SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No.__)
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
LEXINGTON SMALLCAP FUND, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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<PAGE>
LEXINGTON SMALLCAP FUND, INC.
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
1-800-526-0056
December 20, 1999
Dear Shareholder:
At a meeting of the Board of Directors held on November 29, 1999, the
Directors unanimously approved a Plan of Liquidation and Dissolution for
the Lexington SmallCap Fund, Inc. After considering other alternatives,
they concluded that a complete liquidation was in the best interests of the
Lexington SmallCap Fund and its shareholders. The enclosed Notice and
Proxy Statement describe these matters in detail and establish a Special
Meeting of the Shareholders to obtain your approval.
The Lexington SmallCap Fund currently has net assets of approximately
$7 million. The continued operation of the Fund at this size is not
economically feasible for Lexington Management Corporation. The Board,
based on Management's recommendation, believes that the continued operation
of the Fund is not in your best interest as shareholders. In spite of our
efforts to sell shares of the Lexington SmallCap Fund, Management
concluded, and the Directors agreed, that further marketing efforts would
not increase the Fund's size sufficiently to make its continued operation
practicable.
We recommend that you approve the Plan of Liquidation and
Dissolution. Lexington Management Corporation is paying all costs
associated with implementing this Plan, except the costs of solicitation
which will be borne by the Fund. Subject to your approval, shareholders
remaining in the Lexington SmallCap Fund will receive a cash distribution
as soon as practicable after the consummation of the sale of all of the
Fund's portfolio securities and the payment of all of the Fund's known
liabilities and obligations as described in the Proxy Statement.
After reading the enclosed material, please complete, sign and return
the proxy card so that your shares will be represented. If you decide to
attend the meeting, you may revoke your proxy at any time and vote your
shares in person. Your vote is extremely important.
If you want additional information concerning this proposal, please
call us at 1-800-526-0056. We will answer your questions, discuss choices
and appropriate alternative Lexington investments.
Thank you for your understanding and your help.
Sincerely,
Robert M. DeMichele, President
<PAGE>
LEXINGTON SMALLCAP FUND, INC.
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
1-800-526-0056
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
February 11, 2000
Notice is hereby given that a Special Meeting of the Shareholders of the
Lexington SmallCap Fund, Inc. (the "Fund"), a Maryland corporation, will
be held on February 11, 2000 at 10:00 a.m. Eastern time at the offices of
the Fund, Park 80 West Plaza Two, Saddle Brook, New Jersey, for the
following purposes:
I. To approve or disapprove the liquidation of the assets and
dissolution of the Fund pursuant to the provisions of the Plan
of Liquidation and Dissolution as approved by the Fund's Board
of Directors on November 29, 1999; and
II. The transaction of such other business as may be properly
brought before the meeting.
Shareholders of record at the close of business on November 29, 1999 are
entitled to notice of, and to vote at, this meeting or any adjournment
thereof.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE SPECIAL MEETING, PLEASE FILL
IN, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE
PAID RETURN ENVELOPE ENCLOSED, SO THAT A QUORUM WILL BE PRESENT AND A
MAXIMUM NUMBER OF SHARES MAY BE VOTED. IT IS MOST IMPORTANT AND IN YOU
INTEREST FOR YOU TO SIGN YOUR PROXY CARD AND RETURN IT. THE PROXY IS
REVOCABLE AT ANY TIME PRIOR TO ITS USE.
By Order of the Board of Directors,
Lisa Curcio, Secretary
Dated: December 20, 1999
<PAGE>
LEXINGTON SMALLCAP FUND, INC.
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
1-800-526-0056
PRELIMINARY
PROXY STATEMENT
Dated: December 20, 1999
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD
February 11, 2000
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of the Lexington SmallCap Fund, Inc.
(the "Fund"), a Maryland corporation, for use at a Special Meeting of
Shareholders (the "Meeting") to be held on February 11, 2000 at 10:00 a.m.
