IMPORTANT NOTICE TO SHAREHOLDERS
PLEASE RETURN YOUR PROXY PROMPTLY
SMITH BARNEY SHEARSON FUNDAMENTAL VALUE FUND INC.
Dear Shareholder:
We are both excited by the opportunity which has prompted this proxy
statement and unhappy that we are compelled to send you another proxy
statement in so short a period.
The Fund has the opportunity to achieve a reduction of its expense ratio
through a merger with another Smith Barney Shearson mutual fund, The
Advisors Fund. The Board of The Advisors Fund has determined to cease
operations and together with the Board of the Fund has approved an
agreement and plan of reorganization. Under the agreement the Fund would
receive the assets of The Advisors Fund and issue shares to The Advisors
Fund shareholders. It is projected that, as a result of the inflow of
assets, the cost per share for operating the Fund would decrease as its
fixed expenses are spread out over a larger base of assets. Accordingly,
in light of the expected benefits to you as a shareholder, in order to
permit this transaction, you are being asked to increase the number of
Class A shares. THE BOARD RECOMMENDS THAT YOU VOTE IN FAVOR OF THIS
PROPOSAL.
The Board is also again recommending that you approve the reincorporation
of the Fund. You should be aware that this change will not affect the
regional nature of the Fund. It is expected that all shareholder meetings
will continue to be held in Washington as well as most meetings of the
Board of Directors. Your Board is predominantly comprised of directors who
are residents of the State of Washington. The approval of this proposal
will result in greater management flexibility and will save the Fund, and
you as a shareholder, the expense of proxy solicitations such as this one.
As a Washington corporation the Fund is required to perform various actions
which are unnecessary for corporations of other states. One concrete
example of these Washington requirements is this proxy statement. As
explained under proposals one and two, shareholders are being asked to
consider technical changes in the Fund's articles of incorporation, like
the authorization of shares, which can only be approved by shareholders but
is not required for corporations of other states. Had the proposal to
reincorporate been approved at the shareholders meeting held earlier this
year, this proxy and the expenses associated with it (estimated to be
approximately [$100,000] would not be necessary. Accordingly, you are
being asked to again consider the reincorporation of the Fund. THIS WILL
SAVE YOU, AS A SHAREHOLDER, UNNECESSARY EXPENSE. THE BOARD OF DIRECTORS
URGES YOUR APPROVAL OF THIS PROPOSAL.
Detailed information regarding these proposals is included in the enclosed
proxy statement and, on behalf of the Board of Directors, I urge you to
promptly exercise your right to vote on these issues.
Thank you for your time and participation as a shareholder. If you have
any questions regarding the proposals described in the enclosed proxy
statement, please contact your Financial Consultant.
Very truly yours,
Heath B. McLendon
Chairman of the Board
on behalf of the Board of Directors
Lloyd J. Andrews
Mead, WA
Robert M. Frayn,
Jr.
Bellevue, WA
Leon Gardner
Seattle, WA
Howard J. Johnson
New York, NY
David E. Maryatt
Seattle, WA
Fred O.
Paulsell
Seattle, WA
Jerry A. Viscione
Seattle, WA
Julie Weston
Seattle, WA
PLEASE SIGN AND RETURN YOUR PROXY CARD IN THE ENCLOSED SELF-ADDRESSED
ENVELOPE REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
SMITH BARNEY SHEARSON
FUNDAMENTAL VALUE FUND INC.
- ----------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 29, 1994
To the Shareholders:
Notice is hereby given that the Special Meeting
of Shareholders (the "Meeting") of Smith Barney
Shearson Fundamental Value Fund Inc. (the "Fund"), a
Washington corporation, will be held at 999 Third
Avenue, 40th Floor, Seattle, Washington, on November
29, 1994 at 11:00 a.m. (Pacific Time).
The Meeting is being held for the purposes
listed below:
1. to consider an increase in the number of
authorized Class A common shares which may be issued
by the Fund (Proposal 1);
2. to consider the reclassification of Class D
common shares as Class C common shares of the Fund
(Proposal 2);
3. to approve an amendment to the Fund's Articles
of Incorporation to increase the number of, and
reclassify certain, authorized common shares of the
Fund (Proposal 3);
4. to consider and act upon the reincorporation of
the Fund in the State of Maryland (Proposal 4); and
5. to transact such other business as may
properly come before the Meeting or any
adjournment thereof.
The Board of Directors of the Fund has fixed the
close of business on September 30, 1994 as the record
date for the determination of shareholders entitled to
notice of and to vote at the meeting.
By Order of the
Directors,
Christina T. Sydor
Secretary
October 10, 1994
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE
MEETING ARE REQUESTED TO COMPLETE, SIGN, DATE AND
RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE, WHICH
NEEDS NO POSTAGE IF MAILED IN THE CONTINENTAL UNITED
STATES. INSTRUCTIONS FOR THE PROPER EXECUTION OF
PROXY CARDS ARE SET FORTH ON THE FOLLOWING PAGE.
IT IS IMPORTANT THAT PROXIES BE RETURNED
PROMPTLY.
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy
cards may be of assistance to you and avoid the time
and expense to the Fund involved in validating your
vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly
as it appears in the registration on the proxy card.
2. Joint Accounts: Either party may sign, but
the name of the party signing should conform exactly
to the name shown in the registration on the proxy
card.
3. All Other Accounts: The capacity of the
individual signing the proxy card should be indicated
unless it is reflected in the form of registration.
For example:
Registration
Corporate Accounts
Valid Signature
(1) ABC Corp.
ABC Corp.
(2) ABC Corp.
John Doe,
Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer
John Doe
(4) ABC Corp. Profit Sharing
Plan
John Doe, Trustee
Trust Accounts
(1) ABC Trust
Jane B. Doe,
Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78
Jane B. Doe
Custodian or Estate Accounts
(1) John B. Smith, Cust.
f/b/o John B. Smith,
Jr. UGMA
John B. Smith,
Jr.
(2) Estate of John B. Smith
John B. Smith,
Jr., Executor
SMITH BARNEY SHEARSON
FUNDAMENTAL VALUE FUND INC.
