<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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 Materials Pursuant to ss.240.14a-11(c) or ss.240.14a-12
CLEMENTE STRATEGIC VALUE FUND, INC.
-----------------------------------
Name of Registrant as Specified In Its Charter
N/A
---
Name of Person(s) Filing Proxy Statement if other than the Registrant
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
<PAGE>
5) Total fee paid:
/ / Fee paid previously with preliminary materials:
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which such 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>
CLEMENTE STRATEGIC VALUE FUND, INC.
152 West 57th Street
New York, New York 10019
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held April 26, 2000
The Annual Meeting of Stockholders of Clemente Strategic Value Fund, Inc. (the
"Fund"), a Maryland corporation, will be held at the offices of Clemente
Capital, Inc., 152 West 57th Street, New York, New York, on April 26, 2000 at
9:30 a.m., New York time, for the following purposes:
1. To elect seven Fund directors to serve until their successors are duly
elected and qualified;
2. To ratify the selection by the Board of Directors of
PricewaterhouseCoopers LLP as the Fund's independent accountants for the
year ending December 31, 2000;
3. To amend the Fund's Investment Advisory Agreement with Clemente Capital,
Inc. (the "Adviser") regarding the calculation of the compensation of the
Adviser, including the Basic Fee and the performance fee which, if
approved, may result in an increase in the annual advisory fees.
4. To amend the current U.S. Advisory Agreement among the Fund, the Adviser
and Wilmington Trust Company (the "Sub-Adviser") to a sub-advisory
agreement on substantially the same terms as the current U.S. Advisory
Agreement;
5. To consider a shareholder proposal recommending that the Board take the
steps necessary to provide shareholders an option to receive net asset
value with no redemption penalty, which proposal the Board of Directors
opposes;
6. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed February 29, 2000 as the record date for
the meeting. Only holders of record of the Fund's Common Stock at the close
of business on such date will be entitled to notice of, and to vote at,
such meeting. The stock transfer books will not be closed.
A copy of the Fund's Annual Report for the fiscal year ended December 31,
1999 has been previously mailed to stockholders.
By order of the Board of Directors
William Clark, Secretary
Dated: March __, 2000
IMPORTANT
Unless you expect to be present at the meeting, please fill in, date, sign and
mail the enclosed proxy card in the enclosed reply envelope. Your prompt
response will assure a quorum at the meeting.
<PAGE>
PRELIMINARY PROXY MATERIAL
CLEMENTE STRATEGIC VALUE FUND, INC.
152 West 57th Street
New York, New York 10019
------------------------
PROXY STATEMENT
for
ANNUAL MEETING OF STOCKHOLDERS
to be held April 26, 2000
-------------------------
GENERAL INFORMATION
The Board of Directors of the Fund solicits the proxies of the holders of the
Fund's Common Stock for use at the Annual Meeting of Stockholders (the
"Meeting") to be held at the offices of Clemente Capital, Inc., 152 West 57th
Street, New York, New York, on April 26, 2000, at 9:30 a.m., New York time, and
at any and all adjournments thereof. A form of proxy is enclosed herewith. The
Proxy Statement and the form of proxy were first sent to stockholders on March
__, 2000. Any stockholder who executes and delivers a proxy may revoke it by
written communication at any time prior to its use or by voting in person at the
Annual Meeting.
The cost of soliciting the proxies will be borne by the Fund. Directors,
officers and regular employees of the Fund may solicit proxies by telephone,
facsimile or personal interview. In addition, the Fund has engaged the services
of Georgeson & Company Inc., a professional proxy solicitation firm, to solicit
proxies from its stockholders. The agreement between the parties provides for
solicitation services at an estimated cost of $6,000, plus expenses. The Fund
will, upon request, bear the reasonable expenses of brokers, banks and their
nominees who are holders of record of the Fund's Common Stock on the record
date, incurred in mailing copies of this Notice of Meeting and Proxy Statement
and the enclosed form of proxy to the beneficial owners of the Fund's Common
Stock.
Only holders of issued and outstanding shares of the Fund's Common Stock of
record at the close of business on February 29, 2000 are entitled to notice of,
and to vote at, the Meeting. Each such holder is entitled to one vote per share
of Common Stock so held. The number of shares of Common Stock outstanding on
February 29, 2000 was 4,979,600.
Copies of the Fund's annual report are available free of charge to any
stockholder. Reports may be ordered by writing Clemente Capital, Inc., 152 West
57th Street, New York, New York 10019 or calling (800) 937-5449.
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
At its February 10, 2000 special meeting, the Board of Directors of the Fund
voted to recommend the seven nominees named herein for election by the
shareholders. If elected, each nominee has consented to serve as a director of
the Fund until their successors are duly elected and qualified. In the event
that any of the nominees should become unavailable for election for any
presently unforeseen reason, the persons named in the form of proxy will vote
for any nominee who shall be designated by the present Board of Directors.
Directors shall be elected by a plurality of the shares voting at the Meeting.
The information set forth below as to the ages and principal occupations of
these nominees, and the number of shares of Common Stock of the Fund
beneficially owned by them, directly or indirectly, has been furnished to the
Fund by such nominees.
<PAGE>
NOMINEES
<TABLE>
<CAPTION>
Number and Percentage
(if over 1%) of Shares of
Common Stock
Principal Occupation Beneficially Owned as
Name and Address Age During Past Five Years of February 29, 2000
- ---------------- --- ---------------------- ----------------------
<S> <C> <C> <C>
*Gary A. Bentz 43 Director of the Fund since September 1998; 5,000
One West Pack Square Treasurer of the Fund since February 2000; Chief
Suite 777 Financial Officer and Treasurer of Deep Discount
Asheville, NC 28801 Advisors, Inc., an investment advisory firm,
Director of The Austria Fund, Inc. and Central
European Value Fund, Inc.
*Ralph W. Bradshaw 49 Director of the Fund since September 1998; 600
One West Pack Square Chairman of the Fund since February 2000;
Suite 777 Treasurer of the Fund from January 1999 until
Asheville, NC 28801 February 2000; Consultant to Deep Discount
Advisors, Inc., an investment advisory firm;
Director of The Austria Fund, Inc., Central
European Value Fund, Inc. and The Portugal Fund.
*William Clark 54 Director of the Fund since September 1998; 1,600
One West Pack Square Secretary of the Fund since January 1999;
Suite 777 firm; Consultant to Discount Advisors, Inc., an
Asheville, NC 28801 investment advisory firm; Director of The Austria
Fund, Inc. and Central European Value Fund, Inc.
Thomas H. Lenagh 78 Director of the Fund since June 1987; Independent 1,000
Greenwich Office Park Financial Adviser; Director of Gintel Funds, Adams
Greenwich, CT 06831 Express, ASD Group, ICN Pharmaceuticals, Inrad
Corp. and V-Band Corp.
Scott B. Rogers 44 Chief Executive Officer, Asheville Buncombe
6 Beaverdam Court Community Christian Ministry; President, ABCCM
Asheville, NC 28804 Doctor's Medical Clinic; Director, Southeastern
Jurisdiction Urban Networkers; Director, Asheville
Area Red Cross; Appointee, NC Governor's
Commission on Welfare to Work; Chairman, Recycling
Unlimited; Director, Inter-Denominational
Ministerial Alliance; Director of Central European
Value Fund, Inc.
Andrew Strauss 45 Attorney and senior member of Strauss & 2,500
77 Central Avenue Associates, P.A., attorneys, Asheville, N.C.;
Suite F previous President of White Knight Healthcare,
Asheville, NC 28801 Inc. and LMV Leasing, Inc., a wholly owned
subsidiary of Xerox Credit Corporation; Director
of Central European Value Fund, Inc.
Glenn W. Wilcox, Sr. 67 Chairman of the Board and Chief Executive Officer
418 Vanderbilt Road of Wilcox Travel Agency; Director of Champion
Asheville, NC 28803 Industries, Inc.; Chairman of the Board of Blue
Ridge Printing Co., Inc.; Chairman of the Board of
Towers Associates, Inc., Director of Asheville
Chamber of Commerce; Vice Chairman of the Board of
First Union National Bank of Appalachian State
University; Board of Trustees and Board of
Directors of Mars Hill College; Director of
Central European Value Fund, Inc.
All Directors and Officers as a
Group (7 persons)
10,700
</TABLE>
*May be deemed an "Interested Person" of the Fund, as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), by reason of such person's
serving as an officer of the Fund.
<PAGE>
In addition to Messrs. Bentz, Bradshaw and Clark, Leopoldo M. Clemente, Jr.
serves as an executive officer of the Fund, as set forth below. Each of the
executive officers serves at the pleasure of the Board of Directors.