Eastern time at the offices of the Fund, Park 80 West Plaza Two, Saddle
Brook, New Jersey, and at any adjournment thereof, and was first mailed to
shareholders on or about December 20, 1999. Even if you sign and return
the accompanying proxy, you may revoke it by giving written notice of such
revocation to the Secretary of the Fund prior to the Meeting or by
delivering a subsequently dated proxy or by attending and voting at the
Meeting in person. Management expects to solicit proxies principally by
mail, but Management or agents appointed by Management may also solicit
proxies by telephone, telegraph or personal interview. The costs of
solicitation will be borne by the Fund.
The following are the Proposals for the Meeting:
I. Shareholders will be asked to approve the liquidation of the
assets and dissolution of the Fund pursuant to the provisions
of the Plan of Liquidation and Dissolution (the "Plan") as
approved by the Fund's Board of Directors on November 29, 1999;
and
II. Shareholders will be asked to transact such other business as
may be properly brought before the meeting.
The Board of Directors has fixed the close of business on November
29, 1999 as the record date for the determination of the shareholders
entitled to notice of and to vote at the Meeting or any adjournment
thereof. As of that date, there were approximately 676,480 outstanding
shares of the Fund, each share being entitled to one vote on each matter
to come before the Meeting. As of November 18, 1999, the Directors and
executive officers of the Fund as a group beneficially owned less than 1%
of all issued and outstanding shares of the Fund. As of November 18, 1999,
the following shareholders each beneficially owned 5% or more of the Fund's
shares:
<PAGE>
Number of Percentage of
Name and Address Shares Owned Fund Outstanding
---------------- ------------ ----------------
Smith Richardson Foundation* 590,833 87.34%
60 Jessup Road
Westport, CT 06880
*Smith Richardson Foundation (the "Foundation") may be considered to
control the Fund and to be an "affiliated person" of Lexington
Management Corporation (the "Adviser"). The Adviser is a wholly-owned
subsidiary of Lexington Global Asset Managers, Inc., a Delaware
corporation. Descendants of Lundsford Richardson, Sr., their spouses,
trusts, a corporation in which they have interests and charitable
organizations established by such descendants (the "Richardson Family")
have a controlling interest in Lexington Global Asset Managers, Inc.
Two controlling shareholders of the Richardson Family are Trustees of
the Foundation. The Adviser serves as the adviser for assets of the
Foundation and intends to vote the Foundation's shares in favor of all
proposals.
The Fund's Annual Report for the year ended December 31, 1998 and Semi-
Annual Report dated June 29, 1999, including financial statements, were
sent to all shareholders of record on February 28, 1999, and on August 29,
1999, respectively . The Annual and Semi-Annual Reports do not, however,
form any part of the proxy soliciting material. A copy of the Fund's
Annual and/or Semi-Annual Report may be received, free of charge, by
writing to the Fund at the address listed above or by calling the Fund,
toll free, at 1-800-526-0056.
The favorable vote of the holders of a majority of the issued and
outstanding shares of the Fund entitled to vote at the Meeting is required
for approval of the liquidation of the assets and dissolution of the Fund
pursuant to the provisions of the Plan (Proposal I).
In addition to the solicitation of proxies by mail, the Fund may utilize
the services of officers and employees of the Fund, the Adviser, and
Lexington Funds Distributor, Inc., the Fund's distributor (the
"Distributor"), none of whom receive any compensation therefor, to solicit
proxies by telephone, telegraph and personal interview, and may also
provide shareholders with a procedure for recording their votes by
telegraph, facsimile, telephone or other electronic means. The estimated
costs of solicitation of proxies are expected to be approximately $20,000
in the aggregate for the Fund and will be borne by the Fund. The Fund may
request brokers, custodians, nominees and fiduciaries to forward proxy
material to the beneficial owners of shares of record. Persons holding
shares as nominees will, upon request, be reimbursed for their reasonable
expenses incurred in sending soliciting material to their principals.
At the Meeting, the presence in person or by proxy of shareholders of
a majority in number of the outstanding shares entitled to vote at the
Meeting shall be necessary and sufficient to constitute a quorum for the
transaction of business. In the event that a quorum of shareholders is not
represented at the Meeting, the shareholders entitled to vote thereat,
present in person or represented by proxy, shall have the power to adjourn
the Meeting to be held within a reasonable time after the date originally
set for the Meeting, without notice other than announcement at the Meeting,
until a quorum shall be present or represented. At such adjourned meeting
at which a quorum shall be present or represented, any business may be
transacted at the meeting as originally notified.