_________________________
SPECIAL MEETING OF SHAREHOLDERS
NOVEMBER 29, 1994
__________________________
PROXY STATEMENT
INTRODUCTION
This proxy statement is being furnished to the
shareholders of Smith Barney Shearson Fundamental
Value Fund Inc. (the "Fund") for use at the Special
Meeting of Shareholders of the Fund to be held on
November 29, 1994 at 11:00 a.m. (Pacific time), or at
any adjournments thereof (the "Meeting"). The Meeting
will be held at 999 Third Avenue, 40th Floor, Seattle,
Washington. Proxy solicitations will be made
primarily by mail, but proxy solicitations also may be
made by telephone, telegraph or personal interviews
conducted by officers and employees of the Fund; Smith
Barney Inc. ("Smith Barney"), distributor of shares of
the Fund; Smith Barney Asset Management ("SBAM"), a
division of Smith, Barney Advisers, Inc. ("SBA"), the
investment adviser to and administrator for the Fund;
The Boston Company Advisors, Inc. ("Boston Advisors"),
sub-administrator for the Fund; and/or The Shareholder
Services Group, Inc. ("TSSG"), a subsidiary of First
Data Corporation, the transfer agent for the Fund. In
addition, the Fund has retained [Proxy Advantage] to
assist in the solicitation of proxies for a total
proxy solicitation cost estimated at [$97,000] plus
reimbursement of expenses. The cost of the proxy
solicitation and the expenses incurred in connection
with the preparation of this proxy statement and its
enclosures, including the reimbursement of brokerage
firms and others for their expenses in forwarding
solicitation material to the beneficial owners of the
Fund's shares, will be borne by the Fund.
The Fund currently issues three classes of
shares. Proposal 1 and Proposal 2 will be considered
by holders of Class A and Class D shares of the Fund,
respectively, while Proposal 3 and 4 will be
considered by all shares of the Fund voted as a single
class. Each share is entitled to one vote and any
fractional share is entitled to a fractional vote. If
the enclosed proxy is properly executed and returned
in time to be voted at the Meeting, the shares
represented thereby will be voted in accordance with
the instructions marked thereon. Unless instructions
to the contrary are marked thereon, a proxy will be
voted FOR the matters listed on the Notice of Special
Meeting of Shareholders and FOR any other matters
deemed appropriate. For purposes of determining the
presence of a quorum for transacting business at the
Meeting, abstentions and broker "non-votes" (i.e.,
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 brokers or nominees do not have discretionary
power) will be treated as shares that are present but
which have not been voted. For this reason,
abstention and broker non-votes will have the effect
of a "no" vote for the purposes of obtaining the
requisite approval of each Proposal. Any shareholder
who has given a proxy has the right to revoke it at
any time prior to its exercise either by attending the
Meeting and voting his or her shares in person or by
submitting a letter of revocation or a later-dated
proxy to the Fund at the above address prior to the
date of the Meeting.
In the event that a quorum is not present at the
Meeting, or in the event that a quorum is present but
sufficient votes to approve any of the proposals are
not received, the persons named as proxies may propose
one or more adjournments of the Meeting to permit
further solicitation of proxies. In determining
whether to adjourn the Meeting, the following factors
may be considered: the nature of the proposals that
are the subject of the Meeting; the percentage of
votes actually cast; the percentage of negative votes
actually cast; the nature of any further solicitation
and the information to be provided to shareholders
with respect to the reasons for solicitation. Any
adjournment will require the affirmative vote of a
majority of those shares represented at the Meeting in
person or by proxy. A shareholder vote may be taken
on any one of the proposals in this proxy statement
prior to any adjournment if sufficient votes have been
received for approval of such proposal. Under the By-
laws of the Fund, a quorum is constituted by the
presence in person or by proxy of the holders of a
majority of the outstanding shares of the Fund
entitled to vote at the Meeting.
The Board of Directors of the Fund (the "Board")
has fixed the close of business on September 30, 1994
as the record date (the "Record Date") for the
determination of shareholders of the Fund entitled to
notice of and to vote at the Meeting. At the close of
business on the Record Date, there were issued and
outstanding [ ] shares of Class A common
stock, [ ] shares of Class B common
stock, and [ ] shares of Class D
common stock.
As of the Record Date, to the knowledge of the
Fund and its Board, no single shareholder or "group"
(as that term is used in Section 13(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"))
beneficially owned more than 5% of the outstanding
shares of the Fund. As of the Record Date, the
officers and Board members of the Fund as a group
beneficially owned less than 1% of the shares of the
Fund.
Proxy cards will be sent to each shareholder who
is a record owner of Fund shares. It is essential
that shareholders complete, date and sign the enclosed
proxy card. In order that a shareholder's shares may
be represented at the Meeting, shareholders are
required to allow sufficient time for their proxy to
be received on or before 11:00 a.m. (Pacific time) on
November 29, 1994.
Proposal 1 requires for approval the affirmative
vote of a majority of the Fund's Class A shares then
outstanding and entitled to vote on the Proposal.
Proposal 2 requires for approval the affirmative vote
of a majority of the Fund's Class D shares then
outstanding and entitled to vote on the Proposal.
Proposal 3 requires for approval the affirmative vote
of a majority of the Fund's shares then outstanding
and entitled to vote on the Proposal. Proposal 4
requires for approval the affirmative vote of two-
thirds of all the Fund's shares then outstanding and
entitled to vote on the Proposal.
This proxy statement and accompanying proxy card
is first being mailed on or about October 10, 1994.
PROPOSAL 1: APPROVAL OF AN INCREASE IN THE NUMBER OF
AUTHORIZED CLASS A SHARES OF THE FUND
The Fund has entered into an Agreement and Plan
of Sale and Liquidation (the "Plan") with The Advisors
Fund L.P. ("Advisors Fund") which provides for the
transfer of all or substantially all of the assets of
Advisors Fund in exchange for shares of the Fund and
the assumption by the Fund of certain identified
liabilities of Advisors Fund. The Plan also calls for
the distribution of shares of the Fund to Advisors
Fund shareholders in liquidation of Advisors Fund. As
a result of the proposed reorganization, each
shareholder of Advisors Fund will become the owner of
the number of full and fractional shares of the Fund
having an aggregate net asset value equal to the
aggregate net asset value of the shareholder's shares
of Advisors Fund as of the close of business on the
date that Advisors Fund's assets are exchanged for
shares of the Fund. (Shareholders of Class A and
Class B shares of Advisors Fund will receive Class A
and Class B shares, respectively, of the Fund).
The number of shares of each Class of the Fund
to be issued to holders of the corresponding Class of
shares of Advisors Fund will be calculated by dividing
the net asset value of a shareholder's Advisors Fund
shares by the net asset value of one share of the
corresponding Class of the Fund. Based upon the
current net asset values of Advisors Fund and the
Fund, the Fund will be required to issue approximately
[ ] million additional Class A shares of the Fund.
As a result, the Fund would have issued in the
aggregate, approximately [ ] million Class A shares.
However, the Fund's current Articles of Incorporation
provide that the Fund is authorized to issue only [ ]
million Class A shares.
