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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
TRANSAMERICA INCOME SHARES, INC.
(Name of Registrant as Specified In Its Charter)
NAME OF COMPANY
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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May 21, 1999
Dear Shareholder:
Recently Transamerica Corporation, the parent company of the Fund's investment
adviser, Transamerica Investment Services, Inc. and AEGON N.V., one of the
world's leading international insurance groups, announced their agreement to
merge.
In connection with the merger, the annual meeting of shareholders is being held
sooner than it typically has in the past. At this meeting, you are being asked
to vote on the customary annual proposals. However, because of the deemed
change in control of the Fund's investment adviser, you are being asked to
approve a new advisory agreement that will go into effect upon the closing of
the merger. As you will note from the enclosed proxy materials, there are no
material changes in the new advisory agreement - the advisory fee and the
services to be provided are exactly as they have been in the past. In addition,
you are being asked to re-elect three directors and elect one new director. It
is with regret that we inform you that Donald E. Cantlay, a director of your
Fund for 18 years, passed away on May 5, 1999. We deeply appreciate Mr.
Cantlay's contribution to the Fund and will sorely miss his presence and
involvement with the Fund.
In the course of representing and protecting your interests, the Board of
Directors has evaluated and unanimously approved the new advisory agreement and
the reappointment of Ernst and Young as independent public accountants and
recommends that you vote "FOR" these proposals.
Your vote is important and we encourage you to vote promptly. You may cast your
vote by marking the enclosed proxy card, signing it and returning it in the
enclosed postage paid envelope. If you have any questions regarding the
proposals to be voted on or need assistance in completing your proxy card,
please contact us at 1-800-288-9541. In addition, if we have not received your
vote prior to the meeting date, you may be contacted by our proxy solicitation
firm. We hope that this contact will not be an inconvenience to you.
I appreciate you taking the time to consider these important proposals. Thank
you for investing with Transamerica Income Shares, Inc. and for your continuing
support.
Sincerely,
/s/ Gary U. Rolle
Gary U. Rolle
President
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TRANSAMERICA INCOME SHARES, INC.
1150 SOUTH OLIVE STREET
LOS ANGELES, CA 90015
(800) 288-9541
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders (the "Annual
Meeting") of Transamerica Income Shares, Inc., a Maryland corporation (the
"Corporation"), will be held on June 16, 1999, at 11 a.m. (Pacific Time), at
1150 South Olive Street, Los Angeles, CA 90015. At the Annual Meeting, you and
the other shareholders of the Corporation will be asked to consider and vote on
the following matters:
1. To approve a new investment advisory agreement between Transamerica
Investment Services, Inc. and the Corporation as discussed in Part I of
the attached Proxy Statement.
2. To elect the Board of Directors of the Corporation, as discussed in
Part II of the attached Proxy Statement.
3. To ratify or reject the selection by the Board of Directors of Ernst &
Young LLP as independent public accountants to the Corporation for the
fiscal year ending March 31, 2000, as discussed in Part III of the
attached Proxy Statement.
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment(s) thereof.
Shareholders of record at the close of business on May 10, 1999 are
entitled to notice of, and to vote at, the Annual Meeting or any adjournment
thereof. Regardless of whether you plan to attend the Annual Meeting, PLEASE
COMPLETE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY CARD so that a quorum will
be present and the maximum number of shares may be voted.
By Order of the Board of Directors
/s/ Thomas M. Adams
Thomas M. Adams
Secretary
Los Angeles, California
May 20, 1999
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TRANSAMERICA INCOME SHARES, INC.
1150 SOUTH OLIVE STREET
LOS ANGELES, CA 90015
(800) 288-9541
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Transamerica Income Shares,
Inc. (the "Corporation") for use at the Annual Meeting of Shareholders of the
Corporation, to be held at 1150 South Olive Street, Los Angeles, California
90015, on June 16, 1999 at 11 a.m. (Pacific Time), and at any and all
adjournments thereof (the "Annual Meeting").
This Proxy Statement, the Notice of Annual Meeting and the proxy card are
first being mailed to shareholders on or about May 21, 1999 or as soon as
practicable thereafter. Any shareholder giving a proxy has the power to revoke
it by mail (addressed to the Secretary of the Corporation, c/o Transamerica
Investment Services, Inc., at the address shown at the beginning of this Proxy
Statement) or in person at the Annual Meeting, by executing a superseding proxy
or by submitting a notice of revocation to the Corporation. All properly
executed proxies received in time for the Annual Meeting will be voted as
specified in the proxy or, if no specification is made, in favor of the
Proposals referred to in the Proxy Statement.
The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the votes entitled to be cast shall be necessary and sufficient
to constitute a quorum for the transaction of business. For purposes of
determining the presence of a quorum, abstentions will be counted as present.
Proposal 1 requires the approval of a "majority of the outstanding voting
securities" of the Corporation, as defined in the Investment Company Act of
1940, as amended (the "1940 Act"). Abstentions and broker "nonvotes" will have
the effect of a vote against Proposal 1. See "Proposal 1 -- Required Vote."
Broker "nonvotes" occur when the Corporation receives a proxy from a broker or
nominee who does not have discretionary power to vote on a particular matter and
the broker or nominee has not received instructions from the beneficial owner or
other person entitled to vote the shares represented by the proxy. Proposal 2
requires a plurality vote for the election of each director, and Proposal 3
requires a majority of the votes cast at the Annual Meeting for approval.
Abstentions and broker nonvotes will not be counted in favor of or against
Proposals 2 and 3. See "Proposal 2 -- Required Vote" and "Proposal 3 -- Required
Vote."
The solicitation will be made primarily by mail, but may be supplemented by
telephone calls, telegrams, personal interviews and other communications by
officers, employees and agents of Transamerica Corporation ("Transamerica") and
its affiliates. Authorization to execute proxies may be obtained telephonically
or by electronically transmitted instructions. The Corporation has retained
Georgeson & Company Inc., 88 Pine Street, New York, NY 10005, to aid in the
solicitation of proxies. The costs of retaining Georgeson & Company Inc., which
are anticipated to be approximately $10,000, and other expenses incurred in
connection with the solicitation of proxies and the holding of the Annual
Meeting, will be borne by Transamerica or its affiliates and not by the
Corporation.
Holders of record of the shares of the Corporation at the close of business
on May 10, 1999 (the "Record Date"), as to any matter on which they are entitled
to vote, will be entitled to one vote per share on all business of the Annual
Meeting. There were 6,318,771 shares outstanding as of the Record Date.
Appendix 1 sets forth the beneficial owners of 5% or more of the
Corporation's shares. To the best of the Corporation's knowledge, as of May 10,
1999, no person owned beneficially 5% or more of the Corporation's outstanding
shares, except as stated in Appendix 1.
Appendix 2 sets forth the number of shares of the Corporation owned
beneficially by the directors, nominees for director or executive officers of
the Corporation. To the best of the Corporation's knowledge, as of May 10, 1999,
no director, nominee for director or executive officer of the Corporation owned
beneficially any shares of the Corporation, except as stated in Appendix 2.
