NB LLC,
605 Third Avenue, New York, New York 10158, is currently a wholly owned
subsidiary of NB Holdings. As of the closing of the Proposed Acquisition, NBG
will have a direct or indirect controlling interest in NB LLC (or New NB LLC)
through New NB Holdings. NB LLC is a SEC-registered investment adviser that
provides sub-advisory services to the Funds and to other registered investment
companies, as well as to high-net-worth individuals, unregistered investment
companies, corporations, and institutional investors. If formed, New NB LLC will
assume these responsibilities and NB LLCs SEC investment adviser
registration.
LBAM, 200
South Wacker Drive, Suite 2100, Chicago, Illinois 60601 is currently a wholly
owned subsidiary of LBHI. As of the closing of the Proposed Acquisition, NBG
will have an indirect controlling interest in LBAM, through Fixed Income
Holdings. LBAM is an SEC-registered investment adviser that provides
sub-advisory services to Income Opportunity and to other registered investment
companies, as well as to high-net-worth individuals, unregistered investment
companies, corporations, and institutional investors.
NB
Holdings, 605 Third Avenue, 2nd Floor, New York, New York 10158, is currently a
wholly owned subsidiary of LBHI and the parent and 100% owner of NB Management
and NB LLC. At the closing of the Proposed Acquisition, NB Holdings will sell
all or substantially all of its assets, including all of the outstanding equity
interests in NB LLC, to New NB Holdings. For 69 years, NB Holdings and its
subsidiaries and predecessors have provided clients with a broad range of
investment products, services and strategies for individuals, families, and
taxable and non-taxable institutions. From and after the closing of the Proposed
Acquisition, substantially all of these businesses will be carried out by New NB
Holdings and its subsidiaries.
As
discussed above, NBSH, 605 Third Avenue, 2nd Floor, New York, New York 10158, is
a newly formed entity organized by key members of Neuberger Bermans senior
management for the purpose of acquiring the Acquired Businesses. At or prior to
the closing of the Proposed Acquisition, NBSH will assign the Purchase Agreement
to NBG. NBG will directly or indirectly own New NB Management, NB LLC (or New NB
LLC) and LBAM. Upon the closing of the Proposed Acquisition, NBGs ownership
will be divided between LBHI, certain affiliates of LBHI and, directly or
indirectly, the Management Members. The Management Members will own a majority
interest in NBG and indirectly control New NB Management, NB LLC (or New NB LLC)
and LBAM. Substantially all of the interests and assets of certain other
affiliated entities of NB Holdings are also being purchased by NBG as part of
the Proposed Acquisition.
LBHI, a
global investment bank, is currently the parent of LBAM and NB Holdings, which
is in turn the parent of NB Management and NB LLC. Founded in 1850, LBHI
historically had, until recently, maintained leadership positions in equity and
fixed-income sales, trading and research, investment banking, private equity,
and private client services. LBHIs address is 745 Seventh Avenue, New York, New
York 10019. Commencing on September 15, 2008, LBHI and certain of
9
its affiliates filed voluntary
petitions for bankruptcy protection under chapter 11 of the US Bankruptcy Code.
NB Holdings, NB Management, NB LLC and LBAM are separate legal entities and were
not included in LBHIs bankruptcy filing. Copies of documentation relating to
the LBHI bankruptcy cases, including the Proposed Acquisition, are available on
the internet at http://chapter11.epiqsystems.com/lehman or upon request at
866-841-7867.
Exhibit B
to this Proxy Statement provides information regarding the principal executive
officers and directors of NB Management, NB LLC and LBAM. These principal
executive officers and directors are anticipated to have the same positions with
New NB Management, NB LLC (or New NB LLC) and LBAM.
New Management and Sub-Advisory
Agreements
NB
Management serves as investment manager to each Fund. NB LLC serves as
sub-adviser to each Fund and LBAM serves as an additional sub-adviser to Income
Opportunity. The Proposed Acquisition has been deemed to result in an
assignment of each Funds existing Management Agreement and Sub-Advisory
Agreement (the Existing Agreements) under the 1940 Act. As required by the
1940 Act, each Funds Existing Agreements provide for their automatic
termination in the event of an assignment, and each will terminate upon the
consummation of the Proposed Acquisition. Accordingly, stockholders of each Fund
are being asked to approve a new Management Agreement (collectively, the New
Management Agreements) and a new Sub-Advisory Agreement (collectively, the New
Sub-Advisory Agreements, and, together with the New Management Agreements, the
New Agreements) with the Advisers that are identical in all material respects
to the Existing Agreements in order to permit the investment manager or the
sub-advisers to provide or continue to perform the advisory and sub-advisory
services on the same terms and with the same compensation structure as are
currently in effect. For each Fund, the Proposal to approve a New Sub-Advisory
Agreement is subject to the approval of the Proposal to approve the applicable
New Management Agreement.
In case
the stockholders of a Fund do not approve the New Agreements before the Proposed
Acquisition is completed, the Board has approved New NB Managements provision
of advisory services, and NB LLCs (or New NB LLCs) and LBAMs provision of
sub-advisory services, under interim management and sub-advisory agreements
(together, Interim Agreements) pending approval of the New Agreements by
stockholders of such Fund. Compensation earned by the Advisers under the Interim
Agreements would be held in an interest-bearing escrow account pending
stockholder approval of the New Agreements. If stockholders approve the New
Agreements within 150 days from the termination of the Existing Agreements, the
amount held in the escrow account, including interest, will be paid to the
Advisers, as appropriate. If stockholders of the applicable Funds do not approve
the New Agreements, the Advisers will be paid the lesser of the costs incurred
in performing their services under the Interim Agreements or the total amount in
the escrow account, including interest earned. If at the end of 150 days
following termination of a Funds
10
Existing Agreements the applicable
Funds stockholders still have not approved the New Agreements, the applicable
Directors would take such actions as they deem to be in the best interests of
the Funds and their stockholders, which may include negotiating a new management
agreement and/or applicable new sub-advisory agreement with an advisory
organization selected by the Directors or making other arrangements.
PROPOSAL
1:
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(ALL FUNDS) APPROVAL OF
THE NEW MANAGEMENT AGREEMENTS
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Stockholders of each Fund are being asked to approve a New Management
Agreement between each Fund and New NB Management whereby New NB Management will
provide all advisory services that NB Management currently provides pursuant to
the Funds existing Management Agreement. As described above, each Funds
existing Management Agreement will terminate upon consummation of the Proposed
Acquisition. Therefore, approval of the New Management Agreements is sought so
that the management of each Fund can continue without interruption following the
Proposed Acquisition. If the Proposed Acquisition is not completed for any
reason, the existing Management Agreements will continue in effect.
Board Approval and
Recommendation
The
Directors who were all present in person at a meeting held on December 17, 2008,
including the Directors who are not interested persons of each Fund or of NB
Management (as defined in the 1940 Act) (Independent Directors), unanimously
approved the New Management Agreement for each applicable Fund and unanimously
recommended that stockholders approve the New Management Agreement. A summary of
the Boards considerations is provided below in the section entitled Evaluation
by the Funds Board.
Terms of the Existing and New
Management Agreements
The form
of the New Management Agreement is attached as Exhibit C to this Proxy Statement
and the description of terms in this section is qualified in its entirety by
reference to Exhibit C. Exhibit C-1 shows the date of each existing Management
Agreement, the date when the existing Management Agreement was last approved by
the Board of each Fund, and the date when the existing Management Agreement was
last submitted to a vote of stockholders of each Fund, including the purpose of
such submission.
The terms
of each New Management Agreement are identical to those of the respective
existing Management Agreement, except for the dates of execution and termination
and the identity of the investment manager. The management fee rates under each
New Management Agreement are identical to the management fee rates under the
respective existing Management Agreement. Any contractual arrangement in place
as of December 17, 2008 whereby NB Management has agreed to waive fees of
certain Funds by a specified annual rate will be continued by New NB Management
upon completion of the Proposed Acquisition. For at least two
11
years following the Proposed
Acquisition, no voluntary arrangements to waive fees of a Fund will be changed
by New NB Management so as to increase the expenses a Fund would pay without the
prior approval of the Board. NB Management has advised the Board that it does
not anticipate that the Proposed Acquisition will result in any reduction in the
quality of advisory services now provided to the Funds by NB Management or have
any adverse effect on the ability of NB Management or New NB Management to
fulfill its obligations to the Funds.
The
following discussion applies to both the existing Management Agreement and the
New Management Agreement for each Fund. Accordingly, all references in this
section to the Management Agreements and NB Management equally apply to the New
Management Agreements and New NB Management, respectively.
Investment Management Services
.
NB Management currently serves as
the investment manager to each Fund pursuant to the Management Agreements with
each Fund. In relation to providing investment advisory and portfolio management
services, the Management Agreements provide that NB Management will (1) obtain
and evaluate information relating to the economy, industries, businesses,
securities markets and securities, (2) formulate a continuing program for the
investment of each Funds assets consistent with its investment objectives,
policies and restrictions, and (3) determine from time to time securities to be
purchased, sold, retained or lent by the Funds and implement those decisions,
including the selection of entities through which such transactions are to be
effected. The Management Agreements permit NB Management to effect securities
transactions on behalf of the Funds through associated persons of NB Management
after consummation of the Proposed Acquisition. The Management Agreements also
specifically permit NB Management to compensate, through higher commissions,
brokers and dealers who provide investment research and analysis to the Funds,
subject to obtaining best execution. Exhibit D to this Proxy Statement sets
forth information regarding commissions paid by the Funds to affiliated brokers
during the most recent fiscal year.
Expenses
.
NB Management pays all salaries, expenses, and fees of the
officers, Directors, and employees of the Funds who are officers, directors, or
employees of NB Management. Each Fund bears the expenses of its operation
including the costs associated with: custody, stockholder servicing, stockholder
reports, pricing and portfolio valuation, communications, legal and accounting
fees, Directors fees and expenses, stockholder meetings, bonding and insurance,
brokerage commissions, taxes, trade association fees, nonrecurring and
extraordinary expenses, organizational expenses, offering expenses for common
stock, expenses of listing on a national securities exchange, offering expenses
for any preferred stock, expenses incident to any dividend reinvestment plan and
interest as may accrue on borrowings of the Funds.
Advisory Fee
.
Each Fund pays NB Management an advisory fee based on the
Funds average daily managed assets. Managed assets means the total assets of a
Fund, minus its liabilities other than the aggregate indebtedness entered into
for purposes of leverage. Exhibits E-1 and E-2 to this Proxy Statement set forth
the rate of compensation and aggregate amount of advisory fees paid by each Fund
12
during the last fiscal year as well as
the amount of administration fees paid to NB Management pursuant to
administration agreements with the Funds. The Directors of each Fund have voted
to approve new administration agreements, identical in all material respects to
the current agreements described below, to take effect following the completion
of the Proposed Acquisition. If the Proposed Acquisition is not completed for
any reason, the current administration agreements will remain in effect for each
Fund.
Pursuant
to an administration agreement with each Fund, NB Management provides certain
stockholder-related services not furnished by the Funds stockholder servicing
agent or third party investment providers and assists in the development and
implementation of specified programs and systems to enhance overall stockholder
servicing capabilities. NB Management solicits and gathers stockholder proxies,
performs services connected with the qualification of Fund shares for sale in
various states, and furnishes other services necessary to the operation of the
Funds. Upon consummation of the Proposed Acquisition, New NB Management or
another NBG subsidiary will provide the same services as NB Management under a
substantially similar administration agreement.
NB
Management has entered into contractual undertakings to waive a portion of the
advisory fees for each Fund. NB Management has also entered into voluntary
arrangements to waive certain fees of each Fund. Any contractual arrangement in
place as of December 17, 2008 whereby NB Management has agreed to waive fees of
certain Funds by a specified annual rate will be continued by New NB Management
upon completion of the Proposed Acquisition. For at least two years following
the Proposed Acquisition, no voluntary arrangements to waive fees of a Fund will
be changed by New NB Management so as to increase the expenses a Fund would pay
without the prior approval of the Board. NB Management recently announced that
it would voluntarily extend the contractual advisory fee waivers currently in
place for each Fund for an additional one-year period. Exhibit F to this Proxy
Statement sets out the terms of the current contractual and voluntary
arrangements.
Retention of Sub-Adviser
.
As noted in Exhibit C, the
Management Agreements provide that, subject to NB Management obtaining the
initial and periodic approvals required under Section 15 of the 1940 Act, NB
Management may retain a sub-adviser, at NB Managements own cost and expense, to
make investment recommendations and research information available to NB
Management. The Management Agreements further provide that the retention of a
sub-adviser in no way reduces the responsibilities of NB Management under the
Management Agreements and NB Management is responsible to each Fund for all acts
and omissions of the sub-adviser to the same extent that NB Management is
responsible for its own acts and omissions. See Limitation of Liability,
below.
Services to Other Clients
.
The Management Agreements do not
limit the freedom of NB Management or any of its affiliates to render investment
management and administrative services to other investment companies, to act as
investment
13
adviser or investment counselor to
other persons, firms or corporations, or to engage in other business activities.
NB Management acts as investment manager or sub-adviser to other registered
investment companies with similar investment objectives and policies as certain
of the Funds. Exhibit G to this Proxy Statement sets forth the name, asset size
and the rate of compensation received by NB Management for providing advisory or
sub-advisory services to these other funds.
Limitation of Liability
.
Neither NB Management nor any
director, officer or employee of NB Management performing services pursuant to
the Management Agreements shall be liable for any error of judgment or mistake
of law or any loss unless due to willful misfeasance, bad faith, gross
negligence or reckless disregard of their duties under the Management
Agreements.
Indemnification
.
The Management Agreements provide that the Funds indemnify NB
Management against any and all expenses incurred investigating or defending any
claims for losses or liabilities not resulting from negligence, disregard of its
obligations and duties under the Management Agreements or disabling conduct by
NB Management. Indemnification will be made only after (1) a final decision on
the merits by a court or other regulatory body that NB Management was not liable
or (2) in absence of such a decision a reasonable determination based on a
review of the facts that NB Management was not liable by (i) the vote of a
majority of a quorum of Independent Directors of the Fund or (ii) an independent
legal counsel in a written opinion.
Term
of Agreement
.
Each existing Management Agreement provides that it will remain in
effect until October 31, 2009. Each New Management Agreement will provide that
it will remain in effect for an initial term of two years. Each Management
Agreement will remain in effect from year to year thereafter if approved
annually by (i) the vote of the holders of a majority of the outstanding voting
securities (as defined in the 1940 Act) of each Fund, or by the Board, and also
by (ii) the vote, cast in person at a meeting called for such purpose, of a
majority of the Independent Directors.
Amendment or Assignment
.
Any amendment must be in writing
signed by the parties to the Management Agreement and is not effective unless
authorized for each Fund (i) by resolution of the Board, including the vote or
written consent of a majority of the Independent Directors, and (ii) by a vote
of a majority of the outstanding voting securities (as defined in the 1940 Act)
of the Fund. The Management Agreements provide that they will terminate
automatically and immediately in the event of an assignment (as defined in the
1940 Act).
Termination
.
The Management Agreements may be terminated, without penalty,
at any time by either party to the Agreement upon sixty days prior written
notice to the other party; provided that in the case of termination by a Fund,
the termination has been authorized (i) by resolution of the Board, including
the vote or written consent of a majority of the Independent Directors, or (ii)
by a vote of a majority of the outstanding voting securities (as defined in the
1940 Act) of the Fund.
14
Differences between the Existing and
New Management Agreements
The only
terms of the New Management Agreements that will be different from the terms of
the existing Management Agreements are the dates of execution and termination,
as well as the entity providing the services.
THE DIRECTORS OF EACH FUND
UNANIMOUSLY RECOMMEND
THAT STOCKHOLDERS OF EACH FUND
VOTE
FOR PROPOSAL 1.
PROPOSAL 2:
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(ALL
FUNDS) APPROVAL OF A NEW SUB-ADVISORY AGREEMENT BETWEEN NEW NB MANAGEMENT
AND NB LLC (OR NEW NB LLC)
|
Stockholders of each Fund are being asked to approve a New Sub-Advisory
Agreement with respect to their Fund between New NB Management and NB LLC (or
New NB LLC). As described above, each existing Sub-Advisory Agreement will
automatically terminate upon consummation of the Proposed Acquisition.
Therefore, approval of the New Sub-Advisory Agreements is sought so that the
management of each Fund can continue without interruption following the Proposed
Acquisition. If the Proposed Acquisition is not completed for any reason, the
existing Sub-Advisory Agreements will continue in effect. A discussion of the
Boards approval and recommendations and the terms of the existing and new
sub-advisory agreements in connection with Proposal 2 is set out
below.
PROPOSAL 3:
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(INCOME OPPORTUNITY ONLY) - APPROVAL OF A NEW SUB-ADVISORY
AGREEMENT BETWEEN NEW NB MANAGEMENT AND
LBAM
|
Stockholders of Income Opportunity are being asked to approve a New
Sub-Advisory Agreement with respect to their Fund between New NB Management and
LBAM. As described above, each existing Sub-Advisory Agreement will
automatically terminate upon consummation of the Proposed Acquisition.
Therefore, approval of the New Sub-Advisory Agreements is sought so that the
management of the Fund can continue without interruption following the Proposed
Acquisition. If the Proposed Acquisition is not completed for any reason, the
existing Sub-Advisory Agreements will continue in effect. LBAM currently
provides services to Income Opportunity pursuant to a Sub-Advisory Agreement
dated November 3, 2003 and an Assignment and Assumption Agreement, dated April
1, 2008. Stockholders of the Fund are solely being asked to approve a New
Sub-Advisory Agreement and not a new Assignment and Assumption Agreement. A
discussion of the Boards approval and recommendations and the terms of the
existing and new sub-advisory agreements in connection with Proposal 3 is set
out below.
15
Board Approvals and Recommendations
in Connection with Proposals 2 and 3
The
Directors who were all present in person at a meeting held on December 17, 2008,
including the Independent Directors, unanimously approved the New Sub-Advisory
Agreement for each applicable Fund and unanimously recommended that stockholders
approve the New Sub-Advisory Agreement for each Fund. A summary of the Boards
considerations is provided below in the section entitled Evaluation by the
Funds Board.
Terms of the Existing and New
Sub-Advisory Agreements in Connection with Proposals 2 and 3
The forms
of the New Sub-Advisory Agreements (including the names of the Funds to which
they apply) are attached as Exhibit H to this Proxy Statement and the
description of terms in this section is qualified in its entirety by reference
to Exhibit H. Exhibit H-1 shows the date of each existing Sub-Advisory
Agreement, the date when the existing Sub-Advisory Agreement was last approved
by the Board with respect to each Fund, and the date when the existing
Sub-Advisory Agreement was last submitted to a vote of stockholders of each
Fund, including the purpose of such submission.
The terms
of each New Sub-Advisory Agreement are identical to those of the respective
existing Sub-Advisory Agreement, except for the dates of execution and
termination. The Funds do not pay any fees under either Sub-Advisory Agreement.
All payments to NB LLC or LBAM, as applicable, pursuant to a Sub-Advisory
Agreement with respect to any Fund are made by NB Management. However, the bases
for fees to be paid by NB Management under each New Sub-Advisory Agreement are
identical to the bases for fees under the respective existing Sub-Advisory
Agreement. NB Management, NB LLC and LBAM have advised the applicable Board that
they do not anticipate that the Proposed Acquisition will result in any
reduction in the quality of sub-advisory services now provided to the Funds or
have any adverse effect on the ability of NB LLC (or New NB LLC) and LBAM to
fulfill its obligations under the New Sub-Advisory Agreements.
The
following discussion applies to both the existing Sub-Advisory Agreement and the
New Sub-Advisory Agreement for each Fund. Accordingly, all references in this
section to the Sub-Advisory Agreement equally apply to the New Sub-Advisory
Agreement.
Sub-Advisory Services
.
NB Management, with respect to each
Fund, retains NB LLC and, for Income Opportunity, also retains LBAM. Each of NB
LLC and LBAM provides similar services to NB Management for California
Intermediate, Dividend Advantage, Income Opportunity, Intermediate Municipal and
New York Intermediate. These Sub-Advisory Agreements provide that NB LLC or
LBAM, as applicable, will furnish to NB Management, upon reasonable request, the
same type of investment recommendations and research that NB LLC or LBAM, from
time to time, provides to its employees for use in managing client accounts. In
this
16
manner, NB Management expects to have
available to it, in addition to research from other professional sources, the
capability of the research staff of NB LLC and LBAM. This staff consists of
numerous investment analysts, each of whom specializes in studying one or more
industries, under the supervision of the Chief Investment Officer of each
sub-adviser, who is also available for consultation with NB
Management.
Sub-Advisory Fee
.
The Sub-Advisory Agreements provide
that NB Management will pay for the services rendered based on the direct and
indirect costs to NB LLC or LBAM, as the case may be, in connection with those
services. Exhibit I to this Proxy Statement sets forth the aggregate amount of
sub-advisory fees paid by NB Management with respect to each applicable Fund
during its last fiscal year. LBAM also serves as a sub-adviser for one other
registered investment company advised by NB Management. Exhibit J to this Proxy
Statement sets forth the name, asset size and the rate of compensation received
by LBAM for providing sub-advisory services to this other fund.
Limitation of Liability
.
