As filed, via EDGAR, with the Securities and Exchange Commission on March 10,
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:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
[x] 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>
STRALEM FUND, INC.
405 Park Avenue
New York, NY 10022
March 10, 1999
Dear Shareholder:
The Annual Meeting of Shareholders of Stralem Fund, Inc. (the
"Fund") will be held at 405 Park Avenue, New York, New York 10022, on April 7,
1999 at 11:30 a.m. Eastern time. The attached proxy describes matters to be
voted upon including the following:
1. A proposal to reorganize the Fund from a Delaware
corporation to a Delaware business trust. This new trust will have the same
investment objective as the Fund and shareholder rights under the trust will not
be effected. As a Delaware business trust, the Fund will not be required to hold
annual shareholder meetings. This will ultimately reduce Fund expenses by
eliminating the costs associated with these meetings. Over the years it has
become standard in the mutual fund industry for funds to be organized in states
that do not require annual shareholder meetings.
2. A proposal to update the Fund's fundamental investment
restrictions. The Fund's restrictions have been in effect for many years and do
not reflect changes in federal and state securities laws over the years. The
proposal will not affect the way the Fund is managed or its investment
objective.
The Board of Directors has given full and careful
consideration to these proposals and has concluded that they are in the best
interests of the Fund and its shareholders. We urge you to approve the
proposals.
Please sign, date and return the enclosed proxy card promptly.
Sincerely,
/s/ Philippe E. Baumann
-----------------------
Philippe E. Baumann
President
<PAGE>
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 11:30 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
/s/ Hirschel B. Abelson
-----------------------
Hirschel B. Abelson
Secretary
Dated: March 10, 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>
STRALEM FUND, INC.
405 Park Avenue
New York, New York 10022
PROXY STATEMENT
Dated March 10, 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 11:30 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 the event that a shareholder signs and
returns the proxy ballot, but does not indicate a choice as
<PAGE>
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 $33,000. 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 3,933,007 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:
<TABLE>
<CAPTION>
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned of Fund
------------------- ------------------ -------
<S> <C> <C>
Stralem Employees' 599,644 15.25%
Profit Sharing Trust
405 Park Avenue
New York, New York 10022
Brown Brothers Harriman- 576,911 14.67%
UBS
3 Hanover Street
New York, New York 10005
</TABLE>
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
- 2 -
<PAGE>
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, 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.
- 3 -
<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 182,516
Vice-President, Stralem &
Company Incorporated
Kenneth D. Pearlman, 68 Managing Director, The 1974 376
Evans Partnership
(investment partnership)
Jean Paul Ruff, 64 Chairman, Hawley Fuel 1980 1,530
Coal, Inc.
**Michael Rubin, 58 Retired Vice-President 1997 3,833
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 182,516
Philippe Labaune, 30 Vice President 1997 582
Hirschel B. Abelson, 65 Treasurer and Secretary 1989 218,621
</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.
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>
========================================================================================================================
<S> <C> <C> <C> <C> <C>
Pension or Total Compensation
Retirement Benefits Estimated Annual From Number of
Aggregate Accrued as Part of Benefits Upon Fund and Fund Directorships
Name of Director Compensation from Fund Fund Expenses Retirement Complex in Fund Complex
- ------------------------------------------------------------------------------------------------------------------------
Philippe E. Baumann $0 $0 $0 $0 1
- ------------------------------------------------------------------------------------------------------------------------
Kenneth D. Pearlman $1,000 $0 $0 $1,000 1
- ------------------------------------------------------------------------------------------------------------------------
Jean Paul Ruff $800 $0 $0 $800 1
- ------------------------------------------------------------------------------------------------------------------------
Michael Rubin $1,000 $0 $0 $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 Fund's shares. 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 which 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 May 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 will be agreeing to
waive temporarily any investment policies or restrictions that would otherwise
prohibit the reorganization.
- 6 -
<PAGE>
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 a new investment advisory agreement and a new
distribution agreement between the trust and Stralem.
Both the new and current investment advisory agreements contain identical
fee schedules. The services provided under the new investment advisory agreement
are substantially similar to those under the current agreement. The new
agreement states that Stralem will provide the Fund with investment research,
data, advice and supervision. Stralem will also provide administrative services,
office space utilities and administrative clerical and research personnel. The
format of the new agreement has been updated to conform to industry standards
and includes certain provisions not contained in the current agreement but
common to most investment advisory contracts today. These provisions include
discussions of (i) fees paid for brokerage and research services; (ii) the
proprietary nature of the Fund's name; (iii) the non-exclusivity of advisory
services; and (iv) limitations of trustee and shareholder liabilities.
