SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. __)
Filed by the Registrant |_|
Filed by a Party other than the Registrant |X|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission only
(as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
USLIFE Income Fund, Inc.
(Name of Registrant as Specified in Its Charter)
Ernest Horejsi Trust No. 1B
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
_______________________________________________________
(2) Aggregate number of securities to which transaction applies:
_______________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
_______________________________________________________
(4) Proposed maximum aggregate value of transaction:
_______________________________________________________
(5) Total fee paid:
_______________________________________________________
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
_______________________________________________________
(2) Form, Schedule or Registration Statement No.:
_______________________________________________________
(3) Filing Party:
_______________________________________________________
(4) Date Filed:
_______________________________________________________
Stewart Horejsi
200 South Santa Fe
Salina, Kansas 67401
Dear Fellow Shareholder:
The Ernest Horejsi Trust No. 1B (the "Trust") is the largest shareholder of
the USLIFE Income Fund, Inc. (the "Fund"). The Trust owns more than 14% of the
Fund's stock.
The Fund's management has asked you to approve five proposals at the 2000
Annual Meeting on October 3, 2000. Proposals 2, 3 and 4, if passed, would permit
the Fund to borrow money and issue shares of preferred stock. Proposals 2, 3 and
4 create new risks for the Fund and for you as a shareholder of the Fund. The
Trust believes that the Fund's plan to borrow money to buy primarily
sub-investment-grade securities is unwise and could be detrimental to common
shareholders like you. However, this is what the Fund is asking you to approve.
Please read the enclosed proxy statement and think about whether these new risks
are good for the Fund.
The Trust recommends that the Fund's shareholders vote AGAINST proposals 2,
3 and 4. To vote against proposals 2, 3 and 4, we ask that you sign, date and
return the enclosed WHITE proxy card in the envelope provided and vote against
these proposals. If you have already returned the Fund's blue proxy card, and
you want to change your vote, you have the right to revoke your proxy and vote
against proposals 2, 3 and 4 by signing, dating and mailing a later dated WHITE
proxy card in the envelope provided.
If you have any questions, please contact D.F. King & Co., Inc., who is
assisting us in the solicitation, toll-free at 1(800)488-8035.
PLEASE VOTE AGAINST PROPOSALS 2, 3 AND 4, AND SIGN, DATE AND RETURN THE
ENCLOSED WHITE PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE THAT IS PROVIDED.
Sincerely yours,
Stewart R. Horejsi
Proxy Statement In Opposition To
The Solicitation By The Board Of Directors Of
Uslife Income Fund, Inc.
Annual Meeting of Shareholders
To be held on October 3, 2000
To Our Fellow Shareholders:
The Ernest Horejsi Trust No. 1B (the "Trust") is sending this proxy
statement and the enclosed WHITE proxy card to holders of record on July 6, 2000
of shares of common stock, par value $1.00 per share, of USLIFE Income Fund,
Inc., a Maryland corporation (the "Fund"). This proxy statement relates to our
solicitation of proxies for use at the Annual Meeting of shareholders of the
Fund scheduled to be held on Tuesday, October 3, 2000 at 2:00 p.m., local time,
and any and all adjournments or postponements thereof. The Fund's Annual Meeting
will be held in Meeting Room 1 of The Variable Annuity Life Insurance Company,
Plaza Level, The Woodson Tower, 2919 Allen Parkway, Houston, Texas 77019. This
proxy statement and the accompanying WHITE proxy card will first be sent to
shareholders of the Fund on or about August 31, 2000.
The Fund has scheduled five matters for votes at the Annual Meeting:
1. the election of three directors of the Fund;
2. an amendment to the Fund's Articles of Incorporation to provide for
the authorization and issuance of preferred stock;
3. an amendment to the Fund's fundamental investment restriction
regarding senior securities to provide that the Fund be permitted to
issue preferred stock and other senior securities;
4. an amendment to the Fund's fundamental investment restriction
regarding borrowings; and
5. the ratification of the independent auditor of the Fund.