Neither NB LLC nor LBAM is liable
for any act or omission or any loss suffered by any Fund or any Funds
stockholders under the Sub-Advisory Agreements unless due to willful
misfeasance, bad faith, gross negligence or reckless disregard of its duties
under the Sub-Advisory Agreements.
Term
of Agreement
.
Each existing Sub-Advisory Agreement provides that it will remain in
effect until October 31, 2009. Each New Sub-Advisory Agreement will provide that
it will remain in effect for an initial term of two years. Each Sub-Advisory
Agreement will remain in effect from year to year thereafter if approved
annually by (i) the vote of the holders of a majority of the outstanding voting
securities (as defined in the 1940 Act) of each Fund, or by the Board, and also
by (ii) the vote, cast in person at a meeting called for such purpose, of a
majority of the Independent Directors.
Termination
.
The Sub-Advisory Agreements may be terminated, without
penalty, at any time by the Funds, NB Management, NB LLC or LBAM, as applicable,
upon sixty days prior written notice to the other parties; provided that in the
case of termination by any Fund, the termination has been authorized (i) by
resolution of the Board, including the vote or written consent of a majority of
the Independent Directors, or (ii) by a vote of a majority of the outstanding
voting securities (as defined in the 1940 Act) of the Fund. Furthermore, the
Sub-Advisory Agreements also terminate automatically with respect to each Fund
in the event of an assignment (as defined in the 1940 Act) or if the Management
Agreement terminates with respect to that Fund.
Differences between the Existing and
New Sub-Advisory Agreements
The only
terms of each New Sub-Advisory Agreement that will be different from the terms
of the corresponding existing Sub-Advisory Agreement are the dates of execution
and termination.
17
THE DIRECTORS OF EACH APPLICABLE FUND
UNANIMOUSLY
RECOMMEND THAT STOCKHOLDERS OF EACH APPLICABLE FUND
VOTE FOR PROPOSAL 2 AND PROPOSAL
3.
EVALUATION BY THE FUNDS
BOARD
Board Meetings and Considerations of
the New Agreements
The
Directors of each Fund discussed the Proposed Acquisition on December 17, 2008.
Prior to the submission of the NBSH bid to public auction, NB Management met
telephonically with the Independent Directors to brief them on the Proposed
Acquisition. Following the public auction wherein NBSH was determined to be the
successful bidder, the Independent Directors again met telephonically with NB
Management to obtain additional information about the Proposed Acquisition. The
Independent Directors, with the assistance of independent counsel, prepared due
diligence requests that were presented to NB Management and appointed a Task
Force of Independent Directors to lead the due diligence effort (the Task
Force).
NB
Management provided written responses to the due diligence requests. After
extensive review and analysis and discussions during a telephonic and in person
meeting of the Independent Directors, the Task Force submitted clarifying
questions. The Independent Directors met as a body in person to receive the
report of the Task Force and consider the New Agreements. Throughout the
process, the Task Force and the Independent Directors were advised by
experienced 1940 Act counsel that is independent of NB Management and NBSH. In
addition, the Independent Directors received a memorandum from independent
counsel discussing the legal standards for their consideration of the New
Agreements.
Consideration of the New Agreements followed shortly on the heels of the
Independent Directors annual consideration of whether to renew the Existing
Agreements, carried out pursuant to Section 15(c) of the 1940 Act. In that
process, which began prior to the June 2008 quarterly meeting of the Board and
was concluded at the September 2008 quarterly meeting, the Independent
Directors, following an extensive review of materials submitted by NB Management
and a report from an independent data service, unanimously determined that the
Existing Agreements were fair and reasonable and that their renewal would be in
the best interests of each Fund and its stockholders. Accordingly, in
considering the New Agreements, the Independent Directors took into account the
fact that the terms of the New Agreements would be identical to those of the
Existing Agreements in every respect except the term and termination date and
potentially the name of the investment manager. The Board considerations in
connection with the New Agreements and the Existing Agreements also entered into
the decision by the Board to approve the Interim Agreements, which would take
effect if the stockholders of a Fund do not approve the New Agreements before
the Proposed Acquisition is completed. The Independent Directors consideration
of the Existing Agreements is described below.
18
In
evaluating the proposed New Agreements, the Independent Directors considered
that they have generally been satisfied with the nature and quality of the
services provided to the Funds by NB Management, NB LLC and LBAM, including
investment advisory, administrative and support services, and that the Funds
would be best served by an arrangement that appeared likely to maintain the
continuity and stability of the providers of these services. Accordingly, the
Independent Directors considered very carefully the intentions of NBSH
(including its successor or assign) regarding capitalization, management
structure, staffing, compensation and staff retention and whether these seemed
designed to provide the desired continuity and stability. They inquired
specifically about staffing and resources in the areas of portfolio management,
investment research, trading, fund accounting, legal and compliance, internal
audit, and senior executive staff. Although at the time the Board considered the
New Agreements no final decisions had been reached as to the distribution of
equity interests in NBSH (or its successor or assign), the Directors were
advised that senior members of management, including the Director who is
employed by the Advisers, would receive equity interests in NBSH. Because of
these interests, as well as any future employment arrangements with the
Advisers, these persons, individually or in the aggregate, could have a material
interest in the Proposed Acquisition and in stockholder approval of the New
Agreements. In considering the New Agreements, the Directors were aware of these
interests.
The
Independent Directors inquired whether NBSH (or its successor or assign) had
specific plans for the future structure of the Neuberger Berman funds, whether
they plan to propose to eliminate any funds, and whether they intend to continue
or alter certain expansion plans that are already underway. They also inquired
whether there are plans to change the fees or expense structure of any of the
funds.
The
Independent Directors inquired about the long-term plans for the Advisers,
including any expectations for cost savings or expense reductions. They also
inquired about the capital structure and working capital likely to be available
to NBSH (or its successor or assign).
The
Independent Directors considered the following factors, in addition to the
factors discussed above, among others, in connection with their consideration of
the New Agreements: (1) the nature, extent, and quality of the services provided
by NB Management, NB LLC and LBAM; (2) the performance of each Fund compared to
a relevant market index and a peer group of investment companies; (3) the costs
of the services provided and profits or losses realized by NB Management and its
affiliates from their relationship with the Funds; (4) the extent to which
economies of scale might be realized as each Fund grows; and (5) whether fee
levels reflect any such potential economies of scale for the benefit of
investors in each Fund. In their deliberations, the Independent Directors did
not identify any particular information that was all-important or controlling,
and each Director may have attributed different weights to the various
factors.
19
In
unanimously approving and recommending the New Agreements, the Independent
Directors concluded that the terms of each New Agreement are fair and reasonable
and that approval of the New Agreements is in the best interests of each Fund
and its stockholders. In reaching this determination, the Independent Directors
considered the following factors, among others:
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(1)
|
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that the terms of the
New Agreements are identical in all material respects to those of the
Existing Agreements;
|
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(2)
|
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that the Advisers will
maintain operational autonomy and continuity of management following the
Proposed Acquisition;
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(3)
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the favorable history,
reputation, qualification, and background of NB Management, NB LLC and
LBAM, as well as the qualifications of each entitys personnel and each
entitys respective financial condition;
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(4)
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the commitment of NBSH
(or its successor or assign) to retain key personnel currently employed by
NB Management, NB LLC and LBAM who currently provide services to the
Funds;
|
|
|
|
(5)
|
|
the commitment of NBSH
(or its successor or assign) to maintaining the current level and quality
of Fund services;
|
|
|
|
(6)
|
|
the proposed division
of equity in NBSH (or its successor or assign) among Management Members
and other personnel upon consummation of the Proposed
Acquisition;
|
|
|
|
(7)
|
|
the fees and expense
ratios of the Funds relative to comparable funds;
|
|
|
|
(8)
|
|
that the fees are
identical to those paid under the Existing Agreements;
|
|
|
|
(9)
|
|
that the fees and
expense ratios of the Funds appear to the Board to be reasonable given the
quality of services expected to be provided;
|
|
|
|
(10)
|
|
the commitment of NB
Management (or its successor) to: (a) maintaining the Funds current
contractual fee waiver agreements to ensure that Fund stockholders of
Funds that have such arrangements in place do not face an increase in
expenses upon consummation of the Proposed Acquisition; and (b) not change
any voluntary waiver so as to increase the expenses a Fund would pay
without the prior approval of the Board;
|
|
|
|
(11)
|
|
the performance of the
Funds relative to comparable funds and unmanaged indices;
|
|
|
|
(12)
|
|
the commitment of NB
Management (or its successor) to pay the expenses of the Funds in
connection with the Proposed Acquisition, including all expenses in
connection with the solicitation of proxies with respect to the Proposed
Acquisition, so that stockholders of the Funds would not have to bear such
expenses;
|
20
|
(13)
|
|
the actual and
potential effects on the Advisers of the bankruptcy of LBHI, and the
effects of the LBHI bankruptcy on the information considered by the
Independent Directors in their prior analyses of the principal service
contracts;
|
|
|
|
(14)
|
|
the provisions made to
continue providing to the Advisers certain services that were previously
provided to them by or through LBHI or its other affiliates;
|
|
|
|
(15)
|
|
the possible benefits
that may be realized by the Funds and by the Advisers as a result of the
Proposed Acquisition; and
|
|
|
|
(16)
|
|
that the Proposed
Acquisition is expected to maintain continuity of management of the Funds
and may reduce the potential for future vulnerability to changes in
control of the Advisers that could be adverse to the Funds interests and
that could affect the retention of key employees providing services to the
Funds.
|
Board Consideration of the Existing
Agreements
As noted
above, the Board had recently considered the continuance of the Existing
Agreements for each Fund and the factors considered by the Board are discussed
below. The Directors, including the Independent Directors, unanimously approved
the continuance of those Existing Agreements for each Fund at a meeting held on
September 25, 2008.
In
evaluating the Existing Agreements, the Directors, including the Independent
Directors, reviewed materials furnished by NB Management, NB LLC and LBAM in
response to questions submitted by counsel to the Independent Directors, and met
with senior representatives of NB Management, NB LLC and LBAM regarding their
personnel and operations. The Independent Directors were advised by counsel that
is experienced in 1940 Act matters and that is independent of NB Management, NB
LLC and LBAM. The Independent Directors received a memorandum from independent
counsel discussing the legal standards for their consideration of the proposed
continuance of the Existing Agreements. They met with such counsel separately
from representatives of NB Management to discuss the annual contract review. The
annual contract review extends over two regular meetings of the Board to ensure
that NB Management, NB LLC and LBAM have time to respond to any questions the
Independent Directors may have on their initial review of the report and that
the Independent Directors have time to consider those responses. In addition,
during this process, the Board held a separate meeting devoted primarily to
reviewing and discussing Fund performance.
The Board
considered the following factors, among others, in connection with its approval
of the continuance of the Existing Agreements: (1) the nature, extent, and
quality of the services provided by NB Management, NB LLC and LBAM; (2) the
performance of each Fund compared to relevant market indices and a peer
21
group of investment companies; (3) the
costs of the services provided and profits or losses realized by NB Management
and its affiliates from their relationship with the Funds; (4) the extent to
which economies of scale might be realized as each Fund grows; and (5) whether
fee levels reflect any such potential economies of scale for the benefit of
investors in each Fund. In their deliberations, the Board members did not
identify any particular information that was all-important or controlling, and
each Director may have attributed different weights to the various
factors.
The Board
considered the continued integrity of NB Management, NB LLC and LBAM as
organizations, despite the bankruptcy filing by LBHI. The Board discussed the
efforts made by NB Management, NB LLC and LBAM to retain employees, and the
reported likelihood that such employees would be retained. The Board discussed
the provisions that were being made for ancillary services by NB Management, NB
LLC, LBAM and their affiliates.
The Board
evaluated the terms of the Existing Agreements, the overall fairness of the
Existing Agreements to each Fund and whether the Existing Agreements were in the
best interests of each Fund and its stockholders.
With
respect to the nature, extent and quality of the services provided, the Board
considered the performance of each Fund and the experience and staffing of the
portfolio management and investment research personnel of NB Management, NB LLC
and LBAM who perform services for the Funds. The Board noted that NB Management
also provides certain administrative services, including fund accounting and
compliance oversight. The Board also considered NB Managements, NB LLCs and
LBAMs policies and practices regarding brokerage and the quality of brokerage
execution obtained by NB Management. The Boards Portfolio Transactions and
Pricing Committee from time to time reviewed the quality of the brokerage
services that NB LLC and Lehman Brothers Inc. had provided, and periodically
reviews studies by an independent firm engaged to review and evaluate the
quality of brokerage execution received by each Fund. The Board also reviewed
whether NB Management, NB LLC and LBAM used brokers to execute Fund transactions
that provide research and other services to NB Management, NB LLC and LBAM, and
the types of benefits potentially derived from such services by NB Management,
NB LLC and LBAM, the Funds and other clients of NB Management, NB LLC and LBAM.
In addition, the Board noted the positive compliance history of NB Management,
NB LLC and LBAM, as each firm has been free of significant compliance problems.
The Board
considered the performance of each Fund on both a market return and net asset
value basis relative to its benchmark and a peer group of investment companies
pursuing broadly similar strategies. The Board also considered performance in
relation to the degree of risk undertaken by the portfolio manager(s). In the
case of underperforming Funds, the Board discussed with NB Management
22
each Funds performance and the steps
that NB Management had taken, or intended to take, to improve each Funds
performance. The Board also considered NB Managements resources and
responsiveness with respect to the Funds.
With
respect to the overall fairness of the Existing Agreements, the Board considered
the fee structure for each Fund under the Existing Agreements as compared to a
peer group of comparable funds and any fall-out benefits likely to accrue to NB
Management, NB LLC or LBAM or their affiliates from their relationship with each
Fund. The Board also considered the profitability of NB Management and its
affiliates from their association with the Funds.
The Board
reviewed a comparison of each Funds management fee and overall expense ratio to
a peer group of broadly comparable funds. With regard to the sub-advisory fee
paid to NB LLC and LBAM, the Board noted that this fee is at cost. In
addition, the Board considered the contractual waiver of a portion of the
management fee undertaken by NB Management.
The Board
considered whether there were other funds that were advised or sub-advised by NB
Management or its affiliates or separate accounts managed by NB Management or
its affiliates with similar investment objectives, policies and strategies as
the Funds. The Board noted that there were no such comparable funds and/or
separate accounts.
The Board
also evaluated any apparent or anticipated economies of scale in relation to the
services NB Management provides to each Fund. The Board considered that the
Funds are closed-end funds that are not continuously offering shares and that,
without daily inflows and outflows of capital, there are limited opportunities
for significant economies of scale to be realized by NB Management in managing
each Funds assets.
In
concluding that the benefits accruing to NB Management and its affiliates by
virtue of their relationship to each Fund were reasonable in comparison with the
costs of providing the investment advisory services and the benefits accruing to
each Fund, the Board reviewed specific data as to NB Managements profit or loss
on each Fund for a recent period and the trend in profit or loss over recent
years. The Board also carefully examined NB Managements cost allocation
methodology and in recent years had an independent consultant review the
methodology. It also reviewed an analysis from an independent data service on
profitability margins in the investment management industry. The Board
recognized that NB Management should be entitled to earn a reasonable level of
profits for services it provides to the Funds and, based on its review,
concluded that NB Managements level of profitability was not
excessive.
In
approving the Existing Agreements, the Board concluded that the terms of each
Existing Agreement are fair and reasonable and that approval of the Existing
Agreements is in the best interests of each Fund and its stockholders. In
reaching this determination, the Board considered that NB Management, NB LLC and
23
LBAM, as applicable, could be expected
to provide a high level of service to each Fund; that the performance of each
Fund was satisfactory over time or, in the case of underperforming Funds, that
it retained confidence in NB Managements, NB LLCs and LBAMs capabilities to
manage the Funds; that each Funds fee structure appeared to the Board to be
reasonable given the nature and quality of services provided; and that the
benefits accruing to NB Management and its affiliates by virtue of their
relationship to the Funds were reasonable in comparison with the benefits
accruing to each Fund.
Section 15(f) of the 1940
Act
Section
15(f) of the 1940 Act permits an investment adviser of a registered investment
company (or any affiliated persons of the investment adviser) to receive any
amount or benefit in connection with a sale of securities or other interest in
the investment adviser, provided that two conditions are satisfied.
First, an
unfair burden may not be imposed on the investment company as a result of the
sale, or any express or implied terms, conditions or understandings applicable
to the sale. The term unfair burden, as defined in the 1940 Act, includes any
arrangement during the two-year period after the sale whereby the investment
adviser (or predecessor or successor adviser), or any interested person of the
adviser (as defined in the 1940 Act), receives or is entitled to receive any
compensation, directly or indirectly, from the investment company or its
security holders (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 ordinary fees for bona fide principal underwriting
services).
Second,
during the three-year period after the sale, at least 75% of the members of the
investment companys board of directors cannot be interested persons (as
defined in the 1940 Act) of the investment adviser or its
predecessor.
The
Directors have not been advised by LBHI or NBSH of any circumstances arising
from the Proposed Acquisition that might result in the imposition of an unfair
burden on any Fund as defined in Section 15(f) of the 1940 Act. Moreover, NBSH
(on its behalf and on behalf of its successor or assign) has agreed that for two
years after the consummation of the Proposed Acquisition, it will use its
reasonable best efforts to refrain from imposing, or agreeing to impose, any
unfair burden on any Fund, which includes refraining from proposing any increase
in fees paid by a Fund to the Advisers. Any contractual arrangement in place as
of December 17, 2008 whereby NB Management has agreed to waive fees of certain
Funds by a specified annual rate will be continued by New NB Management upon
completion of the Proposed Acquisition. For at least two years following the
Proposed Acquisition, no voluntary arrangements to waive fees of a Fund will be
changed by New NB Management so as to increase the expenses a Fund would pay
without the prior approval of the Board. At the present time, over 80% of the
Directors are classified as Independent Directors and expect to remain so
classified following the sale of the
24
Acquired Businesses. NBSH (on its
behalf and on behalf of its successor or assign) has agreed to continue to
comply with the Boards current policy that requires that at least 75% of the
Directors are classified as Independent Directors and would not seek to change
it during the three-year period after the completion of the Proposed
Acquisition.
Based on
their evaluation of the materials presented, the Directors who attended the
December 17, 2008 Board meeting, including all the Independent Directors,
unanimously concluded that the terms of the New Agreements are reasonable, fair
and in the best interests of the Funds and their stockholders. The Directors
believe that the New Agreements will enable each Fund to continue to enjoy the
high quality investment management services it has received in the past, at fee
rates identical to the present rates, which the Independent Directors deem
appropriate, reasonable and in the best interests of the Fund and its
stockholders. The Directors unanimously voted to approve and to recommend to the
stockholders of each Fund that they approve the New Agreements.
PROPOSAL 4: (ALL FUNDS) ELECTION OF
DIRECTORS
The Board
of each Fund is divided into three classes (Class I, Class II and Class III).
The terms of office of Class I, Class II and Class III Directors will expire at
the annual meeting of stockholders held in 2009, 2010 and 2011, respectively,
and at each third annual meeting of stockholders thereafter. Each Director shall
hold office until his or her successor is elected and qualified or until his or
her earlier death, resignation or removal. The classification of each Funds
Directors helps to promote the continuity and stability of each Funds
management and policies because the majority of the Directors at any given time
will have prior experience as Directors of the Fund.
Holders
of each Funds preferred stock are entitled, as a class, to the exclusion of the
holders of all other classes of stock of the Fund, to elect two Directors of the
Fund (regardless of the total number of Directors serving on the Funds Board).
These Directors are Class II and Class III Directors up for election in 2010 and
2011. These Directors are not nominees to be considered at the Meeting.
The term
of each current Class I Director expires at the Meeting, but each expressed his
or her willingness to serve another term as Director of the Funds if nominated
by the respective Boards. In addition to these incumbents, Western Investment
LLC (Western) notified the Board of its intention to nominate five candidates
(the Western Candidates) to serve as Class I Directors of each Fund at the
Meeting.
The
Governance and Nominating Committee of each Fund reviewed the qualifications,
experience and background of each Class I incumbent Director and considered
available information about the Western Candidates. Based upon this review and
consideration, each Committee determined that nominating the incumbent Class I
Directors would be in the best interests of its Funds stockholders. Each
25
Funds Board believes that the
incumbents are well suited for service on the Board due to their familiarity
with the Fund as a result of their prior service as Directors, their knowledge
of the financial services sector, and their substantial experience in serving as
directors or trustees, officers or advisers of public companies and business
organizations, including other investment companies.
At a
meeting in February 2009, the Board received the recommendations of the
Governance and Nominating Committees. After discussion and consideration of,
among other things, the backgrounds of the incumbents, each Funds Board voted
to nominate Faith Colish, Michael M. Knetter, Cornelius T. Ryan, Peter P. Trapp
and Robert Conti for election as Class I Directors with a term expiring in 2012.
William E. Rulon has decided to retire as a Director as of March 2009. Each Fund
has a policy that at least three quarters of all Directors be Independent
Directors. Independent Directors are those who are not associated with the
Funds investment manager or sub-adviser or their affiliates, or with any
broker-dealer used by the Funds, the investment manager or the sub-adviser in
the past six months.
