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
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
THIRD AVENUE VALUE FUND, INC.
(Name of Registrant as Specified In Its Charter)
Name of Person(s) Filing Proxy Statement, if other than Registrant
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(j)(2) or Investment Company Act Rule 20a-1(c).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing:
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
PAGE
<PAGE>
October 12, 1996
Dear Shareholder:
A Special Meeting of Shareholders of Third Avenue Value Fund, Inc. (the
"Fund"), has been scheduled for 10:00 a.m. Eastern Standard Time on
Friday, November 15, 1996, at The New York Marriott East Side Hotel,
525 Lexington Avenue, New York, New York 10017.
The primary purpose of this meeting is to consider a proposal by your
Fund's management to convert the corporate structure of your Fund from
a Maryland based corporation to a Delaware based business trust. This
change will provide management with the flexibility to meet the dynamic
needs of today's mutual fund market, and to do so in the most economical
fashion.
The Board of Directors, including myself, recommends an affirmative vote
for all proposals. Please consider each proposal, mark your choices on
the enclosed proxy card and return it in the postage paid envelope
provided. Please return your signed proxy card regardless of how many
shares you own. By returning your proxy card you can help ensure that a
quorum will be present at the meeting.
If you have any questions about the proxy materials or your Third Avenue
Value Fund investment, please contact our shareholder service
representative at (800) 443-1021.
Sincerely,
Martin J. Whitman
Chairman
Third Avenue Value Fund, Inc.
<PAGE>
THIRD AVENUE VALUE FUND, INC.
767 Third Avenue
New York, New York 10017-2023
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF
THIRD AVENUE VALUE FUND, INC.
To be held November 15, 1996
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that a SPECIAL MEETING OF SHAREHOLDERS of
Third Avenue Value Fund, Inc. (the "Fund"), a Maryland corporation,
will be held on Friday, November 15, 1996 at The New York Marriott
East Side Hotel, 525 Lexington Avenue, New York, New York 10017.
The meeting will convene at 10:00 a.m. Eastern Standard Time. The
following proposals will be presented to the shareholders:
1. To elect a Board of Directors;
2. To ratify the selection of Price Waterhouse LLP as the Fund's
independent public accountants for the fiscal year ending
October 31, 1996;
3. To approve or disapprove the proposed Agreement and Articles of
Merger, which provide for a conversion of the Fund from a
Maryland corporation to a Delaware business trust; and
4. To transact such other business as may properly come before the
meeting, or any adjournment thereof.
The transfer books will not be closed, but only those shareholders of
record of the Fund at the close of business on September 16, 1996,
will be entitled to notice of, and to vote on, the proposals at the
meeting or at any adjournment thereof.
Shareholders are invited to attend in person. If you plan to attend
the meeting, so indicate on the enclosed proxy card and return it
promptly in the enclosed envelope. No postage is required if mailed
in the United States. Whether you will be able to attend or not,
PLEASE VOTE, SIGN AND DATE THE PROXY AND RETURN IT PROMPTLY.
October 12, 1996 By Order of the Board of Directors
Stuart Merzer, Secretary
PLEASE RETURN YOUR PROXY IMMEDIATELY
TO PREVENT ADDITIONAL SOLICITATION EXPENSE
PAGE
<PAGE>
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of proxies by or on behalf of the Board of Directors of Third Avenue
Value Fund, Inc. (the "Fund"), for use at a Special Meeting of
Shareholders of the Fund (the "Meeting") scheduled for November 15,
1996, at 10:00 a.m., Eastern Standard Time at The New York Marriott
East Side Hotel, 525 Lexington Avenue, New York, New York 10017 and
at any adjournments thereof. The date of the first mailing of this
Proxy Statement to shareholders was approximately October 12, 1996.
Only shareholders of record of the Fund at the close of business on
September 16, 1996 ("Record Date") are entitled to notice of, and to
vote on, the proposals at the Meeting or any adjournment thereof.
As of the Record Date, there were 22,466,433.923 outstanding
shares of the Fund. Each stockholder is entitled to vote on the
proposals on the basis of one vote per share, with proportionate
voting for fractional shares.
The Fund is an open-end, non-diversified management investment company, as
defined in the Investment Company Act of 1940, as amended (the
"Act"). It was incorporated in Maryland on November 27, 1989 and has
an authorized capitalization of 200 million shares of $0.001 par
value common stock. The shares of the Fund when issued against
payment therefor are fully paid and non-assessable and have no
preference as to conversion, exchange, dividends, retirement or other
features. The shares of the Fund have non-cumulative voting rights,
which means that the holders of more than 50% of the shares voting
for the election of directors can elect 100% of the directors if they
choose to do so. On any matter submitted to a vote of stockholders,
all shares of the Fund issued and outstanding as of the record date
for such vote are entitled to vote.
Shareholders who execute proxies retain the right to revoke them at
any time before they are voted by notifying the Fund or by voting at
the meeting. A proxy, when executed and not revoked, will be voted
as directed. In the absence of such direction, proxies will be voted
in favor of all applicable proposals.
The Fund bears the total expense of this solicitation. Initial
solicitations will be by mail. Further solicitations, at no charge to
the Fund, may be made by mail, telephone or electronic means by Directors,
officers and regular employees of the Fund or its investment adviser,
EQSF Advisers,Inc. (the "Adviser").
Directors shall be elected by a plurality of the shares present in
person or by proxy at the meeting provided a quorum is present
(Proposal No. 1). The affirmative vote of the lesser of two-thirds
of the shares represented at the meeting at which a quorum is present
or a majority of all of the Fund's shares entitled to vote at the
meeting is necessary for ratification of the selection of independent
public accountants (Proposal No. 2). The affirmative vote of a
majority of all the Fund's shares entitled to vote at the meeting is
necessary for approval of conversion of the Fund from a Maryland
corporation to a Delaware business trust (Proposal No. 3).
In the event that a quorum is not present or a quorum is present but
sufficient votes in favor of any of the proposals described in this
Proxy Statement are not received by the time scheduled for the
Meeting, the persons named as proxies will propose one or more
adjournments of the Meeting to permit further solicitation. Any such
adjournment will require the affirmative vote of a majority of the
shares present in person or by proxy at the session of the Meeting to
be adjourned. The persons named as proxies will vote in favor of
such adjournment all executed proxies which make no provision to the
contrary (such as by instructing the proxies to vote against the
proposal).
Abstentions and broker non-votes will likely be included for purposes
of determining whether a quorum is present at the meeting, but will
be treated as votes not cast and, therefore, will not be counted for
purposes of determining whether matters to be voted upon at the
meeting have been approved.
Audited financial statements of the Fund in the form of an Annual
Report have been mailed prior to this proxy mailing. It is not to be
regarded as proxy soliciting material.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Shareholders will vote at the Meeting to elect nine directors. Proxies
which do not contain specific instructions to the contrary will be voted
in favor of the election of the nominees shown below to serve terms
until the next meeting of shareholders and until their successors are
elected and qualified. Each of the current nominees currently serve as
a Director of the Fund and, if elected, will serve as provided in the
preceding sentence or until his or her earlier death, resignation,
retirement or removal.
Each of the nine persons listed below for election to the Board of
Directors has consented to be nominated and to serve, if elected, as
director. If any of the nominees are unavailable to serve as director,
the proxies will be voted for such other persons as the Board of
Directors may choose or the size of the Board may be reduced
accordingly. The Fund currently knows of no reason why any of the
nominees listed below will be unable to serve if elected. All of the
nominees are currently directors of the Fund whose terms expire on the
date of the meeting or when their successors are elected and qualified.
Shareholders will also be asked to approve a proposal providing for the
reorganization of the Fund into a Delaware business trust (see Proposal
No. 3). If that proposal is approved, the initial share of beneficial
interest in the Delaware business trust will also be voted for the
election of the nominees as trustees and each trustee shall serve as
such until the next election or until his term is terminated as provided
in the Trust Instrument of the Delaware business trust.