The Trust is soliciting your proxy to vote AGAINST proposals 2, 3 and 4,
which would have the effect of permitting the Fund to borrow money and issue
shares of preferred stock. We are not making any recommendation with respect to
proposals 1 and 5.
REASONS FOR THE SOLICITATION
The Trust has owned the Fund's common stock since June 29, 1998, and has
invested more than $7.3 million in more than 800,000 shares of the Fund. The
Trust has doubled the number of shares it holds since last year. As a result,
the Trust has a strong financial interest in the Fund. The Trust recommends that
the Fund's shareholders vote AGAINST proposals 2, 3 and 4. A summary of
proposals 2, 3 and 4 is included in the next section of this proxy statement.
If passed, proposals 2, 3 and 4 would allow the Fund to borrow money and
issue shares of preferred stock or other senior securities. The Trust believes
that proposals 2, 3 and 4 are unwise and you should vote AGAINST those proposals
for a number of important reasons.
First, as the Fund itself has admitted in its proxy statement, proposals 2,
3 and 4 create new risks for the Fund, each of which would make your investment
in the Fund more risky. The Fund's proxy statement identifies the following
risks:
o Reduced Net Asset Value and Dividends. If the Fund is unable to earn a
sufficient spread with respect to the investments it makes with the
proceeds from the sale of the senior securities and the mandatory payments
it makes to the holders of the senior securities (i.e., if the Fund does
not earn sufficient income to cover interest payments on borrowed money or
dividends on preferred stock) then, according to the Fund's proxy statement
"the net asset value of the Fund would be lower than would otherwise be the
case ..." If this happens, the dividends you receive could be reduced.
o Below Investment-Grade Investments. The Fund expects to invest the proceeds
of any senior securities offering in securities having a "below
investment-grade credit quality." The Fund admits such securities "involve
greater credit risk than higher grade securities" and, because the senior
securities would be senior to the common stock in terms of payment of
interest or dividends and distribution of assets, "any increased risk
associated with the larger portion of below investment grade investments
would be borne by the holders of common stock." Ask yourself whether you
want to own a Fund that borrows money to invest in "below investment grade
investments" and has no prior experience doing so.
o Forced Asset Sales. The Fund warns that "the mandatory asset coverage
requirements of the 1940 Act could also pose certain risks for the holders
of shares of common stock" and "under adverse market conditions, the Fund
might have to sell portfolio securities to service the preferred stock or
debt securities at a time when investment considerations would not favor
such sales." This means that the Fund could be forced to sell its
underlying investments even though selling might not be in the common
shareholders' best interests.
o Increased Fund Expenses. Issuing preferred stock, according to the Fund,
"involves offering expenses and other costs to the Fund (e.g. underwriting
commissions, rating agency fees and organization expenses), which expenses
and costs will be borne by the holders of the common stock."
o Increase Advisory Fees. The Fund admits that issuing the preferred stock
will result in an increase in the investment advisory fee payable by the
Fund. The fee is a percentage of the Fund's adjusted net assets and a
percentage of the Fund's net investment income. While the percentages will
not change, the Fund's adjusted net assets will increase and the Fund
believes its net investment income will increase. The Fund's investment
advisor has agreed to waive increased fees for a year, but not permanently.
As a result, the Fund's investment advisor will make more money, whether or
not the value of your investment increases.
o Reduction in Net Income. According to the Fund, if the new preferred stock
is convertible into common shares, "the net income per share of common
stock and the net asset value per share of common stock may be reduced if
these securities are so converted." A reduction in the net income or net
asset value of your shares reduces the value of your investment.
o Inhibiting Common Voting Rights. The Fund says that class voting provisions
of the preferred stock "could make it more difficult" for the Fund to take
certain actions proposed by the Board or the common shareholders, such as a
merger. This means that basic corporate actions, otherwise in the
shareholders' better interest, could be unnecessarily hampered.
o Dilution. The Fund says common shareholders will "realize voting dilution"
as a result of any new issuance of preferred stock. That means your vote
would be worth less after a preferred stock offering than it is today.
