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As filed with the U.S. Securities and Exchange Commission
on March 3, 1998
Securities Act File No. 333-29253
Investment Company Act File No. 811-08253
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 19330 [x]
Pre-Effective Amendment No. 2 [x]
Post-Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. 2 [x]
(Check appropriate box or boxes)
Boyar Value Fund, Inc.
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(Exact Name of Registrant as Specified in Charter)
590 Madison Avenue
New York, New York 10022
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(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code:
(212) 409-2000
Mr. Jay R. Petschek
Boyar Value Fund, Inc.
590 Madison Avenue
New York, New York 10022
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(Name and Address of Agent for Service)
Copy to:
Daniel Schloendorn, Esq.
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4677
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Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
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BOYAR VALUE FUND, INC.
FORM N-1A
CROSS REFERENCE SHEET
Part A
Item No. Prospectus Heading
1. Cover Page.................. Cover Page
2. Synopsis.................... The Funds' Expenses
3. Condensed Financial
Information................. Financial Highlights
4. General Description of
Registrant.................. Cover Page; Investment Objective and
Policies; Certain Securities and Investment
Techniques; Risk Factors and Special
Considerations; Additional Information
5. Management of the Fund...... Management of the Fund
6. Capital Stock and Other
Securities.................. Additional Information
7. Purchase of Securities
Being Offered............... How Net Asset Value is Determined; How to
Purchase Shares
8. Redemption or Repurchase.... How to Redeem Shares
9. Pending Legal Proceedings... Not applicable
Part B Heading for the Statement of Additional
Item No. Additional Information
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10. Cover Page.................. Cover Page
11. Table of Contents........... Contents
12. General Information and
History..................... Management of the Fund; See
Prospectus--"Additional Information"
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13. Investment Objective and
Policies.................... Investment Objective; Investment Policies
14. Management of the
Registrant..................
Management of the Fund; See
Prospectus--"Management of the Fund"
15. Control Persons and
Principal Holders of
Securities..................
Management of the Fund; See
Prospectus--"Management of the Fund"
16. Investment Advisory and
Other Services..............
Management of the Fund; See
Prospectus--"Management of the Fund"
17. Brokerage Allocation....... Investment Policies; Portfolio Transactions
18. Capital Stock and Other
Securities..................
Management of the Fund--Organization of the
Fund; See Prospectus--"Additional
Information"
19. Purchase, Redemption and
Pricing of Securities Being
Offered.....................
Additional Purchase and Redemption
Information; See Prospectus--"How to
Purchase Shares", "How to Redeem Shares" and
"How Net Asset Value is Determined"
20. Tax Status.................. Additional Information Concerning Taxes; See
Prospectus--"Dividends, Distributions and
Taxes"
21. Underwriters................ Investment Policies; See
Prospectus--"Management of the Fund"
22. Calculation of Performance
Data........................
Determination of Performance
23. Financial Statements....... Statement of Assets and Liabilities; Report
of Ernst & Young LLP, Independent Accountants
2
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Part C
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Information required to be included in Part C is set forth after the
appropriate item, so numbered, in Part C to this Registration Statement.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT
BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE
ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR
SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
Subject to completion, dated March 3, 1998
PROSPECTUS _____________, 1998
BOYAR VALUE FUND, INC.
590 Madison Avenue, New York, NY 10022
Boyar Value Fund, Inc. (the "Fund") is a no load mutual fund that seeks
long-term capital appreciation, which it pursues by investing primarily in
equity securities of companies that are believed by the Fund's investment
adviser to be intrinsically undervalued.
Investment advisory services for the Fund are provided by Boyar Asset
Management, Inc. (the "Adviser") and the Fund is managed by Ladenburg Thalmann
Fund Management Inc. (the "Manager").
This Prospectus briefly sets forth certain information about the Fund that
investors should know before investing. Investors are advised to read this
Prospectus carefully and retain it for future reference.
Additional information about the Fund, contained in a Statement of Additional
Information, has been filed with the Securities and Exchange Commission ("SEC")
in a document entitled "Statement of Additional Information" and is available
for reference, along with other related materials, on the SEC Internet Web site
(http://www.sec.gov). The Statement of Additional Information is also available
upon request and without charge by calling the Fund at 1-800-266-5566.
Information regarding the status of shareholder accounts may also be obtained by
calling the Fund at the same number. The Fund maintains a Web site at
www.boyarvalue.com. The Statement of Additional Information bears the same date
as this Prospectus and is incorporated by reference into this Prospectus.
Shares of the Fund are not deposits or obligations of or guaranteed or endorsed
by any bank, and shares are not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other government agency.
Investments in shares of the Fund involve investment risks, including the
possible loss of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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CONTENTS
THE FUND'S EXPENSES............................................................3
INVESTMENT OBJECTIVE AND POLICIES..............................................4
CERTAIN SECURITIES AND INVESTMENT TECHNIQUES...................................9
RISK FACTORS AND SPECIAL CONSIDERATIONS.......................................12
MANAGEMENT OF THE FUND........................................................14
HOW TO PURCHASE SHARES........................................................18
HOW TO REDEEM SHARES..........................................................21
HOW NET ASSET VALUE IS DETERMINED.............................................23
DIVIDENDS, DISTRIBUTIONS AND TAXES............................................24
ADDITIONAL INFORMATION........................................................26
(i)
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THE FUND'S EXPENSES
The following table lists the costs that an investor will
incur, either directly or indirectly, as a shareholder of the Fund, based upon
the Fund's projected annual operating expenses:
Shareholder Transaction Expenses
Maximum sales charge imposed on purchases of
share (as a percentage of offering price).................... None
Redemption Fee................................................... None(1)
Annual Operating Expenses (as percentage of
average net assets)
Management and advisory fees..................................... 1.00%
12b-1 fees (distribution and service fees)(2).................... .25%
Other expenses (after expense reimbursements)(3)................. .50%
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Total Fund Operating Expenses (after expense waivers and
reimbursements)(3)............................................... 1.75%
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1 A wire transfer fee is charged by the Fund's custodian in the case of
redemptions made by wire. Such fee is subject to change and is currently
$9.
2 The Fund bears an annual Rule 12b-1 service fee of .25% of the value of the
average daily net assets. Long-term shareholders may pay more than the
economic equivalent of the maximum front-end sales loads permitted by the
National Association of Securities Dealers.
3 The Manager and the Adviser are voluntarily absorbing certain expenses
(excluding litigation, indemnification, taxes and other extraordinary
expenses) that would cause all "Other expenses" to exceed .50%. It is
currently anticipated that this arrangement will continue until further
notice to shareholders. Based on the Fund's projected annualized average
net assets, if these expenses are not absorbed, "Other expenses" would be
1.20% and "Total Fund Operating Expenses" would be 2.45%.
The nature of the services for which the Fund pays management and advisory
fees is described below under "Management of the Fund." The percentage of "Other
expenses" in the table above is based on annualized estimates of expenses for
the Fund's initial fiscal year and includes fees for shareholder services,
custodial fees, legal and accounting fees and registration fees, net of expense
reimbursements.
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Example
The following example demonstrates the projected dollar amount
of total cumulative expenses that would be incurred over various periods with
respect to a hypothetical $1,000 investment in the Fund assuming (1) a 5% annual
return, (2) payment of the shareholder transaction expenses and annual Fund
operating expenses set forth in the table above and (3) complete redemption at
the end of the period.
1 Year 3 Years
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$18.38 $56.90
The above example is intended to assist an investor in
understanding various costs and expenses that the investor would bear upon
becoming a shareholder of the Fund. The example should not be considered to be a
representation of past or future expenses. Actual expenses of the Fund may be
greater or less than those shown above. The assumed 5% annual return shown in
the example is hypothetical and should not be considered to be a representation
of past or future annual return; the actual return of the Fund may be greater or
less than the assumed return.
INVESTMENT OBJECTIVE AND POLICIES
IN GENERAL
The investment objective of the Fund is long-term capital
appreciation, which it pursues by investing primarily in equity securities which
are believed by Boyar Asset Management, Inc. (the "Adviser") to be intrinsically
undervalued. The Fund seeks to achieve its investment objective by investing
substantially all, but under normal market conditions no less than 65 percent,
of its total assets in equity securities, including common stock, preferred
stock or securities convertible into or exchangeable for common stock. It is
anticipated that the equity securities in which the Fund will invest will be
traded on domestic and foreign securities exchanges or on the over-the-counter
markets. The Fund may also make temporary investments in investment grade
corporate debt obligations and U.S. Government securities for defensive purposes
when it believes market conditions warrant and as a cash management technique.
See "Temporary Investments." In addition, the Fund may engage in securities
lending transactions in order to generate income to cover Fund expenses. See
"Lending of Securities." The Fund's investment objective may not be changed
without shareholder approval. There is no assurance that the Fund's investment
objective will be achieved.
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Because the Fund will invest primarily in equity securities,
it will be subject to general conditions prevailing in securities markets and
the net asset value of the Fund's shares will fluctuate with changes in the
market prices of its portfolio securities.
INVESTMENT STRATEGY
The Adviser seeks out intrinsically undervalued corporations
and purchases their shares at low prices relative to their perceived inherent
worth. This can lead to the potential for significant capital appreciation. The
intrinsic value of a corporation is the estimated current worth that would
accrue to the stockholders of a company, either through liquidation of corporate
assets upon termination of operations, or through the sale or merger of the
entire enterprise as a continuing business. In the Adviser's opinion, within an
investment time horizon of three to five years, typically either the stock
market will accurately reflect a corporation's intrinsic value or the assets of
the corporation will be acquired by a third party. From 1975 through June 5,
1997, approximately 43% of the corporations that the chief investment officer of
the Adviser, Mr. Mark A. Boyar, has extensively researched and written in-depth
research reports about in his Asset Analysis Focus research service ("Asset
Analysis Focus") have been acquired or liquidated (i.e., the assets were sold to
a third party and the proceeds of the sale were distributed to the shareholders)
at a premium to the price of the company's shares at the time the initial
research report appeared in Asset Analysis Focus. Of the companies which were
acquired or liquidated, the average time period from the date the initial
research report was issued until a transaction actually occurred was 5.7 years.
This "Buy and Hold" investment strategy reflects the
determination to grow capital and maintain purchasing power by holding stocks
for the long term. A long-term orientation may sound stodgy, but this approach
is as important to investment success as picking the right stocks at the right
price and at the right time. Holding the equity of good companies purchased at
bargain prices allows compounding to work without the return-eroding effects of
commissions and capital gains taxes. Buying and holding stocks not only
postpones the payment of capital gains taxes but there are also added positive
effects on the compounding rate. The Adviser believes that by reducing the
number of transactions generated by profit taking, all the money invested is
still working for a better return until the future tax liability is incurred.
There is an advantage to the "Buy and Hold" investment
strategy assuming various rates of return. Frequent securities trading may
increase the tax liabilities of investors and reduce investors' after tax return
by not taking advantage of lower capital gains rates and the advantage of
deferring payment of Federal tax liabilities. Under a "Buy and Hold" strategy,
tax
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liabilities may be deferred to the future and, when paid, may be paid at capital
gains rates that may be lower than ordinary tax rates. There is no guarantee
that Federal capital gains rates will remain lower than Federal ordinary tax
rates.
To hasten the recognition factor of an intrinsically
undervalued corporation's shares in the marketplace, the Adviser also looks for
companies that have some type of catalyst or trigger, for example: a corporation
that has undergone or is about to undergo an asset redeployment program,
resulting in potentially greater return on assets; a company whose chief
operating officer and major stockholder is relatively old and has no heir to
take over the company upon his death or retirement; or a corporation that is
engaged in more than one business, with the possibility that the second business
might be spun off to the existing shareholders. The Adviser generally will avoid
investing in corporations whose shares are widely held by institutions or
closely followed by investment analysts, because the likelihood of a great
disparity between stock market value and intrinsic value is remote.
At the time of the purchase of the corporation's shares, the
Adviser determines the value of all of the assets and liabilities of the
corporation and thereby establishes a potential selling price for the
corporation's common stock. The Adviser reviews the company's asset base from
time to time (especially when the common stock of a corporation nears its sell
price target), to carefully determine if something has changed to alter its
opinion -- if not, the security is sold when it meets its fully valued price.
The Adviser may alternatively sell covered call options or buy
put options with exercise prices at a stock's sell target price, although it is
not anticipated that the value of the underlying securities on which covered
call and put options will be written or purchased will exceed 5% of the Fund's
total assets in the foreseeable future. See "Stock Options and Currency Exchange
Transactions" in the Statement of Additional Information.
The Adviser employs a variety of different investment
strategies to uncover investment opportunities for the Fund, including the
following:
1. Hidden Assets
"Hidden" assets are assets whose current values are
undervalued on a corporation's financial statements -- a situation which may
lead to a disparity between market value and intrinsic worth. Hidden assets
include real estate -- buildings and undeveloped acreage, reserves of natural
resources -- coal, gas, oil and timber, cellular or cable franchises and
inventory reserves resulting from the last-in-first-out method of inventory
accounting. The Adviser adjusts the value of these assets to
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their current market value to calculate the intrinsic worth of the corporation,
which may be much higher than the value the stock market accords them.
2. Underpriced Businesses
Excessive pessimism about a particular industry or a specific
company may result in extreme disparities between the stock market value of a
corporation and the price that would be placed upon the company if the entire
enterprise were acquired by a knowledgeable private investor. When employing
this method of valuation, the Adviser considers the subject corporation's
historical earning power, present product mix and financial strength as well as
the prices at which similar corporations have been acquired in the recent past.
The Adviser's findings help place an appropriate value on the shares of the
subject company.
3. Undervalued Franchises
A number of corporations have, over time, created valuable
consumer franchises. Their products are recognized easily by consumers around
the world. Such franchises are virtually impossible for a potential competitor
to duplicate. These "franchise" corporations often can raise prices or even
charge a premium for their products or services without losing market share. The
value of this competitive advantage may not be adequately reflected in the price
of the company's shares.
4. Selling For Less Than Net Working Capital
The minimum liquidation value of a corporation is, in most
instances, its net working capital value. This amount is determined by
subtracting from current assets all liabilities senior to the common stock,
including current liabilities, long term debt, preferred stock, capitalized
lease obligations and certain pension liabilities. The stock market will, at
pessimistic extremes, value individual securities at a discount to their net
working capital on a per share basis. Investments made at these levels provide
an opportunity to purchase securities below their liquidating value and acquire
the pro-rata value of property, plant and equipment at zero cost.
5. "Fallen Angels"
Well known corporations that were once the "darlings" of Wall
Street, may fall out of favor with the investment community, causing their stock
prices to plummet to unrealistically low levels. The Adviser may purchase shares
of such companies if it determines that the fundamentals of such a concern are
not permanently impaired.
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6. Restructuring Plays, Breakups and Spin-offs
A company interested in enhancing shareholder value may spin
off a portion of its assets to current stockholders through the creation of a
new public entity. The common stock of the newly spun-off company often trades
temporarily at a substantial discount to its underlying net asset value. This is
in part because this new entity is not immediately followed by Wall Street
analysts. However, the newly focused "pure play" companies often perform well
and soon receive more coverage than they ever would have as one ungainly and
difficult to analyze conglomerate.
7. Bankruptcies
An over-leveraged company that declares bankruptcy can purge
itself of excess debt and then emerge as a more competitive enterprise. The
stigma of bankruptcy, however, can sometimes depress the stock prices of those
companies to bargain levels.
8. Under-Followed Companies
The Adviser normally invests in the equity of corporations not
widely held by institutions or closely followed by other investment analysts.
The Adviser believes that this is the area where the stock market is most
inefficient in providing investors the opportunity to find unrecognized values.
High-profile, popular companies are monitored carefully and consistently by
portfolio managers and investment analysts. The likelihood of a profitable
disparity developing between the stock market values and the intrinsic values of
these businesses is remote.
9. Low Price to Earnings Ratios
The Adviser believes that the risk inherent in the stock
selection process can be reduced by purchasing common equity at price to
earnings ratios that are low relative to those that prevail in the general stock
market. Earnings disappointments rarely hurt low price to earnings common stocks
for long periods of time. On the other hand, positive earnings surprises usually
result in an increase of the price to earnings ratio.
10. Large Free Cash Flows
The Adviser favors companies that generate significantly more
cash than they need to finance day-to-day operations. Such companies can use
this excess cash to repurchase their own shares, increase dividends or make
acquisitions.
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11. Insider Ownership
The Adviser will take positions in the common equity of
corporations whose executives buy and hold large amounts of the company's stock.
Significant insider ownership of a corporation's shares indicates that the
interests of the executives and managers who own those shares are aligned with
the interests of other shareholders and they have a powerful incentive to work
for the company's long-term success. On the other hand, insignificant insider
ownership can depress the shares of an otherwise good company because its
managers own too little equity in the business to care much about maximizing
shareholder value. The Adviser evaluates investments in companies with extreme
positions of insider ownership - significant or insignificant - to aid in
determining a company's intrinsic value. Excessive non-stock and non-performance
related compensation for a company's top officers can also depress the shares of
an otherwise good company. The Adviser will not hesitate to assert its weight as
a shareholder of a business that is poorly managed.
In making investment selections, the Fund also focuses on
certain fundamental financial characteristics of a company, including debt to
capital ratios and the market capitalization of small-, medium- and large-sized
companies. The Fund has no policy regarding the minimum or maximum market
capitalization of companies in which it may invest.
CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
PORTFOLIO TRANSACTIONS
All orders for transactions in securities and options on
behalf of the Fund are placed with broker-dealers selected by the Adviser.
Affiliates of the Manager or the Adviser may serve as the Fund's broker in
effecting portfolio transactions on national securities exchanges and retain
commissions in accordance with certain regulations of the SEC. In addition, the
Adviser may select broker-dealers that provide it with research services and may
cause the Fund to pay these broker-dealers commissions that exceed those that
other broker-dealers may have charged, if it views the commissions as reasonable
in relation to the value of the brokerage and/or research services received.
FOREIGN SECURITIES
Although the Fund will invest primarily in domestic
securities, and has no present intention of investing any significant portion of
its assets in foreign securities, it reserves the right to invest in foreign
securities if the purchase thereof at the time of purchase would not cause more
than 15 percent of the value of the Fund's total assets to be invested in
foreign securities. See "Foreign Securities" below.
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TEMPORARY INVESTMENTS
The Fund has adopted a temporary defensive investment policy,
which permits the Fund to deviate temporarily from fundamental and
non-fundamental investment policies, without a shareholder vote or without prior
contemporaneous notification to shareholders, when significant adverse market,
economic, political or other circumstances require immediate action to avoid
loss. The Fund may invest up to 35 percent of its total assets and, when the
Adviser believes market conditions warrant a temporary defensive position, up to
100 percent of its total assets in corporate bonds rated at least Baa by Moody's
Investors Service, Inc. ("Moody's") or BBB by Standard & Poor's Ratings Services
("S&P"), commercial paper rated at least Prime-2 by Moody's or A-2 by S&P and
obligations issued or guaranteed by the U.S. Government or by its agencies or
instrumentalities or in repurchase agreements for any of the foregoing.
Obligations of certain agencies and instrumentalities of the U.S. Government,
such as the Government National Mortgage Association, are supported by the "full
faith and credit" of the U.S. Government; others, such as those of the Federal
National Mortgage Association, are supported by the discretionary authority of
the U.S. Government to purchase the agency's obligations; and still others, such
as those of the Export-Import Bank of the U.S., are supported by the right of
the issuer to borrow from the U.S. Treasury; and still others, such as those of
the Student Loan Marketing Association, are supported only by the credit of the
instrumentality. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored instrumentalities if it
is not obligated to do so by law. Bonds rated Baa by Moody's and BBB by S&P,
while considered "investment grade" obligations, may have speculative
characteristics.
REPURCHASE AGREEMENTS
The Fund may invest in repurchase agreement transactions with member banks
of the Federal Reserve System and certain non-bank dealers. Repurchase
agreements are contracts under which the buyer of a security simultaneously
commits to resell the security to the seller at an agreed-upon price and date.
Under the terms of a typical repurchase agreement, the Fund would acquire any
underlying security for a relatively short period (usually not more than one
week) subject to an obligation of the seller to repurchase, and the Fund to
resell, the obligation at an agreed-upon price and time, thereby determining the
yield during the Fund's holding period. This arrangement results in a fixed rate
of return that is not subject to market fluctuations during the Fund's holding
period. The value of the underlying securities will at all times be at least
equal to the total amount of the purchase obligation, including interest. The
Fund bears a risk of loss in the event that the other party to a repurchase
agreement defaults on its obligations or becomes bankrupt and the Fund is
delayed in or prevented from exercising
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its right to dispose of the collateral securities, including the risk of a
possible decline in the value of the underlying securities during the period
while the Fund seeks to assert this right. The Adviser, acting under the
supervision of the Fund's Board of Directors (the "Board"), monitors the
creditworthiness of those bank and non-bank dealers with which the Fund enters
into repurchase agreements to evaluate this risk. A repurchase agreement is
considered to be a loan under the Investment Company Act of 1940, as amended
(the "1940 Act").
LENDING OF SECURITIES
The Fund may lend its portfolio securities to broker-dealers
and other financial institutions pursuant to agreements requiring that the loans
be continuously secured by cash, letters of credit or U.S. Government securities
of a value equal to at least the fair market value of the securities lent. These
loans will not be made if as a result the aggregate of all outstanding loans
exceeds 33-1/3 percent of the value of the Fund's total assets taken at current
value.
STOCK OPTIONS
To hedge against adverse market shifts, the Fund may purchase
put options on securities held in its portfolio. The Fund may also seek to
increase its income or may hedge a portion of its portfolio investments through
writing (that is, selling) "covered" call options. As the holder of a put
option, the Fund will have the right to sell the securities underlying the
option and as the writer (seller) of a call option, the Fund will have the
obligation to sell the securities underlying the option, in each case at the
option's exercise price at any time prior to, or on, the option's expiration
date. A covered call option contemplates that, for so long as the Fund is
obligated as the writer of the option, it will own (1) the underlying securities
subject to the option or (2) securities convertible into, or exchangeable
without the payment of any consideration for, the securities subject to the
option. The value of the underlying securities on which covered call and put
options will be written or purchased at any one time by the Fund is not
anticipated to exceed 5 percent of the Fund's total assets.
The Fund may choose to exercise the options it holds, permit
them to expire or terminate them prior to their expiration by entering into
closing sale or purchase transactions. In entering into a closing transaction,
the Fund would sell or purchase an option of the same series as the one it has
written or purchased, respectively. See "Stock Options and Currency Exchange
Transactions" in the Statement of Additional Information.
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INVESTMENT RESTRICTIONS
In order to limit investment risk, the Fund has adopted
certain investment restrictions that are changeable only by shareholder vote.
These restrictions, among other things, prohibit the Fund from: purchasing
securities of any issuer, other than U.S. Government securities and repurchase
agreements collateralized by U.S. Government securities, if the purchase would
cause more than 5 percent of the Fund's total assets, taken at market value, to
be invested in the securities of that issuer, except that 25 percent of the
Fund's assets may be invested without regard to this limit; purchasing more than
10 percent of the voting securities of any issuer, except that 25 percent of the
Fund's assets may be invested without regard to this limit; purchasing
securities on margin; borrowing money or mortgaging or hypothecating the Fund's
assets, although the prohibition against borrowing does not prohibit limited
short-term borrowings to meet redemption requests and the prohibition against
mortgaging or hypothecating assets does not prohibit escrow arrangements
contemplated by writing covered call options; and concentrating more than 25
percent of the Fund's total assets in any one industry. In addition, it is
anticipated that the Fund will not invest more than 15 percent of the Fund's net
assets in restricted or illiquid securities, including securities that are not
readily marketable. This last restriction may be changed by the Fund's Board.
RISK FACTORS AND SPECIAL CONSIDERATIONS
EQUITY FLUCTUATION
Because the major portion of the Fund's portfolio consists of
common stocks, it may be expected that its net asset value will be subject to
greater fluctuation than a portfolio containing mostly fixed income securities.
FOREIGN SECURITIES
Foreign securities present special considerations not
typically associated with investments in domestic securities. Foreign taxes may
reduce income. Currency exchange rates and regulations may cause fluctuations in
the value of foreign securities. Foreign securities are subject to different
regulatory environments than in the United States and, compared to the United
States, there may be a lack of uniform accounting, auditing and financial
reporting standards, less volume and liquidity and more volatility, less public
information and less regulation of foreign issuers. Countries have been known to
expropriate or nationalize assets, and foreign investments may be subject to
political, financial or social instability or adverse diplomatic developments.
There may be difficulties in obtaining service of process on foreign issuers and
difficulties in enforcing judgments with respect to claims under the U.S.
securities laws against these issuers. Favorable or unfavorable
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<PAGE>
differences between U.S. and foreign economies could affect foreign securities
values. The U.S. Government has, in the past, discouraged certain foreign
investments by U.S. investors through taxation or other restrictions and it is
possible that such restrictions could be imposed again.
STOCK OPTIONS
The Fund will receive a premium when it writes call options,
which increases the Fund's return on the underlying security in the event the
option expires unexercised or is closed out at a profit. By writing a call, the
Fund will limit its opportunity to profit from an increase in the market value
of the underlying security above the exercise price of the option for as long as
the Fund's obligation as writer of the option continues. Thus, in some periods,
the Fund will receive less total return and in other periods greater total
return from its hedged positions than it would have received from its underlying
securities if unhedged.
In purchasing a put option, the Fund will seek to benefit from
a decline in the market price of the underlying security. If a put option
purchased is not sold or exercised when it has remaining value, or if the market
price of the underlying security remains equal to or greater than the exercise
price, during the life of the option, the Fund will lose its investment in the
option. For the purchase of a put option to be profitable, the market price of
the underlying security must decline sufficiently below the exercise price to
cover the premium and transaction costs. Because option premiums paid by the
Fund are small in relation to the market value of the investments underlying the
options, buying options can result in large amounts of leverage. The leverage
offered by trading in options could cause the Fund's net asset value to be
subject to more frequent and wider fluctuations than would be the case if the
Fund did not invest in options.
SMALL- AND MEDIUM-SIZED COMPANIES
There is no minimum or maximum market capitalization of the
companies in which the Fund may invest. Investing in securities of small- and
medium-sized companies may involve greater risks since these securities may have
limited marketability and, thus, may be more volatile than securities of larger,
more established companies or the market in general. Because small- and
medium-sized companies normally have fewer shares outstanding than larger
companies, it may be more difficult for the Fund to buy or sell significant
amounts of these shares without an unfavorable impact on prevailing prices.
Small-sized companies may have limited product lines, markets or financial
resources and may lack management depth. In addition, small- and medium-sized
companies are typically subject to a greater degree of changes in earnings and
business prospects than are larger, more established companies. There is
typically less
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publicly available information concerning small- and medium-sized companies than
for larger, more established ones. Although investing in securities of small-
and medium-sized companies offers potential for above-average returns if the
companies are successful, the risk exists that such companies will not succeed
and the prices of their shares could significantly decline in value.
RELATED TRANSACTIONS
The Fund is expected to purchase securities that have been
recommended by Asset Analysis Focus (the research service affiliated with the
Adviser). However, the Fund will acquire new recommendations made by Asset
Analysis Focus no earlier than five Business Days after publication of Asset
Analysis Focus. The Fund may also purchase shares in combination with other
accounts managed by the Adviser. These practices may have an impact on the price
and availability of the securities to be purchased by the Fund.
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS
The overall management of the business and affairs of the Fund
are managed under the direction of its Board of Directors. The Directors, who
are identified in the Statement of Additional Information, approve all
significant agreements between the Fund and the persons that furnish services to
the Fund, including the agreements with the Manager, the Adviser, the Fund's
distributor, custodian and administrator and transfer agent. As the Fund's
Manager, Ladenburg Thalmann Fund Management Inc. is responsible for the
day-to-day business operations of the Fund.
MANAGER
The Manager is located at 590 Madison Avenue, New York, New
York 10022. Ladenburg Thalmann Asset Management Inc. ("LTAM") owns 50% of the
outstanding securities of the Manager. LTAM is a wholly owned subsidiary of
Ladenburg Thalmann & Co. Inc. ("LTCI"), a registered broker-dealer which is a
member of all principal exchanges, including the New York Stock Exchange
("NYSE") since 1868. LTCI is a wholly owned subsidiary of Ladenburg Thalmann
Group Inc. ("Ladenburg Thalmann Group"). Ladenburg Thalmann Group is indirectly
controlled by Brooke Group Ltd. ("Brooke Group"). Bennett S. Lebow, the
Chairman, President and Chief Executive Officer of Brooke Group, may be deemed
to control Brooke Group. Ebbets Field Association LLC, an entity controlled by
Mark A. Boyar, holds the other 50% of the outstanding voting securities of the
Manager.
Pursuant to a Management Agreement with the Fund, the Manager,
under the supervision of the Board of Directors,
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oversees the daily operations of the Fund, supervises the performance of
administrative and professional services provided by others, including the
Adviser. As compensation for its services and the related expenses borne by the
Manager, the Fund pays the Manager a fee, computed daily and payable monthly, at
the annual rate of .50 of one percent of the Fund's average daily net assets.
The Manager may voluntarily waive all or a portion of its fees from time to time
and in its discretion reimburse expenses to be paid by the Fund.
INVESTMENT ADVISER
The Adviser is an investment adviser and an affiliate of Mark
Boyar & Company, Inc. ("Mark Boyar & Co."), a broker-dealer registered with the
SEC. The Adviser's principal business address is 35 East 21st Street, New York,
New York 10010.
Pursuant to the Investment Advisory Agreement among the
Manager, the Adviser and the Fund, the Adviser has agreed to furnish continuous
investment advisory services to the Fund. Subject to the supervision and
direction of the Fund's Board of Directors, the Adviser manages the Fund's
portfolio in accordance with the stated policies of the Fund. The Adviser makes
investment decisions for the Fund and places the purchase and sale orders for
portfolio transactions. For the services provided pursuant to the Investment
Advisory Agreement, the Fund pays the Adviser a fee, computed daily and payable
monthly, at the annual rate of .50 of one percent of the Fund's average daily
net assets. The Adviser may voluntarily waive all or a portion of its fees from
time to time and in its discretion reimburse expenses to be paid by the Fund.
Mark A. Boyar is the chief investment officer of the Fund, and
will be primarily responsible for the day-to-day management to the Fund's
portfolio. Mr. Boyar, the President of Mark Boyar & Co., has also been the
President of the Adviser since 1983. Mark Boyar & Company Inc. publishes Asset
Analysis Focus, an institutionally oriented research service that focuses on
uncovering intrinsically undervalued corporations for investment and merger and
acquisition activity.
ADMINISTRATOR
Countrywide Fund Services, Inc., P.O. Box 5354, Cincinnati,
Ohio 45201-5354, serves as the Fund's administrator and accounting, transfer,
dividend disbursing, shareholder service and plan agent (the "Administrator").
The Administrator is a wholly-owned indirect subsidiary of Countrywide Credit
Industries, Inc., a New York Stock Exchange listed company principally engaged
in the business of residential mortgage lending.
Pursuant to the Administration Agreement, the Accounting
Services Agreement and the Transfer, Dividend
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Disbursing, Shareholder Service and Plan Agency Agreement, the Administrator
furnishes the Fund's accounting, data processing, internal auditing and other
services required by the Fund; prepares reports to shareholders of the Fund and
reports to and filings with the SEC and state Blue Sky authorities; and
calculates the net asset value of shares of the Fund. For administrative
services provided pursuant to the Administration Agreement, the Fund pays the
Administrator a monthly fee, calculated at an annual rate as a percentage of the
Fund's average daily net assets, of .150% for the first $50 million, .125% for
the next $50 million and .100% for over $100 million of average daily net
assets. The monthly fee for administrative services is subject to a $1,000
minimum charge. For accounting services provided pursuant to the Accounting
Services Agreement, the Fund pays the Administrator a monthly fee of $2,000 for
up to $50 million, $2,500 for $50 million to $100 million, $3,000 for $100
million to $200 million, $4,000 for $200 million to $300 million and $5,000 for
over $300 million of average net assets of the Fund during the month. For the
performance of transfer agent services by the Administrator (including transfer,
dividend disbursing, shareholder service and plan agent services provided
pursuant to the Transfer, Dividend Disbursing, Shareholder Service, and Plan
Agency Agreement) the Fund pays the Administrator an annual per account charge
of $18. This fee is paid monthly and is subject to a $1,200 monthly minimum
charge.
DISTRIBUTOR
LTCI acts as distributor of the Fund's shares. LTCI's
principal address is 590 Madison Avenue, New York, New York 10022.
LTCI is a member of the NASD and of the New York, American and
other principal national securities exchanges. LTCI is paid monthly fees by the
Fund in connection with the servicing of shareholder accounts. A monthly service
fee, authorized pursuant to a Shareholder Servicing and Distribution Plan (the
"Plan") adopted by the Fund pursuant to Rule 12b-1 under the 1940 Act, is
calculated at the annual rate of .25% of the value of the average daily net
assets of the Fund and is used by LTCI to provide compensation for ongoing
servicing and/or maintenance of shareholder accounts with the Fund. Compensation
is paid by LTCI to persons, including employees of LTCI, who respond to
inquiries of shareholders of the Fund regarding their ownership of shares or
their accounts with the Fund or who provide other similar services not otherwise
required to be provided by the Fund's Adviser, Administrator or other agent of
the Fund.
Payments under the Plan are not tied exclusively to the service expenses
actually incurred by LTCI, and the payments may exceed expenses actually
incurred by LTCI. The Board of Directors evaluates the appropriateness of the
Plan and its payment terms on a continuing basis and in doing so considers all
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relevant factors, including expenses borne by LTCI and amounts it receives under
the Plan.
Under its terms, the Plan continues from year to year, so long
as its continuance is approved annually by vote of the Board of Directors,
including a majority of the Directors who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operation of the
Plan (the "Independent Directors"). The Plan may not be amended to increase
materially the amount to be spent for the services provided by LTCI without
shareholder approval, and all material amendments of the Plan also must be
approved by the Directors in the manner described above. The Plan may be
terminated at any time, without penalty, by vote of a majority of the
Independent Directors or by a vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) on not more than 30 days' written notice
to LTCI.
Pursuant to the Plan, LTCI will provide the Board of Directors
with periodic reports of amounts expended under the Plan and the purpose for
which the expenditures were made. The Directors believe that the Fund's
expenditures under the Plan will benefit the Fund and its shareholders by
providing better shareholder services.
DIRECTORS AND OFFICERS
The officers of the Fund manage its day-to-day operations and
are directly responsible to its Board. The Board sets broad policies for the
Fund and chooses the Fund's officers. A list of the Directors and officers of
the Fund and a brief statement of their present positions and principal
occupations during the past five years is set forth in the Statement of
Additional Information of the Fund.
CUSTODIAN
Star Bank, N.A. (the "Custodian") acts as custodian of the
Fund's investments. The Custodian's principal address is 425 Walnut Street,
Cincinnati, Ohio.
Pursuant to the Custody Agreement, the Custodian acts as the
Fund's depository, safekeeps its portfolio securities, collects all income and
other payments with respect thereto, disburses funds as instructed and maintains
records in connection with its duties.