The following table sets forth the names of management's nominees for
election as Directors, their principal occupation or employment during
the past five years including the periods during which each of them has
served as a Director of the Fund, their age and the approximate number
of shares of the Fund beneficially owned, directly or indirectly, by
each of them as of September 16, 1996. As of such date, the Directors
and Officers of the Fund, as a group, beneficially owned, directly or
indirectly 223,483.207 shares of the Fund, representing
approximately 1% of the outstanding shares.<PAGE>
Principal Shares Owned
Nominee Age Occupation Beneficially
Phyllis W. Beck* 69 An Associate Judge (1981 to Present) 77,860.283
of the Superior Court of Pennsylvania;
Director of the Fund since November, 1992.
Tibor Fabian 73 A Consultant (1984 to Present) on 22,136.775
financial and organizational matters;
Director (1984 to Present) of REX
Stores, Inc., a chain of discount
electronic stores, formerly
Audio/Video Affiliates, Inc.;
Member, Board of Trustees
1979 to Present) of the
Hospital for Joint Diseases Orthopedic
Institute, NY; Director of the Fund
since its inception.
Gerald Hellerman 58 Managing Director (8/93 to Present) 2,024.573
of Hellerman Associates, a financial
and corporate consulting firm; Chief
Financial Analyst (1976 to 7/93) of
the Antitrust Division of U.S.
Department of Justice; Director of
the Fund since September, 1993.
Marvin Moser, M.D. 72 Trustee (1992 to Present) of the 392.176
Trudeau Institute, a medical research
institute; Clinical Professor of
Medicine (1984 to Present) at Yale
University School of Medicine;
Senior Medical Consultant (1972 to
Present) for the National High Blood
Pressure Education Program of the
National Heart, Lung and Blood
Institute; Emeritus Chief of
Cardiology, Attending Physician in
Medicine and Cardiology (1954 to
1995) of the White Plains, NY
Hospital Medical Center; Chairman
(1977) and a member of the Committee
in 1980, 1984, 1988 and 1992 of the
Joint National Committee on
Detection, Evaluation and Treatment
of High Blood Pressure for the
National Heart, Lung and Blood
Institute; Director of the Fund since
November, 1994.
Donald Rappaport 69 President & Chief Operating Officer 23,072.205
(3/90 to 12/90) of the Fund and
Equity Strategies Fund, Inc. (1984 to
12/90); Director (1987 to 4/94) of
Equity Strategies Fund, Inc.;
President (1989 to 12/90) of Whitman
Advisors, Ltd., an investment
adviser; Registered Securities
Representative (1989 to 1991) of M.
J. Whitman & Co., Inc., a former
broker-dealer; a private investor
(1987 to Present); Director of the
Fund since its inception.
Myron M. Sheinfeld 65 Attorney and Shareholder (1986 to 38,915.964
Present) of Sheinfeld, Maley & Kay
P.C., a law firm; Adjunct Professor
(1975 to 1991) of the University of
Texas Law School; Director (1984 to
1992) of Equity Strategies Fund,
Inc.; Director (1988 to Present) of
Nabors Industries, Inc., an
international drilling contractor;
former Consultant (11/90 to 4/95) to
Meyer Hendricks Victor Osborn &
Maledon, a law firm in Phoenix,
Arizona; Director of the Fund since
its inception.
Martin Shubik 70 Seymour H. Knox Professor (1975 to 12,112.099
Present) of Mathematical and
Institutional Economics, Yale
University; Director (1984 to 4/94)
of Equity Strategies Fund, Inc.;
Director of the Fund since its
inception.
Charles C. Walden 52 Senior Vice President - Investments 556.813
(1973 to present) (Chief Investment
Officer) of Knights of Columbus, a
fraternal benefit society selling
life insurance and annuities;
Chartered Financial Analyst; Director
of the Fund since May, 1996.
Martin J. Whitman 71 Chairman, Chief Executive Officer 40,913.636
(CEO) (1/1/95 to Present) and
President (1/1/95 to 6/29/95) of M.J.
Whitman Holding Corp., (MJWHC), a
holding company managing investment
subsidiaries, and of M.J. Whitman,
Inc., a subsidiary of MJWHC and the
successor broker-dealer of M.J.
Whitman, L.P. (MJWLP), a Delaware
limited partnership which has been
dissolved; Chairman, CEO (1/1/95 to
Present), President (1/1/95 to
6/29/95) and Chief Investment Officer
(10/92 to Present) of M.J. Whitman
Advisers, Inc., a subsidiary of MJWHC
and an investment adviser to private
and institutional clients;
Distinguished Management Fellow (1972
to Present) and Member of Advisory
Board (10/94 to Present) of the Yale
School of Management at Yale
University; Director (3/93 to
Present) of Danielson Trust Company,
a trust company serving as the Fund's
custodian; Director (3/12/93 to
Present) of Herman's Holdings, Inc.,
a holding company, and of Herman's
Sporting Goods, Inc., a retail
sporting goods chain; President (1/91
to Present), Chairman and CEO (3/90
to Present) of the Fund; Chairman and
Managing Director (8/91 to 1/96) of
WHR Management Corporation, an
investment adviser; Director (3/91 to
Present) of Nabors Industries, Inc.,
an international drilling contractor;
Director and Chairman (8/90 to
Present), President (8/90 to 12/90)
CEO (8/96 to Present) and Chief
Investment Officer (12/90
to 8/96) of Danielson Holding
Corporation (DHC), a holding company;
Director (9/87 to Present) of KCP
Holding Company (KCP), an insurance
holding company and subsidiary of
DHC, and of National American
Insurance Company of California, an
insurance company and subsidiary of
DHC and KCP; Managing Director (3/87
to Present) of Whitman Heffernan
Rhein & Co., Inc., a financial
advisory firm; Chairman and CEO (4/86
to Present) and President (1/91 to
Present) of EQSF Advisers, Inc.,
investment adviser to the Fund;
President and CEO (10/74 to Present)
of Martin J. Whitman & Co., Inc.,
(formerly M.J. Whitman & Co., Inc.),
a private investment company;
Director of the Fund since its
inception; Chartered Financial
Analyst.
* Interested person" of the Fund as that term is defined in the
Act. Mrs. Beck is deemed an "interested person" by virtue of
being an immediate family member (sister) of an affiliated person
(Mr. Whitman) of the Fund and the Adviser. Mr. Whitman is deemed
an "interested person" by virtue of his position with the Fund
and the Adviser.
Directors who are not affiliated persons of the Adviser are paid a
fee by the Fund of $1,500 for each Board meeting attended, an annual
stipend of $1,200 for the prior year of service and reimbursement for
any incidental expenses incurred in connection with their attendance at
Board meetings. During the fiscal year ended October 31, 1995, the Fund
paid $20,700 in such fees and expenses to such Directors as a group. The
directors do not receive any pension or retirement benefits. The
Board of Directors held four meetings during the fiscal
year ended October 31, 1995. Each director standing for re-election
attended at least 75% of the total number of meetings held of the
Board of Directors and meetings held of the committees of which he or
she was a member during the last fiscal year.
The Fund has no separate Nominating Committee. The directors will,
subject to the provisions of the Act, fill any vacancies on the Board
in accordance with applicable federal and state laws. The directors
will consider candidates for nomination to the Board submitted by
shareholders. Submissions must be in writing and addressed to the
Board of Directors at the Fund's address. The directors expect to be
able to identify independently an ample number of qualified
candidates.
The Board of Directors recommends that shareholders vote "FOR" the
election of the above nominees to the Board of Directors.
Executive Officers
The Fund does not pay any compensation to its officers for their
services as such, but does pay the allocable portion of the salaries
of officers providing administrative services to the Fund. During
the fiscal year ended October 31, 1995, the Fund paid an aggregate of
$59,878 in salaries to officers of the Fund as a group
pursuant to the foregoing arrangements. The following table sets
forth information with respect to the current executive officers of the
Fund, including their business experience for the past
five years and their age.
