Lehman Selected Growth Stock Portfolio January 18, 1996
A Series of
Lehman Brothers Funds, Inc.
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of the
Lehman Selected Growth Stock Portfolio (the "SGS Portfolio"), an investment
portfolio of Lehman Brothers Funds, Inc. ("Lehman Funds"), to be held on January
18, 1996 at 10:00 a.m. Eastern time at the offices of Lehman Brothers Funds,
Inc. on the 26th floor, conference room #4, located at 3 World Financial Center
New York, New York 10285.
At this meeting, shareholders will be asked to consider and take action on the
proposed reorganization (the "Reorganization") of the SGS Portfolio as the new
Class B shares of the U.S. Selected Growth Portfolio ("USG Portfolio") of AMT
Capital Fund, Inc. ("AMT Capital Fund"). The formal Notice of Special Meeting
of the Shareholders and the Proxy Statement setting forth in detail the matters
to come before the meeting are attached, and a Proxy Card is enclosed for you to
complete and return in the pre-addressed, postage-paid envelope provided.
IT IS IMPORTANT THAT YOU RETURN THE PROXY WHETHER OR NOT
YOU PLAN TO ATTEND THIS MEETING.
The proposed Reorganization provides that each shareholder of the SGS Portfolio
will receive a number of Class B shares of common stock in the new USG Portfolio
equal to the number of shares in the SGS Portfolio each such shareholder held.
Also, as a part of the Reorganization, the SGS Portfolio will transfer all of
its assets to the USG Portfolio. The investment objective, policies,
restrictions, risk factors, and investment approach of the USG Portfolio are
substantially similar to those of the SGS Portfolio. The new Advisory Agreement
is similar to the current Advisory Agreement, except that AMT
Capital Advisers, Inc. ("AMT Capital Advisers") replaces Lehman Brothers Global
Asset Management Inc. ("LBGAM") as investment adviser and the other differences
described herein. Pursuant to the new Advisory Agreement, AMT Capital Advisers
has delegated a portion of its duties to Delphi Asset Management ("Delphi")
which will act as sub-adviser to the USG Portfolio pursuant to a Sub-Advisory
Agreement between AMT Capital Advisers and Delphi. As sub-adviser Delphi will
provide investment research and advice and will determine which portfolio
securities shall be purchased or sold on behalf of the USG Portfolio. AMT
Capital Advisers' duties as investment adviser extend to selecting, evaluating,
and monitoring the sub-adviser.
Susan Hirsch, the portfolio manager at LBGAM primarily responsible for the day-
to-day management of the SGS Portfolio, will serve as portfolio manager of the
USG Portfolio, a position in which she will have the same discretion and
decision-making authority over the new USG Portfolio as she exercised over the
SGS Portfolio. Subsequent to the Reorganization, however, her services will be
retained by Delphi instead of LBGAM. AMT Capital Services, Inc. will serve as
administrator and distributor to the USG Portfolio.
The Board of Directors of Lehman Funds believes that the proposed Reorganization
is in the best interests of the shareholders. The Reorganization also will
allow shareholders to continue to access the portfolio management skills of
Ms. Hirsch in spite of the fact that the SGS Portfolio will cease operations.
The investment advisory fee to be paid by the USG Portfolio will be the same as
that currently paid by the SGS Portfolio, and total Portfolio expenses will not
exceed the total expenses of the SGS Portfolio during its last fiscal year.
At its meeting on November 1, 1995, the Board of Directors approved the proposed
Reorganization.
Again, whether or not you expect to attend the meeting, it is important that
your shares be represented. Therefore, we urge you to vote FOR each of the
proposals contained in the Combined Prospectus/Proxy Statement.
Sincerely,
Andrew D. Gordon
President
LEHMAN SELECTED GROWTH STOCK PORTFOLIO
A Series of
LEHMAN BROTHERS FUNDS, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on January 18, 1996
A Special Meeting (the "Meeting") of the Shareholders of Lehman Selected
Growth Stock Portfolio (the "SGS Portfolio"), a series of Lehman Brothers
Funds, Inc., a Maryland corporation ("Lehman Funds"), will be held on January
18, 1996, at 10:00 a.m. Eastern time at the offices of Lehman Brothers Funds,
Inc. on the 26th floor, conference room #4, located at 3 World Financial Center
New York, New York 10285, or at such adjourned time as may be necessary
for the holders of a majority of SGS Portfolio's outstanding shares to vote for
the following purposes:
(1) To approve or disapprove the proposed Agreement and Plan of
Reorganization by and between Lehman Funds, on behalf of its SGS Portfolio,
and AMT Capital Fund, Inc. ("AMT Capital Fund"), on behalf of its newly-
created U.S. Selected Growth Portfolio (the "USG Portfolio"), providing for
the transfer of all of the assets, subject to all of the liabilities, of SGS
Portfolio in exchange for Class B shares of the USG Portfolio (the "USG
Shares"), and the distribution of such USG Shares to the shareholders of SGS
Portfolio in complete liquidation of SGS Portfolio, as more fully described in
the accompanying Combined Prospectus/Proxy Statement; and
(2) To consider and act upon any other matters that may properly come before
the meeting and any adjournments thereof.
The Agreement and Plan of Reorganization, the transactions contemplated
thereby and related matters are described in the attached Combined
Prospectus/Proxy Statement. A copy of the Agreement and Plan of
Reorganization is attached as Appendix A to this Combined Prospectus/Proxy
Statement.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF
THE PROPOSAL
Only shareholders of record as of the close of business on December 11, 1995
will be entitled to vote at the meeting and any adjournments thereof.
YOUR COOPERATION IN PROMPTLY COMPLETING, SIGNING AND RETURNING THE ENCLOSED
PROXY WILL BE APPRECIATED.
By order of the Board of Directors,
James A. Carbone
Chairman of the Board
Place: 3 World Financial Center, New York, New York 10285
Date: January 18, 1996
IMPORTANT: We urge you to sign, date and return your proxy in the
enclosed envelope which requires no postage and is intended for your
convenience. If you attend the meeting, you may vote your shares in person.
LEHMAN SELECTED GROWTH STOCK PORTFOLIO
A Series of
LEHMAN BROTHERS FUNDS, INC.
3 World Financial Center
New York, NY 10285
(212) 526-7000
AMT CAPITAL FUND, INC.
430 Park Avenue
New York, NY 10022
(212) 308-4848
COMBINED PROSPECTUS/PROXY STATEMENT
____________________________
SOLICITATION OF PROXIES
This Combined Prospectus/Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Lehman Brothers Funds,
Inc. (the "Lehman Funds") to be voted at a Special Meeting of Shareholders of
the Lehman Selected Growth Stock Portfolio (the "SGS Portfolio") to be held
on January 18, 1996 at 10:00 a.m. Eastern time, at the offices of Lehman
Brothers Funds, Inc. located at 3 World Financial Center, New York, New
York 10285, at any adjournment(s) thereof (the "Meeting").
The purpose of the Meeting is to consider an Agreement and Plan of
Reorganization (the "Reorganization Plan") among the Lehman Funds, on
behalf of the Lehman Selected Growth Stock Portfolio ("SGS Portfolio"), an
investment portfolio of Lehman Funds, and AMT Capital Fund, Inc. (the "AMT
Capital Fund"), on behalf of the U.S. Selected Growth Portfolio (the "USG
Portfolio"), an investment portfolio of AMT Capital Fund, that would effect the
reorganization of the SGS Portfolio into the USG Portfolio and certain
transactions and other actions contemplated thereby, as described below (the
"Reorganization" or "Proposal 1"). Pursuant to the Reorganization Plan, which
has been approved by the Board of Directors of Lehman Funds, all of the assets
of the SGS Portfolio would be acquired by the USG Portfolio in exchange for
Class B shares of common stock (the "USG Shares") in the new USG Portfolio
and the assumption by USG Portfolio of all of the liabilities of the SGS
Portfolio. Such USG Shares then would be distributed to SGS Portfolio
shareholders at the rate of one new USG Share (or fraction thereof) for each
share (or fraction thereof) of common stock in the SGS Portfolio. As a result
of the proposed transactions, each shareholder of the SGS Portfolio would
receive a number of full or fractional new USG Shares equal to the number of SGS
Portfolio shares owned by such SGS Portfolio shareholder at the time of the
Reorganization. Such new USG Shares would have an aggregate net asset
value on the effective date of the Reorganization equal to the aggregate net
asset value of the SGS Portfolio shares. A copy of the form of the
Reorganization Plan is set forth in Appendix A to this Combined
Prospectus/Proxy Statement.
Lehman Funds and AMT Capital Fund are both open-end, diversified
investment companies (i.e., mutual funds) incorporated in the state of
Maryland. The investment policies and restrictions of the new USG Portfolio
will be substantially similar to those of the SGS Portfolio. Each of the SGS
Portfolio and USG Portfolio has the investment objective of seeking long-term
capital appreciation. Each seeks to achieve this investment objective through
investments in equity securities of small- and medium- sized U.S. companies
which the adviser or in the case of the USG Portfolio, the sub-adviser,
believes have the potential for above-average capital appreciation.
This Combined Prospectus/Proxy Statement, which should be retained for
future reference, sets forth concisely the information about USG Portfolio,
AMT Capital Fund, SGS Portfolio and Lehman Funds, and the transactions
contemplated by the proposed Reorganization Plan, that an investor should
know before voting on the proposed Reorganization Plan. A copy of the
preliminary prospectus of the Class B shares of the USG Portfolio, dated
October 20, 1995, is included with this Combined Prospectus/Proxy Statement
and is incorporated by reference herein.
A preliminary statement of additional information regarding the new USG
Portfolio, dated October 20, 1995, has been filed with the Securities and
Exchange Commission (the "Commission"). Copies of this document may be
obtained without charge by contacting AMT Capital Services, Inc. at 430 Park
Avenue, New York, New York 10022 or by telephoning AMT Capital Services,
Inc. at 1-800-762-4848.
The current prospectus and statement of additional information regarding the
SGS Portfolio, each dated November 29, 1995, are incorporated by reference
herein. A copy of the current prospectus of the SGS Portfolio and a copy of the
current statement of additional information of the SGS Portfolio each may be
obtained without charge by contacting AMT Capital Services, Inc. at 430 Park
Avenue, New York, New York 10022, or by telephoning AMT Capital
Services, Inc. at 1-800-762-4848.
A statement of additional information, dated December 14, 1995 relating to the
proposed transactions and other actions described in this Combined
Prospectus/Proxy Statement, including historical financial statements, has been
filed with the Commission and is incorporated by reference herein. Copies of
this statement of additional information may be obtained without charge by
contacting AMT Capital Services at 430 Park Avenue, New York, New York
10022, or by telephoning AMT Capital Services at 1-800-762-4848.
_______________________________________________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
________________________________________________________________________________
The date of this Combined Prospectus/Proxy Statement is December 14, 1995.
COMBINED PROSPECTUS/PROXY STATEMENT
TABLE OF CONTENTS
Page
Introduction and Voting Information
Special Meeting: Voting of Proxies; Adjournment
Synopsis
Proposal 1- Approval of the Proposed Agreement and Plan of Reorganization
and the Transactions Contemplated Thereby.