It is the
intention of the persons named on the enclosed proxy card(s) to vote in favor of
the election of each nominee named in this Proxy Statement. Each nominee has
consented to be named in this Proxy Statement and to serve as Director if
elected. Each Funds Board has no reason to believe that any nominee will become
unavailable for election as a Director, but if that should occur before the
Meeting, the proxies will be voted for such other nominees as the Board may
recommend.
None of
the Directors are related to any other. The following tables set forth certain
information regarding each Director of the Funds. Unless otherwise noted, each
Director has engaged in the principal occupation listed in the following table
for five years or more. The business address of each listed person is 605 Third
Avenue, New York, New York 10158.
26
INFORMATION REGARDING NOMINEES
FOR ELECTION
|
|
|
|
|
|
Number
|
|
|
|
|
Position
with
|
|
|
|
of
Funds
|
|
|
|
|
each
Fund
|
|
|
|
in
Fund
|
|
|
Name,
|
|
and
Length
|
|
|
|
Complex
|
|
Other
Directorships Held
|
(Year of
Birth),
|
|
of
Time
|
|
|
|
Overseen
by
|
|
Outside Fund
Complex by
|
and Address
(1)
|
|
Served
(2)
|
|
Principal
Occupation(s)
(3)
|
|
Director
|
|
Director
|
CLASS I
|
Independent
Directors
|
Faith
Colish
(1935)
|
|
Director Since
inception
(4)
|
|
Counsel, Carter
Ledyard & Milburn LLP (law firm) since October 2002; formerly,
Attorney-at-Law and President, Faith Colish, A Professional Corporation,
1980 to 2002.
|
|
53
|
|
Formerly, Director
(1997 to 2003) and Advisory Director (2003 to 2006), ABA Retirement Funds
(formerly, American Bar Retirement Association) (not-for-profit membership
corporation).
|
Michael M. Knetter
(1960)
|
|
Director Since February 2007
|
|
Dean, School of Business, University
of Wisconsin - Madison; formerly, Professor of International Economics and
Associate Dean, Amos Tuck School of Business - Dartmouth College, 1998 to
2002.
|
|
53
|
|
Trustee, Northwestern Mutual Series
Fund, Inc., since February 2007; Director, Wausau Paper, since 2005;
Director, Great Wolf Resorts, since 2004.
|
Cornelius T.
Ryan
(1931)
|
|
Director Since
inception
(4)
|
|
Founding General
Partner, Oxford Partners and Oxford Bioscience Partners (venture capital
investing) and President, Oxford Venture Corporation, since
1981.
|
|
53
|
|
None.
|
Peter P. Trapp
(1944)
|
|
Director Since
inception
(4)
|
|
Retired; formerly, Regional Manager
for Mid-Southern Region, Ford Motor Credit Company, September 1997 to
2007; formerly, President, Ford Life Insurance Company, April 1995 to
August 1997.
|
|
53
|
|
None.
|
27
|
|
|
|
|
|
Number
|
|
|
|
|
Position
with
|
|
|
|
of
Funds
|
|
|
|
|
each
Fund
|
|
|
|
in
Fund
|
|
|
Name,
|
|
and
Length
|
|
|
|
Complex
|
|
Other
Directorships Held
|
(Year of
Birth),
|
|
of
Time
|
|
|
|
Overseen
by
|
|
Outside Fund
Complex by
|
and Address
(1)
|
|
Served
(2)
|
|
Principal
Occupation(s)
(3)
|
|
Director
|
|
Director
|
Director who is an
Interested Person
|
Robert Conti*
(1956)
|
|
Director Since December 2008; Chief
Executive Officer, President and Director since 2008; prior thereto,
Executive Vice President in 2008 and Vice President 2006 to 2008
|
|
Managing Director, NB LLC, since 2007;
formerly, Senior Vice President, NB LLC, 2003 to 2006; formerly, Vice
President, NB LLC, 1999 to 2003; President and Chief Executive Officer, NB
Management, since 2008; formerly, Senior Vice President, NB Management,
2000 to 2008.
|
|
53
|
|
Chairman of the Board, Staten Island
Mental Health Society since 2008.
|
INFORMATION
REGARDING DIRECTORS
WHOSE CURRENT TERMS CONTINUE
|
|
|
|
|
|
Number
|
|
|
|
|
Position
with
|
|
|
|
of
Funds
|
|
|
|
|
each
Fund
|
|
|
|
in
Fund
|
|
|
Name,
|
|
and
Length
|
|
|
|
Complex
|
|
Other
Directorships Held
|
(Year of
Birth),
|
|
of
Time
|
|
|
|
Overseen
by
|
|
Outside Fund
Complex by
|
and Address
(1)
|
|
Served
(2)
|
|
Principal
Occupation(s)
(3)
|
|
Director
|
|
Director
|
CLASS
II
|
Independent
Directors
|
John
Cannon
(1930)
|
|
Director since
inception
(4)
|
|
Consultant; formerly,
Chairman, CDC Investment Advisers (registered investment adviser), 1993 to
January 1999; formerly, President and Chief Executive Officer, AMA
Investment Advisors, an affiliate of the American Medical Association.
|
|
53
|
|
Independent Trustee or
Director of three series of Oppenheimer Funds: Oppenheimer Limited Term
New York Municipal Fund, Rochester Fund Municipals, and Oppenheimer
Convertible Securities Fund since 1992.
|
28
|
|
|
|
|
|
Number
|
|
|
|
|
Position
with
|
|
|
|
of
Funds
|
|
|
|
|
each
Fund
|
|
|
|
in
Fund
|
|
|
Name,
|
|
and
Length
|
|
|
|
Complex
|
|
Other
Directorships Held
|
(Year of
Birth),
|
|
of
Time
|
|
|
|
Overseen
by
|
|
Outside Fund
Complex by
|
and Address
(1)
|
|
Served
(2)
|
|
Principal
Occupation(s)
(3)
|
|
Director
|
|
Director
|
C. Anne
Harvey
(1937)
|
|
Director since
inception
(4)
|
|
President, C.A. Harvey
Associates, since October 2001; formerly, Director, AARP, 1978 to December
2001.
|
|
53
|
|
Formerly, President,
Board of Associates to The National Rehabilitation Hospitals Board of
Directors, 2001 to 2002; formerly, Member, Individual Investors Advisory
Committee to the New York Stock Exchange Board of Directors, 1998 to June
2002.
|
George W. Morriss
(1947)
|
|
Director since February 2007
|
|
Retired; formerly, Executive Vice
President and Chief Financial Officer, Peoples Bank, Connecticut (a
financial services company), 1991 to 2001.
|
|
53
|
|
Manager, Old Mutual 2100 fund complex
(consisting of six funds) since October 2006 for four funds and since
February 2007 for two funds; formerly, Member NASDAQ Issuers Affairs
Committee, 1995 to 2003.
|
Tom D.
Seip
(1950)
|
|
Director since
inception,
(4)
Non-Executive Chair of the Board since 2008, Lead Independent
Director since 2008
|
|
General Partner, Seip
Investments LP (a private investment partnership); formerly, President and
CEO, Westaff, Inc. (temporary staffing), May 2001 to January 2002;
formerly, Senior Executive at the Charles Schwab Corporation, 1983 to
1998, including Chief Executive Officer, Charles Schwab Investment
Management, Inc., and Trustee, Schwab Family of Funds and Schwab
Investments, 1997 to 1998, and Executive Vice President-Retail Brokerage,
Charles Schwab & Co., Inc., 1994 to 1997.
|
|
53
|
|
Director, H&R
Block, Inc. (financial services company), since May 2001; Chairman,
Compensation Committee, H&R Block, Inc., since 2006; formerly,
Director, Forward Management, Inc. (asset management company), 1999 to
2006.
|
29
|
|
|
|
|
|
Number
|
|
|
|
|
Position
with
|
|
|
|
of
Funds
|
|
|
|
|
each
Fund
|
|
|
|
in
Fund
|
|
|
Name,
|
|
and
Length
|
|
|
|
Complex
|
|
Other
Directorships Held
|
(Year of
Birth),
|
|
of
Time
|
|
|
|
Overseen
by
|
|
Outside Fund
Complex by
|
and Address
(1)
|
|
Served
(2)
|
|
Principal
Occupation(s)
(3)
|
|
Director
|
|
Director
|
Director who is
an Interested Person
|
Jack L. Rivkin*
(1940)
|
|
Director since
2002
(4)
|
|
Formerly, Executive Vice President and
Chief Investment Officer, NB Holdings (holding company), 2002 to August
2008 and 2003 to August 2008, respectively; formerly, Managing Director
and Chief Investment Officer, NB LLC, December 2005 to August 2008 and
2003 to August 2008, respectively; formerly, Executive Vice President, NB
LLC, December 2002 to 2005; formerly, Director and Chairman, NB
Management, December 2002 to August 2008; formerly, Executive Vice
President, Citigroup Investments, Inc., September 1995 to February 2002;
formerly, Executive Vice President, Citigroup Inc., September 1995 to
February 2002.
|
|
53
|
|
Director, Idealab (private company),
since 2009; Director, Dale Carnegie and Associates, Inc. (private
company), since 1998; Director, Solbright, Inc. (private company), since
1998.
|
30
|
|
|
|
|
|
Number
|
|
|
|
|
Position
with
|
|
|
|
of
Funds
|
|
|
|
|
each
Fund
|
|
|
|
in
Fund
|
|
|
Name,
|
|
and
Length
|
|
|
|
Complex
|
|
Other
Directorships Held
|
(Year of
Birth),
|
|
of
Time
|
|
|
|
Overseen
by
|
|
Outside Fund
Complex by
|
and Address
(1)
|
|
Served
(2)
|
|
Principal
Occupation(s)
(3)
|
|
Director
|
|
Director
|
CLASS
III
|
Independent
Directors
|
Martha C.
Goss
(1949)
|
|
Director since June
2007
|
|
President, Woodhill
Enterprises Inc./Chase Hollow Associates LLC (personal investment
vehicle), since 2006; Chief Operating and Financial Officer, Hopewell
Holdings LLC/Amwell Holdings, LLC (a holding company for a healthcare
reinsurance company start-up), since 2003; formerly, Consultant, Resources
Connection (temporary staffing), 2002 to 2006.
|
|
53
|
|
Director, Ocwen
Financial Corporation (mortgage servicing), since 2005; Director, American
Water (water utility), since 2003; Director, Channel Reinsurance
(financial guaranty reinsurance), since 2006; Advisory Board Member,
Attensity (software developer), since 2005; Director, Allianz Life of New
York (insurance), since 2005; Director, Financial Womens Association of
New York (not for profit association), since 2003; Trustee Emerita, Brown
University, since 1998.
|
Robert A. Kavesh (1927)
|
|
Director since inception
(4)
|
|
Retired; Marcus Nadler Professor Emeritus of
Finance and Economics, New York University Stern School of Business;
formerly, Executive Secretary-Treasurer, American Finance Association,
1961 to 1979.
|
|
53
|
|
Formerly, Director, The Caring Community
(not-for-profit), 1997 to 2006; formerly, Director, DEL Laboratories, Inc.
(cosmetics and pharmaceuticals), 1978 to 2004; formerly, Director, Apple
Bank for Savings, 1979 to 1990; formerly, Director, Western Pacific
Industries, Inc., 1972 to 1986 (public
company).
|
31
|
|
|
|
|
|
Number
|
|
|
|
|
Position
with
|
|
|
|
of
Funds
|
|
|
|
|
each
Fund
|
|
|
|
in
Fund
|
|
|
Name,
|
|
and
Length
|
|
|
|
Complex
|
|
Other
Directorships Held
|
(Year of
Birth),
|
|
of
Time
|
|
|
|
Overseen
by
|
|
Outside Fund
Complex by
|
and Address
(1)
|
|
Served
(2)
|
|
Principal
Occupation(s)
(3)
|
|
Director
|
|
Director
|
Howard A.
Mileaf
(1937)
|
|
Director since
inception
(4)
|
|
Retired; formerly,
Vice President and General Counsel, WHX Corporation (holding company),
1993 to 2001.
|
|
53
|
|
Formerly, Director,
Webfinancial Corporation (holding company), 2002 to 2008; formerly,
Director WHX Corporation (holding company), January 2002 to June 2005;
formerly, Director, State Theatre of New Jersey (not-for-profit theater),
2000 to 2005.
|
Edward I. OBrien
(1928)
|
|
Director since inception
(4)
|
|
Retired; formerly, Member, Investment
Policy Committee, Edward Jones, 1993 to 2001; President, Securities
Industry Association (SIA) (securities industrys representative in
government relations and regulatory matters at the federal and state
levels), 1974 to 1992; Adviser to SIA, November 1992 to November
1993.
|
|
53
|
|
Formerly, Director, Legg Mason, Inc.
(financial services holding company), 1993 to July 2008; formerly,
Director, Boston Financial Group (real estate and tax shelters), 1993 to
1999.
|
32
|
|
|
|
|
|
Number
|
|
|
|
|
Position
with
|
|
|
|
of
Funds
|
|
|
|
|
each
Fund
|
|
|
|
in
Fund
|
|
|
Name,
|
|
and
Length
|
|
|
|
Complex
|
|
Other
Directorships Held
|
(Year of
Birth),
|
|
of
Time
|
|
|
|
Overseen
by
|
|
Outside Fund
Complex by
|
and Address
(1)
|
|
Served
(2)
|
|
Principal
Occupation(s)
(3)
|
|
Director
|
|
Director
|
Candace L.
Straight
(1947)
|
|
Director since
inception
(4)
|
|
Private investor and
consultant specializing in the insurance industry; formerly, Advisory
Director, Securitias Capital LLC (a global private equity investment firm
dedicated to making investments in the insurance sector), 1998 to December
2003.
|
|
53
|
|
Director, Montpelier
Re (reinsurance company), since 2006; formerly, Director, National
Atlantic Holdings Corporation (property and casualty insurance company),
2004 to 2008; formerly, Director, The Proformance Insurance Company
(property and casualty insurance company), 2004 to 2008; formerly,
Director, Providence Washington Insurance Company (property and casualty
insurance company), December 1998 to March 2006; formerly, Director,
Summit Global Partners (insurance brokerage firm), 2000 to
2005.
|
33
|
|
|
|
|
|
Number
|
|
|
|
|
Position
with
|
|
|
|
of
Funds
|
|
|
|
|
each
Fund
|
|
|
|
in
Fund
|
|
|
Name,
|
|
and
Length
|
|
|
|
Complex
|
|
Other
Directorships Held
|
(Year of
Birth),
|
|
of
Time
|
|
|
|
Overseen
by
|
|
Outside Fund
Complex by
|
and Address
(1)
|
|
Served
(2)
|
|
Principal
Occupation(s)
(3)
|
|
Director
|
|
Director
|
Director who is
an Interested Person
|
Joseph V. Amato*
(1962)
|
|
Director since March
2008
|
|
Chief Executive
Officer and President, NB Holdings (including its predecessor, Neuberger
Berman Inc.) and NB LLC, since 2007; Managing Director of LBAM since 2007;
Global Head of Asset Management in the Investment Management Division,
LBHI, since 2006; Member of the Investment Management Divisions Executive
Management Committee, LBHI, since 2006; Board member of LBAM since 2006;
formerly, Managing Director, Lehman Brothers Inc., 2006 to 2008; formerly,
Chief Recruiting and Development Office, Lehman Brothers Inc., 2005 to
2006; formerly, Global Head of Equity Sales and Member of the Equities
Division Executive Committee, Lehman Brothers Inc., 2003 to
2005.
|
|
53
|
|
Member of Board of
Advisors, McDonough School of Business, Georgetown University, since 2001;
Member of New York City Board of Advisors, Teach for America, since 2005;
Trustee, Montclair Kimberley Academy (private school), since
2007.
|
(1)
|
|
The business address of each
listed person is 605 Third Avenue, New York, New York
10158.
|
|
(2)
|
|
Each Board shall at all times be
divided as equally as possible into three classes of Directors designated
Class I, Class II, and Class III. The terms of office of Class I, Class
II, and Class III Directors shall expire at the annual meeting of
stockholders held in 2009, 2010, and 2011, respectively, and at each third
annual meeting of stockholders thereafter.
|
|
(3)
|
|
Except as otherwise indicated,
each individual has held the positions shown for at least the last five
years.
|
|
(4)
|
|
The inception date of
Intermediate Municipal, California Intermediate, and New York Intermediate
is 2002. The inception date of Income Opportunity is 2003. The inception
date of Dividend Advantage is 2004.
|
34
*
|
|
Indicates a Director who is an
interested person within the meaning of the 1940 Act. Mr. Conti is an
interested person of the Funds by virtue of the fact that he is an officer
of each of NB Management and NB LLC. Mr. Rivkin may be deemed an
interested person of the Funds by virtue of the fact that, until August
2008, he was a director of NB Management and an officer of NB LLC. Mr.
Amato may be deemed an interested person by virtue of the fact that he is
a director and officer of NB Holdings and a board member of
LBAM.
|
Section 16(a) Beneficial Ownership
Reporting Compliance
Under
Section 16(a) of the 1934 Act, Section 30(h) of the 1940 Act and SEC regulations
thereunder, certain of each Funds officers and each Funds Directors and
portfolio managers, persons owning more than 10% of each Funds common stock and
certain officers and directors of the Funds investment manager and sub-adviser
are required to report their transactions in each Funds stock to the SEC and
the American Stock Exchange. Based solely on the review by each Fund of the
copies of such reports received by each Fund, each Fund believes that, during
its fiscal year ended October 31, 2008, all filing requirements applicable to
such persons were met.
Board of Directors and Committee
Meetings
Each
Funds Board met nineteen times during the fiscal year ended October 31, 2008.
Each Director attended at least 75% of the total number of meetings of each
Board and of any committee of which he or she was a member during the fiscal
year ended October 31, 2008.
The Board
is responsible for managing the business and affairs of the Funds. Among other
things, the Board generally oversees the portfolio management of each Fund and
reviews and approves each Funds advisory and sub-advisory contracts and other
principal contracts.
Each
Board has established several standing committees to oversee particular aspects
of the Funds management. The standing committees of the Boards are described
below. The Boards do not have a standing compensation committee although the
Governance and Nominating Committees do consider and make recommendations
relating to Independent Director compensation to the Boards.
Audit
Committee.
The purposes of each Funds Audit
Committee are (a) in accordance with exchange requirements and Rule 32a-4 under
the 1940 Act, to oversee the accounting and financial reporting processes of the
Fund and, as the Committee deems appropriate, to inquire into the internal
control over financial reporting of service providers; (b) in accordance with
exchange requirements and Rule 32a-4 under the 1940 Act, to oversee the quality
and integrity of the Funds financial statements and the independent audit
thereof; (c) in accordance with exchange requirements and Rule 32a-4 under the
1940 Act, to oversee, or, as appropriate, assist Board oversight of, the Funds
compliance with legal and regulatory requirements that relate to the Funds
accounting and financial reporting, internal control over financial reporting
and independent audits; (d) to approve prior to appointment the
35
engagement of the Funds independent
registered public accounting firm and, in connection therewith, to review and
evaluate the qualifications, independence and performance of the Funds
independent registered public accounting firm; (e) to act as a liaison between
the Funds independent registered public accounting firm and the full Board; and
(f) to prepare an audit committee report as required by Item 407 of Regulation
S-K to be included in proxy statements relating to the election of directors.
The independent registered public accounting firm for each Fund shall report
directly to the Audit Committee. Each Fund has adopted a written charter for its
Audit Committee. The charter of each Audit Committee is available on NB
Managements website at www.nb.com. The Audit Committee of each Fund has
delegated the authority to grant pre-approval of permissible non-audit services
and all audit, review or attest engagements of the Funds independent registered
public accounting firm to each member of the Committee between meetings of the
Committee.
The Audit
Committee of each Fund is composed entirely of Independent Directors who are
also considered independent under the listing standards applicable to each Fund.
For each Fund, its members are Martha C. Goss, Howard A. Mileaf, George W.
Morriss (Vice Chair), Cornelius T. Ryan (Chair), Tom D. Seip and Peter P. Trapp.
The Report of each Audit Committee relating to the audit of Fund financial
statements for the fiscal year ended October 31, 2008 is attached hereto as
Exhibit A. During the fiscal year ended October 31, 2008, the Committee of each
Fund met seven times.
Closed-End Funds Committee.
Each
Funds Closed-End Funds Committee is responsible for consideration and
evaluation of issues specific to such Fund. For each Fund, its members are John
Cannon (Vice Chair), George W. Morriss (Chair), Edward I. OBrien, Jack L.
Rivkin, and Tom D. Seip. All members other than Mr. Rivkin are Independent
Directors. During the fiscal year ended October 31, 2008, the Committee of
California Intermediate, Intermediate Municipal and New York Intermediate met
nine times and the Committee of Dividend Advantage and Income Opportunity met
ten times.
Contract Review Committee.
The
Contract Review Committee of each Fund is responsible for overseeing and guiding
the process by which the Independent Directors annually consider whether to
continue each Funds principal contractual arrangements. For each Fund, its
members are Faith Colish (Chair), Martha C. Goss, Robert A. Kavesh, Howard
Mileaf and Candace L. Straight. All members are Independent Directors. During
the fiscal year ended October 31, 2008, the Committee of each Fund met four
times.
Ethics
and Compliance Committee.