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The Corporation provides periodic reports to all of its shareholders which
highlight relevant information, including investment results and a review of
portfolio changes. You can receive an additional copy of the most recent annual
report, without charge, by calling 800-288-9541 or by writing the Corporation's
transfer agent, ChaseMellon Shareholder Services, L.L.C., Overpeck Centre, 85
Challenger Road, Ridgefield Park, NJ 07660.
I. APPROVAL OF NEW
INVESTMENT ADVISORY AGREEMENT
(PROPOSAL 1)
INTRODUCTION
Transamerica Investment Services, Inc. ("TIS") acts as the investment
adviser to the Corporation pursuant to an investment advisory agreement entered
into by the Corporation and TIS. The investment advisory agreement in effect
between the Corporation and TIS prior to the consummation of the transaction
described below between AEGON N.V. ("AEGON"), Tony Merger Corp. ("Merger Sub")
and Transamerica (the "AEGON-Transamerica Transaction" or the "Transaction") is
referred to in this Proxy Statement as the "Former Investment Advisory
Agreement." The investment advisory agreement proposed to become effective
between the Corporation and TIS as of the consummation of the AEGON-Transamerica
Transaction is referred to in this Proxy Statement as the "New Investment
Advisory Agreement" (together with the Former Investment Advisory Agreement, the
"Investment Advisory Agreements," and each an "Investment Advisory Agreement").
A copy of the form of the New Investment Advisory Agreement is attached as
Exhibit A.
THE AEGON-TRANSAMERICA TRANSACTION
TIS is a direct wholly-owned subsidiary of Transamerica. On February 17,
1999, AEGON, Merger Sub, a wholly-owned subsidiary of AEGON, and Transamerica
entered into an Agreement and Plan of Merger and Reorganization (the "Merger
Agreement"). Pursuant to the Merger Agreement, Transamerica will merge with and
into Merger Sub. Merger Sub will be the surviving corporation in the
Transaction, and the separate corporate existence of Transamerica will cease.
The Certificate of Incorporation of Merger Sub will be amended to change the
name of Merger Sub from Tony Merger Corp. to Transamerica Corporation. The
result of the Transaction will be that Transamerica will become a wholly-owned
subsidiary of AEGON.
Consummation of the Transaction may be deemed to constitute an
"assignment," as that term is defined in the 1940 Act, of the Former Investment
Advisory Agreement with TIS. As required by the 1940 Act, the Former Investment
Advisory Agreement provides for its automatic termination in the event of its
assignment. Accordingly, a New Investment Advisory Agreement between the
Corporation and TIS was approved by the Board and is now being proposed for
approval by the shareholders of the Corporation. TIS is seeking an exemptive
order from the Securities and Exchange Commission (the "SEC" or the
"Commission") permitting the Corporation to obtain shareholder approval of its
New Investment Advisory Agreement within 150 days after the consummation of the
Transaction, which is expected to occur in mid-June (and, consequently, within
150 days after the termination of its Former Investment Advisory Agreement).
Pursuant to the exemptive order, should TIS choose to rely on it, the investment
advisory fees would be held in escrow until the earlier of (i) shareholder
approval of the New Investment Advisory Agreement and (ii) the expiration of the
150-day period. THE NEW INVESTMENT ADVISORY AGREEMENT IS SUBSTANTIALLY IDENTICAL
TO THE FORMER INVESTMENT ADVISORY AGREEMENT, EXCEPT FOR THE DATE OF EXECUTION,
THE TERMINATION DATE AND CERTAIN OTHER NON-SUBSTANTIVE CHANGES IMPLEMENTED
SOLELY TO UPDATE OR CORRECT. The material terms of the Investment Advisory
Agreement are described under "Description of the Investment Advisory Agreement"
below.
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In connection with the Transaction, certain executive officers of
Transamerica and its subsidiaries, including TIS, will receive certain benefits.
Such benefits will include (i) the acceleration and cash-out of unvested stock
options, vested stock options and stock appreciation rights and (ii) payments
made under certain value added incentive plans. Such benefits may also include
severance payments contingent upon an executive officer's termination. Mr.
Rolle, a director of the Corporation and an executive officer of TIS and
Transamerica Occidental Life Insurance Company ("TOLIC"), will receive a portion
of such benefits.
BOARD'S RECOMMENDATION
The Board met on May 6, 1999, and the Board members, including the Board
members who are not parties to the New Investment Advisory Agreement or
"interested persons" (as defined in the 1940 Act) of any such party (the
"Non-Interested Directors" or "Non-Interested Board members"), voted to approve
the New Investment Advisory Agreement and to recommend approval to the
shareholders of the Corporation.
BOARD'S EVALUATION
On May 6, 1999, the Board met with senior management personnel of TIS. As a
result of its review and consideration of the Transaction and the proposed New
Investment Advisory Agreement, the Board voted unanimously to approve the New
Investment Advisory Agreement and to recommend it to the shareholders of the
Corporation for their approval.
In connection with its review, TIS and AEGON represented to the Board that:
although integration of the businesses of Transamerica and AEGON may occur and
therefore some changes may result, it is the current intention that the
Transaction will have no material effect on the operational management of the
Corporation and that it will not result in any material change in the management
or operations of TIS as they relate to the Corporation; there will not be any
increase in the advisory fee or any change in any other provision, other than
the date of execution, the termination date and certain other non-substantive
updates and corrections, of the Investment Advisory Agreement as a result of the
Transaction; and the Transaction will not adversely affect TIS's financial
condition.
In connection with its deliberations, the Board obtained such information
as it deemed reasonably necessary to evaluate the New Investment Advisory
Agreement and other agreements, including certain assurances from each of AEGON,
Transamerica and TIS, including the following:
- The Transaction will not result in any change in the Corporation's
investment objectives or policies.
- There is a commitment to the continuance, without interruption, of
services to the Corporation of the type and quality currently provided by
TIS.
- The current plan is to maintain TIS's facilities and organization.
Transamerica informed the Board that it intends to comply with Section
15(f) of the 1940 Act, which provides a non-exclusive safe harbor for an
investment adviser to an investment company or any of the investment adviser's
affiliated persons (as defined in the 1940 Act) to receive any amount or benefit
in connection with a change in control of the investment adviser so long as two
conditions are met. First, for a period of three years after the transaction, at
least 75% of the board members of the investment company must not be "interested
persons" of the investment company's investment adviser or its predecessor
adviser. On or prior to the consummation of the Transaction, the Board is
expected to be in compliance with this provision of Section 15(f). Second, an
"unfair burden" must not be imposed upon the investment company as a result of
such transaction or any express or implied terms, conditions or understandings
applicable thereto. The term "unfair burden" is defined in Section 15(f) to
include any arrangement during the two-year period after the transaction whereby
the investment adviser, or any interested person of any such adviser, receives
or is entitled to receive any compensation, directly or indirectly, from the
investment company or its shareholders (other than fees for bona fide investment
advisory or other services) or from any person in connection with the purchase
or sale of securities or other property to, from or on behalf of the investment
company (other than bona fide ordinary compensation as principal underwriter for
such investment company). Transamerica has advised the Board that it is not
aware of any express or implied term, condition, arrangement or understanding
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<PAGE> 7
that would impose an "unfair burden" on the Corporation as a result of the
Transaction. Transamerica has agreed that it, and its affiliates, will take no
action that would have the effect of imposing an "unfair burden" on the
Corporation as a result of the Transaction. In furtherance thereof, Transamerica
has undertaken to pay the costs of preparing and distributing proxy materials
to, and of holding the meeting of, the Corporation's shareholders, as well as
other fees and expenses in connection with the Transaction.