The Proposed Reorganization
Costs and Expenses of the Reorganization
Continuation of Shareholder Accounts; Share Certificates
Forms of Organization of Lehman Funds and AMT Capital Fund
Operation of the USG Portfolio Following the Reorganization
Purchases of USG Shares
Redemptions
Exchanges
Dividends and Distributions
Advisory and Distribution Fees and Expenses
Investment Objective and Policies
Federal Income Tax Consequences of the Proposed Reorganization
Principal Risk Factors
Proposal 1- Approval of the Proposed Agreement and Plan of Reorganization and
the Transactions Contemplated Thereby.
Reasons for the Proposed Reorganization
Continuity of Portfolio Management
Constant Investment Advisory Fees
Comparative Expense Table
Federal Income Tax Consequences of the Proposed Reorganization
Pro Forma Capitalization and Ratios
Summation
Description of AMT Capital Fund and the New USG Portfolio
Description of Administrator
Description of Distributor and Distribution Arrangements
Comparative Information on Shareholder Rights
General
Shares
Management of the Affairs of AMT Capital Fund
Shareholder Meetings
Liability and Indemnification of Directors and Officers
Removal of Directors
Comparative Information on Investment Advisory Agreements
Additional Information about AMT Capital Fund, Inc. and the U.S. Selected Growth
Portfolio
Additional Information About Lehman Brothers Funds, Inc. and the Lehman Selected
Growth Stock Portfolio
Miscellaneous
Available Information
Legal Matters
Financial Statements and Experts
Other Business
Proposals for Future Meetings
Appendix A: Agreement and Plan of Reorganization
LEHMAN SELECTED GROWTH STOCK PORTFOLIO
A Series of
LEHMAN BROTHERS FUNDS, INC.
3 World Financial Center
New York, NY 10285
COMBINED PROSPECTUS/PROXY STATEMENT
Special Meeting of Shareholders to be held on January 18, 1996.
________________________________________________________________________________
INTRODUCTION AND VOTING INFORMATION
Special Meeting: Voting of Proxies: Adjournment
This Combined Prospectus/Proxy Statement is being furnished to the
shareholders of the SGS Portfolio in connection with the solicitation by the
Board of Directors of Lehman Funds of proxies to be voted at a Special
Meeting of Shareholders of the SGS Portfolio to be held on January 18, 1996 at
10:00 a.m. Eastern time, at the offices of Lehman Brothers Funds, Inc. located
at 3 World Financial Center New York, New York 10285 and at any
adjournment(s) thereof. The purpose of the Meeting is to approve or
disapprove the Reorganization Plan by and between Lehman Funds, on behalf
of the SGS Portfolio, and AMT Capital Fund, on behalf of the USG Portfolio,
providing for the transfer of all of the assets, subject to all of the
liabilities, of SGS Portfolio to the USG Portfolio in exchange for USG Shares,
and the distribution of such USG Shares to the shareholders of SGS Portfolio in
complete liquidation of the SGS Portfolio, as fully described hereafter in this
Combined Prospectus/Proxy Statement; and to consider and act upon any other
matters that may properly come before the meeting and any adjournments
thereof.
Record holders of shares of common stock of the SGS Portfolio at the close of
business on December 11, 1995, the record date, will be entitled to one vote per
share and proportionate fractional votes for fractional shares on all business
to be presented at the Meeting. On the record date, 3,100,007 shares of common
stock of the SGS Portfolio were outstanding and entitled to be voted at the
meeting. These shares were held of record on Lehman Funds' books primarily
by First Data Investor Services Group, Inc. ("FDISG"), Lehman Funds'
administrator and a subsidiary of First Data Corporation, Lehman Funds'
transfer agent. As of the record date there were two 5% beneficial
shareholders. Lehman Brothers Incorporated ("LBI") holds 489,637 shares
(15.8 %) of the SGS Portfolio for its own account, and is the record holder of
1,044,865 shares (33.7 %) of the SGS Portfolio held for the benefit of Credit
Suisse P.K.E. as of the record date. LBI and Credit Suisse P.K.E. may each be
deemed control persons of the SGS Portfolio. It has been LBI's practice to
invest seed capital in certain of the mutual funds advised by its affiliates to
assist the funds in getting established. LBI continually assesses its needs for
capital, and in connection therewith redeems seed capital in the ordinary course
after a fund is established. In that connection, LBI intends to redeem its
current shares in the SGS Portfolio in an orderly manner. LBI's address is 3
World Financial Center, New York, NY 10285. The address of Credit Suisse P.K.E.
is c/o LBI 3 World Financial Center, New York, NY 10285.
The enclosed form of proxy, if properly executed and returned, will be voted in
accordance with the choices specified thereon. If no choice is specified with
respect to a proposal, the proxy will be voted in favor of the proposal being
considered, and, in the discretion of the proxies named in the proxy card, on
any other matter properly brought before the Meeting. The representation in
person or by proxy of a majority of the outstanding voting securities of SGS
Portfolio is necessary to constitute a quorum for voting on the proposals
herein. If a quorum is present at the meeting, the approval of the
Reorganization Plan will require the affirmative vote of at least a majority of
the outstanding voting securities of the SGS Portfolio. As defined in the
Investment Act of 1940 (the "1940 Act"), the term "majority of the outstanding
voting securities' means the vote of the lesser of (i) 67% of the voting shares
of the SGS Portfolio present in person or by proxy at a meeting where more than
50% of the outstanding voting shares are present in person or by proxy; or (ii)
more than 50% of the outstanding voting shares of the Fund (a "1940 Act
Majority"). In the event that a quorum is present at the meeting but sufficient
votes to approve a proposal are not received, or if a quorum is not present, an
affirmative vote of the majority of shares represented at the meeting for
adjournment will cause the meeting to be adjourned to permit the further
solicitation of proxies. For purposes of establishing a quorum, abstentions
and broker non-votes will be treated as shares that are present. Broker "non-
votes" are proxies received by the SGS Portfolio from brokers or nominees when
the broker or nominee has neither received instructions from the beneficial
owner or other persons entitled to vote on a particular matter. Abstentions and
broker "non-votes" are equivalent to a vote against the proposals.
The Reorganization Plan provides that the expenses of the Reorganization
including the costs and expenses incurred in the preparation and mailing of the
notice, this Combined Prospectus/Proxy Statement and the proxy, and
solicitation of proxies, other than the legal expenses of LBGAM, will be borne
by AMT Capital Advisers, Inc. ("AMT Capital Advisers").
The enclosed proxy is revocable by you at any time prior to the exercise thereof
by submitting a written notice of revocation or subsequently executed proxy.
Signing and mailing the proxy will not affect your right to give a later proxy
or to attend the Meeting and vote your shares in person.
This Proxy Statement, the Notice of Special Meeting of Shareholders and the
form of proxy are being first mailed to shareholders on or about December 19,
1995.
The Board of Directors of Lehman Funds has unanimously approved, and
recommends that shareholders vote FOR, Proposal 1, Approval of the
Agreement and Plan of Reorganization and the transactions contemplated
thereby described below.
SYNOPSIS
The following is a summary of certain information contained elsewhere in this
Combined Prospectus/Proxy Statement, the prospectuses of Lehman Funds and
AMT Capital Fund, and the Reorganization Plan. Lehman Funds shareholders
should read this entire Combined Prospectus/Proxy Statement carefully.
PROPOSAL 1
APPROVAL OF THE PROPOSED AGREEMENT AND PLAN OF REORGANIZATION AND THE
TRANSACTIONS CONTEMPLATED THEREBY.
The Proposed Reorganization
SGS Portfolio shareholders will be asked at the Meeting to vote upon and
approve the Reorganization Plan. The Reorganization Plan is set forth in
Appendix A to this Combined Prospectus/Proxy Statement. Pursuant to the
Reorganization Plan, the SGS Portfolio, a series of Lehman Funds, would
effectively be reorganized into the new Class B shares (the "USG Shares") of
the USG Portfolio, a series of AMT Capital Fund. The Reorganization Plan
sets forth the terms and conditions under which the proposed transactions
contemplated by the Reorganization are to be consummated. The Board of
Directors of Lehman Funds, including the "non-interested persons" of Lehman
Funds, as that term is defined in Section 2(a)(19) of the 1940 Act (the "Lehman
Independent Directors"), and the Board of Directors of AMT Capital Fund
including the "non-interested persons" of AMT Capital Fund, as that term is
defined in Section 2(a)(19) of the 1940 Act (the "AMT Capital Fund Independent
Directors"), have unanimously approved the Reorganization Plan.
The consummation of the transactions contemplated by the proposed
Reorganization is subject to a number of conditions set forth in the
Reorganization Plan, some of which conditions may be waived by Lehman
Funds (see "The Proposed Reorganization-- Agreement and Plan of
Reorganization" under Proposal 1 below). Among the significant conditions
(which may not be waived) are (i) the receipt by Lehman Funds and AMT
Capital Fund of an opinion of counsel as to certain Federal income tax aspects
of the Reorganization (see "The Proposed Reorganization--Federal Income Tax
Consequences of the Proposed Reorganization" under Proposal 1, below) and
(ii) the approval of the Reorganization Plan by the affirmative vote of the
holders of at least a 1940 Act Majority of the outstanding shares of the SGS
Portfolio. The Reorganization Plan provides for the acquisition of all of the
assets of the SGS Portfolio by the USG Portfolio in exchange for USG Shares
and the assumption by USG Portfolio of all of the liabilities of the SGS
Portfolio. The USG Shares then would be distributed to the SGS Portfolio
shareholders at a rate of one new USG Share (or fraction thereof) for each SGS
Portfolio share (or fraction thereof) held. The aggregate net asset value of a
USG Share received by an SGS Portfolio shareholder would be equal to the
aggregate net asset value of a share of the SGS Portfolio immediately prior to
the closing of the Reorganization. The Reorganization is anticipated to occur
on January 19, 1996, or such later date as the parties may agree (the
"Reorganization Closing Date").
For the reasons set forth below under "The Proposed Reorganization--Reasons
for the Proposed Reorganization" under "Proposal 1", Lehman Funds' Board,
including all of the Lehman Independent Directors, has unanimously concluded
that the Reorganization would be in the best interest of the SGS Portfolio and
its shareholders and that the interests of the existing SGS Portfolio
shareholders would not be diluted as a result of the transactions contemplated
by the Reorganization. Lehman Funds' Board, therefore, has submitted the
Reorganization Plan effecting the Reorganization for approval by the SGS
Portfolio shareholders at the Meeting, and recommends the approval of the
Reorganization Plan.
Costs and Expenses of the Reorganization
The Reorganization Plan provides that AMT Capital Advisers will bear all the
costs and expenses of the Reorganization of the SGS Portfolio, including
professional fees and the costs of the Meeting, such as the costs and expenses
incurred in the preparation and mailing of the notice, this Combined
Prospectus/Proxy Statement, and the solicitation of proxies, which may include
reimbursement to broker-dealers and others who forward proxy materials to
their clients. Such costs and expenses to be paid by AMT Capital Advisers will
not result in an increase in management or distribution fees payable by the SGS
Portfolio or the USG Portfolio (see "Advisory and Distribution Fees and
Expenses" below).