Second, any new securities would be senior to your common stock. This means
that new preferred shareholders would have a senior "claim" to the assets and/or
earnings of the Fund and this "claim" must be paid before common shareholders
are entitled to any money otherwise payable by the Fund as dividends or in
liquidation of the Fund. This is similar to what would happen if you borrowed on
margin against your stock portfolio: When the market goes down, the lending
broker has a claim that is senior to you, the owner of the portfolio, and gets
first crack at the underlying assets.
Third, while the Fund has not laid out all of the terms of the proposed
preferred stock offering/borrowing, it nonetheless would include a fixed
interest rate, various unspecified "financial and operating constraints," and
optional redemption provisions that would provide for payment of a premium.
Because issuers like the Fund must "entice" preferred stock investors to invest
in new preferred stock offerings, the Trust believes that such terms would be
necessarily designed to benefit (i.e., entice) the preferred shareholders at the
expense of the common shareholders.
Fourth, the Fund's management says that it wants "the benefit of not having
to seek shareholder approval" when and if it decides to issue the proposed
preferred stock. Essentially, the Fund's management wants common shareholders to
sign a blank check now in order to avoid requesting their approval on the
specific terms of the preferred stock when those terms are negotiated. We
believe the Fund should give you the opportunity to vote on the specific terms
of any new securities and let you decide for yourself whether or not issuing the
securities at that time is a good idea.
Fifth, the Trust believes one of the basic hallmarks of a successful
company is extensive insider ownership, essentially indicating a high degree of
insider enthusiasm and faith for the company's business and success. But, with
respect to the Fund, the proxy statement reveals that no Board member and, in
fact, no Fund officer, owns any Fund shares. Simply put, your directors and
officers have invested none of their own money in your Fund. The Trust believes
that the interests of the directors and executive officers of the Fund should be
more closely aligned with yours before the Fund should permit steps to be taken
that increase the risks that you, the common shareholder, ultimately bear.
Finally, you probably do not need to be reminded, but your Fund's price and
net asset value have declined over the last two years. Since the Trust first
bought shares of the Fund, the Fund's price and net asset value declined from
$9.625 and $10.75 on June 30, 1998 to $8.25 and $8.96 on June 30, 2000, down
14.3% and 16.7%, respectively. According to the Fund's own annual report, the
Fund's market price return of negative 6.81% for the year ended June 30, 2000,
compared unfavorably with the Fund's relevant benchmarks, the Merrill Lynch
Corporate Government Index, which returned 4.33%, and the Merrill Lynch High
Yield Bond Index, which returned negative 1.37%. This means your Fund's market
price performance trailed the Merrill Lynch Corporate Government Index by 11.14%
and the Merrill Lynch High Yield Bond Index by 5.44%. The Fund's net asset value
return, assuming reinvestment of dividends, was negative 3.70% for the year
ended June 30, 2000, after a gain of only 0.64% for the previous year.
Many of you have already lost money on your investment in the Fund. Given
the Fund's performance over the last two years, the Trust believes that the
shareholders should not give the Fund's Board of Directors and investment
advisor a blank check to borrow money and create the preferred stock. While the
Fund could benefit if its strategy of borrowing money and reinvesting the
proceeds at a higher rate is successful, there is no guarantee of success, and
the Trust does not believe the potential benefits of this strategy outweigh the
risks. In making your decision to vote for or against the Fund's proposals, ask
yourself first, if the strategy will work, and then ask whether you want to take
the risk and be the Fund's guinea pig. The Trust has decided that it does not
want to be the Fund's guinea pig and thus is sending you this proxy solicitation
and asking for your support. The Trust believes that proposals 2, 3 and 4 are
not good for the Fund's shareholders and should be rejected.
SUMMARY OF PROPOSALS
The following is a summary of the five matters that are scheduled to be
voted upon at the Annual Meeting and is based upon the information provided in
the Fund's proxy statement dated August 18, 2000.
PROPOSAL 1:
The Fund's Board of Directors has nominated three nominees as directors for
election at the 2000 Annual Meeting: Dr. Timothy J. Ebner; Dr. John Wm.