The Ethics and
Compliance Committee of each Fund generally oversees: (a) each Funds program
for compliance with Rule 38a-1 under the 1940 Act and the Funds implementation
and enforcement of its compliance policies and procedures; (b) compliance with
each Funds Code of Ethics (which restricts the personal securities
transactions, including transactions in Fund shares, of employees, officers, and
Directors), and (c) the activities of
36
the Funds Chief Compliance Officer
(CCO). The Committee shall not assume oversight duties to the extent that such
duties have been assigned by the Board expressly to another Committee of the
Board (such as oversight of internal controls over financial reporting, which
has been assigned to the Audit Committee). The Committees primary function is
oversight. Each investment manager, sub-adviser, administrator and transfer
agent (collectively, Service Providers) is responsible for its own compliance
with the federal securities laws and for devising, implementing, maintaining and
updating appropriate policies, procedures and codes of ethics to ensure
compliance with applicable laws and regulations. The CCO is responsible for
administering each Funds Compliance Program, including devising and
implementing appropriate methods of testing compliance by the Fund and its
Service Providers. For each Fund, its members are John Cannon (Chair), Faith
Colish, C. Anne Harvey, Michael M. Knetter, Howard A. Mileaf (Vice Chair) and
Edward I. OBrien. All members are Independent Directors. The Board will receive
at least annually a report on the compliance programs of the Funds and Service
Providers and the required annual reports on the administration of the Codes of
Ethics and the required annual certifications from each Fund, NB Management, NB
LLC and LBAM. During the fiscal year ended October 31, 2008, the Committee of
each Fund met four times.
Executive Committee.
The Executive
Committee of each Fund is responsible for acting in an emergency when a quorum
of the Board of Directors is not available; each Committee has all the powers of
the Board when the Board is not in session to the extent permitted by Maryland
law. For each Fund, its members are John Cannon, Robert Conti (Vice Chair),
Robert A. Kavesh, Howard A. Mileaf, Tom D. Seip (Chair) and Candace L. Straight.
All members except for Mr. Conti are Independent Directors. During the fiscal
year ended October 31, 2008, the Committee of each Fund met once.
Governance and Nominating Committee.
The Governance and Nominating Committee of each Fund is responsible for: (a)
considering and evaluating the structure, composition and operation of that
Board of Directors and each committee thereof, including the operation of the
annual self-evaluation by the Board; (b) evaluating and nominating individuals
to serve as Directors, including as Independent Directors, as members of
committees, as Chair of the Board and as officers of the Fund; and (c)
considering and making recommendations relating to the compensation of
Independent Directors and of those officers as to whom the Board is charged with
approving compensation. Each Committee met to discuss matters relating to the
nomination of Class I Directors with respect to each Fund. For each Fund, its
members are C. Anne Harvey (Chair), Robert A. Kavesh, Michael M. Knetter (Vice
Chair), Howard A. Mileaf and Tom D. Seip. All members are Independent Directors
and are not interested parties of the Funds as defined in section 2(a)(19) of
the 1940 Act. During the fiscal year ended October 31, 2008, the Committee of
each Fund met once.
37
Investment Performance Committee.
The
Investment Performance Committee of each Fund is responsible for overseeing and
guiding the process by which the Board reviews Fund performance. Its members are
Martha C. Goss, Robert A. Kavesh, Edward I. OBrien, Jack L. Rivkin (Vice
Chair), Cornelius T. Ryan and Peter P. Trapp (Chair). All members except for Mr.
Rivkin are Independent Directors. During the fiscal year ended October 31, 2008,
the Committee of each Fund met two times.
Portfolio Transactions and Pricing Committee.
The Portfolio Transactions and Pricing Committee of each Fund (a)
generally monitors the operation of policies and procedures reasonably designed
to ensure that each portfolio holding is valued in an appropriate and timely
manner, reflecting information known to the manager about current market
conditions (Pricing Procedures); (b) considers and evaluates, and recommends
to the Board when the Committee deems it appropriate, amendments to the Pricing
Procedures proposed by management, counsel, the independent registered public
accounting firm and others; (c) from time to time, as required or permitted by
the Pricing Procedures, establishes or ratifies a method of determining the fair
value of portfolio securities for which market prices are not readily available;
(d) generally oversees the program by which the adviser seeks to monitor and
improve the quality of execution for portfolio transactions; and (e) generally
oversees the adequacy and fairness of the arrangements for securities lending;
in each case with special emphasis on any situations in which a Fund deals with
the adviser or any affiliate of the adviser as principal or agent.
The
members of the Committee of each Fund are Faith Colish (Vice Chair), George W.
Morriss, Jack L. Rivkin, Cornelius T. Ryan and Candace L. Straight (Chair). All
members except for Mr. Rivkin are Independent Directors. During the fiscal year
ended October 31, 2008, the Committee of each Fund met six times except for
Income Opportunity which met seven times.
Information Regarding each Funds
Process for Nominating Director Candidates
Governance and Nominating Committee Charter.
A copy of the Governance and Nominating Committee Charter is available
to stockholders on NB Managements website at www.nb.com.
Stockholder Communications.
Each
Funds Governance and Nominating Committee will consider nominees recommended by
stockholders; stockholders may send resumes of recommended persons to the
attention of Claudia A. Brandon, Secretary, Neuberger Berman Funds, 605 Third
Avenue, 2nd Floor, New York, NY, 10158-0180.
Nominee Qualifications.
The Governance
and Nominating Committee will consider nominees recommended by stockholders on
the basis of the same criteria used to consider and evaluate candidates
recommended by other sources. While there is no formal list of qualifications,
the Governance and Nominating Committee considers, among other things, whether
prospective nominees have distinguished records in their primary careers,
unimpeachable integrity, and substantive knowledge in areas important to the
Boards operations, such as background or education
38
in finance, auditing, securities law,
the workings of the securities markets, or investment advice. For candidates to
serve as Independent Directors, independence from each Funds investment
manager, its affiliates and other principal service providers is critical, as is
an independent and questioning mindset. The Committee also considers whether the
prospective candidates workloads would allow them to attend the vast majority
of Board meetings, be available for service on Board committees, and devote the
additional time and effort necessary to keep up with Board matters and the
rapidly changing regulatory environment in which each Fund operates. Different
substantive areas may assume greater or lesser significance at particular times,
in light of a Boards present composition and the Committees (or a Boards)
perceptions about future issues and needs.
Identifying Nominees.
The Governance
and Nominating Committee considers prospective candidates from any reasonable
source. The Committee initially evaluates prospective candidates on the basis of
their resumes, considered in light of the criteria discussed above. Those
prospective candidates that appear likely to be able to fill a significant need
of a Board would be contacted by a Committee member by telephone to discuss the
position; if there appeared to be sufficient interest, an in-person meeting with
one or more Committee members would be arranged. If the Committee, based on the
results of these contacts, believed it had identified a viable candidate, it
would air the matter with the full group of Independent Directors for input.
Any
request by management to meet with the prospective candidate would be given
appropriate consideration. The Funds have not paid a fee to third parties to
assist in finding nominees.
Director Attendance at Annual
Meetings
The Funds
do not have a policy on Director attendance at the annual meeting of
stockholders. For each Fund, one Board member attended the 2008 annual meeting
of stockholders.
39
Ownership of
Securities
Set forth
below is the dollar range of equity securities owned by each Director as of
December 31, 2008.
|
|
|
|
|
|
Aggregate
Dollar
|
|
|
|
|
|
|
Range of
Equity
|
|
|
|
|
|
|
Securities in
all
|
|
|
|
|
|
|
Registered
Investment
|
|
|
Dollar Range of Equity
|
|
Companies
Overseen by
|
|
|
Securities Owned in each
|
|
Director in
Family of
|
Name of Director
|
|
Fund*
|
|
Investment
Companies*
|
Independent Directors
|
|
|
|
|
|
|
John
Cannon
|
|
|
None
|
|
|
Over
$100,000
|
Faith Colish**
|
|
|
$1-$10,000
|
|
|
Over $100,000
|
Martha C.
Goss
|
|
|
None
|
|
|
$10,001-$50,000
|
C. Anne Harvey
|
|
|
None
|
|
|
$50,001-$100,000
|
Robert A.
Kavesh
|
|
|
None
|
|
|
Over
$100,000
|
Michael M. Knetter
|
|
|
None
|
|
|
$50,001-$100,000
|
Howard A.
Mileaf
|
|
|
None
|
|
|
Over
$100,000
|
George W. Morriss
|
|
|
None
|
|
|
$50,001-$100,000
|
Edward I.
OBrien
|
|
|
None
|
|
|
Over
$100,000
|
Cornelius T. Ryan
|
|
|
None
|
|
|
Over $100,000
|
Tom D.
Seip
|
|
|
None
|
|
|
Over
$100,000
|
Candace L. Straight
|
|
|
None
|
|
|
Over $100,000
|
Peter P. Trapp
|
|
|
None
|
|
|
Over $100,000
|
Directors who are
Interested Persons
|
|
|
|
Robert
Conti
|
|
|
None
|
|
|
Over
$100,000
|
Jack L. Rivkin
|
|
|
None
|
|
|
$10,001-$50,000
|
Joseph V. Amato
|
|
|
None
|
|
|
Over
$100,000
|
*
|
|
Valuation as of
December 31, 2008.
|
|
**
|
|
Ms. Colish owns 100
shares of common stock of each Fund other than California Intermediate,
constituting less than 1% of each Funds outstanding shares of common
stock.
|
Independent Directors Ownership of
Securities
As of
January 31, 2009, no Independent Director (or his/her immediate family members)
owned securities of NB Management, NB LLC or LBAM or securities in an entity
controlling, controlled by or under common control with NB Management, NB LLC or
LBAM (not including registered investment companies).
40
Officers of each Fund
The
following table sets forth certain information regarding the officers of each
Fund. Except as otherwise noted, each individual has held the positions shown in
the table below for at least the last five years. The business address of each
listed person is 605 Third Avenue, New York, New York 10158. Officers of each
Fund are appointed by the Directors and serve at the pleasure of the
Board.
Name, (Year of
Birth),
|
|
Position and Length
of
|
|
|
and
Address
(1)
|
|
Time Served
|
|
Principal
Occupation(s)
(2)
|
Andrew B. Allard
(1961)
|
|
Anti-Money Laundering Compliance
Officer since inception
(3)
|
|
Senior Vice President, NB LLC, since
2006; Deputy General Counsel, NB LLC, since 2004; formerly, Vice
President, NB LLC, 2000 to 2005; formerly, Associate General Counsel, NB
LLC, 1999 to 2004; Anti-Money Laundering Compliance Officer, eleven
registered investment companies for which NB Management acts as investment
manager and administrator (six since 2002, two since 2003, two since 2004
and one since 2006).
|
Michael J. Bradler
(1970)
|
|
Assistant Treasurer since
2005
|
|
Vice President, NB LLC, since 2006;
Employee, NB Management, since 1997; Assistant Treasurer, eleven
registered investment companies for which NB Management acts as investment
manager and administrator (ten since 2005 and one since
2006).
|
Claudia A. Brandon
(1956)
|
|
Executive Vice President since 2008
and Secretary since inception
(3)
|
|
Senior Vice President, NB LLC, since
2007 and Employee since 1999; formerly, Vice President, NB LLC, 2002 to
2006; Senior Vice President, NB Management, since 2008 and Assistant
Secretary since 2004; formerly, Vice President-Mutual Fund Board
Relations, NB Management, 2000 to 2008; Executive Vice President, eleven
registered investment companies for which NB Management acts as investment
manager and administrator (eleven since 2008); Secretary, eleven
registered investment companies for which NB Management acts as investment
manager and administrator (three since 1985, three since 2002, two since
2003, two since 2004 and one since
2006).
|
41
Name, (Year of
Birth),
|
|
Position and Length
of
|
|
|
and
Address
(1)
|
|
Time Served
|
|
Principal
Occupation(s)
(2)
|
Maxine L. Gerson
(1950)
|
|
Executive Vice President since 2008
and Chief Legal Officer since 2005 (only for purposes of sections 307 and
406 of the Sarbanes-Oxley Act of 2002)
|
|
Senior Vice President, NB LLC, since
2002; Deputy General Counsel and Assistant Secretary, NB LLC, since 2001;
Senior Vice President, NB Management, since 2006; Secretary and General
Counsel, NB Management, since 2004; Executive Vice President, eleven
registered investment companies for which NB Management acts as investment
manager and administrator (eleven since 2008); Chief Legal Officer (only
for purposes of sections 307 and 406 of the Sarbanes-Oxley Act of 2002),
eleven registered investment companies for which NB Management acts as
investment manager and administrator (ten since 2005 and one since
2006).
|
Sheila R. James
(1965)
|
|
Assistant Secretary since
inception
(3)
|
|
Vice President, NB LLC, since 2008
and Employee since 1999; formerly, Assistant Vice President, NB LLC, 2007;
Assistant Secretary, eleven registered investment companies for which NB
Management acts as investment manager and administrator (six since 2002,
two since 2003, two since 2004 and one since 2006).
|
Brian Kerrane
(1969)
|
|
Vice President since
2008
|
|
Senior Vice President, NB LLC, since
2006; formerly, Vice President, NB LLC, 2002 to 2006; Vice President, NB
Management, since 2008 and Employee since 1991; Vice President, eleven
registered investment companies for which NB Management acts as investment
manager and administrator (eleven since 2008).
|
Kevin Lyons (1955)
|
|
Assistant Secretary since
2003
(4)
|
|
Assistant Vice President, NB LLC,
since 2008 and Employee since 1999; Assistant Secretary, eleven registered
investment companies for which NB Management acts as investment manager
and administrator (eight since 2003, two since 2004 and one since 2006).
|
Owen F. McEntee, Jr. (1961)
|
|
Vice President since 2008
|
|
Vice President, NB LLC, since 2006;
Employee, NB Management, since 1992; Vice President, eleven registered
investment companies for which NB Management acts as investment manager
and administrator (eleven since 2008).
|
42
Name, (Year of
Birth),
|
|
Position and Length
of
|
|
|
and
Address
(1)
|
|
Time Served
|
|
Principal
Occupation(s)
(2)
|
John M. McGovern
(1970)
|
|
Treasurer and Principal Financial
and Accounting Officer since 2005; prior thereto, Assistant Treasurer
since inception
(3)
|
|
Senior Vice President, NB LLC, since
2007; formerly, Vice President, NB LLC, 2004 to 2006; Employee, NB
Management, since 1993; Treasurer and Principal Financial and Accounting
Officer, eleven registered investment companies for which NB Management
acts as investment manager and administrator (ten since 2005 and one since
2006); formerly, Assistant Treasurer, fourteen registered investment
companies for which NB Management acts as investment manager and
administrator, 2002 to 2005.
|
Andrew Provencher
(1965)
|
|
Vice President since
2008
|
|
Managing Director, NB Management,
since 2008; Managing Director, NB LLC, since 2005; formerly, Senior Vice
President, NB LLC, 2003 to 2005; formerly, Vice President, NB LLC, 1999 to
2003; Vice President, eleven registered investment companies for which NB
Management acts as investment manager and administrator (eleven since
2008).
|
Frank Rosato (1971)
|
|
Assistant Treasurer since
2005
|
|
Vice President, NB LLC, since 2006;
Employee, NB Management, since 1995; Assistant Treasurer, eleven
registered investment companies for which NB Management acts as investment
manager and administrator (ten since 2005 and one since
2006).
|
Neil S. Siegel (1967)
|
|
Vice President since 2008
|
|
Managing Director, NB Management,
since 2008; Managing Director, NB LLC, since 2006; formerly, Senior Vice
President, NB LLC, 2004 to 2006; Vice President, eleven registered
investment companies for which NB Management acts as investment manager
and administrator (eleven since 2008); formerly, Head of Institutional
Marketing, Morgan Stanley Investment Management, 1993 to 2004.
|
43
Name, (Year of
Birth),
|
|
Position and Length
of
|
|
|
and
Address
(1)
|
|
Time Served
|
|
Principal
Occupation(s)
(2)
|
Chamaine Williams
(1971)
|
|
Chief Compliance Officer since 2005
|
|
Senior Vice President, NB LLC, since
2007; Chief Compliance Officer, NB Management, since 2006; Senior Vice
President, Lehman Brothers Inc., since 2007; formerly, Vice President,
Lehman Brothers Inc., 2003 to 2006; Chief Compliance Officer, eleven
registered investment companies for which NB Management acts as investment
manager and administrator (ten since 2005 and one since 2006); formerly,
Chief Compliance Officer, Lehman Brothers Asset Management Inc., 2003 to
2007; formerly, Chief Compliance Officer, Lehman Brothers Alternative
Investment Management LLC, 2003 to 2007; formerly, Vice President, UBS
Global Asset Management (US) Inc. (formerly, Mitchell Hutchins Asset
Management, a wholly-owned subsidiary of PaineWebber Inc.), 1997 to 2003.
|
(1)
|
|
The business address
of each listed person is 605 Third Avenue, New York, New York
10158.
|
|
(2)
|
|
Except as otherwise
indicated, each individual has held the positions shown for at least the
last five years.
|
|
(3)
|
|
The inception date of
Intermediate Municipal, California Intermediate, and New York Intermediate
is 2002. The inception date of Income Opportunity is 2003. The inception
date of Dividend Advantage is 2004.
|
|
(4)
|
|
For Dividend
Advantage, the officer has served since the Funds inception in
2004.
|
Compensation of Directors
The
following table sets forth information concerning the compensation of the Funds
Directors. The Funds do not have any pension or retirement plan for their
Directors. For the fiscal year ended October 31, 2008, the Directors received
the amounts set forth in the following table from each Fund. For the calendar
year ended December 31, 2008, the Directors received the compensation set forth
in the following table for serving as trustee/director of the funds in the fund
family. Each officer and Director who is a director, officer or employee of NB
Management, Neuberger Berman or any entity controlling, controlled by or under
common control with NB Management or Neuberger Berman serves as a Director and/
or officer without any compensation from the Funds.
44
TABLE OF COMPENSATION
|
|
|
|
|
|
Total Compensation from
|
|
|
|
|
|
|
Registered Investment
|
|
|
|
|
|
|
Companies in the Neuberger
|
|
|
Compensation from
|
|
Berman Fund Complex Paid
|
Name and
Position
|
|
each Fund for Fiscal
|
|
to
Directors for Calendar
|
with each Fund
|
|
Year Ended 10/31/08
|
|
Year Ended 12/31/08
|
Independent Directors
|
|
|
|
|
John Cannon
|
|
|
$2,436
|
|
|
|
$160,000
|
|
Director
|
|
|
|
|
|
|
|
|
Faith Colish
|
|
|
$2,436
|
|
|
|
$160,000
|
|
Director
|
|
|
|
|
|
|
|
|
Martha C. Goss
|
|
|
$2,330
|
|
|
|
$150,000
|
|
Director
|
|
|
|
|
|
|
|
|
C. Anne Harvey
|
|
|
$2,436
|
|
|
|
$160,000
|
|
Director
|
|
|
|
|
|
|
|
|
Robert A. Kavesh
|
|
|
$2,313
|
|
|
|
$150,000
|
|
Director
|
|
|
|
|
|
|
|
|
Michael M. Knetter
|
|
|
$2,313
|
|
|
|
$150,000
|
|
Director
|
|
|
|
|
|
|
|
|
Howard A. Mileaf
|
|
|
$2,330
|
|
|
|
$150,000
|
|
Director
|
|
|
|
|
|
|
|
|
George W. Morriss
|
|
|
$2,453
|
|
|
|
$160,000
|
|
Director
|
|
|
|
|
|
|
|
|
Edward I. OBrien
|
|
|
$2,313
|
|
|
|
$150,000
|
|
Director
|
|
|
|
|
|
|
|
|
Cornelius T. Ryan
|
|
|
$2,475
|
|
|
|
$160,000
|
|
Director
|
|
|
|
|
|
|
|
|
Tom D. Seip
|
|
|
$2,786
|
|
|
|
$185,000
|
|
Director
|
|
|
|
|
|
|
|
|
Candace L. Straight
|
|
|
$2,436
|
|
|
|
$160,000
|
|
Director
|
|
|
|
|
|
|
|
|
Peter P. Trapp
|
|
|
$2,637
|
|
|
|
$170,000
|
|
Director
|
|
|
|
|
|
|
|
|
Directors who are
Interested Persons
|
|
|
|
|
|
Joseph V. Amato*
|
|
|
N/A
|
|
|
|
N/A
|
|
Director
|
|
|
|
|
|
|
|
|
Robert Conti*
|
|
|
N/A
|
|
|
|
$
0
|
|
Director, President and
|
|
|
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
Jack L. Rivkin
|
|
|
$ 470
|
|
|
|
$ 61,549
|
|
Director
|
|
|
|
|
|
|
|
|
*
|
|
Mr. Conti became a
Director in December 2008 and Mr. Amato became a Director in March
2009.
|
45
Effective
January 1, 2008, the compensation of each Independent Director was restructured.