<TABLE>
<CAPTION>
Name and Address Age Principal Occupation During Past Five Years
- ---------------- --- -------------------------------------------
<S> <C> <C>
Leopoldo M. Clemente, Jr. 61 President of the Fund since June 1987; President and
152 West 57th Street Chief Executive Officer of Clemente Capital, Inc.
New York, NY 10019 since January 1989; Director of The First
Philippine Fund Inc. and Philippine Strategic
Investment (Holdings) Limited.
</TABLE>
The Board of Directors of the Fund held four regular meetings and two special
meetings during 1999. All directors attended at least 75% of such meetings. The
Audit Committee met once during 1999. The purpose of the Audit Committee is to
advise the full Board with respect to accounting, auditing and financial matters
affecting the Fund.
Directors who are not affiliated with Clemente Capital, Inc. ("Clemente Capital"
or the "Adviser") or Wilmington Trust Company ("Wilmington" or the
"Sub-Adviser") receive an annual stipend of $8,000 for serving on the Board and
its committees, an additional $500 for each Board meeting which they attend and
reimbursement for out-of-pocket expenses in connection with their attendance at
directors' meetings. The Fund does not pay any pension or other benefits to its
directors. For the fiscal year ended December 31, 1999, the following table sets
forth compensation paid by the Fund to its directors.
<PAGE>
Total Compensation from the Fund.
Name of Director Compensation from the Fund
- ---------------- --------------------------
Gary A. Bentz $10,000
Ralph W. Bradshaw $10,500
William Clarke $ 4,166
Phillip Goldstein $11,000
Gerald Hellerman $12,000
Thomas H. Lenagh $10,000
Ronald G. Olin $12,500
The Adviser, which pays the compensation and certain expenses of its personnel
who may serve as directors and officers of the Fund, receives an investment
advisory fee.
THE FUND'S BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE
ELECTION OF DIRECTORS PURSUANT TO PROPOSAL NO. 1.
<PAGE>
PROPOSAL NO. 2
RATIFICATION OF THE SELECTION OF
INDEPENDENT ACCOUNTANTS
By vote of the Board of Directors, including the vote of the non-interested
Directors, the firm of PricewaterhouseCoopers LLP has been selected as the
Fund's independent accountants for the year ending December 31, 2000. Such
selection is being submitted to the stockholders for ratification. The
employment of PricewaterhouseCoopers is conditioned on the right of the Fund, by
majority vote of its stockholders, to terminate such employment.
PricewaterhouseCoopers has acted as the Fund's independent accountants from its
inception through December 31, 1999.
The services to be provided by the Fund's independent accountants include
examination of the Fund's annual financial statements and limited review of its
unaudited quarterly statements, assistance and consultation in connection with
Securities and Exchange Commission and New York Stock Exchange filings, and
preparation of the Fund's annual federal and state income tax returns.
A representative of PricewaterhouseCoopers is expected to be present at the
Meeting and will have the opportunity to make a statement if he or she so
desires. This representative will also be available to respond to appropriate
questions.
Proposal No. 2 requires the affirmative vote of a majority of shares voting at
the Meeting for passage.
THE FUND'S BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF
PRICEWATERHOUSECOOPERS LLP AS THE FUND'S
INDEPENDENT ACCOUNTANTS.
<PAGE>
PROPOSAL NO. 3
CONSIDERATION OF A PROPOSAL TO AMEND
THE FUND'S INVESTMENT ADVISORY
AGREEMENT REGARDING THE CALCULATION
OF THE BASIC FEE AND THE PERFORMANCE FEE
WHICH MAY RESULT IN AN INCREASE IN THE
ANNUAL ADVISORY FEES PAYABLE BY THE FUND
At the February 10, 2000 meeting of the Board of Directors, the Directors
approved certain changes to the Fund's current investment advisory agreement
(the "Advisory Agreement") between the Fund and the Adviser. A copy of the
proposed amended and restated investment advisory agreement marked to indicate
all changes from the current agreement is attached hereto as Appendix A. The
purposes for the amendment are as follows: (i) to reflect the Fund's name change
approved at the 1999 Meeting of Stockholders to the "Clemente Strategic Value
Fund, Inc." from the "Clemente Global Growth Fund, Inc."; (ii) to replace the
index used to measure to what extent the Adviser may have earned a performance
fee for each calendar year to the "S&P 500 Index of U.S. Securities" from the
"FT-Actuaries World Index"; (iii) to amend the performance fee schedule attached
to the Advisory Agreement as Appendix A to calculate any applicable performance
fee earned by the Adviser for each calendar year; (iv) to reflect a change in
the calculation of the Basic Fee to pay the Adviser a monthly fee of 1% (on an
annualized basis) of the average weekly net assets of the Fund rather than using
the "month-end net assets", and (v) to reflect certain non-material conforming
changes to the U.S. Advisory Agreement among the Fund, the Adviser, and
Wilmington Trust Company (the "Sub-Adviser"), subject to stockholder approval of
Proposal No. 4.
The Board of Directors approved the amendment to the Advisory Agreement with
respect to the change of indices having considered the nature of the recent
changes to the Fund's investment focus, the greater flexibility afforded the
Fund's Adviser in managing the Fund's assets, and that the index set forth in
the current Advisory Agreement was no longer reflective of the majority of the
Fund's assets and therefore tying any applicable performance fee calculation to
the FT-Actuaries World Index would no longer be appropriate. The Adviser
recommended and the Directors concurred that the appropriate index would be the
S&P 500 Index of U.S. Securities given the fact that approximately 80% of the
Fund's assets are invested in U.S. securities.
The Board of Directors believes that the change in the schedule for calculating
the performance fee is reflective of the Fund's performance generated by the
Adviser since the Fund's inception in 1987. The schedule, as amended, will now
include adjustments to the Basic Fee of amounts up to an additional 1% for
performance in excess of 15% over the stated index. Additionally, the revised
schedule reflects a possible decrease of the Basic Fee if the Fund's performance
falls below the index used for measurement purposes. The Adviser, under this
proposed new schedule, may either (i) double the Basic Fee earned if the Fund's
performance is 15% or greater than the five year percentage point difference
between the Fund's performance and the percentage change in the S&P 500 Index or
(ii) lose its Basic Fee entirely if the Fund's performance falls by 5% or more
below such percentage change.
The Board approved the change in the Basic Fee because the Directors believed
that it was more appropriate to use the average weekly net assets in calculating
the Basic Fee thereby more accurately reflecting any increases or decreases in
the Fund's net assets during the course of any given month rather than the net
assets at month end which is not reflective of any increases or decreases in the
Fund's net assets during the course of any given month.
Certain of the proposed changes may result in an increase and/or a decrease in
the aggregate annual compensation payable by the Fund to the Adviser. The Board
of Directors believes that each of the proposed changes to the Advisory
Agreement are in the best interests of the Fund and its stockholders and,
recommends
<PAGE>
that stockholders vote "FOR" the proposal. If the proposal is not approved by
the stockholders, the current Advisory Agreement will continue in effect under
its terms and conditions.
The 1940 Act requires that any amendment to the Fund's Advisory Agreement be
approved by "a majority of the Fund's outstanding voting securities" which means
that "the vote, at the annual or special meeting of the security holders of such
company duly called (A) of 67 per centum or more of the voting securities
present at such meeting, if the holders of more than 50 per centum of the
outstanding voting securities of such company are present or represented by
proxy; or (B) of more than 50 per centum of the outstanding voting securities of
such company, whichever is the less."
THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" THE AMENDMENT
TO THE INVESTMENT ADVISORY AGREEMENT.
<PAGE>
PROPOSAL NO. 4
CONSIDERATION OF A PROPOSAL TO AMEND
THE U.S. ADVISORY AGREEMENT
WITH WILMINGTON TRUST COMPANY
The Board of Directors at its meeting held on February 10, 2000, approved
certain amendments to the current agreement among the Fund, the Adviser, and
Wilmington Trust Company (the "Sub-Adviser) whereby the Sub-Adviser will render
certain sub-advisory services to the Adviser with respect to all of the Fund's
net assets rather than having responsibility to provide certain advisory
services with respect to only the U.S. portion of the Fund's net assets. The
Directors believe that the services rendered to the Adviser by the Sub-Adviser
are important for the Fund and benefit the Fund and its stockholders. As a
result of the recent changes in the focus of the Fund's investments, a larger
portion of its assets may be invested in U.S. securities. Therefore, it is
appropriate to have this agreement amended to become a sub-advisory agreement
among the parties whereby the Sub-Adviser will render sub-advisory services to
the Adviser with respect to all of the Fund's net assets and not be directed
specifically toward management of the Fund's U.S. securities only.
