<PAGE> 1
As filed with the Securities and Exchange Commission on March
26, 1997 (to be effective April 1, 1997)
Securities Act File No. 33-18505
Investment Company Act File No. 811-5388
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. 19 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 20 [ X ]
(Check appropriate box or boxes)
COWEN FUNDS, 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) 495-6000
Rodd M. Baxter, Esq.
Cowen Funds, Inc.
Financial Square
New York, New York 10005-3531
...........................................
(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 10022-4669
<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 each
series 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 period ended November
30, 1996 was filed with the Securities and Exchange Commission on January 10,
1997.
<PAGE> 3
COWEN FUNDS, INC.
FORM N-1A
THE PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION OF COWEN
INTERMEDIATE FIXED INCOME FUND AND COWEN GOVERNMENT SECURITIES FUND, EACH AS
FILED AS PART OF POST-EFFECTIVE AMENDMENT NO. 20 TO THIS REGISTRATION STATEMENT
FILED EFFECTIVE ON APRIL 1, 1997, AS WELL AS COWEN INTERMEDIATE FIXED INCOME
FUND AND COWEN GOVERNMENT SECURITIES FUND'S ANNUAL REPORT FOR THE PERIOD ENDED
NOVEMBER 30, 1996 ARE HEREBY INCORPORATED BY REFERENCE.
COWEN OPPORTUNITY FUND
FORM N-1A
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Part A
Item No. Prospectus Heading
- -------- ------------------
<S> <C> <C>
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... Not Applicable
Performance
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
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
8. Redemption or Repurchase....... Redemption of Shares
9. Pending Legal Proceedings...... Not applicable
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
14. Management of the Fund....... Management
15. Control Persons and Principal
Holders of Securities....... See in the Prospectus
"Additional Information"
16. Investment Advisory and
Other Services.............. Management; Purchases and
Redemptions; See in the
Prospectus "Management of
the Fund"
17. Brokerage Allocation and
Other Practices............. Investment Objectives and
Policies
18. Capital Stock and Other
Securities.................. See in the Prospectus
"Management of the Fund"
19. Purchase, Redemption and
Pricing of Securities
Being Offered............... Purchases and Redemptions
20. Tax Status................... Taxes
21. Underwriters................. Purchases and
Redemptions; See in the
Prospectus "Purchase of
Shares"
22. Calculations of Yield
Quotations of Money
Market Funds................ Not applicable
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C>
23. Financial Statements......... Financial Statements
</TABLE>
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.
<PAGE> 6
- --------------------------------------------------------------------------------
PROSPECTUS APRIL 1, 1997
COWEN
OPPORTUNITY
FUND
Financial Square New York, NY 10005-3597 800-262-7116 212-495-6724
Cowen Opportunity Fund is a mutual fund that seeks to realize its investment
objective of capital appreciation by investing at least 65 percent of its net
assets in small capitalization companies. Cowen Opportunity Fund is a series of
Cowen Funds, Inc., a registered, open-end, diversified management investment
company.
This Prospectus briefly sets forth certain information about Cowen Opportunity
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
Opportunity Fund 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, serves 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."
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 Cowen 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
COF-1 4/97
- --------------------------------------------------------------------------------
<PAGE> 7
CONTENTS
<TABLE>
<S> <C>
Financial Highlights......................... 3
The Fund's Expenses.......................... 5
Investment Objectives and Policies........... 6
Management of the Fund....................... 10
Net Asset Value.............................. 12
Purchase of Shares........................... 13
Redemption of Shares......................... 18
Dividends, Distributions and Taxes........... 20
Additional Information....................... 21
The Cowen Family of Funds.................... 23
</TABLE>
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 unqualified report thereon for each of the five
years 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 years prior to November 30, 1992, also has been audited by Ernst & Young
LLP, whose report thereon was unqualified.
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------------------------------------------------------------
Period from
March 31,
1988(3)
Years Ended November 30, to
------------------------------------------------------------------------------- November 30,
1996 1995 1994 1993 1992 1991 1990 1989 1988
-------- -------- -------- -------- -------- -------- ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period.............. $ 13.13 $ 12.98 $ 16.06 $ 14.92 $ 14.72 $ 10.78 $ 10.77 $ 9.09 $ 9.51
------- ------- ------- ------- ------- ------- ------ ------ ------
Income from
Investment
Operations:
Investment income
(loss) -- net... (.07)(1) (.04)(1) (.09)(1) (.16)(1) (.20)(1) (.22)(1) (.17) (.09) .14
Net realized and
unrealized gains
(losses) on
securities...... 3.86 .97 1.22 3.79 2.22 4.16 .42 1.93 (.56)
------- ------- ------- ------- ------- ------- ------ ------ ------
Net from
investment
operations...... 3.79 .93 1.13 3.63 2.02 3.94 .25 1.84 (.42)
------- ------- ------- ------- ------- ------- ------ ------ ------
Less Distributions:
Dividends from net
investment
income.......... -- -- -- -- -- -- -- (.16) --
Distributions from
net realized
gains on
investments..... (.31) (.78) (4.21) (2.49) (1.82) -- (.24) -- --
------- ------- ------- ------- ------- ------- ------ ------ ------
Total
Distributions... (.31) (.78) (4.21) (2.49) (1.82) -- (.24) (.16) --
------- ------- ------- ------- ------- ------- ------ ------ ------
Net Asset Value, End
of Year............. $ 16.61 $ 13.13 $ 12.98 $ 16.06 $ 14.92 $ 14.72 $ 10.78 $ 10.77 $ 9.09
======= ======= ======= ======= ======= ======= ====== ====== ======
Total Return(4)...... 29.63% 7.91% 9.53% 29.48% 15.33% 36.55% 2.41% 20.56% 4.42%(2)
Ratios/Supplemental Data
Net assets (000
omitted)........ $ 43,950 $ 38,724 $ 34,487 $ 19,147 $ 13,547 $ 11,672 $ 9,197 $ 7,918 $ 8,444
Ratio of expenses
to average net
assets.......... 1.39% 1.43% 1.47% 1.63% 2.52% 2.80% 3.29% 3.28% 1.74%(2)
Ratio of
investment
income
(loss) -- net to
average net
assets.......... (.46%) (.28%) (.66%) (1.10%) (1.43%) (1.42%) (1.81%) (.75%) 1.33%(2)
Decrease effected
in above expense
ratios due to
expense
reimbursement... .16% .22% .14% -- -- -- .21% .65% .70%(2)
Portfolio Turnover
Rate............ 182% 148% 152% 167% 145% 97% 89% 69% 27%
Average commission
rate paid(6).... $ .0575 $ .0592
</TABLE>
- ---------------
(1) Based upon average shares outstanding.
(2) Not annualized.
(3) Commencement of operations.
(4) Exclusive of sales charge.
(5) Annualized.
(6) Disclosure required for years beginning after September 1, 1995.
3
<PAGE> 9
<TABLE>
<CAPTION>
Class B Class C
-------------------------------- ----------------------------------
Period from Period from
May 17, May 9,
Year ended 1994(3) Year ended 1994(3)
November 30, through November 30, through
---------------- November 30, ------------------ November 30,
1996 1995 1994 1996 1995 1994
------ ------ ------------ ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period......... $12.93 $12.91 $12.18(6) $ 13.20 $ 12.99 $12.36(6)
------ ------ ------ ------- ------ ------
Income from Investment Operations:
Investment income (loss) -- net(1)....... (.18) (.14) (.09) (.01) .01 (.03)
Net realized and unrealized gains
(losses) on securities................. 3.79 .94 .82 3.89 .98 .66
------ ------ ------ ------- ------ ------
Net from investment operations........... 3.61 .80 .73 3.88 .99 .63
------ ------ ------ ------- ------ ------
Less Distributions:
Dividends from net investment income..... -- -- -- -- -- --
Distributions from net realized gains on
investments............................ (.31) (.78) -- (.31) (.78) --
------ ------ ------ ------- ------ ------
Total Distributions...................... (.31) (.78) -- (.31) (.78) --
------ ------ ------ ------- ------ ------
Net Asset Value,
End of Period.............................. $16.23 $12.93 $12.91 $ 16.77 $ 13.20 $12.99
====== ====== ====== ======= ====== ======
Total Return(4).............................. 28.67% 6.97% 11.04%(5) 30.17% 8.40% 9.04%(5)
Ratios/Supplemental Data
Net assets (000 omitted)................. $8,794 $6,455 $2,207 $40,369 $19,264 $8,151
Ratio of expenses to average net
assets................................. 2.17% 2.19% 1.32%(2) 1.01% 1.03% .75%(2)
Ratio of investment income (loss) -- net
to average net assets.................. (1.24%) (1.06%) (0.83%)(2) (.07%) .11% (.26%)(2)
Decrease effected in above expense ratios
due to expense reimbursement........... .16% .22% 0.12%(2) .15% .22% .13%(2)
Portfolio Turnover Rate.................. 182% 148% 152% 182% 148% 152%
Average commission rate paid(7).......... $.0575 $.0592 $ .0575 $ .0592
</TABLE>
- ---------------
(1) Based upon average shares outstanding.
(2) Not annualized.
(3) Commencement of operations.
(4) Exclusive of sales charge.
(5) Annualized.
(6) Based upon the Class A Net Asset Value on the day prior to commencement of
distribution.
(7) 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 and expenses 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
(as percentage of average net assets)
Management fees................................ .90% .90% .90%
12b-1 fees..................................... .25% 1.00% 0%
Other expenses*................................ .29% .31% .18%
----- ----- -----
Total Fund Operating Expenses*...................... 1.44% 2.21% 1.08%
===== ===== =====
</TABLE>
- ------------------
* Cowen is voluntarily absorbing .03% 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 annualized average net assets, if these expenses are
not absorbed, "Other expenses" would be .32%, .34% and .21% and "Total Fund
Operating Expenses" would be 1.47%, 2.24% and 1.11% 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................................ $ 62 $ 92 $ 125 $216
Class B ............................... $ 73 $ 102 $ 142 $262
Class C................................ $ 11 $ 35 $ 61 $135
</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>
$ 23 $72 $ 122 $262
</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 investment objective of the Fund is capital appreciation. It seeks to
achieve this objective by investing primarily in small capitalization issuers.
Current income will be incidental to the objective of capital appreciation.
Under normal market conditions, the Fund invests at least 65 percent of its
net assets in small capitalization issuers, which are issuers having total
market capitalization (number of shares outstanding multiplied by current market
price) of less than $1 billion. Cowen Asset Management expects that the Fund's
assets typically will be invested in common stock of those companies. If Cowen
Asset Management believes that the potential for appreciation of other types of
securities of such companies will equal or exceed that of common stocks, the
Fund may also invest in warrants, preferred stocks, convertible securities and
debt securities. The Fund may invest up to 10 percent of its net assets in
securities of foreign companies or in American Depositary Receipts with respect
to those securities. Cowen Asset Management may also invest up to 35 percent of
the Fund's net assets in equity securities of other companies, may invest up to
20 percent of its net assets in money market instruments and, for temporary
defensive purposes, may invest the Fund's assets without limitation in money
market instruments. If so invested, the Fund's investment objective may not be
achieved. See "Temporary Investments." In addition, Cowen Asset Management may
write covered call options and engage in securities lending transactions in an
effort to enhance the Fund's performance. See
6
<PAGE> 12
"Covered Call Options" and "Lending of Securities." The Fund's investment
objective may not be changed without shareholder approval. There is no assurance
that the investment objective will be achieved.
The Fund will rely on the expertise and analytical resources of Cowen Asset
Management to develop a diversified portfolio composed of securities from a
broad group of industry sectors with a focus on small market capitalization
companies. Investments will include, but not be limited to, companies in the
health-care, biotechnology, telecommunications, computers and software, science
and technology, environmental sciences, energy and financial services industries
as Cowen Asset Management deems appropriate from time to time. Investments may
be made in well-known and established companies as well as in relatively new or
lesser-known companies. It is important to note that while investments in
smaller, less seasoned companies may present more opportunities for growth, they
also involve greater risks than customarily are associated with more established
companies. Securities in which the Fund may invest may have limited
marketability and, therefore, may be subject to wide fluctuations in market
value. In addition, certain securities may lack a significant operating history
and be dependent on products or services without an established market share.
The Fund has adopted certain policies designed to limit investment risk. See
"Investment Restrictions."
Current income is not an objective of the Fund, and investors should not
expect income from dividends and interest comparable to that of mutual funds
with current income as a goal. 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.
OTHER INVESTMENTS
The Fund may invest to a limited degree in securities of companies with
more than $1 billion in market capitalizations and in the following money market
instruments: corporate bonds rated at least Baa by Moody's Investors Service,
Inc. or BBB by Standard & Poor's Corporation, commercial paper 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. Because investments in
large capitalization issuers are not directly in furtherance of the Fund's
investment objective, the Fund will limit its investment in these securities to
not more than 35 percent of its net assets. For the same reason, the Fund will,
under normal market conditions, limit its investment in money market instruments
to 20 percent of its net assets and in excess of that amount only when Cowen
Asset Management believes market conditions warrant a temporary defensive
posture. Bonds rated Baa by Moody's or BBB by Standard & Poor's may have
speculative characteristics not present in higher rated 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 Export-Import Bank, are supported by the right of the issuer to borrow from
the U.S. Treasury; 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
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. In addition, certain obligations, such as
long-term obligations issued by the Government National Mortgage Association and
the Federal National Mortgage Association, represent ownership interests in
pools of mortgages that may be subject to significant unscheduled prepayments as
a result of a decline in mortgage interest rates. Because these prepayments must
be
7
<PAGE> 13
reinvested, possibly in pools including mortgages bearing lower interest rates,
these obligations may have less potential for capital appreciation during
periods of declining interest rates than other investments of comparable
maturity, while having a comparable risk of decline during periods of rising
interest rates.
WARRANTS
A warrant confers upon its holder the right to purchase an amount of
securities at a particular time and price. Because a warrant does not carry with
it the right to dividends or voting rights with respect to the securities which
it entitles a holder to purchase, and because it does not represent any rights
in the assets of the issuer, warrants may be considered more speculative than
certain other types of investments. Also, the value of a warrant does not
necessarily change with the value of the underlying securities and a warrant
ceases to have value if it is not exercised prior to its expiration date. For so
long as the Fund's shares are sold in states so requiring, the Fund will limit
its purchase of warrants to five percent of its net assets, with no more than
two percent of its net assets to be invested in warrants not listed on the New
York Stock Exchange or the American Stock Exchange. The acquisition of warrants
in units or attached to other securities is not subject to these restrictions.
FOREIGN SECURITIES
The Fund may invest up to 10 percent of its assets in securities of foreign
issuers and up to an additional 10 percent of its assets in securities of
Canadian issuers. There are certain risks involved in investing in securities of
companies in foreign nations that are in addition to the usual risks inherent in
investments in domestic companies. These risks include those resulting from
fluctuations in currency exchange rates, revaluation of currencies, future
adverse political and economic developments and the possible imposition of
currency exchange blockages or other foreign governmental laws or restrictions,
reduced availability of public information concerning issuers and the lack of
uniform accounting, auditing and financial reporting standards or of other
regulatory practices and requirements comparable to those applicable to domestic
companies. Moreover, securities of many foreign companies may be less liquid and
their prices more volatile than those of securities of comparable domestic
companies. These investments may be in the form of American Depositary Receipts,
which typically are issued by a U.S. bank or trust company to evidence ownership
of underlying securities issued by a foreign corporation. American Depositary
Receipts are not necessarily denominated in the same currency as the securities
into which they may be converted.
COVERED CALL OPTIONS
To assist in the management of its portfolio and to enhance the Fund's
performance, the Fund may engage 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 at the exercise price
which would approximate the price at which Cowen Asset Management would desire
to sell the security. The Fund will not write covered call options on portfolio
securities having an aggregate value in excess of 25 percent of the Fund's net
assets.
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
8
<PAGE> 14
the option contract. The writer foregoes 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 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" -- 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 objective.
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. These
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.
ILLIQUID SECURITIES
The Fund may invest up to five percent of its assets in securities with
contractual or other restrictions on resale and other instruments that are not
readily marketable, including repurchase agreements with maturities greater than
seven days and securities of companies that are not publicly traded or for which
no readily ascertainable market quotation is available. The Fund may not be able
to dispose of illiquid securities at a time when, or at a price at which, it
desires to do so and may have to bear expenses associated with registering the
securities.
INVESTMENT RESTRICTIONS
In order to limit investment risk, the Fund has adopted certain investment
restrictions that 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; making loans to
others, except through the purchase of qualified debt obligations or lending
portfolio securities; 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 short-term
borrowings from banks in an amount not exceeding 20 percent of the Fund's total
assets to meet redemption requests (and other circumstances not relating to
leveraging) and the prohibition against mortgaging or hypothecating assets does
not prohibit collateral arrangements with respect
9
<PAGE> 15
to such short-term borrowings or escrow arrangements contemplated by writing
covered call options (whenever borrowings exceed five percent of the value of
the Fund's total assets, the Fund will not make any additional investments);
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 securities of issuers that have been in
continual operation for less than three years; 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 commissions 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 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. Consistent with the NASD's
Rules of Fair Practice, Cowen Asset Management may consider a broker-dealer's
sales of shares of the Fund as a factor in selecting from among those brokers
providing comparable prices and execution on the Fund's portfolio transactions.
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.
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's
principal address is Financial Square, New York, New York 10005.
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 and 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 .90 percent of the Fund's average
daily net assets. This fee exceeds the fee paid by most other investment
companies.
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<PAGE> 16
William Church, Vice President and Senior Investment Officer, is primarily
responsible for the daily management of the Fund. Mr. Church has had such
responsibility since the Fund commenced operations on March 31, 1988. Mr. Church
has been with Cowen since 1982 and is currently a Class I Limited Partner of
Cowen and Chief Investment Officer of Cowen Asset Management.
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 Cowen Funds, Inc. with respect to 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.
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 Cowen Funds, Inc.
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
11
<PAGE> 17
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 it should be directed to P.O. Box 419111,
Kansas City, MO 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.
