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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Amendment No. __
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)) [ ] Definitive Proxy Statement [ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
THE 44 WALL STREET EQUITY FUND, INC.
[Name of Registrant as Specified in its Charter]
--------------------------------------------------
[Name of Person(s) Filing Proxy Statement if other
than Registrant]
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A. [ ] $500 per each party to the controversy
pursuant to Exchange Act Rule 14a-6(i)(3). [ ] Fee computed on table below per
Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:_______________________
(2) Aggregate number of securities to which transaction
applies:_______________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: --------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------
(5) Total fee paid:_____________________________
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:_______________________
(2) Form, Schedule or Registration Statement No.___________________
(3) Filing Party:_________________________________
(4) Date Filed:___________________________________
<PAGE>
THE 44 WALL STREET EQUITY FUND, INC.
PROXY SOLICITED BY MANAGEMENT
The undersigned hereby appoints Mark D. Beckerman and
_________________ as proxies of the undersigned, with full power of substitution
to vote at the Special Meeting of Shareholders of The 44 Wall Street Equity
Fund, Inc. ("Fund") to be held on _____________, 1996 at 2:00 p.m., and any
adjournment thereof, all the shares of the Fund standing in the name of the
undersigned as follows:
(1)For [ ] Against [ ] Abstain [ ]
With respect to approval of the new Investment Advisory
Agreement with MDB Asset Management Corporation, as more
fully described in the proxy statement (the Board of
Directors recommends a vote FOR);
(2)For [ ] Against [ ] Abstain [ ]
With respect to approval of a Distribution Plan, as
more fully described in the proxy statement (the Board of
Directors recommends a vote FOR);
(3)Election of Directors.
[ ] For All Nominees [ ] Withhold
Listed Below (ex- Authority To
cept as marked to Vote For All
the contrary) Nominees
Listed Below
R. Barry Borden Kevin M. Covert
Gregory Church Gerald Printz
Dominick Cruciani
(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
(4)For [ ] Against [ ] Abstain [ ]
With respect to the approval of amendments to the Fund's
Articles of Incorporation, as more fully described in the
proxy statement (the Board of Directors recommends a vote
FOR);
<PAGE>
(5)For [ ] Against [ ] Abstain [ ]
With respect to ratification of the selection of
McGladrey & Pullen as auditors of the Fund for the fiscal
year ending June 30, 1996 (the Board of Directors
recommends a vote FOR);
(6)For [ ] Against [ ] Abstain [ ]
In their discretion on all other business that may
properly come before the meeting and any adjournment
thereof.
This proxy will be voted as specified. If no specification is
made, this proxy will be vote FOR the adoption of Proposals 1 and 2, FOR the
election of five directors, FOR the adoption of Proposals 4 and 5, and with
respect to Proposal 6, as said proxies may determine.
Dated:______________199_
(L.S.)
(L.S.)
Signature(s) should be
exactly as name or names appear
on this proxy. If stock is held
jointly, each holder should
sign. If signing as attorney,
executor, administrator, trustee
or guardian, please give us full
name and capacity in which
signing.
<PAGE>
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THE 44 WALL STREET EQUITY FUND, INC.
26 Broadway, Suite 205
New York, New York 10004
Notice of Special Meeting of Shareholders
Meeting Date: _________, 1996
To the Shareholders:
A Special Meeting of Shareholders of The 44 Wall Street Equity
Fund, Inc. (the "Fund") will be held on ________________, 1996 at 2:00 P.M. at
the offices of the Fund located at 26 Broadway, 2nd Floor, New York, New York
10004, for the following purposes:
1. To approve a new Investment Advisory Agreement between the
Fund and MDB Asset Management Corporation ("Asset Management"), in connection
with the proposed purchase of Asset Management by Sheldon E. Goldberg and
Gregory Church, as more fully described in the proxy statement;
2. To approve a Distribution Plan;
3. To elect directors of the Fund;
4. To approve the following amendments to the Fund's Articles
of Incorporation: (a) to change the name of the Fund to "Matterhorn Growth Fund,
Inc."; (b) to authorize the issuance of classes of shares for the Fund; (c) to
modify the provisions relating to the limited liability of directors of the
Fund; and (d) to permit the directors to set an amount for the involuntary
redemption of small accounts;
5. To ratify the selection of McGladrey & Pullen as auditors of the Fund
for the fiscal year ending June 30, 1996; and
6. To transact such other business as may properly come before the meeting
or any adjournment thereof. THE DIRECTORS UNANIMOUSLY RECOMMEND APPROVAL OF EACH
OF THE PROPOSALS.
<PAGE>
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Shareholders of record at the close of business on _____ , 1995
are entitled to vote at the meeting or any adjournment thereof. It is important
that you return your signed proxy promptly, regardless of the size of your
holdings, so that a quorum may be assured.
By Order of the Board of Directors
George Beckerman
Secretary
_______, 1995
Your vote is important! Please indicate your voting
instructions on the enclosed proxy, date and sign it, and return it in the
accompanying postage prepaid envelope. If you sign, date and return the proxy
but give no voting instructions, your shares will be voted to authorize the
election of all of the nominees named in the proxy statement and in favor of all
other proposals noticed above.
<PAGE>
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THE 44 WALL STREET EQUITY FUND, INC.
26 Broadway, Suite 205
New York, New York 10004
PROXY STATEMENT
Special Meeting of Shareholders
___________, 1996
This proxy statement is furnished in connection with the
solicitation by the Board of Directors of The 44 Wall Street Equity Fund, Inc.
(the "Fund") of proxies to be voted at a Special Meeting of Shareholders (the
"Meeting") to be held on _________________, 1996, and any adjournment thereof.
The purposes of the meeting are set forth in the accompanying Notice of Special
Meeting of Shareholders dated ______, 1995.
This proxy solicitation will be made primarily by mailing this
proxy statement and the accompanying proxy card to shareholders commencing on
________, 1995. Supplementary solicitations may be made by telephone or telegram
or by personal interview. Officers and directors of the Fund and MDB Asset
Management Corporation ("Asset Management") who participate in such
solicitations will receive no compensation for their services other than their
regular salaries, if any. The expenses of preparing and mailing this proxy
statement and its enclosures and all other solicitation expenses will be paid by
Sheldon E. Goldberg and Gregory Church, the proposed purchasers of Asset
Management. Messrs. Goldberg and Church may also solicit proxies at their own
expense, and will reimburse brokerage firms, banks and other custodians and
fiduciaries for their expenses in forwarding solicitation materials to the
beneficial owners of shares.
The Fund will furnish without charge a copy of its most recent
annual report and semi-annual report to any shareholder upon request. Such
request may be made by calling the Fund during business hours at 1-800-543-2620,
or by writing to the Fund at the address set forth above.