The services to be provided under the new distribution agreement are
substantially similar to those under the current agreement. The new distribution
agreement appoints Stralem to act as sole distributor of the Fund's shares. The
style of this agreement has also been updated to conform to industry standards.
Federal Income Tax Consequences
It is expected that, for federal income tax purposes, the reorganization
will result in no taxable gain or loss to the shareholders or the Fund.
Following the reorganization, the adjusted basis and holding period of a Fund
share held by a shareholder will be the same as before the reorganization. Prior
to the reorganization, Kramer Levin Naftalis & Frankel LLP will provide an
opinion to this effect. Such opinion, however, is not binding on the Internal
Revenue Service. If for any reason the reorganization does not qualify as a
tax-free reorganization, the shareholders and the Fund would recognize gain or
loss in connection with the transaction. Shareholders should consult their own
advisers concerning the 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.
- 7 -
<PAGE>
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. 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 by 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
- 8 -
<PAGE>
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. The current investment
restriction states that the Fund may not:
"Borrow money for investment purposes. However, for temporary or
emergency purposes, including meeting redemptions and securing
short-term credits for the clearance of purchases and sales of
securities, the Fund may borrow up to 5% of the value of its assets, but
the Fund may not borrow money if, immediately after such borrowing, the
Fund will have net assets of less than 300% of the amount of such
borrowing. (Both references to the Fund's assets in this paragraph mean
the market value of the Fund's net assets.)"
We propose to change this investment restriction to:
"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."
This change gives the Fund the flexibility to borrow money to
purchase securities within the limits of the 1940 Act. Currently the Fund may
borrow money for emergency purposes only. Borrowing money may place the Fund at
risk and therefore the Fund has no current intention to borrow money.
(2) Modernize the restriction on acting as an underwriter and eliminate
the 5% limitation on the Fund's ability to purchase private placements. The
current investment restriction states that the Fund may not:
"Underwrite securities of other issuers, except that the Fund may
purchase securities offered as private placements and, in so doing, may
state at the time of purchase that it has no present intention to
dispose of such securities and may agree that any disposition of such
securities will be subject to compliance with the Securities Act. While
such purchases can at times be made at advantageous prices and offer
attractive opportunities for investment not otherwise available in
- 9 -
<PAGE>
the open market, the liquidity and marketability of such securities may
be limited and the Fund may not be able to dispose of its holdings in
such securities at the current market price. The Management of the Fund
would value the same at fair value in good faith as required by the
Investment Company Act of 1940. No more than 5% of the value of the
Fund's total assets, based upon the then current market value at the
time of the purchase of any such securities, amy be invested in such
securities."
We propose to change this investment restriction to:
"The Fund may not 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."
The proposed restriction is substantively the same as the current
restriction except that the policy is stated in a more succinct fashion. In
addition the 5% limitation has been eliminated allowing the Fund to invest a
greater percentage of its assets in private placements.
(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 current investment restriction states that the
Fund may not:
"Concentrate its investments in a particular industry. 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."
We propose to change this investment restriction to:
"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."
The change more closely tracks the language of the 1940 Act and
allows the Fund more flexibility to enter into other types of investment
arrangements at some future time. The Fund will not enter into such an
arrangement without notifying shareholders.
(4) Modernize and clarify the application of the restriction on
commodities. The current investment restriction states that the Fund may not:
"Engage in the purchase and sale of commodities or commodity contracts."
- 10 -
<PAGE>
We propose to change this investment restriction to:
"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)."
This new restriction is more specific and reflects the Fund's
current policy more clearly. The change will not affect the Fund's investment
techniques.
(5) 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 current investment restriction states
that the Fund may not:
"Make loans, except the Fund may lend money to corporations by
purchasing corporately-offered short-term and/or long-term debt
securities. If any such debt security is not freely marketable under the
Securities Act, the amount thereof will be included in the limitation
referred to in the last sentence of paragraph 2 above. The purchase of a
portion of an issue of publicly distributed bonds, debentures and/or
debt securities will not be considered the making of a loan."
We propose to change this investment restriction to:
"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."
This change will allow the Fund to lend its assets within the
limits of the 1940 Act for any reason that accords with its investment
objective. There is no intention for the Fund to change its current investment
techniques regarding lending.