EXPENSES OF THE FUND
In addition to the fees paid to the Adviser and the Manager,
operating expenses for the Fund generally consist of fees of the Administrator
and other Fund expenses, which include, among others, the fees and expenses, if
any, of the Directors and officers for attending meetings of the Board of
Directors, fees
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of the Fund's Custodian, interest expense, taxes, brokerage fees and
commissions, fees and expenses of the Fund's shareholder servicing operations,
fees and expenses of qualifying and registering the Fund's shares under Federal
and state securities laws, expenses of preparing, printing and distributing
prospectuses and reports to existing shareholders, auditing and legal expenses,
insurance expenses, association dues, and the expense of shareholders' meetings
and proxy solicitations. The Fund is also liable for any non-recurring expenses
that may arise such as litigation to which the Fund may be a party. The Fund may
be obligated to indemnify the Board of Directors and officers with respect to
such litigation. All expenses of the Fund are accrued daily on the books of the
Fund at a rate which is equal to the actual expenses expected to be incurred by
the Fund in accordance with generally accepted accounting principles. Currently,
the Manager and the Adviser are voluntarily absorbing certain expenses and they
may, in their discretion and as they deem appropriate, continue to waive a
portion or all of the fees payable to them by the Fund.
HOW TO PURCHASE SHARES
There are no sales commissions charged to investors.
Assistance in opening accounts may be obtained from the Administrator by calling
1-800-266-5566, or by writing to the Fund at the address shown below for regular
mail orders. Assistance is also available through any broker-dealer authorized
to sell shares of the Fund. Such broker-dealer may charge you a fee for its
services. Payment for shares purchased may be made through your account at the
broker-dealer processing your application and order to purchase. Your investment
will purchase shares at the Fund's net asset value next determined after your
order is received by the Fund in proper order as indicated herein. The minimum
initial investment in the Fund, unless stated otherwise herein, is $5,000. For
retirement plans, the minimum initial investment is $2,500. The Fund may, in the
Adviser's sole discretion, accept certain accounts with less than the stated
minimum initial investment.
Payment must be made by check or money order drawn on a U.S.
bank and payable in U.S. dollars. All orders received by the Administrator,
whether by mail, bank wire or facsimile order from a qualified broker-dealer,
prior to the close of regular trading on the NYSE, normally 4:00 p.m., Eastern
time, will purchase shares at the net asset value next determined on that
business day. If your order is not received by the close of regular trading on
the NYSE, your order will purchase shares at the net asset value determined on
the next business day. See "How Net Asset Value is Determined".
Due to Internal Revenue Service ("IRS") regulations,
applications without social security or tax identification numbers will not be
accepted. If, however, you have already applied for a social security or tax
identification number at the
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time of completing your account application, the application should so indicate.
The Fund is required to, and will, withhold taxes on all distributions and
redemption proceeds if the number is not delivered to the Fund within 60 days.
Investors should be aware that the Fund's account application
contains provisions in favor of the Fund, the Administrator and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating to
the various services made available to investors.
Should an order to purchase shares be canceled because your
check does not clear, you will be responsible for any resulting losses or fees
incurred by the Fund or the Administrator in the transaction.
Regular Mail Orders. Please complete and sign the Account
Application form accompanying this Prospectus and send it with your check, made
payable to Boyar Value Fund, Inc. and mail it to:
Boyar Value Fund, Inc.
c/o Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
Bank Wire Orders. Investments can be made directly by bank
wire. To establish a new account or add to an existing account by wire, please
call the Fund, at 1-800-266-5566, before wiring funds, to advise the Fund of the
investment, the dollar amount and the account registration. This will ensure
prompt and accurate handling of your investment. Please have your bank use the
following wiring instructions to purchase by wire:
Star Bank, N.A.
ABA# 042000013
For Boyar Value Fund #4836-16975
FFC: Shareholder Name and Account Number
It is important that the wire contain all the information and that the Fund
receives prior telephone notification to ensure proper credit. Once your wire is
sent you should, as soon as possible thereafter, complete and mail your Account
Application to the Fund as described under "Regular Mail Orders," above.
Additional Investments. You may add to your account by mail or
wire (minimum additional investment of $1,000) at any time by purchasing shares
at the then current net asset value as aforementioned. Before making additional
investments by bank wire, please call the Fund at 1-800-266-5566 to alert the
Fund that your wire is to be sent. Follow the wire instructions above to send
your wire. When calling for any reason, please have your account number ready,
if known. Mail orders should include, when
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possible, the "Invest by Mail" stub which is attached to your Fund confirmation
statement. Otherwise, be sure to identify your account in your letter.
Automatic Investment Plan. The automatic investment plan
enables shareholders to make regular monthly or quarterly investment in shares
through automatic charges to their checking account. With shareholder
authorization and bank approval, the Administrator will automatically charge the
checking account for the amount specified ($100 minimum) which will be
automatically invested in shares at the net asset value on or about the last
business day of the month or quarter. The shareholder may change the amount of
the investment or discontinue the plan at any time by writing to the
Administrator.
Employees and Affiliates of the Fund. The minimum purchase
requirement is not applicable to accounts of Directors, officers or employees of
the Fund or certain parties related thereto. The minimum initial investment for
such accounts is $1,000.
Stock Certificates. Stock certificates will not be issued for
your shares. Evidence of ownership will be given by issuance of periodic account
statements which will show the number of shares owned.
Tax-Deferred Retirement Plans. Shares of the Fund are
available for purchase in connection with the following tax-deferred retirement
plans:
-- Keogh Plans for self-employed individuals;
-- Individual retirement account (IRA) plans for individuals
and their non-employed spouses;
-- Qualified pension and profit-sharing plans for
employees, including those profit-sharing plans with a
401(k) provision; and
-- 403(b)(7) custodial accounts for employees of public
school systems, hospitals, colleges and other nonprofit
organizations meeting certain requirements of the
Internal Revenue Code of 1986, as amended (the "Code").
Direct Deposit Plans. Shares of the Fund may be purchased
through direct deposit plans offered by certain employers and government
agencies. These plans enable a shareholder to have all or a portion of his or
her payroll or social security checks transferred automatically to purchase
shares of the Fund.
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HOW TO REDEEM SHARES
Shares of the Fund may be redeemed on each day that the Fund
is open for business by sending a written request to the Fund. The Fund is open
for business on each day the NYSE is open for business. Any redemption may be
for more or less than the purchase price of your shares depending on the market
value of the Fund's portfolio securities. All redemption orders received in
proper form, as indicated herein, by the Administrator prior to the close of
regular trading on the NYSE (normally 4:00 p.m., Eastern time) will redeem
shares at the net asset value per share determined as of that business day's
close of trading. Otherwise, your order will redeem shares on the next business
day. You may also redeem your shares through a broker-dealer who may charge you
a fee for its services.
The Board of Directors reserves the right to involuntarily
redeem any account having an account value of less than $5,000 (due to
redemptions, exchanges or transfers, and not due to market action) upon 60 days'
written notice. If the shareholder brings his account value up to $5,000 or more
during the notice period, the account will not be redeemed. Redemptions from
retirement plans may be subject to tax withholding.
If you are uncertain of the requirements for redemption,
please contact the Fund, at 1-800-266-5566, or write to the address shown below.
Regular Mail Redemptions Your request should be addressed to
Boyar Value Fund, Inc., P.O. Box 5354, Cincinnati, Ohio 45201-5354. Your request
for redemption must include:
1) your letter of instruction or a stock assignment specifying
the account number, and the number of shares or dollar
amount to be redeemed. This request must be signed by all
registered shareholders in the exact names in which they are
registered;
2) any required signature guarantees (see "Signature
Guarantees"); and
3) other supporting legal documents, if required in the case of
estates, trusts, guardianships, custodianships,
corporations, partnerships, pension or profit sharing plans,
and other organizations.
Your redemption proceeds will be mailed to you within three business days after
receipt of your redemption request. However, the Fund may delay forwarding a
redemption check for recently purchased shares while it determines whether the
purchase payment will be honored. Such delay (which may take up to 15 days) may
be reduced or avoided if the purchase is made by certified check,
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government check or wire transfer. In such cases, the net asset value next
determined after receipt of the request for redemption will be used in
processing the redemption and your redemption proceeds will be mailed to you
upon clearance of your check to purchase shares. The Fund may suspend redemption
privileges or postpone the date of payment (i) during any period that the NYSE
is closed, or trading on the NYSE is restricted as determined by the Securities
and Exchange Commission (the "SEC"), (ii) during any period when an emergency
exists as defined by the rules of the SEC as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or to
fairly determine the value of its assets, and (iii) for such other periods as
the SEC may permit.
You can choose to have redemption proceeds mailed to you at
your address of record, your bank, or to any other authorized person, or you can
have the proceeds sent by bank wire to your bank ($5,000 minimum). Shares of the
Fund may not be redeemed by wire on days in which your bank is not open for
business. Redemption proceeds will only be sent to the bank account or person
named in your Account Application currently on file with the Fund. You can
change your redemption instructions anytime you wish by filing a letter
including your new redemption instructions with the Fund. (See "Signature
Guarantees.")
There is currently no charge by the Administrator for wire
redemptions, however, the Fund's Custodian charges an $9 wire transfer fee for
redemptions made by wire. This fee is subject to change. The Administrator
reserves the right, upon thirty days' written notice, to make reasonable charges
for wire redemptions. All charges will be deducted from your account by
redemption of shares in your account. Your bank or brokerage firm may also
impose a charge for processing the wire. In the event that wire transfer of
funds is impossible or impractical, the redemption proceeds will be sent by mail
to the designated account.
Signature Guarantees. To protect your account and the Fund
from fraud, signature guarantees are required to be sure that you are the person
who has authorized a change in registration, or standing instructions, for your
account. Signature guarantees are required for (1) change of registration
requests, and (2) requests to establish or change redemption services other than
through your initial account application. Signature guarantees are acceptable
from a member bank of the Federal Reserve System, a savings and loan
institution, credit union, registered broker-dealer or a member firm of a U.S.
Stock Exchange, and must appear on the written request for redemption, or change
of registration.
Systematic Withdrawal Plan. A shareholder who owns shares of
the Fund valued at $25,000 or more at the current offering price may establish a
Systematic Withdrawal Plan to receive a monthly or quarterly check in a stated
amount not less
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than $100. Each month or quarter as specified, the Fund will automatically
redeem sufficient shares from your account to meet the specified withdrawal
amount. The shareholder may establish this service whether dividends and
distributions are reinvested or paid in cash. Systematic withdrawals may be
deposited directly to the shareholder's bank account by completing the
applicable section on the Account Application form accompanying this Prospectus,
or by calling or writing the Fund.
Redemptions In Kind. If the Board determines that conditions
exist which make payment of redemption proceeds wholly in cash unwise or
undesirable, the Fund may make payment wholly or partly in securities or other
investment instruments which may not constitute securities as such term is
defined in the applicable securities laws. If a redemption is paid wholly or
partly in securities or other property, you would incur transaction costs in
disposing of the redemption proceeds.
HOW NET ASSET VALUE IS DETERMINED
The net asset value of the Fund is determined on each business
day that the NYSE is open for trading, as of the close of the NYSE (normally
4:00 p.m., Eastern time). Securities held by the Fund may be primarily listed on
foreign exchanges or traded in foreign markets which are open on days (such as
Saturdays and U.S. holidays) when the NYSE is not open for business. As a
result, the net asset value per share of the Fund may be significantly affected
by trading on days when the Fund is not open for business. Net asset value per
share is determined by dividing the total value of all Fund securities (valued
at market value) and other assets, less liabilities, by the total number of
shares then outstanding. Net asset value includes interest on fixed income
securities, which is accrued daily. See the Statement of Additional Information
for further details.
Securities which are traded over-the-counter are priced at the
last sale price, if available, otherwise, at the last quoted bid price.
Securities traded on a national stock exchange will be valued based upon the
closing price on the valuation date on the principal exchange where the security
is traded. Fixed-income securities will ordinarily be traded in the
over-the-counter market and common stocks will ordinarily be traded on a
national securities exchange, but may also be traded in the over-the-counter
market. Foreign securities are valued on the basis of quotations from the
primary market in which they are traded and are translated from the local
currency into U.S. dollars using currency exchange rates. Securities and other
assets for which no quotations are readily available will be valued in
good faith at fair value using methods determined by the Board of Directors.
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DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividends and Distributions. The Fund expects to distribute
substantially all of its net investment income, if any, on an annual basis. The
Fund also expects to distribute any net realized long-term capital gains at
least once each year. Management will determine the timing and frequency of the
distributions of any net realized short-term capital gains.
Distributions are paid according to one of the following
options:
Share Option - income distributions and capital gains
distributions reinvested in additional
shares.
Income Option - income distributions and short-term capital
gains distributions paid in cash; long-term
capital gains distributions reinvested in
additional shares.
Cash Option - income distributions and capital gains
distributions paid in cash.
You should indicate your choice of option on your application.
If no option is specified on your application, distributions will automatically
be reinvested in additional shares. All distributions will be based on the net
asset value in effect on the payable date.
If you select the Income Option or the Cash Option and the
U.S. Postal Service cannot deliver your checks or if your checks remain uncashed
for six months, your dividends may be reinvested in your account at the then
current net asset value and your account will be converted to the Share Option.
Taxes. The Fund intends to qualify each year as a regulated
investment company ("RIC") within the meaning of the Code. As a RIC, the Fund
will be subject to a 4 percent non-deductible excise tax measured with respect
to certain undistributed amounts of ordinary income and capital gain. The Fund
expects to pay such dividends and make such distributions as are necessary to
avoid the application of this tax.
Dividends paid from net investment income and distributions of
net realized short-term capital gains are taxable to investors as ordinary
income, and distributions derived from net realized long-term capital gains are
taxable to investors as long-term capital gains, in each case regardless
of how long the shareholder has held Fund shares and whether received in cash or
reinvested in additional Fund shares. As a general rule, an investor's gain or
loss on a sale or redemption of his Fund shares will be long-term capital gain
or loss if he
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has held his shares for more than one year and will be short-term capital gain
or loss if he has held his shares for one year or less. However, any loss
realized upon the sale or redemption of shares within six months from the date
of their purchase will be treated as a long-term capital loss to the extent of
any amounts treated as distributions of long-term capital gain during such
six-month period with respect to such shares.
The Taxpayer Relief Act of 1997 made certain changes to the
Code with respect to taxation of long-term capital gains earned by taxpayers
other than a corporation. In general, for sales made after May 6, 1997, the
maximum tax rate for individual taxpayers on net long-term capital gains is
lowered to 20% for most assets (including long-term capital gains recognized by
shareholders on the sale or redemption of Fund shares that were held as capital
assets). This 20% rate applies to sales on or after July 29, 1997 only if the
asset was held for more than 18 months at the time of disposition. Capital gains
on the disposition of assets on or after July 29, 1997 held for more than one
year and up to 18 months at the time of disposition will be taxed as "mid-term
gain" at a maximum rate of 28%. A rate of 18% instead of 20% will apply after
December 31, 2000 for assets held for more than 5 years. However, the 18% rate
applies only to assets acquired after December 31, 2000 unless the taxpayer
elects to treat an asset held prior to such date as sold for fair market value
on January 1, 2001. In the case of individuals whose ordinary income is taxed at
a 15% rate, the 20% rate is reduced to 10% and the 18% rate for assets held for
more than 5 years is reduced to 8%. The Fund will provide information relating
to that portion of a "capital gain dividend" that may be treated by investors as
eligible for the reduced capital gains tax rate for capital assets held for more
than 18 months.
Investors may be proportionately liable for taxes on income
and gains of the Fund, but investors not subject to tax on their income will not
be required to pay tax on amounts distributed to them. The Fund's investment
activities, including short sales of securities, will not result in unrelated
business taxable income to a tax-exempt investor. The Fund will designate that
portion of the Fund's dividends that will qualify for the federal dividends
received deduction for corporations. The Fund's investments in foreign
securities may subject it to certain withholding and other taxes imposed by
foreign countries with respect to dividends, interest, capital gains and other
income. It is not expected that the payment of such taxes by the Fund will give
rise to a direct credit or deduction available to the Fund's shareholders.
The Fund may be required to withhold federal income tax at a
rate of 31 percent ("backup withholding") from dividends paid to non-corporate
shareholders. This tax may be withheld from dividends if (i) the shareholder
fails to furnish the Fund with the shareholder's correct taxpayer identification
number, (ii) the IRS notifies the Fund that the shareholder has failed to
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report properly certain interest and dividend income to the IRS and to respond
to notices to that effect, or (iii) when required to do so, the shareholder
fails to certify that he or she is not subject to backup withholding. Redemption
proceeds may be subject to withholding under the circumstances described in (i)
above. Any amounts withheld under the backup withholding rules may be credited
against a shareholder's federal income tax liability.
Each shareholder will receive an annual statement setting
forth the dollar amounts of dividends and any distributions for the prior
calendar year and the tax status of such dividends and distributions for federal
income tax purposes. Shareholders should consult their own tax advisers as to
the state and local tax consequences of investing in the Fund.
ADDITIONAL INFORMATION
ORGANIZATION
The Fund is registered under the 1940 Act as an open-end,
diversified, management investment company and was incorporated on February 28,
1997 under the laws of the State of Maryland. The Fund has an authorized
capitalization of 1,000,000,000 shares with a par value of $.001 per share and
transferable without restriction. All shares of the Fund have equal rights and
privileges as to participation in dividends and distributions and in the net
distributable assets of the Fund on liquidation.
When issued, shares are fully paid and nonassessable, and have
no preemptive, conversion or exchange rights. Certain aspects of the shares may
be changed, upon notice to Fund shareholders, to satisfy certain tax regulatory
requirements, if the change is deemed necessary by the Directors.
From time to time, advertisements or reports to shareholders
may compare the performance of the shares to that of other mutual funds (or
classes thereof) with a similar investment objective. The performance of the
shares also might be compared to rankings prepared by Lipper Analytical
Services, Inc. and Morningstar, Inc., which are widely recognized, independent
services that monitor the performance of mutual funds, as well as to various
unmanaged indices, such as the Standard & Poor's 500 Composite Stock Price
Index. Performance information may be useful in reviewing the performance of the
shares and in providing a basis for comparison with other investment
alternatives. Investors should be aware that because the performance of the Fund
changes in response to fluctuation in interest rates, price fluctuations in
securities markets, the Fund's expenses and other factors, a performance
quotation should not be considered representative of the Fund's performance for
any future period. Shareholders may make inquiries regarding the Fund,
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<PAGE>
including current performance quotations, by calling their account
representative.
VOTING RIGHTS
Investors in the Fund are entitled to one vote for each full
share held and proportional, fractional votes for fractional shares held. There
will normally be no meeting of investors for the purpose of electing members of
the Board unless and until such time as less than a majority of the members
holding office have been elected by investors. Any Director of the Fund may be
removed from office upon the vote of shareholders holding at least a majority of
the Fund's outstanding shares, at a meeting called for that purpose. A meeting
will be called for the purpose of voting on the removal of a Board member at the
written request of 10% of the outstanding shares of the Fund.
* * *
No person has been authorized to give any information or to
make any representations other than those contained in this Prospectus, the
Fund's Statement of Additional Information or the Fund's official sales
literature in connection with the offering of shares of the Fund, and if given
or made, such other information or representations must not be relied upon as
having been authorized by the Fund. This Prospectus does not constitute an offer
of the shares of the Fund in any state in which, or to any person to whom, such
offer may not lawfully be made.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONSTITUTE A
PROSPECTUS.
<PAGE>
Subject to completion, dated March 3, 1998
STATEMENT OF ADDITIONAL INFORMATION
__________, 1998
BOYAR VALUE FUND, INC.
590 Madison Avenue, New York, New York 10022
For information, call 800-266-5566
Contents
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Page
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Investment Objective...........................................................2
Investment Policies............................................................2
Investment Limitations.........................................................8
Portfolio Valuation...........................................................10
Portfolio Transactions........................................................11
Management Of The Fund........................................................14
Distribution And Shareholder Servicing........................................21
Additional Purchase And Redemption Information................................21
Additional Information Concerning Taxes.......................................22
Determination Of Performance..................................................27
Independent Accountants And Counsel...........................................28
Financial Statement...........................................................29
This Statement of Additional Information is meant to be read in
conjunction with the Prospectus for Boyar Value Fund, Inc. (the "Fund"), dated
_________, 1998, as amended or supplemented from time to time, and is
incorporated by reference in its entirety into that Prospectus. Because this
Statement of Additional Information is not itself a prospectus, no investment in
shares of the Fund should be made solely upon the information contained herein.
Copies of the Fund's Prospectus may be obtained by calling the Fund at
800-266-5566.
<PAGE>
INVESTMENT OBJECTIVE
The investment objective of the Fund is long-term capital
appreciation.
INVESTMENT POLICIES
The following policies supplement the descriptions of the Fund's
investment objective and policies in the Prospectus.
Stock Options and Currency Exchange Transactions
- ------------------------------------------------
Stock Options. When Boyar Asset Management, Inc. (the "Adviser")
believes that individual portfolio securities are approaching the top of the
Adviser's growth and price expectations, the Fund may write covered call options
against such securities. The Fund may also purchase put options. The value of
the underlying securities on which covered call and put options will be written
or purchased, respectively, at any one time by the Fund is not anticipated to
exceed 5% of the Fund's total assets. The Fund writes and purchases options only
for hedging purposes and not for speculation.
The Fund realizes fees (referred to as "premiums") for granting
the rights evidenced by the options it has written. A call option embodies the
right of its purchaser to compel the writer of the option to sell to the option
holder an underlying security at a specified price for a specified time period
or at a specified time. A put option embodies the right of its purchaser to
compel the writer of the option to purchase from the option holder an underlying
security at a specified price for a specified period or at a specified time.
The principal reason for writing covered call options on a
security is to attempt to realize, through the receipt of premiums, a greater
return than would be realized on the securities alone. In return for a premium,
the Fund as the writer of a covered call option forfeits the right to any
appreciation in the value of the underlying security above the strike price for
the life of the option (or until a closing purchase transaction can be
effected). Nevertheless, the Fund as a call writer retains the risk of a decline
in the price of the underlying security. The size of the premiums that the Fund
may receive may be adversely affected as new or existing institutions, including
other investment companies, engage in or increase their option-writing
activities.
In the case of options written by the Fund that are deemed
covered by virtue of the Fund's holding convertible or exchangeable preferred
stock or debt securities, the time required to convert or exchange and obtain
physical delivery of the underlying common stock with respect to which the Fund
has written options may exceed the time within which the Fund must make delivery
in accordance with an exercise notice. In these instances, the Fund may purchase
or temporarily borrow the underlying securities for purposes of physical
delivery. By so doing, the Fund will not bear any market risk, since the Fund
will have the absolute right to receive from the issuer of the underlying
security an equal number of shares to replace
2
<PAGE>
the borrowed securities, but the Fund may incur additional transaction costs or
interest expenses in connection with any such purchase or borrowing.
Options written by the Fund will normally have expiration dates
between one and nine months from the date written. The exercise price of the
options may be below, equal to or above the market values of the underlying
securities at the times the options are written. In the case of call options,
these exercise prices are referred to as "in-the-money," "at-the-money" and
"out-of-the-money," respectively. The Fund may write (i) in-the-money call
options when the Adviser expects that the price of the underlying security will
remain flat or decline moderately during the option period, (ii) at-the-money
call options when the Adviser expects that the price of the underlying security
will remain flat or advance moderately during the option period and (iii)
out-of-the-money call options when the Adviser expects that the premiums
received from writing the call option plus the appreciation in market price of
the underlying security up to the exercise price will be greater than the
appreciation in the price of the underlying security alone. In any of the
preceding situations, if the market price of the underlying security declines
and the security is sold at this lower price, the amount of any realized loss
will be offset wholly or in part by the premium received. To secure its
obligation to deliver the underlying security when it writes a call option, the
Fund will be required to deposit in escrow the underlying security or other
assets in accordance with the rules of the Options Clearing Corporation (the
"Clearing Corporation") and of the securities exchange on which the option is
written.
Prior to their expirations, call options may be sold in closing
sale or purchase transactions (sales or purchases by the Fund prior to the
exercise of options that it has purchased or written, respectively, of options
of the same series) in which the Fund may realize a profit or loss from the
sale. An option position may be closed out only where there exists a secondary
market for an option of the same series on a recognized securities exchange or
in the over-the-counter market. When the Fund has purchased a put option and
engages in a closing sale transaction, whether the Fund realizes a profit or
loss will depend upon whether the amount received in the closing sale
transaction is more or less than the premium the Fund initially paid for the
original option plus the related transaction costs. Similarly, in cases where
the Fund has written a call option, it will realize a profit if the cost of the
closing purchase transaction is less than the premium received upon writing the
original option and will incur a loss if the cost of the closing purchase
transaction exceeds the premium received upon writing the original option. The
Fund may engage in a closing purchase transaction to realize a profit, to
prevent an underlying security with respect to which it has written an option
from being called or, in the case of a call option, to unfreeze an underlying
security (thereby permitting its sale or the writing of a new option on the
security prior to the outstanding option's expiration). The obligation of the
Fund under an option it has written would be terminated by a closing purchase
transaction, but the Fund would not be deemed to own an option as a result of
the transaction. So long as the obligation of the Fund as the writer of an
option continues, the Fund may be assigned an exercise notice by the
broker-dealer through which the option was sold, requiring the Fund to deliver
the underlying security against payment of the exercise price. This obligation
terminates when the option
3
<PAGE>
expires or the Fund effects a closing purchase transaction. The Fund can no
longer effect a closing purchase transaction with respect to an option once it
has been assigned an exercise notice.
There is no assurance that sufficient trading interest will exist
to create a liquid secondary market on a securities exchange for any particular
option or at any particular time, and for some options no such secondary market
may exist. A liquid secondary market in an option may cease to exist for a
variety of reasons. In the past, for example, higher than anticipated trading
activity or order flow or other unforeseen events have at times rendered certain
of the facilities of the Clearing Corporation and various securities exchanges
inadequate and resulted in the institution of special procedures, such as
trading rotations, restrictions on certain types of orders or trading halts or
suspensions in one or more options. There can be no assurance that similar
events, or events that may otherwise interfere with the timely execution of
customers' orders, will not recur. In such event, it might not be possible to
effect closing transactions in particular options. Moreover, the Fund's ability
to terminate options positions established in the over-the-counter market may be
more limited than for exchange-traded options and may also involve the risk that
securities dealers participating in over-the-counter transactions would fail to
meet their obligations to the Fund. The Fund, however, intends to purchase
over-the-counter options only from dealers whose debt securities, as determined
by the Adviser, are considered to be investment grade. If, as a covered call
option writer, the Fund is unable to effect a closing purchase transaction in a
secondary market, it will not be able to sell the underlying security until the
option expires or it delivers the underlying security upon exercise. In either
case, the Fund would continue to be at market risk on the security and could
face higher transaction costs, including brokerage commissions.
Securities exchanges generally have established limitations
governing the maximum number of calls of each class which may be held or
written, or exercised within certain time periods by an investor or group of
investors acting in concert (regardless of whether the options are written on
the same or different securities exchanges or are held, written or exercised in
one or more accounts or through one or more brokers). It is possible that the
Fund and other clients of the Adviser may be considered to be such a group. A
securities exchange may order the liquidation of positions found to be in
violation of these limits and it may impose certain other sanctions. These
limits may restrict the number of options the Fund will be able to purchase on a
particular security.
Currency Exchange Transactions. The value in U.S. dollars of the
assets of the Fund that are invested in foreign securities may be affected
favorably or unfavorably by changes in exchange control regulations, and the
Fund may incur costs in connection with conversion between various currencies.
Currency exchange transactions may be from any non-U.S. currency into U.S.
dollars or into other appropriate currencies. The Fund will conduct its currency
exchange transactions (i) on a spot (i.e., cash) basis at the rate prevailing in
the currency exchange market, (ii) through entering into forward contracts to
purchase or sell currency or (iii) by purchasing exchange-traded currency
options.
4
<PAGE>
Foreign Investments. Investors should recognize that investing in
foreign companies involves certain risks, including those discussed below, which
are not typically associated with investing in U.S. issuers. Since the Fund may
invest in securities denominated in currencies other than the U.S. dollar, and
since the Fund may temporarily hold funds in bank deposits or other money market
investments denominated in foreign currencies, the Fund may be affected
favorably or unfavorably by exchange control regulations or changes in the
exchange rate between such currencies and the dollar. A change in the value of a
foreign currency relative to the U.S. dollar will result in a corresponding
change in the dollar value of the Fund's assets denominated in that foreign
currency. Changes in foreign currency exchange rates may also affect the value
of dividends and interest earned, gains and losses realized on the sale of
securities and net investment income and gains, if any, to be distributed to
shareholders by the Fund. The rate of exchange between the U.S. dollar and other
currencies is determined by the forces of supply and demand in the foreign
exchange markets. Changes in the exchange rate may result over time from the
interaction of many factors directly or indirectly affecting economic and
political conditions in the United States and a particular foreign country,
including economic and political developments in other countries. Of particular
importance are rates of inflation, interest rate levels, the balance of payments
and the extent of government surpluses or deficits in the United States and the
particular foreign country, all of which are in turn sensitive to the monetary,
fiscal and trade policies pursued by the governments of the United States and
foreign countries important to international trade and finance. Governmental
intervention may also play a significant role. National governments rarely
voluntarily allow their currencies to float freely in response to economic
forces. Sovereign governments use a variety of techniques, such as intervention
by a country's central bank or imposition of regulatory controls or taxes, to
affect the exchange rates of their currencies.
Individual foreign economies may differ favorably or unfavorably
from the U.S. economy in such respects as growth of gross national product, rate
of inflation, capital reinvestment, resource self-sufficiency, and balance of
payments positions. The Fund may invest in securities of foreign governments (or
agencies or instrumentalities thereof), and many, if not all, of the foregoing
considerations apply to such investments as well.
Securities of some foreign companies are less liquid and their
prices are more volatile than securities of comparable U.S. companies. Certain
foreign countries are known to experience long delays between the trade and
settlement dates of securities purchased or sold. Due to the increased exposure
of the Fund to market and foreign exchange fluctuations brought about by such
delays, and due to the corresponding negative impact on Fund liquidity, the Fund
will avoid investing in countries which are known to experience settlement
delays which may expose the Fund to unreasonable risk of loss.
U.S. Government Securities. The Fund may invest in debt
obligations of varying maturities issued or guaranteed by the United States
government, its agencies or instrumentalities ("U.S. government securities").
Direct obligations of the U.S. Treasury include a variety of securities that
differ in their interest rates, maturities and dates of
5
<PAGE>
issuance. U.S. government securities also include securities issued or
guaranteed by the Federal Housing Administration, Farmers Home Loan
Administration, Export-Import Bank of the United States, Small Business
Administration, Government National Mortgage Association, General Services
Administration, Central Bank for Cooperatives, Federal Farm Credit Banks,
Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal
Intermediate Credit Banks, Federal Land Banks, Federal National Mortgage
Association, Maritime Administration, Tennessee Valley Authority, District of
Columbia Armory Board and Student Loan Marketing Association. The Fund may also
invest in instruments that are supported by the right of the issuer to borrow
from the U.S. Treasury and instruments that are supported by the credit of the
instrumentality. Because the U.S. government is not obligated by law to provide
support to an instrumentality it sponsors, the Fund will invest in obligations
issued by such an instrumentality only if the Adviser determines that the credit
risk with respect to the instrumentality does not make its securities unsuitable
for investment by the Fund.
Lending of Portfolio Securities. The Fund may lend portfolio
securities to brokers, dealers and other financial organizations that meet
capital and other credit requirements or other criteria established by the
Fund's Board of Directors (the "Board"). These loans, if and when made, may not
exceed 33 1/3% of the Fund's total assets taken at current value. The Fund will
not lend portfolio securities to affiliates of the Adviser unless it has applied
for and received specific authority to do so from the SEC. Loans of portfolio
securities will be collateralized by cash, letters of credit or U.S. government
securities, which are maintained at all times in an amount equal to at least
100% of the current market value of the loaned securities. Any gain or loss in
the market price of the securities loaned that might occur during the term of
the loan would be for the account of the Fund. From time to time, the Fund may
return a part of the interest earned from the investment of collateral received
for securities loaned to the borrower and/or a third party that is unaffiliated
with the Fund and that is acting as a "finder."
By lending its securities, the Fund can increase its income by
continuing to receive interest and any dividends on the loaned securities as
well as by either investing the collateral received for securities loaned in
short-term instruments or obtaining yield in the form of interest paid by the
borrower when U.S. government securities are used as collateral. Although the
generation of income is not an investment objective of the Fund, income received
could be used to pay the Fund's expenses and would increase an investor's total
return. The Fund will adhere to the following conditions whenever its portfolio
securities are loaned: (i) the Fund must receive at least 100% cash collateral
or equivalent securities of the type discussed in the preceding paragraph from
the borrower; (ii) the borrower must increase such collateral whenever the
market value of the securities rises above the level of such collateral; (iii)
the Fund must be able to terminate the loan at any time; (iv) the Fund must
receive reasonable interest on the loan, as well as any dividends, interest or
other distributions on the loaned securities and any increase in market value;
(v) the Fund may pay only reasonable custodian fees in connection with the loan;
and (vi) voting rights on the loaned securities may pass to the borrower,
provided, however, that if a material event adversely
6
<PAGE>
affecting the investment occurs, the Board must terminate the loan and regain
the right to vote the securities. Loan agreements involve certain risks in the
event of default or insolvency of the other party including possible delays or
restrictions upon the Fund's ability to recover the loaned securities or dispose
of the collateral for the loan.
American, European and Continental Depositary Receipts. The
assets of the Fund may be invested in the securities of foreign issuers in the
form of American Depositary Receipts ("ADRs") and European Depositary Receipts
("EDRs"). These securities may not necessarily be denominated in the same
currency as the securities into which they may be converted. ADRs are receipts
typically issued by a U.S. bank or trust company which evidence ownership of
underlying securities issued by a foreign corporation. EDRs, which are sometimes
referred to as Continental Depositary Receipts ("CDRs"), are receipts issued in
Europe typically by non-U.S. banks and trust companies that evidence ownership
of either foreign or domestic securities. Generally, ADRs in registered form are
designed for use in U.S. securities markets and EDRs and CDRs in bearer form are
designed for use in European securities markets.
Convertible Securities. Convertible securities are fixed income
securities that may be converted at either a stated price or stated rate into
underlying shares of common stock. Because of this conversion feature,
convertible securities enable an investor to benefit from increases in the
market price of the underlying common stock while permitting the investor to
obtain a yield that is generally greater than that obtainable from the
underlying common stock. In addition, convertible securities generally offer
greater stability of price than the underlying common stock during declining
market periods. The value of convertible securities fluctuates in relation to
changes in interest rates and, in addition, also fluctuates in relation to the
underlying common stock. The Adviser may make modifications of its investment
strategy for the Fund as it deems advisable in light of its experience in
managing the Fund or in response to changing market or economic conditions.