OUTSTANDING SHARES AND VOTING REQUIREMENTS
The Board of Directors has fixed the close of business on
______________, 1995 as the record date for the Meeting and any adjournments
thereof. As of _______, 1995, there were __________ shares of the Fund issued
and outstanding. No person is a record holder of, nor is known by the Fund to
have a beneficial interest in, 5% or more of the Fund's outstanding shares. Only
shareholders of record at the close of business on that date are entitled to
notice of and to vote at the meeting. Each such shareholder is entitled to one
vote for each full share, and a proportionate vote for each fractional share, of
the Fund held on the record date.
The holders of a majority of the outstanding shares of the Fund
must be present in person or represented by proxy at the Meeting in order to
constitute a quorum for the transaction of any business. If a quorum is present
at the Meeting but sufficient votes to approve one or more of the items on the
agenda are not received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies with
respect to those items. In so doing, the persons named as proxies will attempt
to determine if an adjournment and additional shareholder solicitation are
reasonable and in the best interest of shareholders, and will vote for or
against adjournment accordingly. Any such adjournment will require the
affirmative vote of a majority of the shares present at the Meeting or
represented by proxy.
If the enclosed proxy card is executed properly and returned in
time to be voted at the Meeting, and is not revoked, the shares represented
thereby will be voted according to the instructions marked on the card. The
persons voted as proxies will use their best judgment in voting in connection
with the transaction of such other business as may properly come before the
Meeting or any adjournment thereof. A shareholder giving a proxy may revoke it
at any time before it is exercised by giving written notice of its revocation to
the Secretary of the Fund at the address indicated on the Notice of Special
Meeting, by executing and delivering to the Fund another proxy dated subsequent
to the proxy to be revoked, or by attending the Meeting and voting in person.
Abstentions and broker "non-votes" (proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular matter
with respect to which the broker or nominee does not have discretionary power)
will not be counted for or against any proposal to which they relate, but will
be counted for purposes of determining the shares present at the Meeting.
Abstentions and broker non-votes will therefore have the effect of a "no" vote
for purposes of obtaining the requisite approvals of the proposals before the
Meeting.
<PAGE>
PROPOSAL 1
APPROVAL OF A NEW
INVESTMENT ADVISORY AGREEMENT
At the Meeting, the shareholders will be asked to approve a new
Investment Advisory Agreement (the "New Advisory Agreement") with Asset
Management. A copy of the New Advisory Agreement is set forth as Exhibit A to
this Proxy Statement, with changes from the current Investment Advisory
Agreement (the "Current Advisory Agreement") indicated in bold face type. The
material provisions of the New Advisory Agreement and the Current Advisory
Agreement are the same, with the exception of a new limitation on Fund expenses
(discussed further below).
Shareholders are being asked to approve the New Advisory
Agreement because Mark D. Beckerman, the current owner of all of the outstanding
shares of Asset Management, has agreed to sell his shares to Sheldon E. Goldberg
and Gregory Church (the "Buyers"). Pursuant to the Investment Company Act of
1940 (the "1940 Act"), the sale of Mr. Beckerman's shares will terminate the
Current Advisory Agreement. Approval of the New Advisory Agreement will be
contingent upon the completion of the stock purchase by the Buyers. The Current
Advisory Agreement was last approved by the Fund's shareholders on June 14,
1991, and by the Board of Directors on October 5, 1995.
Pursuant to the New Advisory Agreement, Asset Management will
continue to render investment advice and provide supervisory management services
to the Fund, subject to the control and overall supervisory authority of the
Fund's Board of Directors. Asset Management will continue to provide the Fund
with advice and recommendations with respect to investments, investment
policies, the purchase and sale of portfolio securities, and management of the
cash balances of and credit extended to the Fund. In addition, as discussed
further below, Mr. Beckerman will continue to act as the Fund's portfolio
manager pursuant to an Employment Agreement with Asset Management.
For its services, Asset Management will continue to be
compensated at a rate of 1% of the value of the Fund's average daily net assets,
payable monthly. The rate of compensation will continue to remain constant
whether or not there are fluctuations in the Fund's net assets. Such annual rate
is higher than the rate paid by most registered investment companies, but is the
same as the rate received under the Current Advisory Agreement, is similar to
the rate contracted for by other mutual funds with comparable investment
policies, and is the same rate paid by all other equity funds advised by Asset
Management since its inception.
Except as described below, the Fund will continue to pay all of
its other expenses, including commissions, interest, taxes, legal and accounting
fees, fees of custodians, transfer agents, registrars and dividend disbursing
agents, registration and filing fees, the cost of stock certificates, costs in
connection with annual or special meetings of shareholders, including the
preparation and distribution of proxy soliciting materials, fees and expenses of
Fund directors who are not "interested persons" of Asset Management or of the
principal underwriters of the Fund, office space, office furnishings, office
supplies and office equipment, including telephone service, insurance premiums,
printing costs (which do not include the costs of printed material sent to
persons who are not shareholders), travel expenses, salaries and related
compensation of all non-officer employees, postage, association dues and
extraordinary and non-recurring expenses.
Asset Management has agreed that, for a period of two years
after execution of the New Agreement, it will limit the Fund's operating
expenses (other than interest, taxes, brokerage commissions and other portfolio
transaction expenses, capital expenditures and extraordinary expenses) to 4% of
the Fund's average annual net assets. In addition, Asset Management will
continue to be obligated to reimburse the Fund if Fund expenses exceed those
expenses set forth in any statutory or regulatory formula prescribed by any
state in which Fund shares are registered at such time. Because Fund shares are
not currently registered in any state which requires the Fund to be reimbursed
for such excess expenses, to date Asset Management has not been required to
reimburse the Fund for any such excess expenses.
Like the Current Advisory Agreement, the New Advisory Agreement
will provide that neither Asset Management nor any of its officers, directors or
employees will 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 the New
Advisory Agreement relates, except for losses resulting from Asset Management's
willful misfeasance, bad faith or gross negligence in the performance of its
duties on behalf of the Fund or from its reckless disregard of its duties under
the New Advisory Agreement.
<PAGE>
If executed, the New Advisory Agreement will have an initial
term of two years, and will continue thereafter from year to year subject to the
annual approval of its renewal by vote of a majority of the Board of Directors
or of a majority of the outstanding voting securities of the Fund, and by vote
of a majority of the Directors who are not parties to the New Advisory Agreement
or "interested persons" of the Fund or Asset Management (as that term is defined
in the 1940 Act). Like the Current Advisory Agreement, the New Advisory
Agreement will be terminable at any time on sixty days' notice, without penalty,
by vote of the Board of Directors or of the holders of the majority of the
outstanding voting securities of the Fund, and by Asset Management on the same
notice to the Fund. The New Advisory Agreement will automatically terminate on
assignment.
For the fiscal years ended June 30, 1994 and 1995, total Fund
operating expenses (including the 1% management fee) were 5.01% and 5.18 % of
average net assets, respectively.
Asset Management Stock Purchase Agreement
Asset Management has served as investment advisor to the Fund
since 1988. Asset Management is a New York corporation registered as an
investment advisor under the Investment Advisers Act of 1940, and is
wholly-owned by Mark D. Beckerman, a Director of the Fund who serves as its
President and Portfolio Manager.