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 on each day on
which the New York Stock Exchange, Inc. is open as of 4:15 p.m. Eastern time.
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. 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. 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 cost at the time of its purchase
and thereafter assuming a constant amortization to maturity of any discount or
premium, generally without regard to the effect of fluctuating interest rates on
the market value of the instrument.
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<PAGE> 18
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.
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
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<PAGE> 19
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
Shares Purchased in Percentage of the Percentage of the Dealer
Single Transaction Public Offering Price Net Amount 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. 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 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 Income + Growth Fund, Inc., Cowen Intermediate Fixed Income Fund and
Cowen Government Securities Fund 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 Income + Growth Fund, Inc., Cowen Intermediate Fixed
Income Fund and Cowen Government Securities Fund from Cowen. Class A shares of
the Fund, Cowen Income + Growth Fund, Inc., 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
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<PAGE> 20
shareholder. Shareholders in the Fund 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).
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. Certain dealers may refer to Class C shares as "institutional
shares." 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 the 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 that firm has contacted the
Fund, Cowen or any subsidiary of Cowen with respect to furnishing advice to the
client or with respect to the purchase of the securities of the Fund by such
client; (4) investors purchasing
15
<PAGE> 21
$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) by
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 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.
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 Income + Growth Fund, Inc., a 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.
- 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, or authorities or instrumentalities. This fund
is a series of Cowen Funds, Inc.
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 Income + Growth Fund, Inc., 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
16
<PAGE> 22
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.
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.
17
<PAGE> 23
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
GENERAL INFORMATION
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 that time will be effected on the 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 15 or more 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 a participating securities dealer or transmitted
to the Bank by wire transfer.
Cowen generally will effect redemptions of shares upon oral instruction
received from a shareholder. 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 involuntarily 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
18
<PAGE> 24
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 redemption fee. 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
19
<PAGE> 25
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 multiplied by 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 generally pays dividends from its net investment income and
distributes its net realized capital gains once a year, normally at the end of
the year in which they were earned or at the beginning of the next year. Unless
a shareholder instructs that dividends and distributions on shares of any Class
be paid in cash, dividends and distributions will automatically be reinvested in
additional shares of the same Class at net asset value, without a sales charge.
The Fund intends to qualify each year as a regulated investment company
that is not subject to federal income tax on the investment income and capital
gains that it distributes to shareholders. The requirements for qualification
may cause the Fund to restrict the extent of its short-term trading or options
transactions. The Fund is subject to a four-percent nondeductible excise tax on
certain undistributed amounts of taxable income and gains. The Fund expects to
be able to pay any such additional dividends and distributions as are necessary
to avoid the application of this tax. 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."
Dividends and distributions of short-term capital gains are taxable to
shareholders as ordinary income, whether received in cash or reinvested in
additional shares of the Fund. Distributions of long-term net capital gains are
taxable to shareholders as such, whether received in cash or reinvested, and
regardless of how long a shareholder has held Fund shares. If a shareholder
receives a long-term capital gains distribution with respect to Fund shares and
redeems or transfers the shares before holding them for more than six months,
any loss on the redemption or transfer will be a long-term capital loss. In
general, only dividends from the Fund that reflect its dividend income from U.S.
corporations may, subject to certain limitations, qualify for the federal
dividends-received deduction for corporate shareholders. Dividends or
distributions declared in October, November or December and paid in January are
taxable to shareholders as if paid in December.
Dividends or interest earned on foreign securities may be subject to
foreign taxes which the Fund will pay.
20
<PAGE> 26
Statements as to the tax status of each shareholder's dividends and
distributions are mailed annually. Shareholders are urged to consult their own
tax advisers as to the state and local tax consequences of investing in the
Fund, and as to specific federal tax issues.
ADDITIONAL INFORMATION
The Fund is a series of Cowen Funds, Inc., which was incorporated on June
26, 1986, under the laws of the State of Maryland. Cowen Funds, Inc. has an
authorized capitalization of 3,000,000,000 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 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 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.
When matters are submitted for shareholder vote, shareholders of each
series of Cowen Funds, Inc., including the Fund, will have one vote for each
full share held and proportional, fractional votes for each fractional share
held. Shareholders of all series of Cowen Funds, Inc. will vote collectively on
certain matters affecting all series, such as the election of directors and the
selection of accountants; shareholders of one series are not entitled to vote on
a matter that does affect that series but that does require a separate vote of
another series, such as a particular series' investment management agreement. In
turn, all matters affecting only the interests of one Class, such as the terms
of the Plan as it relates to a Class, require a separate vote of the
shareholders of that Class. Unless otherwise required by the 1940 Act,
ordinarily it will not be necessary for Cowen Funds, Inc. to hold annual
meetings of shareholders. As a result, shareholders may not consider each year
the election of directors or the appointment of accountants. However, pursuant
to the By-Laws of Cowen Funds, Inc., the holders of at least 10 percent of the
shares outstanding and entitled to vote may require a special meeting of
shareholders to be held for any purpose, including that of removing a director
from office. Shareholders of Cowen Funds, Inc. may remove a director by the
affirmative vote of a majority of the outstanding voting shares. In addition,
the Board of Directors will call a special meeting of shareholders for the
purpose of electing directors, if, at any time, less than a majority of the
directors holding office at that time were elected by shareholders.
From time to time, the Fund may advertise its "average annual total return"
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
21
<PAGE> 27
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). 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
Statement of Additional Information further describes the method used to
determine the Fund's performance. The performance of the Fund also might be
compared to rankings prepared by Lipper Analytical Services, Inc., which is a
widely recognized, independent service that monitors 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. Shareholders may make inquiries regarding the
Fund, including current performance quotations, by calling any Cowen account
representative.
22
<PAGE> 28
THE COWEN FAMILY OF FUNDS
COWEN INTERMEDIATE FIXED INCOME FUND, a series of Cowen Funds, Inc., seeks
current income and stability of principal. The Fund seeks to achieve its
objectives through investment primarily in high quality intermediate term fixed
income securities.
COWEN GOVERNMENT SECURITIES FUND, a series of Cowen Funds, Inc., seeks
total return consisting of current income and appreciation of capital through
investment primarily in securities issued or guaranteed by the U.S. Government,
its agencies, authorities or instrumentalities.
COWEN OPPORTUNITY FUND, a series of Cowen Funds, Inc., seeks capital
appreciation through investment in the equity securities of companies that are
expected to benefit from scientific developments and advances.
COWEN INCOME + GROWTH FUND, INC. seeks a high level of dividend income, to
the extent consistent with prudent investment management, by investing primarily
in income-producing equity securities.
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.
For more complete information regarding any of these funds, including
charges and expenses, contact your account representative or call 800-262-7116.
23
<PAGE> 29
STATEMENT OF ADDITIONAL INFORMATION
April 1, 1997
COWEN OPPORTUNITY FUND
a series of
COWEN FUNDS, INC.
Financial Square, New York, NY 10005, (212) 495-6724, (800)
262-7116
This Statement of Additional Information is meant to be read in
conjunction with the Cowen Opportunity Fund Prospectus dated April 1, 1997, and
is incorporated by reference in its entirety therein. Because this Statement of
Additional Information is not itself a prospectus, no investment in shares of
the Cowen Opportunity Fund should be made solely upon the information contained
herein. Copies of the Cowen Opportunity Fund 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.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Investment Objectives and Policies . . . . . 2
Purchases and Redemptions . . . . . . . . . . 9
Management . . . . . . . . . . . . . . . . . 10
Taxes . . . . . . . . . . . . . . . . . . . . 15
Performance Information . . . . . . . . . . . 18
Financial Statements . . . . . . . . . . . . 19
</TABLE>
COWEN & COMPANY
Principal Underwriter
1
<PAGE> 30
INVESTMENT OBJECTIVES AND POLICIES
The Prospectus discusses the investment objectives of the Fund and the
policies to be employed to achieve those objectives. This section contains
supplemental information concerning the types of securities and other
instruments in which the Funds may invest, the investment policies and portfolio
strategies that the funds may utilize and certain risks attendant to those
investments, policies and strategies.
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
Prospectuses 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 Funds will in the foreseeable
future invest in excess of five percent of their respective 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 other financial organizations. A Fund will not lend
securities to Cowen or its affiliates. By lending its securities, a 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 Board of Directors must terminate the loan and regain the
right to vote the securities.
Covered Call Options. Options written by a 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.
2
<PAGE> 31
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.
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 or 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 customers' 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 security 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 that 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.
3
<PAGE> 32
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 stocks but the Fund may incur
additional transaction costs or interest expenses in connection with any such
purchase or borrowing.
Venture Capital Investments. Cowen Opportunity Fund may invest up to five
percent of its assets in venture capital investments, i.e., new and early stage
companies whose securities are not publicly traded. Venture capital investments
may present significant opportunities for capital appreciation but involve a
high degree of business and financial risk that can result in substantial
losses. The disposition of U.S. venture capital investments, which may include
limited partnership interests, would normally be restricted under federal
securities laws. Generally, restricted securities may be sold only in privately
negotiated transactions, in public offerings registered under the Securities Act
of 1933, as amended (the "1933 Act") or in transactions pursuant to Rule 144A
under the 1933 Act. As a result of these restrictions, the Fund may be unable to
dispose of these investments at times when disposition is deemed appropriate due
to investment or liquidity considerations. Alternatively, the Fund may be forced
to dispose of these investments at less than their fair value. Where
registration is required, the Fund may be obligated to pay part or all of the
expenses of such registration.
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 Board of
Directors. It is not anticipated that a 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, a 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 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. The Fund's investment manager, Cowen Asset
Management, acting under the supervision of the Board of Directors, reviews the
creditworthiness of those banks
4
<PAGE> 33
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 at least equal at all times
to the total amount of the repurchase obligation, including interest.
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 18
may be changed by vote of a majority of the Board of 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 value of the Fund's 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. Making short sales of securities or maintaining a short
position.
5. Borrowing money, except that the Fund may borrow from banks for
temporary or emergency (but not leveraging) purposes, including the meeting of
redemption requests that might otherwise require the untimely disposition of
securities, in any amount not exceeding 20 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 borrowings 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
20 percent of the value of the Fund's total assets, except that this prohibition
shall not prohibit collateral arrangements with respect to borrowings described
in Investment Restriction No. 5 or the escrow arrangements contemplated by
writing covered call options.
5
<PAGE> 34
7. Underwriting the securities of other issuers, except insofar as the
Fund may be deemed to be an underwriter under the 1933 Act 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 exchange.
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 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.
13. Purchasing or selling real estate or interests in real estate, except
that the Fund may purchase and sell securities that are issued by companies that
invest or deal in real estate.
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 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 its
Prospectus and this Statement of Additional Information.
15. Investing in oil, gas or other mineral exploration or development
programs, except that the Fund may invest in the securities of companies that
invest in or sponsor those programs.
16. Purchasing restricted securities, illiquid securities (such as
repurchase agreements with maturities in excess of five business days) or
securities that are not readily marketable or for which no readily ascertainable
market value is available if more than five percent of the total assets of the
fund would be invested in those securities.
17. Making investments for the purpose of exercising control or
management.
6
<PAGE> 35
18. Purchasing or retaining the securities of any issuer if, to the
knowledge of the Fund, any of the officers or directors of Cowen Funds, Inc. 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 the 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 any 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 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 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 a Fund may make may also be made by these
other accounts. When a 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 a Fund or the size of the position obtained or disposed of
by a 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.
Purchase 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.
7
<PAGE> 36
To the extent consistent with applicable provisions of the Act, other
securities laws and rules and exemptions adopted by the Securities and Exchange
Commission (the "SEC") thereunder, the 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 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 a Fund except pursuant to exemptive rules or orders adopted by the
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 Cowen Asset Management or
its affiliates exercise investment discretion. Cowen Asset Management's fees
under its agreements with the Funds are not reduced by reason of its receiving
brokerage services. The Board of Directors periodically reviews the commissions
paid by the Funds to determine if the commissions paid over representative
periods of time are reasonable in relation to the benefits inuring to the Funds.
For the fiscal year ended November 30, 1994, Cowen Opportunity Fund paid
an aggregate of approximately $207,404 in commissions to broker-dealers for
execution of portfolio transactions. Cowen effected approximately .64% of the
aggregate dollar amount of such transactions for which it received approximately
$850 (.41%) of the commissions paid by the Fund during that year. The balance of
the commissions ($206,550) was paid to other broker-dealers which furnished
research services to the Fund and which effected the remaining 99.6% of the
aggregate dollar amount of portfolio transactions involving the payment of
commissions.
For the fiscal year ended November 30, 1995, Cowen Opportunity Fund paid
an aggregate of $431,866 in commissions to broker-dealers for execution of
portfolio transactions. Cowen did not effect any transactions for the Fund
during that year. They were paid to other broker-dealers which furnished
research services to the Fund.
For the fiscal year ended November 30, 1996, Cowen Opportunity Fund paid
an aggregate of approximately $601,830 in commissions to broker-dealers for
execution of
8
<PAGE> 37
portfolio transactions. Cowen effected approximately .11% of the
aggregate dollar amount of such transactions for which it received approximately
$1,610 (.27%) of the commissions paid by the Fund during that year. The balance
of the commissions ($600,220) was paid to other broker-dealers which furnished
research services to the Fund and which effected the remaining 99.89% 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. 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
Net Asset Value
The net asset value per share of the Fund is calculated on each day on
which the New York Stock Exchange ("NYSE") is open as of 4:15 p.m. Eastern time.
The NYSE is currently open Monday though 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.
9
<PAGE> 38
Purchases
Shares of the Fund are offered by Cowen Funds, Inc. and are distributed on
a best efforts basis by Cowen as its principal underwriter pursuant to a
Distribution Agreement.
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 a Fund may be suspended or the date
of payment postponed (a) for and 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
Board of Directors
The names of the directors and executive officers of the Funds, 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 Funds, as defined in the 1940 Act, is indicated by an asterisk; unless noted
otherwise the business address of each such individual is Financial Square, New
York, New York 10005. Each of the directors is also a director of one or more
investment companies of which Cowen is Investment Manager.
Directors of the Fund
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 Road and Canterbury Road,
Manchester Center, VT 05255.
10
<PAGE> 39
*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
1994, 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 the 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 65. 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.
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.
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.
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.
11
<PAGE> 40
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 Cowen Funds, Inc. for serving as an officer or
director of Cowen Funds, Inc. Directors who are not officers, directors,
partners, stockholders or employees of Cowen or its affiliates receive a fee, in
respect of the Fund that has commenced investment operations, of $3,000 per
annum plus $500 per meeting attended and reimbursement for travel and
out-of-pocket expenses. For the fiscal year ended November 30, 1996, such fees
and expenses totaled $20,998. None of the Fund's director's or officers, whether
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-- Girls Preparatory School (5%), Post Office Box 4736,
Chattanooga, Tennessee 37405; Mac & Co. (26%), Post Office Box 3198, Pittsburgh,
Pennsylvania 15230-3198.
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 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. 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.
12
<PAGE> 41
From time to time Cowen Asset Management, in its sole discretion and as it
deems appropriate, may assume certain expenses of one or more of the Funds while
retaining the ability to be reimbursed by the applicable Fund for such amounts
prior to the end of the fiscal year. This will have the effect of lowering the
applicable Fund's overall expense ratio and of increasing yield to investors, or
the converse, at the time such amounts are assumed or reimbursed, as the case
may be. For the fiscal years ended November 30, 1994, 1995 and 1996, no
reimbursement was necessary, and the Fund paid Cowen an investment management
fee of $277,486, $509,283 and $672,125, respectively. However, since May 4,
1994, Cowen has voluntarily reimbursed the expenses of the Fund in an amount
equal to an annual rate of .22% through March 31, 1996 and of .13% through
March 31, 1997 and .03% thereafter of the average daily value of its 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 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
13
<PAGE> 42
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 fiscal years ended November 30, 1994, 1995 and 1996, Cowen
received $46,215, $93,590 and $99,793 respectively in servicing fees from Class
A shares and $4,815, $52,019 and $74,751 respectively in servicing and
distribution fees from Class B shares.
Custodian and Transfer and Dividend Agent
Investors Fiduciary Trust Company (the "Bank") 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.
The Bank also serves 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
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019, has been
selected as the Fund's independent auditor.
Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd Street, New
York, New York 10022, serves as counsel for Cowen Funds, Inc.
14
<PAGE> 43
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.
Tax Status of the Funds
The Fund will be treated as a separate taxpayer for federal income tax
purposes. Accordingly, the amounts of investment income and capital gains that
are subject to tax will be determined separately for the Fund and the Fund must
separately meet the diversification, income and distribution requirements for
qualification as a "regulated investment company" within the meaning of the
Internal Revenue Code of 1986.
A qualified Fund will not be liable for federal income tax on any
investment income or capital gains that it distributes to its shareholders, if
at least 90% of its investment income for the taxable year is so distributed.
(Amounts reinvested automatically in additional shares of a Fund will be treated
as distributed to its shareholders). In addition, in order to avoid a four
percent excise tax the Fund must distribute, or be treated as having
distributed, before January 1, at least an amount equal to the sum of 98 percent
of its ordinary income earned during the prior calendar year, 98 percent of the
net capital gains earned during the twelve months ending on the preceding
November 30 and any prior undistributed amounts.
The requirements for qualification as a regulated investment company
include two significant rules as to investment results. First, the Fund must
earn at least 90 percent of its gross income from dividends, interest, payments
with respect to securities loans, gains from the disposition of equity or debt
securities and income or gains from options on securities (the "90 percent
test"). Second, the Fund must earn less than 30 percent of its gross income from
the sale of securities held less than three months (the "30 percent test").
The 30 percent test will restrict the extent to which a Fund may: (i) sell
securities held for less than three months; (ii) write options that expire in
less than three months; (iii) close options that were written or purchased
within the preceding three months; and (iv) hold certain options during the
fourth quarter of its taxable year. Neither Fund expects the 90 percent test to
significantly affect its investment policy.