Accordingly, Class A shareholders of the Fund
are asked to consider and authorize an additional
[ ] Class A shares of the Fund. If this
Proposal, Proposal 2, and Proposal 3 are approved by
the shareholders of the Fund, the Fund will have
[ ] authorized common shares distributed as
follows:
AUTHORIZED CAPITAL*
CURRENT
CLASS A
CURRENT
CLASS B
CURRENT
CLASS D
PROPOSED
CLASS A
PROPOSED
CLASS B
PROPOSED
CLASS C
________________
* The Fund's authorized capital includes
25,000,000 shares of Class C common stock. The Fund
does not currently sell shares of Class C common
stock. The current Class C shares will be
redesignated without shareholder action as Class Y and
Class Z shares prior to the Meeting.
Required Vote
Adoption of Proposal One requires the
affirmative vote of a majority of the Fund's Class A
shares then outstanding and entitled to vote on the
Proposal.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE
INDEPENDENT BOARD MEMBERS, RECOMMEND THAT THE CLASS A
SHAREHOLDERS VOTE FOR THE PROPOSED AUTHORIZATION OF
ADDITIONAL CLASS A SHARES.
PROPOSAL 2: APPROVAL OF THE RECLASSIFICATION OF CLASS
D SHARES AS CLASS C SHARES OF THE FUND
The Fund, and each of the Smith Barney Shearson
funds, is part of the Smith Barney family of mutual
funds. In order to facilitate transfers of
investments among the Smith Barney family of funds,
each fund in that family has taken steps necessary to
implement a consolidated pricing structure for all
Smith Barney mutual funds. Under the consolidated
pricing structure, each Smith Barney mutual fund would
consist of the following classes: Class A shares,
which will be subject to a front-end load and a
service fee; Class B shares, which will be subject to
a distribution fee, a service fee and a five-year
contingent deferred sales load ("CDSC"); Class C
shares, which will be subject to a distribution fee, a
service fee and a one-year CDSC; Class Y shares, which
have no sales charge, distribution fee or service fee
for investors of $5 million or more; and Class Z
shares, which also has no sales charge, distribution
fee or service fee for qualifying employee benefit
plans. In addition, to better identify the funds as
members of the Smith Barney family of funds, each fund
that currently has the word "Shearson" in its name,
including the Fund, will drop the word "Shearson" from
its name, effective October 14, 1994.
The Board has determined that it is desirable
for the Fund to adopt this consolidated pricing
structure and the change of the Fund's name.
Currently, the Fund's Class A and Class B shares
correspond to the Class A and Class B shares of the
new consolidated structure. However, the Fund's
shares that correspond to the consolidated structure
Class C shares are designated in the Fund's Articles
of Incorporation as Class D shares, and the Fund does
not have any shares that correspond to the
consolidated structure Class Y and Class Z shares.
Under Washington law, reclassification of a
class of stock of which no shares have been issued can
be accomplished by the Board of Directors without
shareholder action. To implement the new consolidated
pricing structure, the Board of Directors of the Fund
has authorized reclassification of certain of the
Fund's authorized but unissued shares as Class Y
shares and Class Z shares. Further, the Board,
without shareholder action, approved dropping the word
"Shearson" from the Fund's name effective October 14,
1994. However, because Washington law requires
shareholder approval to reclassify a class of stock of
which shares have been issued, the Board cannot
reclassify Class D shares as Class C shares without
shareholder approval.
Accordingly, to fully implement the consolidated
pricing structure, Class D shareholders are asked to
reclassify the existing Class D shares of the Fund as
new Class C shares of the Fund. Such reclassification
will have no impact on the preferences, limitations or
relative rights of current Class D shareholders.
Required Vote
Adoption of Proposal Two requires the
affirmative vote of a majority of the Fund's Class D
shares then outstanding and entitled to vote on the
Proposal.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE
INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT THE CLASS D
SHAREHOLDERS VOTE FOR THE PROPOSED RECLASSIFICATION OF
CLASS D SHARES AS CLASS C SHARES.
PROPOSAL 3: THE APPROVAL OF AMENDMENTS TO THE FUND'S
ARTICLES OF INCORPORATION
As discussed in Proposal 1 above, completion of
the transaction contemplated by the Plan necessitates
the authorization of additional Class A shares of the
Fund. Similarly, as discussed in Proposal 2 above,
the Smith Barney consolidated pricing structure
requires the reclassification of Class D shares as
Class C shares. Under Washington state law an
increase in the Fund's authorized common stock or any
reclassification of outstanding shares requires an
amendment to the Fund's Articles of Incorporation.
Accordingly, you are being asked to consider and
approve certain amendments to the Fund's Articles of
Incorporation (the "Amendment") to effect Proposals 1
and 2 above.
The proposed text of the Amendment, assuming
both Proposals 1 and 2 are approved, is included as
Exhibit A to this Proxy Statement. If Proposal 3 is
approved by the shareholders, the Articles of
Incorporation will be amended to reflect the increase
in the number of authorized Class A shares and/or the
reclassification of Class D shares as Class C shares,
contingent upon the Fund receiving sufficient votes to
approve Proposals 1 and/or 2. The Amendment will be
filed with the Secretary of State's office in the
state of Washington prior to the completion of the
proposed transaction with Advisors Fund and the
issuance of any Class A shares in connection
therewith.
Required Vote
Adoption of Proposal Three requires the
affirmative vote of a majority of the Fund's shares
then outstanding and entitled to vote on the Proposal.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE
INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR THE PROPOSED AMENDMENTS TO THE
FUND'S ARTICLES OF INCORPORATION.
PROPOSAL 4: TO CONSIDER AND ACT UPON THE
REINCORPORATION OF THE FUND IN THE STATE OF MARYLAND
The Board, at a meeting held on March 15, 1994
and pursuant to written consent dated as of May 13,
1994, approved an Agreement and Plan of Reorganization
(the "Plan") pursuant to which all of the assets,
liabilities and obligations of the Fund will be
assumed and carried on by a newly formed Maryland
corporation ("Maryland Corp."). At the Annual Meeting
of Shareholders on June 28, 1994, of the shares
authorized to vote, [ %] voted to approve the Plan, [
]% voted against it, and [ ]% abstained. The Plan
did not, however, receive the favorable vote of two-
thirds of the shares entitled to vote that was
required. Because the proposed transaction under the
Plan (the "Reorganization") is expected to achieve
cost savings and administrative conveniences for the
Fund, the Board is again seeking shareholder approval
of the Reorganization. The investment objectives,
policies and restrictions of the Maryland Corp., as
well as the Board of Directors and the investment
adviser, will be identical to those of the Fund. As a
result, the Fund will continue to have a Pacific
Northwest orientation to its operations, and will
continue to hold most Board Meetings and shareholder
meetings in Washington. The Reorganization will
become effective on or about December 3, 1994, if
approved by shareholders of the Fund. A copy of the
Plan is attached as Exhibit B to this proxy statement.