<PAGE>
THE PERSONS NAMED IN THE ACCOMPANYING PROXY WILL VOTE THE NUMBER OF
SHARES REPRESENTED THEREBY AS DIRECTED BY THE PROXY OR, IN THE ABSENCE OF
SUCH DIRECTION, FOR APPROVAL OF EACH OF THE ABOVE PROPOSALS.
PROPOSAL I
PROPOSAL TO LIQUIDATE THE ASSETS
AND DISSOLVE THE FUND PURSUANT
TO THE PROVISIONS OF THE PLAN
OF LIQUIDATION AND DISSOLUTION
The Liquidation in General
The Fund proposes to liquidate the assets and dissolve the Fund pursuant
to the provisions of the Plan as approved by the Fund's Board of Directors
on November 29, 1999. The Plan provides for the complete liquidation of
all of the assets of the Fund. If the Plan is approved, the Adviser will
undertake to liquidate the Fund's assets at market prices and on such terms
and conditions as the Adviser shall determine to be reasonable and in the
best interests of the Fund and its shareholders. In no event will any of
the securities owned by the Fund be sold at a price which is less than the
best price available in the public market on the date of sale.
At the meeting of the Directors held on November 29, 1999, the Directors
determined that an orderly liquidation of the Fund's assets was in the best
interest of the shareholders. In the event the Plan is not adopted, the
Directors will consider what action, if any, should be taken, including the
suspension of sales.
<PAGE>
Reasons for the Liquidation
The Fund is the only series of a Maryland corporation and commenced
operations on January 2, 1996. As of December 31, 1998, the Fund's net
assets were approximately $8,172,488. The Directors determined at a
meeting held on November 29, 1999 that the liquidation and termination of
the Fund was the appropriate course of action. After a discussion of all
available options, the Directors, including all of the Directors who are
not "interested persons" of the Fund (as that term is defined in the
Investment Company Act of 1940, as amended (the "1940 Act")), unanimously
adopted a resolution declaring the proposed liquidation and dissolution
advisable and directed that it be submitted to the shareholders for
consideration. Several factors, including those described below,
influenced the Directors' determination that the Fund be liquidated and
terminated.
Prior to their November 29, 1999 meeting, the Directors had been advised
by the Adviser that over the long term, the continued operation of the Fund
at its size was not economically feasible for the Adviser or the Fund's
shareholders. At the November 29, 1999 Board Meeting, the Adviser stated
that it had reviewed the following possible alternatives for the Fund: (i)
continuation of the Fund with increased marketing; (ii) the merger or sale
of the Fund into a similar investment company; (iii) gradual liquidation
of the Fund; and (iv) a prompt liquidation of the Fund. The Adviser
reported to the Directors that it had considered the viability of each
alternative and had concluded that a prompt liquidation of the Fund was the
only viable alternative consistent with the best interests of the
shareholders of the Fund. See "Federal Income Tax Consequences" below.
The Adviser was not confident that further marketing efforts would increase
the Fund's size sufficiently. The Adviser reported that it found the
merger or sale of the Fund into a similar investment company not to be
realistic alternatives because of the relatively small amount of assets
under management in the Fund and the fact that the Adviser could not assure
any potential merging or acquiring fund that the Fund's assets would remain
in the Fund. Further, the Adviser determined that it would be
inappropriate to terminate its reimbursement of certain Fund expenses or
seek to raise its advisory fees in order to make the Fund more economically
attractive to itself as increased fees would be detrimental to the ability
of the Fund to acquire additional assets under management.
At the November 29, 1999 meeting of the Board of Directors, the Adviser
requested that the Board of Directors consider the liquidation of the Fund
pursuant to the Plan attached to this Proxy Statement as Exhibit A. In
connection with the proposal, the Adviser has agreed to bear the costs
associated with the liquidation of the Fund. Based upon the Adviser's
presentation and recommendation, the Board of Directors concluded that a
liquidation of the Fund was in the best interests of the Fund and its
shareholders.