Lancaster; and Dr. John E. Maupin, Jr. The Trust is not making any
recommendation with respect to proposal 1.
PROPOSAL 2:
The Fund's Board has proposed an amendment to the Fund's Articles of
Incorporation to allow the Fund to issue shares of preferred stock. The proposed
amendment to the Articles of Incorporation, if approved by the shareholders,
will allow the Fund to issue five million shares of preferred stock. The
amendment also will allow the Board to issue shares of preferred stock in one or
more classes or series, and to fix the terms and conditions for each such class
or series to the extent permitted by law.
If the shareholders approve the amendment, Article Fifth of the Articles of
Incorporation will be amended to read in its entirety as follows:
The total number of shares of stock which the corporation shall have
authority to issue is fifteen million (15,000,000) shares, of which
ten million (10,000,000) shares shall be Common Stock, of the par
value of One Dollar ($1.00) each, and five million (5,000,000) shares
shall be Preferred Stock, of the par value of One Dollar ($1.00) each.
The Board of Directors is expressly authorized to provide for the
issuance of all or any shares of the Preferred Stock in one or more
classes or series, and to fix for each such class or series such
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications or terms or conditions of
redemption thereof, as shall be stated and expressed in the resolution
or resolutions adopted by the Board of Directors providing for the
issuance of such class or series and as may be permitted by the
General Corporation Law of Maryland and the Investment Company Act of
1940, as amended.
The Trust recommends that the Fund's shareholders vote AGAINST proposal 2
for the reasons stated in the section entitled "Reasons For The Solicitation,"
above.
PROPOSAL 3:
The Board has proposed an amendment to the Fund's fundamental investment
restriction regarding senior securities so that the Fund may issue preferred
stock and other senior securities. Currently, the Fund is prohibited from
issuing preferred stock and senior securities. The current restriction reads:
The Fund will not issue any senior securities (as defined in the
Investment Company Act of 1940 as amended), except insofar as any
borrowing permitted under the Fund's investment restriction relating
to borrowing might be considered to be the issuance of senior
securities.
The proposed amendment would replace this restriction with the following:
The Fund will not issue any senior securities (as defined in the
Investment Company Act of 1940, as amended), except to the extent
permitted by applicable law.
The approval of proposal 3 (together with the approval of proposal 2) would
allow the Fund to issue shares of preferred stock. The holders of the preferred
stock would have priority over holders of the Fund's common stock as to the
distribution of assets and payment of dividends.
The Trust recommends that the Fund's shareholders vote AGAINST proposal 3
for the reasons stated in the section entitled "Reasons For The Solicitation,"
above.
PROPOSAL 4:
The Board has proposed an amendment to the Fund's fundamental investment
restriction regarding borrowings so that senior securities would not be deemed
borrowings. Currently, the Fund has a fundamental investment restriction that
limits the Fund's ability to borrow money. Proposal 4 would change the
restriction to provide that senior securities will not be deemed to be
borrowings for the purpose of this investment restriction.
The current borrowing restriction provides that:
The Fund will not borrow money except (a) on an unsecured basis in an
amount not in excess of 25% of the value of the Fund's total assets,
after giving effect to the borrowings and, in addition, (b) from banks
for temporary or emergency purposes in an amount not exceeding 5% of
the value of its total assets.
The proposed amendment would replace the current borrowing restriction
with the following:
The Fund will not borrow money except (a) on an unsecured basis in an
amount not in excess of 25% of the value of its total assets, after
giving effect to the borrowings and, in addition, (b) from banks for
temporary or emergency purposes in an amount not exceeding 5% of the
value of its total assets; provided, however, that the issuance of
senior securities shall not be deemed to be the borrowing of money for
the purposes of this restriction.
The Trust recommends that the Fund's shareholders vote AGAINST proposal 4
for the reasons stated in the section entitled "Reasons For The Solicitation,"
above.
PROPOSAL 5:
The Board has selected Ernst & Young LLP to serve as independent auditor of
the Fund for the fiscal year ending June 30, 2001, subject to ratification by
the Fund's shareholders. The Trust is not making any recommendation with respect
to proposal 5.