In accordance with the terms of a Stock Purchase Agreement
dated as of November 10, 1995 (the "Purchase Agreement"), between Mr. Beckerman
and the Buyers, the Buyers have agreed to purchase all of the outstanding voting
stock of Asset Management from Mr. Beckerman. As consideration for their
purchase, the Buyers have agreed that, at the closing of the transactions
contemplated by the Purchase Agreement (the "Closing"), Asset Management will
enter into an Employment Agreement with Mr. Beckerman, under which Mr. Beckerman
will be appointed Portfolio Manager of the Fund for a term of five years. In
addition, Mr. Beckerman will receive an option entitling him to acquire a 10%
interest in each class of outstanding shares of Asset Management during the last
year of the term of the Employment Agreement. The option will expire if Mr.
Beckerman's employment by Asset Management is terminated for cause (as defined
in the Employment Agreement), or if he voluntarily resigns as Portfolio Manager
of the Fund. The Employment Agreement provides that the option will be
exercisable without cost to Mr. Beckerman.
As compensation for serving as the Fund's Portfolio Manager,
Mr. Beckerman will receive annual compensation from Asset Management equal to
0.75% of the average daily net assets of the Fund up to $15 million. In the
event the Employment Agreement is terminated before the expiration of the five
year term, Mr. Beckerman will continue to receive such compensation for the
duration of the term, unless his employment is terminated by Asset Management
for cause. In addition, if Mr. Beckerman does not exercise his option to
purchase an interest in Asset Management, he will receive as additional
compensation an aggregate of $150,000 over a period of four years, unless his
employment has been terminated for cause or he has voluntarily resigned as
Portfolio Manager of the Fund.
As required by Section 15(f) of the 1940 Act, Messrs. Goldberg
and Church have agreed to use their best efforts to ensure that, for a period of
three years after the Closing, at least 75% of the Directors of the Fund will
not be "interested persons" of the Fund, as that term is defined in the 1940
Act. In addition, Mr. Beckerman has agreed to indemnify Messrs. Goldberg and
Church, for a period of three years after the Closing, against any damages
incurred by them or the Fund arising from the operations of the Fund prior to
the Closing.
The Closing of the transactions contemplated by the Purchase
Agreement is conditioned, among other things, upon (i) approval of the Proposals
which are the subject of this Proxy Statement, (ii) appointment of Cumberland
Brokerage Corporation and Bainbridge & Co., broker-dealers registered under the
Securities Exchange Act of 1934 and owned by Messrs. Goldberg and Church,
respectively, as principal distributors for the Fund, and (iii) termination of
the current investment advisory agreement between Asset Management and
Progressive Portfolio Series, a registered investment company for which Asset
Management currently serves as investment advisor.
Messrs. Goldberg and Church have informed the Fund that they
have entered into a voting agreement which requires them to vote all shares held
by them together. They have also informed the Fund that, immediately after the
Closing, they intend to sell an aggregate of 24% of the outstanding shares of
Asset Management to eight individual investors. In addition, after the Closing
they propose to terminate the Fund's current Administrative Service Agreement
with American Data Services, Inc., and to retain Investment Company
Administration Corporation, a mutual fund administrator which is not affiliated
with the Buyers, as the Fund's administrator.
<PAGE>
Consideration of New Agreement by the Board
The Board of Directors of the Fund, including all of the
Directors who are not "interested persons" of the Fund within the meaning of the
1940 Act, has concluded that it will be in the best interests of the Fund and
its shareholders if the New Advisory Agreement with Asset Management is
approved. The Board, therefore, recommends shareholder approval of the New
Advisory Agreement.
In making this recommendation, the Directors carefully
evaluated the following factors, among others: (1) the excellent performance of
the Fund since Mr. Beckerman became its Portfolio Manager, and his agreement to
continue to act in that capacity; (2) that the level of the advisory fees
currently paid to Asset Management will be unchanged under the New Advisory
Agreement; (3) the agreement of Asset Management to limit annual Fund expenses
to 4% of average net assets for a period of two years after the Closing, which
would result in a significant decrease in the Fund's current expense ratio, and
the belief of Messrs. Goldberg and Church that it will be possible to
significantly reduce Fund expenses below that level in the future; (4) that the
other terms of the New Advisory Agreement will be substantially the same as
those of the Current Advisory Agreement, except for different effective and
termination dates; (5) the history, reputation, qualification, and background of
Messrs. Goldberg and Church; (6) the capabilities of Messrs. Goldberg and
Church, and the broker-dealer firms that they own, to increase the assets of the
Funds, thereby potentially resulting in greater economies of scale and portfolio
diversity; and (7) the commitment of Messrs. Goldberg and Church to pay or
reimburse the Fund for the expenses of this Proxy solicitation.
Required Vote
The affirmative vote of the holders of a majority of the
outstanding shares of record of the Fund is required to approve the New Advisory
Agreement. For this purpose, the term "majority" means the lesser of (i) 67% of
the shares represented at the Meeting if more than 50% of such outstanding
shares are represented, or (ii) more than 50% of such outstanding shares.
<PAGE>
PROPOSAL 2
APPROVAL OF A DISTRIBUTION PLAN
At the Special Meeting, shareholders will be asked to approve a
Distribution Plan adopted by the Board of Directors pursuant to Rule 12b-1 under
the 1940 Act, pursuant to which the Fund is authorized to finance certain
activities relating to the distribution of its shares for the purpose of
promoting sales of Fund shares. A copy of the proposed Distribution Plan is set
forth as Exhibit B to this Proxy Statement.
Description of Distributors
Shares of the Fund are currently distributed to the public by
Beckerman and Company, Inc.("BecCo"), a registered broker-dealer owned by Mr.
Beckerman and his father and brother. BecCo provides such distribution services,
at no cost to the Fund, pursuant to a Distribution Agreement (the "Current
Distribution Agreement") with the Fund dated June 14, 1991, which was last
approved by the Board of Directors on October 5, 1995. Fund shares are sold to
the public at net asset value, without any sales charge or commission. BecCo
pays the cost of Fund sales materials, including the cost of printing
prospectuses for distribution to prospective investors, and the Fund bears the
cost of prospectuses sent to existing shareholders.
At the Closing, the Current Distribution Agreement will be
terminated, and the Fund will retain Cumberland Brokerage Corporation and
Bainbridge & Company as distributors of the Fund's shares (the "New
Distributors") pursuant to new distribution agreements approved by the Board of
Directors on November 29, 1995 (the "New Distribution Agreements"). Cumberland
Brokerage Corporation and Bainbridge & Company are registered broker-dealers
owned by Messrs. Goldberg and Church, respectively. The New Distribution
Agreements are identical in all material respects to the Current Distribution
Agreement.
