As filed, via EDGAR, with the Securities and Exchange Commission on February 19,
1999.
File No.:2-34277
ICA No.: 811-1920
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|X| Preliminary proxy statement |_| Confidential, for Use of the
|_| Definitive proxy statement Commission Only
|_| Definitive additional materials (as permitted by Rule 14a-6(e)(2))
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
STRALEM FUND, INC.
------------------
(Name of Registrant as Specified in Its Charter)
Aviva L. Grossman
-----------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
<PAGE>
PRELIMINARY PROXY MATERIALS
FOR THE INFORMATION OF THE SECURITIES AND EXCHANGE COMMISSION
STRALEM FUND, INC.
405 Park Avenue
New York, New York 10022
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 7, 1999
The annual meeting of shareholders (the "Meeting") of Stralem Fund,
Inc. (the "Fund") will be held at the offices of the Fund, 405 Park Avenue,
Fourteenth Floor, New York, N.Y. on April 7, 1999 at ______ A.M., Eastern time,
for the following purposes:
(1) To elect four Directors to hold office until the election and
qualification of their successors:
(2) To approve or disapprove a reorganization of the Fund to a Delaware
business trust;
(3) To ratify or reject the selection of Richard A. Eisner & Company,
LLP as independent auditors for the Fund;
(4) To approve or disapprove changes to the Fund's fundamental
investment restrictions (none of which will change the Fund's current investment
objective); and
(5) To transact such other business as may properly come before the
Meeting or any adjournment(s) thereof.
Shareholders of record as of the close of business on March 5, 1999 are
entitled to receive notice of, and to vote at, the Meeting and any and all
adjournment(s) thereof. Your attention is called to the accompanying proxy
statement.
By Order of the Board of Directors
Hirschel B. Abelson
Secretary
Dated: __________ __, 1999
<PAGE>
You can help avoid the necessity and expense of sending follow-up
letters to ensure a quorum by promptly returning the enclosed proxy. If you are
unable to attend the Meeting, please mark, sign, date, and return the enclosed
proxy so that the necessary quorum may be represented at the Meeting. The
enclosed envelope requires no postage if mailed in the United States.
<PAGE>
PRELIMINARY PROXY MATERIALS
FOR THE INFORMATION OF THE SECURITIES AND EXCHANGE COMMISSION
STRALEM FUND, INC.
405 Park Avenue
New York, New York 10022
PROXY STATEMENT
Dated March __, 1999
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
April 7, 1999
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Stralem Fund, Inc., a Delaware
corporation (the "Fund"), in connection with the annual meeting of shareholders
(the "Meeting") to be held on April 7, 1999 at _____ a.m. Eastern time at the
offices of the Fund, 405 Park Avenue, Fourteenth Floor, New York, N.Y., and at
any adjournment(s) thereof.
The Meeting has been called for the following purposes:
1. To elect four Directors to hold office until the election and
qualification of their successors;
2. To approve or disapprove a reorganization of the Fund to a Delaware
business trust;
3. To ratify or reject the selection of Richard A. Eisner & Company,
LLP as independent auditors for the Fund;
4. To approve or disapprove changes to the Fund's fundamental
investment restrictions (none of which will change the Fund's current investment
objective); and
5. To transact such other business as may properly come before the
Meeting or any adjournment(s) thereof.
Even if you sign and return the accompanying proxy, you may revoke it
by giving written notice of such revocation to the Secretary of the Fund prior
to the Meeting or by delivering a subsequently dated proxy or by attending and
voting at the Meeting in person. In
<PAGE>
the event that a shareholder signs and returns the proxy ballot, but does not
indicate a choice as to any of the items on the proxy ballot, the proxy
attorneys will vote those shares of beneficial interest ("shares") in favor of
such proposal(s).
The cost of preparing and mailing the notice of meeting, the proxy card
and this proxy statement has been or is to be borne by the Fund, and is
estimated to be approximately $_______. Proxy solicitations will be made
primarily by mail, but may also be made by telephone, telegraph, facsimile, or
personal interview conducted by certain officers or employees of the Fund and
Stralem & Company Incorporated, the Fund's investment adviser, none of whom will
receive compensation therefor.
The Board of Directors has fixed the close of business on March 5, 1999
as the record date for the determination of the shareholders entitled to notice
of, and to vote at, the Meeting or any adjournment(s) thereof (the "Record
Date"). As of the Record Date, there were approximately ________ outstanding
shares of the Fund. The holders of each share of the Fund shall be entitled to
one vote for each full share and a fractional vote for each fractional share. As
of March 5, 1999, the following shareholders beneficially owned 5% or more of
the Fund's outstanding shares:
Number of Shares
Name and Address Beneficially Percent
of Beneficial Owner Owned of Fund
------------------- ----- -------
A copy of the Fund's annual report for the fiscal year ended December
31, 1998 may be received, free of charge, by calling the Fund, at 212-888-8123.