There are no other changes to this agreement other than those deemed necessary
to conform this agreement to a sub-advisory agreement. A copy of the new
Sub-Advisory Agreement marked to indicate all changes proposed from the current
U.S. Advisory Agreement is attached hereto as Appendix B.
The Sub-Adviser will continue to be paid its fees from the Adviser in an amount
equal to 25% of the net fees payable to the Adviser.
The Board of Directors believes that the proposed amendments to the U.S.
Advisory Agreement are in the best interests of the Fund and its stockholders
and recommends that stockholders vote "FOR" the proposal. If the proposal is not
approved by the stockholders, the current U.S. Advisory Agreement will continue
in effect and the Sub-Adviser will continue to provide the Adviser and the Fund
with investment advisory services only with respect to the U.S. securities held
by the Fund.
The 1940 Act requires that any amendment to this Agreement be approved by "a
majority of the Fund's outstanding voting securities" which means that "the
vote, at the annual or special meeting of the security holders of such company
duly called (A) of 67 per centum or more of the voting securities present at
such meeting, if the holders of more than 50 per centum of the outstanding
voting securities of such company are present or represented by proxy; or (B) of
more than 50 per centum of the outstanding voting securities of such company,
whichever is the less."
THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" THE
AMENDMENTS TO THE SUB-ADVISORY AGREEMENT.
<PAGE>
PROPOSAL NO. 5
SHAREHOLDER PROPOSAL
A shareholder has submitted the following proposal for inclusion in this Proxy
Statement. Such shareholder claims beneficial ownership of at least $2,000 worth
of the Fund's common stock. The Fund will provide the name and address of the
proposing shareholder to any shareholder of the Fund who so requests such
information by written or oral request to William Clark, c/o Clemente Strategic
Value Fund, Inc., 152 West 57th Street, New York, New York 10019, telephone
number 212-765-0700.
RESOLVED: The shareholders recommend that the Board provide shareholders an
option to receive Net Asset Value, with no redemption penalty, as soon as
possible.
Supporting Statement:
Many shareholders voted for Mr. Olin and his team with the expectation that the
new Board would give shareholders an opportunity to realize Net Asset Value
(NAV) for their shares. This proposal asks precisely that. The wording is taken
directly from a shareholder proposal that Mr. Olin submitted to the Portugal
Fund earlier this year. What Mr. Olin proposed for PGF is, I believe, also
correct for CLM.
The proposal does not recommend open-ending the Fund. Instead, the Fund can
implement the proposal by conducting a self-tender offer at NAV. This will
permit shareholders who prefer the closed-end form to remain and benefit from
the Fund's buyback program, while allowing others to exit and realize NAV.
Mr. Olin recommended this approach in his letter of July 14, 1998 to the old CLM
Board. He wrote: "Many shareholders feel that they should be entitled to receive
full NAV for their shares right away and should not have to wait for perpetual
share buybacks or other techniques to slowly eliminate the discount. The optimal
solution for the Clemente Global Growth Fund might be a combination of the two
remedies. First, allowing those who wished NAV to exit to an open-end
counterpart or cash out, and then instituting a perpetual buyback program in the
remaining closed-end fund to keep the discount from reappearing."
Shareholders should take Mr. Olin at his word and vote "FOR" this proposal.
Board of Directors' Position on the Proposal
<PAGE>
The shareholder proposal asks that the Board provide Net Asset Value (NAV)
without incurring a redemption penalty to those shareholders wishing to leave
the Fund. Most of the Directors believe that this is not the most effective
means to deliver long-term added value to a majority of shareholders. With two
of the seven current directors dissenting, the Board opposes the proposal and
agrees with the majority of shareholders who voted in the 1999 annual meeting
that providing some means for shareholders to receive Net Asset Value should be
rejected in favor of other means of maximizing shareholder value within the
closed-end structure. They believe that somewhat more patience is justified in
an attempt to reap potentially greater rewards. The goal of this Board is not to
pit one shareholder against another, but to establish a balance that satisfies
the greatest number of shareholders.
Different types of investors have their own agendas and their own beliefs. The
closed-end structure is fundamentally different from an open-end structure or
one that provides NAV on demand. Attempts to deliver NAV immediately to a
minority of shareholders who wish to exit the Fund may well destroy or diminish
the advantages otherwise enjoyed by the remaining shareholders. For the time
being, a majority of the current Board is committed to realizing the potential
of the Fund without changing its fundamental nature.
The major benefits of the closed-end structure to long-term shareholders are
threefold: flexibility in managing fund assets, lower expenses, and performance
enhancement through profiting from the discount.
Flexibility in managing fund assets. Unlike open-end funds, closed-end funds are
not subject to cash flow disruptions caused by inflows or outflows of capital
when shareholders buy new shares or redeem shares. This permits fund management
to take a more long-term perspective on investments and may permit a more
effective investment strategy. This may in turn produce higher long-term
portfolio returns. In addition, cash can be raised to take advantage of
anticipated market declines without fear that it will instead have to be used to
satisfy the shareholder redemptions typical of open-end funds that normally
accompany market reversals. Less liquid securities, such as other closed-end
funds selling at discounts, can be placed in the fund's portfolio without fear
that redemptions will require untimely sales to raise capital.
Lower expenses. Because closed-end funds need not engage in many of the
shareholders services normally required of open-end funds and do not have the
same marketing and communication activities, costs can be kept to a minimum. The
Board has found many ways to reduce expenses and are pursuing many more. The
Board remains convinced that closed-end funds can be run more cost effectively
than open-end funds and that these savings, along with the additional
flexibility in managing fund assets, may well permit substantial additional
returns to be realized over time as compared with equivalent open-end funds.
Profiting from the discount. Closed-end funds often sell at discounts, at least
part of the time. A fund that purchases its own shares at a discount benefits
loyal, long-term shareholders in two ways. First, the net asset value is
automatically increased at no additional risk. Second, the supply of shares
available for sale at a discount is reduced and this creates price pressure
which is likely to reduce the discount (below 5%) and to enhance share value.
While the extra liquidity may benefit shareholders who choose to sell their
shares, the greatest value of an ongoing buyback program accrues to long-term
shareholders. Shareholders who view the Fund as a long-term, tax efficient
investment may be better off in a closed-end structure at a nominal or moderate
discount which fluctuates.
It is important to note that Mr. Olin's shareholder proposal for The Portugal
Fund ("PGF") stated that:
"RESOLVED: if a majority favors open-ending, but it fails to receive the
super-majority vote required, the shareholders recommend that the Board provide
shareholders an option to receive Net Asset Value, with no redemption penalty,
as soon as possible."
<PAGE>
Mr. Olin believes that the reference to his proposal for a different fund may be
misleading because it omits the conditional part of the PGF proposal. In fact,
the Clemente shareholders have twice voted down proposals to deliver NAV to
shareholders in the last two shareholder meetings. The implication is that Mr.
Olin was recommending that shareholders vote for an option to receive NAV,
whereas he was simply recommending that the Board follow the wishes of a
majority of the shareholders, which is precisely what they have been doing at
Clemente.
The supporting statement further states that Mr. Olin recommended a self-tender
offer at NAV in a July 14, 1998 letter to the old CLM Board, without
characterizing that this was just one of two options presented for
consideration. The other option, Remedy #1 - Perpetual Share Buybacks to Enhance
NAV and Reduce Discounts, has in fact been implemented at Clemente. Remedy #2,
referred to in the supporting statement, included the delivery of NAV to
shareholders. The delivery of NAV to shareholders has been rejected during both
of the last two annual meetings by the vote of the Clemente shareholders.
For all these reasons, a majority of the current Board recommends that
shareholders vote AGAINST this shareholder proposal.
Note: The two directors who were elected at the 1998 Annual Meeting of
Stockholders support measures designed to benefit long-term shareholders.
Nevertheless, because there can be no assurance that such measures will lead to
the permanent elimination of the discount, they believe that those shareholders
who would like to dispose of their shares at this time should be afforded an
opportunity to do so at a price equal to (or close to) net asset value.
Therefore, these directors respectfully dissent from the Board's recommendation
to oppose this proposal.
Effect of Passage of the Proposal
Proposal No. 5 requires the affirmative vote of a majority of shares voting at
the Meeting for passage. Passage of the Proposal will constitute a
recommendation only to the Board of Directors. A decision to provide NAV by
open-ending the Fund will require that the Board of Directors decide to pursue
such a course of action, followed by an additional vote of the Fund's
shareholders. The 1940 Act requires that any conversion of a closed-end
investment company to an open-end investment company be by a vote of "a majority
of the Fund's outstanding voting securities." The term "a majority of the Fund's
outstanding voting securities" is defined by the 1940 Act to mean the vote, at
the annual or a special meeting of the security holders of such company duly
called (A) of 67 per centum or more of the voting securities present at such
meeting, if the holders of more than 50 per centum of the outstanding voting
securities of such company are present or represented by proxy; or (B) of more
than 50 per centum of the outstanding voting securities of such company,
whichever is the less."