Name Age Principal Occupation
David M. Barse 34 Executive Vice President and Chief
Operating Officer (5/96 to Present)
of the Fund; President, Chief
Operating Officer and Director
(7/96 to Present) of Danielson
Holding Corporation; Director (8/96
to Present) of National American
Insurance Company of California;
Director (8/96 to Present) of
Danielson Trust Company; Executive
Vice President and Director (4/95
to Present) of EQSF Advisers, Inc.;
President (6/95 to Present),
Director, Chief Operating Officer
(COO), Secretary (1/95 to 1/96)
and Executive Vice President (1/95
to 6/95) of M.J. Whitman Holding
Corp.; President (6/95 to Present),
Director, COO and Secretary (1/95
to Present), Executive Vice
President (1/95 to 6/95) of M.J.
Whitman, Inc.; President (6/95 to
Present), Director and COO (1/95 to
Present), Executive Vice President
(1/95 to 6/95) and Corporate
Counsel (10/92 to Present) of M.J.
Whitman Advisers, Inc.; Director (7/94
to 12/94), Executive Vice President and
Secretary (1/92 to 12/94) of
Whitman Securities Corp.; Vice
President and Corporate Counsel
(5/94 to 1/95) of the Fund; Counsel
(1/94 to 10/94) of Carl Marks
Strategic Investments, L.P.; and
Attorney (1/90 to 12/91) of
Robinson Silverman Pearce, a law
firm.<PAGE>
Michael T. Carney 42 Chief Financial Officer (CFO) and
Treasurer (3/90 to Present) of the
Fund; Director (8/96 tp Present) of
National American Insurance Company of
California; CFO, Treasurer, Director
(1/1/95 to Present) and Executive
Vice President (6/29/95 to Present)
of M.J. Whitman Holding Corp. and
of M.J. Whitman, Inc.; Treasurer,
Director (1/95 to Present),
Executive Vice President (6/29/95
to Present) and CFO (10/92 to
Present) of M.J. Whitman Advisers,
Inc.; Treasurer (12/93 to Present)
of Longstreet Investment Corp.; CFO
(3/93 to 6/95) of Danielson Trust
Company; Limited Partner (1/92 to
12/94) of M.J. Whitman, L.P.; CFO
of WHR Management Corporation (8/91
to Present), Danielson Holding
Corporation (8/90 to Present) and
Carl Marks Strategic Investments,
L.P., an investment partnership
(1/90 to 4/94); CFO (1/90 to 4/94)
of Carl Marks & Co., Inc., a
broker-dealer; CFO (8/89 to 12/90)
of Whitman Advisors, Ltd.; CFO and
Treasurer (5/89 to 4/94) of Equity
Strategies Fund, Inc.; CFO and
Treasurer (5/89 to Present) of EQSF
Advisers, Inc.; CFO (5/89 to
Present) of Whitman Heffernan Rhein
& Co., Inc., Martin J. Whitman &
Co., Inc., (formerly M.J. Whitman &
Co., Inc.) and WHR Management
Company, L.P., a firm managing
investment partnerships.
Kerri Weltz 29 Treasurer (5/96 to Present), Controller
(1/96 to Present), Assistant Controller
(1/93 to 12/95) and Staff Accountant (1/92
to 12/92) for the Fund; Controller (1/96
to Present), Assistant Controller (1/93
to 12/95), and Staff Accountant (1/92
to 12/92) of EQSF Advisers, Inc.;
Controller (8/96 to Present),
Payroll Manager (5/91 to 12/93) and
Accounts Payable Supervisor (5/91
to 12/91) of Danielson Holding
Corp.; Controller (5/96 to Present) and
Assistant Controller (1/95 to 5/96)
of Whitman Heffernan & Rhein
Workout Fund II, L.P. and Whitman
Heffernan & Rhein Workout Fund II-A, L.P.;
Assistant Treasurer (5/96 to Present) of
WHR Management Corp.; Assistant Treasurer
(5/96 to Present), Assistant Controller
(1/93 to 5/96), Staff Accountant
(1/92 to 12/92), Payroll Manager
(5/91 to 12/93) and Accounts
Payable Supervisor (5/91 to 12/91)
of Whitman Heffernan Rhein & Co.,
Inc.; Assistant Treasurer (5/96 to
Present), Payroll Manager (5/91 to
12/93), Accounts Payable Supervisor
(5/91 to 12/91) of M.J. Whitman &
Co., Inc.; Assistant Controller
(10/94 to 12/95) of Longstreet
Investment Corp and Emerald Investment
Partners, L.P.; Assistant Controller
(1/93 to 4/94) and Staff Accountant
(1/92 to 12/92) of Equity Strategies Fund,
Inc.; Payroll Manager (5/91 to 12/93) of
M.J. Whitman, L.P.; Accounting Clerk (6/89
to 12/91) of Mediamark Research, Inc.
Stuart L. Merzer 30 Secretary (10/96 to Present) and Compliance
Director (8/95 to Present) of the Fund;
Secretary (10/96 to Present) and Compliance
Director (8/95 to Present) of EQSF
Advisers,Inc.; Compliance Director (8/95 to
Present)of M.J. Whitman Advisers, Inc.;
Compliance Examiner/Staff Accountant (6/90
to 8/95) at United States Securities &
Exchange Commission - Investment Management
Division, Northeast Regional Office.
PROPOSAL NO. 2
RATIFICATION OF THE SELECTION OF PRICE WATERHOUSE LLP
AS THE FUND'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL
YEAR ENDING OCTOBER 31, 1996
At its meeting on November 15, 1995, the Board of Directors, including a
majority of those directors who are not "interested persons" (as that
expression is defined in the Act) of the Fund, selected the firm of Price
Waterhouse LLP to be independent public accountants to the Fund for
the fiscal year ending October 31, 1996. Shareholders of the Fund
are being asked at this meeting to ratify the selection of Price
Waterhouse LLP. Services in connection with the audit function to be
performed by the Fund's independent public accountants include: (i)
the examination of the annual financial statements of the Fund; (ii)
all services rendered in order to permit the auditors to render a
formal opinion on the Fund's financial statements; and (iii)
provision of assistance and consultations with respect to filings
with the SEC. Price Waterhouse LLP does not have any direct or
indirect financial interest in the Fund. It is not expected that a
representative of Price Waterhouse LLP will be present at the
Meeting.
Recommendation
The Board of Directors recommends that you vote FOR ratification of
the selection of Price Waterhouse LLP as independent accountants to
the Fund. Unless a contrary specification is made, any executed but
unmarked proxies will be voted FOR this Proposal No. 2.
PROPOSAL NO. 3
TO APPROVE OR DISAPPROVE THE PROPOSED AGREEMENT AND ARTICLES
OF MERGER WHICH PROVIDE FOR THE CONVERSION OF THE FUND
FROM A MARYLAND CORPORATION TO A DELAWARE BUSINESS TRUST
At a meeting on September 12, 1996, the Board of Directors of the Fund
approved in concept the conversion of the Fund from a Maryland
Corporation to a Delaware business trust. On September 12, 1996,
the Board approved an Agreement and Articles of Merger (the
"Agreement") in substantially the form attached hereto as Exhibit A.
The Agreement provides for the conversion of the Fund by means of a
merger (the "Merger") of the Maryland corporation into a newly
created Delaware business trust (the "Trust").
The investment objective, policies and limitations of the Fund will
not change as a result of the conversion. The Trust will carry on
the business of the existing Fund. The Adviser will be responsible
for the investment management of the successor Trust, subject to
supervision by the Board of Trustees, under an investment advisory
agreement identical to the current agreement with the Adviser.