Warrants. The Fund may purchase warrants issued by domestic and
foreign companies to purchase newly created equity securities consisting of
common and preferred stock. The equity security underlying a warrant is
outstanding at the time the warrant is issued or is issued together with the
warrant.
Investing in warrants can provide a greater potential for profit
or loss than an equivalent investment in the underlying security, and, thus, can
be a speculative investment. The value of a warrant may decline because of a
decline in the value of the underlying security, the passage of time, changes in
interest rates or in the dividend or other policies of the company whose equity
underlies the warrant or a change in the perception as to the future price of
the underlying security, or any combination thereof. Warrants generally pay no
dividends and confer no voting or other rights other than to purchase the
underlying security.
7
<PAGE>
Illiquid Securities. The Fund may not invest more than 15% of its
net assets in illiquid securities, including securities that are illiquid by
virtue of the absence of a readily available market, time deposits maturing in
more than seven days and repurchase agreements which have a maturity of longer
than seven days. Securities that have legal or contractual restrictions on
resale but have a readily available market are not considered illiquid for
purposes of this limitation. Repurchase agreements subject to demand are deemed
to have a maturity equal to the notice period.
Historically, illiquid securities have included securities
subject to contractual or legal restrictions on resale because they have not
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), securities which are otherwise not readily marketable and repurchase
agreements having a maturity of longer than seven days. Securities which have
not been registered under the Securities Act are referred to as private
placements or restricted securities and are purchased directly from the issuer
or in the secondary market. Mutual funds do not typically hold a significant
amount of these restricted or other illiquid securities because of the potential
for delays on resale and uncertainty in valuation. The Fund's investment in
illiquid securities is subject to the risk that, should the Fund desire to sell
any of these securities when a ready buyer is not available at a price that is
deemed to be representative of their value, the value of the Fund's net assets
could be adversely affected.
Borrowing. The Fund may borrow, temporarily, up to 33 1/3% of its
total assets for extraordinary purposes or to meet redemption requests which
might otherwise require untimely disposition of portfolio holdings. To the
extent the Fund borrows for these purposes, the effects of market price
fluctuations on portfolio net asset value will be exaggerated. If, while such
borrowing is in effect, the value of the Fund's assets declines, the Fund could
be forced to liquidate portfolio securities when it is disadvantageous to do so.
The Fund would incur interest and other transaction costs in connection with
borrowing. The Fund will borrow only from a bank.
INVESTMENT LIMITATIONS
The investment limitations numbered 1 through 10 may not be
changed without the affirmative vote of the holders of a majority of the Fund's
outstanding shares. Such majority is defined as the lesser of (i) 67% or more of
the shares present at the meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy, or (ii) more
than 50% of the outstanding shares. Investment limitations 11 through 13 may be
changed by a vote of the Board at any time.
The Fund may not:
1. Borrow money except that the Fund may borrow from banks for
temporary or emergency purposes in an amount that may not exceed 33 1/3% of the
value of the Fund's total assets at the time of such borrowing. For purposes of
this restriction, short sales, the entry into currency transactions, options,
and forward commitment transactions that are not
8
<PAGE>
accounted for as financings (and the segregation of assets in connection with
any of the foregoing) shall not constitute borrowing.
2. Make loans, except that the Fund may purchase or hold
fixed-income securities, lend portfolio securities up to 33 1/3% of the Fund's
total assets and enter into repurchase agreements in accordance with its
investment objective, policies and limitations.
3. Purchase any securities which would cause 25% or more of the
value of the Fund's total assets at the time of purchase to be invested in the
securities of issuers conducting their principal business activities in the same
industry; provided that there shall be no limit on the purchase of U.S.
Government Securities.
4. Purchase the securities of any issuer if as a result (a) more
than 5% of the value of the Fund's total assets would be invested in the
securities of such issuer or (b) the Fund would acquire 10% or more of the
voting securities of such issuer, except that these limitations do not apply to
U.S. Government Securities and repurchase agreements collateralized by U.S.
Government Securities and except that up to 25% of the value of the Fund's total
assets may be invested without regard to these limitations.
5. Underwrite any securities issued by others except to the
extent that the investment in restricted securities and the sale of securities
or the purchase of securities directly from the issuer in accordance with the
Fund's investment objective, policies and limitations may be deemed to be
underwriting.
6. Purchase or sell real estate, except that the Fund may invest
in securities (a) secured by real estate, mortgages or interests therein, (b)
issued by companies which invest in real estate or interests therein or (c) hold
and sell real estate acquired by the Fund as the result of the ownership of
securities.
7. Make short sales of securities or maintain a short position,
except that the Fund may maintain short positions in currencies, securities and
stock indexes, futures contracts and options on futures contracts and enter into
short sales or short sales "against the box" in accordance with the Fund's
investment objective, policies and limitations.
8. Purchase securities on margin, except that the Fund may obtain
any short-term credits necessary for the clearance of purchases and sales of
securities. For purposes of this restriction, the deposit or payment of initial
or variation margin in connection with transactions in currencies, options,
futures contracts or related options will not be deemed to be a purchase of
securities on margin.
9. Invest in commodities, except that the Fund may (a) purchase
and sell futures contracts, including those relating to securities, currencies
and indexes, and options on futures contracts, securities, currencies or
indexes, (b) purchase and sell currencies on a forward commitment or
delayed-delivery basis and (c) enter into stand-by commitments.
9
<PAGE>
10. Pledge, mortgage or hypothecate its assets, or otherwise
issue senior securities, except (a) to the extent necessary to secure permitted
borrowings and (b) to the extent related to the deposit of assets in escrow in
connection with the purchase of securities on a forward commitment or
delayed-delivery basis and collateral and initial or variation margin
arrangements with respect to currency transactions, options, futures contracts,
and options on futures contracts.
11. Invest more than 15% of the Fund's net assets in securities
which may be illiquid because of legal or contractual restrictions on resale or
securities for which there are no readily available market quotations. For
purposes of this limitation, repurchase agreements with maturities greater than
seven days shall be considered illiquid securities.
12. Make additional investments if the Fund's borrowings exceed
5% of its total assets.
13. Purchase securities of other investment companies except in
connection with a merger, consolidation, acquisition, reorganization or offer of
exchange, or as otherwise permitted under the 1940 Act.
Notwithstanding paragraphs numbered 1, 7, 8, 9 and 10, the Fund
has no present intention of engaging in transactions involving futures contracts
and options on futures contracts or of entering into short sales and short sales
"against the box," and will not do so until approved by the Fund's Board and
upon appropriate notice to investors.
If a percentage restriction (other than the percentage limitation
set forth in No. 1 above) is adhered to at the time of an investment, a later
increase or decrease in the percentage of assets resulting from a change in the
values of portfolio securities or in the amount of the Fund's assets will not
constitute a violation of such restriction.
PORTFOLIO VALUATION
The share net price (net asset value) of the shares of the Fund
is determined as of the close of the regular session of trading on the New York
Stock Exchange ("NYSE") (normally 4:00 p.m., Eastern time) on each business day,
except on days when the NYSE is closed. The NYSE is currently scheduled to be
closed on New Year's Day, Dr. Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas,
and on the preceding Friday or subsequent Monday when one of these holidays
falls on a Saturday or Sunday, respectively. The Fund may also be open for
business on other days in which there is sufficient trading in its portfolio
securities such that its net asset value might be materially affected. For a
description of the methods used to determine the share price, see "Net Asset
Value" in the Prospectus.
Trading in securities in certain foreign countries is completed
at various times prior to the close of business on each business day in New York
(i.e., a day on which the NYSE is open for trading). In addition, securities
trading in a particular country or countries
10
<PAGE>
may not take place on all business days in New York. Furthermore, trading takes
place in various foreign markets on days which are not business days in New York
and days on which the Fund's net asset value is not calculated. As a result,
calculation of the Fund's net asset value may not take place contemporaneously
with the determination of the prices of certain portfolio securities used in
such calculation. Events affecting the values of portfolio securities that occur
between the time their prices are determined and the close of regular trading on
the NYSE will not be reflected in the Fund's calculation of net asset value
unless the Board or its delegates deems that the particular event would
materially affect net asset value, in which case an adjustment may be made. All
assets and liabilities initially expressed in foreign currency values will be
converted into U.S. dollar values at the prevailing rate as quoted by a pricing
service. If such quotations are not available, the rate of exchange will be
determined in good faith pursuant to consistently applied procedures established
by the Board.
PORTFOLIO TRANSACTIONS
The Adviser is responsible for establishing, reviewing and, where
necessary, modifying the Fund's investment program to achieve its investment
objective. Purchases and sales of newly issued portfolio securities are usually
principal transactions without brokerage commissions effected directly with the
issuer or with an underwriter acting as principal. Other purchases and sales may
be effected on a securities exchange or over-the-counter, depending on where it
appears that the best price or execution will be obtained. The purchase price
paid by the Fund to underwriters of newly issued securities usually includes a
concession paid by the issuer to the underwriter, and purchases of securities
from dealers, acting as either principals or agents in the after market, are
normally executed at a price between the bid and asked price, which includes a
dealer's mark-up or mark-down. Transactions on U.S. stock exchanges and some
foreign stock exchanges involve the payment of negotiated brokerage commissions.
On exchanges on which commissions are negotiated, the cost of transactions may
vary among different brokers. On most foreign exchanges, commissions are
generally fixed. There is generally no stated commission in the case of
securities traded in domestic or foreign over-the-counter markets, but the price
of securities traded in over-the-counter markets includes an undisclosed
commission or mark-up. U.S. government securities are generally purchased from
underwriters or dealers, although certain newly issued U.S. government
securities may be purchased directly from the U.S. Treasury or from the issuing
agency or instrumentality.
The Adviser will select specific portfolio investments and effect
transactions for the Fund and in doing so seeks to obtain the overall best
execution of portfolio transactions. In evaluating prices and executions, the
Adviser will consider the factors it deems relevant, which may include the
breadth of the market in the security, the price of the security, the financial
condition and execution capability of a broker or dealer and the reasonableness
of the commission, if any, for the specific transaction and on a continuing
basis. All orders for transactions in securities and options on behalf of the
Fund are placed with broker-dealers selected by the Adviser. Affiliates of
Ladenburg Thalmann Fund Management Inc. ("the Manager") or the Adviser may serve
as the Fund's broker in effecting portfolio transactions
11
<PAGE>
on national securities exchanges and retain commissions in accordance with
certain regulations of the SEC.
The Adviser may, in its discretion, effect transactions in
portfolio securities with dealers (other than the Adviser, the Manager and their
affiliates) who provide brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) to the Fund
and/or other accounts over which the Adviser exercises investment discretion.
The Adviser may place portfolio transactions with a broker or dealer with whom
it has negotiated a commission that is in excess of the commission another
broker or dealer would have charged for effecting the transaction if the Adviser
determines in good faith that such amount of commission was reasonable in
relation to the value of such brokerage and research services provided by such
broker or dealer viewed in terms of either that particular transaction or of the
overall responsibilities of the Adviser. Research and other services received
may be useful to the Adviser in serving both the Fund and its other clients and,
conversely, research or other services obtained by the placement of business of
other clients may be useful to the Adviser in carrying out its obligations to
the Fund. Research may include furnishing advice, either directly or through
publications or writings, as to the value of securities, the advisability of
purchasing or selling specific securities and the availability of securities or
purchasers or sellers of securities; furnishing seminars, information, analyses
and reports concerning issuers, industries, securities, trading markets and
methods, legislative developments, changes in accounting practices, economic
factors and trends and portfolio strategy; access to research analysts,
corporate management personnel, industry experts and economists; comparative
performance evaluation and technical measurement services and quotation
services; and products and other services (such as third party publications,
reports and analyses, and computer and electronic access, equipment, software,
information and accessories that deliver, process or otherwise utilize
information, including the research described above) that assist the Adviser in
carrying out its responsibilities. Research received from brokers or dealers is
supplemental to the Adviser's own research program. The fees to the Adviser
under its advisory agreement with the Fund are not reduced by reason of its
receiving any brokerage and research services. Since the Adviser and the Manager
are obligated to provide management, which includes elements of research and
related skills, such research and related skills will not be used by the Adviser
or the Manager (or their affiliates) for negotiating commissions at a rate
higher than that determined in accordance with the above criteria.
Investment decisions for the Fund concerning specific portfolio
securities are made independently from those for other clients advised by the
Adviser. Such other investment clients may invest in the same securities as the
Fund. When purchases or sales of the same security are made at substantially the
same time on behalf of such other clients, transactions are averaged as to price
and available investments allocated as to amount, in a manner which the Adviser
believes to be equitable to each client, including the Fund. In some instances,
this investment procedure may adversely affect the price paid or received by the
Fund or the size of the position obtained or sold for the Fund. To the extent
permitted by
12
<PAGE>
law, securities to be sold or purchased for the Fund may be aggregated with
those to be sold or purchased for such other investment clients in order to
obtain best execution.
Any portfolio transaction for the Fund on a securities exchange
may be executed through Ladenburg Thalmann & Co. Inc., a broker-dealer and an
affiliate of the Manager (the "Distributor"), or Mark Boyar & Company, Inc.
("Mark Boyar & Co."), an affiliate of the Adviser, if, in the Adviser's
judgment, the use of the Distributor or an affiliate of the Adviser is likely to
result in price and execution at least as favorable as those of other qualified
brokers, and if, in the transaction, the Distributor or an affiliate of the
Adviser charges the Fund a commission rate consistent with those charged by the
Distributor or an affiliate of the Adviser to comparable unaffiliated customers
in similar transactions. All transactions with affiliated brokers will comply
with Rule 17e-1 under the 1940 Act.
In no instance will portfolio securities be purchased from or
sold to the Manager, the Adviser or the Distributor or any affiliated person of
such companies. In addition, the Fund will not give preference to any
institutions with whom the Fund enters into distribution or shareholder
servicing agreements concerning the provision of distribution services or
support services.
Transactions for the Fund may be effected on foreign securities
exchanges. In transactions for securities not actively traded on a foreign
securities exchange, the Fund will deal directly with the dealers who make a
market in the securities involved, except in those circumstances where better
prices and execution are available elsewhere. Such dealers usually are acting as
principal for their own account. On occasion, securities may be purchased
directly from the issuer. Such portfolio securities are generally traded on a
net basis and do not normally involve brokerage commissions. Securities firms
may receive brokerage commissions on certain portfolio transactions, including
options, futures and options on futures transactions and the purchase and sale
of underlying securities upon exercise of options.
The Fund may participate, if and when practicable, in bidding for
the purchase of securities for the Fund's portfolio directly from an issuer in
order to take advantage of the lower purchase price available to members of such
a group. The Fund will engage in this practice, however, only when the Adviser,
in its sole discretion, believes such practice to be otherwise in the Fund's
interest.
Portfolio Turnover
The Fund anticipates that the rate of Portfolio turnover will,
generally, not exceed 50% in the current fiscal year. The Fund does not intend
to seek profits through short-term trading, but the rate of turnover will not be
a limiting factor when the Fund deems it desirable to sell or purchase
securities. The Fund's portfolio turnover rate is calculated by dividing the
lesser of purchases or sales of its portfolio securities for the year by the
monthly average value of the portfolio securities. Securities with remaining
maturities of one year or less at the date of acquisition are excluded from the
calculation.
13
<PAGE>
MANAGEMENT OF THE FUND
Officers and Board of Directors
- -------------------------------
The names (and ages) of the Fund's Directors and officers, their
addresses, present positions and principal occupations during the past five
years and other affiliations are set forth below.
Occupations During the
----------------------
Name, Address, Age Position(s) Held Past Five Years
- ------------------ ---------------- ---------------
Mark A. Boyar (54)* Chairman and Chief President and Director
35 East 21 Street Executive Officer of Boyar Asset
New York, New York 10010 Management, Inc. since
June 1983; President of
Mark Boyar & Company,
Inc. since 1979; Manager
and Member of Ebbets
Field Association LLC
since 1998; Chairman
and general partner of
Boyar Partners L.P.
since 1990; Chairman
N.R.M.B. Management,
Inc. since 1988.
Jay R. Petschek (39)* President, Treasurer, President of LTFM since
590 Madison Avenue Chief Financial Officer 1997; President and
New York, New York 10022 and Director Director of Ladenburg
Thalmann Asset
Management Inc. since
1996; Senior Managing
Director, Director of
Investment Policy and
Director of Ladenburg
Thalmann & Co., Inc.
since 1996 and Managing
Director Corporate
Finance from 1984-1995;
President of Corsair
Management Company Inc.
since 1993; General
Partner of Corsair
Capital Partners L.P.
since 1991.
Henry A. Alpert (50) Director President of Spartan
1158 Broadway Petroleum Corp. since
Hewlett, New York 10010 1974; Director of
Griffon Corp. since
1995.
A.F. Petrocelli (54) Director Chairman, President, CEO
United Capital Corp. and Director of United
9 Park Place, 4th Floor Capital Corp. since
Great Neck, New York 11021 1981; Director of
Philips
- --------------------------------
* Indicates an "interested person" under Section 2(a)(19) of the 1940 Act.
14
<PAGE>
International Realty
Corp. since 1997;
Director of Nathan's
Famous, Inc. since
1993; Director of Prime
Hospitality Corp. since
1992; Director of Metex
Corporation since 1981;
Director of Dorne &
Margolin, Inc. since
1981.
Jeffrey S. Silverman (52) Director Chairman of LTS Capital
777 Third Avenue Partners; Chairman and
New York, New York 10017 CEO of Ply Gem
Industries, Inc.
1986-1997; Director of
Catalina Lighting since
June 1997; Director of
Realco since 1995.
Richard Finkelstein (48) Director Vice President of Kenco
1000 Clint Moore Road, Management, Inc. &
Suite 110 Affiliates since 1992.
Boca Raton, Florida 33487
Robert G. Dorsey (40) Vice President President and Treasurer
312 Walnut Street of Countrywide Fund
Cincinnati, Ohio 45202 Services, Inc.; Vice
President and Treasurer
of Countrywide
Financial Services,
Inc.; Treasurer of
Countrywide
Investments, Inc.; Vice
President of
Countrywide Investment
Trust, Countrywide
Tax-Free Trust
Countrywide Strategic
Trust, Brundage, Story
and Rose Investment
Trust, Markman
MultiFund Trust, PRAGMA
Investment Trust,
Maplewood Investment
Trust, a series
company, the Thermo
Opportunity Fund, Inc.,
Lake Shore Family of
Funds, the Dean Family
of Funds, Well Family
of Real Estate Funds,
15
<PAGE>
Profit Funds Investment
Trust and the New York
State Opportunity
Funds; Assistant Vice
President of
Williamsburg Investment
Trust, Schwartz
Investment Trust, The
Tuscarora Investment
Trust, The Gannett
Welsh & Kotler Funds
and Interactive
Investments.
John F. Splain (41) Secretary Vice President,
312 Walnut Street Secretary and General
Cincinnati, Ohio 45202 Counsel of Countrywide
Fund Services, Inc.;
Secretary and General
Counsel of Countrywide
Investments, Inc. and
Countrywide Financial
Services, Inc.;
Secretary of
Countrywide Investment
Trust, Countrywide
Tax-Free Trust,
Countrywide Strategic
Trust, Brundage, Story
and Rose Investment
Trust, Williamsburg
Investment Trust,
Markman MultiFund
Trust, The Tuscarora
Investment Trust,
PRAGMA Investment
Trust, Maplewood
Investment Trust, a
series company, Wells
Family of Real Estate
Funds, Profit Funds
Investment Trust and
The Thermo Opportunity
Fund, Inc.; Assistant
Secretary of Schwartz
Investment Trust, The
Gannett Welsh & Kotler
Funds, Interactive
Investments, the New
York State Opportunity
Funds, Lake Shore
Family of Funds and the
Dean Family of
16
<PAGE>
Funds.
Mark J. Seger (36) Assistant Treasurer Vice President and Chief
312 Walnut Street Operating Officer of
Cincinnati, Ohio 45202 Countrywide Fund
Services, Inc. and Vice
President of its parent
company, Countrywide
Financial Services,
Inc.; Treasurer of
Countrywide Investment
Trust, Countrywide
Tax-Free Trust,
Countrywide Strategic
Trust, Brundage, Story
and Rose Investment
Trust, Williamsburg
Investment Trust,
Markman MultiFund
Trust, PRAGMA
Investment Trust,
Maplewood Investment
Trust, a series
company, The Thermo
Opportunity Fund, Inc.,
Lake Shore Family of
Funds, the New York
State Opportunity
Funds, Wells Family of
Real Estate Funds,
Profit Funds Investment
Trust and the Dean
Family of Funds;
Assistant Treasurer of
Schwartz Investment
Trust, The Tuscarora
Investment Trust, The
Gannett Welsh & Kotler
Funds and Interactive
Investments, all of
which are registered
investment companies.
Tina D. Hosking (29) Assistant Secretary Assistant Vice President
312 Walnut Street and Counsel of
Cincinnati, Ohio 45202 Countrywide Fund
Services, Inc.;
Secretary of PRAGMA
Investment Trust Lake
Shore Family of Funds
and The New York State
Opportunity Funds;
Assistant Secretary of
The Gannett Welsh &
Kotler Funds and Wells
17
<PAGE>
Family of Real Estate
Funds.
No employee of the Manager, the Adviser or any of their
respective affiliates will receive any compensation from the Fund for acting as
an officer or director of the Fund. Each other Director will receive an annual
fee of $3,000, and $500 for each meeting of the Board attended by him for his
services as Director and will be reimbursed for expenses incurred in connection
with his attendance at Board meetings.
Directors' Compensation
- -----------------------
Name of Director Total Compensation from Fund+
---------------- ----------------------------
Mark A. Boyar None
Jay R. Petschek None
Jeffrey S. Silverman $5,000
Henry A. Alpert $5,000
A.F. Petrocelli $5,000
Richard Finkelstein $5,000
+ Amounts shown are estimates of future payments to be made in the fiscal
year ending December 31, 1998, which the directors have elected to take
in shares of the Fund.
As of February 27, 1998, the officers and directors of the Fund as a group
owned less than 1% of the Fund's outstanding shares.
Manager
- -------
The Manager serves as manager of the Fund pursuant to a
management agreement (the "Management Agreement"). The services provided by, and
the fees payable by the Fund to, the Manager under the Management Agreement are
described in the Prospectus. The fees are calculated at an annual rate based on
a percentage of the Fund's average daily net assets. See in the Prospectus,
"Management of the Fund."
The Fund is responsible for the payment of all expenses incurred
in connection with the organization, registration of shares and operations of
the Fund, including such extraordinary or non-recurring expenses as may arise,
such as litigation to which the Fund may be a party. The Fund may have an
obligation to indemnify the Fund's officers and Directors with respect to such
litigation, except in instances of willful misfeasance, bad faith, gross
negligence or reckless disregard by such officers and Directors in the
performance of their duties. The Manager bears promotional expenses in
connection with the distribution of the Fund's shares to the extent that such
expenses are not assumed by the Fund under its 12b-1
18
<PAGE>
Plan (see below). The compensation and expenses of any officer, Director or
employee of the Fund who is an officer, director or employee of the Manager are
paid by the Manager.
By its terms, the Fund's Management Agreement will remain in
force for an initial two-year term and from year to year thereafter, subject to
annual approval by (a) the Board of Directors or (b) a vote of the majority of
the Fund's outstanding voting securities; provided that in either event
continuance is also approved by a majority of the Directors who are not
interested persons of the Fund, by a vote cast in person at a meeting called for
the purpose of voting on such approval. The Fund's Management Agreement may be
terminated at any time, on sixty days' written notice, without the payment of
any penalty, by the Board of Directors, by a vote of the majority of a Fund's
outstanding voting securities, or by the Manager. The Management Agreement
automatically terminates in the event of its assignment, as defined by the 1940
Act and the rules thereunder.
Ladenburg Thalmann Asset Management, Inc. ("LTAM") owns 50% of
the outstanding securities of the Manager. LTAM is a wholly owned subsidiary of
Ladenburg Thalmann & Co. Inc. ("LTCI"), a registered broker-dealer which is a
member of all principal exchanges, including the NYSE since 1868. LTCI is a
wholly owned subsidiary of Ladenburg Thalmann Group Inc. An entity controlled by
Mark A. Boyar, Ebbets Field Association LLC, holds the other 50% of the
outstanding voting securities of the Manager. The principal business address of
the Manager is 590 Madison Avenue, New York, New York 10022.
Investment Adviser
- ------------------
The Adviser serves as investment adviser to the Fund pursuant to
a written agreement (the "Investment Advisory Agreement"). The services provided
by, and the fees payable by the Fund to, the Adviser under the Investment
Advisory Agreement are described in the Prospectus. These fees are calculated at
an annual rate based on a percentage of the Fund's average daily net assets. See
in the Prospectus, "Management of the Fund."
By its terms, the Fund's Advisory Agreement will remain in force
for an initial two-year term and from year to year thereafter, subject to annual
approval by (a) the Board of Directors or (b) a vote of the majority of the
Fund's outstanding voting securities; provided that in either event continuance
is also approved by a majority of the Directors who are not interested persons
of the Fund, by a vote cast in person at a meeting called for the purpose of
voting on such approval. The Fund's Advisory Agreement may be terminated at any
time, on sixty days' written notice, without the payment of any penalty, by the
Board of Directors, by a vote of the majority of a Fund's outstanding voting
securities, or by the Adviser. The Advisory Agreement automatically terminates
in the event of its assignment, as defined by the 1940 Act and the rules
thereunder.
The name "Boyar" is a property right of the Adviser. The Adviser
may use the name "Boyar" in other connections and for other purposes, including
in the name of other investment companies. The Fund has agreed to discontinue
any use of the name "Boyar" if the Adviser ceases to be employed as the Fund's
investment adviser.
19
<PAGE>
The Adviser is an affiliate of Mark Boyar & Co., a broker-dealer
registered with the SEC. The Adviser's principal business address is 35 East
21st Street, New York, New York 10010. Mark A. Boyar, Chairman and Chief
Executive Officer of the Fund, is a controlling person of the Adviser and Mark
Boyar & Co.
Administrator
- -------------
Countrywide Fund Services, Inc. (the "Administrator") serves
as the Fund's administrator and accounting, transfer, dividend disbursing,
shareholder service and plan agent pursuant to three written agreements (the
"Agreements"). The services provided by, and the fees payable by the Fund to,
the Administrator under the Agreements are described in the Prospectus. See in
the Prospectus, "Management of the Fund."
Custodian
- ---------
Star Bank, N.A. (the "Custodian") serves as custodian of the
Fund's U.S. and foreign assets, pursuant to a custodian agreement (the "Custody
Agreement"). The services provided by the Custodian are described in the
Prospectus. Under the Custody Agreement, the Custodian will receive fixed fees,
based on portfolio transactions, in addition to fees based on the market value
of the Fund's portfolio calculated at .03% on the first $20 million, .02% on the
next $20 million and .015% on any balance over $40 million. The Custodian's fees
are payable monthly and subject of a monthly minimum of $300. See in the
Prospectus, "Management of the Fund."
By its terms, the Custody Agreement will remain in force until
terminated. The Custody Agreement may be terminated at any time, on sixty days'
written notice, without the payment of any penalty, by the Board of Directors or
by the Custodian.
Organization of the Fund
- ------------------------
The Fund was incorporated on February 28, 1997 under the laws of
the State of Maryland under the name "Boyar Value Fund, Inc." The Fund's charter
authorizes the Board to issue one billion (1,000,000,000) shares of common
stock, $.001 par value per share (the "Shares").
All shareholders of the Fund, upon liquidation, will participate
ratably in the Fund's net assets. Shares do not have cumulative voting rights,
which means that holders of more than 50% of the shares voting for the election
of Directors can elect all Directors. Shares are transferable but have no
preemptive, conversion or subscription rights.
DISTRIBUTION AND SHAREHOLDER SERVICING
The Fund has entered into a Shareholder Servicing and
Distribution Plan (the "12b-1 Plan"), pursuant to Rule 12b-1 under the 1940 Act,
pursuant to which the Fund will pay the Distributor, in consideration for
Services (as defined below), a fee calculated at an
20
<PAGE>
annual rate of .25% of the average daily net assets of the Fund. Services
performed by the Distributor include (i) ongoing servicing and/or maintenance of
the accounts of shareholders of the Fund, as set forth in the 12b-1 Plan
("Shareholder Services"), and (ii) sub-transfer agency services, subaccounting
services or administrative services related to the sale of Shares, as set forth
in the 12b-1 Plan ("Administrative Services" and collectively with Shareholder
Services, "Services") including, without limitation, (a) payments reflecting an
allocation of overhead and other office expenses of the Distributor related to
providing Services; (b) payments made to, and reimbursement of expenses of,
persons who provide support services in connection with the distribution of
Shares including, but not limited to, office space and equipment, telephone
facilities, answering routine inquiries regarding the Fund, and providing any
other Shareholder Services; (c) payments made to compensate selected dealers or
other authorized persons for providing any Services; (d) costs of printing and
distributing prospectuses, statements of additional information and reports of
the Fund to prospective shareholders of the Fund; and (e) costs involved in
obtaining whatever information, analyses and reports with respect to service
activities that the Fund may, from time to time, deem advisable.
Pursuant to the 12b-1 Plan, the Distributor provides the Board,
at least quarterly, with reports of amounts expended under the 12b-1 Plan and
the purpose for which the expenditures were made.
The 12b-1 Plan will continue in effect for so long as their
continuance is specifically approved at least annually by the Board, including a
majority of the Directors who are not interested persons of the Fund and who
have no direct or indirect financial interest in the operation of the 12b-1
Plan, as the case may be ("Independent Directors"). Any material amendment of
the 12b-1 Plan would require the approval of the Board in the manner described
above. The 12b-1 Plan may not be amended to increase materially the amount to be
spent thereunder without shareholder approval. The 12b-1 Plan may be terminated
at any time, without penalty, by vote of a majority of the Independent Directors
or by a vote of a majority of the outstanding voting securities of the Fund.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The offering price of the Fund's shares is equal to the per share
net asset value of the shares of the Fund. Information on how to purchase and
redeem Fund shares and how such shares are priced is included in the Prospectus
under "How Net Asset Value is Determined."
Under the 1940 Act, the Fund may suspend the right of redemption
or postpone the date of payment upon redemption for any period during which the
NYSE is closed, other than customary weekend and holiday closings, or during
which trading on the NYSE is restricted, or during which (as determined by the
SEC) an emergency exists as a result of which disposal or fair valuation of
portfolio securities is not reasonably practicable, or for such other periods as
the SEC may permit.
21
<PAGE>
If the Board determines that conditions exist which make payment
of redemption proceeds wholly in cash unwise or undesirable, the Fund may make
payment wholly or partly in securities or other investment instruments which may
not constitute securities as such term is defined in the applicable securities
laws. If a redemption is paid wholly or partly in securities or other property,
a shareholder would incur transaction costs in disposing of the redemption
proceeds.
ADDITIONAL INFORMATION CONCERNING TAXES
The following is a summary of the material United States federal
income tax considerations regarding the purchase, ownership and disposition of
shares in the Fund. Each prospective shareholder is urged to consult his own tax
adviser with respect to the specific federal, state, local and foreign tax
consequences of investing in the Fund. The summary is based on the laws in
effect on the date of this Statement of Additional Information, which are
subject to change.
The Fund and Its Investments
- ----------------------------
The Fund and Its Investments. The Fund intends to qualify to be
treated as a regulated investment company each taxable year under the Internal
Revenue Code of 1986, as amended (the "Code"). To so qualify, the Fund must,
among other things: (a) derive at least 90% of its gross income in each taxable
year from dividends, interest, payments with respect to securities, loans and
gains from the sale or other disposition of stock or securities or foreign
currencies, or other income (including, but not limited to, gains from options,
futures or forward contracts) derived with respect to its business of investing
in such stock, securities or currencies and (b) diversify its holdings so that,
at the end of each quarter of the Fund's taxable year, (i) at least 50% of the
market value of the Fund's assets is represented by cash, securities of other
regulated investment companies, United States government securities and other
securities, with such other securities limited, in respect of any one issuer, to
an amount not greater than 5% of the Fund's assets and not greater than 10% of
the outstanding voting securities of such issuer and (ii) not more than 25% of
the value of its assets is invested in the securities (other than United States
government securities or securities of other regulated investment companies) of
any one issuer or any two or more issuers that the Fund controls and are
determined to be engaged in the same or similar trades or businesses or related
trades or businesses. The Fund expects that all of its foreign currency gains
will be directly related to its principal business of investing in stocks and
securities.
As a regulated investment company, the Fund will not be subject
to United States federal income tax on its net investment income (i.e., income
other than its net realized long- and short-term capital gains) and its net
realized long- and short-term capital gains, if any, that it distributes to its
shareholders, provided that an amount equal to at least 90% of the sum of its
investment company taxable income (i.e., 90% of its taxable income minus the
excess, if any, of its net realized long-term capital gains over its net
realized short-term capital losses (including any capital loss carryovers), plus
or minus certain other adjustments as specified in the Code) and its net
tax-exempt income for the taxable year is distributed, but
22
<PAGE>
will be subject to tax at regular corporate rates on any taxable income or gains
that it does not distribute. Furthermore, the Fund will be subject to a United
States corporate income tax with respect to such distributed amounts in any year
that it fails to qualify as a regulated investment company or fails to meet this
distribution requirement. Any dividend declared by the Fund in October, November
or December of any calendar year and payable to shareholders of record on a
specified date in such a month shall be deemed to have been received by each
shareholder on December 31 of such calendar year and to have been paid by the
Fund not later than such December 31, provided that such dividend is actually
paid by the Fund during January of the following calendar year.
The Fund intends to distribute annually to its shareholders
substantially all of its investment company taxable income. The Board of
Directors of the Fund will determine annually whether to distribute any net
realized long-term capital gains in excess of net realized short-term capital
losses (including any capital loss carryovers). The Fund currently expects to
distribute any excess annually to its shareholders. However, if the Fund retains
for investment an amount equal to all or a portion of its net long-term capital
gains in excess of its net short-term capital losses and capital loss
carryovers, it will be subject to a corporate tax (currently at a rate of 35%)
on the amount retained. In that event, the Fund will designate such retained
amounts as undistributed capital gains in a notice to its shareholders who (a)
will be required to include in income for United Stares federal income tax
purposes, as long-term capital gains, their proportionate shares of the
undistributed amount, (b) will be entitled to credit their proportionate shares
of the 35% tax paid by the Fund on the undistributed amount against their United
States federal income tax liabilities, if any, and to claim refunds to the
extent their credits exceed their liabilities, if any, and (c) will be entitled
to increase their tax basis, for United States federal income tax purposes, in
their shares by an amount equal to 65% of the amount of undistributed capital
gains included in the shareholder's income. Organizations or persons not subject
to federal income tax on such capital gains will be entitled to a refund of
their pro rata share of such taxes paid by the Fund upon filing appropriate
returns or claims for refund with the Internal Revenue Service (the "IRS").