Continuation of Shareholder Accounts; Share Certificates
As a result of the proposed transactions contemplated by the Reorganization,
each SGS Portfolio shareholder will cease to be a shareholder of the SGS
Portfolio and, as described below, will receive USG Shares at the rate of one
USG Share (or fraction thereof) for each SGS Portfolio share (or fraction
thereof) held on the Reorganization Closing Date, and the USG Shares will
have an aggregate net asset value equal to the aggregate net asset value of such
shareholder's SGS Portfolio shares as of the close of business on the
Reorganization Closing Date.
The USG Portfolio will establish accounts for all SGS Portfolio shareholders
containing the appropriate number of USG Shares. Receipt of USG Shares by
an SGS Portfolio shareholder will be deemed to authorize the USG Portfolio
and its agents to establish for the SGS Portfolio shareholder, with respect to
the USG Portfolio, all of the same (i) account options, including telephone
redemptions, if any, (ii) dividend and distribution options, and (iii) options
for payment that SGS Portfolio shareholders had elected previously with respect
to the SGS Portfolio. Similarly, no further action will be necessary in order
to continue any retirement plan currently maintained by a SGS Portfolio
shareholder, with respect to USG Shares.
SGS Portfolio shareholders to whom certificates have been issued will be
required to surrender their certificates in order to receive USG Shares.
No sales charge will be imposed in connection with the issuance of USG Shares
to the SGS Portfolio shareholders pursuant to the Reorganization.
Forms of Organization of Lehman Funds and AMT Capital Fund
The USG Portfolio is a newly-created series of AMT Capital Fund, a Maryland
corporation organized on August 3, 1993, and an open-end management
investment company registered under the 1940 Act. In addition, AMT Capital
Fund has two other series of shares outstanding: the Money Market Portfolio
and the HLM International Equity Portfolio. The operations of the AMT
Capital Fund and of the USG Portfolio are governed by the Articles of
Incorporation and the By-Laws of AMT Capital Fund, and by Maryland Law,
as applicable.
SGS Portfolio is an investment portfolio of Lehman Funds, a Maryland
corporation and an open-end management investment company registered under
the 1940 Act. The operations of Lehman Funds and the SGS Portfolio are
governed by the Articles of Incorporation and the By-Laws of Lehman Funds,
and by Maryland Law, as applicable.
The Lehman Funds (including the SGS Portfolio) and AMT Capital Fund
(including the USG Portfolio) are also subject to the provisions of the 1940
Act, and the rules and regulations of the Securities and Exchange Commission
(the "Commission") thereunder.
Operation of the USG Portfolio Following the Reorganization
Upon consummation of the Reorganization, USG Portfolio will operate in a
manner that is substantially similar to the current operation of the SGS
Portfolio. The USG Portfolio will be governed by the Board of Directors and
officers of AMT Capital Fund. Background information with respect to AMT
Capital Fund's directors and officers is set forth in USG Portfolio's statement
of additional information, which is available upon request from AMT Capital
Services. The responsibilities, powers, and fiduciary duties of the directors
of AMT Capital Fund are substantially similar to those of the directors of
Lehman Funds. AMT Capital Fund's directors supervise the business affairs and
investments of the USG Portfolio, which will be managed on a daily basis by
AMT Capital Advisers, the adviser, and Delphi Asset Management ("Delphi"),
the sub-adviser, to the USG Portfolio. Susan Hirsch, the portfolio manager at
LBGAM primarily responsible for the day-to-day management of the SGS
Portfolio, will serve as portfolio manager of the USG Portfolio, a position in
which she will have the same discretion and decision-making authority over the
new USG Portfolio as she exercised over the SGS Portfolio. Subsequent to the
Reorganization, however, her services will be retained by Delphi instead of
LBGAM. AMT Capital Services Inc. ("AMT Capital Services") will serve as
administrator and distributor to the USG Portfolio. The investment objective,
policies, and restrictions of the new USG Portfolio will be substantially
similar to those of the SGS Portfolio.
Purchases of USG Shares
The USG Shares have rights that are substantially similar to the shares
currently offered by SGS Portfolio; however, the USG Shares will have no
contingent deferred sales charges ("CDSC"), and the CDSC that is currently
applicable to shares of the SGS Portfolio will be waived in connection with the
disposal of SGS Portfolio shares as part of the Reorganization. In addition,
the USG Portfolio has designated a class of its shares as Class A shares, none
of which have been offered to the public. For information regarding the terms
under which shares of the USG Portfolio are offered and applicable distribution
charges, see "Purchase of Shares" in the preliminary prospectus of the USG
Portfolio.
The SGS Portfolio has LBI serve as its distributor. The new USG Portfolio will
have AMT Capital Services as the distributor pursuant to a Distribution
Agreement (the "Distribution Agreement") with AMT Capital Fund. The
Distribution Agreement between AMT Capital Fund and AMT Capital Services
is substantially similar to the distribution agreement between LBI and the SGS
Portfolio. Under the Distribution Agreement and the Services and Distribution
Plan to be in effect with respect to the USG Shares, pursuant to Rule 12b-1 of
the 1940 Act (the "New Services and Distribution Plan"), AMT Capital
Services may have selling agreements with several dealers which may allow for
greater portfolio share distribution opportunities whereas SGS Shares are only
sold by LBI. LBI will serve as a dealer in USG Shares under a new Dealer
Agreement between AMT Capital Services and LBI.
The New Services and Distribution Plan will be substantially similar in all
material respects to the Services and Distribution Plan currently in place for
the SGS Portfolio (the "Current Services and Distribution Plan").
Redemptions
USG Portfolio offers the same redemption rights and privileges currently
offered by the SGS Portfolio, and such rights and privileges are subject to the
same restrictions and procedures currently prescribed by the SGS Portfolio,
except that the USG Portfolio does not impose any CDSC, whereas the SGS
Portfolio imposes a maximum CDSC of 2.00% of the redemption proceeds.
The CDSC will be waived for all SGS shareholders in connection with the
Reorganization. For information regarding redemption of USG Portfolio
shares, see "Redemption of Shares" in the preliminary prospectus of the USG
Portfolio.
Exchanges
The USG Portfolio does not allow for the exchange of its shares.
Dividends and Distributions
As is SGS Portfolio's practice, USG Portfolio will distribute its investment
income and net realized capital gains, if any, once a year, normally either at
the end of the year in which they are earned or at the beginning of the next
year. Unless a shareholder instructs AMT Capital Fund to pay dividends or
capital gains distributions in cash and to credit them to the shareholder's
account, dividends and distributions will be reinvested automatically in
additional USG Shares at their net asset value, except that for SGS shareholders
who become USG shareholders in connection with the Reorganization, the elections
with respect to payments of dividends and distributions that such shareholders
previously made with respect to their shares of the SGS Portfolio will remain
the same. Shares redeemed during a given month are entitled to dividends and
distributions declared up to and including the date of redemption.
Similar to SGS Portfolio's practice, each USG Portfolio shareholder or its
authorized representative will receive an annual statement designating the
amount of any dividends and distributions made during the year and their
federal tax qualification.
Advisory and Distribution Fees and Expenses
The SGS Portfolio is advised by LBGAM. The new USG Portfolio will be
advised by its investment adviser, AMT Capital Advisers, and by its sub-
adviser, Delphi. The new Advisory Agreement is substantially similar to the
current Advisory Agreement, except for the following differences: (1) AMT
Capital Advisers replaces LBGAM as investment adviser; (2) the new
Advisory Agreement permits AMT Capital Advisers to engage a sub-adviser;
and (3) the new Advisory Agreement provides for indemnification of the
adviser in certain circumstances (as described under "Comparative
Information on Advisory Agreements"). AMT Capital Advisers has selected
Delphi to serve as sub-adviser to the USG Portfolio pursuant to a Sub-
Advisory Agreement. The sub-adviser will provide investment research and
advice and will determine which portfolio securities shall be purchased or
sold on behalf of the Portfolio. AMT Capital Advisers' duties as investment
adviser include selecting, evaluating, and monitoring the sub-adviser.
As described below under Proposal 1, the respective terms of the new Advisory
Agreement, Distribution Agreement, and New Services and Distribution Plan
with respect to the USG Portfolio are substantially similar to those of the
current Advisory Agreement, Distribution Agreement, and Current Services and
Distribution Plan for the SGS Portfolio. Accordingly, the aggregate contractual
rates payable by the USG Portfolio for investment advisory services and
distribution services will remain the same under the new Advisory Agreement,
Distribution Agreement, and New Services and Distribution Plan, respectively.
Investment Objective and Policies
Upon consummation of the Reorganization, the investment objective, policies and
restrictions of the USG Portfolio will be substantially similar to those of the
SGS Portfolio. Accordingly, the objective of the USG Portfolio is to seek long-
term capital appreciation. It will seek to achieve this investment objective
through investments in equity securities of small- and medium-sized U.S.
companies which the sub-adviser believes have the potential for above-average
capital appreciation. The investment objective of the USG Portfolio is a
fundamental policy and may not be changed without the approval of vote of at
least a 1940 Act Majority of the outstanding voting securities of the USG
Portfolio. The investment objective, policies, and restrictions of the USG
Portfolio and the investment risks are described under "Investment Objective and
Policies" in the preliminary prospectus of the USG Portfolio and under
"Investment Objective and Policies" in the preliminary statement of additional
information of the USG Portfolio.
Federal Income Tax Consequences of the Proposed Reorganization
The USG Portfolio and the SGS Portfolio will receive, as a condition to the
Reorganization, an opinion from Dechert Price & Rhoads, counsel to the USG
Portfolio, to the effect that the proposed Reorganization will constitute a tax-
free reorganization within the meaning of Section 368(a) of the U.S. Internal
Revenue Code of 1986, as amended (the "Code"). Accordingly, no gain or loss
generally will be recognized by the USG Portfolio, the SGS Portfolio or their
respective shareholders. For additional information regarding the federal
income tax consequences of the Proposed Reorganization, see "The Proposed
Reorganization--Federal Income Tax Considerations of the Proposed
Reorganization" under Proposal 1, below.
PRINCIPAL RISK FACTORS
Because the investment objective, policies, and restrictions of the USG
Portfolio are substantially similar to those of the SGS Portfolio, the risks
associated with the particular investment policies and strategies that the USG
Portfolio and the SGS Portfolio are authorized to employ also are substantially
similar. Investment in the USG Portfolio may involve an above-average risk, as
the securities of the kinds of companies in which the USG Portfolio invests may
be subject to significant price fluctuation. Furthermore, the USG Portfolio may
engage in the use of derivatives which may entail certain risks. For additional
information regarding the principal risk factors of investing in the USG
Portfolio, see "Risk Factors and Special Considerations" in the preliminary
prospectus of the USG Portfolio.
PROPOSAL 1
APPROVAL OF THE PROPOSED AGREEMENT AND PLAN OF REORGANIZATION AND THE
TRANSACTIONS CONTEMPLATED THEREBY.