In evaluating the New Investment Advisory Agreement, the Board took into
account that the fees and expenses payable by the Corporation under its New
Investment Advisory Agreement are the same as under its Former Investment
Advisory Agreement, that the services provided to the Corporation are the same
and that the other terms are, except for the date of execution, the termination
date and certain other non-substantive updates and corrections, identical. The
Board noted that, in previously approving the Former Investment Advisory
Agreement, the Board had considered a number of factors, including the nature
and quality of services provided by TIS; investment performance, both that of
the Corporation itself and relative to that of competitive investment companies;
the investment advisory fees and expense ratios of the Corporation and
competitive investment companies; TIS's profitability from managing the
Corporation; and the potential benefits to TIS and to the Corporation and its
shareholders of receiving research services from broker-dealer firms in
connection with the allocation of portfolio transactions to such firms.
The Board discussed the Transaction with the senior management of TIS,
Transamerica and AEGON and among themselves. The Board considered that AEGON and
Transamerica are large, well-established companies with substantial resources.
AS A RESULT OF ITS REVIEW AND CONSIDERATION OF THE TRANSACTION
AND THE NEW INVESTMENT ADVISORY AGREEMENT, AT ITS MEETING
THE BOARD VOTED TO APPROVE THE NEW INVESTMENT ADVISORY
AGREEMENT AND TO RECOMMEND ITS APPROVAL
TO THE SHAREHOLDERS.
DESCRIPTION OF THE INVESTMENT ADVISORY AGREEMENT
Except as disclosed below, the Former Investment Advisory Agreement and New
Investment Advisory Agreement are substantially identical.
Pursuant to the Investment Advisory Agreement, the Corporation employs TIS
to provide investment advisory, statistical and research facilities and
services, and to supervise the composition of the Corporation's investment
portfolio, subject to supervision by the Board. The Agreement provides that TIS
shall: (a) furnish research and statistical and other factual information and
reports; (b) furnish advice, information and recommendations with respect to the
acquisition, holding or disposal by the Corporation of eligible securities; (c)
furnish necessary assistance in the preparation of required reports,
prospectuses, registration statements and amendments to the same; (d) furnish,
at TIS's expense, office space, facilities and equipment; and (e) arrange, if
desired by the Corporation, for members of TIS to serve without compensation by
the Corporation as officers, directors or employees of the Corporation.
Under the Investment Advisory Agreement, TIS makes decisions to buy and
sell securities, selects brokers and dealers, and negotiates commissions.
Securities orders are placed with brokers or dealers selected for their ability
to give execution at prices and commission rates favorable to the Corporation
and, in some instances, for the ability to provide research and other services.
As part of the process of brokerage allocation, TIS is authorized to pay
commissions that may exceed what another broker might charge. If portfolio
business is transacted with brokers or dealers that provide research,
comparative performance data, pricing quotations or other services, the
Corporation pays any cost of such services and TIS and other clients advised by
TIS may benefit.
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Except for the expenses paid by TIS as set forth above, the Corporation
pays all of its own expenses, including registration fees and costs, taxes,
brokerage, transfer agent fees, custodial fees, stock exchange listing costs,
shareholder reports, postage, auditing and legal fees, and the fees and travel
expenses of the Non-Interested Directors. Under the Investment Advisory
Agreement, TIS has agreed to reimburse the Corporation to the extent that
certain expenses exceed 1.5% of the first $30 million of average net assets and
1% of average net assets over $30 million. The expenses subject to this expense
limitation exclude interest, taxes, brokerage and certain costs and expenses
incident to the public offering of shares.
In return for the services provided by TIS and the expenses it assumes
under the Investment Advisory Agreement, the Corporation pays TIS an advisory
fee at the annual rate of 0.50% of average net assets. The advisory fee is
accrued weekly and payable monthly. As of the Corporation's last fiscal year
ended March 31, 1999, the Corporation had net assets of $158,030,821 and paid an
aggregate advisory fee to TIS during such fiscal year of $800,335.
The Investment Advisory Agreement provides that it may be terminated
without penalty upon sixty (60) days' written notice by the Corporation, either
by majority vote of the Board or by vote of a majority of the outstanding voting
securities, or by TIS. As stated above, the Agreement provides for its automatic
termination in the event of its assignment unless such automatic termination
shall be prevented by an exemptive order of the SEC.
TIS has acted as the investment adviser for the Corporation since its
commencement of operations on August 1, 1972. The effective date of the Former
Investment Advisory Agreement was August 1, 1972. The Board last approved the
continuance of the Former Investment Advisory Agreement on May 14, 1998. The
shareholders last approved the Former Investment Advisory Agreement on July 30,
1998 for the purpose of ratifying such continuance.
THE NEW INVESTMENT ADVISORY AGREEMENT
The New Investment Advisory Agreement, if approved by the shareholders,
would be dated the date of the consummation of the Transaction, which is
expected to occur in mid-June. The New Investment Advisory Agreement would be in
effect for an initial term of two years, and would be continued thereafter from
year to year only if specifically approved at least annually by the vote of a
"majority of the outstanding voting securities" of the Corporation, or by the
Board and, in either event, by the vote of a majority of the Non-Interested
Directors, cast in person at a meeting called for such purpose. In the event
that the shareholders do not approve the New Investment Advisory Agreement, the
Board will take such action as it deems to be in the best interests of the
Corporation and the shareholders.
DIFFERENCES BETWEEN THE FORMER AND NEW INVESTMENT ADVISORY AGREEMENT
The New Investment Advisory Agreement is identical to the Former Investment
Advisory Agreement, except for the date of execution, the termination date and
certain other non-substantive changes implemented solely to update or correct.
The New Investment Advisory Agreement reflects (i) the change in name of the
investment adviser that has occurred since the original execution of the Former
Investment Advisory Agreement and (ii) the correct jurisdiction of incorporation
of the Corporation. In addition, whereas the form of the Former Investment
Advisory Agreement consisted of an original agreement and a subsequent amendment
to that agreement, the New Investment Advisory Agreement is in a restated form
that reflects the terms of that amendment.
TIS AND OTHER SERVICE PROVIDERS
TIS is a Delaware corporation and is an investment adviser registered under
the Investment Advisers Act of 1940, as amended. TIS has been in existence since
1967 and has provided investment services to investment companies since 1968.
TIS is a direct wholly-owned subsidiary of Transamerica. TIS's address is 1150
South Olive Street, Los Angeles, California 90015. Appendix 3 includes
information regarding each director, nominee for director and officer of the
Corporation who is associated with TIS.
