in
similar transactions. Over-the-counter purchases and sales are transacted
directly with principal market makers except in those cases in which better
prices and executions may be obtained elsewhere, and principal transactions are
not entered into with affiliates of the Fund except pursuant to exemptive rules
or orders adopted by SEC.
In selecting brokers or dealers to execute portfolio transactions on
behalf of the Fund, Cowen Asset Management seeks the best overall terms
available. In assessing the best overall terms available for any transaction,
Cowen Asset Management will consider the factors it deems relevant, including
the breadth of the market in the investment, the price of the investment, the
financial condition and execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the specific transaction and on a
continuing basis. In addition, Cowen Asset Management is authorized, in
selecting parties to execute a particular transaction and in evaluating the best
overall terms available, to consider the brokerage and research services, as
those terms are defined in Section 28(e) of the Securities Exchange Act of 1934,
provided to the Fund and/or other accounts over which
7
<PAGE> 36
Cowen Asset Management or its affiliates exercise investment discretion. Cowen
Asset Management's fees under its agreement with the Fund are not reduced by
reason of its receiving brokerage services. The Fund's Directors periodically
review the commissions paid by the Fund to determine if the commissions paid
over representative periods of time are reasonable in relation to the benefits
inuring to the Fund.
For the period from July 31, 1994 through November 30, 1994 the Fund
paid an aggregate of approximately $41,670 in commissions to broker-dealers for
execution of portfolio transactions. Cowen effected approximately 4.4% of the
aggregate dollar amount of such transactions for which it received approximately
$1,050 (2.5%) of the commissions paid by the Fund during that year. The balance
of the commissions ($40,620) was paid to other broker-dealers which furnished
research services to the Fund and which effected the remaining 95.6% of the
aggregate dollar amount of portfolio transactions involving the payment of
commissions.
For the fiscal year ended November 30, 1995, the Fund paid an
aggregate of approximately $146,789 in commissions to broker-dealers for
execution of portfolio transactions. Cowen effected approximately 3.8% of the
aggregate dollar amount of such transactions for which it received approximately
$4,503 (3.1%) of the commissions paid by the Fund during that year. The balance
of the commissions ($142,286) was paid to other broker-dealers which furnished
research services to the Fund and which effected the remaining 96.2% of the
aggregate dollar amount of portfolio transactions involving the payment of
commissions.
For the fiscal year ended November 30, 1996, the Fund paid an
aggregate of approximately $188,848 in commissions to broker-dealers for
execution of portfolio transactions. Cowen effected approximately 4.0% of the
aggregate dollar amount of such transactions for which it received approximately
$8,050 (4.3%) of the commissions paid by the Fund during that year. The balance
of the commissions ($180,798) was paid to other broker-dealers which furnished
research services to the Fund and which effected the remaining 96.0% of the
aggregate dollar amount of portfolio transactions involving the payment of
commissions.
Portfolio Valuation
The assets of the Fund are generally valued on the basis of market
quotations. Securities whose principal market is on an exchange are valued at
the last sales price on the exchange or, in the absence of currently reported
sales on the exchange, at the most recent bid price in the over-the-counter
market or, in the absence of a recent bid price, the bid equivalent as obtained
from one or more of the major market makers for the securities to be valued.
Securities traded principally in the over-the-counter market are valued at the
most recent bid price. Other investments and other assets, including restricted
securities and securities for which market quotations are not readily available,
are valued at fair value under procedures approved by the Board of Directors.
High-quality, short-term securities with maturities of 60 days or less are
valued at amortized cost, which constitutes fair value as determined by the
Board of Directors. Amortized cost valuation involves initially valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument.
8
<PAGE> 37
Although this method provides certainty in valuation, it may result in periods
during which value, as determined by amortized cost, is higher or lower than the
price the Fund would receive if it sold the instrument.
PURCHASES AND REDEMPTIONS
Purchases
Shares of the Fund are offered on a continuous basis by the Fund and
are distributed on a best efforts basis by Cowen as principal underwriter for
the Fund pursuant to a Distribution Agreement. As noted elsewhere in this
Statement of Additional Information and in the Prospectus, Cowen receives an
investment advisory fee and brokerage commissions for effecting portfolio
transactions on behalf of the Fund.
The word "Cowen" in the Fund's name has been adopted pursuant to a
provision contained in the Distribution Agreement. Under that provision, Cowen
may terminate the Fund's license to use the word "Cowen" in its name when Cowen
ceases to act as the Fund's principal underwriter.
Redemptions
The right of redemption of shares of the Fund may be suspended or the
date of payment postponed (a) for any periods during which the NYSE is closed
(other than for customary weekend and holiday closings), (b) when trading in the
markets the Fund normally utilizes is restricted, or an emergency, as defined by
the rules and regulations of the SEC, exists, making disposal of the Fund's
investments or determination of its net asset value not reasonably practicable,
or (c) for such other periods as the SEC by order may permit for protection of
the Fund's shareholders.
MANAGEMENT OF THE FUND
Board of Directors
The names of the Fund's directors and executive officers, their
addresses, principal occupations during the past five years and other
affiliations are set forth below. Each Director who is an "interested person" of
the Fund, as defined in the Act is indicated by an asterisk. Each of the
directors is also a director of one or more other investment companies for which
Cowen serves as principal underwriter.
Directors of the Fund
9
<PAGE> 38
James H. Carey, Director, age 64. Managing Director of Briarcliff
Financial Associates, Inc. (since June, 1991) and Chief Executive Officer,
Director and Treasurer of National Capital Benefits Corporation (since March,
1994). Mr. Carey is also a Director of Airborne Freight Corporation,
Jonathan Woodner Company, NCB Insurance Limited (Bermuda), The Midland
Company, The Murray & Isabella Rayburn Foundation and the U.S. Committee for
UNICEF. Prior thereto he was President and Chief Executive Officer, The
Berkshire Bank (May 1989 to June 1991). His address is Village View and
Canterbury Roads, Manchester Center, VT 05255.
*Joseph M. Cohen, Chairman and Chief Executive Officer of the Fund,
age 59. Principal Executive Officer and since March 1991 Class I Limited Partner
of Cowen and Chairman and President of Cowen Incorporated, the sole general
partner of Cowen. Prior thereto he was the Managing General Partner of Cowen.
Director, Chairman and Chief Executive Officer of the Cowen Mutual Funds. Until
December 15, 1992, he was also President of the Fund and the Cowen Mutual Funds.
Dr. Peter P. Gil, Director, age 74. Director, Arthur D. Little
Management Institute Board since 1991 and currently Acting Dean of the
Institute; Trustee and Executive Committee Member, Plimoth Plantation,
(Plymouth, Mass.); member of the Dominion Bridge Corporation's Technology
Committee. From July 1988 to July 1995, Dr. Gil served in a variety of senior
administrative positions at the Sloan School of Management, Massachusetts
Institute of Technology, as Director, Management of Technology Program, the
Senior Executive Program, External Relations of the School; and Senior Lecturer.
Prior to July 1988 he was Associate Dean of the School. His address is 79 Main
Street, New Castle, New Hampshire 03854-0651.
Dr. Martin J. Gruber, Director, age 59. Chairman, Department of
Finance and Nomura Professor of Finance, Leonard N. Stern School of Business
Administration, New York University. He is also a Director of BT Pyramid
Mutual Funds, Japan Equity Fund, Inc., and the Taiwan Equity Fund, Inc.; and
a trustee of BT Leadership Trust and T.I.A.A. Board. His address is New York
University, 44 West 4th Street, New York, New York 10012.
Burton J. Weiss, Director, age 66. Self-employed consultant
since March, 1988. His address is 103 Marin Drive, Chapel Hill, North
Carolina 27516.
Officers of the Fund Not Noted Above
Rodd M. Baxter, Secretary. General Counsel of Cowen Asset
Management and Director of Cowen. His address is Financial Square, New York,
New York 10005.
Benedict Capaldi, Senior Investment Officer. Senior Portfolio
Manager of Cowen Asset Management and Managing Director of Cowen. His
address is Financial Square, New York, New York 10005.
10
<PAGE> 39
William Church, Vice President and Senior Investment Officer.
Class I Limited Partner of Cowen, Managing Director of Cowen Incorporated and
Chief Investment Officer of Cowen Asset Management. His address is Financial
Square, New York, New York 10005.
Paul Houk, Investment Officer. Senior Portfolio Manager of Cowen
Asset Management. Director of Cowen. His address is Financial Square, New
York, NY 10005.
Creighton H. Peet, Vice President, Treasurer and Senior Investment
Officer. Class I Limited Partner of Cowen, Managing Director of Cowen
Incorporated. His address is Financial Square, New York, New York 10005.
William Rechter, Senior Investment Officer and Senior Vice
President. Class I Limited Partner of Cowen and Managing Director of Cowen
Incorporated. His address is Financial Square, New York, New York 10005.
David Sarns, President. Chief Administrative Officer and Class I
Limited Partner of Cowen and Managing Director of Cowen Incorporated. His
address is Financial Square, New York, New York 10005.
Irwood Schlackman, Controller. Mutual Fund Administrator of
Cowen. His address is Financial Square, New York, New York 10005.
Compensation and Holders of Securities
No officer, director, partner or employee of Cowen or its affiliates
will receive any compensation from the Fund for serving as an officer or
director of the Fund. Directors who are not officers, directors, partners,
stockholders or employees of Cowen or its affiliates receive a fee of $3,000 per
annum plus $500 per meeting attended and $375 for each audit committee meeting
attended and reimbursement for travel and out-of pocket expenses. For the four
months ended November 30, 1994, the fiscal years ending November 30, 1995 and
1996 such fees and expenses totaled $16,907, $21,995 and $22,203, respectively.
None of the Fund's directors and officers, either individually or as a group,
beneficially owned more than 1% of the Fund's outstanding stock as of the close
of business on March 5, 1997. As of March 5, 1997, the following persons owned
5% or more of a class of the Fund's securities: Class C-- Batrus & Co. (20%),
Post Office Box 9005, Mail Stop 2174, Church Street Station, New York, New York
10006; Branch Cabell & Co. 401K (13%), Post Office Box 27602, Richmond, Virginia
23261-7602; Cowen & Co. 401K (29%), Financial Square, New York, NY 10005.
11
<PAGE> 40
COMPENSATION TABLE
<TABLE>
<CAPTION>
Name of Aggregate Pension or Estimated Annual Total
Person Compensation Retirement Benefits Compensation
From Benefits Upon From
Registrant Accrued as Retirement Registrant
Part of Fund and Fund
Expenses Complex Paid
to Directors*
<S> <C> <C> <C> <C>
James H. Carey $5,375 -0- -0- $21,500
Peter Gil $5,375 -0- -0- $21,500
Martin J. Gruber $5,375 -0- -0- $21,500
Burton J. Weiss $5,375 -0- -0- $21,500
</TABLE>
*There are six funds included in the complex.
Investment Manager
Cowen, through Cowen Asset Management, its investment management
division, serves as investment manager to the Fund pursuant to an Investment
Management Agreement which became effective on the date the Fund commenced
investment operations. Cowen, a limited partnership organized under the laws of
New York, is controlled by its general partner, Cowen Incorporated. Cowen
Incorporated is controlled by Mr. Joseph M. Cohen. The services provided by, and
the fees payable by the Fund to Cowen Asset Management under its Investment
Management Agreement is described in the Prospectus. From time to time, Cowen,
in its sole discretion and as it deems appropriate, may waive a portion or all
of the fees payable to it by the Fund. For the four months ended November 30,
1994, and for the fiscal years ended November 30, 1995 and 1996, Cowen received
investment management fees of $100,004, $379,702 and $506,210, respectively.
From May 9, 1994 through August 31, 1995, Cowen voluntarily
reimbursed the Fund's expenses in an amount equal to an annual rate of .20 of 1%
through August 31, 1995, .18 of 1% from that date through March 31, 1996 and .14
of 1% through November 30, 1996 of the average daily value of the Fund's net
assets.
Shareholder Servicing and Distribution Plan (the "Plan")
Cowen is paid monthly fees by the Fund in connection with (1) the
servicing of shareholder accounts in Class A and Class B shares and (2)
providing distribution related services in respect of Class B shares. A monthly
service fee, authorized pursuant to the Plan adopted by the Fund pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act"), is
12
<PAGE> 41
calculated at the annual rate of .25% of the value of the average daily net
assets of the Fund attributable to each of Class A and Class B shares and is
used by Cowen to provide compensation for ongoing servicing and/or maintenance
of shareholder accounts with the Fund. Compensation is paid by Cowen to persons,
including Cowen employees, who respond to inquiries of shareholders of the Fund
regarding their ownership of shares of their accounts with the Fund or who
provide other similar services not otherwise required to be provided by the
Fund's investment adviser, transfer agent or other agent of the Fund.
In addition, pursuant to the Plan, the Fund pays to Cowen a monthly
distribution fee at the annual rate of .75% of the Funds average daily net
assets attributable to Class B shares. The distribution fee is used by Cowen to
provide (1) initial and ongoing sales compensation to its registered
representative or those of other broker-dealers that enter into selected dealer
agreements with Cowen in respect of sales of Class B shares; (2) costs of
printing and distributing the Fund's Prospectus, Statement of Additional
Information and sales literature to prospective investors in Class B shares; (3)
costs associated with any advertising relating to Class B shares; and (4)
payments to, and expenses of, persons who provide support services in connection
with the distribution of Class B shares.
Payments under the Plan are not tied exclusively to the service
and/or distribution expenses actually incurred by Cowen, and the payments may
exceed expenses actually incurred by Cowen. The Board of Directors evaluates the
appropriateness of the Plan and its payment terms on a continuing basis and in
doing so considers all relevant factors, including expenses borne by Cowen and
amounts it received under the Plan.
For the four months ended November 30, 1994, and for the fiscal years
ended November 30, 1995 and 1996, Cowen received $28,652, $102,414 and $125,649,
respectively, in servicing fees from Class A shares and $667, $9,341, and
$21,608 respectively, in servicing and distribution fees from Class B shares.
Custodian and Transfer and Dividend Agent
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City,
Missouri 64105, is custodian of the Fund's assets pursuant to a Custody
Agreement. Under the Custody Agreement, the Bank (i) maintains a separate
account or accounts in the name of the Fund, (ii) holds and transfers portfolio
securities on account of the Fund, (iii) receives and disburses money on behalf
of the Fund and (iv) collects and receives all income and other payments and
distributions on account of the Fund's portfolio securities.
Investors Fiduciary Trust Company has also agreed to serve as the
Fund's transfer and dividend disbursing agent pursuant to a Transfer Agency
Agreement, under which the Bank (i) issues and redeems shares of the Fund, (ii)
addresses and mails all communications by the Fund to its shareholders and (iii)
maintains shareholder accounts.
Auditors and Counsel
13
<PAGE> 42
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019, has
been selected as the Fund's independent auditors.
Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd Street,
New York, New York 10022, serves as counsel for the Fund.
TAXES
Set forth below is a summary of certain general federal income tax
considerations which may affect the Funds and their shareholders. As the summary
is not intended as a substitute for individual tax planning, investors are urged
to consult their own tax advisers with specific reference to their particular
federal, state or local tax situations.
Taxation of Shareholders
If a shareholder receives a distribution taxable as long-term capital
gain, and redeems or exchanges his or her shares of the Fund before he or she
has held the shares (without hedging them) for more than six months, any loss on
such redemption or exchange up to the amount of the distribution will be treated
as long-term capital loss.
Dividends of investment income from the Fund may qualify for the
dividends-received deduction for corporate shareholders only to the extent of
the aggregate amount of dividends received by the Fund from United States
corporations. The Fund must hold stock for more than 45 days (90 days in the
case of certain preferred stock), without hedging its investment in the stock in
certain ways, for dividends paid on the stock to be eligible dividends.
If the Fund is the holder of record of any stock on the record date
for any dividends payable with respect to such stock, such dividends are
included in the Fund's gross income as of the later of (a) the date such stock
became ex-dividend with respect to such dividends (i.e., the date on which a
buyer of the stock would not be entitled to receive the declared, but unpaid,
dividends) or (b) the date the Fund acquired such stock. Accordingly, in order
to satisfy its income distribution requirements, the Fund may be required to pay
dividends based on anticipated earnings, and shareholders may receive dividends
in an earlier year than would otherwise be the case.
If a shareholder (a) incurs a sales charge in acquiring Fund shares,
(b) disposes of those shares within ninety days and (c) acquires shares in a
mutual fund for which the otherwise applicable sales charge is reduced by reason
of reinvestment right (i.e., an exchange privilege), the original sales charge
increases the shareholder's tax basis in the original shares only to the extent
that the otherwise applicable sales charge for the second acquisition is not
reduced. The portion of the original shares would be treated as incurred with
respect to the second acquisition and, as a general rule, would increase the
shareholder's tax basis in the newly acquired shares. Furthermore, the same rule
also applies to a disposition of the newly acquired shares made within ninety
days of the second acquisition.
14
<PAGE> 43
The provision prevents a shareholder from immediately deducting the sales charge
by shifting his investment in a family of mutual funds.
In general, if a shareholder fails to furnish a correct taxpayer
identification number, fails to report dividend and interest income in full, or
fails to certify that he or she has provided a correct taxpayer identification
number and that he or she is not subject to withholding, then the shareholder
may be subject to 31 percent federal backup withholding tax on dividends,
capital gains distribution and the proceeds of redemptions or exchange. An
individual's taxpayer identification number is his or her social security
number. The backup withholding tax is not an additional tax and may be credited
against a shareholder's regular federal income tax liability.
Taxation of Fund Investments
Gain or loss on the sale of a security will generally be long-term
capital gain or loss if the Fund has held the security for more than one year.
If a Fund acquires a debt security at a discount, however, the portion of any
gain upon its sale or redemption that reflects the accrued market discount will
be taxed as ordinary income, rather than capital gain.
In general, when the Fund writes a covered call option on a security,
and either the option expires unexercised or the Fund enters into a closing
purchase transaction, the Fund will normally recognize a short-term capital gain
or loss (except that any losses on certain covered call stock options will be
treated as long-term capital losses). If a call option is exercised, the premium
received will be treated as additional proceeds from the sale of the underlying
security.
Although the Fund expects to be relieved of all or substantially all
federal and state income or franchise taxes, depending upon the extent of its
activities in certain states and localities, that portion of the Fund's income
which is treated as earned in any such state or locality could be subject to
state or local tax.
PERFORMANCE INFORMATION
From time to time, the Fund may advertise its "average annual total
return" for the different Classes over various periods of time. These total
return figures show the average percentage change in value of an investment in
the Fund from the beginning date of the measuring period to the end of the
measuring period. These figures reflect changes in the price of the Fund's
shares and assume that any income dividends and/or capital gains distributions
made by the Fund during the period were invested in shares of the Fund. Figures
will be given for recent one, five and ten year periods, or the life of the Fund
to the extent it has not been in existence for any such periods, and may be
given for other periods as well, such as on a year-by-year basis. When
considering "average" total return figures for periods longer than one year, it
is important to note that the Fund's annual total return for any one year in the
period might have been greater or lesser than the average for the entire period.
The Fund may also use "aggregate" total return figures for various periods,
representing the cumulative period (again reflecting changes in share prices and
assuming reinvestment of dividends and distributions).
15
<PAGE> 44
Aggregate total returns may be shown by means of schedules, charts, or graphs,
and may indicate subtotals of the various components of total return (i.e.,
change in value of initial investment, income dividends, and capital gains
distributions). The performance of the Fund also might be compared to rankings
prepared by Lipper Analytical Services, Inc., and Morningstar, Inc. which are
widely recognized, independent services that monitor the performance of mutual
funds, as well as to various unmanaged indices, such as the Standard & Poor's
500 Composite Stock Price Index. Performance Information may be useful in
reviewing the performance of the Fund and in providing a basis for comparison
with other investment alternatives. Investors should be aware that, because the
performance of the Fund changes in response to fluctuations in interest rates,
price fluctuations in securities markets, the Fund's expenses and other factors,
a performance quotation should not be considered representative of the Fund's
performance for any future period. To the extent any advertisement or sales
literature of a Fund describes the expenses or performance of any Class, it will
also disclose the information for other Classes. Shareholders may make inquiries
regarding the Fund, including current performance quotations, by calling any
Cowen account representative.
The Fund's "average annual total return" will be computed in
accordance with the following formula prescribed by the Securities and Exchange
Commission:
TOTAL RETURN = P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = Ending Redeemable Value of a hypothetical $1,000 investment made at
the beginning of a 1, 5, or 10 year period at the end of the 1, 5, or 10
year periods (or fractional portion thereof), assuming reinvestment of all
dividends and distributions.
Class A Shares/Average Annual Total Return for the periods ended November 30,
1996:
1 year = 12.25%
5 years = 12.55%
10 years = 10.11%
*Inception = 10.25%
*September 19, 1986
Class B Shares/Average Annual Total Return for the periods ended November 30,
1996:
1 year = 11.89%
*Inception = 16.23%
*May 17, 1994
Class C Shares/Average Annual Total Return for the periods ended November 30,
1996:
16
<PAGE> 45
1 year = 18.25%
*Inception = 18.14%
*May 9, 1994
The Class A total return figures calculated in accordance with the
above formula assumes that the maximum 4.75% sales load has been deducted from
the hypothetical $1,000 initial investment at the time of purchase. The Class B
total return figures calculated in accordance with the above formula assumes the
deduction of the appropriate contingent deferred sales charge at the end of each
period.
The ERV assumes complete redemption of the hypothetical investment
at the end of the measuring period. A Fund's net investment income changes in
response to fluctuations in interest rates and the expenses of the Fund.
FINANCIAL STATEMENTS
The Fund hereby incorporates by reference the financial statements and related
notes and the report of Ernst & Young LLP thereon included in the Fund's Annual
Report to Shareholders for the period ended November 30, 1996. The Fund will
provide copies of the Annual Report to each person who requests a copy of this
Statement of Additional Information. The Fund will also furnish copies of the
Annual Report, without charge, to any shareholder upon request directed to the
Fund, at the address or telephone number given on the cover page of this
Statement of Additional Information.
17
<PAGE> 46
PART C
OTHER INFORMATION
Item 24: Financial Statements and Exhibits
(a) Financial Statements included in Registration Statement:
(i) Financial Highlights included in Part A.
(ii) Incorporated by reference under "Financial Statements" in
Part B of Cowen Income + Growth Fund is the Annual Report to
Shareholders dated November 30, 1996, which includes the
Statement of Investments and Statement of Assets and
Liabilities as of November 30, 1996; Statement of Operations
for the year ended November 30, 1996; Statement of Changes in
Net Assets for the years ended November 30, 1995 and 1996;
Notes to Financial Statements; and the Report of Ernst &
Young, LLP, Independent Auditors, dated January 3, 1997.
(b) Exhibits:
Exhibit No. Description of Exhibits
- ----------- -----------------------
1 (i) Articles of Incorporation of Registrant
(ii) Articles of Amendment
2 (i) By-Laws of Registrant
(ii) Amendment of Article I, Sections 1 and 2 of Registrant's
By-Laws
3 Not applicable
4 Not applicable
5 Investment Management Agreement
6 Distribution Agreement
7 Not applicable
8 Custody Agreement with Investors Fiduciary Trust Company
9 Transfer Agency Agreement with Investors Fiduciary Trust
Company
10 (i) Opinion and consent of Venable Baetjer and Howard, Aug. 7,
1986
(ii) Opinion and consent of Willkie Farr & Gallagher, Aug. 7,
1986
C-1
<PAGE> 47
(iii) Opinion and consent of Venable Baetjer and Howard, April
29, 1994
11 Consent of Independent Auditors
12 Not Applicable
13 Subscription Agreement
14 Not applicable
15 (i) Form of Shareholder Servicing and Distribution Plan
(ii) Form of Shareholder Servicing Agreement
(iii) Form of Distribution Related Services Agreement
Item 25. Persons Controlled by or Under Common Control with Registrant
The majority of the directors who serve on the Registrant's Board of
Directors also comprise the majority of the Board of Directors of Cowen Standby
Reserve Fund, Inc., Cowen Standby Tax-Exempt Reserve Fund, Inc. and Cowen Funds,
Inc. Each of these registered investment companies was incorporated under the
laws of Maryland.