On November 1, 1995, the Board of Directors of Lehman Funds, including all
of the Lehman Independent Directors, approved the Reorganization Plan,
subject to approval by the shareholders of SGS Portfolio. The Reorganization
Plan provides for (a) the transfer of all of the assets and liabilities of the
SGS Portfolio to the newly formed USG Portfolio, subject to all of the
liabilities of USG Shares, in exchange solely for USG Shares, and (b) the
distribution by the SGS Portfolio to its shareholders of USG Shares in
complete liquidation of the SGS Portfolio.
As a result of the Reorganization, each shareholder of the SGS Portfolio will
become a shareholder of the USG Portfolio and will hold, immediately after the
Reorganization Closing Date, the same number of USG Shares that such
shareholder held in the SGS Portfolio immediately before the Reorganization
Closing Date. The investment objective, policies, restrictions, risk factors,
and investment approach of the USG Portfolio will be substantially similar to
those of the SGS Portfolio. The new Advisory Agreement is substantially similar
to the current Advisory Agreement, except for the following differences: AMT
Capital Advisers replaces LBGAM as the investment adviser, the new Advisory
Agreement permits AMT Capital Advisers to engage a sub-adviser, and the new
Advisory Agreement provides that the USG Portfolio will indemnify AMT
Capital Advisers in certain circumstances. AMT Capital Advisers has selected
Delphi to serve as sub-adviser to the USG Portfolio pursuant to a Sub-Advisory
Agreement between AMT Capital Advisers and Delphi. The sub-adviser will
provide investment research and advice and will determine which portfolio
securities shall be purchased or sold on behalf of the Portfolio. AMT Capital
Advisers' duties as investment adviser include selecting, evaluating, and
monitoring the sub-adviser.
Susan Hirsch, the portfolio manager at LBGAM primarily responsible for the
day-to-day management of the SGS Portfolio, will serve as portfolio manager
of the USG Portfolio, a position in which she will have the same discretion and
decision-making authority over the new USG Portfolio as she exercises over the
SGS Portfolio. Subsequent to the Reorganization, however, her services will be
retained by Delphi instead of LBGAM. AMT Capital Services will serve as
administrator and distributor to the USG Portfolio.
AMT Capital Fund is a registered investment company, organized as a
corporation under the laws of Maryland in 1992, with its principal place of
business at 430 Park Avenue, New York, New York 10022. AMT Capital
Fund offers two other existing portfolios, the HLM International Equity
Portfolio and the Money Market Portfolio, neither of which is involved in the
Reorganization. AMT Capital Fund recently created the USG Portfolio into
which it is proposed that the SGS Portfolio will be reorganized. In the event
that shareholders of SGS Portfolio do not approve the Reorganization Plan, the
Directors of Lehman Funds will consider the alternatives available to them.
A copy of the Reorganization Plan is attached to this Combined
Prospectus/Proxy Statement as Appendix A, and the description of the
Reorganization Plan herein is qualified in its entirety by reference to Appendix
A.
Reasons for the Proposed Reorganization
Continuity of Portfolio Management. Susan Hirsch has served as the portfolio
manager of the SGS Portfolio since its inception in May, 1994, and has been
primarily responsible for the day-to-day management of the SGS Portfolio and
thus responsible for its current track record. Prior to joining LBGAM as
portfolio manager in 1994, Ms. Hirsch was a Senior Vice President at Lehman
Funds, where she had primary responsibility for the selection of investments for
the Lehman Brother Selected Growth Stock List. Ms. Hirsch is a member of
Institutional Investor Magazine's 1991, 1992 and 1993 All American Research
Team for small growth stocks.
In light of the recent decision by LBGAM to exit certain of its mutual fund
businesses, the Reorganization allows current shareholders to continue to
access the investment expertise of Ms. Hirsch. Ms. Hirsch has agreed to
terminate her employment at LBGAM effective upon the Reorganization
Closing Date and join Delphi, the sub-adviser to the USG Portfolio.
Consequently, the transition of Ms. Hirsch from managing the SGS Portfolio to
managing the USG Portfolio will be uninterrupted.
Constant Investment Advisory Fees. Under the current Advisory Agreement
between Lehman Funds and LBGAM, the SGS Portfolio pays LBGAM a
monthly base fee at the annual rate of 0.75% of the average daily net assets of
the SGS Portfolio. Under the new Advisory Agreement between AMT Capital
Fund and AMT Capital Advisers, the USG Portfolio will pay AMT Capital
Advisers a monthly base fee at the annual rate of 0.75% of the average daily net
assets of the USG Portfolio. AMT Capital Advisers will pay Delphi, the sub-
adviser, its sub-advisory fee pursuant to the Sub-Advisory Agreement out of
AMT Capital Advisers' investment advisory fee.
LBGAM and FDISG have voluntarily agreed to reimburse the SGS Portfolio
for "Total Fund Operating Expenses," in excess of 2.10% of its average net
assets. AMT Capital Advisers, Delphi and AMT Capital Services have
similarly voluntarily agreed to reimburse the USG Portfolio for "Total Fund
Operating Expenses," in excess of 2.10% of its average net assets. As a result,
the total expense ratio of the USG Portfolio will not be greater than that of
the SGS Portfolio for its most recent fiscal year.
The following table and example provide a comparison of the annual operating
expenses (as a percentage of average net assets) the SGS Portfolio currently
pays and the estimated amounts the USG Portfolio would pay following
consummation of the Reorganization:
Comparative Expense Table
Shareholder Transaction Expenses
SGS Portfolio USG Portfolio
Existing Shareholder Estimated Shareholder
Expense Expense
Contingent Deferred 2.00% (a) 0%
Sales Charge
(maximum charge as
a percentage of
redemption proceeds)
(a) The CDSC will be waived for shareholders of the SGS Portfolio in connection
with the Reorganization.
Annual Fund Operating Expenses
SGS Portfolio USG Portfolio
Existing Expense Estimated Expense
Investment Advisory Fees 0.75% 0.75% (b)
OtherExpenses- including
Administration Fees
(after reimbursement) 0.35% (c) 0.35% (c)
Rule 12b-1 Fees 1.00% (d) 1.00% (e)
(after reimbursement)
Total Operating Expenses 2.10% (f) 2.10% (g)
(after reimbursement)
(a) The SGS Portfolio will waive the CDSC for shareholders of the SGS
Portfolio in connection with the Reorganization.
(b) This amount includes advisory fees and sub-advisory fees.
(c) This amount reflects voluntary expense reimbursements as explained
hereinafter. Absent these voluntary expense reimbursements, the ratio of
"Other Expenses" to average net assets would have been 0.46% for the
SGS Portfolio, and is estimated to be 0.75% for the USG Portfolio.
(d) LBI receives an annual 12b-1 fee of 1.00% of the value of the SGS
Portfolio's average daily net assets, consisting of a .75% distribution fee
and a .25% service fee. Under the rules of the National Association of
Securities Dealers, Inc. (the "NASD") a 12b-1 fee may be treated as a sales
charge for certain purposes. Because a 12b-1 fee is an annual fee charged
against the assets of a fund, long-term shareholders may indirectly pay
more in total sales charges than the economic equivalent of the maximum
front-end sales charge permitted by rules of the NASD.
(e) USG Portfolio has adopted the same 12b-1 fee as described in (c) which fee
is paid to AMT Capital Services.
(f) This amount reflects the agreement by LBGAM and the SGS Portfolio's
administrator to reimburse the SGS Portfolio for "Total Fund Operating
Expenses" in excess of 2.10% average net assets for a period of at least one
year from the date of the Prospectus dated November 28, 1994. Absent
these voluntary expense reimbursements, the ratio of "Total Fund Operating
Expenses" to average net assets would be 2.21%.
(g) The amount set forth for "Total Operating Expenses" reflects the
agreement by AMT Capital Advisers, Delphi and AMT Capital Services to
reimburse the USG Portfolio for "Total Fund Operating Expenses" in
excess of 2.10% of its average net assets for an indefinite time period.
Absent these voluntary expense reimbursements, the ratio of "Total Fund
Operating Expenses" is estimated to be 2.5%.
Example
You would pay the following expenses on a $1,000 investment in each of the
SGS Portfolio and the USG Portfolio, assuming (1) 5% annual return and (2)
redemption at the end of each time period.
1 Year 3 Years 5 Years 10 Years
SGS Portfolio $21 $66 $113 $243
USG Portfolio $21 $66 $113 $243
These examples should not be considered a representation of future expenses or
performance. Actual operating expenses and annual returns may be greater or
less than those shown.
Federal Income Tax Consequences of the Proposed Reorganization. The SGS
Portfolio and Lehman Funds will receive, as a condition to the Reorganization,
an opinion from Dechert Price & Rhoads, counsel to the USG Portfolio, to the
effect that, based on the facts, assumptions and representations of the parties,
for federal income tax purposes: (i) the acquisition by the USG Portfolio of
substantially all of the assets of the SGS Portfolio in exchange solely for USG
Shares and the assumption by the USG Portfolio of the liabilities of the SGS
Portfolio, followed by the distribution of such USG Shares to the SGS Portfolio
shareholders in exchange for their shares of the SGS Portfolio in complete
liquidation of the SGS Portfolio, will constitute a "reorganization" within the
meaning of Section 368(a) of the U.S. Internal Revenue Code of 1986, as
amended (the "Code"), and the USG Portfolio and the SGS Portfolio will each
be "a party to a reorganization" within the meaning of Section 368(b) of the
Code; (ii) no gain or loss will be recognized to the SGS Portfolio upon the
transfer of substantially all of its assets to the USG Portfolio in exchange
solely for USG Shares and the assumption by the USG Portfolio of the liabilities
of the SGS Portfolio, or upon the distribution to the target shareholders of
such USG Shares; (iii) the basis of the assets of the SGS Portfolio in the hands
of the USG Portfolio will be, in each instance, the same as the basis of those
assets in the hands of the SGS Portfolio immediately prior to the
Reorganization; (iv) the holding period of the assets of the SGS Portfolio in
the hands of the USG Portfolio will include the period during which the assets
were held by the SGS Portfolio; (v) no gain or loss will be recognized by the
USG Portfolio upon the receipt of the assets of the SGS Portfolio in exchange
for USG Shares; (vi) no gain or loss will be recognized by the shareholders of
the SGS Portfolio upon the receipt of USG Shares solely in exchange for their
shares of the SGS Portfolio; (vii) the basis of the USG Shares received by the
shareholders of the SGS Portfolio will be the same as the basis of the shares of
the SGS Portfolio surrendered in exchange therefor; and (viii) the holding
period of the USG Shares received by the shareholders of the SGS Portfolio
will include the holding period of the shares of the SGS Portfolio surrendered
in exchange therefore, provided that on the date of the exchange the shares of
the SGS Portfolio were held as capital assets in the hands of the shareholders
of the SGS Portfolio.
The foregoing is only intended to be a summary of the principal federal income
tax consequences of the Reorganization and should not be considered tax advice.
In addition, while it is believed that the foregoing is correct, it is not
certain that the U.S. Internal Revenue Service will agree with the conclusions
stated above. Shareholders of the SGS Portfolio may wish to consult their own
tax advisers regarding the federal, state and local tax consequences with
respect to the foregoing matters and any other considerations which may be
applicable to the shareholders of the SGS Portfolio.