Reasons for the Reorganization
The Fund is currently organized as a Washington
corporation and is subject to regulation under the
corporate laws of the State of Washington. The Plan
contemplates a transfer of the business and operations
of the Fund to the newly formed Maryland Corp. The
laws governing Maryland corporations offer greater
flexibility than do Washington corporate laws and
Management of the Fund believes that this fact may
produce administrative conveniences in operations and
resultant cost savings. For example, under Maryland
law, the Board of Directors could effect all of the
action contemplated by Proposals 1, 2 and 3 in this
proxy statement and thereby avoid the cost and delay
of this solicitation.
In determining to approve the Reorganization,
the Board concluded that the Reorganization would be
in the best interest of the Fund and its shareholders
and the interests of existing shareholders of the Fund
would not be diluted as a result of the transactions
contemplated by the Reorganization.
Summary of the Agreement and Plan of Reorganization
The Plan provides for the Reorganization to take
place pursuant to (1) a transfer of its business and
assets by the Fund to the Maryland Corp. (subject to
the assumption of the Fund's liabilities and
obligations by the Maryland Corp.), in exchange for
shares of the Maryland Corp., and (2) the distribution
of the shares of the Maryland Corp. to shareholders of
the Fund, ultimately leaving each shareholder of the
Fund holding the same number of shares of the Maryland
Corp. as he or she owned of the Fund immediately prior
to closing of the transaction. After the effective
date of the Reorganization, the Fund's current
corporate entity would be dissolved.
A vote in favor of the Plan will also authorize
the Fund, as sole shareholder of the Maryland Corp.,
to vote its Maryland Corp. shares in favor of: (i) the
election of Directors of the Maryland Corp.; (ii) the
approval of the investment advisory agreement with
SBAM; (iii) the approval of the distribution agreement
and services and distribution plan with Smith Barney;
and (iv) the ratification of the selection of Deloitte
& Touche as the Maryland Corp.'s independent auditors.
Accordingly, by voting to approve the Plan,
shareholders of the Fund are also authorizing the
persons named in the accompanying form of proxy to
vote such proxy in favor of the authorization of the
Fund to vote its Maryland Corp. shares in favor of
each of the Fund's current Directors as Directors of
the Maryland Corp., unless shareholders specifically
include in their proxies their desire to withhold
authority to vote on the election of such Directors.
Additionally, a vote for the Plan represents an
authorization of the Fund to vote its Maryland Corp.
shares in favor of proposed investment advisory and
distribution agreements and a services and
distribution plan with SBAM and Smith Barney,
respectively, each of which is identical to those
currently in effect between the Fund and each service
provider. The purpose of this procedure is to enable
these actions to be taken without holding another
shareholder meeting.
The obligations of the Fund and the Maryland
Corp. under the Plan are subject to various conditions
as stated therein. To provide against unforeseeable
events, the Plan may be terminated or amended at any
time prior to the closing of the Reorganization by
action of the Board of either the Fund or the Maryland
Corp., notwithstanding the approval of the Plan by the
shareholders of the Fund. However, no amendment may
be made that materially adversely affects the
interests of shareholders of the Fund.
Comparative Information on Shareholder Rights
General. As a corporation organized under the
laws of the State of Maryland, the Maryland Corp. is
governed by its Articles of Incorporation, its By-
Laws, and applicable Maryland law. The Fund, which is
organized as a Washington corporation, is governed by
its Articles of Incorporation, By-Laws, and applicable
Washington law.
Shares of the Maryland Corp. and the Fund.
Interests in the Maryland Corp. are represented by
transferable shares of capital stock, par value $0.001
per share. The Maryland Corp. currently has
authorized one billion shares, all of which have been
classified as follows: 200,000,000 Class A Common
Shares; 200,000,000 Class B Common Shares; 200,000,000
Class C Common Shares; 200,000,000 Class Y Common
Shares; and 200,000 Class Z Common Shares. Each share
represents an equal proportionate interest in the
assets and liabilities of a Class, and each share is
entitled to dividends and distributions out of the
income (after expenses) attributable to the Class as
declared by the Maryland Corp.'s Board of Directors.
Interests in the Fund are represented by shares
of common stock. The Fund currently has authorized
common stock of 150,000,000 shares with no stated par
value. Such shares are currently classified into four
classes, consisting of 25,000,000 shares of Class A
Common Stock, 75,000,000 shares of Class B Common
Stock, 25,000,000 shares of Class C Common Stock, and
25,000,000 shares of Class D Common Stock. When the
current Class C shares are reclassified, and if
Proposals 1, 2 and 3 are approved, the Fund will have
five classes consisting of _____ shares of Class A
Common Stock, 75,000,000 of Class B Common Stock,
25,000,000 shares of Class C Common Stock, 12,000,000
shares of Class Y Common Stock, and 13,000,000 shares
of Class Z Common Stock. Each share represents an
equal proportionate interest in the assets and
liabilities of a class, and each share is entitled to
dividends and distributions attributable to such Class
on a pro-rata basis.
Voting Requirements. The Maryland Corp. and the
Fund provide comparable voting requirements and rights
for shareholders. The shareholders of the Fund and
the Maryland Corp. have the power to vote, as a single
class, inter alia, (1) for the election or removal of
Directors, (2) with respect to approval of an
investment advisory or management contract, (3) with
respect to dissolution of the Fund or termination of
the Maryland Corp., (4) with respect to certain
amendments of the Articles of Incorporation of the
Fund or the Maryland Corp., (5) with respect to any
merger, consolidation, or sale of assets, and (6) with
respect to other matters for which shareholder
approval may be required under the 1940 Act.
On a matter submitted to a vote of shareholders
of the Fund or the Maryland Corp., each holder of a
share of the Fund or the Maryland Corp. is entitled to
one vote for each whole share and to a proportionate
fractional vote for each fractional share,
irrespective of the Class thereof, outstanding in the
shareholder's name on the books of the Fund or the
Maryland Corp. Similarly, as to any matter with
respect to which a separate vote of any class is
required by the 1940 Act, Maryland law or Washington
law, the affected class (or classes) shall be entitled
to vote as a separate class (or classes), but any
unaffected class shall not be entitled to a separate
vote as a class..
Except as may otherwise be provided in the
respective By-Laws, the Boards of Directors of the
Maryland Corp. and the Fund are expressly authorized
to make, alter, amend and repeal By-Laws or to adopt
new By-Laws of the Maryland Corp. or the Fund,
respectively, without any action on the part of the
shareholders. In either case; the By-Laws made by the
Boards of Directors and the power so conferred may be
altered or repealed by the shareholders.