Item 26. Number of Holders of Securities
Number of Record Holders
Title of Class as of March 5, 1997
-------------- ------------------------
Common Stock, par value $.001
per share................... 2,711
Item 27. Indemnification
Reference is hereby made to Registrant's Registration Statement
filed on May 14, 1986, as amended on August 8, 1986.
Items 28 Business and Other Connections of Investment Manager;
and 29. Principal Underwriter
Cowen & Company ("Cowen"), through Cowen Asset Management, serves as
Investment Manager to Registrant and is the principal underwriter and
distributor of the Registrant's shares. Cowen is also the Investment Manager,
principal underwriter and distributor of shares of Cowen Funds, Inc. ("CFI"),
Cowen Standby Reserve Fund, Inc. ("CSRF") and Cowen Standby Tax-Exempt Reserve
Fund, Inc. ("CSTXF"). Listed on the following pages are the names of all of the
General Partners, Class I Limited Partners and Limited Partners of Cowen as of
March 5, 1997, their positions and their positions with Registrant, if any, and
under the heading "Other Business Activities and Principal Business Addresses,
and business profession, vocation or employment of a substantial nature (other
than business of Cowen) in which they have been engaged for their own account or
in the capacity of director, officer, employee, partner or trustee during the
past two fiscal years of the Registrant (referred to on the following pages as
"CI+G").
C-2
<PAGE> 48
<TABLE>
<CAPTION>
OTHER BUSINESS
NAME, CLASS OF PARTNER POSITION, IF ANY, WITH FUND LISTED BELOW ACTIVITIES AND
AND PRINCIPAL BUSINESS --------------------------------------------------- PRINCIPAL BUSINESS
BUSINESS ADDRESS CSRF CSTXRF CI+G CFI ADDRESS
- ------------------------- ------------ ------------ ------------ ------------ -----------------------
<S> <C> <C> <C> <C> <C>
GENERAL PARTNER
Cowen Incorporated (1)
CLASS I LIMITED PARTNERS
Anthony J. Aliberti (1)...... Since 1/1/96 -- Cowen
Incorporated (1) -- MD
Richard A. Altschuler (3).... Since 3/30/92 -- Cowen
Incorporated (1) -- MD
Michael H. Bassett (1)....... Since 3/30/92 -- Cowen
Incorporated (1) -- MD
William A. Belfiore (1)...... Since 1/1/96 -- Cowen
Incorporated (1) -- MD
Anthony R.Bergamaschi (1).... Since 3/30/92 -- Cowen
Incorporated (1) -- MD
Christopher A. Beyer (1)..... Since 3/30/94 -- Cowen
Incorporated (1) -- MD
Andrew C. Brosseau (3)....... Since 1/1/96 -- Cowen
Incorporated (1) -- MD
Kennedy M. Buckley (1)....... Since 3/30/92 -- Cowen
Incorporated (1) -- MD
Richard S. Chu (3)........... Since 3/30/91 -- Cowen
Incorporated (1) -- MD
William R. Church (1)........ V, SI V, SI Since 3/30/91 -- Cowen
Incorporated (1) -- MD
Jarrod M. Cohen (1).......... Since 3/30/93 -- Cowen
Incorporated (1) -- MD
Joseph M. Cohen (1).......... C, D C, D C, D C, D Since 3/30/91 -- Cowen
Incorporated (1) -- P, D
Peter E. Cohen (1)........... Since 3/30/93 -- Cowen
Incorporated (1) -- MD
Terrence R. Connelly (1)..... Since 1/1/96 -- Cowen
Incorporated (1) -- MD
Philip A. Conti (1).......... Since 3/30/92 -- Cowen
Incorporated (1) -- MD
Arthur Cowen, III (1)........ ETC Enterprises, Inc. (8)
P; Since 3/30/91 Cowen
Incorporated (1) -- MD
Nancy M. Crowell (6)......... Since 3/30/92 -- Cowen
Incorporated (1) -- MD
John P. Dunphy (1)........... Since 3/30/92 -- Cowen
Incorporated (1) -- MD
James R. Dwyer (1)........... Since 3/30/92 -- Cowen
Incorporated (1) -- MD
</TABLE>
C-3
<PAGE> 49
<TABLE>
<CAPTION>
OTHER BUSINESS
NAME, CLASS OF PARTNER POSITION, IF ANY, WITH FUND LISTED BELOW ACTIVITIES AND
AND PRINCIPAL --------------------------------------------------- PRINCIPAL BUSINESS
BUSINESS ADDRESS CSRF CSTXRF CI+G CFI ADDRESS
- ------------------------- ------------ ------------ ------------ ------------ -----------------------
<S> <C> <C> <C> <C> <C>
Alec D. Green(7).............. Since 1/1/96 -- Cowen
Incorporated (1) -- MD
Edward I. Herbst (1).......... Since 3/30/91 -- Cowen
Incorporated (1) -- MD
Thomas L. Hyde (1)............ Since 3/30/93 -- Cowen
Incorporated (1) -- MD
Gerald P. Kaminsky (1)........ D, SI D, SI Since 3/30/91 -- Cowen
Incorporated (1) -- MD
Thomas King (3)............... Since 3/30/92 -- Cowen
Incorporated (1) -- MD
Albert F. Laub (3)............ Since 3/30/91 -- Cowen
Incorporated (1) -- MD
William D. Lautman (1)........ Since 3/30/93 -- Cowen
Incorporated (1) -- MD
Daniel T. Lemaitre (3)........ Since 3/30/92 -- Cowen
Incorporated (1) -- MD
Dana T. Lerch (1)............. Since 3/30/92 -- Cowen
Incorporated (1) -- MD
Maria F. Lewis-Kussmaul (3)... Since 3/30/93 -- Cowen
Incorporated (1) -- MD
Stuart S. Lovejoy (1)......... Since 1/1/96 -- Cowen
Incorporated (1) -- MD
Arthur S. Lutzke (1).......... Since 3/30/91 -- Cowen
Incorporated (1) -- MD
David E. Mack (1)............. Since 3/30/91 -- Cowen
Incorporated (1) -- MD
Stephen Malfitano (1)......... Since 3/30/94 -- Cowen
Incorporated (1) -- MD
Joseph M. Marinaro (1)........ Since 3/30/96 -- Cowen
Incorporated (1) -- MD
William O. Matthews (1)....... Since 3/30/91 -- Cowen
Incorporated (1) -- MD
William K. McCormick (5)...... Since 3/30/91 -- Cowen
Incorporated (1) -- MD
Carl A. Merz (1).............. Since 3/30/92 -- Cowen
Incorporated (1) -- MD
Raymond K. Moran (3).......... Since 3/30/91 -- Cowen
Incorporated (1) -- MD
</TABLE>
C-4
<PAGE> 50
<TABLE>
<CAPTION>
OTHER BUSINESS
NAME, CLASS OF PARTNER POSITION, IF ANY, WITH FUND LISTED BELOW ACTIVITIES AND
AND PRINCIPAL --------------------------------------------------- PRINCIPAL BUSINESS
BUSINESS ADDRESS CSRF CSTXRF CI+G CFI ADDRESS
- ------------------------- ------------ ------------ ------------ ------------ -----------------------
<S> <C> <C> <C> <C> <C>
Jerrold B. Newman (6).... Since 3/30/92 -- Cowen
Incorporated (1) -- MD
Donald F. Novell (1)..... Since 3/30/94 -- Cowen
Incorporated (1) -- MD
Gary S. Pardo (1)........ Since 3/30/93 -- Cowen
Incorporated (1) -- MD
Elizabeth T. Pawel (1)... Since 1/1/96 -- Cowen
Incorporated (1) -- MD
Drew Peck................ Since 1/1/96 -- Cowen
Incorporated (1) -- MD
Creighton H. Peet (1).... D, T D, T V, SI, T V, SI, T Since 3/30/91 -- Cowen
Incorporated (1) -- MD
Antonio G. Pinto (1)..... Since 3/30/91 -- Cowen
Incorporated (1) -- MD
Edward M. Posner (1)..... Since 3/30/91 -- Cowen
Incorporated (1) -- MD
Peter J. Power (1)....... Since 3/30/92 -- Cowen
Incorporated (1) -- MD
Paul S. Raniolo (1)...... Since 3/30/93 -- Cowen
Incorporated (1) -- MD
William Rechter (1)...... SI SI Since 3/30/92 -- Cowen
Incorporated (1) -- MD
Stephen E. Reilly (3).... Since 3/30/91 -- Cowen
Incorporated (1) -- MD
Todd B. Robbins (1)...... Since 3/30/93 -- Cowen
Incorporated (1) -- MD
Richard L. Rugani
(1 and 3).............. Since 3/30/92 -- Cowen
Incorporated (1) -- MD
David R. Sarns (1)....... P P P P Since 3/30/93 -- Cowen
Incorporated (1) -- MD
Ravi P. Singh (1)........ Since 3/30/93 -- Cowen
Incorporated (1) -- MD
Arthur J. Stavaridis
(1 and 3).............. Since 3/30/92 -- Cowen
Incorporated (1) -- MD
David K. Stone (3)....... Since 3/30/93 -- Cowen
Incorporated (1) -- MD
Richard S. Striefler (1). Since 3/30/93 -- Cowen
Incorporated (1) -- MD
Franklyn Theis (3)....... Since 3/30/92 -- Cowen
Incorporated (1) -- MD
</TABLE>
C-5
<PAGE> 51
<TABLE>
<CAPTION>
OTHER BUSINESS
NAME, CLASS OF PARTNER POSITION, IF ANY, WITH FUND LISTED BELOW ACTIVITIES AND
AND PRINCIPAL --------------------------------------------------- PRINCIPAL BUSINESS
BUSINESS ADDRESS CSRF CSTXRF CI+G CFI ADDRESS
- --------------------------- ------------ ------------ ------------ ------------ -----------------------
<S> <C> <C> <C> <C> <C>
Robert Valdez (6).......... Since 3/30/94 -- Cowen
Incorporated (1) -- MD
Cai Von Rumohr (3)......... Since 3/30/91 -- Cowen
Incorporated (1) -- MD
Harold Vogel (1)........... Since 1/1/96 -- Cowen
Incorporated (1) -- MD
Stephen R. Weber (3)....... Since 3/30/91 -- Cowen
Incorporated (1) -- MD
Miriam C. Willard (1)...... Since 1/1/96 -- Cowen
Incorporated (1) -- MD
Jonathan H. Zauderer (1)... Since 1/1/96 -- Cowen
Incorporated (1) -- MD
Michael Zolezzi (6)........ Since 3/30/94 -- Cowen
Incorporated (1) -- MD
</TABLE>
<TABLE>
<CAPTION>
LIMITED PARTNERS
- -------------------------
<S> <C> <C> <C> <C> <C>
Jacques Coe (4).......... None
George N. Cowen (4)...... None
Richard B. Frackman (1).. None
John B. Greene (5)....... None
Joseph V. Perri (1)...... None
Charles L. Wood (2)...... None
</TABLE>
- ---------------
(1) Financial Square, New York, New York 10005
(2) Texaco Heritage Plaza, 111 Bagby St., #2350, Houston, Texas 77002
(3) Two International Place, Boston, Massachusetts 02110
(4) West Building, 31st Floor, 280 Park Avenue, New York, New York 10017
(5) Courthouse Plaza Northeast, Dayton, Ohio 45402
C-6
<PAGE> 52
(6) Four Embarcadero Center, Suite 1200, San Francisco, California 94111
(7) One Angel Court, London, England ECZR, 7HJ
(8) 30 West 75th Street, New York, New York 10023
<TABLE>
<S> <C> <C>
P -- President
C -- Chairman of the Board
D -- Director
V -- Vice President
T -- Treasurer
S -- Secretary
SI -- Senior Investment Officer
AS -- Assistant Secretary
MD -- Managing Director
</TABLE>
Item 29(c). Not Applicable
Item 30. Location of Accounts and Records
(1) Cowen Income + Growth Fund, Inc.
Financial Square
New York, New York 10005
(2) Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
Item 31. Management Service
Not applicable.
Item 32. Undertakings
Not applicable.
C-7
<PAGE> 53
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
be signed on its behalf by the undersigned, thereto duly authorized, in the City
of New York, and State of New York, on the 25th day of March, 1997.
COWEN INCOME + GROWTH FUND, INC.
/s/ Joseph M. Cohen
by: Creighton H. Peet,
Attorney-in-Fact
-------------------
Joseph M. Cohen, Chairman
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933, and has duly caused this Amendment
to the Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of New York, and State of New York, on the
25th day of March, 1997.
Signature Title Date
- --------- ----- ----
/s/ Joseph M. Cohen Chairman (Chief March 25, 1997
by Creighton H. Peet, Executive Officer)
Attorney-in-Fact and Director
- ----------------
Joseph M. Cohen
/s/ James H. Carey Director March 25, 1997
by Creighton H. Peet,
Attorney-in-Fact
- ----------------
James H. Carey
/s/ Peter P. Gil Director March 25, 1997
by Creighton H. Peet,
Attorney-in-Fact
- ----------------
Peter P. Gil
/s/ Martin J. Gruber Director March 25, 1997
by Creighton H. Peet,
Attorney-in-Fact
- ----------------
Martin J. Gruber
March 25, 1997
Treasurer (Chief,
Creighton H. Peet Financial Officer)
- -----------------
Creighton H. Peet
/s/ Burton J. Weiss Director March 25, 1997
by Creighton H. Peet,
Attorney-in-Fact
- ----------------
Burton J. Weiss
C-8
<PAGE> 54
INDEX TO EXHIBITS
Exhibit No. Description of Exhibits
- ----------- -----------------------
1 (i) Articles of Incorporation of Registrant
(ii) Articles of Amendment
2 (i) By-Laws of Registrant
(ii) Amendment of Article I, Sections 1 and 2 of
Registrant's By-Laws
5 Investment Management Agreement
6 Distribution Agreement
8 Custody Agreement with Investors Fiduciary Trust
Company
9 Transfer Agency Agreement with Investors Fiduciary
Trust Company
10 (i) Opinion and consent of Venable Baetjer and Howard,
Aug. 7, 1986
(ii) Opinion and consent of Willkie Farr & Gallagher, Aug.
7, 1986
(iii) Opinion and consent of Venable Baetjer and Howard,
April 29, 1994
11 Consent of Independent Auditors
13 Subscription Agreement
15 (i) Form of Shareholder Servicing and Distribution Plan
(ii) Form of Shareholder Servicing Agreement
(iii) Form of Distribution Related Services Agreement
<PAGE> 1
EXHIBIT 1(i)
ARTICLES OF INCORPORATION
OF
COWEN INCOME + GROWTH FUND, INC.
ARTICLE I
THE UNDERSIGNED, Jon S. Rand, whose post office address is c/o Willkie Farr &
Gallagher, One Citicorp Center, 153 East 53rd Street, New York, New York 10022,
being at least eighteen years of age, does hereby act as an incorporator and
forms a corporation, under and by virtue of the
Maryland General Corporation Law.
ARTICLE II
NAME
The name of the Corporation is COWEN INCOME + GROWTH FUND, INC.
ARTICLE III
PURPOSES AND POWERS
The Corporation is formed for the following purposes:
(1) To conduct and carry on the business of an investment company.
(2) To hold, invest and reinvest its assets in securities and other investments
or to hold part or all of its assets in cash.
(3) To issue and sell shares of its capital stock in such amounts and on such
terms and conditions and for such purposes and for such amount or kind of
consideration as may now or hereafter be permitted by law.
(4) To redeem, purchase or acquire in any other manner, hold, dispose of,
resell, transfer, reissue or cancel (all without the vote or consent of the
stockholders of the Corporation) shares of its capital stock, in any manner and
to the extent now or hereafter permitted by law and by these Articles of
Incorporation.
(5) To do any and all additional acts and to exercise any and all additional
powers or rights as may be necessary, incidental, appropriate or desirable for
the accomplishment of all or any of the foregoing purposes. The Corporation
shall be authorized to exercise and enjoy all of the powers, rights and
privileges granted to, or conferred upon, corporations by the Maryland General
Corporation Law now or hereafter in force, and the enumeration of the foregoing
shall not be deemed to exclude any
<PAGE> 2
powers, rights or privileges so granted or conferred.
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
The post office address of the principal office of the Corporation in the State
of Maryland is c/o The Corporation Trust Company Incorporated, 32 South Street,
Baltimore, Maryland 21202. The name of the resident agent of the Corporation in
the State of Maryland is The Corporation Trust Company Incorporated, a Maryland
Corporation. The post office address of the resident agent is 32 South Street,
Baltimore, Maryland 21202.
ARTICLE V
CAPITAL STOCK
(1) The total number of shares of capital stock that the Corporation shall have
authority to issue is five hundred million (500,000,000) shares, of the par
value of one tenth of one cent ($.001) per share and of the aggregate par value
of five hundred thousand dollars ($500,000), all of which five hundred million
(500,000,000) shares are designated Common Stock.
(2) Any fractional share shall carry proportionately the rights of a whole share
including, without limitation, the right to vote and the right to receive
dividends. A fractional share shall not, however, have the right to receive a
certificate evidencing it.
(3) All persons who shall acquire stock in the Corporation shall acquire the
same subject to the provisions of these Articles of Incorporation and the
By-Laws of the Corporation.
(4) No holder of stock of the Corporation by virtue of being such a holder shall
have any right to purchase or subscribe for any shares of the Corporation's
capital stock or any other security that the Corporation may issue or sell
(whether out of the number of shares authorized by these Articles of
Incorporation or out of any shares of the Corporation's capital stock that the
Corporation may acquire) other than a right that the Board of Directors in its
discretion may determine to grant.
(5) The Board of Directors shall have authority by resolution to classify and
reclassify any authorized but unissued shares of capital stock from time to time
by setting or changing in any one or more respects the preferences, conversion
or other rights, voting powers, restrictions, limitations as to
<PAGE> 3
dividends, qualifications or terms or conditions of redemption of the capital
stock.
(6) Notwithstanding any provision of law requiring any action to be taken
or authorized by the affirmative vote of the holders of a designated
proportion of the votes of all classes or of any class of stock of the
Corporation, such action shall be effective and valid if taken or authorized
by the affirmative vote of a majority of the total number of votes entitled to
be cast thereon, except as otherwise provided in these Articles of
Incorporation.
ARTICLE VI
REDEMPTION
Each holder of shares of the Corporation's capital stock shall be entitled to
require the Corporation to redeem all or any part of the shares of capital stock
of the Corporation standing in the name of the holder on the books of the
Corporation, and all shares of capital stock issued by the Corporation shall be
subject to redemption by the Corporation, at the redemption price of the shares
as in effect from time to time as may be determined by the Board of Directors of
the Corporation in accordance with the provisions of this Article VI, subject to
the right of the Board of Directors of the Corporation to suspend the right of
redemption or postpone the date of payment of the redemption price in accordance
with provisions of applicable law. Without limiting the generality of the
foregoing, the Corporation shall, to the extent permitted by applicable law,
have the right at any time to redeem the shares owned by any holder of capital
stock of the Corporation (i) if the redemption is, in the opinion of the Board
of Directors of the Corporation, desirable in order to prevent the Corporation
from being deemed a "personal holding company" within the meaning of the
Internal Revenue Code of 1954, as amended, or (ii) if the value of the shares in
the account maintained by the Corporation or its transfer agent for any class of
stock is less than two hundred fifty dollars ($250); provided, however, that a
shareholder shall be notified that the value of his account is less than two
hundred fifty dollars ($250) and shall be allowed sixty (60) days to make
additional purchases of shares before the redemption is processed by the
Corporation. The redemption price of shares of capital stock of the Corporation
shall be net asset value as determined by the Board of Directors of the
Corporation from time to time in accordance with the provisions of applicable
law, less a redemption fee or other charge, if any, as may be fixed by
resolution of the Board of Directors of the Corporation. Payment of the
redemption price shall be made in cash by the Corporation at the time and in the
manner as may be determined from time to time by the Board of Directors of the
Corporation unless, in the opinion of the Board of Directors, which shall be
conclusive, conditions exist that make payment wholly in cash unwise or
undesirable; in
<PAGE> 4
such event the Corporation may make payment wholly or partly by securities or
other property included in the assets belonging or allocable to the class of the
shares redemption of which is being sought, the value of which shall be
determined as provided herein. The Board of Directors may establish procedures
for redemption of shares.
ARTICLE VII
BOARD OF DIRECTORS
(1) The number of directors constituting the Board of Directors shall be four
(4). This number may be changed pursuant to the By-Laws of the Corporation, but
shall at no time be less than the minimum number required under the Maryland
General Corporation Law. The names of the directors who shall act until the
first annual meeting of shareholders or until their successors are duly chosen
and qualified are:
Joseph M. Cohen;
Creighton H. Peet;
Burton J. Weiss; and
William Rechter.
(2) In furtherance, and not in limitation, of the powers conferred by the laws
of the State of Maryland, the Board of Directors is expressly authorized:
(i) To make, alter or repeal the By-Laws of the Corporation, except where such
power is reserved by the By-Laws to the stockholders, and except as otherwise
required by the Investment Company Act of 1940.
(ii) From time to time to determine whether and to what extent and at what times
and places and under what conditions and regulations the books and accounts of
the Corporation, or any of them other than the stock ledger, shall be open to
the inspection of the stockholders. No stockholder shall have any right to
inspect any account or book or document of the Corporation, except as conferred
by law or authorized by resolution of the Board of Directors or of the
stockholders.
(iii) Without the assent or vote of the stockholders, to authorize the issuance
from time to time of shares of the stock of any class of the Corporation,
whether now or hereafter authorized, and securities convertible into shares of
stock of the Corporation of any class or classes, whether now or hereafter
authorized, for such consideration as the Board of Directors may deem advisable.
<PAGE> 5
(iv) Without the assent or vote of the stockholders, to authorize and issue
obligations of the Corporation, secured and unsecured, as the Board of Directors
may determine, and to authorize and cause to be executed mortgages and liens
upon the real or personal property of the Corporation.
(v) Notwithstanding anything in these Articles of Incorporation to the contrary,
to establish in its absolute discretion the basis or method for determining the
value of the assets belonging to any class, the value of the liabilities
belonging to any class, and the net asset value of each share of any class of
the Corporation's stock for purposes of sales, redemptions, repurchases of
shares or otherwise.
(vi) To determine in accordance with generally accepted accounting principles
and practices what constitutes net profits, earnings, surplus or net assets in
excess of capital, and to determine what accounting periods shall be used by the
Corporation for any purpose; to set apart out of any funds of the Corporation
reserves for such purposes as it shall determine and to abolish the same; to
declare and pay any dividends and distributions in cash, securities or other
property from surplus or any funds legally available therefor, at such intervals
as it shall determine; to declare dividends or distributions by means of a
formula or other method of determination, at meetings held less frequently than
the frequency of the effectiveness of such declarations; to establish payment
dates for dividends or any other distributions on any basis, including dates
occurring less frequently than the effectiveness of declarations thereof; and to
provide for the payment of declared dividends on a date earlier or later than
the specified payment date in the case of stockholders of the Corporation
redeeming their entire ownership of shares of any class of the Corporation.
(vii) In addition to the powers and authorities granted herein and by statute
expressly conferred upon it, the Board of Directors is authorized to exercise
all powers and do all acts that may be exercised or done by the Corporation
pursuant to the provisions of the laws of the State of Maryland, these Articles
of Incorporation and the By-Laws of the Corporation.