REASONS FOR THE PROPOSED CONVERSION
The Fund was originally incorporated in Maryland on November 27, 1989
and began operations on October 9, 1990. The Directors unanimously
recommend conversion of the Fund by merger to a Delaware business
trust format. The Directors have determined that Delaware business
trust law affords additional advantages to the operations of a mutual
fund as compared to those available under Maryland law, particularly
those relating to the issuance of separate series or classes of
shares, the legal distinctness of such separate series or classes of
shares and mergers and other extraordinary transactions. The Fund is
contemplating the addition of separate series or funds to the
existing Fund and the reorganization into a Delaware business trust
would afford the Fund the flexibility to add such series or funds in
the future.
The Delaware business trust law contains certain provisions that
permit mutual funds to operate flexibly and efficiently. For
example, Delaware business trusts are not required to hold annual
meetings of shareholders. The Delaware business trust law provides
specifically that each series of a trust will not be liable for the
debts of another series provided certain conditions are met. Unlike
certain other business trusts (such as Massachusetts), Delaware
business trust law provides specifically that shareholders of a
Delaware business trust are not subject to liability for the
obligations of the trust. Finally, the Delaware business trust law
has very liberal provisions regarding extraordinary corporate
transactions, such as mergers.
The following discussion summarizes the material differences between
the legal structure of a Delaware business trust, created pursuant to
the Delaware Business Trust Act (the "Delaware Act"), and a
corporation organized under the General Corporation Law of Maryland
(the "GCL"), by comparing the provisions of the proposed governing
instruments of the Trust, the Agreement and Declaration of Trust and
By-Laws, with the provisions of the Fund's corporate charter and By-Laws,
and the Fund's current governing instruments prior to its change of
domicile.
DIFFERENCES BETWEEN LEGAL STRUCTURES
AN OVERVIEW OF THE GOVERNING INSTRUMENTS
An Agreement and Declaration of Trust ("Declaration of Trust") is the
instrument which provides for the purpose, powers, capital structure
and governance of the business and affairs of the Trust. The Trust's
By-Laws also contain provisions governing the operations of the
Trust. Under the GCL, the business and affairs of a Maryland
corporation are governed by its charter and By-Laws subject to the
provisions of the GCL.
A MULTIPLE SERIES INVESTMENT COMPANY
Under the Delaware Act, the debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect
to a particular series of the trust are enforceable only against the
assets of such series, and not against the assets of another series
or of the trust generally, provided that certain requirements are
satisfied. The Trust intends to fulfill such requirements and its
Declaration of Trust provides that each of its series shall not be
charged with the liabilities of another series.
The GCL does not contain specific statutory provisions addressing
series liability with respect to a multiple series investment
company; however, if the stock of a corporation is divided into
classes or series, the GCL requires the charter to set forth any
preferences or restrictions relating to such classes or series. It
is possible, however, that the assets of one series would be subject
to the liabilities of another series, including contractual
liabilities if the contracts in question did not negate such
liabilities.
SHAREHOLDER VOTING POWERS AND MEETINGS
Shareholders of both a Delaware business trust and a Maryland
corporation registered as an investment company are subject to the
voting requirements contained in the Act in connection with the
election and removal of directors/trustees, the selection of
auditors, the approval of investment advisory agreements and plans of
distribution, and certain changes in investment company status or
certain investment policies. There are differences, however, in the
Delaware Act and the GCL with respect to shareholder voting on other
matters.
The Trust's Declaration of Trust provides that all shares of the
Trust entitled to vote on a matter shall vote without
differentiations between the separate series on a one-vote-per-share
basis; each whole share shall be entitled to one vote and each
fractional share shall be entitled to a proportionate fractional
vote. If a matter to be voted on does not affect the interests of
all series, then only the shareholders of the affected series shall
be entitled to vote on the matter. The Trust's Declaration of Trust
gives the shareholders of a fund the right to vote only: (i) for the
election or removal of trustees; (ii) with respect to additional
matters relating to the Trust as may be required by the Act; and
(iii) on such other matters as the trustees may consider necessary or
desirable.
The Fund's corporate charter, consistent with the GCL, provides that
the holder of each share of stock of the Fund is entitled to one vote
for each full share, and a fractional vote for each fractional share
of stock.
The Trust's By-Laws provide that a special meeting of shareholders
for the purpose of voting upon the removal of any trustee shall be
called by the Secretary upon the written request of the holders of
shares entitled to cast not less than 10% of all votes entitled to be
cast at the meeting. The GCL and the Fund's By-Laws provide that the
Board of Directors must call a special meeting of shareholders for
any valid purpose upon the written request of the holders of shares
entitled to cast not less than 25% of all votes entitled to be cast
at the meeting.
With respect to amendments, the Trust's Declaration of Trust states
that, if shares of a series have been issued, approval by the
shareholders of such series is required to adopt any amendments to
the Declaration of Trust which would adversely affect to a material
degree the rights and preferences of the shares of such series or to
increase or decrease the par value of the shares of such series. In
addition, before adopting any amendment to the Declaration of Trust
relating to shares of a series, without shareholder approval, the
trustees are required to determine that it is: (i) consistent with
the fair and equitable treatment of all shareholders; and (ii)
shareholder approval is not required by the Act or other applicable
law.
With respect to charter amendments, under the Fund's charter and the
GCL, the charter may be amended only: (i) upon adoption of a
resolution by the directors which sets forth the proposed amendments;
and (ii) approval of the proposed amendment by the holders of a
majority of the Fund's outstanding shares entitled to vote. Because
shareholder approval is required for each amendment to the charter,
the GCL is more restrictive than the Delaware Act or the Declaration
of Trust.
Under both the Delaware Act and the GCL, annual meetings of a
registered investment company's shareholders are not required to be
held. Pursuant to the GCL, however, an annual meeting is required to
be held when the Act requires the election of directors to be acted
upon by shareholders. The Delaware Act does not require an annual
meeting to be held in any case.
SHAREHOLDER LIABILITY
The Delaware Act provides that, except to the extent otherwise
provided in the governing instrument, the shareholders of a Delaware
business trust shall be entitled to the same limitation of personal
liability extended to shareholders of a private corporation organized
for profit under the general corporation law of Delaware. As a
general matter, shareholders of both Delaware and Maryland
corporations are not liable for the obligations of the corporation.
TRUSTEE/DIRECTOR LIABILITY
The Delaware Act provides that a trustee, when acting in such
capacity, shall not be personally liable to any person other than the
business trust or a beneficial owner for any act, omission or
obligation of the business trust or any trustee. The Delaware Act
also states that the trustee's duties and liabilities to the trust
and its shareholders may be expanded or restricted by provisions in
the governing instrument. In this regard, the Trust's Declaration of
Trust provides that the trustees shall not be responsible or liable
in any event for any neglect or wrongdoing of any officer, agent,
employee, manager or principal underwriter of the Trust, nor shall
any trustee be responsible for the act or omission of any other
trustee. In addition, the Declaration of Trust also states that the
trustees, acting in their capacity as trustees, shall not be
personally liable for acts done by or on behalf of the Trust.
The GCL requires a director to perform his or her duties in good
faith, in a manner he or she reasonably believes to be in the best
interest of the Fund and with the care that an ordinarily prudent
person in a like position would use under similar circumstances. A
director who performs his or her duties in accordance with this
standard has no liability by reason of being or having been a
director. If it is established that a director did not meet the
foregoing standard, the director, for example, may be personally
liable to the corporation for (i) voting or assenting to a
distribution of assets to shareholders which is in violation of the
charter or the GCL; and (ii) voting or assenting to a repurchase of
the Fund's shares in violation of the GCL.
The provisions of the Trust's Declaration and the GCL are subject to
the provisions of the Act which contemplate the possibility of
personal liability by a trustee or director in certain circumstances,
such as breach of fiduciary duty involving personal misconduct.
INDEMNIFICATION
The Declaration of Trust, consistent with the Delaware Act, provides
that the Trust, subject to its By-Laws, may indemnify, out of its
assets, and hold harmless each and every trustee and officer from and
against any and all claims, demands, costs, losses, expenses, and
damages, arising out of, or related to, such trustee's performance of
his or her duties as a trustee or officer. As required by the Act,
pursuant to the Declaration of Trust, the Trust will not indemnify
any trustee or officer from or against any liability to the Trust or
any shareholder by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his or her office.