The liquidation of the assets and termination of the Fund will have the
effect of permitting the Fund's shareholders to invest the distributions
to be received by them upon the Fund's liquidation in investment vehicles
of their own choice. Investors who desire the continued use of a managed
investment such as a money market fund may obtain a prospectus for the
Lexington Money Market Trust by calling, toll free, 1-800-526-0056.
In the event that the shareholders do not approve the Plan, the
Directors will continue to search for other alternatives for the Fund.
Plan of Liquidation and Dissolution of the Fund
The Plan provides for the complete liquidation of all of the assets of
the Fund. If the Plan is approved, the Adviser will undertake to liquidate
the Fund's assets at market prices and on such terms and conditions as the
Adviser shall determine to be reasonable and in the best interests of the
Fund and its shareholders. In no event will any of the portfolio
securities owned by the Fund be sold at a price which is less than the best
price available in the public market on the date of sale.
At the meeting of the Directors held on November 29, 1999, the Directors
determined that an orderly liquidation of the Fund's holdings over a
reasonable period of time would decrease the probability of having to sell
portfolio securities at unfavorable prices. Thus, the Directors directed
that the Adviser begin to liquidate the Fund's assets as it deems
appropriate and in the best interests of the shareholders of the Fund.
<PAGE>
Liquidation Value
If the Plan is adopted by the Fund's shareholders at the Meeting, as
soon as practicable after the consummation of the sale of all of the Fund's
portfolio securities and the payment of all the Fund's known liabilities
and obligations, the Fund's shareholders will receive a distribution in an
amount equal to the net asset value per share, as determined in accordance
with the Fund's current registration statement together with accrued and
unpaid dividends with respect to each of their shares of the Fund (the
"Liquidation Distribution") by .
Federal Income Tax Consequences
The following summary provides general information with regard to the
federal income tax consequences to shareholders on receipt of the
Liquidation Distribution from the Fund pursuant to the provisions of the
Plan. This summary also discusses the effect of federal income tax
provisions on the Fund resulting from its liquidation and dissolution;
however, the Fund has not sought a ruling from the Internal Revenue Service
(the "Service") with respect to the liquidation of the Fund. This summary
is based on the tax laws and regulations in effect on the date of this
proxy, all of which are subject to change by legislative or administrative
action, possibly with retroactive effect.
This summary of the federal income tax consequences is generally
applicable to shareholders who are individual United States citizens (other
than dealers in securities) and does not address the particular federal
income tax consequences which may apply to other shareholders, such as
corporations, trusts, estates, tax exempt organizations or non-resident
aliens. This summary does not address state or local tax consequences. The
tax consequences discussed herein may affect shareholders differently
depending upon their particular tax situations unrelated to the Liquidation
Distribution, and accordingly, this summary is not a substitute for careful
tax planning on an individual basis. SHAREHOLDERS MAY WISH TO CONSULT
THEIR PERSONAL TAX ADVISERS CONCERNING THEIR PARTICULAR TAX SITUATIONS AND
THE IMPACT THEREON OF RECEIVING THE LIQUIDATION DISTRIBUTION AS DISCUSSED
HEREIN.
As discussed above, pursuant to the Plan, the Fund will sell its assets
and distribute the proceeds to its shareholders. The Fund anticipates that
it will retain its qualification as a regulated investment company under
the Internal Revenue Code of 1986, as amended (the "Code"), during the
liquidation period and, therefore, will not be taxed on any of its net
income from the sale of its assets.
For federal income tax purposes, a shareholder's receipt of the
Liquidation Distribution will be a taxable event in which the shareholder
will be viewed as having sold his or her shares of the Fund in exchange for
an amount equal to the Liquidation Distribution that he or she receives.
Each shareholder will recognize gain or loss measured by the difference
between the adjusted tax basis in the shares and the aggregate Liquidation
Distribution received from the Fund. Assuming the shares are held as a
capital asset, the gain or loss will be characterized as a capital gain or
loss. Generally, a capital gain or loss attributable to shares held for
more than one year will constitute a long-term capital gain or loss, while
a capital gain or loss attributable to shares held for not more than one
year will constitute a short-term capital gain or loss.