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The following table shows the address and principal occupation of the
principal executive officer and each director of TIS:
<TABLE>
<CAPTION>
NAME ADDRESS PRINCIPAL OCCUPATION
- ---- ------- --------------------
<S> <C> <C>
Richard N. Latzer................. * Director, President & Chief Executive Officer
of TIS; Director & Chief Investment Officer
of TOLIC
Gary U. Rolle..................... * Director, Executive Vice President & Chief
Investment Officer of TIS; Director & Chief
Investment Officer of TOLIC
Thomas J. Cusack.................. * Director of TIS; Chairman, President & Chief
Executive Officer of TOLIC
Edgar H. Grubb.................... * Director of TIS; Director of TOLIC; Executive
Vice President & Chief Financial Officer of
Transamerica
Frank C. Herringer................ * Director of TIS; Director of TOLIC; Chairman,
President & Chief Executive Officer of
Transamerica
</TABLE>
- ---------------
* c/o Transamerica Investment Services, Inc., 1150 South Olive Street, Los
Angeles, CA 90015
Transamerica is a financial services company with approximately $58.5
billion in assets. Its principal offices are located at 600 Montgomery Street,
24th Floor, San Francisco, California 94111. Transamerica's two major lines of
business are life insurance (including asset management) and finance. As a
result of the AEGON-Transamerica Transaction, Transamerica will become a direct
wholly-owned subsidiary of AEGON.
AEGON is headquartered in The Hague, The Netherlands, and is a publicly
traded holding corporation of one of the world's ten largest life insurance
groups ranked by market capitalization and assets. Over 80% of AEGON's existing
business is in life insurance, pensions and related savings and investment
products. AEGON's address is Mariahoeveplain 50, 2591 TV The Hague, The
Netherlands.
Vereniging AEGON ("Association AEGON") controls a majority voting interest
in AEGON through its minority holding of common stock plus its holding of all
the issued and outstanding preferred stock of AEGON. Except for the interest
held by Association AEGON, the voting interest in AEGON is widely dispersed.
Association AEGON currently intends to increase gradually its ownership of AEGON
common stock to 40% by purchasing shares of common stock on the open market. At
the same time, Association AEGON intends to decrease its holding of preferred
stock. It is currently contemplated that, at all times, Association AEGON will
maintain the majority of voting rights of AEGON. Association AEGON is registered
in The Hague, The Netherlands and its address is Mariahoeveplain 50, 2591 TV The
Hague, The Netherlands.
Directors, officers and employees of TIS from time to time may enter into
transactions with various banks, including the Corporation's custodian bank. It
is TIS's opinion that the terms and conditions of those transactions will not be
influenced by existing or potential custodial or other relationships of the
Corporation.
State Street Bank and Trust Company ("State Street"), located at 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian to the
Corporation.
ChaseMellon Shareholder Services, L.L.C., located at Overpeck Centre, 85
Challenger Road, Ridgefield Park, NJ 07660, serves as transfer agent to the
Corporation.
Ernst & Young LLP, located at 725 South Figueroa Street, Los Angeles,
California 90017, performs audits of the Corporation's financial statements.
REQUIRED VOTE
Approval of the New Investment Advisory Agreement will require the
affirmative vote of a "majority of the outstanding voting securities" of the
Corporation (as defined in the 1940 Act), which means the
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affirmative vote of the lesser of (i) more than 50% of the outstanding shares
and (ii) 67% or more of the shares present at the meeting if more than 50% of
the outstanding shares are represented at the meeting in person or by proxy.
THE BOARD MEMBERS RECOMMEND THAT THE
SHAREHOLDERS VOTE IN FAVOR OF THIS PROPOSAL 1.
II. ELECTION OF DIRECTORS
(PROPOSAL 2)
It is proposed that the three persons currently serving as directors of the
Corporation (the "Directors") be re-elected and that a fourth person be newly
elected to the Board. The nominees for Director (the "Nominees") who are
proposed for election at the Annual Meeting are Gary U. Rolle, Peter J. Sodini
and Jon C. Strauss, each of whom is currently a Director, and Dr. James H.
Garrity.
The term of office of each person elected as a Director will be until the
next annual meeting and until his successor is elected and qualified (or until
such Director's earlier retirement, resignation, death or disqualification). The
Nominees have agreed to serve as Directors if elected. If any of the Nominees
should be unavailable for election at the time of the Annual Meeting (which is
not presently anticipated), the persons named as proxies may vote for another
person in their discretion.
The principal occupations and business experience for at least the last
five years of each Nominee and each executive officer of the Corporation are as
indicated in the table below.
NOMINEES AND EXECUTIVE OFFICERS INFORMATION
<TABLE>
<CAPTION>
CURRENT
POSITION WITH PRINCIPAL OCCUPATION
NAME, ADDRESS** AND AGE THE CORPORATION DURING THE PAST FIVE YEARS
----------------------- --------------- --------------------------
<S> <C> <C>
Gary U. Rolle (58)*............... President, Chairman, Executive Vice President and Chief
Director Investment Officer of Transamerica
Investment Services, Inc.; Director and
Chief Investment Officer of Transamerica
Occidental Life Insurance Company;
Director of Transamerica Investors, Inc.
Peter J. Sodini (58).............. Director Associate at Freeman Spogli & Co. (a
private investor); President, Chief
Executive Officer and Director of The
Pantry, Inc. (a supermarket); Director of
Pamida Holdings Corp. (a retail
merchandiser) and Buttrey Food and Drug
Co. (a supermarket).
Jon C. Strauss (59)............... Director President of Harvey Mudd College.
Previously Vice President and Chief
Financial Officer of Howard Hughes Medical
Institute; President of Worcester
Polytechnic Institute; Vice President and
Professor of Engineering at University of
Southern California.
Dr. James H. Garrity (60)......... None President of John Tracy Clinic and the
Tracy Family Hearing Center.
Susan A. Silbert (55)............. Vice President Senior Vice President of Transamerica
Investment Services, Inc.
Heidi Y. Hu (36).................. Vice President Vice President and Portfolio Manager of
Transamerica Investment Services, Inc.
since 1998. Previously Portfolio Manager
at Arco Investment Management Co.,
1994-1998; Analyst at Arco Investment
Management Co., 1989-1994.
</TABLE>
7
<PAGE> 11
<TABLE>
<CAPTION>
CURRENT
POSITION WITH PRINCIPAL OCCUPATION
NAME, ADDRESS** AND AGE THE CORPORATION DURING THE PAST FIVE YEARS
----------------------- --------------- --------------------------
<S> <C> <C>
Susan R. Hughes (43).............. Treasurer Vice President and Chief Financial Officer
of Transamerica Investment Services, Inc.
since 1997; Independent Financial
Consultant 1992-1997
Thomas M. Adams (64).............. Secretary Partner in the law firm of Lanning, Adams
& Peterson
</TABLE>
- ---------------
* Nominee who is an "interested person" (as defined in the 1940 Act) of the
Corporation or TIS. Mr. Rolle is an "interested person" by reason of his
positions with TIS.