Description of the Distribution Plan
The New Distributors will recover the expenses they incur in
distributing shares of the Fund through the Distribution Plan, at the annual
rate of 0.25% of the Fund's average daily net assets. The Distribution Plan is a
"compensation" plan, which means that the distribution fees paid by the Fund are
intended to compensate the New Distributors for services rendered even if the
amounts paid exceed their actual expenses (in which case the New Distributors
would receive a profit). If in any year the New Distributors' expenses incurred
in connection with the distribution of Fund shares exceed the distribution fees
paid by the Fund, the New Distributors will recover such excess if the
Distribution Plan continues to be in effect in some later year when the
distribution fees exceed their distribution expenses. There is no limit on the
periods during which unreimbursed expenses may be carried forward; the Fund does
not pay interest, carrying or other finance charges on any carried forward
amounts; and the Fund will not be obligated to pay any unreimbursed expenses
that may exist at such time, if any, as the Distribution Plan terminates.
In accordance with the requirements of Rule 12b-1, the
Distribution Plan includes the following provisions:
- it shall continue in effect for a period of more than one
year from the date of its execution upon the annual
approval of the Board of Directors, including the approval
of the Directors who are not interested persons of the
Fund and have no financial direct or indirect financial
interest in the operation of the Plan or in any agreements
related to the Plan;
- persons authorized to direct the disposition of monies
payable to the New Distributors under the Plan shall
provide quarterly to the Board a written report of the
amounts expended under the Plan and the purposes for which
such expenditures were made;
- it may be terminated at any time by vote of a majority of
the members of the Board of Directors who are not
interested persons of the Fund and have no direct or
indirect financial interest in the operation of the Plan
or in any agreements related to the Plan, or by vote of a
majority of the outstanding voting securities of the Fund;
and
- it may not be amended to increase materially the amount to
be spent for distribution without the approval of the
majority of disinterested members of the Board of
Directors, who do not have a direct or indirect financial
interest in the operation of the Plan or in any agreements
related to the Plan, and the approval of shareholders.
<PAGE>
Consideration of Distribution Plan by the Board
In accordance with the requirements of Rule 12b-1, a majority
of the Board of Directors (including a majority of the disinterested Directors
who do not have a direct or indirect financial interest in the operation of the
Plan or in any agreements related to the Plan) have concluded, in the exercise
of their reasonable business judgment and in light of their fiduciary duties
under the 1940 Act and state law, that there is a reasonable likelihood the
proposed Distribution Plan will benefit the Fund and its shareholders.
In making this determination, the Board considered, among other
factors, whether the existing no-load distribution arrangement currently affords
the best means for Fund assets to grow to an appreciable size to realize greater
cost efficiencies (i.e., the benefits of economies of scale). The Board
considered this an important Fund objective particularly because of the high
expense ratio of the Fund in recent years, the slow growth of Fund assets over
this period, and a fundamental desire to keep the Fund competitive. Since
inception, the Fund has had a no-load distribution fee structure. The Board
determined that this structure may in part be responsible for the slow growth of
Fund assets over the years, particularly since many Fund competitors have
adopted various distribution fee arrangements during this time. The Board
concluded that an increased rate of growth of Fund assets, sufficient to realize
the reduced costs that come from a larger asset size, could only be achieved if
the Fund also were to adopt a distribution fee arrangement.
For these reasons, among others, the Board of Directors
recommends approval of the Distribution Plan.
Required Vote
The affirmative vote of the holders of a majority of the
outstanding shares of record of the Fund is required to approve the Distribution
Plan. For this purpose, the term "majority" means the lesser of (i) 67% of the
shares represented at the Meeting if more than 50% of such outstanding shares
are represented, or (ii) more than 50% of such outstanding shares.
<PAGE>
PROPOSAL 3
ELECTION OF DIRECTORS
The Board of Directors proposes that each of the five nominees
listed below be elected to hold office effective upon the Closing, until the
next meeting of shareholders and until his successor is elected and qualified.
Each of the nominees has indicated his willingness to serve if elected. If any
of the nominees should withdraw or otherwise become unavailable for election for
unanticipated reasons, the proxyholders will exercise their voting power in
favor of such substitute nominee, if any, as the Board of Directors may
designate. The Fund has no reason to believe that it will be necessary to
designate substitute nominees.
Dr. Cruciani has served on the Board of Directors since 1991.
The other nominees were proposed by Messrs. Goldberg and Church and approved as
nominees by the current Board of Directors. Information on the business
experience during the past five years of each nominee is set forth below:
Name, Address and
Age of Nominee
Principal
Occupation
Shares Owned
Beneficially as
of , 1995
R. Barry Borden
P.O. Box 677
Bala Cynwyd, PA 19004
(Age __)
President, LMA
Group, Inc.
(general
management
consulting) since
April 1990.
Gregory Church*
301 Oxford Valley Rd.
Yardley, PA 19067
(Age __)
President, Church
Capital
Management, Inc.
and G.A. Church &
Company
(registered
investment
advisors) since
June 1987;
Chairman,
Bainbridge &
Company
(registered
broker-dealer)
since October 1994.
- - - -----------------------
* Mr. Church will be an "interested person" of the Fund, as defined in the 1940
Act, because of his ownership of Asset Management and Bainbridge & Company.
<PAGE>
Kevin M. Covert
76 Euclid Avenue
Haddenfield, NJ 08083
(Age __)
Partner, Kulzer & DiPadova (law
firm) since 19__.
Dominick A. Cruciani, Jr.
______ Wyoming Avenue
Scranton, PA 18503
(Age __)
Physician since
1958. A Director
of the Fund since
June 1991.
Gerald Printz
==================
(Age __)
President,
AMSADOR, Ltd.
(computer security
and disaster
recovery planning
consultant), since
----.
As of ____________, 1995, the current Directors and officers of
the Fund as a group owned approximately ____% of the Fund's outstanding
securities.
The Board of Directors has no separate nominating, compensation
or audit committee. For the year ended June 30, 1995, the Board of Directors
held three meetings, and each of the current Directors attended at least 75% of
such meetings. Attendance fees of $250 per meeting have been authorized for
those Directors who are not "interested persons" (as such term is defined in the
1940 Act) of the investment advisor or the principal underwriter of the Fund.
The following table sets forth the aggregate compensation paid by the Fund to
such Directors for the fiscal year ended June 30, 1995, and the aggregate
compensation paid to them for service on the boards of both the Fund and
Progressive Portfolio Securities:
<TABLE>
Pension or Total Compensation
Retirement from the Fund and
Benefits Accrued Estimated Annual Progressive
Aggregate as Part of Fund Benefits Upon Portfolio
Compensation from Expenses Retirement Securities
the Fund
Name
<S> <C> <C> <C> <C>
Albert Gruber $ 750 None None $ 1,500
Andrew M. Sherman $ 750 None None $ 1,500
Myer M. Alperin $ 750 None None $ 1,500
Dominick A. Cruciani $ 750 None None $ 1,500
</TABLE>
<PAGE>
PROPOSAL 4
APPROVAL OF AMENDMENTS TO
THE FUND'S ARTICLES OF INCORPORATION
Fund shareholders are being asked to approve certain amendments
to the Fund's Articles of Incorporation described below. A copy of the form of
the proposed amendments is set forth as Exhibit C to this Proxy Statement.