<PAGE>
The receipt of a Liquidation Distribution by an Individual Retirement
Account Plan ("IRA") which holds shares would generally not be viewed as
a taxable event to the beneficiary; however, some IRAs which hold shares
may have been established with custodians who do not possess the power to
reinvest the Liquidation Distribution, but instead must immediately
distribute such amounts to the IRA beneficiary. In this situation, the
amount received by the beneficiary will constitute a taxable distribution;
and if the beneficiary has not attained 59 1/2 years of age, such distribution
will generally constitute a premature distribution subject to a 10% penalty
tax. This penalty tax is in addition to the beneficiary's regular income
tax. Beneficiaries who receive a distribution from their IRAs on account
of the liquidation may be able to avoid the above-described taxes and
characterize the receipt of the Liquidation Distribution as a tax-free
distribution if, within 60 days of receipt of the Liquidation Distribution,
it is "rolled over" into a new IRA or into an otherwise eligible retirement
plan and the shareholder has not engaged in a rollover from this IRA to
another IRA or otherwise eligible retirement plan during the one year
period ending on the day of receipt of the Liquidation Distribution. Such
a rollover will not generate a deduction for the current year. IRA
shareholders who do not wish to roll over their Liquidation Distribution,
or who have rolled over their IRAs during the one-year period ending on the
day of receipt of the distribution, may contact the Fund's custodian to
make other arrangements for the transfer of their IRAs. Tax results will
vary depending upon the status of each beneficiary, and therefore
beneficiaries who receive distributions from an IRA on account of the
liquidation of the Fund must consult with their own tax advisers regarding
their personal tax results in this matter.
The foregoing summary sets forth general information regarding the
anticipated federal income tax consequences to the Fund and to individual
shareholders who are United States citizens of the liquidation of the Fund,
as previously discussed. No tax ruling has been or will be requested from
the Service regarding the payment or receipt of a Liquidation Distribution.
The statements above are, therefore, not binding on the Service, and there
can be no assurance that the Service will concur with this summary or that
the tax consequences to any shareholder upon receipt of a Liquidation
Distribution will be as set forth above. EACH SHAREHOLDER SHOULD SEEK
INDEPENDENT COUNSEL REGARDING THE POSSIBLE FEDERAL, STATE AND LOCAL INCOME
TAX CONSEQUENCES TO SUCH SHAREHOLDER OF RECEIVING A LIQUIDATION.
Liquidation Distributions
At present, the date or dates on which the Fund will pay Liquidation
Distributions to its shareholders and on which the Fund will be liquidated
are not known to the Fund, but it is anticipated that if the Plan is
adopted by the shareholders such liquidation would occur on or prior
to . Shareholders will receive their Liquidation
Distribution without any further action on their part.
The right of a shareholder to redeem his or her shares of the Fund at
any time has not been impaired by the adoption of the Plan. Therefore, a
shareholder may redeem shares in accordance with redemption procedure set
forth in the Fund's current prospectus without the necessity of waiting for
the Fund to take any action. The Fund does not impose any redemption
charges.
<PAGE>
Conclusion
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
PROPOSED LIQUIDATION OF ASSETS AND DISSOLUTION OF THE FUND PURSUANT TO THE
PROVISIONS OF THE PLAN OF LIQUIDATION AND DISSOLUTION.
PROPOSAL II
OTHER MATTERS
The Directors do not know of any matters to be presented at the Meeting
other than those set forth in this Proxy Statement. If any other business
should come before the meeting, the persons named in the accompanying proxy
will vote thereon in accordance with their best judgment.
ADDITIONAL INFORMATION
The Adviser. Lexington Management Corporation, P.O. Box 1515, Park 80
West Plaza Two, Saddle Brook, New Jersey 07663, is the adviser to the Fund.
The Adviser identifies and analyzes possible investments for the Fund,
determines the amount and timing of such investments, and the form of
investment. The Adviser has the responsibility of monitoring and reviewing
the Fund's portfolio, and, on a regular basis, recommending the ultimate
disposition of such investments. It is the Adviser's responsibility to
cause the purchase and sale of securities in the Fund's portfolio, subject
at all times to the policies set forth by the Fund's Board of Directors.
The Adviser also provides certain administrative and managerial services
to the Fund.