Liquidation or Termination. In the event of the
liquidation of the Maryland Corp., the net assets of
the Maryland Corp. shall be distributed among the
classes based on their relative net asset values or in
such other manner as may be determined by the Board of
Directors. The assets so distributable to the
shareholders of any particular class shall be
distributed among such shareholders in proportion to
the number of shares of that class held by them and
recorded on the books of the Maryland Corp. The
liquidation of any particular class in which there are
shares then outstanding may be authorized by vote of
the majority of the Board of Directors, subject to the
approval of a majority of the outstanding voting
securities of that class, as defined in the 1940 Act
and the Maryland General Corporation Law.
In the event of liquidation of the Fund, the
shareholders of each class of stock of the Fund are
entitled to receive, as a class, out of the assets of
the Fund available for distribution but other than
general assets not belonging to any particular class
of stock, the assets belonging to such class. The
assets so distributable to the shareholders of any
class shall be distributed among the shareholders in
proportion to the number of shares of the class of
stock held by them. General assets of the Fund not
attributable to any particular class, or any proceeds
thereof, shall be allocated among the respective
classes in proportion to the asset value of each class
in relation to the asset value of all classes.
Directors. Directors of the Maryland Corp.
shall be initially elected by a vote of the
shareholders. Thereafter there will be no need to
convene an annual meeting of shareholders to consider
the election of directors unless and until a majority
of directors then in office have not been elected by
the shareholders. It is anticipated that subsequent
to the Reorganization the Board of Directors of the
Maryland Corp. shall consist of the current Board of
Directors of the Fund.
Directors of the Fund are currently elected
annually by shareholders and serve until the next
annual meeting or until their successors are elected
and qualified.
Shareholder liability. Under both Maryland and
Washington law, a shareholder is not liable to the
Maryland Corp. or the Fund or their creditors except
for payment of the consideration for which the shares
of the Maryland Corp. or the Fund were authorized to
be issued by the Directors of the Maryland Corp. or
the Fund.
Liability of Directors. The Articles of
Incorporation of the Maryland Corp. provide for the
indemnification of the directors and officers of the
Maryland Corp. to the fullest extent permitted by
Maryland law. Maryland law generally permits
indemnification of directors and officers against
certain costs, liabilities and expenses that any such
person may incur by reason of serving in such
positions unless it is proved that: (i) the act or
omission of the director or officer was material to
the cause of action adjudicated in the proceeding and
was committed in bad faith or was the result of active
and deliberate dishonesty; (ii) the director or
officer actually received an improper personal benefit
in money, property or services; or (iii) in the case
of criminal proceedings, the director or officer had
reasonable cause to believe that the act or omission
was unlawful. Insofar as indemnification for
liabilities arising under the Securities Act of 1933
(the "Securities Act") may be permitted to directors,
officers or persons controlling the Maryland Corp.
pursuant to the foregoing provisions, the Maryland
Corp. has been informed that in the opinion of the
Securities and Exchange Commission, such
indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable.
Under the Fund's Articles of Incorporation, By-
Laws and Washington law: (1) any officer or director
of the Fund will be personally liable only for his or
her own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties
involved in the conduct of their respective office;
(2) officers and directors will be indemnified for the
expenses of litigation against them unless their
conduct is determined to constitute willful
misfeasance, bad faith, gross negligence or reckless
disregard of his duties; and (3) the Fund may also
advance money for these expenses provided that the
officer or director undertakes to repay the Fund if
his or her conduct is later determined to preclude
indemnification.
Rights of Inspection. Maryland law provides
that a shareholder of the Maryland Corp. has the right
to examine the Maryland Corp.'s By-Laws, minutes of
the proceedings of shareholders and annual statements
of affairs.
Shareholders of the Fund have the right to
inspect and copy the Fund's Articles of Incorporation,
By-laws, minutes of shareholder meetings and other
actions, certain financial statements and certain
other records, accounts and books of the Fund for any
reason upon written demand, and may inspect and copy
other records of the Fund upon written demand if the
records are demanded in good faith and for a proper
purpose, the records and purpose are described in the
demand with reasonable particularity, and the records
are directly connected with the shareholder's purpose.
The foregoing is only a summary of certain
characteristics of the operations of the Maryland
Corp. and the Fund, their Articles of Incorporation
and their By-Laws and certain provisions of Maryland
and Washington law. The foregoing is not a complete
description of the documents cited. Shareholders
should refer to the provisions of Maryland law and
Washington law directly for a more thorough
description.
Dissenter's Rights
Chapter 23B.13 of the Washington Business
Corporation Act provides that a shareholder who
objects to the Reorganization is entitled to obtain
payment of the fair value of his or her shares upon
consummation of the Reorganization and further
specifies the required procedures to be followed in
connection therewith. A shareholder who wishes to
assert dissenters' rights must (a) deliver to the Fund
before the vote is taken written notice of the
shareholder's intent to demand payment for the
shareholder's shares if the Reorganization is
effected, and (b) not vote such shares in favor of the
Reorganization. If the Reorganization is authorized
at the Meeting, a notice will be sent to all
dissenting shareholders. The dissenting shareholders
then must demand payment, certify when he or she
acquired the shares, and deposit the shares with the
Fund.
The discussion above is intended only to
summarize the necessary procedures under Washington
law for a shareholder to perfect his or her right to
dissent from the proposed Reorganization and obtain
payment of the fair market value of his or her shares.
Shareholders wishing to perfect their dissenters'
rights should consult the Washington Business
Corporation Act.
The staff of the Securities and Exchange
Commission has taken the position in Investment
Company Act Release 8752 (April 10, 1975) that
adherence to rights statutes such as that of
Washington by registered investment companies issuing
redeemable securities would constitute a violation of
Rule 22c-1 under the 1940 Act, which precludes such a
company from redeeming securities otherwise than at a
price based upon the net asset value next computed
after receipt of a tender of such securities for
redemption. In this connection, the staff has also
taken the position in Release No. 8752 that pursuant
to Section 50 of the 1940 Act, Rule 22c-1 supersedes
rights statutes. While the Fund is not aware of any
judicial decision which has dealt with this issue, it
intends to adhere to the position of the staff of the
Securities and Exchange Commission and will not honor
any shareholder's request for appraisal rights.
Federal Income Tax Consequences
It is anticipated that the transactions
contemplated by the Plan will be tax-free.
Consummation of the Reorganization is subject to
receipt of an opinion of Willkie Farr & Gallagher,
counsel to the Fund, that under the Internal Revenue
Code of 1986, as amended (the "Code"), the
Reorganization will not give rise to the recognition
of income, gain or loss for Federal income tax
purposes to the Fund or the shareholders of the Fund.