THE BOARD OF DIRECTORS RECOMMENDS SHAREHOLDERS
VOTE "AGAINST" PROPOSAL NO. 5.
<PAGE>
THE INVESTMENT ADVISER, THE SUB-ADVISER
AND THE ADMINISTRATOR
The Investment Adviser
Clemente Capital, Inc., the Fund's investment adviser, has its principal office
at 152 West 57th Street, New York, New York 10019. Lilia C. Clemente is Chairman
and Chief Executive Officer of the Adviser. Leopoldo M. Clemente, Jr., President
of the Fund, is President, Chief Investment Officer and a Director of the
Adviser. In addition to Mr. and Mrs. Clemente, the Adviser's Directors are:
Salvador Diaz-Verson, Jr., President of Diaz-Verson Capital Investments, Inc.,
an investment advisory firm located in Columbus, Georgia; Robert J. Christian,
Chief Investment Officer, Wilmington Trust Company; and Irving L. Gartenberg,
Esq., general counsel to the Adviser. Mrs. Clemente owns approximately 60% of
the outstanding Common Stock of the Adviser. The address for Mr. and Mrs.
Clemente is 152 West 57th Street, New York, New York 10019. The address for Mr.
Diaz-Verson is 1200 Brookstone Centre Parkway, Suite 105, Columbus, Georgia
31904; the address for Mr. Christian is 1100 North Market Street, Wilmington,
Delaware 19890; and the address for Mr. Gartenberg is 122 East 42nd Street, 46th
Floor, New York, New York 10017. Wilmington Trust Company owns 24% of the
outstanding Common Stock of the Adviser.
The Sub-Adviser
Wilmington Trust Company is a Delaware bank and trust company with principal
offices at 1100 North Market Street, Wilmington, Delaware 19890. Wilmington is a
wholly-owned subsidiary of Wilmington Trust Corporation, 1100 North Market
Street, Wilmington, Delaware 19890.
<PAGE>
Ted T. Cecala is the principal executive officer of Wilmington Trust. The name
and principal occupation of each director of Wilmington Trust as of March 23,
1999 were as follows:
<TABLE>
<CAPTION>
Name of Director Occupation
<S> <C>
Ted T. Cecala....................................Chief Executive Officer and Chairman of the Board of Wilmington Trust
Andrew B. Kirkpatrick, Jr........................Counsel to the law firm of Morris, Nichols, Arsht and Tunnell
David P. Roselle.................................President of the University of Delaware
Mary Jornlin-Theisen.............................Civic leader
Charles S. Crompton, Jr..........................Partner in the law firm of Potter, Anderson & Corroon
Edward B. du Pont................................Private investor
Stacey J. Mobley.................................Senior Vice President, external affairs, E.I. Du Pont de Nemours and Company
Carolyn S. Burger................................Principal of CB Associates, Inc., a consulting firm
Robert V.A. Harra, Jr............................President, Chief Operating Officer and Treasurer of Wilmington Trust
Leonard W. Quill.................................Retired
Richard R. Collins...............................Chairman of Collins, Inc, a consulting firm
Hugh E. Miller...................................Retired
Thomas P. Sweeney................................Partner in the law firm of Richards, Layton & Finger, P.A.
H. Stewart Dunn, Jr..............................Partner in the law firm of Ivins, Phillips & Barker
R. Keith Elliot..................................Chairman of the Board and Chief Executive Officer of Hercules Incorporated
Robert C. Forney.................................Retired
Rex L. Mears.....................................President of Ray S. Mears and Sons, Inc.
Robert W. Tunnell, Jr............................Managing Partner of Tunnell Companies, L.P.
H. Rodney Sharp, III.............................Retired
</TABLE>
Each of the above persons may be reached c/o Wilmington Trust Company,
1100 North Market Street, Wilmington, Delaware 19890.
The Administrator
PFPC Inc., 400 Bellevue Parkway, Wilmington, Delaware, serves as
Administrator of the Fund.
MISCELLANEOUS
As of the date of this Proxy Statement, management does not know of any other
matters that will come before the Meeting. If an attempt is made to bring
proposals not described in this Proxy Statement before the Annual Meeting or any
adjournment thereof, the proxy holders will, if necessary, use their
discretionary authority to vote on such proposals. In the event that any other
matter properly comes before the Meeting, the persons named in the enclosed form
of proxy intend to vote all proxies in accordance with their best judgment on
such matters.
All shares represented by proxies sent to the Fund to be voted at the Annual
Meeting will be voted if received prior to the Meeting. Votes shall be tabulated
by the Fund's transfer agent. Abstentions do not constitute a vote "for" or
"against" a matter and will be disregarded in determining votes cast on an
issue. 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 the shares on a particular matter with respect to
which the brokers or nominees do not have discretionary power) will treated the
same as abstentions. Abstentions and broker "non-votes" will have the effect of
a "no" vote for purposes of obtaining the requisite approval of each proposal.
<PAGE>
Quorum. A quorum is constituted with respect to the Fund by the presence in
person or by proxy of the holders of more than 50% of the outstanding shares of
the Fund entitled to vote at the Meeting. For purposes of determining the
presence of a quorum for transacting business at the Meeting, abstentions and
broker "non-votes" (that is, proxies from brokers or nominees indicating that
such persons have not received instructions from the beneficial owners 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 at the Meeting but which have not been voted.
In the event that a quorum is not present at the Meeting, or in the event that a
quorum is present at the Meeting but sufficient votes to approve any or all of
the proposals are not received, the persons named as proxies, or their
substitutes, may propose one or more adjournments of the Meeting to permit the
further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares affected by the adjournment that
are represented at the Meeting in person or by proxy.
The vote required for passage of each of the proposals listed herein and for the
election of the directors is listed at the end of each section describing said
proposal or election.
ADDITIONAL INFORMATION
As of February 29, 2000, (1) Ron Olin Investment Management Company and Deep
Discount Advisers, Inc., both located at One West Pack Square, Suite 777,
Asheville, North Carolina 28801, together owned approximately 33.7% of the
outstanding common shares of the Fund based on the most recent Schedule 13D. As
of such date, no other person owned of record or, to the knowledge of
management, beneficially owned more than 5% of the outstanding shares of the
Fund.; and (2) Karpus Investment Management, 14 Tobey Village Office Park,
Pittsford, New York 14534 owned 300,850 shares, approximately 6.0% of the
outstanding shares of the Fund.
<PAGE>
2001 ANNUAL MEETING
Stockholder proposals meeting the requirements contained in the proxy rules
adopted by the Securities and Exchange Commission may, under certain conditions,
be included in the Fund's proxy material for an annual meeting of stockholders.
Pursuant to these rules, proposals of stockholders intended to be presented at
the Fund's 2001 Annual Meeting of Stockholders (expected to be held in late
April, 2001) must be received by the Fund on or before December 16, 2000 to be
considered for inclusion in the Fund's Proxy Statement and form of proxy
relating to that Annual Meeting. Receipt by the Fund of a stockholder proposal
in a timely manner does not insure the inclusion of such proposal in the Fund's
proxy material. Pursuant to the Fund's advance notice provision contained in its
by-laws, proposed matters other than those governed by the foregoing rules must
be submitted to the Fund no later than 60 days prior to the meeting.
CLEMENTE STRATEGIC VALUE FUND, INC.
WILLIAM CLARK,
Secretary
Dated: March __, 2000
PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD NOW
<PAGE>
RESULTS OF THE 1999 ANNUAL MEETING
The Fund held its 1999 Annual Meeting on May 21, 1999. At the meeting, the
shareholders voted on the election of Fund directors, the ratification of
PricewaterhouseCoopers LLP as the Fund's independent accountants for the year
ending December 31, 1999, and three shareholder proposals, the results of which
were as follows:
<TABLE>
<CAPTION>
Abstentions
and Broker Votes
For Against Withheld Non-Votes
<S> <C> <C> <C> <C>
PROPOSAL ONE
Election of Directors
Ronald G. Olin 3,931,207 411,942
Gary A. Bentz 4,137,436 205,713
Ralph W. Bradshaw 3,931,336 411,813
William Clark 4,137,436 205,713
Philip Goldstein 4,136,854 206,295
Gerald Hellerman 4,135,854 207,295
Thomas H. Lenagh 3,930,136 413,013
PROPOSAL TWO
Amending the Articles of Incorporation to change the Fund's name. 3,987,912 144,011 100,864
PROPOSAL THREE
Ratification of Independent Accountants.............................. 4,141,051 35,913 166,186
PROPOSAL FOUR
Elimination of a fundamental investment policy prohibiting
investments in other investment companies.............................. 2,892,234 184,884 100,707
PROPOSAL FIVE
Shareholder Proposal to convert the Fund to an open-end fund........... 934,264 2,289,252 69,930
</TABLE>
<PAGE>
APPENDIX A
----------
CLEMENTE STRATEGIC VALUE FUND, INC.