Change of Name
The first proposed amendment would change the name of the Fund
to Matterhorn Growth Fund, Inc. The Board of Directors believes that this change
will assist future sales of Fund shares by removing any associations in the
minds of investors related to the 1988 settlement of the complaint of the
Securities and Exchange Commission which related to management of the Fund prior
to its retention of Asset Management.
Authorization of Classes of Shares
The second proposed amendment would authorize the Board in the
future to issue classes of shares of the Fund. The issuance by registered
investment companies of several classes of shares, each with different sales
load arrangements, has become increasingly common in the mutual fund industry.
Although the Fund has no current intention to authorize any additional classes
of shares, the Board of Directors believes that having the flexibility to do so
is advisable in the event that it proves to be in the best interests of the
shareholders in the future. Involuntary Redemption of Shares
Subsection (9) of Article SEVENTH currently provides that the
Board of Directors may cause the Fund to redeem at net asset value the shares
held by any shareholder if the net asset value of such shares does not exceed
$500, if such shareholder has not purchased at least $100 of shares within the
past twelve months. No such involuntary redemption may be made without giving
the shareholder at least 30 days' prior written notice and an opportunity during
the notice period to purchase at least $100 of additional shares.
The third proposed amendment to this provision would permit the Board of
Directors to change the minimum account value from time to time, as
circumstances warrant in the future. The Board currently has no intention of
changing such amount.
Limitation of Directors' Liability
The fourth proposed amendment is intended to limit the personal
lability of the Fund's Directors and officers to the Fund and its stockholders
for money damages to the maximum extent permitted by applicable law.
In recent years, a substantial majority of states has followed
Delaware in enacting statutes authorizing adoption of charter provisions
limiting the personal liability of directors (and, in some states, officers) for
money damages. Many of these states have enacted statutes authorizing
corporations to adopt charter provisions eliminating or limiting, with certain
exceptions, the personal liability of a director to the corporation or its
stockholders for money damages. This development is a response to recent trends
in liability insurance and lawsuits relating to directors and officers, which
trends have been perceived as threats to the quality and stability of corporate
governance.
The Maryland General Corporation Law was amended in 1988 to
authorize a charter provision which eliminates or limits liability of directors
and officers of a Maryland corporation to its stockholders or to the corporation
for monetary damages, except that such a charter provision may not limit
liability (a) for, and to the extent of, actual receipt of an improper benefit
in money, property, or services, or (b) in respect of an adjudication based upon
a finding of active and deliberate dishonesty which was material to the cause of
action adjudicated. The new law does not affect potential liability of directors
and officers to third parties, such as creditors of the Fund. The proposed
amendment, if adopted, will make such legislation fully applicable to the
Directors and officers of the Company immediately upon the effective date of the
amendment.
<PAGE>
Stockholders should recognize that the members of the Board of
Directors have a personal interest in this matter, which interest is potentially
adverse to the interest of the stockholders. However, the Board of Directors
strongly believes that the amendment is in the best interests of the Fund and
its stockholders. While the Fund has not experienced difficulty in attracting or
retaining qualified directors and officers, and while no current Director or
officer has resigned or indicated an intention to resign if the amendment is not
approved by the stockholders, the Board of Directors believes that the amendment
is important in order to enhance the ability of the Company to attract and
retain the best qualified individuals as Directors and officers, to assure that
Directors and officers who do serve will not be discouraged from entrepreneurial
decision-making because of the threat of litigation seeking money damages, and
to improve the ability of the Company to obtain Directors' and officers'
liability insurance at the most reasonable cost.
Under Maryland law, Directors are required to discharge their
duties in good faith, in a manner reasonably believed to be in the best
interests of the corporation and with the care that an ordinarily prudent person
in a like position would use under similar circumstances. Maryland courts,
however, have held that a Director may not be liable for money damages (as
opposed to equitable relief) unless his conduct constitutes gross or culpable
negligence. If the proposed amendment is adopted, a stockholder will be able to
recover money damages against a Director or officer of the Company only if he is
able to prove that (a) the Director or officer actually received an improper
benefit in money, property or services (in which case recovery is limited to the
actual amount of such improper benefit; (b) the action, or failure to act, by
the Director or officer, was the result of active and deliberate dishonesty
which was material to the cause of action adjudicated in the proceeding; or (c)
the Director or officer acted with willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
or her office.
The amendment would not limit the right of the Fund of any
stockholder to sue for an injunction or any other non-monetary relief in the
event of a breach of a Director's or officer's duty of care or other breach of
duty or responsibility, although it is possible that the elimination of money
damages may have the practical effect of discouraging such suits, unless one of
the exceptions of the legislation (i.e., cases of improper personal benefit or
active and deliberate dishonesty material to the claim) is applicable. The
amendment would not apply to any act or omission by a Director or officer
occurring prior to the effective date of February 18, 1988, regardless of when a
claim might be asserted. The amendment also would not apply to claims against
Directors or officers arising out of their responsibilities under the federal
securities laws. The amendment's coverage extends only so far as legally
permitted.
The next to the last sentence of the proposed amendment
provides that a subsequent amendment of the new provision may not eliminate or
reduce the protection it provides to Directors and officers with respect to
claims relating to the period of time during which the new provision existed in
the currently proposed form. The Board of Directors believes it is important to
assure Directors and officers of the Company that the protection of the
amendment will not be retroactively withdrawn. In addition, if Maryland law is
subsequently amended so as to permit further or lesser limitation or elimination
of the monetary liability of Directors and officers, then under the proposed
amendment such liability will be limited or eliminated to the fullest extent so
permitted without further action by the Company's stockholders. In the event
that such amendment would permit further limitation or elimination of liability,
the rights of stockholders to bring causes of action against Directors and
officers for breaches of fiduciary duties could be further limited or
eliminated. The Fund is not aware of any proposed or anticipated changes to
Maryland law to limit or authorize the limitation of the personal liability of
Directors or officers of the Fund other than the law described above.
As of the date of this Proxy Statement, the Directors and
executive officers of the Fund are not aware of any pending or threatened claims
in respect of any acts or omissions by the Directors and executive officers, nor
has there been any recent litigation which would have been affected by the new
law or the proposed amendment had they been in effect at that time.
Required Vote
The affirmative vote of the holders of a majority of the
outstanding shares of record of the Fund is required to approve the proposed
amendments to the Fund's Articles of Incorporation.
<PAGE>
PROPOSAL 5
RATIFICATION OF SELECTION OF AUDITORS
McGladrey & Pullen has served as independent accountants to the
Fund since its inception in 1980. A majority of the Board of Directors of the
Fund, including a majority of Directors who are not "interested persons" of the
Fund, has selected McGladrey & Pullen to serve as independent public accountants
for the Fund for the fiscal year ending June 30, 1996, subject to the right of
the Fund, by vote of a majority of shares at any meeting called for the purpose,
to terminate such employment immediately without penalty. McGladrey & Pullen has
advised the Fund that it has no direct or material indirect ownership interest
in the Fund.
