Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54145

split or similar events). In addition, any shares of

the Series A Convertible Preferred Stock transferred

by WRI to any person other than WRI or its affiliates

is required to be converted into New ONEOK

Common Stock.

13The Shareholder Agreement terminates under

certain circumstances described in Article V of the

agreement.

14 ‘‘Voting Ownership Percentage’’ means the

Voting Power (as defined in the Shareholder

Agreement) represented by New ONEOK Common

Stock and shares of any other class of capital stock

of New ONEOK then entitled to vote in the election

of directors (not including Convertible Preferred

Stock) (’’Voting Securities’’) beneficially owned by

the person whose voting ownership percentage is

being determined.

15The Shareholder Agreement states that a

‘‘Regulatory Change’’ will be deemed to have

occurred upon the receipt by WRI of an opinion of

counsel (which counsel must be reasonably

acceptable to New ONEOK) to the effect that either

(1) the 1935 Act has been repealed, modified,

amended or otherwise changed or (2) WRI has

received an exemption, or, in the unqualified

opinion of WRI’s counsel, is entitled without any

regulatory approval to claim an exemption, or has

received an approval or no-action letter from the

Commission or its staff under the 1935 Act or has

registered under the 1935 Act, or any combination

of the foregoing, and as a consequence of (1) and/

or (2), WRI may fully and legally exercise such

rights under the Shareholder Agreement as take

effect in the period after the Regulatory Change has

occurred.

16 ‘‘Total Ownership Percentage’’ means the

Voting Power (as defined in the Shareholder

Agreement) which would be represented by the

Securities Beneficially Owned (as defined in the

Shareholder Agreement) by the Person whose Total

Ownership Percentage is being determined if all

shares of Convertible Preferred Stock (as Defined in

the Shareholder Agreement), or other Securities

convertible into Voting Securities (as defined in the

Shareholder Agreement), Beneficially Owned by

such Person were converted into shares of Common

Stock (or other Voting Security.

17The Shareholder Agreement defines

‘‘Maximum Ownership Percentage’’ as a Total

Ownership Percentage of 45%, less the Voting

Power (as defined under the Shareholder

Agreement) represented by all Voting Securities (as

defined in the Shareholder Agreement) transferred

by the Shareholder Group during the term of the

Shareholder Agreement, including the Voting

Power represented by any shares of Convertible

Preferred Stock which were converted into shares

of New ONEOK Common Stock contemporaneously

with such transfer pursuant to the terms of the

Shareholder Agreement.

18Among other things, the Shareholder

Agreement provides that, with respect to the

election of directors to New ONEOK’s board of

directors, WRI will vote all New ONEOK Common

Stock held by it in accordance with the

recommendation of New ONEOK’s nominating

committee. The New ONEOK nominating

committee recommends nominees to fill vacancies

on the board, establishes procedures to identify

potential nominees, recommends criteria for

membership on the board, and recommends the

successor chief executive officer when a vacancy

occurs. The New ONEOK By-laws provide that the

chief executive officer of New ONEOK must be

elected by the affirmative vote of 80% of the

directors of New ONEOK.

19Section 9(a)(2) makes it unlawful, without

approval of the Commission under Section 10, ‘‘for

any person * * * to acquire, directly or indirectly,

any security of any public utility company, if such

person is an affiliate * * * of such company and

of any other public utility or holding company, or

will by virtue of such acquisition become such an

affiliate.’’ Commission approval under Section

9(a)(2) is required because WRI (which is already

an affiliate of its subsidiary, KGE) will become an

affiliate of New ONEOK as a result of the proposed

Transactions.

of the New ONEOK Common Stock

outstanding before conversion of any of

the Series A Convertible Preferred Stock

into New ONEOK Common Stock and

up to 45% of the New ONEOK Common

Stock that would be outstanding after

conversion of all such stock. The

present shareholders of ONEOK

Common Stock will hold shares of New

ONEOK Common Stock representing at

least 90.1% of the New ONEOK

Common Stock then outstanding and

not less than 55% of the New ONEOK

Common Stock that would be

outstanding after conversion of all of the

Series A Convertible Preferred Stock to

be held by WRI.