152 West 57th Street, 25th Floor
New York, New York 10019
__________, 2000
Clemente Capital, Inc.
152 West 57th Street, 25th Floor
New York, New York 10019
Re: Amended and Restated
Investment Advisory Agreement
Dear Sirs:
Clemente Strategic Value Fund, Inc. (the "Fund") a corporation
organized under the laws of the State of Maryland confirms its agreement with
Clemente Capital, Inc. (the "Investment Adviser") as follows:
1. Appointment of Investment Adviser. The Fund desires to employ its capital by
investing and reinvesting in investments of the kind and in accordance with the
limitations specified in its Articles of Incorporation dated April 30, 1987 as
amended from time to time (the "Charter"), and in its Prospectus as from time to
time in effect (the "Prospectus"), and in the manner and to the extent as may
from time to time be approved by the Board of Directors of the Fund. The Fund
desires to employ and hereby appoints the Investment Adviser to act as
investment adviser of the Fund. The Investment Adviser accepts the appointment
and agrees to furnish the services for the compensation set forth below.
2. Delivery of Fund Documents. The Fund has furnished the
Investment Adviser with copies properly certified or authenticated of each of
the following:
(a) Charter.
(b) By-Laws-of the Fund, as amended from time to time.
(c) Resolutions of the Directors of the Fund selecting Clemente
Capital, Inc. as Investment Adviser and approving the form of
this Agreement.
(d) Prospectus.
The Fund will furnish the Investment Adviser from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
3. Name of Fund. The Fund may use the name "Clemente Strategic
Value Fund, Inc." or any name derived from the name "Clemente Capital, Inc."
only for so long as this Agreement or any other Investment Advisory Agreement
between the Investment Adviser and the Fund or any extension, renewal or
amendment hereof or thereof remains in effect, including any similar agreement
with any organization which shall have succeeded to the Investment Adviser's
business as investment adviser. At such time as such an agreement shall no
longer be in effect, the Fund will (to the extent that it lawfully can) cease to
use such name or any other name indicating that it is advised by or otherwise
connected with the Investment Adviser or any organization which shall have
<PAGE>
so succeeded to the Investment Adviser's business. The Fund acknowledges that
the Investment Adviser may grant the non-exclusive right to use the name
"Clemente" to any other corporation or entity, including but not limited to any
investment company of which the Investment Adviser or any subsidiary or
affiliate thereof or any successor to the business thereof shall be an
investment adviser.
4. Services Provided by Investment Adviser. Subject to the
supervision and direction of the Board of Directors of the Fund, the Investment
Adviser will (a) act in strict conformity with the Fund's Articles of
Incorporation, the Investment Company Act of 1940, as amended (the "1940 Act")
and the Investment Advisers Act of 1940, as amended, (b) manage the Fund's
portfolio and furnish a continual investment program for the Fund in accordance
with the Fund's investment objective and policies as described in the Fund's
Prospectus, (c) make investment decisions for the Fund, (d) provide the Fund
with investment research and statistical data, advice and supervision, data
processing and clerical services, (e) provide the Fund with office facilities
which may be the Investment Adviser's own offices, (f) determine what securities
shall be purchased for the Fund, what securities shall be held or sold by the
Fund, and what portion of the Fund's assets shall be held uninvested, (g) review
asset allocations and investment policies with the Board of Directors of the
Fund every quarter, and (h) advise and assist the officers of the Fund in taking
such steps as are necessary or appropriate to carry out the decisions of the
Board of Directors of the Fund and its committees with respect to the foregoing
matters and the conduct of the business of the Fund. In addition, the Investment
Adviser will furnish the Fund with whatever statistical information the Fund may
reasonably request with respect to the securities that the Fund may hold or
contemplate purchasing.
The Investment Adviser will keep the Fund informed of
developments materially affecting the Fund's portfolio, and will, on its own
initiative, furnish the Fund from time to time with whatever information the
Investment Adviser believes is appropriate for this purpose.
5. Allocation of Charges and Expenses. The Investment Adviser
will make available, without expense to the Fund, the services of such of its
officers, directors and employees as may be duly elected officers or directors
of the Fund, subject to the individual consent of such persons to serve and to
any limitations imposed by law. The Investment Adviser will pay all expenses
incurred in performing its investment advisory services under this Agreement,
including compensation of and office space for officers and employees of the
Fund connected with investment and economic research, trading and investment
management of the Fund, as well as the fees of all Directors of the Fund who are
"affiliated persons" of the Investment Adviser, as that term is defined in the
1940 Act or any of its "affiliated persons". The Investment Adviser will not be
required to pay any expenses of the Fund other than those specifically allocated
to it in this paragraph 5. In particular, but without limiting the generality of
the foregoing, the Fund will be required to pay: organization and offering
expenses; fees and expenses incurred by the Fund in connection with membership
in investment company organizations; brokerage and other expenses of executing
portfolio transactions; legal, auditing or accounting expenses; taxes or
governmental fees; the fees and expenses of any administration, transfer agent,
registrar or dividend disbursing agent of the Fund; the cost of preparing share
certificates or any other expenses, including clerical expenses of issue, or
repurchase
-2-
<PAGE>
of shares of capital stock (the "Shares") of the Fund; interest charges and
other costs of borrowing funds; the expenses of and fees for registering or
qualifying securities for sale and of maintaining the registration of the Fund;
the fees and expenses of Directors of the Fund who are not affiliated with the
Investment Adviser; the cost of preparing and distributing reports and notices
to shareholders and reports to regulatory agencies; the costs and or fees
incident to Directors' and Shareholders' meetings; the cost of preparing and
mailing proxy materials; the costs and or fees incident to the listing (and
maintenance of such listing) of the Fund's Shares on stock exchanges; the fees
or disbursements of custodians and subcustodians of the Fund's assets, including
expenses incurred in the performance of any obligations enumerated by the
Charter or By-Laws of the Fund insofar as they govern agreements with any such
custodian; the cost of office supplies, including stationery; travel expenses of
all offices and employees of the Fund; litigation and indemnification expenses
and other extraordinary expenses not incurred in the ordinary course of the
Fund's business.
6. Compensation of the Adviser. In consideration of the services
rendered pursuant to this Agreement, the Fund will pay to the Investment
Adviser, as compensation for the services provided by the Investment Adviser
under this Agreement, a monthly fee comprised of a basic fee of 1% (on an
annualized basis) of the average weekly net assets of the Fund (the "Basic Fee")
that is subject to adjustment based on the investment performance of the Fund in
relation to the investment performance of the S&P 500 Index of U.S. securities
(the "S&P 500 Index").
Adjustments to the Basic Fee will be made by comparison of the
Fund's investment performance for the applicable performance period to the
investment record of the S&P 500 Index for the same period. The applicable
performance period is a rolling sixty (60) month period whereby the most recent
calendar month is substituted for the earliest month as time passes.
The Basic Fee for each month may be increased to a maximum of
2.00% (on an annualized basis) or decreased to a minimum of 0.00% (on an
annualized basis) depending on the extent by which the Fund's performance varies
from the S&P 500 Index over the performance period described above.
The maximum monthly fee rate as adjusted for performance will
be 1/12 of 2.00% and will be payable if the investment performance of the Fund
exceeds the percentage change in the investment record of the S&P 500 Index by
fifteen (15) or more percentage points for the performance period, and the
minimum monthly fee rate as adjusted for performance will be 1/12 of 0.00% and
will be payable if the percentage change in the investment performance of the
Fund is exceeded by the investment record of the S&P 500 Index by five or more
percentage points for the performance period. Appendix A sets forth the method
of determining the adjustments to the Basic Fee.
In calculating the investment performance of the Fund as
compared with the investment record of the S&P 500 Index, dividends and other
distributions of the Fund and dividends and other distributions reported with
respect to component securities of the S&P 500 Index during the performance
period will be treated as having been reinvested. Also, any taxes paid by the
Fund
-3-
<PAGE>
which may be claimed as tax credits by the shareholders of the Fund are added
back in calculating the Fund's performance in order to be comparative with the
S&P 500 Index.