Taxation of Shareholders
Capital Gains. If a shareholder who receives a distribution taxable as
long-term capital gain with respect to shares of a Fund redeems or exchanges the
shares before holding them (unhedged) for more than six months, loss on the
redemption or exchange, up to the amount of the distribution, will be treated as
a long-term capital loss.
15
<PAGE> 44
Dividends of investment income from a Fund may qualify for the federal
dividends-received deduction of corporate shareholders only to the extent of the
aggregate amount of dividends received by the Funds from U.S. corporations. A
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 a 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, a 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 sales charge that does not increase the
shareholder's tax basis in 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. This provision prevents a shareholder from
immediately deducting the sales charge by shifting his investment in a family of
mutual funds.
Backup Withholding. In general, if a shareholder who is taxed as an
individual cannot certify that he has given his correct taxpayer identification
number to the Fund and that he is not subject to backup withholding, he will be
subject to a 31 percent federal backup withholding tax on Fund dividends and
distributions and the proceeds of redemptions or exchanges of Fund shares. (An
individual's taxpayer identification number is his 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
Capital Gains. When a Fund sells a security, the resulting gain or loss
will generally be capital gain or loss and will 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 after April 30, 1995, 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.
16
<PAGE> 45
Options. The tax consequences of a Fund's options transactions
will vary depending on the nature of the underlying security.
When a Fund writes a call option on an equity or convertible debt
security, and either the option expires unexercised or the Fund enters into a
closing purchase transaction, the Funds 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 the option is
exercised, the premium received will be treated as additional proceeds from the
sale of the underlying security.
In general, exchange-traded options on nonconvertible debt securities are
"section 1256 contracts". Gain or loss on a section 1256 contract is recognized
for tax purposes when actually realized (by a closing transaction, exercise or
expiration). In addition, any section 1256 contracts held at the end of a Fund's
taxable year will be treated as if sold at their year-end fair market value and
the resulting "mark-to-market" gain or loss will be taxable. Both realized and
mark-to-market gains or losses from section 1256 contracts will be treated as 60
percent long-term and 40 percent short-term capital gain or loss, regardless of
how long the Fund holds each contract. Until the Internal Revenue Service
formally rules that mark-to-market gain on contracts held for less than three
months at the close of a Fund's taxable year does not represent short-term gain
for purposes of the 30 percent test, the Funds may restrict their fourth-quarter
transactions in section 1256 contracts.
In general, when a taxpayer substantially reduces the risk of loss on an
investment position by entering into one or more other positions which "offset"
that position (because their values ordinarily vary inversely with its value),
the combination of positions creates a "straddle." Under an exception, certain
covered call stock options do not form straddles with the optioned stock, but
the Funds may enter into options transactions that do constitute straddles.
If two or more positions form a straddle, special tax rules may cause
losses realized by a Fund on a position to be eliminated or deferred or may
recharacterize short-term capital losses as long-term or long-term capital gains
as short-term. Furthermore, interest and other carrying charges allocable to a
position that is part of a straddle must be capitalized.
Foreign Taxes. Because the Fund will invest no more than 10% of its assets
in foreign securities and up to an additional 10 percent of its assets in
securities of Canadian issuers, shareholders will not receive credits against
their federal income tax due for foreign taxes paid by a Fund, if any.
17
<PAGE> 46
PERFORMANCE INFORMATION
From time to time, a Fund may quote its performance, in terms of the
Classes' total returns, in reports or other communications to shareholders or in
advertising material. 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. The period selected for a calculation of
total return will depend on the purpose of reporting the performance and may be
as short as seven days.
A Fund's "average annual total return" figures described and shown in the
Prospectuses are computed according to a formula prescribed by the Securities
and Exchange Commission. The formula can be expressed as follows:
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 = 23.51%
5 year = 16.85%
* Inception = 15.58%
* March 31, 1988
Class B Shares/Average Annual Total Return for the periods ended November 30,
1996:
1 year = 23.67%
* Inception = 15.00%
* May 17, 1994
Class C Shares/Average Annual Total Return for the periods ended November 30,
1996:
1 year = 30.17%
* Inception = 16.63%
* May 9, 1994
18
<PAGE> 47
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 the
period.
A Fund's net assets change in response to fluctuations in interest rates,
price fluctuations in securities markets, and the expenses of the Fund.
Consequently, any given performance quotation should not be considered as
representative of the Fund's performance for any specified period in the future.
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
Cowen Funds, Inc. hereby incorporates by reference the financial
statements and related notes and the report of Ernst & Young LLP thereon
included in the Annual Report to Shareholders of Cowen Opportunity Fund for the
fiscal year ended November 30, 1996. Cowen Funds, Inc. will provide a copy of
the Cowen Opportunity Fund Annual Report to each person who requests a copy of
this Statement of Additional Information. Cowen Funds, Inc. will also furnish a
copy of the Cowen Opportunity Fund Annual Report, without charge, to any
shareholder of this Fund upon request directed to Cowen Funds, Inc., at the
address or telephone number given on the cover page of this Statement of
Additional Information.
19
<PAGE> 48
PART C
OTHER INFORMATION
Item 24: Financial Statements and Exhibits
(a) Financial Statements included in Registration Statement:
(i) "Financial Highlights" included in Part A of Cowen Opportunity
Fund.
(ii) Incorporated by reference under "Financial Statements" in Part B
of Cowen Opportunity Fund is that Fund's Annual Report to Shareholders,
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.
(iii) Incorporated by reference under "Financial Highlights"
included in Part A of Cowen Intermediate Fixed Income Fund and Cowen
Government Securities Fund.
(iv) Incorporated by reference under "Financial Statements" included
in Part B of Cowen Intermediate Fixed Income Fund and Cowen Government
Securities Fund is the Funds' Annual Report to Shareholders 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, dated November 11, 1987
(iii) Articles of Revival of Registrant
(iv) Articles of Amendment, dated April 28, 1994
(v) Articles of Amendment, dated July 8, 1994
2 (i) By-Laws
(ii) Amendment to the By-Laws, dated February 8, 1988
(iii) Amendment to the By-Laws, dated December 15, 1992
3 Not applicable
4 Not applicable
C-1
<PAGE> 49
5 (i) Investment Management Agreement, Cowen Opportunity Fund
(ii) Investment Management Agreement, Cowen Intermediate Fixed Income
Fund
(iii) Investment Management Agreement, Cowen Government
Securities Fund
6 Distribution Agreement, dated as of October 13, 1992
7 Not applicable
8 Custody Agreement
9 Transfer Agency Agreement
10 (i) Opinion and consent of Willkie Farr & Gallagher, dated February
16, 1988
(ii) Opinion and consent of Venable Baetjer & Howard, dated February
16, 1988
(iii) Opinion and consent of Venable Baetjer & Howard, dated
May 12, 1994
11 Consent of Independent Auditors
13 Subscription Agreement
15 (i) Shareholder Servicing and Distribution Plan, Cowen Opportunity
Fund
(ii) Shareholder Servicing and Distribution Plan, Cowen Intermediate
Fixed Income Fund
(iii) Shareholder Servicing and Distribution Plan, Cowen
Government Securities Fund
(iv) Shareholder Servicing Agreement, Cowen Opportunity Fund
(v) Shareholder Servicing Agreement, Cowen Intermediate Fixed Income
Fund
(vi) Shareholder Servicing Agreement, Cowen Government Securities Fund
(vii) Distribution Related Services Agreement, Cowen
Opportunity Fund
(viii) Distribution Related Services Agreement, Cowen
Intermediate Fixed Income Fund
(ix) Distribution Related Services Agreement, Cowen Government
Securities Fund
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 Income
+ Growth Fund, Inc. Each of these registered investment companies is
incorporated under the laws of Maryland.
Item 26. Number of Holders of Securities
As of March 5, 1997, there were 4,002 record holders of Cowen Opportunity
Fund, 802 record holders of Cowen Intermediate Fixed Income Fund and 189 record
holders of Cowen Government Securities Fund.
C-2
<PAGE> 50
Item 27. Indemnification
Incorporated by reference to Item 27 of Part C of Registrant's
Registration Statement filed on November 13, 1987.
Items 28
and 29. Business and Other Connections of Investment
Manager; and 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 Income + Growth Fund,
Inc. ("CI+G"), 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 Partners of Cowen as of March 5, 1997, their positions and the
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 "CFI").
C-3
<PAGE> 51
<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-4
<PAGE> 52
<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-5
<PAGE> 53
<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-6
<PAGE> 54
<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-7
<PAGE> 55
(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 Funds, 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-8
<PAGE> 56
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 FUNDS, 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.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/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
Treasurer (Chief, March 25, 1997
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
</TABLE>
C-9
<PAGE> 57
INDEX TO EXHIBITS
Exhibit No. Description of Exhibits
1 (i) Articles of Incorporation of Registrant
(ii) Articles of Amendment, dated November 11, 1987
(iii) Articles of Revival of Registrant
(iv) Articles of Amendment, dated April 28, 1994
(v) Articles of Amendment, dated July 8, 1994
2 (i) By-Laws
(ii) Amendment to the By-Laws, dated February 8, 1988
(iii) Amendment to the By-Laws, dated December 15, 1992
5 (i) Investment Management Agreement, Cowen Opportunity Fund
(ii) Investment Management Agreement, Cowen Intermediate Fixed Income
Fund
(iii) Investment Management Agreement, Cowen Government
Securities Fund
6 Distribution Agreement, dated as of October 13, 1992
8 Custody Agreement
9 Transfer Agency Agreement
10 (i) Opinion and consent of Willkie Farr & Gallagher, dated February
16, 1988
(ii) Opinion and consent of Venable Baetjer & Howard, dated February
16, 1988
(iii) Opinion and consent of Venable Baetjer & Howard, dated
May 12, 1994
11 Consent of Independent Auditors
13 Subscription Agreement
15 (i) Shareholder Servicing and Distribution Plan, Cowen Opportunity
Fund
(ii) Shareholder Servicing and Distribution Plan, Cowen Intermediate
Fixed Income Fund
(iii) Shareholder Servicing and Distribution Plan, Cowen
Government Securities Fund
(iv) Shareholder Servicing Agreement, Cowen Opportunity Fund
(v) Shareholder Servicing Agreement, Cowen Intermediate Fixed Income
Fund
(vi) Shareholder Servicing Agreement, Cowen Government Securities Fund
(vii) Distribution Related Services Agreement, Cowen
Opportunity Fund
(viii) Distribution Related Services Agreement, Cowen
Intermediate Fixed Income Fund
(ix) Distribution Related Services Agreement, Cowen Government
Securities Fund
<PAGE> 1
EXHIBIT 1(i)
ARTICLES OF INCORPORATION
OF
COWEN TECHNOLOGY FUND, INC.
ARTICLE I
THE UNDERSIGNED, Helen P. Wiley, 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 Technology 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 dividends,
qualifications or terms or conditions of redemption of the capital stock.
<PAGE> 3
(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 such event the Corporation may make payment wholly or partly by
securities or other property included in the assets belonging or allocable to
<PAGE> 4
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 Church.
(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.
(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
<PAGE> 5
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
<PAGE> 6
liability for which 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 20th day of June, 1986.
<PAGE> 7
/s/ Helen P. Wiley, Incorporator
<PAGE> 1
EXHIBIT 1(ii)
AMENDED ARTICLES OF INCORPORATION
OF
COWEN TECHNOLOGY FUND, INC.
ARTICLE I
THE UNDERSIGNED, Helen P. Wiley, 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 Funds, 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 Amended 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 powers, rights or privileges so granted or
conferred.
<PAGE> 2
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 (the "Shares") 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) The Board of Directors of the Corporation is authorized, from time to time,
to classify or to reclassify, as the case may be, any unissued Shares of the
Corporation, whether now or hereafter authorized, in separate series ("Series").
The Shares of said Series of stock shall have such preferences, rights, voting
powers, restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption as shall be fixed and determined from time to time by
the Board of Directors. The Board of Directors is authorized to increase or
decrease the number of Shares of any Series, but the number of Shares of any
series shall not be decreased by the Board of Directors below the number of
Shares thereof then outstanding. The Corporation may hold as treasury Shares,
reissue for such consideration and on such terms as the Board of Directors may
determine, or cancel, at their discretion from time to time, any Shares
reacquired by the Corporation.
(3) There is hereby established and classified, (a) a Series of stock comprised
of two hundred fifty million Shares to be known as the "Cowen Special Value
Fund" and (b) a Series of stock comprised of two hundred fifty million Shares to
be known as the "Cowen Opportunity Fund". Without limiting the authority of the
Board of Directors set forth herein to establish and designate any further
Series, and to classify and reclassify any unissued Shares, Shares of each
Series, now authorized and hereafter authorized, shall be subject to the
following provisions:
(a) As more fully set forth hereafter, the assets and liabilities and the
<PAGE> 3
income and expenses of each Series shall be determined separately and,
accordingly, the net asset value, the dividends payable to holders, and the
amounts distributable in the event of dissolution of the Corporation to holders
of Shares of the Corporation's stock may vary from Series to Series. Except for
these differences and certain other differences hereafter set forth, each Series
shall have the same preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of and rights to require redemptions.
(b) All consideration received by the Corporation for the issue or sale of
Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including all proceeds derived from the sale, exchange or
liquidation thereof, and any funds or payments derived from any reinvestment of
such proceeds in whatever form the same may be, shall irrevocably belong to that
Series for all purposes, subject only to the rights of creditors and shall be
referred to as "assets belonging to" that Series. The assets belonging to a
particular Series shall be so recorded upon the books of the Corporation.
(c) The assets belonging to each particular Series shall be charged with the
liabilities of the Corporation with respect to that Series, all expenses, costs,
charges and reserves attributable to that Series and that Series' share of the
liabilities, expenses, costs, charges or reserves of the Corporation not
attributable to any particular Series, in the latter case in the proportion that
the net asset value of that Series (determined without regard to such
liabilities) bears to the net asset value of all Series (determined without
regard to such liabilities) as determined in accordance with Article VIII of
these Amended Articles of Incorporation. The determination of the Board of
Directors shall be conclusive as to the allocation of liabilities, including
accrued expenses and reserves, and assets to a particular Series or Series.
(d) Each holder of Shares of the Corporation, upon request to the Corporation
(accompanied by surrender of the appropriate stock certificate or certificates
in proper form for transfer, if any certificates have been issued to represent
such shares) shall be entitled to require the Corporation to redeem, to the
extent that the Corporation may lawfully effect such redemption under the laws
of the State of Maryland, 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
at a price per Share equal to the net asset value per Share computed in
accordance with Article VIII hereof.
(e) 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
<PAGE> 4
(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
1986 or (ii) if the value of the Shares in the account maintained by the
Corporation or its transfer agent for any Series of stock for the stockholder is
less than two hundred fifty (250) dollars and the stockholder has been given at
least sixty (60) days' written notice of the redemption and has failed to make
additional purchases of shares in an amount sufficient to bring the value in his
account to two hundred fifty (250) dollars or more before the redemption is
effected by the Corporation.
(f) Payment by the Corporation for Shares surrendered to it for redemption shall
be made in cash by the Corporation within seven business days after such
surrender out of funds legally available therefor, provided that the Corporation
may suspend the right of redemption or postpone the date of payment of the
redemption price when permitted or required to do so by applicable statutes or
regulations and, with respect to the postponement of the date of payment, until
all checks used to purchase the Shares being redeemed have been collected.
Payment of the aggregate price of shares surrendered for redemption may be made
in cash, or, at the option of the Corporation, wholly or partly by securities or
other property included in the assets belonging or allocable to the Series of
the shares redemption of which is being sought.
(g) The right of any holder of stock of the Corporation redeemed by the
Corporation as provided in subsections (d) or (e) of this section (3) to receive
dividends thereon and all other rights of such holder with respect to such
Shares shall terminate at the time as of which the purchase or redemption price
of such Shares is determined, except the right of such holder to receive (i) the
redemption price of such Shares from the Corporation or its designated agent and
(ii) any dividend or distribution to which such holder has previously become
entitled as the record holder of such Shares on the record date for such
dividend or distribution. If Shares of stock are redeemed by the Corporation
pursuant to subsection (e) of this section (3) and certificates representing the
redeemed shares have been issued, the redemption price need not be paid by the
Corporation until the certificates have been received by the Corporation or its
agent duly endorsed for transfer.
(h) The Corporation shall be entitled to purchase shares of its stock, to the
extent that the Corporation may lawfully effect such purchase under the laws of
the State of Maryland, upon such terms and conditions and for such consideration
as the Board of Directors shall deem advisable, by agreement with the
stockholder at a price not exceeding the net asset value per Share computed in
accordance with Article VIII hereof.
<PAGE> 5
(i) In the absence of any specification as to the purpose for which Shares of
stock of the Corporation are redeemed or purchased by it, all Shares so redeemed
or purchased shall be deemed to be retired in the sense contemplated by the laws
of the State of Maryland and the number of the authorized Shares of stock of the
Corporation shall not be reduced by the number of any shares redeemed or
purchased by it. Until their classification is changed in accordance with
section (2) of this Article V, all Shares so redeemed or purchased shall
continue to belong to the same Series to which they belonged at the time of
their redemption or purchase.
(j) Shares of each Series shall be entitled to such dividends and distributions,
in Shares or in cash or both, as may be declared from time to time by the Board
of Directors, acting in its sole discretion, with respect to such Series,
provided that dividends and distributions shall be paid on shares of a Series
only out of lawfully available assets belonging to that Series. Dividends may be
declared daily or otherwise pursuant to a standing resolution or resolutions
adopted only once or with such frequency as the Board of Directors may
determine. Any such dividend or distribution paid in Shares will be paid at the
current net asset value thereof as defined in Article VIII.
(k) The Board of Directors shall have the power, in its sole discretion, to
distribute in any fiscal year as dividends (including dividends designated in
whole or in part as capital gain distributions) an amount sufficient, in the
opinion of the Board of Directors, to enable each Series of the Corporation to
qualify as a regulated investment company under the Internal Revenue Code of
1986, as from time to time amended, or any successor or comparable statute
thereto, and regulations promulgated thereunder, and to avoid liability of each
Series of the Corporation for federal income and excise taxes in respect of that
year. However, nothing in the foregoing shall limit the authority of the Board
of Directors to make distributions greater than or less than the amount
necessary to qualify as a regulated investment company and to avoid liability of
any Series of the Corporation for such taxes.