WRI and New ONEOK will enter into

a shareholder agreement (‘‘Shareholder

Agreement’’), upon the closing of the

Transactions, which will place certain

restrictions on WRI’s actions as a New

ONEOK shareholder during the term of

the Shareholder Agreement.13 Among

other things, the Shareholder Agreement

will provide that the ‘‘Shareholder

Group’’ (defined as WRI, its affiliates,

partners and certain other persons and

groups contemplated by Section 13(d) of

the Securities Exchange Act of 1934)

will be prohibited from acquiring (1)

any Voting Securities (as defined in the

Shareholder Agreement) that would

cause the Shareholder Group to have

more than a 9.9% Voting Ownership

Percentage,14 prior to the occurrence of

a Regulatory Change (as defined in the

Shareholder Agreement),15 or (2) any

securities that would, at any time, cause

the Shareholder Group’s Total

Ownership Percentage 16 to exceed the

Maximum Ownership Percentage

specified in the Shareholder

Agreement.17 The Shareholder

Agreement gives the Shareholder Group

certain ‘‘top-up’’ and ‘‘dilutive

issuance’’ rights that enable the

Shareholder Group to ensure that the

Voting Ownership Percentage does not

fall below 9.9% and the Total

Ownership Percentage does not fall

below the Maximum Ownership

Percentage. The Shareholder Agreement

will also impose certain restrictions on

WRI’s ability to vote 18 or transfer the

securities of New ONEOK.

Applicant states that the proposed

Transactions satisfy all of the

requirements of Sections 9(a)(2) and 10

under the Act.19 In addition, WRI and

ONEOK have requested a no-action

letter from the Commission in

connection with the proposed

Transactions seeking assurances that

WRI’s ownership interest in New

ONEOK will not cause NEW ONEOK to

be deemed a ‘‘subsidiary’’ of WRI or

WRI to be deemed a ‘‘holding company’’

under the Act.

For the Commission, pursuant to delegated

authority, by the Division of Investment

Management.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–27522 Filed 10–16–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Release No.

22850; 812–10808]

Security First Trust, et al.; Notice of

Application

October 10, 1997.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

exemption under section 6(c) of the

Investment Company Act of 1940 (the

‘‘Act’’) from section 15(a) of the Act.

Summary of Application: Signet

Banking Corporation (‘‘Signet’’), parent

of Virtus Capital Management, Inc.

(‘‘Subadviser’’), has entered into an

agreement and plan of merger with First

Union Corporation (‘‘First Union’’). The

indirect change in control of the

Subadviser will result in the

assignment, and thus the termination, of

the existing subadvisory contract

between Security First Investment

Management Corporation (‘‘Adviser’’)

on behalf of Security First Trust

(‘‘Fund’’), and the Subadviser. The order

would permit the implementation,

without shareholder approval, of a new

investment subadvisory agreement for a

period of up to 120 days following the

date of the change in control of the

Subadviser (but in no event later than

April 30, 1998). The order also would

permit the Subadviser to receive all fees

earned under the new subadvisory

agreement following shareholder

approval.

Applicants: Fund, Adviser, and the

Subadviser.

Filing Dates: The application was

filed on October 7, 1997. Applicants

have agreed to file an amendment

during the notice period, the substance

of which is included in this notice.

Hearing or Notification of Hearing: An

order granting the application will be

issued unless the SEC orders a hearing.

Interested persons may request a

hearing by writing to the SEC’s

Secretary and serving applicants with a
54146 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

copy of the request, personally or by

mail. Hearing requests should be

received by the SEC by 5:30 p.m. on

November 4, 1997, and should be

accompanied by proof of service on

applicants in the form of an affidavit or,

for lawyers, a certificate of service.

Hearing requests should state the nature

of the writer’s interest, the reason for the

request, and the issues contested.

Persons who wish to be notified of a

hearing may request notification by

writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, NW., Washington, DC 20549.