The Code imposes a 4% nondeductible excise tax on the Fund to the
extent the Fund does not distribute by the end of any calendar year at least 98%
of its net investment income for that year and 98% of the net amount of its
capital gains (both long- and short-term) for the one-year period ending, as a
general rule, on October 31 of that year. For this purpose, however, any income
or gain retained by the Fund that is subject to corporate income tax will be
considered to have been distributed by year-end. In addition, the minimum
amounts that must be distributed in any year to avoid the excise tax will be
increased or decreased to reflect any underdistribution or overdistribution, as
the case may be, from the previous year. The Fund anticipates that it will pay
such dividends and will make such distributions as are necessary in order to
avoid the application of this tax.
With regard to the Fund's investments in foreign securities,
exchange control regulations may restrict repatriations of investment income and
capital or the proceeds of securities sales by foreign investors such as the
Fund and may limit the Fund's ability to pay
23
<PAGE>
sufficient dividends and to make sufficient distributions to satisfy the 90% and
excise tax distribution requirements.
If, in any taxable year, the Fund fails to qualify as a regulated
investment company under the Code, it would be taxed in the same manner as an
ordinary corporation and distributions to its shareholders would not be
deductible by the Fund in computing its taxable income. In addition, in the
event of a failure to qualify, the Fund's distributions, to the extent derived
from the Fund's current or accumulated earnings and profits would constitute
dividends (eligible for the corporate dividends-received deduction) which are
taxable to shareholders as ordinary income, even though those distributions
might otherwise (at least in part) have been treated in the shareholders' hands
as long-term capital gains. If the Fund fails to qualify as a regulated
investment company in any year, it must pay out its earnings and profits
accumulated in that year in order to qualify again as a regulated investment
company. In addition, if the Fund failed to qualify as a regulated investment
company for a period greater than one taxable year, the Fund may be required to
recognize any net built-in gains (the excess of the aggregate gains, including
items of income, over aggregate losses that would have been realized if it had
been liquidated) in order to qualify as a regulated investment company in a
subsequent year.
The Fund's short sales against the box, if any, and transactions
in foreign currencies, forward contracts, options and futures contracts
(including options and futures contracts on foreign currencies) will be subject
to special provisions of the Code that, among other things, may affect the
character of gains and losses realized by the Fund (i.e., may affect whether
gains or losses are ordinary or capital), accelerate recognition of income to
the Fund and defer Fund losses. These rules could therefore affect the
character, amount and timing of distributions to shareholders. These provisions
also (a) will require the Fund to mark-to-market certain types of the positions
in its portfolio (i.e., treat them as if they were closed out) and (b) may cause
the Funds to recognize income without receiving cash with which to pay dividends
or make distributions in amounts necessary to satisfy the distribution
requirements for avoiding income and excise taxes. The Fund will monitor its
transactions, will make the appropriate tax elections and will make the
appropriate entries in its books and records when it acquires any foreign
currency, forward contract, option, futures contract or hedged investment in
order to mitigate the effect of these rules and prevent disqualification of the
Fund as a regulated investment company.
Passive Foreign Investment Companies. If the Fund purchases
shares in certain foreign investment entities, called "passive foreign
investment companies" (a "PFIC"), it may be subject to United States federal
income tax on a portion of any "excess distribution" or gain from the
disposition of such shares even if such income is distributed as a taxable
dividend by the Fund to its shareholders. Additional charges in the nature of
interest may be imposed on the Fund in respect of deferred taxes arising from
such distributions or gains. Any tax paid by the Fund as a result of its
ownership of shares in a PFIC will not give rise to any deduction or credit to
the Fund or any shareholder. If the Fund were to invest in a PFIC and elected to
treat the PFIC as a "qualified electing fund" under the Code, in lieu of the
foregoing
24
<PAGE>
requirements, the Fund might be required to include in income each year a
portion of the ordinary earnings and net capital gains of the qualified election
fund, even if not distributed to the Fund, and such amounts would be subject to
the 90% and excise tax distribution requirements described above. In order to
make this election, the Fund would be required to obtain certain annual
information from the passive foreign investment companies in which it invests,
which may be difficult or not possible to obtain.
Recently, legislation was enacted that provides a mark-to-market
election for regulated investment companies effective for taxable years
beginning after December 31, 1997. This election would result in the Fund being
treated as if it had sold and repurchased all of the PFIC stock at the end of
each year. In this case, the Fund would report gains as ordinary income and
would deduct losses as ordinary losses to the extent of previously recognized
gains. The election, once made, would be effective for all subsequent taxable
years of the Fund, unless revoked with the consent of the IRS. By making the
election, the Fund could potentially ameliorate the adverse tax consequences
with respect to its ownership of shares in a PFIC, but in any particular year
may be required to recognize income in excess of the distributions it receives
from PFICs and its proceeds from dispositions of PFIC company stock. The Fund
may have to distribute this "phantom" income and gain to satisfy its
distribution requirement and to avoid imposition of the 4% excise tax. The Fund
will make the appropriate tax elections, if possible, and take any additional
steps that are necessary to mitigate the effect of these rules.
Dividends and Distributions. Dividends of net investment income
and distributions of net realized short-term capital gains are taxable to a
United States shareholder as ordinary income, whether paid in cash or in shares.
Distributions of net-long-term capital gains, if any, that the Fund designates
as capital gains dividends are taxable as long-term capital gains, whether paid
in cash or in shares and regardless of how long a shareholder has held shares of
the Fund. Dividends and distributions paid by the Fund (except for the portion
thereof, if any, attributable to dividends on stock of U.S. corporations
received by the Fund) will not qualify for the deduction for dividends received
by corporations. Distributions in excess of the Fund's current and accumulated
earnings and profits will, as to each shareholder, be treated as a tax-free
return of capital, to the extent of a shareholder's basis in his shares of the
Fund, and as a capital gain thereafter (if the shareholder holds his shares of
the Fund as capital assets).
Shareholders receiving dividends or distributions in the form of
additional shares should be treated for United States federal income tax
purposes as receiving a distribution in the amount equal to the amount of money
that the shareholders receiving cash dividends or distributions will receive,
and should have a cost basis in the shares received equal to such amount.
Investors considering buying shares just prior to a dividend or
capital gain distribution should be aware that, although the price of shares
just purchased at that time may reflect the amount of the forthcoming
distribution, such dividend or distribution may nevertheless be taxable to them.
25
<PAGE>
If the Fund is the holder of record of any stock on the record
date for any dividends payable with respect to such stock, such dividends are
included in the Fund's gross income not as of the date received but as of the
later of (a) the date such stock became ex-dividend with respect to such
dividends (i.e., the date on which a buyer of the stock would not be entitled to
receive the declared, but unpaid, dividends) or (b) the date the Fund acquired
such stock. Accordingly, in order to satisfy its income distribution
requirements, the Fund may be required to pay dividends based on anticipated
earnings, and shareholders may receive dividends in an earlier year than would
otherwise be the case.
Sales of Shares. Upon the sale or exchange of his shares, a
shareholder will realize a taxable gain or loss equal to the difference between
the amount realized and his basis in his shares. Such gain or loss will be
treated as capital gain or loss, if the shares are capital assets in the
shareholder's hands, and will be long-term capital gain or loss if the shares
are held for more than one year and short-term capital gain or loss if the
shares are held for one year or less. Any loss realized on a sale or exchange
will be disallowed to the extent the shares disposed of are replaced, including
replacement through the reinvesting of dividends and capital gains distributions
in the Fund, within a 61-day period beginning 30 days before and ending 30 days
after the disposition of the shares. In such a case, the basis of the shares
acquired will be increased to reflect the disallowed loss. Any loss realized by
a shareholder on the sale of a Fund share held by the shareholder for six months
or less will be treated for United States federal income tax purposes as a
long-term capital loss to the extent of any distributions or deemed
distributions of long-term capital gains received by the shareholder with
respect to such share.
Foreign Taxes. Income received by the Fund from non-U.S. sources
may be subject to withholding and other taxes imposed by other countries.
Because it is not expected that more than 50 percent of the value of the Fund's
total assets at the close of its taxable year will consist of stock and
securities of non-U.S. corporations, it is not expected that the Fund will be
eligible to elect to "pass through" to the Fund's shareholders the amount of
foreign income and similar taxes paid by the Fund. In the absence of such an
election, the foreign taxes paid by the Fund will reduce its investment company
taxable income, and distributions of investment company taxable income received
by the Fund from non-US sources will be treated as United States source income.
Backup Withholding. The Fund may be required to withhold, for
United States federal income tax purposes, 31% of the dividends and
distributions payable to shareholders who fail to provide the Fund with their
correct taxpayer identification number or to make required certifications, or
who have been notified by the IRS that they are subject to backup withholding.
Certain shareholders are exempt from backup withholding. Backup withholding is
not an additional tax and any amount withheld may be credited against a
shareholder's United States federal income tax liabilities.
Notices. Shareholders will be notified annually by the Fund as to
the United States federal income tax status of the dividends, distributions and
deemed distributions attributable to undistributed capital gains (discussed
above in "The Fund and Its Investments")
26
<PAGE>
made by the Fund to its shareholders. Furthermore, shareholders will also
receive, if appropriate, various written notices after the close of the Fund's
taxable year regarding the United States federal income tax status of certain
dividends, distributions and deemed distributions that were paid (or that are
treated as having been paid) by the Fund to its shareholders during the
preceding taxable year.
Other Taxation
- --------------
Distributions also may be subject to additional state, local and
foreign taxes depending on each shareholder's particular situation.
THE FOREGOING IS ONLY A SUMMARY OF CERTAIN MATERIAL TAX
CONSEQUENCES AFFECTING THE FUND AND ITS SHAREHOLDERS. SHAREHOLDERS ARE ADVISED
TO CONSULT THEIR OWN TAX ADVISERS WITH RESPECT TO THE PARTICULAR TAX
CONSEQUENCES TO THEM OF AN INVESTMENT IN THE FUND.
DETERMINATION OF PERFORMANCE
From time to time, the Fund may quote its total returns in
advertisements or in reports and other communications to shareholders. These
figures are calculated by finding the average annual compounded rates of return
for the one-, five- and ten- (or such shorter period as the shares have been
offered) year periods that would equate the initial amount invested to the
ending redeemable value, according to the following formula: P (1 + T)n = ERV.
For purposes of this formula, "P" is a hypothetical investment of $1,000; "T" is
average annual total return; "n" is number of years; and "ERV" is the ending
redeemable value of a hypothetical $1,000 payment made at the beginning of the
one-, five- or ten-year periods (or fractional portion thereof). Total return or
"T" is computed by finding the average annual change in the value of an initial
$1,000 investment over the period and assumes that all dividends and
distributions are reinvested during the period.
The Fund may advertise, from time to time, comparisons of the
performance of its Shares with that of one or more other mutual funds with
similar investment objectives. The Fund may advertise average annual calendar
year-to-date and calendar quarter returns, which are calculated according to the
formula set forth in the preceding paragraph, except that the relevant measuring
period would be the number of months that have elapsed in the current calendar
year or most recent three months, as the case may be.
The Fund may also advertise its yield. Yield is calculated by
annualizing the net investment income generated by the Fund over a specified
thirty-day period according to the following formula:
YIELD = 2[(a-b + 1)|6| -1]
---
cd
27
<PAGE>
For purposes of this formula: "a" is dividends and interest earned during the
period; "b" is expenses accrued for the period (net of reimbursements); "c" is
the average daily number of shares outstanding during the period that were
entitled to receive dividends; and "d" is the maximum offering price per share
on the last day of the period.
The performance of Fund shares will vary from time to time
depending upon market conditions, the composition of the Fund's portfolio and
operating expenses allocable to it. As described above, total return and yield
are based on historical earnings and are not intended to indicate future
performance. Consequently, any given performance quotation should not be
considered as representative of performance for any specified period in the
future. Performance information may be useful as a basis for comparison with
other investment alternatives. However, the Fund's performance will fluctuate,
unlike certain bank deposits or other investments which pay a fixed yield for a
stated period of time. Any fees charged by institutional investors directly to
their customers in connection with investments in Fund shares are not reflected
in the Fund's total return, and such fees, if charged, will reduce the actual
return received by customers on their investments.
INDEPENDENT ACCOUNTANTS AND COUNSEL
Ernst & Young LLP, with principal offices at 1300 Chiquita
Center, Cincinnati, Ohio, serves as independent accountants for the Fund. The
statement of assets and liabilities of the Fund, as of November 20, 1997, that
appears in this Statement of Additional Information has been audited by Ernst &
Young LLP, whose report thereon appears elsewhere herein.
Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd
Street, New York, New York, 10022-4677, serves as counsel for the Fund as well
as counsel to the Manager and the Distributor.
FINANCIAL STATEMENT
The Fund's financial statement follows this Statement of
Additional Information.
28
<PAGE>
Report of Independent Auditors
To the Board of Directors and Shareholder
Boyar Value Fund, Inc.
We have audited the accompanying statement of assets and liabilities of the
Boyar Value Fund, Inc. as of November 20, 1997. This statement of assets and
liabilities is the responsibility of the Fund's management. Our responsibility
is to express an opinion on this statement of assets and liabilities based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of assets and liabilities is
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
statement of assets and liabilities presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the Boyar
Value Fund, Inc. at November 20, 1997, in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Cincinnati, Ohio
February 26, 1998
<PAGE>
BOYAR VALUE FUND, INC.
----------------------
STATEMENT OF ASSETS AND LIABILITIES
-----------------------------------
AS OF NOVEMBER 20, 1997
-----------------------
ASSETS:
Cash $100,000
Organization costs (Note 2) 91,000
--------
Total assets 191,000
LIABILITIES:
Accrued expenses (Note 2) 91,000
--------
Total liabilities 91,000
Net assets for shares of
beneficial interest
outstanding (Note 1) $100,000
========
Shares outstanding (Note 1) 10,000
========
Net asset value per share $10.00
The accompanying notes are an integral
part of this statement.
<PAGE>
BOYAR VALUE FUND, INC.
----------------------
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------
AS OF NOVEMBER 20, 1997
-----------------------
(1) Boyar Value Fund, Inc. (the Fund) is an open-end management investment
company established as a Maryland corporation on February 28, 1997.
The Fund has had no operations except for the initial issuance of shares.
On November 20, 1997, 10,000 shares were issued for cash at $10.00 per
share.
(2) Expenses incurred in connection with the organization of the Fund and the
initial offering of shares are estimated to be $91,000. These expenses have
been paid by Ladenburg Thalmann Fund Management Inc. (The "Manager"). Upon
commencement of the public offering of shares of the Fund, the Fund will
reimburse the Manager for such expenses, with that amount being capitalized
and amortized on a straight-line basis over five years. As of November 20,
1997, all outstanding shares of the Fund were held by the Manager, who
purchased these initial shares in order to provide the Fund with its
required capital. In the event the initial shares of the Fund are redeemed
by any holder thereof at any time prior to the complete amortization of
organizational expenses, the redemption proceeds payable with respect to
such shares will be reduced by the pro rata share (based upon the portion
of the shares redeemed in relation to the required capitalization) of the
unamortized deferred organizational expenses as of the date of such
redemption.
(3) Reference is made to the Prospectus and this Statement of Additional
Information for a description of the Management Agreement, the Underwriting
Agreement, the Shareholder Servicing and Distribution Plan, the
Administration Agreement, tax aspects of the Fund and the calculation of
the net asset value of shares of the Fund.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements -- *
(1) Financial Statements included in Part B.
(A) Report of Independent Accountants
(B) Statement of Net Assets and Liabilities
(b) Exhibits:
Exhibit No. Description of Exhibit
1 Articles of Incorporation.1
2 By-Laws.1
3 Not applicable.
4 Form of Share Certificate.*
5 Investment Advisory Agreement.*
6(a) Underwriting Agreement.*
(b) Form of Dealer's Agreement.*
7 Not applicable.
8 Form of Custody Agreement.*
9(a) Management Agreement.*
(b) Transfer, Dividend Disbursing, Shareholder
Service and Plan Agency Agreement.*
(c) Administration Agreement.*
(d) Accounting Services Agreement.*
(e) Administrative Services Agreement.*
10(a) Opinion and Consent of Willkie Farr & Gallagher,
counsel to the Fund.*
(b) Opinion and Consent of Venable, Baetjer and Howard, LLP,
Maryland counsel to the Fund.*
11 Consent of Ernst & Young LLP, Independent Accountants.*
12 Not applicable.
13 Purchase Agreement.*
14 Not applicable.
C-2
<PAGE>
15 Shareholder Servicing and Distribution Plan.*
16 Not applicable.
17 Not applicable.
18 Not applicable.
- ----------
1 Incorporated by reference to Registrant's Registration Statement on Form
N-1A, filed on June 13, 1997 (Securities Act File No. 333-29253).
* Filed herewith.
Item 25. Persons Controlled by or Under Common Control with Registrant
Not applicable.
Item 26. Number of Holders of Securities
It is anticipated that Ladenburg Thalmann Fund Management Inc. will
hold all of the Registrant's shares of common stock, par value $.001 per share,
on the date Registrant's Registration Statement becomes effective.
Item 27. Indemnification
Registrant, officers and directors of Ladenburg Thalmann Fund
Management Inc., Boyar Asset Management, Inc. and Ladenburg Thalmann & Co. Inc.
and of Registrant are covered by insurance policies indemnifying them for
liability incurred in connection with the operation of Registrant. These
policies provide insurance for any "Wrongful Act" of an officer or director.
Wrongful Act is defined as breach of duty, neglect, error, misstatement,
misleading statement, omission or other act done or wrongfully attempted by an
officer, director or trustee in connection with the operation of Registrant.
Insurance coverage does not extend to (a) conflicts of interest or gain in fact
any profit or advantage to which one is not legally entitled, (b) intentional
non-compliance with any statute or regulation or (c) commission of dishonest,
fraudulent acts or omissions. Insofar as it related to Registrant, the coverage
is limited in amount and, in certain circumstances, is subject to a deductible.
Under Article VIII of the Articles or Incorporation (the "Articles"),
the Directors and officers of Registrant shall not have any liability to
Registrant or its stockholders for money damages, to the fullest extent
permitted by Maryland law. This limitation on liability applies to events
occurring at the time a person serves as a Director or officer of Registrant
C-3
<PAGE>
whether or not such person is a Director or officer at the time of any
proceeding in which liability is asserted. No provision of Article VIII shall
protect or purport to protect any Director or officer of Registrant against any
liability to Registrant or its stockholders to which he would otherwise be
subject by reason or willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
Registrant shall indemnify and advance expenses to its currently acting and its
former Director to the fullest extent that indemnification of Directors and
advancement of expenses to Directors is permitted by the Maryland General
Corporation Law.
Registrant shall indemnify and advance expenses to its officers to the
same extent as its Directors and to such further extent as is consistent with
such law. The Board of Directors may, through a by-law, resolution or agreement,
make further provisions for indemnification of directors, officers, employees
and agents to the fullest extent permitted by the Maryland General Corporation
Law.
Article VIII of the By-Laws further limits the liability of the
Directors by providing that any person who was or is a party or is threatened to
be made a party in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person is a current or former director or officer of
Registrant, or is or was serving while a director or officer of Registrant at
the request of Registrant as a director, officer, partner, trustee, employee,
agent or fiduciary of another corporation, partnership, joint venture, trust,
enterprise or employee benefit plan, shall be indemnified by Registrant against
judgments, penalties, fines excise taxes, settlements and reasonable expenses
(including attorneys' fees) actually incurred by such person in connection with
such action, suit or proceeding to the full extent permissible under the
Maryland General Corporation Law, the 1993 Act and the 1940 Act, as such
statutes are now or hereafter in force, except that such indemnity shall not
protect any such person against any liability to Registrant or any stockholder
thereof to which such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of this office.
Item 28. Business and Other Connections of
Investment Adviser
Boyar Asset Management, Inc. is wholly owned by Mr. Mark A. Boyar and
acts as investment adviser to Registrant. Boyar Asset Management, Inc. renders
investment advice to a wide variety of individual and institutional clients. The
list required by this Item 28 of officers and directors of Boyar Asset
Management, Inc., together with information as to their other business,
profession, vocation or employment of a substantial
C-4
<PAGE>
nature during the past two years, is incorporated by reference to Schedules A
and D of Form ADV filed by Boyar Asset Management, Inc. (SEC File No.
801-19283).
Item 29. Principal Underwriter
(a) Ladenburg Thalmann & Co. Inc. will act as distributor for
Registrant.
(b) For information relating to each director and officer of Ladenburg
Thalmann & Co. Inc., reference is made to Form BD (SEC File No. 8-16354) filed
by Ladenburg Thalmann & Co. Inc. under the Securities Exchange Act of 1934.
(c) None.
Item 30. Location of Accounts and Records
(1) Boyar Value Fund, Inc.
590 Madison Avenue
New York, New York 10022
(Registrant's Articles of Incorporation, By-Laws
and minute books)
(2) Boyar Asset Management, Inc.
35 East 21st Street
New York, New York 10010
(records relating to its functions as investment adviser)
(3) Ladenburg Thalmann Fund Management Inc. 590
Madison Avenue New York, New York 10022 (records
relating to its functions as manager)
(4) Ladenburg Thalmann & Co. Inc.
590 Madison Avenue
New York, New York 10022
(records relating to its functions as distributor)
(5) Countrywide Fund Services, Inc.
312 Walnut Street
Cincinnati, Ohio 45202
records relating to its functions as
administrator and transfer agent)
(6) Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio
(records relating to its functions as custodian)
Item 31. Management Services
Not applicable.
C-5
<PAGE>
Item 32. Undertakings
(a) Registrant hereby undertakes to file an amendment to the
Registration Statement with Certified financial statements showing the initial
capital received before accepting subscriptions from any persons in excess of 25
if Registrant proposes to raise its initial capital pursuant to Section 14(a)(3)
of the 1940 Act.
(b) Registrant hereby undertakes to file a post-effective amendment
using financial statements which need not be certified, within four to six
months from the effective date of the Registration Statement.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant has duly
caused this Amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of New York and the
State of New York, on the 2nd day of March, 1998.
BOYAR VALUE FUND, INC.
By:/s/ Mark A. Boyar
Mark A. Boyar
Chairman and Chief
Executive Officer
Pursuant to the Securities Act of 1933, as amended, this Amendment has
been signed below by the following persons in the capacities and on the date
indicated:
Signature Title Date
- --------- ----- ----
/s/ Mark A. Boyar Chairman and Chief March 2, 1998
Mark A. Boyar Executive Officer
/s/ Jay R. Petschek President, Treasurer, March 2, 1998
Jay R. Petschek Chief Financial Officer
and Director
/s/ Henry A. Alpert Director March 2, 1998
Henry A. Alpert
/s/ A.F. Petrocelli Director March 2, 1998
A.F. Petrocelli
/s/ Jeffrey S. Silverman Director March 2, 1998
Jeffrey S. Silverman
/s/ Richard Finkelstein Director March 2, 1998
Richard Finkelstein
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
- ----------- ----------------------
4 Form of Share Certificate.
5 Investment Advisory Agreement.
6(a) Underwriting Agreement.
(b) Form of Dealer's Agreement.
8 Form of Custody Agreement.
9(a) Management Agreement.
(b) Transfer, Dividend Disbursing, Shareholder
Service and Plan Agency Agreement.
(c) Administration Agreement.
(d) Accounting Services Agreement.
(e) Administrative Services Agreement.
10(a) Opinion and Consent of Willkie Farr & Gallagher,
counsel to the Fund.
(b) Opinion and Consent of Venable, Baetjer and Howard,
LLP, Maryland counsel to the Fund.
11 Consent of Ernst & Young LLP, Independent Accountants.
13 Purchase Agreement.
15 Shareholder Servicing and Distribution
Plan.
<PAGE>
THE STATE OF MARYLAND
BOYAR VALUE FUND, INC.
TOTAL AUTHORIZED ISSUE
1,000,000,000 COMMON SHARES AT $.001 PAR VALUE
This Certifies that ______________________________ is the registered holder of
____________________________ Shares of the above named Corporation, fully paid
and non-assessable transferable only on the books of the Corporation by the
holder hereof in person or by Attorney upon surrender of this Certificate
properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed
this _____________ day of ____________A.D. 19__
- -------------------- ----------------------
Secretary-Treasurer President
<PAGE>
INVESTMENT ADVISORY AGREEMENT
March 10, 1998
Boyar Asset Management, Inc.
35 East 21st Street
New York, New York 10010
Dear Sirs:
Boyar Value Fund, Inc., a corporation organized and existing under the
laws of the State of Maryland (the "Fund"), and Ladenburg Thalmann Fund
Management Inc., the Fund's manager (the "Manager"), herewith confirm their
agreement with Boyar Asset Management, Inc. (the "Adviser") as follows:
1. Investment Description; Appointment
-----------------------------------
The Fund desires to employ the capital of the Fund by investing and
reinvesting in investments of the kind and in accordance with the limitations
specified in its Articles of Incorporation, as may be amended from time to time,
and in its Prospectus and Statement of Additional Information, as from time to
time in effect, and in such manner and to such extent as may from time to time
be approved by the Board of Directors of the Fund. Copies of the Fund's
Prospectus and Statement of Additional Information, as each may be amended from
time to time, have been submitted to the Adviser. The Fund desires to employ and
hereby appoints the Adviser to act as investment adviser to the Fund. The
Adviser accepts the appointment and agrees to furnish the services described in
Section 2 of this Agreement for the compensation set forth in Section 6 this
Agreement.
2. Services as Investment Adviser
------------------------------
(a) Under an agreement dated as of March 10, 1998 between the
Fund and the Manager relating to the Fund (the "Management Agreement"), the
Manager serves as the Fund's manager and has the responsibility of selecting and
monitoring an investment adviser to the Fund. Acting pursuant to the authority
provided in the Management Agreement, the Manager selects the Adviser to serve
as the Fund's investment adviser for the compensation set out in Section 6 of
this Agreement.
(b) Subject to the supervision and direction of the Board of
Directors of the Fund, and subject to review by the Manager, the Adviser will
(a) act in strict conformity with the Fund's Articles of Incorporation, the
Investment Company Act of 1940 and the Investment Advisers Act of 1940, as the
same may
<PAGE>
from time to time be amended, (b) manage the Fund in accordance with
the Fund's investment objective and policies as stated in the Fund's Prospectus
and Statement of Additional Information relating to the Fund as from time to
time in effect, (c) make investment decisions for the Fund and (d) place
purchase and sale orders for securities on behalf of the Fund. In providing
those services, the Adviser will provide investment research and supervision of
the Fund's investments and conduct a continual program of investment, evaluation
and, if appropriate, sale and reinvestment of the Fund's assets. In addition,
the Adviser will furnish the Fund with whatever statistical information the Fund
may reasonably request with respect to the securities that the Fund may hold or
contemplate purchasing.
(c) The Adviser will, at its own expense, maintain sufficient staff,
and employ or retain sufficient personnel and consult with any other persons
that it determines may be necessary or useful to the performance of its
obligations under this Agreement.
3. Brokerage
---------
In executing transactions for the Fund and selecting brokers or
dealers, the Adviser will use its best efforts to seek the best overall terms
available. In assessing the best overall terms available for any portfolio
transaction, the Adviser will consider all factors it deems relevant including,
but not limited to, the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer and the reasonableness of any commission for the specific transaction and
for transactions executed through the broker or dealer in the aggregate. In
selecting brokers or dealers to execute a particular transaction and in
evaluating the best overall terms available, the Adviser may consider the
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934, as the same may from time to time be
amended) provided to the Fund and/or other accounts over which the Adviser or an
affiliate exercises investment discretion.
The Adviser may select affiliates of the Manager or the Adviser to
serve as the Fund's broker in effecting portfolio transactions on national
securities exchanges, if in the Adviser's judgment the use of such affiliated
brokers is likely to result in price and execution at least as favorable as
those of other qualified brokers, and if, in the transaction, such affiliated
brokers charge the Fund a commission rate consistent with those charged by the
affiliated brokers to comparable unaffiliated customers in similar transactions.
All transactions with affiliated brokers shall comply with the regulations of
the Securities and Exchange Commission (the "SEC").
2
<PAGE>
4. Information Provided to the Fund
--------------------------------
The Adviser will keep the Fund informed of developments materially
affecting the Fund, and will, on its own initiative, furnish the Fund from time
to time with whatever information the Adviser believes is appropriate for this
purpose.
5. Standard of Care
----------------
The Adviser shall exercise its best judgment in rendering the
services listed in paragraphs 2, 3 and 4 above. The Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with the matters to which this Agreement relates, provided that
nothing herein shall be deemed to protect or purport to protect the Adviser
against any liability to the Fund or to shareholders of the Fund to which the
Adviser would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence on its part in the performance of its duties or by reason of
the Adviser's reckless disregard of its obligations and duties under this
Agreement.
6. Compensation
------------
In consideration of the services rendered pursuant to this
Agreement, the Fund will pay the Adviser a monthly fee calculated at an annual
rate of .50% of the Fund's average daily net assets. The fee for the period from
the date the Fund's initial registration statement is declared effective by the
SEC to the end of the month during which the initial registration statement is
declared effective shall be prorated according to the proportion that such
period bears to the full monthly period. Upon any termination of this Agreement
before the end of a month, the fee for such part of that month shall be prorated
according to the proportion that such period bears to the full monthly period
and shall be payable upon the date of termination of this Agreement. For the
purpose of determining fees payable to the Adviser, the value of the Fund's net
assets shall be computed at the times and in the manner specified in the Fund's
Prospectus and/or Statement of Additional Information as from time to time in
effect.
7. Expenses
--------
The Adviser will bear all expenses in connection with the
performance of its services under this Agreement. The Fund will bear its
proportionate share of certain other expenses to be incurred in its operation,
including: investment management and administration fees; taxes, interest,
brokerage fees and commissions, if any; fees of Directors of the Fund who are
not officers, directors, or employees of the Adviser, the Manager or any of
their affiliates; fees of any pricing service employed to value shares of the
Fund; SEC fees and state blue sky qualification fees; charges of custodians and
transfer and
3
<PAGE>
dividend disbursing agents; the Fund's proportionate share of insurance
premiums; outside auditing and legal expenses; costs of maintenance of the
Fund's existence; costs attributable to investor services, including, without
limitation, telephone and personnel expenses; costs of preparing and printing
prospectuses and statements of additional information for regulatory purposes
and for distribution to existing shareholders; costs of shareholders' reports
and meetings of the shareholders of the Fund and of the officers or Board of
Directors of the Fund; and any extraordinary expenses.
The Fund will be responsible for nonrecurring expenses which may
arise, including costs of litigation to which the Fund is a party and of
indemnifying officers and Directors of the Fund with respect to such litigation
and other expenses as determined by the Directors.
8. Services to Other Companies or Accounts
---------------------------------------
The Fund and the Manager understand that the Adviser now acts, will
continue to act and may act in the future as investment adviser to various
fiduciary or other managed accounts or to one or more other investment companies
or series of investment companies, and the Fund and the Manager have no
objection to the Adviser so acting, provided that whenever the Fund and one or
more other accounts or investment companies or portfolios advised by the Adviser
have available funds for investment, investments suitable and appropriate for
each will be allocated in accordance with a formula believed to be equitable to
each entity. The Fund and the Manager recognize that in some cases this
procedure may adversely affect the size of the position obtainable for the Fund.
In addition, the Fund and the Manager understand that the persons employed by
the Adviser to assist in the performance of the Adviser's duties hereunder will
not devote their full time to such service and nothing contained herein shall be
deemed to limit or restrict the right of the Adviser or any affiliate of the
Adviser to engage in and devote time and attention to other businesses or to
render services of whatever kind or nature.
9. Term of Agreement
-----------------
This Agreement shall continue for an initial two-year term and
thereafter shall continue automatically, provided such continuance is
specifically approved at least annually by (a) the Board of Directors of the
Fund or (b) a vote of a "majority" (as defined in the Investment Company Act of
1940, as amended) of the Fund's outstanding voting securities, provided that in
either event the continuance is also approved by a majority of the Board of
Directors who are not "interested persons" (as defined in said Act) of any party
to this Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This Agreement is terminable, without penalty, on 60
days' written notice by the Board of Directors of the Fund, by a vote of the
4
<PAGE>
holders of a majority of the Fund's shares, or by the Adviser. This Agreement
will also terminate automatically in the event of its assignment (as defined in
said Act).
10. Governing Law
-------------
This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without reference to conflicts
of laws principles.
11. Miscellaneous
-------------
The Adviser hereby grants to the Fund a license to use the name
"Boyar" as part of its name. The Fund recognizes that directors, officers and
employees of the Adviser may from time to time serve as directors, trustees,
officers and employees of corporations and business trusts (including other
investment companies) and that such other corporations and trusts may include
the name "Boyar" as part of their names, and that the Adviser or its affiliates
may enter into advisory or other agreements with such other corporations and
trusts. If the Adviser ceases to act as the investment adviser of the Fund's
shares, the Fund agrees that the Fund's license to use the word "Boyar" will
terminate and that the Fund will take all necessary action to change the name of
the Fund to a name not including the word "Boyar".
5
<PAGE>
Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place below indicated,
whereupon it shall become a binding agreement between us.
Very truly yours,
BOYAR VALUE FUND, INC.
By: /s/ Mark A. Boyar
Name:Mark A. Boyar
Title: Chairman and CEO
LADENBURG THALMANN FUND
MANAGEMENT INC.
By:/s/ Jay Petschek
Name: Jay Petschek
Title:President
Accepted:
BOYAR ASSET MANAGEMENT, INC.
By:/s/ Mark A. Boyar
Name:Mark A. Boyar
Title: President
6
UNDERWRITING AGREEMENT
This Agreement made as of March 10, 1998 by and between BOYAR VALUE
FUND, INC., a Maryland corporation (the "Fund"), and LADENBURG THALMANN & CO.
INC., a Delaware corporation ("Underwriter").
WHEREAS, the Fund is an investment company registered under the Investment
Company Act of 1940, as amended (the "Act"); and
WHEREAS, Underwriter is a broker-dealer registered with the Securities and
Exchange Commission and a member of the National Association of Securities
Dealers, Inc. (the "NASD");
NOW, THEREFORE, in consideration of the promises and agreements of the
parties contained herein, the parties agree as follows:
1. Appointment.
The Fund hereby appoints Underwriter as its exclusive agent for the
distribution of the shares of capital stock (the "Shares") of the Fund, and
Underwriter hereby accepts such appointment under the terms of this Agreement.
While this Agreement is in force, the Fund shall not sell any Shares except on
the terms set forth in this Agreement. Notwithstanding any other provision
hereof, the Fund may terminate, suspend or withdraw the offering of Shares
whenever, in its sole discretion, it deems such action to be desirable.
2. Sale and Repurchase of Shares.
(a) Underwriter will have the right, as agent for the Fund, to enter
into dealer agreements with responsible investment dealers, and to sell Shares
to such investment dealers against
<PAGE>
orders therefor at the public offering price (as defined in subparagraph 2(e)
hereof) less a discount determined by Underwriter, which discount shall not
exceed the amount of the sales charge stated in the Fund's effective
Registration Statement on Form N-1A under the Securities Act of 1933, as
amended, including the then current prospectus and statement of additional
information (the "Registration Statement"). Upon receipt of an order to purchase
Shares from a dealer with whom Underwriter has a dealer agreement, Underwriter
will promptly cause such order to be filled by the Fund.