PROXY CARDS AND VOTING
All of the five proposals that are scheduled to be voted upon at the Annual
Meeting are included on the Trust's WHITE proxy card. If you wish to vote on the
proposals, you may do so by completing and returning a WHITE proxy card. A WHITE
proxy card that is returned to the Trust or its agent will be voted as you
indicate on the card. If a WHITE proxy card is returned without a vote
indicated, the shares represented thereby will be voted AGAINST proposals 2, 3
and 4, to "withhold" on proposal 1, and FOR proposal 5.
Discretionary authority is provided in the proxy sought hereby as to other
business as may properly come before the meeting, of which the Trust is not
aware as of the date of this proxy statement, and matters incident to the
conduct of the Annual Meeting, which discretionary authority will be exercised
in accordance with Rule 14a-4 promulgated by the SEC pursuant to the Securities
Exchange Act of 1934, as amended.
Voting; Quorum
Only shareholders of record on July 6, 2000 will be entitled to vote at the
Annual Meeting. According to information contained in the Fund's 2000 proxy
statement, there were 5,643,768 shares of common stock issued and outstanding as
of July 6, 2000. Holders of record on July 6, 2000 will be entitled to cast one
vote on each matter for each share of common stock held. Shares of common stock
do not have cumulative voting rights. Proposal 1 (with respect to the election
of directors) and proposal 5 (with respect to the ratification of the
independent auditor) each requires the affirmative vote of a majority of the
votes cast at the Annual Meeting, provided that a quorum is present. Proposal 2,
the proposed Amendment to the Fund's Articles of Incorporation, requires the
affirmative vote of a majority of the shares of common stock outstanding and
entitled to vote. Proposals 3 and 4, the proposed changes to the Fund's
investment restrictions, require the affirmative vote of the lesser of (a) 67%
of the shares present at the Annual Meeting if a quorum is present, or (b) more
than 50% of the outstanding shares of the Fund.
Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and shares with respect to which the broker does
not have discretionary voting authority. Under Maryland law, abstentions and
broker non-votes are counted as shares present for purposes of determining
whether a quorum is present, but are not counted as votes cast for purposes of
determining whether sufficient votes have been received to approve a proposal,
including any adjournment. Accordingly, abstentions and broker non-votes
effectively will be a vote against adjournment or against any proposal where the
required vote is a percentage of the shares.
Under the By-Laws of the Fund, a quorum for the transaction of business is
constituted by the presence in person or by proxy of a majority of the
outstanding shares of the Fund entitled to vote at the meeting.
Revocation of Proxies
You may revoke any proxy given in connection with the Annual Meeting
(whether given to the Fund or to the Trust) at any time prior to the voting of
your proxy at the Annual Meeting by delivering a written revocation of your
proxy to the Secretary of the Fund or with the presiding officer at the Annual
Meeting, by executing and delivering a later dated proxy to the Trust or the
Fund or their solicitation agents, or by voting in person at the Annual Meeting.
Attendance at the Annual Meeting will not in and of itself revoke a proxy.
There is no limit on the number of times that you may revoke your proxy
prior to the Annual Meeting. Only the latest dated, properly signed proxy card
will be counted.
IF YOU HAVE ALREADY SENT A BLUE PROXY CARD TO THE BOARD OF DIRECTORS OF THE
FUND, YOU MAY REVOKE THAT PROXY AND VOTE ON THE PROPOSALS BY SIGNING, DATING AND
MAILING THE ENCLOSED WHITE PROXY CARD IN THE ENVELOPE PROVIDED.
THE WHITE PROXY CARD CONTAINS ALL FIVE OF THE PROPOSALS THAT ARE SCHEDULED
TO BE VOTED UPON AT THE ANNUAL MEETING. IF YOU WISH TO VOTE, YOU MAY DO SO BY
COMPLETING AND RETURNING A WHITE PROXY CARD. A WHITE PROXY CARD THAT IS RETURNED
TO THE TRUST OR ITS AGENT WILL BE VOTED AS YOU INDICATE THEREON. IF A WHITE
PROXY CARD IS RETURNED WITHOUT A VOTE INDICATED THEREON, THE SHARES WILL BE
VOTED AGAINST PROPOSALS 2, 3 AND 4, TO "WITHHOLD" ON PROPOSAL 1 AND TO "ABSTAIN'
ON PROPOSAL 5.