The Fund's corporate By-Laws do not provide for indemnification of
directors and officers although the GCL and the Act would permit
indemnification to the same extent as is provided by the Trust's
Declaration of Trust.
PROCEDURES FOR REORGANIZATION
Upon consummation of the Agreement, the initial series of the Trust
will continue the Fund's business with the same investment objective
and policies. The net asset value of the Fund will not be affected
by the Merger. The Trust has been organized specifically for the
purpose of effecting the Merger. Immediately prior to the effective
date of the Merger, the Trust will have outstanding only a nominal
number of shares of beneficial interest of the Trust. Assuming
approval of this Proposal, such shares will be voted in favor of the
election of the directors proposed to be elected at this meeting who
will then serve as trustees of the Trust (see Proposal No. 1).
The Fund's officers have also been selected as officers of the Trust
and will have comparable responsibilities. Consummation of the Merger
will not result in the recognition of income, gain or loss for
Federal income tax purposes to the Fund or the Fund's respective
shareholders (see Federal Income Tax Consequences of the Plan.)
The Agreement provides that on the effective date of the Merger,
shareholders of the Fund will receive shares of the initial series of the
Trust in exchange for their shares in the Fund. The Trust will establish
open accounts on the share records of the Trust in the names of the
shareholders of record of the Fund as of the close of business on the
effective date of the Merger and will credit to such accounts the exact
number of full and fractional shares of the initial series of the Trust
such shareholder held in the Fund. Fractional shares of Trust shares of
beneficial interest will be carried to the third decimal place. On
the effective date of the Merger, the net asset value per share of
the Trust shall be deemed to be the same as the net asset value per
share of the Fund. As soon as practicable after the effective date
of the Merger, each stockholder shall receive a statement indicating
his or her ownership of shares of the Trust. Please note that no share
certificates will be issued by the Trust.
The Agreement provides that the effective date of the Reorganization
will be th e day on which the Agreement and Articles of Merger are
filed with the Maryland State Department of Assessments and Taxation.
lt is expected that this will be on or about
, 1996, or as soon thereafter as the directors deem advisable and in
the best interest of the Fund and its shareholders. The Agreement
provides that on the effective date of the Merger, the separate
existence of the Fund shall cease. All the assets, rights,
privileges, powers and franchises of the Fund and all debts due on
whatever account to it, shall be taken and deemed to be transferred
to and vested in the initial series of the Trust without any further
act. All such assets, rights, privileges, powers and franchises are
thereafter completely the property of such series of the Trust as
they were of the Fund. Such series of the Trust will become
responsible for all the liabilities and obligations of the Fund, and
the liabilities of the Fund's shareholders, directors, trustees and
officers shall not be affected by the Merger, nor shall the rights of
the creditors thereof or any persons dealing with the Fund or any
liens upon the property of the Fund be impaired by the Merger. The
Merger is subject to a number of conditions which are customary in
reorganizations of this kind. The Agreement and Articles of Merger
may be terminated and the Merger abandoned at any time prior to the
effective date of the Merger by the Board of Directors of the Fund or
the Trustees of the Trust.
CAPITALIZATION AND STRUCTURE
The Fund is an open-end diversified management investment company, as
defined in the Act. It has an authorized capitalization of 200
million common shares of $0.001 par value. The Fund has no other class
of security outstanding. All shares have equal voting and
liquidation rights and are entitled to one vote per share. All outstanding
shares have equal dividend rights, are fully paid, non-assessable and
freely transferable and have no conversion, preemptive or
subscription rights. Fractional shares have the same rights, pro
rata, as full shares. The Trust was organized on
, 1996 and was established pursuant to the Delaware Act. The Trust
has an unlimited number of shares of beneficial interest authorized,
all of which have a par value of $0.001 per share.
series of the Trust have been authorized, corresponding to the Fund
and newly created additional series of the Trust. Each
series has been allocated an unlimited number of shares. All
outstanding shares of the Trust have equal dividend rights, are fully
paid, non-assessable, and freely transferable and have no conversion,
preemptive or subscription rights. Shares of both the Fund and the
Trust may be divided into sub-classes or sub-series. Prior to the
Merger, the Trust will have nominal assets and no liabilities. The
sole shareholder of the Trust will be the Fund. The Trust will have
the same fiscal year end as the Fund, which is October 31.
Shares of the Fund will be exchanged for shares of the Trust pursuant
to the Agreement and Articles of Merger. Thereafter, shares of the
Trust will be available for issuance at their net asset value. The
Trust will adopt the Fund's existing registration statements under
the Securities Act of 1933 and the Act.
FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
It is anticipated that the transaction contemplated by the Agreement
and Articles of Merger will be tax free. Consummation of the Merger
is subject to receipt of an opinion of Skadden, Arps, Slate, Meagher
& Flom, counsel to the Fund and the Trust, that under the Internal
Revenue Code of 1986, as amended, the Merger of the Fund into a
series of the Trust will not give rise to the recognition of a gain
or loss for Federal income tax purposes to the Fund, the Trust or
shareholders of the Fund. A shareholder's adjusted basis for tax
purposes in the shares of the Fund immediately before the Merger will
be the same in the shares of the Trust immediately after the Merger.
Each shareholder should consult his (her) own tax advisor with
respect to the details of these tax consequences and with respect to
state and local tax consequences of the proposed transaction.
REQUESTS FOR REDEMPTION
Any request to redeem shares of the Fund received and processed prior
to the Merger will be treated as a redemption of shares of the Fund.
Any request to redeem shares received or processed after the Merger
will be treated as a request for the redemption of a like number of
shares of the Trust.
Recommendation
The Board of Directors recommends that you vote FOR approval of the
proposed Agreement and Articles, which provide for conversion of the
Fund from a Maryland Corporation to a Delaware Business Trust.
Unless a contrary specification is made, any executed but unmarked
proxies will be voted FOR this Proposal No. 3.
PRINCIPAL SHAREHOLDERS
On the record date, September 16, 1996, to the knowledge of the
management of the Fund, only the following persons owned of record or
beneficially more than 5% of the outstanding shares of the Fund:
Name and Address Percentage of Class Number of Shares
Charles Schwab & Co., Inc.1 31% 7,037,851.671
101 Montgomery Street
San Francisco, CA 94104
National Financial
Services Corp.2 ___% ____________
200 Liberty Street 5th Floor
New York, NY 10284
Donaldson Lufkin & Jenrette3 ___% ____________
Securities Corporation
Mutual Funds Dept. 5th Floor
PO Box 2052, Jersey City, NJ 07303
1. Charles Schwab & Co., Inc. is a discount broker-dealer acting as
a nominee for registered investment advisers whose clients have
purchased shares of the Fund.
2. National Financial Services Corp. is a broker-dealer holding
shares of the Fund as a nominee for its clients.
3. Donaldson Lufkin & Jenrette Securities Corporation is a broker-dealer
holding shares for the benefit of their clients.
OTHER BUSINESS
As stated previously, the cost of solicitation of proxies will be
borne by the Fund. Solicitation will be made by mail, and may be
made by directors, officers and employees, personally or by telephone
or telegram. Proxy cards and material also will be distributed
through brokers, custodians, nominees and other like parties to
beneficial owners of stock, and the Fund expects to reimburse such
parties for their costs and expenses.
While this notice of Special Meeting of Shareholders provides for the
transaction of such other business as may properly come before the
meeting, the directors know of no other business to be presented
other than that set forth in this proxy statement. The enclosed
proxy gives discretionary authority in the event other matters should
be presented. If any other matters properly come before the meeting,
proxies will be voted in accordance with the judgment of the Board of
Directors.