Applicants, c/o Rosemary D. Van

Antwerp, Esq., Evergreen Keystone

Investment Services Inc., 200 Berkeley

Street, Boston, Massachusetts 02116.

FOR FURTHER INFORMATION CONTACT:

John K. Forst, Attorney Advisor, at (202)

942–0569, or Mary Kay Frech, Branch

Chief, at (202) 942–0564 (Office of

Investment Company Regulation,

Division of Investment Management).

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application

may be obtained for a fee at the SEC’s

Public Reference Branch, 450 Fifth

Street, NW., Washington, DC 20549 (tel.

202–942–8090).

Applicants’ Representations

1. The Fund is a Massachusetts

business trust registered under the Act

as an open-end management investment

company. The Fund currently offers two

series, the Virtus Equity Series and

Virtus U.S. Government Income Series

(the ‘‘Portfolios’’), to the public. The

Adviser and the Subadviser, a whollyowned subsidiary of Signet, are

investment advisers registered under the

Investment Advisers Act of 1940. The

Fund and the Adviser have entered into

a sub-advisory agreement for the

Portfolios.

2. On July 18, 1997, First Union

entered into an agreement and plan of

merger with Signet, under which Signet

would be merged with and into First

Union in exchange for shares of

common stock of First Union in

exchange for shares of common stock of

First Union (the ‘‘Transaction’’). As a

result of the Transaction, Signet will

become a wholly-owned subsidiary of

First Union and the Subadviser will

remain a wholly-owned subsidiary of

Signet. Applicants expect

consummation of the Transaction on

November 13, 1997.

3. Applicants request an exemption to

permit implementation, prior to

obtaining shareholder approval, of a

new investment subadvisory agreement

between the Adviser and the

Subadviser, on behalf of the Fund,

(‘‘New Agreement’’). The requested

exemption will cover an interim period

of not more than 120 days beginning on

the date the Transaction is

consummated and continuing through

the date on which the New Agreement

is approved or disapproved by the

shareholders of each Portfolio, but in no

event later than April 30, 1998 (the

‘‘Interim Period’’). Applicants state that

the New Agreement will be identical in

substance to the existing investment

subadvisory agreement (‘‘Existing

Agreement’’). The contractual rates

chargeable for subadvisory services

under the New Agreement will remain

the same as under the Existing

Agreement.

4. On October 7, 1997, the Fund’s

board of trustees held an in-person

meeting to evaluate whether the terms

of the New Agreement are in the best

interests of the Fund and its

shareholders. At the meeting, a majority

of the members of the board, including

a majority of members who are not

‘‘interested persons’’ of the Fund, as that

term is defined in section 2(a)(19) of the

Act (the ‘‘Independent Trustees’’), voted

in accordance with section 15(c) of the

Act to approve the New Agreement and

to submit the New Agreement to the

shareholders of each of the Portfolios at

meetings expected to be held in

February, 1998 (the ‘‘Meetings’’).

5. Applicants expect that proxy

materials for the Meetings will be

mailed during January 1998. Applicants

believe that the requested relief is

necessary to permit continuity of

investment management for the Fund

during the Interim Period and to prevent

disruption of the services for the Fund.

6. Applicants also request an

exemption to permit the Subadviser to

receive from the Fund, upon approval

by its shareholders, all fees earned

under the New Agreement during the

Interim Period. Applicants state that the

fees paid during the Interim Period will

be unchanged from the fees paid under

the Existing Agreement.

7. Applicants propose to enter into an

escrow arrangement with an unaffiliated

financial institution. The fees payable to

the Subadviser during the Interim

Period under the New Agreement will

be paid into an interest-bearing escrow

account maintained by the escrow

agent. The escrow agent will release the

amounts held in the escrow account

(including any interest earned): (a) To

the Adviser only upon approval of the

relevant New Agreement by the

shareholders of the Portfolios; or (b) to

the relevant Portfolio if the Interim

Period has ended and its New

Agreement has not received the

requisite shareholder approval. Before

any such release is made, the

Independent Trustees of the Fund will

be notified.