INFORMATION CONCERNING THE TRUST
As of July 6, 2000, the Trust held 767,200 shares of common stock,
representing approximately 13.6% of the outstanding shares of the Fund. The
Trust is an irrevocable grantor trust that was organized under the laws of
Kansas for the benefit of Ernest Horejsi's issue. The three trustees of the
Trust are Badlands Trust Company, Ms. Susan Ciciora, and Mr. Larry Dunlap. Mr.
Dunlap is a director of Badlands and is a trustee of several trusts of which
various Horejsi family members are beneficiaries. The business address of the
Trust is 122 South Phillips Avenue, Suite 220, Sioux Falls, South Dakota 57104.
Stewart Horejsi is Ernest Horejsi's son (and, as a result, a beneficiary of the
Trust) and serves from time to time as an investment advisor to the Trust. Ms.
Ciciora is Stewart Horejsi's daughter.
The trustees of the Trust may be deemed to control the Trust and may be
deemed to possess indirect beneficial ownership of the shares held by the Trust.
However, none of the trustees, acting alone, can vote or exercise dispositive
authority over shares held by the Trust. Accordingly, Badlands, Ms. Ciciora, and
Mr. Dunlap disclaim beneficial ownership of the shares of common stock
beneficially owned, directly or indirectly, by the Trust.
Badlands is a South Dakota corporation organized to act as a private trust
company to administer the Trust as well as other affiliated trusts. The
directors of Badlands are Ms. Ciciora, Mr. Dunlap, Stephen C. Miller, Robert
Ciciora, who is the brother-in-law of Ms. Ciciora, Dan E. Loveland and Marty
Jans. The executive officers of Badlands are Dan Loveland, President and
Secretary, and Mr. Miller, Vice President and Assistant Secretary. Badlands is
wholly owned by the Stewart Horejsi Trust No. 2, an irrevocable trust organized
by Mr. Stewart Horejsi for the benefit of his issue. The trustees of the Stewart
Horejsi Trust No. 2 are Badlands, Mr. Ciciora and Robert H. Kastner.
The Trust has indicated since 1999 that it may seek control of the Fund,
although at this time no decision has been made to actually seek control. The
Trust is part of a group of affiliated entities that successfully took control
of another closed-end fund, Preferred Income Management Fund (now Boulder Total
Return Fund), in 1998 and 1999.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of August 28, 2000,
regarding the beneficial ownership of shares of common stock by (i) each
beneficial owner of more than 5% of the outstanding shares of common stock
(based upon filings with the SEC and the holdings of the Trust), (ii) the
current executive officers and directors of the Fund (based on information
contained in the 2000 proxy statement of the Fund), and (iii) all directors and
executive officers as a group.
Position with Common Stock
Name and Address the Fund Beneficially Owned Percent
Ernest Horejsi Trust No. 1B
122 South Phillips Avenue, Suite 220 --- 813,000 14.4%
Sioux Falls, South Dakota 57104
Directors and officers as a group --- --- ---
___________________
The current directors and executive officers of the Fund do not own any
shares of the Fund, according to the Fund's 2000 proxy statement.
THE SOLICITATION
Proxies will be solicited by mail and, if necessary to obtain the requisite
shareholder representation, by telephone, personal interview or by other means.
Certain officers, directors or employees of entities related to the Trust may
solicit proxies.
Banks, brokerage houses and other custodians, nominees and fiduciaries will
be requested to forward this proxy statement and the accompanying WHITE proxy
card to the beneficial owner of shares of common stock for whom they hold of
record and the Trust will reimburse them for their reasonable out-of-pocket
expenses.
The expenses related to this proxy solicitation will be borne by the Trust.