A representative of McGladrey & Pullen is expected to attend
the meeting. The representative will be given an opportunity to make a statement
and will be expected to respond to any appropriate questions from shareholders.
OTHER MATTERS
The Board of Directors does not intend to present for action at
the meeting any business other than the matters described in the Notice of
Special Meeting, and at the date of this Proxy Statement is not aware of any
other matters that properly may be presented for action at the meeting. If any
other business not described herein should properly be brought before the
meeting, or if any procedural matters requiring a vote of shareholders should
arise at the meeting, the persons named as proxies or their substitutes will
vote the shares represented by them in accordance with their best judgment.
NEXT MEETING OF SHAREHOLDERS
The Fund is not required, and does not intend, to hold annual
or other periodic meetings of shareholders except as required by the 1940 Act.
The next meeting of shareholders of the Fund will be held at such time as the
Board of Directors may determine or at such time as may be legally required. A
proposal which a shareholder wishes to have included in the Fund's proxy
materials for such meeting must be received by the Fund at its principal office
within a reasonable time before the release of the Fund's proxy soliciting
materials with respect to such meeting, as determined by the Board of Directors.
Any such proposal must comply with the requirements of applicable law and
regulations governing both the eligibility of the proponent and the form and
substance of the proposal.
<PAGE>
A-1
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, dated ____________, 1996 between THE 44 WALL STREET
EQUITY FUND, INC., a Maryland corporation (the "Fund"), and MDB ASSET MANAGEMENT
CORPORATION, a New York corporation (the "Adviser").
WHEREAS, the Fund is engaged in business as an open-end,
non-diversified investment company and is registered as such under the
Investment Company Act of 1940, as amended;
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Fund desires the Adviser to render investment
advisory services to the Fund in the manner and on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Fund and the Adviser agree as follows:
1. Duties and Responsibilities of Adviser.
a. Investment Advisory Services. The Adviser will act as
investment adviser to the Fund and will supervise and direct the investments of
the Fund in accordance with the Fund's investment objectives, policies and
limitations, as provided in the Fund's prospectus or other governing
instruments, as amended from time to time, the Investment Company Act of 1940,
as amended (the "Act"), and the Rules and Regulations of the Securities and
Exchange Commission thereunder, as amended from time to time, and such other
limitations as the Fund may impose by notice in writing to the Adviser. The
Adviser shall obtain and evaluate such information relating to the economy,
industries, businesses, securities and securities markets as it may deem
necessary or useful in the discharge of its obligations hereunder and shall
formulate and implement a continuing program for the management of the assets
and resources of the Fund in a manner consistent with its investment objectives.
In furtherance of this duty, the Adviser is authorized, in its discretion and
without prior consultation with the Fund, to (i) buy, sell, exchange, convert,
lend and otherwise trade in any stocks, bonds and other securities and
investment assets; and (ii) place orders and negotiate the commissions (if any)
for the execution of transactions in securities with or through such brokers,
dealers, underwriters or issuers as the Adviser may select. The investment
policies and all other actions of the Fund are and shall at all times be subject
to the control and direction of the Fund's Board of Directors.
b. Management Services. Subject to the control and direction of
the Board of Directors of the Fund, the Adviser shall provide the Fund with
supervisory management services. The Adviser shall monitor the financial,
accounting and administrative functions of the Fund, maintain liaison with
custodians, depositories, transfer and pricing agents, dealers, insurers and
other agents of or providers of services to the Fund and assist in the
coordination of their activities on behalf of the Fund.
c. Reports to the Fund. The Adviser shall furnish to the Fund
such information, reports, evaluations, analyses and opinions as the Fund may,
at any time or from time to time, reasonably request or as the Adviser may deem
to be desirable.
2. Allocation of Expenses. The Adviser shall pay all compensation, fees
and expenses of the officers and directors of the Fund who are interested
persons of the Adviser. The Fund shall bear and pay all costs and expenses of
its operations and business, other than those expressly stated to be payable by
the Adviser hereunder, including but not limited to (i) brokerage commissions
and other costs incident to the purchase or sale of securities, (ii) interest
and taxes, (iii) legal and accounting fees and expenses, (iv) fees of
custodians, transfer agents, registrars and dividend disbursing agents, (v)
costs of printing, issuing and registering transfer of stock certificates, (vi)
costs in connection with annual or special meetings of shareholders, including
the preparation, printing and distribution of proxy soliciting materials, (vii)
insurance premiums, (viii) the cost of preparing and printing prospectuses,
statements of additional information and supplements thereto, (ix) postage, (x)
compensation of all non-officer employees and compensation, fees and expenses of
officers and directors who are not interested persons of the Adviser, (xi)
office space, officer furnishings, office supplies and office equipment,
including telecommunications equipment and service, (xii) association fees and
dues, (xiii) publications, (xiv) fees and expenses relating to the registration
or qualification of Fund shares under Federal and state securities laws and (xv)
expenses of an extraordinary and non-recurring nature, including the costs of
actions, suits or proceedings to which the Fund is a party and the expenses
which the Fund may incur as a result of its legal obligations to provide
indemnification to its officers, directors and agents.
<PAGE>
The Adviser hereby agrees to reimburse the Fund if and to the
extent (limited to the amount of the advisory fee during the year) that Fund
expenses exceed the limitation specified in any statute or regulation of the
most restrictive state in which Fund shares are and continue to be registered or
qualified at such time, provided and to the extent that any other entity, such
as any principal underwriter for Fund shares, does not so reimburse the Fund. In
addition, if in the twelve month period commencing on the date of execution
hereof, or in the twelve month period commencing on the first anniversary of the
date of execution hereof, the aggregate operating expenses of the Fund (as
hereafter defined) exceed 4.0% of the average daily net assets of the Fund for
such period, the Adviser shall reimburse the Fund for such excess operating
expenses. Such operating expense reimbursement, if any, shall be paid on a
monthly basis. As used herein, the term "operating expenses" of the Fund for a
fiscal period shall mean all expenses of the Fund for such period, including
expenses pursuant to any plan of distribution adopted in accordance with Rule
12b-1 under the Act, but excluding interest, taxes, brokerage commissions and
other portfolio transaction expenses, capital expenditures and expenses of an
extraordinary and non-recurring nature.
3. Advisory Fee. For the services to be rendered and the expenses
assumed and to be paid by the Adviser as provided herein, the Fund will pay to
the Adviser compensation at the annual rate of one percent of the value of the
Fund's net assets, computed in the manner set forth below and payable on the
last business day of the month in which such portion of the management fee is
earned. Such compensation will be calculated on the basis of the average of the
valuations of the net assets of the Fund made as of the close of business on the
last business day of each month during the period for which such compensation is
paid.