SUBMISSION OF SHAREHOLDER PROPOSALS
Any proposal to be presented by a shareholder for inclusion in a
proxy statement for any subsequent shareholders meeting should be
sent to the Fund (or the Trust assuming approval of Proposal No. 3)
within a reasonable time prior to the solicitation of proxies for
that meeting. Submission of proposals by shareholders does not
guarantee its inclusion in a proxy statement since applicable state,
or federal rules may prohibit the proposal. Neither the Fund nor the
Trust is obligated to call a shareholder meeting to consider any
proposal which is substantially the same as a matter voted upon by
the shareholders held during the preceding twelve months, unless
requested by the holders of a majority of all shares entitled to be
voted upon at such meeting.
Respectively Submitted,
Stuart L. Merzer
October 12, 1996 Secretary<PAGE>
EXHIBIT "A"
AGREEMENT AND ARTICLES OF MERGER
between
Third Avenue Value Fund, Inc.
(a Maryland Corporation)
and
(a Delaware Business Trust)
AGREEMENT AND ARTICLES OF MERGER, dated as of the day of November,
1996 (hereinafter referred to as the "Agreement"), by and between
, a Delaware business trust having its
principal office in Wilmington, Delaware (hereinafter referred to as
"Third Avenue Delaware" or the "Surviving Trust"), and Third Avenue
Value Fund, Inc., a Maryland corporation having its principal office
in Baltimore, Maryland (hereinafter referred to as "Third Avenue
Maryland"), said business entities being hereinafter sometimes
collectively referred to as the "Constituent Funds."
BACKGROUND
1.1 Authorized Shares. Third Avenue Delaware is a business trust
duly organized and existing under the laws of the State of
Delaware, having been formed on ,
1996 under Title 12, Delaware Code, Part V, Chapter 38, the
Delaware Business Trust Law (1988), and has authorized an
unlimited number of shares of beneficial interest, par value
$.001 per share.
Third Avenue Delaware has authorized and allocated an unlimited
number of shares of beneficial interest to one series, and may
in the future create additional series of beneficial interest.
Third Avenue Maryland is a corporation duly organized and
existing under the law of the State of Maryland, having been
incorporated on November 27, 1989 under the General Corporation
Law of the State of Maryland, and has authorized capital stock
consisting of 200 million shares of common stock, par value
$.001 per share with an aggregate par value of two million
dollars ($2,000,000).
Third Avenue Delaware has one share of beneficial interest
issued and outstanding which is held by Third Avenue Maryland.
1.2 Offices. The principal office of Third Avenue Maryland in the
State of Maryland is located in Baltimore City, Maryland.
The principal office of Third Avenue Delaware in the State of
Delaware is located in Wilmington, Delaware. The resident
agent of Third Avenue Delaware in the State of Delaware is The
Corporation Trust Incorporated.
Neither Third Avenue Maryland nor Third Avenue Delaware own any
interests in real property located in Maryland.
The address and principal place of business of Third Avenue
Delaware and Third Avenue Maryland is 767 Third Avenue, New
York, New York 10017.
1.3 Authorization. The terms and conditions of the transaction set
forth in this Agreement were advised, authorized, and approved
by Third Avenue Maryland in the manner and by the vote required
by its Articles of Incorporation and the laws of the State of
Maryland and by Third Avenue Delaware in the manner and by the
vote required by its Agreement and Declaration of Trust and the
laws of the State of Delaware. The Board of Directors of Third
Avenue Maryland and the Board of Trustees of Third Avenue
Delaware have, by resolutions duly adopted, approved this
Agreement and the merger of Third Avenue Maryland into the
Surviving Trust as being advisable and in the best interests of
their respective business entities and shareholders. The Board
of Directors of Third Avenue Maryland and the Board of Trustees
of Third Avenue Delaware directed the submission of this
Agreement to their respective shareholders. Under the terms of
the Merger, as set forth herein, on the Effective Date of the
Merger, Third Avenue Delaware will distribute shares to the
shareholders of Third Avenue Maryland.
The Board of Directors of Third Avenue Maryland and the Board
of Trustees of Third Avenue Delaware have adopted this
Agreement as a Plan of Reorganization intended to qualify as
such under the provisions of Section 368(a)(1) of the Internal
Revenue Code of 1986, as amended.
NOW THEREFORE, in consideration of the premises and the mutual
covenants and conditions hereinafter contained, and intending
to be legally bound, the parties hereto agree as follows:
ARTICLE I - THE MERGER
1.1 Third Avenue Maryland and Third Avenue Delaware agree that
Third Avenue Maryland shall be merged into Third Avenue
Delaware (hereinafter the "Merger"). Third Avenue Delaware
shall be the Surviving Trust and shall be governed by the laws
of the State of Delaware. The terms and conditions of the
merger and the mode of carrying the same into effect are as set
forth in this Agreement.
1.2 The Agreement and Declaration of Trust of Third Avenue Delaware
as it shall exist on the Effective Date of the Merger (as
hereinafter defined) shall constitute the Agreement and
Declaration of Trust of the Surviving Trust.
1.3 The Bylaws of Third Avenue Delaware as they exist on the
Effective Date of the Merger shall constitute the Bylaws of the
Surviving Trust.
1.4 The Trustees of Third Avenue Delaware on the Effective Date of
the Merger shall constitute the Board of Trustees of Third
Avenue Delaware and shall hold office until their successors
are elected and shall qualify or until their earlier
resignation, death or removal.
1.5 Price Waterhouse LLP shall continue as auditors to report upon
the financial statements of the Surviving Trust.
ARTICLE II - CONVERSION OF SHARES AND EXCHANGE RATIO
2.1 Upon the effective date of the Merger, shareholders of Third
Avenue Maryland will receive shares of the Third Avenue Value
Fund series of Third Avenue Delaware (the "Initial Series") in
exchange for their shares in Third Avenue Maryland. The manner
and basis of converting the issued and outstanding shares of
the common stock of Third Avenue Maryland into the shares of
beneficial interest of Third Avenue Delaware shall be as
follows:
(a) Immediately following the Effective Date, as defined in
Article III herein, Third Avenue Delaware will establish
open accounts on its stock records for the Initial Series
in the names of the shareholders of record of Third
Avenue Maryland as of the close of business on the
Effective Date and credit to such accounts the exact
number of full and fractional shares of the Initial
Series such shareholder held in Third Avenue Maryland as
of the close of business on the Effective Date. Fractional
shares of the Initial Series will be carried to the third
decimal place. On the Effective Date, the net asset value
per share of the Initial Series shall be deemed to be the
same as the net asset value per share of Third Avenue
Maryland. As promptly as practicable after the Effective
Date,
each stockholder of record of Third Avenue Maryland shall be
sent at that stockholder's address of record, a statement
indicating the number of shares of the Initial Series
which have been credited to his or her account.
Simultaneously with the crediting of the shares of the
Initial Series to the shareholders of record of Third
Avenue Maryland, the shares of the Third Avenue Maryland
held by such shareholders shall be canceled.
(b) On the Effective Date, the shares of the Initial Series
heretofore held by Third Avenue Maryland shall be
redeemed and canceled by Third Avenue Delaware.
2.2 Each of the shares of beneficial interest of the Initial Series
of Third Avenue Delaware issued and outstanding on the
Effective Date of the Merger shall remain issued and
outstanding and unaltered by the terms of this Agreement.
2.3 On the Effective Date, each share of Third Avenue Maryland
which has been authorized but is unissued and not outstanding,
will become a share of the Initial Series of Third Avenue
Delaware.