Proposal 1 requires the affirmative vote of a plurality of the votes
cast at the Meeting in person or by proxy. Proposals 2 and 4 require the
affirmative vote of a "majority of the outstanding voting securities" of the
Fund, which for this purpose means the affirmative vote of the lesser of (1)
more than 50% of the outstanding shares of the Fund, or (2) 67% or more of the
shares of the Fund present at the Meeting, if the holders of more than 50% of
the outstanding shares of the Fund are present or represented by proxy at the
Meeting. Proposal 3 requires the affirmative vote of a majority of the votes
cast at the Meeting in person or by proxy, provided that a quorum is present at
the Meeting.
One-third of the shares outstanding and entitled to vote, either in
person or by proxy, constitute a quorum. For purposes of determining the
presence of a quorum and counting votes on the matters presented, shares
represented by abstentions and "broker non-votes" will be counted as present,
but not as votes cast, at the Meeting. Under the Investment Company Act of 1940,
as amended (the "1940 Act"), the affirmative vote necessary to approve a matter
under consideration may be determined with reference to a percentage of votes
present at the Meeting,
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<PAGE>
which would have the effect of treating abstentions and non-votes as if they
were votes against the proposal.
If the proposals are approved, it is anticipated that they will become
effective as soon as practical after shareholder approval.
Proposal 1
ELECTION OF DIRECTORS
---------------------
It is proposed that shareholders elect as Directors the individuals
(the "Nominees") listed below, each to serve until their successors have been
elected and shall have qualified. The Board of Directors consists of four
Directors. If authority is granted on the accompanying proxy to vote in the
election of Directors, it is the intention of the persons named in the proxy to
vote at the Meeting for the election of the Nominees named below, each of whom
has consented to serve if elected. If any of the Nominees is unavailable to
serve for any reason, the persons named as proxies will vote for such other
Nominee or Nominees selected by the Board of Directors or the Board may reduce
the number of Directors as provided in the Fund's By-Laws. The Fund currently
knows of no reason why any of the Nominees listed below will be unable to serve
if elected.
If the reorganization of the Fund to a Delaware business trust is
approved by shareholders, (see Proposal 2) then the Directors elected at this
meeting will become Trustees of the Trust and will serve until the next election
or until their terms are terminated. If the reorganization is not approved, the
Directors elected at this meeting will continue to serve as Directors of the
Fund.
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<PAGE>
Nominees for Election to the Board of Directors
<TABLE>
<CAPTION>
Shares Owned
Nominee's Name Principal Occupation (s) Year First Became Beneficially
Address*** and Age During Past 5 Years A Director March 5, 1999*
- ------------------ ------------------- ---------- --------------
<S> <C> <C> <C>
**Philippe E. Baumann, 68 Director and Executive 1972 ______
Vice-President, Stralem &
Company Incorporated
Kenneth D. Pearlman, 68 Managing Director, The 1974 ______
Evans Partnership
(investment partnership)
Jean Paul Ruff, 64 Chairman, Hawley Fuel 1980 _______
Coal, Inc.
**Michael Rubin, 58 Retired Vice-President 1997 _______
and Assistant Vice-
President and Assistant
Secretary, Vice-President,
Stralem & Company,
Incorporated
</TABLE>
- ------------
* Beneficial ownership is defined in accordance with the rules of the
Securities and Exchange Commission and means generally the power to vote or
dispose of shares, regardless of any economic interest therein.
** An "interested person" of the Fund, as defined by Section 2(a)(19) of the
1940 Act.
*** The address of each Nominee is 405 Park Avenue, New York, NY 10022.
There are no standing audit, nominating or compensation committees of
the Board of Directors, or any committees performing similar functions. The
Board of Directors met five times during the twelve months ended December 31,
1998 and each of the Directors attended at least 75% of those meetings.
Executive Officers of the Fund
<TABLE>
<CAPTION>
Shares Owned
Year First Became Beneficially
Name and Age Principal Occupation an Officer March 5, 1999*
- -------------------- -------------------- ---------- --------------
<S> <C> <C> <C>
Philippe E. Baumann, 68 President 1973 [______]
Philippe Labaune, 30 Vice President 1997 [______]
Hirschel B. Abelson, 65 Treasurer and Secretary 1989 [_______]
</TABLE>
- ----------
* Beneficial ownership is defined in accordance with the rules of the
Securities and Exchange Commission and means generally the power to vote or
dispose of shares, regardless of any economic interest therein.
- 4 -
<PAGE>
Remuneration of Directors and Certain Executive Officers
Each Director except Philippe E. Baumann is reimbursed for expenses
incurred in attending each meeting of the Board of Directors or any committee
thereof. Each Director except Philippe E. Baumann receives a fee of $200 for
each Board meeting attended up to a maximum of $1,200 per year.