Applicants’ Legal Analysis

1. Section 15(a) of the Act provides,

in pertinent part, that it is unlawful for

any person to serve as an investment

adviser to a registered investment

company, except pursuant to a written

contract that has been approved by the

vote of a majority of the outstanding

voting securities of the investment

company. Section 15(a) further requires

the written contract to provide for its

automatic termination in the event of its

‘‘assignment.’’ Section 2(a)(4) of the Act

defines ‘‘assignment’’ to include any

direct or indirect transfer of a contract

by the assignor, or of a controlling block

of the assignor’s outstanding voting

securities by a security holder of the

assignor.

2. Applicants state that, following the

completion of the Transaction, Signet

will become a wholly-owned subsidiary

of First Union. Applicants believe,

therefore, that the Transaction will

result in an ‘‘assignment’’ of the Existing

Agreement and that the Existing

Agreement will terminate by its terms

upon consummation of the Transaction.

3. Rule 15a–4 provides, in pertinent

part, that if an investment advisory

contract with an investment company is

terminated by an assignment in which

the adviser does not directly or

indirectly receive a benefit, the adviser

may continue to serve for 120 days

under a written contract that has not

been approved by the company’s

shareholders, provided that: (a) The new

contract is approved by that company’s

board of directors (including a majority

of the non-interested directors); (b) the

compensation to be paid under the new

contract does not exceed the

compensation that would have been

paid under the contract most recently

approved by the company’s

shareholders; and (c) neither the adviser

nor any controlling person of the

adviser ‘‘directly or indirectly receives

money or other benefit’’ in connection

with the assignment. Applicants state

that because of the benefits to Signet,

the Subadviser’s parent, arising from the

Transaction, applicants may not rely on

rule 15a–4.

4. Section 6(c) provides that the SEC

may exempt any person, security, or

transaction from any provision of the

Act, if and to the extent that such

exemption is necessary or appropriate

in the public interest and consistent

with the protection of investors and the

purposes fairly intended by the policy

and provisions of the Act. Applicants
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54147

1 15 U.S.C. § 78s(b)(1).

2 17 CFR 240.19b–4.

3The PACE Quote consists of the best bid/offer

among the American, Boston, Cincinnati, Chicago,

New York, Pacific and Philadelphia Stock

Exchanges as well as the Intermarket Trading

System/Computer Assisted Execution System

(‘‘ITS/CAES’’). See PACE Rule.

believe that the requested relief meets

this standard.

5. Applicants note that the terms and

timing of the Transaction were

determined by First Union and Signet

and arose primarily out of business

considerations beyond the scope of the

Act and unrelated to the Fund and the

Subadviser, including the time needed

to obtain federal and state banking

approvals for the Transaction.

Applicants submit that it is in the best

interests of shareholders of the Fund to

avoid any interruption in services to the

Fund, to allow sufficient time for the

consideration and return of proxies, and

to hold a shareholders meeting.

6. Applicants submit that the scope

and quality of services provided to the

Fund during the Interim Period will not

be diminished. During the Interim

Period, the Subadviser would operate

under the New Agreement, which

would be substantively the same as the

Existing Agreement, except for its

effective date. Applicants submit that if

the personnel providing material

services pursuant to the New Agreement

change materially, the Subadviser will

apprise and consult with the Fund’s

board of trustees to assure that the board

(including a majority of the Independent

Trustees) is satisfied that the services

provided by the Subadviser will not be

diminished in scope or quality.

Accordingly, the Fund should receive,

during the Interim Period, the same

subadvisory services, provided in the

manner, at the same fee levels as the

Fund received before the Transaction.

7. Applicants contend that the best

interests of shareholders of the Fund

would be served if the Subadviser

receives fees for its services during the

Interim Period. Applicants state that the

fees are essential to maintaining the

subadviser’s ability to provide services

to the Fund. In addition, the fees to be

paid during the Interim Period will be

unchanged from the fees paid under the

Existing Agreements, which have been

approved by the shareholders of each

respective Portfolio.