(l) For the purpose of allowing the net asset value per Share of a Series to
remain constant, the Corporation shall be entitled to declare, pay and credit as
dividends daily the net income (which may include or give effect to realized and
unrealized gains and losses, as determined in accordance with the Corporation's
accounting and portfolio valuation policies) of the Corporation allocated to
that Series. If the amount so determined for any day is negative, the
Corporation shall be entitled, without the payment of monetary compensation but
in consideration of the interest of the Corporation and its stockholders in
maintaining a constant net asset value per Share of the Series, to redeem pro
rata from all the stockholders of
<PAGE> 6
record of Shares of the Series at the time of such redemption (in proportion to
their respective holdings thereof) sufficient outstanding shares of the Series,
or fractions thereof, as shall permit the net asset value per Share of the
Series to remain constant.
(m) In the event of the liquidation or dissolution of the Corporation, the
stockholders of a Series shall be entitled to receive, as a class, out of the
assets of the Corporation available for distribution to stockholders, the assets
belonging to that Series. The assets so distributable to the stockholders of a
Series shall be distributed among such stockholders in proportion to the number
of shares of that Series held by them and recorded on the books of the
Corporation. In the event that there are any assets available for distribution
that are not attributable to any particular Series, such assets shall be
allocated to all Series in proportion to the net assets of the respective Series
and then distributed to the holders of stock of each Series in proportion to the
number of Shares of that Series held by the respective holders.
(n) On each matter submitted to a vote of the stockholders, each holder of a
Share shall be entitled to one vote for each such Share standing in his name on
the books of the Corporation; provided, however, that when required by the
Investment Company Act of 1940 or regulations thereunder, as from time to time
amended (the "1940 Act"), or the laws of the State of Maryland or when the Board
of Directors has determined that the matter affects only the interests of one
Series, matters may be submitted to a vote of the stockholders of a particular
Series, and each holder of Shares thereof shall be entitled to votes equal to
the Shares of the Series standing in his name on the books of the Corporation.
(o) The presence in person or by proxy of the holders of one-third of the Shares
of capital stock of the Corporation outstanding and entitled to vote thereat
shall constitute a quorum for the transaction of business at a stockholders'
meeting, except that where any provision of law or of these Amended Articles of
Incorporation permit or require that holders of any Series shall vote as a
Series, then one-third of the aggregate number of Shares of capital stock of
that Series outstanding and entitled to vote shall constitute a quorum for the
transaction of business by that Series.
(p) The Corporation may issue Shares in fractional denominations to the same
extent as its whole Shares, and any fractional Share shall carry proportionately
the rights of a whole Share including, without limitation, the right to vote,
the right to receive dividends and distributions and the right to participate
upon liquidation of the Corporation. A fractional Share shall not, however, have
the right to receive a certificate evidencing it.
<PAGE> 7
(4) No holder of stock of the Corporation by virtue of being such a holder shall
have any right to purchase, subscribe for, or otherwise acquire any Shares of
the Corporation that the Corporation may issue or sell (whether out of the
number of Shares authorized by these Amended 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) Notwithstanding any provision of the Maryland General Corporation Law
requiring any action to be taken or authorized by the affirmative vote of a
greater proportion than a majority 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 Amended
Articles of Incorporation.
(6) All persons who shall acquire stock in the Corporation shall acquire the
same subject to the provisions of these Amended Articles of Incorporation and
the By-Laws of the Corporation, as from time to time amended.
ARTICLE VI
BOARD OF DIRECTORS
(1) The number of directors constituting the Board of Directors shall be three
(3). 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; and William Church.
(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, as amended.
(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
<PAGE> 8
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 approve the issuance
from time to time of Shares of the stock of any Series, whether now or hereafter
authorized, and securities convertible into Shares of stock of the Corporation
of any Series, whether now or hereafter authorized, for such consideration as
the Board of Directors may deem advisable.
(iv) Notwithstanding anything in these Amended 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 Series, the amount of the
liabilities belonging to any Series, and the net asset value of each Share of
any Series of the Corporation's stock for purposes of sales, redemptions,
repurchases of Shares or otherwise.
(v) 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 Amended
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 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
<PAGE> 9
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 Amended
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, as amended, 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 VII
INDEMNIFICATION
To the maximum extent permitted by the General Corporation Law of the State of
Maryland as from time to time amended, the Corporation shall indemnify its
currently acting and its former directors and officers and those persons who, at
the request of the Corporation, serve or have served another corporation,
partnership, joint venture, trust or other enterprise in one or more of such
capacities.
ARTICLE VIII
NET ASSET VALUE
The net asset value of each Share of each Series as at the time of a particular
determination shall be the quotient obtained by dividing the amount at such time
of the net assets of the Series (being the amount of the assets belonging to the
Series less its actual and accrued liabilities exclusive of capital stock and
surplus) by the total number of Shares of the Series outstanding at that time.
The Board of Directors shall have the power and duty to determine from time to
time the net asset value per Share at such times and by such methods as it shall
determine subject to any restrictions or requirements under the 1940 Act and the
rules, regulations and interpretations thereof promulgated or issued by the
Securities and Exchange Commission or insofar as permitted by any order of the
Securities and Exchange Commission applicable to the Corporation. The Board of
Directors may delegate such power and duty to any one or more of the directors
and officers of the Corporation, to the Corporation's investment manager, to the
investment adviser(s) of particular series, to the custodian or depository of
the Corporation's assets, to the Corporation's transfer agent, or to another
agent of the Corporation.
ARTICLE IX
<PAGE> 10
AMENDMENTS
The Corporation reserves the right from time to time to make any amendment to
these Amended Articles of Incorporation, now or hereafter authorized by law,
including any amendment that alters the contract rights, as expressly set forth
in these Amended Articles of Incorporation, of any outstanding stock.
IN WITNESS WHEREOF, I have adopted and signed these Amended Articles of
Incorporation and do hereby acknowledge that the adoption and signing are my
act.
Dated the 11th day of November, 1987
/s/ Helen P. Wiley, Incorporator
<PAGE> 1
EXHIBIT 1(iii)
COWEN FUNDS, INC.
ARTICLES OF REVIVAL
COWEN FUNDS, INC., a Maryland corporation having its principal office in
Baltimore City, Maryland (hereinafter referred to as the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: These Articles of Revival are for the purpose of reviving the Charter
of the Corporation.
SECOND: The name of the Corporation at the time of the forfeiture of its
Charter was COWEN FUNDS, INC.
THIRD: The name which the Corporation will use after the revival of its
Charter pursuant to these Articles of Revival shall be COWEN FUNDS, INC., which
name complies with the provisions of the Corporations and Associations Article
of the Annotated Code of Maryland with respect to corporate names.
FOURTH: The name and post office address of the resident agent of the
Corporation in the State of Maryland is The Corporation Trust Company
Incorporated, 32 South Street, Baltimore, Maryland 21202. Said resident agent
is a citizen actually residing in this State.
FIFTH: Prior to the filing of these Articles of Revival, the Corporation has:
(a) Filed all annual reports required to be filed by the Corporation or which
would have been required to be filed by the Corporation if its Charter had not
been forfeited;
(b) Paid all fees required by law; and
(c) Paid all unemployment insurance contributions or reimbursement payments,
all State and local taxes (except taxes on real estate) and all interest and
penalties due by the Corporation or which would have become due if its Charter
had not been forfeited, whether or not barred by limitations.
IN WITNESS WHEREOF, the Corporation has caused these Articles of Revival to be
signed and acknowledged in its name and on its behalf by its last acting Vice
President and its corporate seal to be hereunto affixed and attested by its last
acting Secretary all as of this 29th day of October, 1992.
ATTEST: COWEN FUNDS, INC.
By: /s/Faith Colish, Last Acting Secretary
<PAGE> 2
By: /s/William R. Church, Last Acting Vice President
THE UNDERSIGNED, the last acting Vice President and Secretary of COWEN FUNDS,
INC., who executed on behalf of said Corporation the foregoing Articles of
Revival, of which this certificate is made a part, hereby acknowledge, in the
name and on behalf of said Corporation, the foregoing Articles of Revival to be
their act.
Dated: October 29, 1992 /s/William Church, Last Acting Vice President
/s/Faith Colish, Last Acting Secretary
AFFIDAVIT FOR REVIVAL OF A CHARTER
I, William Church of New York, New York, Last Acting Vice President of COWEN
FUNDS, INC., hereby declare that the previously mentioned corporation has paid
all unemployment insurance contributions or reimbursement payments, all State
and local taxes except taxes on real estate, and all interest and penalties due
by the corporation or which would have become due if the charter had not been
forfeited, whether or not barred by limitations.
/s/William Church
I hereby certify that on October 29, 1992, before me, the subscriber, a notary
public of the State of New York, in and for the County of New York, personally
appeared William Church and made oath under the penalties of perjury that the
matters and facts set forth in this affidavit are true to the best of his
knowledge, information and belief.
As witness my hand and notarial seal
/s/Peter D. Saganski (Signature of notary public)
My Commission expires:
5/21/94
<PAGE> 1
EXHIBIT 1(iv)
COWEN FUNDS, INC.
ARTICLES OF AMENDMENT
COWEN FUNDS, 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 that:
FIRST: The charter of the Corporation is hereby amended by amending Article V,
sections (1) and (2) of the Amended Articles of Incorporation to read as
follows:
(1) The total number of shares of capital stock that the Corporation shall
have authority to issue is three billion (3,000,000,000) shares of the par
value of one-tenth of one cent ($.001) per share (the "Shares") and of the
aggregate par value of three million dollars ($3,000,000), all of which three
billion (3,000,000,000) Shares are initially designated Common Stock.
(2) The Board of Directors of the Corporation is authorized, from time to time,
to classify or to reclassify, as the case may be, any unissued Shares of the
Corporation, whether now or hereafter authorized, in separate series ("Series")
and in separate classes within Series. The Shares of said Series and classes
shall have such preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption as shall be fixed and determined from time to time by
the Board of Directors. The Board of Directors is authorized to increase or
decrease the number of Shares of any Series or class within a Series, but the
number of Shares of any Series or any such class shall not be decreased by the
Board of Directors below the number of Shares thereof then outstanding.
SECOND: The charter of the Corporation is hereby further amended by (i) amending
the introductory language in Article V, section (3) of the Amended Articles of
Incorporation, (ii) amending paragraphs (i), (n) and (o) of Article V, section
(3) of the Amended Articles of Incorporation, (iii) relettering paragraph (p) of
Article V, section (3) of the Amended Articles of Incorporation as paragraph (q)
thereof, and (iv) inserting a new paragraph (p) in Article V, section (3) of the
Amended Articles of Incorporation, items (i), (ii), (iii) and (iv) above to read
as follows:
(3) There is hereby established and classified (a) a Series of stock comprised
of seven hundred fifty million (750,000,000) Shares to be known as the "Cowen
Special Value Fund," of which two hundred fifty million (250,000,000) Shares,
two hundred fifty million (250,000,000) Shares and two hundred fifty million
(250,000,000) Shares, respectively,
<PAGE> 2
are classified as Class A Common Stock, Class B Common Stock and Class C Common
Stock, respectively, of that Series, (b) a Series of Stock comprised of seven
hundred fifty million (750,000,000) Shares to be known as the "Cowen
Opportunity Fund," of which two hundred fifty million (250,000,000) Shares, two
hundred fifty million (250,000,000) Shares and two hundred fifty million
(250,000,000) Shares, respectively, are classified as Class A Common Stock,
Class B Common Stock and Class C Common Stock, respectively, of that Series,
(c) a Series of Stock comprised of seven hundred fifty million (750,000,000)
Shares to be known as the "Cowen Intermediate Fixed Income Fund" and (d) a
Series of Stock comprised of seven hundred fifty million (750,000,000) Shares
to be known as the "Cowen Tradition Fixed Income Fund." Without limiting the
authority of the Board set forth herein to establish and designate any further
Series or classes within Series, and to classify and to reclassify any unissued
Shares, Shares of each Series, now authorized and hereafter authorized, shall
be subject to the following provisions:
* * * *
(i) In the absence of any specification as to the purpose for which Shares of
stock of the Corporation are redeemed or purchased by it, all Shares so
redeemed or purchased shall be deemed to be retired in the sense contemplated
by the laws of the State of Maryland and the number of the authorized Shares of
stock of the Corporation shall not be reduced by the number of any Shares
redeemed or purchased by it. Until their classification is changed in
accordance with section (2) of this Article V, all Shares so redeemed or
purchased shall continue to belong to the same Series and class to which they
belonged at the time of their redemption or purchase.
* * * *
(n) 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 Series or 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
Investment Company Act of 1940 or regulations thereunder, as from time to time
amended (the "1940 Act") or pursuant to the Order, as hereinafter defined, or
pursuant to any other applicable order, rule or interpretation issued by the
Securities and Exchange Commission, or otherwise, and except with respect to
any matter which the Board of Directors has determined affects only one or more
Series or classes of stock, in which case only the holders of Shares of the
Series, class or classes, as the case may be, affected shall be entitled to
vote.
<PAGE> 3
(o) The presence in person or by proxy of the holders of one-third of the
Shares of capital stock of the Corporation outstanding and entitled to vote
thereat shall constitute a quorum for the transaction of business at a
stockholders' meeting, except that where any provision of law or of these
Amended Articles of Incorporation permits or requires that holders of any
Series or class within a Series shall vote as a separate Series or class, then
one-third of the aggregate number of Shares of capital stock of that Series or
class outstanding and entitled to vote thereat shall constitute a quorum for
the transaction of business by that Series or class.
(p) The classes within each Series will be invested in a common investment
portfolio and shall also be subject to the following preferences, conversion
and other rights, restrictions, limitations as to dividends, qualifications,
and terms and conditions of redemption:
(i) The income of the Series and those expenses and liabilities that are not
attributable to any particular class of Shares within the Series shall be
allocated among the classes in the Series in accordance with the net assets of
the Series attributable to each such class or as otherwise determined by the
Board of Directors, but, in any event, in a manner consistent with the
provisions of the Order, as defined in subparagraph (iii) below.
(ii) The liabilities and expenses attributable to each of the classes within a
Series shall be determined separately from those of each other 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 within a Series. Except for these differences and certain other
differences set forth in this Article V, the classes within a Series shall have
the same preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption.
(iii) The dividends and distributions of investment income and capital gains
with respect to the classes of Shares within a Series 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 within the Series to
reflect differing allocations of the liabilities and expenses of the Series
among the classes and any resultant differences among the net asset values per
Share of the classes within the Series, 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 within a Series 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
<PAGE> 4
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 such order or any
rule or interpretation under the 1940 Act that modifies or supersedes such
order (the "Order").
(iv) The proceeds of the redemption of a Share (including a fractional Share)
of any class of Common Stock within any Series 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.
(q) The Corporation may issue Shares in fractional denominations to the same
extent as its whole Shares, and any fractional Share shall carry
proportionately the rights of a whole Share including, without limitation, the
right to vote, the right to receive dividends and distributions and the right
to participate upon liquidation of the Corporation. A fractional Share shall
not, however, have the right to receive a certificate evidencing it.
THIRD: The charter of the Corporation is hereby further amended by amending
Article VI, section (2), paragraphs (iii) and (iv) of the Amended Articles of
Incorporation to read as follows:
(iii) Without the assent or vote of the stockholders, to approve the issuance
from time to time of Shares of the stock of any Series or class within a
Series, whether now or hereafter authorized, and securities convertible into
Shares of stock of the Corporation of any Series or any class within a Series,
whether now or hereafter authorized, for such consideration as the Board of
Directors may deem advisable.
(iv) Notwithstanding anything in these Amended 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 or attributable to any Series
or any class within a Series, the amount of the expenses and liabilities
belonging to or attributable to any Series or class within a Series, and the
net asset value of each Share of any Series or class within a Series of the
Corporation's stock for purposes of sales, redemptions, repurchases of Shares
or otherwise.
FOURTH: The charter of the Corporation is further amended by amending Article
VIII of the Amended Articles of Incorporation to read as follows:
ARTICLE VIII
NET ASSET VALUE
The Board of Directors shall have the power and duty to determine from
<PAGE> 5
time to time the net asset value per Share of each Series, or class within a
Series, of stock of the Corporation, as the case may be, at such times and by
such methods as it shall determine subject to any restrictions or requirements
under the 1940 Act and the rules, regulations and interpretations thereof
promulgated or issued by the Securities and Exchange Commission or insofar as
permitted by the Order or any other order of the Securities and Exchange
Commission applicable to the Corporation. The Board of Directors may delegate
such power and duty to any one or more of the directors and officers of the
Corporation, to the Corporation's investment manager, to the investment
adviser(s) of particular Series, to the custodian or depository of the
Corporation's assets, to the Corporation's transfer agent, or to another agent
of the Corporation.
FIFTH: The charter of the Corporation is further amended by amending Article
VII of the amended Articles of Incorporation to read as follows:
ARTICLE VII
INDEMNIFICATION AND EXCULPATION
(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 VII 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 VII are
to the law as from time to time amended. No amendment to the
<PAGE> 6
Amended Articles of Incorporation of the Corporation shall affect any right of
any person under this Article VII based on any event, omission or proceeding
prior to such amendment.