Set forth below is information regarding compensation paid or accrued
for the fiscal year ended December 31, 1998 for each Director:
<TABLE>
<CAPTION>
==================================================================================================
Pension or
Retirement Benefits Estimated Annual
Aggregate Accrued as Part of Benefits Upon
Name of Director Compensation from Fund Fund Expenses Retirement
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
Philippe E. Baumann $0 $0 $0
- --------------------------------------------------------------------------------------------------
Kenneth D. Pearlman $1,000 $0 $0
- --------------------------------------------------------------------------------------------------
Jean Paul Ruff $800 $0 $0
- --------------------------------------------------------------------------------------------------
Michael Rubin $1,000 $0 $0
==================================================================================================
</TABLE>
<TABLE>
<CAPTION>
=========================================================================
Total Compensation
From Number of
Fund and Fund Directorships
Name of Director Complex in Fund Complex
<S> <C> <C>
- -------------------------------------------------------------------------
Philippe E. Baumann $0 1
- -------------------------------------------------------------------------
Kenneth D. Pearlman $1,000 1
- -------------------------------------------------------------------------
Jean Paul Ruff $800 1
- -------------------------------------------------------------------------
Michael Rubin $1,000 1
=========================================================================
</TABLE>
REQUIRED VOTE AND BOARD OF DIRECTORS' RECOMMENDATION
The election of the Nominees to the Board of Directors will require the
affirmative vote of a plurality of the votes cast at the meeting in person or by
proxy.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" THE ELECTION OF NOMINEES TO THE BOARD OF
DIRECTORS.
Proposal 2
APPROVAL OR DISAPPROVAL OF
REORGANIZATION OF THE FUND
Introduction
On February 3, 1999, the Board of the Directors of the Fund unanimously
approved an Agreement and Plan of Reorganization, Liquidation and Distribution
(the "Agreement"). This document describes the terms and conditions under which
the Fund will reorganize from a Delaware corporation into a Delaware business
trust. As a Delaware business trust the Fund will not be required to hold annual
shareholder meetings. This will reduce the amount of expenses that the Fund
incurs in connection with these meetings including the expenses of printing and
mailing proxies and proxy solicitation. In addition, the Fund will reduce the
amount of taxes it pays annually by approximately $10,000 by not paying the
Delaware corporate franchise tax. If you approve this Proposal, the Fund will be
reorganized from a Delaware corporation into a Delaware business trust.
- 5 -
<PAGE>
Description of a Delaware Business Trust
A Delaware business trust is an unincorporated association created by a
trust instrument and managed by a board of trustees. The trustees may delegate
their day-to-day responsibilities to the investment adviser. To be governed and
bound as a business trust, a certificate of trust must be filed with the
Delaware Secretary of State. Shareholders of business trusts enjoy the same
limited liability as those of Delaware corporations. Similarly, trustees of a
business trust are exempt from personal liability to third parties for the
business trusts obligations, and the governing instrument may provide that the
trust will indemnify and hold harmless any trustee or shareholder against any
claim or demand (subject to the limitations of the Federal Securities Laws).
The trust will call a shareholder meeting if required to do so in
writing by shareholders entitled to cast 10% or more of the shareholders. As a
business trust, shareholders will continue to have the power to vote with
respect to the election of trustees (as needed), the removal of trustees, the
approval of any advisory contract, termination of the Delaware trust, any
amendments to the trust instrument affecting shareholder voting rights, and on
such additional matters as required by the Securities and Exchange Commission or
by other law.
Delaware business trusts are not required to issue share certificates.
The trust will not issue certificates unless specifically requested.
Shareholders' holdings in the Fund will be maintained and accounted for as
record entries on the Fund's computer system.
Plan of Reorganization
To proceed with the reorganization, a Delaware business trust was
established for the Fund. Prior to the reorganization the trust will issue one
share to the Fund. On the date of the reorganization, the Fund will transfer all
of its assets subject to all of its liabilities to the trust. The trust will
issue shares in the exact number of full and fractional shares that each
shareholder owned in the Fund. On the date of the reorganization, the trust's
share price will be the same as that of the Fund. Upon completion of the
reorganization, each shareholder will be the owner of full and fractional trust
shares equal in number and net asset value to his or her Fund shares. The
Delaware corporate entity will then be dissolved. A copy of the Agreement is
included as Exhibit A to this proxy statement.
If approved by shareholders, the reorganization will take place as soon
as feasible after the Fund receives the necessary legal opinions. We think this
could be accomplished by ____________ of 1999. However, at any time prior to the
reorganization, the Board of Directors may decide that it is in the best
interest of the Fund and its shareholders not to go forward with this project.
If that happens, the Fund will continue to operate as it is currently organized.
Operation of the Trust
The reorganization will not have any material effect on the operation of
the Fund. The trust's investment objective and policies will be identical to
those of the Fund. Certain investment restrictions of the Fund, including those
that prohibit it from acquiring control of another company, could prohibit the
reorganization. By approving this proposal shareholders
- 6 -
<PAGE>
will be agreeing to waive temporarily any investment policies or restrictions
that would otherwise prohibit the reorganization including the prohibition
against acquiring control of another company.