(b) Underwriter will also have the right, as agent for the Fund, to
sell such Shares to the public against orders therefor at the public offering
price.
(c) Underwriter will also have the right, as agent for the Fund, to
sell Shares at their net asset value to such persons as may be approved by the
Directors of the Fund, all such sales to comply with the provisions of the Act
and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.
(d) Underwriter will also have the right to take, as agent for the
Fund, all actions which, in Underwriter's judgment, are necessary to carry into
effect the distribution of the Shares.
(e) The public offering price for the Shares of the Fund shall be the
net asset value of the Shares then in effect, plus any applicable sales charge
determined in the manner set forth in the Registration Statement or as permitted
by the Act
2
<PAGE>
and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder. In no event shall any applicable sales charge exceed the
maximum sales charge permitted by the Rules of Fair Practice of the NASD.
(f) The net asset value of the Shares shall be determined in the
manner provided in the Registration Statement, and when determined shall be
applicable to transactions as provided for in the Registration Statement. The
net asset value of the Shares shall be calculated by the Fund or by another
entity on behalf of the Fund. Underwriter shall have no duty to inquire into or
liability for the accuracy of the net asset value per Share as calculated.
(g) On every sale, the Fund shall receive the applicable net asset
value of the Shares promptly, but in no event later than the tenth business day
following the date on which Underwriter shall have received an order for the
purchase of the Shares. Underwriter shall have the right to retain the sales
charge less any applicable dealer discount.
(h) Upon receipt of purchase instructions, Underwriter will transmit
such instructions to the Fund or its transfer agent for registration of the
Shares purchased.
(i) Nothing in this Agreement shall prevent Underwriter or any
affiliated person (as defined in the Act) of Underwriter from acting as
underwriter or distributor for any other person, firm or corporation (including
other investment companies) or in any way limit or restrict Underwriter or any
such affiliated person from buying, selling or trading any
3
<PAGE>
securities for its or their own account or for the accounts of others for whom
it or they may be acting; provided, however, that Underwriter expressly
represents that it will undertake no activities which, in its judgment, will
adversely affect the performance of its obligations to the Fund under this
Agreement.
(j) Underwriter, as agent of and for the account of the Fund, may
repurchase the Shares at such prices and upon such terms and conditions as shall
be specified in the Registration Statement.
3. Sale of Shares by the Fund.
The Fund reserves the right to issue any Shares at any time directly
to the holders of Shares ("Shareholders"), to sell Shares to its Shareholders or
to other persons approved by Underwriter at not less than net asset value and to
issue Shares in exchange for substantially all the assets of any corporation or
trust or for the shares of any corporation or trust.
4. Basis of Sale of Shares.
Underwriter does not agree to sell any specific number of Shares.
Underwriter, as agent for the Fund, undertakes to sell Shares on a best efforts
basis only against orders therefor.
5. Rules of NASD, etc.
(a) Underwriter will conform to the Rules of Fair Practice of the NASD
and the securities laws of any jurisdiction in which it sells, directly or
indirectly, any Shares.
(b) Underwriter will require each dealer with whom Underwriter has a
dealer agreement to conform to the applicable provisions hereof and the
Registration Statement with respect to
4
<PAGE>
the public offering price of the Shares, and neither Underwriter nor any such
dealers shall withhold the placing of purchase orders so as to make a profit
thereby.
(c) Underwriter agrees to furnish to the Fund sufficient copies of any
agreements, plans or other materials it intends to use in connection with any
sales of Shares in adequate time for the Fund to file and clear them with the
proper authorities before they are put in use, and not to use them until so
filed and cleared.
(d) Underwriter, at its own expense, will qualify as dealer or broker,
or otherwise, under all applicable State or federal laws required in order that
Shares may be sold in such States as may be mutually agreed upon by the parties.
(e) Underwriter shall not make, or permit any representative, broker
or dealer to make, in connection with any sale or solicitation of a sale of the
Shares, any representations concerning the Shares except those contained in the
then current prospectus and statement of additional information covering the
Shares and in printed information approved by the Fund as information
supplemental to such prospectus and statement of additional information. Copies
of the then effective prospectus and statement of additional information and any
such printed supplemental information will be supplied by the Fund to
Underwriter in reasonable quantities upon request.
6. Records to be Supplied by Fund.
The Fund shall furnish to Underwriter copies of all information,
financial statements and other papers which
5
<PAGE>
Underwriter may reasonably request for use in connection with the distribution
of the Shares, and this shall include, but shall not be limited to, one
certified copy, upon request by Underwriter, of all financial statements
prepared for the Fund by independent public accountants.
7. Expenses.
In the performance of its obligations under this Agreement,
Underwriter will pay the costs incurred in qualifying as a broker or dealer
under state and federal laws and in establishing and maintaining its
relationships with the dealers selling the Shares. All other costs in connection
with the offering of the Shares will be paid by the Fund or Underwriter in
accordance with agreements between them as permitted by applicable law,
including the Act and rules and regulations promulgated thereunder.
8. Indemnification of Fund.
Underwriter, to the extent of the net commissions received by it from
the sale of Shares but to no greater amount, agrees to indemnify and hold
harmless the Fund, and each person who has been, is, or may hereafter be a
director, officer, employee, shareholder or control person of the Fund, against
any loss, damage or expense (including the reasonable costs of investigation)
reasonably incurred by any of them in connection with any claim or in connection
with any action, suit or proceeding to which any of them may be a party, which
arises out of or is alleged to arise out of or is based upon any untrue
statement or alleged untrue statement of a material fact, or the
6
<PAGE>
omission or alleged omission to state a material fact necessary to make the
statements not misleading, on the part of Underwriter or any agent or employee
of Underwriter or any other person for whose acts Underwriter is responsible,
unless such statement or omission was made in reliance upon written information
furnished by the Fund. Underwriter likewise, to the extent of the net
commissions received by it from the sale of Shares but to no greater amount,
agrees to indemnify and hold harmless the Fund and each such person in
connection with any claim or in connection with any action, suit or proceeding
which arises out of or is alleged to arise out of Underwriter's failure to
exercise reasonable care and diligence with respect to its services, if any,
rendered in connection with investment, reinvestment, automatic withdrawal and
other plans for Shares. The term "expenses" for purposes of this and the next
paragraph includes amounts paid in satisfaction of judgments or in settlements
which are made with Underwriter's consent. The foregoing rights of
indemnification shall be in addition to any other rights to which the Fund or
each such person may be entitled as a matter of law.
9. Indemnification of Underwriter.
Underwriter, its directors, officers, employees, shareholders and
control persons shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of any of such persons in
7
<PAGE>
the performance of Underwriter's duties or from the reckless disregard by any of
such persons of Underwriter's obligations and duties under this Agreement. The
Fund will advance attorneys' fees or other expenses incurred by any such person
in defending a proceeding, upon the undertaking by or on behalf of such person
to repay the advance if it is ultimately determined that such person is not
entitled to indemnification. Any person employed by Underwriter who may also be
or become an officer or employee of the Fund shall be deemed, when acting within
the scope of his employment by the Fund, to be acting in such employment solely
for the Fund and not as an employee or agent of Underwriter.
10. Termination and Amendment of this Agreement.
This Agreement shall automatically terminate, without the payment of
any penalty, in the event of its assignment. This Agreement may be amended only
if such amendment is approved (i) by Underwriter, (ii) either by action of the
Board of Directors of the Fund or at a meeting of the Shareholders of the Fund
by the affirmative vote of a majority of the outstanding Shares, and (iii) by a
majority of the Directors of the Fund who are not interested persons of the Fund
or of Underwriter by vote cast in person at a meeting called for the purpose of
voting on such approval.
Either the Fund or Underwriter may at any time terminate this
Agreement on sixty (60) days' written notice delivered or mailed by registered
mail, postage prepaid, to the other party.
8
<PAGE>
11. Effective Period of this Agreement.
This Agreement shall take effect upon its execution and shall remain
in full force and effect for a period of two (2) years from the date of its
execution (unless terminated automatically as set forth in Section 10), and from
year to year thereafter, subject to annual approval (i) by Underwriter, (ii) by
the Board of Directors of the Fund or a vote of a majority of the outstanding
Shares, and (iii) by a majority of the Directors of the Fund who are not
interested persons of the Fund or of Underwriter by vote cast in person at a
meeting called for the purpose of voting on such approval.
12. New Series.
The terms and provisions of this Agreement shall become automatically
applicable to any additional series of the Fund established during the initial
or renewal term of this Agreement.
13. Successor Investment Company.
Unless this Agreement has been terminated in accordance with Paragraph
10, the terms and provisions of this Agreement shall become automatically
applicable to any investment company which is a successor to the Fund as a
result of a reorganization, recapitalization or change of domicile.
14. Severability.
In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
9
<PAGE>
15. Questions of Interpretation.
(a) This Agreement shall be governed by the substantive laws of the
State of New York without regard to its conflict of law provisions. Any disputes
arising out of this Agreement shall be adjudicated solely in the courts of the
State of New York or the federal court for the Southern District of New York (in
either case only within New York County, New York). The parties each agree to
personal jurisdiction and venue solely within New York County, New York, waive
any objections to personal jurisdiction and venue in New York County, New York,
and agree not to seek personal jurisdiction and venue in any other location.
(b) Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Act shall be resolved by reference to such term or provision of the Act
and to interpretation thereof, if any, by the United States courts located in
New York County, New York or in the absence of any controlling decision of any
such court, by rules, regulations or orders of the Securities and Exchange
Commission issued pursuant to said Act. In addition, where the effect of a
requirement of the Act, reflected in any provision of this Agreement is revised
by rule, regulation or order of the Securities and Exchange Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order.
10
<PAGE>
16. Notices.
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Fund for this purpose
shall be 35 East 21st Street, New York, New York 10010, and that the address of
Underwriter for this purpose shall be 590 Madison Avenue, New York, New York
10022.
IN WITNESS WHEREOF, the Fund and Underwriter have each caused this
Agreement to be signed in duplicate on its behalf, all as of the day and year
first above written.
ATTEST: BOYAR VALUE FUND, INC.
/s/ John Splain By:/s/ Mark A. Boyar
ATTEST: LADENBURG THALMANN & CO. INC.
- ---------------------------- By:/s/ Jay Petschek
11
<PAGE>
LADENBURG THALMANN & CO. INC.
590 MADISON AVENUE
NEW YORK, NEW YORK 10022
800-______________
Dealer's Agreement
Ladenburg Thalmann & Co. Inc. ("Underwriter") invites you, as a
selected dealer, to participate as principal in the distribution of shares (the
"Shares") of Boyar Value Fund, Inc. (the "Fund"), of which it is the exclusive
underwriter. Underwriter agrees to sell to you, subject to any limitations
imposed by the Fund, Shares issued by the Fund and to promptly confirm each sale
to you. All sales will be made according to the following terms:
1. All offerings of any of the Shares by you must be made at the net
asset value, and shall be subject to the conditions of offering, set forth in
the then current Prospectus of the Fund and to the terms and conditions herein
set forth, and you agree to comply with all requirements applicable to you of
all applicable laws, including federal and state securities laws, the rules and
regulations of the Securities and Exchange Commission, and the Rules of Fair
Practice of the National Association of Securities Dealers, Inc. (the "NASD"),
including Section 24 of the Rules of Fair Practice of the NASD. You will not
offer the Shares for sale in any state or other jurisdiction where they are not
qualified for sale under the Blue Sky Laws and regulations of such state or
jurisdiction, or where you are not qualified to act as a dealer. Upon
application to Underwriter, Underwriter will inform you as to the states or
other jurisdictions in which Underwriter believes the Shares may legally be
sold.
2. With respect to all accounts for which you are designated as Dealer
of Record, you will receive a service fee, payable quarterly, at the annual rate
of .25% of the average balance of all such accounts during such quarter. You
hereby authorize Underwriter to act as your agent in connection with all
transactions in open accounts in which you are designated as Dealer of Record.
All designations as Dealer of Record, and all authorizations of Underwriter to
act as your Agent pursuant thereto, shall cease upon the termination of this
Agreement or upon the investor's instructions to transfer his open account to
another Dealer of Record.
3. Service fees will be paid to you at the address of your principal
office, as indicated below in your acceptance of this Agreement.
4. Underwriter reserves the right to cancel this Agreement at any time
without notice if any Shares shall be offered for sale by you at less than the
then current net asset value determined by, or for, the Fund.
<PAGE>
5. All orders are subject to acceptance or rejection by Underwriter in
its sole discretion. The Underwriter reserves the right, in its discretion,
without notice, to suspend sales or withdraw the offering of Shares entirely.
6. Payment shall be made to the Fund and shall be received by its
Transfer Agent within three (3) business days after the acceptance of your order
or such shorter time as may be required by law. With respect to all Shares
ordered by you for which payment has not been received, you hereby assign and
pledge to Underwriter all of your right, title and interest in such Shares to
secure payment therefor. You appoint Underwriter as your agent to execute and
deliver all documents necessary to effectuate any of the transactions described
in this paragraph. If such payment is not received within the required time
period, Underwriter reserves the right, without notice, and at its option,
forthwith (a) to cancel the sale, (b) to sell the Shares ordered by you back to
the Fund, or (c) to assign your payment obligation, accompanied by all pledged
Shares, to any person. You agree that Underwriter may hold you responsible for
any loss, including loss of profit, suffered by the Fund, its Transfer Agent or
Underwriter, resulting from your failure to make payment within the required
time period.
7. No person is authorized to make any representations concerning
Shares of the Fund except those contained in the current applicable Prospectus
and Statement of Additional Information and in sales literature issued and
furnished by Underwriter supplemental to such Prospectus. Underwriter will
furnish additional copies of the current Prospectus and Statement of Additional
Information and such sales literature and other releases and information issued
by Underwriter in reasonable quantities upon request.
8. Under this Agreement, you act as principal and are not employed by
Underwriter as broker, agent or employee. You are not authorized to act for
Underwriter nor to make any representation on its behalf; and in purchasing or
selling Shares hereunder, you rely only upon the current Prospectus and
Statement of Additional Information furnished to you by Underwriter from time to
time and upon such written representations as may hereafter be made by
Underwriter to you over its signature.
9. You appoint the transfer agent for the Fund as your agent to
execute the purchase transactions of Shares in accordance with the terms and
provisions of any account, program, plan or service established or used by your
customers and to confirm each purchase to your customers on your behalf, and you
guarantee the legal capacity of your customers purchasing such Shares and any
co-owners of such Shares.
10. You will (a) maintain all records required by law relating to
transactions in the Shares, and upon the request of
-2-
<PAGE>
Underwriter, or the request of the Fund, promptly make such records available to
Underwriter or to the Fund as are requested, and (b) promptly notify Underwriter
if you experience any difficulty in maintaining the records required in the
foregoing clause in an accurate and complete manner. In addition, you will
establish appropriate procedures and reporting forms and schedules, approved by
Underwriter and by the Fund, to enable the parties hereto and the Fund to
identify all accounts opened and maintained by your customers.
11. Each party hereto represents that it is presently, and, at all
times during the term of this Agreement, will be, a member in good standing of
the NASD and agrees to abide by all its Rules of Fair Practice including, but
not limited to, the following provisions:
(a) You shall not withhold placing customers' orders for any Shares so
as to profit yourself as a result of such withholding. You shall not purchase
any Shares from Underwriter other than for investment, except for the purpose of
covering purchase orders already received.
(b) All conditional orders received by Underwriter must be at a
specified definite price.
(c) Neither Underwriter, as exclusive underwriter for the Fund, nor you
as principal, shall purchase any Shares from a record holder at a price lower
than the net asset value then quoted by, or for, the Fund. Nothing in this
sub-paragraph shall prevent you from selling Shares for the account of a record
holder to Underwriter or the Fund at the net asset value currently quoted by, or
for, the Fund and charging the investor a fair commission for handling the
transaction.
(d) You warrant on behalf of yourself and your registered
representatives and employees that any purchase of Shares at net asset value by
the same pursuant to the terms of the Prospectus of the Fund is for investment
purposes only and not for purposes of resale. Shares so purchased may be resold
only to the Fund.
12. You agree that you will indemnify Underwriter, the Fund, the Fund's
transfer agent and the Fund's custodian and hold such persons harmless from any
claims or assertions relating to the lawfulness of your company's participation
in this Agreement and the transactions contemplated hereby or relating to any
activities of any persons or entities affiliated with your company which are
performed in connection with the discharge of your responsibilities under this
Agreement. If any such claims are asserted, the indemnified parties shall have
the right to engage in their own defense, including the selection and engagement
of legal counsel of their choosing, and all costs of such defense shall be borne
by you.
-3-
<PAGE>
13. This Agreement will automatically terminate in the event of its
assignment. Either party hereto may cancel this Agreement without penalty upon
ten days' written notice. This Agreement may also be terminated at any time
without penalty by the vote of a majority of the members of the Board of
Directors of the Fund who are not "interested persons" (as such term is defined
in the Investment Company Act of 1940) and who have no direct or indirect
financial interest in the Fund's Distribution Expense Plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 or any agreement relating to such
Plan, including this Agreement, or by a vote of a majority of the outstanding
voting securities of the Fund on ten days' written notice.
14. All communications to Underwriter should be sent to Ladenburg
Thalmann & Co. Inc., 590 Madison Avenue, New York, New York 10022, or at such
other address as Underwriter may designate in writing. Any notice to you shall
be duly given if mailed or telegraphed to you at the address of your principal
office, as indicated below in your acceptance of this Agreement.
15. This Agreement supersedes any other agreement with you relating to
the offer and sale of the Shares, and relating to any other matter discussed
herein.
16. This Agreement shall be binding (i) upon placing your first order
with Underwriter for the purchase of Shares, or (ii) upon receipt by Underwriter
in New York, New York of a counterpart of this Agreement duly accepted and
signed by you, whichever shall occur first. This Agreement shall be construed in
accordance with the substantive laws of the State of New York without regard to
its conflict of law provisions. Any disputes arising out of this Agreement shall
be adjudicated solely in the courts of the State of New York or the federal
court for the Southern District of New York (in either case only within New York
County, New York). The parties each agree to personal jurisdiction and venue
solely within New York County, New York, waive any objections to personal
jurisdiction and venue in New York County, New York, and agree not to seek
personal jurisdiction and venue in any other location.
17. The undersigned, executing this Agreement on behalf of Dealer,
hereby warrants and represents that he is duly authorized to so execute this
Agreement on behalf of Dealer.
-4-
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return all copies of this Agreement to the
Underwriter. ACCEPTED BY DEALER
ACCEPTED BY DEALER
By:-----------------------
Authorized Signature
- -----------------------------
Type or Print Name, Position
- -----------------------------
Dealer Name
- -----------------------------
Address
- -----------------------------
Address
- -----------------------------
Phone
- -----------------------------
Date
LADENBURG THALMANN & CO. INC.
By:-------------------------
Date------------------------
-5-
<PAGE>
CUSTODY AGREEMENT
This AGREEMENT, dated as of ______ __, 1998, by and between BOYAR
VALUE FUND INC., a corporation organized under the laws of the State of
Maryland, and STAR BANK, N.A., a national banking association (the "Custodian").
W I T N E S S E T H:
WHEREAS, the Fund desires that its Securities and cash be held and
administered by the Custodian pursuant to this Agreement; and
WHEREAS, the Fund is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Fund and the Custodian hereby agree as follows:
ARTICLE I.
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1.1. "Authorized Person" means any Officer or other person duly authorized
by resolution of the Board of Directors to give Oral Instructions and Written
Instructions on behalf of the Fund and named in Exhibit A hereto or in such
resolutions of the Board
<PAGE>
of Directors, certified by an Officer, as may be received by the Custodian from
time to time.
1.2. "Board of Directors" shall mean the Directors from time to time
serving under the Fund's Articles of Incorporation, as from time to time
amended.
1.3. "Book-Entry System" shall mean a federal book-entry system as provided
in Subpart O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of 31 CFR
Part 350, or in such book-entry regulations of federal agencies as are
substantially in the form of such Subpart O.
1.4. "Business Day" shall mean any day recognized as a settlement day by
The New York Stock Exchange, Inc. and any other day for which the Fund computes
the net asset value of Shares of the Fund.
1.5. "Fund Custody Account" shall mean any of the accounts in the name of
the Fund, which is provided for in Section 3.2 below.
1.6. "NASD" shall mean The National Association of Securities Dealers, Inc.
1.7. "Officer" shall mean the Chairman, President, any Vice President, any
Assistant Vice President, the Secretary, any Assistant Secretary, the Treasurer,
or any Assistant Treasurer of the Fund.
1.8. "Oral Instructions" shall mean instructions orally transmitted to and
accepted by the Custodian because such instructions are: (i) reasonably believed
by the Custodian to have been given by an Authorized Person, (ii) recorded and
kept
2
<PAGE>
among the records of the Custodian made in the ordinary course of business and
(iii) orally confirmed by the Custodian. The Fund shall cause all Oral
Instructions to be confirmed by Written Instructions prior to the end of the
next Business Day. If such Written Instructions confirming Oral Instructions are
not received by the Custodian prior to a transaction, it shall in no way affect
the validity of the transaction or the authorization thereof by the Fund. If
Oral Instructions vary from the Written Instructions which purport to confirm
them, the Custodian shall notify the Fund of such variance but such Oral
Instructions will govern unless the Custodian has not yet acted.
1.9. "Proper Instructions" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by both parties.
1.10. "Securities Depository" shall mean The Depository Trust Company and
(provided that Custodian shall have received a copy of a resolution of the Board
of Directors, certified by an Officer, specifically approving the use of such
clearing agency as a depository for the Fund) any other clearing agency
registered with the Securities and Exchange Commission under Section 17A of the
Securities and Exchange Act of 1934, as amended (the "1934 Act"), which acts as
a system for the central handling of Securities where all Securities of any
particular class or series of an issuer deposited within the system are treated
as fungible and may be transferred or pledged by bookkeeping entry without
physical delivery of the Securities.
3
<PAGE>
1.11. "Securities" shall include, without limitation, common and preferred
stocks, bonds, call options, put options, debentures, notes, bank certificates
of deposit, bankers' acceptances, mortgage-backed securities or other
obligations, and any certificates, receipts, warrants or other instruments or
documents representing rights to receive, purchase or subscribe for the same, or
evidencing or representing any other rights or interests therein, or any similar
property or assets that the Custodian has the facilities to clear and to
service.
1.12. "Shares" shall mean the shares of common stock issued by the Fund.
1.13. "Sub-Custodian" shall mean and include (i) any branch of a "U.S.
Bank," as that term is defined in Rule 17f-5 under the 1940 Act, (ii) any
"Eligible Foreign Custodian," as that term is defined in Rule 17f-5 under the
1940 Act, having a contract with the Custodian which the Custodian has
determined will provide reasonable care of assets of the Fund based on the
standards specified in Section 3.3 below. Such contract shall include provisions
that provide: (i) for indemnification or insurance arrangements (or any
combination of the foregoing) such that the Fund will be adequately protected
against the risk of loss of assets held in accordance with such contract; (ii)
that the Fund's assets will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the Sub-Custodian or its
creditors except a claim of payment for their safe custody or administration, in
the case of cash deposits, liens or rights in favor of creditors of the
Sub-Custodian arising under
4
<PAGE>
bankruptcy, insolvency, or similar laws; (iii) that beneficial ownership for the
Fund's assets will be freely transferable without the payment of money or value
other than for safe custody or administration; (iv) that adequate records will
be maintained identifying the assets as belonging to the Fund or as being held
by a third party for the benefit of the Funds; (v) that the Fund's independent
public accountants will be given access to those records or confirmation of the
contents of those records; and (vi) that the Fund will receive periodic reports
with respect to the safekeeping of the Fund's assets, including, but not limited
to, notification of any transfer to or from the Fund's account or a third party
account containing assets held for the benefit of the Fund. Such contract may
contain, in lieu of any or all of the provisions specified above, such other
provisions that the Custodian determines will provide, in their entirety, the
same or a greater level of care and protection for Fund assets as the specified
provisions, in their entirety.
1.14. "Written Instructions" shall mean (i) written communications actually
received by the Custodian and signed by an Authorized Person, or (ii)
communications by telex or any other such system from one or more persons
reasonably believed by the Custodian to be Authorized Persons, or (iii)
communications between electro-mechanical or electronic devices provided that
the use of such devices and the procedures for the use thereof shall have been
approved by resolutions of the Board of Directors, a copy of which, certified by
an Officer, shall have been delivered to the Custodian.
5
<PAGE>
ARTICLE II.
APPOINTMENT OF CUSTODIAN
2.1. Appointment. The Fund hereby constitutes and appoints the Custodian as
custodian of all Securities and cash owned by or in the possession of the Fund
at any time during the period of this Agreement.
2.2. Acceptance. The Custodian hereby accepts appointment as such custodian
and agrees to perform the duties thereof as hereinafter set forth.
2.3. Documents to be Furnished. The following documents, including any
amendments thereto, will be provided contemporaneously with the execution of the
Agreement to the Custodian by the Fund:
a. A copy of the Articles of Incorporation of the Fund certified by
the Secretary;
b. A copy of the Bylaws of the Fund certified by the Secretary;
c. A copy of the resolution of the Board of Directors of the Fund
appointing the Custodian, certified by the Secretary;
d. A copy of the then current Prospectus of the Fund; and
e. A certification of the Chairman or President and the Secretary of
the Fund setting forth the names and signatures of the current
Officers of the Fund and other Authorized Persons.
6
<PAGE>
2.4. Notice of Appointment of Dividend and Transfer Agent. The Fund agrees
to notify the Custodian in writing of the appointment, termination or change in
appointment of any Dividend and Transfer Agent of the Fund.
ARTICLE III.
CUSTODY OF CASH AND SECURITIES
3.1. Segregation. All Securities and non-cash property held by the
Custodian for the account of the Fund (other than Securities maintained in a
Securities Depository or Book-Entry System) shall be physically segregated from
other Securities and non-cash property in the possession of the Custodian and
shall be identified as subject to this Agreement.
3.2. Fund Custody Account. The Custodian shall open and maintain in its
trust department a custody account in the name of the Fund, subject only to
draft or order of the Custodian, in which the Custodian shall enter and carry
all Securities, cash and other assets of the Fund which are delivered to it.
3.3. Appointment of Agents. (a) In its discretion, the Custodian may
appoint one or more Sub-Custodians to act as Securities Depositories or as
sub-custodians to hold Securities and cash of the Fund and to carry out such
other provisions of this Agreement as it may determine, provided, however, that
the appointment of any such agents and maintenance of any Securities and cash of
the Fund shall be at the Custodian's expense and shall not relieve the Custodian
of any of its obligations or liabilities under this Agreement.
7
<PAGE>
(b) If, after the initial approval of Sub-Custodians by the Board of
Directors in connection with this Agreement, the Custodian wishes
to appoint other Sub-Custodians to hold property of the Fund, it
will so notify the Fund and provide it with information
reasonably necessary to determine any such new Sub-Custodian's
eligibility under Rule 17f-5 under the 1940 Act, including a copy
of the proposed agreement with such Sub-Custodian. The Fund shall
at the meeting of the Board of Directors next following receipt
of such notice and information give a written approval or
disapproval of the proposed action.
(c) The Agreement between the Custodian and each Sub-Custodian acting
hereunder shall contain the required provisions set forth in Rule
17f-5(a)(1)(iii).
(d) At the end of each calendar quarter, the Custodian shall provide
written reports notifying the Board of Directors of the placement
of the Securities and cash of the Fund with a particular
Sub-Custodian and of any material changes in the Fund's
arrangements. The Custodian shall promptly take such steps as may
be required to withdraw assets of the Fund from any Sub-Custodian
that has ceased to meet the requirements of Rule 17f-5 under the
1940 Act.
(e) With respect to its responsibilities under this Section 3.3, the
Custodian hereby warrants to the Fund that it agrees to exercise
reasonable care, prudence and
8
<PAGE>
diligence such as a person having responsibility for the
safekeeping of property of the Fund. The Custodian further
warrants that the Fund's assets will be subject to reasonable
care, based on the standards applicable to custodians in the
relevant market, if maintained with each Sub-Custodian, after
considering all factors relevant to the safekeeping of such
assets, including, without limitation: (i) the Sub-Custodian's
practices, procedures, and internal controls, for certificated
securities (if applicable), the method of keeping custodial
records, and the security and data protection practices; (ii)
whether the Sub-Custodian has the requisite financial strength to
provide reasonable care for Fund assets; (iii) the
Sub-Custodian's general reputation and standing and, in the case
of a Securities Depository, the Securities Depository's operating
history and number of participants; and (iv) whether the Fund
will have jurisdiction over and be able to enforce judgments
against the Sub-Custodian, such as by virtue of the existence of
any offices of the Sub-Custodian in the United States or the
Sub-Custodian's consent to service of process in the United
States.
(f) The Custodian shall establish a system to monitor the
appropriateness of maintaining the Fund's assets with a
particular Sub-Custodian and the contract governing the Fund's
arrangements with such Sub-Custodian.
9
<PAGE>
3.4. Delivery of Assets to Custodian. The Fund shall deliver, or cause to
be delivered, to the Custodian all of the Fund's Securities, cash and other
assets, including (a) all payments of income, payments of principal and capital
distributions received by the Fund with respect to such Securities, cash or
other assets owned by the Fund at any time during the period of this Agreement,
and (b) all cash received by the Fund for the issuance, at any time during such
period, of Shares. The Custodian shall not be responsible for such Securities,
cash or other assets until actually received by it.
3.5. Securities Depositories and Book-Entry Systems. The Custodian may
deposit and/or maintain Securities of the Fund in a Securities Depository or in
a Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of Securities of the Fund in any Securities
Depository or Book-Entry System, the Fund shall deliver to the
Custodian a resolution of the Board of Directors, certified by an
Officer, authorizing and instructing the Custodian on an on-going
basis to deposit in such Securities Depository or Book-Entry
System all Securities eligible for deposit therein and to make
use of such Securities Depository or Book-Entry System to the
extent possible and practical in connection with its performance
hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans
10
<PAGE>
of Securities, and deliveries and returns of collateral
consisting of Securities.
(b) Securities of the Fund kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of
the Custodian in such Book-Entry System or Securities Depository
which includes only assets held by the Custodian as a fiduciary,
custodian or otherwise for customers.
(c) The records of the Custodian with respect to Securities of the
Fund maintained in a Book-Entry System or Securities Depository
shall, by book-entry, identify such Securities as belonging to
the Fund.
(d) If Securities purchased by the Fund are to be held in a
Book-Entry System or Securities Depository, the Custodian shall
pay for such Securities upon (i) receipt of advice from the
Book-Entry System or Securities Depository that such Securities
have been transferred to the Depository Account, and (ii) the
making of an entry on the records of the Custodian to reflect
such payment and transfer for the account of the Fund. If
Securities sold by the Fund are held in a Book-Entry System or
Securities Depository, the Custodian shall transfer such
Securities upon (i) receipt of advice from the Book-Entry System
or Securities Depository that payment for such Securities has
been transferred to the Depository Account, and (ii) the making
of an entry on the records of the
11
<PAGE>
Custodian to reflect such transfer and payment for the account of
the Fund.
(e) The Custodian shall provide the Fund with copies of any report
(obtained by the Custodian from a Book-Entry System or Securities
Depository in which Securities of the Fund are kept) on the
internal accounting controls and procedures for safeguarding
Securities deposited in such Book-Entry System or Securities
Depository.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to a
Fund resulting (i) from the use of a Book-Entry System or
Securities Depository by reason of any negligence or willful
misconduct on the part of Custodian or any Sub-Custodian
appointed pursuant to Section 3.3 above or any of its or their
employees, or (ii) from failure of Custodian or any such
Sub-Custodian to enforce effectively such rights as it may have
against a Book-Entry System or Securities Depository. At its
election, the Fund shall be subrogated to the rights of the
Custodian with respect to any claim against a Book-Entry System
or Securities Depository or any other person from any loss or
damage to the Fund arising from the use of such Book-Entry System
or Securities Depository, if and to the extent that the Fund has
not been made whole for any such loss or damage.
12
<PAGE>
3.6. Disbursement of Moneys from Fund Custody Account. Upon receipt of
Proper Instructions, the Custodian shall disburse moneys from the Fund Custody
Account but only in the following cases:
(a) For the purchase of Securities for the Fund but only in
accordance with Section 4.1 of this Agreement and only (i) in the
case of Securities (other than options on Securities, futures
contracts and options on futures contracts), against the delivery
to the Custodian (or any Sub-Custodian appointed pursuant to
Section 3.3 above) of such Securities registered as provided in
Section 3.9 below or in proper form for transfer, or if the
purchase of such Securities is effected through a Book-Entry
System or Securities Depository, in accordance with the
conditions set forth in Section 3.5 above; (ii) in the case of
options on Securities, against delivery to the Custodian (or such
Sub-Custodian) of such receipts as are required by the customs
prevailing among dealers in such options; (iii) in the case of
futures contracts and options on futures contracts, against
delivery to the Custodian (or such Sub-Custodian) of evidence of
title thereto in favor of the Fund or any nominee referred to in
Section 3.9 below; and (iv) in the case of repurchase or reverse
repurchase agreements entered into between the Fund and a bank
which is a member of the Federal Reserve System or between the
Fund and a primary dealer in U.S.
13
<PAGE>
Government securities, against delivery of the purchased
Securities either in certificate form or through an entry
crediting the Custodian's account at a Book-Entry System or
Securities Depository with such Securities;
(b) In connection with the conversion, exchange or surrender, as set
forth in Section 3.7(f) below, of Securities owned by the Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in
Section 5.1 below;
(e) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the
account of the Fund: interest; taxes; administration, investment
advisory, accounting, auditing, transfer agent, custodian,
trustee and legal fees; and other operating expenses of the Fund;
in all cases, whether or not such expenses are to be in whole or
in part capitalized or treated as deferred expenses;
(f) For transfer in accordance with the provisions of any agreement
among the Fund, the Custodian and a broker-dealer registered
under the 1934 Act and a member of the NASD, relating to
compliance with rules of The Options Clearing Corporation and of
any registered national securities exchange (or of any similar
organization or organizations) regarding escrow
14
<PAGE>
or other arrangements in connection with transactions by the
Fund;
(g) For transfer in accordance with the provision of any agreement
among the Fund, the Custodian, and a futures commission merchant
registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market (or any similar
organization or organizations) regarding account deposits in
connection with transactions by the Fund;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including
the Custodian), which deposit or account has a term of one year
or less; and
(i) For any other proper purpose, but only upon receipt, in addition
to Proper Instructions, of a copy of a resolution of the Board of
Directors, certified by an Officer, specifying the amount and
purpose of such payment, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom such
payment is to be made.