Pro Forma Capitalization and Ratios. The following table shows the
capitalization of the SGS Portfolio and the USG Portfolio separately as of
October 31, 1995 (unaudited), and combined in the aggregate on a pro forma
basis (unaudited), as of that date giving effect to the Reorganization:
SGS Portfolio USG Portfolio Pro Forma Combined
Net Assets:
$39,307,059 $0 $39,307,059
Net Asset Value
("NAV") Per Share: $13.51 $0 $13.51
Shares Outstanding 2,904,618 $0 2,904,618
The following table shows the ratio of expenses to average net assets and the
ratio of net investment income to average net assets of the SGS Portfolio and
the USG Portfolio separately for the year ended October 31, 1995 (unaudited),
and combined in the aggregate on a pro forma basis (unaudited), as of that date,
giving effect to the Reorganization:
SGS Portfolio USG Portfolio Pro Forma Combined
Ratio of Expenses 2.10% (a) 0% 2.10%
to Average Net
Assets
Ratio of Net -1.67% 0% -1.67%
Investment Income
to Average Net
Assets
(a) This amount reflects the agreement by LBGAM and the SGS
Portfolio's administrator to reimburse the SGS Portfolio for "Total Fund
Operating Expenses" in excess of 2.10% average net assets for a period of
at least one year from the date of the Prospectus dated November 28, 1994.
Absent these voluntary expense reimbursements, the ratio of "Total Fund
Operating Expenses" to average net assets would be 2.21%. AMT Capital
Advisers, Delphi and AMT Capital Services have agreed to reimburse the
USG Portfolio for "Total Fund Operating Expenses" in excess of 2.10% of
its average net assets for an indefinite time period. Absent these voluntary
expense reimbursements, the ratio of "Total Fund Operating Expenses" is
estimated to be 2.5%.
Summation. Based upon the foregoing, Lehman Funds' Board of Directors has
determined that the Reorganization is in the best interests of the shareholders
of the SGS Portfolio, and has determined further that the interests of the
shareholders will not be diluted as a result of the Reorganization.
In reaching this conclusion, the Board of Directors of Lehman Funds
considered many factors, including without limitation the following: the
compatibility of the investment objective, policies and restrictions, as well as
the service features available to shareholders, of the SGS Portfolio and the USG
Portfolio; the capabilities and resources of AMT Capital Advisers, Delphi and
the other proposed service providers in the areas of investment, administration,
fund accounting, transfer agency, custody, marketing and shareholder servicing,
as applicable; expense ratios and available information regarding the fees and
expenses of the SGS Portfolio and the USG Portfolio as well as similar funds;
the terms and conditions of the Reorganization and whether the Reorganization
would result in a dilution of shareholder interests; costs to be incurred by the
SGS Portfolio and the USG Portfolio in connection with the Reorganization;
tax consequences of the Reorganization; possible alternatives to the
Reorganization; and the commitment of AMT Capital Advisers and its affiliates
to maintain and enhance the business of the USG Portfolio for the benefit of
shareholders of the USG Portfolio, including former shareholders of the SGS
Portfolio.
Description of AMT Capital Fund and the New USG Portfolio
The USG Portfolio has been organized specifically for the purpose of
effectuating the Reorganization of the SGS Portfolio. Prior to the
Reorganization Closing Date, the USG Portfolio will have no assets (other than
a nominal investment by Alan M. Trager, President of AMT Capital Services,
as the sole initial shareholder of the USG Portfolio) and no liabilities. The
investment objective, policies, restrictions, risk factors, and investment
approach of USG Portfolio will be substantially similar to those of the SGS
Portfolio at the Reorganization Closing Date, except that the USG Portfolio is
prohibited from borrowing money for leveraging purposes. Although the SGS
Portfolio is permitted to borrow for leveraging purposes, in practice, it does
not do so. The USG Portfolio will be advised by a new investment adviser, AMT
Capital Advisers, with Delphi serving as the sub-adviser. However, Susan
Hirsch has agreed to continue to serve as portfolio manager since Delphi has
retained her services to manage the new portfolio. AMT Capital Services will
serve as the administrator and distributor to the new portfolio.
The manner in which USG Shares are distributed and the distribution system
will be substantially the same as for the SGS Portfolio, except for differences
discussed in the section "Distributor." In addition, dividends on USG Shares
will be declared and paid on the same basis and at the same times as dividends
are paid to shareholders of the SGS Portfolio. Further, all rights, privileges
and obligations of shareholders existing immediately prior to the reorganization
are substantially similar in all material respects to those which shareholders
will be entitled as shareholders of the USG Portfolio, except for the
differences discussed below under "Comparative Information on Shareholder
Rights".
Description of Administrator
AMT Capital Services will serve as the administrator to the USG Portfolio
pursuant to an Administration Agreement with AMT Capital Fund, on behalf of
the USG Portfolio, which is substantially similar in all material respects to
the current Administration Agreement except that AMT Capital Services will serve
as administrator.
AMT Capital Services provides administrative services to, and assists in
managing and supervising all aspects of, the general day-to-day business
activities and operations of the USG Portfolio other than investment advisory
activities, including oversight of custodial, transfer agency, dividend
disbursing, accounting, auditing, compliance and related services. AMT Capital
Services acts as an administrator responsible for managing all aspects of the
USG Portfolio's operations. It focuses on selecting, managing, and replacing,
if necessary, the other service providers to secure the best services at the
best prices available on the market.
Founded in early 1992, AMT Capital Services is a registered broker-dealer
whose senior managers are former officers of Morgan Stanley and The
Vanguard Group, where they were responsible for the administration and
distribution of The Pierpont Funds, a $5 billion fund complex now owned by
J.P. Morgan, and the private label administration group of Vanguard, which
administered over $10 billion in assets in the aggregate for 45 portfolios.
Description of Distributor and Distribution Arrangements
AMT Capital Services will also serve as the distributor to the USG Portfolio
under the Distribution Agreement with AMT Capital Fund. LBI will serve as a
dealer in USG Shares under a new Dealer Agreement between AMT Capital
Services and LBI. AMT Capital Fund's Distribution Agreement relating to the
USG Shares is substantially similar in all material respects to Lehman Funds'
Distribution Agreement currently in place for the SGS Portfolio. In addition,
the New Services and Distribution Plan will be substantially similar in all
material respects to the Current Services and Distribution Plan currently in
place for the SGS Portfolio. Under the Distribution Agreement and the New
Services and Distribution Plan, AMT Capital Services may have selling
agreements with several dealers, which may allow for greater portfolio share
distribution opportunities, whereas SGS shares are sold only by LBI.
Comparative Information on Shareholder Rights
General. Lehman Funds and AMT Capital Fund are Maryland corporations.
Lehman Funds is an open-end registered investment company governed by its
Articles of Incorporation dated May 5, 1993, as amended and restated, its By-
Laws and applicable Maryland law. AMT Capital Fund is governed by its
Articles of Incorporation dated August 3, 1993, as amended and restated, its
By-Laws, and applicable Maryland law. The business and affairs of each of the
SGS Portfolio and the USG Portfolio are managed under the direction of their
respective Boards of Directors.
Shares. The number of authorized shares of common stock of Lehman Funds is
Ten Billion (10,000,000,000). The number of authorized shares of common
stock of the AMT Capital Fund is Two Billion Five Hundred Million
(2,500,000,000). Under the Articles of Incorporation of both the AMT Capital
Fund and Lehman Funds the Board of Directors may, without shareholder
approval, provide for the issuance of additional sub-classes of Common Stock
of a particular class or portfolio with such preferences, conversions or other
rights and characteristics as shall be determined by resolution of the Board of
Directors.
The distribution system for the USG Shares will be substantially similar to that
currently in place for the SGS Shares except that the USG Portfolio will also
have an additional class of shares (its Class A shares) and will not have a
contingent deferred sales charges with respect to either class of shares.
Management of the Affairs of AMT Capital Fund
AMT Capital Fund's Board of Directors has the power to determine a minimum
net asset value of a shareholder account or minimum investment which may be
made by a shareholder. The Board of Directors may authorize the closing of
those shareholder accounts not meeting the specified minimum amounts by
redeeming all of the shares in such accounts upon notice to the affected
shareholders.
AMT Capital Fund and Lehman Funds may suspend redemptions in such manner
as may be approved from time to time by or pursuant to the discretion of the
Board of Directors during any period (i) during which the New York Stock
Exchange is closed other than customary weekend and holiday closing, (ii) during
which trading on the New York Stock Exchange is restricted, (iii) during which
an emergency exists as a result of which disposal by the applicable Fund of
securities owned by such class is not reasonably practicable or it is not
reasonably practicable for the applicable Fund fairly to determine the value for
the net assets of such class, or (iv) during any other period when the
Securities and Exchange Commission (or any succeeding governmental authority)
may for the protection of security holders of the applicable Fund by order
permit suspension of the right of redemption or postponement of the date of
payment on redemption.
Shareholder Meetings. Neither Lehman Funds nor AMT Capital Fund is
required to hold annual meetings of shareholders, but are required to hold
meetings of shareholders for purposes of voting on certain matters as required
under the 1940 Act.
Liability and Indemnification of Directors and Officers. Both Lehman Funds
and AMT Capital Fund provide for the indemnification of their directors and
officers to the full extent permitted by Maryland General Corporation Law.
Removal of Directors. The AMT Capital Fund may, subject to the limits of the
1940 Act and unless otherwise prohibited by the by-laws, remove a director
with or without cause, by the affirmative vote of a majority of (a) the Board of
Directors, (b) a committee of the Board of Directors appointed for such purpose,
or (c) the shareholders by vote of a majority of the outstanding shares of AMT
Capital Fund. Lehman Funds has no similar provision for (a) and (b), but does
have an identical provision for (c).
The foregoing is only a summary of certain characteristics of the operations of
Lehman Funds and AMT Capital Fund, their Articles of Incorporation, By-
Laws and Maryland law. The foregoing is not a complete description of the
documents cited. Shareholders should refer to the provisions of Maryland law
directly for a more thorough description.
Comparative Information on Investment Advisory Agreements
The duties and obligations of the adviser outlined under the current and new
Advisory Agreements are substantially similar, except for the following
differences: (1) AMT Capital Advisers replaces LBGAM as investment adviser;
(2) the new Advisory Agreement permits AMT Capital Advisers to engage a sub-
adviser; and (3) the new Advisory Agreement provides for indemnification of the
adviser in certain circumstances (as described below). The current Advisory
Agreement continues from year to year, so long as its continuance is
specifically approved at least annually (a) by vote of a majority of the Board
of Directors who are not parties to the Advisory Agreement or "interested
persons" of any party thereto and (b) by the Board of Directors or by vote of a
majority of the outstanding securities (as defined in the 1940 Act) of the SGS
Portfolio.