For serving as a trustee/director of the funds in the fund family, each
Independent Director and each Interested Director who is not an employee of NB
Management or its affiliates receives an annual retainer of $90,000, paid
quarterly, and a fee of $10,000 for each of the six regularly scheduled meetings
he or she attends in-person or by telephone. For any additional special
in-person or telephonic meeting of a Board, the Governance and Nominating
Committee Chair determines whether a fee is warranted. To compensate for the
additional time commitment, the Chair of each Committee receives $10,000 per
year except the Chair of the Executive Committee. No additional compensation is
provided for service on a Board committee. The Non-Executive Chair who is also
an Independent Director receives an additional $35,000 per year.
THE DIRECTORS OF EACH FUND
UNANIMOUSLY
RECOMMEND THAT YOU VOTE FOR EACH NOMINEE.
46
INFORMATION ON THE FUNDS INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
Ernst
& Young LLP (Ernst & Young) audited financial statements for the
fiscal year ended October 31, 2008 for each of the Funds. Ernst & Young, 200
Clarendon Street, Boston, MA 02116, serves as the independent registered public
accounting firm for each Fund and provides audit services, tax compliance
services and assistance and consultation in connection with the review of each
Funds filings with the SEC. In the opinion of the Audit Committee, the services
provided by Ernst & Young are compatible with maintaining the independence
of each Funds independent registered public accounting firm. The Board has
selected Ernst & Young as the independent registered public accounting firm
for each of the Funds for the fiscal year ending October 31, 2009. Ernst &
Young has served as each Funds independent registered public accounting firm
since the Funds inception. Ernst & Young has informed the Fund that it has
no material direct or indirect financial interest in any Fund.
Representatives of Ernst & Young 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 should any matter arise requiring their presence.
Information concerning the fees billed by the independent registered public
accounting firm is included in Exhibit K.
GENERAL INFORMATION
Ownership of Shares
Information regarding the percent ownership of each person who as of
March 2, 2009, to the knowledge of each Fund, owned beneficially 5% or more
of any class of the outstanding shares of a Fund is included in Exhibit L to
this Proxy Statement.
Since the
beginning of each Funds most recently completed fiscal year, no Director has
purchased or sold securities exceeding 1% of the outstanding securities of any
class of LBHI or its subsidiaries.
As of the
date hereof, no final determination has been made with respect to all of the
individuals who will comprise the ownership group of NBSH; however, it is
expected that up to approximately 200 individuals will have indirect ownership
interests in NBG ranging from approximately 1/3 of 1% to less than 5%. Among
those who will comprise the ownership group are two individuals who currently
are Directors and deemed interested persons for 1940 Act purposes, certain
officers and other key employees of each of the Advisers as well as officers of
certain of the Advisers affiliates.
47
Payment of Solicitation Expenses
The Funds
will bear costs normally associated with their annual meetings (
i.e.
, a portion of mailing,
printing and production of the Proxy Statement). NB Management (or its
successor) will bear all other normal and customary fees and expenses in
connection with the Proposed Acquisition (including, but not limited to,
Directors fees relating to the special Board meetings, proxy solicitation costs
and legal fees). NB Management has engaged The Altman Group, Inc. and MacKenzie
Partners, Inc., both proxy solicitation firms, to assist in the solicitation of
proxies. The aggregate cost of retaining such proxy solicitation firms is
expected to be about $190,000 plus expenses in connection with the solicitation
of proxies. The proxy solicitation firms expect to employ approximately 35
people in connection with the solicitation of proxies. The aggregate cost in
connection with the solicitation of proxies is expected to be about $250,000, of
which approximately $0 has been spent to date.
Other Matters to Come Before the
Meeting
The Funds
are aware that at least one stockholder of each Fund has submitted a
notification of intention to nominate a slate of Directors. If other business
should properly come before the Meeting, the proxy holders will vote on it in
accordance with their best judgment for those shares they are authorized to
vote. However, any proposal submitted to a vote at the Meeting by anyone other
than the officers or Directors of the Funds may be voted only in person or by
written proxy.
Stockholder Proposals
Each
Funds bylaws require stockholders wishing to nominate Directors or make
proposals to be voted on at the Funds annual meeting to provide notice of the
nominations or proposals in writing delivered or mailed by first class United
States mail, postage prepaid, to the Secretary of the Fund. To be valid, the
notice must include all of the information specified in the applicable Funds
bylaws. Stockholder proposals meeting tests contained in the SECs proxy rules
may, under certain conditions, be included in a Funds proxy material for a
particular annual stockholder meeting. Proposals submitted for inclusion in a
Funds proxy material for the 2010 annual meeting must be received by the
Secretary on or before December 5, 2009. The fact that the Funds receive a
stockholder proposal in a timely manner does not ensure its inclusion in its
proxy material, since there are other requirements in the proxy rules relating
to such inclusion. Stockholders who wish to make a proposal that would not be
included in a Funds proxy materials or to nominate a person or persons as a
Director at a Funds 2010 annual meeting must ensure that the proposal or
nomination is delivered to the Secretary no earlier than November 5, 2009 and no
later than December 5, 2009. However, if the date of the mailing of the notice
for the annual meeting is advanced or delayed by more than thirty days from the
anniversary date of the mailing of this years notice for the annual meeting or
a special meeting of stockholders is held, notice by the stockholders to be
timely must be delivered no earlier than 120th day prior to the date of such
meeting, and no later than the later to occur of (i) the 90th day prior to the
date of such meeting or
48
(ii) the 10th day following the day on
which public announcement of the date of such meeting is first made by the Fund.
The proposal or nomination must be in good order and in compliance with all
applicable legal requirements, including the requirements set forth in each
Funds bylaws. The Chairman of the Meeting may refuse to acknowledge a
nomination or other proposal by a stockholder that is not made in the manner
described above.
Notice to Banks, Broker-Dealers and
Voting Directors and their Nominees
Please
advise the Funds, c/o Secretary, 605 Third Avenue, New York, New York 10158,
whether other persons are beneficial owners of Fund shares for which proxies are
being solicited and, if so, the number of copies of the Proxy Statement to
supply copies to the beneficial owners of these shares.
Investment Manager, Sub-Adviser, and
Administrator
NB
Management, 605 Third Avenue, New York, New York 10158, is the investment
manager and administrator to each Fund. New NB Management will perform the same
advisory services, and be located at the same address, as NB Management. NB LLC,
605 Third Avenue, New York, New York 10158, is the sub-adviser to all the Funds.
LBAM, 200 South Wacker Drive, Suite 2100, Chicago, Illinois 60601, is also a
sub-adviser to Income Opportunity.
VOTING INFORMATION
Voting Rights
Stockholders of record on the Record Date are entitled to be present and
to vote at the Meeting. Each share or fractional share is entitled to one vote
or fraction thereof. Exhibit M of this Proxy Statement sets forth the number of
shares of each class of each Fund issued and outstanding as of the Record Date.
Regardless of the class of shares they own, stockholders of each Fund will vote
as a single class on each Proposal. Each Funds stockholders will vote on each
Proposal with respect to that Fund.
If the
enclosed proxy card is properly executed and returned in time to be voted at the
Meeting, the shares represented by the proxy card will be voted in accordance
with the instructions marked on the proxy card. If no instructions are marked on
the proxy card, the proxy will be voted FOR the Proposals. Any stockholder who
has given a proxy has the right to revoke it any time prior to its exercise by
attending the Meeting and voting his or her shares in person, or by submitting a
letter of revocation or a later-dated proxy card to the Fund at the address
indicated on the enclosed envelope provided with this Proxy Statement. Any
letter of revocation or later-dated proxy card must be received by the Fund
prior to the Meeting and must indicate your name and account number to be
effective. Proxies voted by telephone or Internet may be revoked at any time
before they are voted at the Meeting in the same manner that proxies voted by
mail may be revoked.
49
In
tallying stockholder votes, proxies that reflect abstentions or broker
non-votes (shares held by brokers or nominees as to which instructions have not
been received from the beneficial owners or the persons entitled to vote and
either (i) the broker or nominee does not have discretionary voting power or
(ii) the broker or nominee returns the proxy but expressly declines to vote on a
particular matter) will be counted as shares that are present and entitled to
vote for purposes of determining the presence of a quorum and effectively will
be a vote against approval. For shares held in individual retirement accounts
(IRA, Roth IRA or SIMPLE Retirement plans), the IRA custodian will vote the
shares in the account in accordance with instructions given by the depositor.
However, if the depositor fails to provide instructions on how to vote the
shares in the account, the custodian will vote the undirected shares in the same
proportion as shares are voted in other individual retirement accounts.
Pursuant
to the rules of the NYSE, shares of preferred stock of California Intermediate,
Intermediate Municipal and New York Intermediate with reset features of one year
or less may be voted under certain conditions by broker-dealer firms and counted
for purposes of establishing a quorum of those Funds if no instructions are
received by the date specified in the broker-dealers statement accompanying the
proxy materials. These conditions include, among others, that (i) at least 30%
of the Funds shares of preferred stock outstanding have voted on the proposal,
and (ii) less than 10% of the Funds shares of preferred stock outstanding have
voted against such proposal. If these conditions are met, the broker-dealer firm
may vote such uninstructed shares of preferred stock on the proposal in the same
proportion as the votes cast by all shares of preferred stock voted on such
proposal. A Fund will include shares held of record by broker-dealers as to
which such authority has been granted in its tabulation of the total number of
shares present for purposes of determining whether the necessary quorum of
stockholders of the Fund exists.
For
situations in which Advisers have proxy voting discretion, they will vote the
Proposals in accordance with their proxy voting policies. Generally, this means
that they will follow a third-party proxy voting providers recommendation,
however, they have the ability to vote contrary to the recommendation in certain
circumstances.
Proxy
solicitations will be made primarily by mail, but may also be made by telephone,
electronic transmissions or personal meetings with officers and employees of NB
Management, affiliates of NB Management or other representatives of the Funds.
Proxy solicitations may also be made by The Altman Group, Inc. or MacKenzie
Partners, Inc.
Quorum; Adjournment
A quorum
with respect to a Fund is constituted by one-third of the Funds shares
outstanding and entitled to vote at the Meeting, present in person or by proxy.
If a quorum is not present at a Funds Meeting, the persons named as proxies may
propose one or more adjournments of such Meeting to permit further solicitation
of
50
proxies. Subject to the rules
established by the Chairman of the Meeting, the holders of a majority of the
shares entitled to vote at the Meeting and present in person or by proxy may
vote to adjourn, or, if no stockholder entitled to vote is present in person or
by proxy, any officer present entitled to preside or act as secretary of the
Meeting may adjourn the Meeting. In the former case, the persons named as
proxies will vote those proxies that they are entitled to vote FOR or
AGAINST any proposal and those proxies they are required to WITHHOLD on all
nominees in their discretion. If a quorum is present at the Meeting, the
Chairman of the Meeting may adjourn the Meeting if sufficient votes to approve a
Proposal are not received or for any other purpose. A stockholder vote may be
taken on the nominations in this Proxy Statement prior to any such adjournment
if sufficient votes have been received and it is otherwise appropriate. The
Board also may postpone the Meeting of stockholders prior to the Meeting with
notice to the stockholders entitled to vote at or to receive notice of the
Meeting.
Vote Required
Approval
of Proposals 1, 2 and 3 by a Fund will require the affirmative vote of a
majority of the outstanding voting securities of the Fund as defined in the
1940 Act. This means the lesser of (1) 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 present in person or represented by proxy, or (2) more than 50% of the
outstanding shares of the Fund. If Proposal 1 is not approved with respect to a
Fund, then Proposal 2 or 3 (as appropriate) will not be effective with respect
to that Fund, even if stockholders vote in favor of it. With respect to Proposal
4, the election of a nominee to the Board of Directors of a Fund requires the
affirmative vote of a majority of a Funds outstanding shares.
If the
stockholders of a Fund approve the New Management and Sub-Advisory Agreements
for such Fund, their effectiveness is conditioned upon the completion of the
Proposed Acquisition. If approved, these Proposals will not become effective
until the closing of the Proposed Acquisition. Approval of Proposal 4 is not
conditioned upon the completion of the Proposed Acquisition.
To assure
the presence of a quorum at the Meeting, please promptly execute and return the
enclosed proxy. A self-addressed, postage-paid envelope is enclosed for your
convenience. Alternatively, you may vote by telephone or through the Internet at
the number or website address printed on the enclosed proxy card.
By order of the
Boards,
|
|
Claudia A. Brandon
|
Secretary of the Funds
|
April 4, 2009
51
Instructions for Signing Proxy
Cards
The
following general rules for signing proxy cards may be of assistance to you and
avoid the time and expense to the Funds involved in validating your vote if you
fail to sign your proxy card(s) properly.
|
1.
|
|
Individual Accounts:
Sign your name exactly as it appears in the registration on the proxy
card.
|
|
|
|
2.
|
|
Joint Accounts: Any
party may sign, but the name of the party signing should conform exactly
to the name shown in the registration on the proxy card.
|
|
|
|
3.
|
|
Other Accounts: The
capacity of the individual signing the proxy card should be indicated
unless it is reflected in the form of registration. For
example:
|
Registration
|
|
Valid Signature
|
Corporate Accounts
|
|
|
(1) ABC Corp.
|
|
ABC Corp.
|
(2) ABC Corp
|
|
John Doe, Treasurer
|
(3) ABC Corp. c/o John Doe, Treasurer
|
|
John Doe
|
(4) ABC Corp. Profit Sharing Plan
|
|
John Doe, Trustee
|
|
|
|
Trust Accounts
|
|
|
(1) ABC Trust
|
|
Jane B. Doe, Trustee
|
(2) Jane B. Doe, Trustee u/t/d 12/28/78
|
|
Jane B. Doe
|
|
|
|
Custodian or Estate Accounts
|
|
|
(1) John B. Smith, Cust. f/b/o John B. Smith, Jr. UGMA
|
|
John B. Smith
|
(2) John B. Smith
|
|
John B. Smith, Jr.,
|
|
|
Executor
|
52
EXHIBIT LIST
Exhibit
|
|
Title
|
|
Page
|
|
A
|
|
|
Audit Committee Report
|
|
A-1
|
|
B
|
|
|
Principal
Executive Officers and Directors
|
|
|
|
|
|
|
of NB
Management, NB LLC and LBAM
|
|
B-1
|
|
C
|
|
|
Form of New Management Agreement
|
|
C-1
|
|
C-1
|
|
|
Dates of Various
Management Agreement Approvals
|
|
|
|
|
|
|
for Each
Fund
|
|
C-9
|
|
D
|
|
|
Brokerage Commissions
|
|
D-1
|
|
E-1
|
|
|
Rate of
Compensation Under Management Agreements
|
|
E-1
|
|
E-2
|
|
|
Fees Paid to NB Management
|
|
E-2
|
|
F
|
|
|
Current
Contractual and Voluntary Fee Waivers
|
|
F-1
|
|
G
|
|
|
Name, Asset Size, and Compensation Received by NB
|
|
|
|
|
|
|
Management for Advisory or
Sub-Advisory Services
|
|
|
|
|
|
|
to Other Similar
Funds
|
|
G-1
|
|
H
|
|
|
Forms of
Sub-Advisory Agreement
|
|
H-1
|
|
H-1
|
|
|
Dates of Various Sub-Advisory Agreement Approvals
|
|
|
|
|
|
|
for Each
Fund
|
|
H-5
|
|
I
|
|
|
Fees Paid to NB
LLC or LBAM under Sub-Advisory
|
|
|
|
|
|
|
Agreements
|
|
I-1
|
|
J
|
|
|
Name, Asset Size and Compensation Received by NB
|
|
|
|
|
|
|
LLC for
Sub-Advisory Services to Similar Funds
|
|
J-1
|
|
K
|
|
|
Fees Billed by
Independent Registered Public Accounting
|
|
|
|
|
|
|
Firms
|
|
K-1
|
|
L
|
|
|
Control Persons and Principal Holders of Securities
|
|
L-1
|
|
M
|
|
|
Number of Shares
Outstanding for Each Class of Each
|
|
|
|
|
|
|
Fund as of
the Record Date
|
|
M-1
|
53
EXHIBIT A
Audit Committee Report
Neuberger Berman California
Intermediate Municipal Fund Inc.
Neuberger Berman Dividend Advantage Fund
Inc.
Neuberger Berman Income
Opportunity Fund Inc.
Neuberger Berman Intermediate Municipal Fund
Inc.
Neuberger Berman New York
Intermediate Municipal Fund Inc.
Neuberger Berman Real Estate Securities
Income Fund Inc.
(Collectively, The
Funds)
The Audit
Committees of the Boards of Directors of the Funds operate pursuant to a
Charter, which sets forth the role of an Audit Committee in a Funds financial
reporting process. Pursuant to the Charter, the role of the Audit Committee is
to oversee a Funds accounting and financial reporting processes and the quality
and integrity of the Funds financial statements and the independent audit of
those financial statements. Each Committee is responsible for, among other
things, recommending the initial and ongoing engagement of the independent
auditors and reviewing the scope and results of its Funds annual audit with the
Funds independent auditors. Fund management is responsible for the preparation,
presentation and integrity of the Funds financial statements and for the
procedures designed to assure compliance with accounting standards and
applicable laws and regulations. The independent auditors for the Funds are
responsible for planning and carrying out proper audits and reviews.
The Audit
Committees met on December 16, 2008 to review each Funds audited financial
statements for the fiscal year ended October 31, 2008. In performing this
oversight function, the Audit Committees have reviewed and discussed the audited
financial statements with the Funds management and their independent auditors,
Ernst & Young LLP (E&Y). The Audit Committees have discussed with
E&Y the matters required to be discussed by Statement on Auditing Standards
No. 61, as amended, and have received the written disclosures and the letter
from E&Y required by the applicable requirements of the Public Company
Accounting Oversight Board regarding independent accountant communications with
audit committees concerning independence. The Audit Committees also have
discussed with E&Y its independence.
The
members of the Audit Committees are not employed by the Funds as experts in the
fields of auditing or accounting and are not employed by the Funds for
accounting, financial management or internal control purposes. Members of the
Audit Committees rely without independent verification on the information
provided and the representations made to them by management and
E&Y.
A-1
Based
upon this review and related discussions, and subject to the limitation on the
role and responsibilities of the Audit Committee set forth above and in the
Charter, the Audit Committee of each Fund recommended to its Board of Directors
that the audited financial statements be included in the Funds Annual Report to
Stockholders for the fiscal year ended October 31, 2008.
The
members of the Audit Committees are listed below. Each has been determined to be
independent pursuant to American Stock Exchange Rule 121B(b)(1).
Martha C. Goss
Howard A.
Mileaf
George W. Morriss
Cornelius T. Ryan
(Chairman)
Tom D. Seip
Peter P. Trapp
December 16, 2008
A-2
EXHIBIT B
PRINCIPAL EXECUTIVE OFFICERS AND
DIRECTORS OF
NB MANAGEMENT, NB LLC AND LBAM
The
address of each principal executive officer and director of NB Management and NB
LLC, listed below is 605 Third Avenue, New York, New York 10158. The address of
each principal executive officer and director of LBAM, listed below is 200 South
Wacker Drive, Suite 2100, Chicago, IL 60601.
Name
|
|
Principal
Occupation
|
Joseph V. Amato
|
|
CEO and President, NB Holdings; CEO
and President, NB LLC; Managing Director and Board member, LBAM; Director
of each Fund.
|
Claudia A. Brandon
|
|
Senior Vice President and Assistant
Secretary, NB Management; Senior Vice President, NB LLC; Executive Vice
President and Secretary of each Fund.
|
Robert Conti
|
|
President and Chief Executive
Officer, NB Management; Managing Director, NB LLC; President, Chief
Executive Officer and Director of each Fund.
|
Alison Deans
|
|
Managing Director and Chief
Investment Officer, NB Management; Managing Director, NB
LLC.
|
Maxine L. Gerson
|
|
Senior Vice President, Secretary and
General Counsel, NB Management; Senior Vice President, Deputy General
Counsel and Assistant Secretary, NB LLC; Vice President, Assistant
Secretary and Deputy General Counsel, NB Holdings; Executive Vice
President and Chief Legal Officer of each Fund.
|
Edward S. Grieb
|
|
Treasurer and Chief Financial
Officer, NB Management, Managing Director and Chief Financial Officer, NB
LLC; Chief Financial Officer, NB Holdings.
|
Kevin Handwerker
|
|
Managing Director, Secretary and
General Counsel, NB LLC; Executive Vice President, Secretary and General
Counsel, NB Holdings.
|
Richard W. Knee
|
|
Vice President, NB Management;
Managing Director and Board member, LBAM.
|
Lori Loftus
|
|
Senior Vice President and Chief
Compliance Officer, LBAM.
|
Andrew Provencher
|
|
Managing Director, NB Management and
NB LLC; Vice President of each Fund.
|
Neil S. Siegel
|
|
Managing Director, NB Management and
NB LLC; Vice President of each Fund.
|
Bradley C. Tank
|
|
Chairman, CEO, Board member and
Managing Director, LBAM; Global Head of Fixed Income Asset Management and
Co-Head of Institutional Asset Management, Lehman
Brothers.
|
Chamaine Williams
|
|
Senior Vice President and Chief
Compliance Officer, NB Management; Senior Vice President, NB LLC; Chief
Compliance Officer of each Fund.
|
B-1
EXHIBIT C
FORM OF NEW MANAGEMENT AGREEMENT
This
Agreement is made as of ___________, 200_, between_________________a Maryland
corporation (Fund), and Neuberger Berman Management LLC, a Delaware limited
liability company (the Manager).