(3) Any determination made in good faith, and in accordance with accepted
accounting practices, if applicable, by or pursuant to the direction of the
Board of Directors, with respect to the amount of assets, obligations or
liabilities of the Corporation, as to the amount of net income of the
Corporation from dividends and interest for any period or amounts at any time
legally available for the payment of dividends, as to the amount of any reserves
or charges set up and the propriety thereof, as to the time of or purpose for
creating reserves or as to the use, alteration or cancellation of any reserves
or charges (whether or not any obligation or liability for which
<PAGE> 6
the reserves or charges have been created has been paid or discharged or is then
or thereafter required to be paid or discharged), as to the value of any
security owned by the Corporation, the determination of the net asset value of
shares of any class of the Corporation's capital stock, or as to any other
matters relating to the issuance, sale, redemption or other acquisition or
disposition of securities or shares of capital stock of the Corporation, and any
reasonable determination made in good faith by the Board of Directors whether
any transaction constitutes a purchase of securities on "margin," a sale of
securities "short," or an underwriting of the sale of, or a participation in any
underwriting or selling group in connection with the public distribution of, any
securities, shall be final and conclusive, and shall be binding upon the
Corporation and all holders of its capital stock, past, present and future, and
shares of the capital stock of the Corporation are issued and sold on the
condition and understanding, evidenced by the purchase of shares of capital
stock or acceptance: of share certificates, that any and all such determinations
shall be binding as aforesaid. No provision of these Articles of Incorporation
of the Corporation shall be effective to (i) require a waiver of compliance with
any provision of the Securities Act of 1933, as amended, or the Investment
Company Act of 1940, or of any valid rule, regulation or order of the Securities
and Exchange Commission under those Acts or (ii) protect or purport to protect
any director or officer of the Corporation against any liability to the
Corporation or its security holders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office.
ARTICLE VIII
AMENDMENTS
The Corporation reserves the right from time to time to make any amendment to
its Articles of Incorporation, now or hereafter authorized by law, including any
amendment that alters the contract rights, as expressly set forth in its
Articles of Incorporation, of any outstanding stock.
IN WITNESS WHEREOF, I have adopted and signed these Articles of Incorporation
and do hereby acknowledge that the adoption and signing are my act.
Dated the 9th day of May 1986.
/s/ Jon S. Rand, Incorporator
<PAGE> 1
EXHIBIT 1 (ii)
COWEN INCOME + GROWTH FUND, INC.
ARTICLES OF AMENDMENT
COWEN INCOME + GROWTH FUND, INC., a Maryland corporation, having its principal
place of business in Maryland in Baltimore City, Maryland (hereinafter called
the "Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by deleting Article V,
Section (1) of the Articles of Incorporation and inserting a new Article V,
Section (1) as follows:
(1) The total number of shares of capital stock that the Corporation shall have
authority to issue is seven hundred fifty million (750,000,000) shares of the
par value of one-tenth of one cent ($.001) per share and of the aggregate par
value of seven hundred fifty thousand dollars ($750,000), of which two hundred
fifty million (250,000,000) shares are initially classified as shares of Class A
Common Stock, two hundred fifty million (250,000,000) shares are initially
classified as shares of Class B Common Stock, and two hundred fifty million
(250,000,000) shares are initially classified as shares of Class C Common Stock.
SECOND: The charter of the Corporation is hereby further amended by adding a new
Section (7) to Article V of the Articles of Incorporation as follows:
(7) Subject to the power of the Board of Directors set forth in Article V,
Section (5) to reclassify unissued shares, the shares of each class of stock of
the Corporation shall have the following preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption in addition to those set forth in the
Articles of Incorporation relating generally to shares of capital stock of the
Corporation:
(a) All classes of Common Stock of the Corporation will represent interests in
the same investment portfolio.
(b) The income of the Corporation and those expenses and liabilities of the
Corporation that are not attributable to any particular class of Common Stock
shall be allocated among the classes in accordance with the net assets of the
Corporation attributable to each such class or as otherwise determined by the
Board of Directors, but, in any event, in a manner consistent with the Order, as
defined in paragraph (d) below.
<PAGE> 2
(c) The liabilities and expenses attributable to each of the classes shall
otherwise be determined separately from those of each other and of any other
class of stock of the Corporation and, accordingly, the net asset values, the
dividends and distributions payable to holders, and the amounts distributable in
the event of liquidation of the Corporation to holders of shares of the
Corporation's stock may vary from class to class. Except for these differences
and certain other differences set forth in this Article V, Section (7), the
classes shall have the same preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption.
(d) The dividends and distributions of investment income and capital gains with
respect to the classes shall be in such amounts as may be declared from time to
time by the Board of Directors, and such dividends and distributions may vary
among the classes to reflect differing allocations of the liabilities and
expenses of the Corporation among the classes and any resultant differences
among the net asset values per share of the classes, to such extent and for such
purposes as the Board of Directors may deem appropriate. The allocation of
investment income, capital gains, expenses and liabilities of the Corporation
among the classes shall be determined conclusively by the Board of Directors in
a manner that is consistent with any order issued by the Securities and Exchange
Commission in connection with the application for exemption filed by Cowen
Funds, Inc., Cowen Income + Growth Fund, Inc., Cowen Standby Reserve Fund, Inc.,
Cowen Standby Tax-Exempt Reserve Fund, Inc. and Cowen & Company, and any
amendment to any such order or any rule or interpretation under the Investment
Company Act of 1940, as amended, that modifies or supersedes such order (the
"Order").
(e) Except as hereinafter provided, on each matter submitted to a vote of the
stockholders, each holder of a share of stock shall be entitled to one vote for
each share standing in his name on the books of the Corporation irrespective of
the class thereof. All holders of shares of stock shall vote as a single class
except as may otherwise be required by law pursuant to the Order or any other
applicable order, rule or interpretation issued by the Securities and Exchange
Commission, or otherwise, or except with respect to any matter which affects
only one or more classes of stock, in which case only the holders of shares of
the class or classes affected shall be entitled to vote.
(f) The proceeds of the redemption of a share (including a fractional share) of
stock of any class shall be reduced by the amount of any contingent deferred
sales charge payable on such redemption pursuant to the terms of issuance of
such share.
<PAGE> 3
THIRD: The charter of the Corporation is hereby further amended by renumbering
Article VIII of the Articles of Incorporation as Article IX and inserting a new
Article VIII as follows:
ARTICLE VIII EXCULPATION AND INDEMNITY
(1) To the fullest extent that limitations on the liability of directors and
officers are permitted by the Maryland General Corporation Law, no director or
officer of the Corporation shall have any liability to the Corporation or its
stockholders for damages. This limitation on liability applies to events
occurring at the time a person serves as a director or officer of the
Corporation whether or not such person is a director or officer at the time of
any proceeding in which liability is asserted.
(2) The Corporation shall indemnify and advance expenses to its currently acting
and its former directors to the fullest extent that indemnification of directors
is permitted by the Maryland General Corporation Law. The Corporation shall
indemnify and advance expenses to its officers to the same extent as its
directors and to such further extent as is consistent with law. The Board of
Directors may, through a bylaw, resolution or agreement, make further provisions
for indemnification of directors, officers, employees and agents to the fullest
extent permitted by the Maryland General Corporation Law.
(3) No provision of this Article VIII shall be effective to protect or purport
to protect any director or officer of the Corporation against any liability to
the Corporation or its stockholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office.
(4) References to the Maryland General Corporation Law in this Article VIII are
to the law as from time to time amended. No amendment to the Articles of
Incorporation of the Corporation shall affect any right of any person under this
Article VIII based on any event, omission or proceeding prior to such amendment.
FOURTH: A. Each share (including for this purpose a fraction of a share) of
Common Stock issued and outstanding prior to these Articles of Amendment
becoming effective (other than shares held by Class C Eligible Investors as
defined in Paragraph B below), shall, at such effective time, be reclassified
automatically, and without any action or choice on the part of the holder, into
a share (or the same fraction of a share) of Class A Common Stock. Each
share(including for this purpose a fraction of a share) of Common Stock issued
and outstanding prior to these Articles of Amendment becoming effective and held
by Class C Eligible Investors,
<PAGE> 4
shall, at such effective time, be reclassified automatically, and without any
action or choice on the part of the holder, into a share (or the same fraction
of a share) of Class C Common Stock. Outstanding certificates representing
issued and outstanding shares of Common Stock immediately prior to these
Articles of Amendment becoming effective shall, upon these Articles of Amendment
becoming effective, be deemed to represent the same number of shares of Class A
Common Stock or Class C Common Stock, as the case may be. Certificates
representing shares of the Class A Common Stock and Class C Common Stock
resulting from the aforesaid reclassification need not be issued until
certificates representing the shares of Common Stock so reclassified, if issued,
have been received by the Corporation or its agent duly endorsed for transfer.
The Class A Common Stock, Class B Common Stock, and Class C Common Stock shall
have the preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption as set forth in the charter of the Corporation as herein amended.
B. For purposes of Paragraph A above, "Class C Eligible Investors" shall mean
(i) employee benefit plans for employees of Cowen & Company ("Cowen") and
securities dealers that participate in distribution of the Corporation's shares;
(ii) charitable organizations (as defined in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended) with investments in shares of the Corporation
valued at $100,000 or more when these Articles of Amendment become effective;
(iii) any pension fund, corporation, state or local government, Taft-Hartley
plan, foundation and/or endowment that is a client of a consulting firm, if such
consulting firm had, as of the effective date of these Articles of Amendment,
contacted the Corporation, Cowen or any subsidiary of Cowen with respect to
furnishing advice to the client of that consulting firm or with respect to the
purchase of shares of the Corporation by such client; and (iv) investors who
hold shares of the Corporation valued at $4 million or more as of the effective
date of these Articles of Amendment; (v) accounts as to which a bank or
broker-dealer charges and account management fee, provided the bank or
broker-dealer has an agreement with Cowen relating to investment in the
Corporation; and (vi) investors, and their spouses and minor children who are
investment advisory clients of Cowen or any of its subsidiaries or who are
affiliated persons or sponsoring companies of those clients. The Corporation may
determine whether a particular holder of shares of the Corporation is within the
foregoing definition of Class C Eligible Investors and any such determination
shall be conclusive, absent manifest error.
FIFTH: The total number of shares of capital stock that the Corporation had
authority to issue immediately prior to these Articles of Amendment
<PAGE> 5
becoming effective was five hundred million (500,000,000) shares of the par
value of one-tenth of one cent ($.001) per share and of the aggregate par value
of five hundred thousand dollars ($500,000), all of which shares were designated
Common Stock. The total number of shares of capital stock that the Corporation
has authority to issue upon these Articles of Amendment becoming effective is
seven hundred fifty million (750,000,000) shares, all of the par value of
one-tenth of one cent ($.001) per share, and of the aggregate par value of seven
hundred fifty thousand dollars ($750,000), of which two hundred fifty million
(250,000,000) shares are classified as shares of Class A Common Stock, two
hundred fifty million (250,000,000) shares are classified as shares of Class B
Common Stock and two hundred fifty million (250,000,000) shares are classified
as shares of Class C Common Stock.
SIXTH: The amendment of the charter of the Corporation as herein set forth has
been duly advised by the Board of Directors and approved by the stockholders in
the manner required by law and the charter of the Corporation.
SEVENTH: These Articles of Amendment shall become effective at 5:00 P.M. on May
6, 1994.
The undersigned President of the Corporation acknowledges these Articles of
Amendment to be the corporate act of the Corporation and states that to the best
of his knowledge, information and belief, the matters and facts set forth in
these Articles with respect to the authorization and approval of the amendments
to the Corporation's charter are true in all material respects and that this
statement is made under the penalties of perjury.
IN WITNESS WHEREOF, Cowen Income + Growth Fund, Inc. has
caused this instrument to be filed in its name and on its behalf by its
President, David R. Sarns, and witnessed by its Secretary, Rodd M. Baxter,
on the 26th day of April 1994.
COWEN INCOME + GROWTH FUND, INC.
By: /s/ David R. Sarns
WITNESS: By: /s/ Rodd M. Baxter, Secretary
<PAGE> 1
BY-LAWS Exhibit 2(i)
OF
COWEN INCOME + GROWTH FUND, INC.
A Maryland Corporation
ARTICLE I
STOCKHOLDERS
SECTION 1. Annual Meetings. The annual meeting of the stockholders of Cowen
Income + Growth Fund, Inc. (the "Corporation") shall be held on a date fixed
from time to time by the Board of Directors within the thirty-one (31) day
period ending four (4) months after the end of the Corporation's fiscal year. An
annual meeting may be held at any place within the United States as may be
determined by the Board of Directors and as shall be designated in the notice of
the meeting, and at the time specified by the Board of Directors. Any business
of the Corporation may be transacted at an annual meeting without being
specifically designated in the notice unless otherwise provided by statute, the
Corporation's Articles of Incorporation or these By-Laws.
SECTION 2. Special Meetings. Special meetings of the stockholders for any
purpose or purposes, unless otherwise prescribed by statute or by the
Corporation's Articles of Incorporation, may be held at any place within the
United States, and may be called at any time by the Board of Directors or by the
President, and shall be called by the President or Secretary at the request in
writing of a majority of the Board of Directors or at the request in writing of
stockholders entitled to cast at least twenty-five (25) percent of the votes
entitled to be cast at the meeting upon payment by such stockholders to the
Corporation of the reasonably estimated cost of preparing and mailing a notice
of the meeting (which estimated cost shall be provided to such stockholders by
the Secretary of the Corporation). Notwithstanding the foregoing, unless
requested by stockholders entitled to cast a majority of the votes entitled to
be cast at the meeting, a special meeting of the stockholders need not be called
at the request of stockholders to consider any matter that is substantially the
same as a matter voted on at any special meeting of the stockholders held during
the preceding twelve (12) months. A written request shall state the purpose or
purposes of the proposed meeting.
SECTION 3. Notice of Meetings. Written or printed notice of the purpose or
purposes and of the time and place of every meeting of the stockholders shall be
given by the Secretary of the Corporation to each stockholder of record entitled
to vote at the meeting, by placing the notice in the mail at
<PAGE> 2
least ten (10) days, but not more than ninety (90) days, prior to the date
designated for the meeting addressed to each stockholder at his address
appearing on the books of the Corporation or supplied by the stockholder to the
Corporation for the purpose of notice. The notice of any meeting of stockholders
may be accompanied by a form of proxy approved by the Board of Directors in
favor of the actions or persons as the Board of Directors may select. Notice of
any meeting of stockholders shall be deemed waived by any stockholder who
attends the meeting in person or by proxy, or who before or after the meeting
submits a signed waiver of notice that is filed with the records of the meeting.
SECTION 4. Quorum. Except as otherwise provided by statute or by the
Corporation's Articles of Incorporation, the presence in person or by proxy of
stockholders of the Corporation entitled to cast at least a majority of the
votes to be cast shall constitute a quorum at each meeting of the stockholders
and all questions shall be decided by majority vote of the shares so represented
in person or by proxy at the meeting and entitled to vote. In the absence of a
quorum, the stockholders present in person or by proxy at the meeting, by
majority vote and without notice other than by announcement at the meeting, may
adjourn the meeting from time to time as provided in Section 5 of this Article I
until a quorum shall attend. The stockholders present at any duly organized
meeting may continue to do business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum. The absence from
any meeting in person or by proxy of holders of the number of shares of stock of
the Corporation in excess of a majority that may be required by the laws of the
State of Maryland, the Investment Company Act of 1940, or other applicable
statute, the Corporation's Articles of Incorporation or these By-Laws, for
action upon any given matter shall not prevent action at the meeting on any
other matter or matters that may properly come before the meeting, so long as
there are present, in person or by proxy, holders of the number of shares of
stock of the Corporation required for action upon the other matter or matters.
SECTION 5. Adjournment. Any meeting of the stockholders may be adjourned from
time to time, without notice other than by announcement at the meeting at which
the adjournment is taken. At any adjourned meeting at which a quorum shall be
present any action may be taken that could have been taken at the meeting
originally called. A meeting of the stockholders may not be adjourned to a date
more than one-hundred-twenty (120) days after the original record date.
SECTION 6. Organization. At every meeting of the stockholders, the Chairman of
the Board; or in his absence or inability to act, the President, or in his
absence or inability to act, a Vice President, or in the absence or
<PAGE> 3
inability to act of the Chairman of the Board, the President and all the Vice
Presidents, a chairman chosen by the stockholders, shall act as chairman of the
meeting. The Secretary, or in his absence or inability to act, a person
appointed by the chairman of the meeting, shall act as secretary of the meeting
and keep the. minutes of the meeting.
SECTION 7. Order of Business. The order of business at all meetings of the
stockholders shall be as determined by the chairman of the meeting.
SECTION 8. Voting. Except as otherwise provided by statute or the Corporation's
Articles of Incorporation, each holder of record of shares of stock of the
Corporation having voting power shall be entitled at each meeting of the
stockholders to one (1) vote for every share of stock standing in his name on
the records of the Corporation as of the record date determined pursuant to
Section 9 of this Article I.
Each stockholder entitled to vote at any meeting of stockholders may authorize
another person or persons to act for him by a proxy signed by the stockholder or
his attorney-in-fact. No proxy shall be valid after the expiration of eleven
(11) months from the date thereof, unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the stockholder executing it, except
in those cases in which the proxy states that it is irrevocable and in which an
irrevocable proxy is permitted by law.
SECTION 9. Fixing of Record Date. The Board of Directors may set a record date
for the purpose of determining stockholders entitled to vote at any meeting of
the stockholders. The record date for a particular meeting shall be not more
than ninety (90) nor fewer than ten (10) days before the date of the meeting.
All persons who were holders of record of shares as of the record date of a
meeting, and no others, shall be entitled to vote at such meeting and any
adjournment thereof.
SECTION 10. Inspectors. The Board of Directors may, in advance of any meeting of
stockholders, appoint one (1) or more inspectors to act at the meeting or at any
adjournment of the meeting. If the inspectors shall not be so appointed or if
any of them shall fail to appear or act, the chairman of the meeting may appoint
inspectors. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath to execute faithfully the duties of inspector at the
meeting with strict impartiality and according to the best of his ability. The
inspectors shall determine the number of shares outstanding and the voting power
of each share, the number of shares represented at the meeting, the existence of
a quorum and the validity and effect of proxies, and shall receive votes,
ballots or consents, hear and determine all challenges and questions arising in
connection with the right to ~ vote, count and tabulate all votes, ballots or
consents,
<PAGE> 4
determine the result, and do those acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the chairman of the
meeting or any stockholder entitled to vote at the meeting, the inspectors shall
make a report in writing of any challenge, request or matter determined by them
and shall execute a certificate of any fact found by them. No director or
candidate for the office of director shall act as inspector of an election of
directors. Inspectors need not be stockholders of the Corporation.
SECTION 11. Consent of Stockholders in Lieu of Meeting. Except as otherwise
provided by statute or the Corporation's Articles of Incorporation, any action
required to be taken at any annual or special meeting of stockholders, or any
action that may be taken at any annual or special meeting of the stockholders,
may be taken without a meeting, without prior notice and without a vote, if the
following are filed with the records of stockholders' meetings: (a) a unanimous
written consent that sets forth the action and is signed by each stockholder
entitled to vote on the matter and (b) a written waiver of any right to dissent
signed by each stockholder entitled to notice of the meeting but not entitled to
vote at the meeting.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. General Powers. Except as otherwise provided in the Corporation's
Articles of Incorporation, the business and affairs of the Corporation shall be
managed under the direction of the Board of Directors. All powers of the
Corporation may be exercised by or under authority of the Board of Directors
except as conferred on or reserved to the stockholders by law, by the
Corporation's Articles of Incorporation or by these By-Laws.
SECTION 2. Number of Directors. The number of directors shall be fixed from time
to time by resolution of the Board of Directors adopted by a majority of the
directors then in office; provided, however, that the number of directors shall
in no event be fewer than two (2) nor more than fifteen (15). Any vacancy
created by an increase in directors may be filled in accordance with Section 6
of this Article II. No reduction in the number of directors shall have the
effect of removing any director from office prior to the expiration of his term
unless the director is specifically removed pursuant to Section 5 of this
Article II at the time of the decrease. A director need not be a stockholder of
the Corporation, a citizen of the United States or a resident of the State of
Maryland.
SECTION 3. Election and Term of Directors. Directors shall be elected
<PAGE> 5
annually, by written ballot at the annual meeting of stockholders or at a
special meeting held for that purpose. The term of office of each director shall
be from the time of his election and qualification until the annual election of
directors next succeeding his election and until his successor shall have been
elected and shall have qualified, or until his death, or until he shall have
resigned or have been removed as provided in these By-Laws, or as otherwise
provided by statute or the Corporation's Articles of Incorporation.
SECTION 4. Resignation. A director of the Corporation may resign at any time by
giving written notice of his resignation to the Board of Directors or the
Chairman of the Board or to the President or the Secretary of the Corporation.
Any resignation shall take effect at the time specified in it or, should the
time when it is to become effective not be specified in it, immediately upon its
receipt. Acceptance of a resignation shall not be necessary to make it effective
unless the resignation states otherwise.
SECTION 5. Removal of Directors. Any director of the Corporation may be removed
by the stockholders with or without cause by a vote of a majority of the votes
entitled to be cast for the election of directors. SECTION 6. Vacancies. Subject
to the provisions of the Investment Company Act of 1940, any vacancies in the
Board of Directors, whether arising from death, resignation, removal or any
other cause except an increase in the number of directors, shall be filled by a
vote of the majority of the Board of Directors then in office even though that
majority is less than a quorum, provided that no vacancy or vacancies shall be
filled by action of the remaining directors if, after the filling of the vacancy
or vacancies, fewer than two-thirds of the directors then holding office shall
have been elected by the stockholders of the Corporation. A majority of the
entire Board may fill a vacancy that results from an increase in the number of
directors. In the event that at any time a vacancy exists in any office of a
director that may not be filled by the remaining directors, a special meeting of
the stockholders shall be held as promptly as possible and in any event within
sixty (60) days, for the purpose of filling the vacancy or vacancies. Any
director elected or appointed to fill a vacancy shall hold office only until the
next annual meeting of stockholders of the Corporation and until a successor has
been chosen and qualifies or until his earlier resignation or removal.
SECTION 7. Place of Meetings. Meetings of the Board may be held at any place
that the Board of Directors may from time to time determine or that is specified
in the notice of the meeting.
SECTION 8. Regular Meetings. Regular meetings of the Board of Directors may be
held without notice at the time and place determined by
<PAGE> 6
the Board of Directors.
SECTION 9. Special Meetings. Special meetings of the Board of Directors may be
called by two (2) or more directors of the Corporation or by the Chairman of the
Board or the President.
SECTION 10. Annual Meeting. The annual meeting of each newly elected Board of
Directors shall be held as soon as practicable after the meeting of stockholders
at which the directors were elected. No notice of such annual meeting shall be
necessary if held immediately after the adjournment, and at the site, of the
meeting of stockholders. If not so held, notice shall be given as hereinafter
provided for special meetings of the Board of Directors.
SECTION 11. Notice of Special Meetings. Notice of each special meeting of the
Board of Directors shall be given by the Secretary as hereinafter provided. Each
notice shall state the time and place of the meeting and shall be delivered to
each director, either personally or by telephone or other standard form of
telecommunication, at least twenty-four (24) hours before the time at which the
meeting is to be held, or by first-class mail, postage prepaid, addressed to the
director at his residence or usual place of business, and mailed at least three
(3) days before the day on which the meeting is to be held.
SECTION 12. Waiver of Notice of Meetings. Notice of any special meeting need not
be given to any director who shall, either before or after the meeting, sign a
written waiver of notice that is filed with the records of the meeting or who
shall attend the meeting.