The new Advisory Agreement was approved by the Board of Directors of the
AMT Capital Fund, including a majority of AMT Capital Fund's Independent
Directors on December 12, 1995 on behalf of the USG Portfolio, and by the sole
shareholder of the USG Portfolio on December 12, 1995. The new Advisory
Agreement will continue until January 1, 1998 and from year to year thereafter
provided that such continuance is specifically approved at least annually in the
same manner as the current Advisory Agreement. The new Advisory Agreement
is terminable at any time without penalty by a majority of AMT Capital Fund's
Independent Directors or by vote of a majority of the outstanding shares (as
defined in the 1940 Act) of the USG Portfolio on 60 days' written notice to AMT
Capital Advisers and by AMT Capital Advisers on 60 days' written notice to the
AMT Capital Fund.
Under the new Advisory Agreement, AMT Capital Advisers, subject to the
general supervision of the Board of Directors of the AMT Capital Fund, manages
the investment operations of the USG Portfolio and the composition of its assets
and is responsible for performing certain other obligations. In this regard,
AMT Capital Advisers provides performance reporting, portfolio analysis, and
other support to the Fund's Board of Directors relating to the selection,
evaluation, and monitoring of the sub-adviser of the USG Portfolio, Delphi.
The new Advisory Agreement provides that AMT Capital Advisers is not liable to
the USG Portfolio for any error of judgment but shall be liable to the Fund for
any loss resulting from willful misfeasance, bad faith or gross negligence by
AMT Capital Advisers in providing services under the Advisory Agreement or from
reckless disregard by AMT Capital Advisers of its obligations and duties under
the Advisory Agreement. In addition, the USG Portfolio will indemnify AMT
Capital Advisers against losses arising out of its performance under the new
Advisory Agreement except for losses resulting from AMT Capital Advisers' bad
faith, willful misfeasance or gross negligence, or by reason of its reckless
disregard of its obligations and duties under that Agreement.
Under the current Advisory Agreement, LBGAM serves as the investment
adviser to the SGS Portfolio subject to the supervision and direction of Lehman
Funds' Board of Directors. The current Advisory Agreement further provides
for LBGAM to manage the SGS Portfolio in accordance with SGS Portfolio's
investment objective and policies, to make investment decisions for the SGS
Portfolio and to place orders to purchase and sell securities. The current
Advisory Agreement does not provide for any limitation of LBGAM's liability
to the SGS Portfolio, or for any indemnification of LBGAM by the SGS
Portfolio.
Pursuant to the Sub-Advisory Agreement between AMT Capital Advisers and
Delphi, Delphi will serve as sub-adviser to the USG Portfolio. Susan Hirsch has
agreed to serve as portfolio manager of USG Portfolio in her capacity as
portfolio manager for Delphi. AMT Capital Advisers would be responsible for the
management of the investment portfolio of the USG Portfolio and the supervision
of Delphi the sub-adviser. Delphi has retained the services of and has
appointed Susan Hirsch the portfolio manager (effective as of the Reorganization
Closing Date). In that capacity, Ms. Hirsch will be responsible, on behalf of
Delphi, for providing investment research and advice, determining which
portfolio securities are to be purchased or sold by the USG Portfolio,
purchasing and selling securities on behalf of the USG Portfolio and determining
how voting and other rights with respect to the portfolio securities of the USG
Portfolio are exercised in accordance with the USG Portfolio's investment
objective, policies and restrictions. Thus, the USG Portfolio would be managed
in substantially the same manner as the SGS Portfolio, except that AMT Capital
Advisers will serve as investment adviser, and Susan Hirsch will serve as
portfolio manager with the sub-adviser, Delphi, instead of LBGAM.
Under the current Advisory Agreement as described above Lehman Funds
appointed LBGAM as its investment adviser; Lehman Funds pays the adviser on
the first business day of each month a fee for the previous month; the adviser
exercises its responsibility as investment adviser in accordance with the
Articles of Incorporation and the Investment Advisers Act of 1940; the adviser
keeps Lehman Funds informed of developments materially affecting the SGS
Portfolio, and on its own initiative, furnishes Lehman Funds from time to time
with whatever information the adviser believes is appropriate for this purpose;
and the adviser exercises its best judgment in the rendering of its services.
Under the new Advisory Agreement, AMT Capital Fund appoints the adviser as
its attorney-in-fact; the USG Portfolio pays to the adviser promptly at the end
of each calendar month, a fee, calculated on each day during such month; the
adviser must notify AMT Capital Fund of any changes in the membership of the
adviser within a reasonable time after the change; the adviser must indemnify
the Directors of AMT Capital Fund for all of its expenses arising out of the
performance and obligations of the adviser under the Advisory Agreement; and
the adviser has no responsibility or liability for the accuracy or completeness
of AMT Capital Fund's registration statement under the 1940 Act and the
Securities Act of 1933 except for information supplied by the adviser for
inclusion therein about the adviser.
Under the new Advisory Agreement, the adviser represents that it has adopted a
code of ethics governing personal trading that complies in all material respects
with the recommendations contained in the Investment Company Institute "Report
of the Advisory Group on Personal Investing," dated May 9, 1994. While
LBGAM has similarly adopted a revised code of ethics, the current Advisory
Agreement does not contain a representation to that effect.
THE DIRECTORS, INCLUDING THE INDEPENDENT LEHMAN DIRECTORS, RECOMMEND THAT
SHAREHOLDERS VOTE "FOR" PROPOSAL 1 AND ANY UNMARKED PROXIES WILL BE SO VOTED.
Additional Information About AMT Capital Fund, Inc. and the U.S. Selected
Growth Portfolio
Additional information about AMT Capital Fund is included in the preliminary
prospectus of the U.S. Selected Growth Portfolio dated October 20, 1995 (the
"USG Portfolio Prospectus"). A copy of the USG Portfolio prospectus has been
filed with the Securities and Exchange Commission (the "Commission") and is
enclosed herewith and is incorporated by reference. Additional copies may be
obtained without charge by contacting AMT Capital Services at 430 Park Avenue,
New York, New York 10022 or by telephoning AMT Capital Services at 1-800-
762-4848. Further information about AMT Capital Fund is included in the
preliminary statement of additional information for the USG Portfolio, dated
October 20, 1995, which also has been filed with the Commission and may be
obtained without charge by contacting AMT Capital Services at 430 Park Avenue,
New York, New York 10022 or by telephoning AMT Capital Services at 1-800-
762-4848 and is incorporated by reference herein.
Additional Information About Lehman Brothers Funds, Inc. and the Lehman Selected
Growth Stock Portfolio
Additional information about Lehman Brothers Funds, Inc. is included in the
current prospectus of the Lehman Selected Growth Stock Portfolio and statement
of additional information each dated November 29, 1995. A copy of the Lehman
Selected Growth Stock Portfolio prospectus may be obtained without charge by
contacting AMT Capital Services at 430 Park Avenue, New York, New York
10022 or by telephoning AMT Capital Services at 1-800-762-4848 and is
incorporated by reference herein. Further information about Lehman Brothers
Funds, Inc. is included in the current statement of additional information of
the SGS Portfolio, dated November 29, 1995, relating to the proposed
transactions and other actions described in this Combined Prospectus/Proxy
Statement, including financial statements, and has been filed with the
Commission. This statement of additional information may be obtained without
charge by contacting AMT Capital Services at 430 Park Avenue, New York, New York
10022 or by telephoning AMT Capital Services at 1-800-762-4848 and is
incorporated by reference herein.
Miscellaneous
Available Information
AMT Capital Fund and Lehman Funds are each registered under the 1940 Act and
are subject to the informational requirements of the 1940 Act and, in accordance
therewith, each files reports, proxy materials, and other information with the
Commission. Such reports, proxy materials and other information may be
inspected at the Securities and Exchange Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such material also may be obtained from the
Public Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates.
Legal Matters
Certain legal matters in connection with the issuance of the shares of the U.S.
Selected Growth Portfolio will be passed upon by Dechert Price & Rhoads, 477
Madison Avenue, New York, New York 10022. Dechert Price & Rhoads will
render an opinion as to certain Federal income tax consequences of the
Reorganization.
Financial Statements and Experts
The audited financial statements of the Lehman Funds included in the statement
of additional information related to this Combined Prospectus/Proxy Statement
(the "SAI") have been audited by Ernst & Young LLP, independent auditors, for
the period indicated in the report of independent auditors thereon which appears
in the SAI. Copies of these financial statements as included in the SAI may be
obtained without charge by contacting AMT Capital Services, Inc. at 430 Park
Avenue, New York, New York 10022 or by telephoning AMT Capital Services at
1-800-762-4848. There are no financial statements for the USG Portfolio since
it has not yet commenced operations.
OTHER BUSINESS
The Directors know of no other business to be brought before the Meeting.
However, if any other matters properly come before the Meeting, proxies will be
voted in accordance with the judgment of the Board of Directors.
Proposals for Future Meetings
As a Maryland corporation, AMT Capital Fund is not required to hold annual
Shareholder meetings in any year in which no meeting is required under the 1940
Act. Consequently, AMT Capital Fund does not intend to hold annual shareholder
meetings each year, but meetings may be called by the Directors from time to
time. Proposals of shareholders that are intended to be presented at a
future shareholder meeting must be received by AMT Capital Fund by a reasonable
time prior to AMT Capital Fund's mailing of information statements relating to
such meeting.
By Order of the Board of Directors
Patricia L. Bickimer, Secretary
Appendix A
Agreement and Plan of Reorganization
THIS AGREEMENT AND PLAN OF
REORGANIZATION made this __th day of _____________, 199_, by and between the
Lehman Brothers Funds, Inc., a Maryland corporation ("Lehman Fund"), on behalf
of Lehman Selected Growth Stock Portfolio, a separate series of the Lehman
Fund (the "SGS Portfolio"), and AMT Capital Fund, Inc., a Maryland corporation
("AMT Capital Fund"), on behalf of U.S. Selected Growth Portfolio, a separate
series of the AMT Capital Fund (the "USG Portfolio").