The Principal Underwriter. Lexington Funds Distributor, Inc. is the
principal underwriter (or Distributor) of the Fund. The Distributor
promotes the sale and arranges for the sale of shares through its
representatives and to investment dealers. The Adviser and Distributor are
wholly owned subsidiaries of Lexington Global Asset Managers, Inc., a
Delaware corporation, with offices at Park 80 West Plaza Two, Saddle Brook,
New Jersey 07663.
The Administrator. The Adviser also acts as administrator to the Fund
and performs certain administrative and internal accounting services,
including but not limited to, maintaining general ledger accounts,
regulating compliance preparation of financial information for semi-annual
and annual reports, preparing registration statements, calculating net
asset values, communicating with shareholders, supervising the custodian
and providing facilities for such services.
Voting Information and Discretion of the Persons Named as Proxies.
While the Meeting is called to act upon any other business that may
properly come before it, at the date of this Proxy Statement the only
business which the management intends to present or knows that others will
present is the business mentioned in the Notice of Meeting. If any other
matters lawfully come before the Meeting, and in all procedural matters at
the Meeting, it is the intention that the enclosed proxy shall be voted in
accordance with the best judgment of the attorneys named therein, or their
substitutes, present and acting at the Meeting.
<PAGE>
Submission of Proposals for the Next Annual Meeting of the Fund. Under
the Fund's Articles of Incorporation and By-Laws, annual meetings of share-
holders are not required to be held unless necessary under the 1940 Act
(for example, when fewer than a majority of the Directors have been elected
by shareholders). Therefore, the Fund does not hold shareholder meetings
on an annual basis. A shareholder proposal intended to be presented at any
meeting hereafter called should be sent to the Fund at Park 80 West Plaza
Two, Saddle Brook, New Jersey 07663, and must be received by the Fund
within a reasonable time before the solicitation relating thereto is made
in order to be included in the notice or proxy statement related to such
meeting. The submission by a shareholder of a proposal for inclusion in
a proxy statement does not guarantee that it will be included. Shareholder
proposals are subject to certain regulations under federal securities law.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. IF YOU DO NOT EXPECT
TO ATTEND THE MEETING, PLEASE SIGN YOUR PROXY CARD PROMPTLY AND RETURN IT
IN THE ENCLOSED ENVELOPE TO AVOID UNNECESSARY EXPENSE AND DELAY. NO
POSTAGE IS NECESSARY.
December 20, 1999 By Order of the Board of Directors,
Lisa Curcio, Secretary
<PAGE>
EXHIBIT A
PLAN OF LIQUIDATION AND DISSOLUTION
OF
LEXINGTON SMALLCAP FUND, INC.
This Plan of Liquidation and Dissolution (the "Plan") of the
Lexington SmallCap Fund, Inc., a Maryland corporation (the "Fund"), has
been approved by the Board of Directors of the Fund (the "Board") as being
advisable and in the best interests of the Fund and its stockholders. The
Board has directed that this Plan be submitted to the holders of the
outstanding voting shares of the Fund's Common Stock (the "Stockholders")
for their adoption or rejection at a special meeting of stockholders and
has authorized the distribution of a Proxy Statement (the "Proxy
Statement") in connection with the solicitation of proxies for such
meeting. Upon such adoption, the Fund shall voluntarily dissolve and
completely liquidate in accordance with the requirements of the Maryland
General Corporation Law (the "MGCL") and the Internal Revenue Code of 1986,
as amended (the "Code"), as follows:
1. Adoption of Plan. The effective date of the Plan (the
"Effective Date") shall be the date on which the Plan is
adopted by the shareholders.
2. Sale or Distribution of Assets. As soon as practicable after
the Effective Date, but in no event later than
. (the "Liquidation Period"), the Fund shall
have the authority to engage in such transactions as may be
appropriate to its dissolution and liquidation, including,
without limitation, the consummation of the transactions
described in the Proxy Statement.
3. Provisions for Liabilities. Within the Liquidation Period, the
Fund shall pay or discharge or set aside a reserve fund (the
"Reserve Fund") for, or otherwise provide for the payment or
discharge of, any liabilities and obligations, including,
without limitation, contingent liabilities.