ARTICLE III - EFFECTIVE DATE OF THE MERGER
3.1 The Merger shall become effective when, subject to the terms
and conditions hereof, the following actions shall have in all
respects been completed:
(i) this Agreement shall have been adopted by the
shareholders of Third Avenue Maryland in accordance with
the requirements of the laws of the State of Maryland,
which adoption shall have been certified thereon by the
Secretary or an Assistant Secretary of Third Avenue
Maryland;
(ii) this Agreement, certified as aforesaid, shall have been
executed, acknowledged and filed in accordance with the
requirements of the laws of the State of Maryland;
(iii) this Agreement shall have been approved and adopted by
Third Avenue Delaware in accordance with the requirements
of the laws of the State of Delaware; and
(iv) Third Avenue Maryland, as sole shareholder of Third
Avenue Delaware, shall have elected the Trustees of Third
Avenue Delaware with outstanding shareholders on the
record date relating to approval of the Agreement.
The effective time of the Merger shall be the close of business
of Third Avenue Delaware on the date this Agreement is filed in
accordance with the requirements of the law of the State of
Maryland. The date and time when the Merger shall become
effective as aforesaid is herein referred to as the "Effective
Date of the Merger."
3.2 On the Effective Date of the Merger, the separate existence of
Third Avenue Maryland shall cease, except to the extent, if
any, continued by Statute. All the assets, rights, privileges,
powers and franchises of Third Avenue Maryland and all debts
due on whatever account to it, shall be taken and deemed to be
transferred to and vested in Third Avenue Delaware without
further act or deed; and all such assets, rights, privileges,
powers and franchises shall be thereafter as completely the
property of Third Avenue Delaware as they were of Third Avenue
Maryland; and the title to and interest in any real estate
vested by deed, lease or otherwise, unto either of the
Constituent Funds, shall not revert or be in any way impaired.
Third Avenue Delaware shall be responsible for all the
liabilities and obligations of Third Avenue Maryland, but the
liabilities of the Constituent Funds or of their shareholders,
directors, trustees, or officers shall not be affected by the
Merger, nor shall the right of the creditors thereof or any
persons dealing with such business entities, or any liens upon
the property of such business entities, be impaired by the
Merger, and any claim existing or action or proceeding pending
by or against either of such business entities may be
prosecuted to judgment as if the Merger had not taken place, or
Third Avenue Delaware may be proceeded against or substituted
in place of Third Avenue Maryland. Except as otherwise
specifically set forth in this Agreement, the identity,
existence, purposes, powers, franchise, rights, immunities and
liabilities of Third Avenue Delaware and of Third Avenue
Maryland shall continue unaffected and unimpaired by the
Merger. Unless otherwise agreed to by the parties thereto, all
contractual obligations to which Third Avenue Maryland is
subject prior to the merger shall become contractual
obligations of the Initial Series of Third Avenue Delaware.
3.3 Prior to the Effective Date of the Merger, the Constituent
Funds shall take such action as shall be necessary or
appropriate in order to effect the Merger. In case at any time
after the Effective Date of the Merger, Third Avenue Delaware
shall determine that any further conveyance, assignment or
other documents or any further action is necessary or desirable
to vest in or confirm to Third Avenue Delaware full title to
all the properties, assets, rights, privileges, and franchises
of the Constituent Funds, the officers, directors and trustees
of the Constituent Funds, at the expense of the Initial Series
of Third Avenue Delaware, shall execute and deliver all such
instruments and take all such action as Third Avenue Delaware
may determine to be necessary or desirable in order to vest in
and confirm to Third Avenue Delaware title to and possession of
all such cash and securities and other properties, assets,
rights, privileges and franchises, and otherwise to carry out
the purpose of this Agreement.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES
4.1 Each of the Constituent Funds represents and warrants to the
other that:
(a) Such Fund is duly organized and existing in good standing
under the laws of its jurisdiction of incorporation or
organization, respectively.
(b) Such Fund is duly registered as an open-end management
company under the Investment Company Act of 1940 or in
the case of Third Avenue Delaware, will be so registered
no later than the Effective Date of the Merger.
(c) It has full power and authority to carry on its business
as it is presently being conducted and to enter into the
Merger.
(d) There is no suit, action, or legal or administrative
proceeding pending, or to its knowledge threatened,
against it which, if adversely determined, might
materially and adversely affect its financial condition
or the conduct of its business.
(e) At the Effective Date of the Merger, consummation of the
transactions contemplated hereby will not result in the
breach of or constitute a default under any agreement or
instrument by which it is bound.
(f) All of its presently outstanding shares are validly
issued, fully paid and non-assessable.
(g) Immediately prior to the Effective Date of the Merger,
Third Avenue Maryland will have valid and unencumbered
title to its cash, securities, and other assets, if any,
except to the extent the Initial Series consents to
taking title subject to any encumbrance.
(h) The audited financial statements of Third Avenue Maryland
for its most recent fiscal year, appearing in its
registration statement on Form N-1A, and interim
unaudited financial statements, fairly present the
financial position of such Corporation as of the
respective dates indicated thereon, and the results of
its operations and changes in net assets for the
respective periods indicated, in conformity with
generally accepted accounting principles applied on a
consistent basis.
ARTICLE V - CONDITIONS
5.1 The obligations of each of the Constituent Funds to consummate
the Merger shall be subject to the following conditions:
(a) The representations and warranties of the other Fund
contained herein shall be true as of and at the Effective
Date of the Merger and with the same effect as though
made at such date and such other Constituent Fund shall
have performed all obligations required by this Agreement
to be performed by it prior to the Effective Date;
(b) Such authority and orders from the Securities and
Exchange Commission (the "Commission") and state
securities commissions as may be necessary to permit the
parties to carry out the transactions contemplated by
this Agreement shall have been received;
(c) A post-effective amendment to the Registration Statement
of Third Avenue Maryland on Form N-1A under the
Securities Act of 1933, relating to the shares of the
Initial Series of Third Avenue Delaware issuable
hereunder, shall have been filed by Third Avenue Delaware
with the Commission and such 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
(other than any such stop-order, proceeding or threatened
proceeding which shall have been withdrawn or
terminated);
(d) The Commission shall not have issued an unfavorable
advisory report under Section 25(b) of the Investment
Company Act of 1940 nor instituted any proceeding seeking
to enjoin consummation of the reorganization under
Section 25(c) of the Investment Company Act of 1940.
(e) Third Avenue Maryland shall mail to each shareholder of
record of Third Avenue Maryland entitled to vote at the
meeting of shareholders at which action on this Agreement
is to be considered, a Proxy Statement which complies in
all material respects with the applicable provisions of
the Federal securities laws and the rules and regulations
thereunder.
(f) Each party shall have received an opinion of Skadden,
Arps, Slate, Meagher & Flom, New York, New York, to the
effect that the Merger contemplated by this Agreement
qualifies as a "reorganization" under Section 368(a)(1)
of the Internal Revenue Code of 1986, as amended, and as
such: (1) no gain or loss will be recognized by either
Constituent Fund or to the shareholders thereof; (2) the
basis of the shares of beneficial interest of the Initial
Series of Third Avenue Delaware received by Third Avenue
Maryland shareholders will be the same as the basis of
the shares of Third Avenue Maryland surrendered in
exchange therefor; and (3) the holding period of shares
of beneficial interest of the Initial Series of Third
Avenue Delaware received by Third Avenue Maryland
shareholders will include the holding period of Third
Avenue Maryland stock surrendered in exchange therefor,
provided that Third Avenue Maryland stock was held as a
capital asset on the date of the exchange.
(g) Each party shall have received an opinion from Skadden,
Arps, Slate, Meagher & Flom or Miles & Stockbridge in
form and substance satisfactory to it, relating to its
authority to engage in the transactions contemplated
hereby and to the effect (i) that this Agreement and the
merger contemplated thereby and the execution thereof
have been duly authorized and approved by all requisite
action of Third Avenue Maryland and Third Avenue
Delaware, respectively, and this Agreement has been duly
executed and delivered by Third Avenue Maryland and Third
Avenue Delaware, respectively, and is a legal, valid and
binding agreement of each such party in accordance with
its terms; (ii) the shares of beneficial interest of the
Initial Series of Third Avenue Delaware 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 and fully
paid and will be nonassessable; (iii) Third Avenue
Maryland is duly organized, validly existing and in good
standing under the laws of the State of Maryland and
Third Avenue Delaware is duly organized and validly
existing under the laws of the State of Delaware.