** The mailing address for each Nominee and executive officer is 1150 South
Olive Street, Los Angeles, California 90015.
The principal occupations of the Nominees and executive officers for at
least the last five years have been with the employers as shown in the table
above, although in some cases they have held different positions with such
employers.
As of May 10, 1999, those shares of the Corporation that are known to be
beneficially owned by the Nominees and executive officers of the Corporation are
set forth on Appendix 2. Also set forth on Appendix 2, as of May 10, 1999, are
those shares of the Corporation known to be beneficially owned by the Directors
and executive officers of the Corporation as a group.
The Board of Directors met 4 times during the fiscal year ended March 31,
1999. Each Director attended at least 75% of such meetings. The Corporation has
a standing Audit Committee, which during the fiscal year ended March 31, 1999
was composed of Messrs. Sodini, Strauss and Cantlay (a former Director), which
is responsible for the selection of the Corporation's auditors and for the
monitoring of the audit process and its results. Messrs. Sodini and Strauss each
attended the one Audit Committee meeting held during the fiscal year ended March
31, 1999. The Corporation has a standing Corporate Responsibility Committee
composed of Messrs. Rolle, Strauss and Sodini, which reviews nominees for
appointment or election of directors. No meetings of the Corporate
Responsibility Committee were held during the fiscal year ended March 31, 1999.
The Corporation pays the Directors, other than those who are interested
persons of TIS, an annual fee of $1,500 plus $1,000 for each meeting attended.
The Corporation does not pay any pension or retirement benefits for its
Directors.
The following table sets forth the amount of the compensation paid to the
Directors (or deferred in lieu of current payment) by the Corporation during its
fiscal year ended March 31, 1999:
COMPENSATION TABLE
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION TOTAL COMPENSATION
NAME OF PERSON FROM CORPORATION FROM COMPLEX*
- -------------- ---------------------- ------------------
<S> <C> <C>
Donald E. Cantlay**............................ $3,500 $6,000
Richard N. Latzer**............................ -0- -0-
Jon C. Strauss................................. $5,750 $8,750
Gary U. Rolle.................................. -0- -0-
Peter J. Sodini................................ $5,750 $8,750
</TABLE>
- ---------------
* During the fiscal year ended March 31, 1999, each Director was also a member
of the Board of Transamerica Occidental's Separate Account Fund B and of
Transamerica Variable Insurance Fund, Inc. Mr. Rolle is also a director of
Transamerica Investors, Inc. These registered investment companies comprise
the "Fund Complex."
** Messrs. Cantlay and Latzer are no longer Directors.
8
<PAGE> 12
REQUIRED VOTE
The election of directors of the Corporation will be by a plurality of the
shares of the Corporation present at the Annual Meeting in person or by proxy.
Shares represented by duly-executed proxies will be voted for the election of
the persons named herein as Nominees, unless such authority has been withheld in
accordance with an instruction given by a shareholder to abstain from voting for
one or more Nominees on the form of proxy. If no instructions are given, the
proxy will be voted for such Nominees.
THE BOARD MEMBERS RECOMMEND A VOTE FOR THE ELECTION OF THE NOMINEES.
III. RATIFICATION OF ACCOUNTANTS
(PROPOSAL 3)
The Board of Directors has selected Ernst & Young LLP as the auditors for
the Corporation for the fiscal year ending March 31, 2000, subject to removal by
a majority of the outstanding voting securities of the Corporation. Upon the
reasonable request of any shareholder of the Corporation, representatives of
Ernst & Young LLP will attend the meeting, and will, as they see fit, make a
statement and/or respond to appropriate questions.
REQUIRED VOTE
The ratification of the selection of Ernst & Young LLP as the independent
public accountants for the Corporation will require a majority of votes cast at
the Annual Meeting in person or by proxy, if a quorum is present.
THE BOARD MEMBERS RECOMMEND THAT SHAREHOLDERS VOTE
FOR THE RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE CORPORATION.
ADDITIONAL INFORMATION
PROPOSALS OF SHAREHOLDERS
Shareholders wishing to submit proposals for inclusion in a Proxy Statement
for a shareholder meeting subsequent to the Annual Meeting, if any, should send
their written proposals to the Secretary of the Corporation, c/o Transamerica
Investment Services, Inc., at the address shown at the beginning of this Proxy
Statement, within a reasonable time before the solicitation of proxies for such
meeting. The timely submission of a proposal does not guarantee its inclusion.
DATE FOR RECEIPT OF SHAREHOLDERS' PROPOSALS FOR THE NEXT ANNUAL MEETING
It is anticipated that the Corporation's next annual meeting of
shareholders will be held in June 2000. Shareholder proposals must be received
by the Corporation before February 17, 2000 to be included in the Corporation's
proxy statement for the next annual meeting.
OTHER MATTERS TO COME BEFORE THE ANNUAL MEETING
No Board member is aware of any matters that will be presented for action
at the Annual Meeting other than the matters set forth herein. Should any other
matters requiring a vote of shareholders arise, the proxy in the accompanying
form will confer upon the person or persons entitled to vote the shares
represented by such proxy the discretionary authority to vote the shares as to
any such other matters in accordance with their best judgment in the interest of
the Corporation.
9
<PAGE> 13
ADJOURNMENT
In the event that sufficient votes in favor of any of the proposals set
forth in the Notice of the Annual Meeting of Shareholders are not received by
the time scheduled for the Annual Meeting, the persons named as proxies may
propose one or more adjournments of the Annual Meeting after the date set for
the original Annual Meeting to permit further solicitation of proxies with
respect to any such proposals. In addition, if, in the judgment of the persons
named as proxies, it is advisable to defer the action on one or more proposals,
the persons named as proxies may propose one or more adjournments of the Annual
Meeting. Any such adjournment will require the affirmative vote of a majority of
the votes cast on the question in person or by proxy at the session of the
Annual Meeting as permitted by the Corporation's By-Laws. The persons named as
proxies will vote in favor of any such adjournment those proxies which they are
entitled to vote in favor of any such proposals. They will vote against any such
adjournment those proxies required to be voted against any such proposals. The
costs of any additional solicitation and of any adjourned session will be borne
by Transamerica or its affiliates. Any proposals for which sufficient favorable
votes have been received by the time of the Annual Meeting will be acted upon
and such action will be final regardless of whether the Annual Meeting is
adjourned to permit additional solicitation with respect to any other proposal.
IMPORTANT -- WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT
IN THE ENCLOSED ADDRESSED ENVELOPE WHICH REQUIRES NO POSTAGE AND IS INTENDED FOR
YOUR CONVENIENCE. YOUR PROMPT RETURN OF THE ENCLOSED PROXY CARD MAY SAVE THE
NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS TO ENSURE A QUORUM AT THE ANNUAL
MEETING. IF YOU CAN ATTEND THE ANNUAL MEETING AND WISH TO VOTE YOUR SHARES IN
PERSON AT THAT TIME, YOU WILL BE ABLE TO DO SO.