A shareholder's adjusted basis for tax purposes in
shares of the Maryland Corp. after the Reorganization
will be the same as his or her adjusted basis for tax
purposes in the shares of the Fund immediately before
the Reorganization. Each shareholder should consult
his or her own tax adviser with respect to the state
and local tax consequences of the proposed
transaction.
Required Vote
Approval of the above-described Reorganization
of the Fund in Maryland requires an affirmative vote
of two-thirds of the Fund's shares then outstanding
and entitled to vote on the Proposal.
THE BOARD, INCLUDING ALL THE INDEPENDENT BOARD
MEMBERS, RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
REORGANIZATION OF THE FUND.
OTHER MATTERS TO COME BEFORE THE MEETING
The Fund does not intend to present any other
business at the Meeting nor is it aware that any
shareholder intends to do so. If, however, any other
matters are properly brought before the Meeting, the
persons named in the accompanying proxy card will vote
thereon in accordance with their judgment.
SHAREHOLDERS' REQUEST FOR SPECIAL MEETING
Shareholders holding at least 10% of the Fund's
outstanding voting securities (as defined in the 1940
Act) may require the calling of a meeting of
shareholders for the purpose of voting on the removal
of any Board Member of the Fund. Meetings of the
Fund's shareholders for any other purpose will also be
called by the Board Members when requested in writing
by shareholders holding at least 10% of the shares
then outstanding or, if the Board Members shall fail
to call or give notice of any meeting of shareholders
for a period of 30 days after such application,
shareholders holding at least 10% of the shares then
outstanding may call and give notice of such meeting.
October 10, 1994
shared/shearsn2/fundamen/proxy/10-3-94b
EXHIBIT LIST
EXHIBIT A Articles of Amendment to the Articles of
Incorporation
EXHIBIT B Agreement and Plan of Reorganization and
Liquidation
shared/shearsn2/fundamen/proxy/10-3-94b
EXHIBIT A
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
SMITH BARNEY FUNDAMENTAL
VALUE FUND INC.
These Articles of Amendment are submitted in
accordance with Chapter 23B.10 RCW of the Washington
Business Corporation Act.
1. The name of the corporation is Smith
Barney Fundamental Value Fund Inc. (the "Corporation")
2. Section 1 of Article IV of the Articles of
Incorporation of the Corporation is hereby amended to
read in its entirety as follows:
ARTICLE IV
Authorized Capital
(1) The aggregate number of shares which the
Corporation shall have authority to issue is
[ ] shares of common stock. The stock shall
be classified into five classes, consisting of
[ ] shares of Class A Common Stock,
75,000,000 shares of Class B Common Stock, 25,000,000
shares of Class C Common Stock, and 12,000,000 shares
of Class Y Common Stock, and 13,000,000 shares of
Class Z Common Stock.
3. The amendment does not provide for an exchange,
or cancellation of issued shares, but does reclassify
shares formerly classified as Class D shares of Common
Stock as Class C shares of Common Stock. The
reclassification will have no impact on the
preferences, limitations or relative rights of Current
Class D shareholders.
4. The amendment was adopted by shareholder action
on November 29, 1994.
5. The amendment was recommended by the Board of
Directors and was duly approved by the shareholders of
the Corporation in accordance with he provisions of
RCW 23B.10.030 and 23B.10.040.
DATED this day of November , 1994.
SMITH BARNEY
FUNDAMENTAL VALUE FUND INC.
By : . . . . . . . . . . . . . . . . . . . . . . ..
. . .
Lee D. Augsburger
Assistant Secretary
EXHIBIT B
AGREEMENT AND PLAN OF
REORGANIZATION AND LIQUIDATION
AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
dated as of May 20, 1994 (the "Agreement") between
Smith Barney Shearson Fundamental Value Fund Inc., a
Washington corporation (the "Existing Fund"), and
Smith Barney Shearson Fundamental Value Fund Inc., a
Maryland corporation (the "New Fund").
WHEREAS the Existing Fund is a diversified,
open-end management investment company registered
under the Investment Company Act of 1940, as amended
(the "1940 Act"); and
WHEREAS the Existing Fund has authorized capital
stock consisting of 150,000,000 shares of common
stock, no par value; and
WHEREAS the New Fund was organized pursuant to
Articles of Incorporation dated May 12, 1994, and has
authorized capital stock of one billion
(1,000,000,000) shares, $0.001 par value per share:
NOW, THEREFORE, in consideration of the mutual
promises herein contained, the parties hereto agree as
follows:
1. Plan of Reorganization. The Existing Fund
shall, at the Effective Time of the Reorganization (as
hereinafter defined), transfer all of its business and
assets and assign all its liabilities and obligations
to the New Fund, and the New Fund shall acquire all
such business and assets and shall assume all such
liabilities and obligations of the Existing Fund in
exchange for delivery to the Existing Fund by the New
Fund of a number of shares of the New Fund (both full
and fractional) equivalent to the number of shares of
the Existing Fund outstanding immediately prior to the
Effective Time of the Reorganization. All debts,
liabilities, obligations and duties of the Existing
Fund, to the extent that they exist at the Effective
Time of the Reorganization, shall after the Effective
Time of the Reorganization attach to the New Fund and
may be enforced against the New Fund to the same
extent as if the same had been incurred by the New
Fund.
2. Liquidation and Dissolution of the
Existing Fund. At the Effective Time of the
Reorganization, the Existing Fund will liquidate and
the shares of the New Fund (both full and fractional)
received by the Existing Fund will be distributed to
the shareholders of the Existing Fund in exchange for
their shares of such class of the Existing Fund, each
shareholder to receive a number of shares of the New
Fund of a class comparable to the class of shares held
by the shareholders in the Existing Fund equal to the
number of shares of such class of the Existing Fund
held by such shareholder. Such liquidation and
distribution will be accompanied by the establishment
of an open account on the share records of the New
Fund in the name of each shareholder of the Existing
Fund and representing the respective pro rata number
of shares of the New Fund of the appropriate class due
such shareholder. Certificates for shares of the
Existing Fund issued prior to the Effective Time of
the Reorganization shall represent outstanding shares
of the New Fund after the Effective Time of the
Reorganization. As soon as practicable after the
Effective Time of the Reorganization, the Existing
Fund shall file Articles of Dissolution for record
with the Secretary of State of the State of
Washington, and shall take, in accordance with
Washington law, all other steps as shall be necessary
and proper to effect a complete dissolution of the
Existing Fund.