Pursuant to a Sub-Advisory Agreement among the Fund, the
Investment Adviser and Wilmington Trust Company, an indirect affiliate of the
Investment Adviser ("Wilmington Trust"), dated May 29, 1997 (the "Sub-Advisory
Agreement"), Wilmington Trust provides sub-advisory services for the Fund's
portfolio subject to the supervision of the Board of Directors. Under the terms
of the Sub-Advisory Agreement, the Investment Adviser has agreed to pay
Wilmington Trust a monthly fee at the rate of 25% of the net fees payable to the
Investment Adviser.
The investment performance of the Fund for any period,
expressed as a percentage of the Fund's net asset value per share at the
beginning of such period, shall mean and be the sum of: (i) the change in the
Fund's net asset value per share during such period adjusted to reflect dividend
income gross of withholding taxes; (ii) the value of the Fund's cash
distributions per share accumulated to the end of such period; and (iii) the
value of capital gains taxes per share paid or payable on undistributed realized
long-term capital gains accumulated to the end of such period. For this purpose,
the value of distributions per share of realized capital gains, of dividends per
share paid from investment income and of capital gains taxes per share paid or
payable on undistributed realized long-term capital gains shall be treated as
reinvested in shares of the Fund at the net asset value per share in effect at
the close of business on the record date for the payment of such distributions
and dividends and the date on which provision is made for such taxes, after
giving effect to such distributions, dividends and taxes. Fractions of a
percentage point in calculating such investment performance shall be rounded to
the nearer whole point and to the higher whole point if exactly one-half.
The investment record of the S&P 500 Index for any period,
expressed as a percentage of the S&P 500 Index level at the beginning of such
period, shall mean and be the sum of: (i) the change in the level of the S&P 500
Index during such period; and (ii) the value, computed consistently with the S&P
500 Index, of dividends and other distributions as reported in the S&P 500
Index, made by companies whose securities comprise the S&P 500 Index accumulated
to the end of such period. For this purpose, dividends and other distributions
on the securities which comprise the S&P 500 Index shall be treated as having
been reinvested in the S&P 500 Index. Fractions of a percentage point in
calculating such investment record shall be rounded to the nearer whole point
and to the higher whole point if exactly one-half.
The Investment Adviser will receive a flat 1% fee of the
average month-end net assets of the Fund (on an annualized basis) payable
monthly for the four (4) month period from January 1, 2000 through April 30,
2000 and such four (4) month period will not be included in the performance
period. For the period from May 1, 2000 to December 31, 2000 the Basic Fee plus
or minus the performance adjustments set forth in Appendix A will be calculated
monthly and will be paid at the end of such eight (8) month period. Thereafter,
the Basic Fee plus or minus the performance adjustments will be calculated and
paid monthly.
-4-
<PAGE>
Any calculation of the investment performance of the Fund and
the investment record of the S&P 500 Index shall be in accordance with any then
applicable rules of the Securities and Exchange Commission.
In the event of any termination of this Agreement, the fee
provided for in this paragraph 6 shall be calculated on the basis of a period
ending on the last day on which this Agreement is in effect, subject to a pro
rata adjustment based on the number of days elapsed in the current period as a
percentage of the total number of days in such period.
7. Services to Other Accounts. The Fund understands that the
Investment Adviser now acts, will continue to act and may act in the future as
investment adviser to fiduciary and other managed accounts, and the Fund has no
objection to the Investment Adviser so acting, provided that whenever the Fund
and one or more other accounts advised by the Investment Adviser are prepared to
purchase, or desire to sell, the same security, available investments or
opportunities for sales will be allocated in a manner believed by the Investment
Adviser to be equitable to each entity. The Fund recognizes that in some cases
this procedure may affect adversely the price paid or received by the Fund or
the size of the position purchased or sold by the Fund. In addition, the Fund
understands that the persons employed by the Investment Adviser to provide
service to the Fund in connection with the performance of the Investment
Adviser's duties under this Agreement will not devote their full time to that
service. Moreover, nothing contained in this Agreement will be deemed to limit
or restrict the right of the Investment Adviser or any "affiliated person" of
the Investment Adviser to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature to other persons or
entities, including serving as investment adviser to, or employee, officer,
director or trustee of, other investment companies.
8. Brokerage; Avoidance of Conflicts of Interest. In connection
with purchases or sales of portfolio securities for the account of the Fund,
neither the Investment Adviser nor any of its directors, officers or employees
will act as a principal or agent or receive any commission with respect to such
purchases or sales. The Investment Adviser or its agents shall arrange for the
placing of all orders for the purchase and sale of portfolio securities for the
Fund's account with brokers or dealers selected by the Investment Adviser. In
the selection of such brokers or dealers and the placing of such orders, the
Investment Adviser will use its best efforts to seek for the Fund the most
favorable execution and net price available and will consider all factors it
deems relevant in making such decisions including, but not limited to, price
(including any applicable brokerage commission or dealer spread), size of order,
difficulty of execution, and operational facilities of the firm involved and the
firm's risk in positioning a block of securities.
The parties agree that it is in the interests of the Fund that
the Investment Adviser have access to supplemental investment and market
research and security and economic analyses provided by brokers who may execute
brokerage transactions at a higher cost to the Fund than may result when
brokerage is allocated to other brokers on the basis of the best price and
execution. The Investment Adviser is authorized to place orders for the purchase
and sale of securities for the Fund with such brokers, subject to review by the
Fund's Directors from time to time. In selecting brokers
-5-
<PAGE>
or dealers to execute a particular transaction and in evaluating the best price
and execution available, the Investment Adviser may consider the brokerage and
research services (as such terms are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended) provided to the Fund and/or other accounts
over which the Investment Adviser exercises investment discretion.
9. Standard of Care. The Investment Adviser will exercise its
best judgment in rendering the services described in paragraph 4 above. The
Investment Adviser shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by the Investment Adviser of its obligations and duties under
this Agreement, or a loss resulting from a breach of fiduciary duty with respect
to receipt of compensation for services (in which case any award of damages
shall be limited to the period and amount set forth in Section 36(b)(3) of the
1940 Act). Any person, even though an officer, director, employee, or agent of
the Investment Adviser, who may be or become an officer, director, employee or
agent of the Fund, will be deemed, when rendering services to the Fund, to be
rendering such services to, or acting solely for, the Fund and not as an
officer, director, employee or agent, or one under the control or direction of
the Investment Adviser, even though paid by it.
10. Duration and Termination of this Agreement. This Agreement
shall remain in force until April 30, 2002 and from year to year thereafter, but
only so long as such continuance is specifically approved at least annually by
the vote of a majority of the Directors who are not interested persons of the
Investment Adviser or of the Fund, cast in person at a meeting called for the
purpose of voting on such approval and by a vote of the Board of Directors or of
a majority of the outstanding voting securities of the Fund. The aforesaid
requirement that continuance of this Agreement be specifically approved at least
annually shall be construed in a manner consistent with the 1940 Act and the
rules and regulations thereunder. This Agreement may, on sixty (60) days,
written notice, be terminated at any time without the payment of any penalty, by
the Board of Directors of the Fund, or by vote of a majority of the outstanding
voting securities of the Fund, or by the Investment Adviser. This Agreement
shall automatically terminate in the event of its assignment. In interpreting
the provisions of this Agreement, the definitions contained in Section 2(a) of
the 1940 Act (particularly the definitions of "interested person", "assignment"
and "majority of the outstanding voting securities"), as from time to time
amended, shall be applied, subject, however, to such exemptions, as may be
granted by the Securities and Exchange Commission by any rule, regulation or
order.
11. Amendment of this Agreement. No provisions of this Agreement
may be amended, changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
amendment, change, waiver, discharge or termination is sought, and no amendment
of this Agreement shall be effective until approved by vote of the holders of a
majority of the outstanding voting securities of the Fund and by the Board of
Directors of the Fund, including a majority of the Directors who are not
interested persons of the Investment Adviser or of the Fund, cast in person at a
meeting called for the purpose of voting on such approval.
-6-
<PAGE>
12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York in a manner not
in conflict with the provisions of the 1940 Act.
13. Miscellaneous. Neither the holders of Shares of the Fund nor
the Directors shall be personally liable hereunder. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
If you are in agreement with the foregoing, please sign the
form of acceptance on the accompanying counterpart of this letter and return
such counterpart to the Fund, whereupon this letter shall become a binding
contract between the Fund and the Investment Adviser.
Yours very truly,
CLEMENTE STRATEGIC VALUE FUND,
INC.