3.7. Delivery of Securities from Fund Custody Account. Upon receipt of
Proper Instructions, the Custodian shall release and deliver Securities from the
Fund Custody Account but only in the following cases:
15
<PAGE>
(a) Upon the sale of Securities for the account of the Fund but only
against receipt of payment therefor in cash, by certified or
cashiers check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of
Section 3.5 above;
(c) To an offeror's depository agent in connection with tender or
other similar offers for Securities of the Fund; provided that,
in any such case, the cash or other consideration is to be
delivered to the Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name
of the Fund, the Custodian or any Sub-Custodian appointed
pursuant to Section 3.3 above, or of any nominee or nominees of
any of the foregoing, or (ii) for exchange for a different number
of certificates or other evidence representing the same aggregate
face amount or number of units; provided that, in any such case,
the new Securities are to be delivered to the Custodian;
(e) To the broker selling Securities, for examination in accordance
with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the issuer of such Securities, or pursuant to provisions for
conversion contained in such Securities, or pursuant to any
deposit agreement,
16
<PAGE>
including surrender or receipt of underlying Securities in
connection with the issuance or cancellation of depository
receipts; provided that, in any such case, the new Securities and
cash, if any, are to be delivered to the Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or
reverse repurchase agreement entered into by the Fund;
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(i) For delivery in connection with any loans of Securities of the
Fund, but only against receipt of such collateral as the Fund
shall have specified to the Custodian in Proper Instructions;
(j) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by the Fund, but only against
receipt by the Custodian of the amounts borrowed;
(k)) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Fund;
(l) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian and a broker-dealer registered
under the 1934 Act and a member of the NASD, relating to
compliance with the
17
<PAGE>
rules of The Options Clearing Corporation and of any registered
national securities exchange (or of any similar organization or
organizations) regarding escrow or other arrangements in
connection with transactions by the Fund;
(m) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian, and a futures commission merchant
registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market (or any similar
organization or organizations) regarding account deposits in
connection with transactions by the Fund; or
(n) For any other proper corporate purpose, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of the
Board of Directors, certified by an Officer, specifying the
Securities to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to
whom delivery of such Securities shall be made.
3.8. Actions Not Requiring Proper Instructions. Unless otherwise instructed
by the Trust, the Custodian shall with respect to all Securities held for the
Fund:
(a) Subject to Section 7.4 below, collect on a timely basis all
income and other payments to which the Fund is
18
<PAGE>
entitled either by law or pursuant to custom in the securities
business;
(b) Present for payment and, subject to Section 7.4 below, collect on
a timely basis the amount payable upon all Securities which may
mature or be called, redeemed, or retired, or otherwise become
payable;
(c) Endorse for collection, in the name of the Fund, checks, drafts
and other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates
of ownership under the federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in
effect, and prepare and submit reports to the Internal Revenue
Service ("IRS") and to the Fund at such time, in such manner and
containing such information as is prescribed by the IRS;
(f) Hold for the Fund, either directly or, with respect to Securities
held therein, through a Book-Entry System or Securities
Depository, all rights and similar securities issued with respect
to Securities of the Fund; and
(g) In general, and except as otherwise directed in Proper
Instructions, attend to all non-discretionary details in
connection with the sale, exchange, substitution,
19
<PAGE>
purchase, transfer and other dealings with Securities and assets
of the Fund.
3.9. Registration and Transfer of Securities. All Securities held for the
Fund that are issued or issuable only in bearer form shall be held by the
Custodian in that form, provided that any such Securities shall be held in a
Book-Entry System if eligible therefor. All other Securities held for the Fund
may be registered in the name of the Fund, the Custodian, or any Sub-Custodian
appointed pursuant to Section 3.3 above, or in the name of any nominee of any of
them, or in the name of a Book-Entry System, Securities Depository or any
nominee of either thereof. The Fund shall furnish to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form for
transfer, or to register in the name of any of the nominees hereinabove referred
to or in the name of a Book-Entry System or Securities Depository, any
Securities registered in the name of the Fund.
3.10. Records. (a) The Custodian shall maintain complete and accurate
records with respect to Securities, cash or other property held for the Funds,
including (i) journals or other records of original entry containing an itemized
daily record in detail of all receipts and deliveries of Securities and all
receipts and disbursements of cash; (ii) ledgers (or other records) reflecting
(A) Securities in transfer, (B) Securities in physical possession, (C) monies
and Securities borrowed and monies and Securities loaned (together with a record
of the collateral therefor and substitutions of such collateral), (D)
20
<PAGE>
dividends and interest received, and (E) dividends receivable and interest
receivable; and (iii) canceled checks and bank records related thereto. The
Custodian shall keep such other books and records of the Fund as the Fund shall
reasonably request, or as may be required by the 1940 Act, including, but not
limited to, Section 31 of the 1940 Act and Rule 31a-2 promulgated thereunder.
(b) All such books and records maintained by the Custodian shall (i)
be maintained in a form acceptable to the Fund and in compliance
with rules and regulations of the Securities and Exchange
Commission, (ii) be the property of the Fund and at all times
during the regular business hours of the Custodian be made
available upon request for inspection by duly authorized
officers, employees or agents of the Fund and employees or agents
of the Securities and Exchange Commission, and (iii) if required
to be maintained by Rule 31a-1 under the 1940 Act, be preserved
for the periods prescribed in Rule 31a-2 under the 1940 Act.
3.11. Fund Reports by Custodian. The Custodian shall furnish the Fund with
a daily activity statement and a summary of all transfers to or from the Fund
Custody Account on the day following such transfers. At least monthly and from
time to time, the Custodian shall furnish the Fund with a detailed statement of
the Securities and moneys held by the Custodian and the Sub-Custodians for the
Fund under this Agreement.
3.12. Other Reports by Custodian. The Custodian shall provide the Fund with
such reports, as the Fund may reasonably
21
<PAGE>
request from time to time, on the internal accounting controls and procedures
for safeguarding Securities, which are employed by the Custodian or any
Sub-Custodian appointed pursuant to Section 3.3 above.
3.13. Proxies and Other Materials. The Custodian shall cause all proxies
relating to Securities which are not registered in the name of the Fund, to be
promptly executed by the registered holder of such Securities, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Fund such proxies, all proxy soliciting materials and
all notices relating to such Securities.
3.14. Information on Corporate Actions. The Custodian shall promptly
deliver to the Fund all information received by the Custodian and pertaining to
Securities being held by the Fund with respect to optional tender or exchange
offers, calls for redemption or purchase, or expiration of rights as described
in the Standards of Service Guide attached as Exhibit B. If the Fund desires to
take action with respect to any tender offer, exchange offer or other similar
transaction, the Fund shall notify the Custodian at least five Business Days
prior to the date on which the Custodian is to take such action. The Fund will
provide or cause to be provided to the Custodian all relevant information for
any Security which has unique put/option provisions at least five Business Days
prior to the beginning date of the tender period.
22
<PAGE>
ARTICLE IV.
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
4.1. Purchase of Securities. Promptly upon each purchase of Securities for
the Fund, Written Instructions shall be delivered to the Custodian, specifying
(a) the name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any) or other units purchased, (c) the date of purchase and
settlement, (d) the purchase price per unit, (e) the total amount payable upon
such purchase, and (f) the name of the person to whom such amount is payable.
The Custodian shall upon receipt of such Securities purchased by the Fund pay
out of the moneys held for the account of the Fund the total amount specified in
such Written Instructions to the person named therein. The Custodian shall not
be under any obligation to pay out moneys to cover the cost of a purchase of
Securities for the Fund, if in the Fund Custody Account there is insufficient
cash available to the Fund.
4.2. Liability for Payment in Advance of Receipt of Securities Purchased.
In any and every case where payment for the purchase of Securities for the Fund
is made by the Custodian in advance of receipt of the Securities purchased but
in the absence of specified Written Instructions to so pay in advance, the
Custodian shall be liable to the Fund for such Securities to the same extent as
if the Securities had been received by the Custodian.
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4.3. Sale of Securities. Promptly upon each sale of Securities by the Fund,
Written Instructions shall be delivered to the Custodian, specifying (a) the
name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any), or other units sold, (c) the date of sale and settlement, (d)
the sale price per unit, (e) the total amount payable upon such sale, and (f)
the person to whom such Securities are to be delivered. Upon receipt of the
total amount payable to the Fund as specified in such Written Instructions, the
Custodian shall deliver such Securities to the person specified in such Written
Instructions. Subject to the foregoing, the Custodian may accept payment in such
form as shall be satisfactory to it, and may deliver Securities and arrange for
payment in accordance with the customs prevailing among dealers in Securities.
4.4. Delivery of Securities Sold. Notwithstanding Section 4.3 above or any
other provision of this Agreement, the Custodian, when instructed to deliver
Securities against payment, shall be entitled, if in accordance with generally
accepted market practice, to deliver such Securities prior to actual receipt of
final payment therefor. In any such case, the Fund shall bear the risk that
final payment for such Securities may not be made or that such Securities may be
returned or otherwise held or disposed of by or through the person to whom they
were delivered, and the Custodian shall have no liability for any for the
foregoing.
24
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4.5. Payment for Securities Sold, etc. In its sole discretion and from time
to time, the Custodian may credit the Fund Custody Account, prior to actual
receipt of final payment thereof, with (i) proceeds from the sale of Securities
which it has been instructed to deliver against payment, (ii) proceeds from the
redemption of Securities or other assets of the Fund, and (iii) income from
cash, Securities or other assets of the Fund. Any such credit shall be
conditional upon actual receipt by Custodian of final payment and may be
reversed if final payment is not actually received in full. The Custodian may,
in its sole discretion and from time to time, permit the Fund to use funds so
credited to the Fund Custody Account in anticipation of actual receipt of final
payment. Any such funds shall be repayable immediately upon demand made by the
Custodian at any time prior to the actual receipt of all final payments in
anticipation of which funds were credited to the Fund Custody Account.
4.6. Advances by Custodian for Settlement. The Custodian may, in its sole
discretion and from time to time, advance funds to the Fund to facilitate the
settlement of the Fund's transactions in the Fund Custody Account. Any such
advance shall be repayable immediately upon demand made by Custodian.
ARTICLE V.
REDEMPTION OF FUND SHARES
5.1. Transfer of Funds. From such funds as may be available for the purpose
in the Fund Custody Account, and upon receipt of Proper Instructions specifying
that the funds are
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required to redeem Shares of the Fund, the Custodian shall wire each amount
specified in such Proper Instructions to or through such bank as the Fund may
designate with respect to such amount in such Proper Instructions.
5.2. No Duty Regarding Paying Banks. The Custodian shall not be under any
obligation to effect payment or distribution by any bank designated in Proper
Instructions given pursuant to Section 5.1 above of any amount paid by the
Custodian to such bank in accordance with such Proper Instructions.
ARTICLE VI.
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of the Fund, into
which account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among the
Fund, the Custodian and a broker-dealer registered under the 1934
Act and a member of the NASD (or any futures commission merchant
registered under the Commodity Exchange Act), relating to
compliance with the rules of The Options Clearing Corporation and
of any registered national securities exchange (or the Commodity
Futures Trading Commission or any registered contract market), or
of any similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the Fund,
26
<PAGE>
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by the Fund or in
connection with financial futures contracts (or options thereon)
purchased or sold by the Fund,
(c) which constitute collateral for loans of Securities made by the
Fund,
(d) for purposes of compliance by the Fund with requirements under
the 1940 Act for the maintenance of segregated accounts by
registered investment companies in connection with reverse
repurchase agreements and when-issued, delayed delivery and firm
commitment transactions, and
(e) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution
of the Board of Directors, certified by an Officer, setting forth
the purpose or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
ARTICLE VII.
CONCERNING THE CUSTODIAN
7.1. Standard of Care. The Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under this Agreement, and shall
be without liability to the Fund for any loss, damage, cost, expense (including
attorneys' fees and disbursements), liability or claim unless such loss, damage,
27
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cost, expense, liability or claim arises from negligence, bad faith or
willful misconduct on its part or on the part of any Sub-Custodian appointed
pursuant to Section 3.3 above. The Custodian shall be entitled to rely on and
may act upon advice of counsel on all matters, and shall be without liability
for any action reasonably taken or omitted pursuant to such advice. The
Custodian shall promptly notify the Fund of any action taken or omitted by the
Custodian pursuant to advice of counsel. The Custodian shall not be under any
obligation at any time to ascertain whether the Fund is in compliance with the
1940 Act, the regulations thereunder, the provisions of the Fund's Articles of
Incorporation or bylaws, or its investment objectives and policies as then in
effect.
7.2. Actual Collection Required. The Custodian shall not be liable for, or
considered to be the custodian of, any cash belonging to the Fund or any money
represented by a check, draft or other instrument for the payment of money,
until the Custodian or its agents actually receive such cash or collect on such
instrument.
7.3. No Responsibility for Title, etc. So long as and to the extent that it
is in the exercise of reasonable care, the Custodian shall not be responsible
for the title, validity or genuineness of any property or evidence of title
thereto received or delivered by it pursuant to this Agreement.
7.4. Limitation on Duty to Collect. Custodian shall not be required to
enforce collection, by legal means or otherwise, of any money or property due
and payable with respect to Securities
28
<PAGE>
held for the Fund if such Securities are in default or payment is not made after
due demand or presentation.
7.5. Reliance Upon Documents and Instructions. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in writing
received by it and reasonably believed by it to be genuine. The Custodian shall
be entitled to rely upon any Oral Instructions and any Written Instructions
actually received by it pursuant to this Agreement.
7.6. Express Duties Only. The Custodian shall have no duties or obligations
whatsoever except such duties and obligations as are specifically set forth in
this Agreement, and no covenant or obligation shall be implied in this Agreement
against the Custodian.
7.7. Co-operation. The Custodian shall cooperate with and supply necessary
information, to the entity or entities appointed by the Fund to keep the books
of account of the Fund and/or compute the value of the assets of the Fund. The
Custodian shall take all such reasonable actions as the Fund may from time to
time request to enable the Fund to obtain, from year to year, favorable opinions
from the Fund's independent accountants with respect to the Custodian's
activities hereunder in connection with (a) the preparation of the Fund's
reports on Form N-1A and Form N-SAR and any other reports required by the
Securities and Exchange Commission, and (b) the fulfillment by the Fund of any
other requirements of the Securities and Exchange Commission.
29
<PAGE>
ARTICLE VIII.
INDEMNIFICATION
8.1. Indemnification by Fund. The Fund shall indemnify and hold harmless
the Custodian and any Sub-Custodian appointed pursuant to Section 3.3 above, and
any nominee of the Custodian or of such Sub-Custodian, from and against any
loss, damage, cost, expense (including attorneys' fees and disbursements),
liability (including, without limitation, liability arising under the Securities
Act of 1933, the 1934 Act, the 1940 Act, and any state or foreign securities
and/or banking laws) or claim arising directly or indirectly (a) from the fact
that Securities are registered in the name of any such nominee, or (b) from any
action or inaction by the Custodian or such Sub-Custodian (i) at the request or
direction of or in reliance on the advice of the Fund, or (ii) upon Proper
Instructions, or (c) generally, from the performance of its obligations under
this Agreement or any sub-custody agreement with a Sub-Custodian appointed
pursuant to Section 3.3 above, provided that neither the Custodian nor any such
Sub-Custodian shall be indemnified and held harmless from and against any such
loss, damage, cost, expense, liability or claim arising from the Custodian's or
such Sub-Custodian's negligence, bad faith or willful misconduct.
8.2. Indemnification by Custodian. The Custodian shall indemnify and hold
harmless the Fund from and against any loss, damage, cost, expense (including
attorneys' fees and disbursements), liability (including without limitation,
liability arising under the Securities Act of 1933, the 1934 Act,
30
<PAGE>
the 1940 Act, and any state or foreign securities and/or banking laws) or claim
arising from the negligence, bad faith or willful misconduct of the Custodian or
any Sub-Custodian appointed pursuant to Section 3.3 above, or any nominee of the
Custodian or of such Sub-Custodian.
8.3. Indemnity to be Provided. If the Fund requests the Custodian to take
any action with respect to Securities, which may, in the opinion of the
Custodian, result in the Custodian or its nominee becoming liable for the
payment of money or incurring liability of some other form, the Custodian shall
not be required to take such action until the Fund shall have provided indemnity
therefor to the Custodian in an amount and form satisfactory to the Custodian.
8.4. Security. If the Custodian advances cash or Securities to the Fund for
any purpose, either at the Fund's request or as otherwise contemplated in this
Agreement, or in the event that the Custodian or its nominee incurs, in
connection with its performance under this Agreement, any loss, damage, cost,
expense (including attorneys' fees and disbursements), liability or claim
(except such as may arise from its or its nominee's negligence, bad faith or
willful misconduct), then, in any such event, any property at any time held for
the account of the Fund shall be security therefor, and should the Fund fail
promptly to repay or indemnify the Custodian, the Custodian shall be entitled to
utilize available cash of the Fund and to dispose of other assets of the Fund to
the extent necessary to obtain reimbursement or indemnification.
31
<PAGE>
ARTICLE IX.
FORCE MAJEURE
Neither the Custodian nor the Fund shall be liable for any failure or delay
in performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that the Custodian in the event of a failure
or delay (i) shall not discriminate against the Fund in favor of any other
customer of the Custodian in making computer time and personnel available to
input or process the transactions contemplated by this Agreement and (ii) shall
use its best efforts to ameliorate the effects of any such failure or delay.
ARTICLE X.
EFFECTIVE PERIOD; TERMINATION
10.1. Effective Period. This Agreement shall become effective as of its
execution and shall continue in full force and effect until terminated as
hereinafter provided.
<PAGE>
10.2. Termination. Either party hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than sixty (60) days after the date of the
giving of such notice. If a successor custodian shall have been appointed by the
Board of Directors, the Custodian shall, upon receipt of a notice of acceptance
by the successor custodian, on such specified date of termination (a) deliver
directly to the successor custodian all Securities (other than Securities held
in a Book-Entry System or Securities Depository) and cash then owned by the Fund
and held by the Custodian as custodian, and (b) transfer any Securities held in
a Book-Entry System or Securities Depository to an account of or for the benefit
of the Fund at the successor custodian, provided that the Fund shall have paid
to the Custodian all fees, expenses and other amounts to the payment or
reimbursement of which it shall then be entitled. Upon such delivery and
transfer, the Custodian shall be relieved of all obligations under this
Agreement. The Fund may at any time immediately terminate this Agreement in the
event of the appointment of a conservator or receiver for the Custodian by
regulatory authorities or upon the happening of a like event at the direction of
an appropriate regulatory agency or court of competent jurisdiction.
10.3. Failure to Appoint Successor Custodian. If a successor custodian is
not designated by the Fund on or before the date of termination specified
pursuant to Section 10.1 above, then the Custodian shall have the right to
deliver to a bank or
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trust company of its own selection, which (a) is a "bank" as defined in the 1940
Act and (b) has aggregate capital, surplus and undivided profits as shown on its
then most recent published report of not less than $25 million, all Securities,
cash and other property held by Custodian under this Agreement and to transfer
to an account of or for the Fund at such bank or trust company all Securities of
the Fund held in a Book-Entry System or Securities Depository. Upon such
delivery and transfer, such bank or trust company shall be the successor
custodian under this Agreement and the Custodian shall be relieved of all
obligations under this Agreement.
ARTICLE XI.
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as agreed upon from time to
time by the Fund and the Custodian. The fees and other charges in effect on the
date hereof and applicable to the Fund are set forth in Exhibit C attached
hereto.
ARTICLE XII.
NOTICES
Unless otherwise specified herein, all demands, notices, instructions, and
other communications to be given hereunder shall be in writing and shall be sent
or delivered to the recipient at the address set forth after its name
hereinbelow:
To the Fund:
------------
Boyar Value Fund, Inc.
c/o Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
Telephone: (513) 629-2000
Facsimile: (513) 629-2041
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<PAGE>
To Custodian:
-------------
Star Bank, N.A.
425 Walnut Street, M.L. 6118
Sixth Floor
Cincinnati, Ohio 45202
Attention: Mutual Fund Custody Services
Telephone: (800) 485-8510
Facsimile: (513) 632-3299
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XII. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XIII.
MISCELLANEOUS
13.1. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
13.2. References to Custodian. The Trust shall not circulate any printed
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in the prospectus or
statement of additional information for the Fund and such other printed matter
as merely identifies Custodian as custodian for the Fund. The Fund shall submit
printed matter requiring approval to Custodian in draft form, allowing
sufficient time for review by Custodian and its counsel prior to any deadline
for printing.
13.3. No Waiver. No failure by either party hereto to exercise, and no
delay by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the
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<PAGE>
exercise of any other right, and the remedies provided herein are cumulative and
not exclusive of any remedies provided at law or in equity.
13.4. Amendments. This Agreement cannot be changed orally and no amendment
to this Agreement shall be effective unless evidenced by an instrument in
writing executed by the parties hereto.
13.5. Counterparts. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
13.6. Severability. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected or
impaired thereby.
13.7. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party hereto.
13.8. Headings. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed and delivered in its name and on
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its behalf by its representatives thereunto duly authorized, all as of the day
and year first above written.
ATTEST: BOYAR VALUE FUND, INC.
______________________________ By:_____________________________
President
ATTEST: STAR BANK, N.A.
______________________________ By:____________________________
37
<PAGE>
EXHIBIT A
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Fund to administer the Fund Custody Account.
Authorized Persons Specimen Signatures
------------------ -------------------
Chairman: ______________________
President/Treasurer: ______________________
Secretary: ______________________
Vice President: ______________________
Assistant Secretary: ______________________
Assistant Treasurer: ______________________
Transfer Agent/Fund Accountant Employees:
Christina Kelso ______________________
M. Kathleen Leugers ______________________
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APPENDIX B
----------
Star Bank, N.A.
Standards of Service Guide
Star Bank, N.A. is committed to providing superior quality service to all
customers and their agents at all times. We have compiled this guide as a tool
for our clients to determine our standards for the processing of security
settlements, payment collection,a nd capital change transactions. Deadlines
recited in this guide represent the times required for Star Bank to guarantee
processing. Failure to meet these deadlines will result in settlement at our
client's risk. In all cases, Star Bank will make every effort to compete all
processing on a timely basis.
Star Bank is a direct participant of the Depository Trust Company, a direct
member of the Federal Reserve Bank of Cleveland, and utilizes the Bankers Trust
Company as its agent for ineligible and foreign securities.
For corporate reorganizations, Star Bank utilizes SEI's Reorg Source,
Financial Information, Inc., XCITEK_ DTC Important Notices, and the Wall Street
Journal.
For bond calls and mandatory puts, Star Bank utilizes SEI's Bond source,
Kenny Information Systems, Standard & Poor's Corporation, and DTC Important
Notices. Star Bank will not notify clients of optional put opportunities.
Any securities delivered free to Star Bank or its agents must be received
three (3) business days prior to any payment or settlement in order for the Star
Bank standards of service to apply.
Should you have any questions regarding the information contained in this
guide, please feel free to contact your account representative.
The information contained in this Standards of Service Guide is
subject to change. Should any changes be made Star Bank will
provide you with an updated copy of its Standards of Service
Guide.
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EXHIBIT C
STAR BANK, N.A.
Domestic Custody Fee Schedule
Boyar Value Fund, Inc.
Star Bank, N.A., as Custodian, will receive monthly compensation for services
according to the terms of the following Schedule:
I. Portfolio Transaction Fees:
(a) For each repurchase agreement trade not executed
by Star Bank, N.A............................................ $ 7.00
(b) For each portfolio transaction processed through
DTC or Federal Reserve....................................... $ 9.00
(c) For each portfolio transaction processed through
our New York custodian...................................... $25.00
(d) For each GNMA/Amortized Security
Purchase.......................................................$ 16.00
(e) For each GNMA Prin/Int Paydown, GNMA Sales.................... $ 8.00
(f) For each option/future contract written,
exercised or expired................................... $ 40.00
(g) For each Cedel/Euroclear transaction....................... $ 80.00
(h) For each Disbursement (Fund expenses only).................... $ 5.00
A transaction is a purchase/sale of a security, free receipt/free delivery
(excludes initial conversion), maturity, tender or exchange.
II. Aggregate Market Value Fee
Based upon an annual rate of: Million
-------
.0003 (3.0 Basis Points) on First $20
.0002 (2.0 Basis Points) on Next $20
.00015 (1.5 Basis Points) on Balance
III. Monthly Minimum Fee $300.00
IV. Out-of-Pocket Expenses
The only out-of-pocket expenses charged to your account will be shipping
fees or transfer fees.
V. Earnings Credits
On a monthly basis any earnings credits generated from uninvested custody
balances will be applied against any cash management service fees
generated. Earnings credits are based on a Cost of Funds Tiered Earnings
Credit Rate.
<PAGE>
MANAGEMENT AGREEMENT
March 10, 1998
Ladenburg Thalmann Fund Management Inc.
590 Madison Avenue
New York, New York 10022
Dear Sirs:
Boyar Value Fund, Inc. (the "Fund"), a corporation organized and
existing under the laws of the State of Maryland, herewith confirms its
agreement with Ladenburg Thalmann Fund Management Inc., the Fund's manager (the
"Manager") as follows:
1. Investment Description; Appointment
The Fund desires to employ the capital of the Fund by investing and
reinvesting in investments of the kind and in accordance with the limitations
specified in its Articles of Incorporation, as may be amended from time to time,
and in its Prospectus and Statement of Additional Information, as from time to
time in effect, and in such manner and to such extent as may from time to time
be approved by the Board of Directors of the Fund. Copies of the Fund's
Prospectus and Statement of Additional Information, as each may be amended from
time to time, have been submitted to the Manager. The Fund desires to employ and
hereby appoints the Manager to act as manager to the Fund. The Manager accepts
the appointment and agrees to furnish the services described in Section 2 of
this Agreement for the compensation set forth in Section 5 of this Agreement.
2. Services as Investment Adviser
(a) Subject to the supervision and direction of the Board of
Directors of the Fund, the Manager is generally responsible for furnishing, or
causing to be furnished to the Fund, investment management services. Included
among the specific services to be provided by the Manager are: the selection of
an investment adviser to the Fund; the selection and supervision of an
administrator; the review of all purchases and sales of portfolio instruments
made by the Fund to assess compliance with its stated investment objective and
policies; the monitoring of the selection of brokers and dealers effecting
transactions on behalf of the Fund; the maintenance and furnishing of all
required records or reports pertaining to the Fund to the extent those records
or reports are not maintained or furnished by the Fund's transfer agent,
custodian or other agents employed by the Fund; and, the providing of general
administrative services to the Fund not otherwise provided by the Fund's
transfer agent, custodian or other agents employed by the Fund.
<PAGE>
(b) The Fund acknowledges that the Manager has selected Boyar Asset
Management, Inc., a corporation formed under the laws of the State of New York
("the Adviser"), as the Fund's investment adviser and the Fund approves of the
selection of the Adviser.
(c) The Manager will, at its own expense, maintain sufficient staff,
and employ or retain sufficient personnel and consult with any other persons
that it determines may be necessary or useful to the performance of its
obligations under this Agreement.
3. Information Provided to the Fund
The Manager will keep the Fund informed of developments materially
affecting the Fund, and will, on its own initiative, furnish the Fund from time
to time with whatever information the Manager believes is appropriate for this
purpose.
4. Standard of Care
The Manager shall exercise its best judgment in rendering the
services listed in paragraphs 2 and 3 above. The Manager shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, provided that
nothing herein shall be deemed to protect or purport to protect the Manager
against any liability to the Fund or to shareholders of the Fund to which the
Manager would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence on its part in the performance of its duties or by reason of
the Manager's reckless disregard of its obligations and duties under this
Agreement.
5. Compensation
In consideration of the services rendered pursuant to this
Agreement, the Fund will pay the Manager a monthly fee calculated at an annual
rate of .50% of the Fund's average daily net assets. The fee for the period from
the date the Fund's initial registration statement is declared effective by the
Securities and Exchange Commission to the end of the month during which the
initial registration statement is declared effective shall be prorated according
to the proportion that such period bears to the full monthly period. Upon any
termination of this Agreement before the end of a month, the fee for such part
of that month shall be prorated according to the proportion that such period
bears to the full monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of determining fees payable to
the Manager, the value of the Fund's net assets shall be computed at the times
and in the manner specified in the Fund's Prospectus and/or Statement of
Additional Information as from time to time in effect.
2
<PAGE>
6. Expenses
The Manager will bear all expenses in connection with the
performance of its services under this Agreement. The Fund will bear its
proportionate share of certain other expenses to be incurred in its operation,
including: investment advisory and administration fees; taxes, interest,
brokerage fees and commissions, if any; fees of Directors of the Fund who are
not officers, directors, or employees of the Adviser, the Manager or any of
their affiliates; fees of any pricing service employed to value shares of the
Fund; Securities and Exchange Commission fees and state blue sky notification
fees; charges of custodians and transfer and dividend disbursing agents; the
Fund's proportionate share of insurance premiums; outside auditing and legal
expenses; costs of maintenance of the Fund's existence; costs attributable to
investor services, including, without limitation, telephone and personnel
expenses; costs of preparing and printing prospectuses and statements of
additional information for regulatory purposes and for distribution to existing
shareholders; costs of shareholders' reports and meetings of the shareholders of
the Fund and of the officers or Board of Directors of the Fund; and any
extraordinary expenses.
The Fund will be responsible for nonrecurring expenses which may
arise, including costs of litigation to which the Fund is a party and of
indemnifying officers and Directors of the Fund with respect to such litigation
and other expenses as determined by the Directors.
7. Services to Other Companies or Accounts
The Fund understands that the Manager may act in the future as
investment manager, adviser or administrator to various fiduciary or other
managed accounts or to one or more other investment companies or series of
investment companies, and the Fund has no objection to the Manager so acting,
provided that whenever the Fund and one or more other accounts or investment
companies or portfolios served by the Manager have available funds for
investment, investments suitable and appropriate for each will be allocated in
accordance with a formula believed to be equitable to each entity. The Fund and
the Manager recognize that in some cases this procedure may adversely affect the
size of the position obtainable for the Fund. In addition, the Fund understands
that the persons employed by the Manager to assist in the performance of the
Manager's duties hereunder will not devote their full time to such service and
nothing contained herein shall be deemed to limit or restrict the right of the
Manager or any affiliate of the Manager to engage in and devote time and
attention to other businesses or to render services of whatever kind or nature.
3
<PAGE>
8. Term of Agreement
This Agreement shall continue for an initial two-year term and
thereafter shall continue automatically, provided such continuance is
specifically approved at least annually by (a) the Board of Directors of the
Fund or (b) a vote of a "majority" (as defined in the Investment Company Act of
1940, as amended) of the Fund's outstanding voting securities, provided that in
either event the continuance is also approved by a majority of the Board of
Directors who are not "interested persons" (as defined in said Act) of any party
to this Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This Agreement is terminable, without penalty, on 60
days' written notice by the Board of Directors of the Fund, by a vote of the
holders of a majority of the Fund's shares, or by the Manager. This Agreement
will also terminate automatically in the event of its assignment (as defined in
said Act).
9. Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without reference to conflicts of laws
principles.
10. Miscellaneous
The Fund recognizes that directors, officers and employees of the
Manager may from time to time serve as directors, trustees, officers and
employees of corporations and business trusts (including other investment
companies) and that the Manager or its affiliates may enter into Management or
other agreements with such other corporations and trusts.
4
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Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place below indicated,
whereupon it shall become a binding agreement between us.
Very truly yours,
BOYAR VALUE FUND, INC.
By: /s/ Mark A. Boyar
Name:Mark A. Boyar
Title: Chairman and CEO
Accepted:
LADENBURG THALMANN FUND
MANAGEMENT INC.
By: /s/ Jay Petschek
Name: Jay Petschek
Title: President
5
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TRANSFER, DIVIDEND DISBURSING, SHAREHOLDER SERVICE
AND PLAN AGENCY AGREEMENT
AGREEMENT dated as of March 10, 1998 between Boyar Value Fund, Inc. (the
"Fund"), a Maryland corporation, and Countrywide Fund Services, Inc.
("Countrywide"), an Ohio corporation.
WHEREAS, the Fund is an investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund wishes to employ the services of Countrywide to serve as
its transfer, dividend disbursing, shareholder service and plan agent; and
WHEREAS, Countrywide wishes to provide such services under the conditions
set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Fund and Countrywide agree as follows:
1. APPOINTMENT.
The Fund hereby appoints and employs Countrywide as agent to perform
those services described in this Agreement for the Fund. Countrywide shall act
under such appointment and perform the obligations thereof upon the terms and
conditions hereinafter set forth.
2. DOCUMENTATION.
The Fund will furnish from time to time the following documents:
A. Each resolution of the Board of Directors of the Fund authorizing the
original issue of its shares;
B. Each Registration Statement filed with the Securities and Exchange
Commission (the "SEC") and amendments thereof;
C. A certified copy of each amendment to the Articles of Incorporation
and the Bylaws of the Fund;
D. Certified copies of each resolution of the Board of Directors
authorizing officers to give instructions to Countrywide;
E. Specimens of all new forms of share certificates accompanied by Board
of Directors' resolutions approving such forms;
<PAGE>
F. Such other certificates, documents or opinions which Countrywide may,
in its discretion, deem necessary or appropriate in the proper
performance of its duties;
G. Copies of all Investment Advisory Agreements in effect; and
H. Copies of all documents relating to special investment or withdrawal
plans which are offered or may be offered in the future by the Fund
and for which Countrywide is to act as plan agent.
3. COUNTRYWIDE TO RECORD SHARES.
Countrywide shall record the issuance of shares of the Fund and
maintain pursuant to applicable rules of the SEC a record of the total number of
shares of the Fund which are authorized, issued and outstanding, based upon data
provided to it by the Fund. Countrywide shall also provide the Fund on a regular
basis or upon reasonable request the total number of shares which are
authorized, issued and outstanding, but shall have no obligation when recording
the issuance of the Fund's shares, except as otherwise set forth herein, to
monitor the issuance of such shares or to take cognizance of any laws relating
to the issue or sale of such shares, which functions shall be the sole
responsibility of the Fund.
4. COUNTRYWIDE TO VALIDATE TRANSFERS.
Upon receipt of a proper request for transfer and upon surrender to
Countrywide of certificates, if any, in proper form for transfer, Countrywide
shall approve such transfer and shall take all necessary steps to effectuate the
transfer as indicated in the transfer request. Upon approval of the transfer,
Countrywide shall notify the Fund in writing of each such transaction and shall
make appropriate entries on the shareholder records maintained by Countrywide.
5. SHARE CERTIFICATES.
If the Fund authorizes the issuance of share certificates and an
investor requests a share certificate, Countrywide will countersign and mail, by
insured first class mail, a share certificate to the investor at his address as
set forth on the transfer books of the Fund, subject to any other instructions
for delivery of certificates representing newly purchased shares and subject to
the limitation that no certificates representing newly purchased shares shall be
mailed to the investor until the cash purchase price of such shares has been
collected and credited to the account of the Fund maintained by the Custodian.
The Fund shall supply Countrywide with a sufficient supply of blank share
certificates and from time to time shall renew such supply upon request of
Countrywide. Such blank share certificates shall be properly signed, manually
or,
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<PAGE>
if authorized by the Fund, by facsimile; and notwithstanding the death,
resignation or removal of any officers of the Fund authorized to sign share
certificates, Countrywide may continue to countersign certificates which bear
the manual or facsimile signature of such officer until otherwise directed by
the Fund. In case of the alleged loss or destruction of any share certificate,
no new certificates shall be issued in lieu thereof, unless there shall first be
furnished an appropriate bond satisfactory to Countrywide and the Fund, and
issued by a surety company satisfactory to Countrywide and the Fund.
