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:
|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 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:
_______________________________________________________
Ernest Horejsi Trust No. 1B
614 Broadway
P.O. Box 801
Yankton, South Dakota 57078
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 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 0F 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-[949-2583].
PLEASE VOTE AGAINST PROPOSALS 2, 3 AND 4, SIGN, DATE AND RETURN
THE ENCLOSED WHITE PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE THAT
IS PROVIDED.
Sincerely yours,
ERNEST HOREJSI TRUST NO. 1B
By:
Its:
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 __, 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 million in 796,700 shares of the Fund. As a
result, the Trust has a strong financial interest in the common stock, just
as you do. 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."
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. 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 believe 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 from $___ and $____ in __________
1998 to $_____ and $______ in _________ 2000. MANY OF YOU HAVE ALREADY LOST
MONEY ON YOUR INVESTMENT IN THE FUND. Given the Fund's performance over
the last five quarters, 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. 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 __, 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," below.
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 or 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," below.
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," below.
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, IT WILL BE VOTED AGAINST PROPOSALS 2, 3 AND 4, AND, AS
TO PROPOSALS 1 AND 5, THE SHARES WILL BE VOTED AS "WITHHOLD" AND "ABSTAIN."
INFORMATION CONCERNING THE TRUST
As of July 6, 2000, the Trust held 767,200 shares of common stock,
representing approximately 13.59% 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.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of July 6, 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 information contained in filings with the SEC), (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 Common Stock
Name and Address with the Fund Beneficially Owned Percent
Ernest Horejsi Trust No.1B
122 South Phillips Avenue, Suite 220 --- 767,200 13.59%
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.
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-[949-2583]
Dated: August __, 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 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, than 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 repect 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
BARTLIT BECK HERMAN PALENCHAR & SCOTT
1899 Wynkoop Street
8th Floor
Denver, Colorado 80202
August __, 2000
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: USLIFE Income Fund, Inc.
Dear Sir or Madam:
On behalf of Ernest Horejsi Trust No. 1B, we hereby
electronically transmit, pursuant to Regulation S-T promulgated by the
Securities and Exchange Commission, a preliminary Proxy Statement in
opposition to the solicitation by the Board of Directors of USLIFE
Income Fund, Inc. in connection with the proposals that are scheduled
to be voted upon at the Fund's October 3, 2000 Annual Meeting.
Please contact the undersigned at (303) 592-3144 should you
require further information or have any additional questions.
Very truly yours,
/s/ Thomas R. Stephens
Thomas R. Stephens