The Trust estimates that the total amount of expenses to be incurred by it in
this proxy solicitation will be approximately $75,000, of which approximately
$15,000 to $25,000 will be paid to D.F. King. Expenses to date have been
approximately $25,000.
If you have any questions concerning this proxy solicitation or the
procedures to be followed to execute and deliver a proxy, please contact D.F.
King & Co., Inc. at:
Call Toll-Free: 1 (800) 488-8035
Dated: August 31, 2000
PROXY CARD
THIS PROXY IS SOLICITED IN OPPOSITION TO THE BOARD OF DIRECTORS
OF USLIFE INCOME FUND, INC. BY THE ERNEST HOREJSI TRUST NO.1B
PROXY FOR THE OCTOBER 3, 2000 ANNUAL MEETING OF SHAREHOLDERS OF
USLIFE INCOME FUND, INC.
The undersigned holder of shares of common stock of USLIFE Income Fund,
Inc., a Maryland corporation (the "Fund"), hereby appoints Stewart R. Horejsi,
Carl Johns, Laura Rhodenbaugh and Stephen C. Miller, and each of them, as
attorneys and proxies for the undersigned, with full powers of substitution and
revocation, to represent the undersigned and to vote on behalf of the
undersigned all shares of common stock that the undersigned is entitled to vote
at the Annual Meeting of Shareholders of the Fund to be held in Meeting Room 1
of The Variable Annuity Life Insurance Company, Plaza Level, The Woodson Tower,
2919 Allen Parkway, Houston, Texas 77019, on Tuesday, October 3, 2000 at 2:00
p.m., local time, and any adjournments or postponements thereof. The undersigned
hereby acknowledges receipt of the Proxy Statement in Opposition of the Trust
and hereby instructs said attorneys and proxies to vote said shares as indicated
hereon. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting. A majority of the proxies
present and acting at the Meeting in person or by substitute (or, if only one
shall be so present, then that one) shall have and may exercise all of the power
and authority of said proxies hereunder. The undersigned hereby revokes any
proxy previously given.
IMPORTANT:
Please indicate your vote by an "X" in the appropriate box below. This proxy, if
properly executed, will be voted in the manner directed by the undersigned
shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED AGAINST PROPOSALS
2, 3 AND 4 BELOW, TO WITHHOLD ON PROPOSAL 1, AND FOR PROPOSAL 5.
Please refer to the Proxy Statement in Opposition for a discussion of the
reasons for the Trust's opposition to proposals 2, 3 and 4.
1. ELECTION OF THE FOLLOWING THREE NOMINEES AS DIRECTORS: DR. TIMOTHY J.
EBNER, DR. JOHN WM. LANCASTER AND DR. JOHN E. MAUPIN, JR.
FOR __________
WITHHOLD __________
YOU MAY WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE OR
NOMINEES BY MARKING THE FOR BOX AND STRIKING OUT THE NAME OF ANY SUCH
NOMINEE.
2. PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION TO PROVIDE FOR THE
AUTHORIZATION AND ISSUANCE OF PREFERRED STOCK.
FOR __________
AGAINST __________
ABSTAIN __________
3. PROPOSAL TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
REGARDING SENIOR SECURITIES.
FOR __________
AGAINST __________
ABSTAIN __________
4. PROPOSAL TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
REGARDING BORROWINGS.
FOR __________
AGAINST __________
ABSTAIN __________
5. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS THE
INDEPENDENT AUDITOR OF THE FUND.
FOR __________
AGAINST __________
ABSTAIN __________
The Trust recommends that the shareholders vote AGAINST proposals 2, 3 and 4.
The Trust makes no recommendation with respect to proposals 1 and 5.
IMPORTANT:
Please sign exactly as name appears hereon or on the proxy card previously sent
to you. When shares are held by joint tenants, both should sign. When signing as
an attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by the
President or other duly authorized officer. If a partnership, please sign in
partnership name by authorized person.
DATE: _____________________ ________________________________
Signature(s)
_______________________________
Title (if applicable)
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