SIXTH: A. The Class A Common Stock, Class B Common Stock and Class C Common
Stock of each of the Cowen Special Value Fund Series and Cowen Opportunity Fund
Series 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. Each Share (including for this purpose a fraction of a Share)
of Common Stock of the Cowen Special Value Fund Series 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 of the Cowen Special Value Fund Series. Each
Share (including for this purpose a fraction of a Share) of Common Stock of the
Cowen Special Value Fund Series issued and outstanding prior to these Articles
of Amendment becoming effective and held by Class C Eligible Investors, 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 of the Cowen Special Value Series. Each Share
(including for this purpose a fraction of a Share) of Common Stock of the Cowen
Opportunity Fund Series issued and outstanding prior to these Articles of
Amendment becoming effective (other than Shares held by Class C Eligible
Investors), 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 of the Cowen Opportunity Fund
Series. Each Share (including for this purpose a fraction of a Share) of
Common Stock of the Cowen Opportunity Fund Series issued and outstanding prior
to these Articles of Amendment becoming effective and held by Class C Eligible
Investors, 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 of the Cowen Opportunity Fund
Series. Outstanding certificates representing issued and outstanding Shares of
Common Stock of the Cowen Special Value Fund Series and Cowen Opportunity Fund
Series immediately prior to these Articles of Amendment becoming effective,
shall, respectively, 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, of the Cowen Special Value Fund Series and
the Cowen Opportunity Fund Series, respectively. Certificates representing
Shares of the Class A Common Stock
<PAGE> 7
and Class C Common Stock of the aforesaid Series 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.
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 particular Series 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 particular Series 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 the Shares of the particular
Series of the Corporation by such client; (iv) investors who hold Shares of the
particular Series of the Corporation valued at $4 million or more as of the
effective date of these Articles of Amendment; (v) accounts as to which a bank
or broker-dealer charges an account management fee, provided the bank or
broker-dealer has an agreement with Cowen relating to investment in the
particular Series of the Corporation; and (vi) investors, and their spouses and
minor children, who are investment advisory clients of Cowen or any of its
subsidiaries or who are affiliated persons or sponsoring companies of those
clients. The Corporation may determine whether a particular holder of Shares
of the Corporation is within the foregoing definition of Class C Eligible
Investors and any such determination shall be conclusive, absent manifest error.
SEVENTH: A. Immediately before the increase in authorized capital stock
provided for in these Articles of Amendment, the total number of Shares of
capital stock that the Corporation had authority to issue was five hundred
million (500,000,000) shares, of the par value of one-tenth of one cent ($.001)
per share, and of the aggregate par value of five hundred thousand dollars
($500,000), all of which five hundred million (500,000,000) Shares were
designated as Common Stock, consisting of a Series of stock comprised of two
hundred fifty million (250,000,000) Shares designated as the Cowen Opportunity
Fund, a Series of stock comprised of fifty million (50,000,000) Shares
designated as the Cowen Intermediate Fixed Income Fund, a Series of stock
comprised of fifty million (50,000,000) shares designated as the Cowen
Tradition Fixed Income Fund, and a Series of stock comprised of one hundred
fifty million (150,000,000) Shares designated as the Cowen Special Value Fund.
<PAGE> 8
B. Immediately after the increase in authorized capital stock provided for in
these Articles of Amendment, the total number of shares of capital stock that
the Corporation shall have authority to issue is three billion (3,000,000,000)
Shares, of the par value of one-tenth of one cent ($.001) per share, and of the
aggregate par value of three million dollars ($3,000,000), all of which are
designated Common Stock, of which (i) two hundred fifty million (250,000,000)
Shares, two hundred fifty million (250,000,000) Shares and two hundred fifty
million (250,000,000) Shares, respectively, are further designated and
classified as Class A Common Stock, Class B Common Stock and Class C Common
Stock, respectively, of the Cowen Opportunity Fund Series, (ii) two hundred
fifty million (250,000,000) Shares, two hundred fifty million (250,000,000)
Shares and two hundred fifty million (250,000,000) Shares, respectively, are
further designated and classified as Class A Common Stock, Class B Common Stock
and Class C Common Stock, respectively, of the Cowen Special Value Fund Series,
(iii) seven hundred fifty million shares (750,000,000) are further designated as
Common Stock of Cowen Intermediate Fixed Income Fund and (iv) seven hundred
fifty million shares (750,000,000) are further designated as Common Stock of
Cowen Tradition Fixed Income Fund.
EIGHTH: 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 of
the Corporation in the manner required by law and the charter of the
Corporation.
NINTH: These Articles of Amendment shall become effective at 5:00 P.M. on May
6, 1994.
The undersigned President of Cowen Funds, Inc. 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 FUNDS, INC. has caused this instrument to be executed
and filed in its name and on its behalf by its President, David R. Sarns, and
witnessed by its Secretary, Rodd M. Baxter, on the 28th day of April, 1994.
COWEN FUNDS, INC.
By: /s/ David R. Sarns, President
<PAGE> 9
WITNESS: /s/ Rodd M. Baxter, Secretary
<PAGE> 1
EXHIBIT 1(v)
COWEN FUNDS, INC.
ARTICLES OF AMENDMENT
COWEN FUNDS, 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 that:
FIRST: The charter of the Corporation is hereby amended by (i) amending the
introductory language in Article V, section (3) of the Amended Articles of
Incorporation and (ii) inserting a new subparagraph (v) in Article V, section
(3), paragraph (p) of the Amended Articles of Incorporation, items (i) and )ii)
above to read as follows:
(3) There is hereby established and classified (a) a Series of stock comprised
of seven hundred fifty million (750,000,000) Shares to be known as the "Cowen
Special Value Fund," of which two hundred fifty million (250,000,000) Shares,
two hundred fifty million (250,000,000) Shares and two hundred fifty million
(250,000,000) Shares, respectively, are classified as Class A Common Stock,
Class B Common Stock and Class C Common Stock, respectively, of that Series, (b)
a Series of Stock comprised of seven hundred fifty million (750,000,000) Shares
to be known as the "Cowen Opportunity Fund," of which two hundred fifty million
(250,000,000) Shares, two hundred fifty million (250,000,000) Shares and two
hundred fifty million (250,000,000) Shares, respectively, are classified as
Class A Common Stock, Class B Common Stock and Class C Common Stock,
respectively, of that Series, (c) a Series of Stock comprised of seven hundred
fifty million (750,000,000) Shares to be known as the "Cowen Intermediate Fixed
Income Fund," of which two hundred fifty million (250,000,000) Shares, two
hundred fifty million (250,000,000) Shares and two hundred fifty million
(250,000,000) Shares, respectively, are classified as Class A Common Stock,
Class B Common Stock and Class C Common Stock, respectively, of that Series and
(d) a Series of Stock comprised of seven hundred fifty million (750,000,000)
Shares to be known as the "Cowen Government Securities Fund," of which two
hundred fifty million (250,000,000) Shares, two hundred fifty million
(250,000,000) Shares, and two hundred fifty million (250,000,000) Shares,
respectively, are classified as Class A Common Stock, Class B Common Stock and
Class C Common Stock, respectively, of that Series. Without limiting the
authority of the Board set forth herein to establish and designate any further
Series or classes within Series, and to classify and to reclassify any unissued
Shares, Shares of each Series, now authorized and hereafter authorized, shall be
subject to the following provisions:
* * * *
<PAGE> 2
(p) The classes within each Series will be invested in a common investment
portfolio and shall also be subject to the following preferences, conversion
and other rights, restrictions, limitations as to dividends, qualifications,
and terms and conditions of redemption:
* * * *
(v) Notwithstanding any provisions to the contrary in the charter of the
Corporation, the Board of Directors may determine not to permit certain
dividends to accrue on Shares of the Cowen Intermediate Fixed Income Fund
Series Class A Common Stock, Class B Common Stock and Class C Common Stock or
on Shares of the Cowen Government Securities Fund Series Class A Common Stock,
Class B Common Stock and Class C Common Stock until the proceeds of the sale
thereof are received by the Corporation.
SECOND: A. The Class A Common Stock, Class B Common Stock and Class C Common
Stock of each of the Cowen Intermediate Fixed Income Fund Series and Cowen
Government Securities Fund Series 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. Upon these Articles of Amendment
becoming effective, the Cowen Tradition Fixed Income Fund Series shall be
redesignated as the Cowen Government Securities Fund Series. Each Share
(including for this purpose a fraction of a Share) of Common Stock of the Cowen
Tradition Fixed Income Fund Series issued and outstanding prior to these
Articles of Amendment becoming effective (other than Shares held by Class C
Eligible Investors), 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 of the Cowen
Government Securities Fund Series. Each Share (including for this purpose a
fraction of a Share) of Common Stock of the Cowen Tradition Fixed Income Fund
Series issued and outstanding prior to these Articles of Amendment becoming
effective and held by Class C Eligible Investors, 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 of the Cowen Government Securities Fund Series. Each Share (including for
this purpose a fraction of a Share) of Common Stock of the Cowen Intermediate
Fixed Income Fund Series issued and outstanding prior to these Articles of
Amendment becoming effective (other than Shares held by Class C Eligible
Investors), 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 of the Cowen Intermediate
<PAGE> 3
Fixed Income Fund Series. Each Share (including for this purpose a fraction of a
Share of Common Stock of the Cowen Intermediate Fixed Income Fund Series issued
and outstanding prior to these Articles of Amendment becoming effective and held
by Class C Eligible Investors, 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 of the Cowen
Intermediate Fixed Income Fund Series. Outstanding certificates representing
issued and outstanding Shares of Common Stock of the Cowen Intermediate Fixed
Income Fund Series and Cowen Tradition Fixed Income Fund Series immediately
prior to these Articles of Amendment becoming effective, shall, respectively,
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, of the Cowen Intermediate Fixed Income Fund Series and the Cowen
Government Securities Fund Series, respectively. Certificates representing
Shares of the Class A Common Stock and Class C Common Stock of the aforesaid
Series 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.
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 particular Series 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 particular Series 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 the Shares of the particular
Series of the Corporation by such client; (iv) investors who hold Shares of the
particular Series 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 an account management fee, provided the bank or
broker-dealer has an agreement with Cowen relating to investment in the
particular Series of 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
<PAGE> 4
definition of Class C Eligible Investors and any such determination shall be
conclusive, absent manifest error.
THIRD: These Articles of Amendment do not increase the authorized stock of the
Corporation.
FOURTH: 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 of
the Corporation in the manner required by law and the charter of the
Corporation.
FIFTH: These Articles of Amendment shall become effective at 5:00 P.M. on July
8, 1994.
The undersigned President of Cowen Funds, Inc. 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 FUNDS, INC. has caused this instrument to be executed
and filed in its name and on its behalf by its President, David R. Sarns, and
witnessed by its Secretary, Rodd M. Baxter, on the 6th day of July, 1994.
COWEN FUNDS, INC.
/s/ David R. Sarns, President
WITNESS:
By: /s/ Rodd M. Baxter, Secretary
<PAGE> 1
EXHIBIT 2(i)
COWEN FUNDS, INC.
BY-LAWS
Incorporated Under the Laws of the State of Maryland
ARTICLE I
OFFICES.
Cowen Funds, Inc. (the "Corporation") shall maintain a principal office in the
State of Maryland. The Corporation may also have other offices at such other
places, either within or without the State of Maryland, as the Board of
Directors may from time to time designate or the business of the Corporation may
require.
ARTICLE II
STOCKHOLDERS.
Section 1. Annual Meeting: If a meeting of the stockholders of the Corporation
is required by the Investment Company Act of 1940, as amended (the "1940 Act"),
to take action on (a) the election of directors, (b) approval of investment
management arrangements, (c) ratification of the selection of independent public
accountants or (d) approval of a distribution agreement, then there shall be
submitted to the stockholders at such meeting the question of the election of
directors, and a special meeting called for any of the foregoing purposes shall
be deemed the annual meeting of stockholders for that year. In other years in
which no action by stockholders is required for any of the foregoing purposes,
no annual meeting need be held.
Section 2. Special Meetings: Special meetings of the stockholders for any
purpose may be called at any time by a majority of the Board of Directors, the
Chairman of the Board or by the President, and shall be called by the Secretary
at the request in writing of the holders of shares entitled to vote at least 10%
of all the shares entitled to be voted at such meeting, provided that (a) such
request shall state the purposes of such meeting and the matters proposed to be
acted on and (b) the stockholders requesting such meeting shall have paid to the
Corporation the reasonably estimated cost of preparing and making the notice
thereof, which the Secretary shall determine and specify to such stockholders.
Notwithstanding the foregoing, unless requested by the holders of shares
entitled to vote a majority of all shares entitled to be voted at such meetings
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 upon at any meeting of the stockholders held during the preceding twelve
(12) months. Special meetings shall be held at such place
<PAGE> 2
or places within or without the State of Maryland as shall from time to time be
designated by the Board of Directors and stated in the notice of such meeting.
At a special meeting no business shall be transacted and no corporate action
shall be taken other than that stated in the notice-of the meeting.
Section 3. Notice of Meetings: Written notice of the date, time and place, 12:15
p.m. and, in the case of a special meeting, the purpose of purposes for which
the meeting is called, shall be given by the Secretary of the Corporation to
each stockholder of record entitled to vote thereat, by mailing the same to him
at his address as the same appears upon the records of the Corporation not less
than ten (10) nor more than ninety (90) days prior to the date designated for
the meeting. 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 adjourned meeting
need not be given other than by announcement at the meeting so adjourned, unless
otherwise ordered in connection with such adjournment. Such further notice, if
any, shall be given as may be required by law.
Section 4. Waiver of Notice: Notice of any stockholders' meeting need not be
given to any stockholder who submits a signed waiver of notice, in person or by
proxy, whether before or after the meeting. The attendance of any stockholder at
a meeting, in person or by proxy, without protesting prior to the conclusion of
the meeting the lack of notice of such meeting, shall constitute a waiver of
notice by him.
Section 5. Quorum: The presence in person or by proxy of the stockholders of
one-third of the shares capital stock of the Corporation issued and outstanding
and entitled to vote thereat shall constitute a quorum for the transaction of
business at a stockholders' meeting, except that where any provision of law or
of the Articles of Incorporation permit or require that stockholders of any
series of capital stock of the Corporation shall vote as a series, then
one-third of the aggregate number of shares of capital stock of that series
outstanding and entitled to vote shall constitute a quorum for the transaction
of business by that series.
Section 6. Adjournment of Meetings: If less than a quorum shall attend at the
time for which a meeting shall have been called, the meeting may be adjourned
from time to time by a majority vote of the stockholders present or by proxy and
entitled to vote thereat, without notice other than by announcement at the
meeting until a quorum shall attend, to a date not more than 120 days after the
original record date. Any meeting at which a quorum is present may also be
adjourned in like manner and for such time or upon such call as may be
determined by a majority vote of the
<PAGE> 3
stockholders present in person or by proxy and entitled to vote thereat. At any
adjourned meeting at which a quorum shall be present, any business may be
transacted and any corporate action may be taken that might have been transacted
at the meeting as originally called.
Section 7. Voting: Each stockholder entitled to vote at any meeting may vote
either in person or by proxy, duly appointed by instrument in writing subscribed
by such stockholder and bearing a date not more than eleven months prior to said
meeting, unless said proxy provides for a longer period. Each stockholder
entitled to vote shall at every meeting of the stockholders be entitled to one
vote for each share of stock registered in his name on the books of the
Corporation on the date fixed as a record date for the determination of its
stockholders entitled to vote, as hereinafter provided; provided, however, that
when required by the 1940 Act or the laws of the State of Maryland or when the
Board of Directors has determined that the matter affects only the interest of
one series of stock, matters may be submitted to a vote of the stockholders of
that particular series, and each stockholder thereof shall be entitled to votes
equal to the shares of stock of that series registered in his name on the books
of the Corporation. At all meetings of stockholders all matters, except as
otherwise provided by law, the Articles of Incorporation or these By-laws, shall
be determined by a majority vote of the stockholders present in person or by
proxy and entitled to vote thereat.
Section 8. Fixing of Record Date for Determining Stockholders Entitled to Vote
at Meeting: 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 9. 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,
may be required to 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 may be authorized to 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
<PAGE> 4
questions arising in connection with the right to vote, count and tabulate all
votes, ballots or consents, 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 may be required to 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 10. Consent of Stockholders in Lieu of Meeting: 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 the meeting: (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 III
DIRECTORS.
Section 1. Number and Qualifications: The number of initial directors shall be
three. The number of directors shall be changed 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
three (3) nor more than nine (9) and, except that the number of directors may be
fewer than three (3) to the extent permitted by applicable law. Any vacancy
created by an increase in directors may be filled in accordance with Section 5
of this Article III. 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 4 of this
Article III 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 2. Responsibilities: The general management of the affairs of the
Corporation shall be vested in the Board of Directors, which may delegate to
Officers, employees and to committees of two (2) or more Directors such powers
and duties as it may from time to time see fit, subject to the limitations
hereinafter set forth, and except as may otherwise be provided by law.
Section 3. Election and Term of Office: Except as otherwise provided in
<PAGE> 5
Section 5 of this Article III, Directors shall be elected by the stockholders on
a date fixed by the Board of Directors. Directors shall be elected by vote of
the holders of a majority of the shares present in person or by proxy and
entitled to vote thereon. Directors shall hold office until the election and
qualification of their successors or until their earlier death, resignation or
removal.
Section 4. Removal and Resignation of Directors. Any Director may be removed
from the Board of Directors, with or without cause, by the holders of a majority
of the shares of outstanding stock entitled to vote at any special meeting of
the stockholders called for that purpose, and the office of such Director shall
forthwith become vacant. Any Director may resign at any time. Such resignation
shall take effect at the time specified therein, and if no time be specified, at
the time of its receipt by the Chairman of the Board or if no Chairman has been
elected, by the President or by the Secretary. The acceptance of a resignation
shall not be necessary to make it effective, unless the resignation states
otherwise.
Section 5. Filling of Vacancies: Subject to the provisions of the 1940 Act, any
vacancies in the Board of Directors, whether arising from death, resignation,
removal or otherwise, or an increase in the number of Directors, shall be filled
by a majority of the remaining Directors, even though that majority is less than
a quorum, except that a newly created directorship may be filled only by a
majority vote of the entire Board of Directors, provided that the stockholders
removing any Director may at the same meeting fill the vacancy caused by such
removal, and provided further, 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 have been
elected by the stockholders. In the event that at any time, other than the time
preceding the first stockholders' meeting, less than a majority of the Directors
holding office at that time were so elected by the stockholders, a meeting of
the stockholders shall be held promptly and in any event within 60 days for the
purpose of electing directors to fill any vacancies in the Board of Directors
unless the Securities and Exchange Commission shall by order extend such period.