SECTION 13. Quorum and Voting. One-third, but not fewer than two (2) of the
members of the entire Board of Directors shall be present in person at any
meeting of the Board so as to constitute a quorum for the transaction of
business at the meeting, and except as otherwise expressly required by statute,
the Corporation's Articles of Incorporation, these By-Laws, the Investment
Company Act of 1940, or any other applicable statute, the act of a majority of
the directors present at any meeting at which a quorum is present shall be the
act of the Board. In the absence of a quorum at any meeting of the Board, a
majority of the directors present may adjourn the meeting to another time and
place until a quorum shall be present. Notice of the time and place of any
adjourned meeting shall be given to the directors who were not present at the
time of the adjournment and, unless the time and place were announced at the
meeting at which the adjournment was taken, to the other directors. At any
adjourned meeting at which a quorum is present, any business may be transacted
that might have been transacted at the meeting as originally called.
<PAGE> 7
SECTION 14. Organization. The Board of Directors may designate a Chairman of the
Board, who shall preside at each meeting of the Board. In the absence or
inability of the Chairman of the Board to act, the President, or, in his absence
or inability to act, another director chosen by a majority of the directors
present, shall act as chairman of the meeting and preside at the meeting. The
Secretary (or, in his absence or inability to act, any person appointed by the
chairman) shall act as secretary of the meeting and keep the minutes of the
meeting.
SECTION 15. Committees. The Board of Directors may designate one (1) or more
committees of the Board of Directors, each consisting of two (2) or more
directors. To the extent provided in the resolution, and permitted by law, the
committee or committees shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation and
may authorize the seal of the Corporation to be affixed to all papers that may
require it. Any committee or committees shall have the name or names determined
from time to time by resolution adopted by the Board of Directors. Each
committee shall keep regular minutes of its meetings and provide those minutes
to the Board of Directors when required. The members of a committee present at
any meeting, whether or not they constitute a quorum, may appoint a director to
act in the place of an absent member.
SECTION 16. Written Consent of Directors in Lieu of a Meeting. Subject to the
provisions of the Investment Company Act of 1940, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee of the Board may be taken without a meeting if all members of the
Board or committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of the proceedings of the Board
or committee.
SECTION 17. Telephone Conference. Members of the Board of Directors or any
committee of the Board may participate in any Board or committee meeting by
means of a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other at the same
time. Participation by such means shall constitute presence in person at the
meeting.
SECTION 18. Compensation. Each director shall be entitled to receive
compensation, if any, as may from time to time be fixed by the Board of
Directors, including a fee for each meeting of the Board or any committee
thereof, regular or special, he attends. Directors may also be reimbursed by the
Corporation for all reasonable expenses incurred in traveling to and from the
place of a Board or committee meeting.
<PAGE> 8
ARTICLE III
OFFICERS, AGENTS AND EMPLOYEES
SECTION 1. Number and Qualifications. The officers of the Corporation shall be a
President, a Secretary and a Treasurer, each of whom shall be elected by the
Board of Directors. The Board of Directors may elect or appoint one (1) or more
Vice Presidents and may also appoint any other officers, agents and employees it
deems necessary or proper. Any two (2) or more offices may be held by the same
person, except the offices of President and Vice President, but no officer shall
execute, acknowledge or verify any instrument in more than one (1) capacity.
Officers shall be elected by the Board of Directors each year at its first
meeting held after the annual meeting of stockholders, each to hold office until
the meeting of the Board following the next annual meeting of the stockholders
and until his successor shall have been duly elected and shall have qualified,
or until his death, or until he shall have resigned or have been removed, as
provided in these By-Laws. The Board of Directors may from time to time elect,
or designate to the President the power to appoint, such officers (including one
or more Assistant Vice Presidents, one or more Assistant Treasurers and one or
more Assistant Secretaries) and such agents as may be necessary or desirable for
the business of the Corporation. Such other officers and agents shall have such
duties and shall hold their offices for such terms as may be prescribed by the
Board or by the appointing authority.
SECTION 2. Resignations. Any officer of the Corporation may resign at any time
by giving written notice of his resignation to the Board of Directors, the
Chairman of the Board, the President or the Secretary. Any resignation shall
take effect at the time specified therein or, if the time when it shall become
effective is not specified therein, immediately upon its receipt. The acceptance
of a resignation shall not be necessary to make it effective unless otherwise
stated in the resignation.
SECTION 3. Removal of Officer, Agent or Employee. Any officer, agent or employee
of the Corporation may be removed by the Board of Directors with or without
cause at any time, and the Board may delegate the power of removal as to agents
and employees not elected or appointed by the Board of Directors. Removal shall
be without prejudice to the person's contract rights, if any, but the
appointment of any person as an officer, agent or employee of the Corporation
shall not of itself create contract rights.
SECTION 4. Vacancies. A vacancy in any office, whether arising from death,
resignation, removal or any other cause, may be filled for the unexpired portion
of the term of the office that shall be vacant, in the manner prescribed in
these By-Laws for the regular election or
<PAGE> 9
appointment to the office.
SECTION 5. Compensation. The compensation of the officers of the Corporation
shall be fixed by the Board of Directors, but this power may be delegated to any
officer with respect to other officers under his control.
SECTION 6. Bonds or Other Security. If required by the Board, any officer, agent
or employee of the Corporation shall give a bond or other security for the
faithful performance of his duties, in an amount and with any surety or sureties
as the Board may require.
SECTION 7. President. The President shall be the chief executive officer of the
Corporation. In the absence or inability of the Chairman of the Board (or if
there is none) to act, the President shall preside at all meetings of the
stockholders and of the Board of Directors. The President shall have, subject to
the control of the Board of Directors, general charge of the business and
affairs of the Corporation, and may employ and discharge employees and agents of
the Corporation, except those elected or appointed by the Board, and he may
delegate these powers.
SECTION 8. Vice President. Each Vice President shall have the powers and perform
the duties that the Board of Directors or the President may from time to time
prescribe.
SECTION 9. Treasurer. Subject to the provisions of any contract that may be
entered into with any custodian pursuant to authority granted by the Board of
Directors, the Treasurer shall have charge of all receipts and disbursements of
the Corporation and shall have or provide for the custody of the Corporation's
funds and securities, he-shall have full authority to receive and give receipts
for all money due and payable to the Corporation, and to endorse checks, drafts,
and warrants, in its name and on its behalf and to give full discharge for the
same; he shall deposit all funds of the Corporation, except those that may be
required for current use, in such banks or other places of deposit as the Board
of Directors may from time to time designate; and, in general, he shall perform
all duties incident to the office of Treasurer and such other duties as may from
time to time be assigned to him by the Board of Directors or the President.
SECTION 10. Secretary.
The Secretary shall:
(a) keep or cause to be kept in one or more books provided for the purpose, the
minutes of all meetings of the Board of Directors, the committees of the Board
and the stockholders;
<PAGE> 10
(b) see that all notices are duly given in accordance with the provisions of
these By-Laws and as required by law;
(c) be custodian of the records and the seal of the Corporation and affix and
attest the seal to all stock certificates of the Corporation (unless the seal of
the Corporation on such certificates shall be a facsimile, as hereinafter
provided) and affix and attest the seal to all other documents to be executed on
behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and other documents
and records required by law to be kept and filed are properly kept and filed;
and
(e) in general, perform all the duties incident to the office of Secretary and
such other duties as from time to time may be assigned to him by the Board of
Directors or the President.
SECTION 11. Delegation of Duties. In case of the absence of any officer of the
Corporation, or for any other reason that the Board of Directors may deem
sufficient, the Board may confer for the time being the powers or duties, or any
of them, of such officer upon any other officer or upon any director.
ARTICLE IV
STOCK
SECTION 1. Stock Certificates. Each holder of stock of the Corporation shall be
entitled upon specific written request to such person as may be designated by
the Corporation to have a certificate or certificates, in a form approved by the
Board, representing the number of shares of stock of the Corporation owned by
him; provided, however, that certificates for fractional shares will not be
delivered in any case. The certificates representing shares of stock shall be
signed by or in the name of the Corporation by the President or a Vice President
and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer and sealed with the seal of the Corporation. Any or all of the
signatures or the seal on the certificate may be facsimiles. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before the certificate is issued, it may be issued
by the Corporation with the same effect as if the officer, transfer agent or
registrar was still in office at the date of issue.
SECTION 2. Books of Account and Record of Stockholders. There shall be kept at
the principal executive office of the Corporation correct and
<PAGE> 11
complete books and records of account of all the business and transactions of
the Corporation. There shall be made available upon request of any stockholder,
in accordance with Maryland law, a record containing the number of shares of
stock issued during a specified period not to exceed twelve (12) months and the
consideration received by the Corporation for each such share.
SECTION 3. Transfers of Shares. Transfers of shares of stock of the Corporation
shall be made on the stock records of the Corporation only by the registered
holder of the shares, or by his attorney "hereunto authorized by power of
attorney duly executed and filed with the Secretary or with a transfer agent or
transfer clerk, and on surrender of the certificate or certificates, if issued,
for the shares properly endorsed or accompanied by a duly executed stock
transfer power and the payment of all taxes thereon. Except as otherwise
provided by law, the Corporation shall be entitled to recognize the exclusive
right of a person in whose name any share or shares stand on the record of
stockholders as the owner of the share or shares for all purposes, including,
without limitation, the rights to receive dividends or other distributions and
to vote as the owner, and the Corporation shall not be bound to recognize any
equitable or legal claim to or interest in any such share or shares on the part
of any other person.
SECTION 4. Regulations. The Board of Directors may make any additional rules and
regulations, not inconsistent with these By-Laws, as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
stock of the Corporation. The Board may appoint, or authorize any officer or
officers to appoint, one or more transfer agents or one or more transfer clerks
and one or more registrars and may require all certificates for shares of stock
to bear the signature or signatures of any of them.
SECTION 5. Lost, Destroyed or Mutilated Certificates. The holder of any
certificate representing shares of stock of the Corporation shall immediately
notify the Corporation of its loss, destruction or mutilation and the
Corporation may issue a new certificate of stock in the place of any certificate
issued by it that has been alleged to have been lost or destroyed or that shall
have been mutilated. The Board may, in its discretion, require the owner (or his
legal representative) of a lost, destroyed or mutilated certificate: to give to
the Corporation a bond in a sum, limited or unlimited, and in a form and with
any surety or sureties, as the Board in its absolute discretion shall determine,
to indemnify the Corporation against any claim that may be made against it on
account of the alleged loss or destruction of any such certificate, or issuance
of a new certificate. Anything herein to the contrary notwithstanding, the Board
of Directors, in its absolute discretion, may refuse to issue any such new
certificate, except pursuant to legal
<PAGE> 12
proceedings under the laws of the State of Maryland.
SECTION 6. Fixing of Record Date for Dividends, Distributions, etc. The Board
may fix, in advance, a date not more than ninety (90) days preceding the date
fixed for the payment of any dividend or the making of any distribution or the
allotment of rights to subscribe for securities of the Corporation, or for the
delivery of evidences of rights or evidences of interests arising out of any
change, conversion or exchange of common stock or other securities, as the
record date for the determination of the stockholders entitled to receive any
such dividend, distribution, allotment, rights or interests, and in such case
only the stockholders of record at the time so fixed shall be entitled to
receive such dividend, distribution, allotment, rights or interests.
SECTION 7. Information to Stockholders and Others. Any stockholder of the
Corporation or his agent may inspect and copy during the Corporation's usual
business hours the Corporation's By-Laws, minutes of the proceedings of its
stockholders, annual statements of its affairs and voting trust agreements on
file at its principal office.
ARTICLE V
INDEMNIFICATION AND INSURANCE
SECTION 1. Indemnification of Directors and Officers. Any person who was or is a
party or is threatened to be made a party in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is a current or former
director or officer of the Corporation, or is or was serving while a director or
officer of the Corporation at the request of the Corporation as a director,
officer, partner, trustee, employee, agent or fiduciary of another corporation,
partnership, joint venture, trust, enterprise or employee benefit plan, shall be
indemnified by the Corporation against judgments, penalties, fines, excise
taxes, settlements and reasonable expenses (including attorneys' fees) actually
incurred by such person in connection with such action, suit or proceeding to
the full extent permissible under the Maryland General Corporation Law, the
Securities Act of 1933, as amended and the Investment Company Act of 1940, as
those statutes are now or hereafter in force, except that such indemnity shall
not protect any such person against any liability to the Corporation or any
stockholder thereof to which such person would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office ("disabling conduct").
SECTION 2. Advances. Any current or former director or officer of the
<PAGE> 13
Corporation claiming indemnification within the scope of this Article V shall be
entitled to advances from the Corporation for payment of the reasonable expenses
incurred by him in connection with proceedings to which he is a party in the
manner and to the full extent permissible under the Maryland General Corporation
Law, the Securities Act of 1933, as amended, and the Investment Company Act of
1940, as those statutes are now or hereafter in force; provided however, that
the person seeking indemnification shall provide to the Corporation a written
affirmation of his good faith belief that the standard of conduct necessary for
indemnification by the Corporation has been met and a written undertaking to
repay any such advance, if it should ultimately be determined that the standard
of conduct has not been met, and provided further that at least one of the
following additional conditions is met: (a) the person seeking indemnification
shall provide a security in form and amount acceptable to the Corporation for
his undertaking; (b) the Corporation is insured against losses arising by reason
of the advance; or (c) a majority of a quorum of directors of the Corporation
who are neither "interested persons" as defined in Section 2(a)(19) of the
Investment Company Act of 1940 nor parties to the proceeding (-disinterested
non-party directors"), or independent legal counsel, in a written opinion, shall
determine, based on a review of facts readily available to the Corporation at
the time the advance is proposed to be made, that there is reason to believe
that the person seeking indemnification will ultimately be found to be entitled
to indemnification.
SECTION 3. Procedure. At the request of any current or former director or
officer, or any employee or agent whom the Corporation proposes to indemnify,
the Board of Directors shall determine, or cause to be determined, in a manner
consistent with the Maryland General Corporation Law, the Securities Act of
1933, as amended and the Investment Company Act of 1940, as those statutes are
now or hereafter in force, whether the standards required by this Article V have
been met; provided, however, that indemnification shall be made only following:
(a) a final decision on the merits by a court or other body before whom the
proceeding was brought that the person to be indemnified was not liable by
reason of disabling conduct or (b) in the absence of such a decision, a
reasonable determination, based upon a review of the facts, that the person to
be indemnified was not liable by reason of disabling conduct, by (i) the vote of
a majority of a quorum of disinterested non-party directors or (ii) an
independent legal counsel in a written opinion.
SECTION 4. Indemnification of Employees and Agents. Employees and agents who are
not officers or directors of the Corporation may be indemnified, and reasonable
expenses may be advanced to such employees or agents, in accordance with the
procedures set forth in this Article V to
<PAGE> 14
the extent permissible under the Maryland General Corporation Law, the
Securities Act of 1933, as amended and the Investment Company Act of 1940 as
those statutes are now or hereafter in force, and to such further extent,
consistent with the foregoing, as may be provided by action of the Board of
Directors or by contract.
SECTION 5. Other Rights. The indemnification provided by this Article V shall
not be deemed exclusive of any other right, with respect to indemnification or
otherwise, to which those seeking such indemnification may be entitled under any
insurance or other agreement, vote of stockholders or disinterested directors or
otherwise, both as to action by a director or officer of the Corporation in his
official capacity and as to action by such person in another capacity while
holding such office or position, and shall continue as to a person who has
ceased to be a director or officer and shall in-tire to the benefit of the
heirs, executors and administrators of such a person.
SECTION 6. Insurance. The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or who, while a director, officer,
employee or agent of the Corporation, is or was serving at the request of the
Corporation as a director, officer; partner, trustee, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust, enterprise
or employee benefit plan, against any liability asserted against and incurred by
him in any such capacity, or arising out of his status as such, provided that no
insurance may be obtained by the Corporation for liabilities against which it
would not have the power to indemnify him under this Article V or applicable
law.
ARTICLE VI
SEAL
The seal of the Corporation shall be circular in form and shall bear the name of
the Corporation, the year of its incorporation, the words "Corporate Seal. and
"Maryland. and any emblem or device approved by the Board of Directors. The seal
may be used by causing it or a facsimile to be impressed or affixed or in any
other manner reproduced, or by placing the word "(seal)" adjacent to the
signature of the authorized officer of the Corporation.
ARTICLE VII
FISCAL YEAR
The Corporation's fiscal year shall be fixed by the Board of Directors.
<PAGE> 15
ARTICLE VIII
AMENDMENTS
These By-Laws may be amended or repealed by the affirmative vote of a majority
of the Board of Directors at any regular or special meeting of the Board of
Directors, subject to the requirements of the Investment Company Act of 1940.
As adopted, May 13, 1986
<PAGE> 1
AMENDMENT TO THE BY-LAWS Exhibit 2(ii)
OF
COWEN INCOME + GROWTH FUND, INC.
Dated October 26, 1988
Sections 1 and 2 of Article I of the By-Laws of Cowen Income + Growth Fund, Inc.
be, and they are, amended to read in their entirety as follows:
"SECTION 1. Annual Meetings. No annual meeting of stockholders of Cowen Income +
Growth Fund, Inc. (the "corporation") shall be held unless required by
applicable law or otherwise determined by the Board of Directors. An annual
meeting may be held at any place within the United States as may be determined
by the Board of Directors and as shall be designated in the notice of the
meeting, and at the time specified by the Board of Directors. Any business of
the Corporation may be transacted at an annual meeting without being
specifically designated in the notice unless otherwise provided by statue, the
Corporation's Articles of Incorporation or these By-Laws.
"SECTION 2. Special Meetings. Special meetings of the stockholders for any
purpose or purposes, unless otherwise prescribed by statute or by the
Corporation's Articles of Incorporation, may be held at any place within the
United States, and may be called at any time by the Board of Directors or by the
President, and shall be called by the President or Secretary at the request in
writing of a majority of the Board of Directors or at the request in writing of
stockholders entitled to cast at least ten (10) percent of the votes entitled to
be cast at the meeting upon payment by such stockholders to the Corporation of
the reasonably estimated cost of preparing and mailing a notice of the meeting
(which estimated cost shall be provided to such stockholders by the Secretary of
the Corporation). Notwithstanding the foregoing, unless requested by
stockholders entitled to cast a majority of the votes entitled to be cast at the
meeting, a special meeting of the stockholders need not be called at the request
of stockholders to consider any matter that is substantially the same as a
matter voted on at any special meeting of the stockholders held during the
preceding twelve (12) months. A written request shall state the purpose or
purposes of the proposed meeting.
<PAGE> 1
INVESTMENT MANAGEMENT AGREEMENT Exhibit (5)
March 29, 1991
Cowen & Co.
Financial Square
New York, New York 10005
Dear Sirs:
Cowen Income + Growth Fund, Inc. ( the "Fund"), a corporation organized
under the laws of the State of Maryland, herewith confirms its agreement with
Cowen & Co. ("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 Prospectus and Statement 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 Prospectus, Statement of Additional Information
and Articles of Incorporation, as amended, have been or will be submitted to
Cowen. The Fund desires to employ and hereby appoints Cowen to act as its
investment manager. Cowen accepts the appointment and agrees to furnish the
services set forth below for the compensation set forth below.
3. Services as Investment Manager
Subject to the supervision and direction of the Board of Directors of the
Fund, Cowen will (a) act in strict conformity with the Fund's Articles of
Incorporation and by-laws, the Investment Company Act of 1940 and the Investment
Advisers Act of 1940, as the same may from time to time be amended, (b) manage
the Fund's portfolio in accordance with the Fund's investment objective and
policies as stated in its 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, and (d) supply office
facilities (which may be in Cowen's own offices); statistical and research data;
data processing services; clerical, accounting and bookkeeping services;
internal auditing and legal services; internal executive and administrative
services; stationary 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. Cowen will
supervise the Fund's investments generally and conduct a continual program of
evaluation of the Fund's
<PAGE> 2
assets.
In connection with the performance of its duties under this Agreement, it
is understood that Cowen will from time to time employ or associate with itself
such person or persons as 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 pan' by Cowen and that no
obligation may be incurred on the Fund's behalf in any such respect. 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 Pro Provided to toe Fund; Books and Records
(a) Cowen will keep the Fund informed of developments materially affecting
the Fund's portfolio, and will, on its own initiative, furnish the Fund from
time to time with whatever information Cowen believes is appropriate for this
purpose.
(b) In compliance with the requirements of Rule 31a-3 under the Investment
Company Act of 1940, 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
Cowen shall exercise its best judgment in rendering the services listed in
paragraph 2 above. 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 Cowen against any liability to the Fund
or to its shareholders to which Cowen would 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 Cowen's reckless disregard of its
obligations and duties under this Agreement.
Any person, even though also a partner, officer, employee, or agent of
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 Cowen even though paid by it.
5. Compensation
In consideration of the services rendered pursuant to this Agreement, the
Fund will pay Cowen on the first business day of each month a fee for the
previous month, calculated daily, at the annual rate of .75 of 1.00% of the
Fund's average daily net assets. Upon any termination of this Agreement before
the end of a month, the fee for such pan 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
<PAGE> 3
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 or Statement of Additional
Information as from time to time in effect.
6. Expenses
Cowen will bear all expenses in connection with the performance of its
services under this Agreement. The Fund will bear certain other expenses toe 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 Cowen; Securities and Exchange Commission fees and state Blue Sky
qualification fees; management, advisory and administration fees; distribution
expenses; charges of custodians and transfer and dividend disbursing agents;
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 and
distribution expenses and, if permitted by State securities commissions,
extraordinary expenses) exceed the expense limitation of any State having
jurisdiction over the Fund, Cowen will reimburse the Fund for such excess
expense. Cowen's expense reimbursement obligation will be limited to the amount
of its fees received pursuant to this Agreement However, 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.
Such expense reimbursement, if any, will be estimated, reconciled and paid on a
monthly basis.
8. Services to Other Companies or Accounts
The Fund understands that 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 Cowen's so acting, provided that whenever the Fund and
one or more other accounts or investment companies advised by 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 Cowen to assist in the performance of 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 Cowen or any affiliate
of Cowen to engage in and devote time and attention to other businesses or to
render services of whatever kind or nature.
<PAGE> 4
9. Term of Agreement
This Agreement shall become effective on the date first written above and
shall continue until the second anniversary of that date and thereafter shall
continue so long as 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 Investment Company Act of 1940) 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 said 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 Cowen. This Agreement will also terminate automatically in
the event of its assignment (as defined in said Act and the Rules thereunder).
10. Amendment of the 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 successor and shall be governed by New York law.
If the foregoing is in accordance with your understanding, kindly indicate
your acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours,
COWEN INCOME + GROWTH FUND, INC.
By: /s/ Stuart Goodman
Accepted and Agreed
COWEN & CO.
By: COWEN INCORPORATED, GENERAL PARTNER
By: /s/ Creighton H. Peet, MANAGING DIRECTOR
<PAGE> 1
DISTRIBUTION AGREEMENT Exhibit (6)
October 13, 1992
Cowen & Company
Financial Square
New York, New York 10005-3597
Dear Sirs:
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned, Cowen Income + Growth Fund, Inc. (the "Fund"), a
corporation organized under the laws of the State of Maryland, has agreed that
Cowen & Company ("Cowen") shall be, for the period of this Agreement, the
distributor of shares of the Fund.
1. Services as Distributor
1.1 Cowen will act as agent for the distribution of shares of the Fund covered
by the Fund's registration statement on Form N-1A (the "Registration Statement")
under the Securities Act of 1933, as amended (the "1933 Act"), and the
Investment Company Act of 1940, as amended (the "1940 Act").
1.2 Cowen agrees to use its best efforts to solicit orders for the sale of
shares of the Fund at the public offering price, as determined in accordance
with the Registration Statement, and will undertake such advertising and
promotion as it believes is reasonable in connection with such solicitation.
Cowen agrees to bear all selling expenses, including the cost of printing
prospectuses and statements of additional information and distributing them to
prospective shareholders.
1.3 All activities by Cowen as distributor of the Fund's shares shall comply
with all applicable laws, rules and regulations, including, without limitation,
all rules and regulations made or adopted by the Securities and Exchange
Commission (the "SEC") or by any securities association registered under the
Securities Exchange Act of 1934.
