Section
8.01. Other Events
On July
20, 2010 the Board of Directors of Value Line, Inc. (“Value Line”) approved a
transaction involving its wholly owned subsidiaries EULAV Asset Management, LLC
(“EULAV”), the investment adviser to the Value Line Mutual Funds (the “Value
Line Funds”) and certain separate accounts, and EULAV Securities,
Inc. (“ESI”), the distributor of the Value Line Funds. Completion of
the transaction is subject to various conditions described below. If
the transaction is completed, Value Line will contribute all of the outstanding
stock of ESI to EULAV, EULAV will be converted to a Delaware statutory trust
named EULAV Asset Management (“EAM”), Value Line will restructure its ownership
of EAM so that it has no voting authority with respect to the election or
removal of the trustees of EAM and retains only interests in the revenues and
residual profits of EAM and EAM will grant residual profits interests to five
individuals selected by the independent directors of Value Line.
Upon
completion of the transaction the business and affairs of EAM will be managed by
five individuals and a non-voting Delaware resident who are trustees
(collectively the “Trustees”) and by its officers to the extent authorized by
the Trustees. The Trustees will be elected by the five shareholders,
each of which will own voting profits interests in EAM having a 20% vote in the
election of Trustees. Value Line will hold non-voting interests that
entitle Value Line to receive a range of 41% to 55% of EAM’s revenues (excluding
distribution revenues) from EAM’s mutual fund and separate account
business. In addition, Value Line will receive 50% of the residual
profits of EAM (subject to temporary increase in certain limited
circumstances). The voting profits interests shareholders will
receive the other 50% of residual profits of EAM. EAM will elect to
be taxed as a pass-through entity similar to a partnership.
EAM is
authorized as part of the transaction to use the name “Value Line” for the 14
existing mutual funds for which EULAV currently serves as the investment
adviser.
Mitchell
Appel, president of ESI and EULAV as well as of each of the Value Line Funds,
and Chief Financial Officer and a director of Value Line, will be one of the
voting profits interests shareholders and the first Chief Executive Officer of
EAM. He will resign his positions with Value Line upon closing of the
transaction.
The
transaction is subject to approval of new investment advisory agreements with
the Value Line Funds by the shareholders of the Value Line Funds which will not
differ in substance from the current investment advisory agreements and to entry
into the trust agreement. The Value Line Board and the Board of each
of the Value Line Funds have approved this transaction.
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, as amended, the Registrant has duly caused this
Current Report to be signed on its behalf by the undersigned hereunto duly
authorized.