Any person elected to fill a vacancy shall hold office, subject to the right of
removal as hereinbefore provided, until the election and qualification of his
successor.
Section 6. Regular Meetings: The Board of Directors shall hold regular meetings
for the purpose of organization and the transaction of any business, provided a
quorum is present. Regular meetings may be held at such times as may be
determined from time to time by resolution of the Board of Directors.
<PAGE> 6
Section 7. Special Meetings: Special meetings of the Board of Directors
may be called at any time by two (2) or more Directors, the Chairman of
the Board of Directors, if any, or by the President.
Section 8. Notice and Place of Meetings: Regular meetings of the Board of
Directors may be held without notice at such time and place as shall be
designated by resolution of the Board of Directors. Notice shall be required,
however, for special meetings. Each notice shall state the time and place of the
meeting and shall be delivered to each Director at his residence or usual place
of business either by first-class mail, postage prepaid, at least three (3) days
before the day on which the meeting is to be held, or personally or by telephone
or other standard form of telecommunications at least 24 hours prior to the time
at which the meeting is to be held. Notice of a meeting need not be given to any
Director who submits a signed waiver of notice before or after the meeting, nor
to any Director who attends the meeting without protesting the lack of notice
prior thereto or at its commencement.
Section 9. Business Transacted at Meetings: Any business may be transacted and
any corporate action may be taken at any regular or special meeting of the Board
of Directors at which a quorum shall be present, whether such business or
proposed action be stated in the notice of such meeting or not, unless special
notice of such business or proposed action shall be required by law.
Section 10. Quorum: A one-third of the entire Board of Directors, but not less
than two Directors, shall be necessary to constitute a quorum for the
transaction of business, and the acts of a majority of the Directors present at
a meeting at which a quorum is present shall be the acts of the Board of
Directors, unless otherwise provided by law, the Articles of Incorporation or
these By-laws. If a quorum is not present at a meeting of the Board of
Directors, a majority of the Directors present may adjourn the meeting to such
time and place as they may determine without notice other than announcement at
the meeting until enough Directors to constitute a quorum shall be present. When
a quorum is once present to organize a meeting, it is not broken by the
subsequent withdrawal of any Directors.
Section 11. Action Without A Meeting: Subject to the provisions of the 1940 Act,
any action required or permitted to be taken by the Board of Directors or any
committee thereof may be taken without a meeting if all members of the Board or
any committee consent in writing to the adoption of a resolution authorizing the
action. The resolution and the written consents thereto by the members of the
Board or committee shall be filed with the minutes of the proceedings of the
Board or committee.
<PAGE> 7
Section 12. Participation By Telephone: Any one or more members of the Board or
any committee thereof may participate in a meeting of the Board or such
committee by means of a conference telephone or similar communications equipment
allowing all persons participating in the meeting to hear each other at the same
time. Participation by such means shall constitute presence in person at a
meeting.
Section 13. Compensation: The Board of Directors may establish by resolution
reasonable compensation of all Directors for services to the Corporation as
Directors, including a fee for each meeting of the Board or any committee
thereof, regular or special, attended. Directors may also be reimbursed by the
Corporation for all reasonable expenses incurred in traveling to and from the
place a Board or committee meeting is held. Nothing herein contained shall
preclude any Director from serving the Corporation in any other capacity, as an
Officer, agent or otherwise, and receiving compensation therefor.
ARTICLE IV
COMMITTEES.
Section 1. Executive Committee: The Board of Directors may designate three (3)
or more Directors to constitute an Executive Committee to hold office at the
pleasure of the Board, which Committee shall, during the intervals between
meetings of the Board of Directors, have and exercise all of the powers of the
Board of Directors in the management of the business and affairs of the
Corporation, subject only to such restrictions or limitations as the Board of
Directors may from time to time specify, or as limited by the Maryland General
Corporation Law, and shall have power to authorize the seal of the Corporation
to be affixed to all instruments which may require it. Any member of the
Executive Committee may be removed at any time, with or without cause, by a
resolution of a majority of the entire Board of Directors. Any person ceasing to
be a Director shall ipso facto cease to be a member of the Executive Committee.
Any vacancy in the Executive Committee occurring from any cause whatsoever may
be filled from among the Directors by the Board of Directors.
Section 2. Other Committees: Other committees, consisting of at least two (2)
Directors, may be appointed by the Board of Directors, which committees shall
hold office for such time and have such powers and perform such duties as may
from time to time be assigned to them by the Board of Directors or the committee
appointing them. Any member of such a committee may be removed at any time, with
or without cause, by the Board of Directors or the committee appointing such
committee. Any vacancy in a committee occurring from any cause whatsoever may be
filled by the Board of Directors or the committee appointing such committee.
<PAGE> 8
Section 3. Resignation: Any member of a committee may resign at any time. Such
resignation shall be made in writing and shall take effect at the time specified
therein, or, if no time be specified, at the time of its receipt by the Chairman
of the Board, if any, the President or the Secretary. The acceptance of a
resignation shall not be necessary to make it effective unless so specified
therein.
Section 4. Quorum: A majority of the members of a committee shall constitute a
quorum. The act of a majority of the members of a committee present at any
meeting at which a quorum is present shall be the act of such committee. The
members of a committee shall act only as a committee, and the individual members
thereof shall have no powers as such.
Section 5. Record of Proceedings: Each committee shall keep a record of its acts
and proceedings, and shall report the same to the Board of Directors when and as
required by the Board of Directors.
Section 6. Organization, Meetings, Notices: A committee may hold its meetings at
the principal office of the Corporation, or at any other place upon which a
majority of the committee may at any time agree. Each committee may make such
rules as it may deem expedient for the regulation and carrying on of its
meetings and proceedings. Unless otherwise ordered by the Executive Committee,
any notice of a meeting of such Committee may be given by the Secretary or by
the chairman of the Committee and shall be sufficiently given if mailed to each
member at his residence or usual place of business at least three (3) days
before the day on which the meeting is to be held, or if sent to him at such
place by telegraph or cable, or delivered personally or by telephone not later
than 24 hours prior to the time at which the meeting is to be held.
Section 7. Compensation: The members of any committee shall be entitled
to such compensation as may be established by resolution of the Board of
Directors.
ARTICLE V
OFFICERS.
Section 1. Number: The Officers of the Corporation shall be a President, a
Secretary and a Treasurer and such Vice Presidents and other Officers as may be
appointed in accordance with the provisions of Section 3 of this Article V. The
Board of Directors, in its discretion, may also elect a Chairman of the Board of
Directors.
Section 2. Election, Term of Office and Qualifications: The Officers, shall be
chosen and shall serve at the pleasure of the Board of Directors. Each
<PAGE> 9
such Officer shall, except as herein otherwise provided, hold office until the
selection and qualification of his successor. 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 in more than one (1) capacity execute, acknowledge or verify
any instrument required by law to be executed, acknowledged or verified by more
than one officer.
Section 3. Other Officers: Other Officers, including, without limitation, one or
more Vice Presidents, Assistant Secretaries and Assistant Treasurers, may from
time to time be appointed by the Board of Directors, which other Officers shall
have such powers and perform such duties as may be assigned to them by the Board
of Directors or the Officer or committee appointing them. All such Officers
shall be corporate officers of the Corporation with the power to bind the
Corporation by acts within the scope of their authority.
Section 4. Removal of Officers: Any Officer of the Corporation may be removed
from office whenever in the Board of Directors' judgment the best interest of
the Corporation will be served thereby, by a vote of a majority of the Board of
Directors. Removal shall be without prejudice to the person's contract rights,
if any, but the appointment of such person as an Officer shall not of itself
create contract rights.
Section 5. Resignation: 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, if any, the President or the Secretary. Such resignation shall
take effect at the time specified therein, and if no time be specified,
immediately upon its receipt. The acceptance of a resignation shall not be
necessary in order to make it effective, unless so specified therein.
Section 6. Filling of Vacancies: A vacancy in any office shall be filled by
the Board of Directors.
Section 7. Compensation: The compensation of the Officers shall be fixed
by the Board of Directors, or by any committee upon whom such power
may be conferred by the Board of Directors.
Section 8. Bonds or Other Security: If required by the Board of Directors, 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 of Directors may require.
Section 9. Chairman of the Board of Directors: The Chairman of the Board of
Directors, if one is elected, shall be a Director and shall preside at all
<PAGE> 10
meetings of the Board of Directors and of the stockholders at which he shall be
present. He shall have power to call special meetings of the stockholders or of
the Board of Directors or of the Executive Committee at any time and shall have
such power and perform such other duties as may from time to time be assigned to
him by the Board of Directors.
Section 10. President: The President shall have responsibility for the general
direction of the business affairs and property of the Corporation, and of its
several Officers, and shall have and exercise all such powers and discharge such
duties as usually pertain to the office of President and Chief Executive
Officer. He shall have responsibility for the day-to-day affairs of the
Corporation, subject to the control of the Board of Directors. He shall perform
such duties as may be assigned to him from time to time by the Board of
Directors and shall, in the absence of the Chairman of the Board, perform and
carry out the functions of the Chairman of the Board.
Section 11. Treasurer: The Treasurer shall be the Chief Financial Officer and
Chief Accounting Officer of the Corporation. 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, the Chairman of the Board or the President.
Section 12. Secretory: 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;
(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 any 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
<PAGE> 11
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, the Chairman of the Board or the President.
Section 13. 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 VI
CAPITAL STOCK.
Section 1. Issue of Certificates of Stock: Share certificates shall not be
issued unless requested in writing by a shareholder. If properly requested,
certificates of capital stock shall be in such form or forms as shall be
approved by the Board of Directors, representing the number of shares of the
particular series of stock of the Corporation owned by him; provided, however,
that certificates for fractional shares will not be delivered in any case. They
shall be numbered in the order of their issue, and shall be signed by or in the
name of the Corporation by the Chairman of the Board of Directors, the President
or any Vice President, and by the Secretary or the Treasurer or any Assistant
Secretary or Assistant Treasurer, and sealed with the seal of the Corporation.
Any or all of the signatures or the seal on the certificates may be facsimiles.
In case any Officer or Officers who shall have signed any such certificate or
certificates shall cease to be such Officer or Officers of the Corporation,
whether because of death, resignation or otherwise, before such certificate or
certificates shall have been delivered by the Corporation, such certificate or
certificates may nevertheless be adopted by the Corporation and be issued and
delivered as though the person or persons who signed such certificate or
certificates have not ceased to be such Officer or Officers of the Corporation,
Section 2. Registration and Transfer of Shares: The name of each person owning a
share of the capital stock of the Corporation shall be entered on the books of
the Corporation together with the number of shares held by him, the numbers of
the certificates covering such shares and the dates of issue of such
certificates. The shares of a particular series of stock of the Corporation
shall be transferable on the books of the Corporation by the
<PAGE> 12
holders thereof in person, or by their duly authorized attorneys or legal
representatives, on surrender and cancellation of certificates for a like number
of shares of the same series, accompanied by an assignment of power of transfer
endorsed thereon or attached thereto, duly executed, and with such proof of the
authenticity of the signature as the Corporation or its agents may reasonably
require. A record shall be made of each transfer. The Board of Directors may
make any further rules and regulations, not inconsistent with these By-Laws, as
it may deem expedient concerning the transfer and registration of certificates
for stock. 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 3. Lost, Destroyed and Mutilated Certificates: The holder of any stock
of the Corporation shall immediately notify the Corporation of any loss, theft,
destruction or mutilation of the certificates therefor. The Corporation may
issue a new certificate of stock in the place of any certificate theretofore
issued by it and alleged to have been lost, stolen or destroyed. The Board of
Directors may, in its discretion, require the owner of the lost, stolen or
destroyed certificate, or his legal representatives, to give the Corporation a
bond, in such sum not exceeding double the value of the stock and with such
surety or sureties as they may require, to indemnify it against any claim that
may be made against it by reason of the issue of such new certificate and
against all other liability in the premises, or may remit such owner to such
remedy or remedies as he may have under the laws of the State of Maryland.
ARTICLE VII
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 (the "1933 Act"), and the 1940 Act, as those
<PAGE> 13
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
Corporation claiming indemnification within the scope of this Article VII 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 1933 Act and the 1940 Act, 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 1940 Act 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 1933 Act and the 1940
Act, as those statutes are now or hereafter in force, whether the standards
required by this Article VII 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)
<PAGE> 14
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 VII to the extent permissible under the
Maryland General Corporation Law, the 1933 Act and the 1940 Act, 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 VII 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 inure 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, whether or not
the Corporation would have the power to indemnify him under this Article VII or
applicable law.
ARTICLE VIII
SEAL.
Section 1. 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 IX
<PAGE> 15
MISCELLANEOUS PROVISIONS.
Section 1. Notices: Except as otherwise expressly provided, any notice required
by these By-laws to be given shall be sufficient if given by depositing the same
in a post office or letter box in a sealed wrapper with first class postage
prepaid thereon and addressed to the person entitled thereto at his address, as
the same appears upon the books of the Corporation, or by telegraphing or
cabling the same to such person at such address; and such notice shall be deemed
to be given at the time it is mailed, telegraphed or cabled.
Section 2. Waiver of Notice: Any stockholder or Director may at any time, by
writing or by telegraph or by cable, waive any notice required to be given under
these By-laws, and if any stockholder or Director shall be present at any
meeting his presence shall constitute a waiver of such notice.
Section 3. Contracts, Checks, Drafts: The Board of Directors, except as may
otherwise be required by law, may authorize any Officer or Officers, agent or
agents, in the name of and on behalf of the Corporation to enter into any
contract or execute or deliver any instrument. All checks, drafts or other
orders for the payment of money, notes or other evidences of indebtedness issued
in the name of the Corporation, shall be signed by such Officer or Officers,
agent or agents of the Corporation, and in such manner, as shall be designated
from time to time by resolution of the Board of Directors.
Section 4. Deposits: All funds of the Corporation shall be deposited from time
to time to the credit of the Corporation in such bank or banks, trust companies
or other depositaries as the Board of Directors may select, and, for the purpose
of such deposit, checks, drafts, warrants and other orders for the payment of
money which are payable to the order of the Corporation, may be endorsed for
deposit, assigned and delivered by any Officer of the Corporation, or by such
agents of the Corporation as the Board of Directors, the Chairman of the Board,
if any, or the President may authorize for that purpose.
Section 5. Voting Stock of Other Corporations: Except as otherwise ordered by
the Board of Directors or the Executive Committee, the Chairman of the Board, if
any, or the President shall have full power and authority on behalf of the
Corporation to attend and to act and to vote at any meeting of the stockholders
of any corporation of which the Corporation is a stockholder and to execute a
proxy to any other person to represent the Corporation at any such meeting, and
at any such meeting the Chairman of the Board, if any, or the President or the
holder of any such proxy, as the case may be, shall possess and may exercise any
and all rights
<PAGE> 16
and powers incident to ownership of such stock and which, as owner thereof, the
Corporation might have possessed and exercised if present. The Board of
Directors or the Executive Committee may from time to time confer like powers
upon any other person or persons.
ARTICLE X
AMENDMENTS.
These By-laws may be amended or repealed by the Board of Directors at any
regular or special meeting of the Board of Directors, subject to the
requirements of the 1940 Act.
Dated: November 12, 1987
<PAGE> 1
EXHIBIT 2(ii)
AMENDMENT TO THE BY-LAWS OF
COWEN FUNDS, INC.
DATED FEBRUARY 8, 1988
RESOLVED, that Article I, Section 2 of the By-Laws of he fund be amended to
read as follows:
Section 2. Special Meetings: Special meetings of the stockholders for any
purpose may be called at any time by a majority of the Board of Directors, the
Chairman of the Board or by the President, and shall be called by the Secretary
at the request in writing of the holders of shares entitled to vote at least 10%
of all the shares entitled to be voted at such meeting, provided that (a) such
request shall state the purposes of such meeting and the matters proposed to be
acted on and (b) the stockholders requesting such meeting shall have paid to the
Corporation the reasonably estimated cost of preparing and making the notice
thereof, which the Secretary shall determine and specify to such stockholders.
Notwithstanding the foregoing, unless requested by the holders of shares
entitled to vote a majority of all shares entitled to be voted at such meetings
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 upon at any meeting of the stockholders held during the preceding twelve
(12) months. Special meetings shall be held at such place or places within or
without the State of Maryland as shall from time to time be designated by the
Board of Directors and stated in the notice of such meeting. At a special
meeting no business shall be transacted and no corporation action shall be taken
other than that stated in the notice of the meeting.
<PAGE> 1
EXHIBIT 2(iii)
CERTIFICATE OF AMENDMENT OF
BY-LAWS OF
COWEN FUNDS, INC.
The undersigned, Faith Colish, hereby certifies as follows.
1. I am Secretary of Cowen Funds, Inc. (the "corporation"), a corporation
organized under the Laws of the State of Maryland.
2. Effective December 15, 1992, ARTICLE V, Section 1. Of the By-Laws of the
Corporation was amended to read in its entirety as follows:
"Section 1. Number: The officers of the Corporation shall be a Chairman, a
President, a Secretary and a Treasurer and such Vice Presidents and other
Officers as may be appointed in accordance with the provisions of Section 3 of
this Article V."
3. Effective December 15, 1992, ARTICLE V, Section 9. of the By-Laws of the
Corporation was amended to read in its entirely as follows:
"Section 9. Chairman: The Chairman shall be the Chief Executive Officer of the
Corporation. He shall preside at all meetings of the Board of Directors and of
the stockholders at which he shall be present. He shall have power to call
special meeting of the stockholders or of the Board of Directors or of the
Executive Committee at any time. He shall have responsibility for the general
direction of the business affairs and property of the Corporation, and of its
several off Officers, and shall have and exercise all such powers and discharge
such duties as usually pertain to the office of Chief Executive Officer. He
shall have responsibility for the day-to-day affairs of the Corporation, subject
to the control of the Board of Directors. He shall have such power and perform
such other duties as may from time to time be assigned to him by the Board of
Directors and may delegate any of this powers."