1.4 Cowen will provide one or more persons during normal business hours to
respond to telephone questions concerning the Fund.
1.5 Cowen acknowledges that, whenever in the judgment of the Fund's officers
such action is warranted for any reason, including, without limitation, market,
economic or political conditions, those officers may decline to accept any
orders for, or make any sales of, the Fund's shares
<PAGE> 2
until such time as those officers deem it advisable to accept such orders and to
make such sales.
1.6 Cowen will act only on its own behalf as principal should it choose to enter
into selling agreements with selected dealers or others.
2. Duties of the Fund
2.1 The Fund agrees at its own expense to execute any and all documents, to
furnish any and all information and to take any other actions that may be
reasonably necessary in connection with the qualification of the Fund's shares
for sale in those states that Cowen may designate.
2.2 The Fund shall furnish from time to time, for use in connection with the
sale of the Fund's shares, such information and reports with respect to the Fund
and its shares as Cowen may reasonably request, all of which shall be signed by
one or more of the Fund's duly authorized officers; and the Fund warrants that
the statements contained in any such reports, when so signed by one or more of
the Fund's officers, shall be true and correct. The Fund shall also furnish
Cowen upon request with: (a) annual audits of the Fund's books and accounts made
by independent public accountants regularly retained by the Fund, (b)
semi-annual unaudited financial statements pertaining to the Fund, (c) quarterly
earnings statements prepared by the Fund, (d) a monthly itemized list of the
securities in the Fund's portfolio, (e) monthly balance sheets as soon as
practicable after the end of each month and (f) from time to time such
additional information regarding the Fund's financial condition as Cowen may
reasonably request.
3. Representations and Warranties
The Fund represents to Cowen that the Registration Statement, including the
prospectuses and statement of additional information forming parts thereof, has
been prepared in conformity with the requirements of the 1933 Act, the 1940 Act
and the rules and regulations of the SEC thereunder. As used in this Agreement
the terms "Registration Statement", "prospectus" and "statement of additional
information" shall mean any registration statement, prospectus and statement of
additional information filed by the Fund with the SEC and any amendments and
supplements thereto which at any time shall have been filed with the SEC. The
Fund represents and warrants to Cowen that the Registration Statement, when such
becomes effective, will include all statements required to be contained therein
in conformity with the 1933 Act, the 1940 Act and the rules and regulations of
the SEC; that all statements of fact contained in the Registration
<PAGE> 3
Statement will be true and correct when such becomes effective; and that the
Registration Statement when such becomes effective will not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading to a
purchaser of the Fund's shares. Cowen may, but shall not be obligated to,
propose from time to time such amendment or amendments to the Registration
Statement and such supplement or supplements to any prospectus or statement of
additional information as, in the light of future developments, may, in the
opinion of Cowen's counsel, be necessary or advisable. If the Fund shall not
propose such amendment or amendments and/or supplement or supplements within
fifteen days after receipt by the Fund of a written request from Cowen to do so,
Cowen may, at its option, terminate this Agreement. The Fund shall not file any
amendment to the Registration Statement or supplement to any prospectus or
statement of additional information without giving Cowen reasonable notice
thereof in advance; provided, however, that nothing contained in this Agreement
shall in any way limit the Fund's right to file at any time such amendments to
the Registration Statement and/or supplements to any prospectus or statement of
additional information, of whatever character, as the Fund may deem advisable,
such right being in all respects absolute and unconditional.
4. Indemnification
4.1 The Fund authorizes Cowen and any dealers with whom Cowen has entered into
dealer agreements to use any prospectus or statement of additional information
furnished by the Fund from time to time, in connection with the sale of the
Fund's shares. The Fund agrees to indemnify, defend and hold Cowen, its several
officers and directors, and any person who controls Cowen within the meaning of
Section 15 of the 1933 Act, free and harmless from and against any and all
claims, demands, liabilities and expenses (including the cost of investigating
or defending such claims, demands or liabilities and any counsel fees incurred
in connection therewith) which Cowen, its officers and directors, or any such
controlling person, may incur under the 1933 Act, the 1940 Act or common law or
otherwise, arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, any
prospectus or any statement of additional information, or arising out of or
based upon any omission or alleged omission to state a material fact required to
be stated in the Registration Statement, any prospectus or any statement of
additional information, or necessary to make the statements in any of them not
misleading; provided, however, that the Fund's agreement to indemnify Cowen, its
officers or directors, and any such controlling person shall not be deemed to
cover any
<PAGE> 4
claims, demands, liabilities or expenses arising out of or based upon any
statements or representations made by Cowen or its representatives or agents
other than such statements and representations as are contained in the
Registration Statement, prospectus or statement of additional information and in
such financial and other statements as are furnished to Cowen pursuant to
paragraph 2.2 hereof; and further provided that the Fund's agreement to
indemnify Cowen and the Fund's representations and warranties hereinbefore set
forth in paragraph 3 shall not be deemed to cover any liability to the Fund or
its shareholders to which Cowen would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of Cowen's reckless disregard of its obligations and duties under this
Agreement. The Fund's agreement to indemnify Cowen, its officers and directors,
and any such controlling person, as aforesaid, is expressly conditioned upon the
Fund's being notified of any action brought against Cowen, its officers or
directors, or any such controlling person, such notification to be given by
letter or by telegram addressed to the Fund at its principal office in New York,
New York and sent to the Fund by the person against whom such action is brought,
within ten days after the summons or other first legal process shall have been
served. The failure so to notify the Fund of any such action shall not relieve
the Fund from any liability that the Fund may have to the person against whom
such action is brought by reason of any such untrue or alleged untrue statement
or omission or alleged omission otherwise than on account of the Fund's
indemnity agreement contained in this paragraph 4.1. The Fund will be entitled
to assume the defense of any suit brought to enforce any such claim, demand or
liability, but, in such case, such defense shall be conducted by counsel of good
standing chosen by the Fund and approved by Cowen. In the event the Fund elects
to assume the defense of any such suit and retain counsel of good standing
approved by Cowen, the defendant or defendants in such suit shall bear the fees
and expenses of any additional counsel retained by any of them; but in case the
Fund does not elect to assume the defense of any such suit, or in case Cowen
does not approve of counsel chosen by the Fund, the Fund will reimburse Cowen,
its officers and directors, or the controlling person or persons named as
defendant or defendants in such suit, for the fees and expenses or any counsel
retained by Cowen or them. The Fund's indemnification agreement contained in
this paragraph 4.1 and the Fund's representations and warranties in this
Agreement shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of Cowen, its officers and directors, or any
controlling person, and shall survive the delivery of any of the Fund's shares.
This agreement of indemnity will inure exclusively to Cowen's benefit, to the
benefit of its several officers and directors, and their respective estates, and
to the benefit of the controlling persons and their successors. The Fund agrees
to notify Cowen promptly of the commencement of any litigation or
<PAGE> 5
proceedings against the Fund or any of its officers or directors in connection
with the issuance and sale of any of the Fund's shares.
4.2 Cowen agrees to indemnify, defend and hold the Fund, its several officers
and directors, and any person who controls the Fund within the meaning of
Section 15 of the 1933 Act, free and harmless from and against any and all
claims, demands, liabilities and expenses (including the costs of investigating
or defending such claims, demands or liabilities and any counsel fees incurred
in connection therewith) that the Fund, its officers or directors or any such
controlling person may incur under the 1933 Act, the 1940 Act or common law or
otherwise, but only to the extent that such liability or expense incurred by the
Fund, its officers or directors or such controlling person resulting from such
claims or demands shall arise out of or be based upon (a) any unauthorized sales
literature, advertisements, information, statements or representations or (b)
any untrue or alleged untrue statement of a material fact contained in
information furnished in writing by Cowen to the Fund and used in the answers to
any of the items of the Registration Statement, or shall arise out of or be
based upon any omission or alleged omission to state a material fact in
connection with such information furnished in writing by Cowen to the Fund and
required to be stated in such answers or necessary to make such information not
misleading. Cowen's agreement to indemnify the Fund, its officers and directors,
and any such controlling person, as aforesaid, is expressly conditioned upon
Cowen's being notified of any action brought against the Fund, its officers or
directors, or any such controlling person, such notification to be given by
letter or telegram addressed to Cowen at its principal office in New York, New
York and sent to Cowen by the person against whom such action is brought, within
ten days after the summons or other first legal process shall have been served.
Cowen shall have the right of first control of the defense of such action, with
counsel of its own choosing, satisfactory to the Fund, if such action is based
solely upon such alleged misstatement or omission on Cowen's part, and in any
other event the Fund, its officers or directors or such controlling person shall
each have the right to participate in the defense or preparation of the defense
of any such action. The failure so to notify Cowen of any such action shall not
relieve Cowen from any liability that Cowen may have to the Fund, its officers
or directors, or to such controlling person by reason of any such untrue or
alleged untrue statement or omission or alleged omission otherwise than on
account of Cowen's indemnity agreement contained in this paragraph 4.2, Cowen
agrees to notify the Fund promptly of the commencement of any litigation or
proceedings against Cowen or any of its officers or directors in connection with
the issuance and sale of any of the Fund's shares.
5. Effectiveness of Registration
<PAGE> 6
None of the Fund's shares shall be offered by either Cowen or the Fund under any
of the provisions of this Agreement and no orders for the purchase or sale of
the shares hereunder shall be accepted by the Fund if and so long as the
effectiveness of the Registration Statement or any necessary amendments thereto
shall be suspended under any of the provisions of the 1933 Act or if and so long
as a current prospectus as required by Section 5(b)(2) of the 1933 Act is not on
file with the SEC; provided, however, that nothing contained in this paragraph 5
shall in any way restrict or have an application to or bearing upon the Fund's
obligation to repurchase its shares from any shareholder in accordance with the
provisions of the Fund's prospectuses, statement of additional information or
articles of incorporation.
6. Notice to Cowen
The Fund agrees to advise Cowen immediately in writing:
(a) of any request by the SEC for amendments to the registration statement,
prospectus or statement of additional information then in effect or for
additional information;
(b) in the event of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceeding
for that purpose;
(c) of the happening of any event that makes untrue any statement of a material
fact made in the Registration Statement then in effect or that requires the
making of a change in the Registration Statement in order to make the statements
therein not misleading; and
(d) of all actions of the SEC with respect to any amendment to the Registration
Statement which may from time to time be filed with the SEC.
7. Term of Agreement
This Agreement shall become effective as of the date hereof 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
Fund's Board of Directors or (b) a vote of a majority (as defined in the 1940
Act) of the Fund's outstanding voting securities, provided that in either event
the continuance is also approved by a majority of the Directors of the Fund who
are not interested persons (as defined in the 1940 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
<PAGE> 7
is terminable, without penalty, on 60 days' written notice, by the Fund's Board
of Directors or by vote of the holders of a majority of the Fund's shares, or on
90 days' written notice, by Cowen. This agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act and the
Rules thereunder).
Please confirm that the foregoing is in accordance with your understanding by
indicating your acceptance hereof at the place below indicated, whereupon it
shall become a binding agreement between us.
Very truly yours,
COWEN INCOME + GROWTH, INC.
By: /s/ Lawrence Leibowitz, Vice President
Accepted and Agreed:
COWEN & COMPANY
By: /s/ Creighton H. Peet, Authorized Officer
<PAGE> 1
CUSTODY AGREEMENT Exhibit (8)
THIS AGREEMENT made the 8th day of May, 1988, by and between INVESTORS FIDUCIARY
TRUST COMPANY, a trust company chartered under the laws of the state of
Missouri, having its trust office located at 127 West 10th Street, 14th Floor,
Kansas City, Missouri 64105 ("Custodian"), and COWEN INCOME + GROWTH FUND, INC.
a Maryland corporation, having its principal office and place of business at
Financial Square, New York, New York 10005 ("Fund").
WITNESSETH:
WHEREAS, the Fund has issued its Common Stock, $.001 par value per share with
the proceeds of the sale allocated to the Fund's investment program; and
WHEREAS, Fund desires to appoint Investors Fiduciary Trust Company Custodian of
the securities and monies of the Fund; and
WHEREAS, Investors Fiduciary Trust Company is willing to accept such
appointment;
NOW THEREFORE, for and in consideration of the mutual promises contained herein,
the parties hereto, intending to be legally bound, mutually covenant and agree
as follows:
1. APPOINTMENT OF CUSTODIAN
Fund hereby constitutes and appoints Custodian as custodian of the
securities and monies at any time owned by the Fund;
2. DELIVERY OF CORPORATE DOCUMENTS
Fund has delivered or will deliver to Custodian prior to the effective date of
this Agreement, copies of the following documents and all amendments or
supplements thereto, properly certified or authenticated:
A. Resolutions of the Board of Directors of Fund appointing Custodian as
custodian hereunder and approving the form of this Agreement; and
B. Resolutions of the Board of Directors of Fund designating certain persons to
give instructions on behalf of Fund to Custodian and authorizing Custodian to
rely upon written instructions over their signatures.
3. DUTIES AND RESPONSIBILITIES OF CUSTODIAN
<PAGE> 2
A. Delivery of Assets
Fund will deliver or cause to be delivered to Custodian on the effective date of
this Agreement, or as soon thereafter as practicable, and from time to time
thereafter, all portfolio securities acquired by it and monies then owned by it
except as permitted by the Investment Company Act of 1940 or from time to time
coming into its possession during the time of this Agreement shall continue in
effect. Custodian shall have no responsibility or liability whatsoever for or on
account of securities or monies not so delivered. All securities so delivered to
Custodian (other than bearer securities) shall be registered in the name of Fund
or its nominee, or of a nominee of Custodian, or shall be properly endorsed and
in form for transfer satisfactory to Custodian.
B. Delivery of Accounts and Records
Fund shall turn over to Custodian all of the Fund's relevant accounts and
records previously maintained by it. Custodian shall be entitled to rely
conclusively on the completeness and correctness of the accounts and records
turned over to it by Fund, and Fund shall indemnify and hold Custodian harmless
of and from any and all expenses, damages and losses whatsoever arising out of
or in connection with any error, omission, inaccuracy or other deficiency of
such accounts and records or in the failure of Fund to provide any portion of
such or to provide any information needed by the Custodian knowledgeably to
perform its function hereunder.
C. Delivery of Assets to Third Parties
Custodian will receive delivery of and keep safely the assets of Fund delivered
to it from time to time. Custodian will not deliver, assign, pledge or
hypothecate any such assets to any person except as permitted by the provisions
of this Agreement or any agreement executed by it according to the terms of
section 3.S. of this Agreement. Upon delivery of any such assets to a
subcustodian pursuant to Section 3.S.2 of this agreement, Custodian will create
and maintain records identifying those assets which have been delivered to the
subcustodian as belonging to Fund. The Custodian is responsible for the
securities and monies of Fund only until they have been transmitted received by
other persons as permitted under the terms of this Agreement, except for
securities and monies transmitted to a subcustodian as provided for by section
3.S., for which Custodian remains responsible. Custodian shall be responsible
only for the monies and securities of Fund held by it or its nominees or
Subcustodians under this Agreement. Custodian may participate directly or
through a subcustodian in the Depository Trust Company or Treasury/Federal
Reserve Book
<PAGE> 3
Entry System (as such entity is defined at 17 CFR Section 270.17f-4(b) or other
depository approved by the Fund).
D. Registration of Securities
Custodian will hold stocks and other registerable portfolio securities of Fund
registered in the name of Fund or in the name of any nominee of Custodian for
whose fidelity and liability Custodian will be fully responsible, or in street
certificate form, so-called, with or without any indication of fiduciary
capacity. Unless otherwise instructed, Custodian will register all such
portfolio securities in the name of its authorized nominee. All securities, and
the ownership thereof by Fund, which are held by Custodian hereunder, however,
shall at all times be identifiable on the records of the Custodian. The Fund
agrees to hold Custodian and its nominee harmless for any liability as a record
holder of securities held in custody.
E. Exchange of Securities
Upon receipt of instructions as defined herein in Section 4.A, Custodian will
exchange, or cause to be exchanged, portfolio securities held by it for the
account of Fund for other securities or cash issued or paid in connection with
any reorganization, recapitalization, merger, consolidation, split-up of shares,
change of par value, conversion or otherwise, and will deposit any such
securities in accordance with the terms of any reorganization or protective
plan. Without instructions, Custodian is authorized to exchange securities held
by it in temporary form for securities in definitive form, to effect an exchange
of shares when the par value of the stock is changed, and, upon receiving
payment therefor, to surrender bonds or other securities held by it at maturity
or when advised of earlier call for redemption, except that Custodian shall
receive instructions prior to surrendering any convertible security.
F. Purchases of Investments of the Fund
Fund will, on each business day on which a purchase of securities shall be made
by it, deliver to Custodian instructions which shall specify with respect to
each such purchase:
1. The name of the issuer and description of the security;
2. The number of shares or the principal amount purchased, and accrued interest,
if any;
3. The trade date;
<PAGE> 4
4. The settlement date;
5. The purchase price per unit and the brokerage commission, taxes and other
expenses payable in connection with the purchase;
6. The total amount payable upon such purchase; and
7. The name of the person from whom or the broker or dealer through whom the
purchase was made; and
In accordance with such instructions, Custodian will pay for out of monies held
for the account of the Fund, but only insofar as monies are available therein
for such purpose, and receive the portfolio securities so purchased by or for
the account of the Fund except that Custodian may in its sole discretion advance
funds to the Fund which may result in an overdraft because the monies held by
the Custodian in the account of the Fund are insufficient to pay the total
amount payable upon such purchase. Such payment will be made only upon receipt
by Custodian of the securities so purchased in form for transfer satisfactory to
Custodian.
G. Sales and Deliveries of Investments of the Fund - Other than Options and
Futures
Fund will, on each business day on which a sale of investment securities of Fund
has been made, deliver to Custodian instructions specifying with respect to each
such sale:
1. The name of the issuer and description of the securities;
2. The number of shares or principal amount sold, and accrued interest, if any;
3. The date on which the securities sold were purchased or other information
identifying the securities sold and to be delivered;
4. The trade date;
5. The settlement date;
6. The sale price per unit and the brokerage commission, taxes or other expenses
payable in connection with such sale;
7. The total amount to be received by Fund upon such sale; and
8. The name and address of the broker or dealer through whom or person
<PAGE> 5
to whom the sale was made.
In accordance with such instructions, Custodian will deliver or cause to be
delivered the securities thus designated as sold for the account of the Fund to
the broker or other person specified in the instructions relating to such sale,
such delivery to be made only upon receipt of payment therefor in such form as
is satisfactory to Custodian, with the understanding that Custodian may deliver
or cause to be delivered securities for payment in accordance with the customs
prevailing among dealers in securities.
H. Purchases or Sales of Security Options, Options on Indices and Security Index
Futures Contracts Fund will, on each business day on which a purchase or sale of
the following options and/or futures shall be made by it, deliver to Custodian
instructions which shall specify with respect to each such purchase or sale:
1. Security Options
a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
e. The exercise price;
f. Whether the transaction is an opening, exercising, expiring or closing
transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased;
i. Market on which option traded;
j. Name and address of the broker or dealer through whom the sale or purchase
was made.
2. Options on Indices
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
h. Whether the transaction is an opening, exercising, expiring or closing
transaction;
i. Whether the transaction involves a put or call;
j. Whether the option is written or purchased;
k. The name and address of the broker or dealer through whom the sale or
purchase was made, or other applicable settlement instructions.
<PAGE> 6
3. Security Index Future Contracts
a. The last trading date specified in the contract and, when available, the
closing level, thereof;
b. The index level on the date the contract is entered into;
c. The multiple;
d. Any margin requirements; and
e. The need for a segregated margin account (in addition to instructions, and if
not already in the possession of Custodian, Fund shall deliver a substantially
complete and executed custodial safekeeping account and procedural agreement
which shall be incorporated by reference into this Custody Agreement).
f. The name and address of the futures commission merchant through whom the sale
or purchase was made, or other applicable settlement instructions.
4. Option on Index Future Contracts
a. The underlying index future contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
f. Whether the transaction involves an opening, exercising, expiring or closing
transaction;
g. Whether the transaction involves a put or call; h. Whether the option is
written or purchased
i. The market on which the option is traded.
I. Securities Pledged or Loaned
If specifically allowed for in the Registration Statement of Fund:
1. Upon receipt of instructions, Custodian will release or cause to be released
securities held in custody to the pledgee designated in such instructions by way
of pledge or hypothecation to secure any loan incurred by Fund; provided,
however, that the securities shall be released only upon payment to Custodian of
the monies borrowed, except that in cases where additional collateral is
required to secure a borrowing already made, further securities may be released
or caused to be released for that purpose upon receipt of instructions. Upon
receipt of instructions, Custodian will pay, but only from funds available for
such purpose, any such loan upon redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note or notes evidencing such
loan.
<PAGE> 7
2. Upon receipt of instructions, Custodian will release securities held in
custody to the borrower designated in such instructions; provided, however, that
the securities will be released only upon deposit with Custodian of full cash
collateral as specified in such instructions, and that Fund will retain the
right to any dividends, interest or distribution on such loaned securities. Upon
receipt of instructions and the loaned securities, Custodian will release the
cash collateral to the borrower.
J. Routine Matters Custodian will, in general, attend to all routine and
mechanical matters in connection with the sale, exchange, substitution,
purchase, transfer, or other dealings with securities or other property of Fund
except as may be otherwise provided in this Agreement or directed from time to
time by the Board of Directors of Fund.
K. Deposit Account
Custodian will open and maintain a special purpose deposit account or accounts
in the name of Custodian ("Account"), subject only to draft or order by
Custodian upon receipt of instructions. All monies received by Custodian from or
for the account of the Fund shall be deposited in one or more said accounts
which have been identified as being account(s) to hold assets allocated to the
Fund barring events not in the control of the Custodian such as strikes,
lockouts or labor disputes, riots, war or equipment or transmission failure or
damage, fire, flood, earthquake or other natural disaster, action or inaction of
governmental authority or other causes beyond its control, at 9:00 a.m., Kansas
City time, on the second business day after deposit of any check into the Fund's
account(s). Custodian may open and maintain an Account in such other banks or
trust companies as may be designated by it or by properly authorized resolution
of the Board of Directors of Fund, such Account, however, to be in the name of
Custodian and subject only to its draft or order.
L. Income and other Payments to Fund Custodian will:
1. Collect, claim and receive and deposit for the account of Fund all income and
other payments which become due and payable on or after the effective date of
this Agreement with respect to the securities deposited under this Agreement,
and credit the account of the Fund with such income when received;
2. Execute ownership and other certificates and affidavits for all federal,
state and local tax purposes in connection with the collect-ion of bond and
note coupons; and
3. Take such other action as may be necessary or proper in connection
<PAGE> 8
with:
a. the collection, receipt and deposit of such income and other payments,
including but not limited to the presentation for payment of:
1. all coupons and other income items requiring presentation; and
2. all other securities which may mature or be called, redeemed, retired or
otherwise become payable and regarding which the Custodian has actual knowledge,
or notice of which is contained in publications of the type to which it normally
subscribes for such purpose; and
b. the endorsement for collection, in the name of Fund, of all checks, drafts or
other negotiable instruments.
Custodian, however, will not be required to institute suit or take other
extraordinary action to enforce collection except upon receipt of instructions
and upon being indemnified to its satisfaction against the costs and expenses of
such suit or other actions. Custodian will receive, claim and collect all stock
dividends, rights and other similar items and will deal with the same pursuant
to instructions. Unless prior instructions have been received to the contrary,
Custodian will, without further instructions, sell any rights held for the
account of the particular Fund on the last trade date prior to the date of
expiration of such rights.