6. RECEIPT OF FUNDS.
Upon receipt of any check or other instrument drawn or endorsed to it
as agent for, or identified as being for the account of, the Fund, Countrywide
shall stamp the check or instrument with the date of receipt, determine the
amount thereof due the Fund and shall forthwith process the same for collection.
Upon receipt of notification of receipt of funds eligible for share purchases in
accordance with the Fund's then current prospectus and statement of additional
information, Countrywide shall notify the Fund, at the close of each business
day, in writing of the amount of said funds credited to the Fund and deposited
in its account with the Custodian.
7. PURCHASE ORDERS.
Upon receipt of an order for the purchase of shares of the Fund,
accompanied by sufficient information to enable Countrywide to establish a
shareholder account, Countrywide shall, as of the next determination of net
asset value after receipt of such order in accordance with the Fund's then
current prospectus and statement of additional information, compute the number
of shares due to the shareholder, credit the share account of the shareholder,
subject to collection of the funds, with the number of shares so purchased,
shall notify the Fund in writing or by computer report at the close of each
business day of such transactions and shall mail to the shareholder and/or
dealer of record a notice of such credit when requested to do so by the Fund.
8. RETURNED CHECKS.
A. In the event that Countrywide is notified by the Fund's Custodian that
any check or other order for the payment of money is returned unpaid for any
reason, Countrywide will:
B. Give prompt notification to the Fund of the non-payment of said check;
C. In the absence of other instructions from the Fund, take such steps as
may be necessary to redeem any shares purchased on the basis of such returned
check and cause the proceeds of such redemption plus any dividends declared with
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respect to such shares to be credited to the account of the Fund and to request
the Fund's Custodian to forward such returned check to the person who originally
submitted the check; and
D. Notify the Fund of such actions and correct the Fund's records
maintained by Countrywide pursuant to this Agreement.
9. DIVIDENDS AND DISTRIBUTIONS.
The Fund shall furnish Countrywide with appropriate evidence of
Directors action authorizing the declaration of dividends and other
distributions. Countrywide shall establish procedures in accordance with the
Fund's then current prospectus and statement of additional information and with
other authorized actions of the Fund's Board of Directors under which it will
have available from the Custodian or the Fund any required information for each
dividend and other distribution. After deducting any amount required to be
withheld by any applicable laws, Countrywide shall, as agent for each
shareholder who so requests, invest the dividends and other distributions in
full and fractional shares in accordance with the Fund's then current prospectus
and statement of additional information. If a shareholder has elected to receive
dividends or other distributions in cash, then Countrywide shall disburse
dividends to shareholders of record in accordance with the Fund's then current
prospectus and statement of additional information. Countrywide shall, on or
before the mailing date of such checks, notify the Fund and the Custodian of the
estimated amount of cash required to pay such dividend or distribution, and the
Fund shall instruct the Custodian to make available sufficient funds therefor in
the appropriate account of the Fund. Countrywide shall mail to the shareholders
periodic statements, as requested by the Fund, showing the number of full and
fractional shares and the net asset value per share of shares so credited. When
requested by the Fund, Countrywide shall prepare and file with the Internal
Revenue Service, and when required, shall address and mail to shareholders, such
returns and information relating to dividends and distributions paid by the Fund
as are required to be so prepared, filed and mailed by applicable laws, rules
and regulations.
10. UNCLAIMED DIVIDENDS AND UNCLAIMED REDEMPTION PROCEEDS.
Countrywide shall, at least annually, furnish in writing to the Fund
the names and addresses, as shown in the shareholder accounts maintained by
Countrywide, of all shareholders for which there are, as of the end of the
calendar year, dividends, distributions or redemption proceeds for which checks
or share certificates mailed in payment of distributions have been returned.
Countrywide shall use its best efforts to contact the shareholders affected and
to follow any other written instructions received from the Fund concerning the
disposition of any such unclaimed dividends, distributions or redemption
proceeds.
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<PAGE>
11. REDEMPTIONS AND EXCHANGES.
A. Countrywide shall process, in accordance with the Fund's then current
prospectus and statement of additional information, each order for the
redemption of shares accepted by Countrywide. Upon its approval of such
redemption transactions, Countrywide, if requested by the Fund, shall mail to
the shareholder and/or dealer of record a confirmation showing trade date,
number of full and fractional shares redeemed, the price per share and the total
redemption proceeds. For each such redemption, Countrywide shall either: (a)
prepare checks in the appropriate amounts for approval and verification by the
Fund and signature by an authorized officer of Countrywide and mail the checks
to the appropriate person, or (b) in the event redemption proceeds are to be
wired through the Federal Reserve Wire System or by bank wire, cause such
proceeds to be wired in federal funds to the bank account designated by the
shareholder, or (c) effectuate such other redemption procedures which are
authorized by the Fund's Board of Directors or its then current prospectus and
statement of additional information. The requirements as to instruments of
transfer and other documentation, the applicable redemption price and the time
of payment shall be as provided in the then current prospectus and statement of
additional information, subject to such supplemental instructions as may be
furnished by the Fund and accepted by Countrywide. If Countrywide or the Fund
determines that a request for redemption does not comply with the requirements
for redemptions, Countrywide shall promptly notify the shareholder indicating
the reason therefor.
B. If shares of the Fund are eligible for exchange with shares of any other
investment company, Countrywide, in accordance with the then current prospectus
and statement of additional information and exchange rules of the Fund and such
other investment company, or such other investment company's transfer agent,
shall review and approve all exchange requests and shall, on behalf of the
Fund's shareholders, process such approved exchange requests.
C. Countrywide shall notify the Fund and the Custodian on each business day
of the amount of cash required to meet payments made pursuant to the provisions
of this Paragraph 11, and, on the basis of such notice, the Fund shall instruct
the Custodian to make available from time to time sufficient funds therefor in
the appropriate account of the Fund. Procedures for effecting redemption orders
accepted from shareholders or dealers of record by telephone or other methods
shall be established by mutual agreement between Countrywide and the Fund
consistent with the Fund's then current prospectus and statement of additional
information.
D. The authority of Countrywide to perform its responsibilities under
Paragraph 7, Paragraph 9, and this Paragraph 11 shall be suspended with respect
to the Fund upon
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<PAGE>
receipt of notification by it of the suspension of the determination of the
Fund's net asset value.
12. AUTOMATIC WITHDRAWAL PLANS.
Countrywide will process automatic withdrawal orders pursuant to the
provisions of the withdrawal plans duly executed by shareholders and the current
prospectus and statement of additional information of the Fund. Payments upon
such withdrawal order shall be made by Countrywide from the appropriate account
maintained by the Fund with the Custodian on approximately the last business day
of each month in which a payment has been requested, and Countrywide will
withdraw from a shareholder's account and present for repurchase or redemption
as many shares as shall be sufficient to make such withdrawal payment pursuant
to the provisions of the shareholder's withdrawal plan and the current
prospectus and statement of additional information of the Fund. From time to
time on new automatic withdrawal plans a check for a payment date already past
may be issued upon request by the shareholder.
13. WIRE-ORDER PURCHASES.
Countrywide will send written confirmations to the dealers of record
containing all details of the wire-order purchases placed by each such dealer by
the close of business on the business day following receipt of such orders by
Countrywide. Upon receipt of any check drawn or endorsed to the Fund (or
Countrywide, as agent) or otherwise identified as being payment of an
outstanding wire-order, Countrywide will stamp said check with the date of its
receipt and deposit the amount represented by such check to Countrywide's
deposit accounts maintained with the Custodian. Countrywide will cause the
Custodian to transfer federal funds in an amount equal to the net asset value of
the shares so purchased to the Fund's account with the Custodian and will notify
the Fund before noon of each business day of the total amount deposited in the
Fund's deposit accounts, and in the event that payment for a purchase order is
not received by Countrywide or the Custodian on the tenth business day following
receipt of the order, prepare an NASD "notice of failure of dealer to make
payment."
14. OTHER PLANS.
Countrywide will process such accumulation plans, group programs and
other plans or programs for investing in shares of the Fund as are now provided
for in the Fund's current prospectus and statement of additional information and
will act as plan agent for shareholders pursuant to the terms of such plans and
programs duly executed by such shareholders.
15. RECORDKEEPING AND OTHER INFORMATION.
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<PAGE>
Countrywide shall create and maintain all records required by
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act and the rules thereunder, as the same
may be amended from time to time, pertaining to the various functions performed
by it and not otherwise created and maintained by another party pursuant to
contract with the Fund. All such records shall be the property of the Fund at
all times and shall be available for inspection and use by the Fund. Where
applicable, such records shall be maintained by Countrywide for the periods and
in the places required by Rule 31a-2 under the 1940 Act. The retention of such
records shall be at the expense of the Fund. Countrywide shall make available
during regular business hours all records and other data created and maintained
pursuant to this Agreement for reasonable audit and inspection by the Fund, any
person retained by the Fund, or any regulatory agency having authority over the
Fund.
16. SHAREHOLDER RECORDS.
Countrywide shall maintain records for each shareholder account
showing the following:
A. Names, addresses and tax identifying numbers;
B. Name of the dealer of record, if any;
C. Number of shares held of each series;
D. Historical information regarding the account of each shareholder,
including dividends and distributions in cash or invested in shares;
E. Information with respect to the source of all dividends and
distributions allocated among income, realized short-term gains and realized
long-term gains;
F. Any instructions from a shareholder including all forms furnished by the
Fund and executed by a shareholder with respect to (i) dividend or distribution
elections and (ii) elections with respect to payment options in connection with
the redemption of shares;
G. Any correspondence relating to the current maintenance of a
shareholder's account;
H. Certificate numbers and denominations for any shareholder holding
certificates;
I. Any stop or restraining order placed against a shareholder's account;
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<PAGE>
J. Information with respect to withholding in the case of a foreign account
or any other account for which withholding is required by the Internal Revenue
Code of 1986, as amended; and
K. Any information required in order for Countrywide to perform the
calculations contemplated under this Agreement.
17. TAX RETURNS AND REPORTS.
Countrywide will prepare in the appropriate form, file with the
Internal Revenue Service and appropriate state agencies and, if required, mail
to shareholders of the Fund such returns for reporting dividends and
distributions paid by the Fund as are required to be so prepared, filed and
mailed and shall withhold such sums as are required to be withheld under
applicable federal and state income tax laws, rules and regulations.
18. OTHER INFORMATION TO THE FUND.
Subject to such instructions, verification and approval of the
Custodian and the Fund as shall be required by any agreement or applicable law,
Countrywide will also maintain such records as shall be necessary to furnish to
the Fund the following: annual shareholder meeting lists, proxy lists and
mailing materials, shareholder reports and confirmations and checks for
disbursing redemption proceeds, dividends and other distributions or expense
disbursements.
19. ACCESS TO SHAREHOLDER INFORMATION.
Upon request, Countrywide shall arrange for the Fund's investment
adviser to have direct access to shareholder information contained in
Countrywide's computer system, including account balances, performance
information and such other information which is available to Countrywide with
respect to shareholder accounts.
20. COOPERATION WITH ACCOUNTANTS.
Countrywide shall cooperate with the Fund's independent public
accountants and shall take all reasonable action in the performance of its
obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their unqualified
opinion where required for any document for the Fund.
21. SHAREHOLDER SERVICE AND CORRESPONDENCE.
Countrywide will provide and maintain adequate personnel, records and
equipment to receive and answer all shareholder and dealer inquiries relating to
account status, share purchases, redemptions and exchanges and other investment
plans available to Fund shareholders. Countrywide will answer written
correspondence from shareholders relating to their share
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<PAGE>
accounts and such other written or oral inquiries as may from time to time be
mutually agreed upon, and Countrywide will notify the Fund of any correspondence
or inquiries which may require an answer from the Fund.
22. PROXIES.
Countrywide shall assist the Fund in the mailing of proxy cards and
other material in connection with shareholder meetings of the Fund, shall
receive, examine and tabulate returned proxies and shall, if requested by the
Fund, provide at least one inspector of election to attend and participate as
required by law in shareholder meetings of the Fund.
23. FURTHER ACTIONS.
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
24. COMPENSATION.
For the performance of Countrywide's obligations under this Agreement,
the Fund shall pay Countrywide, on the first business day following the end of
each month, a monthly fee in accordance with the schedule attached hereto as
Schedule A. The Fund shall promptly reimburse Countrywide for any out-of-pocket
expenses and advances which are to be paid by the Fund in accordance with
Paragraph 25.
25. EXPENSES.
Countrywide shall furnish, at its expense and without cost to the Fund
(i) the services of its personnel to the extent that such services are required
to carry out its obligations under this Agreement and (ii) use of data
processing equipment. All costs and expenses not expressly assumed by
Countrywide under this Paragraph 25 shall be paid by the Fund, including, but
not limited to, costs and expenses of officers and employees of Countrywide in
attending meetings of the Board of Directors and shareholders of the Fund, as
well as costs and expenses for postage, envelopes, checks, drafts, continuous
forms, reports, communications, statements and other materials, telephone,
telegraph and remote transmission lines, use of outside pricing services, use of
outside mailing firms, necessary outside record storage, media for storage of
records (e.g., microfilm, microfiche, computer tapes), printing, confirmations
and any other shareholder correspondence and any and all assessments, taxes or
levies assessed on Countrywide for services provided under this Agreement.
Postage for mailings of dividends, proxies, reports and other mailings to all
shareholders shall be advanced to Countrywide three business days prior to the
mailing date of such materials.
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<PAGE>
26. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
The parties hereto acknowledge and agree that nothing contained herein
shall be construed to require Countrywide to perform any services for the Fund
which services could cause Countrywide to be deemed an "investment adviser" of
the Fund within the meaning of Section 2(a)(20) of the 1940 Act or to supersede
or contravene the Fund's prospectus or statement of additional information or
any provisions of the 1940 Act and the rules thereunder. Except as otherwise
provided in this Agreement and except for the accuracy of information furnished
to it by Countrywide, the Fund assumes full responsibility for complying with
all applicable requirements of the 1940 Act, the Securities Act of 1933, as
amended, and any other laws, rules and regulations of governmental authorities
having jurisdiction.
27. REFERENCES TO COUNTRYWIDE.
The Fund shall not circulate any printed matter which contains any
reference to Countrywide without the prior written approval of Countrywide,
excepting solely such printed matter as merely identifies Countrywide as
Administrative Services Agent, Transfer, Shareholder Servicing and Dividend
Disbursing Agent and Accounting Services Agent. The Fund will submit printed
matter requiring approval to Countrywide in draft form, allowing sufficient time
for review by Countrywide and its counsel prior to any deadline for printing.
28. EQUIPMENT FAILURES.
Countrywide shall take all steps necessary to minimize or avoid
service interruptions, and has entered into one or more agreements making
provision for emergency use of electronic data processing equipment. Countrywide
shall have no liability with respect to equipment failures beyond its control.
29. INDEMNIFICATION OF COUNTRYWIDE.
A. Countrywide may rely on information reasonably believed by it to be
accurate and reliable. Except as may otherwise be required by the 1940 Act and
the rules thereunder, neither Countrywide nor its shareholders, officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Fund in connection with any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under or
payments made pursuant to this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of the duties of
Countrywide under this Agreement or by reason of reckless disregard by any of
such persons of the obligations and duties of Countrywide under this Agreement.
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<PAGE>
B. Any person, even though also a director, officer, employee,
shareholder or agent of Countrywide, or any of its affiliates, who may be or
become an officer, director, employee or agent of the Fund, shall be deemed,
when rendering services to the Fund or acting on any business of the Fund, to be
rendering such services to or acting solely as an officer, director, employee or
agent of the Fund and not as a director, officer, employee, shareholder or agent
of or one under the control or direction of Countrywide or any of its
affiliates, even though paid by one of these entities.
C. The Fund shall indemnify and hold harmless Countrywide, its
directors, officers, employees, shareholders, agents, control persons and
affiliates from and against any and all claims, demands, expenses and
liabilities (whether with or without basis in fact or law) of any and every
nature which Countrywide may sustain or incur or which may be asserted against
Countrywide by any person by reason of, or as a result of: (i) any action taken
or omitted to be taken by Countrywide in good faith in reliance upon any
certificate, instrument, order or share certificate reasonably believed by it to
be genuine and to be signed, countersigned or executed by any duly authorized
person, upon the oral instructions or written instructions of an authorized
person of the Fund or upon the opinion of legal counsel for the Fund or its own
counsel; or (ii) any action taken or omitted to be taken by Countrywide in
connection with its appointment in good faith in reliance upon any law, act,
regulation or interpretation of the same even though the same may thereafter
have been altered, changed, amended or repealed. However, indemnification under
this subparagraph shall not apply to actions or omissions of Countrywide or its
directors, officers, employees, shareholders or agents in cases of its or their
own gross negligence, willful misconduct, bad faith, or reckless disregard of
its or their own duties hereunder.
30. INDEMNIFICATION OF THE FUND.
Notwithstanding any other provision of this Agreement, Countrywide
shall indemnify and hold harmless the Fund, its directors, officers, employees,
shareholders, agents, control persons and affiliates, from and against any and
all claims, demands, expenses and liabilities (whether with or without basis in
fact or law) of any and every nature which the Fund may sustain or incur or
which may be asserted against the Fund by any person by reason of, or as a
result of, Countrywide's gross negligence, willful misconduct, bad faith, or
reckless disregard of its duties hereunder.
31. TERMINATION
A. The provisions of this Agreement shall be effective on the date first
above written, shall continue in effect for two years from that date and shall
continue in force from year to year thereafter, but only so long as such
continuance is approved
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(1) by Countrywide, (2) by vote, cast in person at a meeting called for the
purpose, of a majority of the Fund's directors who are not parties to this
Agreement or interested persons (as defined in the 1940 Act) of any such party,
and (3) by vote of a majority of the Fund's Board of Directors or a majority of
the Fund's outstanding voting securities.
B. Either party may terminate this Agreement on any date by giving the
other party at least sixty (60) days' prior written notice of such termination
specifying the date fixed therefor. Upon termination of this Agreement, the Fund
shall pay to Countrywide such compensation as may be due as of the date of such
termination, and shall likewise reimburse Countrywide for any out-of-pocket
expenses and disbursements reasonably incurred by Countrywide to such date.
C. In the event that in connection with the termination of this Agreement a
successor to any of Countrywide's duties or responsibilities under this
Agreement is designated by the Fund by written notice to Countrywide,
Countrywide shall, promptly upon such termination and at the expense of the
Fund, transfer all records maintained by Countrywide under this Agreement and
shall cooperate in the transfer of such duties and responsibilities, including
providing for assistance from Countrywide's cognizant personnel in the
establishment of books, records and other data by such successor.
32. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent Countrywide or any affiliated
person (as defined in the 1940 Act) of Countrywide from providing services for
any other person, firm or corporation (including other investment companies);
provided, however, that Countrywide expressly represents that it will undertake
no activities which, in its judgment, will adversely affect the performance of
its obligations to the Fund under this Agreement.
33. SEVERABILITY.
In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
34. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the substantive laws of the State
of New York without regard to its conflict of law provisions. Any disputes
arising out of this Agreement shall be adjudicated solely in the courts of the
State of New York or the federal court for the Southern District of New York (in
either case only within New York County, New York). The parties each agree to
personal jurisdiction and venue solely within New York County, New York, waive
any objections to personal
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jurisdiction and venue in New York County, New York, and agree not to seek
personal jurisdiction and venue in any other location. Any question of
interpretation of any term or provision of this Agreement having a counterpart
in or otherwise derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts located in New York
County, New York or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the SEC issued pursuant to said 1940
Act. In addition, where the effect of a requirement of the 1940 Act, reflected
in any provision of this Agreement, is revised by rule, regulation or order of
the SEC, such provision shall be deemed to incorporate the effect of such rule,
regulation or order.
35. NOTICES.
All notices, requests, consents and other communications required or
permitted under this Agreement shall be in writing (including telex and
telegraphic communication) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Fund: Boyar Value Fund, Inc.
590 Madison Avenue
New York, New York 10022
Attention: Jay R. Petschek
To Countrywide: Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice complying with the
terms of this Section 35. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
36. CONFIDENTIALITY.
A. All information furnished to Countrywide or its representatives by the
Fund, including without limitation all names, addresses, telephone numbers and
other information of customers and prospective customers, and whether furnished
before or after the date hereof (the "Information"), will be kept confidential
by Countrywide and/or its representatives, and will not, except to the extent
necessary in order to carry out
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Countrywide's responsibilities and obligations under this Agreement, be
disclosed by Countrywide or any of its representatives and will not be used by
Countrywide or any of its representatives for any purpose other than fulfilling
Countrywide's responsibilities and obligations under this Agreement. The term
"representatives" as used herein shall include Countrywide's affiliates, and
Countrywide and its affiliates' respective officers, directors, employees,
agents, and controlling persons. Countrywide acknowledges and agrees that any
information supplied to Countrywide by a customer or potential customer of the
Fund as a result of discussions, solicitations, or communications between the
Fund and said customer or potential customer shall constitute "Information" for
the purposes hereof. Countrywide shall be permitted to transmit the Information
only to those of its representatives who need to know the Information for the
purpose of assisting Countrywide in fulfilling its responsibilities and
obligations under this Agreement, who are informed by Countrywide of the
confidential nature of the Information and who have agreed in writing to keep
the Information confidential on the same terms as if such representatives were
signatories hereto. Copies of all agreements by which Countrywide's
representatives have agreed to keep the Information confidential shall be
delivered by Countrywide to the Fund promptly after execution thereof. In any
event Countrywide shall be responsible for the breach of this Agreement by its
representatives.
B. In the event that Countrywide or its representatives is requested or
becomes legally compelled to disclose any of the Information, said party agrees
to provide the Fund with prompt written notice, but in any event within 3
business days, so that the Fund may seek (with Countrywide's and/or its
representatives' cooperation, if so requested by the Fund) a protective order or
other appropriate remedy. In the event that such protective order or other
remedy is not obtained, or that the Fund waives compliance with these
confidentiality provisions, Countrywide and its representatives agree to furnish
only that portion of the Information which in the reasonable opinion of its
counsel is legally required and will use its best efforts to obtain reliable
assurance that confidential treatment will be accorded the Information.
C. The term "Information" as used herein shall not include matters which
(i) are or become generally available to the public other than as a result of a
disclosure by Countrywide or its representatives, or (ii) were know to
Countrywide on a non-confidential basis prior to its disclosure to Countrywide
by the Fund.
D. The Fund shall be entitled to injunctive relief to prevent breaches of
Countrywide's confidentiality obligations hereunder and to specifically enforce
the terms hereof in addition to any other remedy to which the Fund may be
entitled at law or in equity.
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<PAGE>
E. The confidentiality provisions of this Agreement shall survive the
termination of this Agreement.
37. AMENDMENT.
This Agreement may not be amended or modified except by a written
agreement executed by both parties.
38. BINDING EFFECT.
Each of the undersigned expressly warrants and represents that he has
the full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
39. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
40. FORCE MAJEURE.
If Countrywide shall be delayed in its performance of services or
prevented entirely or in part from performing services due to causes or events
beyond its control, including and without limitation, acts of God, interruption
of power or other utility, transportation or communication services, acts of
civil or military authority, sabotages, national emergencies, explosion, flood,
accident, earthquake or other catastrophe, fire, strike or other labor problems,
legal action, present or future law, governmental order, rule or regulation, or
shortages of suitable parts, materials, labor or transportation, such delay or
non-performance shall be excused and a reasonable time for performance in
connection with this Agreement shall be extended to include the period of such
delay or non-performance.
41. MISCELLANEOUS.
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
BOYAR VALUE FUND, INC.
By: /s/ Jay Petschek
Its: President
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<PAGE>
COUNTRYWIDE FUND SERVICES, INC.
By:/s/ Robert A. Dorsey
Its: President
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<PAGE>
Schedule A
----------
COMPENSATION
------------
Services FEE
- -------- ---
(Per Account)
As Transfer, Dividend Disbursing,
Shareholder Service and Plan Agent:
Boyar Value Fund, Inc. Payable monthly at
rate of $18.00/year
The Fund will be subject to a minimum charge of $1,200 per month.
<PAGE>
ADMINISTRATION AGREEMENT
AGREEMENT dated as of March 10, 1998 between Boyar Value Fund, Inc. (the
"Fund"), a Maryland corporation, and Countrywide Fund Services, Inc.
("Countrywide"), an Ohio corporation.
WHEREAS, the Fund is an investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund wishes to employ the services of Countrywide to serve as
its administrative agent; and
WHEREAS, Countrywide wishes to provide such services under the conditions
set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Fund and Countrywide agree as follows:
1. APPOINTMENT.
The Fund hereby appoints and employs Countrywide as agent to perform
those services described in this Agreement for the Fund. Countrywide shall act
under such appointment and perform the obligations thereof upon the terms and
conditions hereinafter set forth.
2. DOCUMENTATION.
The Fund will furnish from time to time the following documents:
A. Each resolution of the Board of Directors of the Fund authorizing the
original issue of its shares;
B. Each Registration Statement filed with the Securities and Exchange
Commission (the "SEC") and amendments thereof;
C. A certified copy of each amendment to the Articles of Incorporation
and the Bylaws of the Fund;
D. Certified copies of each resolution of the Board of Directors
authorizing officers to give instructions to Countrywide;
E. Specimens of all new forms of share certificates accompanied by Board
of Directors' resolutions approving such forms;
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<PAGE>
F. Such other certificates, documents or opinions which Countrywide may,
in its discretion, deem necessary or appropriate in the proper
performance of its duties;
G. Copies of all Investment Advisory Agreements in effect; and
H. Copies of all documents relating to special investment or withdrawal
plans which are offered or may be offered in the future by the Fund
and for which Countrywide is to act as plan agent.
3. FUND ADMINISTRATION.
Subject to the direction and control of the Directors of the Fund,
Countrywide shall supervise the Fund's business affairs not otherwise supervised
by other agents of the Fund. To the extent not otherwise the primary
responsibility of, or provided by, other agents of the Fund, Countrywide shall
supply (i) office facilities, (ii) internal auditing and regulatory services,
and (iii) executive and administrative services. Countrywide shall coordinate
the preparation of (i) tax returns, (ii) reports to shareholders of the Fund,
(iii) reports to and filings with the SEC and state securities authorities
including preliminary and definitive proxy materials, post-effective amendments
to the Fund's registration statement, and the Fund's Form N-SAR, and (iv)
necessary materials for Board of Directors' meetings unless prepared by other
parties under agreement with the Fund. Countrywide shall provide personnel to
serve as officers of the Fund if so elected by the Board of Directors; provided,
however, that the Fund shall reimburse Countrywide for the reasonable
out-of-pocket expenses incurred by such personnel in attending Board of
Directors' meetings and shareholders' meetings of the Fund.
4. RECORDKEEPING AND OTHER INFORMATION.
Countrywide shall create and maintain all records required by
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act and the rules thereunder, as the same
may be amended from time to time, pertaining to the various functions performed
by it and not otherwise created and maintained by another party pursuant to
contract with the Fund. All such records shall be the property of the Fund at
all times and shall be available for inspection and use by the Fund. Where
applicable, such records shall be maintained by Countrywide for the periods and
in the places required by Rule 31a-2 under the 1940 Act. The retention of such
records shall be at the expense of the Fund. Countrywide shall make available
during regular business hours all records and other data created and maintained
pursuant to this Agreement for reasonable audit and inspection by the Fund, any
person retained by the Fund, or any regulatory agency having authority over the
Fund.
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<PAGE>
5. FURTHER ACTIONS.
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
6. COMPENSATION.
For the performance of Countrywide's obligations under this Agreement,
the Fund shall pay Countrywide, on the first business day following the end of
each month, a monthly fee at the annual rate of .15% of the Fund's average daily
net assets up to $50 million; .125% of such assets from $50 to $100 million; and
.10% of such assets in excess of $100 million; provided, however, that the
minimum fee shall be $1,000 per month.
7. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
The parties hereto acknowledge and agree that nothing contained herein
shall be construed to require Countrywide to perform any services for the Fund
which services could cause Countrywide to be deemed an "investment adviser" of
the Fund within the meaning of Section 2(a)(20) of the 1940 Act or to supersede
or contravene the Fund's prospectus or statement of additional information or
any provisions of the 1940 Act and the rules thereunder. Except as otherwise
provided in this Agreement and except for the accuracy of information furnished
to it by Countrywide, the Fund assumes full responsibility for complying with
all applicable requirements of the 1940 Act, the Securities Act of 1933, as
amended, and any other laws, rules and regulations of governmental authorities
having jurisdiction.
8. REFERENCES TO COUNTRYWIDE.
The Fund shall not circulate any printed matter which contains any
reference to Countrywide without the prior written approval of Countrywide,
excepting solely such printed matter as merely identifies Countrywide as
Administrative Services Agent, Transfer, Dividend Disbursing, Shareholder
Service and Plan Agent and Accounting Services Agent. The Fund will submit
printed matter requiring approval to Countrywide in draft form, allowing
sufficient time for review by Countrywide and its counsel prior to any deadline
for printing.
9. INDEMNIFICATION OF COUNTRYWIDE.
A. Countrywide may rely on information reasonably believed by it to be
accurate and reliable. Except as may otherwise be required by the 1940 Act and
the rules thereunder, neither Countrywide nor its shareholders, officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Fund in connection with any error of judgment, mistake of law, any act or
omission connected with or arising out
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<PAGE>
of any services rendered under or payments made pursuant to this Agreement or
any other matter to which this Agreement relates, except by reason of willful
misfeasance, bad faith or gross negligence on the part of any such persons in
the performance of the duties of Countrywide under this Agreement or by reason
of reckless disregard by any of such persons of the obligations and duties of
Countrywide under this Agreement.
B. Any person, even though also a director, officer, employee, shareholder
or agent of Countrywide, or any of its affiliates, who may be or become an
officer, director, employee or agent of the Fund, shall be deemed, when
rendering services to the Fund or acting on any business of the Fund, to be
rendering such services to or acting solely as an officer, director, employee or
agent of the Fund and not as a director, officer, employee, shareholder or agent
of or one under the control or direction of Countrywide or any of its
affiliates, even though paid by one of these entities.
C. Notwithstanding any other provision of this Agreement, the Fund shall
indemnify and hold harmless Countrywide, its directors, officers, employees,
shareholders, agents, control persons and affiliates from and against any and
all claims, demands, expenses and liabilities (whether with or without basis in
fact or law) of any and every nature which Countrywide may sustain or incur or
which may be asserted against Countrywide by any person by reason of, or as a
result of: (i) any action taken or omitted to be taken by Countrywide in good
faith in reliance upon any certificate, instrument, order or share certificate
reasonably believed by it to be genuine and to be signed, countersigned or
executed by any duly authorized person, upon the oral instructions or written
instructions of an authorized person of the Fund or upon the opinion of legal
counsel for the Fund or its own counsel; or (ii) any action taken or omitted to
be taken by Countrywide in connection with its appointment in good faith in
reliance upon any law, act, regulation or interpretation of the same even though
the same may thereafter have been altered, changed, amended or repealed.
However, indemnification under this subparagraph shall not apply to actions or
omissions of Countrywide or its directors, officers, employees, shareholders or
agents in cases of its or their own gross negligence, willful misconduct, bad
faith, or reckless disregard of its or their own duties hereunder.
10. INDEMNIFICATION OF THE FUND.
Notwithstanding any other provision of this Agreement, Countrywide
shall indemnify and hold harmless the Fund, its directors, officers, employees,
shareholders, agents, control persons and affiliates, from and against any and
all claims, demands, expenses and liabilities (whether with or without basis in
fact or law) of any and every nature which the Fund may sustain or incur or
which may be asserted against the Fund by any person by reason of, or as a
result of, Countrywide's gross
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<PAGE>
negligence, willful misconduct, bad faith, or reckless disregard of its duties
hereunder.
11. TERMINATION
A. The provisions of this Agreement shall be effective on the date
first above written, shall continue in effect for two years from that date and
shall continue in force from year to year thereafter, but only so long as such
continuance is approved (1) by Countrywide, (2) by vote, cast in person at a
meeting called for the purpose, of a majority of the Fund's directors who are
not parties to this Agreement or interested persons (as defined in the 1940 Act)
of any such party, and (3) by vote of a majority of the Fund's Board of
Directors or a majority of the Fund's outstanding voting securities.
B. Either party may terminate this Agreement on any date by giving the
other party at least sixty (60) days' prior written notice of such termination
specifying the date fixed therefor. Upon termination of this Agreement, the Fund
shall pay to Countrywide such compensation as may be due as of the date of such
termination, and shall likewise reimburse Countrywide for any out-of-pocket
expenses and disbursements reasonably incurred by Countrywide to such date.
C. In the event that in connection with the termination of this
Agreement a successor to any of Countrywide's duties or responsibilities under
this Agreement is designated by the Fund by written notice to Countrywide,
Countrywide shall, promptly upon such termination and at the expense of the
Fund, transfer all records maintained by Countrywide under this Agreement and
shall cooperate in the transfer of such duties and responsibilities, including
providing for assistance from Countrywide's cognizant personnel in the
establishment of books, records and other data by such successor.
12. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent Countrywide or any affiliated
person (as defined in the 1940 Act) of Countrywide from providing services for
any other person, firm or corporation (including other investment companies);
provided, however, that Countrywide expressly represents that it will undertake
no activities which, in its judgment, will adversely affect the performance of
its obligations to the Fund under this Agreement.
13. SEVERABILITY.
In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
-5-
<PAGE>
14. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the substantive laws of the State
of New York without regard to its conflict of law provisions. Any disputes
arising out of this Agreement shall be adjudicated solely in the courts of the
State of New York or the federal court for the Southern District of New York (in
either case only within New York County, New York). The parties each agree to
personal jurisdiction and venue solely within New York County, New York, waive
any objections to personal jurisdiction and venue in New York County, New York,
and agree not to seek personal jurisdiction and venue in any other location. Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts located in New York
County, New York or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the SEC issued pursuant to said 1940
Act. In addition, where the effect of a requirement of the 1940 Act, reflected
in any provision of this Agreement, is revised by rule, regulation or order of
the SEC, such provision shall be deemed to incorporate the effect of such rule,
regulation or order.
15. NOTICES.
All notices, requests, consents and other communications required or
permitted under this Agreement shall be in writing (including telex and
telegraphic communication) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Fund: Boyar Value Fund, Inc.