4. Brokerage. Subject to the approval of the Board of Directors of the
Fund, the Adviser, in carrying out its duties under Paragraph 1.A, may cause the
Fund to pay a broker-dealer (including a broker-dealer which is an affiliated
person of the Fund or Adviser) which furnishes brokerage or research services
(as such services are defined under Section 28(e) of the Securities and Exchange
Act of 1934, as amended (the "Exchange Act")) a higher commission than that
which might be charged by a broker-dealer which does not furnish brokerage or
research services or which furnishes brokerage or research services deemed to be
of lesser value, if such commission is deemed reasonable in relation to the
brokerage and research services provided by the broker-dealer, viewed in terms
of either that particular transaction or the overall responsibilities of the
Adviser with respect to the accounts as to which it exercises investment
discretion (as such term is defined under Section 3(a)(35) of the Exchange Act).
5. Adviser's Use of the Services of Others. The Adviser may (at its cost
except as contemplated by Paragraph 4) employ, retain or otherwise avail itself
of the services or facilities of other persons or organizations for the purpose
of providing the Adviser or the Fund with such statistical or other factual
information, advice or assistance as the Adviser may deem necessary, appropriate
or convenient for the discharge of its obligations hereunder or otherwise
helpful to the Fund.
6. Securities Transactions. In connection with purchases or sales of
portfolio securities for the account of the Fund, neither the Adviser nor any
affiliated person will act as a principal.
7. Services to Other Clients. The services of the Adviser to the Fund
hereunder are not to be deemed exclusive, and the Adviser will be free to render
similar services to others so long as its services hereunder are not impaired
thereby.
8. Limitation on Share Transactions. Neither the Adviser nor any of its
officers or employees will take any long or short position in the capital stock
of the Fund; but this prohibition shall not prevent the purchase by or for the
Adviser or any of its officers or employees of shares of the capital stock of
the Fund at the price at which such shares are offered to the public at the
moment of purchase; provided, that (i) such purchase is to be made for
investment purposes only, and (ii) if any shares of stock so purchased are
resold or redeemed within two months after the date of purchase, such fact will
be immediately reported to the Fund.
<PAGE>
9. Adverse Interests. Subject to and in accordance with the Articles of
Incorporation and By-Laws of the Fund and the Certificate of Incorporation and
By-Laws of the Adviser, it is understood that directors, officers, agents, and
shareholders of the Fund are or may be interested in the Adviser (or any
successor thereof) as directors, officers or stockholders, or otherwise, that
directors, officers, agents and stockholders of the Adviser are or may be
interested in the Fund as stockholder or otherwise, and that the effect of any
such adverse interests shall be governed by such charter documents and by-laws.
10. Limitation on Liability. Neither the Adviser nor any of its officers,
directors or employees, nor any person performing executive, administrative,
trading or other functions for the Fund (at the direction or request of the
Adviser) or the Adviser in connection with the Adviser's discharge of its
obligations undertaken or reasonably assumed with respect to this agreement,
shall 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 for loss resulting from willful misfeasance, bad faith, or gross
negligence in the performance of its or his duties on behalf of the Fund or from
reckless disregard by the Adviser or such person of the duties of the Adviser
under this Agreement.
11. Term of Agreement. This agreement shall become effective and its term
shall commence as of the date hereof. Unless sooner terminated as provided in
Paragraphs 12 and 13 below, this agreement shall continue in force until the
date of the next annual meeting of shareholders of the Fund or until the second
anniversary of the execution hereof, whichever is sooner, and from year to year
thereafter, but only so long as such continuance is specifically approved at
least annually by a majority of the Board of Directors who are not parties to
this agreement or interested persons of the Fund or the Adviser or by vote of a
majority of the outstanding voting securities of the Fund and a majority of
those directors who are not parties to this agreement or interested persons of
the Fund or the Adviser.
12. Termination. This agreement may be terminated at any time by the Fund
upon 60 days' written notice to the Adviser, without payment of penalty, by vote
of the Board of Directors of the Fund or by vote of a majority of the
outstanding securities of the Fund. This agreement may also be terminated at any
time by the Adviser upon 60 days' written notice to the Fund.
13. Amendment or Assignment. This agreement may not be amended,
transferred, assigned, sold or in any manner hypothecated or pledged without the
affirmative vote of the holders of a majority of the outstanding voting
securities of the Fund; and this agreement shall automatically and immediately
terminate in the event of its assignment.
14. Interpretation. Nothing herein contained will be deemed to require the
Fund to take any action contrary to its Articles of Incorporation or By-Laws or
any applicable statute or regulation or to relieve or deprive the Board of
Directors of the Fund of its responsibility for and control of the conduct of
the affairs of the Fund.
15. Definitions. Any questions 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 interpretations thereof, if any, by the United States courts or,
in the absence of any controlling decision of any such court, by rules,
regulations or orders of the Securities and Exchange Commission validly issued
pursuant to the Act. Specifically, the terms "vote of a majority of the
outstanding voting securities," "interested person," "assignment," and
"affiliated person," as used in Paragraphs 2, 4, 6, 11, 12 and 13 hereof, shall
have the meanings assigned to them by Section 2(a) of the Act. In addition,
where the effect of a requirement of the Act reflected in any provision of this
agreement is relaxed by a rule, regulation or order of the Securities and
Exchange Commission, whether of special or of general application, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order.
IN WITNESS WHEREOF, each of the parties hereto has caused this
instrument to be executed on its behalf on the day and year first above written.
<PAGE>
THE 44 WALL STREET EQUITY FUND, INC.
By
(President)
MDB ASSET MANAGEMENT CORPORATION
By
(President)
<PAGE>
B-1
EXHIBIT B
THE 44 WALL STREET EQUITY FUND, INC.
DISTRIBUTION PLAN
INTRODUCTION
The Board of Directors (the "Board") of The 44 Wall Street
Equity Fund, Inc. (the "Fund") has approved the adoption of the Distribution
Plan (the "Plan") set forth below with respect to the distribution of capital
shares of the Fund (the "Shares"). This Plan is designed to conform to the
requirements of Rule 12b-1 promulgated under the Investment Company Act of 1940,
as amended (the "Act").
The Fund on behalf of each Portfolio has entered into a
distribution agreement (the "Distribution Agreement") pursuant to which the Fund
will employ a Distributor to distribute Shares of the Fund. Under the
Distribution Agreement, the Distributor is not entitled to receive payments from
investors of sales charges with respect to the sale of Shares of the Fund. Under
this Plan, the Fund intends to compensate the Distributor for expenses incurred,
and services and facilities provided, by the Distributor in distributing Shares
of the Fund.
THE PLAN
The material aspects of the Plan are as follows:
Section 1. The Funds will pay the Distributor for: (a) expenses
incurred in connection with advertising and marketing shares of the Fund,
including but not limited to any advertising or marketing via radio, television,
newspapers, magazines, telemarketing or direct mail solicitations; (b) periodic
payments of fees for distribution assistance made to one or more securities
dealers, or other industry professionals, such as investment advisers,
accountants, estate planning firms and the Distributor itself (collectively
"Service Organizations") in respect of the average daily value of the Fund's
Shares beneficially owned by persons ("Clients") for whom the Service
Organization is the dealer of record or holder of record or with whom the
Service Organization has a servicing relationship, and (c) expenses incurred in
preparing, printing and distributing the Fund's prospectuses and statements of
additional information (except those used for regulatory purposes or for
distribution to existing shareholders of the Fund).