The trust will continue to be managed by the Fund's investment adviser,
Stralem & Company Incorporated ("Stralem") under the direction of the Fund's
existing Directors who will become Trustees. Stralem will also continue to act
as distributor of the Fund's shares. Your approval of the reorganization will be
considered approval of the new investment advisory agreement and the new
distribution agreement between the trust and Stralem. Both the new investment
advisory agreement and the new distribution agreement contain similar terms to
these current agreements. No material changes have been made to the services to
be provided or to the fees paid pursuant to these agreements. The format of the
agreements, however, have been changed to modernize and clarify certain of the
provisions.
Federal Income Tax Consequences
Consummation of the reorganization is subject to the condition that the
Fund receives an opinion from Kramer Levin Naftalis & Frankel LLP, counsel to
the Fund, stating that for federal income tax purposes: (i) the Fund will not
recognize any gain or loss as a result of the reorganization; (ii) the trust
will not recognize any gain or loss on the receipt of the assets of the Fund in
exchange for shares of the trust and the assumption of the liabilities of the
Fund; (iii) the shareholders of the Fund will not recognize any gain or loss on
the exchange of their shares of the Fund for shares of the trust in the
reorganization; (iv) the aggregate tax basis of the trust shares received by
each shareholder of the Fund in the reorganization will be the same as the
aggregate tax basis of the shares of the Fund exchanged therefor; (v) the
trust's adjusted tax bases in the assets received from the Fund in the
reorganization will be the same as the adjusted tax bases of such assets in the
hands of the Fund immediately prior to the reorganization; (vi) the holding
period of each former shareholder of the Fund in the trust shares received in
the reorganization will include the period during which such shareholder held
his shares of the Fund exchanged therefor, if such shares were held as a capital
asset at the time of the reorganization; and (vii) the trust's holding periods
in the assets received from the Fund in the reorganization will include the
holding periods of such assets in the hands of the Fund immediately prior to the
reorganization.
The Fund and the trust have not sought a tax ruling from the Internal
Revenue Service (the "IRS") with respect to the tax aspects of the
reorganization, but will act in reliance upon the opinion of counsel discussed
in the previous paragraph. Such opinion is not binding on the IRS and does not
preclude the IRS from adopting a contrary position. If for any reason the
reorganization did not qualify as a tax-free reorganization for federal income
tax purposes, then the reorganization would be treated as a taxable asset sale
and purchase. In such event, the Fund would recognize gain or loss on the
transaction measured by the difference between the consideration received by the
Fund and the tax basis of Fund assets; the tax basis of the assets acquired by
the trust would equal the purchase price plus the amount of any liabilities
transferred to the trust; and upon distribution of the trust shares in
dissolution of the Fund, the shareholders of the Fund would recognize gain or
loss on the disposition of their Fund shares measured by the difference between
the fair market value of the trust shares received by them and the basis of the
Fund shares held by them. Shareholders should consult their own advisers
concerning the
- 7 -
<PAGE>
potential tax consequences of the reorganization to them, including state and
local income tax consequences.
REQUIRED VOTE AND BOARD OF DIRECTORS' RECOMMENDATION
Approval of the reorganization of the Fund will require the affirmative
vote of a "majority of the outstanding voting securities" of the Fund, which,
for this purpose, means the affirmative vote of the lesser of (1) more than 50%
of the outstanding shares of the Fund, or (2) 67% or more of the shares of the
Fund present at the Meeting if more than 50% of the outstanding shares of the
Fund are represented at the Meeting in person or by proxy. The Fund will call a
shareholder meeting if required to do so in writing by shareholders entitled to
cast 10% or more of the Fund's votes. If the shareholders of the Fund do not
approve the reorganization, the Board will take such further action as it may
deem to be in the best interests of the Fund's shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL.
Proposal 3
RATIFICATION OR REJECTION OF
INDEPENDENT AUDITORS
The Board of Directors, including a majority of the Directors who are not
interested persons of the Fund, unanimously appointed Richard A. Eisner &
Company, LLP, as independent auditors to examine and to report on the financial
statements of the Fund for the fiscal year ending December 31, 1999. Such
appointment was expressly conditioned upon the right of the Fund by a vote of
the majority of the outstanding voting securities at any meeting called for the
purpose to terminate such employment. The Board's selection of Richard A. Eisner
& Company, LLP is hereby submitted to shareholders for ratification.
Richard A. Eisner & Company, LLP has served as the independent auditors
for the Fund during its most recent fiscal period ended December 31, 1998.
Services performed by Richard A. Eisner & Company LLP during such time have
included the audit of the financial statements of the Fund and services related
to filings of the Fund with the Securities and Exchange Commission. Richard A.
Eisner & Company, LLP has informed the Fund that neither Richard A. Eisner &
Company, LLP nor any of its partners has any direct or material indirect
financial interest in the Fund. Representatives of Richard A. Eisner & Company,
LLP are not expected to be present at the Meeting but have been given the
opportunity to make a statement if they so desire, and will be available by
telephone should any matter arise requiring their participation.