590 Madison Avenue
New York, New York 10022
Attention: Jay R. Petschek
To Countrywide: Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice complying with the
terms of this Section 15. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
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<PAGE>
16. CONFIDENTIALITY.
A. All information furnished to Countrywide or its representatives by
the Fund, including without limitation all names, addresses, telephone numbers
and other information of customers and prospective customers, and whether
furnished before or after the date hereof (the "Information"), will be kept
confidential by Countrywide and/or its representatives, and will not, except to
the extent necessary in order to carry out Countrywide's responsibilities and
obligations under this Agreement, be disclosed by Countrywide or any of its
representatives and will not be used by Countrywide or any of its
representatives for any purpose other than fulfilling Countrywide's
responsibilities and obligations under this Agreement. The term
"representatives" as used herein shall include Countrywide's affiliates, and
Countrywide and its affiliates' respective officers, directors, employees,
agents, and controlling persons. Countrywide acknowledges and agrees that any
information supplied to Countrywide by a customer or potential customer of the
Fund as a result of discussions, solicitations, or communications between the
Fund and said customer or potential customer shall constitute "Information" for
the purposes hereof. Countrywide shall be permitted to transmit the Information
only to those of its representatives who need to know the Information for the
purpose of assisting Countrywide in fulfilling its responsibilities and
obligations under this Agreement, who are informed by Countrywide of the
confidential nature of the Information and who have agreed in writing to keep
the Information confidential on the same terms as if such representatives were
signatories hereto. Copies of all agreements by which Countrywide's
representatives have agreed to keep the Information confidential shall be
delivered by Countrywide to the Fund promptly after execution thereof. In any
event Countrywide shall be responsible for the breach of this Agreement by its
representatives.
B. In the event that Countrywide or its representatives is requested
or becomes legally compelled to disclose any of the Information, said party
agrees to provide the Fund with prompt written notice, but in any event within 3
business days, so that the Fund may seek (with Countrywide's and/or its
representatives' cooperation, if so requested by the Fund) a protective order or
other appropriate remedy. In the event that such protective order or other
remedy is not obtained, or that the Fund waives compliance with these
confidentiality provisions, Countrywide and its representatives agree to furnish
only that portion of the Information which in the reasonable opinion of its
counsel is legally required and will use its best efforts to obtain reliable
assurance that confidential treatment will be accorded the Information.
C. The term "Information" as used herein shall not include matters
which (i) are or become generally available to the public other than as a result
of a disclosure by Countrywide or its
-7-
<PAGE>
representatives, or (ii) were know to Countrywide on a non-confidential basis
prior to its disclosure to Countrywide by the Fund.
D. The Fund shall be entitled to injunctive relief to prevent breaches
of Countrywide's confidentiality obligations hereunder and to specifically
enforce the terms hereof in addition to any other remedy to which the Fund may
be entitled at law or in equity.
E. The confidentiality provisions of this Agreement shall survive the
termination of this Agreement.
17. AMENDMENT.
This Agreement may not be amended or modified except by a written
agreement executed by both parties.
18. BINDING EFFECT.
Each of the undersigned expressly warrants and represents that he has
the full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
19. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
20. FORCE MAJEURE.
If Countrywide shall be delayed in its performance of services or
prevented entirely or in part from performing services due to causes or events
beyond its control, including and without limitation, acts of God, interruption
of power or other utility, transportation or communication services, acts of
civil or military authority, sabotages, national emergencies, explosion, flood,
accident, earthquake or other catastrophe, fire, strike or other labor problems,
legal action, present or future law, governmental order, rule or regulation, or
shortages of suitable parts, materials, labor or transportation, such delay or
non-performance shall be excused and a reasonable time for performance in
connection with this Agreement shall be extended to include the period of such
delay or non-performance.
21. MISCELLANEOUS.
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
BOYAR VALUE FUND, INC.
By:/s/ Jay Petschek
Its: President
COUNTRYWIDE FUND SERVICES, INC.
By: /s/ Robert A. Dorsey
Its: President
<PAGE>
ACCOUNTING SERVICES AGREEMENT
AGREEMENT dated as of March 10, 1998 between Boyar Value Fund, Inc. (the
"Fund"), a Maryland corporation, and Countrywide Fund Services, Inc.
("Countrywide"), an Ohio corporation.
WHEREAS, the Fund is an investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund wishes to employ the services of Countrywide to provide
the Fund with certain accounting and pricing services; and
WHEREAS, Countrywide wishes to provide such services under the conditions
set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Fund and Countrywide agree as follows:
1. APPOINTMENT.
The Fund hereby appoints and employs Countrywide as agent to perform
those services described in this Agreement for the Fund. Countrywide shall act
under such appointment and perform the obligations thereof upon the terms and
conditions hereinafter set forth.
2. CALCULATION OF NET ASSET VALUE.
Countrywide will calculate the net asset value of the Fund and the per
share net asset value of the Fund, in accordance with the current prospectus and
statement of additional information of the Fund, once daily as of the time
selected by the Fund's Board of Directors. Countrywide will prepare and maintain
a daily valuation of all securities and other assets of the Fund in accordance
with instructions from a designated officer of the Fund or its investment
adviser and in the manner set forth in the Fund's current prospectus and
statement of additional information. In valuing securities of the Fund,
Countrywide may contract with, and rely upon market quotations provided by,
outside services.
3. BOOKS AND RECORDS.
Countrywide will maintain and keep current the general ledger for the
Fund, recording all income and expenses, capital share activity and security
transactions of the Fund. Countrywide will maintain such further books and
records as are necessary to enable it to perform its duties under this
Agreement, and will periodically provide reports to the Fund and
<PAGE>
its authorized agents regarding share purchases and redemptions and trial
balances of the Fund. Countrywide will prepare and maintain complete, accurate
and current all records with respect to the Fund required to be maintained by
the Fund under the Internal Revenue Code of 1986, as amended (the "Code"), and
under the rules and regulations of the 1940 Act, and will preserve said records
in the manner and for the periods prescribed in the Code and the 1940 Act. The
retention of such records shall be at the expense of the Fund.
All of the records prepared and maintained by Countrywide pursuant to
this Section 3 which are required to be maintained by the Fund under the Code
and the 1940 Act will be the property of the Fund. In the event this Agreement
is terminated, all such records shall be delivered to the Fund at the Fund's
expense, and Countrywide shall be relieved of responsibility for the preparation
and maintenance of any such records delivered to the Fund.
4. PAYMENT OF FUND EXPENSES.
Countrywide shall process each request received from the Fund or its
authorized agents for payment of the Fund's expenses. Upon receipt of written
instructions signed by an officer or other authorized agent of the Fund,
Countrywide shall prepare checks in the appropriate amounts which shall be
signed by an authorized officer of Countrywide and mailed to the appropriate
party.
5. FORM N-SAR.
Countrywide shall maintain such records within its control and shall
be requested by the Fund to assist the Fund in fulfilling the requirements of
Form N-SAR.
6. COOPERATION WITH ACCOUNTANTS.
Countrywide shall cooperate with the Fund's independent public
accountants and shall take all reasonable action in the performance of its
obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their unqualified
opinion where required for any document for the Fund.
7. FURTHER ACTIONS.
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
8. FEES.
For the performance of the services under this Agreement, the Fund
shall pay Countrywide a monthly fee in
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<PAGE>
accordance with the schedule attached hereto as Schedule A. The fees with
respect to any month shall be paid to Countrywide on the last business day of
such month. The Fund shall also promptly reimburse Countrywide for the cost of
external pricing services utilized by Countrywide.
9. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
The parties hereto acknowledge and agree that nothing contained herein
shall be construed to require Countrywide to perform any services for the Fund
which services could cause Countrywide to be deemed an "investment adviser" of
the Fund within the meaning of Section 2(a)(20) of the 1940 Act or to supersede
or contravene the Fund's prospectus or statement of additional information or
any provisions of the 1940 Act and the rules thereunder. Except as otherwise
provided in this Agreement and except for the accuracy of information furnished
to it by Countrywide, the Fund assumes full responsibility for complying with
all applicable requirements of the 1940 Act, the Securities Act of 1933, as
amended, and any other laws, rules and regulations of governmental authorities
having jurisdiction.
10. REFERENCES TO COUNTRYWIDE.
The Fund shall not circulate any printed matter which contains any
reference to Countrywide without the prior written approval of Countrywide,
excepting solely such printed matter as merely identifies Countrywide as
Administrative Services Agent, Transfer, Dividend Disbursing, Shareholder
Service and Plan Agent and Accounting Services Agent. The Fund will submit
printed matter requiring approval to Countrywide in draft form, allowing
sufficient time for review by Countrywide and its counsel prior to any deadline
for printing.
11. EQUIPMENT FAILURES.
Countrywide shall take all steps necessary to minimize or avoid
service interruptions, and has entered into one or more agreements making
provision for emergency use of electronic data processing equipment. Countrywide
shall have no liability with respect to equipment failures beyond its control.
12. INDEMNIFICATION OF COUNTRYWIDE.
A. Countrywide may rely on information reasonably believed by it to be
accurate and reliable. Except as may otherwise be required by the 1940 Act and
the rules thereunder, neither Countrywide nor its shareholders, officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Fund in connection with any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under or
payments made pursuant to this Agreement or any other matter to which this
Agreement relates,
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<PAGE>
except by reason of willful misfeasance, bad faith or gross negligence on the
part of any such persons in the performance of the duties of Countrywide under
this Agreement or by reason of reckless disregard by any of such persons of the
obligations and duties of Countrywide under this Agreement.
B. Any person, even though also a director, officer, employee,
shareholder, or agent of Countrywide, or any of its affiliates, who may be or
become an officer, director, employee or agent of the Fund, shall be deemed,
when rendering services to the Fund or acting on any business of the Fund, to be
rendering such services to or acting solely as an officer, director, employee or
agent of the Fund and not as a director, officer, employee, shareholder or agent
of or one under the control or direction of Countrywide or any of its
affiliates, even though paid by one of those entities.
C. Notwithstanding any other provision of this Agreement, the Fund
shall indemnify and hold harmless Countrywide, its directors, officers,
employees, shareholders, agents, control persons and affiliates from and against
any and all claims, demands, expenses and liabilities (whether with or without
basis in fact or law) of any and every nature which Countrywide may sustain or
incur or which may be asserted against Countrywide by any person by reason of,
or as a result of: (i) any action taken or omitted to be taken by Countrywide in
good faith in reliance upon any certificate, instrument, order or share
certificate reasonably believed by it to be genuine and to be signed,
countersigned or executed by any duly authorized person, upon the oral
instructions or written instructions of an authorized person of the Fund or upon
the opinion of legal counsel for the Fund or its own counsel; or (ii) any action
taken or omitted to be taken by Countrywide in connection with its appointment
in good faith in reliance upon any law, act, regulation or interpretation of the
same even though the same may thereafter have been altered, changed, amended or
repealed. However, indemnification under this subparagraph shall not apply to
actions or omissions of Countrywide or its directors, officers, employees,
shareholders or agents in cases of its or their own gross negligence, willful
misconduct, bad faith, or reckless disregard of its or their own duties
hereunder.
13. INDEMNIFICATION OF THE FUND.
Notwithstanding any other provision of this Agreement, Countrywide
shall indemnify and hold harmless the Fund, its directors, officers, employees,
shareholders, agents, control persons and affiliates, from and against any and
all claims, demands, expenses and liabilities (whether with or without basis in
fact or law) of any and every nature which the Fund may sustain or incur or
which may be asserted against the Fund by any person by reason of, or as a
result of, Countrywide's gross negligence, willful misconduct, bad faith, or
reckless disregard of its duties hereunder.
-4-
<PAGE>
14. TERMINATION.
A. The provisions of this Agreement shall be effective on the date
first above written, shall continue in effect for two years from that date and
shall continue in force from year to year thereafter, but only so long as such
continuance is approved (1) by Countrywide, (2) by vote, cast in person at a
meeting called for the purpose, of a majority of the Fund's directors who are
not parties to this Agreement or interested persons (as defined in the 1940 Act)
of any such party, and (3) by vote of a majority of the Fund's Board of
Directors or a majority of the Fund's outstanding voting securities.
B. Either party may terminate this Agreement on any date by giving the
other party at least sixty (60) days' prior written notice of such termination
specifying the date fixed therefor. Upon termination of this Agreement, the Fund
shall pay to Countrywide such compensation as may be due as of the date of such
termination, and shall likewise reimburse Countrywide for any out-of-pocket
expenses and disbursements reasonably incurred by Countrywide to such date.
C. In the event that in connection with the termination of this
Agreement a successor to any of Countrywide's duties or responsibilities under
this Agreement is designated by the Fund by written notice to Countrywide,
Countrywide shall, promptly upon such termination and at the expense of the
Fund, transfer all records maintained by Countrywide under this Agreement and
shall cooperate in the transfer of such duties and responsibilities, including
providing for assistance from Countrywide's cognizant personnel in the
establishment of books, records and other data by such successor.
15. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent Countrywide or any affiliated
person (as defined in the 1940 Act) of Countrywide from providing services for
any other person, firm or corporation (including other investment companies);
provided, however, that Countrywide expressly represents that it will undertake
no activities which, in its judgment, will adversely affect the performance of
its obligations to the Fund under this Agreement.
16. SEVERABILITY.
In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
17. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the substantive laws of the State
of New York without regard to its conflict of
-5-
<PAGE>
law provisions. Any disputes arising out of this Agreement shall be adjudicated
solely in the courts of the State of New York or the federal court for the
Southern District of New York (in either case only within New York County, New
York). The parties each agree to personal jurisdiction and venue solely within
New York County, New York, waive any objections to personal jurisdiction and
venue in New York County, New York, and agree not to seek personal jurisdiction
and venue in any other location. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretations thereof, if any, by the United
States Courts located in New York County, New York or in the absence of any
controlling decision of any such court, by rules, regulations or orders of the
Securities and Exchange Commission issued pursuant to said 1940 Act. In
addition, where the effect of a requirement of the 1940 Act, reflected in any
provision of this Agreement, is revised by rule, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
18. NOTICES.
All notices, requests, consents and other communications required or
permitted under this Agreement shall be in writing (including telex and
telegraphic communication) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Fund: Boyar Value Fund, Inc.
590 Madison Avenue
New York, New York 10022
Attention: Jay R. Petschek
To Countrywide: Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice complying with the
terms of this Section 18. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
-6-
<PAGE>
19. CONFIDENTIALITY.
A. All information furnished to Countrywide or its representatives by
the Fund, including without limitation all names, addresses, telephone numbers
and other information of customers and prospective customers, and whether
furnished before or after the date hereof (the "Information"), will be kept
confidential by Countrywide and/or its representatives, and will not, except to
the extent necessary in order to carry out Countrywide's responsibilities and
obligations under this Agreement, be disclosed by Countrywide or any of its
representatives and will not be used by Countrywide or any of its
representatives for any purpose other than fulfilling Countrywide's
responsibilities and obligations under this Agreement. The term
"representatives" as used herein shall include Countrywide's affiliates, and
Countrywide and its affiliates' respective officers, directors, employees,
agents, and controlling persons. Countrywide acknowledges and agrees that any
information supplied to Countrywide by a customer or potential customer of the
Fund as a result of discussions, solicitations, or communications between the
Fund and said customer or potential customer shall constitute "Information" for
the purposes hereof. Countrywide shall be permitted to transmit the Information
only to those of its representatives who need to know the Information for the
purpose of assisting Countrywide in fulfilling its responsibilities and
obligations under this Agreement, who are informed by Countrywide of the
confidential nature of the Information and who have agreed in writing to keep
the Information confidential on the same terms as if such representatives were
signatories hereto. Copies of all agreements by which Countrywide's
representatives have agreed to keep the Information confidential shall be
delivered by Countrywide to the Fund promptly after execution thereof. In any
event Countrywide shall be responsible for the breach of this Agreement by its
representatives.
B. In the event that Countrywide or its representatives is requested
or becomes legally compelled to disclose any of the Information, said party
agrees to provide the Fund with prompt written notice, but in any event within 3
business days, so that the Fund may seek (with Countrywide's and/or its
representatives' cooperation, if so requested by the Fund) a protective order or
other appropriate remedy. In the event that such protective order or other
remedy is not obtained, or that the Fund waives compliance with these
confidentiality provisions, Countrywide and its representatives agree to furnish
only that portion of the Information which in the reasonable opinion of its
counsel is legally required and will use its best efforts to obtain reliable
assurance that confidential treatment will be accorded the Information.
C. The term "Information" as used herein shall not include matters
which (i) are or become generally available to the public other than as a result
of a disclosure by Countrywide or its
-7-
<PAGE>
representatives, or (ii) were know to Countrywide on a non-confidential basis
prior to its disclosure to Countrywide by the Fund.
D. The Fund shall be entitled to injunctive relief to prevent breaches
of Countrywide's confidentiality obligations hereunder and to specifically
enforce the terms hereof in addition to any other remedy to which the Fund may
be entitled at law or in equity.
E. The confidentiality provisions of this Agreement shall survive the
termination of this Agreement.
20. AMENDMENT.
This Agreement may not be amended or modified except by a written
agreement executed by both parties.
21. BINDING EFFECT.
Each of the undersigned expressly warrants and represents that he has
the full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
22. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
23. FORCE MAJEURE.
If Countrywide shall be delayed in its performance of services or
prevented entirely or in part from performing services due to causes or events
beyond its control, including and without limitation, acts of God, interruption
of power or other utility, transportation or communication services, acts of
civil or military authority, sabotages, national emergencies, explosion, flood,
accident, earthquake or other catastrophe, fire, strike or other labor problems,
legal action, present or future law, governmental order, rule or regulation, or
shortages of suitable parts, materials, labor or transportation, such delay or
non-performance shall be excused and a reasonable time for performance in
connection with this Agreement shall be extended to include the period of such
delay or non-performance.
24. MISCELLANEOUS.
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
BOYAR VALUE FUND, INC.
By:/s/ Jay Petschek
Its: President
COUNTRYWIDE FUND SERVICES, INC.
By: /s/ Robert A. Dorsey
Its: President
-9-
<PAGE>
Schedule A
----------
COMPENSATION
------------
The Fund will pay Countrywide a monthly fee, according to the average
net assets of the Fund during such month, as follows:
Average Monthly Net Assets Monthly Fee
-------------------------- -----------
0 - $ 50,000,000 $ 2,000
50 - 100,000,000 2,500
100 - 200,000,000 3,000
200 - 300,000,000 4,000
Over - 300,000,000 5,000
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement, dated as of March 10, 1998,
between Ladenburg Thalmann Fund Management Inc., a corporation organized under
the laws of the State of Delaware ("LTFM"), and Ladenburg Thalmann Asset
Management Inc., a corporation organized under the laws of the State of New York
("LTAM").
WHEREAS, LTFM acts as investment manager to Boyar Value Fund, Inc., a
corporation organized under the laws of the State of Maryland (the "Fund"), of
which Boyar Asset Management, Inc., a corporation organized under the laws of
the State of Delaware ("BAM"), is the investment adviser; and
WHEREAS, LTAM is prepared to provide LTFM with all administrative services
necessary or appropriate for the conduct of LTFM's business, subject to and in
accordance with the terms of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto hereby agree as follows:
1. Administrative Services. So long as this Agreement is in effect, LTAM
will provide to LTFM all administrative services necessary or appropriate for
the conduct of LTFM's business. Without limiting the generality of the
foregoing, LTAM shall (i) administer the business affairs of LTFM and supervise
the overall day to day operations thereof; (ii) provide LTFM will full
administrative services, including the maintenance of books and records, such as
journals, ledger accounts and other records required to be maintained in
connection with the conduct of LTFM's business; and (iii) provide LTFM with the
services of persons competent to perform such supervisory, administrative and
clerical functions as are necessary to provide effective operation of the Fund.
Nothing in this Agreement shall require LTFM to provide or pay for any service
that the Fund is obligated to pay or provide for under the terms of the Fund's
agreements with LTFM, BAM or others.
2. Additional Funds. In the event that LTFM agrees to act as investment
manager of another fund, and wishes to retain LTAM to perform administrative
services hereunder for that fund, it shall notify LTAM in writing. If LTAM is
willing to render such services, it shall notify LTFM in writing, whereupon such
fund shall become a Fund as defined herein.
3. Staffing. LTAM shall, at its own expense, maintain such staff and employ
or retain such personnel and consult with such other persons as it shall from
time to time determine to be
<PAGE>
necessary or appropriate to the performance of its obligations under this
Agreement.
4. Information to be Made Available. LTFM shall, from time to time, furnish
or otherwise make available to LTAM such financial reports and other information
relating to the business and affairs of the Fund as LTAM may reasonably require
in order to discharge its duties and obligations under this Agreement or to
comply with any applicable law or regulation.
5. Fees. For the services to be rendered, and the expenses to be assumed by
LTAM, LTFM shall pay to LTAM, in like manner and terms, the compensation payable
by the Fund to LTFM pursuant to Section 5 of the Management Agreement, dated as
of March 10, 1998, by the Fund and LTFM (the "Management Agreement").
6. Exculpation. LTAM shall use its commercially reasonable efforts in the
performance of its administrative activities on behalf of LTFM, but in the
absence of willful misconduct, bad faith, gross negligence or reckless disregard
of its duties hereunder, LTAM shall not be liable to LTFM for any error of
judgment or mistake of law or for any act or omission by LTAM or for any losses
sustained by LTFM, the Fund or their shareholders. Nothing in this Agreement is
intended to confer any rights upon the Fund or its shareholders against LTAM.
7. Other Activities. It is understood that LTAM and its shareholders,
officers and employees may have advisory, administrative, management or other
contracts with other organizations or persons, and may have other interests and
businesses.
8. Term. This Agreement shall continue for an initial two-year term and
thereafter shall continue automatically for successive periods of one year
unless terminated by any of the parties hereto by written notice delivered to
the other parties hereto within 60 days of the expiration of the then-existing
period. In the event BAM ceases to be the investment adviser, or LTFM ceases to
be the investment manager, of the Fund, this Agreement shall automatically
terminate with respect to the Fund.
9. Amendments. This Agreement may be amended or modified by the parties
hereto in any manner by written agreement executed by each of the parties
hereto.
10. Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of New York.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
LADENBURG THALMANN ASSET MANAGEMENT INC.
By:/s/ Jay Petschek
Name: Jay Petschek
Title: President
LADENBURG THALMANN FUND MANAGEMENT INC.
By: /s/ Jay Petschek
Name:Jay Petschek
Title: President
3
<PAGE>
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4677
February 26, 1998
Boyar Value Fund, Inc.
590 Madison Avenue
New York, New York 10022
Ladies and Gentlemen:
We have acted as counsel to Boyar Value Fund, Inc. (the "Fund"), a
corporation organized under the laws of the State of Maryland, in connection
with the preparation of a registration statement on Form N-1A covering the offer
and sale of an indefinite number of shares of its common stock, par value $.001
per share (the "Common Shares").
We have examined copies of the Charter and By-Laws of the Fund, the Fund's
prospectus and statement of additional information (the "Statement of Additional
Information") included in its Registration Statement on Form N-1A, Securities
Act File No. 333-29253 and Investment Company Act File No. 811-08253 (the
"Registration Statement"), all resolutions adopted by the Fund's Board of
Directors (the "Board") at its initial meeting held on December 10, 1997,
consents of the Board and other records, documents and papers that we have
deemed necessary for the purpose of this opinion. We have also examined such
other statutes and authorities as we have deemed necessary to form a basis for
the opinion hereinafter expressed.
In our examination of material, we have assumed the genuineness of all
signatures and the conformity to original documents of all copies submitted to
us. As to various questions of fact material to our opinion, we have relied upon
statements and certificates of officers and representatives of the Fund and
others.
Based upon the foregoing, we are of the opinion that:
1. The Fund is duly organized and validly existing as a corporation in
good standing under the laws of the State of Maryland.
<PAGE>
Boyar Value Fund, Inc.
February 26, 1998
Page 2
2. The 10,000 presently issued and outstanding Common Shares of the Fund
have been validly and legally issued and are fully paid and
nonassessable.
3. The Common Shares of the Fund to be offered for sale pursuant to the
Registration Statement are, to the extent of the number of Common
Shares authorized to be issued by the Fund in its Charter, duly
authorized and, when sold, issued and paid for as contemplated by the
Registration Statement, will have been validly and legally issued and
will be fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, to the reference to us in the Statement of Additional
Information and to the filing of this opinion as an exhibit to any application
made by or on behalf of the Fund or any distributor or dealer in connection with
the registration or qualification of the Fund or the Common Shares under the
securities laws of any state or other jurisdiction.
We are members of the Bar of the State of New York only and do not opine as
to the laws of any jurisdiction other than the laws of the State of New York and
the laws of the United States, and the opinions set forth above are,
accordingly, limited to the laws of those jurisdictions. As to matters involving
the application of the laws of the State of Maryland, we have relied on the
opinion of Messrs. Venable, Baetjer and Howard, LLP.
Very truly yours,
/s/ Willkie Farr & Gallagher
<PAGE>
VENABLE, BAETJER AND HOWARD, LLP
1800 Mercantile Bank & Trust Bldg.
Two Hopkins Plaza
Baltimore, Maryland 21201-2978
February 26, 1998
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022-4677
Re: Boyar Value Fund, Inc.
----------------------
Ladies and Gentlemen:
We have acted as special Maryland counsel for Boyar Value Fund,
Inc., a Maryland corporation (the "Fund"), in connection with the organization
of the Fund and the issuance of shares of its common stock, par value $.001 per
share (the "Common Shares").
As Maryland counsel for the Fund, we are familiar with its
Charter and Bylaws. We have examined its Registration Statement on Form N-1A,
Securities Act File No. 333-29253 and Investment Company Act File No. 811-08253,
including the prospectus and statement of additional information contained
therein, substantially in the form in which it is to become effective (the
"Registration Statement"). We have further examined and relied upon a
certificate of the Maryland State Department of Assessments and Taxation to the
effect that the Fund is duly incorporated and existing under the laws of the
State of Maryland and is in good standing and duly authorized to transact
business in the State of Maryland.
We have also examined and relied upon such corporate records of
the Fund and other documents and certificates with respect to factual matters as
we have deemed necessary to render the opinion expressed herein. We have
assumed, without independent verification, the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, and the
conformity with originals of all documents submitted to us as copies.
<PAGE>
Willkie Farr & Gallagher
February 26, 1998
Page 2
Based on such examination, we are of the opinion and so advise
you that:
1. The Fund is duly organized and validly existing as a
corporation in good standing under the laws of the State
of Maryland.
2. The 10,000 presently issued and outstanding Common Shares
of the Fund have been validly and legally issued and are
fully paid and nonassessable.
3. The Common Shares of the Fund to be offered for sale
pursuant to the Registration Statement are, to the extent
of the number of Common Shares authorized to be issued by
the Fund in its Charter, duly authorized and, when sold,
issued and paid for as contemplated by the Registration
Statement, will have been validly and legally issued and
will be fully paid and nonassessable.
This letter expresses our opinion with respect to the Maryland
General Corporation Law governing matters such as due organization and the
authorization and issuance of stock. It does not extend to the securities or
"blue sky" laws of Maryland, to federal securities laws or to other laws.
You may rely upon our foregoing opinion in rendering your opinion
to the Fund that is to be filed as an exhibit to the Registration Statement. We
consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Venable, Baetjer and Howard, LLP
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Independent
Accountants and Counsel" in the Statement of Additional Information and to the
use of our report dated February 26, 1998 in Pre-Effective Amendment No. 2 to
the Registration Statement on Form N-1A (No. 333-29253) of the Boyar Value Fund,
Inc.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Cincinnati, Ohio
February 26, 1998
<PAGE>
PURCHASE AGREEMENT
Boyar Value Fund, Inc. (the "Fund"), a corporation organized under the
laws of the State of Maryland, and Ladenburg Thalmann Fund Management Inc.
("LTFM") hereby agree as follows:
1. The Fund offers LTFM and LTFM hereby purchases 10,000 shares of
common stock of the Fund, each of which shall be designated "Common Shares" each
having a par value $.001 per share (the "Shares") at a price of $10.00 (the
"Initial Shares"). LTFM hereby acknowledges receipt of certificates representing
the Initial Shares and the Fund hereby acknowledges receipt from LTFM of
$100,000.00 in full payment for the Initial Shares.
2. LTFM represents and warrants to the Fund that the Initial Shares are
being acquired for investment purposes and not for the purpose of distributing
them.
3. LTFM agrees that if the holder of the Initial Shares redeems any
Initial Shares in the Fund before five years after the date upon which the Fund
commences its investment activities, the redemption proceeds will be reduced by
the amount of unamortized organizational expenses in the same proportion as the
number of Initial Shares being redeemed bears to the number of Initial Shares
outstanding at the time of redemption. The parties hereby acknowledge that any
Shares acquired by LTFM other than the Initial Shares have not been acquired to
fulfill the requirements of Section 14 of the Investment Company Act of 1940, as
amended, and, if redeemed, their redemption proceeds will not be subject to
reduction based on the unamortized organizational expenses of the Fund.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 20th day of November, 1997.
BOYAR VALUE FUND, INC.
By: /s/ Mark A. Boyar
Name:Mark A. Boyar
Title:Chairman and CEO
ATTEST:_____________________
LADENBURG THALMANN FUND MANAGEMENT INC.
By:/s/ Jay Petschek
Name:Jay Petschek
Title:President
-2-
<PAGE>
SHAREHOLDER SERVICING AND DISTRIBUTION PLAN
-------------------------------------------
This Shareholder Servicing and Distribution Plan ("Plan") is adopted
by Boyar Value Fund, Inc., a corporation organized under the laws of State of
Maryland (the "Fund"), with respect to the common stock, par value $.001 per
share, of the Fund (the "Shares") pursuant to Rule 12b-1 (the "Rule") under the
Investment Company Act of 1940, as amended (the "1940 Act"), subject to the
following terms and conditions:
Section 1. Amount of Payments.
The Fund will pay Ladenburg Thalmann & Co. Inc. ("LTCI"), a
corporation organized under the laws of the State of Delaware, for shareholder
servicing and distribution services provided to the Shares, an annual fee of up
to .25% of the value of the average daily net assets of the Fund. Fees to be
paid with respect to the Fund under this Plan will be calculated monthly and
paid quarterly by the Fund.
Section 2. Services Payable under the Plan.
(a) The annual fees described above payable with respect to the Fund
are intended to compensate LTCI, or enable LTCI to compensate other persons
("Service Providers"), including any other distributor of Shares, for providing
(i) ongoing servicing and/or maintenance of the accounts of holders of Shares
("Shareholder Services"); (ii) services that are primarily intended to result
in, or that are primarily attributable to, the sale of Shares ("Selling
Services"); and (iii) subtransfer agency services, subaccounting services or
administrative services with respect to the Shares ("Administrative Services").
Shareholder Services may include, among other things, responding to inquiries of
prospective investors regarding the Fund and services to shareholders not
otherwise required to be provided by the Fund's manager, investment adviser,
administrator, custodian or other agent of the Fund. Selling Services may
include, but are not limited to: the printing and distribution to prospective
investors in the Shares of prospectuses and statements of additional information
describing the Fund; the preparation, including printing, and distribution of
sales literature, reports and media advertisements relating to the Shares;
providing telephone services relating to the Fund; distributing Shares; costs
relating to the formulation and implementation of marketing and promotional
activities, including, but not limited to, direct mail promotions and
television, radio, newspaper, magazine and other mass media advertising, and
related travel and entertainment expenses; and costs involved in obtaining
whatever information, analyses and reports with respect to marketing and
promotional activities that the Fund may, from time to time, deem advisable. In
providing compensation for Selling Services in accordance with this Plan, LTCI
is expressly authorized (i) to
<PAGE>
make, or cause to be made, payments reflecting an allocation of overhead and
other office expenses related to providing Selling Services; (ii) to make, or
cause to be made, payments, or to provide for the reimbursement of expenses of,
persons who provide support services in connection with the distribution of
Shares including, but not limited to, office space and equipment, telephone
facilities, answering routine inquiries regarding the Fund, and providing any
other service; and (iii) to make, or cause to be made, payments to compensate
selected dealers or other authorized persons for providing any Selling Services.
Administrative Services may include, but are not limited to, establishing and
maintaining accounts and records on behalf of Fund shareholders; processing
purchase, redemption and exchange transactions in Shares; and other similar
services not otherwise required to be provided by the Fund's transfer agent or
any other agent.
(b) Payments under this Plan are not tied exclusively to the expenses
for shareholder servicing, administration and distribution expenses actually
incurred by LTCI or any Service Provider, and the payments may exceed expenses
actually incurred by LTCI and/or such Service Provider. Furthermore, any portion
of any fee paid to LTCI or to any of its affiliates by the Fund or any of their
past profits or other revenue may be used in their sole discretion to provide
services to shareholders of the Fund or to foster distribution of Shares.
Section 3. Approval of Plan.
Neither this Plan nor any related agreements will take effect until
approved by a majority of (a) the outstanding voting Shares, (b) the full Board
of Directors of the Fund and (c) those Directors who are not interested persons
of the Fund and who have no direct or indirect financial interest in the
operation of this Plan or in any agreements related to it (the "Independent
Directors"), cast in person at a meeting called for the purpose of voting on
this Plan and the related agreements.
Section 4. Continuance of Plan.
This Plan will continue in effect with respect to the Shares from year
to year so long as its continuance is specifically approved annually by vote of
the Fund's Board of Directors in the manner described in Section 3(b) and 3(c)
above. The Fund's Board of Directors will evaluate the appropriateness of this
Plan and its payment terms on a continuing basis and in doing so will consider
all relevant factors, including the types and extent of Shareholder Services,
Selling Services and Administrative Services provided by LTCI and/or Service
Providers and amounts LTCI and/or Service Providers receive under this Plan.
-2-
<PAGE>
Section 5. Termination.
This Plan may be terminated at any time with respect to the Shares by
vote of a majority of the Independent Directors or by a vote of a majority of
the outstanding voting Shares.
Section 6. Amendments.
This Plan may not be amended to increase materially the amount of the
fees described in Section 1 above with respect to the Shares without approval of
at least a majority of the outstanding voting Shares. In addition, all material
amendments to this Plan must be approved in the manner described in Section 3(b)
and 3(c) above.
Section 7. Selection of Certain Directors.
While this Plan is in effect with respect to the Fund, the selection
and nomination of the Fund's Directors who are not interested persons of the
Fund will be committed to the discretion of the Directors then in office who are
not interested persons of the Fund.
Section 8. Written Reports.
In each year during which this Plan remains in effect with respect to
the Fund, any person authorized to direct the disposition of monies paid or
payable by the Fund pursuant to the Plan or any related agreement will prepare
and furnish to the Fund's Board of Directors, and the Board will review, at
least quarterly, written reports, complying with the requirements of the Rule,
which set out the amounts expended under this Plan and the purposes for which
those expenditures were made.
Section 9. Preservation of Materials.
The Fund will preserve copies of this Plan, any agreement relating to
this Plan and any report made pursuant to Section 8 above, for a period of not
less than six years (the first two years in an easily accessible place) from the
date of this Plan, the agreement or the report.
Section 10. Meaning of Certain Terms.
As used in this Plan, the terms "interested person" and "majority of
the outstanding voting securities" will be deemed to have the same meanings that
those terms have under the 1940 Act and the rules and regulations under the 1940
Act, subject to any exemption that may be granted to the Fund under the 1940 Act
by the Securities and Exchange Commission.
-3-
<PAGE>
Section 11. Date of Effectiveness.
This Plan will become effective as of the date the Fund first
commences its investment operations.
IN WITNESS WHEREOF, the Fund has executed this Plan as of the 3rd day
of March, 1998.
BOYAR VALUE FUND, INC.
By: /s/ Jay Petschek
Name: Jay Petschek
Title:President
-4-