3. Issued Share. Prior to the Effective Time
of the Reorganization and after the Existing Fund has
taken the actions authorized by shareholders of the
Existing Fund pursuant to Section 4(f) hereof, the
single share of the New Fund heretofore held by the
Existing Fund shall be redeemed and canceled by the
New Fund.
4. Conditions Precedent to the Obligation of
the Existing Fund. The obligations of the Existing
Fund to effectuate the Plan of Reorganization and
Liquidation hereunder shall be subject to the
performance by the New Fund of all the obligations to
be performed by it hereunder on or before the
Effective Time of the Reorganization and to the
satisfaction of each of the following conditions:
(a) Such authority, including "no-action"
letters and orders from the Securities and Exchange
Commission (the "Commission") and state securities
commissions as may be necessary to permit the Existing
Fund to carry out the transactions contemplated by
this Agreement, if any, shall have been received.
(b) The Existing Fund shall have received an
opinion of Willkie Farr & Gallagher, counsel to the
New Fund, that the New Fund is duly formed and
existing under the laws of the State of Maryland and
that the shares of the New Fund to be issued pursuant
to the terms of this Agreement have been duly
authorized, and, when issued and delivered as provided
in this Agreement, will have been validly issued,
fully paid and nonassessable. With respect to issues
of Maryland Law, Willkie Farr & Gallagher may rely on
the opinion of local counsel in rendering its opinion.
(c) The Existing Fund shall have received an
opinion of Willkie Farr & Gallagher, counsel to the
Existing Fund, to the effect that the transaction
contemplated by the Agreement qualifies as a
"reorganization" under Section 368(a)(1)(F) of the
Internal Revenue Code of 1986 (the "Code").
(d) The shares of the New Fund shall have been
duly qualified for offering to the public in all
states of the United States, the Commonwealth of
Puerto Rico and the District of Columbia (except where
such qualifications are not required) so as to permit
the transfers contemplated by this Agreement to be
consummated.
(e) All representations and warranties of the
New Fund contained in this Agreement shall be true and
correct in all material respects as of the date hereof
and, except as they may be affected by the
transactions contemplated by this Agreement, as of the
Effective Time of the Reorganization with the same
force and effect as if made as of the Effective Time
of the Reorganization.
(f) The Board of Directors of the New Fund
shall have taken the following actions at a meeting
duly called for such purposes:
(1) approval of an Investment Advisory
Agreement (the "Advisory Agreement") between the New
Fund and Smith Barney Asset Management Division of
Smith Barney Advisers, Inc.;
(2) approval of the Distribution Agreement
(the "Distribution Agreement") and Services and
Distribution Plan (the "Plan") between the New Fund
and Smith Barney Inc.;
(3) selection of Deloitte & Touche as the New
Fund's independent auditors for the fiscal year ending
September 30, 1994;
(4) authorization of the issuance by the New
Fund, prior to the Effective Time of the
Reorganization, of one share of the New Fund to the
Existing Fund at the price of $_______ for the purpose
of enabling the Existing Fund to vote on the matters
referred to in paragraph (e) of Section 5;
(5) submission of the matters referred to in
paragraph (e) of Section 5 to the Existing Fund as the
sole shareholder of the New Fund; and
(6) authorization of the issuance of shares of
the New Fund at the Effective Time of the
Reorganization in exchange for the assets of the
Existing Fund pursuant to the terms and provisions of
this Agreement.
(g) The New Fund shall have filed with the
Commission one or more post-effective amendments to
the Existing Fund's Registration Statement on Form N-
1A under the Securities Act of 1933 and the 1940 Act,
containing such amendments as are determined by the
Board of the New Fund to be necessary and appropriate
as a result of this Agreement and such amendment or
amendments shall have become effective, and no stop-
order suspending the effectiveness of the Registration
Statement shall have been issued, and no proceeding
for that purpose shall have been initiated or
threatened by the Commission (and not withdrawn or
terminated).
(h) The Existing Fund shall have received the
affirmative vote of at least two-thirds of all votes
entitled to be cast on the transaction at a meeting of
the shareholders of the Existing Fund duly called for
the purpose of considering the proposed
Reorganization.
At any time prior to the Effective Time of the
Reorganization, any of the foregoing conditions may be
waived by the Board of Directors of the Existing Fund
if, in the judgment of such Board, such waiver will
not have a material adverse effect on the benefits
intended under this Agreement to the shareholders of
the Existing Fund.
5. Conditions Precedent to the Obligations of
the New Fund. The obligations of the New Fund to
effectuate the Plan of Reorganization and Liquidation
hereunder shall be subject to the performance by the
Existing Fund of all the obligations to be performed
by its hereunder on or before the Effective Time of
the Reorganization and to the satisfaction of each of
the following conditions:
(a) Such authority, including "no-action"
letters and orders from the Commission and state
securities commissions as may be necessary to permit
the New Fund to carry out the transactions
contemplated by this Agreement, if any, shall have
been received by the New Fund.
(b) One or more post-effective amendments to
the Registration Statement of the Existing Fund on
Form N-1A under the Securities Act of 1933 and the
1940 Act, containing (i) such amendments to such
Registration Statement as are determined by the Board
of Directors of the New Fund to be necessary and
appropriate as a result of this Agreement and (ii) the
adoption by the New Fund of such Registration
Statement as its own, shall have been filed with the
Commission and such post-effective amendment or
amendments to the Registration Statement shall have
become effective, and no stop-order suspending the
effectiveness of the Registration Statement shall have
been issued, and no proceeding for that purpose shall
have been initiated or threatened by the Commission
(and not withdrawn or terminated).
(c) The New Fund shall have received an
opinion of Willkie Farr & Gallagher to the effect that
the transaction contemplated by the Agreement
qualifies as a "Reorganization" under Section
368(a)(1)(F) of the Code.
(d) All representations and warranties of the
Existing Fund contained in this Agreement shall be
true and correct in all material respects as of the
date hereof and, except as they may be affected by the
transactions contemplated by this Agreement, as of the
Effective Time of the Reorganization with the same
force and effect as if made as of the Effective Time
of the Reorganization.
(e) A vote approving this Agreement and the
reorganization contemplated hereby shall have been
adopted by at least two-thirds of all the votes
entitled to be cast on the transaction at a meeting of
the shareholders of the Existing Fund. The vote
approving this Agreement and the reorganization
contemplated hereby shall direct the Existing Fund to
vote, and the Existing Fund shall have voted, as the
sole shareholder of the New Fund to:
(1) elect the Directors of the Existing Fund
as Directors of the New Fund;
(2) approve the Advisory Agreement;
(3) approve the Distribution Agreement and the
Plan; and
(4) ratify the selection of Deloitte & Touche
as the New Fund's independent auditors for the fiscal
year ending September 30, 1994.