M. Payment of Dividends and other Distributions
On or before the declaration of any dividend or other distribution on the shares
of any class of Capital Stock of Fund ("Shares") by the Board of Directors of
Fund, Fund shall deliver to Custodian instructions with respect thereto,
including a copy of the Resolution of said Board of Directors certified by the
Secretary or an Assistant Secretary of Fund wherein there shall be set forth the
record date as of which shareholders entitled to receive such dividend or other
distribution shall be determined, the date of payment of such dividend or
distribution, and the amount payable per share on such dividend or distribution.
For purposes of the foregoing, it shall be sufficient for the Fund to furnish a
copy of the Resolution of the Board of Directors specifying procedures by which
the record date , payment date and amount of dividend or other distribution
shall be determined, and authorizing officers of the Fund to act in accordance
with such procedures. Except if the ex-dividend date and the reinvestment date
of any dividend are the same, in which case funds shall remain in the Custody
Account, on the date specified in such Resolution for the payment of such
dividend or other distribution, Custodian will pay out of the monies held for
the account of the Fund, insofar as the same shall be available for such
<PAGE> 9
purposes, and credit to the account of the Dividend Disbursing Agent for Fund,
such amount as may be necessary to pay the amount per share payable in cash on
the Shares issued and outstanding on the record date established by such
Resolution.
N. Shares of Fund Repurchased or Redeemed by Fund
Whenever any Fund Shares are repurchased or redeemed by Fund, Fund or its agent
shall advise Custodian of the class of shares redeemed or repurchased and the
aggregate dollar amount to be paid for such shares and shall confirm such advice
in writing. Upon receipt of such advice, Custodian shall charge such aggregate
dollar amount to the custody account of the Fund and either deposit the same in
the account maintained for the purpose of paying for the repurchase or
redemption of such Shares or deliver the same in accordance with such advice.
Custodian shall not have any duty or responsibility to determine that Fund
Shares repurchased or redeemed by Fund have been removed from the proper
shareholder account or accounts or that the proper number of such shares have
been cancelled and removed from the shareholder records.
O. Shares of Fund Purchased from Fund
Whenever the Shares are purchased from Fund, Fund will deposit or cause to be
deposited with Custodian the amount received for such shares, and will notify
Custodian of the class of shares purchased and to which the proceeds are to be
allocated.
Custodian shall not have any duty or responsibility to determine that Fund
Shares purchased from Fund have been added to the proper shareholder account or
accounts or that the proper number of such shares have been added to the
shareholder records.
P. Proxies and Notices
Custodian will promptly deliver or mail or have delivered or mailed to Fund all
proxies properly signed, all notices of meetings, all proxy statements and other
notices, requests or announcements affecting or relating to securities held by
Custodian for Fund and will, upon receipt of instructions, execute and deliver
or cause its nominee to execute and deliver or mail or have delivered or mailed
such proxies or other authorizations as may be required. Except as provided by
this Agreement or pursuant to instructions hereafter received by Custodian,
neither it nor its nominee will exercise any power inherent in any such
securities, including any power to vote the same, or execute any proxy, power of
attorney, or other similar instrument voting any of such securities, or give any
consent, approval or waiver with
<PAGE> 10
respect thereto, or take any other similar action.
Q. Disbursements
Custodian will pay or cause to be paid insofar as funds are available for the
purpose, bills, statements and other obligations of Fund (including but not
limited to obligations in connection with the conversion, exchange or surrender
of securities owned by Fund, interest charges, dividend disbursements, taxes,
management fees, custodian fees, legal fees, auditors fees, transfer agents
fees, brokerage commissions, compensation to personnel, and other operating
expenses of Fund) pursuant to instructions of Fund setting forth the account, if
more than one, from which payment is to be made, the name of the person to whom
payment is to be made, the amount of the payment, and the purpose of the
payment.
R. Daily Statement of Accounts
Custodian will, within a reasonable time, render to Fund as of the close of
business on each day, a detailed statement of the amounts received or paid and
of securities received or delivered for the account of the Fund during said day.
Custodian will, from time to time, upon request by Fund, render a detailed
statement of the securities and monies held for the Fund under this Agreement,
and Custodian will maintain such books and records as are necessary to enable it
to do so and will permit such persons as are authorized by Fund including Fund's
independent public accountants, access to such records or confirmation of the
contents of such records; and if demanded, will permit federal and state
regulatory agencies to examine the securities, books and records. Upon the
written instructions of Fund or as demanded by federal or state regulatory
agencies, Custodian will instruct any subcustodian to give such persons as are
authorized by Fund including Fund's independent public accountants, access to
such records or confirmation of the contents of such records; and if demanded,
to permit federal and state regulatory agencies to examine the books, records
and securities held by subcustodian which relate to Fund.
S. Appointment of Subcustodians
1. Notwithstanding any other provisions of this Agreement, monies or securities
of Fund may be held in Custodian's own custody or in the custody of one or more
other banks or trust companies selected by Custodian. Any such subcustodian must
have the qualifications required for custodian under the Investment Company Act
of 1940, as amended. The subcustodian may participate directly or indirectly in
the Depository Trust
<PAGE> 11
Company or Treasury/Federal Reserve Book Entry System (as such entity is defined
at 17 CFR Sec. 270.17f-4(b)) or other depository approved by the Fund. Neither
Custodian nor subcustodian will be entitled to reimbursement by Fund for any
fees or expenses of any subcustodian. The appointment of a subcustodian will not
relieve Custodian of any of its obligations hereunder.
2. Notwithstanding any other provisions of this Agreement, Fund's foreign
securities (as defined in Rule 17f-5(c)(1) under the Investment Company Act of
1940) and Fund's cash or cash equivalents, in amounts reasonably necessary to
effect Fund's foreign securities transactions, may be held in the custody of one
or more banks or trust companies acting as Subcustodians, according to Section
3.S.1; and thereafter, pursuant to a written contract or contracts as approved
by Fund's Board of Directors, may be transferred to an account maintained by
such subcustodian with an eligible foreign custodian, as defined in Rule
17f-5(c)(2), provided that any such arrangement involving a foreign custodian
shall be in accordance with the provisions of Rule 17f-5 under the Investment
Company Act of 1940 as that Rule may be amended from time to time.
3. Custodian shall be responsible for insuring that any subcustodian has
appropriately segregated assets of the Fund.
T. Adoption of Procedures
Custodian and Fund may from time to time adopt procedures as they agree upon,
and Custodian may conclusively assume that no procedure approved by Fund, or
directed by Fund, conflicts with or violates any requirements of its prospectus,
"Articles of Incorporation," Bylaws, or any rule or regulation of any regulatory
body or governmental agency. Fund will be responsible to notify Custodian of any
changes in statutes, regulations, rules or policies which might necessitate
changes in Custodian's responsibilities or procedures.
U. Overdrafts
If Custodian shall in its sole discretion advance funds to the account of the
Fund which results in an overdraft because the monies held by Custodian on
behalf of the Fund are insufficient to pay the total amount payable upon a
purchase of securities as specified in Fund's instructions or for some other
reason, the amount of the overdraft shall be payable out of the account of the
Fund to IFTC upon demand and shall bear a reasonable interest rate determined by
Custodian from the date advanced until the date of payment.
<PAGE> 12
V. Accounts and Records Property of Fund
Custodian acknowledges that all of the accounts and records maintained by
Custodian pursuant to this Agreement are the property of Fund, and will be made
available to Fund for inspection or reproduction within a reasonable period of
time, upon demand. Custodian will assist Fund's independent auditors, or upon
approval of Fund, or upon demand, any regulatory body having jurisdiction over
the Fund or Custodian, in any requested review of Fund's accounts and records
but shall be reimbursed for all expenses and employee time invested in any such
review outside of routine and normal periodic reviews. Upon receipt from Fund of
the necessary information, Custodian will supply necessary data for Fund's
completion of any necessary tax returns, questionnaires, periodic reports to
Shareholders and such other reports and information requests as Fund and
Custodian shall agree upon from time to time.
4. INSTRUCTIONS
A. The term "instructions", as used herein, means written or oral instructions
to Custodian from a designated representative of Fund. Certified copies of
resolutions of the Board of Directors of Fund naming one or more designated
representatives to give instructions in the name and on behalf of Fund, may be
received and accepted from time to time by Custodian as conclusive evidence of
the authority of any designated representative to act for Fund and may be
considered to be in full force and effect (and Custodian will be fully protected
in acting in reliance thereon) until receipt by Custodian of notice to the
contrary. Unless the resolution delegating authority to any person to give
instructions specifically requires that the approval of anyone else will first
have been obtained, Custodian will be under no obligation to inquire into the
right of the person giving such instructions to do so. Notwithstanding any of
the foregoing provisions of this Section 4, no authorizations or instructions
received by Custodian from Fund, will be deemed to authorize or permit any
Director, Trustee, officer, employee, or agent of Fund to withdraw any of the
securities or similar investments of Fund upon the mere receipt of such
authorization or instructions from such director trustee, officer, employee or
agent.
Notwithstanding any other provision of this Agreement, Custodian, upon receipt
(and acknowledgment if required at the discretion of Custodian) of the
instructions of a designated representative of Fund will undertake to deliver
for the account of the Fund monies, (provided such monies are on hand or
available) in connection with transactions for the account of the Fund and to
wire transfer such monies to such broker, dealer, subcustodian, bank or other
agent specified in such instructions by a
<PAGE> 13
designated representative of Fund.
B. No later than the next business day immediately following each oral
instruction, Fund will send Custodian written confirmation of such oral
instruction. At Custodian's sole discretion, Custodian may record on tape, or
otherwise, any oral instruction whether given in person or via telephone, each
such recording identifying the parties, the date and the time of the beginning
and ending of such oral instruction.
5. LIMITATION OF LIABILITY OF CUSTODIAN
A. Custodian shall hold harmless and indemnify Fund from and against any loss or
liability arising out of Custodian's failure to comply with the terms of this
Agreement or arising out of Custodian's negligence, willful misconduct, or bat
faith. Custodian shall not be liable for consequential damages. Custodian may
request and obtain the advice and opinion of counsel for Fund, or of its own
counsel with respect to questions or matters of law, and it shall be without
liability to Fund for any action taken or omitted by it in good faith, in
conformity with such advice or opinion. If IFTC reasonably believes that it
court not prudently act according to the instructions of the Fund or the Fund's
counsel, it may in its discretion, with notice to the Fund, not act according to
such instructions.
B. Custodian may rely upon the advice of Fund and upon statements of Fund's
accountants and other persons believed by it, in good faith, to be expert in
matters upon which they are consulted and Custodian shall not be liable for any
actions taken, in good faith, upon such statements.
C. If Fund requires Custodian in any capacity to take, with respect to any
securities, any action which involves the payment of money by it, or which in
Custodian's opinion might make it or its nominee liable for payment of monies or
in any other way, Custodian, upon notice to Fund given prior to such actions,
shall be and be kept reasonably indemnified by Fund in an amount and form
satisfactory to Custodian against any liability on account of such action.
D. Custodian shall be entitled to receive, and Fund agrees to pay to Custodian,
on demand, reimbursement for such cash disbursements, costs and expenses as may
be agreed upon from time to time by Custodian and Fund.
E. Custodian shall be protected in acting as custodian hereunder upon any
instructions, advice, notice, request, consent, certificate or other instrument
or paper reasonably appearing to it to be genuine and to have been properly
executed and shall, unless otherwise specifically provided herein, be
<PAGE> 14
entitled to receive as conclusive proof of any fact or matter required to be
ascertained from Fund hereunder, a certificate signed by the Fund's President,
or other officer specifically authorized for such purpose.
F. Without limiting the generality of the foregoing, Custodian shall be under
no duty or obligation to inquire into, and shall not be liable for:
1. The validity of the issue of any securities purchased by or for Fund, the
legality of the purchase thereof or evidence of ownership required by Fund to be
received by Custodian, or the propriety of the decision to purchase or amount
paid therefor;
2. The legality of the sale of any securities by or for Fund, or the propriety
of the amount for which the same are sold;
3. The legality of the issue or sale of any shares of the Capital Stock of Fund,
or the sufficiency of the amount to be received therefor;
4. The legality of the repurchase or redemption of any shares of Fund Shares, or
the propriety of the amount to be paid therefor; or
5. The legality of the declaration of any dividend by Fund, or the legality of
the issue of any Fund Shares in payment of any stock dividend.
G. Custodian shall not be liable for, or considered to be Custodian of, any
money represented by any check, draft, wire transfer, clearing house funds,
uncollected funds, or instrument for the payment of money received by it on
behalf of Fund, until Custodian actually receives such money, provided only
that-it shall advise Fund promptly if it fails to receive any such money in the
ordinary course of business, and use its best efforts and cooperate with Fund
toward the end that such money shall be received.
H. Except for any Subcustodians appointed under section 3.S., Custodian shall
not be responsible for loss occasioned by the acts, defaults or insolvency of
any broker, bank, trust company, or any other person with whom Custodian may
deal in the absence of negligence, misconduct, or bad faith on the part of
Custodian.
I. Notwithstanding anything herein to the contrary, Custodian may, and with
respect to any foreign subcustodian appointed under Section 3.S.2 must, provide
Fund for its approval, agreements with banks or trust
<PAGE> 15
companies which will act as Subcustodians for Fund pursuant to Section 3.S of
this Agreement.
J. Custodian may advance, or cause to be advanced, to Fund monies as a result of
orders or instructions of Fund or procedures for purposes pursuant to this
Agreement, including, among others, payments for securities, options or futures
purchased, return of securities loaned, pledged or sold pursuant to repurchase
or redemption of Fund Shares, payment of Custodian's fees, or where Custodian
shall incur or be assessed any taxes, charges, expenses, assessments, claims or
liabilities for which Custodian is entitled to be reimbursed or indemnified
under this Agreement (collectively the "Liabilities"). To further secure
Custodian's right to repayment of the Liabilities, Fund herewith grants to
Custodian a security interest in the property of the Fund to which such
obligation(s) relate(s) at any time held by, or for the account of, or under the
control of, Custodian.
6. COMPENSATION
Fund will pay to Custodian such compensation as is stated in the Fee Schedule
attached hereto as Exhibit A which may be changed from time to time as agreed to
in writing by Custodian and Fund. Custodian may charge such compensation against
monies held by it for the account of the Fund to which such obligation(s)
relate(s). Custodian will also be entitled, notwithstanding the provisions of
Sections or 5.D. hereof, to charge against any monies held by it for the account
of the Fund to which such obligation(s) relate(s) the amount of any loss,
damage, liability or expense for which it shall be entitled to reimbursement
under the provisions of this Agreement including fees or expenses due to IFTC
for other services provided to the Fund by the Custodian. Custodian will not be
entitled to reimbursement by Fund for any loss or expenses of any subcustodian.
7. TERMINATION
The term of this Agreement shall be one year. Either party to this Agreement may
terminate the same by notice in writing, delivered or mailed, postage prepaid,
to the other party hereto and received not less than ninety (90) days prior to
the date upon which such termination will take effect. Upon termination of this
Agreement, Fund will pay to Custodian such compensation for its reimbursable
disbursements, costs and expenses paid or incurred to such date and Fund will
use its best efforts to obtain a successor custodian. Unless the holders of a
"majority" (as that term is defined under the Investment Company Act of 1940) of
the outstanding shares of "Capital Stock" of Fund vote to have the securities,
funds and other properties of the Fund held under this Agreement delivered and
paid over to some other person, firm or corporation specified in the
<PAGE> 16
vote, having not less the Two Million Dollars ($2,000,000) aggregate capital,
surplus and undivided profits, as shown by its last published report, and
meeting such other qualifications for Custodian as set forth in the Bylaws of
Fund, the Board of Directors of Fund will, forthwith upon giving or receiving
notice of termination of this Agreement, appoint as successor custodian a bank
or trust company having such qualifications. Nothing hereinabove shall impose a
duty upon the Fund to call for a vote of its shareholders with respect to
whether to terminate the Agreement. Custodian will, upon termination of this
Agreement deliver to the successor custodian so specified or appointed, at
Custodian's office, all securities then held for the Fund by Custodian
hereunder, duly endorsed and in form for transfer, all funds and other
properties of Fund deposited with or held by Custodian hereunder, or will
co-operate in effecting changes in book-entries at the Depository Trust Company
or in the Treasury/Federal Reserve Book Entry System pursuant to 31 CFR Sec.
306.118 In the event no such vote has been adopted by the stockholders of Fund
and no written order designating a successor custodian has been delivered to
Custodian on or before the date when such termination becomes effective, then
Custodian will deliver the securities, funds and properties held for the Fund to
a bank or trust company at the selection of Custodian and meeting the
qualifications for custodian, if any, set forth in the Bylaws of Fund and having
not less that Two Million Dollars ($2,000,000) aggregate capital, surplus and
undivided profits, as shown by its last published report. Upon either such
delivery to a successor custodian, Custodian will have no further obligations or
liabilities under this Agreement. Thereafter such bank or trust company will be
the successor custodian under this Agreement and will be entitled to reasonable
compensation for its services. In the event that no such successor custodian can
be found, Fund will submit to its shareholders before permitting delivery of the
cash and securities owned by Fund to anyone other than a successor custodian,
the question of whether the Fund will be liquidated or function without a
custodian. Notwithstanding the foregoing requirement as to delivery upon
termination of this Agreement, Custodian may make any other delivery of the
securities, funds and property of the Fund permitted by the Investment Company
Act of 1940, Fund's Certificate of Incorporation and Bylaws then in effect or
apply to a court of competent jurisdiction for the appointment of a successor
custodian.
8. NOTICES
Notices, requests, instructions and other writings received by Fund at Financial
Square, New York, New York 10005 or at such other address as Fund may have
designated to Custodian in writing, will be deemed to have been properly given
to Fund hereunder; and notices, requests, instructions and other writings
received by Custodian at its offices at 127 West 10th
<PAGE> 17
Street, 14th Floor, Kansas City, Missouri 64105, or to such other address as it
may have designated to Fund in writing, will be teemed to have been properly
given to Custodian hereunder. Until further notice is given to the Custodian,
all notices and writings to be delivered to the Fund by Custodian shall be given
to Mr. Irwood Schlackman, c/o Cowen &Co., Financial Square, New York, New York
10005 and IFTC shall on a best efforts basis also give a copy to Mr. Stuart F.
Goodman at the same address.
9. MISCELLANEOUS
A. This Agreement is executed and delivered in the State of Missouri and shall
be governed by the laws of said state.
B. All the terms and provisions of this Agreement shall be binding upon, inure
to the benefit of, and be enforceable by the respective successor and assigns of
the parties hereto.
C. No provisions of the Agreement may be amended or modified, in any manner
except by a written agreement properly authorized and executed by both parties
hereto.
D. 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.
E. This Agreement shall become effective at the opening of business on the 9th
day of May, 1988.
F. This Agreement may be executed simultaneously in two or more counterparts,
each of which will be deemed an original but all of which together will
constitute one ant the same instrument.
G. If any part, term or provision of this Agreement is by the courts held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
H. Custodian will not release the identity of Fund to an issuer which requests
such information pursuant to the Shareholder Communications Act of 1985 for the
specific purpose of direct communications between such issuer and Fund unless
the Fund directs the Custodian otherwise.
<PAGE> 18
I. This Agreement may not be assigned by either party without prior written
consent of the other party.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly respective authorized officers.
INVESTORS FIDUCIARY TRUST COMPANY
By: /s/ Christopher E. Black, Vice President
ATTEST: /s/ Cheryl J. Naegler, Assistant Secretary
COWEN INCOME + GROWTH FUND, INC.
By: /s/ Stuart Goodman, Treasurer
ATTEST: /s/ Faith Colish, Secretary
<PAGE> 1
EXHIBIT (9)
AGENCY AGREEMENT
THIS AGREEMENT made the 6th day of May, 1988, by and between
COWEN INCOME + GROWTH FUND, INC. a corporation existing
under the laws of the State of Maryland, having its principal place of
business at Financial Square, New York, New York 10005 ("Fund"), and
INVESTORS FIDUCIARY TRUST COMPANY, a state chartered trust
company organized and existing under the laws of the State of Missouri,
having its principal place of business at 127 West 10th Street, Kansas City,
Missouri 64105 ("IFTC"):
WITNESSETH:
WHEREAS, the Fund has issued or intends to issue one or more series of
its Common Stock, $.001 par value per share, with the proceeds of the sale
allocated to the Fund's investment program; and
WHEREAS, Fund desires to appoint IFTC as Transfer Agent and Dividend
Disbursing Agent with respect to its common stock, and IFTC desires to
accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Documents to be Filed with Appointment
In connection with the appointment of IFTC as Transfer Agent and
Dividend Disbursing Agent for Fund, there will be filed with IFTC the
following documents:
A. A certified copy of the resolutions of the Board of Directors of Fund
appointing IFTC as Transfer Agent and Dividend Disbursing Agent,
approving the form of this Agreement, and designating certain persons to
sign stock certificates, if any, and give written instructions and requests on
behalf of Fund;
B. A certified copy of the Articles of Incorporation of Fund and all
amendments thereto;
C. A certified copy of the Bylaws of Fund;
D. Copies of Registration Statements and amendments thereto, filed with
the Securities and Exchange Commission.
E. Specimens of all forms of outstanding stock certificates, in the forms
<PAGE> 2
approved by the Board of Directors of Fund, with a certificate of the
Secretary of Fund, as to such approval;
F. Specimens of the signatures of the officers of the Fund authorized to
sign stock certificates and individuals authorized to sign written
instructions and requests;
G. An opinion of counsel for Fund with respect to:
(1) Fund's organization and existence under the laws of its state of
organization,
(2) Status of all shares of stock of Fund covered by the appointment under
the Securities Act of 1933, as amended, and any other applicable federal or
state statute and
(3) That all issued shares are, and all unissued shares will be, when issued,
validly issued, fully paid and nonassessable.
2. Certain Representations and Warranties of IFTC
IFTC represents and warrants to Fund that:
A. It is a trust company duly organized and existing and in good standing
under the laws of Missouri.
B. It is duly qualified to carry on its business in the State of Missouri.
C. It is empowered under applicable laws and by its Articles of
Incorporation and bylaws to enter into and perform the services
contemplated in this Agreement.
D. It is registered as a transfer agent to the extent required under the
Securities Exchange Act of 1934.
E. All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
F. It has and will continue to have and maintain the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
3. Certain Representations and Warranties of Fund
Fund represents and warrants to IFTC that:
<PAGE> 3
A. It is a corporation duly organized and existing and in good standing under
the laws of the State of Maryland.
B. It is an open-end diversified management investment company registered under
the Investment Company Act of 1940, as amended.
C. A registration statement under the Securities Act of 1933 has been filed and
will be effective with respect to all shares of Fund being offered for sale.
D. All requisite steps have been or will be taken as necessary to qualify Fund's
shares for sale in all applicable states.
E. Fund is empowered under applicable laws and by its charter and bylaws to
enter into and perform this Agreement.
4. Scope of Appointment
A. Subject to the conditions set forth in this Agreement, Fund hereby employs
and appoints IFTC as Transfer Agent and Dividend Disbursing Agent on or about
May 6, 1988 or in accordance with the Fund's Registration Statement.
B. IFTC hereby accepts such employment and appointment and agrees that it will
act as Fund's Transfer Agent and Dividend Disbursing Agent. IFTC agrees that it
will also act as agent in connection with Fund's periodic withdrawal payment
accounts and other open accounts or similar plans for shareholders, if any.
C. IFTC agrees to provide the necessary facilities, equipment and personnel to
perform its duties and obligations hereunder in accordance with industry
practice.
D. Fund agrees to use its best efforts to deliver to IFTC in Kansas City,
Missouri, as soon as they are available, all of its shareholder account records.