10
<PAGE> 14
APPENDIX 1
BENEFICIAL OWNERS OF 5% OR MORE OF SHARES
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CORPORATION
------------------- -------------------- -----------
<S> <C> <C>
Transamerica life insurance companies....................... 479,575 shares 7.6%
1150 South Olive Street
Los Angeles, CA 90015
</TABLE>
11
<PAGE> 15
APPENDIX 2
SHARES OWNED BY DIRECTORS,
NOMINEES FOR DIRECTOR AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
NAME OF BENEFICIAL OWNER (# OF SHARES)
------------------------ --------------------
<S> <C>
Gary U. Rolle, Chairman and President....................... 0
Peter J. Sodini, Director................................... 0
Jon C. Strauss, Director.................................... 0
Dr. James H. Garrity, Nominee for Director.................. 0
</TABLE>
All directors and executive officers as a group beneficially owned 6,775
shares of the Corporation, which is less than 1% of the shares outstanding as of
May 10, 1999.
12
<PAGE> 16
APPENDIX 3
DIRECTORS, NOMINEES FOR DIRECTOR AND OFFICERS ASSOCIATED WITH TIS
<TABLE>
<CAPTION>
NAME POSITION WITH THE CORPORATION
- ---- -----------------------------
<S> <C>
Gary U. Rolle................................ President, Chairman, Director
Susan A. Silbert............................. Vice President
Heidi Y. Hu.................................. Vice President
Susan R. Hughes.............................. Treasurer
</TABLE>
13
<PAGE> 17
EXHIBIT A
MANAGEMENT AND INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this day of , 1999 by and between
TRANSAMERICA INCOME SHARES, INC., a Maryland corporation (hereinafter called the
"Fund"), and TRANSAMERICA INVESTMENT SERVICES, INC., a Delaware corporation
(hereinafter called the "Manager").
WHEREAS, the Fund proposes to engage in business as a closed-end management
investment company and is registered as such under the Investment Company Act of
1940; and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser for one or more investment companies and others; and
WHEREAS, the Fund desires to retain the Manager to render such services in
the manner and on the terms and conditions hereinafter set forth; and
WHEREAS, the Manager desires to perform such services in the manner and on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, this agreement
W I T N E S S E T H:
that in consideration of the foregoing and of the premises and covenants
hereinafter contained, the Fund and the Manager agree as follows:
1. The Fund hereby employs the Manager to provide investment
advisory, statistical and research facilities and services, to supervise
the composition of the Fund's portfolio and to determine the nature and
timing of changes therein and the manner of effectuating such changes,
subject to supervision of the Fund's Board of Directors and for the period
and on the terms set forth in this Agreement. The Manager hereby accepts
such employment and agrees to render the services and to assume the
obligations herein set forth, for the compensation herein provided.
2. The Manager shall:
(a) Furnish to the Fund research and statistical and other factual
information and reports with respect to securities held by the Fund
or which the Fund might purchase. It will also furnish to the Fund
such information as may be appropriate concerning developments which
may affect issuers of securities held by the Fund or which the Fund
might purchase or the businesses in which such issuers may be
engaged. Such statistical and other factual information and reports
shall include information and reports on industries, businesses,
corporations and all types of securities, whether or not the Fund
has at any time any holdings in such industries, businesses,
corporations or securities.
(b) Furnish to the Fund, from time to time, advice, information and
recommendations with respect to the acquisition, holding, or
disposal by the Fund of eligible securities.
(c) Furnish to the Fund necessary assistance in:
(i) The preparation of all reports now or hereafter required by
Federal or other laws.
(ii) The preparation of prospectuses, registration statements and
amendments thereto that may be required by Federal or other
laws or by the rule or regulation of any duly authorized
commission or administrative body. However, nothing herein
shall obligate the Manager to pay the costs of preparation,
printing, or mailing of prospectuses being used in connection
with sales of the Fund's shares or otherwise.
<PAGE> 18
(d) Furnish to the Fund at the Manager's expense, office space in the
offices of the Manager or in such other place or places as may be
agreed upon from time to time, and all necessary office facilities,
simple business equipment, supplies, utilities and telephone service
for managing the affairs and investments and keeping the general
accounts and records of the Fund (exclusive of the necessary records
of the transfer agent, registrar or custodian), and shall arrange,
if desired by the Fund, for members of the Manager's organization to
serve without compensation from the Fund as officers, directors or
employees of the Fund. Manager agrees to advance registration fees
in connection with initial Federal and state registration of Fund
shares and to assume sole responsibility for such fees unless and
until such shares are sold; provided, however, that registration
fees in connection with all subsequent Federal and other
registrations of Fund shares shall be paid by the Fund without any
advance of such fees from the Manager.
(e) Utilize the services of Transamerica Fund Sales, Inc. whenever
practicable to tender portfolio securities which the Fund owns and
wishes to tender to a company making an offer for those securities.
When Fund portfolio securities are tendered by Transamerica Fund
Sales, Inc., the Manager will arrange to receive the solicitation
fees, less expenses, received by Transamerica Fund Sales and will
deduct that net amount from the management fee payable by the Fund
to the Manager.
(f) In the performance of its duties hereunder the Manager may in its
discretion, purchase without additional cost to the Fund statistical
information and other services from other sources, including
affiliates of Transamerica Corporation, a Delaware corporation,
("Transamerica"). The Manager has provided the Fund with a conformed
copy of the Investment Research Agreement dated August 1, 1972
between the Manager and Transamerica Investment Research, Inc.
("Research") a subsidiary of Transamerica, pursuant to which (1)
Research provides the Manager with statistical and analytical
research and other information and reports with respect to the
economy, particular industries, and securities held by the Fund, to
the extent that such research or other information is sought on
behalf of the Fund, (2) as well as information concerning
developments affecting issuers, or the businesses thereof, of
securities held by the Fund or securities which the Fund might
purchase.
3. Except as otherwise expressly provided herein, the Fund assumes
and shall pay or cause to be paid all expenses of the Fund, including,
without limitation: (a) all costs and expenses incident to any public
offering of shares of the Fund, for cash or otherwise, including those
relating to the registration of shares under the Securities Act of 1933, as
amended, the qualification of shares of the Fund under state securities
laws, the printing or other reproduction and distribution of any
registration statement (and all amendments thereto) under the Securities
Act of 1933, the preliminary and final prospectuses included therein, and
any other necessary documents incident to any public offering, the
advertising of shares of the Fund, the appointment of a depositary or
forwarding agents to receive securities being tendered in exchange for
shares of the Fund, the services rendered by any securities dealers or
brokers, the review by the National Association of Securities Dealers, Inc.
of any underwriting arrangements, and the services of any evaluator of
securities exchangeable for shares of the Fund; (b) the charges and
expenses of any registrar and any custodian or depositary appointed by the
Fund for the safekeeping of its cash, portfolio securities and other
property; (c) the charges and expenses of auditors; (d) the charges and
expenses of any stock transfer or dividend agent or agents appointed by the
Fund; (e) broker's commissions chargeable to the Fund in connection with
portfolio securities transactions to which the Fund is a party; (f) all
taxes, including securities issuance and transfer taxes, and corporate fees
payable by the Fund to Federal, state or other governmental agencies; (g)
the cost and expense of engraving or printing of stock certificates
representing shares of the Fund; (h) fees involved in registering and
maintaining registrations of the Fund and of its shares with the Securities
and Exchange Commission and various states and other jurisdictions; (i) all
expenses of shareholders' and directors' meetings and of preparing,
printing and mailing proxy statements and quarterly, semi-annual and annual
reports to shareholders; (j) fees and travel expenses of directors who are
not "interested persons" (as defined in the Investment Company Act of 1940)
of the Fund; (k) all expenses incident to any dividend or distribution
program; (l) charges and
A-2
<PAGE> 19
expenses of legal counsel in connection with matters relating to the Fund,
including without limitation, legal services rendered in connection with
the Fund's corporate and financial structure and relations with its
shareholders, issuance of Fund shares, and registrations and qualifications
of securities under Federal, state and other laws; (m) association dues;
(n) interest payable on Fund borrowings; (o) fees and expenses incident to
the listing of the Fund shares on any stock exchange; and (p) postage.