(h) The shares of beneficial interest of Third Avenue
Delaware shall have been duly qualified for offering to
the public in those states of the United States and
jurisdictions in which they are presently qualified, so
as to permit the transfers contemplated by this Agreement
to be consummated.
(i) The holders of at least a majority of the outstanding
shares of common stock of Third Avenue Maryland shall
have voted in favor of the adoption of this Agreement and
the Merger at an annual or special meeting or any
adjournment thereof.
ARTICLE VI - COVENANTS
6.1 Third Avenue Maryland shall distribute all declared but unpaid
dividends to its shareholders prior to the Effective Date of the
Merger.
ARTICLE VII - TERMINATION
7.1 Anything contained in this Agreement to the contrary
notwithstanding, this Agreement may be terminated and the
Merger abandoned at any time (whether before or after adoption
hereof by the shareholders of the Constituent Funds) prior to
the Effective Date of the Merger:
(a) by mutual consent of the Constituent Funds; or
(b) on and after January 1, 1997, by either of the
Constituent Funds if any condition set forth in Article V
hereof has not been fulfilled or waived by it.
7.2 An election by a Constituent Fund to terminate this Agreement
and abandon the Merger shall be exercised by a majority vote
of its Board of Directors or Board of Trustees, respectively.
7.3 At any time prior to the filing of this Agreement, any of the
terms or conditions of this Agreement may be waived by the
Constituent Fund entitled to the benefit thereof by action
taken by its Board of Directors or Board of Trustees,
respectively, or its President if, in the good faith 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 Constituent Fund on behalf of which such
action is taken.
7.4 The respective representations and warranties of the
Constituent Funds contained in Article IV hereof shall expire
with, and be terminated by, the Merger, and neither the
respective Constituent Funds nor any of their directors or
trustees, respectively, or officers shall have any
liability with respect to any such representations or
warranties after the Effective Date of the Merger. This
provision shall not protect any director or trustee,
respectively, or officer of either of the Constituent Funds
against any liability to such Fund or to its shareholders to
which he would otherwise be subject.
ARTICLE VIII - MISCELLANEOUS
8.1 This Agreement constitutes the entire agreement between the
parties and there are no agreements, understandings,
restrictions, representations or warranties between the parties
other than those set forth herein or herein provided for.
8.2 This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original but all of
such counterparts together shall constitute but one
instrument.
IN WITNESS THEREOF, each of the Constituent Funds has caused this
Agreement and Articles of Merger to be executed on its behalf by its
President and its corporate seal to be affixed thereto and attested
by its Secretary all as of the day and year first above written.
Attest: THIRD AVENUE VALUE FUND, INC.
a Maryland corporation
/s/ Stuart L. Merzer By: /s/
Stuart L. Merzer, Secretary , President
Attest: __________________________
a Delaware business trust
/s/ Stuart L. Merzer By:/s/
Stuart L.Merzer, Secretary , President
CERTIFICATION OF ADOPTION
OF
AGREEMENT AND ARTICLES OF MERGER
The undersigned hereby certify that the terms and conditions of the
merger as set forth in the foregoing Agreement and Articles of Merger
were advised, authorized and approved by each of the Constituent
Funds in the manner and by the vote required by its charter and the
laws of the State of Maryland, in the case of Third Avenue Value
Fund, Inc. and in the manner and by the vote required by its
Agreement and Declaration of Trust and the laws of the State of
Delaware in the case of , to
wit by the Board of Directors and shareholders of Third Avenue Value
Fund, Inc. and by the Trustees and shareholders of
.
Attest: THIRD AVENUE VALUE FUND, INC.
a Maryland corporation
/s/ Stuart L. Merzer BY: /s/
Stuart L. Merzer, Secretary , President
Attest: _________________________
a Delaware business trust
/s/ Stuart L. Merzer By: /s/
Stuart L. Merzer, Secretary , President
THE UNDERSIGNED, President of THIRD AVENUE VALUE FUND, INC., a
Maryland corporation, who executed on behalf of said corporation the
foregoing Agreement and Articles of Merger and the Certification of
Adoption of Agreement and Articles of Merger, hereby acknowledges, in
the name and on behalf of said corporation, the foregoing Agreement
and Articles of Merger to be the corporate act of said corporation
and further certifies that, to the best of his knowledge, information
and belief, the matters and facts set forth therein are true in all
material respects, under the penalties of perjury.
/s/
, President
THE UNDERSIGNED, President of , a Delaware
business trust, who executed on behalf of said trust the foregoing
Agreement and Articles of Merger and the Certification of Adoption of
Agreement and Articles of Merger, hereby acknowledges, in the name
and on behalf of said trust, the foregoing Agreement and Articles of
Merger, to be the authorized act of said trust and further certifies
that, to the best of his knowledge, information and belief, the
matters and facts set forth therein with respect to the approval
thereof are true in all material respects, under the penalties of
perjury.
/s/
, President
PROXYTHIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORSPROXY
OF THIRD AVENUE VALUE FUND, INC. (the "Fund")
SPECIAL MEETING NOVEMBER 15, 1996 AT 10:00 A.M. EASTERN TIME
The undersigned hereby revokes all previous proxies for his shares
and appoints David M. Barse and Michael T. Carney, and each of them,
with the power of substitution, as Proxies, and hereby authorizes
them to vote as designated below, as effectively as the undersigned
could do if personally present, all the shares of THIRD AVENUE VALUE
FUND, INC. (the "Fund") held of record by the undersigned on
September 16, 1996, at the Special Meeting of Shareholders, or any
adjournment thereof, to be held at 10:00 a.m. Eastern Time on
November 15, 1996 at The New York Marriott, 525 Lexington Avenue, New
York, New York 10017.
1. ELECTION OF A BOARD OF TRUSTEES.
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below)to vote for all nominees
listed below
(INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name in the list
below.)
Phyllis W. Beck Tibor Fabian Gerald Hellerman
Donald Rappaport Myron M. Sheinfeld Marvin Moser, M.D.
Martin Shubik Martin J. Whitman Charles C. Walden
2. RATIFICATION OF THE SELECTION OF PRICE WATERHOUSE LLP AS THE
FUND'S INDEPENDENT PUBLIC AUDITORS FOR THE FISCAL YEAR ENDING
OCTOBER 31, 1996.
FOR AGAINST ABSTAIN
3. APPROVAL OF THE PROPOSED AGREEMENT AND ARTICLES OF MERGER WHICH
PROVIDE FOR A CONVERSION OF THE FUND FROM A MARYLAND
CORPORATION TO A DELAWARE BUSINESS TRUST.
FOR AGAINST ABSTAIN
4. TRANSACTION OF SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE MEETING.
FOR AGAINST ABSTAIN
(Continued and to be signed on reverse.)
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY IMMEDIATELY IN THE
POSTAGE-PAID ENVELOPE PROVIDED.
This Proxy is solicited on behalf of the Board of Directors and when
properly executed will be voted as specified. If no specification is
made, the undersigned's vote, as a shareholder of THIRD AVENUE VALUE
FUND, INC., will be cast for the election of all directors and FOR
Proposals (2) and (3). If any other matters properly come before the
meeting about which the proxy holders were not aware prior to the
time of the solicitation of the Fund, authorization is given to the
proxy holders to vote in accordance with their judgment on such
matters. Management is not aware of any such matters. The
undersigned acknowledges receipt of the Notice of Meeting and Proxy
Statement dated October 12, 1996. Please sign exactly as name appears
below. When shares are held by joint tenants, both should sign.
Signature*
Dated: , 1996
* Please sign exactly as your name appears on this Proxy. If
signing for an estate, trust or corporation, title or capacity
should be stated.
CHECK HERE IF YOU PLAN TO ATTEND THE MEETING. ( PERSON(S) WILL
ATTEND.)
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