(6) Delete the restriction prohibiting investments for control. This will
give the Fund additional flexibility to respond quickly to changes in the
financial markets. The Fund is still, however, subject to the diversification
requirements of Subchapter M and the 1940 Act (regarding non-diversified funds).
The Fund has no intention of investing for control and will only do so
temporarily in extraordinary circumstances (such as a reorganization or merger).
The current investment restriction states that the Fund may not:
"Invest in companies for the purpose of exercising control or
management."
(7) Delete the restriction as to purchases on margin to allow the Fund to
obtain short-term credit if necessary to clear transactions. The Fund will still
be subject to Section 12(a) of the 1940 Act prohibiting all other purchases on
margin. The current investment restriction states that the Fund may not:
"Purchase securities on margin."
- 11 -
<PAGE>
(8) Reclassify the restriction as to short sales to be non-fundamental to
allow more flexibility by Fund management in changing financial markets. The
current investment restriction states that the Fund may not:
"Make short sales, except that the Fund may sell securities short to the
extent that, at the time of any such sale, it owns not less than the
amount of such security sold short and/or other securities convertible
or exchangeable into such amount.1 The Fund may also make such short
sales in special arbitrage situations for the purpose of profiting from
a current difference between the price of a security sold, such as
stock, and a security owned, such as a debenture convertible into that
stock."
This restriction will become part of the Fund's strategies as set
forth in the statement of additional information and could be changed without
shareholder vote. The Fund will still be subject to the 1940 Act which prohibits
investments in short sales except in connection with an underwriting in which
the Fund is a participant.
(9) Reclassify the restriction as to options to become non-fundamental to
allow more flexibility by Fund management in changing markets. The current
investment restriction states that the Fund may not:
"Purchase or sell put and call options on stocks and stock price indexes
listed on major exchanges (i.e., not including securities traded
over-the-counter) where the total cost of such puts and calls exceeds
10% of the net asset value of the Fund at the time of purchase. Call and
put options are, respectively, contracts to buy or sell a security or
stock price index at a specific price expiring at a specific time. The
Fund will not sell call options where it does not already own the
security underlying such options. See item 14 regarding the risks
associated with such options. The Fund will not purchase options on
securities traded over-the-counter; provided, however, that the Fund
shall be permitted to purchase call options on securities traded
over-the-counter to complete a short sale with respect to such
securities previously entered into by the Fund."
The proposed strategy will read as follows:
"The Fund may purchase and sell options on stocks and stock price index
listed on major exchanges (i.e., not including securities traded
over-the-counter) where the total cost of such options does not exceed
10% of the net asset value of the Fund at the time of purchase."
- --------
1 A short sale is a sale of securities not owned at the time of
sale anticipating the price to fall and the securities to be
repurchased at a profit. A person selling short borrows the
equivalent securities to be delivered to the buyer and eventually
buys the securities to return to the buyer. In the case of the
type of short sales made by the Fund (referred to as a "short
sale against the box"), the Fund already owns the stock being
sold, but keeps possession of it, and therefore has to borrow the
equivalent stock to deliver to the purchaser.
- 12 -
<PAGE>
The reworded version of this restriction will become part of the
Fund's strategies set forth in the statement of additional information and could
be changed without shareholder vote. The Fund will still be subject to the
prohibitions of the 1940 Act. (See # 13 below for additional discussion on
options trading.)
(10) Delete the restriction on purchase of securities of other registered
open-end investment companies to allow the Fund to invest in other funds if it
meets with its investment objective. This restriction was, until recently,
required by some state regulations due to the duplication of fees contained in
these arrangements. The Fund is still subject to the limitations on such
purchases by Section 12 of the 1940 Act. The current investment restriction
states that the Fund may not:
"Purchase the securities of any other registered open-end investment
company, except as part of a merger or consolidation with, or the
acquisition of the assets of, another investment company; however, the
Fund may purchase the securities of no-load open-end investment
companies that invest primarily in money market instruments, provided
that (i) not more than 10% of the Fund's and any of its affiliates' net
assets shall be invested in such money market investment companies, (ii)
not more than 5% of the Fund's net assets shall be invested in any
single such money market investment company and (iii) such purchase will
not result in the Fund owning more than 3% of the outstanding voting
stock of the acquired investment company. (The Fund may purchase shares
of registered closed-end investment companies. However, no more than 5%
of the then current value of the Fund's total assets based upon market
value at the time of purchase may be invested in such securities and no
more than 10% of the Fund's net assets will be invested in investment
companies of any type.)2"
(11) Delete the restriction concerning pledging and mortgaging assets. The
current restriction investment restriction states that the Fund may not:
"Mortgage, pledge, hypothecate or in any manner transfer, as security
for indebtedness, any securities owned by it. In connection with short
sales, the Fund may, however, pledge or hypothecate securities as
security for its obligation to replace the securities sold short."