By:
----------------------------------
Title:
-------------------------------
-7-
<PAGE>
The foregoing Agreement is hereby accepted as of the date thereof.
CLEMENTE CAPITAL, INC.
By:
----------------------------------
Title:
-------------------------------
-8-
<PAGE>
APPENDIX A
Compensation of the Investment Adviser
Paragraph 6 of Investment Advisory Agreement
The following adjustments to the Basic Fee on an annualized
basis shall apply with respect to the indicated percentage point differences
between the performance of the Fund and the percentage change in the S&P 500
Index (percentage point differences represented by fractions shall be rounded to
the nearer whole point and to the higher whole point if exactly one-half).
<TABLE>
<CAPTION>
5-Year Percentage Point
Difference Between
Performance
of Fund Adjustment Fee as
and % Change in Basic to Basic Fee Adjusted
S&P 500 Index Fee (Annualized) (Annualized)
-------------- ----- ------------ ------------
<S> <C> <C> <C>
+15% or greater 1% +1.0% 2.00%
+ 14 1 +0.9 1.90
+ 13 1 +0.8 1.80
+ 12 1 +0.7 1.70
+ 11 1 +0.6 1.60
+ 10 1 +0.5 1.50
+ 9 1 +0.4 1.40
+ 8 1 +0.3 1.30
+ 7 1 +0.2 1.20
+ 6 1 +0.1 1.10
+ 5 1 0.0 1.00
+ 4 1 -0.1 .90
+ 3 1 -0.2 .80
+ 2 1 -0.3 .70
+ 1 1 -0.4 .60
0 1 -0.5 .50
- - 1 1 -0.6 .40
- - 2 1 -0.7 .30
- - 3 1 -0.8 .20
- - 4 1 -0.9 .10
- - 5 or greater 1 -1.0 0.00
</TABLE>
-9-
<PAGE>
The following table provides various examples of the
calculation of the increase or decrease, if any, to the Basic Fee on an
annualized basis, assuming certain investment performances of the Fund and
percentage changes in the investment record of the S&P 500 Index for the
performance period.
<TABLE>
<CAPTION>
% change in Adjustment Fee as
Fund S&P 500 to Basic Fee Adjusted
Performance Index Difference (Annualized) (Annualized)
----------- ------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
+ 2% + 5% - 3 % -.8% .2%
+ 10 + 10 0 -0.5 0.5
+ 16 + 17 - 1 -0.6 0.4
+ 3 + 14 - 11 -1 0
- 5 - 8 + 3 -0.2 0.8
+ 2 - 9 + 11 0.6 1.6
</TABLE>
-10-
<PAGE>
APPENDIX B
----------
SUB ADVISORY AGREEMENT
AGREEMENT made as of May 29, 1997, as amended as of __________,
2000, between Clemente Capital, Inc., a New York corporation (the "Adviser"),
Clemente Global STRATEGIC VALUE Fund, Inc., a Maryland corporation (the "Fund")
and Wilmington Trust Company, a Delaware corporation (the "Sub-Adviser").
WHEREAS, the Fund is registered as a closed-end, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Adviser has been appointed investment adviser to the
Fund, pursuant to an Investment Advisory Agreement dated June 19, 1987, as
amended as of _________, 2000, which has been approved by the Fund's
shareholders and by the Fund's Board of Directors, most recently on _________,
2000 (the "Advisory Agreement"); and
WHEREAS, the Adviser and the Fund desire to retain the Sub-Adviser
to assist the Adviser in providing a continuous investment program for the
Fund's portfolio (the "Portfolio") and the Sub-Adviser is willing to do so; and
WHEREAS, the Board of Directors of the Fund has approved this
Agreement, subject to approval by the shareholders of the Fund, and the
Sub-Adviser is willing to furnish such services upon the terms and conditions
herein set forth.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Adviser and the Fund hereby appoint the
Sub-Adviser to serve as sub-adviser to the Adviser with respect to the
Portfolio. Intending to be legally bound, the Sub-Adviser accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided.
2. Advisory Services. Subject to the supervision of the Fund's
Board of Directors, the Sub-Adviser will assist the Adviser in providing a
continuous investment program for the Portfolio, including investment research
and management with respect to the securities and investments and cash
equivalents comprising the Portfolio. The Sub-Adviser will provide services
under this Agreement in accordance with the Fund's investment objective,
policies and restrictions as stated in the Fund's Prospectus and resolutions of
the Fund's Board of Directors applicable to the Fund.
<PAGE>
Without limiting the generality of the foregoing, the
Sub-Adviser further agrees that it:
(a) will assist in determining from time to time what
securities and other investments will be purchased, retained or sold
for the Portfolio;
(b) will manage in consultation with the Adviser the
Portfolio's temporary investments in securities, cash and cash
equivalents;
(c) will place orders pursuant to its investment
determinations for the Portfolio either directly with the issuer or
with any broker or dealer;
(d) will consult with the Adviser on a continuous basis as to
the Fund's total assets which shall be invested in the Portfolio;
(e) will attend regular business and investment-related
meetings with the Fund's Board of Directors and the Adviser if
requested to do so by the Fund and/or the Adviser; and
(f) will maintain books and records with respect to the
securities transactions for the Portfolio, furnish to the Adviser and
the Fund's Board of Directors such periodic and special reports as they
may request with respect to the Portfolio, and provide in advance to
the Adviser all reports to the Board of Directors for examination and
review within a reasonable time prior to the Fund's Board meetings.
3. Covenants by the Sub-Adviser. The Sub-Adviser agrees with
respect to the services provided to the Fund that it:
(a) will conform with all Rules and Regulations of the
Securities and Exchange Commission;
(b) will telecopy trade information to the Adviser no later
than the first business day following the day of the trade and cause
broker confirmations to be sent directly to the Adviser and adopt such
other trade reporting, settlement and clearance procedures with respect
to the Fund as shall be in accordance with the Fund's existing
procedures and as mutually agreed by the panics hereto; and
-2-
<PAGE>
(c) will treat confidentially and as proprietary information
of the Fund all records and other information relative to the Fund and
prior, present or potential shareholders, and will not use such records
and information for any purpose other than performance of its
responsibilities and duties hereunder (except after prior notification
to and approval in writing by the Fund, which approval shall not be
unreasonably withheld, and may not be withheld and will be deemed
granted where the Sub-Adviser may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge
such information by duly constituted authorities, or when so requested
by the Fund).
4. Services Not Exclusive. The services furnished by the
Sub-Adviser hereunder are deemed not to be exclusive, and nothing in this
Agreement shall (i) prevent the Sub-Adviser or any affiliated person (as defined
in the 1940 Act) of the Sub-Adviser or any affiliated person of such person from
acting as investment adviser or manager for any other person or persona,
including other management investment companies or investment vehicles or
accounts of any type with investment objectives and policies the same as or
similar to those of the Fund or (ii) limit or restrict the Sub-Adviser or any
such affiliated person from buying, selling or trading any securities or other
investments (including any securities or other investments which the Fund is
eligible to buy) for its or their own accounts or for the accounts of others for
whom it or they may be acting; provided, however. that the Sub-Adviser agrees
that it will not undertake any activities which, in its reasonable judgment,
will adversely affect the performance of its obligations under this Agreement.
5. Portfolio Transactions. Investment decisions for the Portfolio
shall be made by the Sub-Adviser independently from those for any other
investment companies and accounts advised or managed by the Sub-Adviser. The
Portfolio and such investment companies and accounts may, however, invest in the
same securities. When a purchase or sale of the same security is made at
substantially the same time on behalf of the Portfolio and/or another investment
company or account, the transaction will be averaged as to price, and available
investments allocated as to amount, in a manner which the Sub-Adviser believes
to be equitable to the Fund and such other investment company or account. In
some instances, this investment procedure may adversely affect the price paid or
received by the Fund or the size of the position obtained or sold by the Fund.
To the extent permitted by law, the Sub-Adviser may aggregate the securities to
be sold or purchased for the Portfolio with those to be sold or purchased for
other investment companies or accounts in order to obtain best execution.