REQUIRED VOTE AND BOARD OF DIRECTORS' RECOMMENDATION
Approval of the selection of Richard A. Eisner & Company, LLP as
independent auditors to examine and report on the financial statements of the
Fund for the fiscal year ending December 31, 1999 will require the affirmative
vote of a majority of the votes cast at the Meeting in person or by proxy,
provided that a quorum is present at the Meeting.
- 8 -
<PAGE>
Approval of the reorganization set forth in Proposal 2 will also be considered
to be approval of Richard A. Eisner & Company, LLP to act as independent
auditors to the trust. If the reorganization is not approved, then Richard A.
Eisner & Company will continue to act as independent auditors to the Fund.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL.
Proposal 4
APPROVAL OR DISAPPROVAL OF CHANGES TO THE FUND'S
FUNDAMENTAL INVESTMENT RESTRICTIONS
The Fund has adopted a number of fundamental investment restrictions
which can only be changed be a vote of the Fund's shareholders. These investment
restrictions have been in effect for many years and are described in the Fund's
Statement of Additional Information. During that time, amendments have been made
to the 1940 Act and other federal and state securities laws which have either
eliminated the necessity for these restrictions or modified their parameters. In
addition, over the years new investment instruments and techniques have been
developed which these restrictions do not reflect. Stralem is proposing to
either modify, eliminate or reclassify most of the Fund's investment
restrictions to correspond with these industry changes. Restrictions that are no
longer required by state law will be eliminated, those that require updating
will be amended and still others will be reclassified as non-fundamental. This
will give the Fund greater flexibility to respond to further regulatory
developments and changes in the financial markets. Non-fundamental restrictions
can be changed by directors (or trustees) without shareholder vote. The
elimination of certain restrictions does not indicate that the Fund will engage
in these practices without notifying investors. A summary of each of the
proposed recommendations is set forth below.
(1) Modernize the restriction on borrowing to create flexibility by
allowing borrowings up to 33 1/3% of the Fund's assets. The proposed investment
restriction is as follows:
"The Fund may not borrow money, except that the Fund may (a) enter into
commitments to purchase securities and instruments in accordance with
its investment program, provided that the total amount of any borrowing
does not exceed 33 1/3% of the Fund's total assets at the time of the
transaction; and (b) borrow money in an amount not exceeding 33 1/3% of
the value of its total assets at the time when the loan is made. Any
borrowings representing more than 33 1/3% of the Fund's total assets
must be repaid before the Fund may make additional investments."
(2) Modernize the restriction on acting as an underwriter and eliminate
the 5% limitation on the Fund's ability to purchase private placements. The
proposed investment restriction is as follows:
- 9 -
<PAGE>
"The Fund may underwrite securities of other issuers, except to extent
that the Fund may be considered an underwriter within the meaning of
the Securities Act when reselling securities held in its own
portfolio."
(3) Modify the Fund's restriction as to concentration to exclude
government securities from the 25% limitation and to allow the Fund to invest in
a "master/feeder" type fund. The proposed investment restriction is as follows:
"The Fund may not concentrate its investments in a particular industry
(other than securities issued or guaranteed by the government or any of
its agencies or instrumentalities). No more than 25% of the value of
the Fund's total assets, based upon the current market value at the
time of purchase of securities in a particular industry, may be
invested in such industry. This restriction shall not prevent the Fund
from investing all of its assets in a "master" fund that has adopted a
similar restriction."
(4) This restriction on purchase or sale of real estate is unchanged.
(5) Modernize and clarify the application of the restriction on
commodities. The proposed investment restriction is as follows:
"The Fund may not purchase or sell physical commodities unless acquired
as a result of ownership of securities or other instruments (but this
shall not prevent the Fund from purchasing or selling options and
futures contracts or from investing in securities or other instruments
backed by physical commodities)."
(6) Amend the restriction on loans to clarify the limitation on
securities lending and to exclude those transactions that current regulatory
interpretations and policies allow. The proposed investment restriction is as
follows:
"The Fund may not lend any security or make any other loan if, as
result, more than 33 1/3% of its total assets would be lent to other
parties, but this limitation does not apply to purchases of publicly
issued debt securities or to repurchase agreements."
(7) Delete the restriction prohibiting investments for control. This will
give the Fund additional flexibility to respond quickly to changes in the
financial markets.
(8) Delete the restriction as to purchases on margin.
(9) Reclassify the restriction as to short sales to be non-fundamental to
allow more flexibility in changing financial markets.
(10) Reclassify the restriction as to options to become one of the
Fund's investment strategies.
(11) Delete the restriction on purchase of securities of other registered
open-end investment companies.
- 10 -
<PAGE>
(12) Delete the restriction concerning pledging and mortgaging assets.
(13) Delete the restriction on joint trading accounts.
(14) Delete the restriction as to selling a put or call option unless the
Fund owns such option at the time of the sale.