WITNESSETH:
WHEREAS,
Fund is registered under the Investment Company Act of 1940, as amended (1940
Act), as an closed-end, [non-diversified / diversified] management investment
company; and
WHEREAS, Fund desires to retain the
Manager as investment adviser to furnish the investment advisory and portfolio
management services described herein and the Manager is willing to furnish such
services;
NOW, THEREFORE, in consideration of
the premises and mutual covenants herein contained, it is agreed between the
parties hereto as follows:
1.
SERVICES OF THE
MANAGER
.
1.1.
Investment Management Services. The Manager shall act as the investment adviser
to the Fund and, as such, shall (i) obtain and evaluate such information
relating to the economy, industries, businesses, securities markets and
securities as it may deem necessary or useful in discharging its
responsibilities hereunder, (ii) formulate a continuing program for the
investment of the assets of the Fund in a manner consistent with its investment
objectives, policies and restrictions, and (iii) determine from time to time
securities to be purchased, sold, retained or lent by the Fund, and implement
those decisions, including the selection of entities with or through which such
purchases, sales or loans are to be effected; provided, that the Manager will
place orders pursuant to its investment determinations either directly with the
issuer or with a broker or dealer, and if with a broker or dealer, (a) will
attempt to obtain the best net price and most favorable execution of its orders,
and (b) may nevertheless in its discretion purchase and sell portfolio
securities from and to brokers and dealers who provide the Manager with
research, analysis, advice and similar services and pay such brokers and dealers
in return a higher commission or spread than may be charged by other brokers or
dealers.
The Fund
hereby authorizes any entity or person associated with the Manager which is a
member of a national securities exchange to effect or execute any transaction on
the exchange for the account of the Fund which is permitted by Section 11(a) of
the Securities Exchange Act of 1934 and Rule 11a2-2(T) thereunder, and the Fund
hereby consents to the retention of compensation for such transactions in
accordance with Rule 11a-2(T)(a)(iv).
C-1
The
Manager shall carry out its duties with respect to the Funds investments in
accordance with applicable law and the investment objectives, policies and
restrictions of the Fund adopted by the directors of Fund (Directors), and
subject to such further limitations as the Fund may from time to time impose by
written notice to the Manager.
1.2. The
Manager can use any of the officers and employees of Neuberger Berman, LLC to
provide any of the non-investment advisory services described herein, and can
subcontract to third parties, provided the Manager remains as fully responsible
to the Fund under this contract as if the Manager had provided services
directly.
2.
EXPENSES OF THE
FUND
.
2.1.
Expenses to Be Paid by the Manager. The Manager shall pay all salaries, expenses
and fees of the officers, directors and employees of the Fund who are officers,
directors or employees of the Manager.
In the
event that the Manager pays or assumes any expenses of the Fund not required to
be paid or assumed by the Manager under this Agreement, the Manager shall not be
obligated hereby to pay or assume the same or any similar expense in the future;
PROVIDED, that nothing herein contained shall be deemed to relieve the Manager
of any obligation to the Fund under any separate agreement or arrangement
between the parties.
2.2.
Expenses to Be Paid by the Fund. The Fund shall bear the expenses of its
operation, except those specifically allocated to the Manager under this
Agreement or under any separate agreement between the Fund and the Manager.
Subject to any separate agreement or arrangement between the Fund and the
Manager, the expenses hereby allocated to the Fund, and not to the Manager,
include, but are not limited to:
2.2.1. Custody. All charges of
depositories, custodians, and other agents for the transfer, receipt,
safekeeping, and servicing of its cash, securities, and other
property.
2.2.2.
Stockholder Servicing. All expenses of maintaining and servicing Stockholder
accounts, including but not limited to the charges of any Stockholder servicing
agent, dividend disbursing agent or other agent engaged by the Fund to service
Stockholder accounts.
2.2.3.
Stockholder Reports. All expenses of preparing, setting in type, printing and
distributing reports and other communications to Stockholders of the
Fund.
2.2.4.
Pricing and Portfolio Valuation. All expenses of computing the Funds net asset
value per share, including any equipment or services obtained for the purpose of
pricing shares or valuing the Funds investment portfolio.
C-2
2.2.5.
Communications. All charges for equipment or services used for communications
between the Manager or the Fund and any custodian, Stockholder servicing agent,
portfolio accounting services agent, dividend disbursing agent, dividend
reinvestment plan agent or other agent engaged by the Fund.
2.2.6.
Legal and Accounting Fees. All charges for services and expenses of the Funds
legal counsel and independent auditors.
2.2.7.
Directors Fees and Expenses. All compensation of Directors other than those
affiliated with the Manager, all expenses incurred in connection with such
unaffiliated Directors services as Directors, and all other expenses of
meetings of the Directors or committees thereof.
2.2.8.
Stockholder Meetings. All expenses incidental to holding meetings of
Stockholders, including the printing of notices and proxy materials, and proxy
solicitation therefor.
2.2.9.
Bonding and Insurance. All expenses of bond, liability, and other insurance
coverage required by law or regulation or deemed advisable by the Directors,
including, without limitation, such bond, liability and other insurance expense
that may from time to time be allocated to the Fund in a manner approved by the
Directors.
2.2.10.
Brokerage Commissions. All brokers commissions and other charges incident to
the purchase, sale or lending of the Funds portfolio securities.
2.2.11.
Taxes. All taxes or governmental fees payable by or with respect to the Fund to
federal, state or other governmental agencies, domestic or foreign, including
stamp or other transfer taxes.
2.2.12.
Trade Association Fees. All fees, dues and other expenses incurred in connection
with the Funds membership in any trade association or other investment
organization.
2.2.13.
Nonrecurring and Extraordinary Expenses. Such nonrecurring and extraordinary
expenses as may arise, including the costs of actions, suits, or proceedings to
which the Fund is a party and the expenses the Fund may incur as a result of its
legal obligation to provide indemnification to Funds officers, Directors and
agents.
2.2.14.
Organizational Expenses and Offering Expenses for Common Stock. Any and all
organizational expenses of the Fund and any and all offering expenses for shares
of the Funds common stock paid by the Manager shall be reimbursed by the Fund
if and at such time or times agreed by the Fund and the Manager.
2.2.15.
Expenses of Listing on a National Securities Exchange. Any and all expenses of
listing and maintaining the listing of shares of the Funds common stock on any
national securities exchange.
C-3
2.2.16.
Offering Expenses for any Preferred Stock. Any and all offering expenses
(including rating agency fees) for any preferred stock of the Fund paid by the
Manager shall be reimbursed by the Fund if and at such time or times agreed by
the Fund and the Manager.
2.2.17.
Dividend Reinvestment Plan. Any and all expenses incident to any dividend
reinvestment plan.
2.2.18. Interest. Such interest as
may accrue on borrowings of the Fund.
3.
ADVISORY
FEE
.
3.1. Fee.
As compensation for all services rendered, facilities provided and expenses paid
or assumed by the Manager under this Agreement, the Fund shall pay the Manager
an annual fee equal to __% of the Funds average daily total assets minus
liabilities other than the aggregate indebtedness entered into for purposes of
leverage (Managed Assets).
3.2.
Computation and Payment of Fee. The advisory fee shall accrue on each calendar
day, and shall be payable monthly on the first business day of the next
succeeding calendar month. The daily fee accruals shall be computed by
multiplying the fraction of one divided by the number of days in the calendar
year by the annual advisory fee rate, and multiplying this product by the
Managed Assets of the Fund, determined in the manner established by the
Directors, as of the close of business on the last preceding business day on
which the Funds net asset value was determined.
4.
OWNERSHIP OF
RECORDS
.
All
records required to be maintained and preserved by the Fund pursuant to the
provisions or rules or regulations of the Securities and Exchange Commission
under Section 31 (a) of the 1940 Act and maintained and preserved by the Manager
on behalf of the Fund are the property of the Fund and shall be surrendered by
the Manager promptly on request by the Fund; provided, that the Manager may at
its own expense make and retain copies of any such records.
5.
REPORTS TO
MANAGER
.
The Fund
shall furnish or otherwise make available to the Manager such copies of the
Funds financial statements, proxy statements, reports, and other information
relating to its business and affairs as the Manager may, at any time or from
time to time, reasonably require in order to discharge its obligations under
this Agreement.
6.
REPORTS TO THE
FUND
.
The
Manager shall prepare and furnish to the Fund such reports, statistical data and
other information in such form and at such intervals as the Fund may reasonably
request.
C-4
7.
RETENTION OF
SUB-ADVISER
.
Subject
to the Fund obtaining the initial and periodic approvals required under Section
15 of the 1940 Act, the Manager may retain a sub-adviser, at the Managers own
cost and expense, for the purpose of making investment recommendations and
research information available to the Manager. Retention of a sub-adviser shall
in no way reduce the responsibilities or obligations of the Manager under this
Agreement and the Manager shall be responsible to Fund for all acts or omissions
of the sub-adviser in connection with the performance of the Managers duties
hereunder.
8.
SERVICES TO OTHER
CLIENTS
.
Nothing
herein contained shall limit the freedom of the Manager or any affiliated person
of the Manager to render investment management and administrative services to
other investment companies, to act as investment adviser or investment counselor
to other persons, firms or corporations, or to engage in other business
activities.
9.
LIMITATION OF LIABILITY OF
MANAGER AND ITS PERSONNEL
.
9.1.
Neither the Manager nor any director, officer or employee of the Manager
performing services for the Fund at the direction or request of the Manager in
connection with the Managers discharge of its obligations hereunder shall be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with any matter to which this Agreement relates;
provided, that nothing herein contained shall be construed (i) to protect the
Manager against any liability to the Fund or its Stockholders to which the
Manager would otherwise be subject by reason of the Managers willful
misfeasance, bad faith, or gross negligence in the performance of the Managers
duties, or by reason of the Managers reckless disregard of its obligations and
duties under this Agreement (disabling conduct), or (ii) to protect any
director, officer or employee of the Manager who is or was a Director or officer
of the Fund against any liability to the Fund or its Stockholders to which such
person would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
such persons office with the Fund.
9.2. The
Fund will indemnify the Manager against, and hold it harmless from, any and all
expenses (including reasonable counsel fees and expenses) incurred investigating
or defending against claims for losses or liabilities described in Section 9.1
not resulting from negligence, disregard of its obligations and duties under
this Agreement or disabling conduct by the Manager. Indemnification shall be
made only following: (i) a final decision on the merits by a court or other body
before whom the proceeding was brought that the Manager was not liable by reason
of negligence, disregard of its obligations and duties under this Agreement or
disabling conduct or (ii) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that the Manager was not liable
by reason of negligence,
C-5
disregard of its obligations and duties
under this Agreement or disabling conduct by (a) the vote of a majority of a
quorum of directors of the Fund who are neither interested persons of the Fund
nor parties to the proceeding (disinterested non-party directors) or (b) an
independent legal counsel in a written opinion. The Manager shall be entitled to
advances from the Fund for payment of the reasonable expenses incurred by it in
connection with the matter as to which it is seeking indemnification hereunder
in the manner and to the fullest extent permissible under the Maryland General
Corporation Law. The Manager shall provide to the Fund a written affirmation of
its good faith belief that the standard of conduct necessary for indemnification
by the Fund has been met and a written undertaking to repay any such advance if
it should ultimately be determined that the standard of conduct has not been
met. In addition, at least one of the following additional conditions shall be
met: (a) the Manager shall provide security in form and amount acceptable to the
Fund for its undertaking; (b) the Fund is insured against losses arising by
reason of the advance; or (c) a majority of a quorum of the full Board of
Directors of the Fund, the members of which majority are disinterested non-party
directors, or independent legal counsel, in a written opinion, shall have
determined, based on a review of facts readily available to the Fund at the time
the advance is proposed to be made, that there is reason to believe that the
Manager will ultimately be found to be entitled to indemnification
hereunder.
10.
EFFECT OF
AGREEMENT
.
Nothing
herein contained shall be deemed to require the Fund to take any action contrary
to the Articles of Incorporation or By-Laws of the Fund, any actions of the
Directors binding upon the Fund, or any applicable law, regulation or order to
which the Fund is subject or by which it is bound, or to relieve or deprive the
Directors of their responsibility for and control of the conduct of the business
and affairs of the Fund.
11.
TERM OF
AGREEMENT
.
The term
of this Agreement shall begin on the date first above written and, unless sooner
terminated as hereinafter provided, this Agreement shall remain in effect
through ___ __, 20__. Thereafter, this Agreement shall continue in effect from
year to year, subject to the termination provisions and all other terms and
conditions hereof, provided, such continuance is approved at least annually by
vote of the holders of a majority of the outstanding voting securities of the
Fund or by the Directors, provided, that in either event such continuance is
also approved annually by the vote, cast in person at a meeting called for the
purpose of voting on such approval, of a majority of the Directors who are not
parties to this Agreement or interested persons of either party hereto; and
provided further that the Manager shall not have notified the Fund in writing at
least sixty (60) days prior to the first expiration date hereof or at least
sixty (60) days prior to any expiration date hereof of any year thereafter that
it does not desire such continuation. The Manager shall
C-6
furnish to the Fund, promptly upon its
request, such information as may reasonably be necessary to evaluate the terms
of this Agreement or any extension, renewal or amendment thereof.
12.
AMENDMENT OR ASSIGNMENT OF
AGREEMENT
.
Any
amendment to this Agreement shall be in writing signed by the parties hereto;
provided, that no such amendment shall be effective unless authorized on behalf
of the Fund (i) by resolution of the Directors, including the vote or written
consent of a majority of the Directors who are not parties to this Agreement or
interested persons of either party hereto, and (ii) by vote of a majority of the
outstanding voting securities of the Fund. This Agreement shall terminate
automatically and immediately in the event of its assignment.
13.
TERMINATION OF
AGREEMENT
.
This
Agreement may be terminated at any time by either party hereto, without the
payment of any penalty, upon sixty (60) days prior written notice to the other
party; provided, that in the case of termination by the Fund, such action shall
have been authorized (i) by resolution of the Directors, including the vote or
written consent of a majority of Directors who are not parties to this Agreement
or interested persons of either party hereto, or (ii) by vote of a majority of
the outstanding voting securities of the Fund.
14.
NAME OF THE
FUND
.
The Fund
hereby agrees that if the Manager shall at any time for any reason cease to
serve as investment adviser to the Fund, the Fund shall, if and when requested
by the Manager, eliminate from the Funds name the name Neuberger Berman and
thereafter refrain from using the name Neuberger Berman or the initials NB
in connection with its business or activities, and the foregoing agreement of
the Fund shall survive any termination of this Agreement and any extension or
renewal thereof.
15.
INTERPRETATION AND DEFINITION
OF TERMS
.
Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretation thereof, if any, by the United States courts or, in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the Securities and Exchange Commission validly issued pursuant to the 1940
Act. Specifically, the terms vote of a majority of the outstanding voting
securities, interested person, assignment and affiliated person, as used
in this Agreement shall have the meanings assigned to them by Section 2(a) of
the 1940 Act. In addition, when the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement
C-7
is modified, interpreted or relaxed by
a rule, regulation or order of the Securities and Exchange Commission, whether
of special or of general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
16.
CHOICE OF
LAW
.
This
Agreement is made and to be principally performed in the State of New York and
except insofar as the 1940 Act or other federal laws and regulations may be
controlling, this Agreement shall be governed by, and construed and enforced in
accordance with, the internal laws of the State of New York.
17.
CAPTIONS
.
The
captions in this Agreement are included for convenience of reference only and in
no way define or delineate any of the provisions hereof or otherwise affect
their construction or effect.
18.
EXECUTION IN
COUNTERPARTS
.
This
Agreement may be executed simultaneously in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by
their respective officers thereunto duly authorized and their respective seals
to be hereunto affixed, as of the day and year first above written.
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
Title:
|
|
|
|
|
|
NEUBERGER BERMAN MANAGEMENT LLC
|
|
|
|
By:
|
|
|
|
Title:
|
|
|
Date
|
|
|
|
C-8
EXHIBIT C-1
|
|
|
|
|
Date of
Last
|
|
|
|
|
|
Submission
|
|
|
|
Date of
Last
|
|
of
Existing
|
|
|
|
Approval
by
|
|
Management
|
|
Date
of
|
|
Directors of
the
|
|
Agreement to
Vote
|
|
Management
|
|
Management
|
|
of
Stockholders of
|
|
Agreement
|
|
Agreement
|
|
each Fund
|
Neuberger Berman
|
|
|
|
|
|
California
Intermediate
|
|
|
|
|
|
Municipal Fund Inc.
|
11/3/2003
|
|
9/25/2008
|
|
9/23/2003*
|
Neuberger
Berman
|
|
|
|
|
|
Dividend Advantage
|
|
|
|
|
|
Fund Inc.
|
3/25/2004
|
|
9/25/2008
|
|
3/9/2004**
|
Neuberger Berman Income
|
|
|
|
|
|
Opportunity Fund
Inc.
|
11/3/2003
|
|
9/25/2008
|
|
9/23/2003*
|
Neuberger
Berman
|
|
|
|
|
|
Intermediate
Municipal
|
|
|
|
|
|
Fund Inc.
|
11/3/2003
|
|
9/25/2008
|
|
9/23/2003*
|
Neuberger Berman
|
|
|
|
|
|
New York
Intermediate
|
|
|
|
|
|
Municipal Fund Inc.
|
11/3/2003
|
|
9/25/2008
|
|
9/23/2003*
|
*
|
|
Stockholder approval was obtained
in connection with termination of the prior agreement due to the sale of
NB Holdings, the parent company of NB Management, to
LBHI.
|
|
|
|
**
|
|
Stockholder approval was obtained
prior to the commencement of operations for the Fund by NB LLC or its
affiliate as the sole stockholder.
|
C-9
EXHIBIT D
BROKERAGE
COMMISSIONS
(Paid to affiliated brokers
for fiscal year ended October 31, 2008)
|
|
|
|
|
|
|
|
%
of Total
|
|
|
|
Commissions
|
|
Commissions
|
Fund
|
Affiliated Broker*
|
|
Paid
|
|
Paid
|
Neuberger Berman
|
Neuberger Berman, LLC
|
|
|
$
|
0
|
|
|
0
|
%
|
California
Intermediate
|
Lehman Brothers Inc.
|
|
|
$
|
0
|
|
|
0
|
%
|
Municipal Fund Inc.
|
|
|
|
|
|
|
|
|
|
Neuberger
Berman
|
Neuberger
Berman, LLC
|
|
|
$
|
582
|
|
|
0.1
|
%
|
Dividend Advantage
|
Lehman Brothers
Inc.
|
|
|
$
|
34,703
|
|
|
6.8
|
%
|
Fund Inc.
|
|
|
|
|
|
|
|
|
|
Neuberger Berman Income
|
Neuberger Berman, LLC
|
|
|
$
|
9
|
|
|
0.0
|
%
|
Opportunity Fund
Inc.
|
Lehman Brothers Inc.
|
|
|
$
|
12,870
|
|
|
3.1
|
%
|
Neuberger
Berman
|
Neuberger
Berman, LLC
|
|
|
$
|
0
|
|
|
0
|
%
|
Intermediate
Municipal
|
Lehman Brothers
Inc.
|
|
|
$
|
0
|
|
|
0
|
%
|
Fund Inc.
|
|
|
|
|
|
|
|
|
|
Neuberger Berman
|
Neuberger Berman, LLC
|
|
|
$
|
0
|
|
|
0
|
%
|
New York
Intermediate
|
Lehman Brothers Inc.
|
|
|
$
|
0
|
|
|
0
|
%
|
Municipal Fund Inc.
|
|
|
|
|
|
|
|
|
|
*
|
|
Neuberger Berman, LLC
and Lehman Brothers Inc. are Affiliated Brokers because they are
wholly-owned subsidiaries of Lehman Brothers Holdings
Inc.
|
D-1
EXHIBIT E-1
|
|
RATE OF COMPENSATION UNDER THE MANAGEMENT AGREEMENTS
|
|
Rate of Compensation
|
|
as
a percentage of
|
Fund
|
Managed Assets
|
Neuberger Berman California Intermediate
|
|
|
Municipal Fund Inc.
|
0.25
|
%
|
Neuberger Berman
Dividend Advantage Fund Inc.
|
0.60
|
%
|
Neuberger Berman Income Opportunity Fund Inc.
|
0.60
|
%
|
Neuberger Berman
Intermediate Municipal Fund Inc.
|
0.25
|
%
|
Neuberger Berman New York Intermediate
|
|
|
Municipal Fund Inc.
|
0.25
|
%
|
E-1
EXHIBIT E-2
FEES PAID TO NB
MANAGEMENT
(Pursuant to Management and
Administration Agreements between each
Fund and NB Management for fiscal
year ended October 31, 2008)
|
Management
|
|
Administration
|
Fund
|
Fee
|
|
Fee
|
Neuberger Berman California Intermediate
|
|
|
|
|
|
Municipal Fund Inc.
|
$
|
390,887
|
|
$
|
469,064
|
Neuberger Berman
Dividend Advantage
|
|
|
|
|
|
Fund Inc.
|
$
|
945,128
|
|
$
|
393,803
|
Neuberger Berman Income Opportunity
|
|
|
|
|
|
Fund Inc.