4. Effective December 15, 1992, ARTICLE V, Section 10. Of the By-Laws of the
Corporation was amended to read in its entirety as follows:
"Section 10. President: The President shall be the Chief Operating Officer of
the corporation and shall have such duties as may from time to time be assigned
to him by the Chairman or the Board of Directors. In the absence of the Chairman
he shall perform and carry out the functions of the Chairman."
IN WITNESS WHEREOF, I have executed this Certificate as this 4th day of January,
1993.
<PAGE> 2
/s/ Faith Colish, Secretary, Cowen Funds, Inc.
<PAGE> 1
EXHIBIT 5(i)
INVESTMENT MANAGEMENT AGREEMENT
COWEN OPPORTUNITY FUND
A SERIES OF COWEN FUNDS, INC.
May 9, 1994
Cowen Asset Management
Cowen & Company
Financial Square
New York, New York 10005-3597
Dear Sirs:
Cowen Funds, Inc. (the "Fund"), a corporation organized under the laws of the
State of Maryland, herewith confirms its agreement with Cowen Asset Management,
a division of Cowen & Company ("Cowen"), as follows:
1. Investment Description: Appointment
The Fund desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the limitations specified in its
Articles of Incorporation, as amended, and in its Prospectuses and Statements of
Additional Information as from time to time in effect, and in such manner and to
such extent as may from time to time be approved by the Board of Directors of
the Fund. Copies of the Fund's Prospectuses, Statements of Additional
Information and Articles of Incorporation, as amended, have been or will be
submitted to Cowen. The Fund desires to employ and hereby appoints Cowen to act
as investment manager to its Cowen Opportunity Fund (the "Portfolio"). Cowen
accepts the appointment and agrees to furnish the services set forth below for
the compensation set forth below.
2. Services as Investment Manager
Subject to the supervision and direction of the Board of Directors of the Fund,
Cowen will (a) act in strict conformity with the Fund's Articles of
Incorporation and by-laws, the Investment Company Act of 1940 (the "Act") and
the Investment Advisers Act of 1940, as the same may from time to time be
amended, (b) manage the Portfolio in accordance with the Portfolio's investment
objective and policies as stated in the Portfolio's Prospectus and Statement of
Additional Information as from time to time in effect, (c) make general
investment decisions for the Portfolio including decisions concerning (i) the
specific types of securities to be held by the Portfolio and the proportion of
the Portfolio's assets that should be allocated to such investments during
particular market cycles and (ii) the
<PAGE> 2
specific issuers whose securities will be purchased or sold by the Portfolio,
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; stationery and office supplies;
preparation of reports to shareholders of the Portfolio; 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
Portfolio; and general assistance in all aspects of the Portfolio's operations.
In providing those services, Cowen will supervise the Portfolio's investments
generally and conduct a continual program of evaluation of the Portfolio's
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 paid by Cowen and that no
obligation may be incurred on the Portfolio'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 Provided to the Fund: Books and Records
(a) Cowen will keep the Fund informed of developments materially affecting the
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 Act, 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 could otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of Cowen's reckless disregard of
<PAGE> 3
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 .90 of 1.00% of the Portfolio's
average daily net assets. The fee for the period from the date the Portfolio
commences investment operations to the end of the month during which the
Portfolio commences investment operations shall be prorated according to the
proportion that such period bears to the full monthly period. Upon any
termination of this Agreement before the end of a month, the fee for such part
of that month shall be prorated according to the proportion that such period
bears to the full monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of determining fees payable to
Cowen, the value of the Portfolio's net assets shall be computed at the times
and in the manner specified in the Portfolio's Prospectus and the 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 Portfolio will bear certain other expenses to be
incurred in its operation, including: taxes, interest, brokerage fees and
commissions, if any; fees of directors of the Fund who are not officers or
employees of Cowen; Securities and Exchange Commission fees and state Blue Sky
qualification fees; management, advisory and administration fees; charges of
custodians and transfer and dividend disbursing agents; 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.
<PAGE> 4
7. Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the Portfolio (including fees
pursuant to this Agreement, but excluding interest, taxes, brokerage expenses,
an applicable portion of distribution expenses and, with the prior written
consent of the appropriate state securities commissions, extraordinary expenses)
exceed the applicable expense limitation of any state having jurisdiction over
the Fund, Cowen will reimburse the 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 Portfolio for such excess expenses
regardless of the amount of fees paid to it during such fiscal year to the
extent that the securities regulations of any state in which Fund shares are
registered and qualified for sale so require. This expense reimbursement, if
any, will be estimated, reconciled and paid on a monthly basis. From time to
time Cowen, in its sole discretion and as it deems appropriate, may assume
certain expenses of the Portfolio while retaining the ability to be reimbursed
by the Portfolio for such amounts prior to the end of the fiscal year. Cowen
will not be reimbursed for such amounts if such action would violate the
provisions of any applicable state securities laws relating to the limitation of
the Portfolio's expenses.
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 Portfolio 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 Portfolio. 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.
9. Term of Agreement
This Agreement shall become effective on the date the Portfolio is approved by
shareholders and shall continue for an initial two year term
<PAGE> 5
and thereafter shall continue automatically, provided such continuance is
specifically approved at least annually by (a) the Board of Directors of the
Fund or (b) a vote of a "majority" (as defined in the Act) of the Portfolio's
outstanding voting securities, provided that in either event the continuance is
also approved by a majority of the Board of Directors who are not "interested
persons" (as defined in that Act) of any party to this Agreement, by vote cast
in person at a meeting called for the purpose of voting on such approval. This
Agreement is terminable, without penalty, on 60 days' written notice, by the
Board of Directors of the Fund or by vote of holders of a majority of the
Portfolio'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
the Act and the Rules thereunder).
10. Amendment of this Agreement
No provision of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought, and no
material amendment of this Agreement shall be effective until approved by vote
of the holders of a majority of the outstanding voting securities of the
Portfolio.
11. Miscellaneous
The captions in this Agreement are included for convenience of reference only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. If any provision of this Agreement shall be held
or made invalid by court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be invalidated or rendered unenforceable thereby. This
Agreement shall inure to the benefit of the parties hereto and their respective
successors and shall be governed by New York law without giving effect to the
conflict of law provisions thereof.
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 FUNDS, INC.
By: /s/ Creighton H. Peet, Vice President
Accepted and Agreed:
<PAGE> 6
COWEN ASSET MANAGEMENT,
A DIVISION OF COWEN & COMPANY
By: /s/ David R. Sarns, President
<PAGE> 1
EXHIBIT 5(ii)
INVESTMENT MANAGEMENT AGREEMENT COWEN INTERMEDIATE FIXED INCOME FUND A SERIES OF
COWEN FUNDS, INC.
July 11, 1994
Cowen Asset Management
Cowen & Company
Financial Square
New York, New York 10005-3597
Dear Sirs:
Cowen Funds, Inc. (the "Fund"), a corporation organized under the laws of the
State of Maryland, herewith confirms its agreement with Cowen Asset Management,
a division of Cowen & Company ("Cowen"), as follows:
1. Investment Description: Appointment
The Fund desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the limitations specified in its
Articles of Incorporation, as amended, and in its Prospectuses and Statements of
Additional Information as from time to time in effect, and in such manner and to
such extent as may from time to time be approved by the Board of Directors of
the Fund. Copies of the Fund's Prospectuses, Statements of Additional
Information and Articles of Incorporation, as amended, have been or will be
submitted to Cowen. The Fund desires to employ and hereby appoints Cowen to act
as investment manager to its Cowen Opportunity Fund (the "Portfolio"). Cowen
accepts the appointment and agrees to furnish the services set forth below for
the compensation set forth below.
2. Services as Investment Manager
Subject to the supervision and direction of the Board of Directors of the Fund,
Cowen will (a) act in strict conformity with the Fund's Articles of
Incorporation and by-laws, the Investment Company Act of 1940 (the "Act") and
the Investment Advisers Act of 1940, as the same may from time to time be
amended, (b) manage the Portfolio in accordance with the Portfolio's investment
objective and policies as stated in the Portfolio's Prospectus and Statement of
Additional Information as from time to time in effect, (c) make general
investment decisions for the Portfolio including decisions concerning (i) the
specific types of securities to be held by the Portfolio and the proportion of
the Portfolio's assets that should be allocated to such investments during
particular market cycles and (ii) the
<PAGE> 2
specific issuers whose securities will be purchased or sold by the Portfolio,
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; stationery and office supplies;
preparation of reports to shareholders of the Portfolio; 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
Portfolio; and general assistance in all aspects of the Portfolio's operations.
In providing those services, Cowen will supervise the Portfolio's investments
generally and conduct a continual program of evaluation of the Portfolio's
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 paid by Cowen and that no
obligation may be incurred on the Portfolio'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 Provided to the Fund: Books and Records
(a) Cowen will keep the Fund informed of developments materially affecting the
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 Act, 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 could otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of Cowen's reckless disregard of
<PAGE> 3
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 .90 of 1.00% of the Portfolio's
average daily net assets. The fee for the period from the date the Portfolio
commences investment operations to the end of the month during which the
Portfolio commences investment operations shall be prorated according to the
proportion that such period bears to the full monthly period. Upon any
termination of this Agreement before the end of a month, the fee for such part
of that month shall be prorated according to the proportion that such period
bears to the full monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of determining fees payable to
Cowen, the value of the Portfolio's net assets shall be computed at the times
and in the manner specified in the Portfolio's Prospectus and the 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 Portfolio will bear certain other expenses to be
incurred in its operation, including: taxes, interest, brokerage fees and
commissions, if any; fees of directors of the Fund who are not officers or
employees of Cowen; Securities and Exchange Commission fees and state Blue Sky
qualification fees; management, advisory and administration fees; charges of
custodians and transfer and dividend disbursing agents; 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.
<PAGE> 4
7. Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the Portfolio (including fees
pursuant to this Agreement, but excluding interest, taxes, brokerage expenses,
an applicable portion of distribution expenses and, with the prior written
consent of the appropriate state securities commissions, extraordinary expenses)
exceed the applicable expense limitation of any state having jurisdiction over
the Fund, Cowen will reimburse the 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 Portfolio for such excess expenses
regardless of the amount of fees paid to it during such fiscal year to the
extent that the securities regulations of any state in which Fund shares are
registered and qualified for sale so require. This expense reimbursement, if
any, will be estimated, reconciled and paid on a monthly basis. From time to
time Cowen, in its sole discretion and as it deems appropriate, may assume
certain expenses of the Portfolio while retaining the ability to be reimbursed
by the Portfolio for such amounts prior to the end of the fiscal year. Cowen
will not be reimbursed for such amounts if such action would violate the
provisions of any applicable state securities laws relating to the limitation of
the Portfolio's expenses.
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 Portfolio 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 Portfolio. 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.
9. Term of Agreement
This Agreement shall become effective on the date the Portfolio is approved by
shareholders and shall continue for an initial two year term
<PAGE> 5
and thereafter shall continue automatically, provided such continuance is
specifically approved at least annually by (a) the Board of Directors of the
Fund or (b) a vote of a "majority" (as defined in the Act) of the Portfolio's
outstanding voting securities, provided that in either event the continuance is
also approved by a majority of the Board of Directors who are not "interested
persons" (as defined in that Act) of any party to this Agreement, by vote cast
in person at a meeting called for the purpose of voting on such approval. This
Agreement is terminable, without penalty, on 60 days' written notice, by the
Board of Directors of the Fund or by vote of holders of a majority of the
Portfolio'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
the Act and the Rules thereunder).
10. Amendment of this Agreement
No provision of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought, and no
material amendment of this Agreement shall be effective until approved by vote
of the holders of a majority of the outstanding voting securities of the
Portfolio.
11. Miscellaneous
The captions in this Agreement are included for convenience of reference only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. If any provision of this Agreement shall be held
or made invalid by court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be invalidated or rendered unenforceable thereby. This
Agreement shall inure to the benefit of the parties hereto and their respective
successors and shall be governed by New York law without giving effect to the
conflict of law provisions thereof.
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 FUNDS, INC.
By: /s/ Creighton H. Peet, Vice President
Accepted and Agreed:
<PAGE> 6
COWEN ASSET MANAGEMENT,
A DIVISION OF COWEN & COMPANY
By: /s/ David R. Sarns, President
<PAGE> 1
EXHIBIT 5(iii)
INVESTMENT MANAGEMENT AGREEMENT
COWEN GOVERNMENT SECURITIES FUND
A SERIES OF COWEN FUNDS, INC.
July 11, 1994
Cowen Asset Management
Cowen & Company
Financial Square
New York, New York 10005-3597
Dear Sirs:
Cowen Funds, Inc. (the "Fund"), a corporation organized under the laws of the
State of Maryland, herewith confirms its agreement with Cowen Asset Management,
a division of Cowen & Company ("Cowen"), as follows:
1. Investment Description: Appointment
The Fund desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the limitations specified in its
Articles of Incorporation, as amended, and in its Prospectuses and Statements of
Additional Information as from time to time in effect, and in such manner and to
such extent as may from time to time be approved by the Board of Directors of
the Fund. Copies of the Fund's Prospectuses, Statements of Additional
Information and Articles of Incorporation, as amended, have been or will be
submitted to Cowen. The Fund desires to employ and hereby appoints Cowen to act
as investment manager to its Cowen Opportunity Fund (the "Portfolio"). Cowen
accepts the appointment and agrees to furnish the services set forth below for
the compensation set forth below.
2. Services as Investment Manager
Subject to the supervision and direction of the Board of Directors of the Fund,
Cowen will (a) act in strict conformity with the Fund's Articles of
Incorporation and by-laws, the Investment Company Act of 1940 (the "Act") and
the Investment Advisers Act of 1940, as the same may from time to time be
amended, (b) manage the Portfolio in accordance with the Portfolio's investment
objective and policies as stated in the Portfolio's Prospectus and Statement of
Additional Information as from time to time in effect, (c) make general
investment decisions for the Portfolio including decisions concerning (i) the
specific types of securities to be held by the Portfolio and the proportion of
the Portfolio's assets that should be allocated to such investments during
particular market cycles and (ii) the
<PAGE> 2
specific issuers whose securities will be purchased or sold by the Portfolio,
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; stationery and office supplies;
preparation of reports to shareholders of the Portfolio; 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
Portfolio; and general assistance in all aspects of the Portfolio's operations.
In providing those services, Cowen will supervise the Portfolio's investments
generally and conduct a continual program of evaluation of the Portfolio's
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 paid by Cowen and that no
obligation may be incurred on the Portfolio'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 Provided to the Fund: Books and Records
(a) Cowen will keep the Fund informed of developments materially affecting the
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 Act, 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 could otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of Cowen's reckless disregard of
<PAGE> 3
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 .90 of 1.00% of the Portfolio's
average daily net assets. The fee for the period from the date the Portfolio
commences investment operations to the end of the month during which the
Portfolio commences investment operations shall be prorated according to the
proportion that such period bears to the full monthly period. Upon any
termination of this Agreement before the end of a month, the fee for such part
of that month shall be prorated according to the proportion that such period
bears to the full monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of determining fees payable to
Cowen, the value of the Portfolio's net assets shall be computed at the times
and in the manner specified in the Portfolio's Prospectus and the 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 Portfolio will bear certain other expenses to be
incurred in its operation, including: taxes, interest, brokerage fees and
commissions, if any; fees of directors of the Fund who are not officers or
employees of Cowen; Securities and Exchange Commission fees and state Blue Sky
qualification fees; management, advisory and administration fees; charges of
custodians and transfer and dividend disbursing agents; 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.
<PAGE> 4
7. Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the Portfolio (including fees
pursuant to this Agreement, but excluding interest, taxes, brokerage expenses,
an applicable portion of distribution expenses and, with the prior written
consent of the appropriate state securities commissions, extraordinary expenses)
exceed the applicable expense limitation of any state having jurisdiction over
the Fund, Cowen will reimburse the 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 Portfolio for such excess expenses
regardless of the amount of fees paid to it during such fiscal year to the
extent that the securities regulations of any state in which Fund shares are
registered and qualified for sale so require. This expense reimbursement, if
any, will be estimated, reconciled and paid on a monthly basis. From time to
time Cowen, in its sole discretion and as it deems appropriate, may assume
certain expenses of the Portfolio while retaining the ability to be reimbursed
by the Portfolio for such amounts prior to the end of the fiscal year. Cowen
will not be reimbursed for such amounts if such action would violate the of the
Portfolio's expenses.
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 Portfolio 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 Portfolio. 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.
9. Term of Agreement
This Agreement shall become effective on the date the Portfolio is approved by
shareholders and shall continue for an initial two year term and thereafter
shall continue automatically, provided such continuance is
<PAGE> 5
specifically approved at least annually by (a) the Board of Directors of the
Fund or (b) a vote of a "majority" (as defined in the Act) of the Portfolio's
outstanding voting securities, provided that in either event the continuance is
also approved by a majority of the Board of Directors who are not "interested
persons" (as defined in that Act) of any party to this Agreement, by vote cast
in person at a meeting called for the purpose of voting on such approval. This
Agreement is terminable, without penalty, on 60 days' written notice, by the
Board of Directors of the Fund or by vote of holders of a majority of the
Portfolio'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
the Act and the Rules thereunder).
10. Amendment of this Agreement
No provision of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought, and no
material amendment of this Agreement shall be effective until approved by vote
of the holders of a majority of the outstanding voting securities of the
Portfolio.
11. Miscellaneous
The captions in this Agreement are included for convenience of reference only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. If any provision of this Agreement shall be held
or made invalid by court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be invalidated or rendered unenforceable thereby. This
Agreement shall inure to the benefit of the parties hereto and their respective
successors and shall be governed by New York law without giving effect to the
conflict of law provisions thereof.
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 FUNDS, INC.