(15) Clarify and modernize the language concerning senior securities to
allow the Fund to engage in certain practices that may be considered investing
in senior securities. The proposed investment restriction is as follows:
"The Fund may not issue any senior security (as defined by the 1940
Act), except that (a) the Fund may engage in transactions that may
result in the issuance of senior securities to the extent permitted
under applicable regulations and interpretations of the 1940 Act or an
exemptive order; (b) the Fund may acquire other securities, the
acquisition of which may result in the issuance of a senior security,
to the extent permitted under applicable regulations or interpretations
of the 1940 Act; and (c) subject to the restrictions set forth below,
the Fund may borrow as authorized by the 1940 Act."
REQUIRED VOTE AND BOARD OF DIRECTORS' RECOMMENDATION
Approval of the changes to the Fund's fundamental investment restrictions
will require the affirmative vote of a "majority of the outstanding voting
securities" of the Fund, which, for this purpose, means the affirmative vote of
the lesser of (1) more than 50% of the outstanding shares of the Fund, or (2)
67% or more of the shares of the Fund present at the Meeting if more than 50% of
the outstanding shares of the Fund are represented at the Meeting in person or
by proxy. The Fund will call a shareholder meeting if required to do so in
writing by shareholders entitled to cast 10% or more of the Fund's votes. If the
shareholders of the Fund do not approve the reorganization, the Board will take
such further action as it may deem to be in the best interests of the Fund's
shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL.
OTHER INFORMATION
Voting Information and Discretion of the Persons Named as Proxies.
While the Meeting is called to act upon any other business that may properly
come before it, at the date of this proxy statement the only business which
management intends to present or knows that others will present is the business
mentioned in the Notice of Meeting. If any other matters lawfully come before
the Meeting, and in all procedural matters at the Meeting, it is the intention
that the enclosed proxy shall be voted in accordance with the best judgment of
the attorneys named therein, or their substitutes, present and acting at the
Meeting.
If at the time any session of the Meeting is called to order a quorum
is not present, in person or by proxy, the persons named as proxies may vote
those proxies which have been
- 11 -
<PAGE>
received to adjourn the Meeting to a later date. In the event that a quorum is
present but sufficient votes in favor of one or more of the proposals have not
been received, the persons named as proxies may propose one or more adjournments
of the Meeting to permit further solicitation of proxies with respect to any
such proposal. All such adjournments will require the affirmative vote of a
majority of the shares present in person or by proxy at the session of the
Meeting to be adjourned. The persons named as proxies will vote those proxies
which they are entitled to vote in favor of the proposal, in favor of such an
adjournment, and will vote those proxies required to be voted against the
proposal, against any such adjournment. A vote may be taken on one or more of
the proposals in this proxy statement prior to any such adjournment if
sufficient votes for its approval have been received and it is otherwise
appropriate. Any adjourned session or sessions may be held within a reasonable
time after the date set for the original Meeting without the necessity of
further notice.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. IF YOU DO NOT EXPECT TO
ATTEND THE MEETING, PLEASE SIGN YOUR PROXY CARD PROMPTLY AND RETURN IT IN THE
ENCLOSED ENVELOPE TO AVOID UNNECESSARY EXPENSE AND DELAY. NO POSTAGE IS
NECESSARY IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors,
Hirschel B. Abelson
Secretary
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<PAGE>
STRALEM FUND, INC.
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS of Stralem Fund, Inc. (the
"Fund), for use at the annual meeting of shareholders to be held at the offices
of the Fund, 405 Park Avenue Fourteenth Floor, New York, New York, on April 7,
1999 at ____a.m. Eastern time.
The undersigned hereby appoints Philippe E. Baumann and Hirschel B. Abelson, and
each of them, with full power of substitution, as proxies of the undersigned to
vote at the above-stated annual meeting, and at all adjournments thereof, all
shares of beneficial interest of the Fund that are held of record by the
undersigned on the record date for the annual meeting, upon the following
matters:
Please mark box in blue or black ink.
ITEM 1. Votes on Proposal to elect directors to serve as members of the Board of
Directors of the Fund, the nominees are: Philippe E. Baumann, Kenneth D.
Pearlman, Jean Paul Ruff, and Michael T. Rubin.
FOR ALL
FOR WITHHOLD EXCEPT
|_| |_| |_| TO WITHHOLD
AUTHORITY TO VOTE FOR
ANY INDIVIDUAL
NOMINEE, MARK THE
"FOR ALL EXCEPT" BOX,
AND STRIKE A LINE
THROUGH THE
NOMINEE'S NAME IN THE
LIST ABOVE.
ITEM 2. Vote on Proposal to approve a reorganization of the Fund to a Delaware
business trust.
FOR AGAINST ABSTAIN
|_| |_| |_|
ITEM 3. Vote on Proposal to ratify the selection of Richard A. Eisner &
Company, LLP as independent certified public accountants to the Fund.