Either the Adviser, or at the Sub-Adviser's option, the
Sub-Adviser shall place orders for the purchase and sale of portfolio securities
for the Portfolio and will solicit broker-dealers to execute transactions in
accordance with the Fund's policies and restrictions regarding brokerage
allocations. If applicable, the Sub-Adviser shall place orders pursuant to its
investment determinations for the Portfolio either directly with the issuer or
with any broker or dealer. If it executes portfolio transactions and selects
brokers or dealers, the Sub-Adviser shall
-3-
<PAGE>
use its reasonable best efforts to seek the most favorable execution of orders,
after taking into account all factors the Sub-Adviser deems relevant, including
the breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the specific transaction and
on a continuing basis. Consistent with this obligation, the Sub-Adviser may, to
the extent permitted by law, purchase and sell portfolio securities to and from
brokers and dealers who provide brokerage and/or research services (within the
meaning of Section 28(e) of the Securities Exchange Act of 1934) to or for the
benefit of the Portfolio and/or other accounts over which the Sub-Adviser or any
of its affiliates exercises investment discretion. The Sub-Adviser is authorized
to pay to a broker or dealer who provides such brokerage and/or research
services a commission for executing a portfolio transaction for the Fund which
is in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Adviser determines in good
faith that such commission was reasonable in relation to the value of the
brokerage and/or research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Sub-Adviser's overall
responsibilities to the Fund. In no instance will portfolio securities be
purchased from or sold to the Adviser or the Sub-Adviser or any affiliated
person of either thereof, except as permitted by Rules and Regulations of the
Securities and Exchange Commission.
6. Books and Records. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Sub-Adviser hereby agrees that all records which
it maintains for the Fund are the property of the Fund and further agrees to
surrender promptly to the Fund any of such records upon the Fund's request. The
Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act.
7. Expenses. During the term of this Agreement, the Sub-Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities, commodities and other
investments (including brokerage commissions and other transaction charges, if
any) purchased for the Fund. Nothing herein, however, shall be deemed to require
the Sub-Adviser to pay any expenses of the Fund or the Adviser.
8. Compensation. For the services provided and the expenses
assumed with respect to the Portfolio pursuant to this Agreement, the
Sub-Adviser will be entitled to a fee, computed monthly, from the Adviser equal
to twenty-five (25%) percent of the fees received by the Adviser from the Fund
pursuant to the Advisory Agreement.
9. Standard of Care: Limitation of Liability. The Sub-Adviser
shall exercise due care and diligence and use the same skill and care in
providing its services hereunder as it uses in providing services to other
investment companies, accounts and customers, but shall not
-4-
<PAGE>
be liable for any action taken or omitted by the Sub-Adviser in the absence of
bad faith, willful misconduct, gross negligence or reckless disregard of its
duties.
10. Reference to the Sub-Adviser. Neither the Adviser nor any
affiliate or agent of it shall make reference to or use the name of the
Sub-Adviser or any of its affiliates, or any of their clients, except references
concerning the identity of and services provided by the Sub-Adviser to the Fund,
which references shall not differ in substance from those included in the most
recent proxy statement or annual report of the Fund, or the Fund's current
registration statement, this Agreement and the Advisory Agreement between the
Adviser and the Fund, in any advertising or promotional materials without the
prior approval of the Sub-Adviser, which approval shall not be unreasonably
withheld or delayed. The Adviser hereby agrees to make all reasonable efforts to
cause thc Fund and any affiliate thereof to satisfy the foregoing obligation.
11. Duration and Termination. Unless sooner terminated, this
Agreement shall continue until ________, 2000, and thereafter shall continue
automatically for successive annual periods, provided such continuance is
specifically approved at least annually by the Fund's Board of Directors or the
vote of a "majority of the outstanding voting securities of the Fund," defined
as the lesser of (a) sixty-seven (67%) percent of the shares of the Fund
represented at a meeting if holders of more than fifty (50%) percent of the
outstanding shares of the Fund are present in person or by proxy or (b) more
than fifty (50%) percent of the outstanding shares of the Fund, provided that in
either event its continuance also is approved by a majority of the Fund's
Directors who are not "interested persons" (as defined in the 1940 Act) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable at any time
without penalty, on sixty (60) days' notice, by the Fund's Board of Directors,
by the Adviser or by the Sub-Adviser or by vote of a majority of the outstanding
voting securities of the Fund. This Agreement will terminate automatically in
the event of its assignment (as defined in the 1940 Act).
12. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, and no amendment of this
Agreement shall be effective until approved by the vote of the holders of a
majority of the outstanding voting securities of the Fund and by the Board of
Directors of the Fund, including a majority of the Directors who are not
interested persons of the Adviser or the Sub-Adviser, cast in person at a
meeting called for the purpose of voting on such approval.
13. Notice. Any notice, advice or report to be given pursuant to
this Agreement shall be delivered or mailed:
-5-
<PAGE>
To the Sub-Adviser at:
1100 North Market Street
Wilmington, Delaware 19890
Attention: Mr. Robert J. Christian
To the Adviser at:
152 West 57th Street
New York, New York 10019
Attention: Mr. Leopoldo M. Clemente, Jr.
To the Fund at:
152 West 57th Street
New York, New York 10019
Attention: Mr. Leopoldo M. Clemente, Jr.
with a copy to:
Spitzer & Feldman P.C.
405 Park Avenue
New York, New York 10022
Attention: Thomas R. Westle, Esq.
14. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.
This Agreement constitutes the entire agreement of the
parties, shall be binding upon and shall inure to the benefit of the panics
hereto and their respective successors and shall be governed by New York law.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed by their officers designated below as of the day and year first
above written.
CLEMENTE STRATEGIC VALUE FUND, INC.
By:
--------------------------------
Name:
Title:
CLEMENTE CAPITAL, INC.
By:
--------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY
By:
--------------------------------
Name:
Title:
-7-
<PAGE>
PROXY
CLEMENTE STRATEGIC VALUE FUND, INC.
The undersigned stockholder of Clemente Strategic Value Fund, Inc. (the
"Fund") hereby constitutes and appoints Ralph Bradshaw and William Clarke, or
either of them, the action of a majority of them voting to be controlling, as
proxy of the undersigned, with full power of substitution, to vote all shares of
Common Stock of the Fund standing in his name on the books of the Fund at the
Annual Meeting of Stockholders of the Fund to be held on Wednesday, April 26,
2000 at 9:30 A.M., New York time, at the offices of Clemente Capital, Inc., 152
West 57th Street, 25th Floor, New York, New York or at any adjournment thereof,
with all the powers which the undersigned would possess if personally present,
as designated on the reverse hereof:
The undersigned hereby instructs the said proxies to vote in accordance with the
aforementioned instructions with respect to the approval or disapproval of (a)
the election of seven Directors, (b) the ratification of the selection by the
Board of Directors of the Fund's independent accountants, (c) the approval of
disapproval of a Board proposal, and (e) the approval or disapproval of a
shareholder proposal, but, if no such specification is made, (i) to vote for the
election of the seven directors nominated by the Fund, (ii) to vote for the
amendment of the Fund's Investment Advisory Agreement, (iii) to vote for the
ratification of the selection by the Board of Directors of the Fund's
independent accountants, (iv) to vote for the amendment of the Fund's U.S.
Advisory Agreement, (v) to vote against the shareholder proposal, and (vi) to
vote in their discretion with respect to such other matters as may properly come
before the Meeting.
- -----------------------------------------------------------------
PROXY SOLICITED ON BEHALF OF CLEMENTE STRATEGIC VALUE FUND, INC.'S BOARD OF
DIRECTORS FOR ANNUAL MEETING OF STOCKHOLDERS--APRIL 26, 2000
(To be dated and signed on reverse side)
/ /
Please mark boxes / / or /X/ in blue or black ink.
(A) Election of seven Directors, as set forth below, until their successors are
duly elected and qualified:
Gary A. Bentz, Ralph W. Bradshaw, William Clark, Scott B. Rogers
- --------------------------------------------------------------------------------
Page 1
<PAGE>
Andrew Strauss, Thomas H. Lenagh and Glenn W. Wilcox, Sr.
FOR ALL NOMINEES LISTED ABOVE WITHHOLD
AUTHORITY
(except as indicated to the contrary below) / / to vote for all
nominees listed above / /
(INSTRUCTION: To withhold authority to vote for an individual, write that
nominee's name in the space provided below.)
A. To elect seven Fund directors to serve until their successors are duly
elected and qualified;
B. To ratify the selection by the Board of Directors of
PricewaterhouseCoopers LLP as the Fund's independent accountants for the
year ending December 31, 2000;
C. To amend the Fund's Investment Advisory Agreement with Clemente Capital,
Inc. regarding the calculation of the compensation of the Adviser,
including the Basic Fee and the performance fee which, if approved, may
result in an increase in the annual advisory fees.
D. To amend the current U.S. Advisory Agreement among the Fund, the Adviser
and Wilmington Trust Company to a sub-advisory agreement on substantially
the same terms as the current U.S. Advisory Agreement;
E. To consider a shareholder proposal recommending that the Board take the
steps necessary to provide shareholders an option to receive net asset
value with no redemption penalty, which proposal the Board of Directors
opposes;
6. To transact such other business as may properly come before the meeting
or any adjournment thereof.