|
$
|
1,923,799
|
|
$
|
801,583
|
Neuberger Berman
Intermediate Municipal
|
|
|
|
|
|
Fund Inc.
|
$
|
1,189,926
|
|
$
|
1,427,911
|
Neuberger Berman New York Intermediate
|
|
|
|
|
|
Municipal Fund Inc.
|
$
|
317,921
|
|
$
|
381,505
|
E-2
EXHIBIT F
CURRENT CONTRACTUAL AND VOLUNTARY
ADVISORY FEE WAIVERS
Percentage of Average Daily Managed
Assets Waived
Contractual Advisory Fee
Waivers
|
|
Neuberger
|
|
|
|
Neuberger
|
|
Berman
|
Neuberger
|
Neuberger
|
Neuberger
|
Berman
|
|
California
|
Berman
|
Berman
|
Berman
|
New
York
|
Fiscal
Year
|
Intermediate
|
Dividend
|
Income
|
Intermediate
|
Intermediate
|
ended
|
Municipal
|
Advantage
|
Opportunity
|
Municipal
|
Municipal
|
October 31
|
Fund Inc.
|
Fund Inc.
|
Fund Inc.
|
Fund Inc.
|
Fund Inc.
|
2008
|
0.20%
|
0.20%
|
0.25%
|
0.20%
|
0.20%
|
2009
|
0.15%
|
0.14%
|
0.19%
|
0.15%
|
0.15%
|
2010
|
0.10%
|
0.07%
|
0.13%
|
0.10%
|
0.10%
|
2011
|
0.05%
|
N/A
|
0.07%
|
0.05%
|
0.05%
|
Percentage of Average Daily Managed
Assets Waived
Contractual and Voluntary Advisory Fee
Waivers
|
|
Neuberger
|
|
|
|
Neuberger
|
|
Berman
|
Neuberger
|
Neuberger
|
Neuberger
|
Berman
|
|
California
|
Berman
|
Berman
|
Berman
|
New
York
|
Fiscal
Year
|
Intermediate
|
Dividend
|
Income
|
Intermediate
|
Intermediate
|
(ended
|
Municipal
|
Advantage
|
Opportunity
|
Municipal
|
Municipal
|
October 31)
|
Fund Inc.
|
Fund Inc.
|
Fund Inc.
|
Fund Inc.
|
Fund Inc.
|
2008
|
0.20%
|
0.20%
|
0.25%
|
0.20%
|
0.20%
|
2009
|
0.15%
|
0.14%
|
0.19%
|
0.15%
|
0.15%
|
2010
|
0.15%*
|
0.14%*
|
0.19%*
|
0.15%*
|
0.15%*
|
2011
|
0.10%*
|
0.07%*
|
0.13%*
|
0.10%*
|
0.10%*
|
2012
|
0.05%*
|
N/A
|
0.07%*
|
0.05%*
|
0.05%*
|
*
|
|
NB Management has
voluntarily agreed to extend the terms of the current contractual advisory
fee waivers for an additional year.
|
F-1
EXHIBIT G
NAME, ASSET SIZE AND COMPENSATION
RECEIVED
BY NB MANAGEMENT FOR ADVISORY OR
SUB-ADVISORY
SERVICES PROVIDED TO OTHER
SIMILAR FUNDS
Rate of Compensation based on the
Similar Funds average daily net assets
|
|
Asset
size of
|
Rate of
Compensation
|
Fund
|
Similar Fund
|
Similar Fund*
|
of Similar
Fund
|
Neuberger
Berman Intermediate Municipal Fund
Inc.
|
Neuberger
Berman Municipal Intermediate Bond
Fund
|
$
26,164,823
|
0.25% of the first
|
|
$500 million
|
|
0.225% of the next
|
|
$500 million
|
|
0.20% of the next
|
|
$500 million
|
|
|
|
0.175% of the next
|
|
|
|
$500 million
|
|
|
|
0.15% in excess of
|
|
|
|
$2
billion
|
*
As of December 31, 2008
(Unaudited).
G-1
EXHIBIT H
FORM OF NEW SUB-ADVISORY AGREEMENT
FOR ALL FUNDS
NEUBERGER BERMAN MANAGEMENT LLC
605 Third Avenue
New York, New York 10158-3698
Neuberger Berman, LLC
605 Third Avenue
New York, New York 10158-3698
Dear Sirs:
We have
entered into a Management Agreement with _____________________ (Fund) pursuant
to which we are to act as investment adviser to the Fund. We hereby agree with
you as follows:
1.
|
|
You agree for the duration of
this Agreement to furnish us with such investment recommendations and
research information, of the same type as that which you from time to time
provide to your employees for use in managing client accounts, all as we
shall reasonably request. In the absence of willful misfeasance, bad faith
or gross negligence in the performance of your duties, or of the reckless
disregard of your duties and obligations hereunder, you shall not be
subject to liability for any act or omission or any loss suffered by the
Fund or its security holders in connection with the matters to which this
Agreement relates.
|
|
2.
|
|
In consideration of your
agreements set forth in paragraph 1 above, we agree to pay you on the
basis of direct and indirect costs to you of performing such agreements.
Indirect costs shall be allocated on a basis mutually satisfactory to you
and to us.
|
|
3.
|
|
As used in this Agreement, the
terms assignment and vote of a majority of the outstanding voting
securities shall have the meanings given to them by Section 2(a)(4) and
2(a)(42), respectively, of the Investment Company Act of 1940, as
amended.
|
This
Agreement shall terminate automatically in the event of its assignment, or upon
termination of the Management Agreement between the Fund and the
undersigned.
This
Agreement may be terminated at any time, without the payment of any penalty, (a)
by the Directors of the Fund or by vote of a majority of the outstanding
securities of the Fund or by the undersigned on not less than sixty days
written notice addressed to you at your principal place of business; and (b) by
you, without
H-1
the payment of any penalty, on not less
than thirty nor more than sixty days written notice addressed to the Fund and
the undersigned at the Funds principal place of business.
This
Agreement shall remain in full force and effect until ____ __, 20__ (unless
sooner terminated as provided above) and from year to year thereafter only so
long as its continuance is approved in the manner required by the Investment
Company Act of 1940, as from time to time amended.
If you
are in agreement with the foregoing, please sign the form of acceptance on the
enclosed counterpart hereof and return the same to us.
|
Very truly
yours,
|
|
|
|
NEUBERGER BERMAN MANAGEMENT LLC
|
|
|
|
By:
|
|
|
|
Name:
|
|
Title
|
|
|
|
The
foregoing is hereby accepted as
|
|
of the
date first above written.
|
|
|
|
NEUBERGER BERMAN, LLC
|
|
|
|
By:
|
|
|
|
Name:
|
|
Title
|
H-2
FORM OF NEW SUB-ADVISORY AGREEMENT
FOR INCOME
OPPORTUNITY
NEUBERGER BERMAN MANAGEMENT LLC
605 Third Avenue
New York, New York 10158-3698
Lehman Brothers Asset Management LLC
200 South Wacker Drive
Suite 2100
Chicago, IL 60601
Dear Sirs:
We have
entered into a Management Agreement with Neuberger Berman Income Opportunity
Fund Inc. (Fund) pursuant to which we are to act as investment adviser to the
Fund. We hereby agree with you as follows:
1.
|
|
You agree for the duration of
this Agreement to furnish us with such investment recommendations and
research information, of the same type as that which you from time to time
provide to your employees for use in managing client accounts, all as we
shall reasonably request. In the absence of willful misfeasance, bad faith
or gross negligence in the performance of your duties, or of the reckless
disregard of your duties and obligations hereunder, you shall not be
subject to liability for any act or omission or any loss suffered by the
Fund or its security holders in connection with the matters to which this
Agreement relates.
|
|
2.
|
|
In consideration of your
agreements set forth in paragraph 1 above, we agree to pay you on the
basis of direct and indirect costs to you of performing such agreements.
Indirect costs shall be allocated on a basis mutually satisfactory to you
and to us.
|
|
3.
|
|
As used in this Agreement, the
terms assignment and vote of a majority of the outstanding voting
securities shall have the meanings given to them by Section 2(a)(4) and
2(a)(42), respectively, of the Investment Company Act of 1940, as
amended.
|
This
Agreement shall terminate automatically in the event of its assignment, or upon
termination of the Management Agreement between the Fund and the
undersigned.
This
Agreement may be terminated at any time, without the payment of any penalty, (a)
by the Directors of the Fund or by vote of a majority of the outstanding
securities of the Fund or by the undersigned on not less than sixty days
written notice addressed to you at your principal place of business; and (b) by
you, without the payment of any penalty, on not less than thirty nor more than
sixty days written notice addressed to the Fund and the undersigned at the
Funds principal place of business.
H-3
This
Agreement shall remain in full force and effect until ____ __, 20__ (unless
sooner terminated as provided above) and from year to year thereafter only so
long as its continuance is approved in the manner required by the Investment
Company Act of 1940, as from time to time amended.
If you
are in agreement with the foregoing, please sign the form of acceptance on the
enclosed counterpart hereof and return the same to us.
|
Very truly
yours,
|
|
|
|
NEUBERGER
BERMAN MANAGEMENT LLC
|
|
|
|
By:
|
|
|
Name:
|
|
Title
|
|
|
|
The foregoing
is hereby accepted as
|
|
of the date
first above written.
|
|
|
|
LEHMAN
BROTHERS ASSET MANAGEMENT LLC
|
|
|
|
By:
|
|
|
Name:
|
|
Title
|
H-4
EXHIBIT H-1
|
|
|
|
|
|
Date of Last
|
|
|
|
|
|
|
Submission
|
|
|
|
|
Date of
Last
|
|
of
Existing
|
|
|
|
|
Approval
by
|
|
Sub-Advisory
|
|
|
Date
of
|
|
Directors of
the
|
|
Agreement to Vote
|
|
|
Sub-Advisory
|
|
Sub-Advisory
|
|
of
Stockholders of
|
|
|
Agreement
|
|
Agreement
|
|
each Fund
|
Neuberger Berman California
|
|
11/3/2003
|
|
9/25/2008
|
|
9/23/2003
|
*
|
Intermediate Municipal Fund
Inc.
|
|
|
|
|
|
|
|
Neuberger Berman
Dividend
|
|
3/25/2004
|
|
9/25/2008
|
|
3/9/2004
|
**
|
Advantage Fund Inc.
|
|
|
|
|
|
|
|
Neuberger Berman Income
|
|
11/3/2003
|
|
9/25/2008
|
|
9/23/2003
|
*
|
Opportunity Fund
Inc.
|
|
|
|
|
|
|
|
Neuberger Berman
Intermediate
|
|
11/3/2003
|
|
9/25/2008
|
|
9/23/2003
|
*
|
Municipal Fund Inc.
|
|
|
|
|
|
|
|
Neuberger Berman New York
|
|
|
|
|
|
|
|
Intermediate Municipal Fund
Inc.
|
|
11/3/2003
|
|
9/25/2008
|
|
9/23/2003
|
*
|
*
|
|
Stockholder approval was obtained
in connection with the termination of the prior agreement due to the sale
of NB Holdings, the parent company of NB Management, to LBHI.
|
|
**
|
|
Stockholder approval was obtained
prior to the commencement of operations for the Fund by NB LLC or its
affiliate as the sole stockholder.
|
H-5
EXHIBIT I
FEES PAID TO NB
LLC
(Pursuant to Sub-Advisory Agreement
with respect to each Fund between
NB Management and NB LLC for the fiscal
year ended October 31, 2008)
Fund
|
Sub-Advisory Fees*
|
Neuberger Berman California Intermediate Municipal Fund
Inc.
|
$0
|
Neuberger Berman
Dividend Advantage Fund Inc.
|
$0
|
Neuberger Berman Income Opportunity Fund Inc.
|
$0
|
Neuberger Berman
Intermediate Municipal Fund Inc.
|
$0
|
Neuberger Berman New York
Intermediate Municipal Fund Inc.
|
$0
|
*
|
|
For sub-advisory services
provided, NB LLC receives compensation based on its direct and indirect
costs rather than at a fixed rate.
|
FEES PAID TO LBAM
(Pursuant to Sub-Advisory Agreement with
respect to Income Opportunity between
NB Management and LBAM for the fiscal
year ended October 31, 2008)
Fund
|
Sub-Advisory Fees*
|
Neuberger Berman Income
Opportunity Fund Inc.**
|
$0
|
*
|
|
For sub-advisory
services provided, LBAM receives compensation based on its direct and
indirect costs rather than at a fixed rate.
|
|
**
|
|
Effective April 1, 2008, LBAM
became the Funds sub-adviser for the portion of the Funds portfolio
invested in debt securities (except debt securities issued by real estate
companies).
|
I-1
EXHIBIT J
NAME, ASSET SIZE AND COMPENSATION
RECEIVED
BY LBAM FOR SUB-ADVISORY SERVICES
PROVIDED TO OTHER SIMILAR FUNDS
|
|
|
|
|
|
Rate
of
|
|
|
|
|
Asset size
of
|
|
Compensation
|
Fund
|
|
Similar Fund
|
|
Similar Fund*
|
|
of Similar Fund
|
Neuberger Berman
|
|
Neuberger Berman
|
|
|
|
|
Intermediate Municipal
|
|
Municipal
Intermediate
|
|
|
|
|
Fund
Inc.
|
|
Bond
Fund
|
|
$26,164,823
|
|
**
|
*
|
|
As of December 31, 2008
(Unaudited).
|
|
**
|
|
For sub-advisory services
provided, LBAM receives compensation based on its direct and indirect
costs rather than at a fixed rate.
|
J-1
EXHIBIT K
FEES BILLED BY INDEPENDENT REGISTERED
PUBLIC
ACCOUNTING FIRMS
Audit Fees
The
aggregate fees billed by Ernst & Young for the audit of the annual financial
statements or services that are normally provided in connection with statutory
and regulatory filings or engagements of the Funds for the fiscal years ended
October 31, 2008 and October 31, 2007 are as shown in the table below.
|
|
Audit Fees Billed
|
|
|
Fiscal
Year
|
|
Fiscal
Year
|
|
|
Ended
|
|
Ended
|
Fund
|
|
10/31/08
|
|
10/31/07
|
Neuberger Berman California Intermediate
|
|
$37,250
|
|
$35,600
|
Municipal Fund Inc.
|
|
|
|
|
Neuberger Berman
Dividend Advantage Fund Inc.
|
|
$40,000
|
|
$38,100
|
Neuberger Berman Income Opportunity Fund Inc.
|
|
$40,000
|
|
$38,100
|
Neuberger Berman
Intermediate Municipal Fund Inc.
|
|
$37,250
|
|
$35,600
|
Neuberger Berman New York Intermediate
|
|
|
|
|
Municipal Fund Inc.
|
|
$37,250
|
|
$35,600
|
Audit-Related Fees
The
aggregate audit-related fees billed by Ernst & Young for the fiscal years
ended October 31, 2008 and October 31, 2007 are shown in the table below. The
nature of the services provided involved agreed upon procedures relating to the
preferred stock.
|
|
Audit-Related Fees
|
|
|
Billed
|
|
|
Fiscal
Year
|
|
Fiscal
Year
|
|
|
Ended
|
|
Ended
|
Fund
|
|
10/31/08
|
|
10/31/07
|
Neuberger Berman California Intermediate
|
|
$6,500
|
|
$6,250
|
Municipal Fund Inc.
|
|
|
|
|
Neuberger Berman
Dividend Advantage Fund Inc.
|
|
$6,500
|
|
$6,250
|
Neuberger Berman Income Opportunity Fund Inc.
|
|
$6,500
|
|
$6,250
|
Neuberger Berman
Intermediate Municipal Fund Inc.
|
|
$6,500
|
|
$6,250
|
Neuberger Berman New York Intermediate
|
|
|
|
|
Municipal Fund Inc.
|
|
$6,500
|
|
$6,250
|
K-1
Tax Fees
The
aggregate fees billed by Ernst & Young for the fiscal years ended October
31, 2008 and October 31, 2007 are as shown in the table below. The nature of the
services provided comprised tax compliance, tax advice and tax planning.
|
|
Tax Fees Billed
|
|
|
Fiscal
Year
|
|
Fiscal
Year
|
|
|
Ended
|
|
Ended
|
Fund
|
|
10/31/08
|
|
10/31/07
|
Neuberger Berman California Intermediate
|
|
$10,000
|
|
$9,700
|
Municipal Fund Inc.
|
|
|
|
|
Neuberger Berman
Dividend Advantage Fund Inc.
|
|
$10,000
|
|
$9,700
|
Neuberger Berman Income Opportunity Fund Inc.
|
|
$10,000
|
|
$9,700
|
Neuberger Berman
Intermediate Municipal Fund Inc.
|
|
$10,000
|
|
$9,700
|
Neuberger Berman New York Intermediate
|
|
$10,000
|
|
$9,700
|
Municipal Fund Inc.
|
|
|
|
|
All Other Fees
Aggregate
fees billed by Ernst & Young during the fiscal years ended October 31, 2008
and October 31, 2007 for services provided to the Funds other than those
reported in Audit Fees, Audit-Related Fees and Tax Fees, are as shown in the
table below.
|
|
All Other Fees
|
|
|
Fiscal
Year
|
|
Fiscal
Year
|
|
|
Ended
|
|
Ended
|
Fund
|
|
10/31/08
|
|
10/31/07
|
Neuberger Berman California Intermediate
|
|
$0
|
|
$0
|
Municipal Fund Inc.
|
|
|
|
|
Neuberger Berman
Dividend Advantage Fund Inc.
|
|
$0
|
|
$0
|
Neuberger Berman Income Opportunity Fund Inc.
|
|
$0
|
|
$0
|
Neuberger Berman
Intermediate Municipal Fund Inc.
|
|
$0
|
|
$0
|
Neuberger Berman New York Intermediate
|
|
$0
|
|
$0
|
Municipal Fund Inc.
|
|
|
|
|
K-2
Non-Audit Fees
Aggregate
fees billed by Ernst & Young during the fiscal years ended October 31, 2008
and October 31, 2007 for non-audit services to the Funds, NB Management, NB LLC
and any entity controlling, controlled by or under common control with NB
Management or NB LLC that provides ongoing services to the Funds are as shown in
the table below.
|
|
Aggregate Non-Audit
|
|
|
Fees*
|
|
|
Fiscal
Year
|
|
Fiscal
Year
|
|
|
Ended
|
|
Ended
|
Fund
|
|
10/31/08
|
|
10/31/07
|
Neuberger Berman California Intermediate
|
|
$482,500
|
|
$504,750
|
Municipal Fund Inc.
|
|
|
|
|
Neuberger Berman
Dividend Advantage Fund Inc.
|
|
$482,500
|
|
$504,750
|
Neuberger Berman Income Opportunity Fund Inc.
|
|
$482,500
|
|
$504,750
|
Neuberger Berman
Intermediate Municipal Fund Inc.
|
|
$482,500
|
|
$504,750
|
Neuberger Berman New York Intermediate
|
|
$482,500
|
|
$504,750
|
Municipal Fund Inc.
|
|
|
|
|
*
|
|
Because this is a combined proxy
for multiple Funds, the aggregate total of the fees billed to NB
Management, NB LLC and any entity controlling, controlled by or under
common control with NB Management or NB LLC that provides ongoing services
to the Funds is included in each Funds Aggregate Non-Audit Fees in this
table.
|
Audit Committees Pre-Approval
Policies and Procedures
The Audit
Committees pre-approval policies and procedures for each Registrant to engage
an accountant to render audit and non-audit services delegate to each member of
the Committee the power to pre-approve services between meetings of the
Committee.
Each
Audit Committee has considered these fees and the nature of the services
rendered, and has concluded that they are compatible with maintaining the
independence of Ernst & Young. The Audit Committees did not approve any of
the services described above pursuant to the de minimis exceptions set forth
in Rule 2-01(c)(7)(i)(C) and Rule 2-01(c)(7)(ii) of Regulation S-X. Ernst &
Young did not provide any audit-related services, tax services or other
non-audit services to NB Management, NB LLC and any entity controlling,
controlled by or under common control with NB Management or NB LLC that provides
ongoing services to the Funds that the Audit Committees were required to approve
pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X.