By: /s/ Creighton H. Peet, Vice President
Accepted and Agreed:
COWEN ASSET MANAGEMENT,
<PAGE> 6
A DIVISION OF COWEN & COMPANY
By: /s/ David R. Sarns, President
<PAGE> 1
EXHIBIT 6
DISTRIBUTION AGREEMENT
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 Funds, 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 each of the series 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 contained in the Registration Statement will not be
true and correct when such becomes effective; and that the Registration
Statement when such becomes effective will include an untrue
<PAGE> 3
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 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
<PAGE> 4
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
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
<PAGE> 5
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
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
<PAGE> 6
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 to any series of the Fund, at such
time as that series commences sales of its shares 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 is term inable, 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
<PAGE> 7
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 FUNDS, INC.
By: /s/ Lawrence Leibowitz, Vice President
Accepted and Agreed:
COWEN & COMPANY
By: /s/ Creighton H. Peet, Authorized Officer
<PAGE> 1
EXHIBIT 8
CUSTODY AGREEMENT
THIS AGREEMENT made the 9th day of February, 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 FUNDS, 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 or intends to issue one or more series of its
common stock, with the proceeds of the sale of each series of stock being
allocated to a specific investment program, hereinafter referred to as a
"Portfolio"; and
WHEREAS, Fund desires to appoint Investors Fiduciary Trust Company as 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 which are to be allocated to the
account of the applicable Portfolio;
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.
<PAGE> 2
The Fund will from time to time deliver to the Custodian information with
respect to the establishment of one or more Portfolios.
3. DUTIES AND RESPONSIBILITIES OF CUSTODIAN
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, which shall be segregated in separate accounts
designated for each of the Portfolios. 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 and designating the Portfolio in which they
are held. The Custodian is responsible for the securities and monies of Fund
only until
<PAGE> 3
they have been transmitted to and 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 indirectly through a subcustodian in the
Depositary Trust Company or Treasury/Federal Reserve Book 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:
<PAGE> 4
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;
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
8. The name of the Portfolio for which the purchase was made.
In accordance with such instructions, Custodian will pay for out of monies held
for the account of the appropriate Portfolio, 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 appropriate Portfolio except that
Custodian may in its sole discretion advance funds to a Portfolio which may
result in an overdraft because the monies held by the Custodian in the account
of the Portfolio 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 to whom
the sale was made.
9. The name of the Portfolio for which the securities have been sold; and
In accordance with such instructions, Custodian will deliver or cause to be
<PAGE> 5
delivered the securities thus designated as sold for the account of the
Portfolio 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 the name of the Portfolio for which such transaction was
effected and 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.
3. Security Index Future Contracts
<PAGE> 6
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.
2. Upon receipt of instructions, Custodian will release securities held in
custody to the borrower designated in such instructions; provided, however,
<PAGE> 7
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 each Portfolio shall be deposited in one or more said
accounts which have been identified as being account(s) to hold assets allocated
to such Portfolio 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 account of that Portfolio. 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 appropriate Portfolio 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 collection of bond and
note coupons; and
<PAGE> 8
3. Take such other action as may be necessary or proper in connection
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 Portfolio
on the last trade date prior to the date of expiration of such rights.
M. Payment of Dividends and other Distributions
On the declaration of any dividend or other distribution on the shares of any
class of Capital Stock of Fund ("Portfolio 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.
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
applicable Portfolio, insofar as the same shall be available for such 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
applicable Portfolio Shares issued and outstanding on the record date
established by such Resolution.
N. Shares of Fund Purchased by Fund
<PAGE> 9
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 applicable Portfolio 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 applicable Portfolio 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 the
Portfolio 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 state meets 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 no mince to execute and deliver or m ail or have delivered
or m ailed 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 no mince 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
five any consent, approval or waiver with 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, state meets 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
<PAGE> 10
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 Portfolio 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 each Portfolio during
said day. Custodian will, from time to time, upon request by Fund, render a
detailed statement of the securities and monies held for each Portfolio 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 de mended, 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 m ore
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 Depositary Trust 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
<PAGE> 11
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 Funds 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 applicable to each Portfolio.
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 a
Portfolio which results in an overdraft because the monies held by Custodian on
behalf of such Portfolio 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
Portfolio to IFTC upon de mend and shall bear an interest rate determined by
Custodian from the date advanced until the date of payment.
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 de mend, 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
<PAGE> 12
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 designated Portfolio monies, (provided such monies are on
hand or available) in connection with transactions for the account of such
Portfolio and to wire transfer such monies to such broker, dealer, subcustodian,
bank or other agent specified in such instructions by a 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
<PAGE> 13
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
bad 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
could 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 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
<PAGE> 14
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, neglects, 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 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 Custodians 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"). In all cases, Custodian
shall make such advances only with respect to the Portfolio designated in such
instructions. To further secure Custodian's right to repayment of the
Liabilities, Fund here with grants to Custodian a security interest in the
property of the particular Portfolio 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
<PAGE> 15
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 particular Portfolio to which such
obligation(s) relate(s). Custodian will also be entitled, notwithstanding the
provisions of Sections 5.C. or 5.D. hereof, to charge against any monies held by
it for the account of the particular Portfolio 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
with respect to such Portfolio 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
Agree meet, Fund will pay to Custodian such compensation for its reimbursable
disburse meets, 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, including a majority of the
class of such stock attributable to the Portfolio involved, vote to have the
securities, funds and other properties of any Portfolio held under this
Agreement delivered and paid over to some other person, firm or corporation
specified in the 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 as it pertains
to one or more Portfolios. Custodian will, upon termination of this Agreement
with respect to such Portfolio, deliver to the successor custodian so specified
or appointed, at Custodian's office, all securities then held for such Portfolio
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 Depositary Trust Company
or in the Treasury/Federal Reserve Book-Entry System pursuant to 31 CFR Sec.
<PAGE> 16
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 such
Portfolio 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 with respect to such Portfolio. 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 the shareholders
of the affected Portfolio, before permitting delivery of the cash and securities
owned by Fund and allocated to such Portfolio to anyone other than a successor
custodian, the question of whether such Portfolio 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 allocable to that Portfolio which is 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 Street, 14th Floor, 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 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.
<PAGE> 17
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 close of business on the
10th day of February, 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 and 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 cam between such issuer and Fund unless the Fund
directs the Custodian otherwise.
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/Richard A. Winegar, Executive Vice President
ATTEST: /s/Cheryl J. Naegler, Assistant Secretary
COHEN FUNDS, INC.
<PAGE> 18
By: /s/William R. Church, Vice President and Director
ATTEST: /s/Faith Colish, Secretary
<PAGE> 1
EXHIBIT 9
AGENCY AGREEMENT
THIS AGREEMENT made 9th day of February, 1988, by and between COWEN FUNDS, INC.
a corporation existing under the laws of the State of Maryland, having its
principal place of business at New York, New York ("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, with the proceeds of the sale of each series of stock being
allocated to a specific investment program, hereinafter referred to as a
"Portfolio"; and
WHEREAS, Fund desires to appoint IFTC as Transfer Agent and Dividend Disbursing
Agent with respect to each series of 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 Article 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
March 30, 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 series of 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
designated Portfolio for which the shares pertain.
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 in
any Portfolio 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 such Portfolio.
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 the 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
each Portfolio 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's 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 will 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 masters 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 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
inspection of its operations at reasonable times 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 Funds 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 the 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, Option 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 document must be filed with such regulatory authority.
<PAGE> 10
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 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
<PAGE> 11
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 shareholders 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
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
<PAGE> 12
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 m ail 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 are to be affixed to
the envelopes, the stamps or the cash necessary for such stamps must be
furnished by Fund.
<PAGE> 13
D. IFTC will maintain one or more deposit accounts as Agent for each Portfolio,
into which the funds for payment of dividends, distributions, redemptions or
other disbursements provided for hereunder with respect to the series of stock
to which such Portfolio is related will be deposited, and against which checks
for amounts payable from such Portfolio 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 or 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 of 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 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
<PAGE> 14
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.
B. All of 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
<PAGE> 15
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/ Richard A. Winegar, Executive Vice President
ATTEST:
/s/ Cheryl J. Naegler, Assistant Secretary
COWEN FUNDS, INC.
<PAGE> 16
By: /s/ William R. Church
Title: Vice President
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 shareholders 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:
<PAGE> 17
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.
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)
WILLKIE FARR & GALLAGHER
One Citicorp Center
153 East 53rd Street
New York, NY
10022-4669
February 16, 1988
Cowen Funds, Inc.
Financial Square
New York, New York 10005
Re: Cowen Funds, Inc.
Registration Statement on Form N-1A
(File No. 33-18505)
Dear Sirs:
We have acted as counsel for Cowen Funds, 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. 33-18505) (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 ("Common Stock").
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 enable us to render the opinion expressed below.
In our examination of material, we have assumed the genuineness of all
signatures and the conformity to original documents of all copies submitted to
us. We have relied upon statements and certificates of officers and
representatives of the Fund and others as to various questions of fact material
to our opinion. 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.
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;
<PAGE> 2
2. The 10,509,721 shares of presently issued and outstanding stock of Cowen
Opportunity Fund, and the 1,050,972 shares of presently issued and outstanding
stock of Cowen Special Value Fund, have been validly and legally issued and are
fully paid and non-assessable shares under the laws of the State of Maryland;
and
3. The balance of the shares of Common Stock of the Fund to be sold pursuant to
the Registration Statement are authorized and unissued shares and, when sold,
issued and paid for as contemplated in the Registration Statement, will have
been validly and legally issued and will be fully paid and non-assessable shares
of Common Stock of the Fund under the laws of the State of Maryland.
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(ii)
VENABLE, BAETJER AND HOWARD
ATTORNEYS AT LAW
1800 MERCANTILE BANK AND TRUST BUILDING
2 HOPKINS PLAZA
BALTIMORE, MARYLAND 21201-2978
February 16, 1988
Willkie Farr & Gallagher
One Citicorp Center
153 E. 53rd Street
New York, NY 10022-4669
Re: Cowen Funds, Inc.
Gentlemen:
We have acted as Maryland counsel for Cowen Funds, Inc., a Maryland corporation
(the "Fund"), in connection with the organization of the Fund and the issuance
of shares of two series of its Common Stock, $.001 par value per share ("Common
Stock"): Cowen Special Value Fund and Cowen Opportunity Fund.
As Maryland counsel for the Fund, we have examined its Charter, its By-Laws, the
Prospectus and Statement of Additional Information included in its Registration
Statement on Form N-1A substantially in the form in which it is to become
effective (the "Registration Statement"), and have examined and rolled upon such
corporate records of the Fund and other documents and certificates as to factual
matters as we 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 conformity with originals of all documents submitted to us
as copies.
Based on such examination. 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.
2. The 10,509,721 shares of presently issued and outstanding stock of the Cowen
Opportunity Fund, and the 1,050,972 shares of presently issued and outstanding
stock of the Cowen Special Value Fund have been validly and legally issued and
are fully paid and non-assessable shares under the laws of the State of
Maryland.
3. The balance of the shares of Common Stock of the Fund to be sold
<PAGE> 2
pursuant to the Registration Statement are authorized and unissued shares and,
when sold, issued and paid for as contemplated in the Registration Statement,
will have been validly and legally issued and will be fully paid and
non-assessable shares of Common Stock of the Fund 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 Fund
which is to be filed as an exhibit to the Registration Statement. 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 10(iii)
VENABLE, BAETJER AND HOWARD ATTORNEYS AT LAW
1800 MERCANTILE BANK AND TRUST BUILDING
2 HOPKINS PLAZA
BALTIMORE, MARYLAND 21201-2978
May 12, 1994
Cowen Funds, Inc.
Financial Square
New York, New York 10005
Re: Cowen Funds. Inc.
Ladies and Gentlemen:
We have acted as special Maryland counsel to Cowen Funds, 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 of each of Cowen
Intermediate Fixed Income Fund and Cowen Tradition Fixed Income Fund (to be
redesignated as Cowen Government Securities Fund), each a series of the Company,
(each a class of Common Stock of the Company and, 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 of each of the Cowen Intermediate
fixed Income Fund and Cowen Tradition Fixed Income Fund and redesignating Cowen
Tradition Fixed Income Fund as Cowen Government Securities Fund, in the form
approved by the Directors and stockholders of the Company. We have also examined
the prospectus with respect to the Shares included in Post-Effective Amendment
No. 14 to the Company's Registration Statement on Form N-1A, File No. 33-18505
(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 the Maryland State Department of Assessments and Taxation
("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.
<PAGE> 2
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 copies. We
have also assumed that the Articles will be filed with SDAT and will become
effective.
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 are filed with SDAT and become effective, 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 of the Cowen Intermediate fixed Income Fund and Cowen Government
Securities Fund authorized to be issued by the Company in its Charter, as
amended by the Articles, duly authorized and, when thereafter 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 Funds, Inc. in this Registration Statement (Form N-1A No.
33-18505).
ERNST & YOUNG LLP
New York, New York
March 25, 1997
<PAGE> 1
EXHIBIT 13
SUBSCRIPTION AGREEMENT
Subscription Agreement dated February 10, 1988 between Cowen Funds, Inc., a
Maryland corporation (the "Fund"), and Cowen & Company, 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,
shares of the Common Stock (the "Shares"), consisting of 10,000 Shares of Cowen
Opportunity Fund and 1,000 Shares of Cowen Special Value Fund, at a 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 FUNDS, INC.
By: /s/ Joseph M. Cohen, Chairman of the Board
COWEN & COMPANY
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 Funds. Inc., a corporation organized under the laws of the State of
Maryland (the "Company"), with respect to Cowen Opportunity 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 FUNDS, INC.
By: /s/ David R. Sarns, President
<PAGE> 1
EXHIBIT 15(ii)
SHAREHOLDER SERVICING AND DISTRIBUTION PLAN
This Shareholder Servicing and Distribution Plan (the "Plan") is adopted by
Cowen Funds. Inc., a corporation organized under the laws of the State of
Maryland (the "Company"), with respect to Cowen Intermediate Fixed Income 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 .25% 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 July
11, 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 FUNDS, INC.
By: /s/ David R. Sarns, President
<PAGE> 1
EXHIBIT 15(iii)
SHAREHOLDER SERVICING AND DISTRIBUTION PLAN
This Shareholder Servicing and Distribution Plan (the "Plan") is adopted by
Cowen Funds. Inc., a corporation organized under the laws of the State of
Maryland (the "Company"), with respect to Cowen Government Securities 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 person at a meeting called
for the purpose of voting on the Plan and the
<PAGE> 3
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 July
11, 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 FUNDS, INC.
By: /s/ David R. Sarns, President
<PAGE> 1
EXHIBIT 15(iv)
SHAREHOLDER SERVICING AGREEMENT
Cowen & Company
Financial Square
New York, New York 10005
Dear Sirs:
Cowen Funds, 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 Opportunity 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.
Section 3. Continuance.
<PAGE> 2
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.
This Agreement has been executed by the Company with respect to the
<PAGE> 3
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 FUNDS, INC.
By: /s/ Creighton H. Peet, Vice President
Accepted:
COWEN & COMPANY
By: /s/ David R. Sarns, President
<PAGE> 1
EXHIBIT 15(v)
SHAREHOLDER SERVICING AGREEMENT
Cowen & Company
Financial Square
New York, New York 10005
Dear Sirs:
Cowen Funds, Inc. (the "Company") confirms its agreement with Cowen & Company
("Cowen") implementing the terms of the Shareholder Servicing and Distribution
Plan dated as of July 11, 1994 (the "Plan") adopted by the Company with respect
to each of Class A and Class B shares (the "Classes") of Cowen Intermediate
Fixed Income 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 FUNDS, INC.
By: /s/ Creighton H. Peet, Vice President
Accepted:
COWEN & COMPANY
By: /s/ David R. Sarns, President
<PAGE> 1
EXHIBIT 15(vi)
SHAREHOLDER SERVICING AGREEMENT
Cowen & Company
Financial Square
New York, New York 10005
Dear Sirs:
Cowen Funds, Inc. (the "Company") confirms its agreement with Cowen & Company
("Cowen") implementing the terms of the Shareholder Servicing and Distribution
Plan dated as of July 11, 1994 (the "Plan") adopted by the Company with respect
to each of Class A and Class B shares (the "Classes") of Cowen Government
Securities 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.
Section 3. Continuance.
<PAGE> 2
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 FUNDS, INC.
By: /s/ Creighton H. Peet, Vice President
Accepted:
COWEN & COMPANY
By: /s/ David R. Sarns, President
<PAGE> 1
EXHIBIT 15(vii)
DISTRIBUTION RELATED SERVICES AGREEMENT
Cowen & Company
Financial Square
New York, New York 10005
Dear Sirs:
Cowen Funds, 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 Opportunity 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.
Section 3. Continuance.
<PAGE> 2
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 offered to or held by the public.
<PAGE> 3
* * * * *
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 FUNDS, INC.
/s/ Creighton H. Peet, Vice President
Accepted:
COWEN &COMPANY
/s/ David R. Sarns, President
<PAGE> 1
EXHIBIT 15(viii)
DISTRIBUTION RELATED SERVICES AGREEMENT
Cowen & Company
Financial Square
New York, New York 10005
Dear Sirs:
Cowen Funds, 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 Intermediate Fixed Income
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.
Section 3. Continuance.
<PAGE> 2
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 offered to or held by the public.
<PAGE> 3
* * * * *
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 FUNDS, INC.
/s/ Creighton H. Peet, Vice President
Accepted:
COWEN &COMPANY
/s/ David R. Sarns
<PAGE> 1
EXHIBIT 15(ix)
DISTRIBUTION RELATED SERVICES AGREEMENT
Cowen & Company
Financial Square
New York, New York 10005
Dear Sirs:
Cowen Funds, 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 Government Securities 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.
Section 3. Continuance.
<PAGE> 2
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 offered to or held by the public.
<PAGE> 3
* * * * *
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 FUNDS, INC.
/s/ Creighton H. Peet, Vice President
Accepted:
COWEN &COMPANY
/s/ David R. Sarns