WITNESSETH:
WHEREAS, the Lehman Fund and the AMT Capital Fund are open-end, registered
investment companies of the management type;
WHEREAS, the Lehman Fund is authorized to issue its shares of common stock, and
the AMT Capital Fund is authorized to issue its shares of common stock, in
separate series, each of which maintains a separate and distinct portfolio of
assets;
WHEREAS, the SGS Portfolio is one separate series of the Lehman Fund and the
USG Portfolio is one separate series of the AMT Capital Fund, each of which is
diversified;
WHEREAS, the SGS Portfolio owns securities which are assets of the character
in which the USG Portfolio is permitted to invest;
WHEREAS, Lehman Fund wishes to effect a transfer of all of the assets and
liabilities of the SGS Portfolio to the USG Portfolio;
WHEREAS, the Board of Directors of the Lehman Fund has (a) pursuant to Section
3-105(b) of the Maryland General Corporation Law of the State of Maryland,
declared that the transfer of all of the assets and liabilities of the SGS
Portfolio to the USG Portfolio is advisable on substantially the terms and
conditions set forth herein and has directed that such proposed transaction
be submitted for consideration at either an annual or special meeting of the
SGS Portfolio's shareholders, (b) determined that such transaction is in the
best interests of the SGS Portfolio and its shareholders, and that the interests
of the existing shareholders of the SGS Portfolio would not be diluted as a
result of this transaction, and (c) determined that subsequent to the
consummation of the transaction contemplated by this Agreement the SGS Portfolio
will cease operations;
WHEREAS, the Board of Directors of the AMT Capital Fund has determined that the
transfer of all of the assets and liabilities of the SGS Portfolio to the USG
Portfolio is in the best interest of the USG Portfolio and its shareholders
(it being understood that Alan M. Trager is the sole shareholder of the USG
Portfolio prior to the consummation of the reorganization); and
WHEREAS, the parties hereto intend to provide for the reorganization of the
SGS Portfolio through the transfer to the USG Portfolio of all of the assets,
subject to all of the liabilities, of the SGS Portfolio in exchange for voting
shares of common stock, $0.001 par value, of the USG Portfolio (the "USG
Portfolio Class B Shares"), the dissolution of the SGS Portfolio and the
distribution to the SGS Portfolio shareholders of such USG Portfolio Shares,
all pursuant to the provisions of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code");
NOW THEREFORE, in consideration of the mutual promises herein contained, the
parties hereto agree as follows:
1. Plan of Reorganization and Liquidation
(a) the Lehman Fund, on behalf of the SGS Portfolio, shall transfer to the
USG Portfolio at the closing provided for in Section 2 (the "Closing") all of
the then existing assets of the SGS Portfolio of every kind and nature. In
consideration therefore, the USG Portfolio shall at the Closing (i) assume all
of the SGS Portfolio's liabilities then existing, whether absolute, accrued,
contingent or otherwise and (ii) deliver to the SGS Portfolio that number of
full and fractional USG Portfolio Class B shares equal to the number of full
and fractional shares of the SGS Portfolio then outstanding. The number of
shares of the SGS Portfolio issued and outstanding and the number of USG
Portfolio Class B Shares to be issued to the SGS Portfolio shall be determined
by First Data Investor Services Group, Inc. ("FDISG") , the fund accounting
agent to the SGS Portfolio at 4:00 p.m., Eastern Time, on the Closing Date (as
defined in Section 2 herein) after the declaration of any dividends on that
date. FDISG's determination shall be conclusive and binding on the SGS
Portfolio, the USG Portfolio and their respective shareholders.
(b) Upon consummation of the transactions described in paragraph (a) of this
Section 1, the SGS Portfolio shall distribute in complete liquidation to its
shareholders of record as of the Closing Date (on a pro rata basis) the USG
Portfolio Class B Shares that were received by the SGS Portfolio. Such
distribution and liquidation shall be accomplished by the establishment of an
open account on the share records of the USG Portfolio in the name of each
shareholder of the SGS Portfolio representing a number of USG Portfolio Shares
equal to the number of shares of the SGS Portfolio owned of record by the
shareholder at the Closing Date. Certificates for shares of the SGS Portfolio
issued prior to the reorganization, if any, shall represent outstanding USG
Portfolio Class B Shares following the reorganization. In the interest of
economy and convenience, certificates representing the USG Portfolio Class B
Shares will not be physically issued.
(c) After the Closing Date, the SGS Portfolio shall not conduct any business
except in connection with its liquidation.
(d) Any reporting responsibility of the Lehman Fund including (but not limited
to) the responsibility for any periods ending on or before the Closing Date for
filing of regulatory reports, tax returns, or other documents with the
Securities and Exchange Commission (the "SEC"), any state securities commission,
and any federal, state, or local tax authorities or any other relevant
regulatory authority, is and shall remain the responsibility of the Lehman Fund.
2. Closing and Closing Date. The Closing shall occur at the offices of
Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York, 10017
at 4:00 p.m., Eastern Time, on January 19, 1996 or at such later time and date,
or at such other location, as the parties may mutually agree (the "Closing
Date"). All acts taking place at the Closing shall be deemed to take place
simultaneously as of the close of business on the Closing Date unless otherwise
provided.
2.1 Portfolio securities held by the SGS Portfolio and
represented by a certificate or written instrument shall be made
available by the Lehman Fund or on its behalf to the custodian of
the USG Portfolio for examination no later than five (5) business
days preceding the Closing date. Such portfolio securities
(together with any cash or other assets) shall be delivered by the
SGS Portfolio to the custodian for the account of the USG
Portfolio on or before the Closing Date in conformity with
applicable custody provisions under the Investment Company Act
of 1940 (the "1940 Act") and duly endorsed in proper form for
transfer in such condition as to constitute good delivery thereof.
Portfolio securities and instruments deposited with a securities
depository shall be delivered by book entry in accordance with
customary practices of such depositories and the custodian. All
necessary taxes including without limitation all necessary federal
and state stock transfer stamps shall have been paid prior to
delivery. The cash delivered shall be in the form of a Federal
Funds wire, payable to the order of "Investors Bank & Trust
Company, Custodian for the AMT Capital Fund: U.S. Selected
Growth Portfolio."
3. Representations and Warranties.
3.1 The Lehman Fund represents and warrants to the
AMT Capital Fund as follows:
(a) The Lehman Fund is a corporation duly organized,
validly existing, and in good standing under the laws of the State
of Maryland and the SGS Portfolio is a series of the Lehman Fund;
(b) The Lehman Fund is a registered open-end investment
company and its registration with the SEC as an investment
company under the 1940 Act and the registration of its shares
under the Securities Act of 1933 (the "1933 Act") are in full force
and effect;
(c) The Lehman Fund is not, and the execution, delivery
and performance of the Agreement will not result, in a material
violation of the Lehman Funds' Articles of Incorporation or By-
Laws or of any material agreement, indenture, instrument,
contract, lease or other undertaking to which the Lehman Fund is
a party or by which it is bound;
(d) The Lehman Fund has no material contracts or other
commitments (other than this Agreement) which will be
terminated prior to the Closing Date where such termination will
result in any liability to the SGS Portfolio not reflected on the
SGS Portfolio's balance sheet other than liabilities in the ordinary
course of business incurred subsequent to July 31, 1995 or
otherwise disclosed to the AMT Capital Fund;
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is
presently pending or to its knowledge threatened against the
Lehman Fund or any properties or assets held by it. The Lehman
Fund knows of no facts which might form the basis for the
institution of any such proceedings which would materially and
adversely affect its business and is not a party to or subject to the
provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its
business or its ability to consummate the transactions herein
contemplated;
(f) The Statement of Assets and Liabilities of the SGS
Portfolio at July 31, 1995 has been audited by Ernst & Young LLP
and is in accordance with generally accepted accounting principles
("GAAP") consistently applied, and such statement (a copy of
which has been furnished to the AMT Capital Fund) presents
fairly, in all material respects, the financial position of the SGS
Portfolio as of such date in accordance with GAAP, and there are
no known contingent liabilities of the SGS Portfolio required to
be reflected on the balance sheet (including the notes thereto) in
accordance with GAAP as of such date not disclosed therein;
(g) Since July 31, 1995, there has not been any material
adverse change in the financial condition of the SGS Portfolio
assets, liabilities or business other than changes occurring in the
ordinary course of business, or any incurrence by the SGS
Portfolio of indebtedness maturing more than one year from the
date such indebtedness was incurred, except as otherwise
disclosed to and accepted by the USG Portfolio;
(h) At the Closing Date all material federal and other tax
returns and reports of the SGS Portfolio required by law to have
been filed by such date shall have been filed and are or will be
correct and, to the best of Lehman Funds' knowledge, all federal
and other taxes shown as due or required to be shown as due on
said returns and reports shall have been paid or provision shall
have been made for the payment thereof, and, to the best of the
Lehman Funds' knowledge, no such return is currently under audit
and no assessment has been asserted with respect to such returns;
(i) For each taxable year of operation since inception
(including the taxable year including the Closing Date) the SGS
Portfolio has met the requirements of Subchapter M of the Code
for qualification as a regulated investment company and has
elected to be treated as such, has been eligible to and has
computed its federal income tax under Section 852 of the Code,
and will have distributed all of its investment company taxable
income and net capital gain (as defined in the Code) that has
accrued through the Closing Date;
(j) No facts have come to the attention of the Lehman
Fund which have led the Lehman Fund to conclude that the SGS
Portfolio will fail to qualify as a regulated investment company
under Subchapter M for the taxable year that includes the Closing
Date;
(k) All issued and outstanding shares of the SGS Portfolio
are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable. All of the issued and
outstanding shares of the SGS Portfolio, will, at the time of
Closing, be held by the persons and in the amounts set forth in the
records of the transfer agent. The SGS Portfolio does not have
outstanding any options, warrants or other rights to subscribe for
or purchase any shares of the SGS Portfolio, nor is there
outstanding any security convertible into any shares of the SGS
Portfolio;
(l) At the Closing Date, the Lehman Fund will have good
and valid title to the SGS Portfolio's assets to be transferred to the
USG Portfolio and full right, power, and authority to sell, assign,
transfer and deliver such assets hereunder, and upon delivery and
payment for such assets, the AMT Capital Fund will acquire good
and valid title thereto, subject to no restrictions on the full transfer
thereof, including such restrictions as might arise under the 1933
Act, other than, in each case, as disclosed to the AMT Capital
Fund or as permitted by the then current prospectus of the SGS
Portfolio;
(m) The execution, delivery and performance of this
Agreement has been duly authorized prior to the Closing Date by
all necessary action on the part of the Lehman Funds' Board of
Directors, and, subject to the approval of the shareholders of the
SGS Portfolio, this Agreement constitutes a valid and binding
obligation of the Lehman Fund, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent, transfer,
reorganization, moratorium and similar laws relating to or
affecting creditors' rights and to general equity principles; and
(n) The information to be furnished by the Lehman Fund
for use in registration statements or proxy materials or for use in
any other document filed or to be filed with any federal, state or
local regulatory authority (including the National Association of
Securities Dealers, Inc.) which may be necessary in connection
with the transaction contemplated hereby shall be accurate and
complete in all material respects and shall comply in all material
respects with Federal securities and the laws and regulations
thereunder applicable thereto.