Section 2. While this Plan is in effect the Distributor will be
compensated by the Fund for such distribution expenses that are incurred, and
services and facilities that are provided, in connection with Shares of the Fund
on a monthly basis, at the annual rate of 0.25% of the Fund's average daily net
assets during such month. These monthly payments to the Distributor will be made
in accordance with and subject to the conditions set forth below. For the
purposes of determining the amounts payable under the Plan, the value of the
Fund's net assets shall be computed in the manner specified in the Fund's
prospectus and statement of additional information as then in effect for the
computation of the value of the Fund's net assets.
The distribution fees payable to the Distributor are designed
to compensate the Distributor for the expenses it incurs and the services it
renders in distributing shares of the Fund. However, because this Plan is a
compensation plan, the distribution fees are payable even if the amount paid
exceeds the Distributor's actual expenses. If in any year the Distributor's
expenses incurred in connection with the distribution of Shares of the Fund
exceed the distribution fees paid by the Fund, the Distributor will recover such
excess only if this Plan continues to be in effect with respect to the Fund in
some later year when the distribution fees exceed the Distributor's expenses.
There is no limit on the periods during which unreimbursed expenses may be
carried forward, although the Fund is not obligated to repay any unreimbursed
expenses that may exist at such time, if any, as this Plan terminates or is not
continued with respect to the Fund. No interest, carrying or finance charge will
be imposed on any amounts carried forward.
<PAGE>
Section 3. Payments by the Distributor to a Service
Organization described in this Plan shall be subject to compliance by the
Service Organization with the terms of a selling group agreement between the
Service Organization and the Distributor. If an investor in the Fund ceases to
be a client of a Service Organization that has entered into a selling group
agreement with the Distributor, but continues to hold shares of the Fund, the
Distributor will be entitled to receive similar payments in respect of the
distribution assistance provided with respect to such investor.
Section 4. The Distributor shall provide the Board, at least
quarterly, with a written report of all amounts expended pursuant to this Plan.
The report shall state the purposes for which the amounts were expanded.
Section 5. This Plan shall not take effect with respect to the
Fund until it has been approved by a vote of a majority of the outstanding
voting securities (as defined in the Act) of the Shares of the Fund. If so
approved, this Plan, unless earlier terminated in accordance with its terms,
shall continue in full force and effect thereafter shall continue automatically
for successive annual periods provided such continuance is approved by a
majority of the Board, including a majority of the Directors who are not
"interested persons" (as defined in the Act) of the Fund and who have no direct
or indirect financial interest in the operation of this Plan or in any
agreements entered into in connection with this Plan (the "Disinterested
Directors"), pursuant to a vote cast in person at a meeting called for the
purpose of voting on the continuance of the Plan.
Section 6. This Plan may be amended at any time by the Board
provided that (i) any amendment to increase materially the costs which the Fund
may bear for distribution pursuant to this Plan shall be effective only upon
approval by a vote of a majority of the outstanding voting securities of the
Fund, and (ii) any material amendments of the terms of this Plan shall become
effective only upon approval by a majority of the Board and a majority of the
Disinterested Directors pursuant to a vote cast in person at a meeting called
for the purpose of voting on the Plan.
Section 7. This Plan is terminable, as to the Fund, without
penalty at any time by (i) vote of the majority of the Disinterested Directors,
or (ii) vote of a majority of the outstanding voting securities of the Fund.
Section 8. The Board has adopted this Plan as of November 29,
1995.
<PAGE>
C-1
EXHIBIT C
ARTICLES OF AMENDMENT
THE 44 WALL STREET EQUITY FUND, INC.
THE 44 WALL STREET EQUITY FUND, INC., a Maryland corporation, having
its principal office in the city of Baltimore (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland (the "Department"), that:
FIRST: The below amendment to the Charter of the Corporation was found
advisable and was approved by a majority of the entire Board of Directors in
accordance with the Maryland General Corporation Law, and approved by the
Stockholders of the Corporation.
SECOND: The Charter of the Corporation is hereby amended
(a) by striking in its entirety Article SECOND, and by substituting in lieu
thereof the following:
SECOND: The name of the Corporation is MATTERHORN EQUITY FUND, INC.
(hereinafter called the "Corporation").
(b) by adding as a new Article SEVENTH, subsection (5), the following:
(5) The Board of Directors of the Corporation shall have
the power to authorize the issuance from time to time of
shares of its stock of any class, whether now or hereafter
authorized, or securities convertible into shares of its
stock of any class or classes, whether now or hereafter
authorized, for such consideration as may be deemed
advisable by the Board of Directors and without any action
by the stockholders.
<PAGE>
C-1
(c) by striking in its entirety Article SEVENTH subsection (9), and by
substituting in lieu the following:
(9) The Board of Directors may cause the Corporation to redeem at net asset
value the shares of any series from a holder if such holder has had, for a
period to be determined from time to time by the Board of Directors, shares of
that series having an aggregate net asset value of a certain amount or less
determined from time to time by the Board of Directors in his or her account,
provided that at least sixty (60) days prior written notice of the proposed
redemption has been given to such holder by postage paid mail to his or her last
known address. Upon redemption of shares pursuant to this subsection, the
Corporation shall promptly cause payment of the full redemption price to be made
to the holder of shares so redeemed.
(d) by renumbering the former Article SEVENTH subsections (5), (6),
(7), (8), (9) and (10) as (6) (7), (8), (9), (10) and (11), respectively;
(e) by adding as a new Article EIGHTH the following:
EIGHTH: To the fullest extent permitted by Maryland
statutory or decisional law, as amended or interpreted, no
director or officer of the Corporation shall be personally
liable to the Corporation or its stockholders for money
damages. No amendment of the Charter of the Corporation or
repeal of any of its provisions shall limit or eliminate
the benefits provided to directors or officers under this
provision with respect to any act or omission which
occurred prior to such amendment or repeal. This Article
EIGHTH shall not protect any director or officer of the
Corporation against any liability to the Corporation or to
its security holders to which he or she would be otherwise
subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved
in the conduct of his or her office.
and (f) by renumbering the former Articles EIGHTH and NINTH as Articles
NINTH and TENTH, respectively.
IN WITNESS WHEREOF, THE 44 WALL STREET EQUITY FUND, INC., a Maryland
corporation, has caused these presents to
<PAGE>
be signed in its name and on its behalf by its President and witnessed by
its Secretary on ______________, 1996.
ATTEST:
By:
Name:____________________
Title: Secretary
THE 44 WALL STREET EQUITY FUND, INC.
By:
Name:____________________
Title: President