At any time prior to the Effective Time of the
Reorganization, any of the foregoing conditions may be
waived by the Board of Directors of the New Fund if,
in the judgment of such Board, such waiver will not
have a material adverse effect on the benefits
intended under this Agreement to the shareholders of
the New Fund.
6. Representation and Warranties.
6.1 The Existing Fund represents and warrants
to the New Fund as follows:
(a) The Existing Fund is a Washington
corporation, duly organized, validly existing and in
good standing under the laws of the State of
Washington;
(b) The Existing Fund is a registered
investment company classified as a management company
of the open-end type and its registration with the
Commission as an investment company under the
Investment Company Act of 1940 is in full force and
effect;
(c) The Existing Fund is not, and the
execution, delivery and performance of this Agreement
will not result, in a material violation of its
Articles of Incorporation or By-Laws or of any
agreement, indenture, instrument, contract, lease or
other undertaking to which the Existing Fund is a
party or by which it is bound;
(d) Except as otherwise disclosed in writing
to and accepted by the New Fund, no litigation or
administrative proceeding or investigation of or
before any court or governmental body is presently
pending or, to its knowledge, threatened against the
Existing Fund or any of its properties or assets
(other than that previously disclosed to the New Fund)
which, if adversely determined, would materially and
adversely affect its financial condition or the
conduct of its business. The Existing Fund knows of
no facts which might form the basis for an institution
of such proceedings and is not a party to or subject
to the provisions of any order, decree or judgment of
any court or governmental body which materially and
adversely effects its business or its ability to
consummate the transactions herein contemplated;
(e) All issued and outstanding shares of the
Existing Fund are, and at the Effective Time of the
Reorganization will be, duly and validly issued and
outstanding, fully paid and non-assessable. All of
the issued and outstanding shares of the Existing Fund
will, at the Effective Time of the Reorganization, be
held by the person and in the amounts set forth in the
records of the Existing Fund's transfer agent. The
Existing Fund does not have outstanding any options,
warrants or other rights to subscribe for or purchase
any of the Existing Fund's shares, nor is there
outstanding and security convertible into any of the
Existing Fund's shares;
(f) At the Effective Time of the
Reorganization, the Existing Fund will have good and
marketable title to its assets to be transferred to
the New Fund pursuant to this Agreement, and full
right, power and authority to sell, assign, transfer
and deliver such assets hereunder and, upon delivery
and payment for such assets, the Acquiring Fund will
acquire good and marketable title thereto, subject to
no restrictions on the full transfer thereof,
including such restrictions as might arise under the
Securities Act of 1933, as amended, other than as
disclosed in this Agreement;
(g) The execution, delivery and performance of
this Agreement will have been duly authorized prior to
the Effective Time of the Reorganization by all
necessary actions on the part of the Existing Fund's
Board of Directors, and subject to the approval of the
Existing Fund's shareholders, this Agreement will
constitute a valid and binding obligation of the
Existing Fund, enforceable in accordance with its
terms, subject to enforcement of bankruptcy,
insolvency, reorganization, moratorium and other laws
related to or affecting creditiors rights and to
general equity principles.
6.2 The New Fund represents and warrants to
the Existing Fund as follows:
(a) The New Fund is a Maryland corporation,
duly organized, validly existing and in good standing
under the laws of the State of Maryland;
(b) As of the Effective Time of the
Reorganization, the New Fund will have good and
marketable title to its assets;
(c) The New Fund is not, and the execution,
delivery and performance of this Agreement will not
result, in any material violation of it Articles of
Incorporation or By-Laws or of any agreement,
indenture, instrument, contract, lease or other
undertaking to which the New Fund is a party or by
which it is bound;
(d) No material litigation or administrative
proceeding or investigation of or before any court or
governmental body is presently pending or threatened
against the New Fund or any of its properties or
assets, except as previously disclosed in writing and
agreed to by the Existing Fund. The New Fund knows of
no facts which might form the basis for the
institution of such proceedings and is not a party to
or subject to the provisions of any order, decree or
judgment of any court or governmental body which
materially or adversely affects its business or its
ability to consummate the transactions contemplated
herein;
(e) At the date hereof, all of the issued and
outstanding New Fund shares are, and at the Effective
Time of the Reorganization will be, duly and validly
issued and outstanding, fully paid and non-assessable,
with no personal liability attaching to the ownership
thereof. The New Fund does not have outstanding any
options, warrants or other rights to subscribe for or
purchase any New Fund shares, nor is there outstanding
any security convertible into any New Fund shares;
(f) The execution, delivery and performance of
this Agreement will have been duly authorized prior to
the Effective Time of the Reorganization by all
necessary actions, if any, on the part of the New
Fund's Board of Directors and the New Fund's
shareholders and this Agreement will constitute a
valid and binding obligation of the New Fund
enforceable in accordance with its terms, subject to
enforcement of bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or effecting
creditors' rights and to general equity principles;
(g) The New Fund shares to be issued and
delivered to the Existing Fund, for the account of the
Existing Fund's shareholders, pursuant to the terms of
this Agreement, will at the Effective Time of the
Reorganization have been duly authorized, and when so
issued and delivered, will be duly and validly issued
New Fund shares and will be fully paid and non-
assessable with no personal liability attaching to the
ownership thereof;
(h) The New Fund agrees to use all reasonable
efforts to obtain the approvals and authorizations
required by the 1940 Act, the Securities Act of 1933,
and such of the state Blue Sky or securities laws as
it may deem appropriate in order to continue its
operations after the closing date.
7. Effective Time of the Reorganization. The
distribution of the shares of the New Fund held by the
Existing Fund shall be effective as of [5:00 p.m.,
Boston time, on June 30, 1994], or at such other time
and date as fixed by the mutual consent of the parties
(the "Effective Time of the Reorganization").
8. Termination. The Directors of the
Existing Fund and the New Fund may terminate this
Agreement and abandon the reorganization contemplated
hereby, notwithstanding approval thereof by the
shareholders of the Existing Fund, at any time prior
to the Effective Time of the Reorganization, if
circumstances should develop that, in their judgment,
make proceeding with this Agreement inadvisable.
IN WITNESS WHEREOF, the parties have hereunto
caused this Agreement to be executed and delivered by
their duly authorized officers as of the date and year
first written above.
SMITH BARNEY SHEARSON FUNDAMENTAL VALUE FUND INC., a
Washington Corporation
By: /s/ Heath B. McLendon
Heath B. McLendon
Chairman of the Board
SMITH BARNEY SHEARSON FUNDAMENTAL VALUE FUND INC., a
Maryland Corporation
By: /s/ Heath B. McLendon
Heath B. McLendon
Chairman of the Board
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