FOR AGAINST ABSTAIN
|_| |_| |_|
ITEM 4. Vote on Proposal to approve changes to the Fund's fundamental investment
restrictions.
FOR AGAINST ABSTAIN
|_| |_| |_|
ITEM 5. Vote on the transaction of such other business as may be properly
brought before the meeting.
FOR AGAINST ABSTAIN
|_| |_| |_|
<PAGE>
- --------------------------------------------------------------------------------
Every properly signed proxy will be voted in the manner specified
thereon and, in the absence of specification, will be treated as
GRANTING authority to vote FOR all of the above items.
Receipt of Notice of Annual Meeting is hereby acknowledged.
PLEASE SIGN, DATE AND RETURN PROMPTLY.
---------------------------------------
Sign here exactly as name(s) appears hereon
---------------------------------------
Dated:______________________________, 1999
IMPORTANT: Joint owners must EACH sign.
When signing as attorney, executor,
administrator, trustee, guardian or
corporate officer, please give your full
title as such.
<PAGE>
Exhibit A
FORM OF
AGREEMENT AND PLAN OF
REORGANIZATION, LIQUIDATION AND DISTRIBUTION
This AGREEMENT AND PLAN OF REORGANIZATION, LIQUIDATION AND DISTRIBUTION
is made this __ day of _______, 1999, by and between STRALEM FUND (the "Trust"),
a Delaware business trust established under the Trust Instrument dated January
27, 1999, and STRALEM FUND, Inc. (the "Fund"), a Delaware corporation.
In consideration of the mutual promises herein contained, the parties
hereto agree as follows:
1. Approval by Shareholders.
A meeting of the shareholders of the Fund shall be called and held for
the purpose of acting upon this Agreement and Plan of Reorganization and
Liquidation (the "Agreement") and the transactions contemplated herein.
2. Plan of Reorganization and Liquidation.
(a) [In accordance with Section 271 of the Delaware General Corporation
Law ("DGCL"),] the Fund will convey, transfer and deliver to the Trust at the
closing provided for in Section 3 (hereinafter called the "Closing") all of its
then existing assets [, excluding any Reserve Fund as defined in Paragraph B of
Section 2]. In consideration thereof, the Trust agrees at the Closing (i) to
assume and pay, to the extent that they exist on or after the Effective Time of
the Reorganization (as defined in Section 3 hereof), all of the Fund's
obligation and liabilities, whether absolute, accrued, contingent or otherwise
(such assumption, the "Trust Assumption"); and (ii) to deliver the Fund full and
fractional shares of beneficial interest of the Fund, outstanding immediately
prior to the Effective Time of the Reorganization [constituting all of the
interest in the Trust].
(b) At the Effective Time of the Reorganization, the Fund will dissolve
[in accordance with Section 275 of the DGCL]. Immediately thereafter, the Fund,
having, by virtue of the Trust Assumption (and, to the extent necessary or
appropriate in the judgement of the Fund, the establishment of a reserve fund of
additional assets (the "Reserve Fund")), paid or made reasonable provision to
pay or provide compensation for all obligations, liabilities and claims in
accordance with Section 281 of the DGCL, will liquidate and distribute pro rata
to the shareholders of record as of the Effective Time of the Reorganization the
shares received by the Fund pursuant to this Section 2. Such dissolution,
liquidation and distribution will be accompanied by the establishment of an open
account on the stock records of the Trust in the name of each such shareholder
of the Fund and representing the respective pro rata number of
<PAGE>
shares due such shareholder. Certificates representing the shares of the Trust
will not be issued unless specifically requested. Simultaneously with such
crediting of shares of the Trust to the shareholders of record, the shares of
the Fund held by such shareholders shall be cancelled.
3. Closing and Effective Time of the Reorganization.
The Closing shall occur on (a) the date of the final adjournment of the
meeting of shareholders of the Fund at which this Agreement will be considered
or (b) such later date as the parties may mutually agree (the "Effective Time of
the Reorganization").
4. Conditions Precedent.
The obligations of the Fund and the Trust to effectuate the Agreement
hereunder shall be subject to the satisfaction of each of the following
conditions:
(a) One or more post-effective amendments to the Fund's Registration
Statement on Form N-1A under the Securities Act of 1933 and the Investment
Company Act of 1940 (the "Act") containing (i) such amendments to such
Registration Statement as are determined by the Trustees of the Trust to be
necessary and appropriate as a result of the Agreement; and (ii) the adoption by
the Trust as its own of such Registration Statement, as so amended, shall have
been filed with the Commission and such post-effective amendment or amendments
to the Fund's Registration Statement shall have become effective, and no
stop-order suspending the effectiveness of the Registration Statement shall have
been issued, and no proceeding for that purpose shall have been initiated or
threatened by the Commission (and not withdrawn or terminated).
(b) Each party shall have received an opinion of Kramer Levin Naftalis
& Frankel LLP to the effect that the reorganization contemplated by this
Agreement will not give rise to the recognition of income, gain or loss for
federal income tax purposes to the Fund, the Trust or the Fund's shareholders.