K-3
EXHIBIT L
CONTROL PERSONS AND PRINCIPAL HOLDERS
OF SECURITIES
As of
March 2, 2009, the following are all of the beneficial owners of more than five
percent of each class of each Fund known to each
respective Fund.
|
|
|
|
|
|
Amount
of
|
|
Percentage
|
|
|
|
|
|
|
Beneficial
|
|
of
Class
|
Fund
|
|
Class
|
|
Name and Address
|
|
Ownership
|
|
Owned
|
Neuberger Berman California Intermediate Municipal Fund
Inc.
|
|
Common
|
|
First Trust Portfolios L.P.
|
|
397,468
|
|
5.9%(3)
|
|
|
|
|
First Trust Advisors L.P.
|
|
|
|
|
|
|
|
|
The Charger Corporation
|
|
|
|
|
|
|
|
|
120 East Liberty Drive,
|
|
|
|
|
|
|
|
|
Suite
400
|
|
|
|
|
|
|
|
|
Wheaton, IL 60187
|
|
|
|
|
|
|
Preferred
|
|
Bank of America
|
|
890
|
|
37.7%(1)
|
|
|
|
|
Corporation
|
|
|
|
|
|
|
|
|
100 North Tryon Street
|
|
|
|
|
|
|
|
|
Charlotte, NC 28255
|
|
|
|
|
|
|
|
|
|
Merrill Lynch, Pierce,
|
|
|
|
|
|
|
|
|
Fenner & Smith, Inc.
|
|
|
|
|
|
|
|
|
4 World Financial Center
|
|
|
|
|
|
|
|
|
250 Vesey Street
|
|
|
|
|
|
|
|
|
New York, NY 10080
|
|
|
|
|
|
|
Preferred
|
|
Merrill Lynch, Pierce,
|
|
266
|
|
11.3%(4)
|
|
|
|
|
Fenner & Smith, Inc.
|
|
|
|
|
|
|
|
|
4 World Financial Center
|
|
|
|
|
|
|
|
|
250 Vesey Street
|
|
|
|
|
|
|
|
|
New York, NY 10080
|
|
|
|
|
|
|
Preferred
|
|
UBS AG
|
|
187
|
|
7.92%(2)
|
|
|
|
|
Bahnhofstrasse 45
|
|
|
|
|
|
|
|
|
PO Box CH-8021
|
|
|
|
|
|
|
|
|
Zurich, Switzerland
|
|
|
|
|
Neuberger Berman
Dividend Advantage Fund Inc.
|
|
Common
|
|
Lazard
Asset
|
|
677,282
|
|
11.67%(6)
|
|
|
|
|
Management,
LLC
|
|
|
|
|
|
|
|
|
30 Rockefeller
Plaza
|
|
|
|
|
|
|
|
|
New York, NY 10112
|
|
|
|
|
|
|
Common
|
|
Western
Investment LLC
|
|
438,592
|
|
7.6%(5)
|
|
|
|
|
7050 S. Union
Park
|
|
|
|
|
|
|
|
|
Center, Suite
590,
|
|
|
|
|
|
|
|
|
Midvale, UT
84047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arthur D.
Lipson
|
|
|
|
|
|
|
|
|
7050 S. Union
Park
|
|
|
|
|
|
|
|
|
Center, Suite
590,
|
|
|
|
|
|
|
|
|
Midvale, Utah 84047
|
|
|
|
|
L-1
|
|
|
|
|
|
Amount
of
|
|
Percentage
|
|
|
|
|
|
|
Beneficial
|
|
of
Class
|
Fund
|
|
Class
|
|
Name and Address
|
|
Ownership
|
|
Owned
|
Neuberger Berman Income Opportunity Fund Inc.
|
|
Common
|
|
Western Investment LLC
|
|
1,228,797
|
|
6.9%(5)
|
|
|
|
|
7050 S. Union Park
|
|
|
|
|
|
|
|
|
Center, Suite 590,
|
|
|
|
|
|
|
|
|
Midvale, UT 84047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arthur D. Lipson
|
|
|
|
|
|
|
|
|
7050 S. Union Park
|
|
|
|
|
|
|
|
|
Center, Suite 590,
|
|
|
|
|
|
|
|
|
Midvale, Utah 84047
|
|
|
|
|
|
|
Common
|
|
Claymore Securities, Inc.
|
|
1,084,725
|
|
6.1%(8)
|
|
|
|
|
2455 Corporate West
|
|
|
|
|
|
|
|
|
Drive Lisle, IL 60532
|
|
|
|
|
|
|
Common
|
|
Morgan Stanley
|
|
743,901
|
|
4.2%(7)
|
|
|
|
|
1585 Broadway
|
|
|
|
|
|
|
|
|
New York, NY 10036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Van Kampen Funds Inc.
|
|
|
|
|
|
|
|
|
522 Fifth Avenue
|
|
|
|
|
|
|
|
|
New York, NY 10036
|
|
|
|
|
Neuberger Berman
Intermediate Municipal Fund Inc.
|
|
Preferred
|
|
Bank of America
Corp.
|
|
3,311
|
|
46.1%(1)
|
|
|
|
|
100 North Tryon
Street
|
|
|
|
|
|
|
|
|
Charlotte, NC
28255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merrill Lynch,
Pierce,
|
|
|
|
|
|
|
|
|
Fenner &
Smith, Inc.
|
|
|
|
|
|
|
|
|
4 World
Financial Center
|
|
|
|
|
|
|
|
|
250 Vesey
Street
|
|
|
|
|
|
|
|
|
New York, NY 10080
|
|
|
|
|
|
|
Preferred
|
|
Merrill Lynch,
Pierce,
|
|
857
|
|
11.9%(4)
|
|
|
|
|
Fenner &
Smith, Inc.
|
|
|
|
|
|
|
|
|
4 World
Financial Center
|
|
|
|
|
|
|
|
|
250 Vesey
Street
|
|
|
|
|
|
|
|
|
New York, NY 10080
|
|
|
|
|
|
|
Preferred
|
|
UBS AG
|
|
553
|
|
7.71%(2)
|
|
|
|
|
Bahnhofstrasse
45
|
|
|
|
|
|
|
|
|
PO Box
CH-8021
|
|
|
|
|
|
|
|
|
Zurich, Switzerland
|
|
|
|
|
Neuberger Berman New York Intermediate Municipal Fund
Inc.
|
|
Preferred
|
|
Bank of America Corp.
|
|
1,227
|
|
63.6%(1)
|
|
|
|
|
100 North Tryon Street
|
|
|
|
|
|
|
|
|
Charlotte, NC 28255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merrill Lynch, Pierce,
|
|
|
|
|
|
|
|
|
Fenner & Smith, Inc.
|
|
|
|
|
|
|
|
|
4 World Financial Center
|
|
|
|
|
|
|
|
|
250 Vesey Street
|
|
|
|
|
|
|
|
|
New York, NY 10080
|
|
|
|
|
L-2
|
|
|
|
|
|
Amount
of
|
|
Percentage
|
|
|
|
|
|
|
Beneficial
|
|
of
Class
|
Fund
|
|
Class
|
|
Name and Address
|
|
Ownership
|
|
Owned
|
|
|
Preferred
|
|
Merrill Lynch, Pierce,
|
|
388
|
|
20.1%(4)
|
|
|
|
|
Fenner & Smith, Inc.
|
|
|
|
|
|
|
|
|
4 World Financial Center
|
|
|
|
|
|
|
|
|
250 Vesey Street
|
|
|
|
|
|
|
|
|
New York, NY 10080
|
|
|
|
|
(1)
|
|
Based on an amended Schedule 13G
filed by Bank of America Corporation and Merrill Lynch, Pierce, Fenner
& Smith, Inc. filed on February 11, 2009.
|
|
(2)
|
|
Based on Schedule 13G filed by
UBS AG on February 10, 2009.
|
|
(3)
|
|
Based on Schedule 13G filed by
First Trust Portfolios L.P., First Trust Advisors L.P. and The Charger
Corporation on January 27, 2009.
|
|
(4)
|
|
Based on Schedule 13G filed by
Merrill Lynch, Pierce, Fenner & Smith, Inc. filed on January 12,
2009.
|
|
(5)
|
|
Based on an Amended Schedule 13D
filed by Western Investment LLC and Arthur D. Lipson on March 2,
2009.
|
|
(6)
|
|
Based on an Amended Schedule 13G
filed by Lazard Asset Management, LLC on February 10, 2009.
|
|
(7)
|
|
Based on an Amended Schedule 13G
filed by Morgan Stanley and Van Kampen Funds Inc. on February 17,
2009.
|
|
(8)
|
|
Based on an Amended Schedule 13G
filed by Claymore Securities, Inc. on February 10,
2009.
|
L-3
EXHIBIT M
NUMBER OF SHARES OUTSTANDING
FOR
EACH CLASS OF EACH FUND
AS OF THE
RECORD DATE
|
|
|
|
Shares
|
Fund
|
|
Class
|
|
Outstanding
|
Neuberger Berman California Intermediate
|
|
Common
|
|
6,799,354
|
Municipal Fund Inc.
|
|
Preferred
|
|
2,360
|
Neuberger Berman
Dividend Advantage Fund Inc.
|
|
Common
|
|
5,805,236
|
|
|
Preferred
|
|
110
|
Neuberger Berman Income Opportunity Fund Inc.
|
|
Common
|
|
17,734,383
|
|
|
Preferred
|
|
595
|
Neuberger Berman
Intermediate Municipal Fund Inc.
|
|
Common
|
|
20,705,124
|
|
|
Preferred
|
|
7,176
|
Neuberger Berman New York Intermediate
|
|
Common
|
|
5,582,218
|
Municipal Fund Inc.
|
|
Preferred
|
|
1,930
|
M-1
|
|
|
|
|
|
|
|
|
Neuberger Berman
Management LLC
605 Third Avenue, 2nd floor
New York, New
York 10158-0180
www.nb.com
|
|
|
|
|
|
J0086
04/09
|
6
PLEASE DETACH PROXY CARD HERE
6
|
|
PROXY FOR THE ANNUAL MEETING OF
STOCKHOLDERS ON MAY 13, 2009
P
R
O
X
Y
|
|
The undersigned appoints as
proxies Robert Conti, Owen F. McEntee, Jr. and Claudia A. Brandon, and
each of them (with power of substitution), to vote all the undersigneds
shares of common stock in Neuberger Berman California Intermediate
Municipal Fund Inc., Neuberger Berman Dividend Advantage Fund Inc.,
Neuberger Berman Income Opportunity Fund Inc., Neuberger Berman
Intermediate Municipal Fund Inc. and/or Neuberger Berman New York
Intermediate Municipal Fund Inc. at the Annual Meeting of Stockholders to
be held on May 13, 2009, at 2:00 p.m. Eastern Time at the offices of
Neuberger Berman, LLC, 605 Third Avenue, 41st Floor, New York, New York
10158-3698, and any adjournments or postponements thereof (Meeting),
with all the power the undersigned would have if personally
present.
Receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement is acknowledged by your
execution of this proxy card.
THIS PROXY IS BEING SOLICITED ON
BEHALF OF THE BOARDS OF DIRECTORS OF NEUBERGER BERMAN CALIFORNIA
INTERMEDIATE MUNICIPAL FUND INC., NEUBERGER BERMAN DIVIDEND ADVANTAGE FUND
INC., NEUBERGER BERMAN INCOME OPPORTUNITY FUND INC., NEUBERGER BERMAN
INTERMEDIATE MUNICIPAL FUND INC. AND NEUBERGER BERMAN NEW YORK
INTERMEDIATE MUNICIPAL FUND INC.
The shares of common stock
represented by this proxy will be voted as instructed.
UNLESS
INDICATED TO THE CONTRARY, THIS PROXY SHALL BE DEEMED TO GRANT AUTHORITY
TO VOTE FOR THE PROPOSALS SPECIFIED ON THE REVERSE SIDE. THIS PROXY ALSO
GRANTS DISCRETIONARY POWER TO VOTE UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.
Your vote is important no
matter how many shares you own. If you are not voting by telephone or
internet, please sign and date this proxy on the reverse side and return
it promptly in the enclosed envelope.
|
|
THREE EASY WAYS TO
VOTE
Your telephone or Internet vote
authorizes the named proxies to vote your shares in the same manner as if you
had returned your proxy card. We encourage you to use these cost effective and
convenient ways of voting, available 24 hours a day, 7 days a
week.
TELEPHONE
|
|
INTERNET
|
|
MAIL
|
This method of voting is available for residents of the
U.S. and Canada. On a touch tone telephone, call
TOLL FREE
1-866-458-9861
. You will be prompted to provide your unique
Control Number shown below. Have this proxy card ready, then follow the
prerecorded instructions. Available 24 hours a day, 7 days a week until
11:59 p.m. Eastern Time on Tuesday, May 12, 2009.
|
|
Visit the Internet voting
Web site at
http://www.proxyonline.com
. Enter the unique Control Number
shown below and follow the instructions on your screen. You will incur
only your usual Internet charges. Available 24 hours a day, 7 days a week
until 11:59 p.m. Eastern Time on Tuesday, May 12, 2009.
|
|
Simply sign and date your proxy card and return it in the
postage-paid envelope. If you are voting by telephone or over the
Internet,
please do not mail your proxy
card.
|
If you have any questions or
need assistance voting your proxy, please call The Altman Group toll free
at
1-866-620-7628
IF YOU VOTE BY TELEPHONE OR INTERNET,
DO NOT
MAIL YOUR CARD.
Important Notice Regarding the
Availability of Proxy Materials for the Stockholder Meeting:
The Proxy
Statement is available at
www.proxyonline.com.
|
6
TO DELIVER YOUR PROXY BY
MAIL, PLEASE DETACH PROXY CARD HERE
6
|
|
|
|
|
|
|
|
|
|
|
|
For
|
|
Against
|
|
Abstain
|
1.
|
All Funds:
To approve a new Management Agreement
between the Fund and a newly formed successor entity to Neuberger Berman
Management LLC (New NB Management), to become effective upon
consummation of the proposed acquisition (the Proposed Acquisition)
described in the Proxy Statement.
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
2.
|
All Funds:
To approve a new Sub-Advisory
Agreement, with respect to the Fund, between New NB Management and
Neuberger Berman, LLC (NB LLC), or a newly formed successor entity to NB
LLC, to become effective upon consummation of the Proposed
Acquisition.
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
3.
|
For Neuberger Berman Income Opportunity Fund
Inc.:
To approve a new Sub-Advisory Agreement, with respect to
Neuberger Berman Income Opportunity Fund Inc., between New NB Management
and Lehman Brothers Asset Management LLC, to become effective upon
consummation of the Proposed Acquisition.
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
This proxy card is valid only when signed and
dated.
|
|
Please mark votes
as in
this example
|
|
x
|
|
|
|
|
|
|
|
|
4.
|
All Funds:
To elect five Class I Directors to
serve on the Board of Directors of the Fund until the annual meeting of
stockholders in 2012, or until their successors are elected and
qualified.
|
|
FOR
ALL
Nominees
Listed
o
|
|
WITHHOLD
AUTHORITY
To Vote
For
All
Nominees
Listed
o
|
|
FOR
ALL
Except As
Noted
Below
o
|
Nominees:
|
|
|
|
|
|
|
|
|
(01) Faith Colish (02) Robert
Conti
(03) Michael M. Knetter (04) Cornelius T. Ryan (05) Peter P.
Trapp
|
|
|
|
|
|
|
|
|
|
|
|
Instruction: To withhold your vote for any
individual nominee(s), mark For All Except box and write the nominees
number(s) on the line provided below.
|
|
|
|
|
|
|
|
|
Please sign exactly as your name appears hereon. If
shares are held in the name of two or more persons, any may sign.
Attorneys-in-fact, executors, administrators, etc. should so indicate. If
shares are held by a corporation, partnership, trust, estate or similar
account, the name and capacity of the individual signing the proxy card
should be indicated unless it is reflected in the form of
registration.
|
|
Date:
|
|
, 2009
|
|
Signature
|
|
Signature
|
PLEASE MARK, SIGN, DATE, AND
RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
IF YOU PLAN TO ATTEND THE MEETING, PLEASE CALL
1-800-877-9700.
6
PLEASE DETACH PROXY CARD HERE
6
|
|
PROXY FOR THE ANNUAL MEETING OF
STOCKHOLDERS ON MAY 13, 2009
P
R
O
X
Y
|
|
The undersigned appoints as
proxies Robert Conti, Owen F. McEntee, Jr. and Claudia A. Brandon, and
each of them (with power of substitution), to vote all the undersigneds
shares of preferred stock in Neuberger Berman California Intermediate
Municipal Fund Inc., Neuberger Berman Dividend Advantage Fund Inc.,
Neuberger Berman Income Opportunity Fund Inc., Neuberger Berman
Intermediate Municipal Fund Inc. and/or Neuberger Berman New York
Intermediate Municipal Fund Inc. at the Annual Meeting of Stockholders to
be held on May 13, 2009, at 2:00 p.m. Eastern Time at the offices of
Neuberger Berman, LLC, 605 Third Avenue, 41st Floor, New York, New York
10158-3698, and any adjournments or postponements thereof (Meeting),
with all the power the undersigned would have if personally
present.
Receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement is acknowledged by your
execution of this proxy card.
THIS PROXY IS BEING SOLICITED ON
BEHALF OF THE BOARDS OF DIRECTORS OF NEUBERGER BERMAN CALIFORNIA
INTERMEDIATE MUNICIPAL FUND INC., NEUBERGER BERMAN DIVIDEND ADVANTAGE FUND
INC., NEUBERGER BERMAN INCOME OPPORTUNITY FUND INC., NEUBERGER BERMAN
INTERMEDIATE MUNICIPAL FUND INC. AND NEUBERGER BERMAN NEW YORK
INTERMEDIATE MUNICIPAL FUND INC.
The shares of preferred stock
represented by this proxy will be voted as instructed.
UNLESS
INDICATED TO THE CONTRARY, THIS PROXY SHALL BE DEEMED TO GRANT AUTHORITY
TO VOTE FOR THE PROPOSALS SPECIFIED ON THE REVERSE SIDE. THIS PROXY ALSO
GRANTS DISCRETIONARY POWER TO VOTE UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.
Your vote is important no
matter how many shares you own. If you are not voting by telephone or
internet, please sign and date this proxy on the reverse side and return
it promptly in the enclosed envelope.
|
|
THREE EASY WAYS TO
VOTE
Your telephone or Internet vote
authorizes the named proxies to vote your shares in the same manner as if you
had returned your proxy card. We encourage you to use these cost effective and
convenient ways of voting, available 24 hours a day, 7 days a
week.
TELEPHONE
|
|
INTERNET
|
|
MAIL
|
This method of voting is available for residents of the
U.S. and Canada. On a touch tone telephone, call
TOLL FREE
1-866-458-9861
. You will be prompted to provide your unique
Control Number shown below. Have this proxy card ready, then follow the
prerecorded instructions. Available 24 hours a day, 7 days a week until
11:59 p.m. Eastern Time on Tuesday, May 12, 2009.
|
|
Visit the Internet voting
Web site at
http://www.proxyonline.com
. Enter the unique Control Number
shown below and follow the instructions on your screen. You will incur
only your usual Internet charges. Available 24 hours a day, 7 days a week
until 11:59 p.m. Eastern Time on Tuesday, May 12, 2009.
|
|
Simply sign and date your proxy card and return it in the
postage-paid envelope. If you are voting by telephone or over the
Internet,
please do not mail your proxy
card.
|
If you have any questions or
need assistance voting your proxy, please call The Altman Group toll free
at
1-866-620-7628
IF YOU VOTE BY TELEPHONE OR INTERNET,
DO NOT
MAIL YOUR CARD.
Important Notice Regarding the
Availability of Proxy Materials for the Stockholder Meeting:
The Proxy
Statement is available at
www.proxyonline.com.
|
6
TO DELIVER YOUR PROXY BY
MAIL, PLEASE DETACH PROXY CARD HERE
6
|
|
|
|
|
|
|
|
|
|
|
|
For
|
|
Against
|
|
Abstain
|
1.
|
All Funds:
To approve a new Management Agreement
between the Fund and a newly formed successor entity to Neuberger Berman
Management LLC (New NB Management), to become effective upon
consummation of the proposed acquisition (the Proposed Acquisition)
described in the Proxy Statement.
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
2.
|
All Funds:
To approve a new Sub-Advisory
Agreement, with respect to the Fund, between New NB Management and
Neuberger Berman, LLC (NB LLC), or a newly formed successor entity to NB
LLC, to become effective upon consummation of the Proposed
Acquisition.
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
3.
|
For Neuberger Berman Income Opportunity Fund
Inc.:
To approve a new Sub-Advisory Agreement, with respect to
Neuberger Berman Income Opportunity Fund Inc., between New NB Management
and Lehman Brothers Asset Management LLC, to become effective upon
consummation of the Proposed Acquisition.
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
This proxy card is valid only when signed and
dated.
|
|
Please mark votes
as in
this example
|
|
x
|
|
|
|
|
|
|
|
|
4.
|
All Funds:
To elect five Class I Directors to
serve on the Board of Directors of the Fund until the annual meeting of
stockholders in 2012, or until their successors are elected and
qualified.
|
|
FOR
ALL
Nominees
Listed
o
|
|
WITHHOLD
AUTHORITY
To Vote
For
All
Nominees
Listed
o
|
|
FOR
ALL
Except As
Noted
Below
o
|
Nominees:
|
|
|
|
|
|
|
|
|
(01) Faith Colish (02) Robert
Conti
(03) Michael M. Knetter (04) Cornelius T. Ryan (05) Peter P.
Trapp
|
|
|
|
|
|
|
|
|
|
|
|
Instruction: To withhold your vote for any
individual nominee(s), mark For All Except box and write the nominees
number(s) on the line provided below.
|
|
|
|
|
|
|
|
|
Please sign exactly as your name appears hereon. If
shares are held in the name of two or more persons, any may sign.
Attorneys-in-fact, executors, administrators, etc. should so indicate. If
shares are held by a corporation, partnership, trust, estate or similar
account, the name and capacity of the individual signing the proxy card
should be indicated unless it is reflected in the form of
registration.
|
|
Date:
|
|
, 2009
|
|
Signature
|
|
Signature
|
PLEASE MARK, SIGN, DATE, AND
RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
IF YOU PLAN TO ATTEND THE MEETING, PLEASE CALL
1-800-877-9700.
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