Applicants’ Conditions

Applicants agree as conditions to the

issuance of the exemptive order

requested by the application that:

1. The New Agreement will have

substantially the same terms and

conditions as the Existing Agreement,

except for its effective date.

2. Fees earned by the Subadviser in

respect of the New Agreement during

the Interim Period will be maintained in

an interest-bearing escrow account, and

amounts in the account (including

interest earned on such paid fees) will

be paid (a) to the Subadviser in

accordance with the New Agreement,

after the requisite shareholder approvals

are obtained, or (b) to the respective

Portfolio, in the absence of shareholder

approval with respect to such Portfolio.

3. The Fund will hold a meeting of

shareholders to vote on approval of the

New Agreement on or before the 120th

day following the termination of the

Existing Agreement (but in no event

later than April 30, 1998).

4. Either First Union or the

Subadviser will bear the costs of

preparing and filing the application, and

costs relating to the solicitation of

shareholder approval of the Fund

necessitated by the Transaction.

5. The Subadviser will take all

appropriate steps so that the scope and

quality of advisory and other services

provided to the Fund during the Interim

Period will be at least equivalent, in the

judgment of the Independent Trustees,

to the scope and quality of services

previously provided. If personnel

providing material services during the

Interim Period change materially, the

Subadviser will apprise and consult

with the board to assure that the board,

including a majority of the Independent

Trustees of the Fund, are satisfied that

the services provided will not be

diminished in scope or quality.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–27594 Filed 10–16–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

Sunshine Act Meeting

‘‘FEDERAL REGISTER’’ CITATION OF

PREVIOUS ANNOUNCEMENT: [62 FR 53040,

October 10, 1997].

STATUS: Closed Meeting.

PLACE: 450 Fifth Street, N.W.,

Washington, D.C.

DATE PREVIOUSLY ANNOUNCED: October 7,

1997.

CHANGE IN THE MEETING: Time Change/

Deletions.

The closed meeting scheduled for

Tuesday, October 14, 1997, at 11:00 a.m.

was changed to Tuesday, October 14,

1997, at 2:00 p.m. and the following

items were not considered:

Institution of injunctive actions.

At times, changes in Commission

priorities require alterations in the

scheduling of meeting items. For further

information and to ascertain what, if

any, matters have been added, deleted

or postponed, please contact: The Office

of the Secretary (202) 942–7070.

Dated: October 15, 1997.

Jonathan G. Katz,

Secretary.

[FR Doc. 97–27755 Filed 10–15–97; 3:43 pm]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39225; File No. SR–Phlx–

97–32]

Self-Regulatory Organizations;

Philadelphia Stock Exchange, Inc.;

Order Granting Approval to Proposed

Rule Change Respecting the Public

Order Exposure System for PACE

Orders

I. Introduction

On June 30, 1997, the Philadelphia

Stock Exchange, Inc. (‘‘Phlx’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’) 1 and Rule 19b–4

thereunder,2 a proposed rule change to

extend the duration of its automatic

execution system order exposure time

period for eligible orders from the

current 15 seconds to 30 seconds.

The proposed rule change was

published for comment in Securities

Exchange Act Release No. 38864 (July

23, 1997), 62 FR 40882 (July 30, 1997).

No comments were received on the

proposal. This order approves the

proposed rule change.

II. Description

The operation of the Philadelphia

Stock Exchange Automatic

Communication and Execution

(‘‘PACE’’) System is governed by Phlx

Rule 229 (‘‘PACE Rule’’). The PACE

System is the Exchange’s automatic

order routing and executing system for

securities on its equity trading floor.

With respect to market orders entered

into PACE, Supplementary Material .05

to the PACE Rule provides that, in 1⁄8

point markets or greater, round-lot

market orders up to 500 shares and

partial round-lot (‘‘PRL’’) market orders

up to 599 shares (i.e., orders that

combine a round-lot with an odd-lot

order) are stopped at the PACE Quote 3