E. Subject to the provisions of Sections 19. and 20. hereof, IFTC agrees that it
will perform all of the usual and ordinary services of Transfer Agent and
Dividend Disbursing Agent and as Agent for the various shareholder accounts,
including, without limitation, the following: issuing, transferring and
cancelling stock certificates, maintaining all shareholder accounts (including,
determining that (i) Fund shares purchased from Fund have been added to the
proper shareholder account or accounts and (ii) Fund shares repurchased or
redeemed by Fund have been removed from the
<PAGE> 4
proper shareholder account or accounts and (iii) the proper number of shares
have been added, removed or cancelled from the Fund's shareholder records),
preparing shareholder meeting lists, mailing proxies, receiving and tabulating
proxies, mailing shareholder reports and prospectuses, withholding taxes on
nonresident alien and foreign corporation accounts, for pension and deferred
income, backup withholding or other instances agreed upon by the parties,
preparing and mailing checks for disbursement of income dividends and capital
gains distributions, preparing and filing U.S. Treasury Department Form 1099 for
all shareholders, preparing and mailing confirmation forms to shareholders and
dealers with respect to all purchases and liquidations of Fund shares and other
transactions in shareholder accounts for which confirmations are required,
recording reinvestments of dividends and distributions in Fund shares, recording
redemptions of Fund shares and preparing and mailing checks for payments upon
redemption and for disbursements to withdrawal plan holders.
F. Whenever any Fund shares are repurchased or redeemed by Fund, IFTC shall
advise the Fund's custodian of the stock so repurchased or redeemed, the
aggregate dollar amount to be paid for such shares, and shall confirm such
advice in writing.
G. Whenever Fund shares are purchased from Fund, IFTC will deposit with the
Fund's custodian the amount received for such shares into the account of the
Fund.
H. IFTC agrees to generate reports which provide certain information for blue
sky reporting by the Fund at least on a monthly basis within five business days
after the end of the month.
5. Limit of Authority
Unless otherwise expressly limited by the resolution of appointment or by
subsequent action by the Fund, the appointment of IFTC as Transfer Agent will be
construed to cover the full amount of authorized stock of the class or classes
for which IFTC is appointed as the same will, from time to time, be constituted
and any subsequent increases in such authorized amount.
In case of such increase Fund will file with IFTC:
A. If the appointment of IFTC was theretofore expressly limited, a certified
copy of a resolution of the Board of Directors of Fund increasing the authority
of IFTC;
B. A certified copy of the amendment to the Articles of Incorporation of Fund
authorizing the increase of stock;
<PAGE> 5
C. A certified copy of the order or consent of each governmental or regulatory
authority required by law to consent to the issuance of the increased stock, and
an opinion of counsel that the order or consent of no other governmental or
regulatory authority is required;
D. Opinion of counsel for Fund stating:
(1) The status of the additional shares of stock of Fund under the Securities
Act of 1933, as amended, and any other applicable federal or state statute; and
(2) That the additional shares are, or when issued will be, validly issued,
fully paid and nonassessable.
6. Compensation and Expenses
A. In consideration for its services hereunder as Transfer Agent and Dividend
Disbursing Agent, Fund will pay to IFTC from time to time a reasonable
compensation for all services rendered as Agent, and also, all its reasonable
out-of-pocket expenses, charges, counsel fees, and other disbursements incurred
in connection with the agency. Such compensation will be set forth in a separate
schedule to be agreed to by Fund and IFTC, a copy of which is attached hereto
and incorporated herein by reference as though fully set out at this point. If
and as permitted by applicable law, IFTC may charge against any monies held
under this Agreement, the amount of any compensation, expense, loss, or
liability for which IFTC shall be entitled to reimbursement under this Agreement
on account of services performed for the Fund.
B. Fund agrees to promptly reimburse IFTC for all reasonable out-of-pocket
expenses or advances incurred by IFTC in connection with the performance of
services under this Agreement, for postage (and first class mail insurance in
connection with mailing stock certificates), envelopes, check forms, continuous
forms, forms for reports and statements, stationery, and other similar items,
telephone and telegraph charges incurred in answering inquiries from dealers or
shareholders, microfilm used each year to record the previous year's transaction
in shareholder accounts and computer tapes used for permanent storage of records
and cost of insertion of materials in mailing envelopes by outside firms.
7. Operation of IFTC System
A. In connection with the performance of its services under this Agreement, IFTC
is responsible for such items as:
<PAGE> 6
(1) The accuracy of entries in IFTC's records reflecting orders and instructions
received by IFTC from dealers, shareholders, Fund or its principal underwriter;
(2) The availability and the accuracy of shareholder lists, shareholder account
verifications, confirmations and other shareholder account information to be
produced from its records or data;
(3) The accurate and timely issuance of dividend and distribution checks in
accordance with instructions received from Fund;
(4) The accuracy of redemption transactions and payments in accordance with
redemption instructions received from dealers, shareholders or Fund;
(5) The deposit daily in the appropriate special bank account established for
the Fund of all checks and payments received from dealers or shareholders for
investment in shares;
(6) The requiring of proper forms of instructions, signatures and signature
guarantees and any necessary documents supporting the legality of transfers,
redemptions and other shareholder account transactions, all in conformance with
IFTC-B present procedures with such changes as may be required or approved by
Fund; and
(7) The maintenance of a current duplicate set of Fund's essential records at a
secure distant location, in a form available and usable forthwith in the event
of any breakdown or disaster disrupting its main operation.
8. Indemnification
A. Except to the extent that IFTC is covered by and receives payment from any
insurance required hereunder, IFTC wild not be responsible for, and Fund will
hold harmless and indemnify IFTC from and against any loss by or liability to
the Fund or a third party, including attorney's fees, in connection with any
claim or suit asserting any such liability arising out of or attributable to
actions taken or omitted by IFTC pursuant to this Agreement, unless IFTC has
acted negligently or in bad faith or in a manner constituting willful
misconduct. The matters covered by this indemnification include but are not
limited to those of Section 14 hereof.
Fund will be responsible for, and will have the right to conduct or control the
defense of any litigation asserting liability against which IFTC is indemnified
hereunder. IFTC will not be under any obligation to prosecute or defend any
action or suit in respect of the agency relationship hereunder, which, in its
opinion, may involve it in expense or liability, unless Fund will,
<PAGE> 7
as often as requested, furnish IFTC with reasonable, satisfactory security and
indemnity against such expense or liability.
B. IFTC will hold harmless and indemnify Fund from and against any loss or
liability arising out of IFTC's failure to comply with the terms of this
Agreement or in breach of any representation or warranty of IFTC arising out of
IFTC's negligence, misconduct, or bad faith.
9. Certain Covenants of IFTC and Fund
A. All requisite steps will be taken by Fund from time to time when and as
necessary to qualify the Fund's shares for sale in all states in which Fund's
shares shall at the time be offered for sale and require qualification. If at
any time Fund will receive notice of any stop order or other proceeding in any
such state affecting such registration or the sale of Fund's shares, or of any
stop order or other proceeding under the Federal securities laws affecting the
sale of Fund's shares, Fund will give prompt notice thereof to IFTC.
B. IFTC hereby agrees to perform such transfer agency functions as are attached
hereto as Exhibit A and establish and maintain facilities and procedures
reasonably acceptable to Fund for safekeeping of stock certificates, check
forms, and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such certificates, forms and
devices, and to carry insurance as specified in Exhibit B which will not be
lowered without notice to Fund.
C. To the extent required by Section 31 of the Investment Company Act of 1940 as
amended and Rules thereunder, IFTC agrees that all records maintained by IFTC
relating to the services to be performed by IFTC under this Agreement are the
property of Fund and will be preserved and will be surrendered promptly to Fund
on request.
D. IFTC agrees to furnish Fund semiannual reports of its financial condition,
consisting of a balance sheet, earnings statement and any other financial
information reasonably requested by Fund. The annual financial statements will
be certified by IFTC's certified public accountants.
E. IFTC represents and agrees that it will use its best efforts to keep current
on the trends of the investment company industry relating to shareholder
services and will use its best efforts to continue to modernize and improve its
system without additional cost to Fund.
F. IFTC will permit Fund and its authorized representatives to make periodic
inspections of its operations at reasonable time during business
<PAGE> 8
hours.
10. Recapitalization or Readjustment
In case of any recapitalization, readjustment or other change in the capital
structure of Fund requiring a change in the form of stock certificates, IFTC
will issue or register certificates in the new form in exchange for, or in
transfer of, the outstanding certificates in the old form, upon receiving:
A. Written instructions from an officer of Fund;
B. Certified copy of the amendment to the Articles of Incorporation or other
document effecting the change;
C. Certified copy of the order or consent of each governmental or regulatory
authority, required by law to the issuance of the stock in the new form, and an
opinion of counsel that the order or consent of no other government or
regulatory authority is required;
D. Specimens of the new certificates in the form approved by the Board of
Directors of Fund, with a certificate of the Secretary of Fund as to such
approval;
E. Opinion of counsel for Fund stating:
(1) The status of the shares of stock of Fund in the new form under the
Securities Act of 1933, as amended and any other applicable federal or state
statute; and
(2) That the issued shares in the new form are, and all unissued shares will be,
when issued, validly issued, fully paid and nonassessable.
11. Stock Certificates
Fund will furnish IFTC with a sufficient supply of blank stock certificates and
from time to time will renew such supply upon the request of IFTC. Such
certificates will be signed manually or by facsimile signatures of the officers
of Fund authorized by law and by bylaws to sign stock certificates, and if
required, will bear the corporate seal or facsimile thereof.
12. Death, Resignation or Removal of Signing Officer
Fund will file promptly with IFTC written notice of any change in the officers
authorized to sign stock certificates, written instructions or requests,
together with two signature cards bearing the specimen signature
<PAGE> 9
of each newly authorized officer. In case any officer of Fund who will have
signed manually or whose facsimile signature will have been affixed to blank
stock certificates will die, resign, or be removed prior to the issuance of such
certificates, IFTC may issue or register such stock certificates as the stock
certificates of Fund notwithstanding such death, resignation, or removal, until
specifically directed to the contrary by Fund in writing. In the absence of such
direction, Fund will file promptly with IFTC such approval, adoption, or
ratification as may be required by law.
13. Future Amendments of Charter and Bylaws
Fund will promptly file with IFTC copies of all material amendments to its
Articles of Incorporation or bylaws made after the date of this Agreement.
14. Instructions, Opinion of Counsel and Signatures
At any time IFTC may apply to any officer of Fund for instructions, and may
consult with legal counsel for Fund or its own legal counsel at the expense of
Fund, with respect to any matter arising in connection with the agency and it
will not be liable for any action taken or omitted by it in good faith in
reliance upon such instructions or upon the opinion of such counsel. IFTC will
be protected in acting upon any paper or document reasonably believed by it to
be genuine and to have been signed by the proper person or persons and will not
be held to have notice of any change of authority of any person, until receipt
of written notice thereof from Fund. It will also be protected in recognizing
stock certificates which it reasonably believes to bear the proper manual or
facsimile signatures of the officers of Fund, and the proper countersignature of
any former Transfer Agent or Registrar, or of a co-Transfer Agent or
co-Registrar.
15. Papers Subject to Approval of Counsel
The acceptance by IFTC, of its appointment as Transfer Agent and Dividend
Disbursing Agent and all documents filed in connection with such appointment and
thereafter in connection with the agencies, will be subject to the approval of
IFTC's in-house legal counsel (which approval will be not unreasonably
withheld). For the purpose of securing IFTC's approval, Fund agrees to forward
to IFTC a copy of any document that Fund intends to file with any regulatory
authority which refers to the appointment of IFTC as the Fund~s Transfer Agent
and Dividend Disbursing Agent. If IFTC or its legal counsel disapproves or
otherwise objects to the use of its name in such document it shall notify the
Fund in writing of its disapproval or objection within a reasonable time after
receiving such document for review, but in any event not less than one business
day before such
<PAGE> 10
document must be filed with such regulatory authority.
16. Certification of Documents
The required copy of the Articles of Incorporation of Fund and copies of all
amendments thereto will be certified by the Secretary of State (or other
appropriate official) of the State of Incorporation, and if such Articles of
Incorporation and amendments are required by law to be also filed with a county,
city or other officer of official body, a certificate of such filing will appear
on the certified copy submitted to IFTC. A copy of the order or consent of each
governmental or regulatory authority required by law to the issuance of the
stock will be certified by the Secretary or Clerk of such governmental or
regulatory authority, under proper seal of such authority. The copy of the
Bylaws and copies of all amendments thereto, and copies of resolutions of the
Board of Directors of Fund, will be certified by the Secretary or an Assistant
Secretary of Fund under the corporate seal.
17. Records
IFTC will maintain customary records in connection with its agency, and
particularly will maintain those records required to be maintained pursuant to
subparagraph (2) (iv) of paragraph (b) of Rule 31a-1, 31a-2 and 31a-3 under the
Investment Company Act of 1940, if any.
18. Disposition of Books, Records and Cancelled Certificates
IFTC will send periodically to Fund, or to where designated by the Secretary or
an Assistant Secretary of Fund, all books, documents, and all records no longer
deemed needed for current purposes and stock certificates which have been
cancelled in transfer or in exchange, upon the understanding that such books,
documents, records, and stock certificates will not be destroyed by Fund without
the consent of IFTC (which consent will not be unreasonably withheld), but will
be safely stored for possible future reference.
19. Provisions Relating to IFTC as Transfer Agent
A. IFTC will make original issues of stock certificates upon written request of
an officer of Fund and upon being furnished with a certified copy of a
resolution of the Board of Directors authorizing such original issue, an opinion
of counsel as outlined in paragraphs 1.D. and G. of this Agreement, any
documents required by paragraphs 5. or 10. of this Agreement, and necessary
funds for the payment of any original issue tax.
B. Before making any original issue of certificates Fund will furnish IFTC
<PAGE> 11
with sufficient funds to pay all required taxes on the original issue of the
stock, if any. Fund will furnish IFTC such evidence as may be required by IFTC
to show the actual value of the stock. If no taxes are payable IFTC will be
furnished with an opinion of outside counsel to that effect.
C. Shares of stock will be transferred and new certificates issued in transfer,
or shares of stock accepted for redemption and funds remitted therefor, upon
surrender of the old certificates in form deemed by IFTC properly endorsed for
transfer or redemption accompanied by such documents as IFTC may deem necessary
to evidence that authority of the person making the transfer or redemption, and
bearing satisfactory evidence of the payment of any applicable stock transfer
taxes. IFTC reserves the right to refuse to transfer or redeem shares until it
is satisfied that the endorsement or signature on the certificate or any other
document is valid and genuine, and for that purpose it may require a guaranty of
signature by a firm having membership in the New York Stock Exchange, Midwest
Stock Exchange, American Stock Exchange Securities Corporation, Pacific Coast
Stock Exchange, or any other exchange acceptable to IFTC or by a bank or trust
company approved by it. IFTC also reserves the right to refuse to transfer or
redeem shares until it is satisfied that the requested transfer or redemption is
legally authorized, and it will incur no liability for the refusal in good faith
to make transfers or redemptions which, in its judgment, are improper or
unauthorized. IFTC may, in effecting transfers or redemptions, rely upon
Simplification Acts or other statutes which protect it and Fund in not requiring
complete fiduciary documentation. In cases in which IFTC is not directed or
otherwise required to maintain the consolidated records of shareholder's
accounts, IFTC will not be liable for any loss which may arise by reason of not
having such records, provided that such loss could not have been prevented by
the exercise of ordinary diligence. IFTC will be under no duty to use a greater
degree of diligence by reason of not having such records.
D. When mail is used for delivery of stock certificates IFTC will forward stock
certificates in "nonnegotiable" form by first class or registered mail and stock
certificates in "negotiable" form by registered mail, all such mail deliveries
to be covered while in transit to the addressee by insurance arranged for by
IFTC.
E. IFTC will issue and mail subscription warrants, certificates representing
stock dividends, exchanges or split ups, or act as Conversion Agent upon
receiving written instructions from any authorized officer of Fund pursuant to
section 1.A. hereunder and such other documents as IFTC deems necessary.
F. IFTC will issue, transfer, and split up certificates and will issue
<PAGE> 12
certificates of stock representing full shares upon surrender of scrip
certificates aggregating one full share or more when presented to IFTC for that
purpose upon receiving written instructions from an officer of Fund and such
other documents as IFTC may deem necessary.
G. IFTC may issue new certificates in place of certificates represented to have
been lost, destroyed, stolen or otherwise wrongfully taken upon receiving
instructions from Fund and indemnity satisfactory to IFTC and Fund, and may
issue new certificates in exchange for, and upon surrender of, mutilated
certificates. Such instructions from Fund will be in such form as will be
approved by the Board of Directors of Fund and will be in accordance with the
provisions of law and the bylaws of Fund governing such matter.
H. IFTC will supply a list of the holders of each series of stock to Fund for
any meeting of shareholders called by the Fund upon receiving a request from an
officer of Fund. It will also supply lists at such other times as may be
requested by an officer of Fund.
I. Upon receipt of written instructions of an officer of Fund, IFTC will address
and mail notices to shareholders.
J. In case of any request or demand for the inspection of the stock books of
Fund or any other books in the possession of IFTC, IFTC will endeavor to notify
Fund and to secure instructions as to permitting or refusing such inspection.
IFTC reserves the right, however, to exhibit the stock books or other books to
any person in case it is advised by its counsel that it may be held responsible
for the failure to exhibit the stock books or other books to such person.
20. Provisions Relating to Dividend Disbursing Agency
A. IFTC will, at the expense of Fund, provide a special form of check containing
the imprint of any device or other matter desired by Fund. Said checks must,
however, be of a form and size convenient for use by IFTC.
B. If Fund desires to include additional printed matter, financial statements,
etc., with the dividend checks, the same will be furnished IFTC within a
reasonable time prior to the date of mailing of the dividend checks, at the
expense of Fund.
C. If Fund desires its distributions mailed in any special form of envelopes,
sufficient supply of the same will be furnished to IFTC but the size and form of
said envelopes will be subject to the approval of IFTC. If stamped envelopes are
used, they must be furnished by Fund; or if postage stamps
<PAGE> 13
are to be affixed to the envelopes, the stamps or the cash necessary for such
stamps must be furnished by Fund.
D. IFTC will maintain one or more deposit accounts as Agent for the Fund, into
which the funds for payment of dividends, distributions, redemptions or other
disbursements provided for hereunder with respect to the Fund's stock will be
deposited, and against which checks for amounts payable from will be drawn.
E. IFTC is authorized and directed to stop payment of checks theretofore issued
hereunder, but not presented for payment, when the payees thereof allege either
that they have not received the checks or that such checks have been mislaid,
lost, stolen, destroyed or through no fault of theirs, are otherwise beyond
their control, and cannot be produced by them for presentation and collection,
and, to issue and deliver duplicate checks in replacement thereof.
21. Termination of Agreement
A. This Agreement may be terminated by either party upon receipt of ninety (90)
days written notice from the other party.
B. Fund, in addition to any other rights and remedies, shall have the right to
terminate this Agreement forthwith upon the occurrence at any time of any of the
following events:
(1) Any interruption or cessation of operations by IFTC or its assigns which
materially interferes with the business operation of Fund;
(2) The bankruptcy of IFTC or its assigns or the appointment of a receiver for
IFTC or its assigns;
(3) Any merger, consolidation or sale of substantially all the assets of IFTC or
its assigns;
(4) The acquisition of a controlling interest in IFTC or its assigns, by any
broker, dealer, investment adviser or investment company except as may presently
exist; or
(5) Failure by IFTC or its assigns to perform its duties in accordance with the
Agreement, which failure materially adversely affects the business operations of
Fund and which failure continues for thirty (30) days after receipt of written
notice from Fund.
C. If at any time this Agreement will be terminated by Fund pursuant to
<PAGE> 14
clause (1), (2) or (5) of Section 21.B., IFTC will assign this Agreement to DST
Systems Inc. who will assume the duties and obligations agreed to by IFTC under
the same terms and conditions expressed herein.
D. In the event of termination, Fund will promptly pay IFTC all amounts due to
IFTC hereunder.
22. Assignment
A. Neither this Agreement nor any rights or obligations hereunder may be
assigned by IFTC without the written consent of Fund; provided, however, no
assignment will relieve IFTC of any of its obligations hereunder.
B. This Agreement will inure to the benefit of and be binding upon the parties
and their respective successors and assigns.
23. Confidentiality
A. IFTC agrees that, except as provided in the last sentence of Section 19.J
hereof, or as otherwise required by law, IFTC will keep confidential all records
of and information in its possession relating to Fund or its shareholders or
shareholder accounts and will not disclose the same to any person except at the
request or with the consent of Fund.
B. Fund agrees to keep confidential all financial statements and other financial
records (other than statements and records relating solely to Fund's business
dealings with IFTC) and all manuals, systems and other technical information and
data, not publicly disclosed, relating to IFTC's operations and programs
furnished to it by IFTC pursuant to this Agreement and will not disclose the
same to any person except at the request or with the consent of IFTC.
24. Survival of Representations and Warranties
A. All representations and warranties by either party herein contained will
survive the execution and delivery of this Agreement.
25. Miscellaneous
A. This Agreement is executed and delivered in the State of Missouri and shall
be governed by the laws of said state.
B. All the terms and provisions of this Agreement shall be binding upon, inure
to the benefit of, and be enforceable by the respective successor and assigns of
the parties hereto.
<PAGE> 15
C. No provisions of the Agreement may be amended or modified, in any manner
except by a written agreement properly authorized and executed by both parties
hereto.
D. 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.
E. This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
F. If any part, term or provision of this Agreement is by the courts held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
G. Notices, requests, instructions and other writings received by Fund at
Financial Square, New York, New York 10005, or at such address as Fund may have
designated to IFTC in writing, will be deemed to have been properly given to
Fund hereunder; and notices, requests, instructions and other writings received
by IFTC at its offices at 127 West 10th Street, 14th Floor, Kansas City,
Missouri 64105, or 111 West 10th Street, Kansas City, Missouri 64105 or to such
other address as it may have designated to Fund in writing, will be deemed to
have been properly given to IFTC hereunder. Until further notice is given to
IFTC, all notices and writings to be delivered to the Fund by IFTC shall be
given to Mr. Irwood Schlackman, c/o Cowen & Co., Financial Square, New York, New
York 10005 and IFTC shall on a best efforts basis also give a copy to Mr. Stuart
F. Goodman, c/o Cowen & Co., Financial Square, New York, New York 10005.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective duly authorized officers.
INVESTORS FIDUCIARY TRUST COMPANY
By: /s/ Christopher E. Black, Vice President
----------------------------------------
ATTEST: /s/ Cheryl J. Naegler, Assistant Secretary
------------------------------------------
COWEN INCOME GROWTH + FUND, INC.
<PAGE> 16
By: /s/ Stuart Goodman, Treasurer
-----------------------------
ATTEST: /s/ Faith Colish, Secretary Exhibit A
---------------------------
TRANSFER AGENCY SERVICES AND SYSTEMS FEATURES
Functions
A. Issuance of stock certificates
B. Recording of noncertificate shares
C. Purchase, redemptions, exchanges, transfers and legals
D. Changes of address, etc.
E. Daily balancing of fund
F. Dividend calculation and disbursement
G. Mailing of quarterly, semi-annual or annual reports
H. Filing of 1099/1042 information to shareholders and government
I. Provide N-SAR information
J. Systematic withdrawal plans
K. Preauthorized checks
L. Purchase reminders
M. Reconcilement of dividend and disbursement accounts
N. Provide research and correspondence to shareholder's inquiries
O. Daily communication of reports to funds
P. Provide listings, labels and other special reports
Q. Proxy issuance and tabulation
R. Annual statements of shareholders on microfilm
S. Blue-sky reports
T. Wire order processing
U. 12b-1 processing
EXHIBIT B
INSURANCE COVERAGE
Insurance coverages maintained by IFTC effective January 1, 1988.
Description of Policy:
Brokers Blanket Bond, Standard Form 14
Covering losses caused by dishonesty of employees, physical loss of
securities on or outside of premises while in possession of authorized
person, loss caused by forgery or alteration of checks or similar
instruments.
<PAGE> 17
Coverage: 75,000,000
Errors and Omissions Insurance
Covering replacement of destroyed records and computer errors and
omissions.