4. For the services to be rendered, the Fund shall pay to the Manager
compensation at the annual rate of one-half (1/2) of one percent (1%) of
the value of the net assets of the Fund, calculated as hereinafter set
forth, commencing on the day following effectiveness hereof. Except as
hereinafter set forth, compensation under this Agreement shall be
calculated and accrued weekly by applying the annual rate to the net assets
of the Fund as of the close of the last business day of the week for which
the fee is being calculated and dividing the sum so computed by the number
of weeks in the fiscal year. At the request of the Manager, compensation
hereunder shall be calculated and accrued at more frequent intervals in a
manner consistent with the calculation of fees on a weekly basis. If the
contract becomes effective subsequent to the first day of a week or shall
terminate before the last day of a week, compensation for such weeks shall
be computed in a manner consistent with the calculation of the fees payable
on a weekly basis. Subject to the provisions of paragraph 5 hereof, the
accrued fees will be payable monthly as promptly as possible after
completion of the computations contemplated by paragraph 5 hereof.
5. (a) In the event the expenses of the Fund, including amounts
payable to the Manager pursuant to paragraph 4 hereof (but excluding
interest, taxes, brokerage fees and commissions payable by the Fund in
connection with the purchase or sale of portfolio securities, amounts paid
or payable to the Manager pursuant to clause (v) of this subparagraph (a),
and the following costs and expenses incident to the public offerings of
shares of the Fund contemplated by the prospectus (the "Prospectus")
forming a part of the Fund's registration statement (the "Registration
Statement") filed under the Securities Act of 1933 (No. 2-43188) in the
form in which it becomes effective under said Act: filing fees for the
registration and qualification of the Fund's shares under the Securities
Act of 1933 and the securities laws of various states, legal and auditing
fees and expenses incurred in the preparation and filing of all documents
incident to such registration and qualification, fees payable in connection
with the valuations described in the Prospectus of the securities described
under "List of Acceptable Securities" therein, Depositary and Forwarding
Agent fees incident to the exchange transaction described in the
Prospectus, fees payable to the Dealer Managers and Soliciting Dealers as
described in the Prospectus, the costs of printing the Registration
Statement, the preliminary and final prospectuses forming a part thereof,
the Underwriting Agreement and Dealer Managers' Agreements filed as
exhibits to the Registration Statement, or any blue sky surveys or
memoranda incident to the offerings to be made by the Prospectus, fees
payable to the National Association of Securities Dealers, Inc. in
connection with the offerings described in the Registration Statement, and
the costs of lawfully advertising the offerings described in the
Registration Statement prior to the effective date thereof) for any fiscal
year ending on a date on which this Agreement is in effect exceed one and
one-half percent (1 - 1/2%) of the first thirty million dollars
($30,000,000) of the average net assets of the Fund, plus one percent (1%)
of the average net assets of the Fund in excess of $30,000,000, in each
case as computed below, the Manager will pay such excess to the Fund. Such
expense limitation shall be computed and settlements made monthly as
follows:
(i) Not later than the fifth business day after the end of each
month ending on a day on which this Agreement is in effect, there shall
be computed, on an accrual basis, all of the Fund's expenses which are
includable within the expense limitation described in this subparagraph
(a), for the period commencing with the first day of the then current
fiscal year of the Fund and ending on the last day of the month just
ended. The amount of such expenses shall then be annualized based upon
the number of months then remaining in such fiscal year. Such annualized
amount is hereinafter in this paragraph 5 called "Actual Expenses."
(ii) The amount of the maximum annual expenses of the Fund, as set
forth in this paragraph 5, shall then be computed, based upon the
average of all of the valuations of the net assets of the Fund as of the
close of business on the last day of each week within a completed month
of the then current
A-3
<PAGE> 20
fiscal year of the Fund. Such computation is hereinafter in this
paragraph 5 called "Maximum Annual Expenses."
(iii) There shall next be computed the sum of amounts, if any,
previously deducted from the Manager's monthly fee plus amounts, if any,
previously paid by the Manager to the Fund, in each case in accordance
with the provisions of clause (iv) of this subparagraph (a), during the
period commencing with the second month of the then current fiscal year
of the Fund and ending with the month just ended; there shall be
deducted therefrom the sum of amounts, if any, previously paid by the
Fund to the Manager during the same period in accordance with the
provisions of clause (v) of this subparagraph (a). The net amount
remaining, if any, is hereinafter in this paragraph 5 called the "Net
Credit."
(iv) For any month that Actual Expenses exceed Maximum Annual
Expenses, the difference between (A) one-twelfth (1/12) of such excess,
multiplied by the number of completed months within the then current
fiscal year of the Fund, and (B) Net Credit shall be deducted from the
next monthly fee payable to the Manager. If the amount of such fee is
not sufficient to cover the entire amount to be deducted, the Manager
shall promptly pay to the Fund the difference.
(v) For any month that the sum of Maximum Annual Expenses plus Net
Credit, if any, exceeds Actual Expenses, the Fund will pay to the
Manager the lesser of Net Credit or the amount of such excess at the
time of payment to the Adviser of its monthly fee.
(vi) As promptly as possible after the end of a fiscal year of the
Fund ending on a date on which this Agreement is in effect, there shall
be computed all of the Fund's expenses for such fiscal year which are
includable within the expense limitation described in this subparagraph
(a). If the amount thereof, reduced by the amount of Net Credit, if any,
existing in the last month of such fiscal year, after settlements made
during such month by virtue of the provisions of clauses (iv) or (v) of
this subparagraph (a), exceeds one and one-half percent (1 - 1/2%) of
the first thirty million dollars ($30,000,000) of the average net assets
of the Fund, plus one percent (1%) of the average net assets of the Fund
in excess of such $30,000,000, in each case computed on the basis of the
average of all of the valuations of the net assets of the Fund as of the
close of business on the last day of each week ending within such fiscal
year, the Manager shall pay the amount of such excess to the Fund
promptly, and in all events prior to the publication of the annual
report of the Fund for such fiscal year. In the same manner, should such
computation show that the Fund owes money to the Manager, such amount
shall be promptly paid by the Fund to the Manager.