4. Distribution to Stockholders. As soon as practicable after a
vote of approval of this Plan by the shareholders of the Fund,
the Fund shall liquidate and distribute pro rata on the date
of liquidation (the "Liquidation Date") to its shareholders of
record as of the close of business on the Liquidation Date all
of the remaining assets of the Fund in complete cancellation
and redemption of all the outstanding shares of the Fund,
except for cash, bank deposits or cash equivalents in an
estimated amount necessary to (i) discharge any unpaid
liabilities of the Fund on the Fund's books on the Liquidation
Date, including, but not limited to, income dividends and
capital gains distributions, if any, payable for the period
prior to the Liquidation Date, and (ii) pay such contingent
liabilities as the Board shall reasonably deem to exist against
the assets of the Fund on the Fund's books.
<PAGE>
5. Notice of Liquidation. As soon as practicable after the
Effective Date but in no event later than 20 days prior to the
filing of Articles of Dissolution as provided in Section 6
below, the Fund shall mail notice to all its creditors and
employees that this Plan has been approved by the Board and the
shareholders as provided in the MGCL.
6. Articles of Dissolution. Pursuant to the MGCL, the Fund shall
prepare and file Articles of Dissolution (the "Articles") with
and for acceptance by the Maryland State Department of
Assessments and Taxation.
7. Amendment or Abandonment of Plan. The Board may modify or
amend this Plan at any time without shareholder approval if it
determines that such action would be advisable and in the best
interests of the Fund and its shareholders. If any amendment
or modification appears necessary and in the judgment of the
Board will materially and adversely affect the interests of the
shareholders, such an amendment or modification will be
submitted to the shareholders for approval. In addition, the
Board may abandon this Plan without shareholder approval at any
time prior to the filing of the Articles if it determines that
abandonment would be advisable and in the best interests of the
Fund and its shareholders.
8. Powers of Board and Officers. The Board and the officers of
the Fund are authorized to approve such changes to the terms
of any of the transactions referred to herein, to interpret any
of the provisions of this Plan, and to make, execute and
deliver such other agreements, conveyances, assignments,
transfers, certificates and other documents and take such other
action as the Board and the officers of the Fund deem necessary
or desirable in order to carry out the provisions of this Plan
and effect the complete liquidation and dissolution of the Fund
in accordance with the Code and the MGCL including, without
limitation, the filing of a Form N-8F with the Securities and
Exchange Commission and withdrawing any qualification to
conduct business in any state in which the Fund is so
qualified, as well as the preparation and filing of any tax
returns.
9. Termination of Business Operations. As soon as practicable
upon adoption of the Plan, the Fund shall cease to conduct
business except as shall be necessary in connection with the
effectuation of its liquidation.
LEXINGTON SMALLCAP FUND, INC.
Robert M. DeMichele, President
<PAGE>
LEXINGTON SMALLCAP FUND, INC.
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS of the Lexington
SmallCap Fund, Inc. (the "Fund"), for use at a Special Meeting of
Shareholders to be held at Park 80 West, Plaza Two, Saddle Brook, New
Jersey, on February 11, 2000 at 10 a.m. Eastern time.
The undersigned hereby appoints Richard J. Lavery and Peter
Corniotes, and each of them, with full power of substitution, as proxies
of the undersigned to vote at the above-stated Special Meeting, and at
all adjournments thereof, all shares of stock of the Fund that are held
of record by the undersigned on the record date for the Special Meeting,
upon the following matters:
Please mark box in blue or black ink.
ITEM I. Proposal to liquidate the assets and dissolve the Fund
pursuant to the provisions of the Plan of Liquidation and
Dissolution.
FOR AGAINST ABSTAIN
ITEM II. The transaction of such other business as may be properly
brought before the meeting.
FOR AGAINST ABSTAIN
Every properly signed proxy will be voted in the manner specified
thereon and, in the absence of specification, will be treated as
GRANTING authority to vote FOR all of the above items.
Receipt of Notice of Special Meeting and Proxy Statement is hereby
acknowledged.
PLEASE SIGN, DATE AND RETURN PROMPTLY.
__________________________________________
Sign here exactly as name(s)
appears hereon
__________________________________________
Dated:________________________________, 2000
IMPORTANT: Joint owners must EACH
sign. When signing as attorney,
executor, administrator, trustee,
guardian or corporate officer,
please give your full title as such.