3.2 The AMT Capital Fund represents and warrants to the
Lehman Fund as follows:
(a) The AMT Capital Fund is a corporation duly formed,
validly existing and in good standing under the laws of the State
of Maryland and the USG Portfolio is a series of the AMT Capital
Fund;
(b) The AMT Capital Fund is a registered open-end investment company and
its registration with the SEC as an investment company under the 1940 Act,
and the registration of its shares under the 1933 Act, are in full force and
effect;
(c) The current prospectus and statement of additional
information of the AMT Capital Fund conform in all material
respects to the applicable requirements of the 1933 Act and the
1940 Act and the rules and regulations of the SEC thereunder and
do not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not materially misleading;
(d) At the Closing Date, the AMT Capital Fund will have
good and marketable title to its assets;
(e) The AMT Capital Fund is not, and the execution,
delivery and performance of this Agreement will not result, in a
material violation of the AMT Capital Fund's Articles of
Incorporation or By-Laws or any material agreement, indenture,
instrument, contract, lease or other undertaking to which the AMT
Capital Fund is a party or by which it is bound;
(f) The information to be furnished by the AMT Capital
Fund for use in proxy materials and other documents which may
be necessary in connection with the transactions contemplated
hereby shall be accurate and complete in all material respects and
shall comply in all material respects with federal securities and
other laws and regulations applicable thereto;
(g) AMT Capital Fund has no material contracts or other
commitments (other than this Agreement) which will be
terminated prior to the Closing Date where such termination will
result in any liability to the USG Portfolio other than liabilities in
the ordinary course of business incurred subsequent to December
31, 1994 or otherwise disclosed to the Lehman Fund;
(h) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is
presently pending or to its knowledge threatened against the AMT
Capital Fund or any properties or assets held by it. The AMT
Capital Fund knows of no facts which might form the basis for the
institution of any such proceedings which would materially and
adversely affect its business and is not a party to or subject to the
provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its
business or its ability to consummate the transactions herein
contemplated;
(i) Any and all issued and outstanding shares of the USG
Portfolio are, and at the Closing Date will be, duly and validly
issued and outstanding, fully paid and non-assessable. The USG
Portfolio does not have outstanding any options, warrants or other
rights to subscribe for or purchase any shares of the USG
Portfolio, nor is there outstanding any security convertible into
any shares of the USG Portfolio;
(j) The execution, delivery and performance of this
Agreement have been duly authorized prior to the Closing Date by
all necessary action on the part of the AMT Capital Fund's Board
of Directors, and this Agreement constitutes a valid and binding
obligation of the AMT Capital Fund, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws relating to
or affecting creditors' rights and to general equity principles; and
(k) At the Closing Date, all material federal and other tax
returns and reports of the USG Portfolio required by law to have
been filed by such date shall have been filed and are or will be
correct and, to the best of the AMT Capital Fund's knowledge, all
federal and other taxes shown as due or required to be shown as
due on said returns and reports shall have been paid or provision
shall have been made for the payment thereof, and, to the best of
the AMT Capital Fund's knowledge, no such return is currently
under audit and no assessment has been asserted with respect to
such returns.
4. Conditions Precedent. The obligations of the Lehman
Fund and the AMT Capital Fund to effect the transactions
contemplated hereunder shall be subject to the satisfaction of each
of the following conditions:
(a) All filings shall have been made with, and all authority
and orders shall have been received from, the SEC and state
securities commissions as may be necessary in the opinion of
Dechert Price & Rhoads, counsel to the USG Portfolio, and
Simpson Thacher & Bartlett, counsel to the SGS Portfolio, to
permit the parties to carry out the transactions contemplated by
this Agreement;
(b) The investment objective and permitted investments
of the USG Portfolio are substantially the same as those of the
SGS Portfolio and the rate of investment management fees and
rate of the fees payable pursuant to a Rule 12b-1 plan of
distribution for the USG Portfolio shares are identical to those of
the SGS Portfolio;
(c) The Lehman Fund and the AMT Capital Fund shall have received an opinion
of Dechert Price & Rhoads substantially to the effect that, based on the facts,
assumptions and representations of the parties, the transaction contemplated by
this Agreement constitutes a tax free organization for federal income
tax purposes and as a result no gain or loss will be recognized by Lehman
Funds, the AMT Capital Fund or the shareholders of the SGS Portfolio as a result
of the Transaction;
(d) This Agreement and Plan of Reorganization and the reorganization
contemplated hereby shall have been approved by the Board of Directors of the
Lehman Fund and by the Board of Directors of the AMT Capital Fund and shall
have been recommended for approval to the shareholders of the SGS Portfolio by
the Lehman Funds' Board of Directors;
(e) This Agreement and Plan of Reorganization and the reorganization
contemplated hereby shall have been approved by the affirmative vote of holders
of the outstanding shares of common stock of the SGS Portfolio representing at
least a majority of all of the outstanding voting securities (as defined in
the 1940 Act) of the SGS Portfolio;
(f) The AMT Capital Fund, on behalf of the USG Portfolio, shall have entered
into an Investment Advisory Agreement with AMT Capital Advisers, Inc. and a
Distribution Agreement with AMT Capital Services, Inc., such Agreements to
be in each case substantially similar in form and substance to the respective
Agreement in effect at the Closing Date between the Lehman Fund, on behalf of
the SGS Portfolio, and LBGAM (in the case of the Investment Advisory Agreement)
or Lehman Brothers (in the case of the Distribution Agreement), which Agreements
have been approved by the Board of Directors of the AMT Capital Fund and, to the
extent required by law, by the members of the Board of Directors who are not
"interested persons," as defined in the 1940 Act, of AMT Capital Fund, as
well as by the shareholders of the USG Portfolio (it being understood that
Alan M. Trager as sole shareholder of the USG Portfolio prior to the
consummation of the reorganization, will vote for such ratification);
(g) AMT Capital Advisers shall have entered into a Sub-
Advisory Agreement with Delphi Asset Management, which
Agreement has been approved by the Board of Directors of the
AMT Capital Fund and, to the extent required by law, by the
members of the Board of Directors who are not "interested
persons," as defined in the 1940 Act, of AMT Capital Fund, as
well as by the shareholders of the USG Portfolio (it being
understood that Alan M. Trager, as sole shareholder of the USG
Portfolio prior to the consummation of the reorganization, will
vote for such ratification);
(h) The AMT Capital Fund shall have filed with the SEC
a Registration Statement on Form N-14 complying in all material
respects with the requirements of the 1933 Act, the Securities
Exchange Act of 1934, as amended, the 1940 Act, and applicable
rules and regulations thereunder, relating to a meeting of the
shareholders of the SGS Portfolio to be called to consider and act
upon the transactions contemplated herein, and such Registration
Statement shall have been declared effective. The Lehman Fund
agrees to provide the AMT Capital Fund with information
applicable to the Lehman Fund required under such Acts, rules
and regulations for inclusion in the Registration Statement on
Form N-14;
(i) All securities owned by the SGS Portfolio at the time
of the Closing will be owned by the SGS portfolio free and clear
of any liens, claims, charges, options and encumbrances (except
such liens, claims, charges, options and encumbrances as are
permitted by the then current prospectus of the SGS Portfolio),
and none of such securities is or, after the reorganization as
contemplated hereby, will be subject to any restrictions, legal or
contractual, on the disposition thereof, including restrictions as to
the public offering or sale thereof under the 1933 Act, as amended
(except for such restrictions as are permitted by the then current
prospectus of the SGS Portfolio, which restrictions do not prohibit
the transfer of such securities from the SGS Portfolio to the USG
Portfolio), and all such securities are or will be readily marketable
(except such securities which are not readily marketable and
which the SGS Portfolio is permitted to purchase by its then
current prospectus);
(j) The Lehman Fund, on behalf of the SGS Portfolio,
shall have filed Articles of Transfer with the Maryland
Department of Assessments and Taxation in accordance with
Section 3-109 of the Maryland General Corporation Law and such
Articles of Transfer shall have been accepted by such agency; and
(k) Susan Hirsch shall have entered into an Agreement with Delphi Asset
Management pursuant to which she will be employed, subject to the closing of
the transactions contemplated hereby, as a portfolio manager.
5. Amendment. This Agreement and Plan of Reorganization may be amended at any
time by the mutual agreement of the Lehman Fund and the AMT Capital Fund,
notwithstanding approval thereof by the shareholders of the SGS Portfolio,
provided that no amendment shall have a material adverse effect on the interests
of the shareholders of the SGS Portfolio or the USG Portfolio.
6. Termination. The Lehman Fund and the AMT Capital
Fund may by mutual consent terminate this Agreement and Plan
of Reorganization and abandon the reorganization contemplated
hereby, notwithstanding approval thereof by the shareholders of
the SGS Portfolio, at any time prior to the Closing, if
circumstances should develop that, in their judgment, make
proceeding with the Agreement inadvisable.
7. No Broker's or Finder's Fee. The Lehman Fund and
the AMT Capital Fund each represents that there is no person with
whom it has dealt who by reason of such dealings is entitled to
any broker's or finder's or other similar fee or commission arising
out of the transactions contemplated by this Agreement and Plan
of Reorganization.
8. No Survival of Representations, etc. The representations, warranties,
covenants and agreements of the parties contained herein shall not survive the
Closing Date, except for the provisions of Section 1(c).
9. Waiver. The Lehman Fund or the AMT Capital Fund,
after consultation with its counsel and by consent of its Board of
Directors, Executive Committee or an officer authorized by such
Board of Directors, may waive any condition to its obligations
hereunder if in its judgment such waiver will not have a material
adverse affect of the interests of its shareholders. If the
transactions contemplated by this Agreement and Plan of
Reorganization have not been substantially completed by January
31, 1996, the Agreement shall automatically terminate on that date
unless a later date is agreed to by both the Lehman Fund and the
AMT Capital Fund.
10. Reliance. All covenants, agreements, representations
and warranties made under this Agreement and Plan of
Reorganization shall be deemed to have been material and relied
upon by each of the parties notwithstanding any investigation
made by such party or on its behalf.
11. Notices. All notices required or permitted under this
Agreement and Plan of Reorganization shall be given in writing:
To the Lehman Fund at: Lehman Brothers Funds, Inc.
3 World Financial Center
New York, NY 10020
Attn: Andrew D. Gordon
To the AMT Capital AMT Capital Fund, Inc.
Fund at: 600 Fifth Avenue
New York, NY 10020
Attn: William E. Vastardis
12. Expenses. Expenses of the reorganization, other than
the legal expenses of LBGAM, will be borne by AMT Capital
Advisers, Inc. Any expenses borne by AMT Capital Advisers,
Inc. will be solely and directly related to the Reorganization
within the meaning of Revenue Ruling 73-54, 1973-1 C.B. 187.
13. Miscellaneous Provisions. This Agreement and Plan
of Reorganization shall bind and inure to the benefit of the parties
and their respective successors and assigns. It shall be governed
by and carried out in accordance with the laws of the State of New York.
The name "Lehman Brothers Funds, Inc." is the
designation of the Directors for the time being under the Articles
of Incorporation dated May 5, 1993, and all persons dealing with
the Lehman Fund must look solely to the Lehman Fund property
for the enforcement of any claim against the Lehman Fund, as
neither the Directors, officers, agents or shareholders assume any
personal liability for obligations entered into on behalf of the
Lehman Fund. No series of the Lehman Fund shall be liable for
claims against any other series of the Lehman Fund.
The name "AMT Capital Fund, Inc." is the designation of
the Directors for the time being under the Articles of
Incorporation dated August 3, 1993, and all persons dealing with
the AMT Capital Fund must look solely to the AMT Capital Fund
property for the enforcement of any claim against the AMT
Capital Fund, as neither the Directors, officers, agents or
shareholders assume any personal liability for obligations entered
into on behalf of the AMT Capital Fund. No series of the AMT
Capital Fund shall be liable for claims against any other series of
the AMT Capital Fund.
IN WITNESS WHEREOF, the parties have hereunto caused this Agreement and Plan
of Reorganization to be executed and delivered by their duly authorized officers
as of the day and year first written above.
LEHMAN BROTHERS FUNDS, INC. (on behalf
of the Lehman Selected Growth Stock Portfolio)
Attest: (Seal)
By:______________________ By:____________________________________
Title:___________________ Title:_________________________________
AMT CAPITAL FUND, INC. (on behalf of the
U.S. Selected Growth Portfolio)
Attest: (Seal)
By:______________________ By:____________________________________
Title:__________________ Title:_________________________________