Coverage: $10,000,000
Special Forgery Bond
Covering losses through forgery or alteration of checks or drafts of
customers processed by insured but drawn on or against them.
Coverage: $500,000
Mail Insurance (applies to all full service operations)
Provides indemnity for security lost in the mails.
Coverage:
$10,000,000 nonnegotiable securities mailed to domestic locations via
registered mail.
$1,000,000 nonnegotiable securities mailed to domestic locations via
first-class or certified mail.
$1,000,000 nonnegotiable securities mailed to foreign locations via
registered mail.
$1,000,000 negotiable securities mailed to all locations via registered mail.
<PAGE> 1
EXHIBIT 10 (i)
VENABLE, BAETJER AND HOWARD
ATTORNEYS AT LAW
1800 MERCANTILE BANK & TRUST BUILDING
2 HOPKINS PLAZA
BALTIMORE, MARYLAND 21201
August 7, 1986
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Re: Cowen Income + Growth Fund, Inc.
Gentlemen:
We have acted as special Maryland counsel for Cowen Income + Growth Fund, Inc.,
a Maryland corporation (the "Company") in connection with the organization of
the Company and the issuance of shares of its Common Stock, par value $.001 per
share.
As Maryland counsel for the Company we have examined its Charter, its By-Laws,
the Prospectus included in its registration Statement on Form N-2, substantially
in the form which it is to become effective (the "Prospectus"), and have
examined and relied upon such corporate records of the Company and other
documents and certificates as to factual matters as have deemed to be necessary
to render the opinion expressed herein. We have assumed without independent
verification the genuineness of the signatures on and the authenticity of all
documents furnished to us.
Based on such examination, we are of the opinion that:
1. The Company is duly organized and validly existing as a corporation in good
standing under the laws of State of Maryland.
2. The 10,000 shares of presently issued and outstanding Common Stock of the
Company have been validly sued and are fully paid and nonassessable shares under
the laws of the State of Maryland.
3. The balance of the shares of Common Stock of the Company to be offered for
sale pursuant to the Prospectus are authorized and unissued shares and, when
such shares have been duly sold, issued and paid for as contemplated in the
Prospectus, such shares will have been validly issued and will be fully paid and
nonassessable shares of Common Stock of the
<PAGE> 2
Company under the laws of the State of Maryland.
This letter expresses our opinion as to the Maryland General Corporation
Law governing matters such as due organization and the authorization and
issuance of stock, but does not extend to the securities or "Blue Sky" laws
of Maryland or to federal securities or other laws.
You may rely upon our foregoing opinion in rendering your opinion to the
Company which is to be filed as an exhibit to the Registration Statement;
and we hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement.
Very truly yours,
/s/ Venable, Baetjer and Howard
- -------------------------------
<PAGE> 1
EXHIBIT 10 (ii)
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
August 7, 1986
Cowen Income + Growth Fund, Inc.
One Battery Park Plaza
New York, New York 10004
Re: Cowen Income + Growth Fund, Inc.
Registration Statement on Form N-1A (File No. 33-5676)
Dear Sirs:
We have acted as counsel for Cowen Income + Growth Fund, Inc. (the "Fund"), a
Maryland corporation, in connection with the preparation and filing with the
Securities and Exchange commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act"), and the Investment Company Act of 1940, as
amended, of a Registration Statement on Form N-1A (File No. 33-5676) (the
"Registration Statement"), relating to the public offering of an indefinite
number of shares of the common stock, par value $.001 per share, of the Fund
(the "Shares").
We have examined and relied upon the originals, or copies certified or otherwise
identified to our satisfaction, of such corporate records, documents,
certificates and other instruments as in our judgment are necessary or
appropriate to inable us to render the opinion expressed below.
Based upon the foregoing, we are of the opinion that:
1. The Fund is duly organized and validly existing as a corporation in good
standing under the laws of the State of Maryland; and
2. The Shares have been duly authorized for issuance and, when issued and paid
for pursuant to the Distribution Agreement between the Fund and Cowen & Co., the
Shares will be validly issued, fully paid and nonassessable.
Insofar as this opinion relates to the law of the State of Maryland, we are
relying upon the opinion of Venable, Baetjer and Howard, a copy of which is
being delivered with this opinion and which we believe to be satisfactory in
form and substance.
<PAGE> 2
We consent to the filing of this opinion as an Exhibit to the Registration
Statement and to the reference to us in the Statement of Additional Information
forming a part of the Registration Statement. In giving our consent, however, we
do not concede that we are within the category of persons whose consent is
required under Section 7 of the Act or the Rules and Regulations of the
Commission thereunder.
Very truly yours,
/s/ Willkie Farr & Gallagher
- ----------------------------
<PAGE> 1
EXHIBIT 10 (iii)
VENABLE, BAETJER AND HOWARD
ATTORNEYS AT LAW
1800 MERCANTILE BANK & TRUST BUILDING
2 HOPKINS PLAZA
BALTIMORE, MARYLAND 21201
April 29, 1994
Cowen Income + Growth Fund, Inc.
Financial Square
New York, New York 10005
Re: Cowen Income + Growth Fund. Inc.
Ladies and Gentlemen:
We have acted as special Maryland counsel to Cowen Income + Growth Fund, Inc., a
Maryland corporation (the "Company"), in connection with the classification of
its shares of Common Stock, $.001 par value per share, and the issuance of
shares of Class A Common Stock, Class B Common Stock, and Class C Common Stock,
each a class of Common Stock of the Company (collectively, the "Shares").
We have examined the Company's Charter and Bylaws. We have also examined the
Articles of Amendment (the "Articles") classifying the Class A Common Stock,
Class B Common Stock, and Class C Common Stock in the form approved by the
Directors and stockholders of the Company and filed with the Maryland State
Department of Assessments and Taxation ("SDAT") on April 29, 1994, and to be
effective at 5:00 P.M. on May 6, 1994. We have also examined the prospectus with
respect to the Shares included in Post-Effective Amendment No. 10 to the
Company's Registration Statement on Form N-LA, File No. 33-5676 (the
"Registration Statement"), substantially in the form in which it is to become
effective (the "Prospectus"). We have further examined and relied upon a
certificate of SDAT of recent date to the effect that the Company is duly
incorporated and existing under the laws of the State of Maryland and is in good
standing and duly authorized to transact business in the State of Maryland. We
have also examined and relied upon a certificate of the Secretary of the Company
certifying the resolutions of the Board of Directors and shareholders of the
Company relating to the Articles and the issuance of the Shares.
We have assumed, without independent verification, the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, and
the conformity with originals of all documents submitted to us as
<PAGE> 2
copies. We have also assumed that the Articles will become effective on May 6,
1994.
Based upon the foregoing, we are of the opinion that:
1. The Company is a corporation validly existing and in good standing under the
laws of the State of Maryland.
2. Once the Articles become effective on May 6, 1994, the Shares to be offered
for sale pursuant to the Prospectus will be, to the extent of the respective
number of shares of each of the Class A, Class B and Class C Common Stock
authorized to be issued by the Company in its Charter, as amended by the
Articles, duly authorized and, when sold, issued and paid for as contemplated by
the Prospectus, will have been validly and legally issued and will be fully paid
and nonassessable.
This letter expresses our opinion with respect to the Maryland General
Corporation Law governing matters such as the authorization and issuance of
stock. It does not extend to the securities or "Blue Sky" laws of Maryland, to
federal securities laws or to other laws.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Venable, Baetjer and Howard
- -------------------------------
<PAGE> 1
Exhibit 11
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" in the Prospectus, "Auditors and Counsel" and "Financial
Statements" in the Statement of Additional Information and to the
incorporation by reference of our report dated January 3, 1997 on
Cowen Income + Growth Fund, Inc. in this Registration Statement
(Form N-1A No.33-5676).
ERNST & YOUNG LLP
New York, New York
March 25, 1997
<PAGE> 1
EXHIBIT (13)
SUBSCRIPTION AGREEMENT
Subscription Agreement dated August, 1986 between Cowen Income + Growth Fund,
Inc., a Maryland corporation (the "Fund"), and Cowen & Co., a New York Limited
Partnership ("Cowen").
WHEREAS, the Fund is an investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund proposes to issue and sell its common stock (the "Common
Stock") to the public pursuant to a Registration Statement on Form N-1A (the
"Registration Statement") filed with the Securities and Exchange Commission; and
WHEREAS, Section 14(a) of the 1940 Act requires registered investment companies
to have a net worth of at least $100,000 before making a public offering of its
securities;
NOW, THEREFORE, the Fund and Cowen agree as follows:
1. The Fund offers to sell to Cowen, and Cowen agrees to purchase from the Fund,
10,000 shares of the Common Stock (the "Shares") at price of $10.00 per Share
on a date, to be specified by the Fund, prior to the effective date of the
Registration Statement.
2. Cowen represents and warrants to the Fund that Cowen is acquiring the Shares
for investment and not with a view to resale or further distribution of the
Shares.
3. Cowen's right under this Subscription Agreement to purchase the Shares is not
assignable.
IN WITNESS WHEREOF, the Fund and Cowen have caused their duly authorized
officers to execute this Subscription Agreement as of the date first above
written.
COWEN INCOME + GROWTH FUND, INC.
By: /S/ Joseph M. Cohen, Chairman of the Board
------------------------------------------
COWEN & CO.
By: /s/ Joseph M. Cohen, General Partner
------------------------------------
<PAGE> 1
EXHIBIT 15 (i)
SHAREHOLDER SERVICING AND DISTRIBUTION PLAN
This Shareholder Servicing and Distribution Plan (the "Plan") is adopted by
Cowen Income + Growth Fund, Inc., a corporation organized under the laws of the
State of Maryland (the "Company"), with respect to Cowen Income + Growth Fund
(the "Fund"), a series of the Company pursuant to Rule 12b-1 (the "Rule") under
the Investment Company Act of 1940, as amended (the "1940 Act"), subject to the
following terms and conditions:
Section 1. Compensation.
(a) Class A Servicing Fee. The Company will pay Cowen & Company, a limited
partnership organized under the laws of the State of New York ("Cowen"), a fee
in connection with the servicing of Fund shareholder accounts in Class A shares
calculated daily and paid monthly by the Company at the annual rate of .25% of
the value of the average daily net assets of the Fund attributable to the Class
A shares (the "Class A Service Fee").
(b) Class B Servicing Fee. The Company will pay Cowen a fee in connection with
the servicing of Fund shareholder accounts in Class B shares calculated daily
and paid monthly by the Company at the annual rate of .25% of the value of the
average daily net assets of the Fund attributable to the Class B shares (the
"Class B Service Fee" and together with the Class A Service Fee, the "Service
Fees").
(c) Class B Distribution Fee. In addition to the Class B Service Fee, the
Company will pay to Cowen a fee in connection with distribution related services
provided in respect of the Class B shares of the Fund (the "Distribution Fee")
calculated daily and paid monthly at the annual rate of .75% of the value of the
average daily net assets of the Fund attributable to the Class B shares.
(d) The Service Fees and the Distribution Fee will be calculated daily and paid
monthly by the Fund with respect to the foregoing classes of the Fund's shares
(each a "Class" and together the "Classes") at the annual rates indicated above.
Section 2. Expenses Covered by the Plan.
(a) With respect to expenses incurred by each Class, its respective Service Fees
will be used by Cowen to provide compensation for ongoing servicing and/or
maintenance of shareholder accounts with the Fund and to cover an allocable
portion of overhead and other Cowen branch office expenses related to the
servicing and/or maintenance of shareholder accounts.
<PAGE> 2
Compensation will be paid by Cowen to persons, including Cowen employees, who
respond to inquiries of shareholders of the Fund regarding their ownership of
shares or their accounts with the Fund or who provide other similar services not
otherwise required to be provided by the Fund's manager, investment adviser,
transfer agent or other agent of the Fund.
(b) The Distribution Fee will be used by Cowen to provide initial and ongoing
sales compensation to its registered representatives in respect of sales of
Class B shares; costs of printing and distributing the Fund's Prospectus,
Statement of Additional Information and sales literature to prospective
investors that are attributable to sales of the Class B shares of the Fund;
costs associated with any advertising relating to the Class B shares of the
Fund; an allocation of overhead and other Cowen branch office expenses related
to the distribution of the Class B shares of Fund shares; and payments to, and
expenses of, persons who provide support services in connection with the
distribution of Class B shares of the Fund.
(c) Payments under the Plan are not tied exclusively to the expenses for
shareholder servicing and distribution related activities actually incurred by
Cowen, so that those payments may exceed expenses actually incurred by Cowen.
The Board of Directors of the Company will evaluate the appropriateness of the
Plan and its payment terms on a continuing basis and in doing so will consider
all relevant factors, including expenses borne by Cowen and amounts it receives
under the Plan.
Section 3. Approval by Shareholders.
The Plan will not take effect, and no fee will be payable in accordance with
Section 1 of the Plan, with respect to a Class until the Plan has been approved
by a vote of at least a majority of the outstanding voting securities
represented by that Class. The Plan will be deemed to have been approved with
respect to a Class so long as a majority of the outstanding voting securities of
that Class votes for the approval of the Plan, notwithstanding that: (a) the
Plan has not been approved by a majority of the outstanding voting securities
represented by any other Class, or (b) the Plan has not been approved by a
majority of the outstanding voting securities of the Fund.
Section 4. Approval by Directors.
Neither the Plan nor any related agreements will take effect until approved by a
majority vote of both (a) the full Board of Directors of the Company, and (b)
those Directors who are not interested persons of the Company who have no direct
or indirect financial interest in the operation of the Plan or in any agreements
related to it (the "Independent Directors"), cast in
<PAGE> 3
person at a meeting called for the purpose of voting on the Plan and the related
agreements.
Section 5. Continuance of the Plan.
The Plan will continue in effect with respect to each Class from year to year so
long as its continuance is specifically approved annually by vote of the Board
of Directors in the manner described in Section 4 above.
Section 6. Termination.
The Plan may be terminated with respect to any Class at any time, without
penalty, by vote of a majority of the Independent Directors or by a vote of a
majority of the outstanding voting securities of that Class of the Fund on not
more than 30 days' written notice to Cowen. The Plan may remain in effect with
respect to a particular Class even if the Plan has been terminated in accordance
with this Section 6 with respect to any other Class.
Section 7. Amendments.
The Plan may not be amended with respect to any Class to increase materially the
amount of the fees described in Section 1 above, unless the amendment is
approved by a vote of at least a majority of the outstanding voting securities
of that Class, and all material amendments to the Plan must also be approved by
the Board of Directors in the manner described in Section 4 above.
Section 8. Selection of Certain Directors.
While the Plan is in effect, the selection and nomination of Directors who are
not interested persons of the Company be committed to the discretion of the
Directors then in office who are not interested persons of the Company.
Section 9. Written Reports.
In each year during which the Plan remains in effect, Cowen and any person
authorized to direct the disposition of monies paid or payable by the Company
with respect to the Fund pursuant to the Plan or any related agreement will
prepare and furnish to the Board of Directors, and the Board will review, at
least quarterly, written reports, complying with the requirements of the Rule,
which set out the amounts expended under the Plan and the purposes for which
those expenditures were made.
Section 10. Preservation of Materials.
<PAGE> 4
The Company will preserve copies of the Plan, any agreement relating to the Plan
and any report made pursuant to Section 9 above, for a period of not less than
six years (the first two years in an easily accessible place) from the date of
the Plan, agreement or report.
Section 11. Meanings of Certain Terms.
As used in the Plan, the terms "interested person" and "majority of the
outstanding voting securities" will be deemed to have the same meaning that
those terms have under the 1940 Act and the rules and regulations under the 1940
Act, subject to any exemption that may be granted to the Company under the 1940
Act by the Securities and Exchange Commission.
Section 12. Dates.
The Plan has been executed by the Company with respect to the Fund as of May 9,
1994 and will become effective, as to a particular Class, as of the date on
which interests in that Class are first offered to or held by the public.
COWEN INCOME + GROWTH FUND, INC.
By: /s/ David R. Sarns, President
-----------------------------
<PAGE> 1
EXHIBIT 15 (ii)
SHAREHOLDER SERVICING AGREEMENT
Cowen & Company
Financial Square
New York, New York 10005
Dear Sirs:
Cowen Income + Growth Fund, Inc. (the "Company") confirms its agreement with
Cowen & Company ("Cowen") implementing the terms of the Shareholder Servicing
and Distribution Plan dated as of May 9, 1994 (the "Plan") adopted by the
Company with respect to each of Class A and Class B shares (the "Classes") of
Cowen Income + Growth Fund (the "Fund"), a series of the Company, pursuant to
Rule 12b-1 (the "Rule") under the Investment Company Act of 1940, as amended
(the "1940 Act"), as follows:
Section 1. Compensation and Services to be Rendered.
(a) The Company will pay Cowen an annual fee in connection with the servicing of
Fund shareholder accounts. The annual fee paid to Cowen under this Agreement
will be calculated daily and paid monthly by the Company at the annual rate of
.25% of the average daily net assets with respect to each of the Classes.
(b) The annual fee will be used by Cowen to provide compensation for ongoing
servicing and/or maintenance of shareholder accounts with the Fund and to cover
an allocable portion of overhead and other Cowen branch office expenses related
to the servicing and/or maintenance of shareholder accounts. Compensation will
be paid by Cowen to persons, including Cowen employees, who respond to inquiries
of shareholders of the Fund regarding their ownership of shares or their
accounts with the Fund or who provide other similar services not otherwise
required to be provided by the Fund's manager, investment adviser, transfer
agent or other agent of the Fund.
Section 2. Approval by Directors.
This Agreement will not take effect until approved by a majority vote of both
(a) the full Board of Directors of the Company and (b) those Directors who are
not interested persons of the Company and who have no direct or indirect
financial interest in the operation of the Plan or in this Agreement (the
"Independent Directors"), cast in person at a meeting called for the purpose of
voting on this Agreement.
<PAGE> 2
Section 3. Continuance.
This Agreement will continue in effect from year to year so long as its
continuance is specifically approved annually by vote of the Company's Board of
Directors in the manner described in Section 2 above.
Section 4. Termination.
(a) This Agreement may be terminated at any time, with respect to a particular
Class of shares of the Fund without the payment of any penalty, by vote of a
majority of the Independent Directors or by vote of a majority of the
outstanding voting securities represented by the particular Class of shares of
the Fund on not more than 60 days' written notice to Cowen. This Agreement may
remain in effect with respect to a particular Class even if the Plan has been
terminated in accordance with this Section 4 with respect to any other Class.
(b) This Agreement will terminate automatically in the event of its assignment.
Section 5. Selection of Certain Directors.
While this Agreement is in effect, the selection and nomination of the Company's
Directors who are not interested persons of the Company will be committed to the
discretion of the Directors then in office who are not interested persons of the
Company.
Section 6. Written Reports.
Cowen agrees that, in each year during which this Agreement remains in effect,
Cowen will prepare and furnish to the Company's Board of Directors, and the
Board will review, at least quarterly, written reports, complying with the
requirements of the Rule, that set out the amounts expended under this Agreement
and the purposes for which those expenditures were made.
Section 7. Meaning of Certain Terms.
As used in this Agreement, the terms "interested person" and "majority of the
outstanding voting securities" will be deemed to have the same meaning that
those terms have under the 1940 Act and the rules and regulations under the 1940
Act, subject to any exemption that may be granted to the Company under the 1940
Act by the Securities and Exchange Commission.
Section 8. Dates.
<PAGE> 3
This Agreement has been executed by the Company with respect to the
Fund as of May 9, 1994 and will become effective, as to any particular
Class, as of the date on which interests in that Class are first offered to or
held by the public.
* * * * *
If the terms and conditions described above are in accordance with your
understanding, kindly indicate your acceptance of this Agreement by
signing and returning to us the enclosed copy of this Agreement.
Very truly yours,
COWEN INCOME + GROWTH FUND, INC.
By:/s/ Creighton H. Peet, Vice President
-------------------------------------
Accepted:
COWEN & COMPANY
By: /s/ David R. Sarns, President
-----------------------------
<PAGE> 1
EXHIBIT 15(iii)
DISTRIBUTION RELATED SERVICES AGREEMENT
Cowen &Company
Financial Square
New York, New York 10005
Dear Sirs:
Cowen Income + Growth Fund, Inc. (the "Company") confirms its agreement with
Cowen &Company ("Cowen") implementing the terms of the shareholder servicing and
distribution plan dated as of May 9, 1994 (the "Plan") adopted by the Company
with respect to the Class B shares (the "Class B shares") of Cowen Income +
Growth Fund (the "Fund"), a series of the Company, pursuant to Rule 12b-1 (the
"Rule") under the Investment Company Act of 1940, as amended (the "1940 Act"),
as follows:
Section 1. Compensation and Services to be Rendered.
(a) The Company will pay Cowen an annual fee in connection with distribution
related services provided with respect to the Class B shares of the Fund. The
annual fee paid to Cowen under this Agreement will be calculated daily and paid
monthly by the Company at the annual rate of .75% of the value of the average
daily net assets of the Fund.
(b) The annual fee will be used by Cowen to provide initial and ongoing sales
compensation to its registered representatives in respect of sales of Class B
shares of the Fund; costs of printing and distributing the Fund's Prospectus,
Statement of Additional Information and sales literature to prospective
investors that are attributable to sales of the Class B shares; costs associated
with any advertising relating to the Class B shares of the Fund; an allocation
of overhead and other Cowen branch office expenses related to the distribution
of the Class B shares of the Fund; and payments to, and expenses of, persons who
provide support services in connection with the distribution of the Class B
shares of the Fund.
Section 2. Approval by Directors.
This Agreement will not take effect until approved by a majority vote of both
(a) the full Board of Directors of the Company and (b) those Directors who are
not interested persons of the Company and who have no direct or indirect
financial interest in the operation of the Plan or in this Agreement (the
"Independent Directors"), cast in person at a meeting called for the purpose of
voting on this Agreement.
<PAGE> 2
Section 3. Continuance.
This Agreement will continue in effect from year to year so long as its
continuance is specifically approved annually by vote of the Company's Board of
Directors in the manner described in Section 2 above.
Section 4. Termination.
(a) This Agreement may be terminated at any time, without the payment of any
penalty, by vote of a majority of the Independent Directors or by vote of a
majority of the outstanding voting securities represented by the Class B shares
of the Fund on not more than 60 days' written notice to Cowen.
(b) This Agreement will terminate automatically in the event of its assignment.
Section 5. Selection of Certain Directors.
While this Agreement is in effect, the selection and nomination of the Company's
Directors who are not interested persons of the Company will be committed to the
discretion of the Directors then in office who are not interested persons of the
Company.
Section 6. Written Reports.
Cowen agrees that, in each year during which this Agreement remains in effect,
Cowen will prepare and furnish to the Company's Board of Directors, and the
Board will review, at least quarterly, written reports, complying with the
requirements of the Rule, that set out the amounts expended under this Agreement
and the purposes for which those expenditures were made.
Section 7. Meaning of Certain Terms.
As used in this Agreement, the terms "interested person" and "majority of the
outstanding voting securities" will be deemed to have the same meaning that
those terms have under the 1940 Act and the rules and regulations under the 1940
Act, subject to any exemption that may be granted to the Company under the 1940
Act by the Securities and Exchange Commission.
Section 8. Dates.
This Agreement has been executed by the Company with respect to the Fund as of
May 9, 1994 and will become effective, as to Class B shares, as of the date on
which interests in that Class are first
<PAGE> 3
offered to or held by the public.
* * * * *
If the terms and conditions described above are in accordance with your
understanding, kindly indicate your acceptance of this Agreement by
signing and returning to us the enclosed copy of this Agreement.
Very truly yours,
COWEN INCOME + GROWTH FUND, INC.
By: /s/ Creighton H. Peet, Vice President
-------------------------------------
Accepted:
COWEN & COMPANY
By: /s/ David R. Sarns, President
-----------------------------