(b) If, for any fiscal year of the Fund ending on a date on which
this Agreement is in effect, the expenses of the Fund which are
includable within the expense limitation described in subparagraph (a)
of this paragraph 5, and which are to be paid by the Fund after
application of the limitation calculation in this subparagraph (a) of
this paragraph 5 exceed twenty-five percent (25%) of the gross income of
the Fund for such fiscal year, the Manager will pay the amount of such
excess to the Fund promptly and in all events prior to the publication
of the Fund's annual report for such fiscal year. For purposes of this
subparagraph (b), "gross income of the Fund" shall include, but not be
limited to, gains from the sale of securities, without offset or
deduction for losses from the sale of securities, unpaid interest on
debt securities in the Fund's portfolio, accrued to and including the
last day of such fiscal year, and dividends declared but not paid on
equity securities in the Fund's portfolio, the record dates for which
fall on or prior to the last day of such fiscal year.
6. The services of the Manager to the Fund are not to be deemed
exclusive, and the Manager shall be free to engage in any other business or
to render similar services to others so long as its services hereunder be
not impaired thereby. The Manager assumes no responsibility under this
Agreement other than to render the services called for hereunder in good
faith, and shall not be responsible for any action of the Board of
Directors of the Fund, or any committee thereof, in the following or
declining to follow any advice or recommendation of the Manager. Nothing in
this Agreement shall limit or restrict the right of any director, officer
or employee of the Manager to engage in any other business or to devote his
time
A-4
<PAGE> 21
and attention in part to the Management or other aspects of any other
business, whether of a similar or dissimilar nature.
7. This Agreement shall remain in effect for two years from the date
hereof, unless sooner terminated as hereinafter provided. This Agreement
shall continue in effect from year to year thereafter provided it is
approved annually by vote of a majority of the outstanding voting
securities of the Fund or by vote of the Board of Directors of the Fund and
by a majority of the Directors of the Fund who are not parties to this
Agreement or "interested persons" (as defined in the Investment Company Act
of 1940) of any party to this Agreement, which vote must be cast in person
at a meeting called for the purpose of voting on approval of the terms of
this Agreement and its continuance; provided, however, that (a) the Fund
may, at any time and without the payment of any penalty, terminate this
Agreement upon sixty days written notice to the Manager either by majority
vote of the Board of Directors of the Fund or by the vote of a majority of
the outstanding voting securities of the Fund; (b) this Agreement shall
immediately terminate in the event of its assignment (within the meaning of
the Investment Company Act of 1940) unless such automatic termination shall
be prevented by an exemptive order of the Securities and Exchange
Commission; and (c) the Manager may terminate this Agreement without
payment of penalty on sixty days written notice to the Fund. Any notice
under this Agreement shall be given in writing, addressed and delivered, or
mailed postpaid, to the other party at the principal office of such party.
8. This Agreement and any amendment hereto shall become effective
when approved by a majority of (a) the outstanding voting securities of the
Fund and (b) the Directors of the Fund who are not parties to this
Agreement or "interested persons" (as defined in the Investment Company Act
of 1940) of any such party, whichever occurs later.
9. For purposes of this Agreement, a "majority of the outstanding
voting securities of the Fund" shall be determined in accordance with the
applicable provisions of the Investment Company Act of 1940.
10. This Agreement shall be construed in accordance with the laws of
the State of California and the applicable provisions of the Investment
Company Act of 1940. To the extent applicable law of the State of
California, or any of the provisions herein, conflict with applicable
provisions of the Investment Company Act of 1940, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in Los Angeles, California.
<TABLE>
<S> <C>
ATTEST: TRANSAMERICA INCOME SHARES, INC.
- --------------------------------------------------- By -----------------------------------------------------
Secretary President
ATTEST: TRANSAMERICA INVESTMENT SERVICES, INC.
- --------------------------------------------------- By -----------------------------------------------------
Secretary Vice President
</TABLE>
A-5
<PAGE> 22
- --------------------------------------------------------------------------------
TRANSAMERICA INCOME SHARES, INC.
1150 South Olive Street
Los Angeles, CA 90015
The undersigned hereby appoints Gary U. Rolle and Thomas M. Adams, and each of
them, as proxies of the undersigned (the "Proxies"), each with full power to
appoint his substitute, and hereby authorizes each of them to represent and
vote all the shares of common stock of Transamerica Income Shares, Inc. (the
"Corporation") held of record as of May 10, 1999 at the Annual Meeting of
Shareholders to be held at 1150 South Olive Street, Los Angeles, CA 90015 on
June 16, 1999, at 11:00 a.m. (Pacific Time), and at any and all of the
adjournment(s) or postponement(s) thereof.
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF THE CORPORATION.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR APPROVAL OF THE NEW INVESTMENT ADVISORY AGREEMENT, FOR ELECTION OF
THE NOMINEES AND FOR RATIFICATION OF THE SELECTION OF THE INDEPENDENT PUBLIC
ACCOUNTANTS. In their discretion, the Proxies are each authorized to vote upon
such other business as may properly come before the meeting and any
adjournments or postponements of the meeting unless otherwise prohibited by the
undersigned. A shareholder wishing to vote in accordance with the Board
of Directors' recommendation need only sign and date this proxy and return it
in the envelope provided.
The undersigned hereby acknowledge(s) receipt of a copy of the accompanying
Notice of the Annual Meeting of Shareholders and the Proxy Statement with
respect thereto and hereby revoke(s) any proxy heretofore given. The proxy may
be revoked at any time before it is exercised.
Note: Please sign exactly as the name(s) appear(s) on this proxy card. When
signing as attorney, executor, administrator, trustee, or guardian, please
give full title as such. If signing for a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
_______________________________________
_______________________________________
_______________________________________
_______________________________________
_______________________________________
PLEASE VOTE, DATE AND SIGN ON REVERSE AND PROMPTLY RETURN THIS PROXY
IN THE ENCLOSED ENVELOPE.
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<PAGE> 23
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<S> <C>
TRANSAMERICA INCOME SHARES, INC. PLEASE MARK [X]
YOUR VOTES AS
INDICATED IN
THIS EXAMPLE
1. To approve the new investment advisory 2. To elect as directors the nominees listed below: FOR ABSTAIN
agreement between the Corporation and NOMINEES: GARY U. ROLLE, PETER J. SODINI, JON C. STRAUSS, [ ] [ ]
Transamerica Investment Services, Inc. DR. JAMES H. GARRITY
INSTRUCTION: To abstain from voting for any individual nominee, write
FOR AGAINST ABSTAIN that nominees's name on the space provided below.
[ ] [ ] [ ]
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3. To ratify the election by the Board of Directors of Ernst & Young LLP as Mark box at right if an address change or [ ]
independent public accountants for the fiscal year ending March 31, 2000. comment has been noted on the reverse
side of this card
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Please sign exactly as name appears to the left.
When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as
such. If signing for a corporation, please sign in
full corporate name by President or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
RECORD DATE SHARES:
Dated , 1999
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Shareholder sign here
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Co-owner signs here
Please be sure to sign and date proxy.
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