This restriction had been included by state regulations that are
no longer applicable. There is no equivalent prohibition under the 1940 Act. By
eliminating this restriction the Fund could pledge its securities in
transactions other than short sales but because this places the Fund at risk it
is highly unlikely to do so.
(12) Delete the restriction on joint trading accounts. The current
investment restriction states that the Fund may not:
"Participate on a joint basis in any securities trading account."
- --------
2 Additionally, the Fund will not require more than 3% of the total
outstanding voting stock of any such closed-end investment
company.
- 13 -
<PAGE>
The Fund will continue to be prohibited from participating in a
joint trading account under the 1940 Act except in connection with an
underwriting in which the Fund is a participant (See #2 above).
(13) Delete the second restriction as to selling a put or call options.
The current investment restriction states that the Fund may not:
"Sell a put or call option unless it owns such option at the time of
such sale. The maximum financial risk equals the original costs of such
put or call option. In the case of a call option, the Fund will only
sell such option if it already owns the security underlying such option.
Therefore, there is no financial liability risk since the Fund is long
on the securities on which call options may have been sold."
This restriction duplicated the prior restriction on call
options, but prohibited selling a put option unless the Fund owned such option,
and was included because of a state regulation that is no longer in effect (See
#9 above). Under the strategy proposed above, to the extent that the Fund does
not own the underlying security, there could be unlimited exposure up to the
value of the security. The Fund will, however, segregate assets to meet its
obligations when engaging in options trading.
(14) 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 but are permitted by the 1940 Act. The current investment
restriction states that the Fund may not:
"Issue senior securities of the Fund."
We propose to change this investment restriction to:
"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."
This new restriction simply explains in more detail the specifics
of the 1940 Act pertaining to senior securities to which the Fund has always
been subject. The change will not affect the Fund's investment techniques.
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
- 14 -
<PAGE>
50% of the outstanding shares of the Fund are represented at the Meeting in
person or by proxy. If shareholders do not approve any of these changes to the
investment restrictions, the Fund will continue to operate with that current
restriction.
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 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,
/s/ Hirschel B. Abelson
-----------------------
Hirschel B. Abelson
Secretary
- 15 -
<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,
Liquidation and Distribution (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 -
<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 11:30 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:
1. Modernize restriction on borrowing.
FOR AGAINST ABSTAIN
|_| |_| |_|
<PAGE>
2. Modernize restriction on underwriting.
FOR AGAINST ABSTAIN
|_| |_| |_|
3. Modify restriction as to concentration.
FOR AGAINST ABSTAIN
|_| |_| |_|
4. Modernize and clarify restriction on commodities.
FOR AGAINST ABSTAIN
|_| |_| |_|
5. Amend restriction on lending.
FOR AGAINST ABSTAIN
|_| |_| |_|
6. Delete restriction prohibiting investments for control.
FOR AGAINST ABSTAIN
|_| |_| |_|
7. Delete restriction as to purchases on margin.
FOR AGAINST ABSTAIN
|_| |_| |_|
8. Reclassify restriction as to short sales as non-fundamental.
FOR AGAINST ABSTAIN
|_| |_| |_|
9. Reclassify restriction as to options as non-fundamental.
FOR AGAINST ABSTAIN
|_| |_| |_|
10. Delete restriction on purchase of securities of other
registered open-end investment companies.
FOR AGAINST ABSTAIN
|_| |_| |_|
11. Delete restriction concerning pledging and mortgaging assets.
FOR AGAINST ABSTAIN
|_| |_| |_|
<PAGE>
12. Delete restriction on joint trading accounts.
FOR AGAINST ABSTAIN
|_| |_| |_|
13. Delete the second restriction as to selling options.
FOR AGAINST ABSTAIN
|_| |_| |_|
14. Clarify and modernize restriction on senior securities.
FOR AGAINST ABSTAIN
|_| |_| |_|
ITEM 5. Vote on the transaction of such other business as may be properly
brought before the meeting.
FOR AGAINST ABSTAIN
|_| |_| |_|
- --------------------------------------------------------------------------------
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.
<TABLE>
<CAPTION>
<S> <C>
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.
</TABLE>