(c) The Fund shall have received the opinion of Kramer Levin Naftalis &
Frankel LLP, counsel for the Fund, dated the Effective Time of the
Reorganization, addressed to and in form and substance satisfactory to the
Trust, to the effect that: (i) the Fund is a corporation duly organized and
validly existing under the laws of the State of Delaware; (ii) this Agreement
and the reorganization provided for herein and the execution and filing of this
Agreement have been duly authorized and approved by all requisite corporate
action of the Fund and this Agreement has been duly executed and delivered by
the Fund and is a valid and binding obligation of the Fund; and (iii) the Fund
is an open-end diversified investment company of the management type registered
under the Act.
(d) The Trust shall have received the opinion of Kramer Levin Naftalis
& Frankel LLP, counsel for the Trust, dated the Effective Time of the
Reorganization, addressed to and in form and substance satisfactory to the Fund,
to the effect that: (i) the Trust is a business trust duly formed and existing
in good standing under the laws of Delaware; (ii) this Agreement and the
reorganization provided for herein and the execution and filing of this
Agreement have
- 2 -
<PAGE>
been duly authorized and approved by all requisite action of the Trust and this
Agreement has been duly executed and delivered by the Trust and is a valid and
binding obligation of the Trust; and (iii) the shares of the Trust to be issued
in the reorganization have been duly authorized and upon issuance thereof in
accordance with this Agreement will be validly issued, fully paid and
non-assessable shares of the Trust.
(e) The shares of the Trust shall have been duly qualified for offering
to the public in such jurisdictions (except where such qualifications are not
required) so as to permit the transfers contemplated by this Agreement to be
consummated.
(f) A vote approving this Agreement and the reorganization contemplated
hereby, including a temporary amendment of those of the Fund's investment
restrictions that might otherwise preclude the consummation of the
reorganization, shall have been adopted by at least a majority of the
outstanding shares of the Fund entitled to vote at an annual or special meeting.
(g) The shareholders of the Fund shall have voted to approve the
actions of the Fund, as sole shareholder of the Trust, to:
(1) elect as Trustees of the Trust (the "Trustees") the
individuals nominated to serve as Directors of the Fund to hold
office in accordance with the Trust's Trust Instrument (except
any individual who is no longer willing or able to be elected);
(2) approve the Investment Advisory Agreement between
the Trust and Stralem & Company Incorporated (the "Investment
Advisory Agreement");
(3) approve the Distribution Agreement between the Trust
and Stralem & Company Incorporated (the "Distribution
Agreement");
(4) approve the Custodian Agreement between the Trust
and Schroder & Co. Inc. (the "Custodian Agreement"); and
(5) ratify the selection of Richard A. Eisner & Company,
LLP as independent auditors for the Trust for the fiscal year
ending December 31, 1999.
(h) The Trustees shall have taken the following action at a meeting
duly called for such purposes:
(1) approval of the Investment Advisory Agreement;
(2) approval of the Distribution Agreement;
(3) approval of the Custodian Agreement;
- 3 -
<PAGE>
(4) selection of Richard A. Eisner & Company, LLP as
independent auditors for the Trust for the fiscal year ending
December 31, 1999;
(5) submission of the matters referred to in paragraph
(g)(2)-(5) of this Section 4 to the sole shareholder of the
Trust; and
(6) authorization of the issuance by the Trust of Shares
of the Trust at the Effective Time of the Reorganization in
exchange for the Fund's assets pursuant to the terms and
provisions of this Agreement.
At any time prior to the Effective Time of the Reorganization, any of
the foregoing conditions may be waived by the Board of Directors of the Fund if,
in the judgment of such Board, such waiver will not have a material adverse
effect on the benefits intended under this Agreement to the shareholders of the
Fund.
5. Termination.
The Board of Directors of the Fund may terminate this Agreement and
abandon the reorganization contemplated hereby, at any time prior the Effective
Time of the Reorganization, notwithstanding approval thereof by the shareholders
of the Fund if, in the judgment of such Board, proceeding with the Agreement
would be inadvisable.
6. Entire Agreement.
This Agreement embodies the entire agreement between the parties and
there are no agreements, understandings, restrictions or warranties among the
parties other than those set forth herein or herein provided for.
7. Further Assurances.
The Fund and the Trust shall take such further action as may be
necessary or desirable and proper to consummate the transactions contemplated
hereby.
8. Governing Law.
This Agreement and the transactions contemplated hereby shall be
governed by and construed and enforced in accordance with the laws of the State
of Delaware.
- 4 -
<PAGE>
IN WITNESS WHEREOF, each of the Fund and the Trust has caused this
Agreement and Plan of Reorganization, Liquidation and Distribution to be
executed on its behalf by its duly authorized officers designated below as of
the day and year first above written.
STRALEM FUND, INC.
By: ___________________________
Name:
Title:
STRALEM FUND
By: ___________________________
Name:
Title:
- 5 -
